Good morning, and welcome to the Pyxus International Inc fiscal year 2024 first quarter earnings call. Please note that this call is being recorded. All lines have been placed on a listen-only mode at this time. After the speaker's remarks, there will be a question- and- answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. To withdraw your question, again, press star one. I would now like to turn today's call over to Tomás Grigera, Treasurer. You may begin. Thank you. With me this morning are Pieter Sikkel, our President and CEO, and Flavia Landsberg, our CFO. Before we begin discussing our financial results, I would like to cover a few points. You may hear statements during the course of this call that express a belief, expectation, or intention, as well as those that are not historical fact. These statements are forward-looking and involve a number of risks and uncertainties that may cause actual events and results to differ materially from those forward-looking statements. These risks and uncertainties are described in detail, along with other risks and uncertainties in our filings with the SEC, including our most recent Form 10-K. We do not undertake to update any forward-looking statements made on this conference call to reflect any changes in management's expectations or any change in assumptions or circumstances on which these statements are based. During our call today, we will reference certain financial measures that are not calculated in accordance with generally accepted accounting principles. These non-GAAP financial measurements, including earnings before interest, taxes, depreciation, and amortization, commonly referred to as EBITDA or Adjusted EBITDA and free cash flow, are not measures of results of operations under generally accepted accounting principles in the United States and should not be considered as an alternative to U.S. GAAP measures. A table including a reconciliation of these non-GAAP financial measures to the comparable GAAP measures and other disclosures regarding these non-GAAP financial measures is included in the appendix to the presentation and in the company's earnings press release issued earlier today. Any replay, rebroadcast, transcript, or other reproduction of this conference call, other than the replay as provided by Pyxus International, has not been authorized and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents. During the call today, Pieter will provide an overview of our operating results and share insights into our ESG efforts. Flavia will then provide details of Pyxus's financial results. Now I'll hand the call over to Pieter. Good morning. Thank you for joining our call today. Fiscal year 2024 is off to a strong start, with increased demand, higher tobacco prices, and solid margins during the first quarter, driving a 39% increase in revenue and a 172% increase in Adjusted EBITDA year-over-year. Our increased sales were driven by high customer demand, increased tobacco prices, and the significant acceleration of customer shipments into quarter one from later in the fiscal year. A favorable customer mix during the quarter boosted margins on tobacco shipped to customers. During the first two quarters of our fiscal year, we typically purchase the majority of tobacco from farmers growing in the Southern Hemisphere, which we ship to customers later in the year. During the second quarter and into the third quarter, we typically purchase tobacco from farmers in the Northern Hemisphere. We estimate that we reached the peak of our fiscal 2024 purchases during the first quarter. We accelerated our buying significantly, using our geographic footprint to acquire tobacco inventory from multiple markets to meet higher current crop supply requirements and customer demand for the year. At quarter end, we completed most of our purchasing in Africa and South America, well ahead of the typical year, to bring our inventory level to $1 billion. Pyxus's uncommitted inventories remained near all-time lows during the quarter. As a result, fiscal 2024 customer shipments will use a higher percentage of the tobacco purchased during the current fiscal year compared to the prior year. During the quarter, we continued to focus on the aggressive management of our working capital, which enabled the noteworthy acceleration of our operating cycle and fueled higher sales and stronger results than in the previous year. This provided Pyxus the funding and liquidity needed to purchase significantly larger volumes of more expensive tobacco compared to fiscal 2023. Flavia will discuss this further in a moment. Looking across the industry, we anticipate ongoing strong demand and pricing, as undersupply conditions are expected to persist throughout the fiscal year. Our teams around the world diligently monitor the weather and other risk factors that could affect our results, and we believe we are ready to adjust our strategies as needed to meet our objectives. Before I turn the call over to Flavia, I'd like to congratulate our teams on an outstanding ESG win for our business. Recently, our joint venture in India commissioned a solar plant with the goal of driving operational efficiencies, mitigating the risk of power outages, and reducing our greenhouse gas emissions. The solar plant came online during the closing days of fiscal 2023, and during its first few months of operation, we generated approximately one-third of the energy required to run our tobacco processing facility during daylight hours. Self-generated solar energy can produce an annual cost savings of 30% when compared to electricity purchased from the grid, and its use is expected to reduce the facility's annual emissions by even more than 30%. Thank you to the team members who conceived and executed this initiative. I will turn the call over to Flavia to give details on our results. Flavia? Thank you, Pieter. To start, I would like to remind everyone that Pyxus is a volume and a margin business. We benefited from the strength of both during this quarter, as you can see in our results. We grew Adjusted EBITDA in the first quarter to $43.5 million, an increase of $27.5 million compared to the same quarter in the prior year. Our significantly higher sales and strong margins helped generated the net income of $0.8 million. This is the first time in several years that we have achieved positive net income during the first quarter. I will discuss this further in a moment. Our first quarter sales increased by 38.7% compared to the prior year. We benefit from a 17.6% improvement in average price per kilo, as well as an 18.6% increase in volume. Our ability to accelerate customer shipments from Africa and South America into the first quarter significantly added to our sales growth. Looking at our margins, a favorable shift in customer mix contributed to a 56% improvement in the average gross margin per kilo compared to the prior year. Margin in the first quarter of fiscal 2024 increased to $0.78 per kilo on the average price of $5.27 per kilo. Margin in the prior year was $0.50 per kilo on an average price of $4.48 per kilo. The net income that we achieved during the quarter was primarily due to the increase in sales volume accelerated from future quarters and a significant increase in margin. It is important to note that in the agriculture industry, the same market conditions may not be repeated in the next or near-term quarters. As Pieter mentioned, we excel in managing our working capital to ensure sufficient liquidity to meet our purchasing goals. During the quarter, we financed the purchase of more tobacco at higher prices compared to the same quarter in the prior year. Our primary sources of liquidity to purchase tobacco are short-term borrowings under our foreign seasonal lines of credit, the ABL credit facility, cash generated from operations, and our securitized receivables. As we ship inventory to customers throughout the fiscal year, we plan to sell short-term borrowings and repay the ABL credit facility. Additionally, our teams utilize several receivable securitization programs to provide liquidity by speeding up our collections from customers. Looking at the P&L more closely, in the first quarter of fiscal 2024, interest expenses increased by $4.8 million compared to the prior year, primarily due to the higher variable interest rates on our seasonal lines. To mitigate variable interest rates headwinds, we remain focused on renewing seasonal lines of credit at lower margins and reducing durations of seasonal borrowings through continued acceleration of our operating cycle. During the first quarter, our operating income increased significantly to $36.4 million, compared to $6.9 million in the prior year. This was another positive outcome of our accelerating shipments and higher gross profit margins due to the customer mix. Our first quarter free cash flow represented a $59.7 million increase in cash usage compared to the prior year. Our free cash flow in the first half of the year typically is lower than in the second half, due to the inventory purchasing peaks on the Southern Hemisphere crop. Continuing focus on working capital management and improved liquidity supported over $100 million of accelerated purchases in the first quarter when compared to the prior year. Cash and cash equivalent increased to $100 million from $165 million in the prior year. It was primarily used to reduce our outstanding balance on the ABL from $90 million in the prior year to $50 million in the first quarter of the fiscal year 2024. The use of foreign seasonal lines of credit typically increase as we build inventory and decreases as inventory is sold. Since the end of fiscal year 2023, our foreign seasonal lines of credit have increased by $202 million, resulting in an incremental of $40 million of outstanding seasonal lines compared to the prior year. A result of the successful debt exchange in fourth quarter of fiscal 2023, the semiannual interest payments of $7.9 million of our 8.5% notes occurred in the first quarter. Prior to the exchange, comparable payments took place during the second quarter. Going forward, the bulk of our semiannual interest payments on our senior notes will remain in the first and third quarter. Turning to our credit profile and debt levels. Our higher Adjusted EBITDA and working capital management enable us to strengthen our credit profile compared to the prior year. Based on the last 12 months, our net debt to Adjusted EBITDA ratio was 6.1x for the first quarter of fiscal 2024, compared to 8.4x in the prior year. Similarly, based on the last 12 months, our interest coverage ratio for the first quarter was 1.5x, compared to 1.2x in the prior year. Total debt at June 30th, 2023, of $1.2 billion decreased by $8.5 million compared to the prior year. This decrease was primarily due to $65 million less cash at quarter end, and $40 million of incremental borrowing on our foreign seasonal line of credit. Before I turn the call back to Pieter, I would like to commend our teams for the solid execution to increase volumes, extend margins and accelerate our business cycle to generate strong first quarter results. I look forward to continue this momentum in the remaining three quarters of fiscal year 2024. I will now turn the call back to Pieter. Thank you, Flavia. We continue to execute against our plan and are building upon the progress made in the first quarter of the fiscal year. We clearly stated what we intended to do, and as Flavia highlighted, our teams achieved many of our objectives. We believe our positive first quarter results position us to achieve our previously announced fiscal 2024 guidance for sales between $1.9 billion and $2.1 billion, and Adjusted EBITDA between $155 million and $180 million. With that, operator, please open the phone lines for questions. Certainly. At this time, I would like to remind everyone, in order to ask a question, please press star followed by one on your telephone keypad. Please note, if you are listening on the webcast and would like to ask a question, you will need to dial in to the teleconference. Thank you. Your first question comes from Oren Schacht with BTIG. Your line is now open. Good morning, everyone. Pieter, you did reference the pull forward of some shipments into Q1, and obviously, this Q1 performance was the best in recent memory, and yet the guidance maintained for the year suggests then that 2Q through 4Q would be down year-over-year versus last year. Can you just help us understand a little bit the dynamics there? Maybe unpack a little bit how much of the first quarter performance was pull forward, how much of it is just stronger demand in the marketplace, as you've referenced? Just help us understand that a bit better. Thank you. Hello? Year-on-year guidance is, is, is, considerably improved on last year. Sorry, can you hear me? I can hear you now. Sorry. Our year, our year-on-year guidance is considerably improved on last year. Our first quarter, we are very, very pleased with that. A considerable target of ours was accelerate the year. We have obviously achieved that in the first quarter, and we anticipate continuing doing that as we. Yeah. The key focus of that is to reduce interest costs as we go forward. For us, I, I think you're highlighting the variable of the rolling 12 months EBITDA and the increased first quarter versus the guidance. I think what, what happens when you start accelerating shipments is that what might have shipped, for example, in Q 2 of last year, is shipping in Q 1 of this year. Therefore, on a 12-month basis, you've got, you've got that folded over each other within the, the rolling 12 months, which we don't have in the full year guidance. We are anticipating when we're looking at the guidance that we, we, we basically have one crop within one year, certainly at the midpoint of the guidance. The first quarter is very positive. Okay, build on that, we've accelerated purchasing this year, and that gives us significant opportunities to continue to process, pack, and ship earlier than we have in the last few years. Understood. Just to complement what, just to, to, to add what Pieter. Very important to focus on conversion cycle. You see in the presentation that we over 30-35 days, will give us the ability to continue to manage interest costs in a high interest cost environment, manage that in a much better way and compensate some of the headwinds from the market. Thank you very much. Your next question comes from Rosemary Sisson with Odeon Capital Group. Your line is now open. Yes, good morning. Just to follow on with that question a little bit, do you believe that because you've accelerated shipments, that you've been able to attract some business that you before wouldn't have gotten? I mean, in other words, have you taken some market share away from other smaller players? Is there something going on there? Because you mentioned customer mix also contributing to the higher profitability. Just curious if there's any dynamics in there relative to your acceleration. Look, I, I, we are anticipating growth this year, and this is despite the fact that we came into the year with very low inventory. This, this fiscal year, we really had to focus very much on current crop tobaccos, just because of the low inventory we carried from last year. I, I think our performance in quarter one is, is a mix of acceleration of shipments, improving margins, growth in volumes, and all three of those will continue to drive our results throughout the year. It's, it's a, it's a combination. We're obviously very pleased, as you saw from the slides, four out of five regions saw improved results in the quarter. We do anticipate continuing our progress as we, as we move forward through the year. We have to see what happens with the Northern Hemisphere crops that we'll start purchasing very shortly. Certainly, we've got a good foundation out of quarter one to perform well for the year. Okay, great. Thank you very much. Next, we have Bruce Monrad with Northeast Investors. Your line is open. Hi, guys. Can you hear me okay? Yes, Bruce. Okay, great. Yeah, let me follow up on that, if I would. It sounds. I'm hearing your comments that you have one crop, and that sounds like it's more of a supply issue, and your, your conservative wording on accelerated. Maybe I'll just pivot a little bit on that and just ask, I mean, you know, you've had a couple of years where your customers ran down inventories, really, you know, you're using the word accelerated, but it's not like your customers are satiated or anything like that. I mean, if you had more, if you had a bigger crop, they could take it probably, right? Bruce, we've, we've seen very strong demand for this year. We've also seen significantly increased crop sizes, particularly in Africa and to some extent in Brazil and India. What, what is, what is, what is occurring is that despite the increased crop sizes, demand is still very strong. That is being and the increased crop volume is being used to satisfy that demand. You, you are correct. If, if we could have got a little bit more volume in certain markets, we would have been quite pleased with that. We are certainly very pleased with where we are with what we have purchased to date in order to be able to fulfill the shipments that we anticipate for the rest of the year. Okay, customer inventories, yeah, again, there's a seasonal issue here, but, you know, on a secular basis, customer inventories are fine. I think it's a little bit difficult for us to comment on customer inventories. We don't exactly have those numbers. I think there's still strong demand out there for tobaccos in order to be able to satisfy customer requirements. Each customer has a little bit of a different duration level at this point in time. Some are maybe closer to their normal durations, others may still be topping up. One, one last question. There seems to be a little bit of confusion here. Can you confirm that the Pyxus notes and the Pyxus term loan, not, not Intabex, but are pari passu, you know, up at the Pyxus level, as a result of the exchange? Can you repeat the question? There, there seems to be confusion about the priority between the, the, the debt, the, the term loan at Pyxus and the new bonds at, at Pyxus. Again, this is distinct from Intabex. Are, are can you confirm that they share the same collateral and that they are pari passu, that they rank equally? You know, I think the best way to do is just send you the waterfall that we have, so you can have it. It's a lot of detail in there, including, you know, what kind of collateral is in there. I will send that to you, so you can have all the details that are necessary. Oh, okay. I'm actually just parroting what I've got in front of me from the exchange offer document. I was sort of hoping there'd be a broader comment on it so that we, if there was any confusion, we could get it. Okay, thank you. Your next question comes from Arthur Cavalas with Three Quart. Your line is open. Thanks for taking my question. I wanted to ask first about the guidance and how purchasing, buying buying that you've done so far, can sort of lead us to think about where you're gonna land on your guidance? As we stated, I believe we've said we certainly have accelerated purchasing this year. We've had a strong purchasing program throughout South America and Africa in particular at this point in time, and some Asian markets. That has met, or, in most cases, our expectations, and those are generally based on larger crops. Our opportunity now, obviously, by having those volumes in early, is to process, commit those to customers, get the shipping instructions we need in order to be able to get those tobaccos out. Obviously, with an earlier processing program, purchasing program, that gives us a better opportunity to ship those volumes within the fiscal year. I think we'll see as we progress through the year. So far, in quarter two, we've been looking at our, our shipments. Certainly for July, they've been going where we, where we expect them to be, and we've got pretty good visibility for the rest, so we're, we're feeling pretty good about quarter two. We'll see what happens when we finish the quarter and as we get into Q3 and Q4. I think proportionately, probably we need a little bit less in quarter three and four than we did last year, just because of the, the way the crops are coming in. We're feeling positive about where we are at this point in the year. Already, as, as we stated, you compare it to the same quarter last year, we purchased over $100 million. At the comparison, $100 million more, and the balance sheet was strong to fulfill that. You can see we only added, like $40 million on the seasonal lines, and the rest is related to shortening the cycle, as well as, some of securitization programs that we have to accelerate some of the receivables. This is, this is helpful, and this actually leads me to my second question, which is, the interest costs have gone up quarter-over-quarter. Of course, obviously, it's a higher interest rate environment, but how do you foresee what you're doing with the capital structure impacting what interest costs will be on a forward basis this year? You know, as we don't provide guidance on interest expense, but we are extremely focused on managing this interest. How, how we, how we do that is basically shorten the operating cycle, that's number one, and into accelerated shipments will help us to do that. The second one is our credit profile is improving. In, in terms of the spread, we are working very hard, and we have great results of decreasing that spread in order also to lower the interest rates, even though the base continues to grow. You know, a good example is on the long-term debt, the debt exchange actually lower a bit some of the interest costs that kind of compensated for the increase in the base that happened in the past few months. The seasonal lines is the same thing, continue to work on decreasing the spread in order to, to manage better our interest cost. I see. One thing that's on my mind, and you didn't talk about reducing your interest costs, is buying your debt at a discount. Is that under consideration? We always, we're always looking for opportunities. We have to have a strong cash flow, you know, and, and that's what we work on in performance. We have to accelerate the shipment in order to unveil some, some, working capital, but we're always looking for opportunities to deleverage the company. Okay. Thank you. Your next question comes from Joe Von Meister with Intermarket. Your line is open. Hi, guys. It's actually Joe Von Meister. The question is, your guidance is based on one shipment cycle in the 2024 fiscal year. Is that correct? Yes, that's correct. Was there a double dip in shipments in the first quarter report just provided? Partially, yes. If you get a double dip, that the second part of that double dip or the second dip would occur in the fourth quarter or the third quarter? I think that's very much market dependent. Obviously, we continue to work to accelerate shipments to various parts of the year. That is very much dependent on different markets around the globe. See, usually, you typically ship most of your product in the third and fourth quarter, right? Historically, yes. I think that we've got a little bit of a different cycle this year. We got some acceleration coming. Last year was very strong in the third quarter. Obviously, in the fourth quarter was a little bit less. So that's been changing a little bit over the last few years. But if you went back to pre-COVID, very substantial quarter. What, what, what kind of EBITDA impact would, would a double dip have versus your current guidance? We're not gonna be able to disclose that, but what we can tell you again is that this is, you know, accelerating the shipments is intentional. I mean, the idea here is as we shorten the cycle, is, it help us to shrink the balance sheet. It's specifically about managing interest costs. The guidance is only one, one cycle, and that basically was a movement within the year, right? You're talking about from the first half of the year is accelerating from the second half of the year. The overall impact, of overall impact on, in the guidance is continued to be within the year. All I can say is you guys are doing a great job. Thank you. Thank you, Joe. Your next question comes from Rosemary Sisson with Odeon Capital Group. Your line is open. Thanks for taking this follow-up. I just was curious as to whether your guidance incorporates a continuation of a similar gross profit margin on the, yeah, per kilo? Our gross margin, it'll vary across the quarters depending on what region and origin is shipping. There's always, there's always a lot of mix changes within that as the quarters go on. Earlier in the year, we'll be shipping more South America. Later in the year, it'll come Africa and Asia. That'll, that'll vary across the quarters, but, you know, our, our, our guidance obviously has a range with it and, and is looking at various potential margin levels and shipment levels throughout the year. Just to, to add, our—y ou, you can see that as soon as we focus very much on the margin per kilo, you can see that it's a, a tremendous increase on margin per kilo on this quarter versus the same quarter last year. This is, this is a consequence of a customer mix and geographic mix, okay? That has to do a lot with the acceleration. That being said, our guidance, it is include increases in volumes and expansion of margins. That comes with both, okay. We do expect the first half margin per kilo be higher than the second half of margin per kilo. That's related to geographic and customer mix. Thank you, Flavia. That's, that's great. Yeah, it's, it's interesting because also, I was looking at Philip Morris International's results, and they expect cigarette shipment volume for them. Can you hear us? To decline. Are you there? Hello? Philip Morris International said that they expect shipment volume to decline from, you know, 1.5%-2.5% this year. You've actually, you, you don't feel that in the demand that you're experiencing from your customer, from all of your customers, from a, you know, international cigarette demand perspective. We can't hear Rose, here. Hello? Hello. We got message. Hello? Pardon the interruption. We are having technical difficulties. Please allow us one moment. Hello, you guys can able to hear us? We had a technical problem here. We're dropped from the call. Can you hear us? Yes. Okay. Rosemary, I don't know how much you heard from what I said related to the margins per kilo. Yes, I did hear the margins answer. I did, I asked another question on Philip Morris International's statement that their demand is down 1.5%-2.5% this year, they expect. I don't know if you heard that question or not, but it's just, it's interesting because you're seeing strong demand, and they, you know, this is one of your biggest customers, and they're seeing a decline. Where are you seeing demand increase? Well, I, I think, the difference between cigarette sales statistics for any one customer and the demand is not necessarily the same. I won't particularly comment on Philip Morris, but, as I said earlier, we have a wide portfolio of customers from a multitude of geographies around the globe. We continue to see very strong demand across that customer portfolio. That'll move up and down with, potentially with an individual customer on an annual basis, but overall, we continue to see opportunities and take opportunities for growth. In certain cases, that, that may be related to the geography that we are in or those crops that are more in demand versus others, opportunities that we've taken in the past with the reversal of vertical integration, various other programs that we have, but across our business, we are seeing strong demand in totality. Thank you very much. Your next question comes from Patrick Fitzgerald with Baird. Your line is open. Hey, thanks a lot for taking the, the question. I know that there's some, you know, mix, shift issues in the price per kilo, that you sold this quarter, but if you have any general commentary on pricing, you know, as the year progresses, that would be very helpful. Thank you. I, I think in, in general, what we're still seeing across the global marketplace is that we are seeing increase in farmer pricing, generally in, in most geographies this year, not to the very significant increases that we saw, particularly, with, with last year's crop. There are still, inflationary, increases in certain markets and, and to some extent, those markets catching up with South America. Obviously, our focus is on, converting that into, increased, export pricing and, margins, and, continue to improve on our performance year-over-year. Okay. I guess, you know, this is a different way of asking kind of the same question as the person before. You know, long term, I know that there are some changes in volumes based on the pandemic and shipment issues, but long term, isn't, you know, don't, won't tobacco volumes decline long term, or is that just the wrong assumption to make? Well, I, I think you've, you've got to think about it in this way. Let's take kind of the midpoint of our revenue. Let's say we're at $2 billion revenue this year, and we look at the total amount of leaf tobacco consumed in combustible cigarette production in any one year, probably over $40 billion. Now, a lot of that is domestically produced for domestic supply, but there is a very substantial market out there for our basic product. We continue to focus on how we can get increased share of that requirement. At the same time, we also have other businesses. We do value-added tobacco production, though we see those businesses continue to perform well, and there are other opportunities for us. We're, we're very excited as to where we are. We're, we're a relatively, small piece of a very large market, and we see opportunities for continued growth. Let me point out a couple more things here. First is, this is a very global market, so consumption in the United States may be going down, but in some areas in the world, especially in Asia, it's not. That's number one. Number two is it's a very stable market. If you look at consumption through the past years, comes, you know, some crisis, you know, some economic crisis, it comes some, you know, COVID and all that, and pretty solid, pretty very, very solid consumption. It's very, very, very, very, very stable if you look at the past, you know, even 10, 20 years. It's almost like inflation and almost like, you know, crisis-proof. That's the, another important part. Super stable, the growth in other parts of the world are quite strong. Okay, thanks. Is there any help you could provide in terms of thinking about cash taxes for the year? Yeah, the cash taxes for the year includes the taxes that we that we will have to pay related to the exchange. That's why you see some cash taxes higher. You will see that payment in quarter two. You're gonna see that payment in quarter two. The overall cash taxes will be more, much more efficient on the taxes, tax planning for the business. We We do have the one-time cash taxes to be paid in July related to the exchange. Okay, but like, compared to last year, I think it was $19 million last year. Do you think it'll be- We don't give. Higher than the. We, we, we don't give guidance on that, but it's pretty, it, it's not unusual on that part, besides the exchange taxes. Okay. Thanks a lot. There are no further questions at this time. This will conclude today's conference call. Thank you for joining us today. You may now disconnect.