What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-14 compared with 2023-08-10 · 158 added, 86 removed, 444 unchanged (35% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

(in thousands, except per share data) 2023 2022 2023 2022

3 unchanged sentences

Selling, general, and administrative expenses 40,033 34,987 74,096 69,575

Other expense (income), net 2,624 ( 1,085 )

Other expense, net 1,089 1,151 3,713 66

Restructuring and asset impairment charges 1,254 4,045 1,294 4,345

1 unchanged sentence

Loss on deconsolidation/disposition of subsidiaries — 49 — 648

Loss on pension settlement — 2,588 — 2,588

Interest expense, net 32,947 28,814 63,791 54,288

1 unchanged sentence

Income tax expense (benefit) 7,558 ( 1,210 ) 10,204 ( 2,077 )

Loss (income) from unconsolidated affiliates 2,158 ( 3,749 )

Income (loss) from unconsolidated affiliates 2,111 1,555 ( 47 ) 5,304

Net income (loss) 7,896 ( 1,550 ) 8,666 ( 16,055 )

2 unchanged sentences

$ 8,095 $ ( 1,537 ) $ 8,899 $ ( 16,200 )

Income (loss) per share:

Earnings (loss) per share:

Basic and diluted $ 0.32 $ ( 0.06 ) $ 0.36 $ ( 0.65 )

5 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

(in thousands) 2023 2022 2023 2022

Net income (loss) $ 7,896 $ ( 1,550 ) $ 8,666 $ ( 16,055 )

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Foreign currency translation adjustment ( 1,545 ) ( 4,801 ) ( 838 ) ( 3,854 )

Pension and other postretirement benefit plans — ( 1,562 ) — ( 1,562 )

Cash flow hedges ( 1,000 ) ( 1,768 ) ( 138 ) ( 3,271 )

Total other comprehensive income (loss), net of tax 1,569 ( 556 )

Total other comprehensive loss, net of tax ( 2,545 ) ( 8,131 ) ( 976 ) ( 8,687 )

Total comprehensive income (loss) 5,351 ( 9,681 ) 7,690 ( 24,742 )

6 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands) June 30, 2023 June 30, 2022 March 31, 2023

(in thousands) September 30, 2023 September 30, 2022 March 31, 2023

Current assets

41 unchanged sentences

Retained deficit ( 249,055 ) ( 235,013 ) ( 257,954 )

Accumulated other comprehensive income 7,084 3,248 5,515

Accumulated other comprehensive income (loss) 4,539 ( 4,883 ) 5,515

Total stockholders’ equity of Pyxus International, Inc.

8 unchanged sentences

Attributable to Pyxus International, Inc.

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income (Loss)

(in thousands) Common

7 unchanged sentences

Balance, June 30, 2023 $ 390,290 $ ( 257,150 ) $ ( 5,685 ) $ 8,335 $ 4,434 $ 3,945 $ 144,169

Net income (loss) — 8,095 — — — ( 199 ) 7,896

Other — — — — — 493 493

Other comprehensive loss, net of tax — — ( 1,545 ) — ( 1,000 ) — ( 2,545 )

Balance, September 30, 2023 $ 390,290 $ ( 249,055 ) $ ( 7,230 ) $ 8,335 $ 3,434 $ 4,239 $ 150,013

Balance, March 31, 2022 $ 390,290 $ ( 218,813 ) $ ( 8,873 ) $ 6,328 $ 6,349 $ 6,090 $ 181,371

3 unchanged sentences

Balance, June 30, 2022 $ 390,290 $ ( 233,476 ) $ ( 7,926 ) $ 6,328 $ 4,846 $ 3,196 $ 163,258

Net loss — ( 1,537 ) — — — ( 13 ) ( 1,550 )

Other comprehensive loss, net of tax — — ( 4,801 ) ( 1,562 ) ( 1,768 ) — ( 8,131 )

Balance, September 30, 2022 $ 390,290 $ ( 235,013 ) $ ( 12,727 ) $ 4,766 $ 3,078 $ 3,183 $ 153,577

See "Notes to Condensed Consolidated Financial Statements"

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended

(in thousands) June 30, 2023 June 30, 2022

Six Months Ended

(in thousands) September 30, 2023 September 30, 2022

Operating Activities:

4 unchanged sentences

Loss on foreign currency transactions 4,551 970

Asset impairment charges — 4,035

Loss on deconsolidation/disposition of subsidiaries — 648

Loss on pension settlement — 2,588

Loss from unconsolidated affiliates, net of dividends 13,707 6,217

13 unchanged sentences

Purchases of property, plant, and equipment ( 9,225 ) ( 5,426 )

Proceeds from sale of property, plant, and equipment 2,822 2,114

Collections from beneficial interests in securitized trade receivables 79,296 76,209

4 unchanged sentences

Net proceeds from short-term borrowings 192,186 176,302

Repayment of DDTL facility — ( 110,250 )

Proceeds from term loan facility — 100,000

Proceeds from revolving loan facilities 105,000 45,000

1 unchanged sentence

Debt issuance costs ( 3,851 ) ( 5,544 )

Fees paid to refinance the DDTL facility — ( 4,000 )

Other, net ( 67 ) 340

5 unchanged sentences

Cash, cash equivalents, and restricted cash at end of period $ 117,670 $ 115,773

Pyxus International, Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended

(in thousands) September 30, 2023 September 30, 2022

Other information:

Cash paid for income taxes, net $ 6,604 $ 11,235

Cash paid for income taxes related to debt exchange 12,543 —

Cash paid for interest, net 43,881 37,906

8 unchanged sentences

Revenue Recognition

Income (Loss) Per Share

Restructuring and Asset Impairment Charges

Earnings (Loss) Per Share

Inventories, Net

9 unchanged sentences

Segment Information

Subsequent Event

Basis of Presentation and Summary of Significant Accounting Policies

15 unchanged sentences

The following disaggregates sales and other operating revenues by major source, with the All Other category being included for purposes of reconciliation of the respective balances below of the Leaf segment (the Company's sole reportable segment) to the condensed consolidated financial statements:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Product revenue $ 585,801 $ 475,599 $ 1,036,739 $ 798,483

4 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Balance, beginning of period $ ( 24,440 ) $ ( 23,330 ) $ ( 24,730 ) $ ( 24,541 )

4 unchanged sentences

Trade receivables, net $ 233,679 $ 205,024 $ 233,679 $ 205,024

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.

As of June 30, 2023, market specific factors coupled with tax rate sensitivity caused the AETR method to produce an unreliable estimate of the Company’s annual effective tax rate;

Restructuring and Asset Impairment Charges

The Company continued its focus on cost saving initiatives.

The employee separation and asset impairment charges for the periods ended September 30, 2023 were primarily related to changes in the corporate organizational structure and the continued restructuring of certain leaf operations.

The employee separation and asset impairment charges for the periods ended September 30, 2022 were primarily related to the restructuring of certain non-leaf agriculture operations.

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

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Employee separation charges $ 1,254 $ 10 $ 1,294 $ 310

Asset impairment and other non-cash charges — 4,035 — 4,035

Restructuring and asset impairment charges $ 1,254 $ 4,045 $ 1,294 $ 4,345

For each period presented, the Company's quarterly provision for income taxes is not calculated using the annual effective tax rate method ("AETR method"), which applies an estimated annual effective tax rate to pre-tax income or loss.

As of the end of the current period, market specific factors coupled with tax rate sensitivity caused the AETR method to produce an unreliable estimate of the Company’s annual effective tax rate;

therefore, the Company recorded its interim income tax provision using the discrete method, as allowed under ASC 740-270, Income Taxes - Interim Reporting .

Using the discrete method, the Company determined current and deferred income tax expense as if the three-month interim period of the current fiscal year were an annual period.

The effective tax rate for the three months ended June 30, 2023 and 2022 was 47.5 % and 4.5 %, respectively.

For the three months ended June 30, 2023 and 2022, the difference between the Company’s effective rate and the U.S.

statutory rate of 21.0% is primarily due to the impact of foreign exchange effects, valuation allowance impacts of non-deductible interest, U.S.

Using the discrete method, the Company determined income tax expense as if each of the six-month interim periods reported were an annual period.

The effective tax rate for the six months ended September 30, 2023 and 2022 was 53.9 % and 8.9 %, respectively.

For the six months ended September 30, 2023, the difference between the Company’s effective rate and the U.S.

statutory rate of 21.0% is primarily due to a $ 6,658 increase in the Company's liability for unrecognized tax benefits in Africa, the impact of changes in valuation allowance for non-deductible interest, U.S.

taxation of foreign earnings, and variations in the jurisdictional mix of earnings.

Income (Loss) Per Share

Earnings (Loss) Per Share

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

Three Months Ended

Basic and diluted income (loss) per share:

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Basic and diluted earnings (loss) per share:

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

1 unchanged sentence

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

Basic and diluted income (loss) per share $ 0.03 $ ( 0.59 )

Basic and diluted earnings (loss) per share $ 0.32 $ ( 0.06 ) $ 0.36 $ ( 0.65 )

Inventories, Net

The following summarizes the composition of inventories, net:

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Processed tobacco $ 646,757 $ 712,078 $ 498,398

4 unchanged sentences

Equity Method Investments

The following summarizes the Company's equity method investments as of June 30, 2023:

The following summarizes the Company's equity method investments as of September 30, 2023:

Investee Name Location Primary Purpose Ownership Percentage Basis Difference

3 unchanged sentences

India Purchase and process tobacco 49 % ( 5,770 )

China Brasil Tobacos Exportadora SA Brazil Purchase and process tobacco 49 % 43,900

China Brasil Tabaco Exportadora SA Brazil Purchase and process tobacco 49 % 43,599

Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş.

4 unchanged sentences

The following summarizes financial information for these equity method investments:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Operations statement:

1 unchanged sentence

Gross profit 12,173 5,766 19,359 19,855

Net (loss) income ( 3,854 ) 8,330

Net income 5,010 3,913 1,156 12,243

Company's dividends received 13,660 1 13,660 11,523

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Balance sheet:

7 unchanged sentences

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

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Investments in variable interest entities $ 80,067 $ 81,988 $ 93,754

3 unchanged sentences

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

Three Months Ended June 30, 2023

Six Months Ended September 30, 2023

Weighted Average Remaining Useful Life Beginning Carrying Amount, Net Amortization Expense Ending Intangible Assets, Net

13 unchanged sentences

The following summarizes debt and notes payable:

June 30, June 30, March 31,

September 30, September 30, March 31,

(in thousands) Interest Rate 2023 2022 2023

2 unchanged sentences

$ — $ 55,000 $ 25,000

DDTL Facility (2)

Term Loan Facility (2)

Senior secured notes:

20 unchanged sentences

Letters of credit $ 6,783 $ 14,292 $ 11,684

(1) Weighted average rate for the trailing twelve months ended June 30, 2023 or, for indebtedness outstanding only during a portion of such twelve-month period, for the portion of such period that such indebtedness was outstanding.

(2) The amount outstanding at June 30, 2022 is net of original issue discount of $ 499 .

The DDTL Facility was refinanced on July 28, 2022, with the issuance of the DDTL Term Loans, which refinancing included a partial principal payment of $ 9,000 and an exit fee payment of $ 5,250 .

Subsequent to this refinancing, on February 6, 2023, the DDTL Term Loans were exchanged for $ 102,000 (inclusive of a $ 2,000 exit fee) of Intabex Term Loans.

(1) Weighted average rate for the trailing twelve months ended September 30, 2023 or, for indebtedness outstanding only during a portion of such twelve-month period, for the portion of such period that such indebtedness was outstanding.

(2) The amount outstanding at September 30, 2022 is net of original issue discount of $ 3,536 .

This Term Loan Facility was established through the refinancing of the DDTL Facility on July 28, 2022, which included a partial principal payment of $ 9,000 and an exit fee payment of $ 5,250 .

Subsequent to this refinancing, on February 6, 2023, the Term Loan Facility was exchanged for $ 102,000 (inclusive of a $ 2,000 exit fee) of Intabex Term Loans.

(3) On February 6, 2023, $ 260,452 of the 10.0 % Notes due 2024 were exchanged for 8.5 % Notes due 2027.

The remaining 10.0 % Notes due 2024 outstanding of $ 20,004 is net of a debt discount of $ 387 .

The remaining 10.0 % Notes due 2024 outstanding of $ 20,085 is net of a debt discount of $ 306 , and are reported in the current portion of long-term debt.

Total repayment at maturity is $ 20,391 .

11 unchanged sentences

("Pyxus Holdings"), certain subsidiaries of Pyxus Holdings (together with Pyxus Holdings, the "Borrowers"), and the Company and its wholly owned subsidiary, Pyxus Parent, Inc.

("Pyxus Parent"), as parent 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 "ABL Credit Facility"), the proceeds of which may be used to refinance existing senior bank debt, pay fees and expenses related to the ABL Credit Facility, partially fund capital expenditures, and provide for the ongoing working capital needs of the Borrowers.

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 of $ 100,000 , subject to the limitations described below in this paragraph.

("Pyxus Parent"), as parent guarantors, entered into an ABL Credit Agreement (as amended on May 23, 2023, 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 "ABL Credit Facility"), the proceeds of which may be used to refinance existing senior bank debt, pay fees and expenses related to the ABL Credit Facility, partially fund capital expenditures, and provide for the ongoing working capital needs of the Borrowers.

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

1 unchanged sentence

A detailed description of the ABL Credit Agreement is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

At June 30, 2023, Pyxus Holdings was in compliance with the covenants under the ABL Credit Agreement.

At September 30, 2023, the Borrowers and the parent guarantors under the ABL Credit Agreement were in compliance with the covenants under the ABL Credit Agreement.

Intabex Term Loans

4 unchanged sentences

A detailed description of the Intabex Term Loan Credit Agreement is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

At June 30, 2023, Pyxus Holdings and the guarantors under the Intabex Term Loan Credit Agreement were in compliance with all covenants under the Intabex Term Loan Credit Agreement.

At September 30, 2023, Pyxus Holdings and the guarantors under the Intabex Term Loan Credit Agreement were in compliance with all covenants under the Intabex Term Loan Credit Agreement.

Pyxus Term Loans

3 unchanged sentences

A detailed description of the Pyxus Term Loan Credit Agreement is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

At June 30, 2023, Pyxus Holdings and the guarantors under the Pyxus Term Loan Credit Agreement were in compliance with all covenants under the Pyxus Term Loan Credit Agreement.

At September 30, 2023, Pyxus Holdings and the guarantors under the Pyxus Term Loan Credit Agreement were in compliance with all covenants under the Pyxus Term Loan Credit Agreement.

8.50% Senior Secured Notes due 2027

Pursuant to an exchange offer (the "Notes Exchange" and, together with the DDTL Facility Exchange and the Exit Facility Exchange, the "Debt Exchange Transactions") made by Pyxus Holdings and accepted by holders of approximately 92.7 % of the aggregate principal amount of the outstanding 10.0 % Senior Secured First Lien Notes due 2024 issued by Pyxus Holdings (the "2024 Notes") pursuant to that certain Indenture, dated as of August 24, 2020 (the "2024 Notes Indenture"), by and among Pyxus Holdings, the guarantors party thereto and the trustee, collateral agent, registrar and paying agent thereunder, on February 6, 2023, Pyxus Holdings issued approximately $ 260,452 in aggregate principal amount of 8.5 % Senior Secured Notes

due December 31, 2027 (the "2027 Notes" and, together with the New Term Loans, the "New Secured Debt") to the exchanging holders of the 2024 Notes for an equal principal amount of 2024 Notes.

February 6, 2023, Pyxus Holdings issued approximately $ 260,452 in aggregate principal amount of 8.5 % Senior Secured Notes due December 31, 2027 (the "2027 Notes" and, together with the New Term Loans, the "New Secured Debt") to the exchanging holders of the 2024 Notes for an equal principal amount of 2024 Notes.

The 2027 Notes were issued pursuant to the Indenture, dated as of February 6, 2023 (the "2027 Notes Indenture"), among Pyxus Holdings, the guarantors party thereto, and Wilmington Trust, National Association, as trustee, and Alter Domus, as collateral agent.

2 unchanged sentences

A detailed description of the 2027 Notes and the 2027 Notes Indenture is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

At June 30, 2023, Pyxus Holdings and the guarantors of the 2027 Notes were in compliance with all covenants under the 2027 Notes Indenture.

At September 30, 2023, Pyxus Holdings and the guarantors of the 2027 Notes were in compliance with all covenants under the 2027 Notes Indenture.

Refinanced Senior Secured Debt

18 unchanged sentences

• approximately 64.1 % of the 2024 Notes outstanding under the 2024 Notes Indenture.

Pursuant to the Support Agreement, the Supporting Holders agreed to participate in the DDTL Facility Exchange, the Exit Facility Exchange and the Notes Exchange.

Pursuant to the Support Agreement, the Supporting Holders agreed to participate in the Debt Exchange Transactions.

Based on a Schedule 13D/A filed with the SEC on January 4, 2023 by Glendon Capital Management, L.P.

6 unchanged sentences

Altman, Owl Creek Asset Management, L.P.

is the investment manager of certain funds and reported beneficial ownership of 2,405 shares of the

Company’s common stock on December 31, 2021, representing approximately 9.6 % of the outstanding shares of the Company’s common stock.

A representative of the Glendon Investor and a representative of the Monarch Investor served as directors of Pyxus at the time the Company and its applicable subsidiaries entered into the Initial DDTL Credit Facility Agreement, the amendments thereto (including the DDTL Credit Agreement) and the Support Agreement, effected borrowings under the Initial DDTL Credit Facility Agreement and the DDTL Credit Agreement and commenced the DDTL Facility Exchange, the Exit Facility Exchange and the Notes Exchange.

The Initial DDTL Credit Facility Agreement and the amendments thereto (including the DDTL Credit Agreement), any and all borrowings thereunder, the related guaranty transactions, the Support Agreement, the DDTL Facility Exchange, the Exit Facility Exchange and the Notes Exchange, including the Intabex Term Loan Credit Agreement, the Intabex Term Loans, the Pyxus Term Loan Credit Agreement, the Pyxus Term Loans, the 2027 Notes and the 2027 Notes Indenture were approved, and determined to be on terms and conditions at least as favorable to the Company and its subsidiaries as could reasonably have been obtained in a comparable arm’s-length transaction with an unaffiliated party, by a majority of the disinterested members of the Board of Directors of Pyxus.

is the investment manager of

certain funds and reported beneficial ownership of 2,405 shares of the Company’s common stock on December 31, 2021, representing approximately 9.6 % of the outstanding shares of the Company’s common stock.

The Initial DDTL Credit Facility Agreement and the amendments thereto (including the DDTL Credit Agreement), any and all borrowings thereunder, the related guaranty transactions, the Support Agreement, and the Debt Exchange Transactions, including the Intabex Term Loan Credit Agreement, the Intabex Term Loans, the Pyxus Term Loan Credit Agreement, the Pyxus Term Loans, the 2027 Notes and the 2027 Notes Indenture were approved, and determined to be on terms and conditions at least as favorable to the Company and its subsidiaries as could reasonably have been obtained in a comparable arm’s-length transaction with an unaffiliated party, by a majority of the disinterested members of the Board of Directors of Pyxus.

Other Outstanding Debt

3 unchanged sentences

The 2024 Notes are stated to mature on August 24, 2024.

At June 30, 2023, Pyxus Holdings and the guarantors of the 2024 Notes were in compliance with all covenants under the 2024 Notes Indenture, as amended by the 2024 Notes Supplemental Indenture.

At September 30, 2023, Pyxus Holdings and the guarantors of the 2024 Notes were in compliance with all covenants under the 2024 Notes Indenture, as amended by the 2024 Notes Supplemental Indenture.

Foreign Seasonal Lines of Credit

4 unchanged sentences

Certain of the foreign seasonal lines of credit are secured by trade receivables and inventories as collateral and are guaranteed by the Company and certain of its subsidiaries.

As of June 30, 2023, the total borrowing capacity under individual foreign seasonal lines of credit range up to $ 160,551 .

As of June 30, 2023, the aggregate amount available for borrowing under the seasonal lines of credit was $ 149,047 .

At June 30, 2023 , the Company was permitted to borrow under foreign seasonal lines of credit up to a total $ 712,255 , subject to limitations under the ABL Credit Agreement and the agreements governing the New Secured Debt.

At June 30, 2023 , $ 896 of cash was held on deposit as a compensating balance.

At June 30, 2023, the Company, and its subsidiaries, were in compliance with the covenants associated with its short-term seasonal lines of credit.

As of September 30, 2023, the total borrowing capacity under individual foreign seasonal lines of credit range up to $ 159,394 .

As of September 30, 2023, the aggregate amount available for borrowing under the seasonal lines of credit was $ 130,214 .

At September 30, 2023 , the Company was permitted to borrow under foreign seasonal lines of credit up to a total $ 663,326 , subject to limitations under the ABL Credit Agreement and the agreements governing the New Secured Debt.

At September 30, 2023 , $ 904 of cash was held on deposit as a compensating balance.

At September 30, 2023, the Company, and its subsidiaries, were in compliance with the covenants associated with its short-term seasonal lines of credit.

Securitized Receivables

1 unchanged sentence

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 June 30, 2023, the investment limit of this facility was $ 100,000 of trade receivables.

As of September 30, 2023, the investment limit of this facility was $ 100,000 of trade receivables.

For the other facilities, the Company offers trade receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution.

As of June 30, 2023, the investment limit under the second facility was $ 110,000 of trade receivables.

As of June 30, 2023, the investment limit under the third and fourth facilities were variable based on qualifying sales.

As of September 30, 2023, the investment limit under the second facility was $ 110,000 of trade receivables.

As of September 30, 2023, the investment limit under the third and fourth facilities were variable based on qualifying sales.

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

As of June 30, 2023 and 2022, and March 31, 2023, trade receivables, net in the condensed consolidated balance sheets has been reduced by $ 908 , $ 14,893 , and $ 3,193 as a result of the net settlement, respectively.

As of September 30, 2023 and 2022, and March 31, 2023, trade receivables, net in the condensed consolidated balance sheets has been reduced by $ 10,014 , $ 5,108 , and $ 3,193 as a result of the net settlement, respectively.

Refer to " Note 14.

1 unchanged sentence

The following summarizes the Company's accounts receivable outstanding in the securitization facilities, which represents trade receivables sold into the program that have not been collected from the customer, and related beneficial interests, which represents the Company's residual interest in receivables sold that have not been collected from the customer:

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Receivables outstanding in facility $ 177,932 $ 149,523 $ 173,979

3 unchanged sentences

The following summarizes the Company's cash purchase price and deferred purchase price:

Three Months Ended

Cash proceeds for the period ended:

Six Months Ended

September 30,

Cash proceeds:

Cash purchase price $ 344,823 $ 320,256

3 unchanged sentences

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

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Amounts guaranteed (not to exceed) $ 93,554 $ 103,434 $ 152,032

3 unchanged sentences

Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing 68 102 12,529

(1) Most of the guarantees outstanding at June 30, 2023 expire within one year .

(1) Most of the guarantees outstanding at September 30, 2023 expire within one year .

Derivative Financial Instruments

1 unchanged sentence

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

The Company recorded a net gain of $ 1,434 and $ 862 from its derivative financial instruments in cost of goods and services sold for the three months ended June 30, 2023 and June 30, 2022, respectively.

As of June 30, 2023 and 2022, and March 31, 2023, the Company recorded current derivative assets of $ 0 , $ 560 , and $ 3,970 within other current assets, respectively.

Dollar notional amount of derivative contracts outstanding as of June 30, 2023 and 2022, and March 31, 2023 was $ 4,378 , $ 7,259 , and $ 63,622 , respectively.

The Company recorded a net gain of $ 1,386 and $ 2,820 from its derivative financial instruments in cost of goods and services sold for the three and six months ended September 30, 2023, respectively.

The Company recorded a net gain of $ 1,848 and $ 2,710 from its derivative financial instruments in cost of goods and services sold for the three and six months ended September 30, 2022, respectively.

As of September 30, 2023 and 2022, and March 31, 2023, the Company recorded current derivative assets of $ 132 , $ 0 , and $ 3,970 within other current assets, respectively, and current derivative liabilities of $ 78 , $ 531 , and $ 0 within accrued expenses and other current liabilities, respectively.

The following summarizes the U.S.

Dollar notional amount of derivative contracts outstanding:

September 30, 2023 September 30, 2022 March 31, 2023

Dollar notional outstanding $ 14,327 $ 32,000 $ 63,622

Fair Value Measurements

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

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Level 2 Level 3 Total

6 unchanged sentences

Financial Liabilities:

Derivative financial instruments $ 78 $ — $ 78 $ 531 $ — $ 531 $ — $ — $ —

Long-term debt (1)

481,248 507 481,755 417,542 577 418,119 523,758 514 524,272

Guarantees — 1,458 1,458 — 1,206 1,206 — 5,262 5,262

Total liabilities $ 481,326 $ 1,965 $ 483,291 $ 418,073 $ 1,783 $ 419,856 $ 523,758 $ 5,776 $ 529,534

(1) This fair value measurement disclosure does not affect the condensed consolidated balance sheets.

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

Three Months Ended

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

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

5 unchanged sentences

Ending balance $ 24,393 $ 507 $ 1,458 $ 22,842 $ 577 $ 1,206

For the three months ended June 30, 2023 and 2022, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 748 and $ 618 , respectively.

Six Months Ended

September 30, 2023 September 30, 2022

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

Beginning balance $ 19,522 $ 514 $ 5,262 $ 28,072 $ 246 $ 2,956

Issuances of sales of receivables/guarantees — — 2,254 — — 687

Settlements ( 73,381 ) ( 7 ) ( 4,761 ) ( 72,756 ) — ( 1,343 )

Additions 84,277 — — 71,082 370 —

Losses recognized in earnings ( 6,025 ) — ( 1,297 ) ( 3,556 ) ( 39 ) ( 1,094 )

Ending balance $ 24,393 $ 507 $ 1,458 $ 22,842 $ 577 $ 1,206

For the six months ended September 30, 2023 and 2022, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 1,230 and $ 597 , respectively.

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 June 30, 2023, the assessment for intrastate trade tax credits taken is $ 2,739 and the total assessment including penalties and interest is $ 10,793 .

At September 30, 2023, the assessment for intrastate trade tax credits taken is $ 2,636 and the total assessment including penalties and interest is

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 June 30, 2023, the assessment for intrastate trade tax credits taken is $ 2,364 and the total assessment including penalties and interest is $ 6,883 .

At September 30, 2023, the assessment for intrastate trade tax credits taken is $ 2,275 and the total assessment including penalties and interest is $ 6,699 .

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

3 unchanged sentences

The Company has an agreement with the state government regarding the amounts and timing of credits that can be sold.

The tax credits have a carrying value of $ 20,445 as of June 30, 2023.

The tax credits have a carrying value of $ 19,329 as of September 30, 2023.

The intrastate trade tax credits are monitored for impairment in future periods based on market conditions and the Company’s ability to use or sell the tax credits.

Other Matters

In addition to the above-mentioned matters, certain of the Company’s subsidiaries are involved in other litigation or legal matters incidental to their business activities, including tax matters.

While the outcome of these matters cannot be predicted with certainty, they are being vigorously defended and the Company does not currently expect that any of them will have a

material adverse effect on its business or financial position.

In addition to the above-mentioned matters, the Company or certain of its subsidiaries are involved in other litigation or legal matters incidental to their business activities, including tax matters.

While the outcome of these matters cannot be predicted with certainty, they are being vigorously defended and the Company does not currently expect that any of them will have a material adverse effect on its business or financial position.

However, should one or more of these matters be resolved in a manner adverse to its current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material.

2 unchanged sentences

The following summarizes sale and purchase transactions with related parties:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Sales $ 10,399 $ 9,928 $ 21,217 $ 20,550

1 unchanged sentence

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

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023 Location in Condensed Consolidated Balance Sheet

Accounts receivable, related parties $ 12,927 $ 2,657 $ 3,090 Other receivables

4 unchanged sentences

Debt Arrangements ," funds managed by the Glendon Investor, funds managed by the Monarch Investor, and funds managed by Owl Creek Asset Management, L.P., (such funds are collectively referred to as the "Investor-Affiliated Funds") held 2024 Notes and/or Exit Term Loans, were parties to the Initial DDTL Facility Credit Agreement and amendments thereto (including the DDTL Credit Agreement) and the Support Agreement, and received the New Secured Debt pursuant to the Debt Exchange Transactions.

Accrued expenses and other current liabilities as presented in the consolidated balance sheets as of June 30, 2023 and 2022, and March 31, 2023, includes $ 3,945 , $ 5,953 , and $ 3,653 , respectively, of interest payable to Investor-Affiliated Funds and CI Investments, Inc.

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of September 30, 2023 and 2022, and March 31, 2023, includes $ 9,480 , $ 4,085 , and $ 3,653 , respectively, of interest payable to Investor-Affiliated Funds and CI Investments, Inc.

("CI Investments"), which is also a beneficial owner of greater than five percent of the Company's common stock.

Interest expense as presented in the consolidated statements of operations includes $ 10,075 and $ 8,097 for the three months ended June 30, 2023 and 2022 that relates to the Investor-Affiliated Funds and CI Investments.

Interest expense as presented in the condensed consolidated statements of operations includes $ 10,294 and $ 20,369 for the three and six months ended September 30, 2023, respectively, and $ 8,133 and $ 16,230 for the three and six months ended September 30, 2022, respectively, that relates to the Investor-Affiliated Funds and CI Investments.

Segment Information

The following summarizes segment information, with the All Other category being included for purposes of reconciliation of the respective balances below of the Leaf segment (the Company's sole reportable segment) to the condensed consolidated financial statements:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2023 2022 2023 2022

Sales and other operating revenues:

8 unchanged sentences

Consolidated operating income $ 46,290 $ 27,136 $ 82,708 $ 34,088

June 30, 2023 June 30, 2022 March 31, 2023

September 30, 2023 September 30, 2022 March 31, 2023

Segment assets:

2 unchanged sentences

Total assets $ 1,742,454 $ 1,698,065 $ 1,582,463

Subsequent Event

Third Amendment to the ABL Credit Agreement

On October 24, 2023, the Company, the Borrowers, and Pyxus Parent entered into a Third Amendment to the ABL Credit Agreement (the "ABL Amendment"), with the lenders party thereto and PNC Bank, National Association, as Administrative Agent and Collateral Agent.

The ABL Amendment amends the ABL Credit Agreement to, among other things:

• increase the aggregate amount of the revolving loan commitments under the ABL Credit Facility from $ 100,000 to $ 120,000 ;

• create a grid based commitment fee applicable to unused amounts under the ABL Credit Facility from a rate of 0.375 % per annum to a rate of (i) 0.25 % per annum when the outstanding borrowings equal or exceed $ 60,000 , and (ii) 0.375 % per annum when the outstanding borrowings are less than $ 60,000 ;

• reduces the requirement for determining permitted repayment of the New Term Loans, the 2024 Notes and the 2027 Notes;

• loosens the events triggering application of the cash dominion provisions of the ABL Credit Agreement.

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