Pyxus (PYYX) Q1 Revenue Falls 20%

Key Points

• Revenue fell 19.9% to $508.8 million (GAAP) in Q1 FY2026, reflecting shipment timing and seasonal effects.

• Diluted EPS (GAAP) swung to a loss of $(0.62), compared to a profit of $0.18 in Q1 FY2025.

• Management reiterated full-year 2026 guidance, forecasting FY2026 GAAP sales of $2.3–$2.5 billion and adjusted EBITDA of $205–$235 million for FY2026.

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Pyxus International (OTC:PYYX), a global leaf tobacco merchant and supply chain manager, released its first-quarter fiscal 2026 results on August 6, 2025. Revenue (GAAP) for Q1 FY2026 was $508.8 million, a decline of 19.9% from the same period last year, as expected by management due to earlier shipment pull-forwards. Diluted EPS (GAAP) registered a loss of $(0.62), down from a $0.18 profit in Q1 FY2025. No analyst estimates were available for comparison, but management stated that the quarter was in line with its own expectations. The company maintained its full-year outlook, with a clear focus on a stronger second half. Overall, the quarter reflected seasonality and supply chain dynamics at play in the tobacco market.

Business Overview and Key Success Factors

Pyxus International specializes in sourcing, processing, and supplying leaf tobacco to major tobacco product manufacturers worldwide. Its core business relies on a global network to buy and deliver tobacco customized to customer requirements.

The business has focused on mastering global supply chain management. This includes using its SENTRI® track-and-trace platform to manage tobacco across five continents. Maintaining strong relationships with leading manufacturers and adapting to regulatory and sustainability demands are critical to its ongoing success.

Quarter Review: Revenue, Profitability, and Operations

GAAP revenue dropped nearly 20% from the prior year. Management pointed to the pull-forward of shipments into Q4 FY2025, which reduced volumes available for shipment. Volume sold in the leaf segment fell 30.1%, from 95.7 million kilos to 66.9 million kilos. However, the average selling price per kilo increased by 11.2%, reaching $6.85 per kilo, helped by tight supply and customer demand.

The processing and other business, which includes tobacco processing and value-added services, grew its revenues by 20.1% and increased gross profit (GAAP) by 72.7%. Gross margin in this division improved to 15.1%, up from 10.5% in Q1 FY2025, as increased processing demand offset declines in the core leaf segment. The overall gross profit margin (GAAP) decreased slightly, with changes in customer and regional sales mix weighing on profitability. Operating income nearly halved, falling to $21 million, adjusted EBITDA declined 46.4% compared to the same quarter of the prior fiscal year, reflecting the seasonally weaker quarter and shipment dynamics.

Inventory levels rose as Pyxus bought record crops in South America and Africa. Tobacco inventory was $1.09 billion (GAAP), with uncommitted inventory at just 2.4% of processed stock, highlighting robust demand. The operating cycle—measuring how long it takes to buy, process, and sell tobacco—shortened to 160 days, down from 172 days in the same period last fiscal year, indicating improvement in operational efficiency. Cash and equivalents increased, despite a rise in net debt as the company replenished its inventory for the upcoming high-shipment periods.

The company reported steady progress on its sustainability agenda. Segment trends saw the leaf operation's gross profit and margin decline, while processing improved both revenue and margin. The company's position as one of only two global public leaf merchants helped it secure large crop volumes, balancing risks amid market fluctuations.

Looking Ahead: Guidance and Investor Focus

Management reiterated its full-year guidance for FY2026, forecasting total sales of $2.3 to $2.5 billion and adjusted EBITDA (non-GAAP) of $205 to $235 million. Executives stressed that both revenue and profit are expected to be weighted toward the second half of the fiscal year, as the company moves increased inventory and processes larger crops for shipment. No changes were made to previously stated targets.

Investors should keep an eye on the pace of second-half shipments and on margins as new crops are marketed. Monitoring working capital, pricing trends, and customer demand will be crucial throughout the year, with execution on the larger second-half rebound being particularly important for management to achieve its goals.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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