PYXUS INTERNATIONAL, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Readers are cautioned that the statements contained in this report regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which are based on current expectations of future events, may be identified by the use of words such as "guidance", "strategy," "expects," "continues," "plans," "anticipates," "believes," "will," "estimates," "intends," "projects," "goals," "targets," and other words of similar meaning. These statements also may be identified by the fact that they do not relate strictly to historical or current facts. If underlying assumptions prove inaccurate, or if known or unknown risks or uncertainties materialize, actual results could vary materially from those anticipated, estimated, or projected. These risks and uncertainties include those discussed in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended March 31, 2024 and in our other filings with the Securities and Exchange Commission. These risks and uncertainties include: our reliance on a small number of significant customers; continued vertical integration by our customers; 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; variation in our financial results due to growing conditions, customer indications and other factors; loss of confidence in us by our customers, farmers and other suppliers; migration of suppliers who have historically grown tobacco and from whom we have purchased tobacco toward growing other crops; risks related to our advancement of inputs to tobacco suppliers to be settled upon the suppliers delivering us unprocessed tobacco at the end of the growing season; 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 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 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; exposure to foreign tax regimes in which the rules are not clear, are not consistently applied and are subject to sudden change; fluctuations in foreign currency exchange and interest rates; competition with the other primary global independent leaf tobacco merchant and independent leaf merchants; disruption, failure or security breaches of our information technology systems and other cybersecurity risks; continued high inflation; regulations regarding environmental matters; risks related to our capital structure, including risks related to our significant debt and our ability to continue to finance our non-U.S. local operations with uncommitted short-term operating credit lines at the local level; our ability to continue to access capital markets to obtain long-term and short-term financing; potential failure of foreign banks in which our subsidiaries maintain deposits or the failure by such banks to transfer funds or honor withdrawals; the risk that, because our ability to generate cash depends on many factors beyond our control, we may be unable to generate the significant amount of cash required to service our indebtedness; our ability to refinance our current credit facilities at the same availability or at similar or reduced interest rates; failure to achieve our stated goals, which may adversely affect our liquidity; developments with respect to our liquidity needs and sources of liquidity; the volatility and disruption of global credit markets; failure by counterparties to derivative transactions to perform their obligations; increasing scrutiny and changing expectations from governments, as well as other stakeholders such as investors and customers, with respect to our environmental, social and governance policies, including sustainability policies; inherent risk of exposure to product liability claims, regulatory action and litigation facing our e-liquids business if its products are alleged to have caused significant loss, injury, or death; certain shareholders have the ability to exercise controlling influence on various corporate matters; reductions in demand for consumer tobacco products; risks and uncertainties related to pandemics or other widespread health crises and any related shipping constraints, labor shortages and supply-chain impacts; legislative and regulatory initiatives that may reduce consumption of consumer tobacco products and demand for our services and increase regulatory burdens on us or our customers; government actions that significantly affect the sourcing of tobacco, including governmental actions to identify and assess crop diversification initiatives and alternatives to leaf tobacco growing in countries whose economies depend upon tobacco production; governmental investigations into the Company's business activities, including but not limited to, leaf tobacco industry buying and other payment practices; 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. Overview 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. 24 Executive Summary 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. 25 Results of Operations Three Months Ended December 31, 2024 and 2023 Three Months Ended December 31, Change (in millions, except per kilo amounts) 2024 2023 $ % Consolidated: Sales and other operating revenues $ 778.3 $ 529.8 248.5 46.9 Cost of goods and services sold 661.9 437.3 224.6 51.4 Gross profit* 116.5 92.6 23.9 25.8 Gross profit as a percent of sales 15.0 % 17.5 % Selling, general, and administrative expenses $ 46.5 $ 42.4 4.1 9.7 Other expense, net 3.8 2.3 1.5 65.2 Restructuring and asset impairment charges 0.1 0.1 — — Operating income 66.1 47.8 18.3 38.3 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 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 Leaf: Product revenues $ 742.9 $ 500.5 242.4 48.4 Tobacco costs 603.1 394.6 208.5 52.8 Transportation, storage, and other period costs 27.7 23.2 4.5 19.4 Total product cost of goods sold 630.8 417.8 213.0 51.0 Product revenue gross profit 112.1 82.7 29.4 35.6 Product revenue gross profit as a percent of sales 15.1 % 16.5 % Kilos sold 123.5 100.0 23.5 23.5 Average price per kilo $ 6.02 $ 5.01 1.01 20.2 Average cost per kilo 5.11 4.18 0.93 22.2 Average gross profit per kilo 0.91 0.83 0.08 9.6 Processing and other revenues $ 32.4 $ 28.6 3.8 13.3 Processing and other revenues costs of services sold 28.5 19.4 9.1 46.9 Processing and other gross profit 3.9 9.2 (5.3) (57.6) Processing and other gross profit as a percent of sales 12.0 % 32.2 % All Other: Sales and other operating revenues $ 3.0 $ 0.7 2.3 328.6 Cost of goods and services sold 2.5 0.1 2.4 2,400.0 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. 26 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. 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. 27 Nine Months Ended December 31, 2024 and 2023 Nine Months Ended December 31, Change (in millions, except per kilo amounts) 2024 2023 $ % Consolidated: Sales and other operating revenues $ 1,979.5 $ 1,631.2 348.3 21.4 Cost of goods and services sold 1,703.8 1,376.8 327.0 23.8 Gross profit* 275.8 254.4 21.4 8.4 Gross profit as a percent of sales 13.9 % 15.6 % Selling, general, and administrative expenses 126.0 116.5 9.5 8.2 Other expense, net 9.7 6.0 3.7 61.7 Restructuring and asset impairment charges 0.4 1.4 (1.0) (71.4) Operating income* 139.6 130.5 9.1 7.0 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 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 Leaf: Product revenue $ 1,847.9 $ 1,537.3 310.6 20.2 Tobacco costs 1,516.0 1,242.4 273.6 22.0 Transportation, storage, and other period costs 70.5 66.0 4.5 6.8 Total cost of goods sold 1,586.5 1,308.4 278.1 21.3 Product revenue gross profit 261.4 228.9 32.5 14.2 Product revenue gross profit as a percent of sales 14.1 % 14.9 % Kilos sold 305.2 297.2 8.0 2.7 Average price per kilo $ 6.05 $ 5.17 0.88 17.0 Average cost per kilo 5.20 4.40 0.80 18.2 Average gross profit per kilo 0.85 0.77 0.08 10.4 Processing and other revenues $ 122.5 $ 91.4 31.1 34.0 Processing and other revenues costs of services sold 106.0 66.5 39.5 59.4 Processing and other gross profit 16.5 24.9 (8.4) (33.7) Processing and other gross profit as a percent of sales 13.5 % 27.2 % All Other: Sales and other operating revenues $ 9.1 $ 2.5 6.6 264.0 Cost of goods and services sold 11.2 1.9 9.3 489.5 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. 28 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 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. 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 $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. 29 Liquidity and Capital Resources Overview Our primary sources of liquidity are cash generated from operations, short-term borrowings under our foreign seasonal lines of credit, availability under our ABL Credit Facility, and cash collections from our securitized receivables. Our liquidity requirements are affected by various factors from our core tobacco leaf business, including crop seasonality, foreign currency and interest rates, green tobacco prices, customer mix, crop size, and quality. Our leaf tobacco business is seasonal, and purchasing, processing, and selling activities have several associated peaks where cash on-hand and outstanding indebtedness may vary significantly compared to year end. The first three quarters of our fiscal year generally represent the peak of our working capital requirements. Although we believe that our sources of liquidity will be sufficient to fund our anticipated operating needs for the next twelve months, we anticipate periods during which our liquidity needs for operations will approach the levels of our anticipated available cash and permitted borrowings under our credit facilities. Unanticipated developments affecting our liquidity needs, including with respect to the foregoing factors, and sources of liquidity, including impacts affecting our cash flows from operations and the availability of capital resources (including an inability to renew or refinance seasonal lines of credit), may result in a deficiency in liquidity. To address a potential liquidity deficiency, we may undertake plans to minimize cash outflows, which could include exiting operations that do not generate positive cash flow. Debt Financing We continue to finance our business with a combination of short-term and long-term credit lines, the long-term debt securities, advances from customers, and cash from operations when available. See " Note 11. Debt Arrangements " to the "Notes to Condensed Consolidated Financial Statements" for a summary of our short-term and long-term debt. We continuously monitor and, as available, adjust funding sources as needed to enhance and drive various business opportunities. From time to time we may take steps to reduce our debt or otherwise improve our financial position. Such actions could include prepayments, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, and refinancing of debt. 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 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 Senior Secured Credit Facilities: ABL Credit Facility $ 120.0 $ 120.0 $ 120.0 $ 120.0 Foreign seasonal lines of credit 871.5 285.1 692.2 250.2 Other long-term debt 0.4 0.3 0.4 0.2 Letters of credit 11.5 3.4 8.1 3.4 Total $ 1,003.4 $ 408.8 $ 820.7 $ 373.8 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 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. 30 Net Debt We refer to "Net debt," a non-GAAP measure, as total debt liabilities less cash and cash equivalents. We believe this non-GAAP financial measure is useful to monitor leverage and to evaluate changes to the Company's capital structure. A limitation associated with using net debt is that it subtracts cash and cash equivalents, and therefore, may imply that management intends to use cash and cash equivalents to reduce outstanding debt and that cash held in certain jurisdictions can be applied to repay obligations owing in other jurisdictions and without reduction for applicable taxes. In addition, net debt suggests that our debt obligations are less than the most comparable GAAP measure indicates. The following summarizes the computation of net debt: (in millions) December 31, 2024 December 31, 2023 March 31, 2024 Notes payable $ 608.6 $ 473.0 $ 499.3 Current portion of long-term debt 0.1 20.3 20.3 Long-term debt (1) 454.6 574.1 497.7 Total debt liabilities* $ 1,063.3 $ 1,067.3 $ 1,017.3 Less: Cash and cash equivalents 103.3 90.2 92.6 Net debt $ 960.0 $ 977.1 $ 924.7 * Amounts may not equal column totals due to rounding (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 $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) December 31, 2024 December 31, 2023 March 31, 2024 Cash, cash equivalents, and restricted cash $ 109.7 $ 94.7 $ 99.8 Trade and other receivables, net 344.2 239.5 187.5 Inventories and advances to tobacco suppliers, net 874.3 867.6 952.1 Recoverable income taxes 2.7 4.6 4.5 Prepaid expenses and other current assets 54.4 52.6 66.4 Total current assets* $ 1,385.2 $ 1,259.1 $ 1,310.2 Notes payable $ 608.6 $ 473.0 $ 499.3 Accounts payable 169.8 136.4 181.2 Advances from customers 88.4 42.6 90.7 Accrued expenses and other current liabilities 104.2 78.2 97.0 Income taxes payable 20.5 6.9 8.5 Operating leases payable 8.2 8.1 8.1 Current portion of long-term debt 0.1 20.3 20.3 Total current liabilities* $ 999.8 $ 765.5 $ 905.2 Current ratio 1.4 to 1 1.6 to 1 1.4 to 1 Working capital $ 385.4 $ 493.6 $ 405.0 * Amounts may not equal column totals due to rounding 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. 31 Inventories The following summarizes inventory committed to a customer and uncommitted inventory balances for processed tobacco: (in millions) December 31, 2024 December 31, 2023 March 31, 2024 Committed $ 581.4 $ 626.7 $ 570.4 Uncommitted 21.9 32.3 14.9 Total processed tobacco $ 603.3 $ 659.0 $ 585.3 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. See " Note 7. Inventories, Net " to the "Notes to Condensed Consolidated Financial Statements" for additional information. Sources and Uses of Cash We typically finance our non-U.S. tobacco operations with uncommitted short-term foreign seasonal lines of credit, normally extending for a term of 180 to 365 days, corresponding to the tobacco crop cycle in that market. These short-term foreign seasonal lines of credit are typically uncommitted and provide lenders the right to cease making loans and demand repayment of loans. These short-term foreign seasonal lines of credit are generally renewed at the outset of each tobacco season. We maintain various other financing arrangements to meet the cash requirements of our businesses. See " Note 11. Debt Arrangements " to the "Notes to Condensed Consolidated Financial Statements" for additional information. We utilize capital in excess of cash flow from operations to finance accounts receivable, inventory, and advances to tobacco suppliers in foreign countries. 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 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 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. dollar versus many of the currencies in which we have costs may have an impact on our working capital requirements. We will continue to monitor and hedge foreign currency costs, as needed. 32 The following summarizes the sources and uses of our cash flows: Nine Months Ended December 31, (in millions) 2024 2023 Net income $ 21.1 $ 12.8 Trade and other receivables (305.1) (170.1) Inventories and advances to tobacco suppliers 73.4 (50.3) Payables and accrued expenses 2.1 (41.5) Other 36.8 32.3 Net cash used in operating activities $ (171.7) $ (216.8) Collections from beneficial interests in securitized trade receivables 142.8 127.3 Other (11.9) (10.4) Net cash provided by investing activities $ 130.9 $ 116.9 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) — Other (3.5) (5.8) Net cash provided by financing activities $ 55.6 $ 62.6 Effect of exchange rate changes on cash (5.0) (6.8) Increase (decrease) in cash, cash equivalents, and restricted cash* $ 9.9 $ (44.2) 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 $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. 33 Pension and Postretirement Health and Life Insurance Benefits The following summarizes cash contributions to pension and postretirement health and life insurance benefits: Nine Months Ended December 31, (in millions) 2024 Contributions made during the period $ 3.4 Contributions expected for the remainder of the fiscal year 1.5 Total $ 4.9 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no significant changes to our market risk exposures since March 31, 2024. For a discussion of our exposure to market risk, see Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.