RICHMOND, Va., Nov. 2, 2023
/PRNewswire/ -- George C. Freeman, III, Chairman, President,
and Chief Executive Officer of Universal Corporation (NYSE:UVV),
stated, "Our fiscal year 2024 is developing very well with
operating income for the six months and quarter ended September 30, 2023, up 30% and 46%, respectively,
compared to the six months and quarter ended September 30, 2022. Gross profit margins also
rebounded nicely in the first half of fiscal year 2024, compared
with the same period in fiscal year 2023, with our ingredients
companies making a positive contribution. Our Tobacco Operations
segment delivered strong performance in the first half of fiscal
year 2024 on robust demand for leaf tobacco from our customers.
Results for the Ingredients Operations segment were also up in the
second quarter of fiscal year 2024, compared to the same quarter in
the prior fiscal year. This segment saw some supply chain
normalization, which stabilized demand from certain of our
customers and generated better results in the second quarter of
fiscal year 2024, compared to the first quarter of fiscal year 2024
when the segment experienced soft customer demand.
"Strong demand for leaf tobacco from our customers and a
favorable tobacco product mix benefited our results for the first
half of fiscal year 2024. Leaf tobacco margins improved in the
first half of fiscal year 2024, despite lower leaf tobacco sales
volumes, as we had fewer shipments of lower margin tobacco,
compared to the first half of fiscal year 2023. Segment operating
income for our Tobacco Operations segment was up 46% and 55% for
the six months and quarter ended September
30, 2023, respectively, compared to the six months and
quarter ended September 30, 2022. Our
uncommitted tobacco inventory level of 12% at September 30, 2023, remained low, and global leaf
tobacco supply continues to be tight for all types of tobacco.
Looking ahead, we continue to expect that similar to fiscal year
2023, our tobacco shipments will be strongly weighted to the
second half of the fiscal year 2024. We also believe our
uncommitted tobacco inventory levels will remain low for the rest
of fiscal year 2024.
"We were pleased to see demand from certain customers for our
ingredients products stabilizing in the quarter ended September 30, 2023. Although results for the
Ingredients Operations segment were lower in the six months ended
September 30, 2023, compared to the
six months ended September 30, 2022,
we believe that our customers have been working through their
excess inventory levels, and raw material prices, such as apple
prices, are coming down. While navigating evolving market dynamics,
we remain focused on and encouraged by both our core and new
business opportunities with existing and first-time ingredients
customers. We continue to strongly believe that our commercial and
research and development efforts coupled with our expanded range of
capabilities that we can offer our customers due to our ongoing
investments in our ingredients platform will strengthen our
business for the future.
"Our costs continued to be elevated in the first half of fiscal
year 2024, compared to the first half of fiscal year 2023. Interest
expense was up over $13 million
primarily on higher interest rates, and green tobacco prices were
also higher. Despite the higher costs, we have been able to reduce
our debt levels in fiscal year 2024. At September 30, 2023, our net debt levels, which we
define as the sum of notes payable and overdrafts, long-term debt,
and customer advances and deposits, less cash and cash equivalents,
declined by about $70 million,
compared to our net debt levels at September
30, 2022.
"Universal has a fundamental responsibility to its stakeholders
to achieve high standards of environmental performance to support
sustainable operations, which we demonstrate through our supplier
engagement and disclosures on climate change, water stewardship,
and forestry. Our record is highlighted by 15 years of
participation in CDP disclosure, the establishment of science-based
targets, and recognition by CDP as a Supplier Engagement Leader. To
add to our commitment to environmental sustainability, we have
committed to water stewardship throughout our operations. To
Universal, water stewardship is water usage that is socially and
culturally equitable, environmentally sustainable, economically
beneficial, and achieved through a multi–stakeholder process. Our
Nominating and Corporate Governance Committee and our management
team have approved a Water Stewardship policy to guide and publicly
commit to water stewardship through our global operations."
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FINANCIAL
HIGHLIGHTS
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Six Months Ended
September 30,
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Change
|
(in millions of
dollars, except per share data)
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2023
|
|
2022
|
|
$
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%
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|
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|
|
|
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|
Consolidated
Results
|
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Sales and other
operating revenue
|
$
|
1,156.2
|
|
|
$
|
1,080.8
|
|
|
$
|
75.4
|
|
|
7
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%
|
Cost of goods
sold
|
$
|
938.0
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|
|
$
|
890.8
|
|
|
$
|
47.1
|
|
|
5
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%
|
Gross Profit
Margin
|
18.9
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%
|
|
17.6
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%
|
|
|
|
130 bps
|
Selling, general and
administrative expenses
|
$
|
149.3
|
|
|
$
|
138.8
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|
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$
|
10.5
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|
|
8
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%
|
Operating income
(loss)
|
$
|
66.3
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|
|
$
|
51.2
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|
$
|
15.2
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|
|
30
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%
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Diluted earnings (loss)
per share (as reported)
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$
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1.04
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$
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1.15
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|
$
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(0.11)
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(10)
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%
|
Adjusted diluted
earnings (loss) per share (non-GAAP)*
|
$
|
1.13
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|
|
$
|
1.13
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|
|
$
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—
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—
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%
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Segment
Results
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|
Tobacco operations
sales and other operating revenues
|
$
|
998.6
|
|
|
$
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918.1
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|
|
$
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80.5
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|
|
9
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%
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Tobacco operations
operating income
|
$
|
61.3
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|
|
$
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41.9
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$
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19.4
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|
46
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%
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Ingredients operations
sales and other operating revenues
|
$
|
157.6
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|
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$
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162.7
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|
$
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(5.1)
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(3)
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%
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Ingredient operations
operating income (loss)
|
$
|
2.8
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|
|
$
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9.1
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$
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(6.3)
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(69)
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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 six months ended September 30, 2023, was $26.1 million, or $1.04 per diluted share, compared with
$28.7 million, or $1.15 per diluted share, for the six months ended
September 30, 2022. Excluding
restructuring and impairment costs and certain other non-recurring
items, detailed in Other Items below, net income increased by
$0.2 million and diluted earnings per
share were flat for the six months ended September 30, 2023, compared to the six months
ended September 30, 2022. Operating
income of $66.3 million for the six
months ended September 30, 2023,
increased by $15.2 million, compared
to operating income of $51.2 million
for the six months ended September 30,
2022. Adjusted operating income, detailed in Other Items
below, of $68.9 million increased by
$17.8 million for the first half of
fiscal year 2024, compared to adjusted operating income of
$51.2 million for the first half of
fiscal year 2023.
Net income for the quarter ended September 30, 2023, was $28.1 million, or $1.12 per diluted share, compared with
$21.9 million, or $0.88 per diluted share, for the quarter ended
September 30, 2022. Excluding
restructuring and impairment costs and certain other non-recurring
items, detailed in Other Items below, net income and diluted
earnings per share increased by $8.4
million and $0.33,
respectively, for the quarter ended September 30, 2023, compared to the quarter ended
September 30, 2022. Operating income
of $55.3 million for the quarter
ended September 30, 2023, increased
by $17.4 million, compared to
operating income of $37.9 million for
the quarter ended September 30, 2022.
Adjusted operating income, detailed in Other Items below, of
$57.9 million increased by
$20.0 million for the second quarter
of fiscal year 2024, compared to adjusted operating income of
$37.9 million for the second quarter
of fiscal year 2023.
Consolidated revenues increased by $75.4
million to $1.2 billion and
decreased slightly by $12.5 million
to $638.5 million, respectively, for
the six months and quarter ended September
30, 2023, compared to the same periods in fiscal year 2023.
These changes were largely due to lower tobacco sales volumes but
higher tobacco sales prices and a favorable product mix in the
Tobacco Operations segment.
TOBACCO OPERATIONS
Operating income for the Tobacco Operations segment increased by
$19.4 million to $61.3 million and by $18.6
million to $52.4 million,
respectively, for the six months and quarter ended September 30, 2023, compared with the six months
and quarter ended September 30, 2022.
Tobacco Operations segment operating income was up despite lower
tobacco sales volumes largely on a more favorable product mix in
the six months and quarter ended September
30, 2023, compared to the same periods in the prior fiscal
year, when a large amount of lower margin carryover tobacco crops
were shipped. Carryover crop shipments were significantly lower
while current crop shipments were higher in both South America and Africa in the six months and quarter ended
September 30, 2023, compared to the
same periods in fiscal year 2023. In Europe, sales volumes and revenues were up due
to shipment timing in the six months and quarter ended September 30, 2023, compared to the same periods
in the prior fiscal year. In Asia,
our operations also saw an improved product mix in the six months
and quarter ended September 30, 2023,
compared to the six months and quarter ended September 30, 2022. Equity earnings from our
oriental tobacco joint venture were down significantly in the six
months and quarter ended September 30,
2023, compared to the same periods in the prior fiscal year,
on unfavorable foreign currency comparisons and higher interest
expenses. Selling, general, and administrative expenses for the
Tobacco Operations segment were higher in the six months ended
September 30, 2023, compared to six
months ended September 30, 2022,
primarily on higher compensation costs partially offset by
favorable foreign currency comparisons. In the quarter ended
September 30, 2023, selling, general,
and administrative expenses were down, compared to the quarter
ended September 30, 2022, largely on
favorable foreign currency comparisons. Revenues for the Tobacco
Operations segment of $998.6 million
for the six months ended September 30,
2023, and $554.7 million for
the quarter ended September 30, 2023,
were up $80.5 million and down
$15.4 million, respectively, compared
to the same periods in the prior fiscal year. These changes were
largely due to lower tobacco sales volumes, higher tobacco sales
prices, and a favorable product mix.
INGREDIENTS OPERATIONS
Operating income for the Ingredients Operations segment was
$2.8 million and $4.8 million, respectively, for the six months
and quarter ended September 30, 2023,
compared to $9.1 million and
$4.5 million, respectively for the
six months and quarter ended September 30,
2022. Operating income for the Ingredients Operations
segment was up slightly for the quarter ended September 30, 2023, compared to the quarter end
September 30, 2022, on the
stabilization of sales volumes for certain customers. Results for
our Ingredients Operations segment were down in the six months
ended September 30, 2023, compared to
the six months ended September 30,
2022, on lower demand due to customers continuing to carry
high inventory levels. Prices for some key raw materials were down
in the six months ended September 30,
2023, compared to the six months ended September 30, 2022. Inventory write-downs for the
Ingredients Operations segment were higher in the six months ended
September 30, 2023, compared to the
same period in the prior fiscal year, on the changes in customer
demand and new crop raw material prices. Selling, general, and
administrative expenses for this segment increased in the six
months and quarter ended September 30,
2023, compared to the same periods in the prior fiscal year,
largely on higher labor costs and investments in product
development capabilities. For the quarter ended September 30, 2023, revenues for the Ingredients
Operations segment of $83.8 million
were up $2.9 million, compared to the
quarter ended September 30, 2022,
largely on higher sales volumes partly from new business. Revenues
for the Ingredients Operations segment of $157.6 million for six months ended September 30, 2023, compared to the six months
ended September 30, 2022, were down
$5.1 million, largely on lower sales
volumes and sales prices.
OTHER ITEMS
Cost of goods sold in the six months ended September 30, 2023, increased by 5% to
$938.0 million, compared with the six
months ended September 30, 2022,
largely due to higher green tobacco costs. Cost of goods sold in
the quarter ended September 30, 2023,
decreased by 6% to $506.8 million,
compared with the quarter ended September
30, 2022, primarily on changes in tobacco sales volumes and
product mix. Selling, general, and administrative costs for the six
months ended September 30, 2023,
increased by $10.5 million to
$149.3 million, compared to the six
months ended September 30, 2022, on
higher compensation costs partially offset by favorable foreign
currency comparisons. Selling, general, and administrative costs
for the quarter ended September 30,
2023, increased by $1.4
million to $73.8 million,
compared to the same period in the prior fiscal year, largely on
favorable foreign currency comparisons offset by higher
compensation costs and provisions on advances to suppliers.
Interest expense for the six months and quarter ended September 30, 2023, compared to the same periods
in the prior fiscal year, increased by $13.6
million to $32.6 million and
by $4.8 million to $17.1 million, respectively, on increased costs
from higher interest rates.
For both the six months and quarter ended September 30, 2023, our effective tax rate on
pre-tax income was 21.5%. For the six months and quarter ended
September 30, 2022, our effective tax
rate on pre-tax income was 31.1% and 25.5%, respectively. The
consolidated effective income tax rate for the six months ended
September 30, 2022, was affected by
the sale of our 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 six months ended
September 30, 2022, would have been
approximately 27.5%. 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.
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:
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Adjusted Operating
Income Reconciliation
|
|
|
Three Months
Ended
September 30,
|
|
Six Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
As Reported:
Consolidated operating income
|
$
|
55,312
|
|
|
$
|
37,886
|
|
|
$
|
66,347
|
|
|
$
|
51,152
|
|
Restructuring and
impairment costs(1)
|
2,599
|
|
|
—
|
|
|
2,599
|
|
|
—
|
|
As Adjusted operating
income (Non-GAAP)
|
$
|
57,911
|
|
|
$
|
37,886
|
|
|
$
|
68,946
|
|
|
$
|
51,152
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
Attributable to Universal Corporation and Adjusted Diluted Earnings
Per Share Reconciliation
|
|
|
|
|
|
|
|
|
(in thousands except
for per share amounts)
|
Three Months
Ended
September 30,
|
|
Six Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
As Reported: Net income
attributable to Universal Corporation
|
$
|
28,128
|
|
|
$
|
21,855
|
|
|
$
|
26,064
|
|
|
$
|
28,685
|
|
Restructuring and
impairment costs(1)
|
2,599
|
|
|
—
|
|
|
2,599
|
|
|
—
|
|
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
|
2,599
|
|
|
—
|
|
|
2,599
|
|
|
(1,816)
|
|
Non-GAAP adjustments to
income taxes
|
|
|
|
|
|
|
|
Income tax benefit from
restructuring and impairment costs
|
(465)
|
|
|
—
|
|
|
(465)
|
|
|
—
|
|
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
|
(465)
|
|
|
—
|
|
|
(465)
|
|
|
1,132
|
|
As adjusted: Net income
attributable to Universal Corporation (Non-GAAP)
|
$
|
30,262
|
|
|
$
|
21,855
|
|
|
$
|
28,198
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|
|
$
|
28,001
|
|
As reported: Diluted
earnings per share
|
$
|
1.12
|
|
|
$
|
0.88
|
|
|
$
|
1.04
|
|
|
$
|
1.15
|
|
As adjusted: Diluted
earnings per share (Non-GAAP)
|
$
|
1.21
|
|
|
$
|
0.88
|
|
|
$
|
1.13
|
|
|
$
|
1.13
|
|
|
|
(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.
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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, impacts of the
COVID-19 pandemic and subvariants; 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
November 2, 2023, 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 February 2, 2024. A taped
replay of the call will be available through November 16, 2023, by dialing (877) 674-7070. The
confirmation number to access the replay is 801368.
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)
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Six Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Sales and other
operating revenues
|
|
$
|
638,484
|
|
|
$
|
650,984
|
|
|
$
|
1,156,206
|
|
|
$
|
1,080,806
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
506,767
|
|
|
540,725
|
|
|
937,977
|
|
|
890,829
|
|
Selling, general and
administrative expenses
|
|
73,806
|
|
|
72,373
|
|
|
149,283
|
|
|
138,825
|
|
Restructuring and
impairment costs
|
|
2,599
|
|
|
—
|
|
|
2,599
|
|
|
—
|
|
Operating
income
|
|
55,312
|
|
|
37,886
|
|
|
66,347
|
|
|
51,152
|
|
Equity in pretax
earnings (loss) of unconsolidated affiliates
|
|
(713)
|
|
|
416
|
|
|
(4,879)
|
|
|
(137)
|
|
Other non-operating
income (expense)
|
|
728
|
|
|
(77)
|
|
|
1,453
|
|
|
(139)
|
|
Interest
income
|
|
953
|
|
|
93
|
|
|
2,318
|
|
|
330
|
|
Interest
expense
|
|
17,053
|
|
|
12,270
|
|
|
32,596
|
|
|
18,994
|
|
Income before income
taxes and other items
|
|
39,227
|
|
|
26,048
|
|
|
32,643
|
|
|
32,212
|
|
Income taxes
|
|
8,439
|
|
|
6,642
|
|
|
7,016
|
|
|
10,005
|
|
Net income
|
|
30,788
|
|
|
19,406
|
|
|
25,627
|
|
|
22,207
|
|
Less: net loss (income)
attributable to noncontrolling interests in subsidiaries
|
|
(2,660)
|
|
|
2,449
|
|
|
437
|
|
|
6,478
|
|
Net income
attributable to Universal Corporation
|
|
$
|
28,128
|
|
|
$
|
21,855
|
|
|
$
|
26,064
|
|
|
$
|
28,685
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.13
|
|
|
$
|
0.88
|
|
|
$
|
1.05
|
|
|
$
|
1.16
|
|
Diluted
|
|
$
|
1.12
|
|
|
$
|
0.88
|
|
|
$
|
1.04
|
|
|
$
|
1.15
|
|
UNIVERSAL
CORPORATION
|
CONSOLIDATED BALANCE
SHEETS
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
March
31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
99,683
|
|
|
$
|
58,855
|
|
|
$
|
64,690
|
|
Accounts receivable,
net
|
|
368,924
|
|
|
469,406
|
|
|
402,073
|
|
Advances to suppliers,
net
|
|
105,637
|
|
|
106,475
|
|
|
170,801
|
|
Accounts
receivable—unconsolidated affiliates
|
|
55,409
|
|
|
51,179
|
|
|
12,210
|
|
Inventories—at lower of
cost or net realizable value:
|
|
|
|
|
|
|
Tobacco
|
|
1,086,240
|
|
|
968,167
|
|
|
833,876
|
|
Other
|
|
212,268
|
|
|
234,581
|
|
|
202,907
|
|
Prepaid income
taxes
|
|
23,918
|
|
|
14,820
|
|
|
16,493
|
|
Other current
assets
|
|
95,634
|
|
|
87,910
|
|
|
99,840
|
|
Total current
assets
|
|
2,047,713
|
|
|
1,991,393
|
|
|
1,802,890
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
|
|
Land
|
|
26,262
|
|
|
23,998
|
|
|
24,926
|
|
Buildings
|
|
316,180
|
|
|
300,925
|
|
|
311,138
|
|
Machinery and
equipment
|
|
705,977
|
|
|
659,409
|
|
|
689,220
|
|
|
|
1,048,419
|
|
|
984,332
|
|
|
1,025,284
|
|
Less accumulated
depreciation
|
|
(691,811)
|
|
|
(643,584)
|
|
|
(674,122)
|
|
|
|
356,608
|
|
|
340,748
|
|
|
351,162
|
|
Other assets
|
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
36,318
|
|
|
43,278
|
|
|
40,505
|
|
Goodwill,
net
|
|
213,856
|
|
|
213,803
|
|
|
213,922
|
|
Other intangibles,
net
|
|
74,475
|
|
|
86,129
|
|
|
80,101
|
|
Investments in
unconsolidated affiliates
|
|
70,618
|
|
|
70,878
|
|
|
76,184
|
|
Deferred income
taxes
|
|
16,192
|
|
|
18,180
|
|
|
13,091
|
|
Pension
asset
|
|
10,650
|
|
|
12,740
|
|
|
9,984
|
|
Other noncurrent
assets
|
|
35,342
|
|
|
36,848
|
|
|
51,343
|
|
|
|
457,451
|
|
|
481,856
|
|
|
485,130
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,861,772
|
|
|
$
|
2,813,997
|
|
|
$
|
2,639,182
|
|
UNIVERSAL
CORPORATION
|
CONSOLIDATED BALANCE
SHEETS
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
March
31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Notes payable and
overdrafts
|
|
$
|
301,379
|
|
|
$
|
582,382
|
|
|
$
|
195,564
|
|
Accounts
payable
|
|
70,737
|
|
|
63,823
|
|
|
83,213
|
|
Accounts
payable—unconsolidated affiliates
|
|
166
|
|
|
—
|
|
|
5,830
|
|
Customer advances and
deposits
|
|
166,505
|
|
|
12,644
|
|
|
3,061
|
|
Accrued
compensation
|
|
26,772
|
|
|
20,944
|
|
|
33,108
|
|
Income taxes
payable
|
|
4,494
|
|
|
4,589
|
|
|
3,274
|
|
Current portion of
operating lease liabilities
|
|
10,469
|
|
|
10,735
|
|
|
11,404
|
|
Accrued expenses and
other current liabilities
|
|
120,623
|
|
|
103,330
|
|
|
106,533
|
|
Current portion of
long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
Total current
liabilities
|
|
701,145
|
|
|
798,447
|
|
|
441,987
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
617,086
|
|
|
518,923
|
|
|
616,809
|
|
Pensions and other
postretirement benefits
|
|
42,378
|
|
|
49,398
|
|
|
42,769
|
|
Long-term operating
lease liabilities
|
|
22,804
|
|
|
27,905
|
|
|
25,540
|
|
Other long-term
liabilities
|
|
15,769
|
|
|
15,302
|
|
|
32,512
|
|
Deferred income
taxes
|
|
45,082
|
|
|
49,289
|
|
|
42,613
|
|
Total
liabilities
|
|
1,444,264
|
|
|
1,459,264
|
|
|
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 24,558,493 shares
issued and outstanding at September 30, 2023 (24,555,361 at
September 30, 2022
and 24,555,361 at March 31, 2023)
|
|
339,241
|
|
|
333,540
|
|
|
337,247
|
|
Retained
earnings
|
|
1,119,615
|
|
|
1,080,920
|
|
|
1,136,898
|
|
Accumulated other
comprehensive loss
|
|
(74,667)
|
|
|
(89,606)
|
|
|
(77,057)
|
|
Total Universal
Corporation shareholders' equity
|
|
1,384,189
|
|
|
1,324,854
|
|
|
1,397,088
|
|
Noncontrolling
interests in subsidiaries
|
|
33,319
|
|
|
29,879
|
|
|
39,864
|
|
Total shareholders'
equity
|
|
1,417,508
|
|
|
1,354,733
|
|
|
1,436,952
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,861,772
|
|
|
$
|
2,813,997
|
|
|
$
|
2,639,182
|
|
UNIVERSAL
CORPORATION
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
|
25,627
|
|
|
$
|
22,207
|
|
Adjustments to
reconcile net income (loss) to net cash used by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
29,009
|
|
|
28,294
|
|
Net provision for
losses (recoveries) on advances to suppliers
|
|
3,835
|
|
|
(1,034)
|
|
Inventory
writedowns
|
|
2,870
|
|
|
7,654
|
|
Stock-based
compensation expense
|
|
5,711
|
|
|
5,304
|
|
Foreign currency
remeasurement (gain) loss, net
|
|
7,528
|
|
|
6,191
|
|
Foreign currency
exchange contracts
|
|
2,563
|
|
|
13,562
|
|
Deferred income
taxes
|
|
(3,560)
|
|
|
(7,144)
|
|
Equity in net loss
(income) of unconsolidated affiliates, net of dividends
|
|
3,135
|
|
|
(18)
|
|
Restructuring and
impairment costs
|
|
2,599
|
|
|
—
|
|
Restructuring
payments
|
|
(806)
|
|
|
—
|
|
Other, net
|
|
1,012
|
|
|
1,913
|
|
Changes in operating
assets and liabilities, net:
|
|
(68,989)
|
|
|
(423,177)
|
|
Net cash provided
(used) by operating activities
|
|
10,534
|
|
|
(346,248)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(32,630)
|
|
|
(26,588)
|
|
Proceeds from sale of
business, net of cash held by the business
|
|
3,757
|
|
|
1,168
|
|
Proceeds from sale of
property, plant and equipment
|
|
713
|
|
|
1,644
|
|
Net cash used by
investing activities
|
|
(28,160)
|
|
|
(23,776)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Issuance of short-term
debt, net
|
|
105,649
|
|
|
399,924
|
|
Dividends paid to
noncontrolling interests
|
|
(5,845)
|
|
|
(6,825)
|
|
Repurchase of common
stock
|
|
(4,744)
|
|
|
(3,448)
|
|
Dividends paid on
common stock
|
|
(39,108)
|
|
|
(38,594)
|
|
Other
|
|
(2,963)
|
|
|
(1,869)
|
|
Net cash provided
(used) by financing activities
|
|
52,989
|
|
|
349,188
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, restricted cash and cash equivalents
|
|
(370)
|
|
|
(1,957)
|
|
Net increase (decrease)
in cash, restricted cash and cash equivalents
|
|
34,993
|
|
|
(22,793)
|
|
Cash, restricted cash
and cash equivalents at beginning of year
|
|
64,690
|
|
|
87,648
|
|
|
|
|
|
|
Cash, restricted
cash and cash equivalents at end of period
|
|
$
|
99,683
|
|
|
$
|
64,855
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
99,683
|
|
|
$
|
58,855
|
|
Restricted cash (Other
noncurrent assets)
|
|
—
|
|
|
6,000
|
|
Total cash, restricted
cash and cash equivalents
|
|
$
|
99,683
|
|
|
$
|
64,855
|
|
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
September 30,
|
|
Six Months Ended
September 30,
|
(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
|
|
$
|
28,128
|
|
|
$
|
21,855
|
|
|
$
|
26,064
|
|
|
$
|
28,685
|
|
|
|
|
|
|
|
|
|
|
Denominator for
basic earnings per share
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,869,697
|
|
|
24,779,237
|
|
|
24,855,974
|
|
|
24,774,126
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
1.13
|
|
|
$
|
0.88
|
|
|
$
|
1.05
|
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
|
|
|
|
|
|
|
|
Numerator for
diluted earnings per share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
28,128
|
|
|
$
|
21,855
|
|
|
$
|
26,064
|
|
|
$
|
28,685
|
|
|
|
|
|
|
|
|
|
|
Denominator for
diluted earnings per share:
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,869,697
|
|
|
24,779,237
|
|
|
24,855,974
|
|
|
24,774,126
|
|
Effect of dilutive
securities
|
|
|
|
|
|
|
|
|
Employee and outside
director share-based awards
|
|
145,672
|
|
|
160,190
|
|
|
141,925
|
|
|
163,365
|
|
Denominator for diluted
earnings per share
|
|
25,015,369
|
|
|
24,939,427
|
|
|
24,997,899
|
|
|
24,937,491
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
1.12
|
|
|
$
|
0.88
|
|
|
$
|
1.04
|
|
|
$
|
1.15
|
|
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
September 30,
|
|
Six Months Ended
September 30,
|
(in thousands of
dollars)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
SALES AND OTHER
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
554,653
|
|
|
$
|
570,030
|
|
|
$
|
998,561
|
|
|
$
|
918,093
|
|
Ingredients
Operations
|
|
83,831
|
|
|
80,954
|
|
|
157,645
|
|
|
162,713
|
|
Consolidated sales and
other operating revenues
|
|
$
|
638,484
|
|
|
$
|
650,984
|
|
|
$
|
1,156,206
|
|
|
$
|
1,080,806
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
52,387
|
|
|
$
|
33,790
|
|
|
$
|
61,270
|
|
|
$
|
41,906
|
|
Ingredients
Operations
|
|
4,811
|
|
|
4,512
|
|
|
2,797
|
|
|
9,109
|
|
Segment operating
income
|
|
57,198
|
|
|
38,302
|
|
|
64,067
|
|
|
51,015
|
|
Deduct: Equity in
pretax (earnings) loss of unconsolidated affiliates (1)
|
|
713
|
|
|
(416)
|
|
|
4,879
|
|
|
137
|
|
Restructuring and
impairment costs (2)
|
|
(2,599)
|
|
|
—
|
|
|
(2,599)
|
|
|
—
|
|
Consolidated operating
income
|
|
$
|
55,312
|
|
|
$
|
37,886
|
|
|
$
|
66,347
|
|
|
$
|
51,152
|
|
|
|
(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