Pyxus International (PYYX) 9 Feb 212021 Q3 Earnings call transcript

Company Profile

Participants

Joel Thomas	executive
J. Sikkel	executive
Ann Gurkin	analyst
Ian Parkinson	analyst
Steven Shapiro	analyst

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to today's Pyxus International, Inc. Fiscal Year Third Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Joel Thomas, Chief Financial Officer. Mr. your begin may you conference. Thomas

Joel Thomas

With Thank Sikkel, evening Pieter this President you, and Jenny. our CEO. is me

Before we cover to I would begin discussing our a financial few results, like points.

detail from that during well reflect and these as those described uncertainties forward-looking of forward-looking do actual are any forward-looking in that these our fact. change statements cause or expectations of any hear which not and the in with or most historical as the in filings including to update events to statements not that to statements along in may belief, or are expectation may risks statements this uncertainties management's made You other risks SEC, circumstances change We differ These and risks call on undertake and any our on These and express are involve our recent intention this based. number materially course statements. assumptions XX-K. results Form are a call uncertainties with conference

in that results generally be as of and the including our available alternative EBITDA and financial measurements, in referred measures not other taxes, is a regarding before www.pyxus.com. States to principles disclosures under table, measures amortization, United be a EBITDA, at call an not on may interest, Included non-GAAP of reconciliation earnings accounting non-GAAP U.S. and to A depreciation considered adjusted as should including discussion of and today GAAP operations measurements. website these of are our commonly accepted financial

are reporting filed to start comparable. application the Pyxus our XX XX-Q SEC. And qualified periods pre-emergence the fresh not with connection as Note with that in Chapter from of the post-emergence Form cases, for in start and detailed reporting, due the fresh emergence

an should replay be is than replay, by call Investors or any unauthorized reproduction contents. authorized strictly as aware not conference been and of call reflection transcript the other this has Any other not of prohibited. of rebroadcast, this accurate International its be provided reproduction conference that Pyxus may

over the call hand I'll Now Pieter. to

J. Sikkel

Hello, Since restructuring, Fiscal year everyone, business. categories of in of a which this financial in improve develop the the and XXXX Brazil. streamlined performance. our the potential 'XX our year to us including and countries to and we for continues year undergone We see be evolution operate completion tobacco all joining leaf stronger, a of a United for order strategic financial for thank increased in States strategy fiscal to units we've business review evening. from volume you more

In potential for September addition, the provide submission category of PMTA future the an growth. encouraging e-liquids increased the deadline, in paired developments enforcement with following PMTA regulation, XXXX opportunity

the pandemic. industry, impacted industries, like has been other tobacco by COVID-XX The many

our in disruption channels. experience to chain continue We and supply distribution

customer others to orders quarter volume to in meet the to procedural with and first to of XXXX. is demand, fulfillment fiscal delays we customer we with of of by the resulted supply While expectations This been of in of regards product line timing orders. shifting and year the year of the fulfillment quarter orders have impacted fiscal fourth have of certain XXXX has adequate

to inventory to XX, continue million and the December manage compared $XXX.X working decreased capital to at our million year. we XX.X% prior challenges, these closely, XXXX, or Despite $XXX.X

$XX near the $XXX midpoint Additionally, by range fiscal we our to expect our uncommitted million of of million inventory stated to be year-end.

in to gross and profit. sold under significant Efficiency of complete flow we as the a are we services goods to and benefits cost initiatives reduced the percentage of see As Program, Global Operations the sales beginning through

the $XX.X reduced Further, million from the quarter, financial benefits SG&A for positive million completion our to a expect we Additionally, are $X.X going with XX.X% year. impacts prior expense reduction of we the compared to the see from experiencing restructuring well. as of or interest forward,

In addition, Program, for customer better base, company with in for the position growth environment. financial the believe that our Efficiency market coupled post-COVID the segments current our restructuring there opportunities Operations and are Global we with our

forward for our in sharing sustainable enhanced deliver We and also manner. global to how look intend we strategy ESG compliant a to performance

other like support I'd the continue most to history. been business, of to all operate extraordinary enabled along our with hard suppliers in times. us our these of employees what support recent their our for throughout customers, one Their the periods work, thank has partners and who resilience during unprecedented to from challenging

the where we presented may challenges a world. people's so for our we better the significant by step success continue We and purpose: work critical grow year Our a for believe long-term that the been live forward transform to communities lives to world. our fiscal has our we so together can that XXXX company's company, year has

turn it I'll Joel? over to a that, With provide financial Joel to update.

Joel Thomas

of X.X% sales cannabinoid or This by other cannabinoid prices. and in offset for $XXX.X in well compared X.X% to in product provinces Thank $XX.X sales in X Canadian was due XXXX, an revenues you, of prior period. decrease the ended in regards XX, and results, same rates prices concentration most and average of by and Africa, sales revenue a to Asia million line. and sizes decrease The were in and concentration a partially and the the year in having quarter pandemic. was higher the of to by by leaf increased the operating our a a mix increase foreign was These lamina Pieter. December leaf The as to launch to America occurring X.X% partially offset attributable the months lower in increase North volume as the increases million With volume third and X.X% of increase average X.X% GO! leaf in timing was North volume attributable delays in increase by Africa in caused smaller COVID-XX shipments shipping offset in Europe. Europe product Africa leaf decrease a sales in America partially to changes South mix lamina exchange having was in America driven from product crop

$XXX a was X.X% December This for other period months compared increased to ended in Europe. in and the in and to Cost December conversion conversion due and from Gross South increase These was X in XX.X% million months increase in foreign of prior higher to the XX, same $X.X Africa, X increase partially XXXX, year. million of the and increases changes by having lower concentration profit mainly goods revenues. mix of operating lamina and the increased Asia to sales XX, exchange sales in a last costs services rates the or This for to sold ended offset America the were XXXX, for as period same product XX.X% year. costs attributable lower Africa. in percentage Europe,

expenses current XXXX. Services Products Chapter $XX.X million monetization from year million Other the in with associated the SG&A year evaluate X plans were XX $X.X incurred segment. The subsidiaries in the ended to $X.X The for million and expenses of our and for develop XXXX, interests cases. of months of XX, costs included and December emergence partial a included prior potential

XXXX, industrial increased for hemp included the compared the increase certain of and to charges impairment restructuring of million employee $X.X XX, CBD months $X.X and to December was continued This African ended X charges asset U.S. period. year operations, our million and related separation attributable which same impairment to operations. businesses and the restructuring prior to Restructuring certain

professional tobacco under commenced crop under driven Companies' advertising ended size facility to interest currency debtor-in-possession costs Other the the decreased lower seasonal Services support that This marketing African branding, the various segment, company's million customer well balances outstanding expense foreign pendency they year. Canada's Interest XXXX, during months and cannabis the and prior growth million in The prices, legal same by are XXXX. lower by on green $XX.X crop of the mix, of of for and was rates, obligations funding proceedings Canadian compared January decrease liquidity $X.X Creditor extended subsidiaries to X debt December to as quality, Products of long-term and including credit. Act the to the company's balances the expense requirements Arrangement and and lines XX, factors affected seasonality, period as

$XXX.X the available under of seasonal including credit. As lines XX, company's of cash December $XXX.X availability foreign million, of credit million totaled and lines XXXX,

open We the future about line are for please our excited the questions. of operator, business. on that note, And

Operator

Instructions] [Operator Gurkin go first will to of Ann And we Davenport.

Ann Gurkin

Where I EBITDA do was questions, you looking was see wondering business? that of beginning the out a if couple with I years? you ask see could that tobacco -- several historic business for potential what do where what

Joel Thomas

historically been stay not where or growth. the we we've actually some point not-too-distant future. point, X Ann, consistent. the at be that at coming We opportunities if that but this guidance should the the at probably look last further probably for business years, see in tobacco will has But any Yes. X provided over

excited pretty in again, future we're, so about business. And our the tobacco

Ann Gurkin

It put 'XX, to like bit $X.X little it filing for running in billion, little ended in be were looked January like $X.X bit behind the March that be sales a back year seems out where which -- the to million. you $X.X million, a used

opportunities share, to market you say So share. you've have if was curious gain you although market I lost

those So can kind you numbers? help reconcile of me

J. Sikkel

Yes. a year. think, still in I I mean, Ann, we're COVID-impacted

than, little our our profile bit customer certain are delayed, base. operation It it's would of customers might say takes our our they or geographical expect. we of So profile and a -- I more with in

see indications So through normalization or is to The of date some next next the we as in more growth beginning hopefully, we anticipate And through pretty the we positive the and year. and up we pretty go that year, regarding were We quarters as is have. run into that. into get disclosure we're as revenues the purchasing go anticipate see excited volumes The year. those with pleased and, of our new contract we to that going to even growing. we in couple then going, of

looking certain the so strong, we've operations, so is do. at only Obviously, other the pretty I and is in Brazil, factor, against dollar think, U.S. rates got Argentina, exchange what keep particularly the to So on. Turkey

dollar little those time, a from coming the volume to we with revenue affects positive that see as expect and go operations. at improvement So same forward. improvement, But we bit margin growth the

Ann Gurkin

your out really that debt and I debt, with year business. for debt NewCo, pay net of of excess or that billion, coming this debt? quarter Okay. thought you $XXX your you're billion after from asking For debt, more? I'm $X.X you to like then $X going $X exited this just how core I looks creating this been with the year, the it all expectations about $X restructuring debt year come there. you curious billion cash. with help burdened after for about restructuring And you've curious, netting up process guess out close have in restructured that level. had down Can you've billion was Why wasn't that me years, to understand just And on million

Joel Thomas

we're capital very excited new Yes. No, structure. our Ann, about

XX, If back end was billion, closed go our and a year at ago, $XXX.X December XXXX, at out million. net $X.XXX you at quarter this we debt

$XXX or we year-over-year of about So million down XX.X%. were roughly

have we for what So positioned ago, than and we different well year driving a I where capital very a had business. we vastly we're are structure think the

feel fortunate. we rate, any very at So

Ann Gurkin

Yes. core the after you you debt tobacco into businesses adjacent year $X.X call The business it it. year billion cannabis billion, But that carried Canada, want to like or $X.X year. in before expand after wherever

really whatever. It's a heavy you're a to of net $XXX million, load. down debt bringing still it So

wasn't that restructured And more. why so I'm curious just

Joel Thomas

Yes.

adjusted capital, meet looking a and we you're second year-end our or book. got Remember parallels a for net debt order when You year-end especially to Hemisphere have seasonally that a be us, levels to debt of fiscal related number in number. Southern second third third working to positions levels increases to and careful related debt building between draw trying in to quarter inventory at and quarters number our debt and

And look really related year-end to at to any the just period-over-period and got to so you've quarter. compared balance not sheet examples

So pretty important.

well move this year a balance So forward. positioned in XX% there's, as very again, sheet again, net that's versus look debt. almost decrease last the we at you year, why And again when is

Ann Gurkin

a debt pay to each over plan absolute the So to for -- core do or year multiyear target business? you for how have level you the much period the a or as net a tobacco down target debt

Joel Thomas

Yes.

cash utilize a pay flow One, think we of planning are there. to to debt. free couple I down things

We any haven't yet. targets given

the on to level. side the opportunities think about we see cuts we of is, I improve EBITDA our we consolidated we'll other when some cost months. see over been think our focusing XX to And the that dramatic here improvements, next XX hopefully, this pretty at operational have improvements a real

lot a where that's of our so focus And is today.

the again, And together, coming back you sheet. And pieces leverage based our on we've both combine good balance so we of got start in. a time, see those when over should new

Ann Gurkin

Okay. over spending And what CapEx months? is your next the target XX

Joel Thomas

be to support going historically. and be consistent business the tobacco really to -- what be It's we've with and tobacco should seen should

that in as kind So the in tobacco of to range in $XX million, business. with $XX we've -- somewhere high been million kind maybe the of as that historically

Ann Gurkin

that in when So -- just dynamic, maybe U.S., curious, the particularly business for this market a just time it exit cannabis the Democratic becoming point U.S., of forward. why little the get this Great. legislation like juncture thought legislation or was is favorable more get given this favorable? the administration Okay. move looks then the a Canada? environment or in was potential And at Why more in to some to that the out business turning process to I'm curious,

Joel Thomas

Yes.

the think and think, strong see we've lot nicotine where again, a we in looked tobacco very there that in I and delivery, that this really opportunities got, globally. at are and opportunities a of is business, we've I

going at, businesses negative and We've And cash had we've we're some and our challenges negative. where that is critically been the flow going go this. see start-up where and forward so very some to we're free to anything we strength of free And new strike flow opportunities. looked is related cash or has to

the going regard. really and our to nicotine again, business prospects in vapor tobacco we're, continue So excited for that business, about and push inhalable we're to our

Operator

from Polygon. of question Ian And Parkinson to next our we'll go

Ian Parkinson

look sales this, materially If reported sales. I extrapolate day low. look what at and you higher guys the Universal had extremely The expect other

full So some on the I'd like that comments expectation comments to get some and year. for on your

the margin the much higher gross normal. on side, But seems plus than

the what's to So those? explanation both of

J. Sikkel

requirements be think, terms of and in COVID, freight to we've [ customers X, certain Well, rates, will into to countries I have countries from ISLs Ian, with that X X seen quarter mean, with X some we from ] next disruption as quarter in from certain slippage various said, some go container quarter of through quarter. also likely availability quarter I into year. and But I the with got targeted the and

there from and again, it's had freight and being was Post there, packed. weeks tobacco The ready, in to the it's that able volumes exorbitant to Europe out. article and great effect rates, think Washington get for of And about a a actually few in some example, China ago has I terms back talked that

So timing that's more a issue.

and also that. it We good for were pleased with the gross think improvement, I margin was quarter a

throughout organization, We continue quarter. the focused costs a to be on and was for result that the good

Joel Thomas

if both in quarter the and -- look up from total, million. our segments million our And at $XX.X $X.X aggregate $XX.X million in and you year in look has tobacco Q tobacco look of the to Yes. prior at moved at

that resulted it's So million a line. very year-over-year, positive. top X.X% was And that $XX.X in pickup in increase which an

businesses $XXX tobacco in $XXX.X year. million looking the prior we the million, discretely, at So in we're from -- came up

we're improvements. everything during can trying going we're that really get see hard fourth quarter, to into think to think the I we some we're period. get starting pushing move we And the So to moved as

book There's a is some markets this some the at do outlook But that as shipping there out our very at. and that little strong well still the related order customers lot a the COVID, our as has good challenges -- we're to and to of is with point. of

Ian Parkinson

last especially Yes. year. the weak, of was year Obviously, towards the end extremely

back a but people you'll to So year. not difficult more you'll best year, than be guess hoping that last of I are be

for full So sales? do guidance you year have any

Joel Thomas

there not We've anything out yet. put

getting not yet. some just to be point, but back guidance We at will

COVID held And from that now companies and after. right on back thoughtful point. that. we be are back experiencing it's improvements push around I values. I next think we providing And continuing at a into look coming of the to But have we we year be of to see kind again, some appropriate year out guidance challenges based think will lot for as to where are again,

working So related and us their again, order that book well with is future customer and to positioned, think base very -- we we're good orders.

see we grow. opportunities So to

Ian Parkinson

full the longer-term guess I guidance essentially, halfway to we're through aggressive. I guidance the difficult. providing not is unusual But weeks. given for year providing QX, disruptions the forecast is asking so that next we're more appreciate X

Joel Thomas

Yes.

front, on So of I that normal we things a in year, hesitate. right? not would couple think a probably

year. fourth actually in big certain fourth been countries in, lock then affected for got Our COVID the quarter shaping typically it's that's customers. and quarter got this on back a that's we've up go and world, up is the for biggest the time, cause various kicking and year same very of the at parts us, And of quarter certain you've

Now containers where today. got we've the we good need news generally is them

of of appropriate was We really again, to tough are pieces, I really a But But just ready the X in we building we packed as see some especially where there. this to the to think, anything last fourth of third going third year, good out us not hard quarter. year go. book quarter. And at in better year, 'XX, And again looking, very we're built fiscal for good opportunities. a lot this to there are the fiscal is and And a be into third order weeks energy a point, hopefully, what put last pushing can We've as this moving good. X quarter quarter. quarter and developing going off

So...

Ian Parkinson

and try because and of lot side changes it is I revenue all to even make [ uncertainties business don't across our what harder a the want come appreciate doing. ], understand from in to I those just I that. [indiscernible] of And acknowledge there's

having Why million year million is the million lighter? they at I $XXX tobacco, In it terms a the are all ago. moment, $XXX guess, were inventories $XXX of

Joel Thomas

a things. of quarter. the Well, were in sales up, I couple obviously, mean

that's positive. So much very a

I We third the in also the inventory. quarter. crops the We and had sales had currency shorter Africa, affecting up impacts in mentioned

So where again trying we feel working as dollar again, about we've to but being I of on to for I this all be into can manage seeing think related to where value think the a that feel I items moving on are the all hit year-over-year be our impacted way focus so in lot a also next pretty rest of year was. also that you position. down been and we're able inventory down see able it's the in to of think we're And what orders good I working on to are. $XXX where as of million very our our And we those inventory capital think year, And of debt inventory. good about capital we we well, bring and position

J. Sikkel

Yes.

end little through on is just we're and contracts piggyback a And bit. to everything Just and of quarter, the the uncommitted amount at positive. significant year-over-year, down to committed, of waiting the all in that getting very the of is obviously process is a Uncommitted there. that which a go

reduction also world is of crops green the well. of significantly in reduced certain around is jurisdictions to as unpacked part inventory that's the it's So there. other due the start-up And the the year-on-year, partly delayed some and

Ian Parkinson

at what, Yes. the if And Yes. look quarter. think was, SG&A, then I it million $XX for I

or number I if around figure. year I a should run in you annualize get What think X? $XXX that do So million that, to be rate

Joel Thomas

Yes.

ago, been back as try probably you that's like much pretty work the a improvement guidance can. X SG&A we target that. be. is look for to X or I We've as But bring lot a were we've where provided we darn geared on at related of to doing, any where that I think, efficiency in think we'd good years to if not probably

move And see start to so -- in. it should you it to should start

also it's recurring were be to quarter. there that line through out that important think current flow certain that that in I items the point not should item

So out. I this think we called

So...

Ian Parkinson

you. Got

Okay.

but with just They're are message the we there. down, I is seeing think of the where sales thing delayed. struggle inventory

less Just trying information granular given the is difficult, that see. to reconcile again, those we

like you what give obviously and us appreciated. would is QX on look So any help can QX understanding

J. Sikkel

everything I mean, get this I a cooperate, the travel these time we have over shipments through I opening customer think, to And our more hopefully, Ian, going more next delays on out and obviously back early financial should much COVID various on. don't hopefully, the factories we to a of I samples fiscal Yes. I've schedule next. be will think should including we mean, the And around frame 'XX. out the as get we as -- we can, because work We're for doing next for normalized and normalized quarter including the said, year. going kind operations in globe, still then

Joel Thomas

got you the you of say Note I a also a And go can we've there, bit write-up a in breakout to you to would the was going and a bit on that a kind just of little direct I components and it. XX, of inventory, there's if Q see to. on bit

we're on I So inventory. think well very positioned

Ian Parkinson

behaving? you anything Universal's inconsistent is or results, Okay. your at was look found And business there with do how if you surprising

J. Sikkel

we lot on mean But which are competitors' year really or and seems to inventory get our would say were surprising older a the discussed, discussion, of at I it they I commenting out. just looking carrying that of spend in they crops not down from they as with don't those COVID. time crop, current as they obviously, performance. be quite were a managed to throughout And bit the on eventually

So a for them that positive was quarter. the in

Ian Parkinson

Okay.

you then stocks terms of seeing as are of Sorry, them a hassle reduce the dealing one And shipping more. moment. at the your we're tobacco avoiding customers, way of of in their

on So your catch-up replenish are on you behaving? they those expect some can and later try when how should comment What customers stocks? we

J. Sikkel

so XX customer. depending XX months on duration different anything to has the levels, Each of our customers from

and customers haven't way But to catch Xx they rates can And And would I targeting inventory you from mean say as as certain So -- through, year, on improvement the up positive, freight we work but able as and logistical crop well. origins as in X seen a next into year. I that picked its being season that report hopefully But go they a and we terms us. has through reduction. not forward We're purposeful go it's normalized look The we we until good. occur. American we said, no, to issues South Indications The that. positive the through reductions. have seen next they having indications as we've is they'll will are buying. more when we works for increasing, are up to cycle through on go wait pretty

Ian Parkinson

the the So company a lot obviously, all noise. of things has worked through of because there's

questions of lots So from our side.

I help. me. it for So your That's appreciate

Operator

move we'll Steven And question of Gerstein Shapiro our to Gold next Group. from

Steven Shapiro

a as was now to it And little. curious because before, that it a was you -- you into to you for I you're for tobacco. earlier cannabis went the business The to products. I expertise use growing the answered your question reason different what like was expertise was but your to wanted exiting would said use pursue you

Democratic are given the there of what now earlier the that said the States. group acceptance about somewhat by United confused power, coming Ann more I'm So in into and cannabis

Joel Thomas

that that out on we're vapor is cash and levered and that's And and business around tobacco strong think better phases fact is balance is financial have globally I restructuring that focus areas. have U.S. and are with levered planet the of of are we're start-up Canada focus well are there we necessary may nicotine strong and our are them the Start-up when there very in businesses tried are I on through we've the that a you a coming the business, in focusing be where business XXX challenging. think those generative And that the businesses, portions so already, where our we And a less customer I highly go we're inhalable sheet, EBITDA today very good, we where position to out start-up the in base. years tobacco the business, and as focus experience the where why cash again, positive the other business, factories Yes. to highly of to think in pointed focus positioned it's to generative we've positioned need leaf

why so we're the change. that's And making

Steven Shapiro

sorry, million your increase this reduced at by or quarter, I'm it went I your expenses, -- to in reduction it your I think think. -- looking in -- decrease, And it $X.X this year seems

I think that's what said. your press release

the -- your million it interest decrease. $X.X as I'm was that figured $X.X But $X.X was sorry, million of I interest, actually However, million. it,

expenses other had the increased. actually, So

Joel Thomas

Well, gone expense our from down. so quarter year-over-year $XX.X the interest million a decrease down year-over-year. We've is to for $XX.X XX.X% million,

Steven Shapiro

it correct? $X.X was So million,

Joel Thomas

Yes.

not what you're pointing I'm So been really to sure. expenses -- to. referring which expenses, exact We've

Steven Shapiro

in by million you release, I the expenses said up Well, quarter. $X.X interest that the said $X.X million you this decreased the press $X.X that made have in And that assumed of million.

think have or expenses I interest $X.X other the must really, if other increased than So right? by million $X.X million, my is math

J. Sikkel

talking here. items about we're X think that separate I

the positive. year-on-year for Chapter looking you're included what at of the onetime was million then $X.X expense of prior expenses year-on-year, there. I $X.X similar the interest quarter. the SG&A very is million $X.X million but And It expenses, the reduced only So think, expenses year, current year by were XX

on reduction have normalized and SG&A, basis did will continue. that a we of a So

as looking through We least to we'll at that on to fully roll see that see at are ongoing we restructuring, will expecting as quarters basis drop an completing future we onetime the are significantly. without continue events

Steven Shapiro

roughly [ specific your of have debt, at overall? but don't What's discharge to be if was debt this XX%, Well, I recall. each to the the rate interest to X.X Certainly, part X%, point almost want you as it had average would average. that Right. I down. ], the come

Joel Thomas

Yes.

the debt is arrangements, to our breakout Note if XX, in deck imputed our facility by table, as give So we which go you to interest a rate.

payable at notes for That at, that look long-term has you some. instance, banks about gone rate our debt is about our X.X%, other up at if X.X%, We've our got X.X%. to XX%. notes, about loan at term at they're So XX%

had rates have certain we pretty So obligations where Other have that consistent. the obligations stayed gone up.

Some following the have we months. less debt. in And overall, have come in,

in what's driving interest expense. reduction that's So the

Steven Shapiro

the because you year, the literally -- year of China. is, were to up issue from I for into was Are have calendar in you year shipments had with this experiencing that holding being couldn't this coming I part question last shipments in this example? anything They first the of quarter COVID. think Last the regard getting XXXX, into big year, China, deliver you in

J. Sikkel

think all those geography procedures I work. make to what and is focused on shipments in customer each is we're all through order different, getting in each the

we X slower, we number So year, between up. earlier, X would that But a of you're will calendar we that than first say, for quarters and it's the quarter like what caught reasons. quarter fully in I this X or still of expect, be in would I said saying as

Operator

And Credit to Research Sam next our Manikin Independent question ]. we'll [ from go of

Unknown Analyst

To has normalized. I volumes view I without your to few, the the conference cycle way natural I'd like it evolving looks have you because cycle start on call been of of the if of Universal, distortions. get distortion with, by tobacco COVID listen a if have evolves a normal And like the may. to sort in

and on, kind and abates this? from Or and was normalizing wondering, the I of And going the once this are there other years been On of something after it's of the only little going on since company it COVID your simultaneous industry XX in is redeveloping influences some for of is I've of bit? is sort price view what's per sort ongoing on for quarters. sort a there since the last followed been couple kilo, hand, least has volumes the at decline

that have the same always And during under were theme. more. COVID, second, been to people impression the smoking actually I

Because case of less, guys were so tobaccos inventories of requires just you from it's those cigarette shipping since Did world. understanding my everywhere? less combination have tobacco? the in average so of that extra and Universal get different shipping they And was did sort where the all

So if in from cannot me was this I'm more but Philip questions, where sorry if United help you Morris financial States sort the understand to wondering I they get this tobacco? do So get of all for tobacco have I China, this. -- can

Joel Thomas

year average America months a we're $X.XX, price our up of things. so moved that to out We've per increase. $X.XX you selling a segments, related to our for Yes. I can couple XX.X% understand of the a from lease X kilo breakout about see North ago $X.XX, that got at was and

Other back basically we expect more and issue mix at quarter. to for we out further in probably changes than the as about was $X.XX - segment as mix Leaf that the $X.XX, Our was look a come down But that year. anything

you at Leaf $X.XX looking versus at for X look we're the When year instance, $X.XX North America, ago. a months, for

issue from look X basically, to So for And had But and there. Other, to there we there's - a well. you're that X.XX. the mix, in was we're bit. a the And with do in little X.X up as bit a that again, of Leaf mix months, at if currency little

bounce So into into quarter line across we back we move to first. as the and that -- heavy expect but fourth the shipments

Unknown Analyst

[indiscernible]

Joel Thomas

of have kind we're flows little We fluctuations mix The do product seeing. yes. ebbs related that to and occur,

J. Sikkel

anticipated volumes, than in consumption seeing yes, I your yes, general, they customers past. COVID, the are had think, in I question, less mean, decline during on But in our

has pretty strong I performance rate market So growth they've countries, as think Chinese so slight there. decline as the most far reducing consumption. shown as on And well, shown, of generally that the positive of in

on normal [ being socially don't having the distant back exactly and done is of I have the example getting with think shipping cycle the I so cycle. distant to so customer where site. year, for versus by the been dealing yet. whole purchasing That ] processing, packing, orders we've we're to socially The is -- parent to finalization them crop think that

with starting those in And If say, XXXX would crop to we as we more more terms came to be challenges improve. we us, and continued got 'XX. order a and but in I delays significant into the And able we've and a to expect into a ship, expect our I good I our book have get can are all we -- lower and inventories, and earlier And volumes the reduce to relatively those the was coming durations. We've or has although year question, what all to the had of from in getting we out don't -- crops, be see But will on volumes shipped an gone simple to starting as we it think good in with several on. we XXXX normalized crops the to, hopefully, answered fiscal and 'XX. still disruption of grow obviously changes cycle grow, customer that changes in back get to COVID less year markets.

Unknown Analyst

since be Okay. That's comparisons helpful. in to And I've then Universal? other by bankruptcy locked was now [ related this all if are a you sort couple this with question. it's the to the these the bridge. can And all of previous all under of and business, questions were sort of that question. what always related cannabis issues holds wondering ] been were over But ask answer -- it's I

you several of Universal difference generation cash over been to last flow main the between related in sort capital. working and So years of changes your has the

of product sort you comparable you sort locations? So to it is was now the issues free in and are of of will you bankruptcies inconsistent improve to require it I so damage business sort on it working cash has generation. customers And mix working capital more or to more the of been to serious flow shipping What you're generation? since for your Because a revenues. related that are amount been focus the plans this opposed to spending very Or has regard? and wondering, capital the your core as time be

Joel Thomas

phase the while the is, through CapEx. were were of I was first the There that a start-up of number there were nontobacco-related it Well, working Sam [ investments. think, There ], initial we requirements. part operating businesses, is on

the hit biggest different fourth get and of challenge in to And on our so global in, the quarter hit shutdown difficult quarter, And year, it with our in all then insurmountable. various that of a essentially quarter, at that time, in to world really points a parts came made last was cash. was put that pressure fourth

at that are got banks to good in we support there globe requirements America America very When around go or the very we that Africa well be or capital a we're or with as South look We've set work of positioned. our you North Asia. forward, working it us, whether

we've think, good got to up order we've to at support XX we starting across next opportunities the again, a grow what and point. to with And a our coming we reduced we've to banks requirements good as structure our continue debt we look And as core tobacco got book, of the we got, the So And again, we got look as need XX do. today support. levels we've business. very an capital see months, that I at see enhanced

trying think about business across fiscal out years. probably the positive it's of we're this very the So all drive couple to we where as and year of remainder another

excited we're So about very it.

J. Sikkel

able the And we weren't with receive an past. to enhanced opportunities in balance sheet, seeing that we're

do. I see continue got next and in and share, and we'll think of business renewed the over leaf years take those interest of And couple market that fruits we grow we've what market the other the think to opportunities as of our business. grow we in I opportunities advantage

Unknown Analyst

some big damage you sort was view, of annualized flow some of have significant don't from kind flow then that is commit was the of to the kind to sort see expect of with are the and other the we mentioned the lead need basis what this of just businesses. have me and of point to in this? statement the of Since kind relationship development business you the portion Joel, -- of is picture, you to of -- in capital last And fact in flow capital cash cash I today's if to experimenting from promise, to should quantify a But XXX,XXX this improvements can, cannabis question. that cash the longer an wondering no feet new of related and you you parts working nature. on

know. personally know, to to I want So want investors and

Because related north to I working cash you million So capital was of vividly and adjusted remember CapEx of extremely cash SG&A? -- I are of you to were $XXX damage what EBITDA, personally not EBITDA, when EBITDA, kind generating to profitable.

to -- You asking left is comp you sort never like of that. I of the the now XX cycle, that sort only the been never merged of about was you with and the to ago guys of that deleverage over It's difference the have and and have related That's between years able Universal fact why you it's you questions because over. of your kind cycle. but and --

you during experimenting no help, the I are day, flow is, cannabis normalized of the longer get quantify may, the help end normalized basis course? what question of cash So of the want if I cycle, at that with on you a business, to the kind will from this fact

Joel Thomas

Yes.

restructuring XX and we But we the off should expenses of ], to focus year, Sam this the fiscal [ finish the nicotine continue And to us. going on those on the kinds So impacts to next businesses. onetime as year. we're our we our look again, Chapter of have have of fiscal costs the I'll and tobacco to as behind and and items majority -- focus businesses need we

provides it again, a opportunity. so And great

kinds of be cost at the we new costs we with some -- into before kind aligned of look where generally should we those. structure believe was that those of If and moved businesses, that the expenses, we

the to again, is the a business, restructuring the doing to we've line cost So years work had, and versus of very that the the strengthening currencies the about probably years the initiatives ago. been one strong. lot similar position are the prospects or with hopefully, X a what of call X X improvement for that dollar been And we've we that it, our that were think challenges last, has by. efficiency of we impacted setting over the top is And had structure continued

up kilos. back our million some top XXX million, we line. kilos growth of we XXX to million, million on at overall kilos XXX side, and went look to go full-service us on ago, full-service And If pressure the helped were of full-service X the definitely years it million cost put it that's volume, of I to XXX volume. and would XXX What

that full-service So we grow volumes period. to across able were

we we're which were caused understanding reset Now to up we're to what slow we've through free things down challenges quarter, a as much picked COVID some pretty the to the the certain last customers last versus fourth pushing some from in of impacts experiencing bit come to bit the quarter, little back certain been there year. year. markets out on a that shipments. and has of year that bit we've see the related hard are third quarter starting was into up been third transportation try moving this moving Again, in quarter little to And a as costs, higher a related fourth to

We're to would last been year. and challenges related we're of of a Some certain slowly not But getting up, to back place catching that's fast but because kind surely putting of move movement. starting like we shipments that related have we that good. as customers COVID. of as to the by It's the had see protocols to some

appropriate again, to been So a 'XX, we up as through we're has 'XX will fiscal and better out that a see at, pointed fiscal the costs sized quarter going you're as of beyond. March take inventory very to position, to best and now, to of and a as look way it's move COVID, these cash fourth generative. But good year to going doing it you related be resurgence as we the that now. to pushing order we we're build start for an we into that next record understanding at business, inventory right low book, out, there our But build off uncommitted great prospects And global business. our core right XX we're

Unknown Analyst

may, follow-up million. ago, on this. see that $XXX like But years to can several $XXX if your I just like I was SG&A million,

years correctly? in of tell like this this was I And level, it's about if million, we $XX if $XX the thinking missing am dollar? capital change I me, you am business. you So can the compared same Or I the $XX you've extra wondering the can pre-cannabis thing through to And to the disregard U.S. then in spending compared last the year to couple $XX like million. of current million million a expenditures, sort been like say

Joel Thomas

No.

million our You're recurring. you not the same should look SG&A particular, in Those number. number targets. are that last And in you trying businesses. that time, there be XX spin-off SG&A to when had it clearly $XX.X of X-month looking included year's correctly. targets, results, portion for And definitely the we across period Chapter of but at a If nontobacco-related that costs had the of we $XX.X numbers prepare we look and at million out of at put just

should So that be not future. are costs as we look one-time the there reoccurring to

if top back are taking on the out years X we that of get then years of And the X, targeting you additional that, costs by business ago.

starting So are differences competitor that we ourselves to at positives biggest out related reduced on any other coming environment. our and volumes And more to costs. and origins And rate, up there versus lot form normalized see again, some are of kind understand the the of a to back and a that of competitors customers there.

Unknown Analyst

Yes, the to and totally it the I make you. be guys, but you'll to look, get of hopefully, [indiscernible] most best a for it. able And all happen, mean, still it's I

Joel Thomas

]. Sam [ you, Thank

J. Sikkel

Thanks, [ Sam ].

Operator

back today's any closing concludes session. that Thomas, I'll or conference turn And remarks. the to for additional question-and-answer this time, you Mr. at

Joel Thomas

you Again, for Sunday, any evening. conference call p.m. for in for available our X:XX our XX. participating will February Thank The interested today. on remain for this call persons joining call thank playback you through

Operator

for you call. your today's Thank concludes this And participation.

disconnect. now may You

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