What happened

Renewable energy company Enviva (EVA -1.53%) reported a quarterly loss significantly worse than a year ago, and eliminated its quarterly dividend to preserve cash. Investors are rushing for the exits, sending Enviva shares down as much as 65% on Thursday morning.

So what

Enviva is a producer of industrial wood pellets that can be burned in place of fossil fuels. The company owns and operates 10 plants in the U.S., selling pellets worldwide.

But things are not going to plan for Enviva. The company lost $116.8 million in the first quarter, more than double its $45.3 million loss in the same three months of 2022, on revenue down $25 million year over year to $269.1 million.

The company announced it has eliminated its quarterly dividend to "preserve liquidity," a move that it expects will help it to retain about $1 billion in incremental cash flow through 2026. Enviva also announced a $100 million share repurchase program.

"While the board of directors remains convinced of management's ability to deliver the originally forecasted operational and financial performance over time, it is clearly taking longer than expected," Executive Chairman John Keppler said.

Now what

The market was clearly caught off guard by the announcements. That's perhaps in part because Enviva held its investor day just a month ago, and told a very different story at that time. CEO Thomas Meth conceded the revised plan is "an important departure" from what was laid out just a month ago, but said "a lot has changed" during that time.

"Compared to our expectations, while our cost position has trended in the right direction, it has done so at a much slower pace than we had anticipated, in part due to slower volume growth, and in part due to a higher spend profile for the volume growth we did achieve," Meth said.

Enviva has new priorities it is focusing on, including dealing with labor contracts, bringing in spending, and raising utilization rates inside its factories.

The company still sees substantial long-term demand for its products, but raised real questions about its ability in the near term to meet that demand. Given the sudden U-turn, investors are in no mood to give management the benefit of the doubt.