Pyxus International reported first-quarter fiscal 2027 results that aligned with management expectations, as lower tobacco crop prices in key sourcing regions supported disciplined purchasing practices and balance-sheet improvements. Sales declined to $437.8 million from $508.8 million in the prior-year quarter, primarily reflecting lower average costs and selling prices in Africa and South America, along with timing differences in North American shipments. Despite the sales decline, gross margin as a percentage of sales expanded to 14.0% from 12.9%, as lower tobacco prices enabled the company to pursue more selective and cost-effective purchasing strategies.
The company demonstrated improved financial metrics across several measures. Cash on hand reached $175.9 million at quarter-end with no borrowings under its asset-based lending facility. Leverage improved substantially to 4.9 times from 6.8 times in the prior-year period, while interest coverage increased to 1.6 times from 1.4 times. On a rolling 12-month basis, adjusted EBITDA increased to $225 million from $182.9 million, and adjusted free cash flow reached $123.4 million.
Operating expenses increased in the period, with selling, general and administrative expense rising to $43.9 million from $40.4 million, driven primarily by higher personnel, legal and professional fees. Gross profit per kilogram remained largely stable at $0.84 compared with $0.86 a year earlier. The company reduced notes payable by $52.4 million year over year despite funding seasonal inventory requirements.
Management reaffirmed its full-year outlook without providing specific guidance figures, anticipating shipment volumes will strengthen over the remainder of the fiscal year. The company is continuing to address an upcoming long-term debt maturity and investing in higher-yield, more resilient tobacco seed varieties, including proprietary varieties recently introduced in Tanzania. Leadership stated the company is prioritizing quality of earnings and financial discipline while balancing improvements in customer mix, operational efficiency and margins.
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