Pyxus International, Inc 10-Q for FY2024 Q2

Pyxus International, Inc. (PYYX)

10-Q 2023-11-14 For: 2023-09-30

Added on April 06, 2026

About this 10-Q

Pyxus International, Inc filed this 10-Q on November 14, 2023, covering the quarter ended September 30, 2023 (FY2024 Q2).

Headline figures

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

Revenue: $624.25M; up 22.8% from $508.28M a year earlier
Net income: $8.1M; compared with a net loss of $1.54M a year earlier
Diluted EPS: $0.32; compared with -$0.06 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	9
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
	Item 4.	Controls and Procedures	30

Part II.	Other Information
	Item 1.	Legal Proceedings	30
	Item 1A.	Risk Factors	31







	Item 6.	Exhibits	31

Signature			32


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

	Three Months Ended				Six Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Sales and other operating revenues	$	624,253	$	508,278	$	1,101,345	$	852,183
Cost of goods and services sold	535,587		440,959		939,534		744,109
Gross profit	88,666		67,319		161,811		108,074
Selling, general, and administrative expenses	40,033		34,987		74,096		69,575
Other expense, net	1,089		1,151		3,713		66
Restructuring and asset impairment charges	1,254		4,045		1,294		4,345

Operating income	46,290		27,136		82,708		34,088


Loss on deconsolidation/disposition of subsidiaries	—		49		—		648
Loss on pension settlement	—		2,588		—		2,588
Interest expense, net	32,947		28,814		63,791		54,288









Income (loss) before income taxes and other items	13,343		(4,315)		18,917		(23,436)
Income tax expense (benefit)	7,558		(1,210)		10,204		(2,077)
Income (loss) from unconsolidated affiliates	2,111		1,555		(47)		5,304
Net income (loss)	7,896		(1,550)		8,666		(16,055)
Net (loss) income attributable to noncontrolling interests	(199)		(13)		(233)		145
Net income (loss) attributable to Pyxus International, Inc.	$	8,095	$	(1,537)	$	8,899	$	(16,200)

Earnings (loss) per share:
Basic and diluted	$	0.32	$	(0.06)	$	0.36	$	(0.65)


Weighted average number of shares outstanding:
Basic and diluted	25,000		25,000		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				Six Months Ended
	September 30,				September 30,
(in thousands)	2023		2022		2023		2022
Net income (loss)	$	7,896	$	(1,550)	$	8,666	$	(16,055)

Other comprehensive loss, net of tax:
Foreign currency translation adjustment	(1,545)		(4,801)		(838)		(3,854)
Pension and other postretirement benefit plans	—		(1,562)		—		(1,562)

Cash flow hedges	(1,000)		(1,768)		(138)		(3,271)

Total other comprehensive loss, net of tax	(2,545)		(8,131)		(976)		(8,687)
Total comprehensive income (loss)	5,351		(9,681)		7,690		(24,742)
Comprehensive (loss) income attributable to noncontrolling interests	(199)		(13)		(233)		145
Comprehensive income (loss) attributable to Pyxus International, Inc.	$	5,550	$	(9,668)	$	7,923	$	(24,887)

See "Notes to Condensed Consolidated Financial Statements"


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


(in thousands)	September 30, 2023		September 30, 2022		March 31, 2023
Assets
Current assets
Cash and cash equivalents	$	112,098	$	114,082	$	136,733
Restricted cash	5,572		1,691		2,176
Trade receivables, net	233,679		205,024		185,351
Other receivables	27,664		15,550		17,387
Inventories, net	877,154		890,097		775,071
Advances to tobacco suppliers, net	67,641		48,712		42,305
Recoverable income taxes	5,090		11,970		5,815
Prepaid expenses	36,844		35,069		37,555
Other current assets	15,179		15,863		18,172
Total current assets	1,380,921		1,338,058		1,220,565
Investments in unconsolidated affiliates	87,042		88,695		100,750
Other intangible assets, net	36,251		40,892		38,572
Deferred income taxes, net	15,768		16,691		6,662
Long-term recoverable income taxes	3,410		4,560		2,863
Other noncurrent assets	46,206		44,025		43,761
Right-of-use assets	39,139		33,042		35,892
Property, plant, and equipment, net	133,717		132,102		133,398
Total assets	$	1,742,454	$	1,698,065	$	1,582,463

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable	$	570,036	$	548,490	$	382,544
Accounts payable	153,152		103,494		170,287

Advances from customers	46,056		43,802		42,472
Accrued expenses and other current liabilities	93,981		75,993		92,693
Income taxes payable	12,585		5,262		18,264
Operating leases payable	8,380		8,644		8,723
Current portion of long-term debt	20,232		140		75
Total current liabilities	904,422		785,825		715,058
Long-term taxes payable	2,678		5,783		4,978
Long-term debt	573,959		646,125		618,430
Deferred income taxes	10,225		11,576		9,900
Liability for unrecognized tax benefits	20,170		14,660		14,175
Long-term leases	28,171		23,580		25,581
Pension, postretirement, and other long-term liabilities	52,816		56,939		52,511
Total liabilities	1,592,441		1,544,488		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	(249,055)		(235,013)		(257,954)
Accumulated other comprehensive income (loss)	4,539		(4,883)		5,515
Total stockholders’ equity of Pyxus International, Inc.	145,774		150,394		137,851
Noncontrolling interests	4,239		3,183		3,979
Total stockholders’ equity	150,013		153,577		141,830
Total liabilities and stockholders’ equity	$	1,742,454	$	1,698,065	$	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
Net loss	—		(1,537)		—		—		—		(13)		(1,550)
Other comprehensive loss, net of tax	—		—		(4,801)		(1,562)		(1,768)		—		(8,131)
Balance, September 30, 2022	$	390,290	$	(235,013)	$	(12,727)	$	4,766	$	3,078	$	3,183	$	153,577


	Six Months Ended September 30, 2023
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Amortization Expense		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	8.9 years	$	20,482	$	(1,088)	$	19,394
Technology	4.8 years	8,875		(829)		8,046
Trade names	10.9 years	9,215		(404)		8,811
Total		$	38,572	$	(2,321)	$	36,251


	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


				September 30,		September 30,		March 31,
(in thousands)	Interest Rate			2023		2022		2023
Senior secured credit facilities:
ABL Credit Facility	7.6	%	(1)	$	—	$	55,000	$	25,000
Term Loan Facility (2)	12.3	%	(1)	—		96,464		—

Senior secured notes:
10.0% Notes Due 2024 (3)	10.0	%	(1)	20,085		272,621		19,931
8.5% Notes Due 2027 (4)	8.6	%	(1)	254,076		—		253,483

Senior secured term loans:
Intabex Term Loans (5)	13.3	%	(1)	186,424		$	—	186,194
Pyxus Term Loans (6)	13.3	%	(1)	133,170		$	—	133,393
Exit Facility Loans (7)	12.0	%	(1)	—		$	221,606	—

Other Debt:
Other long-term debt	8.2	%	(1)	436		574		504
Notes payable (8)	8.5	%	(1)	570,036		548,490		382,544
Total debt				$	1,164,227	$	1,194,755	$	1,001,049

Short-term (8)				$	570,036	$	548,490	$	382,544
Long-term:
Current portion of long-term debt				$	20,232	$	140	$	75
Long-term debt				573,959		646,125		618,430
Total				$	594,191	$	646,265	$	618,505

Letters of credit				$	6,783	$	14,292	$	11,684

(1) Weighted average rate for the trailing twelve months ended September 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 September 30, 2022 is net of original issue discount of $3,536. This Term Loan Facility was established through the refinancing of the DDTL Facility on July 28, 2022, which 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 Term Loan Facility was 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 $20,085 is net of a debt discount of $306, and are reported in the current portion of long-term debt. Total repayment at maturity is $20,391.
(4) Balance of $254,076 is net of a debt discount of $6,377. Total repayment at maturity is $260,452.
(5) Balance of $186,424 is net of a debt discount of $2,609. Total repayment at maturity is $189,033, which includes a $2,000 exit fee payable upon repayment.
(6) Balance of $133,170 is net of a debt premium of $2,620. 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 September 30, 2023 and 2022
	Three Months Ended September 30,
							Change
(in millions, except per kilo amounts)	2023			2022			$	%
Sales and other operating revenues	$	624.3		$	508.3		116.0	22.8
Cost of goods and services sold	535.5			441.0			94.5	21.4
Gross profit*	88.7			67.3			21.4	31.8
Selling, general, and administrative expenses	40.0			35.0			5.0	14.3
Other expense, net	1.1			1.2			(0.1)	(8.3)
Restructuring and asset impairment charges	1.3			4.0			(2.7)	(67.5)
Operating income	46.3			27.1			19.2	70.8

Loss on pension settlement	—			2.6			(2.6)	(100.0)
Interest expense, net	33.0			28.8			4.2	14.6
Income tax expense (benefit)	7.6			(1.2)			8.8	733.3
Income from unconsolidated affiliates	2.1			1.6			0.5	31.3
Net (loss) income attributable to noncontrolling interests	(0.2)			—			(0.2)	(100.0)
Net income (loss) attributable to Pyxus International, Inc.*	$	8.1		$	(1.5)		9.6	640.0

Leaf:
Product revenue	$	585.8		$	475.6		110.2	23.2
Tobacco costs	484.7			388.7			96.0	24.7
Transportation, storage, and other period costs	22.2			23.9			(1.7)	(7.1)
Total cost of goods sold	506.9			412.5			94.4	22.9
Product revenue gross profit	78.9			63.1			15.8	25.0
Product revenue gross profit as a percent of sales	13.5		%	13.3		%

Kilos sold	111.7			101.4			10.3	10.2
Average price per kilo	$	5.24		$	4.69		0.55	11.7
Average cost per kilo	4.54			4.07			0.47	11.5
Average gross profit per kilo	0.70			0.62			0.08	12.9

Processing and other revenues	$	37.3		$	30.3		7.0	23.1
Processing and other revenues costs of services sold	27.2			23.0			4.2	18.3
Processing and other gross profit	10.1			7.3			2.8	38.4
Processing and other gross profit as a percent of sales	27.1		%	24.2		%

All Other:
Sales and other operating revenues	$	1.2		$	2.3		(1.1)	(47.8)
Cost of goods and services sold	1.4			5.4			(4.0)	(74.1)
Gross loss*	(0.3)			(3.1)			2.8	90.3
Gross loss as a percent of sales	(25.0)		%	(132.5)		%

* Amounts may not equal column totals due to rounding.


Six Months Ended September 30, 2023 and 2022
	Six Months Ended September 30,
							Change
(in millions, except per kilo amounts)	2023			2022			$	%
Sales and other operating revenues	$	1,101.4		$	852.2		249.2	29.2
Cost of goods and services sold	939.5			744.1			195.4	26.3
Gross profit*	161.8			108.1			53.7	49.7
Selling, general, and administrative expenses	74.1			69.6			4.5	6.5
Other expense, net	3.7			0.1			3.6	3,600.0
Restructuring and asset impairment charges	1.3			4.3			(3.0)	(69.8)
Operating income	82.7			34.1			48.6	142.5
Loss on deconsolidation/disposition of subsidiaries	—			0.6			(0.6)	(100.0)
Loss on pension settlement	—			2.6			(2.6)	(100.0)
Interest expense, net	63.8			54.3			9.5	17.5
Income tax expense (benefit)	10.2			(2.1)			12.3	585.7
(Loss) income from unconsolidated affiliates	(0.1)			5.3			(5.4)	(101.9)
Net (loss) income attributable to noncontrolling interests	(0.2)			0.1			(0.3)	(300.0)
Net income (loss) attributable to Pyxus International, Inc.*	$	8.9		$	(16.2)		25.1	154.9

Leaf:
Product revenue	$	1,036.8		$	798.5		238.3	29.8
Tobacco costs	847.7			654.6			193.1	29.5
Transportation, storage, and other period costs	42.8			44.5			(1.7)	(3.8)
Total cost of goods sold	890.5			699.1			191.4	27.4
Product revenue gross profit*	146.2			99.3			46.9	47.2
Product revenue gross profit as a percent of sales	14.1		%	12.4		%

Kilos sold	197.2			173.5			23.7	13.7
Average price per kilo	$	5.26		$	4.60		0.66	14.3
Average cost per kilo	4.52			4.03			0.49	12.2
Average gross profit per kilo	0.74			0.57			0.17	29.8

Processing and other revenues	$	62.8		$	48.1		14.7	30.6
Processing and other revenues costs of services sold	47.2			35.5			11.7	33.0
Processing and other gross profit	15.6			12.5			3.1	24.8
Processing and other gross profit as a percent of sales	24.8		%	26.1		%

All Other:
Sales and other operating revenues	$	1.8		$	5.6		(3.8)	(67.9)
Cost of goods and services sold	1.8			9.4			(7.6)	(80.9)
Gross loss	—			(3.8)			3.8	100.0
Gross loss as a percent of sales	—		%	(67.8)		%

* Amounts may not equal column totals due to rounding.


	September 30, 2023
(in millions)	Total Borrowing Capacity		Remaining Amount Available
ABL Credit Facility	$	100.0	$	100.0
Foreign seasonal lines of credit	652.8		130.2
Other long-term debt	0.6		0.2
Letters of credit	10.5		3.7
Total	$	763.9	$	234.1


(in millions except for current ratio)	September 30, 2023		September 30, 2022		March 31, 2023
Cash, cash equivalents, and restricted cash	$	117.7	$	115.8	$	138.9
Trade and other receivables, net	261.3		220.6		202.7
Inventories and advances to tobacco suppliers	944.8		938.8		817.4
Recoverable income taxes	5.1		12.0		5.8
Prepaid expenses and other current assets	52.0		50.9		55.7
Total current assets*	$	1,380.9	$	1,338.1	$	1,220.6

Notes payable	$	570.0	$	548.5	$	382.5
Accounts payable	153.2		103.5		170.3
Advances from customers	46.1		43.8		42.5
Accrued expenses and other current liabilities	94.0		76.0		92.7
Income taxes payable	12.6		5.3		18.3
Operating leases payable	8.4		8.6		8.7
Current portion of long-term debt	20.2		0.1		0.1
Total current liabilities*	$	904.4	$	785.8	$	715.1

Current ratio	1.5 to 1		1.7 to 1		1.7 to 1
Working capital	$	476.5	$	552.3	$	505.5
* Amounts may not equal column totals due to rounding


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)
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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: November 14, 2023						/s/ Philip C. Garofolo
						Philip C. Garofolo
						Vice President Finance and Chief Accounting Officer
						(Principal Accounting Officer)


000-25734
(Commission File Number)



	September 30, 2023		September 30, 2022		March 31, 2023
Investments in variable interest entities	$	80,067	$	81,988	$	93,754
Receivables with variable interest entities	12,754		1,882		2,617
Guaranteed amounts to variable interest entities (not to exceed)	61,132		64,448		68,265



	September 30, 2023		September 30, 2022		March 31, 2023
Amounts guaranteed (not to exceed)	$	93,554	$	103,434	$	152,032
Amounts outstanding under guarantee (1)	18,819		26,460		83,420
Fair value of guarantees	1,458		1,206		5,262
Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing	68		102		12,529
(1) Most of the guarantees outstanding at September 30, 2023 expire within one year.



	September 30, 2023						September 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	$	132	$	—	$	132	$	—	$	—	$	—	$	3,970	$	—	$	3,970
Securitized beneficial interests	—		24,393		24,393		—		22,842		22,842		—		19,522		19,522
Total assets	$	132	$	24,393	$	24,525	$	—	$	22,842	$	22,842	$	3,970	$	19,522	$	23,492
Financial Liabilities:
Derivative financial instruments	$	78	$	—	$	78	$	531	$	—	$	531	$	—	$	—	$	—
Long-term debt(1)	481,248		507		481,755		417,542		577		418,119		523,758		514		524,272
Guarantees	—		1,458		1,458		—		1,206		1,206		—		5,262		5,262
Total liabilities	$	481,326	$	1,965	$	483,291	$	418,073	$	1,783	$	419,856	$	523,758	$	5,776	$	529,534
(1) This fair value measurement disclosure does not affect the condensed consolidated balance sheets.


/s/ J. Pieter Sikkel
J. Pieter Sikkel President and Chief Executive Officer
November 14, 2023


/s/ Flavia B. Landsberg
Flavia B. Landsberg Executive Vice President and Chief Financial Officer
November 14, 2023