Pyxus International (PYYX) 11 Aug 222023 Q1 Earnings call transcript

Company Profile

Participants

Tomas Grigera	executive
J. Sikkel	executive
Flavia Landsberg	executive
Bruce Monrad	analyst
Craig Carlozzi	analyst
Yasir Bari	analyst
Patrick John Fitzgerald	analyst
Oren Shaked	analyst
Stan Manoukian	analyst

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to today's Pyxus International Fiscal Year 2023 First Quarter Results Conference Call.

As a reminder, this call is being recorded. [Operator Instructions] I would now like to introduce your host for today's conference, Mr. Tomas Grigera. Mr. begin. may you Grigera,

Tomas Grigera

With CEO; evening CFO. and Lisa. our Pieter President and Flavia me you, are this Sikkel, Thank Landsberg, our

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

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

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

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

hand I'll to Pieter. call the over Now

J. Sikkel

for this joining and evening. Hello, us you everyone, thank

strong XXXX. We fiscal have demand experienced thus in far

and demand by Africa South of from prior and with the more Asia, fiscal America. shipments year by quarter partially from increased first the revenue was shipments consistent offset normalized Our driven timing of timing

In addition, EBITDA year. fiscal to compared prior increased adjusted the

of tobacco South As the compared green processing buying XXXX, was prior higher prices costs crop inventory million $XXX key increased and primarily June activities and to due accelerated new new markets. in year. XX, certain America to in crop This our

are our to costs America weather has were patterns able during to quarters overall Additionally, consistent and customers. The processing capital increase our we expectations which America, South with inventory manage higher effectively stronger our in processed for supply our than meet XXXX, processed we historical crop shortages. and demand, Africa, of current inventory prices see for growing specific La to tobacco in levels markets more the Asia in the committed fiscal exacerbated purchasing working continues tobacco in XX% expect and cycle. Crop inventory adverse to position impact sizes to in meet to goals trends. subsequent certain in committed season, Despite South to due us prevailing near-term shipments and tobacco the be below green Niña

efficiencies and support engage dynamics, patterns. and trials, in unpredictable in purchasing to actions continue our accelerated invest and in global Niña programs regarding business. In we dialogue these and despite agronomy to inflation for markets further customers key to weather research yield with to La impacts efforts market continue local These additional other of training team. We grower response transparent our certain maximize and our the the on

$X.XX $X.XX between million. XXXX billion We adjusted continue to between to be sales to and be and EBITDA $XXX expect $XXX million billion fiscal and

expectations years sizes, aligning better committed together, are world. volumes in deliver we with customer to work a to As stakeholder and crop future we growing value, recovering

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

Flavia Landsberg

This operating revenues ], X the were X.X% other to regards compared year. With XXXX months [ Pieter. and XX, The June prior XX, change shipments was the to in normalized ended was you, due a shipments Africa Thank primarily demand more for from by first increase a by Asia. increase South million, (sic) XXXX sales from of partially timing offset the driven X.X% and $XXX.X timing our America. to leaf results, June increase volume quarter of and greater

operating in required X South due Africa was increase of Asia. The decreased to the costs by shipments The XXXX, XX, and to was change tobacco sales crop partially increase cost to tobacco was the America interest in services in change and lines other for green and million, in affected months XX, prior South factors, as months $XXX.X line by driven mainly prior and sold seasonal offset accelerated rates, America processing efficient XX.X% goods working year. more sourced quality. June a increased management. compared XX.X% year. the revenues. Gross our requirements This liquidity increase the are delayed cash to and of mix, capital additional crop sales by and from prices seasonality, percent June size customer the in compared currency, XXXX, ended X.X% from was the green company's with and In shipments profit that This including foreign for prices, ended was a X various primarily the strategy,

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

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

Operator

take from Bruce first [Operator question Instructions] We'll Northeast with Monrad Investors. our

Bruce Monrad

Can me? you hear

J. Sikkel

can, we Yes, Bruce.

Bruce Monrad

FX. way? I Okay. saw issue on Great. that quarter this Was an any in Did I I -- think didn't much

Flavia Landsberg

it's have $X little million about It not we the very in P&L, at the all. an issue a Actually, it's balance and only little not. sheet. on was over No,

an not it's So issue.

Bruce Monrad

question Okay. -- Great. calls. And of sort then caller asked prior a on I

shipping do at And Can So some need for or shipments shipment I'm Is catch-up comments point? have customers' the they -- -- You the going sort shipments I'm parted deferred, X rebuild your of does like. see period? that? per ever clouds the the as time they little a extra them What's that? on carryover a on about on cloud with maybe bit trajectory. there an curious can and to those? storm that on inventories? Anything where any going. qualitative like And what storm do

J. Sikkel

go It's shipments vessel a of complex the across much geographies. do long way still but containers, have that's think, steady start we've reflected more delays. normalized are Yes, those question We would quarter the in of within those time out Those there, to that seeing region we good schedule. a Asian the certain as yes. And in been on but pricing quarters. and more we're the expect go to to procedural that their I over out, couple really let all improvement out some very see of our that more availability, are me out the I of taking there. news normalization container work customers by shipments seeing with maybe next say nature availability,

that. of In terms about let's catch-up, the talk

in I across demand not We're of factors occurring La up reach because into We this that expectation many really over geographies are the really year seeing strong that last from X think year. pent Hemisphere already. crop particular, this remaining Niña. was from sizes there's -- had year Southern in summer demand coming

end this year I really their to in So as cycle that we're do, our year this requirements. And reflected, in along able point trying the we're over demand as That's but on forward fulfill very shipping. the far carried customers expecting of the not still to at to are improvement and as hoping what of focused to to it's have into related much of bring goes, not terms so really would with availability in we're guidance time. targeting our say, next

Bruce Monrad

simple sort maybe in just on a can I way. press if And it of

COVID. had you So

you You been this you And months' of XX say of those it, talking now. X Or in of normal I'm call years. in XXXX. had that sales you've LTM what's worth here? let's each had, doing XX sales? calendar months about Would

J. Sikkel

we're don't yet. I there think

Bruce Monrad

Okay. months' sales. will order XX your worth normal some point, a customers presumably, All right. of But at

J. Sikkel

order. sure a trying normalized XX-month that. to Yes, I not think been do they're I'm tobacco's to that do available

Operator

We'll Carlozzi question from with Craig take our next Longfellow.

Craig Carlozzi

questions. few A

your a or capital First, expect on are front, working I for source your this you capital a year net use be Do working full guess, fiscal year, year? the to net what expectations XXXX?

Flavia Landsberg

very It's question. good a

if at versus look short tell the me working because year, about with long little let a you renewed to term right? the became the on was DDTL from previous of bit -- compare the you end working term. how So the if and capital capital mainly So the difference biggest is before,

So that's one thing.

versus -- we how let's but do ]. that talk So [ about things

Craig Carlozzi

I'm apologize. sorry, excluding -- I

Excluding strip cash. the out if debt, you

the You talking of part. strip debt. operation I'm out more

Flavia Landsberg

Let's talk about it.

much terms higher, because you So compare what to is inventory working of our It's if in much increased capital, of higher, happened year right? is last specifically prices.

X our strategy, basically seasonal we capital to of from source working that lines. on How places. increasing One was Okay? sourced lines. part This is seasonal is we our increase right,

So finance than lines, with long-term cheaper much the debt. that our inventory expensive is seasonal

one cycle. efficient second the cycle. cash cash is a And our We're lot on our more

increase customers. lot securitization our in on as from shortening by an advance our our cycle, more a we generated securitization we our have programs, cash cash So through the did specifically programs terms well as

to expect thing. with that's all how much So that it, in put incorporate So it us increasing right? these better position would we that, a say, prices didn't, one

on exactly very the about future, think So same well thing. if you we're I positioned think

will It by over much We so are shorter. DSO, considering example. cash XX%, is decrease cycle for our our

So to to to advance that have from better put customers, will increase. position. seasonal continue continue and us We're in a going lines much our

the future, all So that. the very to purchases related well do positioned to in we're

Craig Carlozzi

slightly I one different. if ask perhaps So this

hit suggest neutral. a flow you free it the If simple guidance, your would cash flow basis, of lower end cash on

materially cash a years X there's negative, obviously, or charges. from back has been operations last going really However, X and the lot of, flow

Or the and from cash working [ and current cetera. But (sic) use capital now, to expect do be what lot ], et minus cannabis be that trying liabilities to the That's and current on you get a year of you statement, in material that would XXXX to it XXXX were impact another in do segment, it restructuring really I'm the losses cash? at. incurred onetime neutral? assets flow a charges, we're this purely expect of You charges in

Flavia Landsberg

Yes.

Okay.

So you're very touching point. a on good

negative. do the results, and be and So first delivering that's and yes, just the will, we first foremost thing, The right? we we first won't foremost. Once that, is

Craig Carlozzi

Okay.

liquidity year-over-year? increased expect on year-over-year quarters last show an you basis. increase your as has QX XXXX in a to year-over-year the X Second, Do well

Flavia Landsberg

on as that's increased you decrease the increase, as interest we look well of under right? lines on mean, a overall. rate lines, sources continue increase, we've X -- lot being there's the lot as if cash, liquidity major at costs to of to the based credit ABL, work that the and -- the even And seasonal environment Right. was increase with this increasing our I mentioned, So also a I seasonal it's

can you in you As interest decreased. about cost versus if the average, we cost. our X.X% but $XXX see, actually more, borrow about -- previous interest compare, less it's million about impacted And borrow year, we

to increasing the of So the answer we have seasonal lines. your that yes, is, and answer perspectives continue question? work we does good on, Actually,

Craig Carlozzi

talk is be that's the literally another a design really never missing? your It looking an to you with stepping is of little lot as No, outlook easier suggestion weird one difference. reconcile a the the business, business time help to the just equity -- bit is working a really not And lot we sustainable if a more of ever what to at. shareholders. business were that necessary question. help to I'm I having it's and you or material understanding flow was stakeholders, I here hiring a structure to get question, $X of so it's question, here. you're million with flow and be of filing you a what before. a reconcile since me in sustainable what about direction Yes. can the tomorrow? I'm hard from you would talking -- projected have or And liquidity that cash happen, that slightly it's comments, higher XXXX. third the to But And a trading if time if right? and What the relative I've seen of sufficient Can could path comments am if It's instead you market that a capital do that curious profile, asked suggested are there? missing is suggestion back, EBITDA not to need cap What capital me How outline than that advisers equity the I'm I just going use? to the the a any that answer cash about is type providing. free it's -- steps?

J. Sikkel

But way have purchase to I the from that I it and can the question. way best answer tried cannot. I perspective answer don't equity, to know I is my only that

Flavia Landsberg

You float. can't. No

J. Sikkel

float. no There's

Craig Carlozzi

consider All I that. right. will

Okay.

So you've trying been market buy... to in the

J. Sikkel

certainly I the don't question. better It's know of business. trajectory of not a the or answer reflective the the way performance to

Flavia Landsberg

There's no float. there. no movement There's

Operator

Our Yasir next with question from Intermarket. comes Bari

Yasir Bari

couple I questions. of have a

with opening. if lanes the the you are et that shipping. Starting some catch-up, moving? be Like what's of shipping answered. were does Some on helpful encouraging It's cetera? could the change It'd expand that. How timing of that

delivery? changed? delivery probably I Have then of the part because to problem was -- now the was to expensive. want think they take shipment product, certain it too shipping weren't that didn't And maybe take And customers decided has or of

J. Sikkel

there one second terms of of last is globe of That and particularly issues availability containers vessels me address first and the I I over all the South towards mean of generally year the Let America. think were up. first. cleaned in out half

as extremely of ship big and to crops we're and are move other those weighted reflected whether you significantly, you'll think forward, Asia, definitely in as we extremely current Asia. And and was as see for those can heavily has availability tight. that forward out getting we was few India. think in in we having opportunity forward, quarter numbers improved all quarters. the issue possibly as next which expensive shipments X quickly we I first reflected able can that and The shipment. see was we I obviously to to ready the through And crops China, very looking quarter quarter, the taking be should go as that the X, on out as those see of Thailand, is go It That container

shipping. about I delivery, we're expense not taking question customers think talking of a of of terms There or In maybe tobacco. here expense was

of think as come rates starting shipping that I that, with budgetary we're and has customers the year of see our been reflected most new to down well.

can on ground So pay actual customer cost to is I the is what progress more reflective think well the that, as the we of in willing where see for shipping.

value South have. itself, tobacco we customer significantly that few pricing the from is that the and of a into in the is are cost, inventory quarters go, as of certainly inventory particularly we converting In you'll terms America of terms year, significant got -- around this you'll carrying we see we've our Tobacco increase that expensive in but more to and as all globe, start a see reflected well. in dollar

Yasir Bari

the Got on front, shipments you into -- Or And that? is mostly and Asia? remind And Brazil? Brazil is that out it can And what that just about Africa? of whether me what's status it. of

J. Sikkel

procedural We America there. Yes. into remaining ship still into geographies North are of that issues out we're There certain certain America, some Africa markets South with of the and well. shipping as

to We're as some through cleared start we'll getting slowly hopefully, But up. progress they're this a still see to cycle. year, that think I acceleration as of pre-COVID we delayed well. compared

Yasir Bari

tobacco you got guess, It's Okay. dollar that what upon we expensive, you're just more to amounts necessarily. And touched around just the going clarify volumes more the what the up I is just this, that inventory -- assume So but here shouldn't basically the there's -- narrative expensive. it's right? more then --

And so just...

J. Sikkel

correct. Yes, that's

Yasir Bari

Yes.

those you the about moments tobacco how So kind maintaining then conversations were your confirming expensive? historically? are they got past? -- more. successful you has that. margin sounded somehow going? the such in I where is customers that like have maintaining talking in then your of done that How you it margins pay this like been And to that And mean are How your you there

J. Sikkel

Yes. We've dramatic this and had inflation moments seen we've like where been very we've unsuccessful.

accelerated over, probably I think as to reaffirming this margins XXXX. the today, our and was they've time obviously, do are we've we as convert year. But costs we guidance those believe last managed

Flavia Landsberg

it's that Yasir, lot. demand, helps It very a Remember, strong.

Yasir Bari

lending guess line you they it foreign just your did as right. conversations like you I add, And those before okay mean still at -- to are your And I with lenders, just was on you case? then cycles. more but pretty to can All encouraging potentially looking supportive? you the pretty separately, were -- they last, still this or and crop think is that access forward? to thought multiple now that that I you are going Yes. credit over do get touch lines well,

Flavia Landsberg

terms back of we're -- actually back now We to lines, absolutely. in pre-bankruptcy dollar level. Yes,

and the especially not the talking Okay? spread, basic get continue the I'm spread. I'm the talking about In to terms down, about we continue of right? rate. will price increase, to talk limits, about we'll

continue that we'll down, to We and continue to that. put happen

very in actually it's right? not about -- it, a only Being we on part cycle, the for and there, that success getting not big the our our we -- also as So only some good that's It's pillars strategy. good we're But growth. feel well. of efficient cash more

Operator

our to Baird. We'll Patrick Fitzgerald from question move next on with

Patrick John Fitzgerald

quarter, In the how it's industry it's the one to factors leading about in leading integration there? vertical the -- talked what's you about happening to talk you and volume of growth. last reverse Could

J. Sikkel

on over been there, go don't think X last opportunities forward, progression months. will last at as those X X this to point any the time. we months there's I I that in think still X that in but to major no in the updates be

this no seeing coming to through volume You previous the reversals the But announcements some the growth. undertook make. and we point time, at new are in of results that in

Patrick John Fitzgerald

Okay.

provided you does terms in volume? of of to sales that terms In translate what guidance, the

J. Sikkel

and shipping to Indonesian go rest saying, we're purchasing, in of to certain crops we're see are demand order or Yes. to other various year, we still but we'll for doing in how market extent aspirations growing. by We'll goes goes. seeing for -- to the the that We offset and how We're got of the didn't that the year. aspirations we've related, on got our markets terms some but remaining can U.S., We'll the are the give that. weather as keep sizes the guidance everything below -- so program very a in Indian, it see this Canadian, as see crop -- purchasing we're we strong volume

Patrick John Fitzgerald

the -- this then going going And also price per kilo Okay. you down see on was looks then there think. and just slightly was of could the then it commentary prices kind your average like on -- And inventory, quarter. price higher to commentary forward, you're I

you could of that talk kind just how all about So together? fits

J. Sikkel

for Yes. We are exports at had to South really I shipping -- majority. in still fiscal Also, sales year a compared looking and price percentage higher as generally X, quarter, Asian versus X, year the you're quarter 'XX a Asian the and African the crop tobaccos mean, 'XX vast you're lower of America. crop quarter

get crop So once X, into you coming through. 'XX seeing quarter be X, the pricing you'll X,

Patrick John Fitzgerald

could term kind that All amendment update provide loan right. delayed stands? And then just just of and draw on you an the where

Flavia Landsberg

we renewed DDTL, renewed, DDTL, about in jotted -- the about already actually it's in was call million $XXX the The Yes. it It's value. documentation.

We floor of a and of and have this done and all coupon is completed. X.X a X%,

Operator

Oren our Shaked question with we'll And take next from BTIG.

Oren Shaked

quick just I question Flavia, seasonal on lines. the a for had you So

was somewhat obviously the made disclosed to in reduce you to it a surprised already reduce weren't that were be able to pricing, But I You you're reduce I and as you more. guess continue you little the that July. to comment it to expecting able able

strong. made an that times, is And demand you've very obviously your multiple are credit. guys to point You improving

notwithstanding. crop some the this clearly reduced fairly year, You're good seeing trends sizes

a what get going what looking So bit forward? the on to you of the us reduction seasonal of more maybe some more be at frame can reducing was help a time little meaningful kind a would pushback you pricing and the to understand lines

Flavia Landsberg

There's no pushback.

You lines the when the the seasonal we right? how lines purchase borrow seasonal work, and buy remember we there, crop. We -- are

a so this rate when Brazil, December, in -- a was an example, thus, We November, I for actually get start because line. purchased you example we interest get in is actually benefit this borrowed purchasing, give good hike. right, all we was before of the lot this So

So goes crop, that's to it's ]. down there's not actually going once It will we get the go pushback. This really this continue the is when that's [ -- no go through stand when spreads went down. we -- a year and down. But

Oren Shaked

Okay.

maybe sense time? the line, on think sense at XXX for do down any to XXX today So [indiscernible] that you if you could over have we're a seasonal where come or

Flavia Landsberg

negotiation. Wish I can tell you, but that's part our of

it varies. above in thing the think of increase. that in is in is I one lenders; number Africa, increased, Brazil, lenders that increased But important

We that's and the strategy. we create competition price So have That's we're overall, how more how and that's pushing are. the availability, down.

Operator

from Bruce We'll Monrad Investors. with take question Northeast our next

Bruce Monrad

a follow-up. Just

a is margin discounts between on Is accounts receivables, completely on Or offering So at all? are they you all improved the there getting at gross any -- are connection independent? tied terms there receivable?

Flavia Landsberg

thing securitization they on independent. No, are the this AR is actually the managing But here is AR important through the key the we're program. how it's --

some So securitization well we we the add securitization have as of decreased program the programs. cost as

So right, the piece the well cycle that's on the terms. here, cash as major as reducing

So hold to have receivables, that that back hold there's back. for we some of percentage example, programs a no the now used

Okay? So more we it an how that's make just example, efficient.

Bruce Monrad

on you the calculate the that, including delayed coupon on draw, do all-in that fees is interest rate How And fees, facility? discounts? Okay. what and

Flavia Landsberg

X.X. currently about It's yes. Yes,

bit Okay? base is up X.X. increased. expect rate because a do go the We to

Bruce Monrad

Okay. And fees discounts? and

Flavia Landsberg

saying. I'm what sorry, understand I didn't you're

Bruce Monrad

fees Are in discounts there or there and no?

Flavia Landsberg

X%. It was about yes, -- was it

Operator

Manoukian take Instructions] with [Operator our Independent Credit from Stan next question We'll Research.

Stan Manoukian

you. percentage impression tobacco wondering mostly. is I for sold cost completely I goods of cost independent sort me of deriving of under the of your you a I structure your more own parties or and -- was about from grow the enlighten works. was wondering always you that way have if can bit third And what little tobacco sort been

saying grown. So has materials of from the that raw Asia you are cost

So there. own you your don't operations have

from something like, it buy You or Nation Tobacco else. whatever, China Company of

translate? work? how understand inflation How to cost of does does me help goods you sold can the So it of

J. Sikkel

are... we when Well,

Stan Manoukian

upfront. farmers, and like you own pay your have them guys You

You subsidize them.

[ of ] deforestize them. sort You

sort stuff. of the a do the own of integration. you vertical lot of your buy these But inventories different buy of day, sort you end the from -- at You

integrated And so derives goods facilities? what sold non-vertically part of from your cost of

J. Sikkel

Well, with contract farmers hundreds farmers, around we contract we thousands but vertically Stan, of it's integrated, so the not globe. independent with of

an local a with but very contract as in Brazil, of that currency. So have significant farmers do example, amount we we

was official think the market the effect. increases XX% XX% a year-on-year, Brazil in are by needs market the that always we currency we've -- they in XX% not in strong. It price given purchasers these the other -- year. were over have farmers the I advances Then to the crop very opportunity repay to size Then this the to sell and fell had so them. marketplace

So market the Brazil occurred and end competitive which cost in tobacco, up exports. a first, year have kind of inflation all elevated real then cost. end X this up terms in a factors dollar in -- And of you creates in very and for you those of situation, considerably with terms

tobacco. inflationary So that's significant in increases creates what

and agrochemicals, of top everything significantly, increasing to else. from increasing prices electricity, have that, input been the transportation, are On fertilizer everything

So all of cost these that's very this year. and tobacco, of factors are increases in significant been inflationary

globe really and from to coming we increases significant where of is are cost as Demand they in the parties, across strong, from there. increases. of but the the and this biggest have well, the American strong. there region, But well. And parties that's rest increasing we but year source from terms price South leading prices In the increases third third do also have market as Asia, joint is purchase we ventures,

Stan Manoukian

kilo prices seen not $X.X XXXX, have we exceeding per I since Well, think.

is kind probably you because was a question and by buying only them. strong -- What third operations. not your relationships providers it's saying So of really you're with made my from mistake like third-party meant party, I who I with have own

their them this. with -- and own You of sort like stuff own harvest their help with

structured have And contracts. so through that you my how it and kind inflation question going work? volatility, are inflation way see I is of we the of how How And your does a the exclude ability contracts your to this work? customers this into volatility pass mean your or does really to to pass-through when this directly? in inflation are do it

J. Sikkel

firstly, crop, Stan, of X $X.X, XXXX pricing average reflecting as when in I there. through passing talking earlier, yes, you're still quarter about what's said sales we're most Well, that's I that and are mean, the

through shipping will see As quarter results, a we you'll bit. increased you're the going pricing lot see a over through more adjust forward little we're the got a think But If I average level. that on obviously depending average the we've in go significant that this byproduct, year year, mix. where to on coming increases

Stan Manoukian

It's of terms first out? in, in, first of out sort first your passing inventory, first through in

J. Sikkel

depends of pricing, terms we on it really the -- In customer.

plus. Some are cost

earlier, the annual -- maintenance And we have year. the basis we on this are that's in that's and sure various guidance we that increases Some That's have that on focused negotiation. make and what for And the in continue also of that we target. obviously job that to I said do achieve. we reflected a is pass focused markets, the we yearly as are on the that margin are to levels the through cost

Stan Manoukian

this just per upcoming where guidance, And annual year? do for on so when speaking of ballpark this kilo see price the you the level,

J. Sikkel

It's a to there's of too negotiations to lot say, go. and early

we bit it's also out the So a -- year. ship and little mix dependent within the on that

that on So we're the later better talking about in year.

Stan Manoukian

But assume is by would have price volume growing? average have -- think least would like, XX% don't do I products, inflation to some that, you it be and this would that you increase leverage at to somewhat conceivable XX% you given the in be you know,

J. Sikkel

that the considerably are some price and than of market, you higher mentioned. by market increases XX% that It's

Stan Manoukian

question, was Flavia, And of then couldn't in answer. asking and terms this your lastly, to listen -- your and financial I guidance performance, apologize, your is Craig obviously, I

generate generate year sort working of free missed I'm of sort Or volatility won't capital? will I cash positive sorry intend able? you this So -- this. you you given flow be of to

Flavia Landsberg

intention be is the cash think to we Yes, neutral.

Stan Manoukian

cash an this neutral have to flow year. be intention You

Flavia Landsberg

Instead of negative past. have -- the in been we

With the performance to be of the business, we tend cash neutral.

Stan Manoukian

definitely And prospects capital, right? of your includes working of sort

Flavia Landsberg

sorry. you're what it? repeat saying. understand Can you I'm couldn't I

Stan Manoukian

of million to front, interest flow capital of working or that, of I'm that's I that your working I the look, you cash no? entire $XXX expenditures, that Am kind cash capital plus, cash so should All million from be million kind on is of flow flow reading -- implies don't capital right? to EBITDA year. negative cash $XXX $XX be know, be you $XX million minus So saying plus/minus, right negative neutral, for the of expense should

Flavia Landsberg

I No, all talking No. X... right? quarter the quarter remember, it See, depends don't so. So about, on think you're

Stan Manoukian

year. I'm whole talking year, the about the

Flavia Landsberg

the cash off generate pay -- No, it We and the shouldn't taxes to all Yes. to intention, I'm the interests, be enough generate be. what neutral. all saying is

Stan Manoukian

so from or negative of how mean to and able won't generate, generation implies And on of work? in CapEx $XX plus/minus, generate of I capital maybe you minus interest million of working pay, of if Okay. say, million for cash you say, or otherwise, should be $XX $XX cash another operations breakeven million that your expense; million EBITDA; sort you be either pay cash cash $XXX let's taxes that flow does let's it flow because, X overall you investments. cash

Flavia Landsberg

Yes, It that's should be right. positive.

million business is right. to The to thing the be I to $XXX performance right? able think is main $XXX million, your to calculation of get the

Stan Manoukian

Okay.

Flavia Landsberg

calculation if the million... Do to positive the And $XX should goes everything Get cash million overall, it the $XXX minus pay. be right.

Stan Manoukian

of sort you sheet breakeven will how cash But free balance if generate the flow? delever you

Flavia Landsberg

two paying expensive decreasing the So and we from that on -- the relying number debt. is is Number cheaper. seasonal is three, performing. advance much Number off right, well, customers, increasing cost. is the lines four is sheet one Number balance deleverage

Stan Manoukian

in of won't you pay off -- this won't free DDTL you're if pay year. able this? But is credit think you to do you -- be it Because able breakeven to your your shareholders' facility, year? so be to facility cash off your it flow, terms this Or this intention that

So that's what you're saying, right?

Flavia Landsberg

We -- I'm in saying right? we the I'm will cash of pay what pay be all No, off... the the we're bring shipments, think is it the some saying yes, depends to how to on us shipments tell we going of to off it actually the able what DDTL? cadence do cadence -- much So of

Stan Manoukian

of close what problems, shipping of your all working to right? Assuming years, project XX of will happen. your normalizes, will sort you your will impossible is these At of covered view. free the flow through normalized at shows this level I'm get you the That's it's of these something. of the of from All Because it's what's really end you At we cash generation? the going I've some volatility. history some to misunderstanding level first normalize, normalize, do At assuming just because I it shipping think tough. operations, the yes, my understand. right? it's going is it impossible year, to that point, the to But rest predict say normalized capital Maybe right? it to mean, quarter point, for shipments point what about year happen can't to company some and normalize, of impossible kind shenanigans point,

J. Sikkel

No.

possibly as I paying are think, expensive Stan, we'll obviously, I on have, that focused the can. steadily in early we we seeing we're most do as business. improvements down that think the Clearly, and debt we

side But a the We've I think to have had of And X.X We're decent then, idea sitting we a where you're quarter an in since finance the start better has That's to X. months ours increasing of work another we're obviously, as various right. the other in passed team terms a around as more so to that. And year. excellent I the at I as focus little And doing we a markets. job well debt early grow focused expensive the the continue eliminating and do we're possibly key on bit year globe. the done the reducing can. said, year. lines and as of be of good had we've think first to seasonal focus always it business the we'll will or rest But forward. think going is going start, delivering for we the what be say from a I in has to the

Operator

over to concludes that would the the session. question-and-answer I Grigera call And any like Tomas remarks. turn or closing now back for to additional

Tomas Grigera

conference playback remain will available for interested August Thank in Again, any The for Tuesday, call you thank for our evening. call. you person call participating for joining this our XX. through

Operator

And your presentation. for today's you that Thank does conclude participation.

disconnect. now may You

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