PYYX 10-Q

Pyxus International, Inc. (PYYX)

10-Q 2022-08-11 For: 2022-06-30

View Original

Added on April 06, 2026


Virginia		85-2386250
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

8001 Aerial Center Parkway
Morrisville,	North Carolina	27560
(Address of principal executive offices)		(Zip Code)


Pyxus International, Inc. and Subsidiaries
Table of Contents
			Page No.




Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Statements of Operations	3

		Condensed Consolidated Statements of Comprehensive Loss	4

		Condensed Consolidated Balance Sheets	5

		Condensed Statements of Consolidated Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	7

		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
	Item 4.	Controls and Procedures	29

Part II.	Other Information
	Item 1.	Legal Proceedings	29
	Item 1A.	Risk Factors	29







	Item 6.	Exhibits	30

Signature			31


Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)


(in thousands, except per share data)	Three months ended June 30, 2022		Three months ended June 30, 2021
Sales and other operating revenues	$	343,905	$	333,290
Cost of goods and services sold	303,150		291,170
Gross profit	40,755		42,120
Selling, general, and administrative expenses	34,588		33,845
Other income, net	1,085		162
Restructuring and asset impairment charges	300		233

Operating income	6,952		8,204


Loss on deconsolidation/disposition of subsidiaries	599		—
Interest expense, net	25,474		26,840









Loss before income taxes and other items	(19,121)		(18,636)
Income tax benefit	867		8,439
Income (loss) from unconsolidated affiliates	3,749		(1,431)
Net loss	(14,505)		(11,628)
Net income (loss) attributable to noncontrolling interests	158		(120)
Net loss attributable to Pyxus International, Inc.	$	(14,663)	$	(11,508)

Loss per share:
Basic and diluted	$	(0.59)	$	(0.46)


Weighted average number of shares outstanding:
Basic and diluted	25,000		25,000


See "Notes to Condensed Consolidated Financial Statements"


Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)


(in thousands)	Three months ended June 30, 2022		Three months ended June 30, 2021
Net loss	$	(14,505)	$	(11,628)

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	947		689


Cash flow hedges	(1,503)		4,328

Total other comprehensive (loss) income, net of tax	(556)		5,017
Total comprehensive loss	(15,061)		(6,611)
Comprehensive income (loss) attributable to noncontrolling interests	158		(120)
Comprehensive loss attributable to Pyxus International, Inc.	$	(15,219)	$	(6,491)

See "Notes to Condensed Consolidated Financial Statements"


Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)


(in thousands)	June 30, 2022		June 30, 2021		March 31, 2022
Assets
Current assets
Cash and cash equivalents	$	165,441	$	79,593	$	198,777
Restricted cash	9,495		2,538		2,148
Trade receivables, net	155,976		198,241		247,677
Other receivables	26,859		33,711		12,511


Inventories, net	980,070		854,042		749,427
Advances to tobacco suppliers, net	44,070		36,706		48,932
Recoverable income taxes	8,747		10,894		7,906
Prepaid expenses	44,513		35,217		34,817
Other current assets	16,672		19,713		25,452
Total current assets	1,451,843		1,270,655		1,327,647
Restricted cash	—		389		389

Investments in unconsolidated affiliates	87,139		85,651		95,420
Goodwill	—		36,853		—
Other intangible assets, net	42,052		49,935		45,061
Deferred income taxes, net	8,871		10,179		6,498
Long-term recoverable income taxes	4,571		4,167		4,588

Other noncurrent assets	46,456		42,127		45,424
Right-of-use assets	35,636		41,540		35,979
Property, plant, and equipment, net	135,878		140,332		137,521
Total assets	$	1,812,446	$	1,681,828	$	1,698,527

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable to banks	$	545,224	$	403,792	$	378,612

Accounts payable	144,915		88,807		179,012

Advances from customers	46,071		29,631		52,998

Accrued expenses and other current liabilities	91,054		91,426		82,239
Income taxes payable	6,729		4,110		5,592
Operating leases payable	8,535		8,961		8,065
Current portion of long-term debt	13,781		2,686		107,856
Total current liabilities	856,309		629,413		814,374
Long-term taxes payable	5,783		6,703		6,703
Long-term debt	678,777		669,793		580,477
Deferred income taxes	9,925		14,254		11,670
Liability for unrecognized tax benefits	12,173		15,883		14,401
Long-term leases	26,473		31,843		28,604
Pension, postretirement, and other long-term liabilities	59,748		66,610		60,927
Total liabilities	1,649,188		1,434,499		1,517,156
Commitments and contingencies
Stockholders’ equity
Common Stock—no par value:
Authorized shares (250,000 for all periods)
Issued shares (25,000 for all periods)	390,290		391,089		390,290
Retained deficit	(233,476)		(148,202)		(218,813)
Accumulated other comprehensive income (loss)	3,248		(1,716)		3,804
Total stockholders’ equity of Pyxus International, Inc.	160,062		241,171		175,281
Noncontrolling interests	3,196		6,158		6,090
Total stockholders’ equity	163,258		247,329		181,371
Total liabilities and stockholders’ equity	$	1,812,446	$	1,681,828	$	1,698,527

See "Notes to Condensed Consolidated Financial Statements"









Balance, March 31, 2021	$	391,089	$	(136,686)	$	(4,649)	$	541	$	(2,625)	$	6,270	$	253,940
Net loss attributable to Pyxus International, Inc.	—		(11,508)		—		—		—		(120)		(11,628)
Other	—		(8)		—		—		—		8		—

Other comprehensive income, net of tax	—		—		689		—		4,328		—		5,017
Balance, June 30, 2021	$	391,089	$	(148,202)	$	(3,960)	$	541	$	1,703	$	6,158	$	247,329



	Three months ended June 30, 2022		Three months ended June 30, 2021

Leaf:
Product revenue	$	322,884	$	311,741
Processing and other revenues	17,742		18,117
Total sales and other operating revenues	340,626		329,858
All Other:
Total sales and other operating revenues	3,279		3,432
Total sales and other operating revenues	$	343,905	$	333,290



	Three months ended June 30, 2022		Three months ended June 30, 2021
Balance, beginning of period	$	(24,541)	$	(20,900)
Additions	(165)		(380)
Write-offs	1,376		147
Balance, end of period	(23,330)		(21,133)
Trade receivables	179,306		219,374
Trade receivables, net	$	155,976	$	198,241



	Three months ended June 30, 2022		Three months ended June 30, 2021
Basic and diluted loss per share:
Net loss attributable to Pyxus International, Inc.	$	(14,663)	$	(11,508)
Shares:
Weighted average number of shares outstanding	25,000		25,000
Basic and diluted loss per share	$	(0.59)	$	(0.46)


Investee Name	Location	Primary Purpose	The Company's Ownership Percentage		Basis Difference
Adams International Ltd.	Thailand	purchase and process tobacco	49	%	$	(4,526)
Alliance One Industries India Private Ltd.	India	purchase and process tobacco	49	%	(5,770)
China Brasil Tobacos Exportadora SA	Brazil	purchase and process tobacco	49	%	45,124
Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş.	Turkey	process tobacco	50	%	(416)
Purilum, LLC	U.S.	produce flavor formulations and consumable e-liquids	50	%	4,589
Siam Tobacco Export Company	Thailand	purchase and process tobacco	49	%	(6,098)



Operations statement:	Three months ended June 30, 2022		Three months ended June 30, 2021
Sales	$	69,382	$	31,432
Gross profit	14,089		3,666
Net income	8,330		(2,900)
Company's dividends received	11,522		8,848



Balance sheet:	June 30, 2022		June 30, 2021		March 31, 2022
Current assets	$	441,973	$	290,750	$	375,015
Property, plant, and equipment and other assets	37,876		45,068		42,841
Current liabilities	367,743		228,716		289,816
Long-term obligations and other liabilities	2,249		3,400		2,999



	Three months ended June 30, 2022
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Amortization Expense		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	10.17 years	$	23,568	$	(1,455)	$	22,113
Technology	5.82 years	11,471		(1,352)		10,119
Trade names	12.17 years	10,022		(202)		9,820


Total		$	45,061	$	(3,009)	$	42,052



	Year ended March 31, 2022
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Additions		Amortization Expense		Disposition of Humble Juice		Impairment		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	10.30 years	$	27,730	$	—	$	(2,427)	$	(1,735)	$	—	$	23,568

Technology	5.80 years	12,858		840		(2,227)		—		—		11,471

Trade names	12.42 years	10,829		—		(807)		—		—		10,022
Intangibles not subject to amortization:
Goodwill		36,853		—		—		(4,667)		(32,186)		—
Total		$	88,270	$	840	$	(5,461)	$	(6,402)	$	(32,186)	$	45,061


				June 30,		June 30,		March 31,
(in thousands)	Interest Rate			2022		2021		2022
Senior secured credit facilities:
ABL Credit Facility	3.5	%	(1)	$	90,000	$	—	$	90,000
Exit ABL Credit Facility	5.8	%	(1)	—		67,500		—
DDTL Facility (2)	10.7	%	(1)	109,751		117,353		107,832
Senior secured notes:
10.0% senior secured first lien notes (3)	10.0	%		271,678		268,168		270,762

Exit Term Loan Credit Facility (4)	9.6	%	(1)	220,518		216,533		219,500
Other long-term debt	1.9	%	(1)	611		2,925		239
Notes payable to banks (5)	5.8	%	(1)	545,224		403,792		378,612
Total debt				$	1,237,782	$	1,076,271	$	1,066,945
Short-term (5)				$	545,224	$	403,792	$	378,612
Long-term:
Current portion of long-term debt				$	13,781	$	2,686	$	107,856
Long-term debt				678,777		669,793		580,477
				$	692,558	$	672,479	$	688,333

Letters of credit				$	14,430	$	4,804	$	9,038

(1) Weighted average rate for the trailing twelve months ended June 30, 2022. As the ABL Credit Facility has not been outstanding for a trailing twelve-month period, the interest rate is the weighted average rate from inception through June 30, 2022.
(2) Balance of $109,751 is net of original issue discount of $499. Total repayment will be $110,250, which includes a $5,250 exit fee payable upon repayment.
(3) Balance of $271,678 is net of original issue discount of $9,166. Total repayment will be $280,844.
(4) The aggregate balance of the Term Loan Credit Facility of $220,518 includes $5,436 of accrued paid-in-kind interest.
(5) Primarily foreign seasonal lines of credit.


000-25734
(Commission File Number)



	June 30, 2022		June 30, 2021		March 31, 2022
Investments in variable interest entities	$	80,446	$	78,903	$	88,118
Receivables with variable interest entities	16,825		19,671		2,211
Guaranteed amounts to variable interest entities (not to exceed)	64,610		55,987		55,884



	June 30, 2022		June 30, 2021		March 31, 2022
Amounts guaranteed (not to exceed)	$	118,615	$	95,272	$	114,208
Amounts outstanding under guarantee (1)	45,552		32,461		49,413
Fair value of guarantees	2,601		1,962		2,956
Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing	6,376		12,216		15,781
(1) Most of the guarantees outstanding at June 30, 2022 expire within one year.



	June 30, 2022						June 30, 2021						March 31, 2022
					Total						Total						Total
	Level 2		Level 3		at Fair Value		Level 2		Level 3		at Fair Value		Level 2		Level 3		at Fair Value
Financial Assets:
Derivative financial instruments	$	560	$	—	$	560	$	4,896	$	—	$	4,896	$	9,867	$	—	$	9,867
Securitized beneficial interests	—		22,762		22,762		—		20,271		20,271		—		28,072		28,072
Total assets	$	560	$	22,762	$	23,322	$	4,896	$	20,271	$	25,167	$	9,867	$	28,072	$	37,939
Financial Liabilities:
Long-term debt	$	430,573	$	660	$	431,233	$	450,724	$	3,164	$	453,888	$	447,843	$	246	$	448,089
Guarantees	—		2,601		2,601		—		1,962		1,962		—		2,956		2,956
Total liabilities	$	430,573	$	3,261	$	433,834	$	450,724	$	5,126	$	455,850	$	447,843	$	3,202	$	451,045



	Three months ended June 30, 2022		Three months ended June 30, 2021
Cash proceeds for the period ended:
Cash purchase price	$	153,449	$	90,012
Deferred purchase price	45,468		37,681
Total	$	198,917	$	127,693



	Three months ended June 30, 2022		Three months ended June 30, 2021
Sales and other operating revenues:
Leaf	$	340,626	$	329,858
All Other	3,279		3,432
Consolidated sales and other operating revenues	$	343,905	$	333,290

Segment operating income:
Leaf	$	11,629	$	14,778
All Other	(4,377)		(6,341)
Segment operating income	7,252		8,437

Restructuring and asset impairment charges	300		233

Consolidated operating income	$	6,952	$	8,204


Three Months Ended June 30, 2022 and 2021
							Change
(in millions, except per kilo amounts)	Three months ended June 30, 2022			Three months ended June 30, 2021			$	%
Sales and other operating revenues	$	343.9		$	333.3		10.6	3.2
Cost of goods and services sold	303.2			291.2			12.0	4.1
Gross profit*	40.8			42.1			(1.3)	(3.1)
Selling, general, and administrative expenses	34.6			33.8			0.8	2.4
Other income, net	1.1			0.2			0.9	450.0
Restructuring and asset impairment charges	0.3			0.2			0.1	50.0

Operating income*	7.0			8.2			(1.2)	(14.6)
Loss on deconsolidation/disposition of subsidiaries	0.6			—			0.6	100.0


Interest expense, net	25.5			26.8			(1.3)	(4.9)


Income tax benefit	0.9			8.4			(7.5)	(89.3)
Income (loss) from unconsolidated affiliates	3.7			(1.4)			5.1	364.3
Net income (loss) attributable to noncontrolling interests	0.2			(0.1)			0.3	300.0
Net loss attributable to Pyxus International, Inc.	$	(14.7)		$	(11.5)		(3.2)	(27.8)

Leaf:
Sales and other operating revenues	$	322.9		$	311.7		11.1	3.6
Tobacco costs	266.0			251.8			14.2	5.6
Transportation, storage, and other period costs	20.6			21.5			(0.9)	(4.1)
Total cost of goods sold	286.6			273.3			13.3	4.9
Product revenue gross profit	36.3			38.5			(2.2)	(5.7)
Product revenue gross profit as a percent of sales	11.2		%	12.3		%

Kilos sold	72.1			69.1			3.0	4.3
Average price per kilo	$	4.48		$	4.51		(0.03)	(0.7)
Average cost per kilo	3.98			3.96			0.02	0.5
Average gross profit per kilo	0.50			0.55			(0.05)	(9.1)

Processing and other revenues	$	17.7		$	18.1		(0.4)	(2.1)
Processing and other revenues costs of services sold	12.5			12.4			0.2	1.2
Processing and other gross profit	5.2			5.7			(0.5)	(9.2)
Processing and other gross profit as a percent of sales	29.3		%	31.6		%

All Other:
Sales and other operating revenues	$	3.3		$	3.4		(0.2)	(4.5)
Cost of goods and services sold	4.0			5.5			(1.5)	(27.5)
Gross loss	(0.7)			(2.1)			1.4	65.7
Gross loss as a percent of sales	(21.6)		%	(60.2)		%

* Amounts may not equal column totals due to rounding


	June 30, 2022
(in millions)	Maximum Borrowing Amount		Remaining Amount Available

ABL Credit Facility	$	100.0	$	10.0
Foreign seasonal lines of credit	717.2		171.9
Other long-term debt	0.6		—
Letters of credit	18.3		3.9
Total	$	836.1	$	185.8



(in millions except for current ratio)	June 30, 2022		June 30, 2021		March 31, 2022
Cash, cash equivalents, and restricted cash	$	174.9	$	82.1	$	200.9
Trade and other receivables, net	182.8		232.0		260.2
Inventories and advances to tobacco suppliers	1,024.1		890.7		798.4
Recoverable income taxes	8.7		10.9		7.9
Prepaid expenses and other current assets	61.2		54.9		60.3
Total current assets*	$	1,451.8	$	1,270.7	$	1,327.6

Notes payable to banks	$	545.2	$	403.8	$	378.6
Accounts payable	144.9		88.8		179.0
Advances from customers	46.1		29.6		53.0
Accrued expenses and other current liabilities	91.1		91.4		82.2
Income taxes payable	6.7		4.1		5.6
Operating leases payable	8.5		9.0		8.1
Current portion of long-term debt	13.8		2.7		107.9
Total current liabilities	$	856.3	$	629.4	$	814.4

Current ratio	1.7 to 1		2.0 to 1		1.6 to 1
Working capital	$	595.5	$	641.3	$	513.2
* Amounts may not equal column totals due to rounding


(in millions)	Three months ended June 30, 2022
Contributions made during the period	$	1.4
Contributions expected for the remainder of the fiscal year	3.2
Total	$	4.6


10.01						Amendment and Restatement Agreement dated as of June 2, 2022 among Intabex Netherlands B.V., Pyxus International, Inc., Pyxus Parent, Inc., Pyxus Holdings, Inc., Alliance One International, LLC, Alliance One International Holdings, Ltd, Alliance One International Tabak B.V., the other guarantors party thereto, the Lenders party thereto, and Alter Domus (US) LLC, as administrative agent and collateral agent, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Pyxus International, Inc., filed on June 7, 2022 (File No. 000-25734)
10.02						Fourth Amendment and Restatement Agreement dated 27 June 2022 among Pyxus International, Inc., Pyxus Parent, Inc., Pyxus Holdings, Inc., Alliance One Tobacco (Malawi) Limited, Alliance One Tobacco (Tanzania) Limited, Alliance One Zambia Limited and Eastern and Southern African Trade and Development Bank, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Pyxus International, Inc., filed on July 6, 2022 (File No. 000-25734)
31.01						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.02						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32						Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS						XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibits 101.*)



SIGNATURE




Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Pyxus International, Inc.



Date: August 11, 2022						/s/ Philip C. Garofolo
						Philip C. Garofolo
						Vice President - Chief Accounting Officer
						(Principal Accounting Officer)