Pyxus Intl Inc New

Good day, ladies and gentlemen, and welcome to today's PICS International Incorporated Q2 2022 earnings call. At this time, all participants are in a listen-only mode. If anyone should require assistance during the conference, please press star zero on your touchtone keypad at any time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Joel Thomas, Chief Financial Officer. Mr. Thomas, you may begin your conference.

Thank you, Jennifer. With me this evening is Peter Sickle, our president and CEO. 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 these 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 change in management's expectations or any change in assumptions or circumstances on which these statements are based. Included in our call today may be discussion of non-GAAP financial measurement. including earnings before interest, taxes, depreciation, and amortization, commonly referred to as EBITDA and adjusted EBITDA, that 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 measurements. A table including a reconciliation of and other disclosures regarding these non-GAAP financial measures is available on our website at www.pixus.com. In connection with the emergence from Chapter 11 cases, PIXIS qualified for fresh start reporting as detailed in our most recent Form 10-K report filed with the SEC. And due to the application of fresh start reporting, the pre-emergence and post-emergence periods may not be comparable. Any replay, rebroadcast, transcript, or other reproduction of this conference call, other than the replay as provided by PIXIS 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. Now I'll hand the call over to Peter.

Hello, everyone, and thank you for joining us this evening. As we move into the second half of the fiscal year, we continue to be pleased with the growing momentum of our business. Our new operational and capital structures supported by our sustainability strategy are proving to be points of differentiation with our customers. And we are seeing increased demand for our leaf products and growth in market share. The leaf business continues to be impacted by COVID-19-related shipping constraints, including vessel and equipment availability, poor congestion, and rising freight costs. We are taking proactive steps to mitigate these challenges, including working to accelerate shipments, utilizing new ports for product export, and working closely with customers to determine if there are ways to expedite the process flow for their operations. We estimate that between $90 and $120 million of revenue was delayed from the first half of the fiscal year into future quarters due to COVID-related shipping constraints. Despite these challenges, we continue to manage our working capital closely, consistent with our expectations, inventory at September the 30th, 2021, was $802.4 million, a decrease of 5% when compared to the prior year. Uncommitted inventory is near the low end of our target range of between 50 and 150 million and is expected to remain at this low level throughout fiscal year end. Protection of employee health and safety is a high priority for us, and we continuously evaluate our COVID-19 protocols to address the spread of the virus and minimize potential impact. We appreciate the ongoing hard work of all of our employees and the support of our stakeholders as we work together to address these challenges. With regards to e-liquids, while the regulation and enforcement activities in the e-liquids industry are continuing to mature, we await PMTA approval notification for our pending applications for Humble Juice Co. and 12 state brands. And if our PMTAs are approved, we look forward to the post-PMTA market opportunities. Over the past several months, we've continued to make progress in our sustainability journey in key areas that support the United Nations Sustainable Development Goals. We're currently in the process of finalizing our enhanced ESG strategy, which we intend to announce before the end of the calendar year. This framework builds off of the company's legacy of supporting sustainable agricultural production and includes ambitious long-term targets material to our business and stakeholders. Despite COVID-related shipping constraints that face many industries, the first half of fiscal 2022 reflects improved demand, increased leaf volumes, and improved operational performance. As we leverage the savings from fiscal 21 restructuring initiatives, we continue to expect fiscal 2022 sales to be between $1.65 and $1.8 billion, SG&A expense to be between $140 and $145 million, excluding non-recurring items and potential changes in foreign currency exchange rates, and adjust the DVDA to be between $150 and $170 million. The strengthening of our business in a sustainable manner remains a priority as our global team works together to achieve our purpose of growing a better world. With that, I'll turn it over to Joel to provide a financial update.