By Timothy S. Donahue
Top Takeaways:
- Quarterly Profit: Pyxus reported $4.1 million in net income, helped by a $9.1 million Brazilian facility sale gain.
- Shipping Disruptions: Tobacco volumes fell 15.8% amid logistics delays and power shortages in Malawi.
- Outlook Maintained: Pyxus reaffirmed annual revenue guidance and narrowed its adjusted EBITDA forecast to $215 million–$235 million.
Pyxus International returned to quarterly profitability, but delivering tobacco to customers remains a challenge.
The North Carolina-based leaf tobacco supplier reported second-quarter fiscal 2027 net income attributable to the company of $4.1 million, compared with a loss of $879,000 a year earlier. Revenue declined 6.3% to $534.4 million, as tobacco shipment volumes fell 15.8% to 77 million kilograms.
The earnings improvement was largely attributable to a $9.1 million gain on the sale of its Araranguá tobacco processing facility in Brazil and lower income tax expenses. Operating income declined to $40 million from $46.7 million, and adjusted EBITDA fell to $43 million from $54.8 million.
CEO Pieter Sikkel said the company remains well positioned for a stronger second half despite shipment delays across several tobacco-producing regions.
“Market dynamics extended purchasing timelines, while external factors including widespread global shipping delays, shifted a portion of sales into the back half of the year,” Sikkel said.
He added that nearly 95% of the company’s processed tobacco inventory is committed to customers, offering visibility into expected shipments. During the November 5 earnings call, Sikkel provided additional details about the disruptions affecting the company’s operations.
“We’ve seen significant rises in logistics costs around the globe, and container availability and vessel availability,” he told analysts.
The company has also faced electricity shortages in Malawi, limiting processing capacity. “We’ve seen limited power, so our factory is not running full shifts at this point in time, so that’s delaying some of the processing and exports from Malawi as well,” Sikkel said.
Despite the disruptions, Pyxus reported improved profitability on its tobacco sales.
Quarterly leaf gross profit per kilogram increased 17.5% to $0.94, up from $0.80 a year earlier, reflecting a favorable product mix and lower purchasing costs. Leaf product gross margin improved to 15% from 14.4%.
CFO Dustin Styons said the company deliberately slowed crop purchases to take advantage of lower tobacco prices, even as logistics problems delayed shipments. “In short, timing and volume weighed on first-half results, while the profitability of the leaf we sold improved year-over-year,” Styons said.
Pyxus reported tobacco inventories of approximately $1.03 billion as of September 30, down $71.9 million from a year earlier. Uncommitted processed inventory totaled $42.4 million, or 5.4% of total processed inventory, down from 9% at the end of the previous quarter.
Sikkel said the lower inventory value reflects a deliberate purchasing strategy rather than a reduction in tobacco availability. “The value is down, the volume is up, and that reflects the lower cost of purchasing for this year,” he said.
For the first six months of fiscal 2027, revenue declined 9.9% to $972.2 million, while the net loss attributable to Pyxus narrowed to $3.1 million, down from $16.7 million. Net debt declined by $13.6 million year over year to $1.25 billion, and net leverage improved to 5.86 times from 6.54 times.
Pyxus maintained its full-year revenue forecast of $2.3 billion to $2.5 billion and narrowed its adjusted EBITDA guidance to $215 million–$235 million, compared with its previous range of $210 million–$240 million.
The company also announced an agreement supporting a proposed capital structure transaction to strengthen its balance sheet, extend debt maturities, and improve financial flexibility.
Management expects most of the remaining tobacco shipments to occur in the second half of fiscal 2027, though logistical constraints remain a concern. “We’ve got the tobacco in place. We’re processing around the globe. We got a lot of committed inventory to move out,” Sikkel said.
The company is also monitoring potential El Niño-related weather disruptions across major tobacco-growing regions, which could impact future crop production and sourcing decisions.
