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Item 1. Financial Statements

2024-11-12 compared with 2024-08-07 · 161 added, 132 removed, 486 unchanged (38% 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) 2024 2023 2024 2023

11 unchanged sentences

(Income) loss from unconsolidated affiliates, net ( 585 ) ( 2,111 ) ( 3,148 ) 47

Net income 4,952 770

Net income (loss) attributable to noncontrolling interests 310 ( 34 )

Net income attributable to Pyxus International, Inc.

Net (loss) income ( 3,273 ) 7,896 1,679 8,666

Net (loss) income attributable to noncontrolling interests ( 46 ) ( 199 ) 264 ( 233 )

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

$ ( 3,227 ) $ 8,095 $ 1,415 $ 8,899

Earnings per share:

(Loss) earnings per share:

Basic $ ( 0.12 ) $ 0.32 $ 0.06 $ 0.36

6 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended

Condensed Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended Six Months Ended

September 30, September 30,

(in thousands) 2024 2023 2024 2023

Net income $ 4,952 $ 770

Other comprehensive (loss) income, net of tax:

Net (loss) income $ ( 3,273 ) $ 7,896 $ 1,679 $ 8,666

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 278 ( 1,545 ) 821 ( 838 )

Cash flow hedges 1,266 ( 1,000 ) ( 971 ) ( 138 )

Total other comprehensive (loss) income, net of tax ( 1,694 ) 1,569

Total comprehensive income 3,258 2,339

Comprehensive income (loss) attributable to noncontrolling interests 310 ( 34 )

Comprehensive income attributable to Pyxus International, Inc.

Total other comprehensive income (loss), net of tax 1,544 ( 2,545 ) ( 150 ) ( 976 )

Total comprehensive (loss) income ( 1,729 ) 5,351 1,529 7,690

Comprehensive (loss) income attributable to noncontrolling interests ( 46 ) ( 199 ) 264 ( 233 )

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

$ ( 1,683 ) $ 5,550 $ 1,265 $ 7,923

3 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands) June 30, 2024 June 30, 2023 March 31, 2024

(in thousands) September 30, 2024 September 30, 2023 March 31, 2024

Current assets

38 unchanged sentences

Authorized shares ( 250,000 for all periods)

Issued and outstanding shares ( 25,000 for all periods)

Issued and outstanding shares ( 24,608 , 25,000 and 25,000 )

$ 392,421 $ 390,290 $ 389,789

12 unchanged sentences

Accumulated Other Comprehensive Income

(in thousands) Common

Stock Retained

(in thousands) Common Stock Retained

Deficit Currency Translation Adjustment Pensions,

6 unchanged sentences

Balance, June 30, 2024 $ 392,820 $ ( 250,649 ) $ ( 5,149 ) $ 12,766 $ ( 1,525 ) $ 4,849 $ 153,112

Net loss — ( 3,227 ) — — — ( 46 ) ( 3,273 )

Dividends — — — — — ( 225 ) ( 225 )

Equity-based compensation 601 — — — — — 601

Share repurchases ( 1,000 ) — — — — — ( 1,000 )

Other comprehensive income, net of tax — — 278 — 1,266 — 1,544

Balance, September 30, 2024 $ 392,421 $ ( 253,876 ) $ ( 4,871 ) $ 12,766 $ ( 259 ) $ 4,578 $ 150,759

Balance, March 31, 2023 $ 390,290 $ ( 257,954 ) $ ( 6,392 ) $ 8,335 $ 3,572 $ 3,979 $ 141,830

2 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

See "Notes to Condensed Consolidated Financial Statements"

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

September 30,

(in thousands) 2024 2023

34 unchanged sentences

Effect of exchange rate changes on cash ( 2,138 ) ( 2,230 )

Decrease in cash, cash equivalents, and restricted cash ( 10,690 ) ( 33,408 )

Increase (decrease) in cash, cash equivalents, and restricted cash 31,139 ( 21,239 )

Cash and cash equivalents at beginning of period 92,569 136,733

3 unchanged sentences

Cash paid for income taxes, net $ 14,236 $ 6,604

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

Cash paid for interest, net 51,966 43,881

9 unchanged sentences

Revenue Recognition

Earnings Per Share

(Loss) Earnings Per Share

Restricted Cash

11 unchanged sentences

Segment Information

Subsequent Events

Basis of Presentation and Summary of Significant Accounting Policies

31 unchanged sentences

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

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses , which requires a tabular disclosure of relevant expense captions into prescribed natural expense categories.

The annual disclosure requirements are effective for the Company’s fiscal year ending March 31, 2028, and the interim period disclosure requirements are effective beginning April 1, 2028.

Early adoption is permitted.

This new rule will result in additional disclosures within the footnotes to the financial statements, and is not expected to have an impact on the Company’s financial condition, results of operations, or cash flows.

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

Three Months Ended Six Months Ended

September 30, September 30,

2024 2023 2024 2023

Product revenue $ 515,813 $ 585,801 $ 1,105,030 $ 1,036,739

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,

2024 2023 2024 2023

Balance, beginning of period $ ( 24,035 ) $ ( 24,440 ) $ ( 23,940 ) $ ( 24,730 )

7 unchanged sentences

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 three-month interim periods reported were an annual period.

The effective tax rate for the three months ended June 30, 2024 and 2023 was 71.9 % and 47.5 %, respectively.

For the three months ended June 30, 2024, the difference between the Company’s effective rate and the 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, 2024 and 2023 was 111.6 % and 53.9 %, respectively.

For the six months ended September 30, 2024, the difference between the Company’s effective rate and the U.S.

statutory rate of 21.0% is primarily due to U.S.

taxation of foreign earnings partially offset by foreign tax credits and additional unrecognized tax benefits reserves.

Earnings Per Share

The calculations of basic and diluted earnings per share are based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding, respectively.

taxation of foreign earnings, partially offset by foreign tax credits and increases in the Company's deferred tax valuation allowances.

The long-term liability for unrecognized tax benefits as of September 30, 2024 was $ 12,510 compared to $ 20,170 as of September 30, 2023.

The decrease was primarily driven by tax settlements in Africa.

(Loss) Earnings Per Share

The calculations of basic and diluted (loss) earnings per share are based on net (loss) income divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding, respectively.

Under the treasury stock method, restricted stock units will have a dilutive effect when the respective period's average market price of the Company's common stock exceeds the assumed exercise proceeds and the average amount of cost not yet recognized.

Performance based stock units are included in diluted earnings per share if the performance targets have been met at the end of the reporting period.

Share-based payment awards that provide contingently issuable shares upon a performance or market condition are included in basic and diluted earnings per share only if the condition is met as of the end of the reporting period.

The following summarizes the computation of earnings per share:

Three Months Ended

Net income attributable to Pyxus International, Inc.

Performance based stock units are included in diluted (loss) earnings per share if the performance targets have been met at the end of the reporting period.

Share-based payment awards that provide contingently issuable shares upon a performance or market condition are included in basic and diluted (loss) earnings per share only if the condition is met as of the end of the reporting period.

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

Three Months Ended Six Months Ended

September 30, September 30,

2024 2023 2024 2023

Basic weighted average shares outstanding (1)

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

$ ( 3,227 ) $ 8,095 $ 1,415 $ 8,899

Basic weighted average shares outstanding 25,825 25,000 25,683 25,000

Dilutive equity awards (1)

Diluted weighted average shares outstanding 25,825 25,000 25,683 25,000

Earnings per share:

(Loss) earnings per share:

Basic $ ( 0.12 ) $ 0.32 $ 0.06 $ 0.36

Diluted $ ( 0.12 ) $ 0.32 $ 0.06 $ 0.36

(1) For the three months ended June 30, 2024, the basic weighted average shares outstanding are adjusted to include 461 weighted average shares outstanding, representing the underlying shares associated with the time-vesting restricted stock units granted prior to May 10, 2024 that were modified on such date to remove the market condition.

Refer to " Note 17.

Equity-Based Compensation " for additional information.

(2) For the three months ended June 30, 2024, the weighted average number of outstanding restricted stock units not included in the computation of diluted earnings per share because their effect would be antidilutive is 17 .

(1) For the three and six months ended September 30, 2024, the weighted average number of outstanding restricted stock units not included in the computation of diluted earnings per share because their effect would be antidilutive is 96 and 82 , respectively.

Restricted Cash

The following summarizes the composition of restricted cash:

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Compensating balance for short-term borrowings $ 542 $ 516 $ 516

5 unchanged sentences

The following summarizes the composition of inventories, net:

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Processed tobacco $ 750,552 $ 646,757 $ 585,280

4 unchanged sentences

Equity Method Investments

The following summarizes the Company's equity method investments as of June 30, 2024:

The following summarizes the Company's equity method investments as of September 30, 2024:

Investee Name Location Primary Purpose Ownership Percentage Basis Difference (1)

3 unchanged sentences

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

China Brasil Tabaco Exportadora SA Brazil Purchase and process tobacco 49 % 43,000

China Brasil Tabacos Exportadora S.A.

Brazil Purchase and process tobacco 49 % 43,000

Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş.

2 unchanged sentences

Produce flavor formulations and consumable e-liquids 50 % 4,589

Siam Tobacco Export Company Thailand Purchase and process tobacco 49 % ( 6,098 )

Siam Tobacco Export Corporation Ltd.

Thailand Purchase and process tobacco 49 % ( 6,098 )

(1) Basis differences for the Company's equity method investments were due to fair value adjustments recorded during fiscal 2021.

The following summarizes financial information for these equity method investments:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2024 2023 2024 2023

Statement of operations:

1 unchanged sentence

Gross profit 12,528 12,173 19,715 19,359

Net income (loss) 5,239 ( 3,854 )

June 30, 2024 June 30, 2023 March 31, 2024

Net income 1,182 5,010 6,421 1,156

September 30, 2024 September 30, 2023 March 31, 2024

Balance sheet:

7 unchanged sentences

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

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Investments in variable interest entities $ 97,673 $ 80,067 $ 94,609

3 unchanged sentences

The gross carrying amount and accumulated amortization of intangible assets consist of the following:

June 30, 2024

September 30, 2024

Weighted Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Intangible Assets, Net

4 unchanged sentences

Total $ 49,859 $ ( 18,272 ) $ 31,587

June 30, 2023

September 30, 2023

Weighted Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Intangible Assets, Net

12 unchanged sentences

The following summarizes amortization expense for definite-lived intangible assets:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2024 2023 2024 2023

Amortization expense $ 1,140 $ 1,160 $ 2,292 $ 2,321

1 unchanged sentence

The following summarizes debt and notes payable:

(in thousands) Interest Rate June 30, 2024 June 30, 2023 March 31, 2024

(in thousands) Interest Rate September 30, 2024 September 30, 2023 March 31, 2024

Senior secured credit facilities:

21 unchanged sentences

Letters of credit $ 7,785 $ 6,783 $ 5,070

(1) Weighted average rate for the trailing twelve months ended June 30, 2024 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 10.0 % Notes due 2024 outstanding of $ 20,328 is net of a debt discount of $ 63 .

Total repayment at maturity is $ 20,391 .

(1) Weighted average rate for the trailing twelve months ended September 30, 2024 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) Balance of $ 145,445 is net of a debt discount of $ 2,894 .

15 unchanged sentences

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 .

At June 30, 2024, the Borrowers and the parent guarantors under the ABL Credit Agreement were in compliance with the covenants under the ABL Credit Agreement.

At September 30, 2024, 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, 2024.

At June 30, 2024, 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, 2024, 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

On February 6, 2023, Pyxus Holdings entered into the Pyxus Term Loan Credit Agreement, dated as of February 6, 2023 (the "Pyxus Term Loan Credit Agreement"), by and among, Pyxus Holdings, the guarantors party thereto, the lenders party thereto and Alter Domus, as administrative agent and senior collateral agent, to establish a term loan credit facility in an aggregate principal amount of approximately $ 130,550 (the "Pyxus Credit Facility")., under which term loans in the full aggregate principal amount of the Pyxus Credit Facility (the "Pyxus Term Loans" and, together with the Intabex Term Loans, the "New Term Loans") were deemed made in exchange for certain outstanding term debt of Pyxus Holdings and applicable accrued and unpaid PIK interest thereon.

On February 6, 2023, Pyxus Holdings entered into the Pyxus Term Loan Credit Agreement, dated as of February 6, 2023 (the "Pyxus Term Loan Credit Agreement"), by and among, Pyxus Holdings, the guarantors party thereto, the lenders party thereto and Alter Domus, as administrative agent and senior collateral agent, to establish a term loan credit facility in an aggregate principal amount of approximately $ 130,550 (the "Pyxus Credit Facility"), under which term loans in the full aggregate principal amount of the Pyxus Credit Facility (the "Pyxus Term Loans") were deemed made in exchange for certain outstanding term debt of Pyxus Holdings and applicable accrued and unpaid PIK interest thereon.

The Pyxus Term Loans bear interest, at Pyxus Holdings’ option, at either (i) a term SOFR rate (subject to a floor of 1.5 %) plus 8.0 % per annum or (ii) an alternate base rate plus 7.0 % per annum.

1 unchanged sentence

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, 2024.

At June 30, 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.

At September 30, 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.

8.50 % Senior Secured Notes due 2027

Pursuant to an exchange offer 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") 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.

The 2027 Notes bear interest at a rate of 8.5 % per annum, which interest is computed on the basis of a 360-day year comprised of twelve 30-day months.

The 2027 Notes bear interest at a rate of 8.5 % per annum, which interest is computed on the basis of a 360-

day year comprised of twelve 30-day months.

The 2027 Notes are stated to mature on December 31, 2027.

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, 2024.

At June 30, 2024, Pyxus Holdings and the guarantors of the 2027 Notes were in compliance with all covenants under the 2027 Notes Indenture.

At September 30, 2024, Pyxus Holdings and the guarantors of the 2027 Notes were in compliance with all covenants under the 2027 Notes Indenture.

Related Party Transactions

6 unchanged sentences

On May 31, 2024, Pyxus Holdings completed the purchase of $ 10,345 of aggregate principal amount of the Pyxus Term Loans for a total of $ 9,435 (including accrued and unpaid interest).

On August 2, 2024, Pyxus Holdings completed the purchase of $ 34,191 of aggregate principal amount of the 2027 Notes for a total of $ 26,707 (including accrued and unpaid interest).

The Debt Repurchase Agreement and the transactions contemplated 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.

Other Outstanding Debt

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.

The 2024 Notes bear interest at a rate of 10.0 % per year, payable semi-annually in arrears in cash on February 15 and August 15 of each year.

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

At June 30, 2024, 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.

The 2024 Notes bore interest at a rate of 10.0 % per year, payable semi-annually in arrears in cash on February 15 and August 15 of each year.

On August 26, 2024, upon maturity of the 2024 Notes, Pyxus Holdings paid $ 20,442 , which included $ 51 for accrued and unpaid interest, to retire the 2024 Notes.

Foreign Seasonal Lines of Credit

5 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, 2024, the total borrowing capacity under individual foreign seasonal lines of credit range up to $ 152,600 .

As of June 30, 2024, the aggregate amount available for borrowing under the seasonal lines of credit was $ 169,703 .

At June 30, 2024 , the Company was permitted to borrow under foreign seasonal lines of credit up to a total $ 815,646 , subject to limitations under the ABL Credit Agreement and the agreements governing the Intabex Term Loans, the Pyxus Term Loans and the 2027 Notes.

At June 30, 2024 , $ 542 of cash was held on deposit as a compensating balance.

At June 30, 2024, the Company, and its subsidiaries, were in compliance with the covenants associated with its short-term seasonal lines of credit.

As of September 30, 2024, the total borrowing capacity under individual foreign seasonal lines of credit range up to $ 170,000 .

As of September 30, 2024, the aggregate amount available for borrowing under the seasonal lines of credit was $ 175,431 .

At September 30, 2024, the Company was permitted to borrow under foreign seasonal lines of credit up to a total $ 885,218 , subject to limitations under the ABL Credit Agreement and the agreements governing the Intabex Term Loans, the Pyxus Term Loans and the 2027 Notes.

At September 30, 2024 , $ 542 of cash was held on deposit as a compensating balance.

At September 30, 2024, the Company, and its subsidiaries, were in compliance with the covenants associated with its short-term seasonal lines of credit.

Securitized Receivables

6 unchanged sentences

Servicing fees are recorded as a reduction of selling, general, and administrative expenses within the condensed consolidated statements of operations.

As of June 30, 2024, the investment limit of this facility was $ 120,000 of trade receivables.

As of September 30, 2024, the investment limit of this facility was $ 120,000 of trade receivables.

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

1 unchanged sentence

Although the Company continues to service, administer, and collect the receivables on behalf of the unaffiliated financial institution, the Company does not receive a servicing fee, and as a result, has established a servicing liability based upon unobservable inputs, primarily discounted cash flow.

As of June 30, 2024, the investment limit under the second facility was $ 130,000 of trade receivables.

As of September 30, 2024, the investment limit under the second facility was $ 130,000 of trade receivables.

As servicer for the Finacity Facility and the second facility, 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, 2024 and 2023, and March 31, 2024, trade receivables, net in the condensed consolidated balance sheets has been reduced by $ 8,219 , $ 908 , and $ 15,036 as a result of the net settlement, respectively.

As of March 31, 2024, accrued expenses and other current liabilities in the consolidated balance sheets includes $ 10,279 of net payables for the Finacity Facility.

As of September 30, 2024 and 2023, and March 31, 2024, trade receivables, net in the condensed consolidated balance sheets has been reduced by $ 11,093 , $ 10,014 , and $ 15,036 as a result of the net settlement, respectively.

As of September 30, 2024 and March 31, 2024, accrued expenses and other current liabilities in the consolidated balance sheets includes $ 1,735 and $ 10,279 of net payables for the Finacity Facility.

Refer to " Note 15.

2 unchanged sentences

Following the sale and transfer of the receivables to the unaffiliated financial institution, the receivables are isolated from the Company and its affiliates, and effective control of the receivables is passed to the unaffiliated financial institution, which has all rights, including the right to pledge or sell the receivables.

As of June 30, 2024, the investment limits under these other facilities were variable based on qualifying sales.

As of September 30, 2024, the investment limits under these other facilities were variable based on qualifying sales.

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, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Receivables outstanding in facility $ 126,298 $ 177,932 $ 170,267

3 unchanged sentences

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

Three Months Ended

Six Months Ended

September 30,

Cash proceeds:

4 unchanged sentences

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

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Amounts guaranteed (not to exceed) $ 47,461 $ 93,554 $ 97,411

3 unchanged sentences

Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing 101 68 34,571

(1) Most of the guarantees outstanding at June 30, 2024 expire within one year .

(1) Most of the guarantees outstanding at September 30, 2024 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 $ 851 and $ 1,434 from its derivative financial instruments in cost of goods and services sold for the three months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and 2023, the Company recorded current derivative liabilities of $ 1,834 and $ 11 within accrued expenses and other current liabilities, respectively.

Refer to " N ote 15.

The Company recorded a net loss of $ 412 and net gain of $ 439 from its derivative financial instruments in cost of goods and services sold for the three and six months ended September 30, 2024, 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.

As of September 30, 2024 and 2023, the Company recorded current derivative assets of $ 685 and $ 132 within other current assets, respectively, and current derivative liabilities of $ 490 and $ 78 within accrued expenses and other current liabilities, respectively.

Refer to " Note 15.

Fair Value Measurements " for additional information.

1 unchanged sentence

Dollar notional amount of derivative contracts outstanding:

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Dollar notional outstanding $ 39,600 $ 14,327 $ —

1 unchanged sentence

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

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Level 2 Level 3 Total

2 unchanged sentences

Financial Assets:

Derivative financial instruments $ 685 $ — $ 685 $ 132 $ — $ 132 $ — $ — $ —

Securitized beneficial interests — 11,093 11,093 — 24,393 24,393 — 15,036 15,036

8 unchanged sentences

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

Securitized Beneficial Interests Long-Term Debt Guarantees

Beginning balance at March 31, 2024

$ 15,036 $ 160 $ 5,097

Three Months Ended

September 30, 2024 September 30, 2023

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

Beginning balance $ 25,640 $ 160 $ 2,611 $ 19,641 $ 509 $ 5,764

Issuances of sales of receivables/guarantees 57,410 — 392 47,637 — 1,200

1 unchanged sentence

Losses recognized in earnings ( 2,661 ) — ( 1,039 ) ( 2,687 ) — ( 1,300 )

Ending balance at June 30, 2024

$ 25,640 $ 160 $ 2,611

Securitized Beneficial Interests Long-Term Debt Guarantees

Beginning balance at March 31, 2023

$ 19,522 $ 514 $ 5,262

Ending balance $ 11,093 $ 91 $ 284 $ 24,393 $ 507 $ 1,458

Six Months Ended

September 30, 2024 September 30, 2023

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

Beginning balance $ 15,036 $ 160 $ 5,097 $ 19,522 $ 514 $ 5,262

Issuances of sales of receivables/guarantees 118,439 — 1,330 84,277 — 2,254

1 unchanged sentence

Losses recognized in earnings ( 7,853 ) — ( 3,748 ) ( 6,025 ) — ( 1,297 )

Ending balance at June 30, 2023

$ 19,641 $ 509 $ 5,764

For the three months ended June 30, 2024 and 2023, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 1,250 and $ 748 , respectively.

Ending balance $ 11,093 $ 91 $ 284 $ 24,393 $ 507 $ 1,458

For the six months ended September 30, 2024 and 2023, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 961 and $ 1,230 , respectively.

Gains and losses included in earnings are reported in other expense, net.

2 unchanged sentences

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, 2024, the assessment for intrastate trade tax credits taken is $ 2,375 and the total assessment including penalties and interest is $ 9,796 .

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, 2024, the assessment for intrastate trade tax credits taken is $ 2,050 and the total assessment including penalties and interest is $ 6,201 .

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

At September 30, 2024, the assessment for intrastate trade tax credits taken is $ 2,423 and the total assessment including penalties and interest is $ 10,095 .

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

judicial process.

Should the Company lose in the judicial process, the loss of the intrastate trade tax credits would have a material impact on the financial statements of the Company.

The Company also has local intrastate trade tax credits in the Brazil State of Rio Grande do Sul.

This jurisdiction permits the sale or transfer of excess credits to third parties, however approval must be obtained from the tax authorities.

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 $ 20,377 as of June 30, 2024.

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

5 unchanged sentences

Amended and Restated 2020 Incentive Plan (the "Incentive Plan"), the Company granted time-vesting restricted stock units, with the vesting of these restricted stock units being subject to continued employment through specified dates and the condition that the Company’s common stock be listed for trading on a national securities exchange or an approved foreign securities exchange by March 31, 2028 (the "Listing Condition").

On May 10, 2024 (the "Modification Date"), the time-vesting restricted stock units granted under the Incentive Plan that were outstanding

immediately prior to that date were amended to extend the period by which the Listing Condition must be satisfied for the vesting of such restricted stock units from March 31, 2028 to March 31, 2031 and to provide that the Listing Condition shall be deemed to be satisfied on March 31, 2031 regardless of whether the Company’s common stock has been listed by that date on a national securities exchange or foreign securities exchange and would vest earlier upon the occurrence of a "Change in Control" (as defined in the Incentive Plan) as a result of a merger, consolidation, share exchange or sale of all or substantially all of the assets of the Company.

On the Modification Date, the amended Listing Condition was rendered nonsubstantive, and recipients of all such outstanding time-vesting restricted stock units had satisfied the continued service requirement, meaning the restricted stock units were fully earned for vesting.

During the three months ended June 30, 2024, the Company recognized total equity-based compensation expense of $ 3,031 , which is recorded in selling, general, and administrative expenses within the condensed consolidated statements of operations.

The modified time-vesting restricted stock units accounted for $ 2,877 of the total equity-based compensation to reflect the cumulative catch-up required on the Modification Date.

On May 10, 2024 (the "Modification Date"), the time-vesting restricted stock units granted under the Incentive Plan that were outstanding immediately prior to that date were amended to extend the period by which the Listing Condition must be satisfied for the vesting of such restricted stock units from March 31, 2028 to March 31, 2031 and to provide that the Listing Condition shall be deemed to be satisfied on March 31, 2031 regardless of whether the Company’s common stock has been listed by that date on a national securities exchange or foreign securities exchange and would vest earlier upon the occurrence of a "Change in Control" (as defined in the Incentive Plan) as a result of a merger, consolidation, share exchange or sale of all or substantially all of the assets of the Company.

On the Modification Date, the amended Listing Condition was rendered nonsubstantive, and recipients of all such outstanding time-vesting restricted stock units had satisfied the continued service requirement, meaning the then-outstanding restricted stock units were fully earned for vesting.

During the three and six months ended September 30, 2024, the Company recognized total equity-based compensation expense of $ 601 and $ 3,632 , respectively, which is recorded in selling, general, and administrative expenses within the condensed consolidated statements of operations.

The modified time-vesting restricted stock units accounted for $ 3,263 of the total equity-based compensation recognized year-to-date to reflect the cumulative catch-up required on the Modification Date.

The following summarizes the Company's equity awards granted:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

(in thousands, except grant date fair value) 2024 2023 2024 2023

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Number granted 39 — 807 —

Grant date fair value $ 3.50 $ —

Weighted average grant date fair value $ 3.00 $ — $ 3.48 $ —

Performance-based stock units

Number granted (at target performance level) 29 — 605 —

Grant date fair value $ 4.36 $ —

Restricted stock units granted under the Incentive Plan during the three months ended June 30, 2024 are earned ratably over a three-year period, and will vest, subject to continued employment, upon the earlier of March 31, 2031 or the occurrence of a liquidity event as defined under the terms of the restricted stock unit award agreement.

Unrecognized compensation costs for restricted stock units is $ 2,534 as of June 30, 2024, and is expected to be recognized over a weighted average period of 2.75 years, representing the remaining service period related to the awards, subject to adjustments for actual forfeitures.

Weighted average grant date fair value $ 4.36 $ — $ 4.36 $ —

Restricted stock units granted under the Incentive Plan during the three and six months ended September 30, 2024 are earned ratably over a three-year period, and will vest, subject to continued employment, upon the earlier of March 31, 2031 or the occurrence of a liquidity event as defined under the terms of the restricted stock unit award agreement.

Unrecognized compensation costs for restricted stock units is $ 2,435 as of September 30, 2024, and is expected to be recognized over a weighted average period of 2.53 years, representing the remaining service period related to the awards, subject to adjustments for actual forfeitures.

Under the terms of the performance-based stock units, the amount of shares to be issued (ranging from 0 % to 200 % of the number of shares to be issued at the target performance level) will be contingent upon the per share price achieved in a liquidity event (as defined under the terms of the performance-based stock unit award agreement), subject to continued employment through the date of a liquidity event.

The contingent liquidity event is not probable as of June 30, 2024, and accordingly, no equity-based compensation expense has been recognized for the performance-based stock units granted during the period.

The contingent liquidity event is not probable as of September 30, 2024, and accordingly, no equity-based compensation expense has been recognized for the performance-based stock units granted during the period.

Related Party Transactions

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The following summarizes activities with the Company's equity method investees:

Three Months Ended

Three Months Ended Six Months Ended

September 30, September 30,

2024 2023 2024 2023

Sales $ 3,966 $ 10,399 $ 14,541 $ 21,217

Purchases 63,408 63,110 98,294 101,899

Dividends received — 13,660 — 13,660

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

June 30, 2024 June 30, 2023 March 31, 2024 Location in Condensed Consolidated Balance Sheet

September 30, 2024 September 30, 2023 March 31, 2024 Location in Condensed Consolidated Balance Sheet

Accounts receivable, related parties $ 50 $ 12,927 $ 50 Other receivables

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A representative of the Glendon Investor serves as a director of Pyxus.

Based on a Schedule 13G/A filed with the SEC on May 6, 2024 by Owl Creek Asset Management, L.P.

Based on a Schedule 13G/A filed with the SEC on September 3, 2024 by Owl Creek Asset Management, L.P.

and Jeffrey A.

Altman, Owl Creek Asset Management, L.P.

is the investment manager of certain funds and reported beneficial ownership of 2,605 shares of the Company’s common stock on April 30, 2024, representing approximately 10.4 % of the outstanding shares of the Company’s common stock.

is the investment manager of certain funds and reported beneficial ownership of 3,865 shares of the Company’s common stock on August 31, 2024, representing approximately 15.7 % of the outstanding shares of the Company’s common stock.

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") were holders, in part, of the Intabex Term Loans, the Pyxus Term Loans and the 2027 Notes, which are described in " Note 11.

Debt Arrangements ," during the three months ended June 30, 2024.

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of June 30, 2024 and 2023, and March 31, 2024, includes $ 1,894 , $ 3,945 , and $ 4,239 , 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 $ 7,261 and $ 10,075 for the three months ended June 30, 2024 and 2023, respectively, that relates to the Investor-Affiliated Funds and CI Investments.

Debt Arrangements ," during the six months ended September 30, 2024.

On August 21, 2024, the Company entered into a privately negotiated transaction with CI Investments, Inc.

("CI Investments"), which at that time was a beneficial owner of greater than five percent of the Company's common stock outstanding, to repurchase 392 (which amount is presented in thousands) shares of its common stock for approximately $ 1,000 , inclusive of broker commission fees, which transaction was completed on August 22, 2024.

This transaction was 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.

Following the completion of this transaction and other contemporaneous dispositions of the Company’s common stock by CI Investments, CI Investments ceased to be a beneficial owner of more than five percent of the Company's common stock outstanding.

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of September 30, 2024 and 2023, and March 31, 2024, includes $ 1,624 , $ 9,480 , and $ 4,239 , respectively, of interest payable to Investor-Affiliated Funds and CI Investments (applicable only for the periods in which CI Investments was a beneficial owner of more than five percent of the Company's common stock outstanding).

Interest expense as presented in the condensed consolidated statements of operations includes $ 5,945 and $ 13,206 for the three and six months ended September 30, 2024, respectively, and $ 10,294 and $ 20,369 for the three and six months ended September 30, 2023, respectively, that relates to the Investor-Affiliated Funds and CI Investments (applicable only for the periods in which CI Investments was a beneficial owner of more than five percent of the Company's common stock outstanding).

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 on April 12, 2024, 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 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 on April 12, 2024, 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

Under the terms of the Debt Repurchase Agreement, the Company has paid the following amounts to funds affiliated with the Monarch Investor:

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• On May 31, 2024, the Company paid a total of $ 9,435 , which included $ 332 of accrued and unpaid interest, to retire $ 10,345 of aggregate principal amount of the Pyxus Term Loans.

• On August 2, 2024, the Company paid a total of $ 26,707 , which included $ 379 of accrued and unpaid interest, to retire $ 34,191 of aggregate principal amount of the 2027 Notes.

Upon completion of the transactions under the Debt Repurchase Agreement, the Monarch Investor is no longer a holder of the 2027 Notes and the Pyxus Term Loans.

The Monarch Investor remains a related party as a holder of the Intabex Term Loan and a beneficial owner of more than five percent of the outstanding shares of common stock of the Company.

Segment Information

The following summarizes segment information, with the All Other category being included for purposes of reconciliation of the respective balances 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,

2024 2023 2024 2023

Sales and other operating revenues:

8 unchanged sentences

Consolidated operating income $ 33,078 $ 46,290 $ 73,535 $ 82,708

June 30, 2024 June 30, 2023 March 31, 2024

September 30, 2024 September 30, 2023 March 31, 2024

Segment assets:

2 unchanged sentences

Total assets $ 1,836,674 $ 1,742,454 $ 1,657,913

S ubsequent Events

Debt Repurchase

On August 2, 2024, pursuant to the Debt Repurchase Agreement with funds affiliated with the Monarch Investor, Pyxus paid a total of $ 26,707 , which includes $ 379 for accrued and unpaid interest through the date prior to payment, to retire $ 34,191 of aggregate principal amount of the 2027 Notes.

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