RICHMOND, Va., May 22, 2024
/PRNewswire/ -- George C. Freeman,
III, Chairman, President, and Chief Executive Officer of
Universal Corporation (NYSE:UVV), stated, "Universal Corporation
had a positive finish to a strong fiscal year 2024 with notable
financial and operational performance in both the fiscal year and
quarter ended March 31, 2024. Fiscal
year 2024 was an exceptional year for our tobacco business, as a
favorable product mix, strong customer demand, and the sale of
larger crops in Africa, compared
to fiscal year 2023, drove our strong operating results. Fiscal
year 2024 was also a significant building year for our ingredients
business. We made important progress with our state-of-the-art
expansion project, and we continued to invest in Universal
Ingredients' commercial sales team and research and development
function. We also made advances in fiscal year 2024 towards our
sustainability goals by entering agreements that move us closer to
our operational emissions targets and by making continued progress
towards our social supply chain targets.
"Turning to current tobacco market conditions, while we expect
leaf tobacco supply and demand to return to a more balanced
position over time, we are currently seeing very tight tobacco
supply and elevated green tobacco prices. We continue to leverage
our diverse global footprint and financial flexibility to manage
these conditions and to execute our tobacco strategies. For
example, during the fourth quarter of fiscal year 2024 and into the
first quarter of fiscal year 2025, we accelerated buying in
Brazil to ensure access to the
tobacco we need for our customers. This accelerated buying,
combined with higher green tobacco prices, resulted in increased
use of working capital and higher debt levels at March 31, 2024. We expect most of the net impact
on working capital from our accelerated buying strategy to
naturally unwind over the next two years. In addition, we remain
committed to supporting our tobacco business while efficiently
managing working capital and reducing leverage levels.
"In our ingredients business, the expansion project at our
Lancaster manufacturing facility
is progressing as expected, and we anticipate the facility to be
fully operational in the second half of fiscal year 2025. We are
excited about this unique project as it will significantly expand
our processing capabilities, including aseptic packaging, and
enable us to considerably grow our product portfolio and supply
existing and new customers with additional products. This project
is expected to contribute meaningfully to the results of our
Ingredients Operations segment in fiscal year 2026.
"Our vision for our ingredients business is to be a provider of
a complete, innovative suite of solutions and value-add products.
We believe our investments in our Universal Ingredients platform's
commercial sales team and research and development function support
our vision and will deliver value over time. During fiscal year
2024, we entered several new partnerships to supply innovative
products that capitalize on our newly developed capabilities and
portfolio across our three ingredients companies. Those new
customer relationships and new product sales benefited our
ingredients business by helping offset lower revenues from sales in
fiscal year 2024 due to inventory recalibrations by existing
customers and lower sales prices due to lower raw material prices.
Earnings in fiscal year 2024, however, were below expectations due
to higher costs related to our infrastructure investments, lower
new crop raw material prices, inventory write-downs, and customer
inventory recalibrations. We expect our new product sales to
increase and contribute to our future earnings.
"Going into fiscal year 2025, we remain steadfast in executing
our strategy of maximizing tobacco opportunities while growing the
ingredients business. We believe our leading market position,
global footprint, and proven sustainability practices will continue
to enable us to generate stable cash flow from our tobacco
business. Universal Ingredients is also well positioned with its
fully built platform to deliver high-quality, innovative products
that drive top line growth, margin expansion, and earnings
stability."
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FINANCIAL
HIGHLIGHTS
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Fiscal Year Ended March
31,
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Change
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(in millions of
dollars, except per share data)
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2024
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2023
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$
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%
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Consolidated
Results
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Sales and other
operating revenue
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$
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2,748.6
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$
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2,569.8
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$
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178.7
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7
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%
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Cost of goods
sold
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2,212.5
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2,111.5
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100.9
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5
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%
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Gross profit
margin
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19.50
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%
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17.83
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%
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---
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167 bps
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Selling, general and
administrative expenses
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310.6
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277.2
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33.4
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12
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%
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Restructuring and
impairment costs
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3.5
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—
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3.5
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100
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%
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Operating income (as
reported)
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222.0
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181.1
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40.9
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23
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%
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Adjusted operating
income (Non-GAAP)*
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230.3
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181.1
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49.2
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27
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%
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Diluted earnings per
share (as reported)
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4.78
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4.97
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(0.19)
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(4)
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%
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Adjusted diluted
earnings per share (Non-GAAP)*
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5.08
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3.77
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1.31
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35
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%
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Segment
Results
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Tobacco operations
sales and other operating revenues
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$
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2,438.8
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$
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2,258.3
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$
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180.5
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8
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%
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Tobacco operations
operating income
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222.4
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172.9
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49.5
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29
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%
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Ingredients operations
sales and other operating revenues
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309.8
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311.6
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(1.8)
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(1)
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%
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Ingredients operations
operating income
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3.9
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10.6
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(6.6)
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(63)
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%
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*See Reconciliation of Certain Non-GAAP Financial Measures in
Other Items below
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Net income for the fiscal year ended March 31, 2024, was $119.6
million, or $4.78 per diluted
share, compared with $124.1 million,
or $4.97 per diluted share, for the
fiscal year ended March 31, 2023.
Excluding certain non-recurring items, as detailed in Other Items
below, adjusted net income increased by $33.0 million and adjusted diluted earnings per
share increased by $1.31 for the
fiscal year ended March 31, 2024,
compared to the fiscal year ended March 31,
2023. Operating income for fiscal year 2024 was $222.0 million, an increase of $40.9 million, compared to operating income of
$181.1 million for fiscal year 2023.
Adjusted operating income, detailed in Other Items below, was
$230.3 million, an increase of
$49.2 million for fiscal year 2024,
as compared to fiscal year 2023.
Net income for the quarter ended March
31, 2024, was $40.3 million,
or $1.61 per diluted share, compared
with $53.7 million, or $2.15 per diluted share, for the quarter ended
March 31, 2023. Excluding certain
non-recurring items, as detailed in Other Items below, adjusted net
income and adjusted diluted earnings per share increased by
$20.3 million and $0.82, respectively, for the quarter ended
March 31, 2024, compared to the
quarter ended March 31, 2023.
Operating income for the quarter ended March
31, 2024, was $68.2 million,
an increase of $15.8 million,
compared to operating income of $52.4
million for the quarter ended March
31, 2023. Adjusted operating income, detailed in Other Items
below, was $73.0 million for the
fourth quarter of fiscal year 2024, an increase of $20.6 million, as compared to adjusted operating
income of $52.4 million for the
fourth quarter of fiscal year 2023.
Consolidated revenues increased by $178.7
million to $2.7 billion for
fiscal year 2024, compared to fiscal year 2023. The increase was
largely due to higher tobacco sales prices, which more than offset
lower tobacco sales volumes, as well as an improved product mix in
the Tobacco Operations segment. For the quarter ended March 31, 2024, consolidated revenues increased
by $76.9 million to $770.9 million, compared to consolidated revenues
of $694.0 million for the quarter
ended March 31, 2023, on higher
tobacco sales prices.
TOBACCO OPERATIONS
Revenues for the Tobacco Operations segment were $2.4 billion for fiscal year 2024, up
$180.5 million compared to fiscal
year 2023, on higher tobacco sales prices and a favorable product
mix, partially offset by lower tobacco sales volumes. For the
quarter ended March 31, 2024,
revenues were $696.3 million, up
$80.7 million compared to the quarter
ended March 31, 2023, mainly on
higher tobacco sales prices.
Operating income for the Tobacco Operations segment increased by
$49.5 million to $222.4 million for fiscal year 2024, compared
with fiscal year 2023. Tobacco Operations segment operating income
was up largely on higher tobacco sales prices and a more favorable
product mix, partially offset by lower tobacco sales volumes. In
fiscal year 2023, a large amount of lower margin carryover tobacco
crops was shipped. Larger African crops positively impacted the
results for the Tobacco Operations segment in fiscal year 2024.
Carryover crop shipments from South
America were significantly lower in fiscal year 2024,
compared to fiscal year 2023. In fiscal year 2024, our operations
in Asia saw an improved product
mix, compared to fiscal year 2023. Selling, general, and
administrative expenses for the Tobacco Operations segment were
higher in fiscal year 2024, compared to fiscal year 2023, primarily
due to higher incentive compensation and benefit costs, as well as
unfavorable foreign currency comparisons and costs related to a
value-added tax settlement program in Brazil.
Operating income for the Tobacco Operations segment increased by
$19.6 million to $73.5 million for the quarter ended March 31, 2024, compared with the quarter ended
March 31, 2023. Tobacco Operations
segment operating income was up largely on higher prices and a more
favorable product mix. Larger African crop shipments and an
improved product mix in Asia,
partially offset by lower sales volumes in North and
South America, contributed to the
increase in operating income for the quarter ended March 31, 2024, compared to the quarter ended
March 31, 2023. Selling, general, and
administrative expenses for the Tobacco Operations segment were
higher in the quarter ended March 31,
2024, compared to the quarter ended March 31, 2023, primarily due to higher incentive
compensation and benefit costs, as well as unfavorable foreign
currency comparisons and costs related to a value-added tax
settlement program in Brazil.
INGREDIENTS OPERATIONS
Revenues for the Ingredients Operations segment of $309.8 million for fiscal year 2024, and
$74.6 million for the quarter ended
March 31, 2024, were down
$1.8 million and $3.8 million, respectively, compared to the same
periods in the prior fiscal year, as the sales of new products
partially offset lower sales prices and volumes on core
products.
Operating income for the Ingredients Operations segment was
$4.0 million for fiscal year 2024
compared to $10.6 million for fiscal
year 2023. The operating loss for the Ingredients Operations
segment of $1.0 million for the
quarter ended March 31, 2024, was a
decrease of $1.7 million, compared to
operating income for the segment of $0.7
million for the quarter ended March
31, 2023. Results for the Ingredients Operations segment for
fiscal year 2024 and the quarter ended March
31, 2024, were negatively impacted by higher costs related
to infrastructure investments in the ingredients platform, lower
new crop raw material prices, and inventory write-downs, partially
offset by margins from the sale of new products. Customer inventory
recalibrations mainly in the first half of the fiscal year 2024
also negatively impacted fiscal year 2024. In the fiscal year and
quarter ended March 31, 2024,
selling, general, and administrative expenses were higher, compared
to the same periods in fiscal year 2023, due to higher compensation
and other costs largely related to our investment in expanding
commercial and research and development capabilities.
OTHER ITEMS
Cost of goods sold in the fiscal year and quarter ended
March 31, 2024, increased by 5% to
$2.2 billion and by 9% to
$619.9 million, respectively,
compared with the fiscal year and quarter ended March 31, 2023, largely due to higher green
tobacco costs. Selling, general, and administrative costs for
fiscal year 2024 increased by $33.4
million to $310.6 million,
compared to fiscal year 2023, primarily due to higher incentive
compensation costs as well as unfavorable foreign currency
comparisons and costs related to a value-added tax settlement in
Brazil. Selling, general, and
administrative costs for the quarter ended March 31, 2024, increased by $12.3 million to $82.7
million, compared to the same period in the prior fiscal
year, largely on higher incentive compensation costs and
unfavorable foreign currency comparisons as well as costs related
to a value-added tax settlement program in Brazil. Interest expense for fiscal year 2024
increased by $17.0 million to
$66.3 million, compared to fiscal
year 2023, primarily on higher interest rates. Interest expense for
the quarter ended March 31, 2024,
increased by $2.1 million, compared
to the quarter ended March 31, 2023,
largely on higher debt balances resulting from accelerated tobacco
purchases. Interest income for the quarter ended March 31, 2024, decreased by $5.2 million, compared to the quarter ended
March 31, 2023, primarily on interest
income associated with a favorably resolved tax judgement at a
subsidiary in the quarter ended March 31,
2023.
For the fiscal year and quarter ended March 31, 2024, our effective tax rate on pre-tax
income was 19.0% and 17.3%, respectively.
For the fiscal year and quarter ended March 31, 2023, our effective tax rate on pre-tax
income was 8.3% and a benefit of 22.8%, respectively. In fiscal
year 2023, one of our subsidiaries in Brazil received a favorable final judgement
from the Brazilian Superior Court of Justice. The lawsuit asserted
certain tax credits on exported goods should be excluded from
taxable income. The Brazilian revenue authority asserted certain
tax credits generated on purchased goods and services that were
ultimately exported from Brazil
should be included in the calculation of taxable income. The
Brazilian Superior Court of Justice affirmed the tax credits are
non-taxable in accordance with the historical and existing tax
legislation in Brazil. The ruling
resulted in recognition of $26.6
million of Brazilian tax credits due to the recalculation of
federal income taxes in Brazil for
years 2015 through 2022. The net income tax benefit was partially
offset by a $2.4 million income tax
provision for U.S. federal income taxes. The ruling resulted in a
net income tax benefit of $24.2
million for the fiscal year and quarter ended March 31, 2023. The affirmative ruling also
resulted in recognition of $5.0
million of interest income for the fiscal year and quarter
ended March 31, 2023. Without this
interest income and income tax benefit, the consolidated effective
tax rate for the quarter ended March 31,
2023, would have been approximately 33.4%.
In the fiscal year ended March 31,
2023, we sold our idled Tanzania operations and recognized
$1.1 million of income taxes. Without
this item and the favorable judgement in Brazil discussed above, the consolidated
effective income tax rate for the fiscal year ended March 31, 2023, would have been approximately
25.5%. Additionally, the sale of our idled Tanzania operations resulted in a $1.8 million reduction to consolidated interest
expense related to an uncertain tax position.
SUSTAINABILITY
In fiscal year 2024, Universal continued making progress towards
our sustainability goals. We made progress towards our operational
emissions targets. We also entered into a virtual power purchase
agreement, which will generate renewable electricity equal to our
North American footprint beginning in 2026, and entered into an
emission reduction agreement expected to provide benefits to
tobacco growing areas in the
Philippines, which will offset a portion of our emissions in
Asia beginning in 2025. We
continued monitoring our social supply chain targets, and for the
second year in a row, substantially met our personal protective
equipment distribution, farm labor accommodation, child labor
elimination, and farm labor payment goals for our contracted
tobacco growers.
Reconciliation of Certain Non-GAAP Financial Measures
The following tables set forth certain non-recurring items
included in reported results to reconcile adjusted operating income
to consolidated operating income and adjusted net income to net
income attributable to Universal Corporation:
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Adjusted Operating
Income Reconciliation
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Three Months Ended
March 31,
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Fiscal Year Ended March
31,
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(in
thousands)
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2024
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2023
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2024
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2023
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As Reported:
Consolidated operating income
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$
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68,198
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$
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52,394
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$
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222,009
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$
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181,072
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Value-added tax
settlement costs(1)
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4,754
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—
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4,754
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—
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Restructuring and
impairment costs(2)
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—
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—
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3,523
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—
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Adjusted operating
income (Non-GAAP)
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$
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72,952
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$
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52,394
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$
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230,286
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$
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181,072
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Adjusted Net Income
and Adjusted Diluted Earnings Per Share
Reconciliation
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Three Months Ended
March 31,
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Fiscal Year Ended March
31,
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(in thousands except
for per share amounts)
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|
2024
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|
2023
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2024
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2023
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As Reported: Net income
attributable to Universal Corporation
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$
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40,318
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$
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53,707
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$
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119,598
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$
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124,052
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Value-added tax
settlement costs(1)
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4,754
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—
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4,754
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—
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Restructuring and
impairment costs(2)
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—
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—
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3,523
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—
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Interest expense for
value-added tax settlement(1)
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245
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—
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245
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—
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Interest income related
to a final income tax rulings(3)
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—
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(4,980)
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—
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(4,980)
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Interest expense
reversal on uncertain tax position from sale of operations in
Tanzania
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—
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—
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—
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(1,816)
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Total of Non-GAAP
adjustments to income before income taxes
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4,999
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(4,980)
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8,522
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(6,796)
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Income tax benefit on
final tax ruling(3)
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(24,256)
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—
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(24,256)
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Income tax expense from
sale of operations in Tanzania
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—
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—
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—
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1,132
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Income tax benefit from
Non-GAAP adjustments to income before income taxes(1)(4)
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(498)
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—
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(1,010)
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—
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Total of income tax
impacts for Non-GAAP adjustments to income before income
taxes
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(498)
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(24,256)
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(1,010)
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(23,124)
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As adjusted: Net income
attributable to Universal Corporation (Non-GAAP)
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$
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44,819
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$
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24,471
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$
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127,110
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$
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94,132
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As reported: Diluted
earnings per share
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$
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1.61
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$
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2.15
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$
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4.78
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$
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4.97
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Adjusted: Diluted
earnings per share
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$
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1.79
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$
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0.97
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$
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5.08
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$
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3.77
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(1)
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In the fourth quarter
of fiscal year 2024, the Company utilized a voluntary
government-sponsored value-added tax program in Brazil to settle a
previously contested assessment. The Company's participation in the
settlement program eliminates any future litigation regarding the
matter.
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(2)
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Restructuring and
impairment costs are included in Consolidated operating income in
the consolidated statements of income, but excluded for purposes of
Adjusted operating income, Adjusted net income available to
Universal Corporation, and Adjusted diluted earnings per
share.
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(3)
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The Company recognized
an income tax benefit ($24.2 million) and associated interest
income ($5.0 million) in the fourth quarter of fiscal year 2023
related to a favorable final judgement for one of the Company's
operating subsidiaries in Brazil. The lawsuit related to the
treatment of certain tax credits on exported goods in the
calculation of taxable income.
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(4)
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The income tax effect
of Non-GAAP adjustments was determined based on the timing and
nature of the specific Non-GAAP adjustments and their relevant
jurisdictional income tax rates (foreign, state, and local) and the
applicable U.S. federal income tax rates. The Company considers
current and deferred income tax rates to calculate the impact to
income taxes for the Non-GAAP adjustments.
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Additional information
Amounts described as net income
(loss) and earnings (loss) per diluted share in the previous
discussion are attributable to Universal Corporation and exclude
earnings related to non-controlling interests in subsidiaries.
Adjusted operating income (loss), adjusted net income (loss)
attributable to Universal Corporation, adjusted diluted earnings
(loss) per share, and the total for segment operating income (loss)
referred to in this discussion are non-GAAP financial measures.
These measures are not financial measures calculated in accordance
with GAAP and should not be considered as substitutes for operating
income (loss), net income (loss) attributable to Universal
Corporation, diluted earnings (loss) per share, cash from operating
activities or any other operating or financial performance measure
calculated in accordance with GAAP, and may not be comparable to
similarly-titled measures reported by other companies. A
reconciliation of adjusted operating income (loss) to consolidated
operating (income), adjusted net income (loss) attributable to
Universal Corporation to consolidated net income (loss)
attributable to Universal Corporation and adjusted diluted earnings
(loss) per share to diluted earnings (loss) per share are provided
in Other Items above. In addition, we have provided a
reconciliation of the total for segment operating income (loss) to
consolidated operating income (loss) in Note 3 "Segment
Information" to the consolidated financial statements. Management
evaluates the consolidated Company and segment performance
excluding certain significant charges or credits. We believe these
non-GAAP financial measures, which exclude items that we believe
are not indicative of our core operating results, provide investors
with important information that is useful in understanding our
business results and trends.
This release includes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers that any statements contained herein
regarding financial condition, results of operation, and future
business plans, operations, opportunities, and prospects for its
performance are forward-looking statements based upon management's
current knowledge and assumptions about future events, and involve
risks and uncertainties that could cause actual results,
performance, or achievements to be materially different from any
anticipated results, prospects, performance, or achievements
expressed or implied by such forward-looking statements. Such risks
and uncertainties include, but are not limited to, success in
pursuing strategic investments or acquisitions and integration of
new businesses and the impact of these new businesses on future
results; product purchased not meeting quality and quantity
requirements; our reliance on a few large customers; our ability to
maintain effective information technology systems and safeguard
confidential information; anticipated levels of demand for and
supply of our products and services; costs incurred in providing
these products and services including increased transportation
costs and delays attributed to global supply chain challenges;
timing of shipments to customers; higher inflation rates; changes
in market structure; government regulation and other stakeholder
expectations; economic and political conditions in the countries in
which we and our customers operate, including the ongoing impacts
from international conflicts; product taxation; industry
consolidation and evolution; changes in exchange rates and interest
rates; impacts of regulation and litigation on its customers;
industry-specific risks related to its plant-based ingredient
businesses; exposure to certain regulatory and financial risks
related to climate change; changes in estimates and assumptions
underlying our critical accounting policies; the promulgation and
adoption of new accounting standards, new government regulations
and interpretation of existing standards and regulations; and
general economic, political, market, and weather conditions. Actual
results, therefore, could vary from those expected. A further list
and description of these risks, uncertainties, and other factors
can be found in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2023, and
in other documents the Company files with the Securities and
Exchange Commission. This information should be read in conjunction
with the Annual Reports on Form 10-K for the years ended
March 31, 2023, and March 31, 2024, which is expected to be filed
shortly. The Company cautions investors not to place undue reliance
on any forward-looking statements as these statements speak only as
of the date when made, and it undertakes no obligation to update
any forward-looking statements made.
At 5:00 p.m. (Eastern Time) on
May 22, 2024, the Company will host a
conference call to discuss these results. Those wishing to
listen to the call may do so by visiting www.universalcorp.com at
that time. A replay of the webcast will be available at that
site through August 22, 2024. A
taped replay of the call will be available through June 5, 2024, by dialing (888) 225-1626.
Universal Corporation (NYSE: UVV) is a global agricultural
company with over 100 years of experience supplying products and
innovative solutions to meet our customers' evolving needs and
precise specifications. Through our diverse network of farmers and
partners across more than 30 countries on five continents, we are a
trusted provider of high-quality, traceable products. We leverage
our extensive supply chain expertise, global reach, integrated
processing capabilities, and commitment to sustainability to
provide a range of products and services designed to drive
efficiency and deliver value to our customers. For more
information, visit www.universalcorp.com.
UNIVERSAL
CORPORATION
CONSOLIDATED
STATEMENTS OF INCOME
(in thousands of
dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Fiscal Year Ended
March 31,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Sales and other
operating revenues
|
|
$
|
770,860
|
|
|
$
|
693,979
|
|
|
$
|
2,748,573
|
|
|
$
|
2,569,824
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
619,942
|
|
|
571,171
|
|
|
2,212,475
|
|
|
2,111,539
|
|
Selling, general and
administrative expenses
|
|
82,720
|
|
|
70,414
|
|
|
310,566
|
|
|
277,213
|
|
Restructuring and
impairment costs
|
|
—
|
|
|
—
|
|
|
3,523
|
|
|
—
|
|
Operating
income
|
|
68,198
|
|
|
52,394
|
|
|
222,009
|
|
|
181,072
|
|
Equity in pretax
earnings of unconsolidated affiliates
|
|
4,251
|
|
|
2,175
|
|
|
756
|
|
|
2,383
|
|
Other non-operating
income
|
|
905
|
|
|
1,999
|
|
|
3,084
|
|
|
1,791
|
|
Interest
income
|
|
466
|
|
|
5,616
|
|
|
4,504
|
|
|
6,023
|
|
Interest
expense
|
|
18,152
|
|
|
16,041
|
|
|
66,273
|
|
|
49,300
|
|
Income before income
taxes
|
|
55,668
|
|
|
46,143
|
|
|
164,080
|
|
|
141,969
|
|
Income taxes
|
|
9,611
|
|
|
(10,525)
|
|
|
31,109
|
|
|
11,733
|
|
Net income
|
|
46,057
|
|
|
56,668
|
|
|
132,971
|
|
|
130,236
|
|
Less: net income
attributable to noncontrolling interests in subsidiaries
|
|
(5,739)
|
|
|
(2,961)
|
|
|
(13,373)
|
|
|
(6,184)
|
|
Net income
attributable to Universal Corporation
|
|
$
|
40,318
|
|
|
$
|
53,707
|
|
|
$
|
119,598
|
|
|
$
|
124,052
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.62
|
|
|
$
|
2.17
|
|
|
$
|
4.81
|
|
|
$
|
5.01
|
|
Diluted
|
|
$
|
1.61
|
|
|
$
|
2.15
|
|
|
$
|
4.78
|
|
|
$
|
4.97
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
2024
|
|
|
|
2023
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
55,593
|
|
|
|
|
$
|
64,690
|
|
Accounts receivable,
net
|
|
525,262
|
|
|
|
|
402,073
|
|
Advances to suppliers,
net
|
|
139,064
|
|
|
|
|
170,801
|
|
Accounts
receivable—unconsolidated affiliates
|
|
5,385
|
|
|
|
|
12,210
|
|
Inventories—at lower of
cost or net realizable value:
|
|
|
|
|
|
|
Tobacco
|
|
1,070,580
|
|
|
|
|
833,876
|
|
Other
|
|
193,518
|
|
|
|
|
202,907
|
|
Prepaid income
taxes
|
|
19,484
|
|
|
|
|
16,493
|
|
|
|
|
|
|
|
|
Other current
assets
|
|
93,655
|
|
|
|
|
99,840
|
|
Total current
assets
|
|
2,102,541
|
|
|
|
|
1,802,890
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
|
|
Land
|
|
26,244
|
|
|
|
|
24,926
|
|
Buildings
|
|
323,969
|
|
|
|
|
311,138
|
|
Machinery and
equipment
|
|
693,868
|
|
|
|
|
689,220
|
|
|
|
1,044,081
|
|
|
|
|
1,025,284
|
|
Less accumulated
depreciation
|
|
(678,201)
|
|
|
|
|
(674,122)
|
|
|
|
365,880
|
|
|
|
|
351,162
|
|
Other assets
|
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
32,510
|
|
|
|
|
40,505
|
|
Goodwill,
net
|
|
213,869
|
|
|
|
|
213,922
|
|
Other intangibles,
net
|
|
68,883
|
|
|
|
|
80,101
|
|
Investments in
unconsolidated affiliates
|
|
76,289
|
|
|
|
|
76,184
|
|
Deferred income
taxes
|
|
15,181
|
|
|
|
|
13,091
|
|
Pension
asset
|
|
11,857
|
|
|
|
|
9,984
|
|
Other noncurrent
assets
|
|
50,229
|
|
|
|
|
51,343
|
|
|
|
468,818
|
|
|
|
|
485,130
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,937,239
|
|
|
|
|
$
|
2,639,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
2024
|
|
|
|
2023
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Notes payable and
overdrafts
|
|
$
|
417,217
|
|
|
|
|
$
|
195,564
|
|
Accounts
payable
|
|
108,727
|
|
|
|
|
83,213
|
|
Accounts
payable—unconsolidated affiliates
|
|
1,621
|
|
|
|
|
5,830
|
|
Customer advances and
deposits
|
|
17,179
|
|
|
|
|
3,061
|
|
Accrued
compensation
|
|
39,766
|
|
|
|
|
33,108
|
|
Income taxes
payable
|
|
7,477
|
|
|
|
|
3,274
|
|
Current portion of
operating lease liabilities
|
|
10,356
|
|
|
|
|
11,404
|
|
Accrued expenses and
other current liabilities
|
|
109,015
|
|
|
|
|
106,533
|
|
Current portion of
long-term debt
|
|
—
|
|
|
|
|
—
|
|
Total current
liabilities
|
|
711,358
|
|
|
|
|
441,987
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
617,364
|
|
|
|
|
616,809
|
|
Pensions and other
postretirement benefits
|
|
43,251
|
|
|
|
|
42,769
|
|
Long-term operating
lease liabilities
|
|
19,302
|
|
|
|
|
25,540
|
|
Other long-term
liabilities
|
|
27,902
|
|
|
|
|
32,512
|
|
Deferred income
taxes
|
|
39,139
|
|
|
|
|
42,613
|
|
Total
liabilities
|
|
1,458,316
|
|
|
|
|
1,202,230
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
Universal
Corporation:
|
|
|
|
|
|
|
Preferred
stock:
|
|
|
|
|
|
|
Series A Junior
Participating Preferred Stock, no par value, 500,000 shares
authorized,
none issued or outstanding
|
|
—
|
|
|
|
|
—
|
|
Common stock, no par
value, 100,000,000 shares authorized, 24,573,408 shares issued
and outstanding (24,555,361 at March 31, 2023)
|
|
345,596
|
|
|
|
|
337,247
|
|
Retained
earnings
|
|
1,173,196
|
|
|
|
|
1,136,898
|
|
Accumulated other
comprehensive loss
|
|
(81,585)
|
|
|
|
|
(77,057)
|
|
Total Universal
Corporation shareholders' equity
|
|
1,437,207
|
|
|
|
|
1,397,088
|
|
Noncontrolling
interests in subsidiaries
|
|
41,716
|
|
|
|
|
39,864
|
|
Total shareholders'
equity
|
|
1,478,923
|
|
|
|
|
1,436,952
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,937,239
|
|
|
|
|
$
|
2,639,182
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
2024
|
|
2023
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
|
132,971
|
|
|
$
|
130,236
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
58,326
|
|
|
57,300
|
|
Provision for losses
(recoveries) on advances
|
|
14,090
|
|
|
10,584
|
|
Inventory
write-downs
|
|
9,234
|
|
|
13,995
|
|
Stock-based
compensation expense
|
|
12,063
|
|
|
8,420
|
|
Foreign currency
remeasurement loss (gain), net
|
|
5,114
|
|
|
(3,892)
|
|
Foreign currency
exchange contracts
|
|
(365)
|
|
|
14,163
|
|
Deferred income
taxes
|
|
(5,404)
|
|
|
(7,657)
|
|
Equity in net income of
unconsolidated affiliates, net of dividends
|
|
(1,239)
|
|
|
4,010
|
|
Brazil tax
ruling
|
|
—
|
|
|
(29,236)
|
|
Restructuring and
impairment costs
|
|
3,523
|
|
|
—
|
|
Restructuring
payments
|
|
(1,181)
|
|
|
—
|
|
Other, net
|
|
1,001
|
|
|
(6,249)
|
|
Changes in operating
assets and liabilities, net:
|
|
(302,765)
|
|
|
(202,231)
|
|
Net cash
provided (used) by operating activities
|
|
(74,632)
|
|
|
(10,557)
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(66,013)
|
|
|
(54,674)
|
|
|
|
|
|
|
Proceeds from sale of
business, less cash of businesses sold
|
|
3,757
|
|
|
3,245
|
|
Proceeds from sale of
property, plant and equipment
|
|
2,257
|
|
|
1,079
|
|
|
|
|
|
|
Net cash used
by investing activities
|
|
(59,999)
|
|
|
(50,350)
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
Issuance (repayment) of
short-term debt, net
|
|
223,000
|
|
|
24,712
|
|
Issuance of long-term
debt
|
|
—
|
|
|
123,481
|
|
Repayment of long-term
debt
|
|
—
|
|
|
(23,481)
|
|
Dividends paid to
noncontrolling interests in subsidiaries
|
|
(10,572)
|
|
|
(10,221)
|
|
Repurchase of common
stock
|
|
(4,744)
|
|
|
(3,448)
|
|
Dividends paid on
common stock
|
|
(78,402)
|
|
|
(77,391)
|
|
Proceeds from
termination of interest rate swap agreements
|
|
—
|
|
|
11,786
|
|
Debt issuance costs and
other
|
|
(3,607)
|
|
|
(6,489)
|
|
Net cash
provided (used) by financing activities
|
|
125,675
|
|
|
38,949
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
|
(141)
|
|
|
(1,000)
|
|
Net increase (decrease)
in cash and cash equivalents
|
|
(9,097)
|
|
|
(22,958)
|
|
Cash, restricted cash
and cash equivalents at beginning of year
|
|
64,690
|
|
|
87,648
|
|
Cash, Restricted
Cash and Cash Equivalents at End of Year
|
|
$
|
55,593
|
|
|
$
|
64,690
|
|
|
|
|
|
|
See accompanying
notes.
|
|
|
|
|
NOTE 1. BASIS OF PRESENTATION
Universal Corporation, with its subsidiaries ("Universal" or the
"Company"), is a global business-to-business agri-products supplier
to consumer product manufacturers. The Company is the leading
global leaf tobacco supplier and provides high-quality plant-based
ingredients to food and beverage end markets. Because of the
seasonal nature of the Company's business, the results of
operations for any fiscal quarter will not necessarily be
indicative of results to be expected for other quarters or a full
fiscal year. All adjustments necessary to state fairly the results
for the period have been included and were of a normal recurring
nature. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2023.
NOTE 2. EARNINGS PER SHARE
The following table sets forth the computation of basic and
diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Fiscal Year Ended
March 31,
|
(in thousands,
except per share data)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
|
|
|
|
|
|
|
|
Numerator for basic
earnings per share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
40,318
|
|
|
$
|
53,707
|
|
|
$
|
119,598
|
|
|
$
|
124,052
|
|
|
|
|
|
|
|
|
|
|
Denominator for
basic earnings per share
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,846,063
|
|
|
24,776,193
|
|
|
24,851,858
|
|
|
24,773,710
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
$
|
1.62
|
|
|
$
|
2.17
|
|
|
$
|
4.81
|
|
|
$
|
5.01
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
|
|
|
Numerator for
diluted earnings per share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
40,318
|
|
|
$
|
53,707
|
|
|
$
|
119,598
|
|
|
$
|
124,052
|
|
|
|
|
|
|
|
|
|
|
Denominator for
diluted earnings per share:
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,846,063
|
|
|
24,776,193
|
|
|
24,851,858
|
|
|
24,773,710
|
|
Effect of dilutive
securities
|
|
|
|
|
|
|
|
|
Employee and
outside director share-based awards
|
|
266,044
|
|
|
195,661
|
|
|
189,056
|
|
|
170,131
|
|
Denominator for diluted
earnings per share
|
|
25,112,107
|
|
|
24,971,854
|
|
|
25,040,914
|
|
|
24,943,841
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
1.61
|
|
|
$
|
2.15
|
|
|
$
|
4.78
|
|
|
$
|
4.97
|
|
NOTE 3. SEGMENT INFORMATION
Management regularly evaluates the Company's global business
activities, including product and service offerings to its
customers, as well as senior management's operational and financial
responsibilities. Assessments include an analysis of how its chief
operating decision maker measures business performance and
allocates resources. As a result of this analysis, senior
management has determined the Company conducts operations across
two reportable operating segments, Tobacco Operations and
Ingredients Operations.
The Tobacco Operations segment activities involve contracting,
procuring, processing, packing, storing, and shipping leaf tobacco
for sale to, or for the account of, manufacturers of consumer
tobacco products throughout the world. Through various operating
subsidiaries located in tobacco-growing countries around the world
and significant ownership interests in unconsolidated affiliates,
the Company processes and/or sells flue-cured and burley tobaccos,
dark air-cured tobaccos, and oriental tobaccos. Flue-cured, burley,
and oriental tobaccos are used principally in the manufacture of
cigarettes, and dark air-cured tobaccos are used mainly in the
manufacture of cigars, pipe tobacco, and smokeless tobacco
products. Some of these tobacco types are also increasingly used in
the manufacture of next generation tobacco products that are
intended to provide consumers with an alternative to traditional
combustible products. The Tobacco Operations segment also provides
physical and chemical product testing for tobacco customers. A
substantial portion of the Company's Tobacco Operations' revenues
are derived from sales to a limited number of large, multinational
cigarette and cigar manufacturers.
The Ingredients Operations segment provides its customers with a
broad variety of plant-based ingredients for both human and pet
consumption. The Ingredients Operations segment utilizes a variety
of value-added manufacturing processes converting raw materials
into a wide spectrum of fruit and vegetable juices, concentrates,
dehydrated products, botanical extracts, and flavorings. Customers
for the Ingredients Operations segment include large multinational
food and beverage companies, smaller independent manufacturers, and
retail organizations. FruitSmart, Silva, and Shank's are the
primary operations for the Ingredients Operations segment.
FruitSmart supplies a broad set of juices, concentrates, pomaces,
purees, fruit fibers, seeds, seed powders, and other value-added
products to food, beverage, and flavor companies throughout
the United States and
internationally. Silva procures dehydrated vegetables, fruits, and
herbs from around the world and specializes in processing natural
materials into custom designed dehydrated vegetable and fruit-based
ingredients for a variety of end products. Shank's offers a
diversified portfolio of botanical extracts, distillates, natural
flavors, and color for industrial and private label customers
worldwide, and is known for their significant vanilla expertise.
Shank's is also equipped to offer customers custom bottling and
packaging for their products.
Universal incurs overhead expenses related to senior management,
sales, finance, legal, and other functions that are centralized at
its corporate headquarters, as well as functions performed at
several sales and administrative offices around the world. These
overhead expenses are currently allocated to the reportable
operating segments, generally on the basis of projected annual
financial and operational performance, including volumes planned to
be purchased and/or processed. Management believes this method of
allocation is currently representative of the value of the related
services provided to the operating segments. The Company currently
evaluates the performance of its segments based on operating income
after allocated overhead expenses, plus equity in the pretax
earnings of unconsolidated affiliates.
Operating results for the Company's reportable segments for each
period presented in the consolidated statements of income were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Fiscal Year Ended
March 31,
|
(in thousands of
dollars)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
SALES AND OTHER
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
696,281
|
|
|
$
|
615,578
|
|
|
$
|
2,438,775
|
|
|
$
|
2,258,260
|
|
Ingredients
Operations
|
|
74,579
|
|
|
78,401
|
|
|
309,798
|
|
|
311,564
|
|
Consolidated sales and
other operating revenues
|
|
$
|
770,860
|
|
|
$
|
693,979
|
|
|
$
|
2,748,573
|
|
|
$
|
2,569,824
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
73,477
|
|
|
$
|
53,879
|
|
|
$
|
222,352
|
|
|
$
|
172,889
|
|
Ingredients
Operations
|
|
(1,028)
|
|
|
690
|
|
|
3,936
|
|
|
10,566
|
|
Subtotal
|
|
72,449
|
|
|
54,569
|
|
|
226,288
|
|
|
183,455
|
|
Deduct: Equity in
pretax earnings of unconsolidated affiliates (1)
|
|
(4,251)
|
|
|
(2,175)
|
|
|
(756)
|
|
|
(2,383)
|
|
Restructuring and
impairment costs (2)
|
|
—
|
|
|
—
|
|
|
(3,523)
|
|
|
—
|
|
Consolidated operating
income
|
|
$
|
68,198
|
|
|
$
|
52,394
|
|
|
$
|
222,009
|
|
|
$
|
181,072
|
|
|
|
(1)
|
Equity in pretax
earnings of unconsolidated affiliates is included in reportable
segment operating income, but is reported below consolidated
operating income and excluded from that total in the consolidated
statements of income.
|
(2)
|
Restructuring and
impairment costs are excluded from reportable segment operating
income, but are included in consolidated operating income in the
consolidated statements of income.
|
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SOURCE Universal Corporation