What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-12 compared with 2024-11-12 · 91 added, 74 removed, 221 unchanged (43% of the section changed)

9 unchanged sentences

continued vertical integration by our customers;

global shifts in sourcing customer requirements;

global shifts in sourcing customer requirements, the imposition of tariffs and other changes in international trade policies;

shifts in the global supply and demand position for tobacco products;

4 unchanged sentences

risks that the tobacco we purchase directly from suppliers will not meet our customers’ quality and quantity requirements;

weather and other environmental conditions that can affect the marketability of our inventory;

weather and other environmental conditions that can affect the quantity and marketability of our inventory;

international business risks, including unsettled political conditions, uncertainty in the enforcement of legal obligations, including the collection of accounts receivable, fraud risks, expropriation, import and export restrictions, exchange controls, inflationary economies, currency risks and risks related to the restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries;

many of our operations are located in jurisdictions that pose a high risk of potential violations of the Foreign Corrupt Practices Act;

risks and uncertainties related to geopolitical conflicts, including conflict in the Middle East and disruptions affecting Red Sea shipping;

risks and uncertainties related to geopolitical conflicts, including the conflicts in the Middle East and disruptions affecting Red Sea shipping;

impacts of international sanctions on our ability to sell or source tobacco in certain regions;

23 unchanged sentences

governmental investigations into the Company's business activities, including but not limited to, leaf tobacco industry buying and other payment practices;

and impact of potential regulations to prohibit the sale of cigarettes in the United States other than low-nicotine cigarettes.

and impact of proposed regulations to prohibit the sale of cigarettes and certain other tobacco products in the United States other than low-nicotine versions of those products.

We do not undertake to update any forward-looking statements that we may make from time to time except to the extent required by law.

2 unchanged sentences

Executive Summary

Through the first six months of the fiscal year, sales and other operating revenues increased $99.8 million , or 9.1% , to $1,201.2 million for the six months ended September 30, 2024 compared to $1,101.4 million for the six months ended September 30, 2023 .

This increase was due to a 15.6% increase in average sales prices driven by higher tobacco prices, despite a 7.9% decrease in kilo volumes sold.

Gross profit as a percent of sales decreased from 14.7% for the six months ended September 30, 2023 to 13.3% for the six months ended September 30, 2024 due mainly to regional mix from the El Niño weather effects on Africa and South America.

The ongoing Red Sea conflict, Typhoon Yagi in Southeast Asia in September 2024, and monsoon rains in India and Bangladesh during August and September 2024 contributed to shipping constraints, including vessel and equipment availability, port congestion, and rising freight costs, and undersupply conditions throughout the first half of the fiscal year.

We completed our crop purchases in the southern hemisphere and commenced crop purchases in certain markets in the northern hemisphere during the second quarter.

We continued to experience elevated prices for green tobacco from continued undersupply conditions and inflation.

As of September 30, 2024 , our inventory was $974.6 million and our uncommitted inventory was $16.7 million.

Despite purchasing more expensive green tobacco, our disciplined focus on reducing long-term debt has resulted in a total reduction of $142.8 million of aggregate principal amount of long-term debt since March 2024.

Sales and other operating revenues increased $348.3 million, or 21.4%, to $1,979.5 million for the nine months ended December 31, 2024 compared to $1,631.2 million for the nine months ended December 31, 2023.

This was due to a 17.0% increase in average sales prices driven by higher tobacco prices and a 2.7% increase in kilo volumes sold from Asia and certain markets in Africa and accelerated shipments from Europe and South America.

Gross profit as a percent of sales decreased from 15.6% for the nine months ended December 31, 2023 to 13.9% for the nine months ended December 31, 2024 mainly due to the regional mix and the adverse weather effects of El Niño in South America.

Average gross profit per kilo increased 10.4%, primarily attributable to a more favorable customer and product mix.

The stabilization of shipping logistics during the third quarter resulted in beneficial shifts in the timing of shipments for the three months ended December 31, 2024 and the reduction of processed inventory to $603.3 million as of December 31, 2024 from $659.0 million as of December 31, 2023.

While market conditions are also stabilizing, the industry continues to be undersupplied, as evidenced by the decrease in uncommitted inventory to $21.9 million as of December 31, 2024 from $32.3 million as of December 31, 2023.

We are slightly ahead of schedule for crop purchases in the Northern hemisphere compared to the prior year, which resulted in an increase in unprocessed tobacco to $151.9 million as of December 31, 2024 from $78.0 million as of December 31, 2023.

Despite purchasing more expensive green tobacco, our disciplined focus on reducing long-term debt resulted in a total reduction of $142.8 million of aggregate principal amount of long-term debt since March 2024.

Results of Operations

Three Months Ended September 30, 2024 and 2023

Three Months Ended September 30,

Three Months Ended December 31, 2024 and 2023

Three Months Ended December 31,

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

8 unchanged sentences

Operating income 66.1 47.8 18.3 38.3

Gain on debt retirement 6.9 — 6.9 100.0

Loss on pension settlement — 12.0 (12.0) (100.0)

Interest expense, net 32.9 32.0 0.9 2.8

Income before income taxes and other items 33.2 3.8 29.4 773.7

Income tax expense 18.1 6.2 11.9 191.9

Income from unconsolidated affiliates, net 4.3 6.6 (2.3) (34.8)

Net loss attributable to noncontrolling interests — (0.2) 0.2 100.0

Net (loss) income attributable to Pyxus International, Inc.* $ (3.2) $ 8.1 (11.3) (139.5)

Net income attributable to noncontrolling interests 0.5 0.3 0.2 66.7

Net income attributable to Pyxus International, Inc.

$ 18.9 $ 3.8 15.1 397.4

Product revenues $ 742.9 $ 500.5 242.4 48.4

14 unchanged sentences

Cost of goods and services sold 2.5 0.1 2.4 2,400.0

Gross loss (1.7) (0.3) (1.4) (466.7)

Gross loss as a percent of sales (77.3) % (25.0) %

Gross profit 0.5 0.6 (0.1) (16.7)

Gross profit as a percent of sales 16.7 % 85.7 %

* Amounts may not equal column totals due to rounding.

Sales and other operating revenues were $624.3 million for the three months ended September 30, 2023 and $566.3 million for the three months ended September 30, 2024, a decrease of $58.0 million, or 9.3%.

This was due to a 23.0% decrease in kilo volumes sold primarily due to the accelerated timing of shipments from North America in the three months ended June 30, 2024 and delayed shipments from Africa in the three months ended September 30, 2024 compared to the prior-year period, partially offset by a 14.5% increase in average sales prices over this period, driven by higher tobacco prices.

Cost of goods and services sold were $535.5 million for the three months ended September 30, 2023 and $490.9 million for the three months ended September 30, 2024 , a decrease of $44.6 million, or 8.3%.

This was mainly due to the decrease in kilo volumes sold , partially offset by a 14.5% increase in average cost per kilo primarily due to undersupply conditions and inflation.

Gross profit as a percent of sales decreased from 14.2% for the three months ended September 30, 2023 to 13.3% for the three months ended September 30, 2024, due mainly to product and regional mix.

Average gross profit per kilo increased 14.3%, primarily due t o more favorable customer mix.

Gain on debt retirement of $6.9 million for the three months ended September 30, 2024 was due to the repurchase of $34.2 million aggregate principal amount of the 2027 Notes for $26.3 million, a 23.0% discount to par, during the current quarter.

Sales and other operating revenues were $529.8 million for the three months ended December 31, 2023 and $778.3 million for the three months ended December 31, 2024, an increase of $248.5 million, or 46.9%.

This was due to a 20.2% increase in average sales prices over this period, driven by higher tobacco prices, and a 23.5% increase in kilo volumes sold primarily due the stabilization of shipping logistics that resulted in beneficial shifts in the timing of shipments (in particular, both delayed shipments out of the three months ended September 30, 2024 into the current quarter and accelerated shipments from Europe and South America in the three months ended December 31, 2024 of the type that occurred in the prior year in the three months ended March 31, 2024).

Cost of goods and services sold were $437.3 million for the three months ended December 31, 2023 and $661.9 million for the three months ended December 31, 2024, an increase of $224.6 million, or 51.4%.

This was mainly due to the 22.2% increase in average cost per kilo primarily due to undersupply conditions, inflation, and the increase in kilo volumes sold.

Gross profit as a percent of sales decreased from 17.5% for the three months ended December 31, 2023 to 15.0% for the three months ended December 31, 2024, mainly due to regional mix and the adverse weather effects of El Niño in South America.

Average gross profit per kilo increased 9.6%, primarily attributable to more favorable customer mix.

Selling, general, and administrative expenses were $42.4 million for the three months ended December 31, 2023 and $46.5 million for the three months ended December 31, 2024, an increase of $4.1 million, or 9.7%.

This increase was primarily due to higher personnel costs, including a higher accrual for variable bonus compensation.

Loss on pension settlement of $12.0 million for the three months ended December 31, 2023 was due to the termination of an over-funded defined benefit pension plan in the U.K.

See " Note 16.

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

Interest expense was $33.0 million for three months ended September 30, 2023 and $35.7 million for the three months ended September 30, 2024, an increase of $2.7 million, or 8.2%.

This increase was driven by higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from Africa , and increased variable interest rates.

This increase was partially offset by partial repurchases of the 2027 Notes in March, April, and August 2024, as well as the partial repurchase of the Pyxus Term Loans in May 2024.

Six Months Ended September 30, 2024 and 2023

Six Months Ended September 30,

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

Income tax expense was $6.2 million for the three months ended December 31, 2023 and $18.1 million for the three months ended December 31, 2024, an increase of $11.9 million, or 191.9%.

This increase was primarily due to tax expense related to foreign currency gains in Africa and South America, an increase in income before income taxes, and the jurisdictional mix of earnings.

Nine Months Ended December 31, 2024 and 2023

Nine Months Ended December 31,

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

9 unchanged sentences

Gain on debt retirement 8.2 — 8.2 100.0

Loss on pension settlement — 12.0 (12.0) (100.0)

Interest expense, net 101.9 95.8 6.1 6.4

Income before income taxes and other items 45.9 22.7 23.2 102.2

Income tax expense 32.3 16.4 15.9 97.0

(Income) loss from unconsolidated affiliates, net (3.1) 0.1 (3.2) (3,200.0)

Net income (loss) attributable to noncontrolling interests 0.3 (0.2) 0.5 250.0

Income from unconsolidated affiliates, net 7.4 6.5 0.9 13.8

Net income attributable to noncontrolling interests 0.8 0.1 0.7 700.0

Net income attributable to Pyxus International, Inc.* $ 20.3 $ 12.7 7.6 59.8

15 unchanged sentences

Cost of goods and services sold 11.2 1.9 9.3 489.5

Gross loss (2.6) — (2.6) (100.0)

Gross loss as a percent of sales (42.6) % — %

Gross (loss) profit (2.1) 0.6 (2.7) (450.0)

Gross (loss) profit as a percent of sales (23.1) % 24.0 %

* Amounts may not equal column totals due to rounding.

Sales and other operating revenues were $1,101.4 million for the six months ended September 30, 2023 and $1,201.2 million for the six months ended September 30, 2024, an increase of $99.8 million, or 9.1%.

This was due to a 15.6% increase in average sales prices over this period, driven by higher tobacco prices, partially offset by 7.9% decrease in kilo volumes sold.

Cost of goods and services sold were $939.5 million for the six months ended September 30, 2023 and $1,041.9 million for the six months ended September 30, 2024, an increase of $102.4 million, or 10.9%.

This was mainly due to a 16.4% increase in average cost per kilo, primarily due to undersupply conditions and inflation, partially offset by the decrease in kilo volumes sold .

Gross profit as a percent of sales decreased from 14.7% for the six months ended September 30, 2023 to 13.3% for the six months ended September 30, 2024, due mainly to regional mix.

Average gross profit per kilo increased 10.8%, primari ly due to a more favorable customer mix.

Selling, general, and administrative expenses were $74.1 million for the six months ended September 30, 2023 and $79.5 million for the six months ended September 30, 2024, an increase of $5.4 million, or 7.3%.

This increase wa s primarily due to the recognition of $3.6 million for equity-based compensation pursuant to the Amended and Restated 2020 Incentive Plan, and a higher accrual for bonus compensation.

Sales and other operating revenues were $1,631.2 million for the nine months ended December 31, 2023 and $1,979.5 million for the nine months ended December 31, 2024, an increase of $348.3 million, or 21.4%.

This was due to a 17.0% increase in average sales prices over this period, driven by higher tobacco prices, and 2.7% increase in kilo volumes sold from Asia and certain markets in Africa and accelerated shipments from Europe and South America in the three months ended December 31, 2024 of the type that occurred in the prior year in the three months ended March 31, 2024, partially offset by lower volume from South America compared to the prior-year period.

Cost of goods and services sold were $1,376.8 million for the nine months ended December 31, 2023 and $1,703.8 million for the nine months ended December 31, 2024, an increase of $327.0 million, or 23.8%.

This was mainly due to a 18.2% increase in average cost per kilo, primarily due to undersupply conditions and inflation.

Gross profit as a percent of sales decreased from 15.6% for the nine months ended December 31, 2023 to 13.9% for the nine months ended December 31, 2024, mainly due to regional mix and the adverse weather effects of El Niño in South America.

Average gross profit per kilo increased 10.4%, primarily attributable to a more favorable customer and product mix.

Selling, general, and administrative expenses were $116.5 million for the nine months ended December 31, 2023 and $126.0 million for the nine months ended December 31, 2024, an increase of $9.5 million, or 8.2%.

This increase was primarily due to higher personnel costs, which includes the recognition of $3.9 million for equity-based compensation pursuant to the Amended and Restated 2020 Incentive Plan, and a higher accrual for variable bonus compensation.

See " Note 18.

Equity-Based Compensation " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Gain on debt retirement of $8.2 million for the six months ended September 30, 2024 was due to the repurchase of $10.3 million of aggregate principal amount of the Pyxus Term Loans for $9.4 million, a 12.0% discount to par, and the repurchase of $34.2 million aggregate principal amount of the 2027 Notes for $26.3 million, a 23.0% discount to par.

Gain on debt retirement of $8.2 million for the nine months ended December 31, 2024 was due to the repurchase of $10.3 million of aggregate principal amount of the Pyxus Term Loans for $9.4 million, a 12.0% discount to par, and the repurchase of $34.2 million aggregate principal amount of the 2027 Notes for $26.3 million, a 23.0% discount to par.

See " Note 11.

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

Interest expense, net was $63.8 million for the six months ended September 30, 2023 and $69.0 million for the six months ended September 30, 2024, an increase of $5.2 million, or 8.2%.

This increase was due to higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from South America and Africa , and increased variable interest rates.

Loss on pension settlement of $12.0 million for the nine months ended December 31, 2023 was due to the termination of an over-funded defined benefit pension plan in the U.K.

See " Note 16.

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

Interest expense, net was $95.8 million for the nine months ended December 31, 2023 and $101.9 million for the nine months ended December 31, 2024, an increase of $6.1 million, or 6.4% .

This increase was due to higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from Africa and South America, and increased variable interest rates.

This increase was partially offset by partial repurchases of the 2027 Notes in March, April, and August 2024, as well as the partial repurchase of the Pyxus Term Loans in May 2024.

Income tax expense was $10.2 million for the six months ended September 30, 2023 and $14.2 million for the six months ended September 30, 2024, an increase of $4.0 million, or 39.2%.

This increase was primarily due to tax benefits in the prior period from foreign currency losses and foreign unremitted earnings, partially offset by improvements in the current period valuation allowances and uncertain tax benefits.

Income tax expense was $16.4 million for the nine months ended December 31, 2023 and $32.3 million for the nine months ended December 31, 2024, an increase of $15.9 million, or 97.0%.

This increase was primarily due to tax expense related to foreign currency gains in Africa and South America recognized in the current period and an increase in income before income taxes, partially offset by reductions in the current period valuation allowances.

Liquidity and Capital Resources

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

The following summarizes our total borrowing capacity at September 30, 2024 and 2023 under our short-term and long-term credit lines and letter of credit facilities and the remaining available amount after the reduction for outstanding borrowings and amounts reserved for outstanding letters of credit:

September 30, 2024 September 30, 2023

The following summarizes our total borrowing capacity at December 31, 2024 and 2023 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:

December 31, 2024 December 31, 2023

(in millions) Total Borrowing Capacity Remaining Amount Available Total Borrowing Capacity Remaining Amount Available

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Total $ 1,003.4 $ 408.8 $ 820.7 $ 373.8

The total borrowing capacity under the ABL Credit Facility increased $20.0 million when compared to the prior period as a result of the Company entering into the Third Amendment to the ABL Credit Agreement on October 24, 2023, which among other things, increased the aggregate amount of revolving loan commitments from $100.0 million to $120.0 million.

The amounts presented as available under the ABL Credit Facility are subject to further limitations from the borrowing base consisting of certain eligible accounts receivable and inventory, reduced by specified reserves.

The total borrowing capacity of our foreign seasonal lines of credit increased $179.3 million when compared to the prior year and were primarily utilized to purchase green tobacco at higher prices.

The amounts presented as available for certain of the foreign seasonal lines of credit are subject to further limitations by receivables and inventories as collateral and restrictive covenants.

The amounts presented as the remaining amount available for borrowing under the foreign seasonal lines of credit are subject to limitations based on the level of receivables and inventories as collateral and by certain restrictive covenants.

We refer to "Net debt," a non-GAAP measure, as total debt liabilities less cash and cash equivalents.

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The following summarizes the computation of net debt:

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

(in millions) December 31, 2024 December 31, 2023 March 31, 2024

Notes payable $ 608.6 $ 473.0 $ 499.3

7 unchanged sentences

(1) Fluctuations in long-term debt include borrowings and repayments on the outstanding indebtedness under the ABL Credit Facility, along with repurchases of certain long-term debt.

Weighted average borrowings outstanding under the ABL Credit Facility were $37.3 million and $50.6 million for the three and six months ended September 30, 2024, respectively.

Net debt increased as of September 30, 2024 when compared to September 30, 2023 from higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from South America and Africa.

Weighted average borrowings outstanding under the ABL Credit Facility were $76.0 million and $59.1 million for the three and nine months ended December 31, 2024, respectively.

Net debt decreased as of December 31, 2024 when compared to December 31, 2023 driven by an increase in cash due to higher cash receipts from sales made near the end of the period.

Working Capital

The following summarizes our working capital:

(in millions except for current ratio) September 30, 2024 September 30, 2023 March 31, 2024

(in millions except for current ratio) December 31, 2024 December 31, 2023 March 31, 2024

Cash, cash equivalents, and restricted cash $ 109.7 $ 94.7 $ 99.8

15 unchanged sentences

* Amounts may not equal column totals due to rounding

Working capital declined from September 30, 2023 to September 30, 2024 by $88.9 million, or 18.7%, due to higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from South America and Africa, and increased variable interest rates.

Working capital declined from December 31, 2023 to December 31, 2024 by $108.2 million, or 21.9%, driven by higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from Africa and South America.

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

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

(in millions) December 31, 2024 December 31, 2023 March 31, 2024

Committed $ 581.4 $ 626.7 $ 570.4

1 unchanged sentence

Total processed tobacco $ 603.3 $ 659.0 $ 585.3

Total processed tobacco increased from September 30, 2023 to September 30, 2024 by $103.8 million, or 16.0%, due to the higher costs of procuring and processing tobacco, along with delayed shipments out of Africa.

Total processed tobacco decreased from December 31, 2023 to December 31, 2024 by $55.7 million, or 8.5%, primarily due to the weather effects of El Niño resulting in shorter crops in South America and certain markets in Africa, partially offset by higher costs of procuring and processing tobacco and accelerated shipments from Europe and South America in the three months ended December 31, 2024 that had been expected to occur in the three months ending March 31, 2025.

Uncommitted levels of processed tobacco remain low as undersupply conditions persist in the global tobacco market.

Challenging weather events in multiple geographies and shipping constraints, such as container availability and longer transit routes, have contributed to the continued undersupply conditions.

See " Note 7.

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

As of September 30, 2024, our cash, cash equivalents, and restricted cash was $130.9 million, of which approximately $76.5 million was held in non-U.S.

As of December 31, 2024, our cash, cash equivalents, and restricted cash was $109.7 million, of which approximately $74.1 million was held in non-U.S.

jurisdictions for non-U.S.

working capital needs, a majority of which is subject to exchange controls and certain of which is subject to tax consequences, which could limit our ability to fully repatriate these funds.

working capital needs, a majority of which is subject to exchange controls and a portion of which is subject to tax consequences upon repatriation, which could limit our ability to fully repatriate these funds.

Fluctuation of the U.S.

2 unchanged sentences

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

Six Months Ended

September 30,

Nine Months Ended

(in millions) 2024 2023

3 unchanged sentences

Payables and accrued expenses 2.1 (41.5)

Advances from customers (14.1) 3.6

Other 36.8 32.3

4 unchanged sentences

Net proceeds from short-term borrowings 114.9 93.4

Net repayment of revolving loan facilities — (25.0)

Repayment of long-term borrowings (55.8) —

Net proceeds (repayment) of revolving loan facilities 35.0 (25.0)

Other (3.5) (5.8)

2 unchanged sentences

Increase (decrease) in cash, cash equivalents, and restricted cash* $ 9.9 $ (44.2)

The change in cash, cash equivalents, and restricted cash for the six months ended September 30, 2024 compared to the six months ended September 30, 2023 increased by $52.3 million.

This increase was mainly driven by higher borrowings on our foreign seasonal lines of credit that were primarily used to purchase more expensive green tobacco, particularly from South America and Africa, and the ABL Credit Facility, partially offset by the repayment of long-term debt.

Other information:

Cash paid for income taxes, net $ 21.6 $ 18.3

Cash paid for income taxes related to debt exchange — 12.5

Cash paid for interest, net 81.5 79.2

* Amounts may not equal column totals due to rounding

The change in cash, cash equivalents, and restricted cash for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023 increased by $54.1 million.

This increase was driven by the timing of payments for accounts payable and accrued expenses, lower inventories from increased kilo volume sold from Asia and certain markets in Africa, and short crops from South America and certain markets in Africa.

These increases were partially offset by an increase in accounts receivable primarily due to accelerated shipments from Europe and South America in the three months ended December 31, 2024 that had been expected to occur in the three months ending March 31, 2025.

Cash Paid for Income Taxes, net

Excluding nonrecurring cash paid for income taxes related to debt exchange of $12.5 million in the prior year, cash paid for income taxes, net increased for the nine months ended December 31, 2024 to $21.6 million compared to $18.3 million for the nine months ended December 31, 2023.

This increase was primarily due to multi-year tax settlements in Africa and an increase in income before income taxes, partially offset by deferred payments in North America.

We expect the trend of increased cash paid for income taxes, net to continue for the remainder of the fiscal year.

Cash Paid for Interest, net

Cash paid for interest, net increased for the nine months ended December 31, 2024 to $81.5 million compared to $79.2 million for the nine months ended December 31, 2023.

This increase was consistent with the increase in interest expense.

We expect the trend of increased cash paid for interest, net will continue for the remainder of the fiscal year.

Planned Capital Expenditures

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

We incurred approximately $9.8 million in capital expenditures for the six months ended September 30, 2024 , and are expecting to incur an additional $20.5 million for the remainder of the fiscal year ending March 31, 2025, which includes expenditures expected to be funded through government assistance.

We incurred approximately $15.1 million in capital expenditures for the nine months ended December 31, 2024, and are expecting to incur an additional $11.3 million for the remainder of the fiscal year ending March 31, 2025, which includes expenditures expected to be funded through government assistance.

Pension and Postretirement Health and Life Insurance Benefits

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

Six Months Ended

September 30,

Nine Months Ended

(in millions) 2024

1 unchanged sentence

Contributions expected for the remainder of the fiscal year 1.5

Critical Accounting Policies and Estimates

As of the date of this report, there are no material changes to the critical accounting policies and estimates previously disclosed in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Critical Accounting Estimates

As of the date of this report, there are no material changes to the critical accounting estimates previously disclosed in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Quantitative and Qualitative Disclosures About Market Risk

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis