What changed in this filing

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Item 1. Financial Statements

2022-02-10 compared with 2021-11-10 · 250 added, 325 removed, 990 unchanged (37% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Operations

Successor Predecessor

(in thousands, except per share data) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

(in thousands, except per share data) Three months ended December 31, 2021 Three months ended December 31, 2020

Sales and other operating revenues $ 428,942 $ 379,560

4 unchanged sentences

Restructuring and asset impairment charges 560 7,774

Operating income (loss) 5,454 ( 8,466 ) ( 361 )

Loss on deconsolidation of subsidiaries 2,456 — —

Operating income 30,222 13,480

Loss on deconsolidation/disposition of subsidiaries 7,069 —

Interest expense, net 27,503 24,772

Reorganization items, net — — 132,850

(Loss) income before income taxes and other items ( 25,479 ) ( 16,615 ) 117,806

Income tax (benefit) expense ( 14,128 ) ( 10,583 ) 8,460

Loss before income taxes and other items ( 4,350 ) ( 11,292 )

Income tax expense 31,809 4,492

Income from unconsolidated affiliates 6,102 7,564

Net (loss) income ( 10,023 ) ( 5,798 ) 110,884

Net loss attributable to noncontrolling interests ( 342 ) ( 485 ) ( 314 )

Net (loss) income attributable to Pyxus International, Inc.

Net loss ( 30,057 ) ( 8,220 )

Net income (loss) attributable to noncontrolling interests 43 ( 55 )

Net loss attributable to Pyxus International, Inc.

$ ( 30,100 ) $ ( 8,165 )

(Loss) earnings per share:

Basic $ ( 0.39 ) $ ( 0.21 ) $ 11.15

Diluted $ ( 0.39 ) $ ( 0.21 ) $ 11.12

Loss per share:

Basic and Diluted $ ( 1.20 ) $ ( 0.33 )

Weighted average number of shares outstanding:

Basic 25,000 25,000 9,976

Diluted 25,000 25,000 9,999

Basic and Diluted 25,000 25,000

See "Notes to Condensed Consolidated Financial Statements"

3 unchanged sentences

Successor Predecessor

(in thousands, except per share data) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

(in thousands, except per share data) Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Sales and other operating revenues $ 1,156,433 $ 497,394 $ 447,600

2 unchanged sentences

Selling, general, and administrative expenses 106,005 61,627 87,858

Other expense, net ( 1,654 ) ( 1,933 ) ( 539 )

Other (expense) income, net ( 1,863 ) 2,736 ( 539 )

Restructuring and asset impairment charges 7,652 8,991 566

Operating income (loss) 43,880 5,014 ( 43,957 )

Loss on deconsolidation of subsidiaries 2,456 — —

Loss on deconsolidation/disposition of subsidiaries 9,525 — —

Debt retirement expense — — 828

2 unchanged sentences

(Loss) income before income taxes and other items ( 48,465 ) ( 27,907 ) 16,009

Income tax (benefit) expense ( 22,567 ) ( 10,583 ) 292

(Loss) income from unconsolidated affiliates ( 103 ) 234 2,358

Income tax expense (benefit) 9,242 ( 6,091 ) 292

Income from unconsolidated affiliates 5,999 7,798 2,358

Net (loss) income ( 51,708 ) ( 14,018 ) 18,075

12 unchanged sentences

Condensed Consolidated Statements of Comprehensive (Loss) Income

Successor Predecessor

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

Net (loss) income $ ( 10,023 ) $ ( 5,798 ) $ 110,884

Other comprehensive (loss) income, net of tax:

(in thousands) Three months ended December 31, 2021 Three months ended December 31, 2020

Net loss $ ( 30,057 ) $ ( 8,220 )

Other comprehensive loss, net of tax:

Foreign currency translation adjustment ( 1,753 ) ( 145 )

Pension and other postretirement benefit plans ( 512 ) — 240

Change in pension liability for settlements ( 35 ) 47

Cash flow hedges ( 1,550 ) ( 619 )

Total other comprehensive (loss) income, net of tax ( 4,999 ) ( 807 ) 4,757

Total comprehensive (loss) income ( 15,022 ) ( 6,605 ) 115,641

Comprehensive loss attributable to noncontrolling interests ( 342 ) ( 464 ) ( 306 )

Comprehensive (loss) income attributable to Pyxus International, Inc.

Total other comprehensive loss, net of tax ( 3,338 ) ( 717 )

Total comprehensive loss ( 33,395 ) ( 8,937 )

Comprehensive income (loss) attributable to noncontrolling interests 43 ( 197 )

Comprehensive loss attributable to Pyxus International, Inc.

$ ( 33,438 ) $ ( 8,740 )

Successor Predecessor

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

(in thousands) Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Net (loss) income $ ( 51,708 ) $ ( 14,018 ) $ 18,075

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 2,655 ) ( 952 ) 4,377

Pension and other postretirement benefit plans ( 512 ) — 734

Change in pension liability for settlements ( 35 ) 47 —

Cash flow hedges ( 118 ) ( 619 ) ( 531 )

Total other comprehensive income (loss), net of tax 18 ( 807 ) 4,580

Total other comprehensive (loss) income, net of tax ( 3,320 ) ( 1,524 ) 4,580

Total comprehensive (loss) income ( 55,028 ) ( 15,542 ) 22,655

6 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands) September 30, 2021 September 30, 2020 March 31, 2021

(in thousands) December 31, 2021 December 31, 2020 March 31, 2021

Current assets

39 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands) September 30, 2021 September 30, 2020 March 31, 2021

(in thousands) December 31, 2021 December 31, 2020 March 31, 2021

Commitments and contingencies

23 unchanged sentences

Balance, March 31, 2021 $ 391,089 $ ( 136,686 ) $ ( 4,649 ) $ 541 $ ( 2,625 ) $ 6,270 $ 253,940

(Successor) $ 391,089 $ ( 136,686 ) $ ( 4,649 ) $ 541 $ ( 2,625 ) $ 6,270 $ 253,940

Net loss attributable to Pyxus International, Inc.

3 unchanged sentences

Balance, June 30, 2021 391,089 ( 148,202 ) ( 3,960 ) 541 1,703 6,158 247,329

(Successor) 391,089 ( 148,202 ) ( 3,960 ) 541 1,703 6,158 247,329

Net loss attributable to Pyxus International, Inc.

3 unchanged sentences

Balance, September 30, 2021 391,089 ( 157,883 ) ( 5,551 ) 29 ( 1,193 ) 5,728 232,219

(Successor) $ 391,089 $ ( 157,883 ) $ ( 5,551 ) $ 29 $ ( 1,193 ) $ 5,728 $ 232,219

Net (loss) income attributable to Pyxus International, Inc.

— ( 30,100 ) — — — 43 ( 30,057 )

Change in investment in subsidiaries ( 799 ) — — — — ( 155 ) ( 954 )

Other comprehensive loss, net of tax — — ( 1,753 ) ( 35 ) ( 1,550 ) — ( 3,338 )

Balance, December 31, 2021 $ 390,290 $ ( 187,983 ) $ ( 7,304 ) $ ( 6 ) $ ( 2,743 ) $ 5,616 $ 197,870

See "Notes to Condensed Consolidated Financial Statements"

33 unchanged sentences

Balance, September 30, 2020 (Successor) 391,402 ( 5,313 ) ( 828 ) — — 3,772 389,033

Net loss attributable to Pyxus International, Inc.

— ( 8,165 ) — — — ( 55 ) ( 8,220 )

Fresh start adjustments ( 313 ) — — — — ( 246 ) ( 559 )

Other comprehensive (loss) income, net of tax — — ( 3 ) 47 ( 619 ) ( 142 ) ( 717 )

Balance, December 31, 2020 (Successor) $ 391,089 $ ( 13,478 ) $ ( 831 ) $ 47 $ ( 619 ) $ 3,329 $ 379,537

See "Notes to Condensed Consolidated Financial Statements"

3 unchanged sentences

Successor Predecessor

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

(in thousands) Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Operating Activities:

Net (loss) income $ ( 51,708 ) $ ( 14,018 ) $ 18,075

Adjustments to reconcile net loss to net cash used by operating activities:

Adjustments to reconcile net (loss) income to net cash used by operating activities:

Depreciation and amortization 11,984 13,301 16,580

Loss on deconsolidation of subsidiaries 2,456 — —

Loss on deconsolidation/disposition of subsidiaries 9,525 — —

Debt amortization/interest 17,364 6,552 4,862

1 unchanged sentence

Asset impairment charges 6,111 3,982 213

(Loss) income from unconsolidated affiliates, net of dividends 9,248 ( 257 ) 2,915

Income from unconsolidated affiliates, net of dividends 3,212 ( 7,600 ) 2,915

Reorganization items, net — — ( 130,215 )

15 unchanged sentences

Proceeds from DDTL facility 117,600 — —

Repayment of DDTL facility ( 15,375 ) — —

Proceeds from term loan facility — — 213,418

11 unchanged sentences

Other, net ( 23 ) ( 241 ) ( 565 )

Net cash provided by financing activities 185,473 38,829 63,669

Net cash provided (used) by financing activities 92,188 ( 2,851 ) 63,669

Effect of exchange rate changes on cash ( 2,590 ) ( 369 ) 1,628

3 unchanged sentences

Successor Predecessor

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

(in thousands) Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Increase (decrease) in cash, cash equivalents, and restricted cash 52,530 9,359 ( 55,107 )

9 unchanged sentences

Noncash amounts obtained as a beneficial interest in exchange for transferring trade receivables in a securitization transaction 162,065 59,501 66,821

Noncash contingent consideration from sale of business 1,000 — —

Cancellation of second lien notes — — ( 634,487 )

12 unchanged sentences

(Loss) Earnings Per Share

Restricted Cash

Inventories, Net

Acquisitions and Dispositions

Equity Method Investments

48 unchanged sentences

Cash paid for interest and cash received from interest as reported under other information in the condensed consolidated statements of cash flows have been reclassified to conform to the current year's net presentation of cash paid for interest.

Asset impairment charges reported as changes in operating assets and liabilities, net in prior periods have been reclassified to conform to the current year's presentation.

New Accounting Standards

6 unchanged sentences

The adoption of this new accounting standard did not have a material impact on the Company's financial condition, results of operations, cash flows, or disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In November 2021, the FASB issued ASU No.

2021-10, Disclosures by Business Entities about Government Assistance .

This ASU created ASC Topic 832, Government Assistance , and requires certain information be disclosed regarding assistance received from a government entity when either a grant or contribution accounting model is applied.

The new disclosures are required for annual periods for transactions with a government entity that are within the scope of the Topic.

The new disclosure guidance will be adopted prospectively and is effective for the Company's fiscal year beginning April 1, 2022.

The Company is currently evaluating the impact this new accounting standard will have on its consolidated financial statements and related disclosures.

Emergence from Voluntary Reorganization under Chapter 11

3 unchanged sentences

Expenditures, gains, and losses that are realized or incurred by the Debtors subsequent to the Petition Date and as a direct result of the Chapter 11 Cases are reported as reorganization items, net in the condensed consolidated statements of operations, and include the following:

Two months ended August 31, 2020 Five months ended August 31, 2020

Five months ended August 31, 2020

Reorganization items, net:

6 unchanged sentences

Fresh start reporting adjustments ( 91,541 )

$ 132,850 $ 105,984

Summary Features of the Plan of Reorganization

24 unchanged sentences

in exchange for the Equity Consideration.

• Pyxus Holdings entered into the ABL Credit Agreement (as defined below) to borrow cash under the ABL Credit Facility (as defined below) which together with cash on-hand was sufficient to fund (1) the distributions to holders of Allowed Second Lien Notes Claims (as defined in the Plan) that elected to take the Second Lien Notes Cash Option (as defined in the Plan) and (2) the Existing Equity Cash Pool (as defined in the Plan) (collectively such amount of cash is referred to as the “Cash Consideration”).

• Pursuant to an Asset Purchase Agreement, Old Pyxus transferred to Pyxus Holdings all of its assets (including by assuming and assigning all of Old Pyxus’ Executory Contracts and Unexpired Leases (as such terms are defined in the Plan) to Pyxus Holdings in accordance with the Plan, other than those Executory Contracts and Unexpired Leases that were rejected) and Pyxus Holdings assumed all of Old Pyxus’ obligations that are not discharged under the Plan (including all of Old Pyxus’ obligations to satisfy Allowed Administrative Claims, Allowed Professional Fee Claims, Allowed Other Secured Claims, Allowed Other Priority Claims, Allowed Foreign Credit Line Claims, Allowed General Unsecured Claims, Allowed Debtor Intercompany Claims, and Allowed Debtor Intercompany Claims as set forth in the Plan (as such terms are defined in the Plan)) in exchange for (i) Pyxus Holdings transferring the Equity Consideration to Old Pyxus, (ii) Pyxus Holdings transferring the Cash Consideration to Old Pyxus, (iii) Pyxus Holdings issuing the Notes (as defined below) under the Indenture (as defined below) which, on behalf of Old Pyxus, was issued to the Holders of Allowed First Lien Notes Claims (as defined in the Plan) as set forth in the Plan, and (iv) Pyxus Holdings issuing the Term Loans (as defined below) under the Term Loan Credit Facility (as defined below) which, on behalf of Old Pyxus, was issued to the holders of the DIP Facility Claims (as defined in the Plan) as set forth in the Plan.

• Pyxus Holdings entered into the Exit ABL Credit Agreement (as defined below) to borrow cash under the ABL Credit Facility (as defined below) which together with cash on-hand was sufficient to fund (1) the distributions to holders of Allowed Second Lien Notes Claims (as defined in the Plan) that elected to take the Second Lien Notes Cash Option (as defined in the Plan) and (2) the Existing Equity Cash Pool (as defined in the Plan) (collectively such amount of cash is referred to as the “Cash Consideration”).

First Lien Notes Claims (as defined in the Plan) as set forth in the Plan, and (iv) Pyxus Holdings issuing the Term Loans (as defined below) under the Term Loan Credit Facility (as defined below) which, on behalf of Old Pyxus, was issued to the holders of the DIP Facility Claims (as defined in the Plan) as set forth in the Plan.

In addition to the transfer of assets to Pyxus Holdings, Pyxus Holdings made an offer of employment to all employees of Old Pyxus and all such employees became employed by Pyxus Holdings, or a designated subsidiary, upon the effectiveness of the Plan on the same terms and conditions existing immediately prior to the effectiveness of the Plan.

8 unchanged sentences

ABL Credit Facility

On the Effective Date, Pyxus Holdings entered into an Exit ABL Credit Agreement (the “ABL Credit Agreement”), dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent to establish an asset-based revolving credit facility (the “ABL Credit Facility”).

A detailed description of the ABL Credit Agreement and ABL Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

On the Effective Date, Pyxus Holdings entered into an Exit ABL Credit Agreement (the “Exit ABL Credit Agreement”), dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent to establish an asset-based revolving credit facility (the “ABL Credit Facility”).

A detailed description of the Exit ABL Credit Agreement and ABL Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

See "Note 15.

Debt Arrangements" for additional information with respect to the ABL Credit Agreement and the ABL Credit Facility.

Debt Arrangements" for additional information with respect to the Exit ABL Credit Agreement and the ABL Credit Facility.

Term Loan Credit Facility

10 unchanged sentences

On August 24, 2020, the Company entered into a Shareholders Agreement (the “Shareholders Agreement”), among the Company and the investors listed therein, each other beneficial owner of the Company's common stock as of the date of the Shareholder Agreement deemed to be a party thereto pursuant to the Plan and other persons that may from time to time become parties thereto (collectively, the “Investors”).

The Shareholders Agreement provides that each of Glendon Capital Management,

The Shareholders Agreement provides that each of Glendon Capital Management, L.P.

(together with its affiliates, the “Glendon Investor”) and Monarch Alternative Capital LP (together with its affiliates, the “Monarch Investor”) shall be entitled to nominate two individuals to serve on the seven -member board of directors of the Company so long as it beneficially owns at least 20 % of the outstanding shares of the Company's common stock, or one individual to serve as such a director if it beneficially owns fewer than 20 % of the outstanding shares but at least 10 % of the outstanding shares.

14 unchanged sentences

The Company estimated its enterprise value to be $ 1,252,379 , which is near the low point of the range.

The Company believes utilizing an estimated enterprise value near the low point of the range is appropriate due to the identification of Level 1 trading activity that indicated the estimated enterprise value was near the low point of the range, the Company's performance lagging behind plan (due in part to the continued impact of the COVID-19 pandemic), and the utilization of an increased discount rate for the Other Products and Services long-term projections.

the low point of the range, the Company's performance lagging behind plan (due in part to the continued impact of the COVID-19 pandemic), and the utilization of an increased discount rate for the Other Products and Services long-term projections.

The estimated enterprise value is not necessarily indicative of actual value or financial results.

169 unchanged sentences

On June 10, 2021, the Canadian Court approved the sale agreement.

The consummation of the sale under this agreement is subject to approval of the buyers by Health Canada and the satisfaction of certain other conditions.

The consummation of the sale under this agreement occurred on January 28, 2022.

On May 25, 2021, a definitive agreement was entered into with a separate buyer for the sale of the outstanding equity of Figr East and certain intangible assets of Figr Brands for an aggregate purchase price of Cdn.$ 24,750 .

2 unchanged sentences

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

As discussed below, 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.

As discussed below, the amount of recovery that the Company may receive from the sales of the assets of Figr Norfolk, the outstanding equity of Figr East, and certain intangible assets of Figr Brands will be impacted by the amount of claims against the Canadian Cannabis Subsidiaries submitted in the CCAA Proceeding and the extent to which such claims have been approved by the Canadian Court.

Canadian DIP Financing

Pursuant to the Canadian DIP Facility, the DIP Lender provided Figr Brands with secured debtor-in-possession financing to permit Figr Brands, the parent entity of Figr East and Figr Norfolk, to fund the working capital needs of the Canadian Cannabis Subsidiaries in accordance with the cash flow projections approved by the Monitor and the DIP Lender.

Subsidiaries in accordance with the cash flow projections approved by the Monitor and the DIP Lender.

These payments also funded fees and expenses to be paid to the DIP Lender, professional fees and expenses incurred by the Canadian Cannabis Subsidiaries and the Monitor in respect of the CCAA Proceeding, and such other costs and expenses of the Canadian Cannabis Subsidiaries as may be agreed to by the DIP Lender.

10 unchanged sentences

As a result, the Company recorded a net loss of $ 70,242 for the year ended March 31, 2021 associated with the deconsolidation of the Canadian Cannabis Subsidiaries.

As of September 30, 2021, the Company's adjusted fair value estimate of the related party note receivable was $ 3,519 , which resulted in a loss on the deconsolidation of the Canadian Cannabis Subsidiaries of $ 2,456 recorded within the condensed consolidated statements of operations for the three and six months ended September 30, 2021.

The amount of recovery with respect to the related party note receivable is dependent on the actual amount of administrative claims in the CCAA Proceeding, the amount of claims of unsecured creditors 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, all of which matters are presently uncertain.

In the event the Company's interests are not treated as debt claims by the Canadian Court, the Company may be unable to recover a substantial portion or all of the estimated fair value of the related-party note receivable and may incur additional impairment with respect thereto.

As of December 31, 2021, the Company's adjusted related party note receivable was $ 2,579 , which resulted in a loss on the deconsolidation of the Canadian Cannabis Subsidiaries recorded within the condensed consolidated statements of operations of $ 900 and $ 3,356 for the three and nine months ended December 31, 2021, respectively.

Related Party Relationship

7 unchanged sentences

During processing, ownership remains with the customers.

For the period ended September 30, 2020, the other products and services revenue was primarily composed of revenue from the sale of legal cannabis in Canada and e-liquids product revenue.

For the period ended September 30, 2021, the other products and services revenue was primarily composed of e-liquids product revenue.

For the period ended December 31, 2020, the other products and services revenue was primarily composed of revenue from the sale of legal cannabis in Canada and e-liquids product revenue.

For the period ended December 31, 2021, the other products and services revenue was primarily composed of e-liquids product revenue.

The following disaggregates sales and other operating revenues by major source:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Three months ended December 31, 2021 Three months ended December 31, 2020

Leaf - North America:

10 unchanged sentences

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Leaf - North America:

10 unchanged sentences

The following summarizes activity in the allowance for expected credit losses:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Three months ended December 31, 2021 Three months ended December 31, 2020

Balance, beginning of period $ ( 23,641 ) $ ( 15,091 )

5 unchanged sentences

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Balance, beginning of period $ ( 20,900 ) $ ( 15,361 ) $ ( 15,893 )

6 unchanged sentences

The Company continued its focus on cost saving initiatives.

The employee separation and impairment charges are primarily related to the write-off of the Company's remaining industrial hemp cannabidiol ("CBD") extraction equipment and the continued restructuring of certain leaf operations.

The employee separation and impairment charges are primarily related to the continued wind down of the Company's industrial hemp cannabidiol ("CBD") operations and the continued restructuring of certain leaf operations.

The following summarizes the Company's restructuring and asset impairment charges:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Three months ended December 31, 2021 Three months ended December 31, 2020

Employee separation charges $ 510 $ 4,087

2 unchanged sentences

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Employee separation charges $ 1,913 $ 5,009 $ 353

1 unchanged sentence

Restructuring and asset impairment charges $ 7,652 $ 8,991 $ 566

The following summarizes the activity in the restructuring accrual for employee separation and other cash charges by reportable segment:

Successor Predecessor

Three months ended

September 30, 2021 One month ended

September 30, 2020 Two months ended

August 31, 2020

Other Products and Services Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions

Beginning balance $ 1,902 $ 689 $ 659 $ 312 $ 255 $ — $ 321

Period charges 7 215 1,034 922 — 312 —

Payments ( 197 ) ( 407 ) ( 1,597 ) ( 60 ) ( 26 ) — ( 66 )

Ending balance $ 1,712 $ 497 $ 96 $ 1,174 $ 229 $ 312 $ 255

Successor Predecessor

Six months ended

September 30, 2021 One month ended

September 30, 2020 Five months ended

August 31, 2020

Other Products and Services Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions

Beginning balance $ 2,141 $ 1,406 $ 1,063 $ 312 $ 255 $ — $ 407

Period charges 21 215 1,167 922 — 312 40

Payments ( 450 ) ( 1,124 ) ( 2,134 ) ( 60 ) ( 26 ) — ( 192 )

Ending balance $ 1,712 $ 497 $ 96 $ 1,174 $ 229 $ 312 $ 255

The following summarizes the asset impairment and other non-cash charges by reportable segment:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Leaf - North America $ — $ — $ ( 8 )

Leaf - Other Regions ( 21 ) 295 188

Other Products and Services 5,624 — —

Total $ 5,603 $ 295 $ 180

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Leaf - North America $ — $ — $ 17

Leaf - Other Regions 65 295 196

Other Products and Services 5,624 — —

Total $ 5,689 $ 295 $ 213

The effective tax rate for the six months ended September 30, 2021, the one month ended September 30, 2020, and the five months ended August 31, 2020 was 51.2 %, 63.7 %, and 1.8 %, respectively.

For the six months ended September 30, 2021, the one month ended September 30, 2020, and the five months ended August 31, 2020, the difference between the Company’s effective rate and the U.S.

The Company's quarterly provision for income taxes has generally been calculated using the annual effective tax rate method (“AETR method”), which applies an estimated annual effective tax rate to pre-tax income or loss.

The AETR method was used to calculate the provision for income taxes for the prior reported interim periods of the current fiscal year, for which the Company reported income tax benefits in each prior reporting period.

Due to COVID-19 pandemic-driven variability in the Company's current expectations of results of operations for the remainder of the fiscal year, as of December 31, 2021, the Company recorded its interim income tax provision using the discrete method, as allowed under ASC 740-270, Accounting for Income Taxes - Interim Reporting .

The Company utilized the discrete method, rather than the AETR method, due to significant variations in income tax expense, primarily driven by U.S.

non-deductible interest pursuant to Section 163(j) of the Internal Revenue Code, relative to projected annual pre-tax income (loss) that would have resulted in a disproportionate and unreliable

effective tax rate under the AETR method.

Using the discrete method, the Company determined current and deferred income tax expense as if the nine-month interim period of the current fiscal year was a year-end period.

The effective tax rate for the nine months ended December 31, 2021, the four months ended December 31, 2020, and the five months ended August 31, 2020 was ( 19.1 )%, 21.8 %, and 1.8 %, respectively.

For the nine months ended December 31, 2021, the four months ended December 31, 2020, and the five months ended August 31, 2020, the difference between the Company’s effective rate and the U.S.

statutory rate of 21% is primarily due to the impact of net foreign exchange effects, non-deductible interest, and variations in the expected jurisdictional mix of earnings.

The change in the effective rate for the six months ended September 30, 2021 was primarily due to improved operational results and changes in the U.S.

The change in the effective rate for the nine months ended December 31, 2021 was primarily due to improved operational results and changes in the U.S.

tax profile resulting from the Company's emergence from the Chapter 11 Cases.

As of September 30, 2021, the Company recorded additional tax benefit to current taxes receivable as it expects the year-to-date loss to offset current taxes payable throughout the remainder of the current year.

(Loss) Earnings Per Share

The following summarizes the computation of (loss) earnings per share:

Successor Predecessor

(in thousands, except per share data) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Basic (loss) earnings per share:

Net (loss) income attributable to Pyxus International, Inc.

$ ( 9,681 ) $ ( 5,313 ) $ 111,198

Weighted average number of shares outstanding 25,000 25,000 9,976

Basic (loss) earnings per share $ ( 0.39 ) $ ( 0.21 ) $ 11.15

Diluted (loss) earnings per share:

Net (loss) income attributable to Pyxus International, Inc.

The following summarizes the computation of earnings (loss) per share:

Three months ended December 31, 2021 Three months ended December 31, 2020

Basic and diluted loss per share:

Net loss attributable to Pyxus International, Inc.

$ ( 30,100 ) $ ( 8,165 )

Weighted average number of shares outstanding 25,000 25,000

Restricted shares issued and shares applicable to stock options and restricted stock units, net of shares assumed to be purchased from proceeds at average market price (1)

Adjusted weighted average number of shares outstanding 25,000 25,000 9,999

Diluted (loss) earnings per share $ ( 0.39 ) $ ( 0.21 ) $ 11.12

(1) Outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would

have an antidilutive effect on the loss per share.

The dilutive shares would have been 0 for the three months ended September 30, 2021.

Basic and diluted loss per share $ ( 1.20 ) $ ( 0.33 )

Successor Predecessor

(in thousands, except per share data) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Basic (loss) earnings per share:

12 unchanged sentences

have an antidilutive effect on the loss per share.

The dilutive shares would have been 0 for the six months ended September 30, 2021.

Certain potentially dilutive options were not included in the computation of loss per diluted share because their effect would be

antidilutive.

Potential common shares are also considered antidilutive in the event of a net loss.

The number of potential shares

outstanding that were considered antidilutive and that were excluded from the computation of diluted loss per share, weighted

for the portion of the period they were outstanding were as follows:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Antidilutive stock options and other awards — — 427

Weighted average exercise price $ — $ — $ 56.86

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Antidilutive stock options and other awards — — 427

Weighted average exercise price $ — $ — $ 56.86

Restricted Cash

The following summarizes the composition of restricted cash:

September 30, 2021 September 30, 2020 March 31, 2021

Compensating balance for short-term borrowings $ 2,051 $ 970 $ 1,017

949 22,172 3,459

Other 418 532 $ 532

Total $ 3,418 $ 23,674 $ 5,008

(1) As of September 30, 2020, funds held in escrow was primarily related to professional fees for services rendered during the Chapter 11 Cases.

The dilutive shares would have been 0 for the nine months ended December 31, 2021.

Inventories, Net

The following summarizes the composition of inventories, net:

September 30, 2021 September 30, 2020 March 31, 2021

December 31, 2021 December 31, 2020 March 31, 2021

Processed tobacco $ 650,373 $ 662,179 $ 534,711

4 unchanged sentences

(1) Represents inventory from the Other Products and Services segment.

Acquisitions and Dispositions

Acquisition of Criticality

On December 18, 2017, the Company completed a purchase of a 40.0 % interest in Criticality, a North Carolina-based industrial hemp company that was engaged in CBD extraction and other applications for industrial hemp in accordance with a pilot program authorized under the federal Agriculture Act of 2014 and applicable North Carolina law.

1 unchanged sentence

The acquisition of Criticality was a business combination achieved in stages, which required the Company to remeasure its previously held equity interest in Criticality at its acquisition date fair value.

This remeasurement resulted in a loss of

approximately $ 2,667 being recorded in other income (expense), net within the condensed consolidated statements of operations for the five months ended August 31, 2020.

This remeasurement resulted in a loss of approximately $ 2,667 being recorded in other income (expense), net within the condensed consolidated statements of operations for the five months ended August 31, 2020.

The assets and liabilities were recorded at their fair value.

15 unchanged sentences

Fair value of equity interest $ 8,333

The following summarizes the revenue, operating loss, and net loss for Criticality as well as the resulting impact to basic and diluted (loss) earnings per share:

Successor Predecessor

One month ended September 30, 2020 Two months ended August 31, 2020

Operating loss ( 1,131 ) ( 2,326 )

Net loss ( 1,170 ) ( 2,408 )

Impact to (loss) earnings per share:

Basic ( 0.05 ) ( 0.24 )

Diluted ( 0.05 ) ( 0.24 )

Successor Predecessor

One month ended September 30, 2020 Five months ended August 31, 2020

The following summarizes the revenue, operating loss, and net loss for Criticality as well as the resulting impact to basic and diluted loss per share:

Successor Successor Predecessor

Three months ended December 31, 2020 Four months ended December 31, 2020 Five months ended August 31, 2020

Revenue 16 19 —

Operating loss ( 3,619 ) ( 4,750 ) ( 3,117 )

Net loss ( 9,897 ) ( 11,067 ) ( 3,317 )

Impact to (loss) earnings per share:

Basic ( 0.05 ) ( 0.33 )

Diluted ( 0.05 ) ( 0.33 )

Impact to loss per share:

Basic and Diluted ( 0.40 ) ( 0.44 ) ( 0.33 )

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.

Disposition of Humble Juice Co., LLC

On November 23, 2021, the Company disposed of its ownership interests in Humble Juice Co., LLC ("Humble Juice"), a manufacturer and distributor of flavored e-liquids, in exchange for royalties on future revenue, which was recorded as other assets in the condensed consolidated balance sheet as of December 31, 2021.

Humble Juice's financial results are included in the Company's consolidated results through the transaction date within the Other Products and Services segment.

On the date of the transaction, Humble Juice's assets, liabilities, and equity components were eliminated from the Company's condensed consolidated financial statements.

The Company recognized a loss on the disposition of Humble Juice of $ 5,374 for the three months ended December 31, 2021.

Equity Method Investments

The following summarizes the Company's equity method investments as of September 30, 2021:

The following summarizes the Company's equity method investments as of December 31, 2021:

Location Primary Purpose The Company's Ownership Percentage Basis Difference (1)

11 unchanged sentences

The following summarizes financial information for these equity method investments:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Three months ended December 31, 2021 Three months ended December 31, 2020

Operations statement:

4 unchanged sentences

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Operations statement:

3 unchanged sentences

Company's dividends received 8,666 317 5,104

September 30, 2021 September 30, 2020 March 31, 2021

December 31, 2021 December 31, 2020 March 31, 2021

Balance sheet:

7 unchanged sentences

The following summarizes the Company's financial relationships with its unconsolidated variable interest entities:

September 30, 2021 September 30, 2020 March 31, 2021

December 31, 2021 December 31, 2020 March 31, 2021

Investments in variable interest entities $ 85,263 $ 85,944 $ 89,560

3 unchanged sentences

The following summarizes the changes in the Company's goodwill and other intangible assets, net:

Six months ended September 30, 2021

Nine months ended December 31, 2021

Weighted Average Remaining Useful Life Beginning Gross Carrying Amount Additions Accumulated Amortization (1)

Disposition of Humble Juice (2)

Impairment (3)

Ending Intangible Assets, Net

6 unchanged sentences

Total $ 92,433 $ 840 $ ( 8,355 ) $ ( 6,402 ) $ ( 372 ) $ 78,144

(1) Amortization expense across intangible asset classes for the six months ended September 30, 2021 was $ 2,905 .

(1) Amortization expense across intangible asset classes for the nine months ended December 31, 2021 was $ 4,192 .

(2) See “ Note 11.

Acquisitions and Dispositions ” for additional information.

(3) The Company’s goodwill represents reorganization value in excess of value allocable to tangible and intangible assets as of August 31, 2020.

The impairment is related to the continued restructuring of certain leaf operations.

Seven months ended March 31, 2021 (3)

Weighted Average Remaining Useful Life Beginning Gross Carrying Amount Additions Accumulated Amortization (1)

Deconsolidation of Canadian Cannabis Subsidiaries Impairment Ending Intangible Assets, Net

Deconsolidation of Canadian Cannabis Subsidiaries Impairment (2)

Ending Intangible Assets, Net

Intangibles subject to amortization:

7 unchanged sentences

(1) Amortization expense across intangible asset classes for the seven months ended March 31, 2021 was $ 5,113 .

The following summarizes the estimated intangible asset amortization expense for the next five years and beyond:

Years Ended March 31 Customer

Relationships Technology Trade Names Total

2022 (excluding the six months ended September 30, 2021) $ 1,260 $ 985 $ 404 $ 2,649

2023 2,519 1,970 807 5,296

2024 2,519 2,138 807 5,464

2025 2,519 1,987 807 5,313

2026 2,519 1,713 807 5,039

Thereafter 15,135 3,663 6,794 25,592

$ 26,471 $ 12,456 $ 10,426 $ 49,353

(2) The Company’s goodwill represents reorganization value in excess of value allocable to tangible and intangible assets as of August 31, 2020.

The impairment is related to the Canadian Cannabis Subsidiaries filing for relief from their respective creditors via the CCAA Proceeding in January 2021.

(3) In connection with the Company's emergence from the Chapter 11 Cases on August 24, 2020, a series of transactions were completed pursuant to which the business assets and operations of Old Pyxus vested in the Company.

See “ Note 3.

Emergence from Voluntary Reorganization under Chapter 11 ” for additional information.

Debt Arrangements

The following summarizes debt and notes payable:

Outstanding Lines and Letters Available Interest Rate

March 31, September 30, September 30,

(in thousands) 2021 2021 2021

December 31, December 31, March 31,

(in thousands) Interest Rate 2021 2020 2021

Senior secured credit facilities:

ABL Credit Facility 5.8 % (1)

DDTL Facility (2)

$ 52,500 $ 67,500 $ 67,500

DDTL Facility (2)

Senior secured notes:

4 unchanged sentences

Other long-term debt 1.1 % (1)

1,889 3,362 2,910

Notes payable to banks (5)

6 unchanged sentences

Letters of credit $ 9,543 $ 5,100 $ 2,468

Total credit available $ 189,162

(1) Weighted average rate for the trailing twelve months ended September 30, 2021.

(1) Weighted average rate for the trailing twelve months ended December 31, 2021.

As the DDTL Facility has not been outstanding for a trailing twelve-month period, the interest rate is the weighted average rate from inception through December 31, 2021.

(2) Balance of $ 106,013 is net of original issue discount of $ 4,237 .

7 unchanged sentences

ABL Credit Facility

On the Effective Date, Pyxus Holdings entered into the ABL Credit Agreement, dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent to establish the ABL Credit Facility.

On the Effective Date, Pyxus Holdings entered into the Exit ABL Credit Agreement to establish the ABL Credit Facility.

The ABL Credit Facility may be used for revolving credit loans and letters of credit from time to time up to an initial maximum principal amount o f $ 75,000 , subject to certain limitations.

A detailed description of the ABL Credit Agreement and ABL Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At September 30, 2021, Pyxus Holdings was in compliance with the covenants under the ABL Credit Agreement.

At September 30, 2021, $ 18,500 was available for borrowing under the ABL Credit Facility, after reducing availability by the aggregate borrowings under the ABL Credit Facility of $ 56,500 outstanding on that date.

A detailed description of the Exit ABL Credit Agreement and ABL Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At December 31, 2021, Pyxus Holdings was in compliance with the covenants under the Exit ABL Credit Agreement.

At December 31, 2021, $ 22,500 was available for borrowing under the ABL Credit Facility, after reducing availability by the aggregate borrowings under the ABL Credit Facility of $ 52,500 outstanding on that date.

Term Loan Credit Facility

2 unchanged sentences

A detailed description of the Term Loan Credit Agreement and Term Loan Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At September 30, 2021, Pyxus Holdings was in compliance with the covenants under the Term Loan Credit Agreement.

At December 31, 2021, Pyxus Holdings was in compliance with the covenants under the Term Loan Credit Agreement.

Senior Secured First Lien Notes

1 unchanged sentence

A detailed description of the Notes and the Indenture is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At September 30, 2021, Pyxus Holdings was in compliance with the covenants under the Indenture.

At December 31, 2021, Pyxus Holdings was in compliance with the covenants under the Indenture.

DDTL Facility

6 unchanged sentences

The DDTL Loans may be prepaid by Intabex at any time without premium or penalty other than the Exit Fee described below and, in the case of any prepayment of LIBOR loans, subject to customary breakage.

At September 30, 2021, the aggregate principal amount outstanding was $ 119,263 , net of original issue discount of $ 6,737 , which includes an estimated $ 6,000 exit fee payable upon repayment.

At December 31, 2021, the aggregate principal amount outstanding was $ 106,013 , net of original issue discount of $ 4,237 , which includes an estimated $ 5,250 exit fee payable upon repayment.

Amounts prepaid or repaid in respect of DDTL Loans may not be reborrowed under the DDTL Facility.

22 unchanged sentences

In addition, the DDTL Facility Credit Agreement includes a customary “passive holding company” covenant that contains certain additional restrictions on Intabex and its subsidiaries’ activities and requirements for Intabex to provide to the DDTL Facility Lenders certain periodic financial and operating reports for the Guarantors and their subsidiaries on a consolidated basis.

At September 30, 2021, Intabex and each Guarantor was in compliance with the covenants under the DDTL Facility Credit Agreement.

At December 31, 2021, Intabex and each Guarantor was in compliance with the covenants under the DDTL Facility Credit Agreement.

Related Party Transaction

46 unchanged sentences

The Restated TDB Agreement contains events of default including, but not limited to, nonpayment of principal or interest, violation of covenants, breaches of representations and warranties, cross-default to other debt, bankruptcy and other insolvency events, invalidity of loan documentation, certain changes of control of the Company and the other loan parties, termination of material licenses, and material adverse changes.

At September 30, 2021, the Company and its subsidiaries party to the Restated TDB Agreement were, after giving effect to TDB's consent to certain investments by one of the African Subsidiary Borrowers, in compliance with all such covenants under the Restated TDB Agreement and $ 51,677 was available for borrowing under the Restated TDB Agreement, after reducing availability by the aggregate borrowings under the Restated TDB Agreement of $ 153,323 outstanding on that date.

At December 31, 2021, the Company and its subsidiaries party to the Restated TDB Agreement were in compliance with all such covenants under the Restated TDB Agreement and $ 89,652 was available for borrowing under the Restated TDB

Agreement, after reducing availability by the aggregate borrowings under the Restated TDB Agreement of $ 115,348 outstanding on that date.

Short-Term Borrowings

6 unchanged sentences

Securitized Receivables

The Company sells trade receivables to unaffiliated financial institutions under two accounts receivable securitization facilities.

The Company sells trade receivables to unaffiliated financial institutions under three accounts receivable securitization facilities.

Under the first facility, the Company continuously sells a designated pool of trade receivables to a special purpose entity, which sells 100 % of the receivables to an unaffiliated financial institution.

As of September 30, 2021, the limit under the first facility was $ 125,000 of trade receivables.

Under the second facility, the Company offers receivables for sale to unaffiliated financial institutions, which are then subject to acceptance by the unaffiliated financial institutions.

As of September 30, 2021, the limit under the second facility was $ 125,000 of trade receivables.

As of December 31, 2021, the limit under the first facility was $ 125,000 of trade receivables.

Under the second and third facilities, the Company offers receivables for sale to unaffiliated financial institutions, which are then subject to acceptance by the unaffiliated financial institutions.

As of December 31, 2021, the limit under the second facility was $ 80,000 of trade receivables.

As of December 31, 2021, the investment limit under the third facility was variable based on qualifying sales.

As the servicer of these facilities, the Company may receive funds that are due to the unaffiliated financial institutions, which are net settled on the next settlement date.

As a result of the net settlement, trade and other receivables, net in the condensed consolidated balance sheets has been reduced by $ 4,843 , $ 4,185 , and $ 3,651 as of September 30, 2021 and 2020, and March 31, 2021, respectively.

The following summarizes the accounts receivable securitization information:

September 30, 2021 September 30, 2020 March 31, 2021

As a result of the net settlement, trade and other receivables, net in the condensed consolidated balance sheets has been reduced by $ 2,730 , $ 4,078 , and $ 3,651 as of December 31, 2021 and 2020, and March 31, 2021, respectively.

T he following summarizes the accounts receivable securitization information:

December 31, 2021 December 31, 2020 March 31, 2021

Receivables outstanding in facility $ 105,175 $ 87,012 $ 90,693

2 unchanged sentences

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Cash proceeds for the period ended:

8 unchanged sentences

If default occurs, the Company has recourse against its various suppliers and their production assets.

The Company also guarantees bank loans of certain unconsolidated subsidiaries and a lease obligation for a former unconsolidated subsidiary.

The Company also guarantees bank loans of certain unconsolidated subsidiaries and a lease obligation for a former equity method investment.

The following summarizes amounts guaranteed and the fair value of those guarantees:

September 30, 2021 September 30, 2020 March 31, 2021

December 31, 2021 December 31, 2020 March 31, 2021

Amounts guaranteed (not to exceed) $ 94,462 $ 80,656 $ 93,489

3 unchanged sentences

Amounts due to local banks on behalf of suppliers and included in accounts payable — — 10,930

(1) Of the guarantees outstanding at September 30, 2021, most expire within one year .

(1) Of the guarantees outstanding at December 31, 2021, most expire within one year .

Derivative Financial Instruments

As of September 30, 2021, accumulated other comprehensive loss includes $ 728 , net of $ 465 of tax, for net unrealized gains related to designated cash flow hedges.

The Company recorded a net gain of $( 647 ) and $( 1,062 ) in cost of goods and services sold for the three and six months ended September 30, 2021, respectively.

The Company recorded a net gain of $( 180 ) in selling, general, and administrative expenses for the three and six months ended September 30, 2021.

The Company recorded current derivative assets of $ 1,523 and current derivative liabilities of $ 634 as of September 30, 2021 included in the condensed consolidated balance sheets.

Dollar notional amount of derivative contracts outstanding as of September 30, 2021 was $ 72,522 .

The Company uses forward or option currency contracts to manage risks associated with foreign currency exchange rates on foreign operations.

These contracts are for green tobacco purchases, processing costs, and selling, general, and administrative expenses.

The Company recorded a net gain of $( 663 ) and $( 1,725 ) from its derivative financial instruments in cost of goods and services sold for the three and nine months ended December 31, 2021, respectively.

The Company recorded losses of $ 0 and $ 66 in cost of goods and services sold for the three and four months ended December 31, 2020, respectively, and $ 164 for the five months ended August 31, 2020.

As of December 31, 2021 and December 31, 2020, accumulated other comprehensive loss includes $ 2,743 and $ 619 , respectively, net of $ 215 and $ 168 of tax, respectively, for net unrealized losses related to designated cash flow hedges.

As of December 31, 2021 and December 31, 2020, the Company recorded current derivative assets of $ 603 and $ 1,652 and current derivative liabilities of $ 1,280 and $ 0 within other current assets and accrued expenses and other current liabilities, respectively.

Dollar notional amount of derivative contracts outstanding as of December 31, 2021 and December 31, 2020 was $ 72,522 and $ 44,123 , respectively.

Fair Value Measurements

The following summarizes the financial assets and liabilities measured at fair value on a recurring basis:

September 30, 2021 September 30, 2020 March 31, 2021

December 31, 2021 December 31, 2020 March 31, 2021

Total Total Total

8 unchanged sentences

Total liabilities $ 448,903 $ 2,804 $ 451,707 $ 481,232 $ 4,103 $ 485,335 $ 467,795 $ 4,902 $ 472,697

Level 2 measurements

The fair value of debt is based on the market price for similar financial instruments or model-derived valuations with observable inputs.

The primary inputs to the valuation include market expectations, the Company's credit risk, and the contractual terms of the debt instrument.

• Derivatives:

The fair value of derivatives is based on the discounted cash flow analysis of the expected future cash flows.

The primary inputs to the valuation include forward yield curves, implied volatilities, LIBOR rates, and credit valuation adjustments.

Level 3 measurements

• Guarantees:

The fair value of guarantees is based the discounted cash flow analysis of the expected future cash flows or historical loss rates.

The primary inputs to the discounted cash flow analysis of the expected future cash flows include historical loss rates ranging between 0.6 % to 10.0 % as of September 30, 2021.

The historical loss rate was weighted by the principal balance of the loans.

• Securitized beneficial interests:

The fair value of securitized beneficial interests is based on using the present value of future expected cash flows.

The primary inputs to this valuation include payment speeds of 103 to 107 days and discount rates of 1.4 % to 3.5 % as of September 30, 2021.

The discount rate was weighted by the outstanding interest.

Payment speed was weighted by the average days outstanding.

• Long-term debt:

The fair value of the long-term debt is based on the present value of future payments.

The primary inputs to this valuation include treasury notes interest of 1.0 % to 1.4 % and borrowing rates of 7.0 % to 10.7 % .

The borrowing rates were weighted by average loans outstanding.

The following summarizes the reconciliation of changes in Level 3 instruments measured on a recurring basis:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees

Three months ended December 31, 2021 Three months ended December 31, 2020

Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees

Beginning balance $ 26,056 $ 3,127 $ 343 $ 13,471 $ 3,714 $ 491

5 unchanged sentences

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees

5 unchanged sentences

Ending balance $ 21,573 $ 2,057 $ 747 $ 20,532 $ 3,797 $ 305 $ 11,159 $ 3,892 $ 1,256

For the six months ended September 30, 2021, one month ended September 30, 2020, and five months ended August 31, 2020, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests were $ 826 , $ 53 , and $ 263 , respectively.

For the nine months ended December 31, 2021, four months ended December 31, 2020, and five months ended August 31, 2020, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests were $ 640 , $ 726 , and $ 263 , respectively.

Pension and Other Postretirement Benefits

The following summarizes the net periodic pension cost for the defined benefit pension plans:

Defined Benefit Plans

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Operating expenses:

Service cost $ 99 $ 36 $ 70

Interest expense:

Interest expense 677 226 638

Expected return on plan assets ( 728 ) ( 244 ) ( 494 )

Amortization of prior service cost ( 1 ) — 7

Settlement loss 1

Actuarial loss 4 — 347

Net periodic pension cost $ ( 19 ) $ 18 $ 568

(1) Settlement accounting is triggered if the lump sums paid during a fiscal year exceeds the sum of the plan's service and interest cost.

During the second quarter of fiscal 2022, the Company determined it was probable that a settlement would occur based on the lump sum cash payments activity incurred in the six months ended September 30, 2021.

Settlement losses are recorded in interest expense.

Defined Benefit Plans

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Operating expenses:

Service cost $ 198 $ 36 $ 176

Interest expense:

Interest expense 1,354 226 1,594

Expected return on plan assets ( 1,456 ) ( 244 ) ( 1,234 )

Amortization of prior service cost ( 2 ) — 17

Settlement loss 1

Actuarial loss 8 — 868

Net periodic pension cost $ 32 $ 18 $ 1,421

(1) Settlement accounting is triggered if the lump sums paid during a fiscal year exceeds the sum of the plan's service and interest cost.

Settlement losses are recorded in interest expense.

The following summarizes the net periodic pension cost (income) for the postretirement health and life insurance benefits plans:

Other Postretirement Benefits

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Operating expenses:

Service cost $ 4 $ 1 $ 3

Interest expense:

Interest expense 98 18 114

Amortization of prior service cost — — ( 294 )

Actuarial loss ( 6 ) — 157

Net periodic benefit cost (income) $ 96 $ 19 $ ( 20 )

The following summarizes contributions to pension plans and postretirement health and life insurance benefits:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Contributions made during the period $ 1,553 $ 651 $ 1,066

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Contributions made during the period $ 3,056 $ 651 $ 1,941

Contributions expected for the remainder of the fiscal year 2,815 3,245 —

Total $ 5,871 $ 3,896 $ 1,941

On November 19, 2021, the Compensation Committee of the Company's Board of Directors approved a resolution to terminate the Company's U.S.

defined benefit pension plan ("U.S.

Pension Plan").

Termination of the U.S.

Pension Plan is a twelve -to- eighteen month process.

The Company will settle benefits directly with vested participants electing a lump sum payout and purchase a group annuity contract to administer future payments to the remaining U.S.

Pension Plan participants.

Based on the estimated value of assets held in the U.S.

Pension Plan, the Company estimates that a cash contribution of between $ 3,000 and $ 5,000 will be required to fully fund the U.S.

Pension Plan's liabilities upon termination.

In addition, the Company expects to record a pension settlement charge at plan termination, which includes the reclassification of unrecognized pension gains and losses within accumulated other comprehensive loss to other income (expense) within the Company's consolidated statements of operations.

The Company does not have an estimate for this future settlement charge.

The amount of unrecognized pension gains within accumulated other comprehensive loss related to the U.S.

Pension Plan is approximately $ 1,359 at December 31, 2021.

Contingencies and Other Information

1 unchanged sentence

The government in the Brazilian State of Parana ("Parana") issued a tax assessment on October 26, 2007 with respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil.

At September 30, 2021, the assessment for intrastate trade tax credits taken is $ 2,422 and the total assessment including penalties and interest is $ 8,794 .

At December 31, 2021, the assessment for intrastate trade tax credits taken is $ 2,360 and the total assessment including penalties and interest is $ 8,606 .

On March 18, 2014, the government in Brazilian State of Santa Catarina also issued a tax assessment with respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil.

At September 30, 2021, the assessment for intrastate trade tax credits taken is $ 2,095 and the total assessment including penalties and interest is $ 5,695 .

At December 31, 2021, the assessment for intrastate trade tax credits taken is $ 2,042 and the total assessment including penalties and interest is $ 5,570 .

The Company believes it has properly complied with Brazilian law and will contest any assessment through the judicial process.

11 unchanged sentences

The Company identified an asset retirement obligation ("ARO") associated with one of its facilities that requires it to restore the land to its initial condition upon vacating the facility.

The Company has not recognized a liability under generally accepted accounting principles for this ARO as the fair value of restoring the land at this site cannot be reasonably estimated since the settlement date is unknown at this time.

The Company has not recognized a liability under generally accepted

accounting principles for this ARO as the fair value of restoring the land at this site cannot be reasonably estimated since the settlement date is unknown at this time.

The settlement date is unknown because the land restoration is not required until title is returned to the government, and the Company has no current or future plans to return the title.

3 unchanged sentences

The following summarizes sales and purchases transactions with related parties:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Three months ended December 31, 2021 Three months ended December 31, 2020

Sales $ 1,955 $ 207

1 unchanged sentence

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Sales $ 20,768 $ 746 $ 13,483

Purchases 87,120 47,734 38,655

The Company has the following related party balances included in its condensed consolidated balances sheets:

Successor Location in the Condensed Consolidated Balance Sheets

September 30, 2021 September 30, 2020 March 31, 2021

The Company included the following related party balances in its condensed consolidated balances sheets:

December 31, 2021 December 31, 2020 March 31, 2021 Location in the Condensed Consolidated Balance Sheets

Accounts receivable, related parties $ 1,283 $ 3,344 $ 3,585 Other receivables

Notes receivable, related parties 2,579 — 11,890 Other receivables

Long-term notes receivable, related parties — 149 21 Other non-current assets

Accounts payable, related parties 12,232 28,417 22,376 Accounts payable

5 unchanged sentences

Debt Arrangements" for additional information).

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of September 30, 2021 and 2020, and March 31, 2021, includes $ 4,369 , $ 2,192 , and $ 2,309 , respectively, of interest payable to the Glen don Investor and the Monarch Investor.

Interest expense as presented in the condensed consolidated statements of operations includes $ 8,537 and $ 16,036 for three and six months ended September 30, 2021, respectively, and $ 2,192 for the three and six months ended September 30, 2020, that relates to the Glendon Investor and the Monarch Investor.

On December 30, 2021, the Company repaid $ 15,375 of the DDTL facility.

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of December 31, 2021 and 2020, and March 31, 2021, includes $ 6,039 , $ 4,099 , and $ 2,309 , respectively, of interest payable to the Glen don Investor and the Monarch Investor.

Interest expense as presented in the condensed consolidated statements of operations includes $ 8,530 and $ 24,566 for the three and nine months ended December 31, 2021, respectively, and $ 5,317 and $ 7,509 for the three and nine months ended December 31, 2020, respectively, that relates to the Glendon Investor and the Monarch Investor.

Transactions with the Deconsolidated Canadian Cannabis Subsidiaries

2 unchanged sentences

These payments also funded fees and expenses paid to the DIP Lender, professional fees and expenses incurred by the Canadian Cannabis Subsidiaries and the Monitor in respect of the CCAA Proceeding, and such other costs and expenses of the Canadian Cannabis Subsidiaries as agreed to by the DIP Lender.

As of September 30, 2021 and 2020, and March 31, 2021, the outstanding loan balance under the Canadian DIP Facility was $ 0 , $ 0 , and $ 5,790 , respectively, and is included in other receivables within the condensed consolidated balance sheets.

As of September 30, 2021 and 2020, and March 31, 2021, other receivables as presented in the condensed consolidated balance sheets also includes $ 0 , $ 0 , and $ 59 , respectively, of interest receivable associated with the loans under the Canadian DIP Facility due from the Canadian Cannabis Subsidiaries.

For the three and six months ended September 30, 2021, respectively, the Canadian Cannabis Subsidiaries have incurred $ 19 and $ 184 in interest expense associated with the Canadian DIP Facility, which is considered income to the Company and is recorded in interest expense, net within the condensed consolidated statements of operations.

As of December 31, 2021 and 2020, and March 31, 2021, the outstanding loan balance under the Canadian DIP Facility was $ 0 , $ 0 , and $ 5,790 , respectively, and is included in other receivables within the condensed consolidated balance sheets.

On July 8, 2021, the loans under the Canadian DIP Facility were fully repaid to the DIP Lender.

As of September 30, 2021 and 2020, and March 31, 2021, the fair value of the related party note receivable retained by the Company from the Canadian Cannabis Subsidiaries was $ 3,519 , $ 0 , and $ 6,100 , respectively, and is recorded in other receivables within the condensed consolidated balance sheets.

CCAA Proceeding and Deconsolidation of Subsidiaries" for additional information.

11 unchanged sentences

The following summarizes segment information:

Successor Predecessor

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Three months ended December 31, 2021 Three months ended December 31, 2020

Sales and other operating revenues:

7 unchanged sentences

Other Products and Services ( 5,527 ) ( 12,095 )

Total operating income (loss) $ 5,454 $ ( 8,466 ) $ ( 361 )

Total operating income $ 30,222 $ 13,480

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Nine months ended December 31, 2021 Four months ended December 31, 2020 Five months ended August 31, 2020

Sales and other operating revenues:

8 unchanged sentences

Total operating income (loss) $ 43,880 $ 5,014 $ ( 43,957 )

September 30, 2021 September 30, 2020 March 31, 2021

December 31, 2021 December 31, 2020 March 31, 2021

Segment assets:

4 unchanged sentences

Subsequent Events

CCAA Proceeding and Deconsolidation of Subsidiaries

On May 10, 2021, a definitive agreement for the sale of the assets of Figr Norfolk was entered into for a purchase price of Cdn.$ 5,000 .

On June 10, 2021, the Canadian Court approved the sale agreement.

The consummation of the sale of the assets of Figr Norfolk occurred on January 28, 2022.

As of January 1, 2022, the date of the Company’s annual goodwill impairment testing for fiscal 2022, the Company had goodwill of $ 31,814 .

Due to a sustained decline in the implied value of the Company's equity based on public trading and share price as well as uncertainty in the Company's estimate of timing for future operating results due to the recent economic effects of the COVID-19 pandemic and related variants, the Company expects to recognize non-cash impairment losses to fully write-off the carrying values of its goodwill during the three months ending March 31, 2022.

PNC ABL Credit Facility

On February 8, 2022, Pyxus Holdings, certain subsidiaries of Pyxus Holdings (together with Pyxus Holdings, the “Borrowers”), and the Company and its wholly owned subsidiary, Pyxus Parent, Inc., as guarantors, entered into an ABL Credit Agreement (the “ABL Credit Agreement”), dated as of February 8, 2022, by and among Pyxus Holdings, as Borrower Agent, the Borrowers and parent guarantors party thereto, the lenders party thereto, and PNC Bank, National Association, as Administrative Agent and Collateral Agent, to establish an asset-based revolving credit facility (the “PNC ABL Facility”), the proceeds of which may be used to refinance existing senior bank debt, pay fees and expenses related to the PNC ABL Facility, partially fund capital expenditures, and provide for the ongoing working capital needs of the Borrowers.

The PNC ABL Facility may be used for revolving credit loans and letters of credit from time to time up to an initial maximum principal amount of $ 100,000 , subject to the limitations described below in this paragraph.

The PNC ABL Facility includes a $ 20,000 uncommitted accordion feature that permits Pyxus Holdings, under certain conditions, to solicit the lenders under the PNC ABL Facility to provide additional revolving loan commitments to increase the aggregate amount of the revolving loan commitments under the PNC ABL Facility not to exceed a maximum principal amount of $ 120,000 .

The amount available under the PNC ABL Facility is limited by a borrowing base consisting of certain eligible accounts receivable and inventory, reduced by specified reserves, as follows:

• 85 % of eligible accounts receivable, plus

• 90 % of eligible credit insured accounts receivable, plus

• the lesser of (i) 70 % of eligible inventory valued at the lower of cost (based on a first-in first-out basis) and market value thereof (net of intercompany profits) or (ii) 85 % of the net-orderly-liquidation value percentage of eligible inventory, minus

• applicable reserves.

The PNC ABL Facility permits both base rate borrowings and borrowings based upon the Bloomberg-Short-Term Bank Yield Index rate (“BSBY”).

Borrowings under the PNC ABL Facility bear interest at an annual rate equal to one, three, or six-month reserve-adjusted BSBY Rate plus 300 basis points or 200 basis points above base rate, as applicable, with a fee on unutilized commitments at an annual rate of 37.5 basis points.

The PNC ABL Facility matures, subject to extension on terms and conditions set forth in the ABL Credit Agreement, on the earlier of February 8, 2027 or 90 days prior to the earliest maturity of obligations owing under the Term Loan Credit Agreement and the Indenture.

The PNC ABL Facility may be prepaid from time to time, in whole or in part, without prepayment or premium, subject to a termination fee upon the permanent reduction of commitments under the PNC ABL Facility of 300 basis points for terminations in the first year after entry into the ABL Credit Agreement, 200 basis points for terminations in the second year and 100 basis points for termination in the third year.

In addition, customary mandatory prepayments of the loans under the PNC ABL Facility are required upon the occurrence of certain events including, without limitation, outstanding borrowing exposures exceeding the borrowing base, certain dispositions of assets outside of the ordinary course of business in respect of certain collateral securing the PNC ABL Facility and certain casualty and condemnation events.

With respect to base rate loans, accrued interest is payable monthly in arrears and, with respect to BSBY loans, accrued interest is payable monthly and on the last day of any applicable interest period.

The Borrowers’ obligations under the PNC ABL Facility (and certain related obligations) are (a) guaranteed by Pyxus Parent, Inc.

and the Company and all of Pyxus Holdings’ wholly owned domestic subsidiaries, and each of Pyxus Holdings’ future wholly owned domestic subsidiaries is required to guarantee the PNC ABL Facility on a senior secured basis (collectively, the “ABL Loan Parties”) and (b) secured by the collateral, as described below, which is owned by the ABL Loan Parties.

The liens and other security interests granted by the ABL Loan Parties on the collateral for the benefit of the lenders under the PNC ABL Facility (and certain related secured parties) are, subject to certain permitted liens, secured by first-priority security interests on a pari passu basis with the security interests securing the ABL Loan Parties’ obligations under the Term Loan Credit Agreement and the Notes.

The obligations of Pyxus Holdings and each other ABL Loan Party under the PNC ABL Facility and any related guarantee are repaid pursuant to a waterfall with respect to portions of the Collateral as set forth in the existing intercreditor agreements with respect to Pyxus Holdings’ senior secured debt.

Cash Dominion

Under the terms of the PNC ABL Facility, if (i) an event of default has occurred and is continuing, (ii) excess borrowing availability under the PNC ABL Facility (based on the lesser of the commitments thereunder and the borrowing base) (the “Excess Availability”) falls below 10 % of the total commitments under the PNC ABL Facility at such time, or (iii) Domestic Availability (as defined in the ABL Credit Agreement) being less than $ 20,000 , the ABL Loan Parties will become subject to cash dominion, which will require daily prepayment of loans under the PNC ABL Facility with the cash deposited in certain deposit accounts of the ABL Loan Parties, including concentration accounts, and will restrict the ABL Loan Parties’ ability to transfer cash from their concentration accounts to their disbursement accounts.

Such cash dominion period (a “Dominion Period”) shall end when (i) if arising as a result of a continuing event of default, such event of default ceases to exist, (ii) if arising as a result of non-compliance with the Excess Availability threshold, Excess Availability shall be equal to or greater than 10 % of the total commitments under the PNC ABL Facility for a period of 30 consecutive days and no event of default is continuing, or (iii) if arising as a result of Domestic Availability being less than $ 20,000 , Domestic Availability is greater than $ 20,000 for a period of 30 consecutive days and no event of default is continuing.

Financial Covenants

The ABL Credit Agreement governing the PNC ABL Facility contains (i) a springing covenant requiring that the Company’s fixed charge coverage ratio be no less than 1.10 to 1.00 during any Dominion Period and (ii) a covenant requiring Domestic Availability greater than $ 20,000 at all times until audited financial statements for fiscal year ending March 31, 2023 are delivered under the ABL Credit Agreement.

Affirmative and Restrictive Covenants

The ABL Credit Agreement governing the PNC ABL Facility contains customary representations and warranties, affirmative and negative covenants (subject, in each case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company’s ability to, among other things:

• incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

• pay dividends and make other restricted payments;

• sell certain assets;

• create liens;

• enter into sale and leaseback transactions;

• consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets;

• enter into transactions with affiliates;

• designate subsidiaries as Unrestricted Subsidiaries (as defined in the ABL Credit Agreement).

Exit ABL Credit Agreement

On February 8, 2022, Pyxus Holdings terminated the Exit ABL Credit Agreement and repaid $ 56,500 outstanding thereunder with proceeds from the initial borrowing under the PNC ABL Facility.

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.

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 and restructuring 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 the Company's performance and allocation of its resources.

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

The Company expects to conclude this evaluation during the three months ending March 31, 2022.

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 1. Financial Statements