What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-06-06 compared with 2023-06-06 · 117 added, 93 removed, 418 unchanged (33% of the section changed)

22 unchanged sentences

Executive Summary

In fiscal year 2023, we experienced the third consecutive year of La Niña weather patterns, which limited tobacco supplies and increased tobacco costs in certain markets.

We utilized our global footprint to offset reduced production in these markets and were able to meet our customers' demand for sustainably grown compliant leaf in a short crop year.

In addition, the Company overcame challenges with inflationary tobacco costs, increasing interest rates, and lingering geopolitical issues by growing revenue for the full year by 16.8% to $1.9 billion, improving gross margin per kilo by 13.0% to $0.61, and accelerating our operating cycle.

We strategically utilized some of the funds generated by increased revenue and improvement in our operating

cycle to partially repay the Company's outstanding indebtedness under the ABL Credit Facility as of March 31, 2023, which provides the Company with increased financial flexibility as we approach the buying cycle.

In February 2023, the Company successfully completed an exchange of its existing long-term debt with varying maturity dates for new long-term debt with maturity dates in 2027.

Our new capital structure addresses approaching maturity dates, provides the Company with increased financial flexibility, and relief from certain restrictive covenants.

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

The Company grew sales and other operating revenues for the year ended March 31, 2024 by 6.1% to $2,032.5 million from $1,914.9 million for the year ended March 31, 2023.

This growth was fueled by an increase in average pricing of 10.5%, despite a 4.4% reduction in kilo volumes sold when compared to fiscal 2023.

Gross margin as a percent of sales in fiscal year 2024 improved to 15.4% compared to 13.6% in fiscal year 2023.

The results obtained in fiscal year 2024 enabled the Company to eliminate certain of its long-term debt, which included the purchase of $77.9 million aggregate principal amount of the 2027 Notes for $60.0 million in March 2024, and the purchase of $10.3 million aggregate principal amount of the Pyxus Term Loans for $9.1 million in May 2024.

Pyxus is a global agricultural company with businesses having more than 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.

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Years Ended March 31, 2024 and 2023

Consolidated* Year Ended March 31, 2023 Year Ended March 31, 2022 Change

(in millions) $ %

Years Ended March 31,

Consolidated* Change

(in millions, except per kilo amounts) 2024 2023 $ %

Sales and other operating revenues $ 2,032.5 $ 1,914.9 117.6 6.1

5 unchanged sentences

Restructuring and asset impairment charges 4.8 4.7 0.1 2.1

Goodwill impairment — 32.2 (32.2) (100.0)

Operating income 137.2 93.8 43.4 46.3

1 unchanged sentence

Loss on pension settlement 12.0 2.6 9.4 **

Debt retirement expense — 2.0 (2.0) (100.0)

(Gain) loss on debt retirement (15.9) — (15.9) **

Interest expense, net 125.6 113.2 12.4 11.0

2 unchanged sentences

Net income attributable to noncontrolling interests 0.5 0.9 (0.4) (44.4)

Net loss attributable to Pyxus International, Inc.

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

$ 2.7 $ (39.1) 41.8 106.9

Sales and other operating revenues $ 1,812.2 $ 1,531.8 $ 280.4 18.3

Product revenue $ 1,912.4 $ 1,812.2 100.2 5.5

Tobacco costs 1,535.3 1,474.0 61.3 4.2

9 unchanged sentences

Processing and other revenues costs of services sold 89.6 64.0 25.6 40.0

Processing and other gross margin 24.4 29.5 (5.1) (17.3)

Processing and other gross margin as a percent of sales 27.6 % 30.9 %

Processing and other gross profit 27.6 24.4 3.2 13.1

Processing and other gross profit as a percent of sales 23.5 % 27.6 %

Sales and other operating revenues $ 2.9 $ 14.3 (11.4) (79.7)

3 unchanged sentences

*Dollar and percentage changes may not calculate exactly due to rounding.

**Not meaningful for comparison purposes.

Sales and other operating revenues increased $117.6 million, or 6.1%, to $2,032.5 million for the year ended March 31, 2024 from $1,914.9 million for the year ended March 31, 2023.

This increase was due to a 16.2% increase in average price per kilo driven by higher tobacco prices and a 1.8% increase in kilo volume primarily from Asia.

This increase was due to a 10.5% increase in average price per kilo driven by higher tobacco prices, partially offset by a 4.4% decrease in kilo volume primarily due to the timing of shipments from Africa.

Cost of goods and services sold increased $66.3 million, or 4.0%, to $1,720.2 million for the year ended March 31, 2024 from $1,653.9 million for the year ended March 31, 2023.

This increase was driven by a 16.7% increase in a verage cost per kilo primarily due to undersupply conditions and inflation.

Gross profit as a percent of sales decreased to 13.6% for the year ended March 31, 2023 from 13.8% for the year ended March 31, 2022.

Average gross profit per kilo increased 13.0% primarily due to product mix in Asia and customer mix in North America.

This increase was driven by a 7.9% increase in average cost per kilo primarily due to undersupply conditions and inflation.

Gross profit as a percent of sales increased to 15.4% for the year ended March 31, 2024 from 13.6% for the year ended March 31, 2023.

Average gross profit per kilo increased 27.9% primarily due to more favorable customer and regional mix and the dilution of fixed costs from increased processing and other revenues.

Selling, general, and administrative expenses increased $9.4 million, or 6.2%, to $160.9 million for the year ended March 31, 2024 from $151.5 million for the year ended March 31, 2023.

This increase was primarily due to increased accrued bonus compensation, costs incurred in conjunction with the Debt Exchange Transactions, the normalization of travel expenses post-COVID, and rising healthcare costs.

These increases were partially offset by lower legal and professional service fees driven by strategic cost cutting initiatives.

Selling, general, and administrative expenses as a percent of sales decreased to 7.9% for the year ended March 31, 2023 from 8.7% for the year ended March 31, 2022.

This decrease was related to increased sales and other operating revenues.

This increase was primarily due to increased accrued bonus compensation and travel expenses.

These increases were partially offset by lower professional service fees driven by strategic cost cutting initiatives.

Operating income of $137.2 million for the year ended March 31, 2024 increased $43.4 million, or 46.3%, from operating income of $93.8 million for the year ended March 31, 2023.

This increase was mainly due to higher leaf sales and other operating revenues and increased average leaf gross margin per kilo.

Other expense, net increased $7.9 million, or 254.8%, to $11.0 million for the year ended March 31, 2023 from $3.1 million for the year ended March 31, 2022.

This increase was primarily due to higher utilization of securitization facilities.

This increase was mainly due to increased average leaf gross margin per kilo.

Loss on pension settlement of $12.0 million for the year ended March 31, 2024 was due to the termination of an over-funded defined benefit pension plan in the U.K.

See " Note 22.

Other Expense, Net " for additional information.

Goodwill impairment charges of $32.2 million for the year ended March 31, 2022 were from the full write-off of the carrying value of goodwill for each of the Company's reporting units.

Pension and Other Postretirement Benefits " to the "Notes to Consolidated Financial Statements" for additional information.

Gain (loss) on debt retirement of $15.9 million for the year ended March 31, 2024 was due to the repurchase of $77.9 million aggregate principal amount of the 2027 Notes for $60.0 million, a 23.0% discount to par.

See " Note 17.

Goodwill and Other Intangibles, Net " for additional information.

Income tax expense increased $21.5 million, or 170.6%, to $34.1 million for the year ended March 31, 2023 from $12.6 million for the year ended March 31, 2022.

This increase was primarily due to $20.8 million of non-recurring expense associated with a valuation allowance for deferred assets recognized in conjunction with the Debt Exchange Transactions.

Debt Arrangements " to the "Notes to Consolidated Financial Statements" for additional information.

Interest expense, net was $125.6 million for the year ended March 31, 2024 and $113.2 million for the year ended March 31, 2023, an increase of $12.4 million, or 11.0%.

This increase was due to higher average balances outstanding and increased variable interest rate costs on seasonal lines of credit.

Income tax expense decreased $6.8 million, or 19.9%, to $27.3 million for the year ended March 31, 2024 from $34.1 million for the year ended March 31, 2023.

This decrease was primarily d ue to $20.8 million of non-recurring expense associated with a valuation allowance for deferred assets recognized in conjunction with the debt exchange transactions completed in February 2023 and the favorable impact of foreign currency.

This decrease was partially offset by increased tax expense from operations and non-recurring uncertain tax benefits reserves.

See " Note 17.

Debt Arrangements " for additional information regarding the debt exchange transactions completed in February 2023.

Debt Arrangements " to the "Notes to Consolidated Financial Statements" for additional information regarding the debt exchange transactions completed in February 2023.

Comparison of the Fiscal Year Ended March 31, 2023 to the Fiscal Year Ended March 31, 2022

For a comparison of our results of operations for the years ended March 31, 2023 to March 31, 2022, see "Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended March 31, 2023 , filed with the SEC on June 6, 2023.

Liquidity and Capital Resources

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ABL Credit Facility

On February 8, 2022, our wholly owned subsidiary, Pyxus Holdings, Inc.

Our wholly owned subsidiary, Pyxus Holdings, Inc.

("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 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 provide for the ongoing working capital and general corporate purposes of the Borrowers, the Company, Pyxus Parent, and their subsidiaries.

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 $100.0 million, subject to the limitations described below in this paragraph.

The ABL Credit Agreement establishes an asset-based revolving credit facility (the "ABL Credit Facility"), the proceeds of which may be used to provide for the ongoing working capital and general corporate purposes of the Borrowers, the Company, Pyxus Parent, and their subsidiaries.

The ABL Credit Facility may be used for revolving credit loans and letters of credit from time to time up to a maximum principal amount of $120.0 million, subject to the limitations described below in this paragraph.

The ABL Credit Facility includes a $20.0 million 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 $140.0 million.

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• applicable reserves.

At March 31, 2023, $75.0 million was available for borrowing under the ABL Credit Facility, after reducing availability by the aggregate borrowings under the ABL Credit Facility of $25.0 million outstanding on that date and the $20.0 million of

Domestic Availability (as defined in the ABL Credit Agreement) required to be maintained.

At March 31, 2024, no borrowings under the ABL Credit Facility were outstanding and $120.0 million was available for borrowing under the ABL Credit Facility.

Weighted average borrowings outstanding under the ABL Credit Facility during the fiscal year ended March 31, 2024 were $48.8 million.

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

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

The outstanding amount under the ABL Credit Facility is recorded as noncurrent as of March 31, 2023.

Borrowings under the ABL Credit Facility bear interest at an annual rate equal to one, three, or six-month reserve-adjusted BSBY Rate plus 300 basis points or 200 basis points above base rate, as applicable, with a fee on unutilized commitments at an annual rate of 25.0 basis points if the outstanding borrowings equal or exceed $60.0 million and 37.5 basis points if the outstanding borrowings are less than $60.0 million.

The ABL Credit Facility matures on February 8, 2027.

As of March 31, 2024, there are no amounts outstanding under the ABL Credit Facility.

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

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Cash Dominion.

Under the terms of the ABL Credit Facility, if (i) an event of default has occurred and is continuing, (ii) excess borrowing availability under the ABL Credit Facility (based on the lesser of the commitments thereunder and the borrowing base) (the "Excess Availability") falls below 10% of the total commitments under the ABL Credit Facility at such time, or (iii) Domestic Availability (as defined in the ABL Credit Agreement) being less than $20.0 million, the ABL Loan Parties will become subject to cash dominion, which will require daily prepayment of loans under the ABL Credit Facility with the cash deposited in certain deposit accounts of the ABL Loan Parties, including concentration accounts, and will restrict the ABL Loan Parties’ ability to transfer cash from their concentration accounts to their disbursement accounts.

Such cash dominion period (a "Dominion Period") shall end when (i) if arising as a result of a continuing event of default, such event of default ceases to exist, (ii) if arising as a result of non-compliance with the Excess Availability threshold, Excess Availability shall be equal to or greater than 10% of the total commitments under the ABL Credit Facility for a period of 30 consecutive days and no event of default is continuing, or (iii) if arising as a result of Domestic Availability being less than $20.0 million, Domestic Availability is greater than $20.0 million for a period of 30 consecutive days and no event of default is continuing.

Under the terms of the ABL Credit Facility, if (i) an event of default has occurred and is continuing, (ii) excess borrowing availability under the ABL Credit Facility (based on the lesser of the commitments thereunder and the borrowing base) (the "Excess Availability") falls below the greater of $10.0 million or 10% of the lesser of total commitments under the ABL Credit Facility at such time and the borrowing base at such time, or (iii) Domestic Availability (as defined in the ABL Credit Agreement) being less than the greater of $20.0 million or 20% of the lesser of total commitments under the ABL Credit Facility at such time and the borrowing base at such time, the ABL Loan Parties will become subject to cash dominion, which will require daily prepayment of loans under the ABL Credit Facility with the cash deposited in certain deposit accounts of the ABL Loan Parties, including concentration accounts, and will restrict the ABL Loan Parties’ ability to transfer cash from their concentration accounts to their disbursement accounts.

Such cash dominion period (a "Dominion Period") shall end when (i) if arising as a result of a continuing event of default, such event of default ceases to exist, (ii) if arising as a result of non-compliance with the Excess Availability threshold, no event of default is continuing and, for a period of 30 consecutive days, Excess Availability is equal to or greater than the greater of $10.0 million or 10% of the lesser of total commitments under the ABL Credit Facility and the borrowing base, or (iii) if arising as a result of Domestic Availability being less than the threshold, no event of default is continuing and, for a period of 30 consecutive days, Domestic Availability is greater than $20.0 million or 20% of the lesser of total commitments under the ABL Credit Facility and the borrowing base.

The ABL Credit Agreement governing the ABL Credit Facility contains (i) a springing covenant requiring that the Company’s fixed charge coverage ratio be no less than 1.10 to 1.00 during any Dominion Period and (ii) a covenant requiring Domestic Availability greater than $20.0 million at all times until audited financial statements for fiscal year ending March 31, 2023 are delivered under the ABL Credit Agreement.

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With respect to alternate base rate loans, accrued interest is payable quarterly in arrears on the last business day of each calendar quarter and, with respect to SOFR loans, accrued interest is payable on the last day of each applicable interest period but no less frequently than every three months.

The Pyxus Term Loan Credit Agreement contains customary representations and warranties, affirmative and negative covenants (subject, in each case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company’s and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness or issue disqualified stock or

preferred stock;

make investments;

5 unchanged sentences

On March 31, 2024, 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.

On March 21, 2024, Pyxus Holdings entered into an agreement (the "Debt Repurchase Agreement") with certain holders of its senior debt which included the right of Pyxus Holdings, at its option, to purchase from such holders $10.3 million aggregate principal amount of the Pyxus Term Loans for $9.1 million, a 12.0% discount to par value, plus accrued and unpaid interest and specified customary fees.

On April 12, 2024, Pyxus Holdings exercised its right to purchase such Pyxus Term Loans.

See " Note 27.

Debt Arrangements " to the "Notes to Consolidated Financial Statements" for additional information.

Related Party Transactions " and " Note 2 9 .

Subsequent Events " to the "Notes to Consolidated Financial Statements" for additional information.

8.50% Senior Secured Notes due 2027

13 unchanged sentences

On March 31, 2024, Pyxus Holdings and the guarantors of the 2027 Notes were in compliance with all covenants under the 2027 Notes Indenture.

Pursuant to the Debt Repurchase Agreement entered into on March 21, 2024, Pyxus Holdings agreed to purchase from the holders of its senior debt party to the Debt Repurchase Agreement $77.9 million aggregate principal amount of the 2027 Notes for $60.0 million, a 23.0% discount to par value, plus accrued and unpaid interest and specified customary fees.

The Debt Repurchase Agreement also included the right of Pyxus Holdings, at its option, to purchase from such holders an additional $34.2 million aggregate principal amount of the 2027 Notes for $26.3 million, a 23.0% discount to par value, plus accrued and unpaid interest and customary fees.

The purchase of $77.9 million aggregate principal amount of the 2027 Notes pursuant to the Debt Repurchase Agreement was completed on March 28, 2024.

On April 12, 2024, Pyxus Holdings exercised its right under the Debt Repurchase Agreement to purchase such additional $34.2 million aggregate principal amount of the 2027 Notes.

See " Note 27.

Debt Arrangements " to the "Notes to Consolidated Financial Statements" for additional information.

Related Party Transactions " and " Note 29.

Subsequent Events " to the "Notes to Consolidated Financial Statements" for additional information.

Guarantees and Collateral

3 unchanged sentences

In addition, certain assets of the Specified Intabex Obligors (which were pledged as collateral for the DDTL Term Loans) are pledged as collateral to secure the Intabex Term Loans (the "Intabex Collateral") but do not secure the 2027 Notes, the Pyxus Term Loans or obligations under the ABL Credit Agreement.

On March 27, 2024, Alliance One International Tabak B.V.

was merged with and into Intabex.

The Senior Secured Debt Obligors’ obligations under the ABL Credit Agreement are secured by (i) a first-priority senior lien the ABL Priority Collateral (as defined in the ABL/New Secured Debt Intercreditor Agreement (as defined below)), which includes certain accounts receivable and inventory and certain related intercompany notes, cash, deposit accounts, related general intangibles and instruments, certain other related assets and proceeds of the foregoing of the Senior Secured Debt Obligors, and (ii) a junior-priority lien on substantially all assets of the Senior Secured Debt Obligors other than certain exclusions and the ABL Priority Collateral.

1 unchanged sentence

The Intabex Term Loans are further secured by a first-priority lien on the Intabex Collateral.

The obligations under the New Secured Debt share a single lien, held by Alter Domus, as senior collateral agent (the "Senior Collateral Agent"), on the Collateral (as defined below) subject to the payment waterfall pursuant to the intercreditor

arrangements described below.

See " Note 17.

7 unchanged sentences

The ABL Credit Facility is not secured by real property.

New Secured Debt Intercreditor Agreement .

Secured Debt Intercreditor Agreement .

On February 6, 2023, the New Secured Debt Obligors, together with the representative for the holders of the New Secured Debt and the Senior Collateral Agent, entered into the Intercreditor and Collateral Agency Agreement, dated as of February 6, 2023 (the "New Secured Debt Intercreditor Agreement"), pursuant to which the Senior Collateral Agent, serves as joint collateral agent for the benefit of the holders of the 2027 Notes, the Pyxus Term Loans and the Intabex Term Loans with respect to all common collateral securing such indebtedness (the "Collateral";

which excludes Intabex Collateral).

The New Secured Debt Intercreditor Agreement provides that Collateral or proceeds thereof received in connection with or upon the exercise of secured creditor remedies will be distributed (subject to the provisions described in the next paragraph) first to holders of the New Secured Debt on a pro rata basis based on the aggregate principal amount of each class of New Secured Debt, and then to holders of future junior debt secured by such Collateral on a pro rata basis based on the aggregate principal amount of each class of future junior debt (and in each case permitted refinancing indebtedness thereof).

New Secured Debt, and then to holders of future junior debt secured by such Collateral on a pro rata basis based on the aggregate principal amount of each class of future junior debt (and in each case permitted refinancing indebtedness thereof).

Exercise of rights and remedies against the Collateral and certain rights in a bankruptcy or insolvency proceeding (including the right to object to debtor-in-possession financing or to credit bid) by the Senior Collateral Agent will be controlled first by the holders of a majority in principal amount of the New Term Loans (including, in any event, each holder holding at least 20.0% of the New Term Loans as of February 6, 2023, provided such holder holds at least 15.0% of the New Term Loans as of the date of determination), second, after repayment in full of the New Term Loans, by the holders of a majority in principal amount of the 2027 Notes and last, after repayment in full of the New Term Loans and the 2027 Notes, by holders of a majority in principal amount of any future junior debt secured by the Collateral.

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The DDTL Credit Agreement, its predecessor agreement and the amendments thereto, any and all borrowings thereunder, the related guaranty transactions, the Support Agreement, 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.

The holders of senior debt that are parties to the Debt Repurchase Agreement entered into on March 21, 2024 are funds affiliated with the Monarch Investor and of which the Monarch Investor is the investment advisor.

The Debt Repurchase Agreement and the transactions contemplated thereby, including the exercise by Pyxus Holdings of its right to purchase the Pyxus Term Loans and additional 2027 Notes thereunder, 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.

See " Note 17.

Debt Arrangements " to the "Notes to Consolidated Financial Statements" for additional information.

In conjunction with the Notes Exchange, Pyxus Holdings received consents from requisite holders of 2024 Notes to amend the 2024 Notes Indenture, the 2024 Notes and the related intercreditor and security documents to, among other things, (i) eliminate most of the restrictive covenants and certain of the affirmative covenants in the 2024 Notes Indenture, (ii) eliminate the change of control repurchase obligation in the 2024 Notes Indenture, (iii) subordinate the 2024 Notes in right of payment to existing and future senior indebtedness (including the New Secured Debt), (iv) eliminate certain events of default and (v) release all of the collateral securing the 2024 Notes.

Debt Arrangements " and " Note 27.

Related Party Transactions " to the "Notes to Consolidated Financial Statements" for additional information.

most of the restrictive covenants and certain of the affirmative covenants in the 2024 Notes Indenture, (ii) eliminate the change of control repurchase obligation in the 2024 Notes Indenture, (iii) subordinate the 2024 Notes in right of payment to existing and future senior indebtedness (including the New Secured Debt), (iv) eliminate certain events of default and (v) release all of the collateral securing the 2024 Notes.

On February 6, 2023, the relevant parties to the 2024 Notes Indenture entered into the Second Supplemental Indenture, dated as of February 6, 2023 (the "2024 Notes Supplemental Indenture"), to the 2024 Notes Indenture, pursuant to which the 2024 Notes Indenture, the 2024 Notes and the related intercreditor and security documents were amended to effect these changes.

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At March 31, 2024, the total borrowing capacity under individual foreign seasonal lines of credit range up to $155.0 million.

At March 31, 2023, the aggregate outstanding borrowings of the Company under these seasonal credit lines was approximately $365.1 million and approximately $332.3 million was available for borrowing under these seasonal credit lines, subject to limitations as provided under the ABL Credit Agreement and the agreements governing the New Secured Debt.

At March 31, 2024, the aggregate outstanding borrowings of the Company under these seasonal credit lines, including letters of credit, was approximately $469.5 million and approximately $307.2 million was available for borrowing under these seasonal credit lines, subject to limitations as provided under the ABL Credit Agreement and the agreements governing the New Secured Debt.

The weighted average variable interest rate for these seasonal lines of credit for the year ended March 31, 2024 was 9.8%.

2 unchanged sentences

Seasonal liquidity beyond cash flow from operations is provided by our foreign seasonal lines of credit, advances from customers, and sales of accounts receivable.

For the years ended March 31, 2023 and 2022, our average short-term borrowings, aggregated peak short-term borrowings outstanding, and weighted-average interest rate on short-term borrowings were as follows:

(in millions) March 31, 2023 March 31, 2022

For the year ended March 31, 2024, our average short-term borrowings, quarter-end peak short-term borrowings outstanding, and weighted-average interest rate on short-term borrowings were as follows:

(in millions) 2024

Average short-term borrowings $ 494.8

$ 456.4 $ 393.1

Aggregated peak short-term borrowings outstanding (1)

$ 690.6 $ 559.4

Quarter-end peak short-term borrowings outstanding $ 553.1

Weighted-average interest rate on short-term borrowings 9.8 %

(1) The Company utilized borrowings under the DDTL Facility during the year ended March 31, 2022 to fund a portion of its tobacco purchasing commitments.

Aggregated peak borrowings for the year ended March 31, 2023 occurred during the first q uarter, which represents peak timing for green tobacco purchases and repayments being made in Africa and South America, due to increased borrowing capacity in certain markets.

Quarter-end peak borrowings for the year ended March 31, 2024 occurred during the first quarter, which represented peak timing for green tobacco purchases and repayments being made in both Africa and South America.

The increase in average and peak borrowings is due to the increase in the average cost per kilo of tobacco as a result of undersupply conditions and inflation.

Borrowings during the prior year and in the current year were repaid with cash provided by operating activities.

1 unchanged sentence

Debt Arrangements " to the "Notes to Consolidated Financial Statements" for additional information.

The following summarizes our total borrowing capacity at March 31, 2023 and 2022 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:

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:

March 31, 2024 March 31, 2023

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

(in millions) March 31, 2023 March 31, 2022

Notes payable to banks $ 382.5 $ 378.6

(in millions) 2024 2023

Notes payable $ 499.3 $ 382.5

Current portion of long-term debt (1)

3 unchanged sentences

Net debt $ 924.7 $ 864.3

(1) The decrease in the current portion of long-term debt is due to the refinancing of the DDTL Term Loans on a long-term basis.

(2) The increase in long-term debt is primarily due to the refinancing of the DDTL Term Loans on a long-term basis, partially offset by net repayments on the ABL Credit Facility.

(3) The decrease in cash and cash equivalents is driven by net repayments on the ABL Credit Facility.

(1) The increase in the current portion of long-term debt is due to the 10% Notes due in August 2024.

(2) Includes amounts outstanding under the ABL Credit Facility.

Weighted average borrowings outstanding under the ABL Credit Facility were $48.8 million for the fiscal year ended March 31, 2024.

(3) The decrease in cash and cash equivalents is driven by the partial repurchase of certain long-term debt in March 2024, and net repayments on the ABL Credit Facility.

Working Capital

The following summarizes our working capital:

(in millions except for current ratio) March 31, 2023 March 31, 2022 $ %

March 31, Change

(in millions except for current ratio) 2024 2023 $ %

Cash, cash equivalents, and restricted cash $ 99.8 $ 138.9 (39.1) (28.1)

4 unchanged sentences

Total current assets* $ 1,310.2 $ 1,220.6 89.6 7.3

Notes payable to banks $ 382.5 $ 378.6 3.9 1.0

Notes payable $ 499.3 $ 382.5 116.8 30.5

Accounts payable 181.2 170.3 10.9 6.4

7 unchanged sentences

*Amounts may not equal column totals due to rounding.

Working capital decreased $7.7 million, or 1.5%, to $505.5 million as of March 31, 2023 from $513.2 million as of March 31, 2022 due to a decrease in cash, cash equivalents, and restricted cash and a decrease in accounts receivable through higher utilization of securitization programs.

Higher collections of cash through securitization facilities enabled us to purchase more expensive green tobacco inventories without significantly increasing borrowings under our seasonal foreign lines of credit, and the ability to partially repay the outstanding indebtedness under the ABL Credit Facility, which is classified as long-term debt.

Current liabilities decreased mainly due to the refinancing of the DDTL Term Loans on a long-term basis.

**Not meaningful for comparison purposes.

Working capital declined $100.5 million, or 19.9%, to $405.0 million as of March 31, 2024 from $505.5 million as of March 31, 2023, due to higher utilization of cash for the partial repurchase of long-term debt and to fully pay down the ABL, and higher borrowings on our foreign seasonal credit lines that were used to accelerate the purchase of more expensive green tobacco when compared to the prior year.

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

(in millions) March 31, 2023 March 31, 2022

(in millions) 2024 2023

Committed $ 570.4 $ 479.4

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Total processed tobacco $ 585.3 $ 498.4

Processed tobacco decreased 19.2 million, or 3.7%, to $498.4 million as of March 31, 2023 from $517.6 million as of March 31, 2022 due to undersupply conditions in the global tobacco market and higher sales of inventories.

Processed tobacco increased $86.9 million, or 17.5%, to $585.3 million as of March 31, 2024 from $498.4 million as of March 31, 2023 primarily due to higher tobacco prices and the timing of shipments from Africa.

Uncommitted inventories remain at low levels as undersupply conditions persist in the global tobacco market.

See " Note 1.

Basis of Presentation and Summary of Significant Accounting Policies " and " Note 9.

Inventories, Net " to the "Notes to Consolidated Financial Statements" for further information.

Inventories, Net " to the "Notes to Consolidated Financial Statements" for additional information.

Sources and Uses of Cash

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We will continue to monitor and hedge foreign currency costs, as needed.

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

(in millions) Year Ended March 31, 2023 Year Ended March 31, 2022

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

Years Ended March 31,

(in millions) 2024 2023 2022

Net income (loss) $ 3.2 $ (38.2) $ (82.1)

Trade and other receivables (167.6) (111.9) (261.9)

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Net cash provided by investing activities $ 159.4 $ 154.9 $ 181.2

Net proceeds of short-term borrowings 5.2 9.2

Proceeds from DDTL facility — 117.6

Net proceeds from short-term borrowings 122.5 5.2 9.2

Net (repayment of) proceeds from long-term borrowings (60.3) 0.2 (1.4)

Net (repayment of) proceeds from revolving loan facilities (25.0) (65.0) 21.9

Other (11.6) (23.4) 93.6

Net cash (used in) provided by financing activities $ (83.0) $ 123.3

Increase (decrease) from exchange rate changes on cash 3.5 (2.1)

Net cash provided by (used in) financing activities $ 25.6 $ (83.0) $ 123.3

Effect of exchange rate changes on cash (9.2) 3.5 (2.1)

(Decrease) increase in cash, cash equivalents, and restricted cash* $ (39.1) $ (62.4) $ 103.6

The change in cash, cash equivalents, and restricted cash decreased $166.0 million for the fiscal year ended March 31, 2023 compared to the fiscal year ended March 31, 2022.

The decrease was primarily from net repayments made on the outstanding indebtedness under the ABL Credit Facility in the current fiscal year, and proceeds from the DDTL Facility during the prior fiscal year that did not reoccur.

These decreases were partially offset by improvements in trade accounts receivable due to higher sales and higher utilization of securitization facilities, which resulted in less cash used by operating activities.

*Amounts may not equal totals due to rounding.

The change in cash, cash equivalents, and restricted cash increased $23.3 million for the fiscal year ended March 31, 2024 compared to the fiscal year ended March 31, 2023.

The increase was primarily from higher borrowings on foreign seasonal lines of credit for purchases of more expensive green tobacco and an increase in collections from beneficial interests due to higher sales in the current year.

These increases were partially offset by the repurchase of certain long-term debt and the pay down of the ABL Credit Facility at March 31, 2024.

Planned Capital Expenditures

We are estimating $21.1 million i n capital investments for fiscal 2024 for routine replacement of equipment, as well as investments in assets that will add value to the customer or increase efficiency.

We are estimating $30.3 million in capital investments for fiscal 2025, which includes expenditures expected to be funded through government assistance, for routine replacement of equipment, as well as investments in assets that will add value to the customer or increase efficiency.

Securitized Receivables

We sell trade receivables to unaffiliated financial institutions under multiple revolving trade accounts receivable securitization facilities.

Under the first and second programs, we receive a discount from the face value of the receivable sold, less contractual dilutions which limit the amount that may be outstanding from any one particular customer and insurance reserves that also have the effect of limiting the risk attributable to any one customer.

Under the first and second programs, we receive a discount from the face value of the receivable sold, less contractual

dilutions which limit the amount that may be outstanding from any one particular customer and insurance reserves that also have the effect of limiting the risk attributable to any one customer.

Our beneficial interests in the first and second facilities is subordinate to the purchaser of the receivables.

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Aggregate Contractual Obligations and Commitments

The following summarizes our contractual cash obligations and other commercial commitments as of March 31, 2023 :

The following summarizes our contractual obligations and other commercial commitments as of March 31, 2024 :

Payments / Expirations by Fiscal Year

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Commercial Commitments $ 2,025.7 $ 1,273.1 $ 149.6 $ 563.9 $ 39.1

(1) On May 23, 2023, the ABL Credit Agreement was amended to extend the maturity of the ABL Credit Facility to February 8, 2027.

(1) On May 31, 2024, the Company paid approximately $9.4 million to retire approximately $10.3 million of aggregate principal amount of the Pyxus Term Loans, and included payment for accrued and unpaid interest through the day prior to payment.

The Pyxus Term Loans are included within long-term debt obligation as of March 31, 2024.

(2) Short-term debt obligations consist of the current portion of long-term debt and our seasonal foreign credit lines.

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The variable rate used in the projections is the rate that was being charged on our variable rate debt as of March 31, 2024.

In conjunction with the May 31, 2024 Pyxus Term Loans debt retirement, approximately $0.3 million represented payment for accrued and unpaid interest.

Tobacco and Other Purchase Obligations

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Other purchase obligations consist primarily of purchase commitments of agricultural material.

Tobacco and other purchase obligations increased $143.1 million, or 27.8%, from $515.5 million to $658.6 million primarily due to higher tobacco prices.

Tobacco and other purchase obligations decreased $82.5 million, or 12.5%, from $658.6 million to $576.1 million primarily due to a shift in jurisdictional mix of inventory, driven by the impact of El Nino in South America.

Amounts Guaranteed for Tobacco Suppliers

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We are subject to income tax laws in the countries in which we do business through wholly owned subsidiaries and through affiliates.

We regularly review of the income tax requirements of each of our operations, file appropriate returns, and make appropriate income tax planning analyses.

We regularly evaluate the status of the accumulated unremitted earnings of each of our foreign subsidiaries.

Our ability to repatriate unremitted foreign earnings may be limited by local legal restrictions and foreign exchange controls in certain jurisdictions in which we operate.

If the undistributed earnings are needed in the U.S., we may be required to pay state income and/or foreign local withholding taxes upon repatriation.

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Management considers an accounting estimate critical if it:

(i) requires us to make judgments and estimates about matters that are inherently uncertain, (ii) it is important to an understanding of our financial condition or operating results, and (iii) has a material impact to the financial statements.

(i) requires us to make judgments

and estimates about matters that are inherently uncertain, (ii) it is important to an understanding of our financial condition or operating results, and (iii) has a material impact to the financial statements.

We base our estimates on currently available information, historical experience, and various other assumptions we believe to be reasonable under the circumstances.

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Changes in assumptions are made if there are significant deviations or if future expectations change significantly.

Based upon anticipated changes in assumptions, pension and postretirement expense is expected to decrease by $3.1 million in the year ended March 31, 2024 as compared to March 31, 2023.

The cash contribution to our employee benefit plans during the year ended March 31, 2023 was $11.3 million and is expected to be $7.0 mil lion in fiscal 2024.

The Company terminated one of its defined benefit pension plans in the United Kingdom ("U.K.

Pension Plan") during the year ended March 31, 2024.

Based upon anticipated changes in assumptions, excluding the termination of the U.K.

Pension Plan, pension and postretirement expense for the year ending March 31, 2025 is expected to be consistent with the year ended March 31, 2024.

The contribution to our employee benefit plans during the year ended March 31, 2024 was $4.4 million and is expected to be $4.9 mil lion in fiscal 2025.

The effect of actual results differing from our assumptions are accumulated and amortized over future periods.

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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-K

Item 7. Management’s Discussion and Analysis