Pyxus International (PYYX) 14 Feb 242024 Q3 Earnings call transcript

Good morning, and welcome to the Pyxus International, Inc. Fiscal Year 2024 Third Quarter Earnings Call. Please note that this call is being recorded. [Operator Instructions]. I would now like to turn today's call over to Tomas Grigera, Treasurer.

begin. may You

the President Leading our morning Peter is Financial Thank Chief call Executive our and Landsberg, Officer; Sikkel, Officer. you. this and Chief Flavia

safe call Before attention like begin, to we to I'd our harbor disclosure. your

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

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

and call everyone, you today. for to thank morning joining Good our

first Our increased improved line performance the and third months driven of was through profitability quarter X have growth, we top strong. year, efficiency. capital working the And

to we're result, full our guidance EBITDA. a excited for As year adjusted increase

During today's I very But share performance. our million to of $XXX in with call, Flavia will some first, financial healthy highlights. would provide reported important details quarter margins. sales We the on like

to improved on were to focus billion, total in which anticipated $X.XX an weighting of our and cycle increased X% quarter's half. mix seasonal lower than first this year, increase we given revenues last was over the last While revenue our same Year-to-date, improved just grew our times, period year. compared the the

of in increased over gross XX.X% X Our third points quarter the year. margin last

XX.X%, for the compared to which period at significant stands year. last XX% margin gross represents same year-to-date Our improvement

year. to to the larger in prior interest the Our working Adjusted costs comparable position After of today. the significantly last capital to to quarter, just are brings increased that $XXX over it This was inventory EBITDA. a efficiency again third quarter adjusted pleased we while raise margin XX.X%. $XX.X our in EBITDA enabled guidance maintaining was of performance invest million, company having total million a a our strong X-month

full expense $XX uncommitted to million inventory was net million with the $XXX new levels. continued a million. On year last essentially target quarter for low year-on-year million interest Our over $XXX basis, tobacco $XXX we range in by grew to is EBITDA flat, adjusted year even as

serve capable And end as continue working commitments, influx of excited continued steady We the be customer returns over in capital strong We've against strong $XXX market. our cash. over last in efficiency. of working quarters our the quarter, we'd more several deployment while increased we're to to efficient in a maximizing demand quarters made we well and those third the and demonstrate by million placed to an capital ship consistent for At investments future year. progress building more position

our In social strides and performance, governance our towards the addition environmental, is making achieving to targets. financial company

to There's their the around for in communities around local we their our the thank During on to amongst prior and sustainability that and year we operate no from same We a ahead reduction contributions highlights, question and XXXX would of released target larger our period, continuing progress embracing emissions makes report, critical an year. to make the reporting the the things, how achievement greenhouse compared our responsibility remembering and total environmental X our to schedule success gas like time, at globe the tremendous our other often social XX% fiscal of difference. which world, issues. teams water-related in years

Financial the turn Chief Landsberg, our to call like over would to Officer. Flavia I Now

Thank you, good Pieter, morning, everyone. and

from average year-to-date the increase improved well First, of to geography months This billion X.X% This statement. an the reflects execution, year fiscal $X.XX I the We largely XX.X% year. and including to of X We XX% revenues our year-to-date improvement benefits pricing fiscal to an prior by in of XXXX to our largely sales will compared XX%. and per increased remained of customer months start scale-related mix have despite XXXX. XX.X% was associated with compared well with consistent revenues as effective growth compensation. Through first result by kilo an year accruals some or grew XXXX, December $X.XX profit regions income in our margin for by through gross as kilo. SG&A the per to expenses ending months controlled and Average gross increased inflationary the X with improved incentive first X throughput. pressure performance-related $X.XX to SG&A Year-to-date, year, $XXX.X million in months $XXX.X compared income same fiscal $XX.X year X the period of million the XXXX. compared the in $XXX.X first operating to totaled fiscal to of of XX.X% XXXX. rose million The by year million plan XX,

reflects months a XXXX business and significant scale-related first in the of for to an and X U.K. in addition It's the to conversion fiscal mix gain benefits. Net the includes of plan. same the loss region, worth $XX.X million by $XX.X defined swing both net million period a of costs for customer In that $XX to compared a of also noncash quarter some average million of the related profitability benefits regions X in months noting the income third our positive to the expense elimination year improved due of this income and better net represents fiscal the year by XXXX.

Our of the full already months adjusted prior $XXX.X year year. increased to compared adjusted total the Through through EBITDA $XXX from we XX.X% exceeded strong third months, to million $XXX.X million quarter. with last have contribution the X X year's first EBITDA a million. for in the

the as third This were period revenues and that of year in of into the year in compared to For ago compared than first result from gross of a with $XXX.X from of benefited efforts operating quarter XXXX. prior the year. the acceleration half to difference. of was year-over-year fiscal the ongoing lower same a unusually To a margin as XX.X% in this contributed cycle the quarter, achieved to other volume shipments strong a in shipments. that to delayed to third quarter the the XX.X% lesser expected, this compared year $XXX.X prior to due sales We reduce extent, XX.X% also million the year our decrease year third million quarter times quarter

of reflects quarter in the of million gross as line in to favorable lower deferred an margin revenues significant shifts as quarter, This tax increase million primarily year. leverage income kilo in certain expense compared efficiency the $X.XX million Adjusted third $XX.X better This $XX.X over our well the an to financing. Tax compared also in same by improvement per for and as are mix total We grew created period quarter gain million EBITDA earnings, to year increase to was reflected improvement These related valuation $XX.X decreased XX.X% jurisdictional a prior to the compared was our in in kilo. profitability million the XX.X% to last the fixed fiscal of per XXXX. of $X.XX a global costs. third year mix noninterest of $XX.X third by exchange quarter benefits of operating and third allowance effect. expense a $XX.X net in improved to working capital result due

interest flat year. net was mentioned, of quarter to Pieter As expense $XX our million $XX.X last third million essentially

working of geographic our to discipline, improvement enable across of credit. total improved of of lines us credit lines Our along capital to shorter and our businesses all time, repayment an accelerate increase focus cycle purchase tobacco on seasonal the our outstanding same At our inventory. This, enabled us continued operational credit. foreign with ongoing spread the lower of profile the in diversification efficiency on supported

months several Our XXXX. the first net ended for X.Xx below XX it in and debt the to dipped XX, was years, ratio time adjusted EBITDA Xx for December

third improved quarter X.Xx at to also Our interest and the compared ratio X.Xx last coverage of the end year. was

and Now returning of EBITDA adjusted our our the guidance to the year. remainder for

to the the visibility the into confidence our have of and weeks final We guidance. revise fiscal year

billion be range range million the to to sales We adjusted of to be in billion $X expect to the million. and $XXX of EBITDA in $X.X $XXX

you Flavia, this you, attention your for everyone thank Thank to and morning.

long-term financial improvement simple. strategy for is Our

working progress performance. been have X cost months. made over thirdly, each of better drive objectives to and the on capital continue improve borrowing. past firstly utilization We've excellent secondly, to our our objective, reduce operating including Our

costs. the working will turn have performance Given down driving achieved, our we our and operational increasingly borrowing capital focus degree to our efficiency of

deeper in and able our we our diversification developing liquidity As ago, strengthened When increased key few relationships network, banking upsized the extended world. our we our down. have efforts been drive around months we a borrowing to countries to global and realigned costs ABL sourcing

completed South leverage next the most of our over results. El Nino We've or refinancing strong expect and sourcing on lower debt we've finance strategic improve importantly, global since number working of mitigate which work borrowing enabled the year's course restrictive covenants to creates our us remove We to America total the done maturities, a impact potential February, last operational in costs, flexibility. year for extend significant the to progress capital made from and

an and cash in gains lends generation have for capable ongoing our foundation is improved better to net the more and efficient, more itself balanced resulting and and leverage business We that reduction profitability.

in as position beginning to operator, formula note now to momentum Our into world. Thank build combination XXXX into we market and and take and company customer We reach operations is positioned you. believe a plan high success. diversified fiscal ready scale stronger the of leadership a carry institutional global to well believe a work on we expertise are together to And grow that a the a base, better we're close of XXXX and questions. fiscal I for

[Operator we'll ahead first Instructions]. Sisson and question our take from And go Rosemary with Odeon.

-- wanted entailed ask the little You basis. you The was seen kilo little in really it, mix mentioned certainly going whether bit you kind than delve a more? forward? sustainable, wanted I it's bit profitability. into I higher think, what a you more talk whether were into several Can gross a that years, of and I've entered to on margins to

Rosemary, Good you. for question thank

So on is That a the do strategy. fantastic and job the is said, depend crops margins That's as being well we'll of always to in one continue number of to so. actually we're the as terms our will That operational performance. ill size doing number the obviously, crops. one,

is one capital management. second to related The working the

cost that so still do the then the -- piece grow think be able coming able have start cash we and comes to that actually the that we more is And cash that be left. more related the to same borrowing. that with think with go, We that business. borrowing the of we we And still then third the and of continues we'll we to -- actually room can have cash cost generated, down to is now to still

we XXX. XXX this more already last So to year actually now one guidance than delivered year, to is and

to is so. do continue the So idea to

little Great. Okay. a what in talk means? bit you can terms that about more But mix, of

customers geographies, Rosemary. is of snapshot Yes, and of quarter look, each multitude a product. a

a So we mix, focused as which had are each in third profitability little our products was ship. quarter mix And every from operation in third had that the mix we product performance particular we which Clearly, year. the different was bit a and this a we quarter last we trade. nice all that operational as from in in particular time it those on improving and the

results continue of as that and So focused I develop the think to very we that, continuing you're seeing to well. on performance be

Okay. cost of the your I I get that, Flavia, so with on credit seems quality that's And And you loans. of lower? on order in to working pretty high in progress X-month that do is mentioned clearly, an high. X.X% that, how a how think LTM making? then the quality? a you basis rate it's or on backing need borrowing, at mentioned It your while been least collateral But your relative you foreign to the or Q, you've the your there What to view lenders, think able mean, those basis. be know you lenders that much I you for are do

you. higher think credit our than It's rating with we is. Agree

to listen, there's couple talk of goes back the talk is couple every order We we that to do of and that. the company a that lowering day what So been entertaining right? options in things our it borrowing. we And of deleveraging we've strategy, cost looking -- about and here,

far, We cost been and can have so lowering that. see the you

and spread. We lower in lines we're off paying paying control with looking well securitization we negotiating of cost. cost managing of been the in for that interest We're that terms also capital seasonal the to and also the the terms actually also sense the -- sooner, off in why lowering extremely banks that's opportunities and can have working

next, the by down. to paying So see continue that this continue the Xx for debt. you leverage And to is do long off below a in can our time. went manage first and to time -- so idea a way the room would a now we're that to say, lot strategy do I improve out so. we'll and We going of the to that's think have to with until from to for figure

free And you order mentioned a to start lowest that's that's forward of And to that could to the that be whether in in to good on and generate yet refocus your kind around of seen lowering does capital that time to how some be capital equity, changed will structure structure the seem it this debt and time. rate long change move lower additional interest sort and Okay. I've will expense, you more leverage it cash. a allow very

course have a months? up also coming August. several $XX comment over on of million all here in that You you working maturity next the Can the how you see of out

Yes. Yes.

we we at as mentioned, options, here, credit we we right? options -- we that that like topic by rating rating. So believe that lower some day from company, I cost to leverage retiring the discount, to have and lower how debt have right, how to -- debt a the our can every buying lower engage that's agencies we -- in We

through. go options of lot a to have We

it. And it we near So now. that what day-to-day announce not the to happy that's continue company. able actually, to the plan we're but that continue And conversation. in our that's have what deleverage to future, ready is to look and conversation we're have we're the at

you have Okay. had going into now the Also, maybe of quarter, a would you're the your higher your right I for like of are again, that I to quarter an uncommitted low. think inventory opportunity your seems at inventories you that than indication very Is it next ready end the expected. think them buy little is the bit

have that? has you your sell capital that to know Did customers. do you of between leaf of think order how meet Or you do still to it enough at having can you feel to your Or inventory your part short-term just enough look debt now? constrained demand? and able be balance constraint So how with and kind inventory I the about hand do the on to in your

very Rosemary, actually that inventory levels we're pleased holding. we're with the

cash cash as into the our roll strategy. out as close to continues strong quarters is inventory over obviously That we that. can committed flows of and our from and next that couple get, to ship know, you to As expect we generate

chose the where in in and our that expense So are to manner. we to we X just forward. obviously profitable well. two, a go capital at And we as repay suggest working would satisfying clearly short-term order minimize strong to we see at -- don't That's as in things and our moment, point this capital, demand performance add, constraints time. on lines cost interest customer with working to do

the an capability done think globe. in has extend to excellent across I being job team the able that

Oren with next Shaked Our from will BTIG. question come

company good here question, obviously, driving debt is and ongoing I capital. to is invested the returns it net But only year-over-year. have higher see one is, which still results on

And something, end going you're so -- year-over-year the and unless well. fiscal I'm year to as missing higher

give so comments while comments am your suggest do understand you strong focus than meeting And going lowering capital Or some going to working net driving can I maximizing EBITDA? level you for of debt you about demand on more us that just framework Peter, that think attack debt to other rather plans to and forward? efficiency expect how your forward, a made to to on the

order been we've answer the our clearly on think interest are that that very a Obviously, to of and X cost, very every continue the is in to able times in efficiency consecutively flows that to both. basis with improving expect debt able last have, do we we the on. that. quarter-by-quarter origin detail cadence do focus And we is we in on the debt, That you've to years that see. programs I operational we terms debt cost, and been do now be cash and performance, have structure, focused what we over that. shipment cycle every We've seen and focused can with our on to we And small that to various drive capital the working strong in been very in have. you'll successful we've that

in I think see future. clearly the that you'll

[Operator come Instructions]. Baird. next And Patrick our from question Fitzgerald with will

quarter the to quarter of year-over-year basis so a increase guidance, guidance? on that's the if fourth good high the would just hit us appreciate fourth even your -- in be remind But weak you I the would end why you see. why could

part the look cycle Well, have to take It's a -- on quarter fourth fourth is quarter, -- whole of year, the the it's right? whole you at the year. of

-- that's as number as mix the always it's always of It's can geographies, the one. different the would well end products some have It of of a that -- adjustments at the and year. customers year. We it's at end be happen

you fantastic So year, if $XXX results. a whole see in you $XXX that look EBITDA, at delivering we'll million that's be to will the million

Remember, last subset million, $XXX year, we point already that of view. so were

year if whole the So end. the and more capital on to a opportunity EBITDA. very, the And year decrease very, strong continue operational very that we have to it's able cash the look It's strong working lower to have interest at at cycle, cost you borrowing from to the is again, the expense management. to a very continue

No, up being last I versus certainly be this could and it wasn't case. was, fourth any guess, coming year, Yes. year are in quarter otherwise, or is you the a in it suggesting strong I conservative year, I just shipments

from you be it So of fourth historically. quarter right, fair? the from that working Is fourth comments magnitude? And that sounded bounces if your in be inflow of perspective, a a terms think this would cash the But capital. capital around will it like working what that's quarter from kind

it also on is That's I every is right? needs. fulfill quarter, also depend but focus customers' -- purchases, as the how to will that's seasonal. Yes, our works, usually it said, Our

the not. of crops some early, going some start So

absolutely have posing that cadence go. So terms will we inventory. we are that how depend on capital But no -- will in of buying constraints actually, to

manage So to that in that's the idea capital to order to continue working so. do

scenario, Okay. global 'XX in you And -- fiscal could a best attempt do -- refi. a if case like think you XXXX? -- refi you

company others. but to about don't deleverage the mentioned you, the the -- look lower of I and timing, it's As that it at one cost any options all know we borrowing among options to we

does that for conference closing the conclude turn I'll back session. now Grigera the And to Tomas question-and-answer remarks. any over

We're look you able you results been morning pleased this have again to to share with forward with and soon. you. to Thank talking such good

do you. thank an excellent that today's Thank Have We you does day. And for participation. conclude conference. your