Q2 2021 Old Holdco Inc Earnings Call
Good day, ladies and gentlemen, and welcome to today's Pyxis International Inc. fiscal year Twentytwenty, one second quarter results call.
The time, all participants are in a listen only mode. If anyone should require assistance during the conference. Please press star zero on your Touchtone Todd and.
Type of.
The reminder, just call is being recorded and I like to true to introduce your host for today's conference call Joel Thomas Chief Financial Officer Mr. Thomas You May begin your conference.
Thank you.
It would be the same thing is Pieter sikkel, our president and CEO.
For to begin the discussion or for natural resource.
A couple of few points and make your statements. During the course of the school and express the belief expectation or searching that's one.
Instead of lots of stores.
These statements are forward looking and.
The number of risks and uncertainties may cause actual results to differ materially from these forward looking statements. These risks and uncertainties are described in detail.
The other risks and uncertainties in our filings with the <unk>.
She she according to the most recent for 10-Q filed with the EPS you see.
And your daughter true what the any forward looking statements made on this conference call to reflect the change in managements expectations for any change in the assumptions for circumstances and what's your statements are based.
During our call today, we know distressed and non-GAAP financial measurements, which are not measures of the results of operations under generally accepted accounting principles for the United States and should not be considered sort of alternative for U.S. GAAP measurements and.
The table, including a reconciliation of the other disclosures regarding these non-GAAP financial measures is available on our website <unk>.
You bet for your W. dot picks the start Paul.
No debt in connection with the merchants for pre packaged shopko revenue reorganization.
And this utilized fresh start accounting as detailed in our for the true.
The results of the application for short of Kelly, the pretty merchants and post emergence periods and not comparable and addition under GAAP the pre emergence period and this.
September quarter is reported separately from the post emergence true.
The permit or of curse Universal's the part of your quarter reported tables, and our form 10-Q, and finding the pre emergence period and the post emergence period to present the wide results for the three and six months ended September Thirtyth 2040.
And our discussions today of <unk>.
And we'll be referring to the east combined results for the quarter, which are non-GAAP measures.
And he replay rebroadcast transcript or other reproduction of this conference call other than the replay as provided by the pictures and the National has not been off the watch and it's strictly because of it.
That's true should be aware that any unauthorized reproduction of this conference call may not be accurate reflection of its called the <unk>.
And the Paul we've heard of Peter.
Hello, everyone and thank you for the joining us this evening.
And just being several months since the last hosted one of these calls and we are happy to report and we have significantly reduced debt on our balance sheet as we look forward to of just driving value creation.
Well first of the 24 month the day, we emerged from chapter 11, and the fresh start for our company.
The emergence capital structure extended repayment of of first lien debt, but the new for your mature and the maturity.
Good at $635 million the of existing second lien debt the common equity.
The Q and a new $213 billion exit line that replaced the debt financing and <unk>.
And in connection with the P. package of restructuring.
As well as established and use 75 million to all the asset based revolving credit facility.
These modifications reduced our debt by over $400 million, that's significantly strengthened our balance sheet.
I would like to remind you that that's an agricultural company the nature of our business the seasonal and.
And consistent with prior years, the majority of our revenue and profitability is expected to ER and the second half of the fiscal of yet.
We're in the beginning of a heavy shipping periods.
The third and fourth fiscal quarters.
I'd expect the end of the fiscal year with our uncommitted inventory and the low half of our stated range of $50 million to $150 million.
Hi, but I do want to discuss the impact the type of it 19 has had on our business.
For custom old is the strong confirmation and processing of that it's been slower than anticipated travel.
Travel restrictions limits and the on site visits from past last.
The resolved it and I'll team for examples and then some case some cases producing videos of the cops and that's good visually see various aspects of the production process without being on science and inspect and doesn't.
In addition, some past the massive requested the oldest which typically ship and the first two fiscal quarters of the yet the delayed until quarter three and four.
We are closely monitoring developments related to ship and conditions.
Protecting the health and safety of our employees, while continuing to meet passed at the moment.
That's the one of our top priorities.
Throughout our operations, we've implemented social this and saying I'm tech tracing and hygiene measures to keep the employee size.
Hi, small sort of required throughout our operations and we're in constant communication with the employees reminding them of the importance of wearing losses washing hands frequently practicing social this and thing, but the in and out of the office.
Operational improvement I've also been of focus during the first half of fiscal 21.
As we announced earlier this year.
We implemented a global operations efficiency program and the Guy.
The old of improving operational flexibility and inefficiencies related to the supply chain and global trade.
No. The first changes that we implemented with the reorganization of the tobacco leaf divisions management structure, which involved the shift from five regions to three.
This aligns more closely with the customers approach is one of those reducing cost.
In addition, we have adjusted and reorganize corporate roles and responsibilities and prove up business operations.
We're continuing to execute against various elements of this program as we continue to optimize our global footprint to meet current and future demands and we look forward to share more details of that these assets with you and the future.
Well this year as brought unprecedented challenges. It's also brought up the Tennessee, we've embraced new more efficient ways of working and I expect will remain with us well past the current kind of it and I think prices.
Our employees and demonstrated a steadfast dedication to our company.
And delivering value to our customers and I'd.
And to express our appreciation for all the assets and ingenuity and with that said the life and the global pandemic.
It's the result of that tireless commitment and we've continued to make progress against key strategic initiatives across all areas of the business.
One particular initiatives that I wanted to highlight isn't the in regards to the E liquids cash agree and.
In September the E liquid brands humble juice cut and.
And since I submitted their respective premarket tobacco product applications.
Which included significant volumes of material related to the products product specific details and stream of survey data and.
Scientific studies, and the analyses as well as risk assessments.
The price since received finding the letters from the U.S. food and drug administration, which indicates that the FDA has completed its preliminary review of the P.M.T. Rowe price and the applications are advancing forward and the review process.
We do not anticipate and planning for regulation of the liquid industries. Since we entered the category and we remain committed the holding ourselves to the highest standards and.
And the accountable to a margin maxing commitment and include specific measures to help and show we are.
Okay Maxing the legal age consumers.
Sustainability and the S.G. initiatives remain and an essential part of of business not core to what the who we are.
The sales sustainability has been the driver of innovation across the business. The various programs. We have implemented of not only provided positive impacts to the communities where we operate.
Also results it and improve business efficiency and results.
Oh, the tobacco leaf division is well known for its sustainability and <unk> Agronomic leadership and.
Because of our ingenuity and this area that we've been able to maintain and grow the customer relationships.
And the tobacco industry rolls out its updates and sustainable to back the program, we're committed to continuing to deliver in these areas and demonstrate demonstrating how we're supporting each of our customers and sustainable it's the requirements as well as the United Nations sustainable the vitamin goes.
Finally, I'd like to welcome our new shareholders and board of directors for the company.
In addition of the new members is the key milestones and we believe that track records and diverse perspectives will enhance our company.
We're excited to have them join us.
With that I'll turn it over to the joke to provide the financial update.
Thank you Peter.
I'd like to Echo your remarks, we're glad to have emerged from all pre pack and restructuring and are pleased with how quickly we completed the process when.
With regards to our second fiscal quarter.
Total sales and other operating revenues decreased 80.4 million or 21% of the $302.6 million for the three months ended September Thirtyth play Plenti from $383 million for the same period last year.
This decrease was due to a 12.9% reduction and volume for the weather related the smaller crop sizes and shipping delays and Africa caused by the code of 19 pandemic and.
Its walls and 11.8% decrease the average sales price is attributable to product mix and Asia, Europe, and South America, having a lower concentration of laminate and changes in foreign exchange rates and Africa and South America.
These decreases were partially offset by an increase in the volume due to the timing of shipments and Europe changes and foreign exchange rates, and Europe and product mix and North America, and then the higher concentration of one of the Pos.
The of goods and services sold decreased 55.9 billion for 17.3%, the Jordan and $66.9 million for the three months ended September Thirtyth point for the from $322.8 million for the same period last year.
The change was mainly due to the decrease in sales and other operating revenues and changes in foreign currency exchange rates, and Africa, and South America and South America.
This decrease was partially offset the inventory write offs of cannabis and invest for yeah.
Driven by a shift and expected future product mix and response to market supply conditions and continued market price compression.
Gross profit as a percentage of sales decreased to 11.8% for the pretty much set at September 30, and 40 40 from 15.7% for the same period last year.
This decrease was primarily due to product mix and Asia, Europe, and South America, having a lower concentration of one of the inventory write offs as described.
These decreases were partially offset by changes in foreign exchange rates in Europe for conversion cost in Europe, and the product mix in North America, having the higher concentration Atlanta.
Selling general and administrative expenses decreased 4.5, moving or non and a half percent of $42.8 million for the three months ended September thirtyth fully 20 from 47.3 million for the same quarter last year.
This decrease was mainly due to higher expenses in the prior year for the evaluation of the partial monetization of the company's investments and certain businesses included and the other products and service services segment lower travel expenses caused by the 19 pandemic.
And current year savings from restructuring initiatives.
Interest expense decreased $11.7 million and 33.1% the 23.6 million for the three months ended September 31 point for me from $35.3 million for the shape of the last year the.
This decrease was driven by lower outstanding long term debt balances as well as lower balances on the African she's low credit loans.
Reorganization items for the quarter were 132.9 million and were incurred in connection with the prepackaged chapter 11 restructure the.
Companies the liquidity requirements are affected by various factors from.
From our core tobacco leaf business, including crop seasonality for currency and interest rates green tobacco prices customer mix and shipping requirements crop size and quality of.
The MCE business is seasonal and purchase and processing and selling activities of several associated peaks for cash on hand, and outstanding indebtedness may vary significantly during the fiscal year.
Additionally, our liquidity requirements are increasingly affected our branding marketing and advertising expenses to support growth and the other products and services segment and legal and professional costs.
As of September Thirtyth 2020, our available credit lines, and cash 2400, $31.9 million, which includes 296 million.
For the seasonal lines of credit.
As we stated earlier, we are pleased to have the most quickly from our prepackaged chapter 11 restructuring and appreciate the support from all of our stakeholders as we went through the process takes.
Texas has made significant strides and its transformation journey this year and we are.
The work with our new board of directors for further grow shareholder value.
We are excited about the future of our business and one that the operator. Please open the line for questions.
Thank you if you like the ask the question. Please signal by pressing star of one on your telephone keypad.
If you're using and speak for please make sure. Your mute function is turned off to lay of simple to each of equipment.
And that is star one to ask the question.
Well I'll take the first question from Robert Sullivan and mid Ocean. Please go ahead.
Hi, Thanks, I Wonder if you could give us from sensor and adjusted EBITDA. It was in the quarter knowing that there are probably a lot of.
The adjustment and things, obviously, not seeing the yellow and most recently filed the and Q.
Yeah, Robert we have provided a reconciliation of EBITDA and consistent with what we have provided in the past and it is on our website.
But for the three months ended we were at roughly $13.5 million on a combined consolidated basis.
Okay of the off the check that out of your <unk>.
The next question I guess, one was just where where would you say you are in terms of of the China tobacco and the leads obviously I know you know pretty filing and during the restructuring I know you talked a lot about and that the contributing factor with the ports. The lead initially during co good and the catch up.
Periods, and we're just wondering kind of where where you find yourselves.
Good day by day.
Yeah, I mean, I think I think in terms of the the shipments that went the laid out of the last fiscal year.
From <unk> from Africa, and out of China. The majority of those took place and quarters, one and two of the shipments that would the laid out of the U.S. going to China.
And obviously tied up and times of the a trade war occurring between the United States and and China as well.
We're pleased to note that the.
So back it was included as pop and in Phase one of the new agricultural type deal between the United States.
And the and China and those shipments of where we're working as quickly as we can to execute those obviously, it's a little bit from Texas everything is.
The type of 19, so we can have the.
Our Chinese partners kind of and inspect those products. So we have to make videos, we have to ship samples too.
And to China, the delve into a bit of aren't team for the 20 days and the so there's a lot going onto the do that but that will start of tearing and they and the net future and very low seven day with China, we've been through the new crop process around the around the globe.
And it's been it's been slow just because of the lack of for the opportunity to travel, but and I would say positive in terms of how we'd be net was I've come the kind of at the.
The situation and then again.
As we moved through quarter, three and for which are our heaviest the shipping quarters, we'll see those products start moving out and as well.
And and would you expect kind of a back half I know one one of your competitors universe of all the talking about the back half of the year I think there.
Expecting kind of the turnaround and some of the shipment delays out of Africa.
The two Turner or would you expect something similar.
Yeah, I would say that I mean, I think it's been a it's been slow going around the world and in the first half for for.
For many reasons and.
And pick various countries as an example of but obviously we've had to keep socially distance buying so thats that slowed the down and our factories.
We've had slowed down the line in order to and she'll we've got socially distance processing.
And and the in Africa, the way, we have auction markets and we had to have a slowdown.
Slow down and the receipt of the tobacco, it's just the and.
So that we could keep the employees that as per the government regulations are separate and apart.
But as as we as we're getting through the season and I I can give a more specific example of that country like Argentina, and we ended up processing and three factories the way we would normally come.
Please processing and May weighted this year, we we completed an outside of that so but it is these are not related to the orders themselves. It's more just the process of keeping employees safe the the the the timing of customer orders and procedures to go through and so.
We are anticipating patching up and and and that's what we can see and of course is three and for.
And being able to ship those products out.
Okay. Thanks for that I'll get back in the queue.
Well take our next question from Ian Parkinson of Poly and advisors. Please go ahead.
Thank you and.
The question say it.
Again universal of the guided that the.
That's equal to the the yet and.
Right and Thats, because like for the key it kind of Piceance and say the second line, even more and the.
The north of that is that overall year to date.
One way between the AD.
Average of the prior two years.
A bit the love the he was that in the week, Yeah, Yep and we're getting the we're having a very difficult time hearing you I don't know if it's possible for you to get closer to the microphone that you're speaking to the we really haven't for that.
[laughter].
Not particularly.
And.
What is your expectation for full year.
Sales.
I heard the expectation for full year, and then we were unable to make less part of that and it was it sales yeah.
Hello.
Yes.
We have not provided any guidance with regards to our results for the full year of at this point.
And.
And you get that type of by then.
Possibly in the future.
I'd given you and then.
Hi.
While the.
Thank you provide the guidance now because I think the the very helpful and that's it.
Yes, there are a lot of companies right. Now is the result of of coated that are not providing guidance for.
The biggest competitor does not provide guidance and so and so you're seeing a lot of that in the marketplace right now, but it is something that we would like to get back to doing it's just not appropriate yet.
And I think the vessel.
Has indicated that they expect that for the.
Good day.
Between the two price.
And he can you give a specific.
Hey debt can you get the at least the indication.
Yeah, I think I think directionally in the top one that's that's the.
That makes sense and I.
I think based on everything that we know, but I think the talking beyond that at this point.
It's difficult to do.
Okay and.
And then on the.
Non tobacco side.
What do you estimate the annual cash bad and that business it.
Yeah. So.
Well, there will be more information related to those businesses as we know of.
As we move forward.
At this point, we're not putting the whole lot out there are the one thing I would say is that the most numbers are coming in.
Quickly.
And that's about that's about all I would say with regards that at this point there will be more coming.
Okay, and can you comment on sales trends and the.
And the Canadian kind of its market for the past the too low.
Yeah, So I think of a couple of things.
The timing of rollout of of stores in the market.
It's been very very slow, especially in Ontario, and Unfortunately, there was the overlay of Cove, and as well and so all of those.
The factors have created a lot of challenges in that market. The it all of players the pad.
The deal weighted.
Firstly challenging for us in the face of working through all of across the the rest of the country.
And and so we have rolled out your recently across the rest of the country.
We are not in the put back at this point, but there.
There will be more information to come on.
One of those those business lines of shares.
Here is the need for.
And do you.
You anticipate providing any information between now and the next results.
Which had presumably the dairy.
Yes, I don't know in particular.
Standpoint, the anything in particular, but.
We will be putting more of third quarter results out of those would typically fiscal fiscal quarter. Three as we typically do show of we'll be looking for that as to whether or not the announcements.
Between now and then the.
Difficult to say at this point.
Okay and then.
Total questions from the thank you very much.
Thank you and.
And there appears to be no further questions I'll turn it back to you Mr. Thomas.
Thank you Eduardo and thank you for joining our call the shipping costs.
We will remain available for playback for any interest of persons and ATM on November 21st again, Thank you for participating and our conference call.
This concludes today's call. Thank you for your participation you may now disconnect.
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