UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~September 30,~~December 31, 2019.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.


001-13684
(Commission File Number)

Pyxus International, Inc.

(Exact name of registrant as specified in its charter)

Virginia

54-1746567

(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)

(919) 379-4300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Exchange On Which Registered
Common Stock (no par value)	PYX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company' in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐ Accelerated Filer ☒ Non-Accelerated filer ☐

Smaller Reporting Company ☒ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~October~~January 31, ~~2019,~~2020, the registrant had ~~9,165,401~~9,177,268 shares outstanding of Common Stock (no par value) excluding 785,313 shares owned by a wholly owned subsidiary.

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Pyxus International, Inc. and Subsidiaries

Table of Contents

Page No.

Forward-Looking Statements

~~Page No.~~3

Part I.

Financial Information

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations

Three and ~~Six~~Nine Months Ended ~~September 30,~~December 31, 2019 and 2018

Condensed Consolidated Statements of Comprehensive Loss

Three and ~~Six~~Nine Months Ended ~~September 30,~~December 31, 2019 and 2018

Condensed Consolidated Balance Sheets

~~September 30,~~December 31, 2019 and 2018 and March 31, 2019

Condensed Statements of Consolidated Stockholders’ Equity

Three and ~~Six~~Nine Months Ended ~~September 30,~~December 31, 2019 and 2018

Condensed Consolidated Statements of Cash Flows

~~Six~~Nine Months Ended ~~September 30,~~December 31, 2019 and 2018

Notes to Condensed Consolidated Financial Statements

910

Item 2.

Management's Discussion and Analysis

of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Part II.

Item 1.

Item 1A.

Item 6.

-2-

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 “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. Some of these risks and uncertainties include changes in the timing of anticipated shipments, changes in anticipated geographic product sourcing, changes in relevant capital markets affecting the terms and availability of financing, political instability, currency and interest rate fluctuations, shifts in the global supply and demand position for tobacco products, changes in tax laws and regulations or the interpretation of tax laws and regulations, resolution of tax matters, adverse weather conditions, the impact of disasters or other unusual events affecting international commerce, including impacts from the strain of coronavirus reported to have recently surfaced in Wuhan, China, changes in costs incurred in supplying products and related services, uncertainties with respect to the impact of regulation associated with new business lines, including the risk of obtaining anticipated regulatory approvals in Canada and for nicotine e-liquids products in the United States, uncertainties regarding the regulation of the production and distribution of hemp products and continued compliance with applicable regulatory requirements, uncertainties with respect to the development of the industries and markets of the new business lines, consumer acceptance of products offered by the new business lines, uncertainties with respect to the timing and extent of retail and product-line expansion, the impact of increasing competition in the new business lines, uncertainties regarding obtaining financing to fund planned facilities expansions, ~~in Prince Edward Island and Ontario,~~ the possibility of delays in the completion of ~~these and other~~ facilities expansions and uncertainties regarding the potential production yields of new or expanded facilities, as well as the progress of legalization of cannabis for medicinal and adult recreational uses in other jurisdictions. A further list and description of these risks, uncertainties, and other factors can be found in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended March 31, 2019, in Part II, Item 1A "Risk Factors" in the Company's Quarterly ~~Report~~Reports on Form 10-Q for the ~~period~~periods ended June 30, 2019 and September 30, 2019, and in Part II, Item 1A of this report, and in our other filings with the Securities and Exchange Commission. We do not undertake to update any forward-looking statements that we may make from time to time.

-3-

Part I. Financial Information

Item 1. Financial Statements


Pyxus International, Inc. and Subsidiaries	Pyxus International, Inc. and Subsidiaries																	Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations	Condensed Consolidated Statements of Operations																	Condensed Consolidated Statements of Operations
Three and Six Months Ended September 30, 2019 and 2018
(Unaudited)	(Unaudited)																	(Unaudited)

		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
(in thousands, except per share data)	(in thousands, except per share data)	2019		2018		2019		2018		(in thousands, except per share data)	2019		2018		2019		2018
Sales and other operating revenues	Sales and other operating revenues	$	382,981	$	394,876	$	659,651	$	685,864	Sales and other operating revenues	$	363,260	$	524,487	$	1,022,911	$	1,210,351
Cost of goods and services sold	Cost of goods and services sold	322,761		345,672		559,719		595,266		Cost of goods and services sold	308,133		449,776		867,852		1,045,042
Gross profit	Gross profit	60,220		49,204		99,932		90,598		Gross profit	55,127		74,711		155,059		165,309
Selling, general, and administrative expenses	Selling, general, and administrative expenses	47,263		38,995		96,640		77,079		Selling, general, and administrative expenses	45,911		41,680		142,551		118,759
Other income, net		1,514		2,561		4,462		5,482
Other (expense) income, net										Other (expense) income, net	(401)		7,991		4,061		13,473
Restructuring and asset impairment charges	Restructuring and asset impairment charges	8		182		220		1,723		Restructuring and asset impairment charges	672		1,667		892		3,390
Operating income	Operating income	14,463		12,588		7,534		17,278		Operating income	8,143		39,355		15,677		56,633
Debt retirement benefit	Debt retirement benefit	—		(388)		—		(473)		Debt retirement benefit	—		(1,281)		—		(1,754)
Interest expense (includes debt amortization of $2,711 and $2,366 for the three months and $4,919 and $4,695 for the six months in 2019 and 2018, respectively)		35,334		35,324		69,146		68,235
Interest expense (includes debt amortization of $2,559 and $2,325 for the three months and $7,478 and $7,020 for the nine months in 2019 and 2018, respectively)										Interest expense (includes debt amortization of $2,559 and $2,325 for the three months and $7,478 and $7,020 for the nine months in 2019 and 2018, respectively)	32,200		33,947		101,346		102,182
Interest income	Interest income	1,370		738		2,524		1,625		Interest income	442		962		2,966		2,587
Loss before income taxes and other items		(19,501)		(21,610)		(59,088)		(48,859)
Income tax expense		2,699		34,816		26,152		9,546
(Loss) income before income taxes and other items										(Loss) income before income taxes and other items	(23,615)		7,651		(82,703)		(41,208)
Income tax (benefit) expense										Income tax (benefit) expense	(914)		17,354		25,238		26,900
Income from unconsolidated affiliates	Income from unconsolidated affiliates	5,596		1,584		6,473		2,151		Income from unconsolidated affiliates	255		4,701		6,728		6,852
Net loss	Net loss	(16,604)		(54,842)		(78,767)		(56,254)		Net loss	(22,446)		(5,002)		(101,213)		(61,256)
Net loss attributable to noncontrolling interests		(86)		(208)		(452)		(862)
Net (loss) income attributable to noncontrolling interests										Net (loss) income attributable to noncontrolling interests	(453)		93		(905)		(769)
Net loss attributable to Pyxus International, Inc.	Net loss attributable to Pyxus International, Inc.	$	(16,518)	$	(54,634)	$	(78,315)	$	(55,392)	Net loss attributable to Pyxus International, Inc.	$	(21,993)	$	(5,095)	$	(100,308)	$	(60,487)

Loss per share:	Loss per share:									Loss per share:
Basic	Basic	$	(1.81)	$	(6.04)	$	(8.58)	$	(6.13)	Basic	$	(2.40)	$	(0.56)	$	(10.98)	$	(6.69)
Diluted	Diluted	$	(1.81)	$	(6.04)	$	(8.58)	$	(6.13)	Diluted	$	(2.40)	$	(0.56)	$	(10.98)	$	(6.69)

Weighted average number of shares outstanding:	Weighted average number of shares outstanding:									Weighted average number of shares outstanding:
Basic	Basic	9,144		9,051		9,123		9,038		Basic	9,166		9,068		9,137		9,048
Diluted	Diluted	9,144		9,051		9,123		9,038		Diluted	9,166		9,068		9,137		9,048

See "Notes to Condensed Consolidated Financial Statements"	See "Notes to Condensed Consolidated Financial Statements"																	See "Notes to Condensed Consolidated Financial Statements"

-4-


Pyxus International, Inc. and Subsidiaries	Pyxus International, Inc. and Subsidiaries																	Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss	Condensed Consolidated Statements of Comprehensive Loss																	Condensed Consolidated Statements of Comprehensive Loss
Three and Six Months Ended September 30, 2019 and 2018
(Unaudited)	(Unaudited)																	(Unaudited)

		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
(in thousands)	(in thousands)	2019		2018		2019		2018		(in thousands)	2019		2018		2019		2018
Net loss	Net loss	$	(16,604)	$	(54,842)	$	(78,767)	$	(56,254)	Net loss	$	(22,446)	$	(5,002)	$	(101,213)	$	(61,256)

Other comprehensive (loss) income, net of tax:
Other comprehensive income (loss), net of tax:										Other comprehensive income (loss), net of tax:
Currency translation adjustment	Currency translation adjustment	(1,944)		(6)		(2,344)		(5,318)		Currency translation adjustment	1,871		(2,310)		(474)		(7,628)
Defined benefit pension amounts reclassified to income	Defined benefit pension amounts reclassified to income	311		202		622		568		Defined benefit pension amounts reclassified to income	312		285		934		853
Change in pension liability for settlements	Change in pension liability for settlements	(2,012)		771		(2,012)		771		Change in pension liability for settlements	799		(1,162)		(1,213)		(391)
Change in the fair value of derivatives designated as cash flow hedges	Change in the fair value of derivatives designated as cash flow hedges	(2)		6		(147)		—		Change in the fair value of derivatives designated as cash flow hedges	—		(3,752)		(147)		(3,752)
Amounts reclassified to income for derivatives	Amounts reclassified to income for derivatives	1,430		774		1,944		(716)		Amounts reclassified to income for derivatives	576		2,161		2,520		1,445
Total other comprehensive (loss) income, net of tax		(2,217)		1,747		(1,937)		(4,695)
Total other comprehensive income (loss), net of tax										Total other comprehensive income (loss), net of tax	3,558		(4,778)		1,620		(9,473)
Total comprehensive loss	Total comprehensive loss	(18,821)		(53,095)		(80,704)		(60,949)		Total comprehensive loss	(18,888)		(9,780)		(99,593)		(70,729)
Comprehensive (loss) income attributable to noncontrolling interests		(105)		43		(441)		(786)
Comprehensive loss attributable to noncontrolling interests										Comprehensive loss attributable to noncontrolling interests	(405)		(430)		(846)		(1,216)
Comprehensive loss attributable to Pyxus International, Inc.	Comprehensive loss attributable to Pyxus International, Inc.	$	(18,716)	$	(53,138)	$	(80,263)	$	(60,163)	Comprehensive loss attributable to Pyxus International, Inc.	$	(18,483)	$	(9,350)	$	(98,747)	$	(69,513)

See "Notes to Condensed Consolidated Financial Statements"	See "Notes to Condensed Consolidated Financial Statements"																	See "Notes to Condensed Consolidated Financial Statements"

-5-


Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)	Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)																				Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)	(in thousands)							September 30, 2019			September 30, 2018			March 31, 2019			(in thousands)								December 31, 2019		December 31, 2018		March 31, 2019
Assets	Assets																Assets
Current assets	Current assets																Current assets
Cash and cash equivalents	Cash and cash equivalents							$	172,523		$	116,970		$	192,043		Cash and cash equivalents								$	72,230	$	209,160	$	192,043
Restricted cash	Restricted cash							4,771			2,297			5,378			Restricted cash								2,359		6,335		5,378
Trade receivables, net	Trade receivables, net							202,446			210,934			290,097			Trade receivables, net								180,404		268,747		290,097
Other receivables	Other receivables							12,066			18,313			20,900			Other receivables								12,257		21,305		20,900
Accounts receivable, related parties	Accounts receivable, related parties							9,800			3,587			5,783			Accounts receivable, related parties								6,418		5,077		5,633
Notes receivable, related parties								Notes receivable, related parties														406	—	150
Inventories	Inventories							802,559			954,692			668,171			Inventories								871,850		827,782		668,171
Advances to tobacco suppliers	Advances to tobacco suppliers							46,154			65,241			19,754			Advances to tobacco suppliers								61,536		51,135		19,754
Recoverable income taxes	Recoverable income taxes							9,175			10,628			5,421			Recoverable income taxes								9,751		8,538		5,421
Prepaid expenses	Prepaid expenses							21,484			21,021			15,934			Prepaid expenses								22,447		17,325		15,934
Other current assets	Other current assets							14,627			17,715			15,027			Other current assets								14,345		16,212		15,027
Total current assets	Total current assets							1,295,605			1,421,398			1,238,508			Total current assets								1,254,003		1,431,616		1,238,508
Restricted cash	Restricted cash							389			389			389			Restricted cash								389		389		389
Long-term notes receivable, related parties								Long-term notes receivable, related parties														7,466	742	545
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates							69,243			62,838			69,459			Investments in unconsolidated affiliates								69,368		68,351		69,459
Goodwill	Goodwill							34,422			34,698			34,336			Goodwill								34,570		34,109		34,336
Other intangible assets, net	Other intangible assets, net							68,578			73,330			71,781			Other intangible assets, net								67,404		70,074		71,781
Deferred income taxes, net	Deferred income taxes, net							116,400			114,696			116,451			Deferred income taxes, net								115,947		106,610		116,451
Long-term recoverable income taxes	Long-term recoverable income taxes							2,618			898			3,067			Long-term recoverable income taxes								2,618		898		3,067
Other deferred charges	Other deferred charges							1,880			3,094			2,175			Other deferred charges								1,421		2,634		2,175
Other noncurrent assets	Other noncurrent assets							48,525			52,392			46,713			Other noncurrent assets								48,533		43,514		46,168
Right-of-use assets	Right-of-use assets				45,415	—	—	Right-of-use assets										43,372	—	—
Property, plant, and equipment, net	Property, plant, and equipment, net							295,793			259,318			276,396			Property, plant, and equipment, net								303,956		264,782		276,396
Total assets	Total assets							$	1,978,868		$	2,023,051		$	1,859,275		Total assets								$	1,949,047	$	2,023,719	$	1,859,275
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity																Liabilities and Stockholders’ Equity
Current liabilities	Current liabilities																Current liabilities
Notes payable to banks	Notes payable to banks							$	582,389		$	613,859		$	428,961		Notes payable to banks								$	580,346	$	583,407	$	428,961
Accounts payable	Accounts payable							50,764			48,095			87,049			Accounts payable								61,076		49,373		87,049
Accounts payable, related parties	Accounts payable, related parties							26,454			22,611			19,054			Accounts payable, related parties								11,077		18,372		19,054
Advances from customers	Advances from customers							22,254			11,045			16,436			Advances from customers								19,227		45,900		16,436
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities							98,435			84,682			91,282			Accrued expenses and other current liabilities								103,351		98,233		91,282
Income taxes payable	Income taxes payable							16,847			4,012			3,728			Income taxes payable								15,444		6,513		3,728
Operating leases payable	Operating leases payable							14,492			—			—			Operating leases payable								14,033		—		—
Current portion of long-term debt	Current portion of long-term debt							319			165			332			Current portion of long-term debt								325		165		332
Total current liabilities	Total current liabilities							811,954			784,469			646,842			Total current liabilities								804,879		801,963		646,842
Long-term taxes payable	Long-term taxes payable							8,660			9,155			10,718			Long-term taxes payable								8,523		10,718		10,718
Long-term debt	Long-term debt							901,059			905,096			898,386			Long-term debt								902,461		897,195		898,386
Deferred income taxes	Deferred income taxes							34,530			15,692			26,813			Deferred income taxes								30,396		12,437		26,813
Liability for unrecognized tax benefits	Liability for unrecognized tax benefits							9,171			9,606			11,189			Liability for unrecognized tax benefits								12,233		11,026		11,189
Long-term leases	Long-term leases							28,568			—			—			Long-term leases								28,206		—		—
Pension, postretirement, and other long-term liabilities	Pension, postretirement, and other long-term liabilities							73,291			70,878			73,308			Pension, postretirement, and other long-term liabilities								70,315		72,013		73,308
Total liabilities	Total liabilities							1,867,233			1,794,896			1,667,256			Total liabilities								1,857,013		1,805,352		1,667,256
Commitments and contingencies	Commitments and contingencies																Commitments and contingencies
Stockholders’ equity	Stockholders’ equity	September 30, 2019	September 30, 2018	March 31, 2019				Stockholders’ equity		December 31, 2019			December 31, 2018			March 31, 2019
Common Stock—no par value:	Common Stock—no par value:							Common Stock—no par value:
Authorized shares	Authorized shares	250,000	250,000	250,000				Authorized shares		250,000			250,000			250,000
Issued shares	Issued shares	9,951	9,849	9,881	469,736	474,221	468,936	Issued shares		9,963			9,866			9,881		469,450	474,603	468,936
Retained deficit	Retained deficit							(302,199)			(211,741)			(223,884)			Retained deficit								(324,192)		(213,905)		(223,884)
Accumulated other comprehensive loss	Accumulated other comprehensive loss							(63,290)			(50,032)			(61,342)			Accumulated other comprehensive loss								(59,781)		(57,218)		(61,342)
Total stockholders’ equity of Pyxus International, Inc.	Total stockholders’ equity of Pyxus International, Inc.							104,247			212,448			183,710			Total stockholders’ equity of Pyxus International, Inc.								85,477		203,480		183,710
Noncontrolling interests	Noncontrolling interests							7,388			15,707			8,309			Noncontrolling interests								6,557		14,887		8,309
Total stockholders’ equity	Total stockholders’ equity							111,635			228,155			192,019			Total stockholders’ equity								92,034		218,367		192,019
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity							$	1,978,868		$	2,023,051		$	1,859,275		Total liabilities and stockholders’ equity								$	1,949,047	$	2,023,719	$	1,859,275
See "Notes to Condensed Consolidated Financial Statements"	See "Notes to Condensed Consolidated Financial Statements"																See "Notes to Condensed Consolidated Financial Statements"

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Pyxus International, Inc. and Subsidiaries
Condensed Statements of Consolidated Stockholders' Equity
Three and Six Months Ended September 30, 2019 and 2018
(Unaudited)
Attributable to Pyxus International, Inc.
Accumulated Other Comprehensive Loss
(in thousands) Common
Stock Retained
Deficit Currency Translation Adjustment Pensions,
Net of Tax Loss on Derivatives, Net of Tax Noncontrolling
Interests Total Stockholders' Equity
Balance, March 31, 2019 $ 468,936 $ (223,884) $ (21,979) $ (36,749) $ (2,614) $ 8,309 $ 192,019
Net loss attributable to Pyxus International, Inc. — (61,797) — — — (366) (62,163)
Stock-based compensation 429 — — — — — 429
Other comprehensive (loss) income, net of tax — — (430) 311 369 30 280
Balance, June 30, 2019 469,365 (285,681) (22,409) (36,438) (2,245) 7,973 130,565
Net loss attributable to Pyxus International, Inc. — (16,518) — — — (86) (16,604)
Restricted stock surrender (12) — — — — — (12)
Stock-based compensation 383 — — — — — 383
Dividends paid — — — — — (480) (480)
Other comprehensive (loss) income, net of tax — — (1,925) (1,701) 1,428 (19) (2,217)
Balance, September 30, 2019 $ 469,736 $ (302,199) $ (24,334) $ (38,139) $ (817) $ 7,388 $ 111,635


Pyxus International, Inc. and Subsidiaries																	Pyxus International, Inc. and Subsidiaries
Condensed Statements of Consolidated Stockholders' Equity																	Condensed Statements of Consolidated Stockholders' Equity
(Unaudited)																	(Unaudited)

																		Attributable to Pyxus International, Inc.
																						Accumulated Other Comprehensive Loss

Balance, March 31, 2018		$	473,476	$	(156,348)	$	(12,682)	$	(32,580)	$	—		$	10,962	$	282,828
(in thousands)																	(in thousands)	Common Stock		Retained Deficit		Currency Translation Adjustment		Pensions, Net of Tax		Loss on Derivatives, Net of Tax		Noncontrolling Interests		Total Stockholders' Equity
Balance, March 31, 2019																	Balance, March 31, 2019	$	468,936	$	(223,884)	$	(21,979)	$	(36,749)	$	(2,614)	$	8,309	$	192,019
Net loss attributable to Pyxus International, Inc.	Net loss attributable to Pyxus International, Inc.	—		(759)		—		—		—		��	(654)		(1,413)		Net loss attributable to Pyxus International, Inc.	—		(61,797)		—		—		—		(366)		(62,163)
Stock-based compensation	Stock-based compensation	295		—		—		—		—			—		295		Stock-based compensation	429		—		—		—		—		—		429
Purchase of investment in subsidiary		—		—		—		—		—			5,531		5,531

Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax	—		—		(5,136)		366		(1,496)			(175)		(6,441)		Other comprehensive (loss) income, net of tax	—		—		(430)		311		369		30		280
Balance, June 30, 2018		473,771		(157,107)		(17,818)		(32,214)		(1,496)			15,664		280,800
Balance, June 30, 2019																	Balance, June 30, 2019	469,365		(285,681)		(22,409)		(36,438)		(2,245)		7,973		130,565
Net loss attributable to Pyxus International, Inc.	Net loss attributable to Pyxus International, Inc.	—		(54,634)		—		—		—			(208)		(54,842)		Net loss attributable to Pyxus International, Inc.	—		(16,518)		—		—		—		(86)		(16,604)
Restricted stock surrender	Restricted stock surrender	(8)		—		—		—		—			—		(8)		Restricted stock surrender	(12)		—		—		—		—		—		(12)
Stock-based compensation	Stock-based compensation	458		—		—		—		—			—		458		Stock-based compensation	383		—		—		—		—		—		383
Dividends paid																	Dividends paid	—		—		—		—		—		(480)		(480)
Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax	—		—		(257)		973		780			251		1,747		Other comprehensive (loss) income, net of tax	—		—		(1,925)		(1,701)		1,428		(19)		(2,217)
Balance, September 30, 2018		$	474,221	$	(211,741)	$	(18,075)	$	(31,241)	$	(716)		$	15,707	$	228,155
Balance, September 30, 2019																	Balance, September 30, 2019	469,736		(302,199)		(24,334)		(38,139)		(817)		7,388		111,635
Net loss attributable to Pyxus International, Inc.																	Net loss attributable to Pyxus International, Inc.	—		(21,993)		—		—		—		(453)		(22,446)

Stock-based compensation																	Stock-based compensation	242		—		—		—		—		—		242

See "Notes to Condensed Consolidated Financial Statements"
Purchase of noncontrolling interests in a subsidiary																	Purchase of noncontrolling interests in a subsidiary	(528)		—		33		—		—		(426)		(921)
Other comprehensive income, net of tax																	Other comprehensive income, net of tax	—		—		1,789		1,111		576		48		3,524
Balance, December 31, 2019																	Balance, December 31, 2019	$	469,450	$	(324,192)	$	(22,512)	$	(37,028)	$	(241)	$	6,557	$	92,034

-7-


Pyxus International, Inc. and Subsidiaries
Condensed Statements of Consolidated Stockholders' Equity
(Unaudited)

	Attributable to Pyxus International, Inc.
					Accumulated Other Comprehensive Loss
(in thousands)	Common Stock		Retained Deficit		Currency Translation Adjustment		Pensions, Net of Tax		Loss on Derivatives, Net of Tax		Noncontrolling Interests		Total Stockholders' Equity
Balance, March 31, 2018	$	473,476	$	(156,348)	$	(12,682)	$	(32,580)	$	—	$	10,962	$	282,828
Net loss attributable to Pyxus International, Inc.	—		(759)		—		—		—		(654)		(1,413)
Stock-based compensation	295		—		—		—		—		—		295
Purchase of investment in subsidiary	—		—		—		—		—		5,531		5,531
Other comprehensive (loss) income, net of tax	—		—		(5,136)		366		(1,496)		(175)		(6,441)
Balance, June 30, 2018	473,771		(157,107)		(17,818)		(32,214)		(1,496)		15,664		280,800
Net loss attributable to Pyxus International, Inc.	—		(54,634)		—		—		—		(208)		(54,842)
Restricted stock surrender	(8)		—		—		—		—		—		(8)
Stock-based compensation	458		—		—		—		—		—		458
Other comprehensive (loss) income, net of tax	—		—		(257)		973		780		251		1,747
Balance, September 30, 2018	474,221		(211,741)		(18,075)		(31,241)		(716)		15,707		228,155
Net (loss) income attributable to Pyxus International, Inc.	—		(5,095)		—		—		—		93		(5,002)
Restricted stock surrender	(20)		—		—		—		—		—		(20)
Stock-based compensation	402		—		—		—		—		—		402
Dividends paid	—		—		—		—		—		(390)		(390)
Impact of adoption of ASU 2018-02	—		2,931		—		(2,931)		—		—		—
Other comprehensive loss, net of tax	—		—		(1,787)		(877)		(1,591)		(523)		(4,778)
Balance, December 31, 2018	$	474,603	$	(213,905)	$	(19,862)	$	(35,049)	$	(2,307)	$	14,887	$	218,367

*Amounts may not equal column totals due to rounding

See "Notes to Condensed Consolidated Financial Statements"

~~-7-~~

Pyxus International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Six Months Ended September 30, 2019 and 2018
(Unaudited)
Six Months Ended September 30,
(in thousands) 2019 2018
Operating Activities:
Net loss $ (78,767) $ (56,254)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 17,595 18,393
Debt amortization/interest 6,155 5,832
Debt retirement benefit — (473)
Gain on foreign currency transactions (2,254) (5,129)
Restructuring and asset impairment charges 119 1,723
Loss (gain) on sale of property, plant, and equipment (14) (1,627)
Income from unconsolidated affiliates, net of dividends 185 699
Stock-based compensation 812 753
Changes in operating assets and liabilities, net (206,646) (386,320)
Other, net 5,040 3,086
Net cash used by operating activities (257,775) (419,317)
Investing Activities:
Purchases of property, plant, and equipment (37,272) (21,508)
Proceeds from sale of property, plant, and equipment 694 873
Collections on beneficial interests on securitized trade receivables 127,707 114,212
Dividend received in excess of cumulative earnings — 2,846
Payments to acquire controlling interests, net of cash acquired — (8,692)
Other, net (202) (546)
Net cash provided by investing activities 90,927 87,185
Financing Activities:
Net proceeds from short-term borrowings 159,870 203,100
Repayment of long-term borrowings (91) (17,195)
Debt issuance cost (5,237) (4,945)
Debt retirement cost — (45)
Other, net (480) —
Net cash provided by financing activities 154,062 180,915
Effect of exchange rate changes on cash (7,341) 2,840
Decrease in cash, cash equivalents, and restricted cash (20,127) (148,377)
Cash and cash equivalents at beginning of period 192,043 264,660
Restricted cash at beginning of period 5,767 3,373
Cash, cash equivalents, and restricted cash at end of period $ 177,683 $ 119,656
Other information:
Cash paid for income taxes $ 11,312 $ 15,906
Cash paid for interest 63,985 62,790
Cash received from interest (2,870) (1,200)
Noncash investing activities:
Purchases of property, plant, and equipment included in accounts payable $ 3,678 $ 1,637
Sales of property, plant, and equipment included in notes receivable 1,559 1,430
Non-cash amounts obtained as a beneficial interest in exchange for transferring
trade receivables in a securitization transaction 108,293 90,896
See "Notes to Condensed Consolidated Financial Statements"

-8-


Pyxus International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)
	Nine Months Ended December 31,
(in thousands)	2019		2018
Operating Activities:
Net loss	$	(101,213)	$	(61,256)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization	26,003		26,887
Debt amortization/interest	9,356		8,739
Debt retirement benefit	—		(1,754)
Gain on foreign currency transactions	(3,921)		(1,220)
Asset impairment charges	260		891
Gain on sale of property, plant, and equipment	(168)		(2,155)
Gain on insurance proceeds received for destroyed buildings	—		(6,460)
Income from unconsolidated affiliates, net of dividends	(128)		(1,486)
Bad debt expense	—		2,136
Stock-based compensation	1,054		1,155
Changes in operating assets and liabilities, net	(323,681)		(315,113)
Other, net	5,220		11,143
Net cash used by operating activities	(387,218)		(338,493)

Investing Activities:
Purchases of property, plant, and equipment	(51,479)		(35,327)
Proceeds from sale of property, plant, and equipment	1,844		5,179
Collections on beneficial interests on securitized trade receivables	174,741		171,565
Loans to unconsolidated affiliates	(5,250)		—
Insurance proceeds received for destroyed buildings	—		6,460
Payments to acquire controlling interests, net of cash acquired	—		(8,692)
Other, net	(240)		(886)
Net cash provided by investing activities	119,616		138,299

Financing Activities:
Net proceeds from short-term borrowings	156,784		173,548
Repayment of long-term borrowings	(91)		(25,132)
Debt issuance cost	(5,245)		(5,072)

Purchase of noncontrolling interests in a subsidiary	(921)		—
Other, net	(480)		(459)
Net cash provided by financing activities	150,047		142,885

Effect of exchange rate changes on cash	(5,277)		5,160

Decrease in cash, cash equivalents, and restricted cash	(122,832)		(52,149)
Cash and cash equivalents at beginning of period	192,043		264,660
Restricted cash at beginning of period	5,767		3,373
Cash, cash equivalents, and restricted cash at end of period	$	74,978	$	215,884

Other information:
Cash paid for income taxes	$	13,768	$	19,650
Cash paid for interest	80,191		81,622
Cash received from interest	(2,839)		(2,340)

Noncash investing activities:
Purchases of property, plant, and equipment included in accounts payable	$	4,590	$	1,501
Sales of property, plant, and equipment included in notes receivable	662		1,473
Non-cash amounts obtained as a beneficial interest in exchange for transferring trade receivables in a securitization transaction	151,149		161,943

See "Notes to Condensed Consolidated Financial Statements"

-9-

Pyxus International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands)

1. Basis of Presentation and Significant Accounting Policies

The accompanying condensed consolidated financial statements represent the consolidation of Pyxus International, Inc. (the "Company" or "Pyxus") and all companies that Pyxus directly or indirectly controls, either through majority ownership or otherwise. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include ~~all of~~ the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, ~~all~~the normal and recurring adjustments necessary for fair statement of financial position, results of operations, and cash flows at the dates and for the periods presented have been included. ~~All intercompany~~Intercompany accounts and transactions have been eliminated.

These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019. The year-end condensed balance sheet data was derived from the audited financial ~~statements, but does not include all the disclosures required by U.S. GAAP.~~statements. Due to the seasonal nature of the Company’s business, the results of operations for ~~any~~a fiscal quarter are not necessarily indicative of the operating results that may be attained for other quarters or a full fiscal year.

Leases

The Company measures right-of-use assets and related lease liabilities based on the present value of remaining lease payments, including in-substance fixed payments, the current payment amount when payments depend on an index or rate (e.g., inflation adjustments, market renewals), and the amount the Company believes is probable to be paid to the lessor under residual value guarantees, when applicable. Lease contracts may include fixed payments for non-lease components, such as maintenance, which are included in the measurement of lease liabilities for certain asset classes based on the Company’s election to combine lease and non-lease components. The Company does not recognize short-term leases on the consolidated balance sheet.

As applicable borrowing rates are not typically implied within the lease arrangements, the Company discounts lease payments based on its estimated incremental borrowing rate at lease commencement, or modification, which is based on the Company’s estimated credit rating, the lease term at commencement, and the contract currency of the lease arrangement.

Segments

During the three months ended December 31, 2018, the Company realigned its reportable segments to reflect changes to how the business is managed and results are reviewed by the Company's chief operating decision maker. In connection with the "One Tomorrow Transformation" initiative, the Company changed its organizational structure to support its diversified business lines. Prior to the realignment, the Company assessed financial information based on geographic regions. The Company's diversification efforts have resulted in management placing emphasis on data by business line in addition to the historical focus by geography. As a result of this realignment, the reportable segments now include Leaf - North America, Leaf - Other Regions, and Other Products and Services. ~~Prior-period segment financial information has~~

Reclassifications

Certain prior period amounts have been ~~revised~~reclassified to conform to the ~~current-year presentation.~~current year presentation of notes receivable, related parties in the condensed consolidated balance sheets, restructuring and asset impairment charges in the condensed consolidated statement of cash flows, and the components within inventory, see "Note 17 . Inventories" for more information.

2. New Accounting Standards

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842). Under this guidance, a lessee recognizes assets and liabilities on its balance sheet for most leases, and retains a dual model approach for assessing lease classification and recognizing expense. This guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leasing arrangements. The FASB subsequently issued updates to provide clarification on specific topics, including adoption guidance, practical expedients, and interim transition disclosure requirements. The Company adopted this guidance during the first quarter beginning April 1, 2019 under the modified retrospective approach, which does not require adjustments to comparative periods or require modified disclosures for those comparative periods. The guidance provides a number of optional practical expedients in transition. The Company elected the package of transition practical expedients. The Company implemented changes to ~~the~~its accounting policies, systems, and controls to align with the new guidance. There is a material impact on the consolidated balance sheet from

-10-

applying this guidance, which resulted in the recognition of new right-of-use assets of $43,900 and lease liabilities of $42,064 as of April 1, 2019 associated with the Company’s operating leases. The impact on the results of operations, cash flows, and existing debt covenants is not material. The adoption of this guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from lease arrangements. See "Note 14. Leases" for more information.

~~-9-~~

~~Recent Accounting Pronouncements Not Yet Adopted~~

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.~~ ASU 2016-13 provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. This guidance will be adopted using a modified retrospective approach and is effective for the Company on April 1, 2020. The Company is evaluating the effect that adoption of this guidance will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the test for goodwill impairment as it eliminates step 2two of the goodwill impairment test by no longer requiring an entity to compare the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ~~Upon adoption,~~Under this new standard, goodwill impairment ~~will be~~is measured as the excess of the reporting unit's carrying value over fair value, limited to the amount of goodwill. The Company will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is needed. This guidance ~~will be~~has been early adopted by the Company as of December 31, 2019 on a prospective basis and is effective for the Company beginning on April 1, 2020. Early adoption is available and the Company is currently considering whether it will early adopt for its annual goodwill impairment testing.basis. The ~~Company does not expect the~~ adoption of this new accounting standard did not have a material impact on the Company's financial condition, results of operations, or cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Based on the Company's scoping assessment, ASU 2016-13 will primarily impact trade receivables. The adoption of this new accounting standard will be done using a modified retrospective approach, and is not expected to have a material impact on the Company's financial condition, results of operations, or cash flows. This new accounting standard will be effective for the Company on April 1, 2023, with early adoption permitted.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 updates disclosure requirements for defined benefit plans. This guidance will be adopted using a retrospective approach and is effective for the Company on March 31, 2021. The Company is evaluating the effect that adoption of this guidance will have on its consolidated financial statements and related disclosures.

3. Restricted Cash

The following summarizes the restricted cash balance:


		September 30, 2019		September 30, 2018		March 31, 2019			December 31, 2019		December 31, 2018		March 31, 2019
Compensating balance for short-term borrowings	Compensating balance for short-term borrowings	$	1,938	$	1,256	$	1,225	Compensating balance for short-term borrowings	$	940	$	1,220	$	1,225
Capital investments		—		850		—

Escrow	Escrow	2,318		—		2,894		Escrow	1,363		2,314		2,894
Other	Other	904		580		1,648		Other	445		3,190		$	1,648
Total	Total	$	5,160	$	2,686	$	5,767	Total	$	2,748	$	6,724	$	5,767

As of ~~September 30,~~December 31, 2019 and 2018, and March 31, 2019, the Company held $0, ~~$340,~~$2,644, and $1,082, respectively, in the Zimbabwe Real Time Gross Settlement (“RTGS”) Dollar. RTGS is a local currency equivalent that as of ~~September 30,~~December 31, 2019 was exchanged at a government specified rate of ~~15.2:~~16.8:1 with the U.S. Dollar ("USD").

~~-10-~~-11-

4. Revenue Recognition

The Company derives revenue from contracts with customers, primarily from the sale of processed tobacco and fees charged for processing and related services to the manufacturers of tobacco products. The following disaggregates sales and other operating revenues by the Company's significant revenue streams:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Leaf - North America:	Leaf - North America:									Leaf - North America:
Product revenue	Product revenue	$	44,259	$	45,988	$	75,400	$	92,445	Product revenue	$	39,148	$	60,280	$	114,548	$	152,725
Processing and other revenues	Processing and other revenues	7,196		7,875		11,005		11,470		Processing and other revenues	13,868		17,570		24,873		29,039
Total sales and other operating revenues	Total sales and other operating revenues	51,455		53,863		86,405		103,915		Total sales and other operating revenues	53,016		77,850		139,421		181,764

Leaf - Other Regions:	Leaf - Other Regions:									Leaf - Other Regions:
Product revenue	Product revenue	306,811		321,086		531,958		544,981		Product revenue	293,564		432,423		825,522		977,503
Processing and other revenues	Processing and other revenues	18,757		17,523		29,380		31,553		Processing and other revenues	12,936		9,296		42,316		40,752
Total sales and other operating revenues	Total sales and other operating revenues	325,568		338,609		561,338		576,534		Total sales and other operating revenues	306,500		441,719		867,838		1,018,255

Other Products and Services:	Other Products and Services:									Other Products and Services:
Total sales and other operating revenues	Total sales and other operating revenues	5,958		2,404		11,908		5,415		Total sales and other operating revenues	3,744		4,918		15,652		10,332

Total sales and other operating revenues	Total sales and other operating revenues	$	382,981	$	394,876	$	659,651	$	685,864	Total sales and other operating revenues	$	363,260	$	524,487	$	1,022,911	$	1,210,351

Product revenue is primarily processed tobacco sold to the customer. Processing and other revenues are mainly contracts to process green tobacco owned and provided by the customers. During processing, ownership remains with the customers and the Company is engaged to perform processing services. Other products and services is primarily composed of revenue from the sale of legal cannabis in Canada and e-liquids product revenue.

The following summarizes activity in the allowance for doubtful accounts:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Balance, beginning of period	Balance, beginning of period	$	(7,250)	$	(7,257)	$	(13,381)	$	(7,055)	Balance, beginning of period	$	(7,242)	$	(7,324)	$	(13,381)	$	(7,055)
Additions	Additions	—		(69)		—		(362)		Additions	(5)		(1,774)		—		(2,136)
Write-offs	Write-offs	8		2		6,139		93		Write-offs	—		(15)		6,134		78
Balance, end of period	Balance, end of period	(7,242)		(7,324)		(7,242)		(7,324)		Balance, end of period	(7,247)		(9,113)		(7,247)		(9,113)
Trade receivables	Trade receivables	209,688		218,258		209,688		218,258		Trade receivables	187,651		277,860		187,651		277,860
Trade receivables, net	Trade receivables, net	$	202,446	$	210,934	$	202,446	$	210,934	Trade receivables, net	$	180,404	$	268,747	$	180,404	$	268,747

5. Income Taxes

Accounting for Uncertainty in Income Taxes

As of ~~September 30,~~December 31, 2019, the Company’s unrecognized tax benefits totaled ~~$11,253,~~$16,331, of which ~~$8,974~~$13,122 would impact the Company’s effective tax rate, if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of ~~September 30,~~December 31, 2019, accrued interest and penalties totaled ~~$1,214~~$1,235 and ~~$672,~~$756, respectively. The Company expects to continue accruing interest expense related to the unrecognized tax benefits described above. The Company may be subject to fluctuations in the unrecognized tax benefit due to currency exchange rate movements.

-12-

During the ~~six~~nine months ended ~~September 30,~~December 31, 2019, the Company reached an income tax settlement with the Kenyan Revenue Authority for $1,558 for a previously recorded uncertain tax position. In addition, a previous accrual to settle asserted issues for years 2009 to 2016 in Zimbabwe of $964 was reduced by ~~$943~~$952 to account for the exchange rate impact of the local currency

~~-11-~~

equivalent. An existing accrual for transfer pricing issues in Malawi was increased by an additional $2,772 to account for the Company's evolving negotiations with tax authorities. Also, the Company increased an existing accrual related to U.S. transition tax of $931, resulting from changes in accrued tax pools. The U.S. federal net operating loss was reduced to reflect the impacts of certain tax accounting methods on Global Intangible Low-Taxed Income ("GILTI").

The Company does not expect ~~additional~~significant changes in the amount of its unrecognized tax benefits in the next twelve months but acknowledges circumstances can change due to unexpected developments in the law. In certain jurisdictions, tax authorities have challenged positions taken by the Company that resulted in recognizing benefits that are material to its financial statements. The Company believes it is more likely than not that it will prevail in these situations and accordingly has not recorded liabilities for these positions. The Company expects the challenged positions to be settled at a time greater than twelve months from its balance sheet date.

The Company and its subsidiaries file a U.S. federal consolidated income tax return as well as returns in several U.S. states and a number of foreign jurisdictions. As of ~~September 30,~~December 31, 2019, the Company’s earliest open tax year for U.S. federal income tax purposes is its fiscal year ended March 31, ~~2016.~~2017. The Company's tax attributes from prior periods remain subject to adjustment. Open tax years in state and foreign jurisdictions generally range from three to six years.

Provision for the Three and ~~Six~~Nine Months Ended ~~September 30,~~December 31, 2019

The effective tax rate for the three months ended ~~September 30,~~December 31, 2019 and 2018 was ~~(13.8)%~~3.9% and ~~(161.1)%~~226.8%, respectively. The effective tax rate for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 and 2018 was ~~(44.3)~~(30.5)% and ~~(19.5)~~(65.3)%, respectively. For the three and ~~six~~nine months ended ~~September 30,~~December 31, 2019 and 2018, the effective rate differed from the USU.S. statutory rate of 21% due to the impact of non-deductible interest, net foreign exchange effects and Subpart F income. The primary differences in the effective tax rates ~~year over year~~year-over-year are the impact of net foreign exchange effects, increases in non-deductible interest, as well as Subpart F income, and variation in expected jurisdictional mix of earnings.

For the ~~six~~nine months ended ~~September 30,~~December 31, 2019, the Company's quarterly provision for income taxes has been calculated using the annual effective tax rate method (“AETR method”), which applies an estimated annual effective tax rate to pre-tax income or loss. For the ~~six~~nine months ended ~~September 30,~~December 31, 2019, the Company recorded the net tax effects of certain discrete events, which resulted in an income tax ~~benefit~~expense of ~~$1,089.~~$2,252. This discrete income tax ~~benefit~~expense primarily related to the impact of changes in uncertain tax positions ~~an adjustment made to the deemed repatriation tax liability as a result of retroactive regulatory guidance issued during the prior quarter,~~ and changes in foreign exchange impacts. Comparable tax expense for the six months ended September 30, 2018 was calculated using the discrete method as allowed under ASC 740-270, Accounting for Income Taxes - Interim Reporting. Using the discrete method, the Company determined current and deferred income tax expense as if the interim period were an annual period, and no discrete events were separately identified.

6. Guarantees

In certain markets, the Company guarantees bank loans to suppliers to finance their crops. Under longer-term arrangements, the Company may also guarantee financing on suppliers’ construction of curing barns or other tobacco production assets. Guaranteed loans are generally repaid concurrent with the delivery of tobacco to the Company. The Company is obligated to repay guaranteed loans should the supplier default. If default occurs, the Company has recourse against its various suppliers and their production assets. The Company also guarantees bank loans of certain unconsolidated subsidiaries in Asia and South America. The following summarizes amounts guaranteed and the fair value of those guarantees:


		September 30, 2019		September 30, 2018		March 31, 2019			December 31, 2019		December 31, 2018		March 31, 2019
Amounts guaranteed (not to exceed)	Amounts guaranteed (not to exceed)	$	120,269	$	168,709	$	143,298	Amounts guaranteed (not to exceed)	$	119,342	$	176,762	$	143,298
Amounts outstanding under guarantee(1)	Amounts outstanding under guarantee(1)	48,863		61,904		103,846		Amounts outstanding under guarantee(1)	37,624		79,336		103,846
Fair value of guarantees	Fair value of guarantees	1,026		1,861		3,714		Fair value of guarantees	1,112		2,890		3,714
Amounts due to local banks on behalf of suppliers and included in accounts payable	Amounts due to local banks on behalf of suppliers and included in accounts payable	—		—		18,659		Amounts due to local banks on behalf of suppliers and included in accounts payable	—		—		18,659

(1) Of the guarantees outstanding at ~~September 30,~~December 31, 2019, most expire within one year.

~~-12-~~-13-

7. Goodwill and Intangibles

The following summarizes the changes in goodwill and other intangible assets:


		Six Months Ended September 30, 2019																					Nine Months Ended December 31, 2019
		Weighted Average Remaining Useful Life	Beginning Gross Carrying Amount		Additions		Accumulated Amortization ⁽¹⁾		Impact of Foreign Currency Translation		Ending Intangible Assets, Net			Weighted Average Remaining Useful Life	Beginning Gross Carrying Amount		Additions		Accumulated Amortization ⁽¹⁾		Impact of Foreign Currency Translation		Ending Intangible Assets, Net
Intangibles subject to amortization:	Intangibles subject to amortization:												Intangibles subject to amortization:
Customer relationships	Customer relationships	9.07 years	$	63,980	$	—	$	(31,037)	$	—	$	32,943	Customer relationships	8.88 years	$	63,980	$	—	$	(32,043)	$	—	$	31,937
Production and supply contracts	Production and supply contracts	2.50 years	14,893		—		(11,172)		—		3,721		Production and supply contracts	2.25 years	14,893		—		(11,210)		—		3,683
Internally developed software	Internally developed software	3.70 years	19,917		189		(18,660)		—		1,446		Internally developed software	3.27 years	19,917		243		(18,807)		—		1,353
Licenses ⁽²⁾	Licenses ⁽²⁾	17.50 years	32,284		71		(2,531)		238		30,062		Licenses ⁽²⁾	17.26 years	32,284		118		(3,010)		648		30,040
Trade names	Trade names	6.50 years	500		—		(94)		—		406		Trade names	6.25 years	500		—		(109)		—		391
Intangibles not subject to amortization:	Intangibles not subject to amortization:												Intangibles not subject to amortization:
Goodwill	Goodwill		34,336		—		—		86		34,422		Goodwill		34,336		—		—		234		34,570
Total	Total		$	165,910	$	260	$	(63,494)	$	324	$	103,000	Total		$	165,910	$	361	$	(65,179)	$	882	$	101,974

(1) Amortization expense across intangible asset classes for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 was ~~$3,701.~~$5,386.

(2) Certain of the Company's license intangibles are subject to annual renewal.


	Twelve Months Ended March 31, 2019
	Weighted Average Remaining Useful Life	Beginning Gross Carrying Amount		Additions ⁽¹⁾		Accumulated Amortization ⁽²⁾		Impact of Foreign Currency Translation		Ending Intangible Assets, Net
Intangibles subject to amortization:
Customer relationships	9.55 years	$	58,530	$	5,450	$	(29,027)	$	—	$	34,953
Production and supply contracts	2.93 years	14,893		—		(10,668)		—		4,225
Internally developed software	3.79 years	18,812		1,105		(18,391)		—		1,526
Licenses ⁽³⁾	18.08 years	30,339		2,991		(1,644)		(1,046)		30,640
Trade names	7.00 years	—		500		(63)		—		437
Intangibles not subject to amortization:
Goodwill ⁽⁴⁾		27,546		7,174		—		(384)		34,336
Total		$	150,120	$	17,220	$	(59,793)	$	(1,430)	$	106,117

(1) Additions to goodwill, customer relationships, and trade names relate to the acquisition of Humble ~~Juice.~~Juice Co., LLC ("Humble Juice"). Additions to licenses relates to Canada's Island Garden ("Figr ~~East,~~East"), Figr Norfolk, and Alliance One Specialty Products, LLC.

(2) Amortization expense across intangible asset classes for the fiscal year ended March 31, 2019 was $7,943.

(3) Certain of the Company's license intangibles are subject to annual renewal.

(4) Goodwill activity relates to the Other Products and Services segment.

The following summarizes the estimated future intangible asset amortization expense:


For Fiscal Years Ended	For Fiscal Years Ended	Customer Relationships		Production and Supply Contracts		Internally Developed Software*		Licenses		Trade Names		Total		For Fiscal Years Ended	Customer Relationships		Production and Supply Contracts		Internally Developed Software⁽¹⁾		Licenses		Trade Names		Total
2020 (excluding the six months ended September 30, 2019		$	2,011	$	1,712	$	264	$	908	$	31	$	4,926
2020 (excluding the nine months ended December 31, 2019)														2020 (excluding the nine months ended December 31, 2019)	$	1,005	$	1,674	$	137	$	462	$	16	$	3,294
2021	2021	4,022		1,397		391		1,817		63		7,690		2021	4,022		1,397		435		1,847		63		7,764
2022	2022	4,022		612		318		1,814		63		6,829		2022	4,022		612		361		1,845		63		6,903
2023	2023	4,022		—		286		1,811		63		6,182		2023	4,022		—		290		1,841		63		6,216
2024	2024	4,022		—		168		1,811		63		6,064		2024	4,022		—		130		1,841		63		6,056
Thereafter	Thereafter	14,844		—		19		21,901		123		36,887		Thereafter	14,844		—		—		22,204		123		37,171
		$	32,943	$	3,721	$	1,446	$	30,062	$	406	$	68,578		$	31,937	$	3,683	$	1,353	$	30,040	$	391	$	67,404

*(1) Estimated amortization expense for the internally developed software is based on costs accumulated as of ~~September 30,~~December 31, 2019. These estimates will change as new costs are incurred and until the software is placed into service in all locations.

~~-13-~~-14-

8. Variable Interest Entities

The Company holds variable interests in multiple entities that primarily procure or process inventory or are securitization entities. These variable interests relate to equity investments, advances, guarantees, and securitized receivables. The Company is not the primary beneficiary of the majority of its variable interests, as it does not have the power to direct the activities that most significantly impact the economic performance of the entities due to the entities’ management and board of ~~directors~~directors' structure. As a result, the majority of these variable interest entities are not consolidated. The Company holds a majority voting interest and is the primary beneficiary of its variable interest in Humble Juice, ~~Co., LLC ("Humble Juice"),~~ a consolidated entity for which the related intercompany accounts and transactions have been eliminated.

The following summarizes the Company's financial relationships with its unconsolidated variable interest entities:


		September 30, 2019		September 30, 2018		March 31, 2019			December 31, 2019		December 31, 2018		March 31, 2019
Investment in variable interest entities	Investment in variable interest entities	$	62,468	$	57,251	$	64,281	Investment in variable interest entities	$	63,320	$	62,156	$	64,281
Advances to variable interest entities	Advances to variable interest entities	7,486		994		3,273		Advances to variable interest entities	11,301		2,817		3,273
Guaranteed amounts to variable interest entities (not to exceed)	Guaranteed amounts to variable interest entities (not to exceed)	66,375		73,696		67,027		Guaranteed amounts to variable interest entities (not to exceed)	61,566		73,278		67,027

The Company's investment in and advances to unconsolidated variable interest entities are classified as investments in unconsolidated affiliates and accounts receivable, related parties, respectively, in the condensed consolidated balance sheets. The Company's maximum exposure to loss in these variable interest entities is represented by the investments, advances, guarantees, and the deferred purchase price on the sale of securitized receivables as disclosed in "Note 19. Securitized Receivables".

-15-

9. Segment Information

The Company's operations are managed and reported in ~~ten~~10 operating segments that are organized by product category and geographic area and aggregated into ~~three~~3 reportable segments for financial reporting purposes: Leaf - North America, Leaf - Other Regions, and Other Products and Services. These segment groupings are consistent with information used by the chief operating decision maker to assess performance and allocate resources. The types of products and services from which each reportable segment derives its revenues are as follows:

•Leaf - North America ships tobacco to manufacturers of cigarettes and other consumer tobacco products around the world. Leaf - North America is more highly concentrated on processing and other activities compared to the rest of the world.

•Leaf - Other Regions ships tobacco to manufacturers of cigarettes and other consumer tobacco products around the world. Leaf - Other Regions sells a small amount of processed but un-threshed flue-cured and burley tobacco in loose-leaf and bundle form to certain customers.

•Other Products and Services primarily ~~consists~~involves the sale of cannabis and e-liquid products. Cannabis was legalized for adult use in Canada on October 17, 2018. The cannabis products ofproduced by certain of the Company's subsidiaries have been sold in the Canadian market, primarily to municipally-owned retailers. E-liquids products are sold to consumers via e-commerce platforms and other distribution channels, and retail stores.

~~-14-~~

The following summarizes operating results and assets by segment:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Sales and other operating revenues:	Sales and other operating revenues:									Sales and other operating revenues:
Leaf - North America	Leaf - North America	$	51,455	$	53,863	$	86,405	$	103,915	Leaf - North America	$	53,016	$	77,850	$	139,421	$	181,764
Leaf - Other Regions	Leaf - Other Regions	325,568		338,609		561,338		576,534		Leaf - Other Regions	306,500		441,719		867,838		1,018,255
Other Products and Services	Other Products and Services	5,958		2,404		11,908		5,415		Other Products and Services	3,744		4,918		15,652		10,332
Total sales and other operating revenues	Total sales and other operating revenues	$	382,981	$	394,876	$	659,651	$	685,864	Total sales and other operating revenues	$	363,260	$	524,487	$	1,022,911	$	1,210,351

Operating income (loss):	Operating income (loss):									Operating income (loss):
Leaf - North America	Leaf - North America	$	2,509	$	3,579	$	3,271	$	4,872	Leaf - North America	$	2,609	$	2,870	$	5,880	$	7,888
Leaf - Other Regions	Leaf - Other Regions	26,475		17,366		33,508		25,020		Leaf - Other Regions	25,508		44,133		59,016		70,010
Other Products and Services	Other Products and Services	(14,521)		(8,357)		(29,245)		(12,614)		Other Products and Services	(19,974)		(7,648)		(49,219)		(21,265)
Total operating income	Total operating income	$	14,463	$	12,588	$	7,534	$	17,278	Total operating income	$	8,143	$	39,355	$	15,677	$	56,633


		September 30, 2019		September 30, 2018		March 31, 2019			December 31, 2019		December 31, 2018		March 31, 2019
Segment assets:	Segment assets:							Segment assets:
Leaf - North America	Leaf - North America	$	288,866	$	324,186	$	243,248	Leaf - North America	$	319,433	$	318,295	$	243,248
Leaf - Other Regions	Leaf - Other Regions	1,503,959		1,598,201		1,488,226		Leaf - Other Regions	1,408,705		1,598,879		1,488,226
Other Products and Services	Other Products and Services	186,043		100,664		127,801		Other Products and Services	220,909		106,545		127,801
Total assets	Total assets	$	1,978,868	$	2,023,051	$	1,859,275	Total assets	$	1,949,047	$	2,023,719	$	1,859,275

~~-15-~~-16-

10. ~~Earnings~~Loss Per Share

The following summarizes the computation of ~~earnings~~loss per share:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
(in thousands, except per share data)	(in thousands, except per share data)	2019		2018		2019		2018		(in thousands, except per share data)	2019		2018		2019		2018
Basic loss per share:	Basic loss per share:									Basic loss per share:
Net loss attributable to Pyxus International, Inc.	Net loss attributable to Pyxus International, Inc.	$	(16,518)	$	(54,634)	$	(78,315)	$	(55,392)	Net loss attributable to Pyxus International, Inc.	$	(21,993)	$	(5,095)	$	(100,308)	$	(60,487)
Shares:	Shares:									Shares:
Weighted average number of shares outstanding⁽¹⁾	Weighted average number of shares outstanding⁽¹⁾	9,144		9,051		9,123		9,038		Weighted average number of shares outstanding⁽¹⁾	9,166		9,068		9,137		9,048
Basic loss per share	Basic loss per share	$	(1.81)	$	(6.04)	$	(8.58)	$	(6.13)	Basic loss per share	$	(2.40)	$	(0.56)	$	(10.98)	$	(6.69)

Diluted loss per share:	Diluted loss per share:									Diluted loss per share:
Net loss attributable to Pyxus International, Inc.	Net loss attributable to Pyxus International, Inc.	$	(16,518)	$	(54,634)	$	(78,315)	$	(55,392)	Net loss attributable to Pyxus International, Inc.	$	(21,993)	$	(5,095)	$	(100,308)	$	(60,487)
Shares:	Shares:									Shares:
Weighted average number of shares outstanding⁽¹⁾	Weighted average number of shares outstanding⁽¹⁾	9,144		9,051		9,123		9,038		Weighted average number of shares outstanding⁽¹⁾	9,166		9,068		9,137		9,048
Plus: Restricted shares issued and shares applicable to stock options and restricted stock units, net of shares assumed to be purchased from proceeds at average market price⁽²⁾	Plus: Restricted shares issued and shares applicable to stock options and restricted stock units, net of shares assumed to be purchased from proceeds at average market price⁽²⁾	—		—		—		—		Plus: Restricted shares issued and shares applicable to stock options and restricted stock units, net of shares assumed to be purchased from proceeds at average market price⁽²⁾	—		—		—		—
Adjusted weighted average number of shares outstanding	Adjusted weighted average number of shares outstanding	9,144		9,051		9,123		9,038		Adjusted weighted average number of shares outstanding	9,166		9,068		9,137		9,048
Diluted loss per share	Diluted loss per share	$	(1.81)	$	(6.04)	$	(8.58)	$	(6.13)	Diluted loss per share	$	(2.40)	$	(0.56)	$	(10.98)	$	(6.69)
(1) 785 shares of common stock were owned by a wholly owned subsidiary as of September 30, 2019 and 2018.
(2) All outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would have an antidilutive effect on the loss per share. The dilutive shares would have been 20 and 52 for the three months ended September 30, 2019 and 2018, respectively and 39 and 59 for the six months ended September 30, 2019 and 2018, respectively.
(1) 785 shares of common stock were owned by a wholly owned subsidiary as of December 31, 2019 and 2018.										(1) 785 shares of common stock were owned by a wholly owned subsidiary as of December 31, 2019 and 2018.
(2) Outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would have an antidilutive effect on the loss per share. The dilutive shares would have been 10 and 66 for the three months ended December 31, 2019 and 2018, respectively, and 28 and 62 for the nine months ended December 31, 2019 and 2018, respectively.										(2) Outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would have an antidilutive effect on the loss per share. The dilutive shares would have been 10 and 66 for the three months ended December 31, 2019 and 2018, respectively, and 28 and 62 for the nine months ended December 31, 2019 and 2018, respectively.

Certain potentially dilutive options were not included in the computation of ~~earnings~~loss per diluted share because their effect would be antidilutive. Potential common shares are also considered antidilutive in the event of a net loss. The number of potential shares outstanding that were considered antidilutive and that were excluded from the computation of diluted ~~earnings (loss)~~loss per share, weighted for the portion of the period they were outstanding were as follows:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Antidilutive stock options and other awards	Antidilutive stock options and other awards	450		427		430		427		Antidilutive stock options and other awards	452		427		450		427
Antidilutive stock options and other awards under stock-based compensation programs excluded based on reporting a net loss for the period	Antidilutive stock options and other awards under stock-based compensation programs excluded based on reporting a net loss for the period	—		—		—		—		Antidilutive stock options and other awards under stock-based compensation programs excluded based on reporting a net loss for the period	—		—		—		—
Total common stock equivalents excluded from diluted loss per share	Total common stock equivalents excluded from diluted loss per share	450		427		430		427		Total common stock equivalents excluded from diluted loss per share	452		427		450		427
Weighted average exercise price	Weighted average exercise price	$	56.98	$	60.00	$	59.63	$	60.00	Weighted average exercise price	$	56.66	$	60.00	$	56.98	$	60.00

11. Stock-Based Compensation

The following summarizes the Company's stock-based compensation expense related to awards granted under its various employee and non-employee stock incentive plans:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
(in thousands)	(in thousands)	2019		2018		2019		2018		(in thousands)	2019		2018		2019		2018
Stock-based compensation expense	Stock-based compensation expense	$	383	$	458	$	812	$	753	Stock-based compensation expense	$	242	$	402	$	1,054	$	1,155
Stock-based compensation expense payable in cash	Stock-based compensation expense payable in cash	—		—		—		—		Stock-based compensation expense payable in cash	—		—		—		—

~~-16-~~-17-

The following summarizes the Company's stock-based compensation awards:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
(in thousands, except grant date fair value)	(in thousands, except grant date fair value)	2019		2018		2019		2018		(in thousands, except grant date fair value)	2019		2018		2019		2018
Restricted stock	Restricted stock									Restricted stock
Number granted	Number granted	15		6		28		13		Number granted	11		13		39		26
Grant date fair value	Grant date fair value	$	13.08	$	23.00	$	14.14	$	19.63	Grant date fair value	$	8.94	$	11.86	$	12.41	$	17.04
Restricted stock units	Restricted stock units									Restricted stock units
Number granted	Number granted	—		—		2		61		Number granted	—		5		2		66
Grant date fair value	Grant date fair value	$	—	$	—	$	18.29	$	16.00	Grant date fair value	$	—	$	14.32	$	18.29	$	15.94
Performance-based stock units	Performance-based stock units									Performance-based stock units
Number granted	Number granted	—		—		—		30.00		Number granted	—		—		—		30
Grant date fair value	Grant date fair value	$	—	$	—	$	—	$	16.00	Grant date fair value	$	—	$	—	$	—	$	16.00

Restricted stock units granted during the ~~six~~nine months ended ~~September 30,~~December 31, 2019 vest ratably over a three-year period.

12. Contingencies and Other Information

Brazilian Tax Credits

The government in the Brazilian State of Parana ("Parana") issued a tax assessment on October 26, 2007 with respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil. The assessment for intrastate trade tax credits taken is ~~$3,163~~$3,268 and the total assessment including penalties and interest at ~~September 30,~~December 31, 2019 is ~~$11,159.~~$11,598. On March 18, 2014, the government in Brazilian State of Santa Catarina also issued a tax assessment with respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil. The assessment for intrastate trade tax credits taken is ~~$2,736~~$2,827 and the total assessment including penalties and interest at ~~September 30,~~December 31, 2019 is ~~$7,275.~~$7,551. The Company believes it has properly complied with Brazilian law and will contest any assessment through the judicial process. Should the Company lose in the judicial process, the loss of the intrastate trade tax credits would have a material impact on the financial statements of the Company.

The Company also has local intrastate trade tax credits in the Brazil State of Rio Grande do Sul and the State of Santa Catarina. These jurisdictions permit the sale or transfer of excess credits to third parties, however approval must be obtained from the tax authorities. The Company has agreements with the state governments regarding the amounts and timing of credits that can be sold. The tax credits have a carrying value of ~~$10,649.~~$11,313. The intrastate trade tax credits are monitored for impairment in future periods based on market conditions and the Company’s ability to use or sell the tax credits.

In 1969, the Brazilian government created a tax credit program that allowed companies to earn IPI tax credits (“IPI credits”) based on the value of their exports. The government began to phase out this program in 1979, which resulted in numerous lawsuits between taxpayers and the Brazilian government. The Company has a long legal history with respect to credits it earned while the IPI credit program was in effect. In 2001, the Company won a claim related to certain IPI credits it earned between 1983 and 1990. The Brazilian government appealed this decision and numerous rulings and appeals were rendered on behalf of both the government and the Company from 2001 through 2013. Because of this favorable ruling, the Company began to use these earned IPI credits to offset federal taxes in 2004 and 2005, until it received a Judicial Order to suspend the IPI offsetting in 2005. The value of the federal taxes offset in 2004 and 2005 was $24,142 and the Company established a reserve on these credits at the time of offsetting as they were not yet realizable due to the legal uncertainty that existed. Specifically, the Company extinguished other federal tax liabilities using IPI credits and recorded a liability in Pension, Postretirement and Other Long-Term Liabilities to reflect that the credits were not realizable at that time due to the prevalent legal uncertainty. On March 7, 2013, the Brazilian Supreme Court rendered a final decision in favor of the Company that recognized the validity of the IPI credits and secured the Company's right to benefit from the IPI credits earned from March 1983 to October 1990. This final decision expressly stated the Company has the right to the IPI credits. The Company estimates the total amount of the IPI credits to be approximately $94,316 at March 31, 2013. Since the March 2013 ruling definitively (without the government's ability to appeal) granted the Company the ownership of the IPI credits generated between 1983 and 1990, the Company believes the amount of IPI credits that were used to offset other federal taxes in 2004 and 2005 are realizable beyond a reasonable doubt. Accordingly, at March 31, 2013, the Company recorded the $24,142 IPI credits it realized in the Statements of Consolidated Operations in Other Income. No further benefit has been recognized pending the outcome of the judicial procedure to ascertain the final amount as those amounts have not yet been realized.

~~-17-~~-18-

Other Matters

On ~~June 7,~~October 8, 2019, the ~~Company and certain~~City of ~~its officers were named as defendants in~~New York filed a complaint ~~filed~~ in ~~the United States~~U.S. District Court against 24 e-liquids companies, including the Company’s Humble Juice subsidiary, seeking an injunction to prevent sales of e-cigarette products to residents of New York City without adequate age-verification systems and to prohibit marketing e-cigarettes to New York City residents under the age of 21, as well as statutory damages and compensation to the city for the ~~Eastern District~~costs of ~~North Carolina. The complaint was brought on behalf of a putative class of investors who purchased~~abating underage e-cigarette use. On December 16, 2019, Humble Juice filed its answer to the ~~Company's common stock between June 7, 2018 and November 8, 2018. The complaint alleged~~compliant, denying that the defendants violated federal securities laws provisions with respect to fraud and material representations, which purported misconduct was revealed by the Company's November 8, 2018 announcement that sales and other operating revenues for the quarter ended September 30, 2018 had decreased approximately 12% over the prior year quarterit lacked adequate age-verification systems and the ~~announcement on November 9, 2018 by~~allegations underlying the ~~Securities and Exchange Commission that the Company had settled charges that it had materially misstated its financial statements from 2011 through the second quarter of 2015 due~~City's claim for relief, as well as asserting several affirmative defenses. Humble Juice intends to improper and insufficient accounting, processes and control activities, deferred crop costs, and revenue transactions in Africa. The complaint alleged that members of the purported class were harmed by the decline in the trading price of the Company's common stock on the dates of these announcements. The complaint sought damages in an unspecified amount. On October 31, 2019, the complaint was voluntarily dismissed without prejudice.vigorously defend this matter.

In addition to the above-mentioned matters, certain of the Company’s subsidiaries are involved in other litigation or legal matters incidental to their business activities, including tax matters. While the outcome of these matters cannot be predicted with certainty, the Company is vigorously defending them and does not currently expect that any of them will have a material adverse effect on its business or financial position. However, should one or more of these matters be resolved in a manner adverse to its current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material.

Asset Retirement Obligations

In accordance with generally accepted accounting principles, the Company records all known asset retirement obligations (“ARO”) for which the liability can be reasonably estimated. Currently, it has identified an ARO associated with 1 of its facilities that requires it to restore the land to its initial condition upon vacating the facility. The Company has not recognized a liability under generally accepted accounting principles for this ARO because the fair value of restoring the land at this site cannot be reasonably estimated since the settlement date is unknown at this time. The settlement date is unknown because the land restoration is not required until title is returned to the government, and the Company has no current or future plans to return the title. The Company will recognize a liability in the period in which sufficient information is available to reasonably estimate its fair value.

~~-18-~~-19-

13. Debt Arrangements

The following summarizes debt and notes payable:


								September 30, 2019															December 31, 2019
		Outstanding						Lines and						Outstanding								Lines and
		March 31,		September 30,		Letters		Interest				March 31,		December 31,		Letters		Interest
(in thousands)	(in thousands)	2019		2019		Available		Rate			(in thousands)	2019		2019		Available		Rate
Senior secured credit facility:	Senior secured credit facility:										Senior secured credit facility:
ABL facility ⁽¹⁾	ABL facility ⁽¹⁾	$	—	$	—	$	60,000	—	%	(2)	ABL facility ⁽¹⁾	$	—	$	—	$	60,000	—	%	(2)
Senior notes:	Senior notes:										Senior notes:
8.5% senior secured first lien notes due 2021 ⁽³⁾	8.5% senior secured first lien notes due 2021 ⁽³⁾	270,883		271,870		—		8.5	%		8.5% senior secured first lien notes due 2021 ⁽³⁾	270,883		272,369		—		8.5	%
9.875% senior secured second lien notes due 2021 ⁽⁴⁾	9.875% senior secured second lien notes due 2021 ⁽⁴⁾	627,147		628,918		—		9.9	%		9.875% senior secured second lien notes due 2021 ⁽⁴⁾	627,147		629,821		—		9.9	%
Other long-term debt	Other long-term debt	688		600		—		5.2	%	(2)	Other long-term debt	688		596		—		5.2	%	(2)
Notes payable to banks ⁽⁵⁾	Notes payable to banks ⁽⁵⁾	428,961		582,379		237,226		7.0	%	(2)	Notes payable to banks ⁽⁵⁾	428,961		580,346		258,436		7.1	%	(2)
Total debt	Total debt	$	1,327,679	$	1,483,767	$	297,226				Total debt	$	1,327,679	$	1,483,132	$	318,436
Short-term	Short-term	$	428,961	$	582,389						Short-term	$	428,961	$	580,346
Long-term:	Long-term:										Long-term:
Current portion of long-term debt	Current portion of long-term debt	$	332	$	319						Current portion of long-term debt	$	332	$	325
Long-term debt	Long-term debt	898,386		901,059							Long-term debt	898,386		902,461
		$	898,718	$	901,378							$	898,718	$	902,786
Letters of credit	Letters of credit	$	5,399	$	6,771	7,141					Letters of credit	$	5,399	$	7,151	5,740
Total credit available	Total credit available					$	304,367				Total credit available					$	324,176

(1) As of September 30, 2019, the full amount of the ABL facility was available. Borrowing is permitted under the ABL facility only to the extent that, after consideration of the application of the proceeds of the borrowing, the Company’s unrestricted cash and cash equivalents would not exceed $180 million.
(2) Weighted average rate for the trailing twelve months ended September 30, 2019.
(3) Repayment of $271,870 is net of original issue discount of $975 and unamortized debt issuance of $2,154. Total repayment will be $275,000.
(4) Repayment of $628,918 is net of original issue discount of $3,820 and unamortized debt issuance of $2,949. Total repayment will be $635,686.
(1) As of December 31, 2019, the full amount of the ABL facility was available. Borrowing is permitted under the ABL facility only to the extent that, after consideration of the application of the proceeds of the borrowing, the Company’s unrestricted cash and cash equivalents would not exceed $180 million.											(1) As of December 31, 2019, the full amount of the ABL facility was available. Borrowing is permitted under the ABL facility only to the extent that, after consideration of the application of the proceeds of the borrowing, the Company’s unrestricted cash and cash equivalents would not exceed $180 million.
(2) Weighted average rate for the trailing twelve months ended December 31, 2019.											(2) Weighted average rate for the trailing twelve months ended December 31, 2019.
(3) Repayment of $272,369 is net of original issue discount of $826 and unamortized debt issuance of $1,805. Total repayment will be $275,000.											(3) Repayment of $272,369 is net of original issue discount of $826 and unamortized debt issuance of $1,805. Total repayment will be $275,000.
(4) Repayment of $629,821 is net of original issue discount of $3,328 and unamortized debt issuance of $2,537. Total repayment will be $635,686.											(4) Repayment of $629,821 is net of original issue discount of $3,328 and unamortized debt issuance of $2,537. Total repayment will be $635,686.
(5) Primarily foreign seasonal lines of credit.	(5) Primarily foreign seasonal lines of credit.																				(5) Primarily foreign seasonal lines of credit.

~~ABL Facility~~

The ~~ABL credit agreement restricts the Company from paying dividends during the term of this facility subject to the satisfaction of specified financial ratios. In addition, the~~ indentures governing the Company's outstanding 8.5% senior secured first lien notes due 2021 and its outstanding 9.875% senior secured second lien notes due 2021 contain ~~similar~~ restrictions, subject to certain exceptions and ~~also~~baskets, that prohibit the payment of dividends and other distributions if the Company fails to satisfy a ratio of consolidated EBITDA to fixed charges of at least 2.0 to 1.0. As of ~~September 30,~~December 31, 2019, the Company did not satisfy this fixed charge coverage ratio. The Company may not satisfy this ratio from time to time and failure to meet this fixed charge coverage ratio does not constitute an event of default.

ABL Facility

The ABL credit agreement restricts the Company from paying dividends during the term of this facility subject to the satisfaction of specified financial ratios.

14. Leases

The Company has operating leases for land, buildings, automobiles, and other equipment that expire at various dates through 2040. Leases for real estate generally have initial terms ranging from 2 to 15 years, excluding renewal options. Leases for equipment typically have initial terms ranging from 2 to 5 years excluding renewal options. Most leases have fixed rentals, with many of the real estate leases requiring additional payments for real estate taxes. These lease terms may include optional renewals, terminations or purchases, which are considered in the Company’s assessments when such options are reasonably certain to be exercised.

-20-

The following summarizes weighted-average information associated with the measurement of remaining operating lease as of ~~September 30,~~December 31, 2019:


Weighted-average remaining lease term			~~5.3~~5.2 years
Weighted-average discount rate			~~10.1%~~9.6%

~~-19-~~

The following summarizes lease costs for operating leases:


		Three Months Ended		Six Months Ended			Three Months Ended		Nine Months Ended
		September 30, 2019					December 31, 2019
Operating lease costs	Operating lease costs	$	4,111	$	8,299	Operating lease costs	$	4,268	$	12,567
Variable and short-term lease costs	Variable and short-term lease costs	1,791		3,259		Variable and short-term lease costs	1,830		5,089
Total lease costs	Total lease costs	$	5,902	$	11,558	Total lease costs	$	6,098	$	17,656

The following summarizes supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities:


		Three Months Ended		Six Months Ended			Three Months Ended		Nine Months Ended
		September 30, 2019					December 31, 2019
Operating cash flows impact - operating leases	Operating cash flows impact - operating leases	$	4,673	$	8,813	Operating cash flows impact - operating leases	$	3,051	$	11,864
Right-of-use assets obtained in exchange for new operating leases	Right-of-use assets obtained in exchange for new operating leases	2,815		4,393		Right-of-use assets obtained in exchange for new operating leases	1,111		5,504

The following reconciles maturities of operating lease liabilities to the lease liabilities reflected in the condensed consolidated balance sheet as of ~~September 30,~~December 31, 2019:


2020 (excluding the six months ended September 30, 2019)		$	10,115
2020 (excluding the nine months ended December 31, 2019)				2020 (excluding the nine months ended December 31, 2019)	$	4,458
2021	2021	13,654		2021	13,452
2022	2022	10,504		2022	10,741
2023	2023	6,733		2023	6,904
2024	2024	5,572		2024	5,662
Thereafter	Thereafter	12,392		Thereafter	12,545
Total future minimum lease payments	Total future minimum lease payments	58,970		Total future minimum lease payments	53,762
Less: amounts related to imputed interest	Less: amounts related to imputed interest	15,910		Less: amounts related to imputed interest	11,523
Present value of future minimum lease payments	Present value of future minimum lease payments	43,060		Present value of future minimum lease payments	42,239
Less: operating lease liabilities, current	Less: operating lease liabilities, current	14,492		Less: operating lease liabilities, current	14,033
Operating lease liabilities, non-current	Operating lease liabilities, non-current	$	28,568	Operating lease liabilities, non-current	$	28,206

The Company continuously monitors and may negotiate contract amendments that include extensions or modifications to existing leases. The following presents the future minimum rental commitments under noncancelable operating leases as of March 31, 2019:


2020 (excluding the six months ended September 30, 2019)		$	15,651
2020				2020	$	15,651
2021	2021	10,554		2021	10,554
2022	2022	8,483		2022	8,483
2023	2023	6,735		2023	6,735
2024	2024	5,356		2024	5,356
Thereafter	Thereafter	7,324		Thereafter	7,324
Total	Total	$	54,103	Total	$	54,103

-21-

15. Derivative Financial Instruments

The Company uses forward or option currency contracts to protect against volatility associated with certain non-U.S. dollar denominated forecasted transactions. These contracts are for green tobacco purchases, processing costs, and selling, general, and administrative costs. As of ~~September 30,~~December 31, 2019 and 2018, accumulated other comprehensive loss includes ~~$817~~$241 and ~~$716,~~$2,307, net of tax of ~~$478~~$64 and ~~$190,~~$613, for unrealized losses related to designated cash flow hedges, respectively. The Company recorded

~~-20-~~

losses of ~~$1,809~~$729 and ~~$2,460~~$3,189 in its cost of goods and services sold for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2019, respectively. ~~There were no~~The Company recorded a current derivative ~~assets or liabilities~~asset of $1,029 as of ~~September 30, 2019 and~~December 31, 2018, included in the condensed consolidated balance sheets. There were no0 derivatives contracts outstanding as of ~~September 30,~~December 31, 2019.

16. Pension and Other Postretirement Benefits

The following summarizes the components of net periodic benefit cost:

Pension Benefits
Three Months Ended September 30, Six Months Ended September 30,
2019 2018 2019 2018
Operating expenses:
Service cost $ 117 $ 120 $ 235 $ 240
Interest expense:
Interest expense 1,029 1,155 2,059 2,309
Expected return on plan assets (1,121) (1,286) (2,242) (2,572)
Amortization of prior service cost 10 11 21 21
Settlement loss⁽¹⁾
548 518 548 518
Actuarial loss 456 422 912 845
Net periodic pension cost $ 1,039 $ 940 $ 1,533 $ 1,361
(1) During the three and six months ended September 30, 2019 and 2018, the Company's cash payments activity triggered settlement accounting. Settlement losses are recorded in interest expense.


	Pension Benefits
	Three Months Ended December 31,						Nine Months Ended December 31,
	2019		2018		2019		2018
Operating expenses:
Service cost	$	117	$	120	$	352	$	359
Interest expense:
Interest expense	1,029		1,155		3,088		3,464
Expected return on plan assets	(1,121)		(1,286)		(3,363)		(3,858)
Amortization of prior service cost	10		11		31		32
Settlement loss⁽¹⁾	271		91		819		609
Actuarial loss	456		422		1,368		1,267
Net periodic pension cost	$	762	$	513	$	2,295	$	1,873
(1) During the three and nine months ended December 31, 2019 and 2018, the Company's cash payments activity triggered settlement accounting. Settlement losses are recorded in interest expense.


		Other Postretirement Benefits															Other Postretirement Benefits
		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Operating expenses:	Operating expenses:									Operating expenses:
Service cost	Service cost	$	2	$	4	$	3	$	7	Service cost	$	2	$	4	$	5	$	11
Interest expense:	Interest expense:									Interest expense:
Interest expense	Interest expense	82		83		164		166		Interest expense	82		83		246		248
Amortization of prior service cost	Amortization of prior service cost	(177)		(177)		(354)		(355)		Amortization of prior service cost	(177)		(177)		(531)		(532)
Actuarial loss	Actuarial loss	109		109		219		219		Actuarial loss	109		109		328		328
Net periodic pension cost	Net periodic pension cost	$	16	$	19	$	32	$	37	Net periodic pension cost	$	16	$	19	$	48	$	55

The following summarizes contributions to pension plans and postretirement health and life insurance benefits:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Contributions made during the period	Contributions made during the period	$	1,615	$	1,902	$	3,180	$	3,491	Contributions made during the period	$	1,277	$	1,399	$	4,457	$	4,890
Contributions expected for the remainder of the fiscal year	Contributions expected for the remainder of the fiscal year					3,942		3,756		Contributions expected for the remainder of the fiscal year					2,665		2,357
Total	Total					$	7,122	$	7,247	Total					$	7,122	$	7,247

~~-21-~~-22-

17. Inventories

Inventories consist of the following:


		September 30, 2019		September 30, 2018		March 31, 2019			December 31, 2019		December 31, 2018		March 31, 2019
Processed tobacco	Processed tobacco	$	613,120	$	725,225	$	455,303	Processed tobacco	$	703,124	$	698,092	$	455,163
Unprocessed tobacco	Unprocessed tobacco	170,043		207,580		186,108		Unprocessed tobacco	116,456		107,206		183,607
Other tobacco related								Other tobacco related	20,960		19,771		26,385
Other⁽¹⁾	Other⁽¹⁾	19,396		21,887		26,760		Other⁽¹⁾	31,310		2,713		3,016
Total	Total	$	802,559	$	954,692	$	668,171	Total	$	871,850	$	827,782	$	668,171
(1) Includes inventory from the other products and services segment.
(1) Represents inventory from the other products and services segment.								(1) Represents inventory from the other products and services segment.

18. Other Comprehensive Loss

The changes in accumulated other comprehensive loss and the related tax effect are due to pension and other postretirement benefits and derivatives activity and reclassifications to the condensed consolidated statements of operations, as shown on the condensed consolidated statements of comprehensive loss. The following summarizes pension and other postretirement benefits and derivatives that were reclassified from accumulated other comprehensive loss to interest expense and cost of goods and services sold within the condensed consolidated statement of operations:


		Three Months Ended September 30,						Six Months Ended September 30,			Affected Line Item in the Condensed						Three Months Ended December 31,					Nine Months Ended December 31,	Affected Line Item in the Condensed Consolidated
		2019		2018		2019		2018		Consolidated Statements of Operations			2019		2018		2019		2018		Statements of Operations
Pension and other postretirement benefits*:	Pension and other postretirement benefits*:											Pension and other postretirement benefits*:
Actuarial loss	Actuarial loss	$	560	$	533	$	1,120	$	1,066			Actuarial loss	$	560	$	534	$	1,680	$	1,601
Amortization of prior service cost	Amortization of prior service cost	(165)		(167)		(330)		(334)				Amortization of prior service cost	(165)		(167)		(495)		(502)
Amounts reclassified from accumulated other comprehensive loss to net income, gross	Amounts reclassified from accumulated other comprehensive loss to net income, gross	395		366		790		732				Amounts reclassified from accumulated other comprehensive loss to net income, gross	395		367		1,185		1,099
Tax effects of amounts reclassified from accumulated other comprehensive loss to net income	Tax effects of amounts reclassified from accumulated other comprehensive loss to net income	(84)		(164)		(168)		(164)				Tax effects of amounts reclassified from accumulated other comprehensive loss to net income	(83)		(82)		(251)		(246)
Amounts reclassified from accumulated other comprehensive loss to net income, net	Amounts reclassified from accumulated other comprehensive loss to net income, net	$	311	$	202	$	622	$	568	Interest expense		Amounts reclassified from accumulated other comprehensive loss to net income, net	$	312	$	285	$	934	$	853	Interest expense

		Three Months Ended September 30,						Six Months Ended September 30,			Affected Line Item in the Condensed						Three Months Ended December 31,					Nine Months Ended December 31,	Affected Line Item in the Condensed Consolidated
		2019		2018		2019		2018		Consolidated Statements of Operations			2019		2018		2019		2018		Statements of Operations
Derivatives:	Derivatives:											Derivatives:
Losses reclassified to cost of goods sold	Losses reclassified to cost of goods sold	$	1,809	$	569	$	2,460	$	987			Losses reclassified to cost of goods sold	$	729	$	458	$	3,189	$	1,445
Amounts reclassified from accumulated other comprehensive loss to net income, gross	Amounts reclassified from accumulated other comprehensive loss to net income, gross	1,809		569		2,460		987				Amounts reclassified from accumulated other comprehensive loss to net income, gross	729		458		3,189		1,445
Tax effects of amounts reclassified from accumulated other comprehensive loss to net income	Tax effects of amounts reclassified from accumulated other comprehensive loss to net income	(379)		(119)		(516)		(207)				Tax effects of amounts reclassified from accumulated other comprehensive loss to net income	(153)		(96)		(669)		(303)
Amounts reclassified from accumulated other comprehensive loss to net income, net	Amounts reclassified from accumulated other comprehensive loss to net income, net	$	1,430	$	450	$	1,944	$	780	Cost of goods and services sold		Amounts reclassified from accumulated other comprehensive loss to net income, net	$	576	$	362	$	2,520	$	1,142	Cost of goods and services sold

*Amounts are included in net periodic benefit costs for pension and other postretirement benefits. See "Note 16. Pension and Other Postretirement Benefits" for additional information.

~~-22-~~-23-

19. Securitized Receivables

The Company sells trade receivables to unaffiliated financial institutions under 23 accounts receivable securitization facilities. Under the first facility, the Company continuously sells a designated pool of trade receivables to a special purpose entity, which sells 100% of the receivables to an unaffiliated financial institution. As of ~~September 30,~~December 31, 2019, the investment limit under the first facility was $125,000 of trade receivables. Under the second ~~facility,~~and third facilities, the Company offers receivables for sale to an unaffiliated financial ~~institution,~~institutions, which are then subject to acceptance by the unaffiliated financial ~~institution.~~institutions. As of ~~September 30,~~December 31, 2019, the investment limit under the second facility was $125,000 of trade receivables. As of December 31, 2019, the investment limit under the third facility was variable based on qualifying sales.

As the servicer of these facilities, the Company may receive funds that are due to the unaffiliated financial institutions, which are net settled on the next settlement date. As a result of the net settlement, trade and other receivables, net in the condensed consolidated balance sheets has been reduced by ~~$12,446, $5,328,~~$7,504 and $5,208 as of ~~September 30,~~December 31, 2019 ~~and 2018,~~ and March 31, 2019, ~~respectively.~~respectively, and increased by $78 as of December 31, 2018.

The following summarizes the accounts receivable securitization information:

September 30, March 31,
2019 2018 2019
Receivables outstanding in facility $ 126,006 $ 81,171 $ 210,672
Beneficial interests 25,579 17,512 40,332
Servicing liability 23 — 90
Cash proceeds for the six months ended:
Cash purchase price $ 228,072 $ 243,546 $ 672,333
Deferred purchase price 127,707 114,212 242,966
Service fees 237 303 576
Total $ 356,016 $ 358,061 $ 915,875


	December 31,						March 31,
	2019		2018		2019
Receivables outstanding in facility	$	69,741	$	92,445	$	210,672
Beneficial interests	14,385		24,659		40,332
Servicing liability	5		26		90


	Nine Months Ended December 31,
	2019		2018
Cash proceeds for the period ended:
Cash purchase price	$	331,187	$	416,526
Deferred purchase price	174,741		171,565
Service fees	355		435
Total	$	506,283	$	588,526

20. Fair Value Measurements

The following summarizes the financial assets and liabilities measured at fair value on a recurring basis:


		September 30, 2019											September 30, 2018											March 31, 2019									December 31, 2019																December 31, 2018	March 31, 2019
								Total							Total							Total							Total								Total											Total
		Level 2		Level 3		at Fair Value			Level 2		Level 3		at Fair Value			Level 2		Level 3		at Fair Value			Level 2		Level 3		at Fair Value		Level 2		Level 3		at Fair Value					Level 2			Level 3			at Fair Value
Financial Assets:	Financial Assets:																					Financial Assets:
Derivative financial instruments	Derivative financial instruments	$	—	$	—	$	—		$	—	$	—	$	—		$	186	$	—	$	186	Derivative financial instruments	$	—	$	—	$	—	$	1,029	$		—		$	1,029				$	186		$	—		$	186
Securitized beneficial interests	Securitized beneficial interests	—		25,579		25,579			—		17,512		17,512			—		40,332		40,332		Securitized beneficial interests	—		14,385		14,385		—		24,659		24,659					—			40,332			40,332
Total assets	Total assets	$	—	$	25,579	$	25,579		$	—	$	17,512	$	17,512		$	186	$	40,332	$	40,518	Total assets	$	—	$	14,385	$	14,385	$	1,029	$	24,659	$	25,688				$	186		$	40,332		$	40,518
Financial Liabilities:	Financial Liabilities:																					Financial Liabilities:
Long-term debt	Long-term debt	$	688,431	$	615	$	689,046		$	897,264	$	706	$	897,970		$	830,082	$	703	$	830,785	Long-term debt	$	558,401	$	620	$	559,021	$	742,047	$	708	$	742,755				$	830,082		$	703		$	830,785
Guarantees	Guarantees	—		1,026		1,026			—		1,861		1,861			—		3,714		3,714		Guarantees	—		1,112		1,112		—		2,890		2,890					—			3,714			3,714
Total liabilities	Total liabilities	$	688,431	$	1,641	$	690,072		$	897,264	$	2,567	$	899,831		$	830,082	$	4,417	$	834,499	Total liabilities	$	558,401	$	1,732	$	560,133	$	742,047	$	3,598	$	745,645				$	830,082		$	4,417		$	834,499

Level 2 measurements

•Debt: The fair value of debt is based on the market price for similar financial instruments or model-derived valuations with observable inputs. The primary inputs to the valuation include market expectations, the Company's credit risk, and the contractual terms of the debt instrument.

•Derivatives: The fair value of derivatives is determined using the discounted cash flow analysis of the expected future cash flows. The primary inputs to the valuation include forward yield curves, implied volatilities, LIBOR rates, and credit valuation adjustments.

-24-

Level 3 measurements

•Guarantees: The fair value of guarantees is determined using the discounted cash flow analysis of the expected future cash flows or historical loss rates. The primary inputs to the discounted cash flow analysis include market interest rates ranging between 15.0% to 75.8% and the Company’s historical loss rates ranging between 2.2% to 10.0% as of ~~September 30,~~December 31, 2019. The historical loss rate was weighted by the principal balance of the loans.

~~-23-~~

•Securitized beneficial interests: The fair value of securitized beneficial interests is determined using the present value of future expected cash flows. The primary inputs to this valuation include payment speeds of 6577 to 7380 days and discount rates of ~~3.5%~~1.7% to ~~4.6%~~4.3% as of ~~September 30,~~December 31, 2019. The discount rate was weighted by the outstanding interest. Payment speed was weighted by the average days outstanding.

The following summarizes the reconciliation of changes in Level 3 instruments measured on a recurring basis:


		Three Months Ended September 30, 2019						Six Months Ended September 30, 2019							Three Months Ended December 31, 2019				Nine Months Ended December 31, 2019
		Securitized Beneficial Interests		Guarantees		Securitized Beneficial Interests		Guarantees			Securitized Beneficial Interests		Guarantees		Securitized Beneficial Interests		Guarantees
Beginning balance	Beginning balance	$	14,648	$	3,136	$	40,332	$	3,714	Beginning balance	$	25,579	$	1,026	$	40,332	$	3,714
Issuances of sales of receivables/guarantees	Issuances of sales of receivables/guarantees	61,411		553		108,293		845		Issuances of sales of receivables/guarantees	42,857		478		151,150		1,323
Settlements	Settlements	(49,219)		(2,650)		(120,842)		(3,529)		Settlements	(53,158)		(408)		(174,000)		(3,937)
(Losses) gains recognized in earnings	(Losses) gains recognized in earnings	(1,261)		(13)		(2,204)		(4)		(Losses) gains recognized in earnings	(893)		16		(3,097)		12
Ending balance	Ending balance	$	25,579	$	1,026	$	25,579	$	1,026	Ending balance	$	14,385	$	1,112	$	14,385	$	1,112


		Three Months Ended September 30, 2018						Six Months Ended September 30, 2018							Three Months Ended December 31, 2018				Nine Months Ended December 31, 2018
		Securitized Beneficial Interests		Guarantees		Securitized Beneficial Interests		Guarantees			Securitized Beneficial Interests		Guarantees		Securitized Beneficial Interests		Guarantees
Beginning balance	Beginning balance	$	17,736	$	3,544	$	48,715	$	5,864	Beginning balance	$	17,512	$	1,861	$	48,715	$	5,864
Issuances of sales of receivables/guarantees	Issuances of sales of receivables/guarantees	42,210		1,160		90,896		1,403		Issuances of sales of receivables/guarantees	71,047		1,585		161,943		2,988
Settlements	Settlements	(41,467)		(2,839)		(121,018)		(5,540)		Settlements	(62,432)		(569)		(183,450)		(6,109)
(Losses) gains recognized in earnings	(Losses) gains recognized in earnings	(967)		(4)		(1,081)		134		(Losses) gains recognized in earnings	(1,468)		13		(2,549)		147
Ending balance	Ending balance	$	17,512	$	1,861	$	17,512	$	1,861	Ending balance	$	24,659	$	2,890	$	24,659	$	2,890

For the ~~six~~nine months ended ~~September 30,~~December 31, 2019 and 2018, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests were ~~$926~~$691 and ~~$623,~~$643, respectively.

21. Related Party Transactions

The Company engages in transactions with related parties primarily for the procuring and processing of inventory. The following summarizes sales and purchases with related parties:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Sales	Sales	$	6,273	$	6,873	$	13,777	$	13,763	Sales	$	1,535	$	475	$	15,312	$	14,238
Purchases	Purchases	33,781		21,042		55,136		52,503		Purchases	41,116		46,281		96,252		98,784

The Company’s accounts receivable, notes receivable, and accounts payable balances with related parties, as presented on the consolidated balance sheets, relate to transactions with equity method investments located in Asia, South America, North America, and Europe which grow, purchase, process, and sell tobacco, hemp, or produce consumable e-liquids.

~~-24-~~-25-

22. Equity Method Investments

The following summarizes the Company's equity method investments as of ~~September 30,~~December 31, 2019:


Entity Name	Entity Name	Location	Primary Purpose	The Company's Ownership Percentage		Basis Difference	Entity Name	Location	Primary Purpose	The Company's Ownership Percentage		Basis Difference
Adams International Ltd.	Adams International Ltd.	Thailand	purchase and process tobacco	49	%	—	Adams International Ltd.	Thailand	purchase and process tobacco	49	%	—
Alliance One Industries India Private Ltd.	Alliance One Industries India Private Ltd.	India	purchase and process tobacco	49	%	—	Alliance One Industries India Private Ltd.	India	purchase and process tobacco	49	%	—
China Brasil Tobacos Exportadora SA	China Brasil Tobacos Exportadora SA	Brazil	purchase and process tobacco	49	%	6,189	China Brasil Tobacos Exportadora SA	Brazil	purchase and process tobacco	49	%	5,841
Criticality LLC	Criticality LLC	U.S.	extraction of cannabidiol from industrial hemp	40	%	897	Criticality LLC	U.S.	extraction of cannabidiol from industrial hemp	40	%	881
Nicotine River, LLC	Nicotine River, LLC	U.S.	produce consumable e-liquids	40	%	1,964	Nicotine River, LLC	U.S.	produce consumable e-liquids	40	%	1,902
Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş.	Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş.	Turkey	process tobacco	50	%	—	Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş.	Turkey	process tobacco	50	%	—
Purilum, LLC	Purilum, LLC	U.S.	produce flavor formulations and consumable e-liquids	50	%	—	Purilum, LLC	U.S.	produce flavor formulations and consumable e-liquids	50	%	—
Siam Tobacco Export Company	Siam Tobacco Export Company	Thailand	purchase and process tobacco	49	%	—	Siam Tobacco Export Company	Thailand	purchase and process tobacco	49	%	—

The following summarizes financial information for these equity method ~~investments for the three and six months ended September 30, 2019 and 2018:~~investments:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Operations statement:	Operations statement:									Operations statement:
Sales	Sales	$	149,137	$	45,981	$	195,370	$	93,207	Sales	$	61,515	$	128,731	$	256,885	$	221,938
Gross profit	Gross profit	25,266		9,059		34,773		16,826		Gross profit	9,462		20,705		44,235		37,531
Net income	Net income	11,993		3,532		15,093		5,576		Net income	1,506		10,433		16,599		16,009
Company's dividends received	Company's dividends received	480		5,556		6,574		5,556		Company's dividends received	267		—		6,841		5,556


		September 30,									December 31,
		2019		2018		March 31, 2019			2019		2018		March 31, 2019
Balance sheet:	Balance sheet:							Balance sheet:
Current assets	Current assets	$	259,980	$	241,119	$	152,661	Current assets	$	166,989	$	235,951	$	152,661
Property, plant, and equipment and other assets	Property, plant, and equipment and other assets	54,698		47,044		53,103		Property, plant, and equipment and other assets	57,320		52,233		53,103
Current liabilities	Current liabilities	195,834		185,386		89,791		Current liabilities	103,622		174,688		89,791
Long-term obligations and other liabilities	Long-term obligations and other liabilities	4,693		3,993		3,222		Long-term obligations and other liabilities	6,054		3,320		3,222

Of the amounts presented above, the following summarizes financial information for China Brasil Tobacos Exportadora SA ("CBT") ~~for the three and six months ended September 30, 2019 and 2018:~~:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Operations statement:	Operations statement:									Operations statement:
Sales	Sales	$	118,043	$	14,845	$	136,434	$	38,081	Sales	$	22,521	$	78,405	$	158,955	$	116,486
Gross profit	Gross profit	19,809		2,373		22,021		5,979		Gross profit	3,338		13,492		25,359		19,471
Net income	Net income	10,924		940		10,888		1,720		Net income	1,041		8,918		11,929		10,638
Net income attributable to CBT	Net income attributable to CBT	5,353		461		5,335		843		Net income attributable to CBT	510		4,370		5,845		5,213

~~-25-~~-26-

23. Restructuring and Asset Impairment Charges

The Company announced a cost-saving initiative and restructuring plan to re-purpose its Argentinian subsidiary for storage and special projects during the quarter ended December 31, 2019, with tobacco processing to be provided by a third party going forward. Total costs related to severance for affected employees, and impairment and other one-time costs associated with fixed assets are estimated to be $4,300 and $141, respectively, and are expected to be incurred by March 31, 2020. For the three months ended December 31, 2019, the Company incurred $621 and $141 for severance and impairment related charges, respectively.

During the fiscal year ended March 31, 2019, the Company incurred costs associated with the closure of a processing facility in the Leaf - Other Regions segment in order to process tobacco in the affected area under a third-party processing arrangement going forward, the consolidation of the Company's U.S. green tobacco processing operations into its Wilson, North Carolina facility, and the re-purposing of its Farmville, North Carolina facility for storage and special projects.

The following summarizes the Company's restructuring and asset impairment charges:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Employee separation charges	Employee separation charges	$	8	$	179	$	101	$	1,377	Employee separation charges	$	531	$	1,122	$	632	$	2,499
Asset impairment and other non-cash charges	Asset impairment and other non-cash charges	—		3		119		346		Asset impairment and other non-cash charges	141		545		260		891
Restructuring and asset impairment charges	Restructuring and asset impairment charges	$	8	$	182	$	220	$	1,723	Restructuring and asset impairment charges	$	672	$	1,667	$	892	$	3,390

The following summarizes the activity in the restructuring accrual for employee separation and other cash charges recorded in the Company's Leaf - North America and Leaf - Other Regions segments:


		Three Months Ended September 30,														Six Months Ended September 30,															Three Months Ended December 31,					Nine Months Ended December 31,
		2019						2018						2019						2018							2019						2018		2019	2018
		Leaf - North America		Leaf - Other Regions		Leaf - North America		Leaf - Other Regions		Leaf - North America		Leaf - Other Regions		Leaf - North America		Leaf - Other Regions			Leaf - North America		Leaf - Other Regions		Leaf - North America		Leaf - Other Regions		Leaf - North America		Leaf - Other Regions		Leaf - North America		Leaf - Other Regions
Beginning balance	Beginning balance	$	817	$	214	$	247	$	1,058	$	1,621	$	222	$	—	$	107	Beginning balance	$	266	$	214	$	107	$	889	$	1,621	$	222	$	—	$	107
Period charges	Period charges	—		8		—		179		8		93		247		1,130		Period charges	—		531		892		230		8		624		1,139		1,360
Payments	Payments	(551)		(8)		(140)		(348)		(1,363)		(101)		(140)		(348)		Payments	(251)		(646)		(73)		(328)		(1,614)		(747)		(213)		(676)
Ending balance	Ending balance	$	266	$	214	$	107	$	889	$	266	$	214	$	107	$	889	Ending balance	$	15	$	99	$	926	$	791	$	15	$	99	$	926	$	791

The following summarizes the asset impairment and other non-cash charges ~~for~~recorded in the Company's Leaf - North America and Leaf - Other Regions segments:


		Three Months Ended September 30,						Six Months Ended September 30,							Three Months Ended December 31,				Nine Months Ended December 31,
		2019		2018		2019		2018			2019		2018		2019		2018
Leaf - North America	Leaf - North America	$	—	$	—	$	—	$	—	Leaf - North America	$	—	$	545	$	—	$	545
Leaf - Other Regions	Leaf - Other Regions	—		3		119		346		Leaf - Other Regions	141		—		260		346

Total	Total	$	—	$	3	$	119	$	346	Total	$	141	$	545	$	260	$	891

~~-26-~~

~~24. Subsequent Events~~

On October 15, 2019, a wholly owned Canadian subsidiary of the Company acquired an additional 1.2% equity position in Canada’s Island Garden Inc. ("Figr East") for approximately Canadian Dollars 1.2 million, increasing that subsidiary's ownership level to 94.3%.

On October 8, 2019, the City of New York filed a complaint in U.S. District Court against 24 e-liquids companies, including the Company’s Humble Juice subsidiary, seeking an injunction to prevent sales of e-cigarette products to residents of New York City without adequate age-verification systems and to prohibit marketing e-cigarettes to New York City residents under the age of 21, as well as statutory damages and compensation to the city for the costs of abating underage e-cigarette use. The Company is currently evaluating the complaint.

-27-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Overview

At Pyxus, we believe everything we do is to transform people’s lives so that together we can grow a better world. Pyxus provides responsibly produced, independently verified, and traceable agricultural products, ingredients and services to businesses and customers. Headquartered in the Research Triangle Park region of North Carolina, we contract with growers across five continents to help them produce sustainable, compliant crops.

Historically, Pyxus’ core business has been as a tobacco leaf merchant, purchasing, processing, packing, storing, and shipping tobacco to manufacturers of cigarettes and other consumer tobacco products throughout the world. Through our predecessor companies, we have a long operating history in the leaf tobacco industry with some customer relationships beginning in the early 1900s. In an increasing number of markets, we also provide agronomy expertise for growing leaf tobacco. Our contracted tobacco grower base often produces a significant volume of non-tobacco crop utilizing the agronomic assistance that our team provides. Pyxus is working to find markets for these crops as part of our ongoing efforts to improve farmer livelihoods and the communities in which they live.

We are committed to responsible crop production which supports economic viability for the grower, provides a safe working atmosphere for those involved in crop production and minimizes negative environmental impact. Our agronomists maintain frequent contact with growers prior to and during the growing and curing seasons to provide technical assistance to improve the quality and yield of the crop. Throughout the entire production process, from ~~seed through processing and final shipment,~~seed-to-sale, our SENTRI^SM traceability system provides clear visibility into how products are produced throughout the supply chain, supporting product integrity.

We are continuing our transformation journey designed to diversify the Company's products and services by leveraging our core strengths in agronomy and traceability. In general, our diversification focuses on products that are value-added and require some degree of processing ~~and play~~which plays well to our strengths, as well as offering higher margin potential than our core tobacco leaf business. To support these business lines, we have broad geographic processing capabilities, a diversified product offering, an established customer base for our core leaf tobacco business, and a growing customer ~~base for our new business lines.~~base.

Our strategy to transform into a global agricultural company with a significant presence across multiple consumer products categories has enabled us to achieve significant progress in positioning Pyxus to enhance value for ~~our all of~~ our stakeholders. We are committed to driving improved results and we remain focused on strengthening our leaf business while continuing to invest in our new startup business ventures to position them for growth. Additionally, we continue to evaluate and develop ~~the~~ plans for a potential partial monetization of ~~a portion of Pyxus' ownership~~interests in ~~a consolidation of its two majority-owned Canadian cannabis businesses with two of its minority-owned U.S. hemp~~subsidiaries in the Other Products and ~~e-liquids business in a subsidiary.~~Services segment, for which plans to date have not progressed as initially anticipated but are continuing to develop, and to address the Company's maturing long-term debt.

We believe our success depends on our ability to drive enhanced value, not only for our shareholders, but for all of our stakeholders. Driven by our united purpose—to transform people's lives, so that together we can grow a better world—we are committed to the execution of our strategy for the benefit of our contracted farmers, employees, customers, affiliates, and shareholders.

Our consolidated operations are managed and reported in ten operating segments that are organized by product category and geographic area and aggregated into three reportable segments for financial reporting purposes: Leaf - North America, Leaf - Other Regions, and Other Products and Services. See "Note 1. Basis of Presentation and Significant Accounting Policies" for more information.

-28-


Three Months Ended September 30, 2019 and 2018
Three Months Ended December 31, 2019 and 2018									Three Months Ended December 31, 2019 and 2018
		Three Months Ended September 30,														Three Months Ended December 31,
						Change										Change
(in millions)	(in millions)	2019		2018		$		%	(in millions)	2019		2018		$		%
Sales and other operating revenues	Sales and other operating revenues	$	383.0	$	394.9	$	(11.9)	(3.0)	Sales and other operating revenues	$	363.3	$	524.5	$	(161.2)	(30.7)
Cost of goods and services sold	Cost of goods and services sold	322.8		345.7		(22.9)		(6.6)	Cost of goods and services sold	308.1		449.8		(141.7)		(31.5)
Gross profit		60.2		49.2		11.0		22.4
Gross profit*									Gross profit*	55.1		74.7		(19.6)		(26.2)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	47.3		39.0		8.3		21.3	Selling, general, and administrative expenses	45.9		41.7		4.2		10.1
Other income, net		1.5		2.6		(1.1)		(42.3)
Other (expense) income, net									Other (expense) income, net	(0.4)		8.0		(8.4)		(105.0)
Restructuring and asset impairment charges	Restructuring and asset impairment charges	—		0.2		(0.2)		(100.0)	Restructuring and asset impairment charges	0.7		1.7		(1.0)		(58.8)
Operating income*	Operating income*	14.5		12.6		1.9		15.1	Operating income*	8.1		39.4		(31.3)		(79.4)
Debt retirement benefit	Debt retirement benefit	—		(0.4)		0.4		100.0	Debt retirement benefit	—		(1.3)		1.3		100.0
Interest expense	Interest expense	35.3		35.3		—		—	Interest expense	32.2		33.9		(1.7)		(5.0)
Interest income	Interest income	1.4		0.7		0.7		100.0	Interest income	0.4		1.0		(0.6)		(60.0)
Income tax expense		2.7		34.8		(32.1)		(92.2)
Income tax (benefit) expense									Income tax (benefit) expense	(0.9)		17.4		(18.3)		(105.2)
Income from unconsolidated affiliates	Income from unconsolidated affiliates	5.6		1.6		4.0		250.0	Income from unconsolidated affiliates	0.3		4.7		(4.4)		(93.6)
Net loss attributable to noncontrolling interests		(0.1)		(0.2)		0.1		50.0
Net (loss) income attributable to noncontrolling interests									Net (loss) income attributable to noncontrolling interests	(0.5)		0.1		(0.6)		(600.0)
Net loss attributable to Pyxus International, Inc.*	Net loss attributable to Pyxus International, Inc.*	$	(16.5)	$	(54.6)	$	38.1	69.8	Net loss attributable to Pyxus International, Inc.*	$	(22.0)	$	(5.1)	$	(16.9)	(331.4)

* Amounts may not equal column totals due to rounding	* Amounts may not equal column totals due to rounding																* Amounts may not equal column totals due to rounding

Sales and other operating revenues decreased ~~$11.9~~$161.2 million or ~~3.0%~~30.7% to ~~$383.0~~$363.3 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$394.9~~$524.5 million for the three months ended ~~September 30,~~December 31, 2018. This decrease was ~~primarily~~ due to ~~an 11.2%~~a 27.5% decrease in volume and a 6.9% decrease in average sales ~~prices primarily related~~prices. The decrease in volume was attributable to flue-cured oversupply conditions, the timing of shipments in the Leaf - Other Regions segment in Africa and Asia, and the impact of Hurricane Florence reducing the prior year U.S. crop size (which impacted carryover shipments) and foreign tariffs on U.S. tobacco reducing Leaf - North America segment volumes. The decrease in average sales price was driven by the Leaf - Other Regions segment product mix ~~in Asia and South America~~ having a ~~higher~~lower concentration of ~~byproducts.~~lamina in South America.

Cost of goods and services sold decreased $141.7 million or 31.5% to $308.1 million for the three months ended December 31, 2019 from $449.8 million for the three months ended December 31, 2018. This decrease was ~~partially offset by the continued sales growth in the Other Products and Services segment and a 7.7% increase in volumes~~ mainly ~~in the Leaf - Other Regions segment~~ due to ~~the timing of shipments in South America, partially offset by lower volumes~~a decrease in the Leaf - North America and Leaf - Other Regions segment ~~attributable to Hurricane Florence reducing the prior-year U.S. crop size~~sales and ~~foreign tariffs on U.S. tobacco.~~

Cost of goods sold decreased $22.9 million or 6.6% to $322.8 million for the three months ended September 30, 2019 from $345.7 million for the three months ended September 30, 2018. This decrease was mainly due toother operating revenues and favorable foreign currency exchange rate fluctuations in the Leaf - Other Regions segment resulting in lower leaf raw materials prices in Africa and South America and a decrease in the Leaf - North America segment sales and other operating revenues. These decreases were partially offset by the continued sales growth in the Other Products and Services segment.America.

Gross profit as a percent of sales increased to ~~15.7%~~15.2% for the three months ended ~~September 30,~~December 31, 2019 from ~~12.5%~~14.2% for three months ended ~~September 30,~~December 31, 2018. This increase was attributable to favorable foreign currency exchange rate fluctuations in the Leaf - Other Regions segment resulting in lower leaf raw materials prices ~~and conversion costs~~ in Africa and South ~~America as well as the continued growth of the Other Products and Services segment.~~America. This increase was partially offset by higher Leaf - North America and Leaf - Other Region conversion costs ~~from the impact of Hurricane Florence on the prior year U.S. crop.~~due to lower volumes.

Selling, general, and administrative expense ("SG&A") increased ~~$8.3~~$4.2 million or ~~21.3%~~10.1% to ~~$47.3~~$45.9 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$39.0~~$41.7 million for the three months ended ~~September 30,~~December 31, 2018. SG&A as a percent of sales increased to ~~12.3%~~12.6% for the three months ended ~~September 30,~~December 31, 2019 from ~~9.9%~~8.0% for the three months ended ~~September 30,~~December 31, 2018. These increases were primarily related to branding, marketing, and advertising expenses ~~for~~to support growth of the Figr cannabinoid ~~and Humble Juice e-liquid brands~~brand and costs incurred ~~in connection with the evaluation of~~to evaluate and develop plans for a potential partial monetization of ~~the Company's investments~~interests in ~~certain businesses included~~subsidiaries in the Other Products and Services segment. These increases were partially offset by current year savings due to restructuring initiatives enacted in the Leaf ~~segments~~- North America segment in the prior year.

Income tax expense decreased ~~$32.1~~$18.3 million or ~~92.2%~~105.2% to ~~$2.7~~a $0.9 million benefit for the three months ended ~~September 30,~~December 31, 2019 from ~~$34.8~~a $17.4 million expense for the three months ended ~~September 30,~~December 31, 2018. This decrease was primarily due to ~~the~~a change in the effective tax rate to ~~(13.8)%~~3.9% for three months ended ~~September 30,~~December 31, 2019 from ~~(161.1)%~~226.8% for the three months ended ~~September 30,~~December 31, 2018, and the occurrence of certain discrete items during the three months ended ~~September 30,~~December 31, 2019.

-29-


Leaf - North America Supplemental Information	Leaf - North America Supplemental Information																Leaf - North America Supplemental Information
		Three Months Ended September 30,														Three Months Ended December 31,
						Change										Change
(in millions, except per kilo amounts)	(in millions, except per kilo amounts)	2019		2018		$		%	(in millions, except per kilo amounts)	2019		2018		$		%
Kilos sold	Kilos sold	7.6		7.9		(0.3)		(3.8)	Kilos sold	7.3		11.1		(3.8)		(34.2)
Tobacco sales and other operating revenues:	Tobacco sales and other operating revenues:								Tobacco sales and other operating revenues:
Sales and other operating revenues	Sales and other operating revenues	$	44.3	$	46.0	$	(1.7)	(3.7)	Sales and other operating revenues	$	39.1	$	60.3	$	(21.2)	(35.2)
Average price per kilo	Average price per kilo	5.83		5.82		0.01		0.2	Average price per kilo	5.36		5.43		(0.07)		(1.3)
Processing and other revenues	Processing and other revenues	7.2		7.9		(0.7)		(8.9)	Processing and other revenues	13.9		17.6		(3.7)		(21.0)
Total sales and other operating revenues	Total sales and other operating revenues	51.5		53.9		(2.4)		(4.5)	Total sales and other operating revenues	53.0		77.9		(24.9)		(32.0)
Tobacco cost of goods sold:	Tobacco cost of goods sold:								Tobacco cost of goods sold:
Tobacco costs	Tobacco costs	33.2		36.2		(3.0)		(8.3)	Tobacco costs	30.9		49.0		(18.1)		(36.9)
Transportation, storage, and other period costs	Transportation, storage, and other period costs	5.5		3.0		2.5		83.3	Transportation, storage, and other period costs	5.1		3.2		1.9		59.4
Derivative financial instrument and exchange losses (gains)	Derivative financial instrument and exchange losses (gains)	0.1		0.1		—		—	Derivative financial instrument and exchange losses (gains)	0.1		(0.1)		0.2		200.0
Total tobacco cost of goods sold	Total tobacco cost of goods sold	38.8		39.3		(0.5)		(1.3)	Total tobacco cost of goods sold	36.1		52.1		(16.0)		(30.7)
Average cost per kilo	Average cost per kilo	5.11		4.97		0.14		2.8	Average cost per kilo	4.95		4.69		0.26		5.5
Processing and other revenues cost of services sold	Processing and other revenues cost of services sold	5.6		6.8		(1.2)		(17.6)	Processing and other revenues cost of services sold	10.9		17.1		(6.2)		(36.3)
Total cost of goods and services sold	Total cost of goods and services sold	44.4		46.1		(1.7)		(3.7)	Total cost of goods and services sold	47.0		69.2		(22.2)		(32.1)
Gross profit	Gross profit	7.1		7.8		(0.7)		(9.0)	Gross profit	6.0		8.7		(2.7)		(31.0)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	4.3		3.9		0.4		10.3	Selling, general, and administrative expenses	2.8		4.3		(1.5)		(34.9)
Other expense, net	Other expense, net	(0.3)		(0.2)		(0.1)		(50.0)	Other expense, net	(0.7)		(0.1)		(0.6)		(600.0)

Restructuring and asset impairment charges									Restructuring and asset impairment charges	(0.1)		1.5		(1.6)		(106.7)
Operating income	Operating income	$	2.5	$	3.7	(1.2)		(32.4)	Operating income	$	2.6	$	2.8	(0.2)		(7.1)

Sales and other operating revenues decreased ~~$2.4~~$24.9 million or ~~4.5%~~32.0% to ~~$51.5~~$53.0 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$53.9~~$77.9 million for the three months ended ~~September 30,~~December 31, 2018. This decrease was primarily due to ~~3.8%~~34.2% lower volume and a 1.3% decrease in average sales prices. The decrease in volume was attributable to Hurricane Florence reducing the ~~prior-year~~prior year U.S. crop size (which impacted carryover shipments) and foreign tariffs on U.S. tobacco. ~~This~~The decrease ~~was partially offset by a 0.2% increase~~ in average sales ~~prices due to~~price was driven by product mix having a ~~higher~~lower concentration of lamina.

Cost of goods and services sold decreased ~~$1.7~~$22.2 million or ~~3.7%~~32.1% to ~~$44.4~~$47.0 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$46.1~~$69.2 million for the three months ended ~~September 30,~~December 31, 2018. This decrease was mainly due to the decrease in sales and other operating revenues.

Gross profit as a percent of sales ~~decreased~~increased to ~~13.8%~~11.3% for the three months ended ~~September 30,~~December 31, 2019 from ~~14.5%~~11.2% for the three months ended ~~September 30,~~December 31, 2018. This ~~decrease~~increase was attributable to ~~higher conversion costs from the impact of Hurricane Florence on~~current year savings due to restructuring initiatives enacted in the prior ~~year U.S. crop. This decrease was partially offset by product mix having a higher concentration of lamina.~~year.

SG&A ~~increased $0.4~~decreased $1.5 million or ~~10.3%~~34.9% to $2.8 million for the three months ended December 31, 2019 from $4.3 million for the three months ended ~~September 30, 2019 from $3.9 million for the three months ended September 30,~~December 31, 2018. SG&A as a percent of sales ~~increased~~decreased to ~~8.3%~~5.3% for the three months ended ~~September 30,~~December 31, 2019 from ~~7.2%~~5.5% for the three months ended ~~September 30,~~December 31, 2018. These ~~increases~~decreases were related to lower allocations of general corporate services ~~attributable~~and current year savings due to ~~a change in the Company's reportable segments and were partially offset by the impact of~~ restructuring initiatives enacted in the prior year.

-30-


Leaf - Other Regions Supplemental Information	Leaf - Other Regions Supplemental Information																Leaf - Other Regions Supplemental Information
		Three Months Ended September 30,														Three Months Ended December 31,
						Change										Change
(in millions, except per kilo amounts)	(in millions, except per kilo amounts)	2019		2018		$		%	(in millions, except per kilo amounts)	2019		2018		$		%
Kilos sold	Kilos sold	80.8		74.2		6.6		8.9	Kilos sold	77.6		106.0		(28.4)		(26.8)
Tobacco sales and other operating revenues:	Tobacco sales and other operating revenues:								Tobacco sales and other operating revenues:
Sales and other operating revenues	Sales and other operating revenues	$	306.7	$	321.1	$	(14.4)	(4.5)	Sales and other operating revenues	$	293.5	$	432.4	$	(138.9)	(32.1)
Average price per kilo	Average price per kilo	3.80		4.33		(0.53)		(12.2)	Average price per kilo	3.78		4.08		(0.30)		(7.4)
Processing and other revenues	Processing and other revenues	18.8		17.5		1.3		7.4	Processing and other revenues	13.0		9.3		3.7		39.8
Total sales and other operating revenues	Total sales and other operating revenues	325.5		338.6		(13.1)		(3.9)	Total sales and other operating revenues	306.5		441.7		(135.2)		(30.6)
Tobacco cost of goods sold:	Tobacco cost of goods sold:								Tobacco cost of goods sold:
Tobacco costs	Tobacco costs	246.8		265.9		(19.1)		(7.2)	Tobacco costs	235.6		345.3		(109.7)		(31.8)
Transportation, storage, and other period costs	Transportation, storage, and other period costs	12.2		18.9		(6.7)		(35.4)	Transportation, storage, and other period costs	12.2		22.2		(10.0)		(45.0)
Derivative financial instrument and exchange losses (gains)		1.3		(1.9)		3.2		168.4
Derivative financial instrument and exchange (gains) losses									Derivative financial instrument and exchange (gains) losses	(0.8)		2.9		(3.7)		(127.6)
Total tobacco cost of goods sold	Total tobacco cost of goods sold	260.3		282.9		(22.6)		(8.0)	Total tobacco cost of goods sold	247.0		370.4		(123.4)		(33.3)
Average cost per kilo	Average cost per kilo	3.22		3.81		(0.59)		(15.5)	Average cost per kilo	3.18		3.49		(0.31)		(8.9)
Processing and other revenues cost of services sold	Processing and other revenues cost of services sold	14.3		14.9		(0.6)		(4.0)	Processing and other revenues cost of services sold	9.8		7.1		2.7		38.0
Total cost of goods and services sold	Total cost of goods and services sold	274.6		297.8		(23.2)		(7.8)	Total cost of goods and services sold	256.8		377.5		(120.7)		(32.0)
Gross profit	Gross profit	50.9		40.8		10.1		24.8	Gross profit	49.7		64.2		(14.5)		(22.6)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	25.6		26.1		(0.5)		(1.9)	Selling, general, and administrative expenses	25.3		27.8		(2.5)		(9.0)
Other income, net	Other income, net	1.2		2.7		(1.5)		(55.6)	Other income, net	1.9		7.9		(6.0)		(75.9)
Restructuring and asset impairment charges	Restructuring and asset impairment charges	—		0.2		(0.2)		(100.0)	Restructuring and asset impairment charges	0.8		0.2		0.6		300.0
Operating income	Operating income	$	26.5	$	17.2	$	9.3	54.1	Operating income	$	25.5	$	44.1	$	(18.6)	(42.2)

Sales and other operating revenues decreased ~~$13.1~~$135.2 million or ~~3.9%~~30.6% to ~~$325.5~~$306.5 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$338.6~~$441.7 million for the three months ended ~~September 30,~~December 31, 2018. This decrease was ~~primarily~~ due to a ~~12.2%~~26.8% decrease in volume and a 7.4% decrease in average sales ~~prices related to product mix in Asia and South America having a higher concentration of byproducts. This~~prices. The decrease ~~was partially offset by an 8.9% increase~~ in volume ~~primarily in South America due~~was attributable to flue-cured oversupply conditions and the timing of ~~shipments.~~shipments in Africa and Asia. The decrease in average sales price was driven by product mix having a lower concentration of lamina in South America.

Cost of goods and services sold decreased ~~$23.2~~$120.7 million or ~~7.8%~~32.0% to ~~$274.6~~$256.8 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$297.8~~$377.5 million for the three months ended ~~September 30,~~December 31, 2018. This decrease was mainly due to the decrease in sales and other operating revenues and favorable foreign currency exchange rate fluctuations resulting in lower raw materials prices in Africa and South America.

Gross profit as a percent of sales increased to ~~15.6%~~16.2% for the three months ended ~~September 30,~~December 31, 2019 from ~~12.0%~~14.5% for the three months ended ~~September 30,~~December 31, 2018. This increase was attributable to favorable foreign currency exchange rate fluctuations resulting in lower raw materials prices and lower conversion costs in Africa and South America.

SG&A decreased ~~$0.5~~$2.5 million or ~~1.9%~~9.0% to ~~$25.6~~$25.3 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$26.1~~$27.8 million for the three months ended ~~September 30,~~December 31, 2018. This decrease was related to lower allocations of general corporate ~~services attributable to a change in the Company's reportable segments.~~services. SG&A as a percent of sales increased to ~~7.9%~~8.3% for the three months ended ~~September 30,~~December 31, 2019 from ~~7.7%~~6.3% for the three months ended ~~September 30,~~December 31, 2018. This increase was related to the decrease in sales and other operating revenues.

-31-


Other Products and Services Supplemental Information	Other Products and Services Supplemental Information																Other Products and Services Supplemental Information
		Three Months Ended September 30,														Three Months Ended December 31,
						Change										Change
(in millions)	(in millions)	2019		2018		$		%	(in millions)	2019		2018		$		%
Sales and other operating revenues	Sales and other operating revenues	$	6.0	$	2.4	$	3.6	150.0	Sales and other operating revenues	$	3.7	$	4.9	$	(1.2)	(24.5)
Cost of goods and services sold	Cost of goods and services sold	3.8		1.8		2.0		111.1	Cost of goods and services sold	4.3		3.1		1.2		38.7
Gross profit	Gross profit	2.2		0.6		1.6		266.7	Gross profit	(0.6)		1.8		(2.4)		(133.3)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	17.3		9.0		8.3		92.2	Selling, general, and administrative expenses	17.8		9.6		8.2		85.4
Other income, net		0.6		0.1		0.5		500.0
Other (expense) income, net									Other (expense) income, net	(1.6)		0.2		(1.8)		(900.0)

Operating loss	Operating loss	$	(14.5)	$	(8.3)	$	(6.2)	(74.7)	Operating loss	$	(20.0)	$	(7.6)	$	(12.4)	(163.2)

Sales and other operating revenues ~~increased $3.6~~decreased $1.2 million or ~~150.0%~~24.5% to ~~$6.0~~$3.7 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$2.4~~$4.9 million for the three months ended ~~September 30,~~December 31, 2018. This ~~increase~~decrease was primarily due to ~~increased cannabiniod~~a decrease in cannabinoid revenue attributable to ~~sales~~the timing of orders and a decrease in ~~the province of Nova Scotia following the legalization of the~~e-liquids revenue related to a general industry slow-down amid health and regulatory concerns. These decreases were partially offset by increased cannabinoid revenue driven by Figr products entering into two additional Canadian ~~recreational cannabis market on October 17, 2018, as well as increased e-liquids product revenue attributable to additional product offerings~~provinces: New Brunswick and ~~an expanding customer base.~~Ontario in December 2019.

Cost of goods and services sold increased ~~$2.0~~$1.2 million or ~~111.1%~~38.7% to ~~$3.8~~$4.3 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$1.8~~$3.1 million for the three months ended ~~September 30,~~December 31, 2018. This increase was mainly due to increased cannabinoid depreciation associated with the ~~increase in sales and other operating revenues.~~additional 210,000 square feet of production capacity placed in-service at the Prince Edward Island facility.

Gross profit as a percent of sales ~~increased~~decreased to (16.2)% for the three months ended December 31, 2019 from 36.7% for the three months ended ~~September 30, 2019 from 25.0% for the three months ended September 30,~~December 31, 2018. This ~~increase~~decrease was attributable to higher conversion costs from lower sales ~~volume.~~volume and increase cannabinoid depreciation associated with the additional 210,000 square feet of production capacity placed in-service at the Prince Edward Island facility.

SG&A increased ~~$8.3~~$8.2 million or ~~92.2%~~85.4% to ~~$17.3~~$17.8 million for the three months ended ~~September 30,~~December 31, 2019 from ~~$9.0~~$9.6 million for the three months ended ~~September 30,~~December 31, 2018. ~~This increase is~~SG&A as a percent of sales increased to 481.1% for the three months ended December 31, 2019 from 195.9% for the three months ended December 31, 2018. These increases are related to branding, marketing, and advertising expenses ~~for~~to support growth of the Figr cannabinoid ~~and Humble Juice e-liquid brands~~brand and the ~~evaluation of~~costs incurred to evaluate and develop plans for a potential partial monetization of interests in subsidiaries in the Other Products and Services segment. SG&A as a percent of sales decreased to 288.3% for the three months ended September 30, 2019 from 375.0% for the three months ended September 30, 2018. This decrease was primarily due to the increase in sales and other operating revenues.

-32-


Six Months Ended September 30, 2019 and 2018
Nine Months Ended December 31, 2019 and 2018									Nine Months Ended December 31, 2019 and 2018
		Six Months Ended September 30,														Nine Months Ended December 31,
(in millions)	(in millions)					Change					(in millions)					Change
(percentage change is calculated based on thousands)	(percentage change is calculated based on thousands)	2019		2018		$		%	(percentage change is calculated based on thousands)	2019		2018		$		%
Sales and other operating revenues	Sales and other operating revenues	$	659.7	$	685.9	$	(26.2)	(3.8)	Sales and other operating revenues	$	1,022.9	$	1,210.4	$	(187.5)	(15.5)
Cost of goods and services sold	Cost of goods and services sold	559.7		595.3		(35.6)		(6.0)	Cost of goods and services sold	867.9		1,045.0		(177.1)		(16.9)
Gross profit*	Gross profit*	99.9		90.6		9.3		10.3	Gross profit*	155.1		165.4		(10.3)		(6.2)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	96.6		77.1		19.5		25.3	Selling, general, and administrative expenses	142.6		118.8		23.8		20.0
Other income, net	Other income, net	4.5		5.5		(1.0)		(18.2)	Other income, net	4.1		13.5		(9.4)		(69.6)
Restructuring and asset impairment charges	Restructuring and asset impairment charges	0.2		1.7		(1.5)		(88.2)	Restructuring and asset impairment charges	0.9		3.4		(2.5)		(73.5)
Operating income*	Operating income*	7.5		17.3		(9.8)		(56.6)	Operating income*	15.7		56.6		(40.9)		(72.3)
Debt retirement benefit	Debt retirement benefit	—		(0.5)		0.5		100.0	Debt retirement benefit	—		(1.8)		1.8		100.0
Interest expense	Interest expense	69.1		68.2		0.9		1.3	Interest expense	101.3		102.2		(0.9)		(0.9)
Interest income	Interest income	2.5		1.6		0.9		56.3	Interest income	3.0		2.6		0.4		15.4
Income tax expense	Income tax expense	26.2		9.5		16.7		175.8	Income tax expense	25.2		26.9		(1.7)		(6.3)
Income from unconsolidated affiliates	Income from unconsolidated affiliates	6.5		2.2		4.3		195.5	Income from unconsolidated affiliates	6.7		6.9		(0.2)		(2.9)
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests	(0.5)		(0.9)		0.4		44.4	Net loss attributable to noncontrolling interests	(0.9)		(0.8)		(0.1)		(12.5)
Net loss attributable to Pyxus International, Inc.*	Net loss attributable to Pyxus International, Inc.*	$	(78.3)	$	(55.4)	(22.9)		(41.3)	Net loss attributable to Pyxus International, Inc.*	$	(100.3)	$	(60.5)	(39.8)		(65.8)

* Amounts may not equal column totals due to rounding	* Amounts may not equal column totals due to rounding								* Amounts may not equal column totals due to rounding

Sales and other operating revenues decreased ~~$26.2~~$187.5 million or ~~3.8%~~15.5% to ~~$659.7~~$1,022.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$685.9~~$1,210.4 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was ~~primarily~~ due to a ~~1.1%~~12.5% decrease in volume ~~mainly~~and a 5.0% decrease in averages sales price. The decrease in volume was attributable to flue-cured oversupply conditions, the timing of shipments in the Leaf - ~~North America~~Other Regions segment ~~attributable to~~in Africa, and the impact of Hurricane Florence reducing the ~~prior-year~~prior year U.S. crop size (which impacted carryover shipments) and foreign tariffs on U.S. tobacco ~~and a 3.6%~~reducing Leaf - North America segment volumes. The decrease in ~~the~~ average sales price ~~for the Leaf segments~~was primarily ~~related~~due to product mix having a ~~higher~~lower concentration of ~~byproducts.~~lamina. These decreases were partially offset by an increase in the Leaf - Other Regions segment volumes in South America due to the timing of shipments ~~as well as~~and the continued sales growth in the Other Products and Services segment.

Cost of goods and services sold decreased ~~$35.6~~$177.1 million or ~~6.0%~~16.9% to ~~$559.7~~$867.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$595.3~~$1,045.0 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was mainly due to the decrease in sales and other operating revenues and favorable foreign currency exchange rate fluctuations in the Leaf - Other Regions segment resulting in lower raw materials prices in Africa and South America. These decreases were partially offset by the continued growth of the Other Products and Services segment.

Gross profit as a percent of sales increased to ~~15.1%~~15.2% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~13.2%~~13.7% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This increase was attributable to favorable foreign currency exchange rate fluctuations in the Leaf - Other Regions segment resulting in lower raw materials prices and conversion costs in Africa and South America and the continued growth of the Other Products and Services segment.

SG&A increased ~~$19.5~~$23.8 million or ~~25.3%~~20.0% to ~~$96.6~~$142.6 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$77.1~~$118.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. SG&A as a percent of sales increased to ~~14.6%~~13.9% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~11.2%~~9.8% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. These increases were primarily related to branding, marketing, and advertising expenses ~~for~~to support growth of the Figr cannabinoid and Humble Juice e-liquid brands and the costs incurred ~~in connection with the evaluation of~~to evaluate and develop plans for a potential partial monetization of ~~the Company's investments~~interests in ~~certain businesses included~~subsidiaries in the Other Products and Services segment. These increases were partially offset by current year savings due to restructuring initiatives enacted in the Leaf - North America segment in the prior year.

Income tax expense ~~increased $16.7~~decreased $1.7 million or ~~175.8%~~6.3% to ~~$26.2~~$25.2 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$9.5~~$26.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This ~~increase~~decrease was primarily due to the change in the effective tax rate to ~~(44.3)~~(30.5)% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~(19.5)~~(65.3)% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018 and the occurrence of certain discrete items during the ~~six~~nine months ended ~~September 30,~~December 31, 2019.

-33-


Leaf - North America Supplemental Information	Leaf - North America Supplemental Information																Leaf - North America Supplemental Information
		Six Months Ended September 30,														Nine Months Ended December 31,
(in millions, except per kilo amounts)	(in millions, except per kilo amounts)					Change					(in millions, except per kilo amounts)					Change
		2019		2018		$		%		2019		2018		$		%
Kilos sold	Kilos sold	14.2		18.9		(4.7)		(24.9)	Kilos sold	21.6		29.9		(8.3)		(27.8)
Tobacco sales and other operating revenues:	Tobacco sales and other operating revenues:								Tobacco sales and other operating revenues:
Sales and other operating revenues	Sales and other operating revenues	$	75.4	$	92.4	$	(17.0)	(18.4)	Sales and other operating revenues	$	114.5	$	152.7	$	(38.2)	(25.0)
Average price per kilo	Average price per kilo	5.31		4.89		0.42		8.6	Average price per kilo	5.30		5.11		0.19		3.7
Processing and other revenues	Processing and other revenues	11.0		11.5		(0.5)		(4.3)	Processing and other revenues	24.9		29.1		(4.2)		(14.4)
Total sales and other operating revenues	Total sales and other operating revenues	86.4		103.9		(17.5)		(16.8)	Total sales and other operating revenues	139.4		181.8		(42.4)		(23.3)
Tobacco cost of goods sold:	Tobacco cost of goods sold:								Tobacco cost of goods sold:
Tobacco costs	Tobacco costs	57.6		74.4		(16.8)		(22.6)	Tobacco costs	88.5		123.4		(34.9)		(28.3)
Transportation, storage, and other period costs	Transportation, storage, and other period costs	8.7		5.8		2.9		50.0	Transportation, storage, and other period costs	13.8		9.1		4.7		51.6

Derivative financial instrument and exchange losses (gains)									Derivative financial instrument and exchange losses (gains)	0.1		(0.2)		0.3		150.0
Total tobacco cost of goods sold	Total tobacco cost of goods sold	66.3		80.2		(13.9)		(17.3)	Total tobacco cost of goods sold	102.4		132.3		(29.9)		(22.6)
Average cost per kilo	Average cost per kilo	4.67		4.24		0.43		10.1	Average cost per kilo	4.74		4.42		0.32		7.2
Processing and other revenues cost of services sold	Processing and other revenues cost of services sold	7.9		8.9		(1.0)		(11.2)	Processing and other revenues cost of services sold	18.7		25.9		(7.2)		(27.8)
Total cost of goods and services sold	Total cost of goods and services sold	74.2		89.1		(14.9)		(16.7)	Total cost of goods and services sold	121.1		158.2		(37.1)		(23.5)
Gross profit	Gross profit	12.2		14.8		(2.6)		(17.6)	Gross profit	18.3		23.6		(5.3)		(22.5)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	8.4		9.3		(0.9)		(9.7)	Selling, general, and administrative expenses	11.3		13.5		(2.2)		(16.3)
Other expense, net	Other expense, net	(0.5)		(0.3)		(0.2)		(66.7)	Other expense, net	(1.2)		(0.5)		(0.7)		(140.0)
Restructuring and asset impairment charges	Restructuring and asset impairment charges	—		0.2		(0.2)		(100.0)	Restructuring and asset impairment charges	(0.1)		1.7		(1.8)		(105.9)
Operating income	Operating income	$	3.3	$	5.0	$	(1.7)	(34.0)	Operating income	$	5.9	$	7.9	$	(2.0)	(25.3)

Sales and other operating revenues decreased ~~$17.5~~$42.4 million or ~~16.8%~~23.3% to ~~$86.4~~$139.4 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$103.9~~$181.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was ~~primarily~~ due to ~~lower~~a 27.8% decrease in volume attributable to Hurricane Florence reducing the ~~prior-year~~prior year U.S. crop size (which impacted carryover shipments) and foreign tariffs on U.S. tobacco. This decrease was partially offset by ~~an 8.6%~~a 3.7% increase in average sales ~~prices~~price due to product mix having a higher concentration of lamina.

Cost of goods and services sold decreased ~~$14.9~~$37.1 million or ~~16.7%~~23.5% to ~~$74.2~~$121.1 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$89.1~~$158.2 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was mainly due to ~~the decrease in~~lower volume.

Gross profit as a percent of sales ~~was 14.1%~~increased to 13.1% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 ~~and~~from 13.0% for the nine months ended December 31, 2018. This increase was attributable to current year savings due to restructuring initiatives enacted in the prior year.

SG&A decreased ~~$0.9~~$2.2 million or ~~9.7%~~16.3% to ~~$8.4~~$11.3 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$9.3~~$13.5 million for the ~~six~~nine months ended ~~September 30, 2018.~~December 31, 2018 and was attributable to current year savings due to restructuring initiatives enacted in the prior year. SG&A as a percent of sales increased to ~~9.7%~~8.1% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~9.0%~~7.4% for the ~~six~~nine months ended ~~September 30, 2018. These decreases were related~~December 31, 2018 mainly due to ~~the impact of restructuring initiatives enacted in the prior year.~~lower volume.

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Leaf - Other Regions Supplemental Information	Leaf - Other Regions Supplemental Information																Leaf - Other Regions Supplemental Information
		Six Months Ended September 30,														Nine Months Ended December 31,
(in millions, except per kilo amounts)	(in millions, except per kilo amounts)					Change					(in millions, except per kilo amounts)					Change
		2019		2018		$		%		2019		2018		$		%
Kilos sold	Kilos sold	135.7		132.7		3.0		2.3	Kilos sold	213.3		238.7		(25.4)		(10.6)
Tobacco sales and other operating revenues:	Tobacco sales and other operating revenues:								Tobacco sales and other operating revenues:
Sales and other operating revenues	Sales and other operating revenues	$	531.9	$	545.0	$	(13.1)	(2.4)	Sales and other operating revenues	$	825.3	$	977.5	$	(152.2)	(15.6)
Average price per kilo	Average price per kilo	3.92		4.11		(0.19)		(4.6)	Average price per kilo	3.87		4.10		(0.23)		(5.6)
Processing and other revenues	Processing and other revenues	29.4		31.6		(2.2)		(7.0)	Processing and other revenues	42.5		40.8		1.7		4.2
Total sales and other operating revenues	Total sales and other operating revenues	561.3		576.6		(15.3)		(2.7)	Total sales and other operating revenues	867.8		1,018.3		(150.5)		(14.8)
Tobacco cost of goods sold:	Tobacco cost of goods sold:								Tobacco cost of goods sold:
Tobacco costs	Tobacco costs	430.0		452.5		(22.5)		(5.0)	Tobacco costs	665.6		796.9		(131.3)		(16.5)
Transportation, storage, and other period costs	Transportation, storage, and other period costs	24.9		28.9		(4.0)		(13.8)	Transportation, storage, and other period costs	37.2		51.7		(14.5)		(28.0)
Derivative financial instrument and exchange (gains) losses		0.3		(5.5)		5.8		105.5
Derivative financial instrument and exchange gains									Derivative financial instrument and exchange gains	(0.4)		(2.3)		1.9		82.6
Total tobacco cost of goods sold	Total tobacco cost of goods sold	455.2		475.9		(20.7)		(4.3)	Total tobacco cost of goods sold	702.4		846.3		(143.9)		(17.0)
Average cost per kilo	Average cost per kilo	3.35		3.59		(0.24)		(6.7)	Average cost per kilo	3.29		3.55		(0.26)		(7.3)
Processing and other revenues cost of services sold	Processing and other revenues cost of services sold	22.8		25.5		(2.7)		(10.6)	Processing and other revenues cost of services sold	32.5		32.6		(0.1)		(0.3)
Total cost of goods and services sold	Total cost of goods and services sold	478.0		501.4		(23.4)		(4.7)	Total cost of goods and services sold	734.9		878.9		(144.0)		(16.4)
Gross profit	Gross profit	83.3		75.2		8.1		10.8	Gross profit	132.9		139.4		(6.5)		(4.7)
Selling, general, and administrative expenses	Selling, general, and administrative expenses	53.9		54.5		(0.6)		(1.1)	Selling, general, and administrative expenses	79.1		81.4		(2.3)		(2.8)
Other income, net	Other income, net	4.3		5.8		(1.5)		(25.9)	Other income, net	6.2		13.8		(7.6)		(55.1)
Restructuring and asset impairment charges	Restructuring and asset impairment charges	0.2		1.5		(1.3)		(86.7)	Restructuring and asset impairment charges	1.0		1.7		(0.7)		(41.2)
Operating income	Operating income	$	33.5	$	25.0	$	8.5	34.0	Operating income	$	59.0	$	70.1	$	(11.1)	(15.8)

Sales and other operating revenues decreased ~~$15.3~~$150.5 million or ~~2.7%~~14.8% to ~~$561.3~~$867.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$576.6~~$1,018.3 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was ~~primarily~~ due to a ~~4.6%~~10.6% decrease in volume and a 5.6% decrease in average selling ~~prices related~~prices. The decrease in volume was attributable to ~~product mix having a higher concentration~~flue-cured oversupply conditions and the timing of ~~byproducts.~~shipments in Africa. This decrease was partially offset by ~~a 2.3%~~an increase in volume ~~primarily~~ in South America due to the timing of shipments. The decrease in average selling prices was driven by product mix having a lower concentration of lamina.

Cost of goods and services sold decreased ~~$23.4~~$144.0 million or ~~4.7%~~16.4% to ~~$478.0~~$734.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$501.4~~$878.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was mainly due to the decrease in sales and other operating revenues and favorable foreign currency exchange rate fluctuations resulting in lower raw materials prices in Africa and South America.

Gross profit as a percent of sales increased to ~~14.8%~~15.3% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~13.0%~~13.7% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This increase was attributable to favorable foreign currency exchange rate fluctuations resulting in lower raw materials prices and conversion costs in Africa and South America.

SG&A decreased ~~$0.6~~$2.3 million or ~~1.1%~~2.8% to ~~$53.9~~$79.1 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$54.5~~$81.4 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was due to lower allocations of general corporate ~~services attributable to a change in the Company's reportable segments.~~services. SG&A as a percent of sales increased to ~~9.6%~~9.1% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~9.5%~~8.0% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This increase was related to the decrease in sales and other operating revenues.

Other income, net decreased ~~$1.5~~$7.6 million or ~~25.9%~~55.1% to ~~$4.3~~$6.2 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$5.8~~$13.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This decrease was primarily due to the receipt of insurance proceeds in the prior year from the fiscal 2016 fire in Zimbabwe.

Restructuring and asset impairment charges decreased ~~$1.3~~$0.7 million or ~~86.7%~~41.2% to ~~$0.2~~$1.0 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$1.5~~$1.7 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018 mainly due to a cost-saving and restructuring initiative to close a processing facility in Europe in ~~2018.~~the prior year.

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Other Products and Services Segment Supplemental Information
Other Products and Services Supplemental Information									Other Products and Services Supplemental Information
		Six Months Ended September 30,														Nine Months Ended December 31,
(in millions, except per kilo amounts)	(in millions, except per kilo amounts)					Change					(in millions, except per kilo amounts)					Change
		2019		2018		$		%		2019		2018		$		%
Sales and other operating revenues	Sales and other operating revenues	$	11.9	$	5.4	$	6.5	120.4	Sales and other operating revenues	$	15.7	$	10.3	$	5.4	52.4
Cost of goods and services sold	Cost of goods and services sold	7.5		4.8		2.7		56.3	Cost of goods and services sold	11.8		7.9		3.9		49.4
Gross profit	Gross profit	4.4		0.6		3.8		633.3	Gross profit	3.9		2.4		1.5		62.5
Selling, general, and administrative expenses	Selling, general, and administrative expenses	34.3		13.3		21.0		157.9	Selling, general, and administrative expenses	52.2		23.9		28.3		118.4
Other income, net		0.7		—		0.7		100.0
Other (expense) income, net									Other (expense) income, net	(0.9)		0.2		(1.1)		(550.0)

Operating loss	Operating loss	$	(29.2)	$	(12.7)	$	(16.5)	(129.9)	Operating loss	$	(49.2)	$	(21.3)	$	(27.9)	(131.0)

Sales and other operating revenues increased ~~$6.5~~$5.4 million or ~~120.4%~~52.4% to ~~$11.9~~$15.7 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$5.4~~$10.3 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This increase was primarily due to increased ~~cannabiniod~~cannabinoid revenue attributable to sales in the ~~province~~provinces of Nova Scotia and Prince Edward Island following the legalization of the Canadian recreational cannabis market on October 17, 2018, as well as increased e-liquids product revenue attributable to additional product offerings and an expanding customer base. These increases were partially offset by a decrease in cannabinoid revenue attributable to the timing of orders and a decrease in e-liquids revenue related to a general industry slow-down amid health and regulatory concerns.

Cost of goods and services sold increased ~~$2.7~~$3.9 million or ~~56.3%~~49.4% to ~~$7.5~~$11.8 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$4.8~~$7.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This increase was mainly due to the increase in sales.

Gross profit as a percent of sales increased to ~~37.0%~~24.8% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~11.1%~~23.3% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This increase was due to lower conversion costs attributable to higher sales ~~volume.~~volume and was partially offset by higher overhead absorption related to the additional 210,000 square feet of cannabinoid production capacity placed in-service in Prince Edward Island.

SG&A increased ~~$21.0~~$28.3 million or ~~157.9%~~118.4% to ~~$34.3~~$52.2 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~$13.3~~$23.9 million for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. SG&A as a percent of sales increased to ~~288.2%~~332.5% for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 from ~~246.3%~~232.0% for the ~~six~~nine months ended ~~September 30,~~December 31, 2018. These increases were primarily related to branding, marketing, and advertising expenses ~~for~~to support growth of the Figr cannabinoid and Humble Juice e-liquid brands and the ~~evaluation of~~costs incurred to evaluate and develop plans for a potential partial monetization of interests in subsidiaries in the Other Products and Services segment.

-36-

Liquidity and Capital Resources

Overview

Our liquidity requirements are affected by various factors from our core tobacco leaf business, including crop seasonality, foreign currency and interest rates, green tobacco prices, customer mix, crop size, and quality, branding, marketing, and advertising expenses to support the Other Products and Services segment, increased legal and professional costs associated with the evaluation of a partial monetization of the Company's investments in certain businesses included in the Other Products and Services segment.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 fiscal year-end. Additionally, as we continue our transformation journey our liquidity requirements are increasingly affected by branding, marketing, and advertising expenses to support growth of the Other Products and Services segment, and legal and professional costs incurred to evaluate and develop plans for a potential partial monetization of interests in subsidiaries in the Other Products and Services segment and to address the Company's maturing long-term debt.

We may periodically seek to repurchase our indebtedness through open market transactions, privately negotiated transactions, exchanges, or otherwise, to the extent not prohibited by our financing agreements. Such transactions will depend on prevailing market conditions, our liquidity requirements, contractual restrictions,and other factors. The amounts involved may be material.

As of ~~September 30,~~December 31, 2019, we ~~reached a seasonally adjusted high for~~are in the process of repaying our South American related crop lines as we ~~are shipping~~continue to ship inventory and ~~collecting~~collect receivables. In Africa, ~~purchasing is almost complete and processing and shipping will peak in~~we continue to ship product which should continue into the ~~third~~first quarter of fiscal ~~quarter.~~year 2021 as well as the purchase of the new crop which should begin mid-March. In Asia, the ~~Thai crop has been processed, packed, and is shipping and the~~ Indian Mysore and Indonesian crops are ~~being purchased with~~approaching the end of the processing and shipping ~~scheduled~~is in full force. Europe continues shipping of the current crop and is preparing to ~~occur~~purchase the new crop during the ~~third~~fourth fiscal quarter. ~~Europe~~North America has ~~almost~~ completed flue cured processing with shipping winding down and has commenced the purchasing, processing and shipping ~~will follow during~~of the ~~third and~~burley crop which should continue into the fourth fiscal ~~quarters. North America has commenced flue cured purchasing~~quarter, seasonally elevating its working capital requirements. Fluctuation of the U.S. dollar versus many of the currencies in which we have costs may continue to have an impact on our working capital requirements, as such, we will monitor and ~~processing, with shipping scheduled to occur during the third fiscal quarter.~~hedge foreign currency costs prudently, and as needed on a currency by currency basis.

Working Capital

Our working capital decreased to $483.6 million at September 30, 2019 from $591.7 million at March 31, 2019. Our current ratio was 1.6 to 1 at September 30, 2019 and 1.9 to 1 at March 31, 2019. The decrease in working capital was primarily due to the seasonal buildup of African and South American inventories and advances to tobacco suppliers and the related seasonal increase of notes payable to finance the purchase and processing of these crops.

The following is a summary of items from the condensed consolidated balance sheets:


		September 30,						March 31,			December 31,				March 31,
(in millions except for current ratio)	(in millions except for current ratio)	2019		2018		2019		(in millions except for current ratio)	2019		2018		2019
Cash and cash equivalents	Cash and cash equivalents	$	172.5	$	117.0	$	192.0	Cash and cash equivalents	$	72.2	$	209.2	$	192.0
Trade and other receivables, net	Trade and other receivables, net	214.5		229.2		311.0		Trade and other receivables, net	192.7		290.1		311.0
Inventories and advances to tobacco suppliers	Inventories and advances to tobacco suppliers	848.7		1019.9		687.9		Inventories and advances to tobacco suppliers	933.4		878.9		687.9
Total current assets	Total current assets	1,295.6		1,421.4		1,238.5		Total current assets	1,254.0		1,431.6		1,238.5
Notes payable to banks	Notes payable to banks	582.4		613.9		429.0		Notes payable to banks	580.3		583.4		429.0
Accounts payable	Accounts payable	50.8		48.1		87.0		Accounts payable	61.1		49.4		87.0
Advances from customers	Advances from customers	22.3		11.0		16.4		Advances from customers	19.2		45.9		16.4
Total current liabilities	Total current liabilities	812.0		784.5		646.8		Total current liabilities	804.9		802.0		646.8
Current ratio	Current ratio	1.6 to 1		1.8 to 1		1.9 to 1		Current ratio	1.6 to 1		1.8 to 1		1.9 to 1
Working capital	Working capital	483.6		636.9		591.7		Working capital	449.1		629.6		591.7
Long-term debt	Long-term debt	901.1		905.1		898.4		Long-term debt	902.5		897.2		898.4
Stockholders’ equity attributable to Pyxus International, Inc.	Stockholders’ equity attributable to Pyxus International, Inc.	104.2		212.4		183.7		Stockholders’ equity attributable to Pyxus International, Inc.	85.5		203.5		183.7

Working capital decreased to $449.1 million at December 31, 2019 from $629.6 million at December 31, 2018 primarily due to decreased leaf tobacco sales.

Sources and Uses of Cash

Our primary sources of liquidity are cash generated from operations, cash collections from our securitized receivables, and short-term borrowings under our foreign seasonal lines of credit. We have typically financed our non-U.S. tobacco operations with uncommitted ~~unsecured~~ short-term seasonal lines of credit at the local level. These foreign lines of credit are seasonal in nature, normally extending for a term of 180 to 270 days, corresponding to the tobacco crop cycle in that location. These short-term seasonal lines of credit are typically uncommitted in that the lenders have the right to cease making loans and demand repayment of loans at any time. These short-term seasonal lines of credit are typically renewed at the outset of each tobacco season. We maintain various other financing arrangements that are continually analyzed in order to meet the cash requirements of our businesses. See "Note 13. Debt Arrangements" for additional information.

-37-

We believe that our current cash balances, together with our borrowing availability, provides us with sufficient financial resources to meet our business requirements in the next 12 months, including the ability to meet our principal and interest payments under the terms of our debt financing agreements.

During the ~~second half~~remainder of fiscal 2020, we expect to incur capital expenditures for routine replacement of equipment and investments intended to add value to our customers or increase efficiency in our leaf business, for value-added agriculture capabilities, and expansion of our production capacity in Canada.

~~-37-~~

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 and senior secured credit agreement or indentures, as permitted therein.

The information included below explains the sources and uses of our cash flows for the ~~six~~nine months ended ~~September 30,~~December 31, 2019 and 2018 as derived from our condensed consolidated financial statements:


		Six months ended September 30,							Nine Months Ended December 31,
(in thousands)	(in thousands)	2019		2018		(in thousands)	2019		2018
Operating activities	Operating activities	$	(257,775)	$	(419,317)	Operating activities	$	(387,218)	$	(338,493)
Investing activities	Investing activities	90,927		87,185		Investing activities	119,616		138,299
Financing activities	Financing activities	154,062		180,915		Financing activities	150,047		142,885
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(7,341)		2,840		Effect of exchange rate changes on cash	(5,277)		5,160
Decrease in cash, cash equivalents, and restricted cash	Decrease in cash, cash equivalents, and restricted cash	(20,127)		(148,377)		Decrease in cash, cash equivalents, and restricted cash	(122,832)		(52,149)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	192,043		264,660		Cash and cash equivalents at beginning of period	192,043		264,660
Restricted cash at beginning of period	Restricted cash at beginning of period	5,767		3,373		Restricted cash at beginning of period	5,767		3,373
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	177,683	$	119,656	Cash, cash equivalents, and restricted cash at end of period	$	74,978	$	215,884

Net cash used by operating activities ~~decreased $161.5~~increased $48.7 million in the ~~six~~nine months ended ~~September 30,~~December 31, 2019 compared to the ~~six~~nine months ended ~~September 30,~~December 31, 2018. The ~~decrease~~increase in cash used was primarily due to increased inventory purchase requirements in Africa offset by smaller crop sizes ~~and lower green inventory prices~~ in ~~Africa and~~ South America.

Net cash provided by investing activities ~~increased $3.7~~decreased $18.7 million in the ~~six~~nine months ended ~~September 30,~~December 31, 2019 compared to the ~~six~~nine months ended ~~September 30,~~December 31, 2018. The ~~increase~~decrease in cash provided was primarily due to ~~the timing of collections on our beneficial interests in securitized receivables, partially offset by~~ higher purchases for property, plant, and equipment related to expansion of the Other Products and Services segment.

Net cash provided by financing activities ~~decreased $26.9~~increased $7.2 million in the ~~six~~nine months ended ~~September 30,~~December 31, 2019 compared to the ~~six~~nine months ended ~~September 30,~~December 31, 2018. This ~~decrease~~increase is primarily due to lower net proceeds from short-term borrowings due to decreases in purchasing requirements in South America and lower green inventory prices in Africa, ~~and South America,~~ partially offset by lower debt repayments on our senior notes.

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.

Restricted cash as of ~~September 30,~~December 31, 2019 primarily consists of approximately ~~$1.9~~$0.9 million in compensating balances held with lenders in various jurisdictions where we operate, and approximately ~~$2.3~~$1.4 million held as escrow for bid bonds used in new customer tenders. See "Note 3. Restricted Cash" for additional information.

Approximately ~~$79.0~~$55.2 million of our outstanding cash balance at ~~September 30,~~December 31, 2019 was held in foreign jurisdictions, which includes approximately ~~$3.3~~$0.6 million held by our legal Canadian cannabis businesses. As a result of our cash needs abroad and legal restrictions with respect to repatriation of the proceeds from operations of our Canadian cannabis subsidiaries, it is our intention to permanently reinvest these funds in foreign jurisdictions regardless of the fact that the cost of repatriation would not have a material financial impact.

Debt Financing

We continue to finance our business with a combination of short-term and long-term seasonal credit lines, an ABL facility, long-term debt securities, advances from customers, and cash from operations when available. See a summary of our short-term and long-term debt as of ~~September 30,~~December 31, 2019 and 2018 at "Note 13. Debt Arrangements" for additional information. We will

-38-

continue to monitor and, as available, adjust funding sources as needed to enhance and drive various business opportunities that maintain flexibility and meet cost expectations.

Aggregated peak borrowings by facility occurring during the three months ended ~~September 30,~~December 31, 2019 and 2018 were repaid with cash provided by operating activities. Available credit as of ~~September 30,~~December 31, 2019 was ~~$304.4~~$324.2 million comprised of $60.0 million under our ABL facility, ~~$237.2~~$258.4 million of ~~notes payable to banks,~~foreign seasonal lines of credit, and ~~$7.1~~$5.7 million of availability for letters of credit.

~~-38-~~

Borrowing under the ABL facility is permitted only to the extent that, after consideration of the application of the proceeds of the borrowing, our unrestricted cash and cash equivalents would not exceed ~~$180.0~~$180 million.

No cash dividends were paid to shareholders during the three months ended ~~September 30,~~December 31, 2019. The payment of dividends is restricted under the terms of our ABL credit facility and the indentures governing the 8.5% senior secured first lien notes and the 9.875% senior secured second lien notes.

Zimbabwe Currency Considerations

The Company often holds Zimbabwe RTGS Dollars necessary for operations within Zimbabwe. As of ~~September 30,~~December 31, 2019, the Company held $0 in the Zimbabwe RTGS Dollars. RTGS is a local currency equivalent that, as of ~~September 30,~~December 31, 2019, was exchanged at a government specified rate of ~~15.2:~~16.8:1 with the U.S. Dollar ("USD"). In order to convert these units to U.S. Dollars, we must obtain foreign currency resources from the Reserve Bank of Zimbabwe, subject to the monetary and exchange control policy in Zimbabwe. If the foreign exchange restrictions and government-imposed controls become severe, we may have to reassess our ability to control MTC. As of ~~September 30,~~December 31, 2019, MTC has ~~$89.3~~$90.4 million of net assets.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes to our market risk exposures since March 31, 2019. For a discussion of our exposure to market risk, refer to Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Due to inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable assurance (not absolute) that the objectives of the disclosure controls and procedures are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as required by Rule 13a-15(b) of the Exchange Act), as of ~~September 30,~~December 31, 2019. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective to provide reasonable assurance as of ~~September 30,~~December 31, 2019.

Changes in Internal Control ~~Over~~over Financial Reporting

As required by Rule 13a-15(d) under the Exchange Act, ~~the~~ our management, including ~~the Company’s~~our Chief Executive Officer and Chief Financial Officer, have evaluated ~~the Company’s~~our internal control over financial reporting to determine whether any changes occurred during the quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

~~Certain updates to our internal controls, processes, and systems were implemented in connection with the adoption of ASU 2016-02. Other than these updates, there~~There were no changes that occurred during the three months ended ~~September 30,~~December 31, 2019 that have materially affected, or are reasonably likely to materially affect, ~~the Company's~~our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

See "Note 12. Contingencies and Other Information" to the "Notes to Condensed Consolidated Financial Statements" for additional information with respect to legal proceedings, which is incorporated by reference herein.

Item 1A. Risk Factors

In addition to the other information set forth in this report and in our other filings with the Securities and Exchange Commission, investors should carefully consider our risk factors, which could materially affect our business, financial condition, or operating results. As of the date of this report, there are no material changes to the risk factors previously disclosed in Part I, Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019, and in Part II, Item 1A "Risk Factors" in the Company's Quarterly ~~Report~~Reports on Form 10-Q for the ~~period~~periods ended June 30, 2019 and Se ptember 30, 2019, except for updated information included in the following:

Our equity method investment in Criticality LLC (“Criticality”) is subject to uncertainty regarding the legal and regulatory status of hemp, including with respect to U.S. federal and state implementation of the 2018 Farm Bill and related laws, and changes to such laws and regulations may have material adverse effects on the operations of Criticality.

The U.S. Food and Drug Administration (the “FDA”) is responsible for ensuring public health and safety through regulation of food, drugs, dietary supplements, and cosmetics, among other products, through its enforcement authority pursuant to the Food, Drug, and Cosmetic Act. The FDA's responsibilities include regulating ingredients in, as well as the marketing and labeling of, regulated articles sold in interstate commerce.

The U.S. Drug Enforcement Agency (the “DEA”) enforces the Controlled Substances Act, under which cannabis (including hemp and industrial hemp) has historically been controlled as the Schedule I substance marijuana, with a limited exception for imported partsspread of the ~~plant~~coronavirus could adversely affect our results of operations and our liquidity.

We are carefully monitoring the commercial impact from the spread of the coronavirus reported to have recently surfaced in Wuhan, China. To the extent that ~~typically contain only trace amounts~~anticipated shipments are substantially delayed, either as a result of ~~cannabinoids (i.e., mature stalks, sterilized seeds,~~further spread of the virus or as a result of precautionary measures implemented by governments or commercial enterprises to limit the spread of this virus, anticipated sales may not occur within anticipated time frames and ~~their derivatives). In 2014, the Agriculture Act~~we could experience cash shortfalls from operations that could have a significant adverse effect on our results of ~~2014 (the “2014 Farm Bill”) was enacted in the United States, which allowed for the domestic cultivation of "industrial hemp" (i.e., cannabis plants, plant parts,~~operations and derivatives with no more than 0.3% THC (which is a psychoactive chemical compound in cannabis)) as part of agricultural pilot programs adopted by individual states for the purposes of research by state departments of agriculture and institutions of higher education.our ability to maintain adequate liquidity.

There is significant uncertainty concerning the permissible scope of commercial activity under the 2014 Farm Bill. The 2014 Farm Bill authorized only institutions of higher education and state agriculture departments to cultivate industrial hemp, and only to do so for research purposes. However, it also gave significant discretion to states to regulate industrial hemp pilot programs. Many states that have adopted pilot programs have registered private companies to cultivate and process industrial hemp. Additionally, many states, including North Carolina, where Criticality is based, have interpreted the 2014 Farm Bill to permit marketing research concerning industrial hemp through, among other things, commercial marketing and sale of industrial hemp and industrial hemp products. In contrast, the DEA, FDA, and U.S. Department of Agriculture (the “USDA”) have taken the position that, under the 2014 Farm Bill, industrial hemp products may not be sold for the purpose of general commercial activity or in states without agricultural pilot programs that permit their sale for research marketing purposes; these agencies have also taken the position that, under the 2014 Farm Bill, industrial hemp plants and seeds may not be transported across state lines. There is evidence that Congress does not agree with these agencies’ interpretation of the 2014 Farm Bill, including through its insertion in various appropriations bills language prohibiting the DEA from using funds to impede state agricultural pilot programs. Such language was inserted in the most recent federal appropriations bill, and has been inserted in the draft appropriations bill being considered by Congress. However, there can be no assurance that the current draft appropriations bill will be passed with such language intact, or that such language will be inserted in future appropriations bills while industrial hemp cultivation continues to be governed by the 2014 Farm Bill. There also can be no assurance that these agencies will change their position concerning the permissible scope of commercial activity under the 2014 Farm Bill.

On December 20, 2018, the Agricultural Improvement Act of 2018 (the "2018 Farm Bill") was signed into law. The 2018 Farm Bill, among other things, removes “hemp” and its derivatives (including its cannabinoids, such as cannabidiol (or “CBD”)) from the U.S. Controlled Substances Act and amends the Agricultural Marketing Act of 1946 to provide for commercial production of hemp in the United States. The law defines "hemp" as "the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis."

The 2018 Farm Bill tasked the USDA with establishing a regulatory framework for the commercial hemp industry. On October 31, 2019, the USDA published an interim final rule, which governs hemp production under the 2018 Farm Bill, subject to public review and comment and any changes made when the formal rule is promulgated. As an interim final rule, the regulations take effect immediately. The regulations provide for certain minimum requirements for state plans, provide a plan for the USDA to review and approve state-submitted hemp plans, and establish a federal licensing and regulatory system for

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hemp production in states without an approved state plan. Although the regulations are effective immediately, until such time as the USDA approves state hemp plans or issues federal licenses to hemp cultivators in states without plans in the approval process, hemp production is governed by the more restrictive 2014 Farm Bill, and commercial production of hemp may violate federal law.

There is uncertainty concerning the timing and manner of implementation of the 2018 Farm Bill. Under the interim final rule, the USDA can begin reviewing and approving hemp plans submitted by states that meet the federal standards, giving those jurisdictions primary regulatory authority over hemp production. States that have already submitted plans or are in the process of developing state plans may need to update their laws and programs to meet the new USDA regulations. In addition, the regulations provide the USDA with 60 days to review plans, with additional potential delays for correction, resubmission, re-review and appeal. In light of this schedule, few (if any) state plans are likely to be approved prior to 2020. In addition, hemp cultivators may apply for a federal license directly from the USDA beginning on December 2, 2019. But they may apply for a federal license only if their state has not submitted a plan to the USDA for approval. Therefore, there may be a period under which hemp cultivators have no approved state plan for licensure, but also may not apply for a federal license. Until a hemp cultivator has either a state or federal license, commercial hemp production under the 2018 Farm Bill cannot legally begin. By way of example, in North Carolina, where Criticality is based, there has been no proposed state plan and the legislature is still considering the enabling legislation that would allow a state plan to be submitted.

Additionally, there is uncertainty created by the 2018 Farm Bill’s decision to leave the states as potential primary regulators of hemp production. States may adopt regulatory schemes that impose different levels of regulation and costs on the production of hemp. Because states have not yet obtained USDA approval for plans for commercial hemp production, the timing of the adoption of state plans cannot be assured. Moreover, the 2018 Farm Bill provides that its provisions do not preempt or limit state laws that regulate the production of hemp. Accordingly, some states may choose to restrict or prohibit some or all hemp production or sales. For example, in North Carolina, where Criticality is based, the state legislature is considering legislation that would treat “smokeable hemp” (defined as "harvested raw or dried hemp plant material, including hemp buds or hemp flowers, hemp cigars, and hemp cigarettes") as illegal marijuana under state law unless produced and used in compliance with the proposed legislation.

In addition, the status of the current regulations as an interim final rule creates uncertainty as to the ultimate regulatory structure for commercial hemp production. The current regulations are temporarily in place, pending public notice and comment on the regulations. The USDA may make substantive changes in the regulations when final regulations are approved, and, indeed, has already suggested certain potential changes. The interim final rule is set to expire on November 1, 2021, unless extended, to provide time for a full rulemaking procedure. There is uncertainty what the final rules will be, if any, after the rulemaking procedure.

Further, under the 2018 Farm Bill, the FDA has retained authority over Food, Drug, and Cosmetic Act-regulated products containing hemp and its derivatives, including CBD. Moreover, states have retained regulatory authority through their own analogues to the Food, Drug and Cosmetic Act, and the states may diverge from the federal treatment of the use of hemp as, or in, food, dietary supplements, vapable products, or topical cosmetic products. There can be no assurance that the FDA or states (under their Controlled Substances Act and Food, Drug, and Cosmetic Act analogues) will ultimately permit the sale of non-pharmaceutical products containing hemp-derived CBD.

In light of recent changes in federal law concerning hemp and in many state laws concerning cannabis, it is possible that there could be future changes to the Controlled Substances Act or DEA policies implementing the Controlled Substances Act. Such changes, if they occur, could improve the ability to conduct research on the medical benefits of cannabis. If, for example, Congress were to reschedule non-hemp cannabis or THC under the Controlled Substances Act as legal but potentially controlled substances, enforcement policies across federal agencies, including the FDA, may be materially altered. As federal law generally prohibits the production and sale of non-hemp cannabis and THC, the FDA has historically deferred enforcement related to cannabis to the DEA. However, the FDA has enforced the Food, Drug and Cosmetic Act with regard to hemp-derived products, particularly products containing CBD derived from hemp, sold in interstate commerce. If non-hemp cannabis or THC were to be rescheduled in such a way, the FDA could play a more-active regulatory role in enforcing the Food, Drug and Cosmetic Act against non-hemp cannabis and THC products, which the FDA could assert qualify as, for example, "drugs," even when not promoted for medical uses. Further, in the event that the pharmaceutical industry directly competes with cannabis businesses for market share, as could potentially occur with rescheduling or even under the current state-law systems, the pharmaceutical industry may urge the DEA, FDA, and others to enforce the Controlled Substances Act, the Food, Drug and Cosmetic Act, and related laws against businesses that comply with state but not federal law. Under various contingencies, the potential for multi-agency enforcement could threaten or have a materially adverse effect on the operations of Criticality.

~~The increasing and evolving regulation of tobacco products by the federal, state, and local governments in the United States may adversely affect the Company.~~

The nicotine-containing vaping products of the Company and its equity method investment in Purilum, LLC (“Purilum”), are subject to substantial and evolving regulation by the FDA and other federal agencies (e.g., the Federal Trade Commission, the Consumer Products Safety Commission and the Environmental Protection Agency). While each of the Company and Purilum

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believes that it has complied in all material respects with each currently applicable requirement by the applicable compliance date, it is possible that federal agencies may disagree and take enforcement action against the Company, Purilum, or their respective nicotine-containing vaping products based on legal or factual determinations that differ from the those of the Company and Purilum, which could have a material adverse effect on the business, financial condition, and results of operations of the Company.

In addition, the Food, Drug, and Cosmetic Act, as amended by the Tobacco Control Act, requires that any tobacco product that was not commercially marketed as of the “grandfathering” date of February 15, 2007, receive premarket authorization from the FDA before it can be marketed in the United States. However, the FDA has issued a policy under which the agency will not enforce these requirements for non-finished products (i.e., those intended solely for use in further manufacturing), which include certain products manufactured by the Company and Purilum. In addition, the FDA in July 2017 announced a compliance policy for “finished deemed” tobacco products (i.e., those products subjected to FDA regulation pursuant to the agency’s 2016 “deeming” regulation, including nicotine-containing vaping products) that qualify as “new tobacco products.” That compliance policy allowed the Company and Purilum to market such finished vaping products that qualify as “new tobacco products” that were on the U.S. market on August 8, 2016, until August 8, 2022, and continued marketing of such products during the FDA’s review of a pending marketing application submitted by August 8, 2022. In the absence of this policy, each of the Company and Purilum would have had to obtain prior authorization from FDA to market its finished vaping products after August 8, 2016. Accordingly, the Company’s and Purilum’s nicotine-containing finished vaping products are marketed pursuant to this compliance policy based on evidence in the Company’s and Purilum’s possession that they were on the U.S. market on August 8, 2016, and have not been physically modified since.

On March 13, 2019, the FDA issued a draft guidance document entitled “Modifications to Compliance Policy for Certain Deemed New Tobacco Products.” The document proposed to modify the current compliance policy for certain deemed tobacco products that qualify as “new tobacco products.” Relevant to vaping products, the document proposed to change the deadline for submitting a marketing application for flavored products (other than tobacco-, mint-, and menthol-flavored products) from August 8, 2022 to August 8, 2021. The guidance document also proposed that, even during the compliance policy period, the FDA would prioritize enforcement of the premarket review requirements for such flavored products when offered for sale in ways that pose a greater risk for minors to access such products. This includes enforcement against such flavored products sold: (1) in locations that minors may enter at any time; (2) through retailers (including online retailers) that have sold to minors after the FDA finalizes the document; (3) through online retailers lacking sufficient third-party age- and identity-verification services; and (4) through online retailers with no limit on the quantity that a customer may purchase within a given time period. The guidance document also proposed that, even during the compliance policy period, the FDA similarly would enforce the premarket review requirements against all vaping products promoted to minors or marketed in a manner likely to promote use by minors.

On May 15, 2019, the U.S. District Court for the District of Maryland issued a decision that may have a future impact on the FDA’s compliance policy for deemed “new tobacco products” on the market on August 8, 2016, effective date of the deeming regulations. In response to a complaint filed by public health groups and individual physicians, the court issued an order vacating the draft guidance announcing the FDA’s July 2017 compliance policy. The court then ordered and received briefing on the potential remedy. On July 12, 2019, the court issued its remedy order, which specified that: (1) for all deemed new tobacco products on the U.S. market on August 8, 2016, marketers must file applications within 10 months (i.e., by May 12, 2020) to continue marketing such products without otherwise-required marketing authorizations; (2) such a product may remain on the market pending FDA review of a timely filed application for a period not to exceed one year from the date of the application’s submission; (3) in its discretion, the FDA may enforce the premarket review requirements against such products for which marketers do not file applications within 10 months; and (4) the FDA shall have the ability to exempt deemed new tobacco products on the market on August 8, 2016, from these application submission requirements for good cause on a case-by-case basis. In response to a motion requesting clarification from the court filed by the FDA, the court issued an August 12, 2019, order that added a paragraph to the remedy order stating, “This order does not restrict the FDA's authority to enforce the premarket review provision against deemed products, or categories of deemed products, before the close of either the 10-month application submission period or the FDA application review period described above.”

Under the court’s order, any marketer of a non-grandfathered Deemed Tobacco Product that was on the U.S. market on August 8, 2016, but has not yet received an FDA marketing authorization, generally has until May 12, 2020, to submit a marketing application to continue marketing the product after that date. As regards to vaping and vapable products, this court-ordered modification to the compliance policy remains subject to change. Such change could result from potential appeals by industry parties that have sought to intervene in the litigation for the purposes of appeal, a stay pending appeal requested by these parties, litigation recently filed by industry members in federal district courts in Kentucky and Mississippi that could yield conflicting orders on these matters, or further action by the FDA (as discussed below).

On September 11, 2019, and in response to preliminary data from the 2019 National Youth Tobacco Survey apparently demonstrating increases in reported youth usage of flavored e-cigarette products, the Trump administration announced support for the FDA’s dramatically modifying the court-ordered compliance policy for vaping products. According to a press release issued by the U.S. Department of Health and Human Services, “FDA intends to finalize a compliance policy in the coming

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weeks that would prioritize the agency’s enforcement of the premarket authorization requirements for non-tobacco-flavored e-cigarettes, including mint and menthol, clearing the market of unauthorized, non-tobacco-flavored e-cigarette products.” It further stated, “The compliance policy the FDA anticipates announcing in the coming weeks will outline [an] enforcement policy addressing non-tobacco-flavored e-cigarette products that lack premarket authorization moving forward.”

~~On September 25, 2019, the acting FDA Commissioner testified before a U.S. House of Representatives subcommittee on vaping-related issues. In his prepared testimony, he stated, in relevant part:~~

Earlier this month, the President announced that as part of the Administration’s ongoing work to tackle the epidemic of youth e-cigarette use, FDA intends to finalize a compliance policy in the coming weeks that would prioritize the Agency’s enforcement of the premarket authorization requirements for non-tobacco-flavored e-cigarettes, including mint- and menthol-flavored products. It is important to note that this does not mean flavored e-cigarettes can never be marketed— if companies think they can show that specific products meet the standards established by Congress, then they can submit that evidence to FDA through a product application, which FDA will then evaluate. It does mean that FDA intends to prioritize enforcement action such that, unless and until the manufacturers of these products meet their burden under the Tobacco Control Act to show that scientific evidence demonstrates that their marketing is appropriate for the protection of the public health, these products will be expected to exit the market.

In his oral testimony, he indicated that FDA would issue the guidance in a matter of “weeks” and suggested that the revised compliance policy would take effect within 30 days “or some period along those lines.”

It therefore appears that the FDA intends to modify the court-ordered compliance policy in a manner that would require any flavored nicotine-containing e-liquid or e-cigarette product (other than a tobacco-flavored product) to exit the U.S. market until such time that the FDA authorizes the product’s return in response to a marketing application. Based on these public statements, tobacco-flavored products could remain subject to the preexisting compliance policy, meaning that, provided they were on the U.S. market on August 8, 2016, they could remain marketed until at least May 12, 2020, and for up to one year thereafter during the FDA’s review of a marketing application filed by May 12, 2020, for such a product. However, precisely when the FDA will issue the guidance document announcing the revised compliance policy and its precise contents remain unclear. Whether industry will file legal challenges to the revised compliance policy and whether a reviewing court would temporarily restrain or preliminarily enjoin the FDA from implementing the revised compliance during the pendency of any such legal challenge also remains uncertain.

For the six-month period ended September 30, 2019 and for prior periods, revenues of the Company and Purilum from the sales of e-liquid nicotine products have been derived almost exclusively from the sale of non-tobacco flavored e-liquids products, and Purilum’s business focus is on the development of flavors for vapable products. If the Company and Purilum are required to remove non-tobacco flavored e-liquids products from the market under a revised FDA compliance policy or they fail to complete the required marketing applications for their respective finished nicotine-containing vaping products by the ultimately required deadline, an endeavor that would be extremely time consuming and financially costly, or they fail to ultimately obtain FDA marketing authorizations in response to completed and timely filed marketing applications, Company and Purilum could be prevented from marketing and selling their respective finished vaping products in the United States, which may have a material effect on the business and financial condition and results of the Company. Similarly, if customers who purchase the Company’s or Purilum’s unfinished vaping products fail to obtain FDA marketing authorizations for the finished products that contain such unfinished vaping products (e.g., e-liquids, flavor concentrates), such failure may have a material effect on the business, financial condition and results of operations of the Company.

In addition, future regulatory changes made by the FDA, including potential restrictions or prohibitions on the sale of flavored tobacco products, including vaping products, could have a material adverse effect on the business, financial condition, and results of operations of the Company.

State and local governments also currently regulate tobacco products, including the Company’s and Purilum’s nicotine-containing vaping products. Certain municipalities have enacted local ordinances that prohibit the use of e-liquid, e-cigarette, and other vaping products, and certain local jurisdictions have enacted total or partial bans on the sale of non-tobacco flavored tobacco products, including e-liquid, e-cigarette and other vaping products (including, without limitation San Francisco, California, Boulder, Colorado, and Aspen, Colorado).

In September and October 2019, several states, including Michigan, New York, Massachusetts, Rhode Island, Montana, and Oregon issued or announced an intention to issue emergency regulations temporarily prohibiting the sale of either flavored vaping products, certain flavored vaping products, or all vaping products. A growing number of states have imposed excise taxes on e-liquids, e-cigarettes, and other vaping products. Other states and local jurisdictions have increased the minimum age to purchase such products to 19 or 21, have imposed restrictions or prohibitions on internet sales of such products, and have challenged the marketing of such products under consumer protection statutes (e.g., on the basis that certain marketers unlawfully target underage consumers or make unsubstantiated or misleading claims about their products). For example, in September 2019, Michigan implemented a renewable six-month ban on the sale of flavored e-liquid products; Massachusetts

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announced a temporary ban on the sale of flavored and non-flavored vaping products; New York announced a ban on flavored e-cigarettes; and lawmakers in New Jersey discussed a proposed ban on vaping. Federal, state and local regulations that prohibit or restrict the sale of vaping products, or that decrease consumer demand for these products by prohibiting their use in public places, raising the minimum age for their purchase, raising their prices to unattractive levels via taxation, or banning their sale could adversely impact the financial condition and results or operations of the Company.

Governmental and private sector actions, including restrictions imposed at the federal, state, and local level, may have an adverse impact on the Company, Purilum and their respective e-liquids businesses.

Certain health problems have recently been linked to the inhalation of aerosolized e-liquids. As of September 27, 2019, the U.S. Centers for Disease Control reported that federal and state agencies continue to investigate an outbreak of at least 805 lung injury cases involving patients from 46 states and one U.S. territory, including 12 confirmed deaths. The government reported that all such patients had a history of e-cigarette product use or vaping. While the government has indicated that no single product or substance has been linked to all such cases, approximately 77% reported using THC-containing products, 36% reported exclusive use of THC-containing products, 57% reported using nicotine-containing products, and 16% reported exclusive use of nicotine-containing products. As a result of the current outbreak or future developments related to potential health risks associated with vaping, governments and private sector parties could take actions aimed at reducing the incidence of vaping and/or seeking to hold manufacturers of e-liquids responsible for the adverse health effects associated with the use of vaping products. These actions, combined with potential deterioration in the public’s perception of e-liquids, may result in a reduced market for the Company's and Purilum’s e-liquid products.

Actions by the FDA and other federal, state, or local governments or agencies may impact consumers’ acceptance of or access to e-liquids products (for example, through product standards related to flavored products promulgated by the FDA), limit consumers’ e-liquids choices, delay or prevent the launch of new or modified e-liquids products or products with claims of reduced risk, require the recall or other removal of e-liquids products from the marketplace (for example, as a result of product contamination or regulations that ban certain flavors or ingredients), restrict communications to e-liquids consumers, restrict the ability to differentiate e-liquids products, create a competitive advantage or disadvantage for certain e-liquids companies, impose additional manufacturing, labeling, or packaging requirements, interrupt manufacturing or otherwise significantly increase the cost of doing business, or restrict or prevent the use of specified e-liquids products in certain locations or the sale of e-liquids products by certain retail establishments. Any one or more of these actions may have a material adverse impact on the Company's business, financial condition, and results of operations.

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Item 6. Exhibits


~~10.01~~						Amended and Restated Pyxus International, Inc. 2016 Incentive Plan (incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed by Pyxus International, Inc. on July 15, 2019 (SEC File No. 001-13684))
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						XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB						XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE						XBRL Taxonomy Extension Presentation Linkbase (filed herewith)

~~-45-~~-41-

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: ~~November 7, 2019~~February 10, 2020 /s/ Philip C. Garofolo

Philip C. Garofolo

Vice President - Controller

(Principal Accounting Officer)

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