Universal Corporation Reports Annual Results
Universal (NYSE: UVV) reported its annual results for fiscal year 2024, ending March 31. The company saw a 7% increase in consolidated revenues, reaching $2.75 billion, driven mainly by higher tobacco sales prices. Tobacco operations yielded $2.44 billion in revenues, an 8% increase. However, the ingredients business saw a slight decline in revenues to $309.8 million.
Operating income improved by 23% to $222 million, with adjusted operating income up by 27% to $230.3 million. Despite the higher revenues, diluted earnings per share dropped 4% to $4.78. The company faced higher costs due to increased green tobacco prices and other operational expenses.
Universal's sustainability initiatives made progress, including significant steps towards emissions targets and a renewable energy agreement. The company is optimistic about future growth, particularly in its ingredients business, supported by new product sales and an ongoing expansion project at the Lancaster facility.
- Revenue increased by 7% to $2.75 billion.
- Operating income rose by 23% to $222 million.
- Adjusted operating income grew by 27% to $230.3 million.
- Tobacco operations revenue increased by 8% to $2.44 billion.
- Gross profit margin improved from 17.83% to 19.50%.
- Progress in sustainability goals, including emissions targets and renewable energy agreements.
- Expansion project in Lancaster facility on track, expected to be fully operational in the second half of FY 2025.
- New product sales in the ingredients business helped offset lower revenues from existing customers.
- Ingredients operations revenue declined by 1% to $309.8 million.
- Lower earnings in the ingredients segment, with a 63% drop in operating income.
- Higher costs related to infrastructure investments and increased green tobacco prices.
- Increased selling, general, and administrative expenses by 12% to $310.6 million.
- Interest expense rose by $17 million due to higher interest rates.
- Diluted earnings per share decreased by 4% to $4.78.
- Higher debt levels due to accelerated buying strategy.
Insights
Universal Corporation's fiscal year 2024 results reflect a robust performance, particularly in its tobacco operations. With consolidated revenues increasing to
From a debt perspective, higher green tobacco prices and accelerated buying in Brazil led to increased working capital use and higher debt levels. The company anticipates this impact to unwind over the next two years, indicating a temporary increase in leverage.
Investors should weigh the benefits of the improved product mix and higher sales prices against the higher SG&A expenses and increased debt. The growth in the tobacco sector seems solid, but the performance of the ingredients sector requires monitoring.
The tobacco market dynamics show Universal Corporation's adeptness at leveraging its global footprint to manage supply tensions and elevated prices. By accelerating buying in Brazil, they ensured supply continuity, which is critical given the current tight supply and high tobacco prices. This strategy, while resulting in temporarily higher debt levels, positions the company favorably in servicing its customers and maintaining market share.
On the ingredients business side, the ongoing expansion at the Lancaster facility is strategically significant. The anticipated operational commencement in the second half of fiscal year 2025 will enhance processing capabilities, including aseptic packaging, broadening the product portfolio and potentially driving long-term growth. However, the current negative impact on earnings due to infrastructure investment costs and inventory recalibrations highlights short-term challenges.
Looking forward, Universal's dual focus on maximizing tobacco opportunities and growing the ingredients business appears balanced. The diversification into ingredients could provide a buffer against the cyclical nature of the tobacco industry.
Universal Corporation's strides towards sustainability are noteworthy. Their progress towards operational emissions targets and new agreements for renewable electricity and emissions reduction signal a strong commitment to environmental stewardship. The initiatives in the Philippines and North America reflect a proactive approach to sustainability, supporting the company's long-term operational goals.
The alignment of their sustainability goals with operational strategies can enhance brand value and comply with increasing regulatory and consumer expectations. However, the real impact on financial performance remains to be fully seen and will depend on the successful execution of these agreements and their integration into the broader business model.
"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
"In our ingredients business, the expansion project at our
"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."
FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||
Fiscal Year Ended March 31, | Change | ||||||||||||||||||||||
(in millions of dollars, except per share data) | 2024 | 2023 | $ | % | |||||||||||||||||||
Consolidated Results | |||||||||||||||||||||||
Sales and other operating revenue | $ | 2,748.6 | $ | 2,569.8 | $ | 178.7 | 7 | % | |||||||||||||||
Cost of goods sold | 2,212.5 | 2,111.5 | 100.9 | 5 | % | ||||||||||||||||||
Gross profit margin | 19.50 | % | 17.83 | % | --- | 167 bps | |||||||||||||||||
Selling, general and administrative expenses | 310.6 | 277.2 | 33.4 | 12 | % | ||||||||||||||||||
Restructuring and impairment costs | 3.5 | — | 3.5 | 100 | % | ||||||||||||||||||
Operating income (as reported) | 222.0 | 181.1 | 40.9 | 23 | % | ||||||||||||||||||
Adjusted operating income (Non-GAAP)* | 230.3 | 181.1 | 49.2 | 27 | % | ||||||||||||||||||
Diluted earnings per share (as reported) | 4.78 | 4.97 | (0.19) | (4) | % | ||||||||||||||||||
Adjusted diluted earnings per share (Non-GAAP)* | 5.08 | 3.77 | 1.31 | 35 | % | ||||||||||||||||||
Segment Results | |||||||||||||||||||||||
Tobacco operations sales and other operating revenues | $ | 2,438.8 | $ | 2,258.3 | $ | 180.5 | 8 | % | |||||||||||||||
Tobacco operations operating income | 222.4 | 172.9 | 49.5 | 29 | % | ||||||||||||||||||
Ingredients operations sales and other operating revenues | 309.8 | 311.6 | (1.8) | (1) | % | ||||||||||||||||||
Ingredients operations operating income | 3.9 | 10.6 | (6.6) | (63) | % | ||||||||||||||||||
*See Reconciliation of Certain Non-GAAP Financial Measures in Other Items below | |||||||||||||||||||||||
Net income for the fiscal year ended March 31, 2024, was
Net income for the quarter ended March 31, 2024, was
Consolidated revenues increased by
TOBACCO OPERATIONS
Revenues for the Tobacco Operations segment were
Operating income for the Tobacco Operations segment increased by
Operating income for the Tobacco Operations segment increased by
INGREDIENTS OPERATIONS
Revenues for the Ingredients Operations segment of
Operating income for the Ingredients Operations segment was
OTHER ITEMS
Cost of goods sold in the fiscal year and quarter ended March 31, 2024, increased by
For the fiscal year and quarter ended March 31, 2024, our effective tax rate on pre-tax income was
For the fiscal year and quarter ended March 31, 2023, our effective tax rate on pre-tax income was
In the fiscal year ended March 31, 2023, we sold our idled
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
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:
Adjusted Operating Income Reconciliation | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Fiscal Year Ended March 31, | |||||||||||||||||||||||||||||||
(in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
As Reported: Consolidated operating income | $ | 68,198 | $ | 52,394 | $ | 222,009 | $ | 181,072 | ||||||||||||||||||||||||
Value-added tax settlement costs(1) | 4,754 | — | 4,754 | — | ||||||||||||||||||||||||||||
Restructuring and impairment costs(2) | — | — | 3,523 | — | ||||||||||||||||||||||||||||
Adjusted operating income (Non-GAAP) | $ | 72,952 | $ | 52,394 | $ | 230,286 | $ | 181,072 | ||||||||||||||||||||||||
Adjusted Net Income and Adjusted Diluted Earnings Per Share Reconciliation | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Fiscal Year Ended March 31, | |||||||||||||||||||||||||||||||
(in thousands except for per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
As Reported: Net income attributable to Universal Corporation | $ | 40,318 | $ | 53,707 | $ | 119,598 | $ | 124,052 | ||||||||||||||||||||||||
Value-added tax settlement costs(1) | 4,754 | — | 4,754 | — | ||||||||||||||||||||||||||||
Restructuring and impairment costs(2) | — | — | 3,523 | — | ||||||||||||||||||||||||||||
Interest expense for value-added tax settlement(1) | 245 | — | 245 | — | ||||||||||||||||||||||||||||
Interest income related to a final income tax rulings(3) | — | (4,980) | — | (4,980) | ||||||||||||||||||||||||||||
Interest expense reversal on uncertain tax position from sale of operations in | — | — | — | (1,816) | ||||||||||||||||||||||||||||
Total of Non-GAAP adjustments to income before income taxes | 4,999 | (4,980) | 8,522 | (6,796) | ||||||||||||||||||||||||||||
Income tax benefit on final tax ruling(3) | (24,256) | — | (24,256) | |||||||||||||||||||||||||||||
Income tax expense from sale of operations in | — | — | — | 1,132 | ||||||||||||||||||||||||||||
Income tax benefit from Non-GAAP adjustments to income before income taxes(1)(4) | (498) | — | (1,010) | — | ||||||||||||||||||||||||||||
Total of income tax impacts for Non-GAAP adjustments to income before income taxes | (498) | (24,256) | (1,010) | (23,124) | ||||||||||||||||||||||||||||
As adjusted: Net income attributable to Universal Corporation (Non-GAAP) | $ | 44,819 | $ | 24,471 | $ | 127,110 | $ | 94,132 | ||||||||||||||||||||||||
As reported: Diluted earnings per share | $ | 1.61 | $ | 2.15 | $ | 4.78 | $ | 4.97 | ||||||||||||||||||||||||
Adjusted: Diluted earnings per share | $ | 1.79 | $ | 0.97 | $ | 5.08 | $ | 3.77 | ||||||||||||||||||||||||
(1) | In the fourth quarter of fiscal year 2024, the Company utilized a voluntary government-sponsored value-added tax program in |
(2) | 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. |
(3) | The Company recognized an income tax benefit ( |
(4) | 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 |
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 | ||||||||||||||||||
See accompanying notes. |
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, | — | — | ||||||||||||||
Common stock, no par value, 100,000,000 shares authorized, 24,573,408 shares issued | 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 | ||||||||||||
See accompanying notes. |
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 | ||||||||||||
— | (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
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
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