Pyxus International, Inc 10-Q for FY2024 Q3

Pyxus International, Inc. (PYYX)

10-Q 2024-02-14 For: 2023-12-31

Added on April 06, 2026

About this 10-Q

Pyxus International, Inc filed this 10-Q on February 14, 2024, covering the quarter ended December 31, 2023 (FY2024 Q3).

Headline figures

Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $529.82M; down 19.2% from $655.55M a year earlier
Net income: $3.84M; compared with a net loss of $2.33M a year earlier
Diluted EPS: $0.15; compared with -$0.09 a year earlier

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

6001 Hospitality Court, Suite 100
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 Income (Loss)	4

		Condensed Consolidated Balance Sheets	5

		Condensed Consolidated Statements of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	7

		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
	Item 4.	Controls and Procedures	31

Part II.	Other Information
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	33






	Item 5.	Other Information	33
	Item 6.	Exhibits	33

Signature			34


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

	Three Months Ended				Nine Months Ended
	December 31,				December 31,
(in thousands, except per share data)	2023		2022		2023		2022
Sales and other operating revenues	$	529,816	$	655,553	$	1,631,161	$	1,507,736
Cost of goods and services sold	437,268		567,752		1,376,802		1,311,861
Gross profit	92,548		87,801		254,359		195,875
Selling, general, and administrative expenses	42,381		37,119		116,477		106,694
Other expense, net	2,323		9,040		6,036		9,106
Restructuring and asset impairment charges	85		35		1,379		4,380

Operating income	47,759		41,607		130,467		75,695


Loss on deconsolidation/disposition of subsidiaries	—		—		—		648
Loss on pension settlement	12,008		—		12,008		2,588
Interest expense, net	31,994		31,361		95,785		85,649









Income (loss) before income taxes and other items	3,757		10,246		22,674		(13,190)
Income tax expense	6,156		17,887		16,360		15,810
Income from unconsolidated affiliates	6,578		5,404		6,531		10,708
Net income (loss)	4,179		(2,237)		12,845		(18,292)
Net income attributable to noncontrolling interests	344		96		111		241
Net income (loss) attributable to Pyxus International, Inc.	$	3,835	$	(2,333)	$	12,734	$	(18,533)

Earnings (loss) per share:
Basic and diluted	$	0.15	$	(0.09)	$	0.51	$	(0.74)


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


See "Notes to Condensed Consolidated Financial Statements"


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

	Three Months Ended				Nine Months Ended
	December 31,				December 31,
(in thousands)	2023		2022		2023		2022
Net income (loss)	$	4,179	$	(2,237)	$	12,845	$	(18,292)

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	2,185		4,855		1,347		1,001
Pension and other postretirement benefit plans	3,511		(78)		3,511		(1,640)

Cash flow hedges	(1,288)		(371)		(1,426)		(3,642)

Total other comprehensive income (loss), net of tax	4,408		4,406		3,432		(4,281)
Total comprehensive income (loss)	8,587		2,169		16,277		(22,573)
Comprehensive income attributable to noncontrolling interests	344		96		111		241
Comprehensive income (loss) attributable to Pyxus International, Inc.	$	8,243	$	2,073	$	16,166	$	(22,814)

See "Notes to Condensed Consolidated Financial Statements"


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


(in thousands)	December 31, 2023		December 31, 2022		March 31, 2023
Assets
Current assets
Cash and cash equivalents	$	90,245	$	216,449	$	136,733
Restricted cash	4,442		1,936		2,176
Trade receivables, net	227,529		205,991		185,351
Other receivables	11,988		16,336		17,387
Inventories, net	779,829		696,583		775,071
Advances to tobacco suppliers, net	87,790		79,669		42,305
Recoverable income taxes	4,604		7,053		5,815
Prepaid expenses	36,752		31,495		37,555
Other current assets	15,876		15,648		18,172
Total current assets	1,259,055		1,271,160		1,220,565
Investments in unconsolidated affiliates	93,619		94,099		100,750
Other intangible assets, net	35,030		39,732		38,572
Deferred income taxes, net	7,109		9,738		6,662
Long-term recoverable income taxes	2,648		3,444		2,863
Other noncurrent assets	31,687		43,086		43,761
Right-of-use assets	37,135		32,842		35,892
Property, plant, and equipment, net	135,097		136,556		133,398
Total assets	$	1,601,380	$	1,630,657	$	1,582,463

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable	$	472,972	$	492,326	$	382,544
Accounts payable	136,397		135,092		170,287

Advances from customers	42,589		30,826		42,472
Accrued expenses and other current liabilities	78,231		95,312		92,693
Income taxes payable	6,922		6,665		18,264
Operating leases payable	8,089		9,097		8,723
Current portion of long-term debt	20,251		97,282		75
Total current liabilities	765,451		866,600		715,058
Long-term taxes payable	2,678		4,850		4,978
Long-term debt	574,077		496,636		618,430
Deferred income taxes	5,992		12,770		9,900
Liability for unrecognized tax benefits	15,450		13,402		14,175
Long-term leases	27,523		23,663		25,581
Pension, postretirement, and other long-term liabilities	52,552		56,990		52,511
Total liabilities	1,443,723		1,474,911		1,440,633
Commitments and contingencies
Stockholders’ equity
Common Stock—no par value:
Authorized shares (250,000 for all periods)
Issued shares (25,000 for all periods)	389,789		390,290		390,290
Retained deficit	(245,220)		(237,346)		(257,954)
Accumulated other comprehensive income (loss)	8,947		(477)		5,515
Total stockholders’ equity of Pyxus International, Inc.	153,516		152,467		137,851
Noncontrolling interests	4,141		3,279		3,979
Total stockholders’ equity	157,657		155,746		141,830
Total liabilities and stockholders’ equity	$	1,601,380	$	1,630,657	$	1,582,463

See "Notes to Condensed Consolidated Financial Statements"









Balance, March 31, 2022	$	390,290	$	(218,813)	$	(8,873)	$	6,328	$	6,349	$	6,090	$	181,371
Net (loss) income	—		(14,663)		—		—		—		158		(14,505)
Other	—		—		—		—		—		(3,052)		(3,052)
Other comprehensive income (loss), net of tax	—		—		947		—		(1,503)		—		(556)
Balance, June 30, 2022	$	390,290	$	(233,476)	$	(7,926)	$	6,328	$	4,846	$	3,196	$	163,258
Net loss	—		(1,537)		—		—		—		(13)		(1,550)
Other comprehensive loss, net of tax	—		—		(4,801)		(1,562)		(1,768)		—		(8,131)
Balance, September 30, 2022	$	390,290	$	(235,013)	$	(12,727)	$	4,766	$	3,078	$	3,183	$	153,577
Net (loss) income	—		(2,333)		—		—		—		96		(2,237)


Other comprehensive income (loss), net of tax	—		—		4,855		(78)		(371)		—		4,406
Balance, December 31, 2022	$	390,290	$	(237,346)	$	(7,872)	$	4,688	$	2,707	$	3,279	$	155,746


	Nine Months Ended December 31, 2023
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Amortization Expense		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	8.7 years	$	20,482	$	(1,631)	$	18,851
Technology	4.6 years	8,875		(1,306)		7,569
Trade names	10.7 years	9,215		(605)		8,610
Total		$	38,572	$	(3,542)	$	35,030


	Year Ended March 31, 2023
	Weighted Average Remaining Useful Life	Beginning Carrying Amount, Net		Amortization Expense		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	9.4 years	$	23,568	$	(3,086)	$	20,482
Technology	5.2 years	11,471		(2,596)		8,875
Trade names	11.4 years	10,022		(807)		9,215
Total		$	45,061	$	(6,489)	$	38,572


				December 31,		December 31,		March 31,
(in thousands)	Interest Rate			2023		2022		2023
Senior secured credit facilities:
ABL Credit Facility	8.3	%	(1)	$	—	$	—	$	25,000
Term Loan Facility (2)	11.7	%	(1)	—		97,177		—

Senior secured notes:
10.0% Notes Due 2024 (3)	10.0	%	(1)	20,169		273,593		19,931
8.5% Notes Due 2027 (4)	8.6	%	(1)	254,367		—		253,483

Senior secured term loans:
Intabex Term Loans (5)	13.4	%	(1)	186,546		—		186,194
Pyxus Term Loans (6)	13.4	%	(1)	133,053		—		133,393
Exit Facility Loans (7)	12.0	%	(1)	—		222,620		—

Other Debt:
Other long-term debt	8.5	%	(1)	193		528		504
Notes payable (8)	9.3	%	(1)	472,972		492,326		382,544
Total debt				$	1,067,300	$	1,086,244	$	1,001,049

Short-term (8)				$	472,972	$	492,326	$	382,544
Long-term:
Current portion of long-term debt				$	20,251	$	97,282	$	75
Long-term debt				574,077		496,636		618,430
Total				$	594,328	$	593,918	$	618,505

Letters of credit				$	4,670	$	14,337	$	11,684

(1) Weighted average rate for the trailing twelve months ended December 31, 2023 or, for indebtedness outstanding only during a portion of such twelve-month period, for the portion of such period that such indebtedness was outstanding.
(2) The amount outstanding at December 31, 2022 is net of original issue discount of $2,823. This Term Loan Facility was established through the refinancing of the DDTL Facility on July 28, 2022, which included a partial principal payment of $9,000 and an exit fee payment of $5,250. Subsequent to this refinancing, on February 6, 2023, the Term Loan Facility was exchanged for $102,000 (inclusive of a $2,000 exit fee) of Intabex Term Loans.
(3) On February 6, 2023, $260,452 of the 10.0% Notes due 2024 were exchanged for 8.5% Notes due 2027. The remaining 10.0% Notes due 2024 outstanding of $20,169 is net of a debt discount of $222, and are reported in the current portion of long-term debt. Total repayment at maturity is $20,391.
(4) Balance of $254,367 is net of a debt discount of $6,085. Total repayment at maturity is $260,452.
(5) Balance of $186,546 is net of a debt discount of $2,487. Total repayment at maturity is $189,033, which includes a $2,000 exit fee payable upon repayment.
(6) Balance of $133,053 is net of a debt premium of $2,503. Total repayment at maturity is $130,550.
(7) On February 6, 2023, $189,033, representing 40.0% of the Exit Facility Loans, were exchanged for Intabex Term Loans, and $130,550, representing the remaining 60.0% of the Exit Facility Loans, were exchanged for Pyxus Term Loans.
(8) Primarily foreign seasonal lines of credit.


Three Months Ended December 31, 2023 and 2022
	Three Months Ended December 31,
							Change
(in millions, except per kilo amounts)	2023			2022			$	%
Sales and other operating revenues	$	529.8		$	655.6		(125.8)	(19.2)
Cost of goods and services sold	437.3			567.8			(130.5)	(23.0)
Gross profit*	92.6			87.8			4.8	5.5
Selling, general, and administrative expenses	42.4			37.1			5.3	14.3
Other expense, net	2.3			9.0			(6.7)	(74.4)
Restructuring and asset impairment charges	0.1			—			0.1	100.0
Operating income	47.8			41.6			6.2	14.9

Loss on pension settlement	12.0			—			12.0	100.0
Interest expense, net	32.0			31.4			0.6	1.9
Income tax expense	6.2			17.9			(11.7)	(65.4)
Income from unconsolidated affiliates	6.6			5.4			1.2	22.2
Net income attributable to noncontrolling interests	0.3			0.1			0.2	200.0
Net income (loss) attributable to Pyxus International, Inc.*	$	3.8		$	(2.3)		6.1	265.2

Leaf:
Product revenues	$	500.5		$	625.1		(124.6)	(19.9)
Tobacco costs	394.6			510.2			(115.6)	(22.7)
Transportation, storage, and other period costs	23.2			32.8			(9.6)	(29.3)
Total cost of goods sold	417.8			543.0			(125.2)	(23.1)
Product revenue gross profit	82.7			82.1			0.6	0.7
Product revenue gross profit as a percent of sales	16.5		%	13.1		%

Kilos sold	100.0			129.4			(29.4)	(22.7)
Average price per kilo	$	5.01		$	4.83		0.18	3.7
Average cost per kilo	4.18			4.19			(0.01)	(0.2)
Average gross profit per kilo	0.83			0.64			0.19	29.7

Processing and other revenues	$	28.6		$	27.1		1.5	5.5
Processing and other revenues costs of services sold	19.4			20.5			(1.1)	(5.4)
Processing and other gross profit	9.2			6.6			2.6	39.4
Processing and other gross profit as a percent of sales	32.2		%	24.3		%

All Other:
Sales and other operating revenues	$	0.7		$	3.3		(2.6)	(78.8)
Cost of goods and services sold	0.1			4.2			(4.1)	(97.6)
Gross income (loss)	0.6			(0.9)			1.5	166.7
Gross income (loss) as a percent of sales	85.7		%	(27.4)		%

* Amounts may not equal column totals due to rounding.


Nine Months Ended December 31, 2023 and 2022
	Nine Months Ended December 31,
							Change
(in millions, except per kilo amounts)	2023			2022			$	%
Sales and other operating revenues	$	1,631.2		$	1,507.7		123.5	8.2
Cost of goods and services sold	1,376.8			1,311.9			64.9	4.9
Gross profit	254.4			195.9			58.5	29.9
Selling, general, and administrative expenses	116.5			106.7			9.8	9.2
Other expense, net	6.0			9.1			(3.1)	(34.1)
Restructuring and asset impairment charges	1.4			4.4			(3.0)	(68.2)
Operating income	130.5			75.7			54.8	72.4
Loss on deconsolidation/disposition of subsidiaries	—			0.6			(0.6)	(100.0)
Loss on pension settlement	12.0			2.6			9.4	361.5
Interest expense, net	95.8			85.6			10.2	11.9
Income tax expense	16.4			15.8			0.6	3.8
Income from unconsolidated affiliates	6.5			10.7			(4.2)	(39.3)
Net income attributable to noncontrolling interests	0.1			0.2			(0.1)	(50.0)
Net income (loss) attributable to Pyxus International, Inc.	$	12.7		$	(18.5)		31.2	168.6

Leaf:
Product revenue	$	1,537.3		$	1,423.6		113.7	8.0
Tobacco costs	1,242.4			1,164.8			77.6	6.7
Transportation, storage, and other period costs	66.0			77.8			(11.8)	(15.2)
Total cost of goods sold	1,308.4			1,242.7			65.7	5.3
Product revenue gross profit	228.9			181.0			47.9	26.5
Product revenue gross profit as a percent of sales	14.9		%	12.7		%

Kilos sold	297.2			302.9			(5.7)	(1.9)
Average price per kilo	$	5.17		$	4.70		0.47	10.0
Average cost per kilo	4.40			4.10			0.30	7.3
Average gross profit per kilo	0.77			0.60			0.17	28.3

Processing and other revenues	$	91.4		$	75.2		16.2	21.5
Processing and other revenues costs of services sold	66.5			56.1			10.4	18.5
Processing and other gross profit	24.9			19.1			5.8	30.4
Processing and other gross profit as a percent of sales	27.2		%	25.4		%

All Other:
Sales and other operating revenues	$	2.5		$	8.9		(6.4)	(71.9)
Cost of goods and services sold	1.9			13.1			(11.2)	(85.5)
Gross profit (loss)	0.6			(4.2)			4.8	114.3
Gross profit (loss) as a percent of sales	24.0		%	(47.3)		%

* Amounts may not equal column totals due to rounding.


	December 31, 2023
(in millions)	Total Borrowing Capacity		Remaining Amount Available
ABL Credit Facility	$	120.0	$	120.0
Foreign seasonal lines of credit	692.2		250.2
Other long-term debt	0.4		0.2
Letters of credit	8.1		3.4
Total	$	820.7	$	373.8


(in millions except for current ratio)	December 31, 2023		December 31, 2022		March 31, 2023
Cash, cash equivalents, and restricted cash	$	94.7	$	218.4	$	138.9
Trade and other receivables, net	239.5		222.3		202.7
Inventories and advances to tobacco suppliers	867.6		776.3		817.4
Recoverable income taxes	4.6		7.1		5.8
Prepaid expenses and other current assets	52.6		47.1		55.7
Total current assets*	$	1,259.1	$	1,271.2	$	1,220.6

Notes payable	$	473.0	$	492.3	$	382.5
Accounts payable	136.4		135.1		170.3
Advances from customers	42.6		30.8		42.5
Accrued expenses and other current liabilities	78.2		95.3		92.7
Income taxes payable	6.9		6.7		18.3
Operating leases payable	8.1		9.1		8.7
Current portion of long-term debt	20.3		97.3		0.1
Total current liabilities	$	765.5	$	866.6	$	715.1

Current ratio	1.6 to 1		1.5 to 1		1.7 to 1
Working capital	$	493.6	$	404.6	$	505.5
* Amounts may not equal column totals due to rounding


10.01						Third Amendment to ABL Credit Agreement dated as of October 24, 2023 by and among Pyxus Holdings, Inc., the other borrowers and guarantors party thereto, the lenders party thereto and PNC Bank, National Association, as administrative agent and collateral agent
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 (filed herewith)
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 Exhibit 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: February 14, 2024						/s/ Philip C. Garofolo
						Philip C. Garofolo
						Vice President Finance and Chief Accounting Officer
						(Principal Accounting Officer)


000-25734
(Commission File Number)



	December 31, 2023		December 31, 2022		March 31, 2023
Investments in variable interest entities	$	86,889	$	87,381	$	93,754
Receivables with variable interest entities	—		145		2,617
Guaranteed amounts to variable interest entities (not to exceed)	11,113		68,193		68,265



	December 31, 2023		December 31, 2022		March 31, 2023
Amounts guaranteed (not to exceed)	$	63,967	$	129,837	$	152,032
Amounts outstanding under guarantee (1)	38,083		48,376		83,420
Fair value of guarantees	1,703		1,752		5,262
Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing	42		113		12,529
(1) Most of the guarantees outstanding at December 31, 2023 expire within one year.



	December 31, 2023						December 31, 2022						March 31, 2023
	Level 2		Level 3		Total at Fair Value		Level 2		Level 3		Total at Fair Value		Level 2		Level 3		Total at Fair Value
Financial Assets:
Derivative financial instruments	$	—	$	—	$	—	$	678	$	—	$	678	$	3,970	$	—	$	3,970
Securitized beneficial interests	—		14,312		14,312		—		37,650		37,650		—		19,522		19,522
Total assets	$	—	$	14,312	$	14,312	$	678	$	37,650	$	38,328	$	3,970	$	19,522	$	23,492
Financial Liabilities:

Long-term debt(1)	492,114		200		492,314		419,020		532		419,552		523,758		514		524,272
Guarantees	—		1,703		1,703		—		1,752		1,752		—		5,262		5,262
Total liabilities	$	492,114	$	1,903	$	494,017	$	419,020	$	2,284	$	421,304	$	523,758	$	5,776	$	529,534
(1) This fair value measurement disclosure does not affect the condensed consolidated balance sheets.


ACKNOWLEDGED AND AGREED:			ALLIANCE ONE INTERNATIONAL SERVICES, INC. (NC) AOSP INVESTMENTS, LLC (NC) CRES TOBACCO COMPANY LLC (NC) EASTERN CAROLINA PACKAGING, LLC (NC) PYXUS AGRICULTURE USA, LLC (NC) TWELFTH STATE BRANDS LLC (NC) CRITICALITY, LLC (NC), as Subsidiary Guarantors By: /s/ Tomas Grigera Name: Tomas Grigera Title: Authorized Signatory


Available Tenor			Benchmark Replacement Adjustment
One-Month			0.11448% (11.448 basis points)
Three-Months			0.26161% (26.161 basis points)
Six-Months			0.42826% (42.826 basis points)


Address	BORROWERS:

8001 Aerial Center Parkway Morrisville, North Carolina 27560 Attention: Telephone No.: Facsimile: 919-379-4131	PYXUS HOLDINGS, INC.
	By:	Name: Title:

	ALLIANCE ONE INTERNATIONAL, LLC
8958 West Marlboro Road Farmville, NC 27828 Attention: Telephone No.: Facsimile:	By:	Name: Title:
8958 West Marlboro Road Farmville, NC 27828 Attention: Telephone No.: Facsimile:	ALLIANCE ONE NORTH AMERICA, LLC
	By:	Name: Title:
2305 Baldree Road Wilson, NC 27893 Attention: Telephone No.: Facsimile:	ALLIANCE ONE SPECIALTY PRODUCTS, LLC
	By:	Name: Title:


8001 Aerial Center Parkway Morrisville, North Carolina 27560 Attention: Telephone No.: Facsimile: 919-379-4131	PYXUS PARENT, INC.
	By:	Name: Title:


Lender			Commitment
PNC Bank, National Association			$120,000,000


Total Revolving Loan Commitment			$120,000,000


/s/ J. Pieter Sikkel
J. Pieter Sikkel President and Chief Executive Officer
February 14, 2024


/s/ Flavia B. Landsberg
Flavia B. Landsberg Executive Vice President and Chief Financial Officer
February 14, 2024