Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pyxus International Inc (PYYX, Financial) increased its revenue guidance to between $2.15 billion and $2.35 billion, reflecting confidence in future performance.
- The company successfully leveraged its global footprint to offset shortfalls in North and South America with volumes from Asia and Africa.
- Pyxus International Inc (PYYX) reported a strong first half of fiscal 2025, with revenues up by $99.8 million to $1.2 billion.
- The company maintained operational discipline, protecting margins despite challenging market conditions.
- 97.8% of Pyxus International Inc (PYYX)'s processed tobacco inventory is committed, providing excellent visibility into near-term revenues.
Negative Points
- Second quarter revenues decreased to $566.3 million from $624.3 million in the same quarter of fiscal 2024.
- Adjusted EBITDA for the second quarter was $44.3 million, down from $57.1 million in the previous year.
- Gross margin decreased to 13.3% in the second quarter, compared to 14.2% in the same period last year.
- The company faced a 30% drop in anticipated volumes from the United States due to hurricanes.
- Pyxus International Inc (PYYX)'s trailing 12-month interest coverage ratio decreased to 1.4 times from 1.58 times last year.
Q & A Highlights
Q: Can you explain the impact of the volume shift from Q2 last year to Q3 this year on your sales?
A: Although we don't provide specific volume figures, we had a strong Q1, and our first half performance was robust and comparable to last year. Our inventory levels are at their peak, positioning us for a strong second half, which is why we increased our guidance by $10 million. - Flavia Landsberg, CFO
Q: How do you view the medium-term demand for your products, and what factors are influencing this demand?
A: We've seen strong demand since emerging from COVID, exacerbated by shorter crops due to El Nino. We anticipate larger crops next year, which should balance supply and demand. We expect continued strong demand and are optimistic about next year. - J. Pieter Sikkel, CEO
Q: With the new guidance, should we expect EBITDA margins to improve with larger crop sizes?
A: We anticipate improvement in the second half. Our focus is on shipping committed inventory and improving our operating cycle. We're pleased with our current position and aim to perform well through year-end. - J. Pieter Sikkel, CEO
Q: Can you elaborate on the gross profit decline due to South American product quality?
A: The decline was due to El Nino effects, but our profitability per kilo increased by 10¢. We measure success by profitability per kilo, which improved despite the challenges. - Flavia Landsberg, CFO
Q: Are you considering refinancing your capital structure given the positive outlook?
A: We are always exploring ways to optimize our capital structure, including potential refinancing to reduce interest costs. It's an option we're considering, but it's too early to say definitively. - Flavia Landsberg, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
