What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-10 compared with 2022-08-11 · 147 added, 67 removed, 137 unchanged (61% of the section changed)

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whether foreign lenders that have provided short-term operating credit lines to fund leaf tobacco operations at the local level cease to provide such funding, uncertainty and continuing risks associated with the Company’s ability to achieve its goals and continue as a going concern, and unanticipated developments with respect to liquidity needs and sources of liquidity could result in a deficiency in liquidity;

• risk and uncertainties related to the Company’s leaf tobacco operations, including changes in the timing of anticipated shipments, changes in anticipated geographic product sourcing, changes in relevant capital markets affecting the terms and availability of short-term seasonal financing, political instability, currency and interest rate fluctuations, the impact of high inflation, shifts in the global supply and demand position for tobacco products, changes in tax laws and regulations or the interpretation of tax laws and regulations, resolution of tax matters, adverse weather conditions, the impact of climate change on weather patterns in tobacco-growing regions, the impact of disasters or other unusual events affecting international commerce, the impacts of potential international sanctions on the Company's ability to sell or source tobacco in certain regions, potential changes in governmental regulations applicable to tobacco products, and changes in costs incurred in supplying products and related services;

• 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 the Company's 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 may differ from those in the United States.

• risk and uncertainties related to the Company’s leaf tobacco operations, including changes in the timing of anticipated shipments, changes in anticipated geographic product sourcing, changes in relevant capital markets affecting the terms and availability of short-term seasonal financing, political instability, currency and interest rate fluctuations, the impact of high inflation, shifts in the global supply and demand position for tobacco products, changes in tax laws and regulations or the interpretation of tax laws and regulations, resolution of tax matters, adverse weather conditions, the impact of climate change on weather patterns in tobacco-growing regions, the impact of disasters or other unusual events affecting international commerce, the impacts of international sanctions on the Company's ability to sell or source tobacco in certain regions, changes in governmental regulations applicable to tobacco products, and changes in costs incurred in supplying products and related services;

• 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 safety concerns related to COVID-19 might otherwise require operations at any of the Company's facilities to be halted or limited 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, governmental reactions to the threat of outbreaks, and the pace and efficacy of COVID-19 vaccinations may differ from those in the United States.

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

Executive Summary

We have experienced strong demand thus far in fiscal 2023.

As expected, our first quarter was consistent with the prior fiscal year, with increased demand and more normalized timing of shipments from Asia, partially offset by the timing of shipments from Africa and South America.

As of June 30, 2022, our inventory increased $126.0 million compared to the prior year primarily due to higher new crop green tobacco prices and processing costs in South America, and accelerated new crop buying activities in certain key markets.

In addition, our processed tobacco inventory continues to be more than 90% committed to specific customers.

The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand and we expect to see stronger shipments in subsequent quarters in fiscal 2023, consistent with historical trends.

Despite higher green tobacco prices and processing costs in South America, we were able to effectively manage our working capital to meet our purchasing goals for the current crop cycle.

Crop sizes in certain markets in Africa, Asia, and South America are below expectations due to the adverse impacts of prevailing La Nina weather patterns during the growing season, which has exacerbated supply shortages.

We continue to engage with customers in transparent dialogue regarding the impact of inflation and La Nina on our business.

In response to these and other market dynamics, we accelerated buying activities in certain key markets, and continued to invest in research trials, local programs, and additional training for our global agronomy team to further support our efforts to maximize grower efficiencies and yield despite unpredictable weather patterns.

Moving forward, we are committed to recovering crop sizes, and aligning volumes in future years with customer expectations, as we work to deliver stakeholder value, and together, grow 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.

Through our predecessor companies, we have a long operating history in the leaf tobacco industry with some customer relationships beginning in the early 1900s.

We are committed to responsible crop production that supports economic viability for the supplier, provides a safe working atmosphere for those involved in crop production and minimizes negative environmental impact.

Our agronomists maintain frequent contact with suppliers prior to and during the growing and curing seasons to provide technical assistance to improve the quality and yield of the crop.

Throughout the entire production process, from seed through processing and final shipment, our SENTRI® traceability system provides clear visibility into how products are produced throughout the supply chain, supporting product integrity.

We also provide agronomy expertise for growing leaf tobacco in numerous markets.

Our contracted tobacco grower base produces a significant volume of non-tobacco crop utilizing the agronomic assistance that our team provides.

Pyxus works with our grower base, as needed, to find markets for these crops as part of our ongoing efforts to improve farmer livelihoods and the communities in which they live.

Through the first half of fiscal 2023, we reduced supply chain complexities and increased operational efficiencies.

These efforts result in more normalized shipments in certain markets compared to the prior year.

During the quarter ended September 30, 2022, we experienced increased sales and other operating revenue and operating margin improvement primarily due to increased demand and more normalized timing of shipments from Africa, Asia, and South America.

This enabled the Company to utilize cash generated from increased sales in the quarter to refinance the Delayed Draw Term Loan Facility, repay a portion of the revolving loan facilities, and fully fund the U.S.

defined benefit pension plan.

As of September 30, 2022, our inventory increased $87.7 million compared to the prior year primarily due to higher green tobacco prices and processing costs in South America and delayed shipments from North America.

Our processed tobacco inventory continues to be more than 90% committed to specific customers.

The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand.

The prevailing La Nina weather patterns continue to adversely affect the global supply of tobacco.

Through our efforts to accelerate buying activities in certain key markets, investments we have made across the business, and engaging with customers in transparent dialogue regarding the impacts of La Nina and inflation on our business, we purchased sufficient volume to meet near-term customer demand and maintained our gross profit as a percentage of sales despite historic inflation.

As we approach the second half of fiscal 2023, we are closely monitoring the market for crop inputs like fertilizer and taking steps to mitigate the near-term risk of supply shortages where possible.

The Company is a global agricultural company with nearly 150 years of experience delivering value-added products and services to businesses and customers.

The Company is a trusted provider of responsibly sourced, independently verified, sustainable, and traceable products and ingredients.

Historically, the Company had nine operating segments that were organized by product category and geographic area and were aggregated into three reportable segments for financial reporting purposes:

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Results of Operations

Three Months Ended June 30, 2022 and 2021

(in millions, except per kilo amounts) Three months ended June 30, 2022 Three months ended June 30, 2021 $ %

Three Months Ended September 30, 2022 and 2021

Three Months Ended September 30,

(in millions, except per kilo amounts) 2022 2021 $ %

Sales and other operating revenues $ 508.3 $ 394.2 114.1 28.9

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Gross profit 67.3 52.1 15.2 29.2

Gross profit as a percent of sales 13.2 % 13.2 %

Selling, general, and administrative expenses 35.0 37.9 (2.9) (7.7)

Other income, net 1.1 0.2 0.9 450.0

Other expense, net 1.2 1.8 (0.6) (33.3)

Restructuring and asset impairment charges 4.0 6.9 (2.9) (42.0)

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Loss on deconsolidation/disposition of subsidiaries — 2.5 (2.5) (100.0)

Loss on pension settlement 2.6 — 2.6 100.0

Interest expense, net 28.8 28.5 0.3 1.1

Income tax benefit 1.2 14.1 (12.9) (91.5)

Income from unconsolidated affiliates 1.6 1.3 0.3 23.1

Net income (loss) attributable to noncontrolling interests — (0.3) 0.3 100.0

Net loss attributable to Pyxus International, Inc.* $ (1.5) $ (9.7) 8.2 84.5

Sales and other operating revenues $ 475.6 $ 357.7 117.9 33.0

Tobacco costs 388.7 292.9 95.8 32.7

Transportation, storage, and other period costs 23.9 18.8 5.1 27.2

Total cost of goods sold* 412.5 311.7 100.9 32.4

Product revenue gross profit* 63.1 46.1 17.0 36.9

Product revenue gross profit as a percent of sales 13.3 % 12.9 %

Kilos sold 101.4 86.3 15.1 17.5

Average price per kilo $ 4.69 $ 4.14 0.55 13.3

Average cost per kilo 4.07 3.61 0.46 12.7

Average gross profit per kilo 0.62 0.53 0.09 17.0

Processing and other revenues $ 30.3 $ 33.2 (2.9) (8.7)

Processing and other revenues costs of services sold 23.0 24.6 (1.6) (6.4)

Processing and other gross profit* 7.3 8.7 (1.3) (15.4)

Processing and other gross profit as a percent of sales 24.2 % 26.1 %

Sales and other operating revenues $ 2.3 $ 3.2 (0.9) (28.0)

Cost of goods and services sold 5.4 5.8 (0.4) (6.8)

Gross loss (3.1) (2.6) (0.5) (19.9)

Gross loss as a percent of sales (132.5) % (79.6) %

* Amounts may not equal column totals due to rounding

Sales and other operating revenues were $394.2 million for the three months ended September 30, 2021 and $508.3 million for the three months ended September 30, 2022, an increase of $114.1 million , or 28.9%.

This increase was primarily due t o a 17.5% increase in leaf volume and a 13.3% increase in average price per kilo.

The increase in leaf volume was driven by increased demand and more normalized timing of shipments from Africa, Asia, and South America and was partially offset by the timing of shipments from North America.

The increase in average price per kilo was mainly due to higher tobacco prices.

Cost of goods and services sold were $342.1 million for the three months ended September 30, 2021 and $441.0 million for the three months ended September 30, 2022, an increase of $98.9 million, or 28.9%.

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

Average cost per kilo increased primarily due to higher tobacco prices.

Gross profit was $52.1 million for the three months ended September 30, 2021 and $67.3 million for the three months ended September 30, 2022, an increase of $15.2 million, or 29.2%.

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

Gross profit as a percent of sales was 13.2% for the three months ended September 30, 2022 and 2021.

Operating income was $5.5 million for the three months ended September 30, 2021 and $27.1 million for the three months ended September 30, 2022, an increase of $21.6 million.

This increase was mainly due to higher leaf sales and other operating revenues from increased volume and average price per kilo, lower restructuring and impairment charges, and a reduction in sales, general, and administrative expenses.

Income tax benefit was $14.1 million for the three months ended September 30, 2021 and $1.2 million for the three months ended September 30, 2022, a decrease of $12.9 million, or 91.5%.

The decrease was driven by the Company utilizing a different method for estimating tax expense (benefit) for the period ended September 30, 2022.

Using the discrete method for the period ended September 30, 2022, the Company determined current and deferred income tax expense (benefit) as if the six-month interim period of the current fiscal year were an annual period, which resulted in the recognition of the fiscal 2023 year-to-date benefit in the quarter.

Refer to See " Note 5.

Income Taxes " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Average gross profit per kilo for product revenue was $0.53 for the three months ended September 30, 2021 and $0.62 for the three months ended September 30, 2022, an increase of $0.09 per kilo or 17.0%.

This increase was primarily due to a favorable shift in customer and product mix.

The impact of this increase was partially offset by lower gross profit from processing and other revenues and increased gross loss in the All Other category.

Six Months Ended September 30, 2022 and 2021

Six Months Ended September 30,

(in millions, except per kilo amounts) 2022 2021 $ %

Sales and other operating revenues $ 852.2 $ 727.5 124.7 17.1

Cost of goods and services sold 744.1 633.3 110.8 17.5

Gross profit 108.1 94.2 13.9 14.8

Gross profit as a percent of sales 12.7 % 12.9 %

Selling, general, and administrative expenses 69.6 71.8 (2.2) (3.1)

Other expense, net 0.1 1.7 (1.6) (94.1)

Restructuring and asset impairment charges 4.3 7.1 (2.8) (39.4)

Operating income* 34.1 13.7 20.4 148.9

Loss on deconsolidation/disposition of subsidiaries 0.6 2.5 (1.9) (76.0)

Loss on pension settlement 2.6 — 2.6 100.0

Interest expense, net 54.3 55.3 (1.0) (1.8)

Income tax benefit 2.1 22.6 (20.5) (90.7)

Income (loss) from unconsolidated affiliates 5.3 (0.1) 5.4 5,400.0

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Net loss attributable to Pyxus International, Inc.* $ (16.2) $ (21.2) 5.0 23.6

$ (14.7) $ (11.5) (3.2) (27.8)

Sales and other operating revenues $ 798.5 $ 669.5 129.0 19.3

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* Amounts may not equal column totals due to rounding

Sales and other operating revenues increased $10.6 million , or 3.2%, to $343.9 million for the three months ended June 30, 2022 from $333.3 million for the three months ended June 30, 2021.

This increase was primarily due t o a 4.3% increase in leaf volume driven by greater demand and more normalized timing of shipments from Asia.

This increase was partially offset by the timing of shipments from Africa and South America.

Cost of goods and services sold increased $12.0 million, or 4.1%, to $303.2 million for the three months ended June 30, 2022 from $291.2 million for the three months ended June 30, 2021.

Sales and other operating revenues were $727.5 million for the six months ended September 30, 2021 and $852.2 million for the six months ended September 30, 2022, an increase of $124.7 million, or 17.1%.

This increase was primarily due t o an 11.6% increase in leaf volume and a 6.7% increase in average price per kilo.

The increase in kilo volume was driven by increased demand and more normalized timing of shipments from Asia and was partially offset by the timing of shipments from North America and South America.

The increase in average sales price per kilo was mainly due to higher tobacco prices.

Cost of goods and services sold were $633.3 million for the six months ended September 30, 2021 and $744.1 million for the six months ended September 30, 2022, an increase of $110.8 million, or 17.5%.

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

Gross profit decreased $1.3 million, or 3.1%, to $40.8 million for the three months ended June 30, 2022 from $42.1 million for the three months ended June 30, 2021.

Gross profit as a percent of sales decreased to 11.9% for the three months ended June 30, 2022 from 12.6% for the three months ended June 30, 2021.

These decreases were driven by delayed shipments from Africa and South America and were partially offset by accelerated shipments from Asia.

Income tax benefit decreased $7.5 million, or 89.3%, to $0.9 million for the three months ended June 30, 2022 from $8.4 million for the three months ended June 30, 2021.

The decrease was driven by the Company utilizing a different method for estimating tax expense (benefit) for the period ended June 30, 2022.

Using the discrete method for the period ended June 30, 2022, the Company determined current and deferred income tax expense (benefit) as if the interim three-month period was a year-end period, which resulted in the recognition of the fiscal 2023 year-to-date benefit in the quarter.

Average cost per kilo increased primarily due to higher tobacco prices.

Gross profit was $94.2 million for the six months ended September 30, 2021 and $108.1 million for the six months ended September 30, 2022, an increase of $13.9 million, or 14.8%.

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

Gross profit as a percent of sales went from 12.9% for the six months ended September 30, 2021 to 12.7% for the six months ended September 30, 2022.

This decrease was primarily due to customer mix in South America and higher inventory write-downs within the All Other category from the restructuring of certain non-leaf agriculture operations.

Operating income was $13.7 million for the six months ended September 30, 2021 and $34.1 million for the six months ended September 30, 2022, an increase of $20.4 million, or 148.9% .

Income tax benefit was $22.6 million for the six months ended September 30, 2021 and $2.1 million for the six months ended September 30, 2022, a de crease of $20.5 million , or 90.7% .

This decrease was driven by the Company utilizing a different method for estimating tax expense (benefit) for the period ended September 30, 2022.

Refer to See " Note 5.

Income Taxes " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Average gross profit per kilo for product revenue was $0.57 for the six months ended September 30, 2021 and $0.55 for the six months ended September 30, 2022, an increase of $0.02 per kilo or 3.6% .

This increase was primarily due to a favorable change in customer and product mix.

The impact of the increase was partially offset by lower gross profit from processing and other revenues.

Liquidity and Capital Resources

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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 year end.

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.

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

We believe our sources of liquidity will be sufficient to fund our anticipated operating needs for the next twelve months.

During such time our liquidity needs for operations may 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.

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See " Note 12.

Debt Arrangements " to the "Notes to Condensed Consolidated Financial Statements" for summary of our short-term and long-term debt.

Debt Arrangements " to the "Notes to Condensed Consolidated Financial Statements" for a summary of our short-term and long-term debt.

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

From time to time we may take steps to reduce our debt or otherwise improve our financial position.

Such actions could include prepayments, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, and refinancing of debt.

could include prepayments, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, and refinancing of debt.

The amount of prepayments or the amount of debt that may be repurchased, refinanced, or otherwise retired, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants, and other considerations.

The following summaries our maximum borrowing amount under our short-term and long-term credit lines and letter of credit facilities and the remaining available amount after the reduction for outstanding borrowings and amounts reserved for outstanding letters of credit:

June 30, 2022

(in millions) Maximum Borrowing Amount Remaining Amount Available

The following summarizes our total borrowing capacity under our short-term and long-term credit lines and letter of credit facilities and the remaining available amount after the reduction for outstanding borrowings and amounts reserved for outstanding letters of credit:

September 30, 2022

(in millions) Total Borrowing Capacity Remaining Amount Available

ABL Credit Facility $ 100.0 $ 45.0

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In addition, net debt suggests that our debt obligations are less than the most comparable GAAP measure indicates.

(in millions) June 30, 2022 June 30, 2021 March 31, 2022

(in millions) September 30, 2022 September 30, 2021 March 31, 2022

Notes payable to banks (1)

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Net debt* $ 1,080.7 $ 995.2 $ 868.2

(1) The increase from June 30, 2021 to June 30, 2022 is due to higher borrowings under the Company's foreign seasonal lines of credit in Africa and South America driven by higher prices for green tobacco purchases.

The increase from March 31, 2022 to June 30, 2022 is due to seasonality of the business, with higher working capital requirements in the first quarter of the fiscal year.

(2) The decrease from March 31, 2022 is due to reclassifying the portion of the outstanding amount under the DDTL Facility from current to noncurrent as of June 30, 2022 to the extent borrowings thereunder were refinanced under the Amendment and Restatement of the DDTL Facility Credit Agreement, which became effective prior to issuance of the Company's condensed consolidated financial statements for the three months ended June 30, 2022.

(3) The increase from March 31, 2022 is due to the reclassification of a portion of the outstanding amount under the DDTL Facility from current portion of long-term debt to long-term debt as of June 30, 2022 for the reason described above.

The increase in long-term debt from June 30, 2021 is due to borrowings under the new ABL Credit Facility implemented in February 2022, which increased the maximum borrowing capacity from the Exit ABL Credit Facility that it refinanced.

* Amounts may not equal column totals due to rounding

(1) The increase from September 30, 2021 to September 30, 2022 is due to higher borrowings under the Company's foreign seasonal lines of credit used to finance higher green tobacco prices and processing costs in Africa and South America as well as increased borrowing capacity in certain markets.

The increase from March 31, 2022 to September 30, 2022 is due to seasonality of the business, with higher working capital requirements in the first half of the fiscal year.

(2) The decrease in current portion of long-term debt and the increase in long-term debt from September 30, 2021 and March 31, 2022 are due to the refinancing of the DDTL Facility on a long-term basis.

Working Capital

The following summarizes our working capital:

(in millions except for current ratio) June 30, 2022 June 30, 2021 March 31, 2022

(in millions except for current ratio) September 30, 2022 September 30, 2021 March 31, 2022

Cash, cash equivalents, and restricted cash $ 115.8 $ 130.7 $ 200.9

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Accrued expenses and other current liabilities 76.0 72.6 82.2

Income taxes payable 6.7 4.1 5.6

Operating leases payable 8.5 9.0 8.1

Current portion of long-term debt 0.1 121.9 107.9

Other current liabilities 13.9 8.4 13.7

Total current liabilities* $ 785.8 $ 766.3 $ 814.4

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* Amounts may not equal column totals due to rounding

Working capital decreased from June 30, 2021 to June 30, 2022 by $45.8 million, or 7.1%, primarily due to delayed shipments from Africa and South America, increased foreign seasonal lines of credit mainly driven by higher green tobacco prices and processing costs in South America, and increased foreign seasonal lines of credit in Africa mainly driven by higher capacity and more efficient utilization.

Working capital increased from September 30, 2021 to September 30, 2022 by $43.0 million, or 8.4%, primarily due to the refinancing of the DDTL Facility on a long-term basis as well as the increased capacity and higher utilization of securitization facilities, which resulted in decreased trade receivables despite higher sales.

This increase in working capital was partially offset by increased inventory driven by higher green tobacco prices and processing costs in Africa and South America, which was financed by higher foreign seasonal lines of credit, and delayed shipments from North America.

The following summarizes inventory committed to a customer and uncommitted inventory balances for processed tobacco:

(in millions) June 30, 2022 June 30, 2021 March 31, 2022

(in millions) September 30, 2022 September 30, 2021 March 31, 2022

Committed $ 677.9 $ 536.9 $ 471.9

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Total processed tobacco $ 712.1 $ 605.4 $ 517.6

Total processed tobacco increased from June 30, 2021 to June 30, 2022 by $61.7 million, or 10.6%, primarily due to higher green tobacco prices and processing costs in South America, and accelerated buying activities in certain key markets.

This increase was partially offset by the restructuring of certain African operations in the prior year where the Company no longer operates.

Total processed tobacco increased from September 30, 2021 to September 30, 2022 by $106.7 million, or 17.6%, primarily due to increased foreign seasonal lines of credit used to finance higher green tobacco prices and processing costs in Africa and South America and delayed shipments from North America.

See " Note 1.

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In addition, we may periodically elect to purchase, redeem, repay, retire, or cancel indebtedness prior to stated maturity under our various foreign credit lines.

As of June 30, 2022, our cash and cash equivalents was $165.4 million of which approximately $55.3 million 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.

As of September 30, 2022, our cash, cash equivalents, and restricted cash was $115.8 million of which approximately $46.1 million 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.

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

(in millions) Three months ended June 30, 2022 Three months ended June 30, 2021

Operating activities $ (242.5) $ (186.0)

Investing activities 47.0 29.7

Financing activities 168.8 140.6

Six Months Ended

September 30,

(in millions) 2022 2021

Trade and other receivables $ (48.4) $ (113.8)

Inventories and advances to tobacco suppliers (146.5) (67.1)

Recoverable income taxes (3.5) (29.0)

Payables and accrued expenses (76.6) (60.8)

Advances from customers (9.2) 21.4

Other (2.5) 18.2

Net cash used by operating activities $ (286.7) $ (231.1)

Collections on beneficial interests on securitized trade receivables 76.2 82.6

Other (0.8) (2.4)

Net cash provided by investing activities $ 75.4 $ 80.2

Net proceeds from short-term borrowings 176.3 85.0

Proceeds from DDTL facility — 117.6

Net repayment of revolving loan facilities (35.0) (11.0)

Other (19.5) (6.1)

Net cash provided by financing activities 121.8 185.5

Effect of exchange rate changes on cash 3.9 (1.2)

Decrease in cash, cash equivalents, and restricted cash $ (26.4) $ (15.2)

Cash, cash equivalents, and restricted cash decreased by $11.2 million more during the three months ended June 30, 2022 compared to the decrease during the three months ended June 30, 2021.

This decrease was primarily due to cash used by operating activities driven by delayed shipments from Africa and South America.

This decrease was partially offset by cash provided by financing activities from higher foreign seasonal lines of credit mainly driven by higher green tobacco prices and processing costs in South America, increased foreign seasonal lines of credit in Africa mainly driven by higher capacity and more efficient utilization, and cash provided by investing activities from higher collections from securitized trade receivables.

(Decrease) increase in cash, cash equivalents, and restricted cash* $ (85.5) $ 33.3

* Amounts may not equal column totals due to rounding

Cash, cash equivalents, and restricted cash decreased by $118.8 million during the six months ended September 30, 2022 compared to the increase during the six months ended September 30, 2021.

The decrease was primarily due to higher green tobacco prices and processing costs in Africa and South America and increased inventory from delayed shipments from North America, as well as decreased trade receivables from increased capacity and higher utilization of securitization facilities.

The increase in inventory was financed by higher foreign seasonal lines of credit and increased capacity and higher utilization of trade receivable securitization facilities.

Planned Capital Expenditures

Capital investments in our leaf operations have been made primarily for routine replacement of machinery and equipment, as well as investments in assets that will add value for our customers and increase our efficiency.

We have incurred approximately $2.2 million in capital expenditures for the three months ended June 30, 2022 , and are expecting to incur an additional $20.0 million for the remainder of the fiscal year ending March 31, 2023.

We have incurred approximately $5.4 million in capital expenditures for the six months ended September 30, 2022 , and are expecting to incur an additional $15.9 million for the remainder of the fiscal year ending March 31, 2023.

Pension and Postretirement Health and Life Insurance Benefits

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

(in millions) Three months ended June 30, 2022

Six Months Ended

(in millions) September 30, 2022

Contributions made during the period (1)

Contributions expected for the remainder of the fiscal year 1.5

No cash dividends were paid to shareholders during the three months ended June 30, 2022.

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

(1) Includes $5.3 million paid during the current quarter to fully fund the U.S.

Pension Plan's liabilities in preparation to purchase a group annuity contract to administer future payments to the remaining U.S.

Pension Plan participants.

No cash dividends were paid to shareholders during the six months ended September 30, 2022.

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

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