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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-02-11 · 76 added, 155 removed, 160 unchanged (59% of the section changed)

10 unchanged sentences

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;

global shifts in sourcing customer requirements, including as a result of the imposition of, and changes to, tariffs and other changes in international trade policies;

variation in our financial results due to growing conditions, customer indications and other factors;

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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 shipping in that area;

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;

the impact of increased competition on our earnings;

continued high inflation that may adversely affect our profitability and the demand for our leaf tobacco products;

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;

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, and our substantial debt which may adversely affect us by limiting future sources of financing, interfering with our ability to pay interest and principal on our indebtedness, and subjecting us to additional risks;

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;

our ability to refinance our current credit facilities at the same availability or at similar or reduced interest rates, including due to volatility and disruption of global credit markets;

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 if our products are alleged to have caused significant loss, injury, or death;

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, risks related to the restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries and impacts of international sanctions on our ability to sell or source tobacco in certain regions;

risks and uncertainties related to geopolitical conflicts, including the armed conflicts in the Middle East and disruptions in shipping in that area;

risks related to our operations in jurisdictions that pose a high risk of potential violations of the Foreign Corrupt Practices Act;

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;

disruption, failure or security breaches of our information technology systems and other cybersecurity risks;

regulations regarding environmental matters that may substantially increase our costs and expose us to potential liability;

changing sustainability regulatory requirements and expectations;

exposure to product liability claims, regulatory action, and litigation in the event such products are alleged to have caused injury, harm, 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;

reductions in demand for cigarettes and other consumer tobacco products;

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.

and governmental investigations into our business activities, including, but not limited to, leaf tobacco industry buying and other payment practices.

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.

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Executive Summary

The Company's third quarter results and working capital continue to reflect the impact of larger crops, a trend that has persisted throughout fiscal year 2026.

Operational and financial performance remains aligned with expectations, and after our successful buying season, the Company continues to support customers by ensuring their leaf requirements are met.

The larger crop environment across many of our operating origins, together with various timing-related accelerations and deferrals of shipments, resulted in lower leaf product sales volumes.

This decline was partially offset by strong volume growth in processing and other revenues, which favorably impacted gross margin as a percent of sales.

Larger crops led to improved performance in the Company's equity method investments, particularly in South America and Asia, resulting in higher income from unconsolidated affiliates in both the quarterly and year-to-date periods.

Quarterly results were affected by lower average selling prices in leaf product revenues, along with volume-related declines due to shifts in shipment timing.

Sales and other operating revenues were $655.8 million for the three months ended December 31, 2025, compared to $778.3 million for the three months ended December 31, 2024, representing a decrease of 15.7%, or $122.5 million.

Despite the decrease in sales and other operating revenues, gross margin as a percent of sales for the quarterly period increased slightly from 15.0% for the prior-year period to 15.2%, due to favorable product mix.

Year-to-date sales and other operating revenues reflect the timing of shipments, including the continued impact of lower carry-over sales from the prior fiscal year.

These factors affected leaf product revenues and contributed to a 12.4%, or $244.7 million, decrease in sales to $1,734.8 million for the nine months ended December 31, 2025 from $1,979.5 million for the nine months ended December 31, 2024.

Larger crop volumes for processing and other revenues partially mitigated the decline in leaf product revenues and contributed to an improvement in gross margin as a percent of sales to 14.6%, compared to 13.9% in the prior year.

Current crop tobacco purchases were principally completed by the end of the third quarter.

During the second half of the fiscal year, the Company's operations are primarily focused on processing remaining current crop volumes and fulfilling customer shipments of processed tobacco.

Consistent with trends from the first and second quarters of fiscal year 2026, our total tobacco inventory at the end of the third quarter remained elevated, representative of the larger crop volumes from Africa and South America.

As of December 31, 2025, total processed and unprocessed tobacco inventories were $959.8 million.

This higher inventory position will support ongoing customer demand and is anticipated to contribute to seasonally higher shipment activity in the remainder of the fiscal year.

The Company's first quarter 2027 financial results were consistent with expectations following a strong finish to the prior fiscal year.

The current quarter was impacted by lower average costs and sales prices for leaf tobacco in South America and Africa, and slightly lower leaf volumes sold mainly due to the timing of North America shipments, resulting in reduced consolidated sales and other operating revenues by $71.0 million, or 14.0%, compared to the same period a year ago.

Total gross profit was similarly impacted over this same period, declining $4.2 million, or 6.4%, but the regional mix of sales, primarily from Europe, resulted in gross profit as a percent of sales increasing to 14.0% during the three months ended June 30, 2026 from 12.9% during the three months ended June 30, 2025, and contributed to little change in leaf gross profit per kilo over the same period.

Tobacco crop production remains elevated again this season across the Southern Hemisphere origins in which we operate, resulting in lower leaf purchase prices in our key sourcing locations.

Two consecutive seasons of large crops have allowed us to slow our green tobacco purchases and be more deliberate in our buying approach this season, ensuring that we source lower cost, quality tobacco that meets our customers' requirements.

At June 30, 2026, total tobacco inventories, comprised of unprocessed and processed tobacco, decreased by $24.6 million, or 2.3%, when compared to June 30, 2025.

Unprocessed tobacco decreased $120.3 million, or 23.4%, to $393.5 million as of June 30, 2026 from $513.9 million as of June 30, 2025, mainly due to lower purchase prices and the slower timing of our green tobacco purchases in Africa and South America.

Processed tobacco increased $95.7 million, or 16.6%, to $671.6 million as of June 30, 2026 from $575.9 million as of June 30, 2025, primarily due to higher levels of carry-over inventory from the prior year crop.

Weather Patterns and Crop Conditions

As an agricultural company, our results are inherently subject to major weather patterns, including recurring El Niño and La Niña cycles, which can affect crop size, quality, and the timing of harvesting and purchasing activities in the origins in which we operate.

The current El Niño cycle is forecasted to reach its peak effects between the Company's third and fourth quarters of fiscal year 2027 and has been characterized by certain meteorological sources as a "Super" El Niño, with an intensity expected to exceed that of a typical cycle.

Historically, our origins in Africa and South America tend to be adversely affected by an El Niño cycle that typically occurs when crops are still in the fields growing, while the crop seasons in Asia, Europe, and North America have largely remained unaffected by past cycles.

We are actively monitoring this recent weather development, and while the ultimate impact, if any, on growing conditions and crop volumes cannot be predicted with certainty, we maintain geographically diversified sourcing and continue to assess its potential effect on availability, quality, and cost of leaf tobacco.

Results of Operations

Three Months Ended December 31, 2025 and 2024

Three Months Ended December 31,

Three Months Ended June 30, 2026 and 2025

Three Months Ended June 30,

(in millions, except per kilo amounts) 2026 2025 $ %

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Operating income* 15.7 21.0 (5.3) (25.2)

Gain on pension settlement 0.4 — 0.4 100.0

Interest expense, net 29.8 29.8 — —

Income before income taxes and other items 15.1 33.2 (18.1) (54.5)

Income tax expense 10.3 18.1 (7.8) (43.1)

Income from unconsolidated affiliates, net 12.4 4.3 8.1 188.4

Loss before income taxes and other items* (14.2) (8.8) (5.4) (61.4)

Income tax (benefit) expense (5.7) 5.2 (10.9) (209.6)

Income (loss) from unconsolidated affiliates, net 1.4 (1.3) 2.7 207.7

Net income attributable to noncontrolling interests 0.2 0.6 (0.4) (66.7)

Net income attributable to Pyxus International, Inc.

$ 16.9 $ 18.9 (2.0) (10.6)

Net loss attributable to Pyxus International, Inc.* $ (7.3) $ (15.8) 8.5 53.8

Product revenues $ 393.0 $ 458.2 (65.2) (14.2)

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* Amounts may not equal column totals due to rounding.

Sales and other operating revenues decreased $122.5 million, or 15.7%, to $655.8 million for the three months ended December 31, 2025 from $778.3 million for the three months ended December 31, 2024.

This decrease was a result of lower leaf product revenues due to the timing of customer shipments in Africa and Europe, as well as a lower average price per kilo primarily in South America, with pricing reflective of the lower costs to purchase the current crop.

Cost of goods and services sold decreased $106.0 million, or 16.0%, to $555.9 million for the three months ended December 31, 2025 from $661.9 million for the three months ended December 31, 2024, corresponding to the reduction in sales and other operating revenues, as well as the lower costs incurred to purchase the current crop.

Gross profit decreased $16.6 million, or 14.2%, to $99.9 million for the three months ended December 31, 2025 from $116.5 million for the three months ended December 31, 2024.

This decrease was due to the timing of certain leaf product revenues and the decline in average gross profit per kilo.

Average gross profit per kilo was lower by $0.11, or 12.1%, to $0.80 for the three months ended December 31, 2025 from $0.91 for the three months ended December 31, 2024, which was impacted unfavorably by lower average sales prices due to product mix and customer mix.

Selling, general, and administrative expenses decreased $8.2 million, or 17.6%, to $38.3 million for the three months ended December 31, 2025 from $46.5 million for the three months ended December 31, 2024.

This decrease was primarily due to a lower accrual for variable incentive compensation.

Other expense, net increased $5.0 million, or 131.6%, to $8.8 million for the three months ended December 31, 2025 from $3.8 million for the three months ended December 31, 2024.

This increase was primarily due to the resolution of a discrete customs dispute in the current-year period.

Income tax expense decreased $7.8 million, or 43.1%, to $10.3 million for the three months ended December 31, 2025 from $18.1 million for the three months ended December 31, 2024.

This decrease was primarily attributable to reduced unfavorable foreign currency impacts recognized in income tax expense during the current-year period.

See " Note 4.

Income Taxes " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Income from unconsolidated affiliates, net increased $8.1 million, or 188.4%, to $12.4 million for the three months ended December 31, 2025 from $4.3 million for the three months ended December 31, 2024.

This increase was mainly due to higher profitability in South America as a result of lower purchasing costs for the current crop that was sold during the period.

Nine Months Ended December 31, 2025 and 2024

Nine Months Ended December 31,

(in millions, except per kilo amounts) 2025 2024 $ %

Consolidated:

Sales and other operating revenues $ 1,734.8 $ 1,979.5 (244.7) (12.4)

Cost of goods and services sold 1,481.5 1,703.8 (222.3) (13.0)

Gross profit* 253.3 275.8 (22.5) (8.2)

Gross profit as a percent of sales 14.6 % 13.9 %

Selling, general, and administrative expenses 118.8 126.0 (7.2) (5.7)

Other expense, net 13.9 9.7 4.2 43.3

Restructuring and asset impairment charges 1.6 0.4 1.2 300.0

Operating income* 119.0 139.6 (20.6) (14.8)

Gain on debt retirement — 8.2 (8.2) (100.0)

Gain on pension settlement 0.4 — 0.4 100.0

Interest expense, net 104.3 101.9 2.4 2.4

Income before income taxes and other items 15.1 45.9 (30.8) (67.1)

Income tax expense 25.8 32.3 (6.5) (20.1)

Income from unconsolidated affiliates, net 11.7 7.4 4.3 58.1

Net income attributable to noncontrolling interests 0.8 0.8 — —

Net income attributable to Pyxus International, Inc.* $ 0.2 $ 20.3 (20.1) (99.0)

Product revenue $ 1,584.1 $ 1,847.9 (263.8) (14.3)

Tobacco costs 1,287.4 1,516.0 (228.6) (15.1)

Transportation, storage, and other period costs 73.1 70.5 2.6 3.7

Total cost of goods sold 1,360.5 1,586.5 (226.0) (14.2)

Product revenue gross profit 223.6 261.4 (37.8) (14.5)

Product revenue gross profit as a percent of sales 14.1 % 14.1 %

Kilos sold 273.4 305.2 (31.8) (10.4)

Average price per kilo $ 5.79 $ 6.05 (0.26) (4.3)

Average cost per kilo 4.98 5.20 (0.22) (4.2)

Average gross profit per kilo 0.81 0.85 (0.04) (4.7)

Processing and other revenues $ 143.4 $ 122.5 20.9 17.1

Processing and other revenues costs of services sold 114.6 106.0 8.6 8.1

Processing and other gross profit 28.8 16.5 12.3 74.5

Processing and other gross profit as a percent of sales 20.1 % 13.5 %

Sales and other operating revenues $ 7.3 $ 9.1 (1.8) (19.8)

Cost of goods and services sold 6.4 11.2 (4.8) (42.9)

Gross profit (loss) 0.9 (2.1) 3.0 142.9

Gross profit (loss) as a percent of sales 12.3 % (23.1) %

* Amounts may not equal column totals due to rounding.

Sales and other operating revenues decreased $244.7 million, or 12.4%, to $1,734.8 million for the nine months ended December 31, 2025 from $1,979.5 million for the nine months ended December 31, 2024, largely due to the 10.4% decline in kilo volumes sold as a result of the timing of certain leaf product customer shipments, including the continued impact of lower carry-over sales from accelerated shipments in Africa and North America during the fourth quarter of fiscal year 2025.

Cost of goods and services sold decreased $222.3 million, or 13.0%, to $1,481.5 million for the nine months ended December 31, 2025 from $1,703.8 million for the nine months ended December 31, 2024.

This decrease is mainly due to the reduction in sales and other operating revenues.

Gross profit decreased $22.5 million, or 8.2%, to $253.3 million for the nine months ended December 31, 2025 from $275.8 million for the nine months ended December 31, 2024, due to the decline in leaf product revenues, partially offset by increased gross profit in processing and other revenues primarily from larger crops in Africa.

Average gross profit per kilo was lower by $0.04, or 4.7%, to $0.81 for the nine months ended December 31, 2025 from $0.85 for the nine months ended December 31, 2024, mainly due to product mix.

Despite these declines, the larger crop sales for processing and other revenues contributed to an improvement in gross profit as a percent of sales to 14.6%, compared to 13.9% in the prior year.

Selling, general, and admini strative expenses decreased $7.2 million, or 5.7%, to $118.8 million for the nine months ended December 31, 2025 from $126.0 million for the nine months ended December 31, 2024.

The decrease was driven by a lower accrual for variable incentive compensation and less equity-based compensation expense due to the non-recurrence of modified restricted stock awards, partially offset by increased personnel costs.

Other expense, net increased $4.2 million, or 43.3%, to $13.9 million for the nine months ended December 31, 2025 from $9.7 million for the nine months ended December 31, 2024 .

This increase was due to the resolution of a discrete customs dispute in the current period, along with an unfavorable impact from foreign currency fluctuations.

These higher expenses were partially offset by lower utilization of the Company's securitization facilities.

The 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.

There were no repurchases of senior secured notes or term loans during the nine months ended December 31, 2025.

See " Note 18.

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

Income tax expense decreased $6.5 million, or 20.1%, to $25.8 million for the nine months ended December 31, 2025 from $32.3 million for the nine months ended December 31, 2024.

This decrease was due to lower income before income taxes and other items and from a reduction in unfavorable foreign currency impacts recognized in income tax expense during the current year-to-date period, partially offset by an increase in the reserves for unrecognized tax benefits.

Sales and other operating revenues decreased $71.0 million, or 14.0%, to $437.8 million for the three months ended June 30, 2026 from $508.8 million for the three months ended June 30, 2025.

This decrease was due to the impact of lower average sales prices primarily for leaf products in South America and Africa, and a decline in volumes sold mainly driven by the timing of shipments in North America.

The current crop in North America was substantially shipped in the fourth quarter of fiscal year 2026, whereas comparable crop shipments in the prior year occurred during the first quarter of fiscal year 2026.

Cost of goods and services sold decreased $66.8 million, or 15.1%, to $376.4 million for the three months ended June 30, 2026 from $443.2 million for the three months ended June 30, 2025, corresponding to the reduction in sales and other operating revenues, as well as lower purchasing costs for tobacco.

Gross profit decreased $4.2 million, or 6.4%, to $61.4 million for the three months ended June 30, 2026 from $65.6 million for the three months ended June 30, 2025.

This decrease was mainly due to the timing of shipments in North America and customer mix in Africa, partially offset by improved pricing in Europe.

These same factors led to a slight reduction in average leaf gross profit per kilo of $0.84 for the three months ended June 30, 2026 compared to average leaf gross profit per kilo of $0.86 for the three months ended June 30, 2025.

Income tax (benefit) expense decreased $10.9 million, or 209.6%, to a benefit of $5.7 million for the three months ended June 30, 2026 from an expense of $5.2 million for the three months ended June 30, 2025.

This decrease was primarily attributable to favorable foreign currency impacts recognized during the current-year period, and a decrease in the expense associated with unrecognized tax benefits.

See " Note 4.

Income Taxes " to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Income from unconsolidated affiliates, net increased $4.3 million, or 58.1%, to $11.7 million for the nine months ended December 31, 2025 from $7.4 million for the nine months ended December 31, 2024.

This increase was due to higher profitability generated from larger crop volumes sold in South America and Asia, along with additional income from Asia due to a gain on the sale of certain fixed assets and from the receipt of insurance recoveries following severe flooding that impacted operations in the prior year.

Liquidity and Capital Resources

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The first two 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.

We believe that our sources of liquidity will be sufficient to fund our anticipated operating needs for the next twelve months.

During such time, our liquidity needs for operations may 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.

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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 December 31, 2025 and 2024 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, 2025 December 31, 2024

The following summarizes our total borrowing capacity at June 30, 2026 and 2025 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:

June 30, 2026 June 30, 2025

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

Senior Secured Credit Facilities:

Senior secured credit facility:

ABL Credit Facility $ 150.0 $ 150.0 $ 150.0 $ 150.0

Foreign seasonal lines of credit 1,170.4 351.4 1,025.2 171.2

Other long-term debt — — 0.4 0.3

Letters of credit 10.9 2.6 12.3 3.4

Total $ 1,331.3 $ 504.0 $ 1,187.5 $ 324.6

The total borrowing capacity under the ABL Credit Facility increased $30.0 million when compared to the prior period as a result of the Fourth Amendment to the ABL Credit Agreement entered into on May 12, 2025, which among other things, increased the aggregate amount of revolving loan commitments from $120.0 million to $150.0 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 $183.8 million when compared to the prior year and were primarily utilized to purchase larger volumes of green tobacco.

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.

The total borrowing capacity of our foreign seasonal lines of credit increased $145.2 million and the remaining amount available also increased by $180.2 million when compared to the prior year.

Our foreign seasonal lines of credit are utilized to purchase green tobacco in our sourcing origins and provide us with purchasing flexibility.

Lower green tobacco prices and the slower pace of our purchasing in the current year have resulted in an increase in the remaining amount available for borrowing under our foreign seasonal lines of credit, which 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) December 31, 2025 December 31, 2024 March 31, 2025

(in millions) June 30, 2026 June 30, 2025 March 31, 2026

Notes payable $ 828.6 $ 880.9 $ 477.1

Current portion of long-term debt — 0.1 —

Long-term debt (1)

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Net debt $ 1,108.7 $ 1,239.6 $ 798.6

(1) Fluctuations in long-term debt include borrowings and repayments on the outstanding indebtedness under the ABL Credit Facility.

Weighted average borrowings outstanding under the ABL Credit Facility were $52.0 million and $48.2 million for the three and nine months ended December 31, 2025, respectively.

Net debt increased as of December 31, 2025 when compared to December 31, 2024 due to higher borrowings on our foreign seasonal lines of credit.

(1) Long-term debt includes outstanding indebtedness under the ABL Credit Facility.

There were no outstanding amounts under the ABL Credit Facility as of each period end shown.

Weighted average borrowings outstanding under the ABL Credit Facility were $42.1 million and $57.6 million for the three months ended June 30, 2026 and 2025, respectively.

Net debt decreased as of June 30, 2026 when compared to June 30, 2025 primarily due to higher cash and cash equivalents from the collection of trade receivables, net, as well as reduced borrowings on our foreign seasonal lines of credit due to lower green tobacco prices and a slower pace of purchasing primarily at our sourcing locations in Africa and South America.

Working Capital

The following summarizes our working capital:

(in millions except for current ratio) December 31, 2025 December 31, 2024 March 31, 2025

(in millions except for current ratio) June 30, 2026 June 30, 2025 March 31, 2026

Cash, cash equivalents, and restricted cash $ 179.5 $ 101.4 $ 137.7

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Operating leases payable 10.1 9.6 9.9

Current portion of long-term debt — 0.1 —

Total current liabilities* $ 1,262.3 $ 1,216.8 $ 932.8

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* Amounts may not equal column totals due to rounding.

The change in working capital from December 31, 2024 to December 31, 2025 represents a modest decline of $2.5 million, or 0.6%, and reflects increased borrowings under foreign seasonal lines of credit to support purchases of higher volumes of green tobacco, particularly in Africa and South America, mostly offset by the increase in inventories and advances to tobacco suppliers, net funded by such borrowings.

Working capital increased $16.4 million, or 4.4%, from June 30, 2025 to June 30, 2026.

The improvement was driven by higher cash and cash equivalents resulting from the collection of trade and other receivables, net, and the receipt of cash advances from customers, together with lower outstanding borrowings on our foreign seasonal lines of credit.

These improvements were partially offset by higher contract liabilities associated with our obligation to ship tobacco to certain customers at a future date.

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

(in millions) December 31, 2025 December 31, 2024 March 31, 2025

(in millions) June 30, 2026 June 30, 2025 March 31, 2026

Committed $ 611.3 $ 562.3 $ 462.2

1 unchanged sentence

Total processed tobacco $ 671.6 $ 575.9 $ 507.4

Total processed tobacco increased by $165.3 million, or 27.4%, from December 31, 2024 to December 31, 2025.

The increase primarily reflects larger crop volumes purchased and processed in Africa, including volumes affected by shipment delays from certain African origins during the period.

While uncommitted levels of processed tobacco remained low as of December 31, 2025, larger current season crop volumes, particularly from Africa and South America, led to a shift in the global tobacco market toward a more balanced supply environment during the current fiscal year, compared to undersupply conditions in prior years.

Early indications from the upcoming crop season suggest continued strong production, which is expected to result in oversupply levels at the beginning of fiscal 2027.

Total processed tobacco increased by $95.7 million, or 16.6%, from June 30, 2025 to June 30, 2026.

This increase is primarily from larger carry-over crop volumes in Africa.

The level of uncommitted processed tobacco at June 30, 2026 is higher than the prior-year period, reflecting the current oversupply market environment, compared with more balanced supply and demand conditions a year ago.

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 December 31, 2025, our cash, cash equivalents, and restricted cash was $134.5 million, of which approximately $75.2 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.

As of June 30, 2026, our cash, cash equivalents, and restricted cash was $179.5 million, of which approximately $130.9 million was held in foreign jurisdictions for 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.

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

Nine Months Ended

Three Months Ended

(in millions) 2026 2025

Net income $ 1.0 $ 21.1

Net loss $ (7.0) $ (15.3)

Trade and other receivables 9.6 (52.4)

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Net proceeds from short-term borrowings 353.6 476.9

Repayment of long-term borrowings — (55.8)

Other (5.1) (2.4)

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Increase in cash, cash equivalents, and restricted cash $ 41.9 $ 15.8

* 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, 2025 compared to the nine months ended December 31, 2024 increased by $39.1 million.

This increase was due to higher net proceeds received from foreign seasonal lines of credit and the non-recurrence of partial repayments made on long-term debt in the prior-year period, partially offset by an increase in cash used to purchase larger crop volumes.

The change in cash, cash equivalents, and restricted cash for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 increased by $26.1 million.

This increase was due to higher collections of cash from customers to

satisfy outstanding trade receivables and advances from customers in exchange for our promise to deliver processed tobacco at a future date, partially offset by reduced proceeds from short-term borrowings due to lower green tobacco prices in Africa and South America.

Planned Capital Expenditures

Capital investments in our leaf operations were primarily for routine replacement of machinery and equipment, as well as investments in assets to enhance our sustainability efforts or increase efficiencies, which we believe will add value to our customers.

We incurred approximately $15.8 million in capital expenditures for the nine months ended December 31, 2025, and are expecting to incur an additional $10.3 million for the remainder of the fiscal year ending March 31, 2026.

Capital spend for fiscal year 2027 includes strategic projects to drive long-term efficiencies and cost optimization at our largest operations in Africa and South America.

Capital expenditures are also planned for the routine replacement of machinery and equipment, and investments in other such assets to enhance our operational effectiveness and to support our ongoing sustainability efforts.

For the three months ended June 30, 2026, we incurred approximately $4.2 million in capital expenditures, and are expecting to incur an additional $34.2 million for the remainder of the fiscal year ending March 31, 2027.

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

(in millions) December 31, 2025

Three Months Ended

(in millions) June 30, 2026

Contributions made during the period $ 1.2

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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-Q

Item 2. Management’s Discussion and Analysis