PYXUS INTERNATIONAL, INC.

Previous wording

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.

Current wording

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 continues to unfold and is expected to reach its peak effects between the Company's third and fourth quarters of fiscal 2027. This year's cycle has been characterized by certain meteorological sources as a "Super" El Niño, with an intensity expected to exceed that of previous recorded El Niño events. 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 continue to actively monitor this weather event, 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 this weather cycle's potential effect on availability, quality, and cost of leaf tobacco.

Previous wording

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.

Current wording

Cost of goods and services sold decreased $26.9 million, or 5.6%, to $455.5 million for the three months ended September 30, 2026 from $482.4 million for the three months ended September 30, 2025, corresponding to the reduction in sales and other operating revenues.

Previous wording

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.

Current wording

Income tax expense decreased $8.8 million, or 85.4%, to $1.5 million for the three months ended September 30, 2026 from $10.3 million for the three months ended September 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.

Previous wording

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.

Current wording

Sales and other operating revenues decreased $106.8 million, or 9.9%, to $972.2 million for the six months ended September 30, 2026 from $1,079.0 million for the six months ended September 30, 2025, largely driven by shipment timing in North America that led to an 11.2% decline in leaf volumes sold. 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. Shipment timing from Asia, and current crop shipment delays from Africa and South America were also contributing factors to the decline in leaf volumes sold, partially offset by higher carry-over crop shipments from Africa.

Previous wording

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.

Current wording

The total borrowing capacity of our foreign seasonal lines of credit increased $136.9 million and the remaining amount available also increased by $155.2 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 purchased volumes of green tobacco, and which were purchased at lower prices have resulted in lower borrowings and a corresponding increase in the remaining amount available for borrowing under our foreign seasonal lines of credit, which remaining availability is subject to limitations based on the level of receivables and inventories as collateral and by certain restrictive covenants.

Previous wording

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.

Current wording

Net debt decreased as of September 30, 2026 when compared to September 30, 2025 primarily from reduced borrowings on our foreign seasonal lines of credit due to fewer kilos purchased and at lower green tobacco prices in Africa.

Previous wording

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.

Current wording

Working capital increased $14.1 million, or 3.8%, from September 30, 2025 to September 30, 2026. The increase was due to higher trade receivables resulting from the timing of sales and customer collections near period-end, as well as reduced borrowings under our foreign seasonal lines of credit in Africa that were used to procure fewer kilos of green tobacco and at lower costs. These factors were partially offset by higher customer advances associated with our obligation to ship tobacco to certain customers at a future date.

Previous wording

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. Inventories, Net" to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Current wording

Total processed tobacco increased by $68.9 million, or 9.7%, from September 30, 2025 to September 30, 2026. This increase is primarily from larger carry-over crop volumes in Africa. The percentage of uncommitted processed tobacco at September 30, 2026 was 5.4%, compared to 2.7% at the same time a year ago, reflecting large crops across origins in the Southern Hemisphere over the past two crop cycles. See "Note 7. Inventories, Net" to the "Notes to Condensed Consolidated Financial Statements" for additional information.

Previous wording

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. dollar versus many of the currencies in which we have costs may have an impact on our working capital requirements. We will continue to monitor and hedge foreign currency costs, as needed.

Current wording

As of September 30, 2026, our cash, cash equivalents, and restricted cash was $101.3 million, of which approximately $77.4 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. dollar versus many of the currencies in which we have costs may have an impact on our working capital requirements. We will continue to monitor and hedge foreign currency costs, as needed.

Previous wording

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.

Current wording

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 six months ended September 30, 2026, we incurred approximately $11.8 million in capital expenditures, and are expecting to incur an additional $26.1 million for the remainder of the fiscal year ending March 31, 2027.