Pyxus' growth initiatives gaining momentum across Global
Specialty Products
MORRISVILLE, N.C., Nov. 8, 2018 /CNW/ -- Pyxus
International, Inc. (NYSE: PYX), a global value-added agricultural
company, today announced results for its second fiscal quarter
ended September 30, 2018. Pyxus
International, formerly Alliance One International, Inc., began
trading on the New York Stock Exchange under its new ticker symbol
"PYX" as of September 12, 2018.
Highlights
Second Quarter
- Total sales and other operating revenues decreased 11.7% to
$394.9 million compared to the same
period in the prior year, primarily due to a 10.8% decrease in
volumes mainly attributable to the timing of shipments, the larger
crop last year in South America,
and the stronger U.S. dollar versus certain currencies.
- Gross profit decreased 29.0% to $49.2
million and gross profit as a percentage of sales declined
to 12.5% from 15.5% last year.
- Selling, general and administrative expenses (SG&A)
increased 13.0% to $39.0 million,
driven by the requirements of our new business ventures.
- Net loss was $54.6 million, and
Adjusted EBITDA was $25.9
million.
- The Company purchased $7.0
million of its existing 9.875% senior secured second lien
notes due 2021 at a discount resulting in debt retirement income of
$0.4 million and a remaining face
amount of $645.1 million.
Six Months Year-to-Date
- Total sales and other operating revenues decreased 5.3% to
$685.9 million compared to the same
period in the prior year, primarily due to lower than average sales
prices as a result of product mix and the impact of a stronger U.S.
dollar in certain markets.
- Gross profit decreased 7.5% to $90.6
million and gross profit as a percentage of sales declined
to 13.2% from 13.5% in the prior year.
- SG&A increased 13.4% to $77.1
million, driven by the requirements of our new business
ventures.
- Net loss was $55.4 million, and
Adjusted EBITDA was $45.3
million.
- The Company purchased $17.9
million of its existing 9.875% senior secured second lien
notes due 2021 at a discount resulting in debt retirement income of
$0.5 million.
Pieter Sikkel, President, CEO and
Chairman said, "The second fiscal quarter typically is a seasonally
lower quarter, and the second quarter this year overall was
impacted by decreased volumes due to shipment timing, the larger
crop in South America last year,
and a stronger U.S. dollar in certain markets. The North American
tobacco market in particular was impacted by new and increased
foreign tariffs on U.S. tobacco, adverse weather conditions and the
strength of the U.S. dollar. We are focused on and believe that
there are offsetting opportunities in other markets although timing
remains uncertain.
"We experienced a delay of legalization in Canada of adult-use of cannabis to October,
and a slower roll-out of our industrial hemp business due to
weather and its impact on completing construction of the new
facility in Eastern North
Carolina. Pyxus is committed to managing our working capital
in order to drive efficiency, which is seen clearly in the focus on
minimizing uncommitted tobacco inventory levels. Our current ending
balance is down 16% from the prior-year period, the lowest second
quarter balance in eight years. As a result of announced foreign
tariffs and Hurricane Florence, we anticipate a combined negative
impact to operating income for the full fiscal year of
approximately $25 million related to
the North American tobacco business and the new Argentina export tax, when compared to the
prior year. Pyxus is working to offset these impacts and expects a
solid back half to this fiscal year dependent on shipping and
meeting shifting geographic requirements due to new tariffs. While
there are challenges this year, we are continuing to execute on our
full-year plan and are maintaining our previously announced
guidance.
"As we discussed in detail during our Investor and Analyst Day
in September, we have made significant progress in each of our new
business lines and embraced our new identity as Pyxus
International. Our track-and-trace system, branded SENTRI, along
with our agronomy services are proving to be key differentiators as
we develop markets and partnerships across all aspects of our
business. FIGR, our wholly-owned indirect Canadian subsidiary, has
capitalized on the recent legalization of adult recreational
cannabis in Canada with a
successful launch of branded products, and is well on its way to
accomplish its goal to expand to more than one million square feet
of production."
Mr. Sikkel continued, "As a core aspect of our transformation
strategy, we have set corporate sustainability targets across
business lines, with an emphasis on science-based targets related
to energy and greenhouse gas reductions. At the same time, we are
committed to supporting our employees, our contracted farmers and
their families, while continually improving our supply-chain
management. Pyxus' mission is to pursue industry-leading
sustainability targets and deliver on our purpose to transform
people's lives so that together we can grow a better world."
Global Specialty Products (GSP) Milestones
Highlights in the industrial hemp, e-liquids and the legal
Canadian cannabis business lines this quarter include:
- Industrial Hemp – Pyxus' industrial hemp joint venture,
Criticality, LLC, (Criticality) continues to advance in the
production of cannabidiol hemp oil (CBD) and related consumer
products. The Company is receiving hemp and will be processing at
its new facility in Wilson, NC, in
December. In addition to producing bulk CBD products for
industrial, B2B customers, Criticality will also manufacture and
distribute a line of consumer products under the proprietary
"Korent" brand.
The effects of Hurricane Florence resulted in facility construction
delays but had little impact on the current hemp crop. In spite of
weather issues, Criticality maintains a strong focus on quality of
product and optimal CBD concentration levels.
- E-liquids – The continuous growth of our West Coast
e-liquids businesses required an expansion of space from its 16,000
sq. ft. facility to a new 45,000 sq. ft. facility. The location
enhances synergies and increases efficiencies for our Nicotine
River, Humble Juice Company and our Zip Fulfillment
operations.
- Legal Cannabis – On October 17,
2018, the effective date for legalization of adult
recreational cannabis use in Canada, Pyxus' indirect Canadian subsidiary
FIGR recorded the first-ever legal recreational cannabis sale on
Prince Edward Island (P.E.I.).
Additionally, FIGR was the only company to have oil available in
P.E.I. and one of two companies to have oil in Nova Scotia on opening day.
FIGR East (licensed under the name "Canada's Island Garden") received its Oil
Production and Sales License on August 31,
2018, and is currently one of only 29 firms to have received
an Oil Production and Sales License from Health Canada. FIGR
products are now available for legal recreational purchase by adult
consumers at all PEIMC retailers across P.E.I. and, with strong
initial sell through at retail.
For the first two weeks of sales, FIGR has attained 13% of the
legal adult-use recreational cannabis market in P.E.I., and is
growing market share rapidly in Nova
Scotia. Also, following the announcement that the indirect
Canadian subsidiary FIGR Norfolk (Goldleaf Pharm Inc.) received its
cultivation license from Health Canada on September 28, 2018, the operation has begun
cultivation at its Simcoe,
Ontario, facility.
"We remain focused on our 'One Tomorrow' transformation to drive
progress and achieve sustainable, profitable growth," continued Mr.
Sikkel. "The three pillars of our campaign are first, to invest in
long-term growth opportunities in innovative, higher-margin
products that further diversify our business; second, to improve
profitability, efficiency and simplify our organizational
structure; and third, to improve execution and grow market share of
our leaf business.
"As momentum builds in each of the disruptive categories in our
Global Specialty Products business lines, our mission, as always,
is to be the trusted provider of responsibly produced,
independently verified, sustainable and traceable products,
ingredients and services to businesses and consumers. This is a key
tenet of our 'One Tomorrow' transformation strategy, and we will
continue to build on our strengths and make strides in industrial
hemp, e-liquids and legal cannabis, while remaining committed to
the ongoing success of our tobacco business and maximize
opportunities to drive enhanced shareholder value."
Subsequent Events
On November 7, the Company
announced that due to a confluence of significant events, including
new and increased foreign tariffs on U.S. tobacco, declining export
demand and U.S. dollar strength versus certain foreign currencies,
a decision was made to consolidate all U.S. processing operations
to its state-of-the-art facility in Wilson, NC, beginning with the 2019 season.
The Farmville, NC, facility will
be repurposed for storage and special projects. The net impact will
result in a workforce reduction with certain jobs anticipated to
shift from Farmville to
Wilson. Due to a number of
uncertainties with respect to this transition, the Company is not
yet able to estimate the restructuring charges to be incurred in
connection with these actions.
Performance Summary for Fiscal Quarter Ended September 30, 2018
Total sales and other operating revenues decreased 11.7% to
$394.9 million compared to the same
period in the prior year, primarily due to a 10.8% decrease in
volumes, mainly attributable to the timing of shipments and a
larger crop last year in South
America. Additionally, the strength of the U.S. dollar and
the impact on sales prices, including sales denominated in certain
local currencies, was partially offset by changes in product mix in
North America and Asia, and caused average sales prices to
decrease 0.9% compared to the prior year.
Lower volumes and a stronger U.S. dollar decreased tobacco cost
of goods sold by 10.1%, however the change in product mix resulted
in average tobacco costs per kilo to increase 0.8% compared to the
prior year.
Third-party processing services decreased 15.1%, primarily due
to reduced volume in South America
and Africa. Hurricane Florence
impacted the second quarter's U.S. flue-cured tobacco crop as did
foreign tariffs on U.S. tobacco. As a result of these factors,
factory processing throughput declined for the 2018 U.S. crop,
increasing conversion costs. This impact of reduced U.S. volumes
will also be seen in the third and fourth quarters in both
processing and full-service business. Decreased throughput in
South America, Africa and North
America increased processing costs by 22.6%.
Gross profit decreased 29.0% to $49.2
million, and gross profit as a percentage of sales declined
to 12.5% this year, compared to 15.5% last year.
SG&A increased 13.0% to $39.0
million, primarily from the inclusion of new start-up
business ventures in the current year and increased costs
associated with developing and supporting these new business
ventures as they continue to move through the start-up phase.
Tobacco-related SG&A was down versus the prior year.
Operating income decreased by $26.9
million to $12.6 million as a
result of lower gross profit and higher SG&A costs.
Interest expenses increased by $2.2
million from the prior year to $35.3
million, primarily due to higher than average interest rates
on our seasonal lines of credit.
For the second quarter, cash taxes decreased 28.6% to
$6.5 million and the effective tax
rate was a negative 161.1%, compared to 90.4% in the same period
last year. The impact of tax reform in December 2017 is the main factor which impacted
the effective tax rate and the current year forecasted income and
discrete items compared to the prior year.
Performance Summary for Six Months Ended September 30, 2018
Total sales and other operating revenues decreased 5.3% to
$685.9 million compared to the same
period in the prior year due to lower average sales prices as a
result of product mix and the strength of the U.S. dollar versus
certain foreign currencies. Volumes declined 1.0% from prior year
due to opportunistic sales in North
America last year and delayed shipments from Guatemala this year. The U.S. dollar
strengthening impacted sales prices, including sales denominated in
certain local currencies. The change in product mix and a stronger
U.S. dollar decreased tobacco cost of goods sold by 5.4% and
average tobacco costs per kilo by 4.4%.
Third-party processing services decreased 20.0%, primarily due
to reduced volume in South America
and Africa. In addition, Hurricane
Florence impacted the U.S. flue-cured tobacco crop. As a result of
these factors, factory processing throughput for the 2018 U.S. crop
diminished, resulting in higher conversion costs. The impact of
reduced U.S. volumes will also be seen in the third and fourth
quarters in both processing and full-service business. Decreased
throughput in South America,
Africa and North America partially offset by the impact
of a stronger U.S. dollar on costs increased processing costs by
3.3% during the six-month period.
Gross profit decreased 7.5% to $90.6
million, and gross profit as a percentage of sales declined
to 13.2% this year, compared to 13.5% last year.
SG&A increased 13.4%, primarily from the inclusion of new
start-up business ventures in the current year and increased costs
associated with developing and supporting those new business
ventures as they continue to move through the start-up phase.
Tobacco-related SG&A was down versus the prior year.
Restructuring costs are primarily related to employee severance
costs in connection with the closure of a redundant foreign
processing facility as the Company continues to modify its global
footprint.
Operating income decreased $21.6
million to $17.3 million as a
result of lower gross profit and increased SG&A.
Interest expenses increased by $0.7
million from the prior year to $68.2
million, primarily due to higher average interest rates on
seasonal lines of credit.
For the six-month period, cash taxes increased 59.0% to
$15.9 million and the effective tax
rate was a negative 19.5%, compared to a negative 29.4% for the
same period in the prior year, primarily due to the impact of tax
reform in December 2017 on current
year forecasted income and discrete items compared to the prior
year.
Earnings Per Share
For the quarter ended September 30,
2018, the Company reported a net loss of $54.6 million, or $6.04 per basic share, compared to net income for
the second fiscal quarter last year of $1.0
million, or $.11 per basic
share.
Similarly, for the six months ended September 30, 2018, the Company reported a net
loss of $55.4 million, or
$6.13 per basic share, compared to
net loss of $31.5 million, or
$3.51 per basic share, for the same
period last year.
Liquidity and Capital Resources
Our liquidity at quarter end included available credit lines and
cash of $422.8 million including
$6.9 million available for letters of
credit. We will continue to monitor and adjust funding sources as
needed to enhance and drive various business opportunities that
maintain flexibility and meet cost expectations. In the future, the
Company may elect to redeem, repay, make open market purchases,
retire or cancel indebtedness prior to stated maturity under its
various global bank facilities and outstanding public notes, as
they may permit.
Financial Results Investor Call
The Company will hold a conference call to report financial
results for the period ended September 30,
2018, on November 8, 2018 at
8:00 A.M. ET. The dial in number for
the call is (888) 224-1121 or outside the U.S. (929) 477-0402,
using conference ID 1230652. Those seeking to listen to the call
may access a live broadcast on the Pyxus International website.
Please visit www.pyxusintl.com 15 minutes in advance to
register.
For those who are unable to listen to the live event on
November 8, 2018, a replay will be
available for five days by dialing (888) 203-1112 within the U.S.
or (719) 457-0820 outside the U.S., and entering the access code
1230652. Any replay, rebroadcast, transcript or other reproduction
of this conference call, other than the replay accessible by
calling the number above, has not been authorized by Pyxus
International and is strictly prohibited. Investors should be aware
that any unauthorized reproduction of this conference call may not
be an accurate reflection of its contents.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations of future
events. Such statements include, but are not limited to, statements
about future financial and operating results, plans, objectives,
expectations and intentions and other statements that are not
historical facts. Such statements are based on the current beliefs
and expectations of management and are subject to significant risks
and uncertainties. If underlying assumptions prove inaccurate
or known or unknown risks or uncertainties materialize, actual
results may differ materially from those currently anticipated
expected or projected. The following factors, among others, could
cause actual results to differ from those expressed or implied by
the forward-looking statements: changes in the timing of
anticipated shipments, changes in anticipated geographic product
sourcing, political instability, currency and interest rate
fluctuations, shifts in the global supply and demand position for
tobacco products, changes in tax laws and regulations or the
interpretation of tax laws and regulations, resolution of tax
matters, adverse weather conditions, changes in costs incurred in
supplying tobacco and related services, the impact of regulation
and litigation and risks and uncertainties associated with our new
business lines, including the risk of obtaining anticipated
regulatory approvals in Canada and
continued compliance with applicable regulatory requirements, as
well as the progress of legalization of cannabis for medicinal and
adult recreational uses in other jurisdictions, and the
uncertainties regarding the anticipated extension or expansion of
federal legislation permitting the cultivation of industrial hemp
and commercialization of hemp products, including CBD. Additional
factors that could cause the Company's results to differ materially
from those expressed or implied by forward-looking statements can
be found in the Company's most recent Annual Report on Form 10-K
for the period ended March 31, 2018
and the other filings with the Securities and Exchange Commission
(the "SEC") which are available at the SEC's Internet site
(http://www.sec.gov).
About Pyxus International, Inc.
Pyxus International Inc. (NYSE: PYX) is a global agricultural
company with 145 years' experience delivering value-added products
and services to businesses and customers. Driven by a united
purpose—to transform people's lives, so that together we can grow a
better world—Pyxus International, its subsidiaries and affiliates,
are trusted providers of responsibly sourced, independently
verified, sustainable and traceable products and ingredients. For
more information, visit www.pyxusintl.com.
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months
Ended
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Six Months
Ended
|
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September
30
|
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September
30
|
(in thousands,
except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Sales and other
operating revenues
|
$
394,876
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|
$
447,339
|
|
$
685,864
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|
$
724,332
|
Cost of goods and
services sold
|
345,672
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|
378,008
|
|
595,266
|
|
626,366
|
Gross
profit
|
49,204
|
|
69,331
|
|
90,598
|
|
97,966
|
Selling, general and
administrative expenses
|
38,995
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|
34,463
|
|
77,079
|
|
67,965
|
Other
income
|
2,561
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|
4,587
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|
5,482
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|
8,889
|
Restructuring and
asset impairment charges
|
182
|
|
-
|
|
1,723
|
|
-
|
Operating
income
|
12,588
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|
39,455
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|
17,278
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|
38,890
|
Debt retirement
(benefit)
|
(388)
|
|
-
|
|
(473)
|
|
(2,975)
|
Interest
expense
|
35,324
|
|
33,099
|
|
68,235
|
|
67,540
|
Interest
income
|
738
|
|
727
|
|
1,625
|
|
1,694
|
Income (loss) before
income taxes and other items
|
(21,610)
|
|
7,083
|
|
(48,859)
|
|
(23,981)
|
Income tax
expense
|
34,816
|
|
6,403
|
|
9,546
|
|
7,049
|
Equity in net income
(loss) of investee companies
|
1,584
|
|
276
|
|
2,151
|
|
(649)
|
Net income
(loss)
|
(54,842)
|
|
956
|
|
(56,254)
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|
(31,679)
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Less: Net loss
noncontrolling interests
|
(208)
|
|
(68)
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|
(862)
|
|
(159)
|
Net income (loss)
attributable to Pyxus International, Inc.
|
$
(54,634)
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|
$
1,024
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|
$
(55,392)
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|
$
(31,520)
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Income (loss) per
share:
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Basic
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$
(6.04)
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|
$
0.11
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|
$
(6.13)
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|
$
(3.51)
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Diluted
|
$
(6.04)
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|
$
0.11
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|
$
(6.13)
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|
$
(3.51)
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|
|
|
|
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|
Weighted average
number of shares outstanding:
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Basic
|
9,051
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|
8,982
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|
9,038
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|
8,973
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Diluted
|
9,051
|
|
9,010
|
|
9,038
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|
8,973
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RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION
("ADJUSTED EBITDA")(1)(Unaudited)
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Three Months
Ended
|
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Six Months
Ended
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(in
thousands)
|
September 30,
2018
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017
|
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|
Net income (loss)
attributable to Pyxus International, Inc.
|
$
(54,634)
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$
1,024
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$
(55,392)
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$
(31,520)
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|
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|
|
|
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Plus: Interest
expense (2)
|
35,324
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|
33,099
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|
68,235
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|
67,540
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Plus: Income tax
expense
|
34,816
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|
6,403
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|
9,546
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|
7,049
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Plus: Depreciation
and amortization expense
|
9,116
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|
8,284
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|
18,393
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|
16,671
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EBITDA(1)
|
24,622
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|
48,810
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|
40,782
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|
59,740
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Plus: Abnormal
unrecovered advances (recoveries) to suppliers (3)
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-
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-
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-
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-
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Plus: Reserves for
(recoveries on) doubtful customer receivables
|
68
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(63)
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|
361
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(63)
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Plus: Non-cash
employee stock based compensation
|
459
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|
253
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|
754
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|
544
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Less: Other
income
|
2,561
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|
4,587
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|
5,482
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|
8,889
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Plus: Fully reserved
recovery of tax (4)
|
2,246
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|
2,265
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|
4,543
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|
4,640
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Plus: Restructuring
and asset impairment charges
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182
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|
-
|
|
1,723
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-
|
Plus: Costs
associated with transformation related to "One Tomorrow" new
business initiatives, not anticipated to be recurring
costs(5)
|
2,091
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|
798
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|
2,091
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|
1,538
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Plus: Debt retirement
benefit
|
(389)
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|
-
|
|
(473)
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|
(2,975)
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Plus: Amortization of
basis difference - CBT investment (6)
|
344
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|
335
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|
670
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|
653
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Plus: Kenyan
investigation legal & professional costs
|
82
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|
214
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|
243
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|
1,770
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Less: Kenyan green
leaf operation Adjusted EBITDA (7)
|
1,255
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(3,032)
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(51)
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(4,104)
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Adjusted EBITDA
(1)
|
$
25,889
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$
51,057
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$
45,263
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$
61,062
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(1) Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
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(2) As a
result of adoption of standard ASU No. 2017-07 related to
Compensation-Retirement Benefits on April 1, 2018, the three months
ended September 30, 2017 reflects a reclassification of $342 from
SG&A to Interest expense. The six months ended September
30, 2017 reflects a reclassification of $683 from SG&A to
Interest expense.
|
|
(3) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
(4) Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio
Grande do Sul and Santa Catarina permit the sale or transfer of
excess credits to third parties subject to approval by the related
tax authorities. The Company has long-term agreements with
these Brazilian state governments regarding the amounts and timing
of credits that can be sold. Intrastate trade tax credits
that are not able to be sold under existing agreements are
capitalized into the cost of the current crop and are expensed as
cost of goods and services sold as that crop is sold.
|
|
(5) Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy, including
business development expenses consisting of legal, strategic
consulting, business brokerage and other professional fees,
communications expenses consisting principally of fees to branding
consultants and for translation services, and human resources
expenses, including primarily professional fees related to
recruiting and employee communications.
|
|
(6) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
(7) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is
calculated on the same basis as Adjusted EBITDA presented in this
table. In fiscal year 2016 we decided to exit green leaf sourcing
in the Kenyan market as part of our restructuring
program.
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION
("ADJUSTED EBITDA")(1) (Unaudited)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
thousands)
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Pyxus International, Inc.
|
$
1,024
|
|
$
(15,657)
|
|
$
(31,520)
|
|
$
(47,163)
|
|
|
|
|
|
|
|
|
Plus: Interest
expense (2)
|
33,099
|
|
32,205
|
|
67,540
|
|
63,109
|
Plus: Income tax
expense (benefit)
|
6,403
|
|
3,627
|
|
7,049
|
|
(204)
|
Plus: Depreciation
and amortization expense
|
8,284
|
|
8,601
|
|
16,671
|
|
17,353
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
48,810
|
|
28,776
|
|
59,740
|
|
33,095
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances to suppliers (3)
|
-
|
|
-
|
|
-
|
|
-
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
(63)
|
|
100
|
|
(63)
|
|
143
|
Plus: Non-cash
employee stock based compensation
|
253
|
|
453
|
|
544
|
|
845
|
Less: Other
income
|
4,587
|
|
2,104
|
|
8,889
|
|
1,624
|
Plus: Fully reserved
recovery of tax (4)
|
2,265
|
|
2,221
|
|
4,640
|
|
3,806
|
Plus: Restructuring
and asset impairment charges
|
-
|
|
577
|
|
-
|
|
619
|
Plus: Costs
associated with transformation related to "One Tomorrow"
new business initiatives, not anticipated to be recurring costs
(5)
|
798
|
|
-
|
|
1,538
|
|
-
|
Plus: Debt retirement
benefit
|
-
|
|
-
|
|
(2,975)
|
|
-
|
Plus: Amortization of
basis difference - CBT investment (6)
|
335
|
|
318
|
|
653
|
|
625
|
Plus: Kenyan
investigation legal & professional costs
|
214
|
|
1,578
|
|
1,770
|
|
5,129
|
Less: Kenyan green
leaf operation Adjusted EBITDA (7)
|
(3,032)
|
|
(3,901)
|
|
(4,104)
|
|
(5,548)
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
$
51,057
|
|
$
35,821
|
|
$
61,062
|
|
$
48,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Earnings
before interest, taxes, depreciation and amortization ("EBITDA")
and adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
|
|
|
|
|
|
|
(2) As a
result of adoption of standard ASU No. 2017-07 related to
Compensation-Retirement Benefits on April 1, 2018, the three months
ended September 30, 2017 and 2016 reflect a reclassification
of $342 and $301 respectively from SG&A to Interest
expense. The six months ended September 30, 2017 and
2016 reflect a reclassification of $683 and $602 respectively from
SG&A to Interest expense.
|
|
|
|
|
|
|
|
|
(3) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
|
|
|
|
|
|
|
(4) Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio
Grande do Sul and Santa Catarina permit the sale or transfer of
excess credits to third parties subject to approval by the related
tax authorities. The Company has long-term agreements with
these Brazilian state governments regarding the amounts and timing
of credits that can be sold. Intrastate trade tax credits
that are not able to be sold under existing agreements are
capitalized into the cost of the current crop and are expensed as
cost of goods and services sold as that crop is sold.
|
|
|
|
|
|
|
|
|
(5) Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy, including
business development expenses consisting of legal, strategic
consulting, business brokerage and other professional fees,
communications expenses consisting principally of fees to branding
consultants and for translation services, and human resources
expenses, including primarily professional fees related to
recruiting and employee communications.
|
|
|
|
|
|
|
|
|
(6) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
|
|
|
|
|
|
|
(7) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is calculated
on the same basis as Adjusted EBITDA presented in this table. In
fiscal year 2016 we decided to exit green leaf sourcing in the
Kenyan market as part of our restructuring program.
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION
("ADJUSTED EBITDA") (1) (Unaudited)
|
|
Fiscal Year
Ended
|
|
LTM (8)
|
|
Fiscal Year
Ended
|
|
LTM (8)
|
(in
thousands)
|
March 31,
2018
|
|
September 30,
2018
|
|
March 31,
2017
|
|
September 30,
2017
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Pyxus International, Inc.
|
$
52,436
|
|
$
28,563
|
|
$
(62,928)
|
|
$
(47,285)
|
|
|
|
|
|
|
|
|
Plus: Interest
expense (2)
|
134,279
|
|
134,975
|
|
135,441
|
|
139,872
|
Plus: Income tax
expense (benefit)
|
(58,764)
|
|
(56,267)
|
|
23,481
|
|
30,733
|
Plus: Depreciation
and amortization expense
|
33,598
|
|
35,320
|
|
34,476
|
|
33,794
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
161,549
|
|
142,591
|
|
130,470
|
|
157,114
|
|
|
|
|
|
|
|
|
Plus: Abnormal
unrecovered advances (recoveries) to suppliers (3)
|
-
|
|
-
|
|
-
|
|
-
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
(151)
|
|
273
|
|
(5,545)
|
|
(5,751)
|
Plus: Non-cash
employee stock based compensation
|
1,135
|
|
1,345
|
|
1,551
|
|
1,250
|
Less: Other
income
|
14,382
|
|
10,974
|
|
4,896
|
|
12,162
|
Plus: Fully reserved
recovery of tax(4)
|
11,835
|
|
11,737
|
|
9,356
|
|
10,190
|
Plus: Restructuring
and asset impairment charges
|
383
|
|
2,106
|
|
1,375
|
|
756
|
Plus: Costs
associated with transformation related to "One Tomorrow" new
business initiatives, not anticipated to be recurring costs
(5)
|
6,593
|
|
7,146
|
|
150
|
|
1,688
|
Plus: Debt retirement
benefit
|
(2,975)
|
|
(473)
|
|
(300)
|
|
(3,275)
|
Plus: Amortization of
basis difference - CBT investment (6)
|
1,519
|
|
1,535
|
|
1,518
|
|
1,546
|
Plus: Kenyan
investigation legal & professional costs
|
1,980
|
|
454
|
|
7,171
|
|
3,812
|
Less: Kenyan green
leaf operation Adjusted EBITDA (7)
|
(2,329)
|
|
1,724
|
|
(8,013)
|
|
(6,570)
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
$
169,815
|
|
$
154,016
|
|
$
148,862
|
|
$
161,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
$
1,519,119
|
|
|
|
$
1,466,678
|
Less:
Cash
|
|
|
116,970
|
|
|
|
188,936
|
Total debt less
cash
|
|
|
$
1,402,149
|
|
|
|
$
1,277,742
|
|
|
|
|
|
|
|
|
(Total debt less
cash) /Adjusted EBITDA (1)
|
|
|
9.10x
|
|
|
|
7.90x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented EBITDA and Adjusted EBITDA to adjust for the items
identified above because we believe that it would be helpful to the
readers of our financial information to understand the impact of
these items on our reported results. This presentation enables
readers to better compare our results to similar companies that may
not incur the sporadic impact of various items identified
above. Management acknowledges that there are many items that
impact a company's reported results and this list is not intended
to present all items that may have impacted these results. EBITDA,
Adjusted EBITDA and any ratios calculated based on these measures
are not necessarily comparable to similarly-titled measures used by
other companies or appearing in our debt obligations or agreements.
EBITDA and Adjusted EBITDA as presented may not equal column or row
totals due to rounding.
|
|
|
|
|
|
|
|
|
(2) As a
result of adoption of standard ASU No. 2017-07 related to
Compensation-Retirement Benefits on April 1, 2018, the fiscal years
ended March 31, 2018 and 2017 reflect a reclassification of $1,301
and $2,774 respectively from SG&A to Interest expense.
The last twelve months ended September 30, 2018 and 2017 reflect a
reclassification of $935 and $2,855 resptively from SG&A to
Interest expense.
|
|
|
|
|
|
|
|
|
(3) Unrecovered
amounts expensed directly to cost of goods and services sold in the
income statement for abnormal yield adjustments or unrecovered
amounts from prior crops. Normal yield adjustments are capitalized
into the cost of the current crop and are expensed as cost of goods
and services sold as that crop is sold.
|
|
|
|
|
|
|
|
|
(4) Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio
Grande do Sul and Santa Catarina permit the sale or transfer of
excess credits to third parties subject to approval by the related
tax authorities. The Company has long-term agreements with
these Brazilian state governments regarding the amounts and timing
of credits that can be sold. Intrastate trade tax credits
that are not able to be sold under existing agreements are
capitalized into the cost of the current crop and are expensed as
cost of goods and services sold as that crop is sold.
|
|
|
|
|
|
|
|
|
(5) Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy, including
business development expenses consisting of legal, strategic
consulting, business brokerage and other professional fees,
communications expenses consisting principally of fees to branding
consultants and for translation services, and human resources
expenses, including primarily professional fees related to
recruiting and employee communications.
|
|
|
|
|
|
|
|
|
(6) Related to a
former Brazilian subsidiary that is now deconsolidated following
the completion of a joint venture in March 2014.
|
|
|
|
|
|
|
|
|
(7) Adjusted EBITDA
of our former green leaf sourcing operation in Kenya is
calculated on the same basis as Adjusted EBITDA presented in this
table. In fiscal year 2016 we decided to exit green leaf sourcing
in the Kenyan market as part of our restructuring
program.
|
|
|
|
|
|
|
|
|
(8) Items for the
twelve months ended September 30, 2018 are derived by adding the
items for the six months ended September 30, 2018 and the fiscal
year ended March 31, 2018 and subtracting the items for the six
months ended September 30, 2017. Items for the twelve months
ended September 30, 2017 are derived by adding the items for the
six months ended September 30, 2017 and the fiscal year ended March
31, 2017 and subtracting the items for the six months ended
September 30, 2016.
|
View original
content:http://www.prnewswire.com/news-releases/pyxus-international-inc-reports-results-for-second-quarter-and-six-months-ended-september-30-2018-300746166.html
SOURCE Pyxus International, Inc.