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Item 1. Business

2025-06-10 compared with 2024-06-06 · 48 added, 51 removed, 69 unchanged (59% of the section changed)

Company Overview

This Annual Report on Form 10-K (this "Annual Report") is being filed by Pyxus International, Inc.

This Annual Report on Form 10-K (this "Annual Report") is filed by Pyxus International, Inc.

(the "Company," "Pyxus," "we," or "us").

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The Company has one reportable segment for financial reporting purposes:

An All Other category is included for purposes of reconciliation of respective balances for the Leaf segment.

All Other revenue is primarily composed of revenue from the sale of e-liquids and non-tobacco agriculture products.

An All Other category is included for purposes of reconciliation of the respective balances of the Leaf segment to the consolidated financial statements.

All Other revenue is primarily composed of revenue from the sale of non-tobacco agriculture products.

See " Note 1.

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We purchase tobacco on five continents and ship to customers globally .

We primarily purchase tobacco directly from suppliers.

In those instances, we assume the risk of matching the quantities and grades required by our customers to the crop we must purchase under contract.

We primarily purchase tobacco from suppliers and assume the risk of matching the quantities and grades required by our customers to the crop we are contractually obligated to purchase.

Our arrangements with suppliers vary depending on our predictions of future supply and demand, local historical practice, and availability of capital.

In some locales, we purchase seeds, fertilizer, pesticides, and other products related to growing tobacco, which represent prepaid inventory, and issue them to suppliers with whom we have purchase contracts.

The suppliers, who generally operate small farms, then utilize these inputs to grow tobacco, which we are contractually obligated to purchase as long as the supplier meets our specifications.

In some locales, we purchase crop inputs, such as seeds, fertilizer, pesticides, and other products related to growing tobacco, and issue them to suppliers with whom we have purchase contracts.

The suppliers, who generally operate small farms, then utilize these inputs to grow tobacco, which we are contractually obligated to purchase if the supplier meets our specifications.

The advances of inputs for the current crop generally include the original cost of the inputs plus a mark-up and interest as it is earned.

Where contractually permitted, we charge interest to the suppliers during the period the current crop advance is outstanding.

We account for our advances to tobacco suppliers using a cost accumulation model, which results in us reporting our advances at the lower of cost or recoverable amounts excluding the mark-up and interest.

We account for our advances to suppliers using a cost accumulation model, which results in us reporting our advances at the lower of cost or recoverable amounts excluding the mark-up and interest.

The mark-up and interest on our advances are recognized when the tobacco is delivered as a decrease in our cost of the current crop.

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Under longer-term arrangements with suppliers, we may advance or guarantee financing on suppliers' capital assets, which are also recovered through the delivery of tobacco to us by our suppliers.

Our agronomists maintain frequent contact with suppliers prior to and during the growing and curing seasons to provide technical assistance to improve the quality and yield of the crop.

As a result of various factors including weather, not all suppliers are able to settle the entire amount of advances through delivery of tobacco in a given crop year.

Our agronomists maintain frequent contact with suppliers prior to and throughout the growing and curing seasons to provide technical assistance to improve the quality and yield of the crop.

As a result of various factors, including weather, not all suppliers are able to fully settle advances through delivery of tobacco in a given crop year.

Throughout the crop cycle, we monitor events that may impact the suppliers’ ability to deliver tobacco.

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Unprocessed tobacco is a semi-perishable commodity.

The processing of leaf tobacco facilitates shipping and prevents spoilage and is an essential service to our customers as the quality of processed leaf tobacco substantially affects the quality of the manufacturer’s end product.

Accordingly, our production facilities are located in proximity to our principal sources of tobacco.

We process tobacco in Company-owned and third-party facilities around the world, including in Argentina, Brazil, China, India, Indonesia, Jordan, Macedonia, Malawi, Tanzania, Thailand, Turkey, United States, and Zimbabwe.

The processing of leaf tobacco facilitates shipping by preventing spoilage and is an essential service to our customers as the quality of processed leaf tobacco substantially affects the quality of the manufacturer’s products.

Accordingly, our production facilities are in proximity to our principal sources of tobacco.

We process tobacco in Company-owned and third-party facilities around the world, including in Argentina, Brazil, China, India, Indonesia, Jordan, North Macedonia, Malawi, Tanzania, Thailand, Turkey, United States, and Zimbabwe.

After processing, whole leaves, bundles, strips or stems, and scrap, where applicable, are separately packed in cases, bales, cartons or hogsheads for storage and shipment.

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We utilize contracts, joint ventures, and other arrangements for the purchase of tobacco grown in other countries that produce export-quality flue-cured and burley tobacco.

The majority of the tobacco we purchase is sourced from the African, Asian, and South American regions in which we operate.

Much of the tobacco we purchase is sourced from the African, Asian, and South American regions in which we operate.

The approximate percentage of tobacco purchases from these regions were as follows:

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South America 24% 28% 26%

Key Customers

In our leaf tobacco business, our primary customers are major consumer tobacco product manufacturers.

Refer to " Note 28.

Segment Information " to the "Notes to Consolidated Financial Statements" for additional information regarding customers, and their respective affiliates, that account for more than 10% of our annual revenues.

We delivered approximately 18% of our tobacco sales to customers in Africa, approximately 36% to customers in Asia, and approximately 31% to customers in Europe for the year ended March 31, 2024.

The remaining sales of leaf tobacco are to customers located in other geographic regions of the world.

Leaf tobacco industry competition is based primarily on the price charged for products and services as well as the merchant's ability to meet customer specifications in the buying, processing, residue compliance and financing of tobacco.

Pyxus is one of only two global, publicly held leaf tobacco merchants.

We hold a leading position in most major tobacco growing regions in the world, including the principal export markets for flue-cured, burley and oriental tobacco.

In addition to the primary global independent leaf tobacco merchants, there are a number of other global, regional or national competitors.

These include local independent leaf merchants that have low fixed costs and overhead, and some of our cigarette manufacturing customers that have vertically integrated operations in certain markets.

We have long-standing relationships with growers across the globe that we contract directly with in order to procure tobacco.

We realize our grower base is critical to our ability to provide sustainable, compliant crops that meet the specific requirements of our customers.

We strive to maintain strong and productive relationships with our growers by providing them with agronomic expertise, which includes training on good agricultural practices to support high-quality and high-yielding crops, and training on our agricultural labor practices that sets human rights standards by which they are expected to comply.

Our commitment to conducting business in accordance with international standards and practices related to human rights, and in an ethical and environmentally responsible manner gives our customers confidence that we can satisfy their demand requirements through a sustainable and compliant value chain.

The purchasing and processing activities of our leaf tobacco business are seasonal and vary by market and tobacco variety.

Tobacco grown in North America is purchased, processed, and marketed generally during the five-month period beginning in July and ending in November.

Tobacco grown in North America is purchased, processed, and marketed generally during the five-month period beginning in August and ending in December.

Tobacco grown in South America is usually purchased, processed, and marketed from January through July and, for tobacco grown in Africa, from March through September.

Other tobacco markets around the world have similar purchasing and processing activities, although at different times of the year.

Other tobacco markets around the world have similar purchasing and processing activities, although these activities occur at various times of the year.

During the purchasing, processing, and marketing seasons, inventories of unprocessed tobacco, inventories of redried tobacco, and trade accounts receivable normally reach peak levels in succession.

Current liabilities, particularly advances from customers and short-term notes payable, normally reach their peak in this period as a means of financing the seasonal expansion of current assets.

At March 31, the end of our fiscal year, the seasonal components of our working capital primarily reflect foreign-grown tobacco operations.

At March 31, the end of our fiscal year, the seasonal components of our working capital primarily reflect the foreign-grown tobacco operations.

Track and Trace Technology

In connection with our leaf tobacco operations, the Company uses a proprietary "track and trace" platform, branded as SENTRI ® , which we believe provides transparency into the lifecycle of agricultural products by monitoring information and obtaining data related to the growth, cultivation, harvest, processing, formulation, testing, and release of individual batches of products.

By obtaining data on products at each stage of the supply chain, SENTRI ® permits proactive decision-making for both the Company and its leaf tobacco customers.

In connection with our leaf tobacco operations, the Company uses a proprietary "track and trace" platform, branded as SENTRI ® , to provide transparency into the lifecycle of agricultural products by monitoring information and obtaining data related to the growth, cultivation, harvest, processing, formulation, testing, and release of individual batches of products.

By obtaining data on products at each stage of our supply chain, SENTRI ® permits proactive decision-making for both the Company and its leaf tobacco customers.

The key features of SENTRI ® include:

• Product Tracking :

Data collection and tracking at various stages in the product lifecycle permits customers to gain an understanding of where products originate from, how they were produced, and the product testing data to understand ingredients and the product journey.

Data collection and tracking at various stages in the product lifecycle provides customers with visibility into where products originate, how they were produced, and the product testing completed along the product journey.

• Control and Visibility :

With access to increased data regarding the supply chain, we are able to monitor quality control at various points in the product route to market.

With access to increased data regarding the supply chain, we can monitor quality control at various points in the product route to market.

• Sustainability Commitments :

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• Lot Number Tracking :

We are able to track specific products through the manufacturing process by lot number with full visibility to our customers.

We can track specific products through the manufacturing process by lot number with full visibility to our customers.

This provides more information about the product, its origin, and other information relevant to quality control and product transparency.

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SENTRI ® utilizes an experienced team of agronomists to track data and insights regarding growing practices.

Key Customers

In our leaf tobacco business, our primary customers are major consumer tobacco product manufacturers.

Refer to " Note 26.

We delivered approximately 20% of our tobacco sales to customers in Africa, approximately 35% to customers in Asia, and approximately 30% to customers in Europe for the year ended March 31, 2025.

The remaining sales of leaf tobacco are to customers located in other geographic regions of the world.

Pyxus is one of only two global, publicly held leaf tobacco merchants.

We hold a leading position in most major tobacco growing regions in the world, including the principal export markets for flue-cured, burley, and oriental tobacco.

In addition to the primary global independent leaf tobacco merchants, there are other global, regional, or national competitors.

These include local independent leaf merchants that have low fixed costs and overhead and some of our customers that have vertically integrated operations in certain markets.

We have long-standing relationships with growers across the globe with whom we contract directly to procure tobacco, and our grower base is critical to our ability to provide sustainable, compliant crops that meet the specific requirements of our customers.

We strive to maintain strong, productive relationships with our growers by providing them with agronomic

expertise, which includes training on good agricultural practices to support high-quality and high-yielding crops, and training on our agricultural labor practices that sets human rights standards by which they are expected to comply.

We remain committed to conducting our global business in an ethical and responsible manner, in accordance with international standards and practices relating to human rights and the environment, to give our customers confidence that we can satisfy their demand requirements through a sustainable and compliant value chain.

See " Item 1A.

Risk Factors " for a discussion of applicable government regulation of leaf tobacco.

We are also engaged in the sale of e-liquids and non-tobacco agriculture products, which represented less than 1% of our consolidated revenues for each of the fiscal years ended March 31, 2024, 2023, and 2022.

These operations have been combined and reported in an "All Other" category included for purposes of reconciliation of respective balances for the Leaf segment.

We are also engaged in the sale of non-tobacco agriculture products, which represented less than 1% of our consolidated revenues for each of the fiscal years ended March 31, 2025, 2024, and 2023.

These operations have been combined and reported in an "All Other" category included for purposes of reconciliation of the respective balances of the Leaf segment to the consolidated financial statements.

See " Note 26.

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Human Capital Management

Our workforce is one of our most important stakeholder groups and is critical to achieving our purpose – to transform people’s lives so that together we can grow a better world.

The attraction, development, and retention of talent enables us to make progress against our business strategy.

It is essential that we create and maintain a culture of conducting business in an ethical and responsible manner.

It is for these reasons that we dedicate resources to employee engagement, focus on creating a safe workplace, and recognize employees for the results that they deliver.

As of March 31, 2024, we employed approximately 3,000 p eople, excluding seasonal employees, in our worldwide operations.

Our workforce plays a fundamental role in fulfilling our corporate mission—to transform people’s lives so that, together, we can grow a better world.

Attracting, developing, and retaining top talent is essential to advancing our business strategy and impact.

We remain committed to fostering a workplace culture rooted in ethics and responsibility, and we invest in employee engagement, prioritize workplace safety, and celebrate the contributions of our team in furtherance of organizational success.

As of March 31, 2025, we employed approximately 3,100 people, excluding seasonal employees, in our worldwide operations.

We maintain positive relationships with the Company’s employees and their respective organizations.

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Supply Chain Human Rights Matters

We support efforts to address human rights concerns in the tobacco supply chain.

We support efforts to address human rights concerns throughout the tobacco supply chain.

For example, in our tobacco supply chain, we use on-farm good agricultural practices assessments to assess suppliers' compliance with labor practices.

Our subsidiaries establish contract terms and conditions with tobacco suppliers related to issues such as forced and child labor, and they conduct social compliance due diligence throughout our tobacco-growing regions.

Our subsidiaries establish contract terms and conditions with suppliers related to forced and child labor and other social issues, and they conduct due diligence throughout our tobacco-growing regions to monitor compliance.

Environmental Compliance

We are aware of the impact our business activities have on the environment, and we understand that climate change will have a long-term impact on our business, our employees, suppliers, and the communities in which they live.

We have committed to reducing our environmental impact from our operations and working with our contracted growers to apply sustainable agricultural methods and practices.

As an agricultural company, we recognize the effects our business activities have on the environment, and we understand that climate change could have long-term consequences on our business, our employees, suppliers, and the communities where we operate.

We are committed to reducing our environmental impact by working with our suppliers to integrate sustainable agricultural methods and practices.

Additional information regarding our activities related to our sustainability strategy can be found in our Sustainability Report, which is published on our website.

Currently, there are no material estimated capital expenditures related to environmental control facilities.

In addition, there is no material effect on capital expenditures, results of operations or competitive position anticipated as a result of compliance with current or pending federal or state laws and regulations relating to protection of the environment.

In addition, there is no material effect on capital expenditures, results of operations or competitive position anticipated from compliance with current or pending federal or state laws and regulations relating to protection of the environment.

Available Information

Our website is www.pyxus.com .

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at http://investors.pyxus.com as soon as reasonably practicable after we file such material with, or furnish it to, the U.S.

Securities and Exchange Commission ("SEC").

The information contained on our website shall not be deemed part of this annual report on Form 10-K.

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

What changed 10-K

Item 1. Business