What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-13 · 236 added, 101 removed, 178 unchanged (65% of the section changed)

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These risks and uncertainties include:

• risks related to our indebtedness, including that the Company has substantial debt which may adversely affect it by limiting future sources of financing, interfering with its ability to pay interest, and principal on its indebtedness and subjecting it to additional risks, the Company requires a significant amount of cash to service indebtedness and its ability to generate cash depends on many factors beyond its control, the Company may not be able to refinance or renew its indebtedness, which may have a material adverse effect on its financial condition, the Company may not be able to satisfy the covenants included in its financing arrangements, which could result in the default of its outstanding debt obligations, and despite current indebtedness levels, the Company may still be able to incur substantially more debt, which could exacerbate further the risks associated with its significant leverage;

• risks related to our indebtedness, including that the Company has substantial debt which may adversely affect it by limiting future sources of financing, interfering with its ability to pay interest, and principal on its indebtedness and subjecting it to additional risks, the Company requires a significant amount of cash to service indebtedness and its ability to generate cash depends on many factors beyond its control, the Company may not be able to refinance or renew its indebtedness, including indebtedness due within one year, which may have a material adverse effect on its financial condition, the Company may not be able to satisfy the covenants included in its financing arrangements, which could result in the default of its outstanding debt obligations, and despite current indebtedness levels, the Company may still be able to incur substantially more debt, which could exacerbate further the risks associated with its significant leverage;

• risks and uncertainties relating to the Chapter 11 Cases and the Company's liquidity and business strategy, including but not limited to:

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• risks and uncertainties related to the COVID-19 pandemic, including possible delays in shipments of leaf tobacco, including from the closure or restricted activities at ports or other channels, disruptions to the Company’s operations or the operations of suppliers and customers resulting from restrictions on the ability of employees and others in the supply chain to travel and work, border closures, determinations by Pyxus or shippers to temporarily suspend operations in affected areas, whether the Company’s operations that have been classified as “essential” under various governmental orders restricting business activities will continue to be so classified or, even if so classified, whether site-specific health and safety concerns related to COVID-19 might otherwise require operations at any of our facilities to be halted for some period of time, negative consumer purchasing behavior with respect to the Company’s products or the products of its leaf tobacco customers during periods of government mandates restricting activities imposed in response to the COVID-19 pandemic, and the extent to which the impact of the COVID-19 pandemic on the Company’s operations and the demand for its products may not coincide with impacts experienced in the United States due to the international scope of its operations, including in emerging and other markets in which the Company operates where the timing and severity of COVID-19 outbreaks and the pace of COVID-19 vaccinations and treatments may differ from those in the United States;

• risks and uncertainties related to the Company’s Other Products and Services segment, including that the e-liquids business has a limited operating history, is in a developing market, may not generate the results that the Company anticipates and has needed, and may continue to need, significant investment to fund continued operations and expansion, that its technologies, processes and formulations may become obsolete, the impact of increasing competition, uncertainties with respect to the development of the industry and market, including the level of consumer demand for such products, the potential for product liability claims, uncertainties with respect to the extent of consumer acceptance of the products offered by the e-liquids business, the impact of regulation associated with the e‑liquids business, including the risk of obtaining anticipated regulatory approvals, and risks and uncertainties related to the CCAA Proceeding (as defined below), including whether the remaining sale transaction with respect to the Canadian Cannabis Subsidiaries (as defined below) will be successfully completed within the anticipated time frame or at all and the extent of any recovery, or additional impairment, that Pyxus may recognize with respect to its investment in these subsidiaries.

expansion, that its technologies, processes and formulations may become obsolete, that government approvals necessary for the continued sale of certain e-liquids products may not be obtained, the impact of increasing competition, uncertainties with respect to the development of the industry and market, including the level of consumer demand for such products, the potential for product liability claims, uncertainties with respect to the extent of consumer acceptance of the products offered by the e-liquids business, the impact of regulation associated with the e‑liquids business, including the risk of obtaining anticipated regulatory approvals, and risks and uncertainties related to the CCAA Proceeding (as defined below), including whether the remaining sale transaction with respect to the Canadian Cannabis Subsidiaries (as defined below) will be successfully completed within the anticipated time frame or at all and the extent of any recovery, or additional impairment, that Pyxus may recognize with respect to its investment in these subsidiaries.

We do not undertake to update any forward-looking statements that we make from time to time.

Executive Summary

In the first quarter we began to catch-up from prior-period shipping delays driven by the pandemic and customer shipping instructions.

We are continuing to monitor the impact of COVID on our Company and our workforce, and we will adjust our operations as needed to protect the health and safety of our employees while maintaining business continuity.

Proactive management of shipping logistics, including container availability and freight costs, remains a high priority as we adapt to the evolving global shipping conditions.

In addition, our inventory levels are consistent with our expectations and our uncommitted inventory decreased compared to the prior year.

We continue to customers look for ways to reduce complexity in their supply chains through partnerships with suppliers who support their environmental, social, and governance ("ESG") objectives.

We believe we are well-positioned to capitalize on additional opportunities with our customers.

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.

During the second quarter we continued to catch-up from prior-period shipping delays driven by the pandemic and customer shipping instructions.

In addition, we continue to monitor the impact of COVID on our Company and our workforce, and adjust our operations to protect the health and safety of our employees while maintaining business continuity.

The leaf business continues to be impacted by COVID-related shipping constraints, including vessel and equipment availability, port congestion, and rising freight costs.

We are taking proactive steps to mitigate these challenges, including taking steps to accelerate shipments, exploring 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 million and $120 million of revenue was delayed from the first half of the 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 30, 2021 decreased $42.3 million or 5.0% to $802.4 million when compared to September 30, 2020.

In addition, our uncommitted inventory decreased compared to the prior year.

Our customers continue to look for ways to reduce complexity in their supply chains through partnerships with suppliers who support their environmental, social, and governance ("ESG") objectives.

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.

Historically, Pyxus’ core business has been as a tobacco leaf merchant, purchasing, processing, packing, storing and shipping tobacco to manufacturers of cigarettes and other consumer tobacco products throughout the world.

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Segment Information " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Operating and Reportable Segment Considerations

The Company is reevaluating its operating and reportable segments under ASC Topic 280 – Segment Reporting following the effectiveness of the Plan in August 2020, the appointment of a new Board of Directors in fiscal 2021, the outcomes achieved from cost savings initiatives implemented in fiscal 2021, the Company's exit from its industrial hemp, CBD, and Canadian cannabis businesses in 2021, and the impact the COVID-19 pandemic has had on the Company's global operations.

These events are changing how the Company is managed and the information used by Management to assess performance and allocate resources.

The Company expects to conclude this evaluation during the three months ended December 31, 2021.

Bankruptcy Proceedings

On June 15, 2020, Old Holdco, Inc.

(then named Pyxus International, Inc.) (“Old Pyxus”) and its then subsidiaries Alliance One International, LLC, Alliance One North America, LLC, Alliance One Specialty Products, LLC and GSP Properties, LLC (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to implement a prepackaged Chapter 11 plan of reorganization to effectuate a financial restructuring (the “Restructuring”) of Old Pyxus’ secured debt.

(collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to implement a prepackaged Chapter 11 plan of reorganization to effectuate a financial restructuring (the “Restructuring”) of Old Pyxus’ secured debt.

On August 21, 2020, the Bankruptcy Court issued an order (the “Confirmation Order”) confirming the Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the “Plan”) filed by the Debtors in the Chapter 11 Cases.

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Other than our Chief Executive Officer, our Board of Directors does not include any of the individuals who served as directors of Old Pyxus at the time the Chapter 11 Cases were commenced or at the effectiveness of the Plan.

See " Note 3.

Emergence from Voluntary Reorganization under Chapter 11 " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

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Following the effectiveness of the Plan and the election of additional members of our Board of Directors in October 2020, our Board of Directors determined to exit the industrial hemp, CBD and Canadian cannabis businesses in light of the Company’s limited capital resources and the continuing capital requirements to develop and expand these early-stage businesses.

In December 2020, the Company commenced actions to exit operations of the industrial hemp businesses, including the production and sale of products containing extracts of industrial hemp, including CBD products, by Criticality.

Criticality’s CBD extraction facility has ceased operations.

The Company’s CBD extraction facility has ceased operations.

CCAA Proceeding

On January 21, 2021, Canada's Island Garden Inc.

(“Figr East”), Figr Norfolk Inc.

On January 21, 2021, Figr Norfolk Inc.

(“Figr Norfolk”) and Figr Brands, Inc.

(“Figr Brands”, and together with Figr East and Figr Norfolk, the “Canadian Cannabis Subsidiaries”), which are indirect subsidiaries of the Company, applied for relief from their respective creditors pursuant to Canada’s Companies’ Creditors Arrangement Act (the “CCAA”) in the Ontario Superior Court of Justice (Commercial List) (the “Canadian Court”) in Ontario, Canada as Court File No.

(“Figr Brands”), which are indirect subsidiaries of the Company, and Canada’s Island Garden Inc.

(“Figr East,” and together with Figr Norfolk and Figr Brands, the “Canadian Cannabis Subsidiaries”), which, prior to its sale on June 28, 2021 was an indirect subsidiary of the Company, applied for relief from their respective creditors pursuant to Canada’s Companies’ Creditors Arrangement Act (the “CCAA”) in the Ontario Superior Court of Justice (Commercial List) (the “Canadian Court”) in Ontario, Canada as Court File No.

CV-21-00655373-00CL (the “CCAA Proceeding”).

On January 21, 2021, upon application by the Canadian Cannabis Subsidiaries, the Canadian Court issued an order for creditor protection of the Canadian Cannabis Subsidiaries pursuant to the provisions of the CCAA and the appointment of FTI Consulting Canada Inc.

to serve as the Canadian Court-appointed monitor of the Canadi an Cannabis Subsidiaries during the pendency of the CCAA Proceeding (the “Monitor”).

to serve as the Canadian Court-appointed monitor of the Canadian Cannabis Subsidiaries during the pendency of the CCAA Proceeding (the “Monitor”).

On January 29, 2021, the Canadian Court issued an order permitting the Canadian Cannabis Subsidiaries to initiate a sale and investment solicitation process to be conducted by the Monitor and its affiliate to solicit interest in, and opportunities for, a sale of, or investment in, all or substantially all, or one or more components, of the assets and/or the business operations of the Canadian Cannabis Subsidiaries.

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The sale of Figr East and certain intangible assets of Figr Brands was completed on June 28, 2021.

The amount of recovery that the Company may receive from the sale of the assets of Figr Norfolk, the sale of the outstanding equity of Figr East, and the sale of certain intangible assets of Figr Brands will be impacted by the amount of claims against the Canadian Cannabis Subsidiaries submitted in the CCAA Proceeding, the extent to which such claims are approved by the

Canadian Court, and the extent to which the Company's interest in the Canadian Cannabis Subsidiaries are determined by the Canadian Court to be debt claims entitled to recovery on the same basis as other unsecured creditor claims with respect to the Canadian Cannabis Subsidiaries.

We continue to monitor the impact of the COVID-19 pandemic on our Company and our workforce.

The amount of recovery that the Company may receive from the pending sale of the assets of Figr Norfolk, the completed sale of the outstanding equity of Figr East, and the completed sale of certain intangible assets of Figr Brands will be impacted by the amount of claims against the Canadian Cannabis Subsidiaries submitted in the CCAA Proceeding, the extent to which such claims are approved by the Canadian Court, and the extent to which the Company's interest in the Canadian Cannabis Subsidiaries are determined by the Canadian Court to be debt claims entitled to recovery on the same basis as other unsecured creditor claims with respect to the Canadian Cannabis Subsidiaries.

We continue to monitor the impact of the COVID-19 pandemic on our Company and workforce as well as the impact of COVID-related shipping constraints.

The COVID-19 pandemic and government actions implemented to contain further spread of COVID-19 have severely restricted economic activity around the world, and the onset of new variants of COVID-19 threaten to prolong the effects of the pandemic.

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While our supply chains and distribution channels continue to experience delays due to COVID-19 in certain markets, we currently have adequate supply of products to meet the near-term forecasted demand.

We implemented various measures to reduce the spread of COVID-19 within our workforce including the implementation of health safety practices, providing personal protective equipment, the implementation of travel restrictions, work-from-home policies where possible, restricting visitors to production locations, splitting production workforce, reducing the on-site production workforce levels, screening workers before they enter facilities, implementing social distancing, and encouraging employees to adhere to prevention measures recommended by the Center for Disease Control and the World Health Organization.

In addition, we have developed a robust Return to the Workplace Program to ensure our employees are returning to a safe working environment as federal, state, and local governments begin lifting their COVID-19 related restrictions.

Broad economic impacts from the COVID-19 pandemic, including increased unemployment rates and reduced consumer spending, may extend billing and collection cycles.

In addition, shipping constraints have resulted in delays in shipments to customers, which my continue for the remainder of the fiscal year and beyond.

Broad economic impacts from the COVID-19 pandemic, including increased unemployment rates and reduced consumer spending in some markets in which we operate, may extend billing and collection cycles.

Deterioration in the collectability of accounts receivable from extended billing and collection cycles would adversely affect our results of operations, financial condition, and cash flows, leading to working capital constraints.

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Due to the geographic scope of our operations, including emerging markets, and our sale to customers around the world, our operations and the demand for our products are subject to the impact of the COVID-19 on a global scale.

Improving economic conditions in the United States, for example, may not coincide with improvements in our results of operations because of our exposure to the impact of COVID-19 elsewhere in the world, particularly in emerging markets that lack access to adequate vaccines and medical treatments.

We cannot predict the extent or duration of the COVID pandemic, the effects of the COVID pandemic on the global, national or local economy, or the effect of the COVID pandemic on our business, financial position, results of operations, and cash flows.

Fresh Start Reporting

The Company applied Financial Accounting Standards Board (“FASB”) ASC Topic 852 – Reorganizations (“ASC 852”) in preparing the condensed consolidated financial statements.

The Company applied Financial Accounting Standards Board ASC Topic 852 – Reorganizations in preparing the condensed consolidated financial statements.

For periods subsequent to the commencement of the Chapter 11 Cases, ASC 852 requires distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business.

Upon the effectiveness of the Plan and the emergence of the Debtors from the Chapter 11 Cases, the Company determined it qualified for fresh start reporting under ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date.

Our financial results for the three months ended June 30, 2020 are referred to as those of the “Predecessor.” Our financial results for the three months ended June 30, 2021 are referred to as those of the “Successor.” Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with fresh start reporting, which requires that we report on our results for the periods prior to the Effective Date separately from the period following the Effective Date.

The Company elected to apply fresh start reporting using a convenience date of August 31, 2020 (the "Fresh Start Reporting Date").

Our financial results for the two and five months ended August 31, 2020 are referred to as those of the “Predecessor.” Our financial results for the one month ended September 30, 2020, and for the three and six months ended September 30, 2021 are referred to as those of the “Successor.” Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with fresh start reporting, which requires that we report on our results for the periods prior to the Effective Date separately from the period following the Effective Date.

The Company elected to apply fresh start reporting using a convenience date of August 31, 2020.

The Company evaluated and concluded the events between August 24, 2020 and August 31, 2020 were not material to the Company's financial reporting on both a quantitative or qualitative basis.

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Fresh Start Reporting" to the "Notes to Condensed Consolidated Financial Statements" for additional information.

We do not believe that reviewing the results of these periods in isolation would be useful in identifying any trends in or reaching any conclusions regarding our overall operating performance.

Management believes that operating metrics for the Successor period when combined with the Predecessor period provides more meaningful comparisons to other periods and are useful in identifying current business trends.

Accordingly, in addition to presenting our results of operations as reported in our Condensed Consolidated Financial Statements in accordance with U.S.

GAAP, the tables and discussions below also present the combined results for the three months and six months ended September 30, 2020.

The combined results (referenced as “Combined (Non-GAAP)” or “combined”) for the three months and six months ended September 30, 2020 represent the sum of the reported amounts for the Predecessor period July 1, 2020 through August 31, 2020 combined with the Successor period from September 1, 2020 through September 30, 2020 and the Predecessor period from April 1, 2020 through August 31, 2020 combined with the Successor period from September 1, 2020 through September 30, 2020, respectively.

These combined results are not considered to be prepared in accordance with U.S.

GAAP and have not been prepared as pro forma results under applicable regulations.

The combined operating results are presented for supplemental purposes only, may not reflect the actual results we would have achieved absent our emergence from bankruptcy, may not be indicative of future results and should not be viewed as a substitute for the financial results of the Predecessor period and Successor period presented in accordance with U.S.

In the following discussion of results of operations, comparisons of combined results for the three and six month periods ended September 30, 2020 are to the comparable U.S.

GAAP measures for the respective three and six month periods ended September 30, 2021.

Results of Operations

Three Months Ended June 30, 2021 and 2020

Successor Predecessor Change

(in millions) Three months ended June 30, 2021 Three months ended June 30, 2020 $ %

Three Months Ended September 30, 2021 and 2020

Successor Predecessor Combined

(in millions) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Three months ended September 30, 2020

Sales and other operating revenues $ 394.2 $ 117.8 $ 184.8 $ 302.6

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Selling, general, and administrative expenses 37.9 15.7 27.1 42.8

Other income (expense), net 0.2 (2.4) 2.6 108.3

Other (expense) income, net (1.8) (1.9) 1.9 —

Restructuring and asset impairment charges 6.9 1.2 0.5 1.7

Operating income (loss)* 5.5 (8.5) (0.4) (8.9)

Loss on deconsolidation of subsidiaries 2.5 — — —

Interest expense, net 28.5 8.1 14.7 22.8

Reorganization items — — 132.9 132.9

Income tax (benefit) expense (14.1) (10.6) 8.5 (2.1)

Income from unconsolidated affiliates 1.3 0.2 1.5 1.7

Net loss attributable to noncontrolling interests (0.3) (0.5) (0.3) (0.8)

Net (loss) income attributable to Pyxus International, Inc.* $ (9.7) $ (5.3) $ 111.2 $ 105.9

* Amounts may not equal column totals due to rounding

Sales and other operating revenues increased $91.6 million, or 30.3%, to $394.2 million for the three months ended September 30, 2021 from $302.6 million for the combined three months ended September 30, 2020.

This increase was due to a 12.2% increase in leaf volume from $82.9 million of shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the current quarter and an 18.3% increase in leaf average sales price driven by product mix having a higher concentration of lamina.

These increases were partially offset by the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and the decrease in e-liquids revenue related to a general industry slow-down amid evolving regulations.

Cost of goods and services sold increased $75.2 million, or 28.2%, to $342.1 million for the three months ended September 30, 2021 from $266.9 million for the combined three months ended September 30, 2020.

This increase was mainly due to the increase in sales and other operating revenues.

Gross profit as a percent of sales increased to 13.2% for the three months ended September 30, 2021 from 11.8% for the combined three months ended September 30, 2020.

This increase was attributable to lower conversion costs per kilo, customer mix, and the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021.

This increase was partially offset by foreign currency fluctuations and higher shipping costs.

Selling, general, and administrative ("SG&A") expenses decreased $4.9 million, or 11.4%, to $37.9 million for the three months ended September 30, 2021 from $42.8 million for the combined three months ended September 30, 2020.

SG&A expenses as a percent of sales decreased to 9.6% for the three months ended September 30, 2021 from 14.1% for the combined three months ended September 30, 2020.

These decreases were mainly due to increased sales and other operating revenues, the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021, and savings from fiscal 2021 restructuring initiatives.

Restructuring and asset impairment charges increased $5.2 million or 305.9% to $6.9 million for the three months ended September 30, 2021 from $1.7 million for the combined three months ended September 30, 2020 due to the write-off of the Company's remaining industrial hemp CBD extraction equipment and the continued restructuring of certain leaf operations.

Interest expense, net increased $5.7 million or 25.0% to $28.5 million for the three months ended September 30, 2021 from $22.8 million for the combined three months ended September 30, 2020 due to the borrowings under the DDTL Facility in the current fiscal year.

Reorganization items of $132.9 million were incurred in the prior fiscal year as a result of the Chapter 11 Cases.

Leaf - North America Supplemental Information

Successor Predecessor Combined

(in millions, except per kilo amounts) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Three months ended September 30, 2020

Kilos sold 12.8 2.9 4.4 7.3

Tobacco sales and other operating revenues:

Sales and other operating revenues $ 83.7 $ 17.1 $ 25.3 $ 42.4

Average price per kilo 6.54 5.90 5.75 5.81

Processing and other revenues 6.8 2.9 2.5 5.4

Total sales and other operating revenues 90.5 20.0 27.8 47.8

Tobacco cost of goods sold:

Tobacco costs 69.4 13.5 19.4 32.9

Transportation, storage, and other period costs 3.6 1.3 3.0 4.3

Derivative financial instrument and exchange losses (gains) — (0.1) — (0.1)

Total tobacco cost of goods sold 73.0 14.7 22.4 37.1

Average cost per kilo 5.70 5.07 5.09 5.08

Processing and other revenues cost of services sold 4.9 2.4 1.7 4.1

Total cost of goods and services sold 77.9 17.1 24.1 41.2

Gross profit 12.6 2.9 3.7 6.6

Selling, general, and administrative expenses 3.5 1.8 2.3 4.1

Other expense, net (0.5) (0.1) (0.2) (0.3)

Restructuring and asset impairment charges 0.1 0.1 — 0.1

Operating income $ 8.5 $ 0.9 $ 1.2 $ 2.1

Total sales and other operating revenues increased $42.7 million, or 89.3%, to $90.5 million for the three months ended September 30, 2021 from $47.8 million for the combined three months ended September 30, 2020.

This increase was primarily due to 75.3% higher volume from $44.7 million of shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the current quarter and a 12.6% increase in average sales price driven by product mix having a higher concentration of lamina.

Cost of goods and services sold increased $36.7 million, or 89.1%, to $77.9 million for the three months ended September 30, 2021 from $41.2 million for the combined three months ended September 30, 2020.

This increase was mainly due to the increase in total sales and other operating revenues.

Gross profit as a percent of sales decreased to 13.9% for the three months ended September 30, 2021 from 13.8% for the combined three months ended September 30, 2020.

This decrease was primarily due to customer mix.

This decrease was partially offset by lower conversion costs per kilo.

SG&A expenses as a percent of sales decreased to 3.9% for the three months ended September 30, 2021 from 8.6% for the combined three months ended September 30, 2020 driven by increased total sales and other operating revenues and savings from fiscal 2021 restructuring initiatives.

Leaf - Other Regions Supplemental Information

Successor Predecessor Combined

(in millions, except per kilo amounts) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Three months ended September 30, 2020

Kilos sold 73.6 25.7 44.0 69.7

Tobacco sales and other operating revenues:

Sales and other operating revenues $ 273.9 $ 89.4 $ 137.6 $ 227.0

Average price per kilo 3.72 3.48 3.13 3.26

Processing and other revenues 26.5 7.6 15.2 22.8

Total sales and other operating revenues 300.4 97.0 152.8 249.8

Tobacco cost of goods sold:

Tobacco costs 223.5 72.6 109.2 181.8

Transportation, storage, and other period costs 15.8 5.9 8.4 14.3

Derivative financial instrument and exchange (gains) losses (0.7) 0.4 (0.1) 0.3

Total tobacco cost of goods sold 238.6 78.9 117.5 196.4

Average cost per kilo 3.24 3.07 2.67 2.82

Processing and other revenues cost of services sold 19.6 5.3 12.7 18.0

Total cost of goods and services sold 258.2 84.2 130.2 214.4

Gross profit 42.2 12.8 22.6 35.4

Selling, general, and administrative expenses 30.1 8.4 17.3 25.7

Other (expense) income, net (1.0) 0.6 0.4 1.0

Restructuring and asset impairment charges 1.2 1.1 0.5 1.6

Operating income $ 9.9 $ 3.9 $ 5.2 $ 9.1

Total sales and other operating revenues increased $50.6 million, or 20.3%, to $300.4 million for the three months ended September 30, 2021 from $249.8 million for the combined three months ended September 30, 2020.

This increase was due to a 5.6% increase in volume from $38.2 million of shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the current quarter and a 14.1% increase in average sales price driven by product mix having a higher concentration of lamina.

Cost of goods and services sold increased $43.8 million, or 20.4%, to $258.2 million for the three months ended September 30, 2021 from $214.4 million for the combined three months ended September 30, 2020.

This increase was mainly due to the increase in total sales and other operating revenues.

Gross profit as a percent of sales was 14.0% for the three months ended September 30, 2021 from 14.2% for the combined three months ended September 30, 2020.

This decrease was primarily due to foreign currency fluctuations and higher shipping costs.

This decrease was partially offset by lower conversion costs per kilo.

SG&A expenses as a percent of sales decreased to 10.0% for the three months ended September 30, 2021 from 10.3% for the combined three months ended September 30, 2020 driven by increased total sales and other operating revenues.

Other Products and Services Supplemental Information

Successor Predecessor Combined

(in millions) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Three months ended September 30, 2020

Sales and other operating revenues $ 3.3 $ 0.9 $ 4.2 $ 5.1

Cost of goods and services sold 5.9 6.3 5.2 11.5

Gross loss (2.6) (5.4) (1.0) (6.4)

Selling, general, and administrative expenses 4.4 5.5 7.4 12.9

Other (expense) income, net (0.3) (2.4) 1.7 (0.7)

Restructuring and asset impairment charges 5.6 — — —

Operating loss $ (12.9) $ (13.3) $ (6.7) $ (20.0)

Sales and other operating revenues decreased $1.8 million, or 35.3%, to $3.3 million for the three months ended September 30, 2021 from $5.1 million for the combined three months ended September 30, 2020.

This decrease was primarily due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and the decrease in e-liquids revenue related to a general industry slow-down amid evolving regulations.

Cost of goods and services sold decreased $5.6 million, or 48.7%, to $5.9 million for the three months ended September 30, 2021 from $11.5 million for the combined three months ended September 30, 2020.

This decrease was mainly due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021.

Gross loss as a percent of sales decreased to 78.8% for the three months ended September 30, 2021 from 125.5% for the combined three months ended September 30, 2020.

This decrease was primarily attributable to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021.

SG&A expenses decreased $8.5 million, or 65.9%, to $4.4 million for the three months ended September 30, 2021 from $12.9 million for the combined three months ended September 30, 2020.

SG&A expenses as a percent of sales decreased to 133.3% for the three months ended September 30, 2021 from 252.9% for the combined three months ended September 30, 2020.

These decreases were mainly due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and savings from fiscal 2021 restructuring initiatives.

Restructuring and asset impairment charges were $5.6 million for the three months ended September 30, 2021 primarily due to the write-off of the Company's remaining industrial hemp CBD extraction equipment.

Six Months Ended September 30, 2021 and 2020

Successor Predecessor Combined

(in millions) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Six months ended September 30, 2020

Sales and other operating revenues $ 727.5 $ 117.8 $ 447.6 $ 565.4

Cost of goods and services sold 633.3 107.5 402.6 510.1

Gross profit* 94.2 10.4 45.0 55.4

Selling, general, and administrative expenses 71.8 15.7 87.9 103.6

Other expense, net (1.7) (1.9) (0.5) (2.4)

Restructuring and asset impairment charges 7.1 1.2 0.6 1.8

Operating income (loss)* 13.7 (8.5) (44.0) (52.5)

Loss on deconsolidation of subsidiaries 2.5 — — —

Debt retirement expense — — 0.8 0.8

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Reorganization items — — 106.0 106.0

Income tax benefit (8.4) (8.2) (0.2) (2.4)

Income tax (benefit) expense (22.6) (10.6) 0.3 (10.3)

(Loss) income from unconsolidated affiliates (0.1) 0.2 2.4 2.6

Net loss attributable to noncontrolling interests (0.5) (0.5) (1.0) (1.5)

Net loss attributable to Pyxus International, Inc.

$ (11.5) $ (92.2) $ 80.7 87.5

Net (loss) income attributable to Pyxus International, Inc.* $ (21.2) $ (5.3) $ 19.0 $ 13.7

* Amounts may not equal column totals due to rounding

Sales and other operating revenues increased $70.5 million, or 26.8%, to $333.3 million for the three months ended June 30, 2021 from $262.8 million for the three months ended June 30, 2020.

This increase was due to an 8.6% increase in leaf volume and a 17.4% increase in leaf average sales price.

The 8.6% increase in leaf volume was primarily due to $77.3 million of shipments delayed by the COVID-19 pandemic and customer shipping instructions from the fiscal year ended March 31, 2021 into the first quarter of the current fiscal year.

This increase was partially offset by the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and lower leaf volume in Asia mainly due to shipments delayed by the COVID-19 pandemic and shipping container availability.

The 17.4% increase in leaf average sales price was driven by product mix in Africa, Asia, Europe, and North America having a higher concentration of lamina.

This increase was partially offset by product mix having a lower concentration of lamina in South America.

Cost of goods and services sold increased $48.0 million, or 19.7%, to $291.2 million for the three months ended June 30, 2021 from $243.2 million for the three months ended June 30, 2020.

This increase was mainly due to the increase in sales and other operating revenues and was partially offset by a $15.1 million write-down of industrial hemp inventory in fiscal 2021 that was driven by a shift in expected future products mix in response to market supply conditions and continued market price compression.

Gross profit as a percent of sales increased to 12.6% for the three months ended June 30, 2021 from 7.5% for three months ended June 30, 2020.

This increase was attributable to the fiscal 2021 write-down of industrial hemp inventory, as described above, and lower conversion costs in Africa and South America and product mix in Africa, Asia, and Europe having a higher concentration of lamina.

This increase was partially offset by higher conversion costs in Asia, product mix having a lower concentration of lamina in South America, and foreign exchange rates in Asia and Europe.

Selling, general, and administrative ("SG&A") expenses decreased $27.0 million, or 44.4%, to $33.8 million for the three months ended June 30, 2021 from $60.8 million for the three months ended June 30, 2020 primarily due to expenses included in SG&A in fiscal 2021 for the Chapter 11 Cases that were incurred prior to the commencement of the Chapter 11 Cases, the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021, and savings from fiscal 2021 restructuring initiatives.

SG&A expenses as a percent of sales decreased to 10.1% for the three months ended June 30, 2021 from 23.1% for the three months ended June 30, 2020 driven by increased sales and other operating revenues and the aforementioned decrease in SG&A expenses.

Sales and other operating revenues increased $162.1 million or 28.7% to $727.5 million for the six months ended September 30, 2021 from $565.4 million for the combined six months ended September 30, 2020.

This increase was due to a 10.6% increase in leaf volume from $160.1 million shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the current fiscal year and a 17.8% increase in leaf average selling prices driven by product mix having a higher concentration of lamina.

Cost of goods and services sold increased $123.2 million or 24.2% to $633.3 million for the six months ended September 30, 2021 from $510.1 million for the combined six months ended September 30, 2020.

This increase was mainly due to the increase in total sales and other operating revenues.

Gross profit as a percent of sales increased to 12.9% for the six months ended September 30, 2021 from 9.8% for the combined six months ended September 30, 2020.

This increase was attributable to lower conversion costs per kilo, customer mix, and the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021.

This increase was partially offset by foreign currency fluctuations and higher shipping costs.

SG&A expenses decreased $31.8 million or 30.7% to $71.8 million for the six months ended September 30, 2021 from $103.6 million for the combined six months ended September 30, 2020.

SG&A expenses as a percent of sales decreased to 9.9% for the six months ended September 30, 2021 from 18.3% for the combined six months ended September 30, 2020.

These decreases were driven by increased sales and other operating revenues, the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021, and savings from fiscal 2021 restructuring initiatives.

Restructuring and asset impairment charges increased $5.3 million or 294.4% to $7.1 million for the six months ended September 30, 2021 from $1.8 million for the combined six months ended September 30, 2020.

This increase was primarily due to the write-off of the Company's remaining industrial hemp CBD extraction equipment and the continued restructuring of certain leaf operations.

Interest expense, net increased $2.0 million or 3.8% to $55.3 million for the six months ended September 30, 2021 from $53.3 million for the combined six months ended September 30, 2020.

This increase was due to borrowings under the DDTL Facility in the current fiscal year.

Reorganization items of $106.0 million were incurred in the prior fiscal year as a result of the Chapter 11 Cases.

Leaf - North America Supplemental Information

Successor Predecessor Change

(in millions, except per kilo amounts) Three months ended June 30, 2021 Three months ended June 30, 2020 $ %

Successor Predecessor Combined

(in millions, except per kilo amounts) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Six months ended September 30, 2020

Kilos sold 20.0 2.9 9.5 12.4

7 unchanged sentences

Transportation, storage, and other period costs 7.5 1.3 5.6 6.9

Derivative financial instrument and exchange losses — 0.2 (0.2) (100.0)

Derivative financial instrument and exchange (gains) losses — (0.1) 0.3 0.2

Total tobacco cost of goods sold 113.7 14.7 45.2 59.9

5 unchanged sentences

Other expense, net (0.8) (0.1) (0.5) (0.6)

Operating income (loss) $ 2.6 $ (0.8) 3.4 425.0

Total sales and other operating revenues increased $19.9 million, or 66.6%, to $49.8 million for the three months ended June 30, 2021 from $29.9 million for the three months ended June 30, 2020.

This increase was primarily due to 41.2% higher volume due to $12.4 million of shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the first quarter of the current fiscal year and a 26.6% increase in average sales price driven by product mix having a higher concentration of lamina.

Cost of goods and services sold increased $17.5 million, or 68.6%, to $43.0 million for the three months ended June 30, 2021 from $25.5 million for the three months ended June 30, 2020.

This increase was mainly due to the increase in sales and other operating revenues.

Gross profit as a percent of sales decreased to 13.7% for the three months ended June 30, 2021 from 14.7% for the three months ended June 30, 2020.

Restructuring and asset impairment charges 0.1 0.1 — 0.1

Operating income $ 11.1 $ 0.9 $ 0.4 $ 1.3

Total sales and other operating revenues increased $62.6 million or 80.6% to $140.3 million for the six months ended September 30, 2021 from $77.7 million for the combined six months ended September 30, 2020.

This increase was due to 61.3% higher volume from $57.1 million of shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the current fiscal year and an 18.0% increase in average sales price due to product mix having a higher concentration of lamina.

Cost of goods and services sold increased $54.2 million or 81.3% to $120.9 million for the six months ended September 30, 2021 from $66.7 million for the combined six months ended September 30, 2020.

This increase was mainly due to the increase in total sales and other operating revenues.

Gross profit as a percent of sales decreased to 13.8% for the six months ended September 30, 2021 from 14.2% for the combined six months ended September 30, 2020.

This decrease was primarily due to customer mix.

This decrease was partially offset by lower conversion costs per kilo.

SG&A expenses decreased $1.6 million or 17.8% to $7.4 million for the six months ended September 30, 2021 from $9.0 million for the combined six months ended September 30, 2020.

SG&A expenses as a percent of sales decreased to 5.3% for the six months ended September 30, 2021 from 11.6% for the combined six months ended September 30, 2020.

These decreases were driven by savings from restructuring initiatives.

Leaf - Other Regions Supplemental Information

Successor Predecessor Change

(in millions, except per kilo amounts) Three months ended June 30, 2021 Three months ended June 30, 2020 $ %

Successor Predecessor Combined

(in millions, except per kilo amounts) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Six months ended September 30, 2020

Kilos sold 135.5 25.7 102.5 128.2

14 unchanged sentences

Selling, general, and administrative expenses 55.5 8.4 54.5 62.9

Other income, net 0.1 0.4 (0.3) (75.0)

Other (expense) income, net (0.9) 0.6 0.8 1.4

Restructuring and asset impairment charges 1.4 1.1 0.5 1.6

Operating income (loss) $ 21.8 $ 3.9 $ (1.0) $ 2.9

Total sales and other operating revenues increased $52.4 million, or 23.0%, to $280.1 million for the three months ended June 30, 2021 from $227.7 million for the three months ended June 30, 2020.

This increase was due to a 5.8% increase in volume and a 15.0% increase in average sales price.

The 5.8% increase in volume was primarily due to the higher volume in Africa and South America driven by $64.9 million shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the first quarter of the current fiscal year.

This increase was partially offset by lower volume in Asia mainly due to shipments delayed by the COVID-19 pandemic and the shipping container availability.

The 15.0% increase in average sales price was driven by product mix in Africa, Asia, and Europe having a higher concentration of lamina.

This increase was partially offset by product mix having a lower concentration of lamina in South America.

Cost of goods and services sold increased $45.5 million, or 23.1%, to $242.7 million for the three months ended June 30, 2021 from $197.2 million for the three months ended June 30, 2020.

This increase was mainly due to the increase in sales and other operating revenues.

Gross profit as a percent of sales was 13.4% for the three months ended June 30, 2021 and 2020.

SG&A expenses decreased $11.7 million, or 31.5%, to $25.4 million for the three months ended June 30, 2021 from $37.1 million for the three months ended June 30, 2020 primarily due to fiscal 2021 restructuring initiatives resulting in lower general corporate services.

SG&A expenses as a percent of sales decreased to 9.1% for the three months ended June 30, 2021 from 16.3% for the three months ended June 30, 2020 primarily due to increased sales and other operating revenues and the aforementioned decrease in SG&A expenses.

Total sales and other operating revenues increased $103.0 million or 21.6% to $580.5 million for the six months ended September 30, 2021 from $477.5 million for the combined six months ended September 30, 2020.

This increase was due to a 14.7% increase in average sales prices due to product mix having a higher concentration of lamina and a 5.7% increase in volume from $103.1 million shipments delayed by the COVID-19 pandemic and customer shipping instructions from fiscal 2021 into the current fiscal year.

Cost of goods and services sold increased $89.4 million or 21.7% to $500.9 million for the six months ended September 30, 2021 from $411.5 million for the combined six months ended September 30, 2020.

This increase was mainly due to the increase in total sales and other operating revenues.

Gross profit as a percent of sales was 13.7% for the six months ended September 30, 2021 and 13.8% for the combined six months ended September 30, 2020.

This decrease was primarily due to foreign currency fluctuations and higher shipping costs.

This decrease was offset by lower conversion costs per kilo.

SG&A expenses decreased $7.4 million or 11.8% to $55.5 million for the six months ended September 30, 2021 from $62.9 million for the combined six months ended September 30, 2020.

SG&A expenses as a percent of sales decreased to 9.6% for the six months ended September 30, 2021 from 13.2% for the combined six months ended September 30, 2020.

These decreases were related to the increase in sales and other operating revenues and current year savings from restructuring initiatives.

Other Products and Services Supplemental Information

Successor Predecessor Change

(in millions) Three months ended June 30, 2021 Three months ended June 30, 2020 $ %

Successor Predecessor Combined

(in millions, except per kilo amounts) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Six months ended September 30, 2020

Sales and other operating revenues $ 6.7 $ 0.9 $ 9.4 $ 10.3

2 unchanged sentences

Selling, general, and administrative expenses 9.0 5.5 26.2 31.7

Other income (expense), net 0.3 (2.5) 2.8 112.0

Other expense, net — (2.4) (0.8) (3.2)

Restructuring and asset impairment charges 5.6 — — —

Operating loss $ (19.3) $ (13.3) $ (43.3) $ (56.6)

Sales and other operating revenues decreased $1.8 million, or 34.6%, to $3.4 million for the three months ended June 30, 2021 from $5.2 million for the three months ended June 30, 2020.

This decrease was primarily due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021.

Cost of goods and services sold decreased $15.0 million, or 73.2%, to $5.5 million for the three months ended June 30, 2021 from $20.5 million for the three months ended June 30, 2020.

This decrease was mainly due to a $15.1 million write-down of industrial hemp inventory driven by a shift in expected future products mix in response to market supply conditions and continued market price compression in fiscal 2021 and the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021.

Gross loss as a percent of sales decreased to 61.8% for the three months ended June 30, 2021 from 294.2% for the three months ended June 30, 2020.

This decrease was primarily attributable to the $15.1 million write-down of industrial hemp inventory described above.

SG&A expenses decreased $14.2 million, or 75.9%, to $4.5 million for the three months ended June 30, 2021 from $18.7 million for the three months ended June 30, 2020.

SG&A expenses as a percent of sales decreased to 132.4% for the three months ended June 30, 2021 from 359.6% for the three months ended June 30, 2020.

These decreases were mainly due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021, lower allocations of general corporate services, and savings from fiscal 2021 restructuring initiatives.

Sales and other operating revenues decreased $3.6 million or 35.0% to $6.7 million for the six months ended September 30, 2021 from $10.3 million for the combined six months ended September 30, 2020.

Cost of goods and services sold decreased $20.6 million or 64.4% to $11.4 million for the six months ended September 30, 2021 from $32.0 million for the combined six months ended September 30, 2020.

This decrease was mainly due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and fiscal 2021 inventory write-downs, including inventory write-offs of cannabis and industrial hemp inventory.

Gross loss as a percent of sales decreased to (70.1)% for the six months ended September 30, 2021 from (210.7)% for the combined six months ended September 30, 2020.

This decrease was mainly due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and the inventory write-downs described above.

SG&A expenses decreased $22.7 million or 71.6% to $9.0 million for the six months ended September 30, 2021 from $31.7 million for the combined six months ended September 30, 2020.

SG&A expenses as a percent of sales decreased to 134.3% for the six months ended September 30, 2021 from 307.8% for the combined six months ended September 30, 2020.

These decreases were mainly due to the deconsolidation of the Canadian Cannabis Subsidiaries in the fourth quarter of fiscal 2021 and savings from fiscal 2021 restructuring initiatives.

Restructuring and asset impairment charges of $5.6 million for the six months ended September 30, 2021 were primarily due to the write-off of the Company's remaining industrial hemp CBD extraction equipment.

Liquidity and Capital Resources

1 unchanged sentence

Our leaf tobacco business is seasonal, and purchasing, processing, and selling activities have several associated peaks where cash on-hand and outstanding indebtedness may vary significantly compared to fiscal year-end.

Although we believe that our sources of liquidity will be sufficient to fund our anticipated needs for the next twelve months, we anticipate periods during which our liquidity needs will approach the levels of our anticipated available cash and permitted borrowings under our credit facilities.

The first three quarters generally represent the peak of our working capital requirements.

Although we believe that our sources of liquidity will be sufficient to fund our anticipated operating needs for the next twelve months, we anticipate periods during which our liquidity needs for operations will approach the levels of our anticipated available cash and permitted borrowings under our credit facilities.

Unanticipated developments affecting our liquidity needs, including with respect to the foregoing factors, and sources of liquidity, including impacts affecting our cash flows from operations and the availability of capital resources (including an inability to renew or refinance seasonal lines of credit), may result in a deficiency in liquidity.

1 unchanged sentence

It is possible that, depending on the occurrence of events affecting our liquidity needs and sources of liquidity, such plans may not be sufficient to adequately or timely address a liquidity deficiency.

As of June 30, 2021, we are in our leaf working capital build.

Asia is in the midst of buying, processing, and shipping.

South America is in the final stages of purchasing, processing is in progress, and the peak shipping season for the region is in its beginning stages.

Crops in Africa are in the peak of buying, which will continue into the second quarter while processing and shipping will peak in the second and third quarters.

Europe has completed purchasing of current crops and is finalizing processing and shipment schedules.

North America is preparing to begin flue cured purchasing in the second quarter with processing and shipping occurring in the third and fourth quarters.

Based on the assumption that COVID-related shipping constraints are moderately resolved during the remainder of the fiscal year, we are projecting to generate sufficient cash flow from operations during the third and fourth quarter of the fiscal year to satisfy the indebtedness under the DDTL Facility.

To the extent we are unable to fully satisfy the indebtedness under the DDTL Facility, we may utilize cash flows from operations or cash on-hand to satisfy a portion of the DDTL Facility and refinance the remainder.

Working Capital

The following summarizes our working capital:

Successor Predecessor Successor

(in millions except for current ratio) June 30, 2021 June 30, 2020 March 31, 2021

(in millions except for current ratio) September 30, 2021 September 30, 2020 March 31, 2021

Cash and cash equivalents $ 127.6 $ 125.6 $ 92.7

10 unchanged sentences

Long-term debt 543.2 550.2 551.2

Stockholders’ equity (deficit) attributable to Pyxus International, Inc.

Stockholders’ equity attributable to Pyxus International, Inc.

226.5 385.3 247.7

11 unchanged sentences

The following summarizes our sources and uses of our cash flows:

Successor Predecessor

(in millions) Three months ended June 30, 2021 Three months ended June 30, 2020

Successor Predecessor Combined

(in millions) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Six months ended

September 30, 2020

Operating activities $ (231.1) $ (16.9) $ (182.1) $ (199.0)

2 unchanged sentences

Effect of exchange rate changes on cash (1.2) (0.6) 1.6 1.0

(Decrease) increase in cash, cash equivalents, and restricted cash (15.2) 2.8

Increase (decrease) in cash, cash equivalents, and restricted cash* 33.3 31.2 (55.1) (23.9)

Cash and cash equivalents at beginning of period 92.7 93.1 170.2 263.3

2 unchanged sentences

* Amounts may not equal column totals due to rounding

Net cash used by operating activities increased for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily driven by (excluding non-cash activities) higher inventory and associated payables due to crop normalization in Africa and South America compared to the prior year.

Net cash provided by investing activities decreased for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 primarily due to lower collections on beneficial interests on securitized trade receivables driven by lower qualifying receivables available for sale into the securitization facilities.

Net cash provided by financing activities increased for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 primarily due to the borrowings under the DDTL Facility.

Approximately $62.9 million of our outstanding cash balance at June 30, 2021 was held in foreign jurisdictions.

Net cash used by operating activities increased for the six months ended September 30, 2021 compared to the combined six months ended September 30, 2020, primarily driven by (excluding non-cash activities) higher receivables outstanding in the current period due to increased sales.

Net cash provided by investing activities increased for the six months ended September 30, 2021 compared to the combined six months ended September 30, 2020 primarily due to collection of the DIP loan made to the Canadian Cannabis Subsidiaries.

Net cash provided by financing activities increased for the six months ended September 30, 2021 compared to the combined six months ended September 30, 2020 primarily due to the borrowings under the DDTL Facility and higher net proceeds from short-term borrowings.

Approximately $107.5 million of our outstanding cash balance at September 30, 2021 was held in foreign jurisdictions, certain of which are subject to exchange controls and tax consequences that could limit our ability to fully repatriate these funds.

Fluctuation of the U.S.

6 unchanged sentences

We will continue to monitor and, as available, adjust funding sources as needed to enhance and drive various business opportunities.

Available credit as of June 30, 2021 was $234.8 million primarily comprised of $224.5 million of foreign seasonal lines of credit, $7.5 million from the ABL Credit Facility, and $2.5 million of availability for letters of credit.

No cash dividends were paid to shareholders during the three months ended June 30, 2021.

Available credit as of September 30, 2021 was $189.2 million primarily comprised of $167.0 million of foreign seasonal lines of credit, $18.5 million from the ABL Credit Facility, and $3.3 million of availability for letters of credit.

No cash dividends were paid to shareholders during the three months ended September 30, 2021.

The payment of dividends is restricted under the terms the ABL Credit Agreement, the Term Loan Credit Agreement, and the Indenture.

Additional information with respect to the Restated TDB Agreement, including descriptions of respective affirmative, negative and financial covenants, collateral arrangements, and other terms and conditions, is set forth in "Note 25.

Subsequent Events" to the "Notes to Condensed Consolidated Financial Statements”.

Critical Accounting Policies and Estimates

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis