Significant Risks and Uncertainties, Including Business and Credit Concentrations

6 Months Ended

Jun. 30, 2023

Significant Risks and Uncertainties, Including Business and Credit Concentrations

Our business is significantly impacted by greenhouse gas emission and renewable energy legislation and regulations in the U.K., the EU as well as its member states, and Japan. If the U.K., the EU or 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.

One rail service provider transports wood pellet production for four of our ten production plants to the applicable terminal. Labor strikes or other disruptions to rail service could materially impact our ability to transport our finished products to port for delivery to customers.

In addition to wood pellets sold from our own production, we procure wood pellets from third parties to resell under our long-term off-take arrangements and other sales agreements. During the three and six months ended June 30, 2023, we purchased $19.0 million and $32.8 million, respectively, and during the three and six months ended June 30, 2022 we purchased $10.2 million and $19.6 million, respectively, of wood pellets under long-term contracts with third parties. For the three and six

months ended June 30, 2023, our four largest suppliers of wood pellets purchased represented 39%, 21%, 21%, and 10% and 29%, 18%, 17%, and 12%, respectively, of these purchases.

Our product sales are primarily to industrial customers located in the U.K., Denmark, Japan, 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,
	2023		2022		2023		2022
Customer A	30	%	18	%	34	%	20	%
Customer B	1	%	11	%	5	%	8	%
Customer C	2	%	9	%	6	%	13	%
Customer D	11	%	14	%	10	%	14	%
Customer E	—	%	17	%	—	%	18	%
Customer F	8	%	14	%	7	%	11	%
Customer G	19	%	—	%	16	%	3	%
Customer H	14	%	3	%	11	%	2	%