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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 001-37363
Enviva Partners, LP
(Exact name of registrant as specified in its charter)
Delaware46-4097730
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)Identification No.)
7272 Wisconsin Ave.Suite 1800
Bethesda,MD20814
  (Address of principal executive offices)(Zip code)
(301)657-5560
      (Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Units EVANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒Accelerated filer
Non-accelerated filer ☐Smaller reporting company
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No ☒
As of July 23, 2021, 45,008,079 common units were outstanding.


Table of Contents
ENVIVA PARTNERS, LP
QUARTERLY REPORT ON FORM 10‑Q
TABLE OF CONTENTS
Item 1. 
i

Table of Contents
CAUTIONARY STATEMENT REGARDING FORWARD‑LOOKING STATEMENTS
Certain statements and information in this Quarterly Report on Form 10‑Q (this “Quarterly Report”) may constitute “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward‑looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Although management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:
the volume and quality of products that we are able to produce or source and sell, which could be adversely affected by, among other things, operating or technical difficulties at our wood pellet production plants or deep-water marine terminals;
the prices at which we are able to sell our products;
our ability to successfully negotiate, complete and integrate drop-down or third-party acquisitions, including the associated contracts, or to realize the anticipated benefits of such acquisitions;
failure of our customers, vendors and shipping partners to pay or perform their contractual obligations to us;
our inability to successfully execute our project development, expansion and construction activities on time and within budget;
the creditworthiness of our contract counterparties;
the amount of low-cost wood fiber that we are able to procure and process, which could be adversely affected by, among other things, disruptions in supply or operating or financial difficulties suffered by our suppliers;
changes in the price and availability of natural gas, coal or other sources of energy;
changes in prevailing economic conditions;
unanticipated ground, grade or water conditions;
inclement or hazardous environmental conditions, including extreme precipitation, temperatures and flooding;
fires, explosions or other accidents;
changes in domestic and foreign laws and regulations (or the interpretation thereof) related to renewable or low-carbon energy, the forestry products industry, the international shipping industry or power, heat or combined heat and power generators;
changes in the regulatory treatment of biomass in core and emerging markets;
our inability to acquire or maintain necessary permits or rights for our production, transportation or terminaling operations;
changes in the price and availability of transportation;
changes in foreign currency exchange or interest rates, and the failure of our hedging arrangements to effectively reduce our exposure to the risks related thereto;
risks related to our indebtedness;
our failure to maintain effective quality control systems at our wood pellet production plants and deep-water marine terminals, which could lead to the rejection of our products by our customers;
changes in the quality specifications for our products that are required by our customers;
labor disputes, unionization or similar collective actions;
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our inability to hire, train or retain qualified personnel to manage and operate our business and newly acquired assets;
the effects of the exit of the United Kingdom from the European Union on our and our customers’ businesses;
the possibility of cyber and malware attacks;
our inability to borrow funds and access capital markets; and
viral contagions or pandemic diseases, such as COVID-19.
Please read the risks described in our Annual Report on Form 10-K for the year ended December 31, 2020 and the risk factors included herein in Item 1A. Risk Factors. All forward-looking statements in this Quarterly Report are expressly qualified in their entirety by the foregoing cautionary statements.
Readers are cautioned not to place undue reliance on forward-looking statements and we undertake no obligation to update or revise any such statements after the date they are made, whether as a result of new information, future events or otherwise.
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GLOSSARY OF TERMS
biomass: any organic biological material derived from living organisms that stores energy from the sun.
co-fire: the combustion of two different types of materials at the same time. For example, biomass is sometimes fired in combination with coal in existing coal plants.
dry-bulk: describes dry-bulk commodities that are shipped in large, unpackaged amounts.
metric ton: one metric ton, which is equivalent to 1,000 kilograms and 1.1023 short tons.
off-take contract: an agreement concerning the purchase and sale of a certain volume of future production of a given resource such as wood pellets.
utility-grade wood pellets: wood pellets meeting minimum requirements generally specified by industrial consumers and produced and sold in sufficient quantities to satisfy industrial‑scale consumption.
wood fiber: cellulosic elements that are extracted from trees and used to make various materials, including paper. In North America, wood fiber is primarily extracted from hardwood (deciduous) trees and softwood (coniferous) trees.
wood pellets: energy-dense, low-moisture and uniformly sized units of wood fuel produced from processing various wood resources or byproducts.
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PART I—FINANCIAL INFORMATION    
Item 1. Financial Statements
ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except number of units)
June 30, 2021December 31, 2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents$42,901 $10,004 
Accounts receivable74,398 124,212 
Related-party receivables, net 2,414 
Inventories47,662 42,364 
Prepaid expenses and other current assets13,501 16,457 
Total current assets178,462 195,451 
Property, plant and equipment, net 1,114,521 1,071,819 
Operating lease right-of-use assets49,539 51,434 
Goodwill99,660 99,660 
Other long-term assets10,526 11,248 
Total assets$1,452,708 $1,429,612 
Liabilities and Partners’ Capital
Current liabilities:
Accounts payable$28,041 $15,208 
Related-party payables, net4,581  
Accrued and other current liabilities99,342 108,976 
Interest payable23,966 24,642 
Current portion of long-term debt and finance lease obligations12,056 13,328 
Total current liabilities167,986 162,154 
Long-term debt and finance lease obligations789,451 912,721 
Long-term operating lease liabilities48,368 50,074 
Deferred tax liabilities, net13,224 13,217 
Other long-term liabilities13,154 15,419 
Total liabilities1,032,183 1,153,585 
Commitments and contingencies
Partners’ capital:
Limited partners:
Common unitholders—public (31,421,704 and 26,209,862 units issued and outstanding at June 30, 2021 and December 31, 2020, respectively)
587,737 424,825 
Common unitholder—sponsor (13,586,375 units issued and outstanding at June 30, 2021 and December 31, 2020)
15,394 41,816 
General partner (1) (no outstanding units)
(134,877)(142,404)
Accumulated other comprehensive loss(8)(18)
Total Enviva Partners, LP partners’ capital468,246 324,219 
Noncontrolling interests(47,721)(48,192)
Total partners’ capital420,525 276,027 
Total liabilities and partners’ capital$1,452,708 $1,429,612 
(1) Includes incentive distribution rights
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per unit amounts)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Product sales$271,242 $155,651 $495,772 $353,504 
Other revenue (1)
13,800 12,061 30,314 18,685 
Net revenue285,042 167,712 526,086 372,189 
Cost of goods sold (1)
234,155 124,407 430,794 287,025 
Loss on disposal of assets1,704 640 3,348 1,552 
Depreciation and amortization21,869 14,986 42,321 28,626 
Total cost of goods sold257,728 140,033 476,463 317,203 
Gross margin27,314 27,679 49,623 54,986 
General and administrative expenses2,587 2,096 5,087 3,859 
Related-party management services agreement fee9,246 6,947 18,016 14,636 
Total general and administrative expenses11,833 9,043 23,103 18,495 
Income from operations15,481 18,636 26,520 36,491 
Other (expense) income:
Interest expense(12,647)(10,124)(25,279)(20,518)
Other (expense) income, net(165)(41)(54)131 
Total other expense, net(12,812)(10,165)(25,333)(20,387)
Net income before income tax expense2,669 8,471 1,187 16,104 
Income tax expense24  7  
Net income2,645 8,471 1,180 16,104 
Less net income attributable to noncontrolling interest57  82  
Net income attributable to Enviva Partners, LP$2,588 $8,471 $1,098 $16,104 
Net (loss) income per limited partner common unit:
Basic and diluted$(0.22)$ $(0.49)$0.10 
Weighted-average number of limited partner common units outstanding:
Basic and diluted41,234 34,082 40,587 33,816 
Distributions declared per limited partner common unit$0.8150 $0.7650 $1.6000 $1.4450 
(1) See Note 11, Related-Party Transactions
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net income$2,645 $8,471 $1,180 $16,104 
Other comprehensive (loss) income, net of tax of $0:
Reclassification of net gains on cash flow hedges realized into net income (2) (22)
Currency translation adjustment(4)(3)10  
Total other comprehensive (loss) income(4)(5)10 (22)
Total comprehensive income2,641 8,466 1,190 16,082 
Less comprehensive income attributable to noncontrolling interest57  82  
Comprehensive income attributable to Enviva Partners, LP partners$2,584 $8,466 $1,108 $16,082 
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Partners’ Capital
(In thousands)
(Unaudited)
Limited Partners’ Capital
General
Partner Interest (1)
Common
Units—
Public
Common
Units—
Sponsor
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests 
Total
Partners
Capital 
UnitsAmountUnitsAmount
Partners' capital December 31, 2020$(142,404)26,210 $424,825 13,586 $41,816 $(18)$(48,192)$276,027 
Distributions to unitholders, distribution equivalent and incentive distribution rights(8,120)— (22,238)— (10,598)— — (40,956)
Payments for withholding tax and number of units issued associated with Long-Term Incentive Plan vesting(6,352)230 (1,724)— — — — (8,076)
Issuance of common units, net— — 28 — — — — 28 
Non-cash Management Services Agreement expenses9,141 — 2,656 — — — — 11,797 
Other comprehensive income— — — — — 14 — 14 
Contribution of assets— — — — — — 389 389 
Net income (loss)8,120 — (6,340)— (3,270)— 25 (1,465)
Partners' capital, March 31, 2021$(139,615)26,440 $397,207 13,586 $27,948 $(4)$(47,778)$237,758 
Distributions to unitholders, distribution equivalent and incentive distribution rights(8,322)— (22,229)— (10,665)— — (41,216)
Payments for withholding tax and number of units issued associated with Long-Term Incentive Plan vesting(1,971)57 (507)— — — — (2,478)
Issuance of common units, net— 4,925 214,534 — — — — 214,534 
Non-cash Management Services Agreement expenses6,709 — 2,577 — — — — 9,286 
Other comprehensive loss— — — — — (4)— (4)
Net income (loss)8,322 — (3,845)— (1,889)— 57 2,645 
Partners' capital, June 30, 2021$(134,877)31,422 $587,737 13,586 $15,394 $(8)$(47,721)$420,525 
(1) Includes incentive distribution rights.
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Partners’ Capital
(In thousands)
(Unaudited)
Limited Partners’ Capital
General
Partner Interest (1)
Common
Units—
Public
Common
Units—
Sponsor
Accumulated Other Comprehensive IncomeNon-controlling InterestTotal Partners’ Capital
UnitsAmountUnitsAmount
Partners' capital December 31, 2019$(101,739)19,870 $300,184 13,586 $82,300 $23 $(48,192)$232,576 
Distributions to unitholders, distribution equivalent and incentive distribution rights(3,289)— (14,798)— (9,172)— — (27,259)
Payments for withholding tax and number of units issued associated with Long-Term Incentive Plan vesting(3,356)149 (371)— — — — (3,727)
Non-cash Management Services Agreement expenses3,484 — 2,158 — — — — 5,642 
Other comprehensive loss— — — — — (17)— (17)
Net income3,289 — 2,585 — 1,759 — — 7,633 
Partners' capital, March 31, 2020$(101,611)20,019 $289,758 13,586 $74,887 $6 $(48,192)$214,848 
Distributions to unitholders, distribution equivalent and incentive distribution rights(3,458)— (14,777)— (9,239)— — (27,474)
Payments for withholding tax and number of units issued associated with Long-Term Incentive Plan vesting(160)6 17 — — — — (143)
Issuance of common units, net— 6,154 190,813 — — — — 190,813 
Non-cash Management Services Agreement expenses1,872 — 2,098 — — — — 3,970 
Other comprehensive loss— — — — — (5)— (5)
Net income 3,458 — 3,015 — 1,998 — — 8,471 
Partners' capital, June 30, 2020$(99,899)26,179 $470,924 13,586 $67,646 $1 $(48,192)$390,480 
(1) Includes incentive distribution rights.
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30,
20212020
Cash flows from operating activities:  
Net income$1,180 $16,104 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization43,500 29,204 
MSA Fee Waivers15,025 4,757 
Amortization of debt issuance costs, debt premium and original issue discounts1,265 813 
Loss on disposal of assets3,348 1,552 
Unit-based compensation5,358 4,256 
Fair value changes in derivatives2,797 (5,347)
Unrealized gains (losses) on foreign currency transactions, net27 (138)
Change in operating assets and liabilities:
Accounts and other receivables52,618 (11,406)
Related-party receivables (2,843)
Prepaid expenses and other current and long-term assets1,376 (14)
Inventories(6,034)(7,062)
Derivatives(1,982)(792)
Accounts payable, accrued liabilities and other current liabilities(5,964)11,771 
Related-party payables6,032  
Deferred revenue(4,818)(3,152)
Accrued interest1,163 17,718 
Operating lease liabilities(3,293)(2,169)
Other long-term liabilities(160)406 
Net cash provided by operating activities 111,438 53,658 
Cash flows from investing activities:
Purchases of property, plant and equipment(72,872)(58,839)
Other (3,769)
Net cash used in investing activities (72,872)(62,608)
Cash flows from financing activities:
Principal payments on senior secured revolving credit facility, net(120,000) 
Principal payments on other long-term debt and finance lease obligations(6,891)(2,081)
Cash paid related to debt issuance costs and deferred offering costs(1,345)(1,310)
Proceeds from common unit issuances, net214,865 199,990 
Payments in relation to the Hamlet Drop-Down (40,000)
Distributions to unitholders, distribution equivalent rights and incentive distribution rights holder(81,744)(54,874)
Payment for withholding tax associated with Long-Term Incentive Plan vesting(10,554)(3,727)
Net cash (used in) provided by financing activities(5,669)97,998 
Net increase in cash, cash equivalents and restricted cash32,897 89,048 
Cash, cash equivalents and restricted cash, beginning of period10,004 9,053 
Cash, cash equivalents and restricted cash, end of period$42,901 $98,101 
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
(Unaudited)
Six Months Ended June 30,
20212020
Non-cash investing and financing activities:
Property, plant and equipment acquired included in accounts payable and accrued liabilities$13,595 $21,296 
Equity issuance and debt issuance costs included in liabilities 9,740 
Supplemental information:
Interest paid, net of capitalized interest$23,466 $(77)
See accompanying notes to condensed consolidated financial statements.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(In thousands, except number of units, per unit amounts and unless otherwise noted)


(1) Description of Business and Basis of Presentation
Description of Business
Enviva Partners, LP (together with its subsidiaries, “we,” “us,” “our,” or the “Partnership”) supplies utility-grade wood pellets primarily to major power generators under long-term, take-or-pay off-take contracts. We procure wood fiber and process it into utility-grade wood pellets and load the finished wood pellets into railcars, trucks and barges for transportation to deep-water marine terminals, where they are received, stored and ultimately loaded onto oceangoing vessels for delivery under long-term, take-or-pay off-take contracts to our customers in the United Kingdom (the “U.K.”), Europe and Japan.
As of June 30, 2021, we own and operate nine industrial-scale wood pellet production plants located in the Southeast United States. In addition to the volumes from our plants, we also procure wood pellets from third parties. Wood pellets are exported from our wholly owned deep-water marine terminals at the Port of Chesapeake, Virginia and terminal assets at the Port of Wilmington, North Carolina (the “Wilmington terminal”) and third-party deep-water marine terminals in Mobile, Alabama, Panama City, Florida and Savannah, Georgia.
Basis of Presentation
The unaudited financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.
In the opinion of management, all adjustments and accruals necessary for a fair presentation have been included. All such adjustments and accruals are of a normal and recurring nature unless disclosed otherwise. All intercompany balances and transactions have been eliminated in consolidation. The results reported in the financial statements are not necessarily indicative of the results that may be reported for the entire year.
The unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Reclassification
Certain prior year amounts have been reclassified to conform to current period presentation on the condensed consolidated statements of cash flows.
Greenwood
On July 1, 2020, we acquired from our sponsor all of the limited liability company interests in Enviva Pellets Greenwood Holdings II, LLC, the indirect owner of Enviva Pellets Greenwood, LLC (“Greenwood”), which owns a wood pellet production plant located in Greenwood, South Carolina (the “Greenwood plant” and such transaction, the “Greenwood Drop-Down”) for a purchase price of $129.7 million, after accounting for certain adjustments. The Greenwood Drop-Down was an asset acquisition between entities under common control and accounted for on the carryover basis of accounting. Accordingly, we recorded net assets of $67.8 million as of July 1, 2020 to reflect the Greenwood Drop-Down.
Waycross
On July 31, 2020, we acquired all of the limited liability company interests in Georgia Biomass Holding LLC (the “Georgia Biomass Acquisition”), the owner of a wood pellet production plant located in Waycross, Georgia (the “Waycross plant”). The Georgia Biomass Acquisition was recorded as a business combination and accounted for using the acquisition method. Assets acquired and liabilities assumed were recognized at fair value on the acquisition date of July 31, 2020, and the difference between the consideration transferred, excluding acquisition-related costs, and the fair values of the assets acquired and liabilities assumed was recognized as goodwill. Accordingly, we recorded net identifiable assets of $150.0 million and goodwill of $14.0 million as of July 31, 2020 to reflect the Georgia Biomass Acquisition.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Hamlet JV
We own all of the issued and outstanding Class B Units in Enviva Wilmington Holdings, LLC (the “Hamlet JV”), a limited liability company owned by our sponsor and John Hancock Life Insurance Company (U.S.A.) and certain of its affiliates (collectively, as applicable, “John Hancock”). We consolidate the Hamlet JV as a variable interest entity of which we are the primary beneficiary. As managing member, we have the sole power to direct the activities that most impact the economics of the Hamlet JV. Additionally, as the Class B Units represent a controlling interest in the Hamlet JV, we account for the Hamlet JV as a consolidated subsidiary, not as a joint venture.
(2) Significant Accounting Policies
During interim periods, we follow the accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Recently Adopted Accounting Standards
On January 1, 2021, we adopted ASU 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The adoption did not have a material impact on the financial statements.
Recently Issued Accounting Standards not yet Adopted
Currently, there are no recently issued accounting standards not yet adopted by us that we expect to be reasonably likely to materially impact our financial position, results of operations or cash flows.
(3) Revenue
We disaggregate our revenue into two categories: product sales and other revenue. Product sales includes sales of wood pellets. Other revenue includes fees associated with customer requests to cancel, defer or accelerate shipments in satisfaction of the related performance obligation and third- and related-party terminal services fees. Other revenue also includes fees received for other services, including for sales and marketing, scheduling, sustainability, consultation, shipping and risk management services, where the revenue is recognized when we have satisfied the performance obligation and have a right to the corresponding fee. These categories best reflect the nature, amount, timing and uncertainty of our revenue and cash flows.
Performance Obligations
As of June 30, 2021, the aggregate amount of consideration from contracts with customers allocated to the performance obligations that were unsatisfied or partially satisfied was approximately $13.8 billion. This amount excludes forward prices related to variable consideration including inflation, foreign currency and commodity prices. Also, this amount excludes the effects of the related foreign currency derivative contracts as they do not represent contracts with customers. As of June 30, 2021, we expect to recognize approximately 4.0% of our remaining performance obligations as revenue during the remainder of 2021, an additional 9.0% in 2022 and the balance thereafter. Our off-take contracts expire at various times through 2043 and our terminal services contract expires in 2021.
Variable Consideration
Variable consideration from off-take contracts arises from several pricing features in our off-take contracts, pursuant to which such contract pricing may be adjusted in respect of particular shipments to reflect differences between certain contractual quality specifications of the wood pellets as measured both when the wood pellets are loaded onto ships and unloaded at the discharge port as well as certain other contractual adjustments.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Variable consideration from our terminal services contract arises from price increases based on agreed inflation indices and from above-minimum throughput quantities or services. There was no variable consideration from our terminal services contract for the three and six months ended June 30, 2021 and 2020.
For the three and six months ended June 30, 2021, we recognized $0.2 million and $0.4 million, respectively, of product sales revenue related to performance obligations satisfied in previous periods. For the three months ended June 30, 2020, we reversed an insignificant amount of product sales revenue related to performance obligations satisfied in previous periods. For the six months ended June 30, 2020, we recognized $0.1 million of product sales revenue related to performance obligations satisfied in previous periods.
Contract Balances
Accounts receivable related to product sales as of June 30, 2021 and December 31, 2020 were $70.9 million and $108.5 million, respectively. Of these amounts, $58.7 million and $95.0 million, at June 30, 2021 and December 31, 2020, respectively, related to amounts that were not yet billable under our contracts with customers pending finalization of prerequisite billing documentation. The amounts that had not been billed are billed upon receipt of prerequisite billing documentation, where substantially all is typically billed one to two weeks after full loading of the vessel and where the remaining balance is typically billed one to two weeks after discharge of the vessel.
As of June 30, 2021 and December 31, 2020, we had $0.1 million and $4.9 million, respectively, of deferred revenue for future performance obligations under contracts associated with off-take contracts.
Other
Accrued and other current liabilities included approximately $34.7 million and $50.6 million at June 30, 2021 and December 31, 2020, respectively, for amounts associated with our product sales.
(4) Significant Risks and Uncertainties, Including Business and Credit Concentrations
Our business is significantly impacted by greenhouse gas emissions and renewable energy legislation and regulations in the U.K., the European Union, as well as its member states, and Japan. If the U.K., the European Union and its member states or Japan significantly modify such legislation or regulations, then our ability to enter into new contracts as our existing contracts expire may be materially affected.
Our current product sales are primarily to industrial customers located in the U.K., Denmark, Belgium and the Netherlands. Product sales to third-party customers that accounted for 10% or a greater share of consolidated product sales were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Customer A45 %40 %69 %37 %
Customer B3 %13 %10 %11 %
Customer C20 %40 %32 %31 %
Customer D1 % %17 %8 %
Customer E18 % %32 %1 %
(5) Inventories
Inventories consisted of the following at:
June 30, 2021December 31, 2020
Raw materials and work-in-process$14,236 $12,500 
Consumable tooling21,106 21,855 
Finished goods12,320 8,009 
Total inventories$47,662 $42,364 
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

(6) Property, Plant and Equipment, net
Property, plant and equipment, net consisted of the following at:
June 30, 2021December 31, 2020
Land$22,570 $22,611 
Land improvements61,276 60,110 
Buildings321,691 316,706 
Machinery and equipment848,049 799,881 
Vehicles3,128 3,105 
Furniture and office equipment9,757 8,202 
Leasehold improvements2,660 1,029 
Property, plant and equipment1,269,131 1,211,644 
Less accumulated depreciation(336,509)(295,921)
Property, plant and equipment, net932,622 915,723 
Construction in progress181,899 156,096 
Total property, plant and equipment, net$1,114,521 $1,071,819 
Total depreciation expense and interest capitalized related to construction in progress were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Depreciation expense $22,474 $15,297 $43,521 $29,247 
Interest capitalized related to construction in progress2,286 1,362 4,343 2,427 
Accrued amounts for property, plant and equipment and construction in progress included in accrued and other current liabilities were $22.7 million and $10.8 million at June 30, 2021 and December 31, 2020, respectively.
(7) Derivative Instruments
We use derivative instruments to partially offset our business exposure to foreign currency exchange risk from expected future cash flows and interest rate risk resulting from certain borrowings. Although the preponderance of our off-take contracts are U.S. Dollar-denominated, we are exposed to fluctuations in foreign currency exchange rates related to a minority of our off-take contracts that require future deliveries of wood pellets to be settled in British Pound Sterling (“GBP”) and Euro (“EUR”).
We seek to mitigate the credit risk associated with derivative instruments by limiting our counterparties to major financial institutions. Although we monitor the potential risk of loss due to credit risk, we do not expect material losses as a result of defaults by counterparties. We use derivative instruments to manage cash flow and do not enter into derivative instruments for speculative or trading purposes.
We have entered and may continue to enter into foreign currency forward contracts, purchased option contracts or other instruments to partially manage foreign currency exchange risk. In 2020, we entered into pay-fixed, receive-variable interest rate swaps that expire in September 2021 and October 2021 to hedge interest rate risk associated with our variable rate borrowings under our senior secured revolving credit facility that are not designated and accounted for as cash flow hedges.
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Notes to Condensed Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Derivative instruments are classified as Level 2 assets or liabilities based on inputs such as spot and forward benchmark interest rates (such as LIBOR) and foreign exchange rates. The fair value of derivative instruments at June 30, 2021 and December 31, 2020 were as follows:
Asset (Liability)
Balance Sheet ClassificationJune 30, 2021December 31, 2020
Not designated as hedging instruments:
Interest rate swapsAccrued and other current liabilities$(47)$(119)
Foreign currency exchange contracts:
Prepaid and other current assets$423 $308 
Other long-term assets423 924 
Accrued and other current liabilities(3,009)(2,224)
Other long-term liabilities(3,135)(3,508)
Total derivatives not designated as hedging instruments$(5,345)$(4,619)
Unrealized gains related to the change in fair value of interest rate swaps are recorded in interest expense and were insignificant and $0.1 million, respectively, for the three and six months ended June 30, 2021, and unrealized losses of $0.1 million and $0.2 million, respectively, for the three and six months ended June 30, 2020.
During the three months ended June 30, 2021 and 2020, product sales included net unrealized gains of $0.4 million and losses of $0.1 million, respectively, related to the change in fair value of foreign currency derivatives. During the six months ended June 30, 2021 and 2020, net unrealized losses of $0.8 million and gains of $6.7 million, respectively, related to the change in fair value of foreign currency derivatives were included in product sales.
Included in product sales on the condensed consolidated statements of income are realized losses related to foreign currency derivatives settled of $1.5 million and $2.5 million during the three and six months ended June 30, 2021, respectively. Realized gains related to derivatives settled were insignificant and $0.2 million, respectively, during the three and six months ended June 30, 2020, and were included in product sales.
We enter into master netting arrangements designed to permit net settlement of derivative transactions among the respective counterparties. If we had settled all transactions with our respective counterparties at June 30, 2021, we would have had to pay a net settlement termination payment of $5.4 million, which differs by $0.1 million from the recorded fair value of the derivatives. We present our derivative assets and liabilities at their gross fair values.
The notional amounts of outstanding derivative instruments associated with outstanding or unsettled derivative instruments as of June 30, 2021 and December 31, 2020 were as follows:
June 30, 2021December 31, 2020
Foreign exchange forward contracts in GBP£107,575 £108,825 
Foreign exchange purchased option contracts in GBP£23,515 £40,365 
Foreign exchange forward contracts in EUR19,250 12,250 
Interest rate swaps$70,000 $70,000 
(8) Fair Value Measurements
The amounts reported in the condensed consolidated balance sheets as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, related-party receivables, net, accounts payable, related-party payables, net, and accrued and other current liabilities approximate fair value because of the short-term nature of these instruments.
Derivative instruments and long-term debt including the current portion are classified as Level 2 instruments. Derivatives are classified as Level 2 as they are fair valued using inputs that are observable in active markets such as benchmark interest rates and foreign exchange rates (see Note 7, Derivative Instruments). The fair value of our 2026 Notes was determined based on
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

observable market prices in an active market and was categorized as Level 2 in the fair value hierarchy. The fair value of our Seller Note is classified as Level 2 and is estimated on discounted cash flow analyses based on observable inputs in active markets for debt with similar terms and remaining maturities. The carrying amount of other long-term debt, which is primarily composed of the senior secured revolving credit facility that resets based on a market rate, approximates fair value.
The carrying amount and estimated fair value of long-term debt at June 30, 2021 and December 31, 2020 was as follows:
June 30, 2021December 31, 2020
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
2026 Notes$747,135 $785,625 $746,875 $796,875 
Seller Note35,754 37,882 37,571 40,405 
Other long-term debt2,000 2,000 122,000 122,000 
Total long-term debt$784,889 $825,507 $906,446 $959,280 
(9) Intangibles
Intangible assets (liabilities) consisted of the following as of June 30, 2021 and December 31, 2020:
June 30, 2021December 31, 2020
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Favorable customer contracts$6,200 $(5,645)$555 $6,200 $(5,566)$634 
Assembled workforce1,856 (1,487)369 1,856 (1,249)607 
Unfavorable customer contract(600)124 (476)(600)57 (543)
Unfavorable shipping contract(6,300)1,066 (5,234)(6,300)485 (5,815)
Total intangible liabilities, net$1,156 $(5,942)$(4,786)$1,156 $(6,273)$(5,117)
(10) Long-Term Debt and Finance Lease Obligations
Long-term debt and finance lease obligations at carrying value are composed of the following at:
June 30, 2021December 31, 2020
2026 Notes, net of unamortized discount, premium and debt issuance of $2.9 million and $3.1 million as of June 30, 2021 and December 31, 2020, respectively
$747,135 $746,875 
Senior secured revolving credit facility 120,000 
Seller Note, net of unamortized discount of $1.7 million and $2.4 million as of June 30, 2021 and December 31, 2020, respectively
35,754 37,571 
Other loans2,000 2,000 
Finance leases16,618 19,603 
Total long-term debt and finance lease obligations801,507 926,049 
Less current portion of long-term debt and finance lease obligations(12,056)(13,328)
Long-term debt and finance lease obligations, excluding current installments$789,451 $912,721 
2026 Notes
At June 30, 2021 and December 31, 2020, we were in compliance with the covenants and restrictions associated with, and no events of default existed under, the indenture dated as of December 9, 2019 governing the 2026 Notes. The 2026 Notes are guaranteed jointly and severally on a senior unsecured basis by our existing subsidiaries (excluding Enviva Partners Finance Corp.) that guarantee certain of our indebtedness and may be guaranteed by certain future restricted subsidiaries.
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Notes to Condensed Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Senior Secured Revolving Credit Facility
In April 2021, we amended the credit agreement governing our senior secured revolving credit facility to, among other things, increase the revolving credit commitments from $350.0 million to $525.0 million, extend the maturity from October 2023 to April 2026, increase the letter of credit commitment from $50.0 million to $80.0 million and reduce the cost of borrowing by 25 basis points.
At June 30, 2021 and December 31, 2020, we were in compliance with the covenants and restrictions associated with, and no events of default existed under, our senior secured revolving credit facility. Our obligations under the senior secured revolving credit facility are guaranteed by certain of our subsidiaries and secured by liens on substantially all of our assets; however, the senior secured revolving credit facility is not guaranteed by the Hamlet JV or secured by liens on its assets.
At June 30, 2021 and December 31, 2020, we had a $0.3 million letter of credit outstanding under our senior secured revolving credit facility.
(11) Related-Party Transactions
Related-party amounts included on the unaudited condensed consolidated statements of income were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Other revenue$ $