What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-02-14 compared with 2023-11-14 · 140 added, 105 removed, 497 unchanged (33% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

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

10 unchanged sentences

Income (loss) before income taxes and other items 3,757 10,246 22,674 ( 13,190 )

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

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

Income tax expense 6,156 17,887 16,360 15,810

Income from unconsolidated affiliates 6,578 5,404 6,531 10,708

Net income (loss) 4,179 ( 2,237 ) 12,845 ( 18,292 )

Net (loss) income attributable to noncontrolling interests ( 199 ) ( 13 ) ( 233 ) 145

Net income attributable to noncontrolling interests 344 96 111 241

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

8 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

(in thousands) 2023 2022 2023 2022

Net income (loss) $ 4,179 $ ( 2,237 ) $ 12,845 $ ( 18,292 )

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 2,185 4,855 1,347 1,001

1 unchanged sentence

Cash flow hedges ( 1,288 ) ( 371 ) ( 1,426 ) ( 3,642 )

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

Total other comprehensive income (loss), net of tax 4,408 4,406 3,432 ( 4,281 )

Total comprehensive income (loss) 8,587 2,169 16,277 ( 22,573 )

Comprehensive (loss) income attributable to noncontrolling interests ( 199 ) ( 13 ) ( 233 ) 145

Comprehensive income attributable to noncontrolling interests 344 96 111 241

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

4 unchanged sentences

Condensed Consolidated Balance Sheets

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

(in thousands) December 31, 2023 December 31, 2022 March 31, 2023

Current assets

66 unchanged sentences

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

Net income — 3,835 — — — 344 4,179

Other ( 501 ) — — — — 8 ( 493 )

Dividends paid — — — — — ( 450 ) ( 450 )

Other comprehensive income (loss), net of tax — — 2,185 3,511 ( 1,288 ) — 4,408

Balance, December 31, 2023 $ 389,789 $ ( 245,220 ) $ ( 5,045 ) $ 11,846 $ 2,146 $ 4,141 $ 157,657

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

6 unchanged sentences

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

Net (loss) income — ( 2,333 ) — — — 96 ( 2,237 )

Other comprehensive income (loss), net of tax — — 4,855 ( 78 ) ( 371 ) — 4,406

Balance, December 31, 2022 $ 390,290 $ ( 237,346 ) $ ( 7,872 ) $ 4,688 $ 2,707 $ 3,279 $ 155,746

See "Notes to Condensed Consolidated Financial Statements"

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended

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

Nine Months Ended

(in thousands) December 31, 2023 December 31, 2022

Operating Activities:

7 unchanged sentences

Loss on pension settlement 12,008 2,588

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

Income from unconsolidated affiliates, net of dividends 7,129 814

Changes in operating assets and liabilities, net

28 unchanged sentences

Effect of exchange rate changes on cash ( 6,828 ) 3,776

Decrease in cash, cash equivalents, and restricted cash ( 21,239 ) ( 85,541 )

(Decrease) increase in cash, cash equivalents, and restricted cash ( 44,222 ) 17,071

Cash and cash equivalents at beginning of period 136,733 198,777

4 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended

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

Nine Months Ended

(in thousands) December 31, 2023 December 31, 2022

Other information:

10 unchanged sentences

Basis of Presentation and Summary of Significant Accounting Policies

New Accounting Standards

Revenue Recognition

9 unchanged sentences

Fair Value Measurements

Pension and Other Postretirement Benefits

Contingencies and Other Information

1 unchanged sentence

Segment Information

Subsequent Event

Basis of Presentation and Summary of Significant Accounting Policies

7 unchanged sentences

Intercompany accounts and transactions have been eliminated.

These condensed consolidated interim financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023 filed on June 6, 2023.

These condensed consolidated interim financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 filed on June 6, 2023.

Due to the seasonal nature of the Company’s business, the results of operations for a fiscal quarter are not necessarily indicative of the operating results that may be attained for other quarters or a full fiscal year.

New Accounting Standards

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures .

This ASU amends FASB Topic 280 to permit the disclosure of multiple measures of a segment's profit or loss, and requires an entity with a single reportable segment to apply FASB Topic 280 in its entirety.

In addition, this ASU requires the following new segment disclosures:

• Significant segment expenses by reportable segment if regularly provided to the Chief Operating Decision Maker ("CODM") and included within the reported measure of segment profit or loss;

• Other segment items, which represents the difference between reported segment revenues less the significant segment expenses less reported segment profit or loss;

• Title and position of the CODM.

Disclosures required under this new ASU and the existing segment profit or loss and assets disclosures currently required annually by FASB Topic 280 are to be disclosed in interim periods.

The annual disclosure requirements are effective for the Company's fiscal year ending March 31, 2025, and the interim period disclosure requirements are effective beginning April 1, 2025.

Early adoption is permitted.

The Company is currently evaluating the impact that this new accounting standard will have on its segment disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

Improvements to Income Tax Disclosures , to provide more disaggregation of income tax information mainly related to the effective tax rate reconciliation and the income taxes paid disclosure requirements.

Under the new accounting rules, the tabular effective tax rate reconciliation must include specific categories with certain reconciling items based on the expected tax further disaggregated by nature and/or jurisdiction.

Income taxes paid, net of refunds received, must be broken out by federal, state, and foreign taxes, and further disaggregated by individual jurisdictions based on total income taxes paid.

These new annual disclosure requirements are effective for the Company's fiscal year ending March 31, 2026.

Early adoption is permitted.

The Company is currently evaluating the impact that this new accounting standard will have on its income tax disclosures.

Revenue Recognition

4 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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

5 unchanged sentences

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

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

7 unchanged sentences

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 employee separation and asset impairment charges for the periods ended December 31, 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 December 31, 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,

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

4 unchanged sentences

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 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.

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

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

The effective tax rate for the nine months ended December 31, 2023 and 2022 was 72.2 % and ( 119.9 )%, respectively.

For the nine months ended December 31, 2023, the difference between the Company’s effective rate and the U.S.

statutory rate of 21.0% is primarily due to increases in the Company's deferred tax valuation allowances, liability for unrecognized tax benefits, and variations in the jurisdictional mix of earnings.

Earnings (Loss) Per Share

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

Three Months Ended Six Months Ended

September 30, September 30,

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

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

6 unchanged sentences

The following summarizes the composition of inventories, net:

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

December 31, 2023 December 31, 2022 March 31, 2023

Processed tobacco $ 659,028 $ 571,909 $ 498,398

4 unchanged sentences

Equity Method Investments

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

The following summarizes the Company's equity method investments as of December 31, 2023:

Investee Name Location Primary Purpose Ownership Percentage Basis Difference

10 unchanged sentences

The following summarizes financial information for these equity method investments:

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

4 unchanged sentences

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

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

December 31, 2023 December 31, 2022 March 31, 2023

Balance sheet:

7 unchanged sentences

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

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

December 31, 2023 December 31, 2022 March 31, 2023

Investments in variable interest entities $ 86,889 $ 87,381 $ 93,754

3 unchanged sentences

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

Six Months Ended September 30, 2023

Nine Months Ended December 31, 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:

September 30, September 30, March 31,

December 31, December 31, March 31,

(in thousands) Interest Rate 2023 2022 2023

14 unchanged sentences

Exit Facility Loans (7)

— $ 221,606 —

Other long-term debt 8.5 % (1)

8 unchanged sentences

Letters of credit $ 4,670 $ 14,337 $ 11,684

(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 .

(1) Weighted average rate for the trailing twelve months ended December 31, 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 December 31, 2022 is net of original issue discount of $ 2,823 .

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 .

15 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 (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.

("Pyxus Parent"), as parent guarantors, entered into an ABL Credit Agreement (as amended, 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.

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 .

The ABL Credit Agreement was amended on May 23, 2023 to extend the maturity of the ABL Credit Facility to February 8, 2027.

The ABL Credit Agreement was amended on October 24, 2023 to, among other things:

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

• adjust the fee payable on unused borrowing availability under the ABL Credit Facility from a rate of 0.375 % per annum to a rate of (i) 0.25 % per annum if the outstanding borrowings equal or exceed $ 60,000 and (ii) 0.375 % per annum if the outstanding borrowings are less than $ 60,000 ;

• adjust the covenant restricting the prepayment of the New Term Loans, the 2024 Notes and the 2027 Notes (as such terms are defined below) to permit prepayments, subject to an aggregate limit of $ 100,000 , based on excess borrowing availability under the ABL Credit Facility, after giving pro forma effect to the prepayment, being at least equal to a specified level, with an increased amount being permitted upon pro forma satisfaction of a minimum fixed charge coverage ratio;

• adjust the events triggering application of the cash dominion provisions of the ABL Credit Agreement, in the absence of an event of default, to be if (i) excess borrowing availability under the ABL Credit Facility (based on the lesser of the commitments thereunder and the borrowing base) falls below the greater of $ 10,000 or 10 % of the lesser of total commitments under the ABL Credit Facility at such time and the borrowing base at such time or (ii) Domestic Availability (as defined in the ABL Credit Agreement) being less than the greater of $ 20,000 or 20 % of the lesser of total commitments under the ABL Credit Facility at such time and the borrowing base at such time, with similar adjustments to the events triggering termination of the application of the cash dominion provisions.

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 $ 120,000 , subject to the limitations described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

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 $ 140,000 .

The ABL Credit Facility matures, subject to extension on terms and conditions set forth in the ABL Credit Agreement, on February 8, 2027.

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 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.

At December 31, 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 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.

At December 31, 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 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.

At December 31, 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

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.

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.

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

At December 31, 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

27 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.

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 Debt Exchange Transactions.

5 unchanged sentences

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

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.

At December 31, 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

Excluding all long-term credit agreements, the Company typically finances its foreign operations with uncommitted short-term seasonal lines of credit arrangements with a number of banks.

Excluding long-term credit agreements, the Company typically finances its foreign operations with uncommitted short-term seasonal lines of credit arrangements with a number of banks.

These operating lines are generally seasonal in nature, typically extending for a term of 180 days to 365 days corresponding to the tobacco crop cycle in that location.

2 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 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.

As of December 31, 2023, the total borrowing capacity under individual foreign seasonal lines of credit range up to $ 160,416 .

As of December 31, 2023, the aggregate amount available for borrowing under the seasonal lines of credit was $ 250,164 .

At December 31, 2023 , the Company was permitted to borrow under foreign seasonal lines of credit up to a total $ 700,260 , subject to limitations under the ABL Credit Agreement and the agreements governing the New Secured Debt.

At December 31, 2023 , $ 976 of cash was held on deposit as a compensating balance.

At December 31, 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 September 30, 2023, the investment limit of this facility was $ 100,000 of trade receivables.

As of December 31, 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 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 of December 31, 2023, the investment limit under the second facility was $ 110,000 of trade receivables.

As of December 31, 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 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.

As of December 31, 2023 and 2022, and March 31, 2023, trade receivables, net in the condensed consolidated balance sheets has been reduced by $ 5,813 , $ 12,280 , and $ 3,193 as a result of the net settlement, respectively.

Refer to " Note 1 5 .

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:

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

December 31, 2023 December 31, 2022 March 31, 2023

Receivables outstanding in facility $ 136,203 $ 270,042 $ 173,979

3 unchanged sentences

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

Six Months Ended

September 30,

Nine Months Ended

Cash proceeds:

4 unchanged sentences

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

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

December 31, 2023 December 31, 2022 March 31, 2023

Amounts guaranteed (not to exceed) $ 63,967 $ 129,837 $ 152,032

3 unchanged sentences

Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing 42 113 12,529

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

(1) Most of the guarantees outstanding at December 31, 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 $ 1,386 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 Company recorded a net gain of $ 1,548 and $ 4,368 from its derivative financial instruments in cost of goods and services sold for the three and nine months ended December 31, 2023, respectively.

The Company recorded a net gain of $ 1,966 and $ 4,676 from its derivative financial instruments in cost of goods and services sold for the three and nine months ended December 31, 2022, respectively.

As of December 31, 2023 and 2022, and March 31, 2023, the Company recorded current derivative assets of $ 0 , $ 678 , and $ 3,970 within other current assets, respectively.

The following summarizes the U.S.

Dollar notional amount of derivative contracts outstanding:

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

December 31, 2023 December 31, 2022 March 31, 2023

Dollar notional outstanding $ — $ 32,000 $ 63,622

1 unchanged sentence

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

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

December 31, 2023 December 31, 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)

5 unchanged sentences

Three Months Ended

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 $ 14,312 $ 200 $ 1,703 $ 37,650 $ 532 $ 1,752

Six Months Ended

September 30, 2023 September 30, 2022

Nine Months Ended

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

5 unchanged sentences

Ending balance $ 14,312 $ 200 $ 1,703 $ 37,650 $ 532 $ 1,752

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.

For the nine months ended December 31, 2023 and 2022, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 1,551 and $ 2,252 , respectively.

Pension and Other Postretirement Benefits

The Company terminated one of its defined benefit pension plans in the U.K.

Pension Plan") during the three-month period ended December 31, 2023.

Pension Plan was over-funded.

During the three-month period ended December 31, 2023, the Company utilized the surplus assets to pay termination fees and received a $ 1,106 cash distribution from the plan termination.

The Company recorded a noncash pension settlement charge of $ 12,008 during the three and nine months ended December 31, 2023, which included the disposition of the U.K.

Pension Plan assets and the reclassification of $ 3,511 unrecognized net pension losses, net of $ 1,170 tax benefit, within accumulated other comprehensive income (loss) into the Company's condensed consolidated statements of operations.

Termination of the U.S.

Pension Plan occurred during the three months ended December 31, 2022.

The Company settled benefits with vested participants that elected a lump sum payout and made a cash contribution of $ 5,300 to fully fund the U.S.

defined benefit pension plan ("U.S.

Pension Plan") liabilities that was used to purchase a group annuity contract to administer payments to the remaining U.S.

Pension Plan participants.

The Company recorded pension settlement charges of $ 0 and $ 2,588 for the three and nine months ended December 31, 2022, respectively, which included the reclassification of $ 1,562 unrecognized net pension gains within accumulated other comprehensive income (loss) into the Company's condensed consolidated statements of operations.

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

At December 31, 2023, the assessment for intrastate trade tax credits taken is $ 2,727 and the total assessment including penalties and interest is $ 11,013 .

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

At December 31, 2023, the assessment for intrastate trade tax credits taken is $ 2,353 and the total assessment including penalties and interest is $ 6,997 .

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 $ 19,329 as of September 30, 2023.

The tax credits have a carrying value of $ 17,068 as of December 31, 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.

2 unchanged sentences

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.

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.

Related Party Transactions

1 unchanged sentence

The following summarizes sale and purchase transactions with related parties:

Three Months Ended Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

2 unchanged sentences

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

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

December 31, 2023 December 31, 2022 March 31, 2023 Location in Condensed Consolidated Balance Sheet

Accounts receivable, related parties $ 50 $ 770 $ 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 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.

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of December 31, 2023 and 2022, and March 31, 2023, includes $ 4,091 , $ 7,649 , 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 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.

Interest expense as presented in the condensed consolidated statements of operations includes $ 10,314 and $ 30,683 for the three and nine months ended December 31, 2023, respectively, and $ 9,264 and $ 25,494 for the three and nine months ended December 31, 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 Six Months Ended

September 30, September 30,

Three Months Ended Nine Months Ended

December 31, December 31,

2023 2022 2023 2022

3 unchanged sentences

Consolidated sales and other operating revenues $ 529,816 $ 655,553 $ 1,631,161 $ 1,507,736

Segment operating income:

Segment operating income (loss):

Leaf $ 49,183 $ 47,268 $ 137,421 $ 94,696

3 unchanged sentences

Consolidated operating income $ 47,759 $ 41,607 $ 130,467 $ 75,695

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

December 31, 2023 December 31, 2022 March 31, 2023

Segment assets:

2 unchanged sentences

Total assets $ 1,601,380 $ 1,630,657 $ 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