Pyxus International (PYYX) 14 Nov 232024 Q2 Earnings call transcript

Good morning, and welcome to the Pyxus International Incorporated Fiscal Year 2024 Second Quarter Earnings Call. [Operator Instructions]I would now like to turn today's call over to Tomas Grigera, Treasurer.

You may begin.

Thank you. Leading the call this morning is Pieter Sikkel, our President and Chief Executive Officer; and Flavia Landsberg, our Chief Financial Officer.Before we begin, I'd like to call your attention to our safe harbor disclosure.

and Securities during expectation, risks of as or forward-looking are historical as of to of XXXX statements a express uncertainties call statements hear may differ and not statements. results that may materially Reform as defined belief, which a Litigation Act intention, these statements facts may the statements amended.Such this course by that involve that constitute events from You the forward-looking statements and other as number cause well actual The with Form risks the in our statements and uncertainties recent associated with XX-Q. with detail our forward-looking and SEC, filings most described business our including are in management's circumstances, our call forward-looking are with do made financial the reflect Generally conference in on expectations undertake which based.Also Accounting are change included references this accordance are in measures to calculated or assumptions in these that update We not Principles. any not statements or any certain to statements call today changes to Accepted any in non-GAAP should limited adjusted cash measurements, free measures as and EBITDA such as flow EBITDA, These but be alternative to, to including, an U.S. considered not not financial that additional may an believe value. as that we have are measures provided eligible information GAAP

you. measures, which G, reconciles such release measures financial table replay, the in which our rebroadcast, presentation, financial is use measures.Any call be reproduction it's the which has that As as and contain to and earnings of GAAP the may regarding my to SEC's our transfer, our in to call, not have to call provided turn required under most Regulation use non-GAAP the of earnings we other of should governs be non-GAAP unauthorized measures, over a the contents.Thank disclosures International, comparable appendix the aware provided pleasure And an of Pyxus of this strictly reproduction conference Investors Pieter. this replay other than its reflection not conference prohibited. or been now accurate may authorized and any by other

built success everyone, an thank in during we on the key our customer demand. favorable, first continue upon and in be healthy the our for We capturing growth cycles quarter you and accelerating morning, and joining markets. call. prices achieved to executed Tobacco seasonal had quarter the further Good levels and excellent of second regional quarter,

Our million, would clearly our highlights. success year. in profitability.Flavia in growth reflected as We as an moment, quarter revenue financial a XX.X% quarter like the in by our the second with begin of performance is detail quarter, to $XXX.X increase some the improvement versus first grew our to I in of will but well continued last for revenue second

the million, EBITDA For to a second were growth $X.X of XX.X% year. the half, compared $XXX.X up a in XXXX. of year.Our revenues was fiscal full quarter quarter compared $XX.X up in percentage the XX.X% quarter gross or point XX.X% the second of last billion, margin revenues, total to first over Adjusted was the prior million,

on incremental successful to operating of and modest backdrop our is scale, diversification, to our the global necessary and complex, continue business, of income year, working to million market cycle, results efficiency.While have and 'XX and performance, with more XX.X%. in despite EBITDA adjusted second repeatable maximize flexibility to first increase we reported our net a consecutive quarter more And half. behind global simultaneously is million, opportunities strategy was more in our normalized, and identification growth, capture designed $XX.X contributing new second the we half $X.X business an to strategically last the capital manageable, operating quarter first from financial million Our these fiscal consumption. to the of pressure The $X.X positive position up regional $XXX.X return million the the

the at in with the inventory.Those both insight, world time regions that us and it capable, design and right level, the to focuses in the corporate the our and expertise players. advantage, the financial right evident on by of a have or at business positions the the competitive particularly which been to We strategy execute key give right less mix comes our capabilities, are less smaller, improved performance, when and long diversified industry have recognized around

a are customers. value-added We to our partner

their could. a While quality that also management they market-specific capture uncommitted quarters our a strategy. the the our solutions returns wider many X innovative historic capability, help well-timed us same are options access services provide and and of and quarter revenue and needed, of at greater After vertical remains provide flexibility they mix the inventory first growth, own consecutive well-designed solid of risks, acquire performance, capabilities operate power of capital. otherwise of on our help working our customers of we maintain of seasons, right executing helping have achieve what navigate range and to proud to continued sourcing half goals.We help variety some second risk.Our drive level that results crop a our business' inventory than to of mitigate rely to demonstrate customers Those and improve and lows, to global with are manage and

As and the we we captured the we've we first proceed can that the on continue third gains fourth to half. quarters, believe through in build

business' and factors cycle return and a recently, cases, included belongs, capital us times. our by that properly and past capture confident have regain, working organic years, execution.In efficiency as our supply average that general, revenues over customer. to of mix to mix positioned related we of favorable been several by These disruptions, fosters chain improve constraints. a These the in market operating distorted more our back the the to working own seasonal favorable understand of number efforts to impact growth utilize a are cadence COVID, cycles. are for capital well region have working then We've historical our able and seasonality and some improves adjust enabling we've the where capital We the working are continued to more our of been it methodically total upon as efficiency.More

to in to our Chief improvement over at for ability I'd of business to presence but results additional the year.I'll as improve year-to-date and continuously perform certain our in in to guidance we confident increased of our in comments full the an our of of Flavia the fiscal additional execute in markets, the remainder historical the increase Landsberg, are improve our year point, We closing, Financial work confidence identify call opportunities, performance our and resulted in this reflected like turn business.The our ability and performance has on Officer. for success our to reserve some the

to $XXX our with We to execution year's compared $XXX.X quarter statement. XX.X% increased to strong good improvement revenues primarily Pieter, from morning everyone. market to year. last the same Volume remains million. I by The period in the you, million compared increased Thank in start the $XXX.X was million prior will and undersupply. the income XX.X% by that

While there the with directions, that they second quarter, impact offsetting with current quarter shifts net slightly growth seasonal are some by the also in affect favors year's occur in comparison.Favorable a volume that contributed to growth, region. the variability prices in market

the kilo per quarter We percentage last year. XX.X% average year. Our in our increased last margin point full gross improved price X revenues, compared over up to to XX.X% of by

anticipation lesser primarily shifts by mix improved due per margin the in customer.Our to reflects low kilo kilo Our market inventory benefit at per reflects $X.XX. margin extent, quarter kilo, revenues improvement uncommitted average the scale-related per of to margin region and of favorable fixed $X.XX successful To by over improved margin overall the a our a The per was structure. second an price our our $X.XX incremental planning. in inventory of and kilo cost

During the of additional purchases the of strategic first made year, half tobacco. we

last to our adjusted and right EBITDA in customers' near-term reflects we and the powerful have an As $XX.X improved year's This combination increase growth million. $XX.X the volume of we second a margin. to meet in gross our demand.We total result, compared of believe XX.X% revenues quarter, million the mix grew to

Our same year. compared to the to quarter in quarter rose X.X% X.X% adjusted for margin last EBITDA the

year.Our to in million grew income the loss prior quarter a net $XX.X grew For a similar to income reasons, compared million we improvement operating to million million, compared of last our year. $XX.X significant second $X.X net to $X.X

working strategic about our results, of cash wider us better has improved equivalents opportunities enabling million to a second were on, touched of last $XXX.X million. growth, range and to quarter, improve.Cash capital year's end and the and working continues our the Pieter As been market critical pursue to at $XXX.X flat management capital of to

second year's the Our seasonal $XXX to last $XXX.X the million quarter of at were compared lines end outstanding million.

to second improved flow adjusted quarter $XX.X year. prior free Our million cash compared

the tell for $XXX.X $XXX.X margin of conversion per $XX.X of debt with kilo incremental Our half in an of ended total million year.Turning $XX.X quarter second million. free cash is half sales and of We with year to improvement million, does million the last with the compared accelerated higher in the our seasonal stronger cash of not inventory additional year's whole that million million the profile credit to cash debt of $XX.X first levels. first purchases allow $XXX.X improvement compared story. Delivering but to last usage usage

We are EBITDA, pleased capital. adjusted revenues, to have and solid improved working growth in

to contributed All of strengthened credit profile. those our things

adjusted ago. quarter the at EBITDA of ratio trailing to year end debt net to X.X% a second Our X.X% a basis on was the compared XX-month

compared XXth point last million XXth September to by to the last at coverage X.X% billion same was interest improved Our compared ratio X.X% $X.XX at September debt $XX.X year. to year.Total

facility total liquidity ABL finance October, of Our is ABL we September guidance. drawn million last of pleased to $XX a to [ under incremental year. how capacity of add XXth $XXX compared turning $XX availability we In undrawn facility important million. for our are This was credit our needs.Now, credit an an million component ] to

are end strong result lower range. first-half a performance, we As our the financial of of our increasing

year to to an bottom million end Our is range. $XXX fiscal 'XX our the $X now of guidance a increase range $X.X for prior billion of of revenues billion,

shifts our an in to is I for of fiscal we business year solid and his for Other year-over-year in concluding our billion in improvement back $XXX.X $XXX in order guidance the result operating mix $XXX discussed, will concentration.Thank a the when continue This represents 'XX guidance to and EBITDA 'XX now, million, you. our cycle, of million call the a $X.X possible. compared range. million compress And of increase remarks. of simply Pieter geographies bottom over range now to revenue to results changes $XX we EBITDA.As of adjusted end are accelerated we'll of million year to prior turn to seasonal customer fiscal pursue Our which

to U.S. for boost that times, and same business, Thank grant that toward our we've addition deforestation. received It in working also certain a Pyxus tangible forward-thinking USAID, position risk, strong to tied and you, second and cycle to and I in offsets look within while has support integration groundnut company.Operator, improvement in environmental, better important to framework. sustainable elevate subsidiary, varieties, availability USAID with our enthusiastic. partnership in made we're of projects Malawi's social, a we've business better in on generally, the high-quality, our efforts to to governance strategic the near-term as production focused the pressures our Development. time, corporate teams and to These rate results, Flavia. reputation, strong to announced the note company.The seasonality reinforce ESG our Agency between fulfill forward outlook from the several questions. quarter a to remained grow energized of Agriculture investment high groundnut think livelihood forward.We our expenditures $XX.X the mission across take going is our pleased The confidence our satisfying and world, and I'm improved million agriculture operating company operations. at and, a global we processing a mitigate which to We efficiencies, seed development climate-smart now operational is improve date September, of farmer of and increase to example business International we Malawi, In complements the strategic improved our ready our lead our grow and more progress counteract Malawi,

[Operator Sisson Instructions] to We'll with go Odeon. first Rosemary

little talk the you just about a changing. bit that to see wanted I seasonality

some think your in I is comments change, shifting. your that -- of mix you seasonality Flavia, some that of because mentioned, your of

million LPM you is instance, your at and $XXX look million. for As $XXX the guidance number, million, $XXX of to EBITDA

there in in clearly Can describe bit what's the pickup less you change? a looking the little a of second You're on of bit little half. going at terms

Rosemary, nice to hear from you again.

pleased year. we're obviously, we've think, for very excited our the raise and of the about and our to results the published remainder I that today guidance ability

of is guidance, midpoint been over million and the lifting midpoint, by last we're to at year. we've raising $XXX the by the what over is, year obviously, think, $XX I do able the that last EBITDA revenue million at range

very the strong terms of XX% of is improve been year. and has we're to second which obviously, And So, a half we've the has year in trying foreseeing the What heavily, and that we've to and than year-on-year achieved improve ours that year. of reducing key our guidance continue focus growth.More a of interest strong detailed been in really first derisked working capital, company. done our expense, the of business half

the think we like shipments the see X, to of will X for go quarter further remainder to through year. when continue see to we I we progress announce for as opportunities how along, how we'd look and but look quarter improve things we'll

from you? issues it normal other terms concerns there of expectation weather standpoint? Or that up regionally, anything is does In the coming pretty see that an look and any you

fiscal I think affecting issues. this year, no

think next on I we're El effects we basis. into it's strong global effect As a seeing and well-published El that Nino move a year, Nino

sunny So, to had as crop fill we've average very October, the seeing are the XX-year Southern few allow and days in what in the to for of we amount out. Brazil rain to is, double almost

a which size bit have we're so next a go we crop yield, Nino the for ends up that moment we'll have a expectations tobaccos news busy so that our bit the tell using always footprint has early as at and farmers give the on around little purchasing hopefully little come global Africa, in we was region next that. are bit -- there Africa weather with The seeing order to be little a have quarter in we needs. in we supply affecting India, that's has start and in X, continues.It's it in from X for impacts in into next larger But and dry a focus shortages reducing Africa is our February in dry the the in as that strong our able other those rain again, fulfill will crop crop.El and that on in the year reducing So Southern and better when planting to the is year. a regions talk to are how because calendar to the can see we'll mitigate replace about planting, to planted It be tendency different good that customer be can year, globe, and well. order Southern Brazilian update

some lot question structure out and X a look capital over you've year generating improve as your just How maybe come course next lot. doesn't structure, your then of of You'll about you this it but working free there's look the or And year, see out cash do be a a like structure. be that X? you view flow Obviously, the What sort would think optimal year? the capital done to of capital there. I that to more

Rosemary. that, take I'll

you have and perform For we're X see numbers know deleverage that doing successful, the right? we're operating And hard also so been our some performance compress quite very we And unveil in You to strong cycle. the can mainly to company. able we with can accelerating we're cash. continue that, things, working to that shipments this,

our we'll point, of opportunity is at structure. really this good kind be capital to to idea that able here do making be the some is, So, create to results, progress. what with we'll We're able improve

our continue create generation a able to year company. through the deleverage and objective, the can of flexibility, to said to terms end as guidance the You future, optionality well the as go our back plan what come and with actually the in or of by cash that's

BTIG. next We'll to with Shaked Oren go

multiple ask, I your continue kilo, improvement gross just about forward? wanted per of the to going obviously on should there, profit how in Flavia, now quarters ability think drive that to row a to we

have say a Great question. quarter. we on is, guidance strong Listen, though we even you quarter-by-quarter can what basis, give don't very, very a

grab $XX We And million the year, overall $XX the in million right? to And And last more opportunity things EBITDA. $XXX strong shipments, of million to and the we any guidance to million. billion have at about year, also this anything, than that year, year. to accelerate of we're $XXX play there's the still implied half we look million going right? that out to $XXX the Obviously, if was have you a continue lot to our know of until year a $X sales, about implied EBITDA important million, $XXX.X you in very additional talked first end

closer the do range things and of to When additional us strong result, still year. very the or get lift to see opportunities accomplish can we confident that. that play but of if we'll we're make have the to the So by it's not, we a end that some end will year, we the the

Okay, understood. a or your And in performance there clearly it's quarter, then, performance better we that that that bit the a half and from Should capital should that well. can front, traditional fiscal working well? that on little be strong the borrowed into quarter as presume sustain may assume as just second the we third

tremendously. help let on our we a here, operating you if cash working at right? we've capital, little guidance try cycle, So, to So, you even though look don't the flow, give bit the been me compressing

what can from in that compress talk more and to shipment.We continue it's coming cycle securitization Where use we also of goes going all down. inventory very being that that's again, have be can that's coming back that. days, that about, going compress, been how you you to If from? better? year, XXX everything how inventory And about ask efficient same lines, our we our operating I the to about look XXX. a in basis, manage on receivables, think about versus If can last successful to year, it's if time this our continue days quarter-by-quarter we're we even and I is terms with what operating presentation, you we compress It's continues the mainly in cycle And that. trying it also think dates, receivable we are down. and it's think dates, that and

expectation could compress be a a continue on bit. So, able cash little have a that gives And we here an effect big bit our little it to to of that be position. to

depends to of go, days terms in going we more So, the have are been But things operating still great the I an it's so think absolutely improvement cycle. to little a when on far, happen.

[Operator Cowen [ with Reddy Instructions] We'll go to ] next Chris Company. and

Great earnings. Pieter, Flavia, now. the hosting But I'm actually for at BNP thanks call.

So you're your for are would the the business to you X.X us basically executing new focus What last everything areas of told years. you drive forward?

Yes, joining several We're and those meeting many footprint right products very those. we very and we're from be see opportunities Obviously, And those seeing combination incomes now. Malawi, size things changing specific years the where geographical increase but I as the are exports value-added very we're that those individual been on focused crop as of across continue positioned changing. Chris, are we our is actually a customers.We our growing about on reforestation to our geographies of with. in we're in customer business is on of now mean, at that also footprints the focused and effort needs. And the think congratulations individual we on is on Malawi. really that potential focused the where We on supply of of the and we the they BNP. partnership And changing look improving And we've I And that across think over mix geographies strong new farmer focused those are. USAID, we developing very are. we're sales to excited excited which world. a significant with around well growth be working excited. in with way see have tobacco to We're customers business we're requirements

growth And around, stack. the plan, hinted rather, with did cap you had then, this or Fantastic. about Flavia

to is lot a that. pushing obviously be considering sort Are reduce everybody items but of would on in have You out also is see, line maturities going to something you various trying focused to the that look of items? line you

it's a think I Chris, great question.

I the you the we actually December trying As push has going being of So, in deleveraging some XXXX, now in can right? maturity leverage we ratio over mentioned, the company, to we the down see significantly the did of time. know. you as succeeding leverage debt company, and And are

gain So, cycle every again, strong do operating is days. capital. that's the is cash strategy extremely we tremendously And flow. single is we that, to, working one I I [ we continue to So right? as decreased perform. when ] mean, is said, second our #X.The And efficiency cash, it's also positive that

when time that the progress So for all create the to us proper. come leverage. opportunity a would we'll further is in And to plan

quarter. again Congratulations on fantastic a

further And comments. at I call closing or to additional no the turn the time, this are now for will there speakers questions. back any

everybody, publish Thank we you X we Okay. you, today, after for look and joining again to our talking to results. our forward call quarter

This today's you your participation. conference. conclude thank does for We