Pyxus International, Inc 10-Q for FY2024 Q1

Pyxus International, Inc. (PYYX)

10-Q 2023-08-10 For: 2023-06-30

Added on April 06, 2026

About this 10-Q

Pyxus International, Inc filed this 10-Q on August 10, 2023, covering the quarter ended June 30, 2023 (FY2024 Q1).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $477.09M; up 38.7% from $343.91M a year earlier
Net income: $804K; compared with a net loss of $14.66M a year earlier
Diluted EPS: $0.03; compared with -$0.59 a year earlier

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Virginia		85-2386250
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

6001 Hospitality Court, Suite 100
Morrisville,	North Carolina	27560
(Address of principal executive offices)		(Zip Code)


Pyxus International, Inc. and Subsidiaries
Table of Contents
			Page No.




Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Statements of Operations	3

		Condensed Consolidated Statements of Comprehensive Income (Loss)	4

		Condensed Consolidated Balance Sheets	5

		Condensed Consolidated Statements of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	7

		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
	Item 4.	Controls and Procedures	28

Part II.	Other Information
	Item 1.	Legal Proceedings	28
	Item 1A.	Risk Factors	29







	Item 6.	Exhibits	29

Signature			30


Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

	Three Months Ended
	June 30,
(in thousands, except per share data)	2023		2022
Sales and other operating revenues	$	477,092	$	343,905
Cost of goods and services sold	403,947		303,150
Gross profit	73,145		40,755
Selling, general, and administrative expenses	34,063		34,588
Other expense (income), net	2,624		(1,085)
Restructuring and asset impairment charges	40		300

Operating income	36,418		6,952


Loss on deconsolidation/disposition of subsidiaries	—		599

Interest expense, net	30,844		25,474









Income (loss) before income taxes and other items	5,574		(19,121)
Income tax expense (benefit)	2,646		(867)
Loss (income) from unconsolidated affiliates	2,158		(3,749)
Net income (loss)	770		(14,505)
Net (loss) income attributable to noncontrolling interests	(34)		158
Net income (loss) attributable to Pyxus International, Inc.	$	804	$	(14,663)

Income (loss) per share:
Basic and diluted	$	0.03	$	(0.59)


Weighted average number of shares outstanding:
Basic and diluted	25,000		25,000


See "Notes to Condensed Consolidated Financial Statements"


Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

	Three Months Ended
	June 30,
(in thousands)	2023		2022
Net income (loss)	$	770	$	(14,505)

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	707		947


Cash flow hedges	862		(1,503)

Total other comprehensive income (loss), net of tax	1,569		(556)
Total comprehensive income (loss)	2,339		(15,061)
Comprehensive (loss) income attributable to noncontrolling interests	(34)		158
Comprehensive income (loss) attributable to Pyxus International, Inc.	$	2,373	$	(15,219)

See "Notes to Condensed Consolidated Financial Statements"


Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)


(in thousands)	June 30, 2023		June 30, 2022		March 31, 2023
Assets
Current assets
Cash and cash equivalents	$	100,045	$	165,441	$	136,733
Restricted cash	5,456		9,495		2,176
Trade receivables, net	185,467		155,976		185,351
Other receivables	18,978		26,859		17,387


Inventories, net	1,006,437		980,070		775,071
Advances to tobacco suppliers, net	56,408		44,070		42,305
Recoverable income taxes	5,867		8,747		5,815
Prepaid expenses	42,132		44,513		37,555
Other current assets	15,500		16,672		18,172
Total current assets	1,436,290		1,451,843		1,220,565


Investments in unconsolidated affiliates	98,591		87,139		100,750

Other intangible assets, net	37,412		42,052		38,572
Deferred income taxes, net	8,879		8,871		6,662
Long-term recoverable income taxes	3,373		4,571		2,863

Other noncurrent assets	45,845		46,456		43,761
Right-of-use assets	40,280		35,636		35,892
Property, plant, and equipment, net	132,324		135,878		133,398
Total assets	$	1,802,994	$	1,812,446	$	1,582,463

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable	$	585,408	$	545,224	$	382,544

Accounts payable	133,854		144,915		170,287

Advances from customers	61,297		46,071		42,472

Accrued expenses and other current liabilities	94,356		91,054		92,693
Income taxes payable	20,081		6,729		18,264
Operating leases payable	9,249		8,535		8,723
Current portion of long-term debt	42		13,781		75
Total current liabilities	904,287		856,309		715,058
Long-term taxes payable	4,978		5,783		4,978
Long-term debt	643,808		678,777		618,430
Deferred income taxes	10,336		9,925		9,900
Liability for unrecognized tax benefits	13,494		12,173		14,175
Long-term leases	28,219		26,473		25,581
Pension, postretirement, and other long-term liabilities	53,703		59,748		52,511
Total liabilities	1,658,825		1,649,188		1,440,633
Commitments and contingencies
Stockholders’ equity
Common Stock—no par value:
Authorized shares (250,000 for all periods)
Issued shares (25,000 for all periods)	390,290		390,290		390,290
Retained deficit	(257,150)		(233,476)		(257,954)
Accumulated other comprehensive income	7,084		3,248		5,515
Total stockholders’ equity of Pyxus International, Inc.	140,224		160,062		137,851
Noncontrolling interests	3,945		3,196		3,979
Total stockholders’ equity	144,169		163,258		141,830
Total liabilities and stockholders’ equity	$	1,802,994	$	1,812,446	$	1,582,463

See "Notes to Condensed Consolidated Financial Statements"









Balance, March 31, 2022	$	390,290	$	(218,813)	$	(8,873)	$	6,328	$	6,349	$	6,090	$	181,371
Net (loss) income	—		(14,663)		—		—		—		158		(14,505)
Other	—		—		—		—		—		(3,052)		(3,052)

Other comprehensive income (loss), net of tax	—		—		947		—		(1,503)		—		(556)
Balance, June 30, 2022	$	390,290	$	(233,476)	$	(7,926)	$	6,328	$	4,846	$	3,196	$	163,258



	Three Months Ended June 30, 2023
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Amortization Expense		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	9.2 years	$	20,482	$	(544)	$	19,938
Technology	5.0 years	8,875		(414)		8,461
Trade names	11.2 years	9,215		(202)		9,013


Total		$	38,572	$	(1,160)	$	37,412



	Year Ended March 31, 2023
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Amortization Expense		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	9.4 years	$	23,568	$	(3,086)	$	20,482

Technology	5.2 years	11,471		(2,596)		8,875

Trade names	11.4 years	10,022		(807)		9,215


Total		$	45,061	$	(6,489)	$	38,572


				June 30,		June 30,		March 31,
(in thousands)	Interest Rate			2023		2022		2023
Senior secured credit facilities:
ABL Credit Facility	6.8	%	(1)	$	50,000	$	90,000	$	25,000

DDTL Facility (2)	11.5	%	(1)	—		109,751		—

Senior secured notes:

10.0% Notes Due 2024 (3)	10.0	%	(1)	20,004		271,678		19,931
8.5% Notes Due 2027 (4)	8.6	%	(1)	253,779		—		253,483

Senior secured term loans:
Intabex Term Loans (5)	13.1	%	(1)	186,307		$	—	186,194
Pyxus Term Loans (6)	13.1	%	(1)	133,284		$	—	133,393
Exit Facility Loans (7)	11.4	%	(1)	—		$	220,518	—


Other Debt:
Other long-term debt	7.9	%	(1)	476		611		504
Notes payable (8)	7.9	%	(1)	585,408		545,224		382,544
Total debt				$	1,229,258	$	1,237,782	$	1,001,049

Short-term (8)				$	585,408	$	545,224	$	382,544
Long-term:
Current portion of long-term debt				$	42	$	13,781	$	75
Long-term debt				643,808		678,777		618,430
Total				$	643,850	$	692,558	$	618,505

Letters of credit				$	6,018	$	14,430	$	11,684

(1) Weighted average rate for the trailing twelve months ended June 30, 2023 or, for indebtedness outstanding only during a portion of such twelve-month period, for the portion of such period that such indebtedness was outstanding.
(2) The amount outstanding at June 30, 2022 is net of original issue discount of $499. The DDTL Facility was refinanced on July 28, 2022, with the issuance of the DDTL Term Loans, which refinancing included a partial principal payment of $9,000 and an exit fee payment of $5,250. Subsequent to this refinancing, on February 6, 2023, the DDTL Term Loans were exchanged for $102,000 (inclusive of a $2,000 exit fee) of Intabex Term Loans.
(3) On February 6, 2023, $260,452 of the 10.0% Notes due 2024 were exchanged for 8.5% Notes due 2027. The remaining 10.0% Notes due 2024 outstanding of $20,004 is net of a debt discount of $387. Total repayment at maturity is $20,391.
(4) Balance of $253,779 is net of a debt discount of $6,673. Total repayment at maturity is $260,452.
(5) Balance of $186,307 is net of a debt discount of $2,726. Total repayment at maturity is $189,033, which includes a $2,000 exit fee payable upon repayment
(6) Balance of $133,284 is net of a debt premium of $2,734. Total repayment at maturity is $130,550.
(7) On February 6, 2023, $189,033, representing 40.0% of the Exit Facility Loans were exchanged for Intabex Term Loans, and $130,550, representing the remaining 60.0% of the Exit Facility Loans were exchanged for Pyxus Term Loans.
(8) Primarily foreign seasonal lines of credit.


Three Months Ended June 30, 2023 and 2022
	Three Months Ended June 30,
							Change*
(in millions, except per kilo amounts)	2023			2022			$	%
Sales and other operating revenues	$	477.1		$	343.9		133.2	38.7
Cost of goods and services sold	404.0			303.2			100.8	33.2
Gross profit	73.1			40.8			32.3	79.2

Selling, general, and administrative expenses	$	34.1		$	34.6		(0.5)	(1.4)
Other expense (income), net	2.6			(1.1)			3.7	336.4
Restructuring and asset impairment charges	—			0.3			(0.3)	(100.0)

Operating income	36.4			7.0			29.4	420.0
Loss on deconsolidation/disposition of subsidiaries	—			0.6			(0.6)	(100.0)



Interest expense, net	30.8			25.5			5.3	20.8


Income tax expense (benefit)	2.6			(0.9)			3.5	388.9
Loss (income) from unconsolidated affiliates	2.2			(3.7)			5.9	159.5
Net income attributable to noncontrolling interests	—			0.2			(0.2)	(100.0)
Net income (loss) attributable to Pyxus International, Inc.	$	0.8		$	(14.7)		15.5	105.4

Leaf:
Sales and other operating revenues	$	450.9		$	322.9		128.0	39.6
Tobacco costs	363.0			266.0			97.0	36.5
Transportation, storage, and other period costs	20.7			20.6			0.1	0.5
Total cost of goods sold	383.7			286.6			97.1	33.9
Product revenue gross profit	67.2			36.3			30.9	85.1
Product revenue gross profit as a percent of sales	14.9		%	11.2		%

Kilos sold	85.5			72.1			13.4	18.6
Average price per kilo	$	5.27		$	4.48		0.79	17.6
Average cost per kilo	4.49			3.98			0.51	12.8
Average gross profit per kilo	0.78			0.50			0.28	56.0

Processing and other revenues	$	25.5		$	17.7		7.8	44.1
Processing and other revenues costs of services sold	19.9			12.5			7.4	59.2
Processing and other gross profit	5.6			5.2			0.4	7.7
Processing and other gross profit as a percent of sales	22.0		%	29.3		%

All Other:
Sales and other operating revenues	$	0.7		$	3.3		(2.6)	(78.8)
Cost of goods and services sold	0.4			4.0			(3.6)	(90.0)
Gross income (loss)	0.3			(0.7)			1.0	142.9
Gross income (loss) as a percent of sales	42.9		%	(21.6)		%





*Dollar and percentage changes may not calculate exactly due to rounding.


	June 30, 2023
(in millions)	Total Borrowing Capacity		Remaining Amount Available
ABL Credit Facility	$	100.0	$	50.0
Foreign seasonal lines of credit	702.1		149.1
Other long-term debt	0.6		0.2
Letters of credit	10.1		4.1
Total	$	812.8	$	203.4



(in millions except for current ratio)	June 30, 2023		June 30, 2022		March 31, 2023
Cash, cash equivalents, and restricted cash	$	105.5	$	174.9	$	138.9
Trade and other receivables, net	204.4		182.8		202.7
Inventories and advances to tobacco suppliers	1,062.8		1,024.1		817.4
Recoverable income taxes	5.9		8.7		5.8
Prepaid expenses and other current assets	57.6		61.2		55.7
Total current assets*	$	1,436.3	$	1,451.8	$	1,220.6

Notes payable to banks	$	585.4	$	545.2	$	382.5
Accounts payable	133.9		144.9		170.3
Advances from customers	61.3		46.1		42.5
Accrued expenses and other current liabilities	94.4		91.1		92.7
Income taxes payable	20.1		6.7		18.3
Operating leases payable	9.2		8.5		8.7
Current portion of long-term debt	—		13.8		0.1

Total current liabilities	$	904.3	$	856.3	$	715.1

Current ratio	1.6 to 1		1.7 to 1		1.7 to 1
Working capital	$	532.0	$	595.5	$	505.5
* Amounts may not equal column totals due to rounding


10.1						Second Amendment to ABL Credit Agreement dated as of May 23, 2023 by and among Pyxus Holdings, Inc., the other borrowers and guarantors party thereto, the lenders party thereto and PNC Bank, National Association, as administrative agent and collateral agent, incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on May 30, 2023 (File No. 000-25734)
31.01						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.02						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32						Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (filed herewith)
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith)
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104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



SIGNATURE




Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Pyxus International, Inc.



Date: August 10, 2023						/s/ Philip C. Garofolo
						Philip C. Garofolo
						Vice President - Chief Accounting Officer
						(Principal Accounting Officer)


/s/ J. Pieter Sikkel
J. Pieter Sikkel President and Chief Executive Officer
August 10, 2023


000-25734
(Commission File Number)



	June 30, 2023		June 30, 2022		March 31, 2023
Investments in variable interest entities	$	91,587	$	80,446	$	93,754
Receivables with variable interest entities	4,767		16,825		2,617
Guaranteed amounts to variable interest entities (not to exceed)	61,041		64,610		68,265



	June 30, 2023		June 30, 2022		March 31, 2023
Amounts guaranteed (not to exceed)	$	138,523	$	118,615	$	152,032
Amounts outstanding under guarantee (1)	43,563		45,552		83,420
Fair value of guarantees	5,764		2,601		5,262
Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing	459		6,376		12,529
(1) Most of the guarantees outstanding at June 30, 2023 expire within one year.



	June 30, 2023						June 30, 2022						March 31, 2023
	Level 2		Level 3		Total at Fair Value		Level 2		Level 3		Total at Fair Value		Level 2		Level 3		Total at Fair Value
Financial Assets:
Derivative financial instruments	$	—	$	—	$	—	$	560	$	—	$	560	$	3,970	$	—	$	3,970
Securitized beneficial interests	—		19,641		19,641		—		22,762		22,762		—		19,522		19,522
Total assets	$	—	$	19,641	$	19,641	$	560	$	22,762	$	23,322	$	3,970	$	19,522	$	23,492
Financial Liabilities:

Long-term debt	$	492,098	$	509	$	492,607	$	430,573	$	660	$	431,233	$	523,758	$	514	$	524,272
Guarantees	—		5,764		5,764		—		2,601		2,601		—		5,262		5,262
Total liabilities	$	492,098	$	6,273	$	498,371	$	430,573	$	3,261	$	433,834	$	523,758	$	5,776	$	529,534


/s/ Flavia B. Landsberg
Flavia B. Landsberg Executive Vice President and Chief Financial Officer
August 10, 2023