Pyxus International Reports 28.9% Increase in Sales for Q3

Pyxus International, a multinational company, has reported a 28.9% increase in sales revenue and other operating income, totaling $508.3 million for the three months ending on September 30, 2022, as compared to the previous year. The company's operating profit margin has increased by $21.6 million, reaching $27.1 million. However, the net loss has increased by $8.2 million, reaching $1.5 million. Adjusted EBITDA has increased by 63% to $42.2 million.

We are pleased with the results achieved in the first half of the 2023 fiscal year, particularly the efforts we have made to reduce supply chain complexity and improve operational efficiency," said Pieter Sikkel, President and CEO of Pyxus, in a statement.

Compared to last year, these efforts have led to a more normalized shipment volume in certain markets. In this quarter, we saw an increase of $114.1 million in sales and other operating revenue, with a $21.6 million increase in operating profit margin, largely due to increased demand and more standardized shipping times from Africa, Asia, and South America.

This allows the company to use the cash generated from the increased sales in this quarter to refinance delayed draw term loans, repay a portion of revolving credit financing, and provide full funding for the US fixed-income pension plan.

As of September 30, 2022, our inventory has increased by $87.7 million compared to the previous year. This is mainly due to higher green tobacco prices and processing costs in Africa and South America, as well as delayed shipments from North America. Over 90% of our processed tobacco inventory is accounted for by specific customers. The overall increase in inventory and our committed levels of processed tobacco inventory enable us to meet current demand.

The prevailing La Niña weather pattern continues to have a detrimental impact on global tobacco supply. However, through efforts to accelerate purchasing activity in key markets, investments made throughout the business, and transparent dialogues with customers regarding the effects of La Niña and inflation on our operations, we have procured sufficient quantities to meet current customer demands. Despite historic levels of inflation, we have maintained our gross profit margin as a percentage of sales.

As we approach the second half of the fiscal year 2023, we are closely monitoring the market for agricultural inputs such as fertilizers and taking measures to mitigate the risk of recent supply shortages. We still anticipate sales for fiscal year 2023 to be between $1.75 billion and $1.95 billion, with adjusted EBITDA between $130 million and $160 million.

We remain focused on driving value for stakeholders as we accelerate our contribution to a net-zero future, and have recently been awarded the Gold Leaf Award for Best ESG Strategy in recognition of our efforts to promote sustainable fuel production and help reduce deforestation. We have received positive feedback from clients on our environmental, social, and governance framework, particularly on the strategic alignment with client objectives, and look forward to strengthening partnerships to build a better world together.

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