Pyxus International, Inc. Reports Strong Third Quarter and Year-to-Date Fiscal 2024 Results
- Strong financial performance for Pyxus International, Inc. in the third quarter of fiscal 2024
- Significant margin gains and net income of $3.8 million versus a year-ago net loss of $2.3 million
- Adjusted EBITDA increased by 5.3% to $64.5 million
- Sales and other operating revenues for the nine months ended December 31, 2023, grew by 8.2% to $1.6 billion
- Gross margin improved to 15.6% from 13.0%, and operating income rose by 72.4% to $130.5 million
- Company expects sales for fiscal 2024 to be in the range of $2.0 billion to $2.1 billion, with adjusted EBITDA in the range of $185 million to $195 million
- None.
— Increases Full Year Guidance to Reflect Recent Results and Momentum —
— Significant Margin Gains Drive Third Quarter Performance versus Year-Ago —
— Third Consecutive Quarter of Net Income with
— Third Quarter Adjusted EBITDA Increases by
Pieter Sikkel, Pyxus' President and Chief Executive Officer, stated, "Our teams around the world continue to demonstrate their ability to drive broad-based improvement, leveraging our business momentum and strong position in the current market to produce solid third quarter and year-to-date results. This success positions us to increase our full-year guidance as we remain focused on concluding an outstanding fiscal year."
Sales and other operating revenues for the nine months ended December 31, 2023 increased by
Gross margin through the first nine months of fiscal 2024 improved to
The Company reported positive net income in each of the first three quarters of fiscal 2024 to reach a total of
Consistent with expectations, sales and other operating revenues in the third quarter of
Pyxus achieved a third quarter gross margin of
Third quarter net income improved to
Sikkel commented, "Our operational discipline, improved working capital efficiency, and geographic diversification enabled us to purchase more tobacco even as we accelerated our repayment of outstanding lines of credit. We believe these attributes enable the Company to deliver significant and sustainable value to its financial stakeholders and support further potential improvements in our operational results and working capital."
"The Company released its fiscal 2023 Sustainability Report during the quarter, which recognizes the progress made toward our environmental, social and governance-related targets and serves as a testament to the successful integration of our business and sustainability strategies. Not only did we surpass our water-related target seven years ahead of schedule, we also achieved a significant reduction of our global greenhouse gas emissions," Sikkel continued.
Updated Outlook & Revised Guidance for Fiscal 2024
Today the Company revised its guidance for fiscal 2024. With respect to the full-year, the Company now expects sales to be in the range of
Financial Results Investor Call
The Company will hold an earnings conference call and webcast on Wednesday, February 14, 2024 at 9 a.m. EST. Investors and analysts interested in participating in the call are invited to dial (929) 477-0448 or (888) 256-1007 and use conference ID 1556396. The webcast can be accessed at http://investors.pyxus.com.
A third quarter results presentation will be available on the Company's investor relations webpage prior to the call. For those unable to join the live audio webcast, the archived recording will be available on the Company's investor relations webpage shortly after the call.
Any replay, rebroadcast, transcript, or other reproduction of this conference call, other than the replay accessible by calling the number above, has not been authorized by Pyxus International and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents.
Cautionary Statement Regarding Forward-Looking Statements
Readers are cautioned that the statements contained in this report regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which are based on current expectations of future events, may be identified by the use of words such as "strategy," "expects," "continues," "plans," "anticipates," "believes," "will," "estimates," "intends," "projects," "goals," "targets," and other words of similar meaning. These statements also may be identified by the fact that they do not relate strictly to historical or current facts. If underlying assumptions prove inaccurate, or if known or unknown risks or uncertainties materialize, actual results could vary materially from those anticipated, estimated, or projected. These risks and uncertainties include those discussed in our Annual Report on Form 10-K for the year ended March 31, 2023, our most recent Quarterly Report on Form 10-Q, and in our other filings with the Securities and Exchange Commission. These risks and uncertainties include: our reliance on a small number of significant customers; continued vertical integration by our customers; global shifts in sourcing customer requirements; shifts in the global supply and demand position for tobacco products; variation in our financial results due to growing conditions, customer indications and other factors; loss of confidence in us by our customers, farmers and other suppliers; migration of suppliers who have historically grown tobacco and from whom we have purchased tobacco toward growing other crops; risks related to our advancement of inputs to tobacco suppliers to be settled upon the suppliers delivering us unprocessed tobacco at the end of the growing season; risks that the tobacco we purchase directly from suppliers will not meet our customers' quality and quantity requirements; weather and other environmental conditions that can affect the marketability of our inventory; international business risks, including unsettled political conditions, uncertainty in the enforcement of legal obligations, including the collection of accounts receivable, fraud risks, expropriation, import and export restrictions, exchange controls, inflationary economies, currency risks and risks related to the restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries; many of our operations are located in jurisdictions that pose a high risk of potential violations of the Foreign Corrupt Practices Act; risks and uncertainties related to geopolitical conflicts, including the armed conflict between
Non-GAAP Financial Information
This press release contains financial measures that have not been prepared in accordance with generally accepted accounting principles in
About Pyxus International, Inc.
Pyxus International, Inc. is a global agricultural company with over 150 years of experience delivering value-added products and services to businesses and customers. Driven by a united purpose—to transform people's lives, so that together we can grow a better world—Pyxus International, its subsidiaries and affiliates, are trusted providers of responsibly sourced, independently verified, sustainable and traceable products and ingredients. For more information, visit www.pyxus.com.
Condensed Consolidated Statements of Operations | ||||
Three Months Ended | Nine Months Ended | |||
December 31, | December 31, | |||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 |
Sales and other operating revenues | $ 529,816 | $ 655,553 | ||
Cost of goods and services sold | 437,268 | 567,752 | 1,376,802 | 1,311,861 |
Gross profit | 92,548 | 87,801 | 254,359 | 195,875 |
Selling, general, and administrative expenses | 42,381 | 37,119 | 116,477 | 106,694 |
Other expense, net | 2,323 | 9,040 | 6,036 | 9,106 |
Restructuring and asset impairment charges | 85 | 35 | 1,379 | 4,380 |
Operating income | 47,759 | 41,607 | 130,467 | 75,695 |
Loss on deconsolidation/disposition of subsidiaries | — | — | — | 648 |
Loss on pension settlement | 12,008 | — | 12,008 | 2,588 |
Interest expense, net | 31,994 | 31,361 | 95,785 | 85,649 |
Income (loss) before income taxes and other items | 3,757 | 10,246 | 22,674 | (13,190) |
Income tax expense | 6,156 | 17,887 | 16,360 | 15,810 |
Income from unconsolidated affiliates | 6,578 | 5,404 | 6,531 | 10,708 |
Net income (loss) | 4,179 | (2,237) | 12,845 | (18,292) |
Net income attributable to noncontrolling interests | 344 | 96 | 111 | 241 |
Net income (loss) attributable to Pyxus International, Inc. | $ 3,835 | $ (2,333) | $ 12,734 | $ (18,533) |
Earnings (loss) per share: | ||||
Basic and diluted | $ 0.15 | $ (0.09) | $ 0.51 | $ (0.74) |
Weighted average number of shares outstanding: | ||||
Basic and diluted | 25,000 | 25,000 | 25,000 | 25,000 |
Condensed Consolidated Balance Sheets | |||||
(in thousands) | December 31, 2023 | December 31, 2022 | |||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ 90,245 | $ 216,449 | |||
Restricted cash | 4,442 | 1,936 | |||
Trade receivables, net | 227,529 | 205,991 | |||
Other receivables | 11,988 | 16,336 | |||
Inventories, net | 779,829 | 696,583 | |||
Advances to tobacco suppliers, net | 87,790 | 79,669 | |||
Recoverable income taxes | 4,604 | 7,053 | |||
Prepaid expenses | 36,752 | 31,495 | |||
Other current assets | 15,876 | 15,648 | |||
Total current assets | 1,259,055 | 1,271,160 | |||
Investments in unconsolidated affiliates | 93,619 | 94,099 | |||
Other intangible assets, net | 35,030 | 39,732 | |||
Deferred income taxes, net | 7,109 | 9,738 | |||
Long-term recoverable income taxes | 2,648 | 3,444 | |||
Other noncurrent assets | 31,687 | 43,086 | |||
Right-of-use assets | 37,135 | 32,842 | |||
Property, plant, and equipment, net | 135,097 | 136,556 | |||
Total assets | $ 1,601,380 | $ 1,630,657 | |||
Liabilities and Stockholders' Equity | |||||
Current liabilities | |||||
Notes payable | $ 472,972 | $ 492,326 | |||
Accounts payable | 136,397 | 135,092 | |||
Advances from customers | 42,589 | 30,826 | |||
Accrued expenses and other current liabilities | 78,231 | 95,312 | |||
Income taxes payable | 6,922 | 6,665 | |||
Operating leases payable | 8,089 | 9,097 | |||
Current portion of long-term debt | 20,251 | 97,282 | |||
Total current liabilities | 765,451 | 866,600 | |||
Long-term taxes payable | 2,678 | 4,850 | |||
Long-term debt | 574,077 | 496,636 | |||
Deferred income taxes | 5,992 | 12,770 | |||
Liability for unrecognized tax benefits | 15,450 | 13,402 | |||
Long-term leases | 27,523 | 23,663 | |||
Pension, postretirement, and other long-term liabilities | 52,552 | 56,990 | |||
Total liabilities | 1,443,723 | 1,474,911 | |||
Commitments and contingencies | |||||
Stockholders' equity | |||||
Common Stock—no par value: | |||||
Authorized shares (250,000 for all periods) | |||||
Issued shares (25,000 for all periods) | 389,789 | 390,290 | |||
Retained deficit | (245,220) | (237,346) | |||
Accumulated other comprehensive income (loss) | 8,947 | (477) | |||
Total stockholders' equity of Pyxus International, Inc. | 153,516 | 152,467 | |||
Noncontrolling interests | 4,141 | 3,279 | |||
Total stockholders' equity | 157,657 | 155,746 | |||
Total liabilities and stockholders' equity | $ 1,601,380 | $ 1,630,657 | |||
Segment Results | ||||
Three Months Ended December 31, 2023 and 2022 | ||||
Three Months Ended December 31, | ||||
Change | ||||
(in millions, except per kilo amounts) | 2023 | 2022 | $ | % |
Leaf: | ||||
Product revenues | $ 500.5 | $ 625.1 | (124.6) | (19.9) |
Tobacco costs | 394.6 | 510.2 | (115.6) | (22.7) |
Transportation, storage, and other period costs | 23.2 | 32.8 | (9.6) | (29.3) |
Total cost of goods sold | 417.8 | 543.0 | (125.2) | (23.1) |
Product revenue gross profit | 82.7 | 82.1 | 0.6 | 0.7 |
Product revenue gross profit as a percent of sales | 16.5 % | 13.1 % | ||
Kilos sold | 100.0 | 129.4 | (29.4) | (22.7) |
Average price per kilo | $ 5.01 | $ 4.83 | 0.18 | 3.7 |
Average cost per kilo | 4.18 | 4.19 | (0.01) | (0.2) |
Average gross profit per kilo | 0.83 | 0.64 | 0.19 | 29.7 |
Processing and other revenues | $ 28.6 | $ 27.1 | 1.5 | 5.5 |
Processing and other revenues costs of services sold | 19.4 | 20.5 | (1.1) | (5.4) |
Processing and other gross profit | 9.2 | 6.6 | 2.6 | 39.4 |
Processing and other gross profit as a percent of sales | 32.2 % | 24.3 % | ||
All Other: | ||||
Sales and other operating revenues | $ 0.7 | $ 3.3 | (2.6) | (78.8) |
Cost of goods and services sold | 0.1 | 4.2 | (4.1) | (97.6) |
Gross income (loss) | 0.6 | (0.9) | 1.5 | 166.7 |
Gross income (loss) as a percent of sales | 85.7 % | (27.4) % |
Segment Results | ||||
Nine Months Ended December 31, 2023 and 2022 | ||||
Nine Months Ended December 31, | ||||
Change | ||||
(in millions, except per kilo amounts) | 2023 | 2022 | $ | % |
Leaf: | ||||
Product revenue | $ 1,537.3 | $ 1,423.6 | 113.7 | 8.0 |
Tobacco costs | 1,242.4 | 1,164.8 | 77.6 | 6.7 |
Transportation, storage, and other period costs | 66.0 | 77.8 | (11.8) | (15.2) |
Total cost of goods sold | 1,308.4 | 1,242.7 | 65.7 | 5.3 |
Product revenue gross profit | 228.9 | 181.0 | 47.9 | 26.5 |
Product revenue gross profit as a percent of sales | 14.9 % | 12.7 % | ||
Kilos sold | 297.2 | 302.9 | (5.7) | (1.9) |
Average price per kilo | $ 5.17 | $ 4.70 | 0.47 | 10.0 |
Average cost per kilo | 4.40 | 4.10 | 0.30 | 7.3 |
Average gross profit per kilo | 0.77 | 0.60 | 0.17 | 28.3 |
Processing and other revenues | $ 91.4 | $ 75.2 | 16.2 | 21.5 |
Processing and other revenues costs of services sold | $ 66.5 | 56.1 | 10.4 | 18.5 |
Processing and other gross profit | 24.9 | 19.1 | 5.8 | 30.4 |
Processing and other gross profit as a percent of sales | 27.2 % | 25.4 % | ||
All Other: | ||||
Sales and other operating revenues | 2.5 | $ 8.9 | (6.4) | (71.9) |
Cost of goods and services sold | 1.9 | 13.1 | (11.2) | (85.5) |
Gross profit (loss) | 0.6 | (4.2) | 4.8 | 114.3 |
Gross profit (loss) as a percent of sales | 24.0 % | (47.3) % |
Reconciliation of Certain Non-GAAP Financial Measures (1) (Unaudited) | |||||||||
Three Months Ended | Nine Months Ended | Fiscal Year Ended | Last Twelve Months (8) | ||||||
(in thousands) | December | December | December | December | December | March 31, | March 31, | December | December |
Net income (loss) attributable to Pyxus International, Inc. | $ 3,835 | $ (2,333) | $ 12,734 | $ (18,533) | $ (51,289) | $ (39,141) | $ (82,119) | (7,874) | $ (49,363) |
Plus: Interest expense | 34,379 | 32,053 | 100,779 | 89,805 | 84,376 | 118,458 | 111,043 | 129,432 | 116,472 |
Plus: Income tax expense | 6,156 | 17,887 | 16,360 | 15,810 | 9,242 | 34,127 | 12,640 | 34,677 | 19,208 |
Plus: Depreciation and amortization expense | 4,909 | 4,394 | 14,228 | 14,678 | 11,984 | 19,137 | 16,676 | 18,687 | 19,370 |
EBITDA (1) | 49,279 | 52,001 | 144,101 | 101,760 | 54,313 | 132,581 | 58,240 | 174,922 | 105,687 |
Plus: Reserves for doubtful customer receivables | 540 | (139) | 791 | (129) | 3,268 | 426 | 4,404 | 1,346 | 1,007 |
Plus: Other expense, net | 2,323 | 9,040 | 6,036 | 9,106 | 1,491 | 11,023 | 3,349 | 7,953 | 10,964 |
Plus: Restructuring and asset impairment charges (2) | 85 | 245 | 1,379 | 5,855 | 7,652 | 6,160 | 8,031 | 1,684 | 6,234 |
Plus: Goodwill impairment | — | — | — | — | — | — | 32,186 | — | 31,814 |
Plus: Debt restructuring (3) | — | 63 | 26 | 713 | 3,286 | 5,496 | 3,550 | 4,809 | 977 |
Plus: Pension retirement expense (4) | 12,008 | — | 12,008 | 2,724 | — | 2,724 | — | 12,008 | 2,724 |
Plus: Development of and exit from non-leaf-tobacco businesses (5) | — | 18 | 3 | 697 | 12,306 | 713 | 13,589 | 19 | 1,980 |
Plus: Other adjustments (6) | 276 | 41 | 785 | (554) | 942 | (316) | 3,347 | 1,023 | 1,851 |
Adjusted EBITDA (1) | $ 64,511 | $ 61,269 | $ 165,129 | $ 120,172 | $ 83,630 | $ 158,807 | $ 126,696 | $ 203,764 | $ 163,238 |
Total debt | |||||||||
Less: Cash and cash equivalents | 136,733 | 198,777 | 90,245 | 216,449 | |||||
Net Debt (1) | $ 864,316 | $ 868,168 | $ 977,055 | $ 869,795 | |||||
Net Debt /Adjusted EBITDA (1) | 5.44x | 6.85x | 4.80x | 5.33x | |||||
Adjusted EBITDA (1) | $ 158,807 | $ 126,696 | $ 203,764 | $ 163,238 | |||||
Interest expense | 118,458 | 111,043 | 129,432 | 116,472 | |||||
Interest coverage | 1.34x | 1.14x | 1.57x | 1.40x | |||||
Net cash provided by (used in) operating activities | $ 38,586 | $ 176,069 | $ (216,834) | $ (110,599) | $ (184,831) | $ (137,822) | $ (198,765) | $ (244,057) | $ (124,533) |
Capital expenditures | (5,126) | (4,505) | (14,351) | (9,931) | (12,201) | (16,307) | (14,827) | (20,727) | (12,557) |
Collections from beneficial interests in securitized trade receivables (7) | 48,002 | 46,429 | 127,298 | 122,638 | 155,226 | 165,262 | 189,440 | 169,922 | 156,852 |
Adjusted Free Cash Flow (1) | $ 81,462 | $ 217,993 | $ (103,887) | $ 2,108 | $ (41,806) | $ 11,133 | $ (24,152) | $ (94,862) | $ 19,762 |
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), Adjusted Free Cash Flow, and Net Debt are not measures of results of operations, cash flows from operations or indebtedness under generally accepted accounting principles in
(2) Amounts incurred during the three months ended December 31, 2023 included employee separation charges primarily related to the restructuring of certain non-leaf operations. Amounts incurred during the fiscal years ended March 31, 2023 and 2022 included employee separation and asset impairment charges primarily related to the restructuring of certain non-leaf operations and related inventory write-offs classified within cost of goods and services sold in the Company's condensed consolidated statements of operations.
(3) Amounts incurred during the nine months ended December 31, 2023 and fiscal year ended March 31, 2023 included legal and professional fees incurred in connection with the debt exchange and with the amendment and extension of the delayed-draw term loan, which transactions were completed in the fiscal year ended March 31, 2023. Amounts incurred during the fiscal year ended March 31, 2022 included consulting fees incurred in connection with the implementation of process improvements required in connection with the Company's delayed-draw term loan credit facility established in the prior fiscal year.
(4) During the three months ended December 31, 2023, the Company terminated one of its defined benefit pension plans in the
(5) Includes the aggregate amount of certain items related to the Company's development of and subsequent exits from its non-leaf-tobacco businesses (that is, the production and sale of legal cannabis in
(6) Includes the following items: (i) the addition of amortization of basis difference related to a former Brazilian subsidiary that is now deconsolidated following the completion of a joint venture in March 2014, (ii) the subtraction of the Adjusted EBITDA of the Company's former green leaf sourcing operation in
(7) Represents cash receipts from the beneficial interest on sold receivables under the Company's accounts receivable securitization programs and were classified as investing activities within the condensed consolidated statements of cash flows.
(8) Items for the twelve months ended December 31, 2023 are derived by adding the items for the nine months ended December 31, 2023 as presented in the table and the fiscal year ended March 31, 2023 and subtracting the items for the nine months ended December 31, 2022. Items for the twelve months ended December 31, 2022 are derived by adding the items for the nine months ended December 31, 2022 and the fiscal year ended March 31, 2022 and subtracting the items for the nine months ended December 31, 2021.
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