Sign in

You're signed outSign in or to get full access.

PI

PYXUS INTERNATIONAL, INC. (PYYX)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY2026 delivered modest top-line growth ($570.2M, +0.7% YoY) with notable margin expansion (gross margin 15.4% vs 13.3% YoY) and a sharp increase in operating income (+$13.7M to $46.7M), driven by improved product mix, higher current crop returns, and increased third‑party processing volumes .
  • Management raised FY2026 sales guidance to $2.4–$2.6B (from $2.3–$2.5B) and tightened the Adjusted EBITDA range to $215–$235M (from $205–$235M), citing improved visibility and expected strong second‑half shipments; this guidance change is a likely stock driver .
  • Working capital peaked with inventory up $160.6M YoY to $1.14B and seasonal lines up $163.3M to $908M, as management positions to monetize inventory in H2 and accelerate repayment of seasonal financing; operating cycle improved YoY to 167 days and ABL remained undrawn .
  • Net loss narrowed to $(0.9)M (EPS $(0.03)), while Adjusted EBITDA rose to $54.8M (+23.6% YoY); third‑party processing strength (gross margin 25.8%) and higher volumes offset lower average price per kilo .
  • Consensus (S&P Global) for Q2 was not available; investors should anchor on management’s guidance raise and execution narrative rather than a beat/miss framing for this quarter (consensus unavailable via S&P Global).*

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 15.4% (+210 bps YoY) on improved product mix, better current crop returns, and increased third‑party processing volumes; operating income rose to $46.7M (+41.5% YoY) .
  • Third‑party processing delivered outsized profitability: processing gross margin rose to 25.8% (from 17.0% YoY), with revenues up 14.9% and gross profit up 74.4% .
  • Management raised sales guidance to $2.4–$2.6B and tightened Adjusted EBITDA to $215–$235M, citing “improved near‑term visibility” and confidence in strong H2 shipments: “We are confident in our ability to achieve our updated targets” — CEO Pieter Sikkel .

What Went Wrong

  • Year‑to‑date sales fell 10.2% YoY ($1,079.0M vs $1,201.2M) as accelerated shipments from the current crop did not fully offset lower carry‑over sales from the prior fiscal year .
  • Average price per kilo declined to $5.59 (from $6.00), reflecting higher volumes sold at lower prices; product gross margin held at $0.80 per kilo, but mix pressured pricing .
  • Leverage and interest coverage temporarily elevated due to seasonal working capital (Net Debt/Adj. EBITDA LTM 6.54x; interest coverage 1.48x), though management expects improvement as inventory ships in H2 .

Financial Results

MetricQ4 2025Q1 2026Q2 2026
Revenue ($USD Millions)$501.7 $508.8 $570.2
Gross Profit ($USD Millions)$67.2 $65.6 $87.8
Gross Margin %—12.9% 15.4%
Operating Income ($USD Millions)$13.7 $21.0 $46.7
Adjusted EBITDA ($USD Millions)$28.6 $29.5 $54.8
Net (Loss) Income ($USD Millions)$(5.1) $(15.8) $(0.9)
Diluted EPS ($USD)$(0.20) $(0.62) $(0.03)
SG&A ($USD Millions)$44.9 $40.4 $40.1
Segment and KPIs (Q2 vs prior year)Q2 2026Q2 2025
Leaf Product Revenues ($USD Millions)$511.2 $515.8
Product Gross Profit ($USD Millions)$73.8 $68.9
Product Gross Profit Margin %14.4% 13.4%
Kilos Sold (Millions)91.4 86.0
Avg Price per Kilo ($USD)$5.59 $6.00
Processing & Other Revenues ($USD Millions)$55.5 $48.3
Processing & Other Gross Profit ($USD Millions)$14.3 $8.2
Processing & Other Gross Margin %25.8% 17.0%
Operating & Balance Sheet KPIsQ1 2026Q2 2026
Average Operating Cycle (days)160 167
Inventories, net ($USD Millions)$1,121.8 $1,135.2
Uncommitted Processed Inventory ($USD Millions; % of processed)$13.6; 2.4% $19.5; 2.7%
Notes Payable / Seasonal Lines ($USD Millions)$880.9 $908.0
ABL Availability Drawn ($USD Millions)$0 $0
Net Debt / Adjusted EBITDA (LTM)6.78x 6.54x
Interest Coverage (LTM)1.41x 1.48x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($USD Billions)FY 2026$2.3–$2.5B $2.4–$2.6B Raised
Adjusted EBITDA ($USD Millions)FY 2026$205–$235M $215–$235M Raised lower bound / tightened

Earnings Call Themes & Trends

TopicQ4 2025 (Q-2)Q1 2026 (Q-1)Q2 2026 (Current)Trend
Supply/demand balanceUndersupply persisted; market absorbed larger crops; plan to replenish inventory into FY26 Record crop sizes in South America/Africa; more balanced global leaf market anticipated Balanced demand; potential oversupply next season; Pyxus expects to benefit via cost efficiencies and volumes Moving from undersupply → balanced/oversupply; Pyxus positioned to benefit
Third‑party processingNotable contributor but annual margin down YoY; strategy to expand margin in FY26 Processing revenues +20.1% YoY; margin 15.1% Processing revenues +14.9% YoY; margin 25.8% Strengthening volumes and margins
Operating cycle & leverage38‑day acceleration YoY; leverage 3.7x at FY25 end Cycle improved to 160 days; seasonal lines up with larger crops Cycle 167 days (vs 179 YoY); leverage/coverage seasonal (6.54x / 1.48x) with H2 improvement expected Continued YoY efficiency; seasonal peak then planned H2 deleveraging
Guidance & visibilityInitiated FY26 guidance; tariff uncertainties flagged Reiterated FY26 guidance Raised sales; tightened EBITDA; improved visibility and pricing negotiations Improving confidence and outlook
Regional trendsLarger crops expected in South America/Africa to reduce cost Record crop sizes purchased in South America/Africa to meet demand Larger crops harvested; inventory positioned to fulfill H2 demand Sustained larger crop backdrop
Tariffs/macroGuidance reflects varying tariff implementations Balanced market commentary; less explicit tariff focus Macro stable demand; ongoing negotiations with key customers Tariff risk acknowledged; execution focus

Management Commentary

  • CEO: “Our solid second quarter results underscore our consistent first-half execution… supports our decision to increase our full-year sales guidance and tighten our full-year adjusted EBITDA guidance range.” He added, “We anticipate demand to remain steady… we are well prepared for a potential market shift to oversupply” .
  • CFO: “Adjusted EBITDA increased 23.6% to $54.8 million… driven by higher volumes, stronger gross margin, and relatively flat SG&A… inventory was up $160.6 million YoY to $1.14 billion… We expect second‑half sales and the release of working capital to support an accelerated paydown of seasonal lines” .
  • CEO on oversupply dynamics: “In years of oversupply, we’ve tended to perform at our best… better fixed‑cost absorption… increased volumes, improved margins, and lower costs” .

Q&A Highlights

  • Oversupply scenario: Management views potential oversupply as a positive through lower raw material costs, higher third‑party processing volumes, and improved fixed‑cost absorption driving margins and volumes .
  • H2 volumes: CFO expects higher shipment volumes in the back half and for the full year, supported by larger crops and inventory positioning .
  • Confidence and visibility: Increased guidance aligns with stronger visibility from price negotiations and processing initiatives .

Estimates Context

  • Consensus estimates (S&P Global) for Q2 FY2026 were not available; “Revenue - # of Estimates” and “Primary EPS Consensus Mean” returned no values, preventing a beat/miss assessment.*
  • Actual outcomes: Revenue $570.2M; Adjusted EBITDA $54.8M, EPS $(0.03); given the absence of consensus, analysts may focus on FY guidance raise and H2 shipment cadence .
MetricActual (Q2 2026)ConsensusBeat/Miss
Revenue ($USD Millions)$570.2 N/A*N/A
Adjusted EBITDA ($USD Millions)$54.8 N/A*N/A
EPS ($USD)$(0.03) N/A*N/A

*Consensus values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Strong margin execution and processing profitability offset lower pricing per kilo; operating income and Adjusted EBITDA growth demonstrate disciplined delivery .
  • Guidance raise to $2.4–$2.6B sales and EBITDA tightening to $215–$235M suggests improved visibility and confidence in H2 monetization of inventory; a likely stock catalyst .
  • Seasonal working capital peak is intentional; management expects accelerated paydown of seasonal lines and leverage improvement as inventory ships in H2 .
  • Third‑party processing initiatives are scaling with high margins (25.8% in Q2), providing a resilient earnings lever independent of leaf pricing .
  • Potential oversupply next season could benefit Pyxus via lower input costs, higher volumes, and better fixed‑cost absorption; management historically prefers this setup .
  • Tariff and macro risks remain in FY26 outlook (as flagged in Q4 FY25), but current demand appears balanced; watch for updates on price negotiations and customer volumes .
  • With consensus unavailable, portfolio focus should be on guidance trajectory, shipment visibility, and H2 balance sheet de‑risking as the primary drivers of estimate revisions and stock narrative.*

Citations: