RICHMOND, Va., Feb. 7, 2024
/PRNewswire/ -- George C. Freeman, III, Chairman, President,
and Chief Executive Officer of Universal Corporation (NYSE:UVV),
stated, "Universal Corporation again delivered strong financial and
operational performance in the third quarter of fiscal year 2024.
Operating income and net income for the quarter were up 13% and
28%, respectively, relative to the third quarter of fiscal year
2023, which helped increase operating income and net income for the
nine months of fiscal year 2024 by 20% and 13%, respectively,
compared to the same period last fiscal year.
"Our tobacco business continued to perform very well, driven by
a favorable product mix and strong demand from our customers.
Improved margins, larger crops in Africa, and strong tobacco shipments in line
with our expectations benefited our results in the nine months and
quarter ended December 31, 2023,
compared to the same periods in fiscal year 2023. Global leaf
supply for all types of leaf tobacco continues to be tight, and as
of December 31, 2023, our uncommitted
tobacco inventory was at a low level of 8%. While we expect global
leaf tobacco supply to remain tight in fiscal year 2025, in part
due to El Nino weather conditions, we believe the strength of our
diverse global footprint will help us satisfy our customers' leaf
tobacco needs.
"We continue to be encouraged by the solid progress the team is
making to expand our ingredients business. The investments we have
made to build out the research and development and corporate sales
teams are starting to gain momentum and have positioned us for
future growth. We are also pleased with the progress we are making
on the expansion of our processing capabilities at our ingredients
facility in Lancaster,
Pennsylvania. We expect those resources to be fully
operational in the third quarter of fiscal year 2025 and positively
contributing to our earnings as soon as fiscal year 2026.
"Another important achievement in fiscal year 2024 has been the
progress we made to advance Universal's global sustainability
agenda. These include the December
2023 publication of our 2023 Sustainability Report, and our
recently announced participation in a solar project that we believe
will help us meet our target to reduce operational greenhouse gas
emissions by 30 percent by 2030. We are proud of our sustainability
advances, and we continue to seek opportunities to further promote
sustainability in our business."
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
Nine Months Ended
December 31,
|
|
Change
|
(in millions of
dollars, except per share data)
|
2023
|
|
2022
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
Consolidated
Results
|
|
|
|
|
|
|
|
Sales and other
operating revenue
|
$
|
1,977.7
|
|
|
$
|
1,875.8
|
|
|
$
|
101.9
|
|
|
5
|
%
|
Cost of goods
sold
|
$
|
1,592.5
|
|
|
$
|
1,540.4
|
|
|
$
|
52.2
|
|
|
3
|
%
|
Gross Profit
Margin
|
19.5
|
%
|
|
17.9
|
%
|
|
|
|
160 bps
|
Selling, general and
administrative expenses
|
$
|
227.8
|
|
|
$
|
206.8
|
|
|
$
|
21.0
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
153.8
|
|
|
$
|
128.7
|
|
|
$
|
25.1
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
Diluted earnings (loss)
per share (as reported)
|
$
|
3.17
|
|
|
$
|
2.82
|
|
|
$
|
0.35
|
|
|
12
|
%
|
Adjusted diluted
earnings (loss) per share (non-GAAP)*
|
$
|
3.29
|
|
|
$
|
2.80
|
|
|
$
|
0.49
|
|
|
18
|
%
|
Segment
Results
|
|
|
|
|
|
|
|
Tobacco operations
sales and other operating revenues
|
$
|
1,742.5
|
|
|
$
|
1,642.7
|
|
|
$
|
99.8
|
|
|
6
|
%
|
Tobacco operations
operating income
|
$
|
148.9
|
|
|
$
|
119.0
|
|
|
$
|
29.9
|
|
|
25
|
%
|
Ingredients operations
sales and other operating revenues
|
$
|
235.2
|
|
|
$
|
233.2
|
|
|
$
|
2.1
|
|
|
1
|
%
|
Ingredients operations
operating income (loss)
|
$
|
5.0
|
|
|
$
|
9.9
|
|
|
$
|
(4.9)
|
|
|
(50)
|
%
|
|
*See Reconciliation of
Certain Non-GAAP Financial Measures in Other Items
below.
|
Net income for the nine months ended December 31, 2023, was $79.3 million, or $3.17 per diluted share, compared with
$70.3 million, or $2.82 per diluted share, for the nine months
ended December 31, 2022. Excluding
restructuring and impairment costs and certain other non-recurring
items, as detailed in Other Items below, net income increased by
$12.6 million and diluted earnings
per share increased by $0.49 for the
nine months ended December 31, 2023,
compared to the same period in the prior fiscal year. Operating
income for the nine months ended December
31, 2023, was $153.8 million,
an increase of $25.1 million,
compared to operating income of $128.7
million for the nine months ended December 31, 2022. Adjusted operating income,
detailed in Other Items below, was $157.3
million, an increase of $28.7
million, as compared to the same period in fiscal year
2023.
Net income for the quarter ended December
31, 2023, was $53.2 million,
or $2.12 per diluted share, compared
with $41.7 million, or $1.67 per diluted share, for the quarter ended
December 31, 2022. Excluding
restructuring and impairment costs and certain other non-recurring
items, as detailed in Other Items below, net income and diluted
earnings per share increased by $12.4
million and $0.49,
respectively, for the quarter ended December
31, 2023, compared to the quarter ended December 31, 2022. Operating income for the
quarter ended December 31, 2023, was
$87.5 million, an increase of
$9.9 million, compared to operating
income of $77.5 million for the
quarter ended December 31, 2022.
Adjusted operating income, detailed in Other Items below, was
$88.4 million for the third quarter
of fiscal year 2024, an increase of $10.9
million, as compared to adjusted operating income of
$77.5 million for the third quarter
of fiscal year 2023.
Consolidated revenues increased by $101.9
million to $2.0 billion and by
$26.5 million to $821.5 million, respectively, for the nine months
and quarter ended December 31, 2023,
compared to the same periods in fiscal year 2023. These changes
were 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.
TOBACCO OPERATIONS
Revenues for the Tobacco Operations segment were $1.7 billion for the nine months ended
December 31, 2023, and $743.9 million for the quarter ended December 31, 2023, up $99.8 million and $19.3
million, respectively, compared to the same periods in the
prior fiscal year. These increases were due to higher tobacco sales
prices and a favorable product mix, partially offset by lower
tobacco sales volumes.
Operating income for the Tobacco Operations segment increased by
$29.9 million to $148.9 million and by $10.5 million to $87.6
million, respectively, for the nine months and quarter ended
December 31, 2023, compared with the
nine months and quarter ended December 31,
2022. Tobacco Operations segment operating income was up
largely on higher prices and a more favorable product mix,
partially offset by lower tobacco sales volumes. In the nine months
and quarter ended December 31, 2022,
a large amount of lower margin carryover tobacco crops was shipped.
Larger African crops positively impacted the results for the
Tobacco Operations segment in both the nine months and quarter
ended December 31, 2023. Carryover
crop shipments from South America
were significantly lower in the nine months and quarter ended
December 31, 2023, compared to the
same periods in fiscal year 2023. In the nine months ended
December 31, 2023, our operations in
Europe and in Asia had improved product mixes, compared to
the nine months ended December 31,
2022. Equity earnings from our oriental tobacco joint
venture were down in the nine months ended December 31, 2023, on unfavorable foreign
currency comparisons and higher interest expenses, but increased in
the quarter ended December 31, 2023,
on an improved product mix, compared to the same periods in the
prior fiscal year. Selling, general, and administrative expenses
for the Tobacco Operations segment were higher in the nine months
and quarter ended December 31, 2023,
compared to the nine months and quarter ended December 31, 2022, primarily on higher
compensation and benefit costs, as well as unfavorable foreign
currency comparisons.
INGREDIENTS OPERATIONS
Revenues for the Ingredients Operations segment of $235.2 million for the nine months ended
December 31, 2023, and $77.6 million for the quarter ended December 31, 2023, were up $2.1 million and $7.1
million, respectively, compared to the same periods in the
prior fiscal year, as the sale of new products more than offset the
impact of lower sales prices on core products.
Operating income for the Ingredients Operations segment was
$5.0 million and $2.2 million, respectively, for the nine months
and quarter ended December 31, 2023,
compared to $9.9 million and
$0.8 million, respectively for the
nine months and quarter ended December 31,
2022.
In the quarter ended December 31,
2023, operating income for our Ingredients Operations
segment was in line with results for the same quarter in the prior
fiscal year, as incremental revenue and margin from sale of new
products offset the effects of market challenges for our core
products and higher expenses resulting from the investments that we
are making to position the segment for future growth.
Operating income for the nine months ended December 31, 2023, was lower as compared to the
same period in the prior year, mainly as the result of lower
operating income in the first quarter of the current fiscal year,
as compared to the same period in the prior fiscal year. Results
for the first quarter of fiscal 2024 were negatively impacted by
customer inventory recalibrations. Other factors that contributed
to lower segment operating income for the nine months ended
December 31, 2023, as compared to the
same period in the prior fiscal year, include lower new crop raw
material prices, inventory write-downs, and higher selling,
general, and administrative expenses, partially offset by margins
from the sale of new products. In the nine months and quarter ended
December 31, 2023, selling, general,
and administrative expenses were higher, compared to the same
periods in the prior fiscal year, due to higher compensation and
other costs related to investment in expanding sales and product
development capabilities as well as higher corporate overhead
allocations, partially offset by deferred compensation expense
incurred during the third quarter of fiscal year 2023.
OTHER ITEMS
Cost of goods sold in the nine months and quarter ended
December 31, 2023, increased by 3% to
$1.6 billion and by 1% to
$654.6 million, respectively,
compared with the nine months and quarter ended December 31, 2022, largely due to higher green
tobacco costs. Selling, general, and administrative costs for the
nine months ended December 31, 2023,
increased by $21.0 million to
$227.8 million, compared to the nine
months ended December 31, 2022, on
higher compensation costs. Selling, general, and administrative
costs for the quarter ended December 31,
2023, increased by $10.6
million to $78.6 million,
compared to the same period in the prior fiscal year, largely on
higher compensation costs and unfavorable foreign currency
comparisons. Interest expense for the nine months and quarter ended
December 31, 2023, increased by
$14.9 million to $48.1 million and by $1.3
million to $15.5 million,
respectively, compared to the same periods in the prior fiscal
year, on increased costs from higher interest rates. Interest
income for the nine months and quarter ended December 31, 2023, increased by $3.6 million to $4.0
million and by $1.6 million to
$1.7 million, respectively, compared
to the same periods in the prior fiscal year, primarily on interest
income associated with favorably resolved tax judgements at a
subsidiary as well as higher interest rates on cash deposits.
For the nine months and quarter ended December 31, 2023, our effective tax rate on
pre-tax income was 19.8% and 19.1%, respectively. For the nine
months and quarter ended December 31,
2022, our effective tax rate on pre-tax income was 19.3% and
23.2%, respectively. The consolidated effective income tax rate for
the nine months ended December 31,
2022, was affected by the sale of the idled Tanzania operations in the quarter ended
June 30, 2022, which resulted in
$1.1 million of additional income
taxes. Without this item, the consolidated effective income tax
rate for the nine months ended December 31,
2022, would have been approximately 22.0%. Additionally, the
sale of the idled Tanzania
operations resulted in a $1.8 million
reduction to consolidated interest expense related to an uncertain
tax position.
Reconciliation of Certain Non-GAAP Financial Measures
The following table sets forth certain non-recurring items
included in reported results to reconcile adjusted net income to
net income attributable to Universal Corporation:
Adjusted Operating
Income Reconciliation
|
|
|
Three Months
Ended
December 31,
|
|
Nine Months
Ended
December 31,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
As Reported:
Consolidated operating income
|
$
|
87,464
|
|
|
$
|
77,526
|
|
|
$
|
153,811
|
|
|
$
|
128,678
|
|
Restructuring and
impairment costs(1)
|
924
|
|
|
—
|
|
|
3,523
|
|
|
—
|
|
As Adjusted operating
income (Non-GAAP)
|
$
|
88,388
|
|
|
$
|
77,526
|
|
|
$
|
157,334
|
|
|
$
|
128,678
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
Attributable to Universal Corporation and Adjusted Diluted Earnings
Per Share Reconciliation
|
|
|
|
|
|
|
|
|
(in thousands except
for per share amounts)
|
Three Months
Ended
December 31,
|
|
Nine Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
As Reported: Net income
attributable to Universal Corporation
|
$
|
53,216
|
|
|
$
|
41,660
|
|
|
$
|
79,280
|
|
|
$
|
70,345
|
|
Restructuring and
impairment costs(1)
|
924
|
|
|
—
|
|
|
3,523
|
|
|
—
|
|
Interest expense
reversal on uncertain tax position from sale of operations in
Tanzania
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,816)
|
|
Total of Non-GAAP
adjustments to income before income taxes
|
924
|
|
|
—
|
|
|
3,523
|
|
|
(1,816)
|
|
Non-GAAP adjustments to
income taxes
|
|
|
|
|
|
|
|
Income tax benefit from
restructuring and impairment costs
|
(47)
|
|
|
—
|
|
|
(512)
|
|
|
—
|
|
Income tax expense from
sale of operations in Tanzania
|
—
|
|
|
—
|
|
|
—
|
|
|
1,132
|
|
Total of income tax
impacts for Non-GAAP adjustments to income before income
taxes
|
(47)
|
|
|
—
|
|
|
(512)
|
|
|
1,132
|
|
As adjusted: Net income
attributable to Universal Corporation (Non-GAAP)
|
$
|
54,093
|
|
|
$
|
41,660
|
|
|
$
|
82,291
|
|
|
$
|
69,661
|
|
As reported: Diluted
earnings per share
|
$
|
2.12
|
|
|
$
|
1.67
|
|
|
$
|
3.17
|
|
|
$
|
2.82
|
|
As adjusted: Diluted
earnings per share (Non-GAAP)
|
$
|
2.16
|
|
|
$
|
1.67
|
|
|
$
|
3.29
|
|
|
$
|
2.80
|
|
|
(1)
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.
|
SUSTAINABILITY
Universal is taking important steps to advance its
sustainability agenda as Universal continues to monitor and address
the environmental and social impacts of its businesses. In
December 2023, we published our 2023
Sustainability Report which details efforts we have taken to
promote the sustainability of our operations and contribute to
global sustainability goals. The report focuses on our primary
sustainability topics as well as our environmental, social, and
supply chain goals. We also announced in January 2024 an investment in a solar project
that is intended to address emissions from 100 percent of
Universal's annual purchased electricity demand in the United States. We believe that this is a
meaningful step towards meeting our science-based environmental
target to reduce operational greenhouse gases emissions by 30
percent by 2030.
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; its ability to
maintain effective information technology systems and safeguard
confidential information; anticipated levels of demand for and
supply of its 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, such as the conflict in Ukraine; 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 its 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 Report on Form 10-K for the years ended
March 31, 2023. 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
February 7, 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 May 7, 2024. A
taped replay of the call will be available through February 20, 2023, by dialing (877) 674-7070. The
confirmation number to access the replay is 848937.
Universal Corporation (NYSE: UVV), headquartered in Richmond, Virginia, is a global
business-to-business agri-products supplier to consumer product
manufacturers, operating in over 30 countries on five
continents. We strive to be the supplier of choice for our
customers by leveraging our farmer base, our commitment to a
sustainable supply chain, and our ability to provide high-quality,
customized, traceable, value-added agri-products essential for our
customers' requirements. We find innovative solutions to serve
our customers and have been meeting their agri-product needs for
more than 100 years. Our principal focus since our founding in
1918 has been tobacco, and we are the leading global leaf tobacco
supplier. Through our plant-based ingredients platform, we provide
a variety of value-added manufacturing processes to produce
high-quality, specialty vegetable- and fruit-based ingredients as
well as botanical extracts and flavorings for the food and beverage
end markets. For more information, visit www.universalcorp.com.
UNIVERSAL
CORPORATION
CONSOLIDATED
STATEMENTS OF INCOME
(in thousands of
dollars, except per share data)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Nine Months
Ended
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Sales and other
operating revenues
|
|
$
|
821,507
|
|
|
$
|
795,039
|
|
|
$
|
1,977,713
|
|
|
$
|
1,875,845
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
654,556
|
|
|
649,539
|
|
|
1,592,533
|
|
|
1,540,368
|
|
Selling, general and
administrative expenses
|
|
78,563
|
|
|
67,974
|
|
|
227,846
|
|
|
206,799
|
|
Restructuring and
impairment costs
|
|
924
|
|
|
—
|
|
|
3,523
|
|
|
—
|
|
Operating
income
|
|
87,464
|
|
|
77,526
|
|
|
153,811
|
|
|
128,678
|
|
Equity in pretax
earnings (loss) of unconsolidated affiliates
|
|
1,384
|
|
|
345
|
|
|
(3,495)
|
|
|
208
|
|
Other non-operating
income (expense)
|
|
726
|
|
|
(69)
|
|
|
2,179
|
|
|
(208)
|
|
Interest
income
|
|
1,720
|
|
|
77
|
|
|
4,038
|
|
|
407
|
|
Interest
expense
|
|
15,525
|
|
|
14,265
|
|
|
48,121
|
|
|
33,259
|
|
Income before income
taxes and other items
|
|
75,769
|
|
|
63,614
|
|
|
108,412
|
|
|
95,826
|
|
Income taxes
|
|
14,482
|
|
|
12,253
|
|
|
21,498
|
|
|
22,258
|
|
Net income
|
|
61,287
|
|
|
51,361
|
|
|
86,914
|
|
|
73,568
|
|
Less: net loss (income)
attributable to noncontrolling interests in subsidiaries
|
|
(8,071)
|
|
|
(9,701)
|
|
|
(7,634)
|
|
|
(3,223)
|
|
Net income
attributable to Universal Corporation
|
|
$
|
53,216
|
|
|
$
|
41,660
|
|
|
$
|
79,280
|
|
|
$
|
70,345
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.14
|
|
|
$
|
1.68
|
|
|
$
|
3.19
|
|
|
$
|
2.84
|
|
Diluted
|
|
$
|
2.12
|
|
|
$
|
1.67
|
|
|
$
|
3.17
|
|
|
$
|
2.82
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands of
dollars)
|
|
|
|
December
31,
|
|
December
31,
|
|
March
31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
74,102
|
|
|
$
|
71,283
|
|
|
$
|
64,690
|
|
Accounts receivable,
net
|
|
435,306
|
|
|
536,650
|
|
|
402,073
|
|
Advances to suppliers,
net
|
|
159,481
|
|
|
163,237
|
|
|
170,801
|
|
Accounts
receivable—unconsolidated affiliates
|
|
33,109
|
|
|
5,920
|
|
|
12,210
|
|
Inventories—at lower of
cost or net realizable value:
|
|
|
|
|
|
|
Tobacco
|
|
1,009,030
|
|
|
866,380
|
|
|
833,876
|
|
Other
|
|
196,246
|
|
|
211,561
|
|
|
202,907
|
|
Prepaid income
taxes
|
|
18,304
|
|
|
17,363
|
|
|
16,493
|
|
Other current
assets
|
|
88,051
|
|
|
79,495
|
|
|
99,840
|
|
Total current
assets
|
|
2,013,629
|
|
|
1,951,889
|
|
|
1,802,890
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
|
|
Land
|
|
26,516
|
|
|
24,142
|
|
|
24,926
|
|
Buildings
|
|
319,740
|
|
|
305,215
|
|
|
311,138
|
|
Machinery and
equipment
|
|
720,816
|
|
|
679,970
|
|
|
689,220
|
|
|
|
1,067,072
|
|
|
1,009,327
|
|
|
1,025,284
|
|
Less accumulated
depreciation
|
|
(706,642)
|
|
|
(663,333)
|
|
|
(674,122)
|
|
|
|
360,430
|
|
|
345,994
|
|
|
351,162
|
|
Other assets
|
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
34,913
|
|
|
42,337
|
|
|
40,505
|
|
Goodwill,
net
|
|
213,891
|
|
|
213,881
|
|
|
213,922
|
|
Other intangibles,
net
|
|
71,697
|
|
|
82,917
|
|
|
80,101
|
|
Investments in
unconsolidated affiliates
|
|
75,335
|
|
|
72,565
|
|
|
76,184
|
|
Deferred income
taxes
|
|
14,855
|
|
|
10,005
|
|
|
13,091
|
|
Pension
asset
|
|
11,586
|
|
|
12,740
|
|
|
9,984
|
|
Other noncurrent
assets
|
|
37,538
|
|
|
32,575
|
|
|
51,343
|
|
|
|
459,815
|
|
|
467,020
|
|
|
485,130
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,833,874
|
|
|
$
|
2,764,903
|
|
|
$
|
2,639,182
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands of
dollars)
|
|
|
|
December
31,
|
|
December
31,
|
|
March
31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Notes payable and
overdrafts
|
|
$
|
365,327
|
|
|
$
|
348,073
|
|
|
$
|
195,564
|
|
Accounts
payable
|
|
89,301
|
|
|
92,305
|
|
|
83,213
|
|
Accounts
payable—unconsolidated affiliates
|
|
122
|
|
|
57
|
|
|
5,830
|
|
Customer advances and
deposits
|
|
19,620
|
|
|
5,365
|
|
|
3,061
|
|
Accrued
compensation
|
|
27,967
|
|
|
21,670
|
|
|
33,108
|
|
Income taxes
payable
|
|
5,499
|
|
|
3,715
|
|
|
3,274
|
|
Current portion of
operating lease liabilities
|
|
10,403
|
|
|
11,160
|
|
|
11,404
|
|
Accrued expenses and
other current liabilities
|
|
106,635
|
|
|
115,882
|
|
|
106,533
|
|
Current portion of
long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
Total current
liabilities
|
|
624,874
|
|
|
598,227
|
|
|
441,987
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
617,225
|
|
|
616,750
|
|
|
616,809
|
|
Pensions and other
postretirement benefits
|
|
43,301
|
|
|
50,773
|
|
|
42,769
|
|
Long-term operating
lease liabilities
|
|
22,050
|
|
|
27,030
|
|
|
25,540
|
|
Other long-term
liabilities
|
|
26,609
|
|
|
22,797
|
|
|
32,512
|
|
Deferred income
taxes
|
|
41,165
|
|
|
48,584
|
|
|
42,613
|
|
Total
liabilities
|
|
1,375,224
|
|
|
1,364,161
|
|
|
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 24,559,181 shares
issued
and outstanding at
December 31, 2023 (24,555,361 at December 31, 2022 and
24,555,361
at March 31,
2023)
|
|
344,467
|
|
|
335,160
|
|
|
337,247
|
|
Retained
earnings
|
|
1,152,863
|
|
|
1,102,887
|
|
|
1,136,898
|
|
Accumulated other
comprehensive loss
|
|
(80,254)
|
|
|
(77,255)
|
|
|
(77,057)
|
|
Total Universal
Corporation shareholders' equity
|
|
1,417,076
|
|
|
1,360,792
|
|
|
1,397,088
|
|
Noncontrolling
interests in subsidiaries
|
|
41,574
|
|
|
39,950
|
|
|
39,864
|
|
Total shareholders'
equity
|
|
1,458,650
|
|
|
1,400,742
|
|
|
1,436,952
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,833,874
|
|
|
$
|
2,764,903
|
|
|
$
|
2,639,182
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands of
dollars)
|
|
|
|
|
|
|
|
Nine Months Ended
December 31,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
|
86,914
|
|
|
$
|
73,568
|
|
Adjustments to
reconcile net income (loss) to net cash used by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
43,843
|
|
|
42,844
|
|
Net provision for
losses (recoveries) on advances to suppliers
|
|
9,950
|
|
|
6,127
|
|
Inventory
writedowns
|
|
4,813
|
|
|
10,782
|
|
Stock-based
compensation expense
|
|
10,625
|
|
|
6,630
|
|
Foreign currency
remeasurement (gain) loss, net
|
|
3,227
|
|
|
(1,335)
|
|
Foreign currency
exchange contracts
|
|
2,655
|
|
|
14,600
|
|
Deferred income
taxes
|
|
(2,078)
|
|
|
470
|
|
Equity in net loss
(income) of unconsolidated affiliates, net of dividends
|
|
2,055
|
|
|
5,717
|
|
Restructuring and
impairment costs
|
|
3,523
|
|
|
—
|
|
Restructuring
payments
|
|
(999)
|
|
|
—
|
|
Other, net
|
|
734
|
|
|
(4,967)
|
|
Changes in operating
assets and liabilities, net:
|
|
(211,999)
|
|
|
(338,286)
|
|
Net cash provided
(used) by operating activities
|
|
(46,737)
|
|
|
(183,850)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(47,732)
|
|
|
(39,430)
|
|
Proceeds from sale of
business, net of cash held by the business
|
|
3,757
|
|
|
3,245
|
|
Proceeds from sale of
property, plant and equipment
|
|
1,932
|
|
|
1,634
|
|
Net cash used by
investing activities
|
|
(42,043)
|
|
|
(34,551)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Issuance of short-term
debt, net
|
|
170,433
|
|
|
166,109
|
|
Issuance of long-term
debt
|
|
—
|
|
|
123,481
|
|
Repayment of long-term
debt
|
|
—
|
|
|
(23,481)
|
|
Dividends paid to
noncontrolling interests
|
|
(5,845)
|
|
|
(6,825)
|
|
Repurchase of common
stock
|
|
(4,744)
|
|
|
(3,448)
|
|
Dividends paid on
common stock
|
|
(58,755)
|
|
|
(57,993)
|
|
Proceeds from
termination of interest rate swap agreements
|
|
—
|
|
|
11,786
|
|
Other
|
|
(2,973)
|
|
|
(6,337)
|
|
Net cash provided
(used) by financing activities
|
|
98,116
|
|
|
203,292
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, restricted cash and cash equivalents
|
|
76
|
|
|
(1,256)
|
|
Net increase (decrease)
in cash, restricted cash and cash equivalents
|
|
9,412
|
|
|
(16,365)
|
|
Cash, restricted cash
and cash equivalents at beginning of year
|
|
64,690
|
|
|
87,648
|
|
|
|
|
|
|
Cash, restricted
cash and cash equivalents at end of period
|
|
$
|
74,102
|
|
|
$
|
71,283
|
|
NOTE 1. BASIS OF PRESENTATION
Universal Corporation, which together with its subsidiaries is
referred to herein as "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 (the "2023 Annual Report on Form
10-K").
NOTE 2. EARNINGS PER SHARE
The following table sets forth the computation of basic and
diluted earnings per share:
|
|
Three Months
Ended
December 31,
|
|
Nine Months
Ended
December 31,
|
(in thousands,
except share and per share data)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
|
|
|
|
|
|
|
|
Numerator for basic
earnings per share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
53,216
|
|
|
$
|
41,660
|
|
|
$
|
79,280
|
|
|
$
|
70,345
|
|
|
|
|
|
|
|
|
|
|
Denominator for
basic earnings per share
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,849,498
|
|
|
24,770,294
|
|
|
24,853,774
|
|
|
24,772,827
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
2.14
|
|
|
$
|
1.68
|
|
|
$
|
3.19
|
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
|
|
|
Numerator for
diluted earnings per share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
53,216
|
|
|
$
|
41,660
|
|
|
$
|
79,280
|
|
|
$
|
70,345
|
|
|
|
|
|
|
|
|
|
|
Denominator for
diluted earnings per share:
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,849,498
|
|
|
24,770,294
|
|
|
24,853,774
|
|
|
24,772,827
|
|
Effect of dilutive
securities
|
|
|
|
|
|
|
|
|
Employee and outside
director share-based awards
|
|
206,331
|
|
|
158,132
|
|
|
163,393
|
|
|
161,620
|
|
Denominator for diluted
earnings per share
|
|
25,055,829
|
|
|
24,928,426
|
|
|
25,017,167
|
|
|
24,934,447
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
2.12
|
|
|
$
|
1.67
|
|
|
$
|
3.17
|
|
|
$
|
2.82
|
|
NOTE 3. SEGMENT INFORMATION
The Company conducts operations across two reportable operating
segments, Tobacco Operations and Ingredients Operations.
The Tobacco Operations segment activities involve selecting,
procuring, processing, packing, storing, shipping, and financing
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 non-combustible 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 and smoke
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, flavors, and botanical extracts. 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 manufactures fruit and vegetable juices, purees,
concentrates, essences, fibers, seeds, seed oils, and seed powders.
Silva is primarily a dehydrated product manufacturer of fruit and
vegetable based flakes, dices, granules, powders, and blends.
Shank's manufactures flavors and botanical extracts and also offers
bottling and custom packaging for customers.
The Company currently evaluates the performance of its segments
based on operating income after allocated overhead expenses, plus
equity in the pretax earnings (loss) of unconsolidated affiliates.
Operating results for the Company's reportable segments for each
period presented in the consolidated statements of income and
comprehensive income were as follows.
|
|
Three Months
Ended
December 31,
|
|
Nine Months
Ended
December 31,
|
(in thousands of
dollars)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
SALES AND OTHER
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
743,933
|
|
|
$
|
724,589
|
|
|
$
|
1,742,494
|
|
|
$
|
1,642,682
|
|
Ingredients
Operations
|
|
77,574
|
|
|
70,450
|
|
|
235,219
|
|
|
233,163
|
|
Consolidated sales and
other operating revenues
|
|
$
|
821,507
|
|
|
$
|
795,039
|
|
|
$
|
1,977,713
|
|
|
$
|
1,875,845
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
87,605
|
|
|
$
|
77,104
|
|
|
$
|
148,875
|
|
|
$
|
119,010
|
|
Ingredients
Operations
|
|
2,167
|
|
|
767
|
|
|
4,964
|
|
|
9,876
|
|
Segment operating
income
|
|
89,772
|
|
|
77,871
|
|
|
153,839
|
|
|
128,886
|
|
Deduct: Equity in
pretax (earnings) loss of unconsolidated affiliates
(1)
|
|
(1,384)
|
|
|
(345)
|
|
|
3,495
|
|
|
(208)
|
|
Restructuring and impairment costs
(2)
|
|
(924)
|
|
|
—
|
|
|
(3,523)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating
income
|
|
$
|
87,464
|
|
|
$
|
77,526
|
|
|
$
|
153,811
|
|
|
$
|
128,678
|
|
|
|
(1)
|
Equity in pretax
earnings (loss) of unconsolidated affiliates is included in segment
operating income (Tobacco Operations), but is reported below
consolidated operating income and excluded from that total in the
consolidated statements of income and comprehensive
income.
|
(2)
|
Restructuring and
impairment costs are excluded from segment operating income, but
are included in consolidated operating income in the consolidated
statements of income and comprehensive income.
|
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SOURCE Universal Corporation