Pyxus International Inc.

02/11/2026 | Press release | Distributed by Public on 02/11/2026 06:00

Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Readers are cautioned that the statements contained in this report regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which are based on current expectations of future events, may be identified by the use of words such as "guidance", "strategy," "expects," "continues," "plans," "anticipates," "believes," "will," "estimates," "intends," "projects," "goals," "targets," and other words of similar meaning. These statements also may be identified by the fact that they do not relate strictly to historical or current facts. If underlying assumptions prove inaccurate, or if known or unknown risks or uncertainties materialize, actual results could vary materially from those anticipated, estimated, or projected. These risks and uncertainties include those discussed in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended March 31, 2025, and in our other filings with the U.S. Securities and Exchange Commission. These risks and uncertainties include: our reliance on a small number of significant customers; 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; variation in our financial results due to growing conditions, customer indications and other factors; loss of confidence in us by our customers, farmers and other suppliers; migration of suppliers who have historically grown tobacco and from whom we have purchased tobacco toward growing other crops; risks related to our advancement of inputs to tobacco suppliers to be settled upon the suppliers delivering us unprocessed tobacco at the end of the growing season; risks that the tobacco we purchase directly from suppliers will not meet our customers' quality and quantity requirements; 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; 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; 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; 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; 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; 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.
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.
Overview
Pyxus is a global agricultural company with businesses having more than 150 years of experience delivering value-added products and services to businesses and customers. The Company is a trusted provider of responsibly sourced, independently verified, sustainable, and traceable products and ingredients.
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.
Results of Operations
Three Months Ended December 31, 2025 and 2024
Three Months Ended December 31,
Change
(in millions, except per kilo amounts) 2025 2024 $ %
Consolidated:
Sales and other operating revenues $ 655.8 $ 778.3 (122.5) (15.7)
Cost of goods and services sold 555.9 661.9 (106.0) (16.0)
Gross profit* 99.9 116.5 (16.6) (14.2)
Gross profit as a percent of sales 15.2 % 15.0 %
Selling, general, and administrative expenses $ 38.3 $ 46.5 (8.2) (17.6)
Other expense, net 8.8 3.8 5.0 131.6
Restructuring and asset impairment charges 1.5 0.1 1.4 1,400.0
Operating income 51.3 66.1 (14.8) (22.4)
Gain on pension settlement 0.4 - 0.4 100.0
Interest expense, net 36.6 32.9 3.7 11.2
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
Net income attributable to noncontrolling interests 0.3 0.5 (0.2) (40.0)
Net income attributable to Pyxus International, Inc. $ 16.9 $ 18.9 (2.0) (10.6)
Leaf:
Product revenues $ 614.7 $ 742.9 (128.2) (17.3)
Tobacco costs 493.4 603.1 (109.7) (18.2)
Transportation, storage, and other period costs 28.9 27.7 1.2 4.3
Total product cost of goods sold 522.3 630.8 (108.5) (17.2)
Product gross profit 92.4 112.1 (19.7) (17.6)
Product gross profit as a percent of sales 15.0 % 15.1 %
Kilos sold 115.1 123.5 (8.4) (6.8)
Average price per kilo $ 5.34 $ 6.02 (0.68) (11.3)
Average cost per kilo 4.54 5.11 (0.57) (11.2)
Average gross profit per kilo 0.80 0.91 (0.11) (12.1)
Processing and other revenues $ 37.8 $ 32.4 5.4 16.7
Processing and other costs of services sold 30.8 28.5 2.3 8.1
Processing and other gross profit 7.0 3.9 3.1 79.5
Processing and other gross profit as a percent of sales 18.5 % 12.0 %
All Other:
Sales and other operating revenues $ 3.3 $ 3.0 0.3 10.0
Cost of goods and services sold 2.7 2.5 0.2 8.0
Gross profit 0.6 0.5 0.1 20.0
Gross profit as a percent of sales 18.2 % 16.7 %
* 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 wasprimarily 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,
Change
(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)
Leaf:
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 %
All Other:
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 administrative 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 increasewas 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. 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
Overview
Our primary sources of liquidity are cash generated from operations, short-term borrowings under our foreign seasonal lines of credit, availability under our ABL Credit Facility, and cash collections from our securitized receivables. Our liquidity requirements are affected by various factors from our tobacco leaf business, including crop seasonality, foreign currency and interest rates, green tobacco prices, customer mix, crop size, and quality. Our leaf tobacco business is seasonal, and purchasing, processing, and selling activities have several associated peaks where cash on-hand and outstanding indebtedness may vary significantly compared to year end. 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. 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. To address a potential liquidity deficiency, we may undertake plans to minimize cash outflows, which could include exiting operations that do not generate positive cash flow. It is possible that, depending on the occurrence of events affecting our liquidity needs and sources of liquidity, such plans may not be sufficient to adequately or timely address a liquidity deficiency.
Debt Financing
We continue to finance our business with a combination of short-term and long-term credit lines, the long-term debt securities, advances from customers, and cash from operations when available. See "Note 11. Debt Arrangements" to the "Notes to Condensed Consolidated Financial Statements" for a summary of our short-term and long-term debt.
We continuously monitor and, as available, adjust funding sources as needed to enhance and drive various business opportunities. From time to time we may take steps to reduce our debt or otherwise improve our financial position. Such actions could include prepayments, open market debt repurchases, negotiated repurchases, other redemptions or retirements of outstanding debt, and refinancing of debt. 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
(in millions) Total Borrowing Capacity Remaining Amount Available Total Borrowing Capacity Remaining Amount Available
Senior Secured Credit Facilities:
ABL Credit Facility $ 150.0 $ 150.0 $ 120.0 $ 120.0
Foreign seasonal lines of credit 1,055.3 229.2 871.5 285.1
Other long-term debt - - 0.4 0.3
Letters of credit 11.9 3.5 11.5 3.4
Total $ 1,217.2 $ 382.7 $ 1,003.4 $ 408.8
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.
Net Debt
We refer to "Net debt," a non-GAAP measure, as total debt liabilities less cash and cash equivalents. We believe this non-GAAP financial measure is useful to monitor leverage and to evaluate changes to the Company's capital structure. A limitation associated with using net debt is that it subtracts cash and cash equivalents, and therefore, may imply that management intends to use cash and cash equivalents to reduce outstanding debt and that cash held in certain jurisdictions can be applied to repay obligations owing in other jurisdictions and without reduction for applicable taxes. In addition, net debt suggests that our debt obligations are less than the most comparable GAAP measure indicates. The following summarizes the computation of net debt:
(in millions) December 31, 2025 December 31, 2024 March 31, 2025
Notes payable $ 833.7 $ 608.6 $ 395.0
Current portion of long-term debt - 0.1 -
Long-term debt(1)
455.5 454.6 454.9
Total debt liabilities $ 1,289.2 $ 1,063.3 $ 849.9
Less: Cash and cash equivalents 129.8 103.3 78.3
Net debt $ 1,159.4 $ 960.0 $ 771.6
(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.
Working Capital
The following summarizes our working capital:
(in millions except for current ratio) December 31, 2025 December 31, 2024 March 31, 2025
Cash, cash equivalents, and restricted cash $ 134.5 $ 109.7 $ 85.5
Trade and other receivables, net 268.5 344.2 204.3
Inventories and advances to tobacco suppliers, net 1,091.3 874.3 792.7
Recoverable income taxes 13.0 2.7 6.6
Prepaid expenses and other current assets 60.5 54.4 69.0
Total current assets* $ 1,567.8 $ 1,385.2 $ 1,158.2
Notes payable $ 833.7 $ 608.6 $ 395.0
Accounts payable 136.7 169.8 132.9
Advances from customers 63.9 88.4 135.6
Accrued expenses and other current liabilities 125.8 104.2 90.9
Income taxes payable 15.6 20.5 11.0
Operating leases payable 9.2 8.2 8.5
Current portion of long-term debt - 0.1 -
Total current liabilities $ 1,184.9 $ 999.8 $ 773.9
Current ratio 1.3 to 1 1.4 to 1 1.5 to 1
Working capital $ 382.9 $ 385.4 $ 384.3
* 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.
Inventories
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
Committed $ 740.6 $ 581.4 $ 482.8
Uncommitted 28.0 21.9 7.6
Total processed tobacco $ 768.6 $ 603.3 $ 490.4
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. See "Note 7. Inventories, Net" to the "Notes to Condensed Consolidated Financial Statements" for additional information.
Sources and Uses of Cash
We typically finance our non-U.S. tobacco operations with committed and uncommitted short-term foreign seasonal lines of credit, normally extending for a term of 180 to 365 days, corresponding to the tobacco crop cycle in that market. For uncommitted facilities, the lenders have the right to cease making loans and demand repayment of loans. These short-term seasonal lines of credit are generally renewed at the outset of each tobacco season. We maintain various other financing arrangements to meet the cash requirements of our businesses. See "Note 11. Debt Arrangements" to the "Notes to Condensed Consolidated Financial Statements" for additional information.
We utilize capital in excess of cash flow from operations to finance accounts receivable, inventory, and advances to tobacco suppliers in foreign countries. 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. 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.
The following summarizes the sources and uses of our cash flows:
Nine Months Ended
December 31,
(in millions) 2025 2024
Net income $ 1.0 $ 21.1
Trade and other receivables (209.2) (305.1)
Inventories and advances to tobacco suppliers (295.5) 73.4
Payables and accrued expenses 31.8 2.1
Advances from customers (73.2) (0.4)
Other 26.5 37.2
Net cash used in operating activities $ (518.6) $ (171.7)
Collections from beneficial interests in securitized trade receivables 152.5 142.8
Other (10.3) (11.9)
Net cash provided by investing activities $ 142.2 $ 130.9
Net proceeds from short-term borrowings 431.4 114.9
Repayment of long-term borrowings - (55.8)
Other (3.9) (3.5)
Net cash provided by financing activities $ 427.5 $ 55.6
Effect of exchange rate changes on cash (2.1) (5.0)
Increase in cash, cash equivalents, and restricted cash* $ 49.0 $ 9.9
* 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.
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.
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
Contributions made during the period $ 3.2
Contributions expected for the remainder of the fiscal year 1.3
Total $ 4.5
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates since March 31, 2025. For information regarding our critical accounting estimates, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
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