MORRISVILLE, N.C., Nov. 7, 2019 /CNW/ -- Pyxus International,
Inc. (NYSE: PYX), a global value-added agricultural company, today
announced results for its fiscal quarter ended September 30,
2019.
Quarter Highlights
- Full service leaf volumes increased 7.7% to 88.4 million kilos
when compared to the prior year, driven by the Leaf - Other Regions
segment.
- Sales and other operating revenues decreased 3.0% to
$383.0 million when compared to the
same period last year, primarily due to an 11.2% decrease in
average sales prices mainly related to Leaf product mix in
Asia and South America having a higher concentration of
byproducts.
- Gross profit as a percent of sales improved to 15.7% from 12.5%
for the same period last year attributable to favorable foreign
currency exchange rate fluctuations resulting in lower Leaf green
inventory prices and conversion costs in Africa and South
America as well as the continued growth of the Other
Products and Services segment.
- Selling, general, and administrative expense ("SG&A")
increased $8.3 million to
$47.3 million when compared to the
same period last year primarily related to branding, marketing, and
advertising expenses for the Figr cannabinoid and Humble Juice
e-liquid brands and costs incurred in connection with the
evaluation of a partial monetization of the Company's investments
in certain businesses included in the Other Products and Services
segment.
- Net loss attributable to Pyxus International, Inc. improved
$38.1 million to $16.5 million when compared to the same period
last year.
- Adjusted EBITDA* for the three months ended September 30, 2019 was $41.5 million.
_____________
|
|
|
*Adjusted EBITDA is
not a measure of results under generally accepted accounting
principles in the United States. See the reconciliation tables
included in this press release for details regarding the
calculation of Adjusted EBITDA.
|
_____________
|
Pieter Sikkel, Chairman,
President and CEO said, "Our strategy to transform into a global
agricultural company with a significant presence across multiple
consumer products categories has enabled us to achieve positive
progress in positioning Pyxus to enhance value for our all of our
stakeholders. We've long said that everything we do is to transform
people's lives so that together we can grow a better world and that
vision continues to be the driving force as we move forward on our
journey.
"Focus on improving performance across all of our businesses
during the first half of fiscal year 2020 provided a platform on
which we intend to build. Our growth businesses are planned to ramp
up significantly with positive Adjusted EBITDA on a run-rate basis
by the end of the June 2020 quarter.
Additionally, we continue to evaluate and develop the plans for a
potential monetization of a portion of Pyxus' ownership in a
consolidation of its two majority-owned Canadian cannabis
businesses with its minority-owned U.S. hemp and next
generation flavor businesses.
"Turning to operational performance, the leaf business is
performing in line with expectations. This past quarter we have
experienced strong volumes, solid orders across geographies,
including China, and improving
margins, demonstrating the benefit of the implementation of
strategic initiatives our team continues to execute. We remain
focused on maintaining low levels of uncommitted inventory and
driving forward other key efforts aligned with our working capital
strategy. While some markets continue to present certain
challenges, such as the U.S., which remains impacted by the ongoing
trade tensions with China, we are
encouraged by other markets.
"Figr, our wholly-owned indirect Canadian cannabis subsidiary,
continues to make progress against its strategy to increase
capacity and expand its presence across Canada. Consistent with our timeline to build
to a 332,000-square-foot facility on Prince Edward Island, on November 6, Figr East received approval from
Health Canada to operate an additional 210,000 square feet with
approximately 46,000 square feet for processing and other
activities and 164,000 square feet for growing, bringing the
current total licensed square footage in Prince Edward Island to approximately 234,000
square feet. We have been preparing for receipt of this license
amendment by accelerating our tissue culture program and, upon
receipt of the approval from Health Canada, we began today
operating in the new square footage. The new run rate at the
facility is expected to be up to 28,000 kilograms per year. We are
nearing completion of construction on the remaining section of the
Prince Edward Island expansion,
which includes an additional 10,0000 square feet of
processing/other space and 88,000 square feet of growing space. The
licensing process for the final phase of the expansion will begin
soon and, once the full square footage comes online, we expect
production capacity to be up to approximately 43,000 kilograms per
year.
"The added capacity supports the execution of Figr's strategy to
grow its presence across Canada
and continue to provide high-quality product to customers. Figr
continues to maintain a strong presence in Prince Edward Island, Nova Scotia and New
Brunswick with product in 100% of stores in these markets.
We anticipate that our expansion of sales into Ontario will occur in the third fiscal
quarter, which will offer significant opportunities to drive
further growth.
"Building off Figr's current sales momentum and the additional
square footage coming online in Prince
Edward Island, we anticipate sales will accelerate in the
fourth fiscal quarter as we continue to drive market share and
deliver new, innovative products. In early October, Figr Norfolk
began growing higher THC strains already in production at Figr East
to meet the growing demand for these products. In line with the
launch of the Cannabis 2.0 market in Canada, Figr is also on track to launch THC
vaping products in December, as approved by Health Canada.
"In addition, Figr has recently progressed on several exciting
initiatives. The company launched Budtender, an augmented reality
(AR) app supported by our SENTRISM capabilities,
and also announced that its hemp cultivator program is underway,
which is drawing on the expertise of Criticality, LLC, our
unconsolidated industrial hemp joint venture.
"Industrial hemp had a solid quarter as well. Criticality
successfully launched roll-on liniments available for sale under
the company's Korent™ and Korent Select™ CBD brands. With a
strong innovation pipeline, Criticality has developed a diverse
product offering, with products across multiple categories
including oil drops, vapables and topicals. We expect Criticality
to announce several new launches by the end of the fiscal year, to
include balms, body lotions, fast-acting oral powders and moisture
sealants. In terms of hemp supply, crops are coming in strong. The
hemp buying season began in September and we expect to purchase
over 450,000 kilograms of high CBD hemp which is expected to
provide over 30,000 kilograms of CBD to be formulated and sold in
multiple product lines. Criticality is continuing to scale its
extraction capabilities to handle additional future volume and
product requirements as it grows.
"Regarding e-liquids, the evolving regulatory environment and
recent reported health concerns from illicit products are impacting
the market and associated volumes. While the segment currently
represents a small part of our revenue and profitability, we
believe there continues to be significant long-term opportunity in
the space. When Purilum entered the market five years ago, we
built the production facility to ensure it would exceed standards
that would be established by regulations not yet in place. The
uncertain regulatory environment continues and our approach remains
the same across all of our e-liquid brands. We will continue to
employ exacting production and quality standards that we believe
clearly differentiate our products in the marketplace. For example,
we test all of our Purilum-based e-liquids with both internal and
third-parties so that we know what is and more importantly - what
is not - in our products before they reach consumers. We believe a
clear regulatory framework that requires these types of standards
is essential to creating consumer confidence in the market.
"Bantam had a strong quarter, experiencing record sales and
continued margin improvement. In line with our strategy to provide
a diverse product offering, Humble and Bantam are working to launch
a number of Purilum predicate product SKUs that add to their array
of tobacco-flavored products. While regulation is evolving, we are
well-positioned to expand our share in markets where the sale of
e-liquid products is legal for adult consumers based on product
quality and rigorous testing policies as well as the elasticity of
our brands to move into new segments. For example, Humble Juice Co.
and other affiliates are currently working to develop new CBD lines
that we anticipate will begin to roll out to the market by the
fourth fiscal quarter.
"Additionally, our efforts to enter into value-added
agricultural products are progressing. We are making strides in
both Tanzania and Malawi, as well as other areas, in terms of
establishing operations to support further expansion into new
crops. On November 6, we received a
certificate from the Tanzanian Bureau of Standards certifying that
our Pyxus Agriculture Tanzania subsidiary is in compliance with
national quality and safety manufacturing standards. Per our
strategy, we expect to begin commercial sunflower oil production in
late calendar 2019. We highly value our strong farmer relationships
and look forward to further assisting them in achieving economic
success through income diversification.
"We are continuing to execute on our full-year operating plan
and based on the current outlook, we are maintaining our previously
provided full year fiscal 2020 adjusted EBITDA guidance range and
modifying our revenue guidance range to $1.75 billion to $1.85
billion. Included in our guidance is $9.3 million of adjusted EBITDA that may be
adversely impacted by trade issues related to continuing and new
tariffs that may not be favorably resolved.
"We are also pleased to share that the complaint that was filed
against Pyxus and certain of its officers in the United States District Court for the
Eastern District of North Carolina
on June 7, 2019 was voluntarily
dismissed without prejudice on October 31,
2019.
"We are proud of the progress we have made across the leaf
business as well as our new startup business ventures. We believe
the complementary capabilities of Figr East, Figr Norfolk,
Criticality, and Purilum, combined with our
SENTRISM platform, position us for success across
the cannabinoid value chain, from seed to consumer, as well
as full traceability and consumer transparency. We are
continuing to execute against our plan to aggressively drive growth
for our shareholders, as well as our employees, our contracted
farmers and the communities in which we operate."
Performance Summary for Three Months Ended September 30,
2019
Sales and other operating revenues decreased $11.9 million or 3.0% to $383.0 million for the three months ended
September 30, 2019 from $394.9 million for the three months ended
September 30, 2018. This decrease was
primarily due to an 11.2% decrease in average sales prices
primarily related to the Leaf - Other Regions segment product mix
in Asia and South America having a higher concentration of
byproducts. This decrease was partially offset by the continued
sales growth in the Other Products and Services segment and a 7.7%
increase in volumes mainly in the Leaf - Other Regions segment due
to the timing of shipments in South
America, partially offset by lower volumes in the Leaf -
North America segment attributable
to Hurricane Florence reducing the prior-year U.S. crop size and
foreign tariffs on U.S. tobacco.
Cost of goods sold decreased $22.9
million or 6.6% to $322.8
million for the three months ended September 30, 2019 from $345.7 million for the three months ended
September 30, 2018. This decrease was
mainly due to favorable foreign currency exchange rate fluctuations
in the Leaf - Other Regions segment resulting in lower leaf raw
materials prices in Africa and
South America and a decrease in
the Leaf - North America segment
sales and other operating revenues. These decreases were partially
offset by the continued sales growth in the Other Products and
Services segment.
Gross profit as a percent of sales increased to 15.7% for the
three months ended September 30, 2019
from 12.5% for three months ended September
30, 2018. This increase was attributable to favorable
foreign currency exchange rate fluctuations in the Leaf - Other
Regions segment resulting in lower leaf raw materials prices and
conversion costs in Africa and
South America, as well as the
continued growth of the Other Products and Services segment. This
increase was partially offset by higher Leaf - North America conversion costs from the impact
of Hurricane Florence on the prior year U.S. crop.
Selling, general, and administrative expense ("SG&A")
increased $8.3 million or 21.3% to
$47.3 million for the three months
ended September 30, 2019 from
$39.0 million for the three months
ended September 30, 2018. SG&A as
a percent of sales increased to 12.3% for the three months ended
September 30, 2019 from 9.9% for the
three months ended September 30,
2018. These increases were primarily related to branding,
marketing, and advertising expenses for the Figr cannabinoid and
Humble Juice e-liquid brands and costs incurred in connection with
the evaluation of a partial monetization of the Company's
investments in certain businesses included in the Other Products
and Services segment. These increases were partially offset by
restructuring initiatives enacted in the Leaf segments in the prior
year.
Income tax expense decreased $32.1
million or 92.2% to $2.7
million for the three months ended September 30, 2019 from $34.8 million for the three months ended
September 30, 2018. This decrease was
primarily due to the change in the effective tax rate to (13.8)%
for three months ended September 30,
2019 from (161.1)% for the three months ended September 30, 2018, and the occurrence of certain
discrete items during the three months ended September 30, 2019.
For the three months ended September 30, 2019, the Company
reported a net loss of $16.5 million,
or $1.81 loss per basic share,
compared to a net loss of $54.6
million, or $6.04 loss per
basic share for the three months ended September 30, 2018. The decrease in net loss is
primarily due to a $32.1 million
decrease in income tax expense and a 3.2% increase in gross
margin.
Liquidity and Capital Resources
The Company's liquidity requirements are affected by various
factors including crop seasonality, foreign currency and interest
rates, green tobacco prices, customer mix, crop size and quality,
branding, marketing, and advertising to support the new business
lines, increased legal and professional costs associated with
developing the partial monetization plans referred to above, and
the extent and timing of facility expansions. As of
September 30, 2019, the Company's available credit lines and
cash totaled $476.9 million. The
Company will continue to monitor and adjust funding sources as
needed to enhance and drive various business opportunities that
maintain flexibility and meet cost expectations.
Financial Results Investor Call
The Company will hold a conference call to report financial
results for the period ended September 30,
2019, on November 7, 2019 at
5:30 P.M. ET. The dial in number for
the call is (334) 777-6978 or (800) 367-2403, using conference ID
5848993. Those seeking to listen to the call may access a live
broadcast on the Pyxus International website. Please visit
www.pyxus.com 15 minutes in advance to register.
For those who are unable to listen to the live event on
November 7, 2019, a replay will be
available for five days by dialing (719) 457-0820 or (888) 203-1112
and entering the access code 5848993. 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,
changes in relevant capital markets affecting the terms and
availability of financing, 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 products and related services, uncertainties with
respect to the impact of regulation associated with new business
lines, including the risk of obtaining anticipated regulatory
approvals in Canada, uncertainties
regarding the regulation of the production and distribution of hemp
products and continued compliance with applicable regulatory
requirements, uncertainties with respect to the development of the
industries and markets of the new business lines, consumer
acceptance of products offered by the new business lines,
uncertainties with respect to the timing and extent of retail,
geographic and product-line expansion; the impact of increasing
competition in the new business lines, uncertainties regarding
obtaining financing to fund, and licensing of, planned facilities
expansions in Prince Edward Island
and Ontario, the possibility of
delays in the completion of these and other facilities expansions
and uncertainties regarding the potential production yields of new
or expanded facilities, as well as the progress of legalization of
cannabis for medicinal and adult recreational uses in other
jurisdictions. Additional factors that could cause results to
differ materially from those expressed or implied by
forward-looking statements can be found in Pyxus's most recent
Annual Report on Form 10-K for the period ended March 31, 2019
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.pyxus.com.
Condensed
Consolidated Statements of Operations
|
|
|
Three Months
Ended
September 30,
|
Six Months Ended
September 30,
|
(in thousands,
except per share data)
|
2019
|
2018
|
2019
|
2018
|
Sales and other
operating revenues
|
$
|
382,981
|
$
|
394,876
|
$
|
659,651
|
$
|
685,864
|
Cost of goods and
services sold
|
322,761
|
345,672
|
559,719
|
595,266
|
Gross
profit
|
60,220
|
49,204
|
99,932
|
90,598
|
Selling, general, and
administrative expenses
|
47,263
|
38,995
|
96,640
|
77,079
|
Other income,
net
|
1,514
|
2,561
|
4,462
|
5,482
|
Restructuring and
asset impairment charges
|
8
|
182
|
220
|
1,723
|
Operating
income
|
14,463
|
12,588
|
7,534
|
17,278
|
Debt retirement
benefit
|
—
|
(388)
|
—
|
(473)
|
Interest expense
(includes debt amortization of $2,711 and $2,366 for the three
months and $4,919 and $4,695 for the six months in 2019 and 2018,
respectively)
|
35,334
|
35,324
|
69,146
|
68,235
|
Interest
income
|
1,370
|
738
|
2,524
|
1,625
|
Loss before income
taxes and other items
|
(19,501)
|
(21,610)
|
(59,088)
|
(48,859)
|
Income tax
expense
|
2,699
|
34,816
|
26,152
|
9,546
|
Income from
unconsolidated affiliates
|
5,596
|
1,584
|
6,473
|
2,151
|
Net loss
|
(16,604)
|
(54,842)
|
(78,767)
|
(56,254)
|
Net loss attributable
to noncontrolling interests
|
(86)
|
(208)
|
(452)
|
(862)
|
Net loss attributable
to Pyxus International, Inc.
|
$
|
(16,518)
|
$
|
(54,634)
|
$
|
(78,315)
|
$
|
(55,392)
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
Basic
|
$
|
(1.81)
|
$
|
(6.04)
|
$
|
(8.58)
|
$
|
(6.13)
|
Diluted
|
$
|
(1.81)
|
$
|
(6.04)
|
$
|
(8.58)
|
$
|
(6.13)
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
Basic
|
9,144
|
9,051
|
9,123
|
9,038
|
Diluted
|
9,144
|
9,051
|
9,123
|
9,038
|
|
|
|
|
|
Reconciliation of
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization ("Adjusted
EBITDA")(1) (Unaudited)
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
Fiscal Year
Ended
|
LTM(10)
|
|
(in
thousands)
|
September 30,
2019
|
September 30,
2018
|
September 30,
2019
|
September 30,
2018
|
September 30,
2017
|
March 31,
2019
|
March 31,
2018
|
September 30,
2019
|
September 30,
2018
|
|
Net (loss) income
attributable to Pyxus International, Inc.
|
$
|
(16,518)
|
$
|
(54,634)
|
$
|
(78,315)
|
$
|
(55,392)
|
$
|
(31,519)
|
$
|
(70,467)
|
$
|
52,436
|
$
|
(93,390)
|
$
|
28,563
|
|
Plus: Interest
expense(2)
|
35,334
|
35,324
|
69,146
|
68,235
|
67,540
|
135,553
|
134,279
|
136,464
|
134,974
|
|
Plus: Income tax
expense (benefit)
|
2,699
|
34,816
|
26,152
|
9,546
|
7,049
|
37,840
|
(58,764)
|
54,446
|
(56,267)
|
|
Plus: Depreciation
and amortization expense
|
8,785
|
9,116
|
17,595
|
18,393
|
16,671
|
35,747
|
33,598
|
34,949
|
35,320
|
|
EBITDA(1)
|
30,300
|
24,622
|
34,578
|
40,782
|
59,741
|
138,673
|
161,549
|
132,469
|
142,590
|
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
—
|
68
|
1
|
361
|
(63)
|
6,821
|
(152)
|
6,461
|
272
|
|
Plus: Non-cash
employee stock based compensation
|
383
|
459
|
812
|
754
|
544
|
1,544
|
1,135
|
1,602
|
1,345
|
|
Less: Other
income
|
1,514
|
2,561
|
4,462
|
5,482
|
8,890
|
14,217
|
14,382
|
13,197
|
10,974
|
|
Plus: Fully reserved
recovery of tax(3)
|
2,448
|
2,246
|
5,172
|
4,543
|
4,640
|
10,418
|
11,835
|
11,047
|
11,738
|
|
Plus: Restructuring
and asset impairment charges
|
8
|
182
|
220
|
1,723
|
—
|
4,946
|
382
|
3,443
|
2,105
|
|
Plus: Costs
associated with transformation related to "One Tomorrow" new
business initiatives, not anticipated to be recurring
costs(4)
|
9,189
|
2,015
|
15,019
|
2,015
|
1,538
|
8,127
|
6,593
|
21,131
|
7,070
|
|
Plus: Costs
associated with reorganization of legal entities(5)
|
5
|
426
|
301
|
573
|
202
|
1,543
|
469
|
1,271
|
840
|
|
Plus: Costs
associated with the 2017 U.S. Tax Reform Act(6)
|
—
|
279
|
—
|
959
|
—
|
1,657
|
531
|
698
|
1,490
|
|
Plus: Debt retirement
benefit
|
—
|
(388)
|
—
|
(473)
|
(2,975)
|
(1,753)
|
(2,975)
|
(1,280)
|
(473)
|
|
Plus: Amortization of
basis difference - CBT investment(7)
|
518
|
344
|
846
|
670
|
653
|
1,551
|
1,519
|
1,727
|
1,536
|
|
Plus: One time impact
of newly imposed Argentinian Excise Tax(8)
|
—
|
925
|
—
|
925
|
—
|
2,818
|
—
|
1,893
|
925
|
|
Plus: Kenyan
investigation legal & professional costs
|
—
|
82
|
—
|
243
|
1,770
|
308
|
1,980
|
65
|
453
|
|
Less: Kenyan green
leaf operation Adjusted EBITDA(9)
|
(182)
|
1,255
|
(520)
|
(51)
|
(4,104)
|
(882)
|
(2,329)
|
(1,351)
|
1,724
|
|
Adjusted
EBITDA(1)
|
$
|
41,519
|
$
|
27,444
|
$
|
53,007
|
$
|
47,644
|
$
|
61,264
|
$
|
163,318
|
$
|
170,813
|
$
|
168,681
|
$
|
157,193
|
|
Total debt
|
|
|
|
|
|
|
|
$
|
1,483,767
|
$
|
1,519,120
|
|
Less: Cash
|
|
|
|
|
|
|
|
172,523
|
116,970
|
|
Total debt less
cash
|
|
|
|
|
|
|
|
$
|
1,311,244
|
$
|
1,402,150
|
|
(Total debt less
cash) /Adjusted EBITDA(1)
|
|
|
|
|
|
|
|
7.77x
|
8.92x
|
|
|
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 six months
ended September 30, 2018 and 2017 reflect a reclassification of
$317 and $683 respectively from SG&A to Interest expense. The
fiscal years ended March 31, 2019 and 2018 reflect a
reclassification of $317 and $1,301 respectively from SG&A to
Interest expense.
|
3.
|
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.
|
4.
|
Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy and
exploration of potential monetization transactions involving the
Company's interest in these businesses, including 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.
|
5.
|
Includes expenses
incurred associated with the internal reorganization of legal
entities within the leaf tobacco segments of the company to align
with operations, including legal, strategic, and tax consulting
expenses.
|
6.
|
Includes consulting
expenses incurred associated with the implementation of the 2017
U.S. Tax Reform Act, which became effective January 1,
2018.
|
7.
|
Related to a former
Brazilian subsidiary that is now deconsolidated following the
completion of a joint venture in March 2014.
|
8.
|
The initial impact of
the recently imposed Argentinian Excise Tax was $2,818 for
the fiscal year ended March 31, 2019 and $925 for the three
and six months ended September 30, 2018. The cost of the newly
imposed excise tax could not be addressed with customers due to the
timing of enactment and the nature of our customer contracts.
Customer contracts for the current fiscal year contemplate the
newly imposed excise tax.
|
9.
|
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.
|
10.
|
Items for the twelve
months ended September 30, 2019 are derived by adding the items for
the six months ended September 30, 2019 and the fiscal year ended
March 31, 2019 and subtracting the items for the six months
ended September 30, 2018. 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.
|
Reconciliation of
Combined Leaf Segments Adjusted EBITDA ("Leaf Segments Adjusted
EBITDA")(1) (Unaudited)
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
Fiscal Year
Ended
|
LTM(9)
|
|
(in
thousands)
|
September 30,
2019
|
September 30,
2018
|
September 30,
2019
|
September 30,
2018
|
September 30,
2017
|
March 31,
2019
|
March 31,
2018
|
September 30,
2019
|
September 30,
2018
|
|
Leaf - North America
segment Operating income
|
$
|
2,509
|
$
|
3,579
|
$
|
3,271
|
$
|
4,872
|
$
|
6,123
|
$
|
10,113
|
$
|
26,446
|
$
|
8,512
|
$
|
25,195
|
|
Leaf - Other Regions
segment Operating income
|
26,475
|
17,366
|
33,508
|
25,020
|
32,768
|
112,180
|
88,742
|
120,668
|
80,994
|
|
Total Combined Leaf
Segments Operating income
|
28,984
|
20,945
|
36,779
|
29,892
|
38,891
|
122,293
|
115,188
|
129,180
|
106,189
|
|
Less: Debt retirement
benefit(2)
|
—
|
(369)
|
—
|
(449)
|
(2,975)
|
(1,633)
|
(2,867)
|
(1,184)
|
(341)
|
|
Plus: Interest
income
|
1,381
|
741
|
2,543
|
1,627
|
1,694
|
3,367
|
3,271
|
4,283
|
3,204
|
|
Plus: Equity in net
income (loss) of unconsolidated affiliates
|
5,095
|
678
|
5,058
|
615
|
(294)
|
7,408
|
8,947
|
11,851
|
9,856
|
|
Less: Net (loss)
income attributable to noncontrolling interests
|
(130)
|
(119)
|
(212)
|
(359)
|
(159)
|
(108)
|
(434)
|
39
|
(634)
|
|
Plus: Depreciation
and amortization expense
|
7,803
|
8,374
|
15,656
|
16,907
|
16,671
|
32,760
|
33,189
|
31,509
|
33,425
|
|
Leaf Segments
EBITDA(1)
|
43,393
|
31,226
|
60,248
|
49,849
|
60,096
|
167,569
|
163,896
|
177,968
|
153,649
|
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
—
|
(4)
|
1
|
289
|
(63)
|
6,749
|
(152)
|
6,461
|
200
|
|
Plus: Non-cash
employee stock based compensation
|
137
|
317
|
324
|
596
|
544
|
1,190
|
1,109
|
918
|
1,161
|
|
Less: Other
income
|
860
|
2,505
|
3,797
|
5,482
|
8,890
|
13,989
|
14,379
|
12,304
|
10,971
|
|
Plus: Fully reserved
recovery of tax(3)
|
2,448
|
2,246
|
5,172
|
4,543
|
4,640
|
10,418
|
11,835
|
11,047
|
11,738
|
|
Plus: Restructuring
and asset impairment charges
|
8
|
182
|
220
|
1,723
|
—
|
4,946
|
382
|
3,443
|
2,105
|
|
Plus: Costs
associated with reorganization of legal entities(4)
|
5
|
426
|
301
|
573
|
202
|
1,543
|
469
|
1,271
|
840
|
|
Plus: Costs
associated with the 2017 U.S. Tax Reform Act(5)
|
—
|
193
|
—
|
759
|
—
|
1,277
|
519
|
518
|
1,278
|
|
Plus: Debt retirement
benefit(2)
|
—
|
(369)
|
—
|
(449)
|
(2,975)
|
(1,633)
|
(2,867)
|
(1,184)
|
(341)
|
|
Plus: Amortization of
basis difference - CBT investment(6)
|
518
|
344
|
846
|
670
|
653
|
1,551
|
1,519
|
1,727
|
1,536
|
|
Plus: One time impact
of newly imposed Argentinian Excise Tax(7)
|
—
|
925
|
—
|
925
|
—
|
2,818
|
—
|
1,893
|
925
|
|
Plus: Kenyan
investigation legal & professional costs
|
—
|
82
|
—
|
243
|
1,770
|
308
|
1,980
|
65
|
453
|
|
Less: Kenyan green
leaf operation Adjusted EBITDA(8)
|
(182)
|
1,255
|
(520)
|
(51)
|
(4,104)
|
(882)
|
(2,329)
|
(1,351)
|
1,724
|
|
Leaf Segments
Adjusted EBITDA(1)
|
$
|
45,831
|
$
|
31,808
|
$
|
63,835
|
$
|
54,290
|
$
|
60,081
|
$
|
183,629
|
$
|
166,640
|
$
|
193,174
|
$
|
160,849
|
|
|
1.
|
Leaf Segments EBITDA
and Leaf Segments Adjusted EBITDA are not measures of results of
operations under U.S. GAAP and should not be considered as an
alternative to other U.S. GAAP measurements. We have
presented Leaf Segments EBITDA and Leaf Segments Adjusted EBITDA to
present combined information for the Leaf - North America and Leaf
- Other Regions segments 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 the reported
results of the Company's leaf tobacco reportable segments separate
from the other reportable segment. This presentation provides
readers with disaggregated information adjusted for the sporadic
impact of the various items identified above. Management
acknowledges that there are many items that impact reported results
and this list is not intended to present all items that may have
impacted these results. These non-GAAP measures and any ratios
calculated based on these measures are not necessarily comparable
to similarly-titled measures used by other companies. Leaf Segments
EBITDA and Leaf Segments Adjusted EBITDA as presented may not equal
column or row totals due to rounding.
|
2.
|
Allocation of benefit
based on total consolidated assets.
|
3.
|
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.
|
4.
|
Includes expenses
incurred associated with the internal reorganization of legal
entities within the leaf tobacco segments of the company to align
with operations, including legal, strategic and tax consulting
expenses.
|
5.
|
Includes consulting
expenses incurred associated with the implementation of the 2017
U.S. Tax Reform Act, which became effective January 1, 2018.
Allocation of costs based on total consolidated
SG&A.
|
6.
|
Related to a former
Brazilian subsidiary that is now deconsolidated following the
completion of a joint venture in March 2014.
|
7.
|
The impact of the
recently imposed Argentinian Excise Tax was $2,818 for the fiscal
year ended March 31, 2019 and $925 for the three and six months
ended September 30, 2018. The cost of the newly imposed excise tax
could not be addressed with customers due to the timing of
enactment and the nature of our customer contracts. Customer
contracts for the current fiscal year contemplate the newly imposed
excise tax.
|
8.
|
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.
|
9.
|
Items for the twelve
months ended September 30, 2019 are derived by adding the items for
the six months ended September 30, 2019 and the fiscal year ended
March 31, 2019 and subtracting the items for the six months
ended September 30, 2018. 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.
|
Reconciliation of
Other Products and Services Segment Adjusted EBITDA ("Adjusted
EBITDA")(1) (Unaudited)
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
Fiscal Year
Ended
|
LTM(5)
|
|
(in
thousands)
|
September 30,
2019
|
September 30,
2018
|
September 30,
2019
|
September 30,
2018
|
September 30,
2017
|
March 31,
2019
|
March 31,
2018
|
September 30,
2019
|
September 30,
2018
|
|
Other Products and
Services segment Operating loss
|
(14,521)
|
(8,357)
|
(29,245)
|
(12,614)
|
—
|
(35,039)
|
(3,284)
|
$
|
(51,670)
|
$
|
(15,898)
|
|
Less: Debt retirement
benefit(2)
|
—
|
(20)
|
—
|
(24)
|
—
|
(121)
|
(108)
|
(97)
|
(132)
|
|
Plus: Interest
income
|
(11)
|
(3)
|
(19)
|
—
|
—
|
261
|
—
|
242
|
—
|
|
Plus: Equity in net
income (loss) of unconsolidated affiliates
|
500
|
906
|
1,414
|
1,535
|
(355)
|
2,182
|
324
|
2,061
|
2,214
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
44
|
(89)
|
(240)
|
(503)
|
—
|
(593)
|
(96)
|
(330)
|
(599)
|
|
Plus: Depreciation
and amortization expense
|
982
|
742
|
1,939
|
1,486
|
—
|
2,987
|
409
|
3,440
|
1,895
|
|
Other Products and
Services segment EBITDA(1)
|
(13,094)
|
(6,603)
|
(25,671)
|
(9,066)
|
(355)
|
(28,895)
|
(2,347)
|
(45,500)
|
(11,058)
|
|
Plus: Reserves for
doubtful customer receivables
|
—
|
72
|
—
|
72
|
—
|
72
|
—
|
—
|
72
|
|
Plus: Non-cash
employee stock based compensation
|
246
|
142
|
488
|
158
|
—
|
354
|
25
|
684
|
183
|
|
Less: Other
income
|
654
|
56
|
665
|
—
|
—
|
228
|
3
|
893
|
3
|
|
Plus: Costs
associated with transformation related to "One Tomorrow" new
business initiatives, not anticipated to be recurring
costs(3)
|
9,189
|
2,015
|
15,019
|
2,015
|
1,538
|
8,127
|
6,593
|
21,131
|
7,070
|
|
Plus: Costs
associated with the 2017 U.S. Tax Reform Act(4)
|
—
|
86
|
—
|
200
|
—
|
380
|
12
|
180
|
212
|
|
Plus: Debt retirement
benefit(2)
|
—
|
(20)
|
—
|
(24)
|
—
|
(121)
|
(108)
|
(97)
|
(132)
|
|
Other Products and
Services Segments Adjusted EBITDA(1)
|
$
|
(4,313)
|
$
|
(4,364)
|
$
|
(10,829)
|
$
|
(6,645)
|
$
|
1,183
|
$
|
(20,311)
|
$
|
4,172
|
$
|
(24,495)
|
$
|
(3,656)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Other Products and
Services Segment EBITDA and Other Products and Services Segment
Adjusted EBITDA are not measures of results of operations under
U.S. GAAP and should not be considered as an alternative to other
U.S. GAAP measurements. We have presented these non-GAAP
measures 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 the reported
results of the Company's Other Products and Services Segment,
separate from its other reportable segments. This presentation of
Other Products and Services Segment EBITDA and Other Products and
Services Segment Adjusted EBITDA provides readers with
disaggregated information adjusted for the sporadic impact of
various items identified above. Management acknowledges that
there are many items that impact reported results and this list is
not intended to present all items that may have impacted these
results. Other Products and Services Segment EBITDA and Other
Products and Services Segment Adjusted EBITDA and any ratios
calculated based on these measures are not necessarily comparable
to similarly-titled measures used by other companies. Other
Products and Services Segment EBITDA and Other Products and
Services Segment Adjusted EBITDA as presented may not equal column
or row totals due to rounding.
|
2.
|
Allocation of benefit
based on total consolidated assets.
|
3.
|
Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy and
exploration of potential monetization transactions involving the
Company's interest in these businesses, including 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.
|
4.
|
Includes consulting
expenses incurred associated with the implementation of the 2017
U.S. Tax Reform Act, which became effective January 1, 2018.
Allocation of costs based on total consolidated
SG&A.
|
5.
|
Items for the twelve
months ended September 30, 2019 are derived by adding the items for
the six months ended September 30, 2019 and the fiscal year ended
March 31, 2019 and subtracting the items for the six months
ended September 30, 2018. 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.
|
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content:http://www.prnewswire.com/news-releases/pyxus-international-inc-reports-fiscal-year-2020-second-quarter-results-300954294.html
SOURCE Pyxus International, Inc.