Pyxus International, Inc. (OTCPK: PYYX) Q4 2025 Earnings Call | 06/10/2025

PIXIS International Fiscal Year 2025 Earnings Call Summary

PIXIS International delivered a strong performance in fiscal year 2025, outperforming its initial guidance despite a complex market environment and weather-related challenges. The company demonstrated disciplined execution, leveraged its global footprint for sourcing, and focused on improving its capital structure.

Key Financial Highlights (FY2025 vs. FY2024):

• Overall Volume: Increased by 3%.
• Full-Year Sales: Grew 22% to $2.5 billion.
• Annual Gross Profit: Increased 10% to $343 million (compared to $312 million in FY2024). Average gross profit per kilo rose to $0.84 from $0.78.
• Operating Income: Increased 12% to $153 million.
• Net Income: $15 million (compared to $3 million in FY2024).
• Adjusted EBITDA: Reached $208 million (compared to $194 million in FY2024), representing an 18% compounded annual growth rate over the last three years.
• Adjusted Free Cash Flow: Generated $152 million.
• Long-Term Debt Reduction: Reduced by approximately 25% (or $143 million) since March 1, 2024, lowering leverage from 4.8x to 3.7x (lowest in over 10 years).
• Interest Expense: Consistent with the prior year, as reductions from debt repayment were offset by increased borrowings for more expensive inventory.
• Total Inventory: $762 million at year-end, down from $932 million last year, reflecting accelerated shipments and a more normalized purchasing cadence. Only 1% of total inventory was uncommitted.

Operational and Strategic Achievements:

• Market Navigation: Successfully managed challenges like the El Niño weather event and market-wide supply constraints.
• Sourcing Diversification: Leveraged geographic footprint to procure additional volume from Africa and Asia, offsetting crop reductions in South America.
• Sustainability Commitment: Science-Based Target Initiative (SBTi) validated the company's near-term emission reduction targets, aligning with the Paris Agreement goals. Reported a 16% reduction of indirect emissions since fiscal year 2021, driven by engagement with contracted farmers.
• Farmer Engagement: Approximately one-third of employees are focused on agronomics, working directly with contracted farmers to improve crop quality, yield, and risk management.
• Philip Morris International (PMI) Partnership: Remains involved in the supply chain for PMI's Heat Not Burn product, viewing it as an exciting and positive business stream.

Fourth Quarter FY2025 Performance:

• Revenues: Up 25% to $502 million, driven by pricing and increased volume from accelerated shipments.
• Gross Profit: Grew to $67 million (compared to $58 million in the prior year).
• Operating Income: More than doubled to $14 million (compared to $7 million).
• Net Interest Expense: Improved to $26 million (compared to $30 million).

Fiscal Year 2026 Guidance:

• Sales: Projected to be in the range of $2.3 billion to $2.5 billion.
• Adjusted EBITDA: Projected to be in the range of $205 million to $235 million, reflecting anticipated volume-driven growth on larger crop sizes and continued margin expansion.
• Sales Weighting: Expected to be weighted towards the second half of the year due to inventory replenishment from larger crops and a dynamic trade environment (tariffs).
• Pricing: Anticipated to reduce this year due to larger crop sizes, but increased volumes and higher gross margins are expected to drive EBITDA growth.

The company emphasized its strengthened credit profile and confidence in achieving further growth in volume, gross margin, and EBITDA in fiscal year 2026.