RICHMOND, Va., Aug. 3, 2022 /PRNewswire/ — George C. Freeman, III, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE: UVV), stated, “We are pleased with our start to fiscal year 2023. In the quarter ended June 30, 2022, we continued to effectively navigate increased costs, particularly rising prices for green leaf tobacco, and shipping constraints. We succeeded in getting a significant amount of carryover tobacco shipped out of Brazil, and our plant-based ingredients platform continued to exceed our expectations.
“Results for our Tobacco Operations segment were down modestly in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, largely on unfavorable foreign currency comparisons due to the strong U.S. dollar. Demand for leaf tobacco remains strong, and flue-cured, burley, oriental, and wrapper tobacco remain in an undersupply position. We are also anticipating a reduction in African burley tobacco crop sizes due to weather conditions there. While we were able to ship a greater amount of carryover tobacco out of Brazil in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, we continue to face a challenging logistical environment. We are also continuing to see increased costs for leaf tobacco across virtually all markets.
“Our Ingredients Operations segment performed well in the first quarter of fiscal year 2023. Sales for all of our businesses in this segment were up in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, with strong volumes for both human and pet food product categories. In our Ingredients Operations segment, we are also seeing rising costs for raw materials and the impact of higher freight costs. Synergies captured across the plant-based ingredients platform continue to make good progress. Our businesses are working together on new product development and strategies to serve the platform’s diverse customers which utilize our portfolio of plant-based ingredients and botanical extracts and flavorings offerings. Results for the Ingredients Operations segment for the quarter ended June 30, 2022, include our October 2021 purchase of Shank’s Extracts, LLC (“Shank’s”).
“Our elevated borrowing levels reflect our acquisition of Shank’s as well as higher tobacco inventory levels, largely due to higher green leaf tobacco prices and tobacco shipment timing. We expect our seasonal borrowing levels to decrease in the second half of our fiscal year in line with our tobacco crop shipments, which are weighted to that period.
“At Universal, we are committed to providing transparency around our sustainability efforts and goals. We recently completed our submission to the global non-profit organization CDP regarding climate change, forestry, and water risk to provide more information on our achievements in these areas to our stakeholders. We are also excited to announce that we have engaged a third party to aid in analyzing and communicating our climate change policy as well as to provide independent, third party verification of our results.”
|
FINANCIAL HIGHLIGHTS |
|||||||||||||||||||||||
|
Three Months Ended June 30, |
Change |
||||||||||||||||||||||
|
(in millions of dollars, except per share data) |
2022 |
2021 |
$ |
% |
|||||||||||||||||||
|
Consolidated Results |
|||||||||||||||||||||||
|
Sales and other operating revenue |
$ |
429.8 |
$ |
350.0 |
$ |
79.8 |
23 |
% |
|||||||||||||||
|
Cost of goods sold |
$ |
350.1 |
$ |
287.6 |
$ |
62.5 |
22 |
% |
|||||||||||||||
|
Gross Profit Margin |
18.5 |
% |
17.8 |
% |
70 bps |
||||||||||||||||||
|
Selling, general and administrative expenses |
$ |
66.5 |
$ |
49.8 |
$ |
16.6 |
33 |
% |
|||||||||||||||
|
Restructuring and impairment costs |
$ |
— |
$ |
2.0 |
$ |
(2.0) |
(100) |
% |
|||||||||||||||
|
Operating income (as reported) |
$ |
13.3 |
$ |
10.6 |
$ |
2.7 |
25 |
% |
|||||||||||||||
|
Adjusted operating income (non-GAAP)* |
$ |
13.3 |
$ |
12.6 |
$ |
0.6 |
5 |
% |
|||||||||||||||
|
Diluted earnings per share (as reported) |
$ |
0.27 |
$ |
0.26 |
$ |
0.01 |
4 |
% |
|||||||||||||||
|
Adjusted diluted earnings per share (non-GAAP)* |
$ |
0.25 |
$ |
0.30 |
$ |
(0.05) |
(17) |
% |
|||||||||||||||
|
Segment Results |
|||||||||||||||||||||||
|
Tobacco operations sales and other operating revenues |
$ |
348.1 |
$ |
293.8 |
$ |
54.2 |
18 |
% |
|||||||||||||||
|
Tobacco operations operating income |
$ |
8.1 |
$ |
8.9 |
$ |
(0.8) |
(9) |
% |
|||||||||||||||
|
Ingredients operations sales and other operating revenues |
$ |
81.8 |
$ |
56.2 |
$ |
25.6 |
46 |
% |
|||||||||||||||
|
Ingredient operations operating income |
$ |
4.6 |
$ |
4.3 |
$ |
0.2 |
6 |
% |
|||||||||||||||
|
*See Reconciliation of Certain Non-GAAP Financial Measures in Other Items below. |
Net income for the quarter ended June 30, 2022, was $6.8 million, or $0.27 per diluted share, compared with $6.4 million, or $0.26 per diluted share, for the quarter ended June 30, 2021. Excluding restructuring and impairment costs and certain other non-recurring items, detailed in Other Items below, net income and diluted earnings per share decreased by $1.2 million and $0.05, respectively, for the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021. Operating income of $13.3 million for the quarter ended June 30, 2022, increased by $2.7 million, compared to operating income of $10.6 million for the quarter ended June 30, 2021. Adjusted operating income, detailed in Other Items below, of $13.3 million increased by $0.6 million for the first quarter of fiscal year 2023, compared to adjusted operating income of $12.6 million for the first quarter of fiscal year 2022.
Consolidated revenues increased by $79.8 million to $429.8 million for the three months ended June 30, 2022, compared to the same period in fiscal year 2022, on higher carryover tobacco sales volumes and prices as well as the addition of Shank’s in October 2021 in the Ingredients Operations segment.
TOBACCO OPERATIONS
The first fiscal quarter is historically a slow quarter for our tobacco businesses. Operating income for the Tobacco Operations segment decreased by $0.8 million to $8.1 million for the quarter ended June 30, 2022, compared with the quarter ended June 30, 2021. Although tobacco sales volumes were up modestly, Tobacco Operations segment results were down largely on unfavorable foreign currency comparisons due to the strong U.S. dollar in the quarter ended June 30, 2022, compared to the same quarter in the prior fiscal year. Carryover crop shipments were higher in Brazil in the quarter ended June 30, 2022, compared to the same quarter in the prior fiscal year, largely due to increased shipping availability. In Africa, carryover shipments were down in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, on smaller crops grown in fiscal year 2022. Selling, general, and administrative expenses for the Tobacco Operations segment were higher in the quarter ended June 30, 2022, compared to June 30, 2021, primarily on unfavorable foreign currency comparisons. Revenues for the Tobacco Operations segment of $348.1 million for the quarter ended June 30, 2022, were up $54.2 million, compared to the same period in the prior fiscal year, on higher tobacco sales volumes and prices.
INGREDIENTS OPERATIONS
Operating income for the Ingredients Operations segment was $4.6 million for the quarter ended June 30, 2022, compared to $4.3 million for the quarter ended June 30, 2021. Results for the segment improved year-over-year on the inclusion of the October 2021 Shank’s acquisition. Sales for all of our businesses in this segment were up in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, with continued strong volumes for both human and pet food product categories. Selling, general, and administrative expenses for this segment increased in the quarter ended June 30, 2022, compared to the same quarter in the prior fiscal year, on the addition of Shank’s as well as higher labor costs. In the quarter ended June 30, 2022, the allocation of corporate overhead charges to the Ingredients Operations segment was also up, compared to the quarter ended June 30, 2021. Revenues for the Ingredients Operations segment of $81.8 million for the quarter ended June 30, 2022, were up $25.6 million compared to the quarter ended June 30, 2021, largely on the addition of the revenues for Shank’s as well as higher sales volumes and prices.
OTHER ITEMS
Cost of goods sold in the quarter ended June 30, 2022, increased by 22% to $350.1 million, compared with the same period in the prior fiscal year, consistent with the similar percentage increase in revenues for the current period. Selling, general, and administrative costs for the quarter ended June 30, 2022, increased by $16.6 million to $66.5 million, compared to the same period in the prior fiscal year, primarily on additional costs from the acquisition of Shank’s in the Ingredients Operations segment and unfavorable foreign currency comparisons as well as inflationary increases in compensation and travel costs. Unfavorable foreign currency comparisons were approximately $6.6 million in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021. Interest expense for the quarter ended June 30, 2022, increased by $0.5 million to $6.7 million on increased costs from higher debt balances and interest rates, partially offset by a $1.8 million interest expense accrual reversal related to the sale of our previously idled operations in Tanzania.
For the three months ended June 30, 2022, the Company’s consolidated effective income tax rate on pre-tax income was 54.6%. The consolidated effective income tax rate for the three months ended June 30, 2022 was affected by the sale of our idled Tanzania operations which resulted in $1.1 million of additional income taxes. Without this item, the consolidated effective income tax rate for the three months ended June 30, 2022 would have been approximately 36.2%. 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.
For the three months ended June 30, 2021, the Company’s effective tax rate on pre-tax income was 23.7%.
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 June 30, |
|||||||||
|
(in thousands) |
2022 |
2021 |
|||||||
|
As Reported: Consolidated operating income |
$ |
13,266 |
$ |
10,605 |
|||||
|
Restructuring and impairment costs(1) |
— |
2,024 |
|||||||
|
Adjusted operating income |
$ |
13,266 |
$ |
12,629 |
|||||
|
Adjusted Net Income and Diluted Earnings Per Share |
|||||||||
|
(in thousands and reported net of income taxes) |
Three Months Ended June 30, |
||||||||
|
2022 |
2021 |
||||||||
|
As Reported: Net income available to Universal Corporation |
$ |
6,830 |
$ |
6,357 |
|||||
|
Restructuring and impairment costs(1) |
— |
1,005 |
|||||||
|
Interest expense reversal on uncertain tax position and income tax from sale of operations in Tanzania |
(684) |
— |
|||||||
|
Adjusted net income available to Universal Corporation |
$ |
6,146 |
$ |
7,362 |
|||||
|
As reported: Diluted earnings per share |
$ |
0.27 |
$ |
0.26 |
|||||
|
As adjusted: Diluted earnings per share |
$ |
0.25 |
$ |
0.30 |
|||||
|
(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. |
COVID-19 PANDEMIC IMPACT
On March 11, 2020, the World Health Organization declared the coronavirus (“COVID-19”) a pandemic. Foreign governmental organizations and governmental organizations in the United States have taken various actions to combat the spread of COVID-19 and its subsequent variants, including imposing stay-at-home orders, closing “non-essential” businesses and their operations, and restricting international travel. We continue to closely monitor developments related to the COVID-19 pandemic and have taken and continue to take steps intended to mitigate the potential risks and impacts to us. It is paramount that our employees who operate our businesses are safe and informed. We have assessed and regularly update our existing business continuity plans for our business in the context of this pandemic. For example, we took precautions during the pandemic with regard to employee and facility hygiene, imposed travel limitations on our employees, implemented work-from-home procedures, and we continue to assess and reevaluate protocols designed to protect our employees, customers and the public.
We continue to work with our suppliers to mitigate the impacts to our supply chain due to the pandemic. To date, we have not experienced a material impact to our supply chain, although the COVID-19 pandemic resulted in delays in certain operations during fiscal year 2021. Since March 2020, we have at times also experienced increased volatility in foreign currency exchange rates, which we believe has in part related to the uncertainties from COVID-19, as well as actions taken by governments and central banks in response to COVID-19. We are currently seeing and monitoring some logistical constraints around worldwide vessel and container availability and increased costs stemming from the COVID-19 pandemic.
We believe we currently have sufficient liquidity to meet our current obligations and our business operations remain fundamentally unchanged other than shipping delays, which could continue to impact quarterly comparisons. This remains, however, a rapidly evolving situation, and we cannot predict the extent, resurgence, or duration of the COVID-19 pandemic, the effects of it on the global, national or local economy, including the impacts on our ability to access capital, or its effects on our business, financial position, results of operations, and cash flows. We continue to monitor developments affecting our employees, customers and operations. We will take additional steps and reevaluate current protocols to address the spread of COVID-19 and its impacts, as necessary, and remain thankful for the hard work of our employees and the continued support of our customers, growers, and other partners during these challenging times.
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; 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; 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; timing of shipments to customers; 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 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, 2022, 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 year ended March 31, 2022. 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 August 3, 2022, 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 November 3, 2022. A taped replay of the call will be available through August 16, 2022, by dialing (866) 813-9403. The confirmation number to access the replay is 516295.
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 June 30, |
||||||||||||||
|
2022 |
2021 |
|||||||||||||
|
(Unaudited) |
||||||||||||||
|
Sales and other operating revenues |
$ |
429,822 |
$ |
350,029 |
||||||||||
|
Costs and expenses |
||||||||||||||
|
Cost of goods sold |
350,104 |
287,556 |
||||||||||||
|
Selling, general and administrative expenses |
66,452 |
49,844 |
||||||||||||
|
Restructuring and impairment costs |
— |
2,024 |
||||||||||||
|
Operating income |
13,266 |
10,605 |
||||||||||||
|
Equity in pretax earnings (loss) of unconsolidated affiliates |
(553) |
609 |
||||||||||||
|
Other non-operating income (expense) |
(62) |
48 |
||||||||||||
|
Interest income |
237 |
73 |
||||||||||||
|
Interest expense |
6,724 |
6,208 |
||||||||||||
|
Income before income taxes and other items |
6,164 |
5,127 |
||||||||||||
|
Income taxes |
3,363 |
1,215 |
||||||||||||
|
Net income |
2,801 |
3,912 |
||||||||||||
|
Less: net loss (income) attributable to noncontrolling interests in subsidiaries |
4,029 |
2,445 |
||||||||||||
|
Net income attributable to Universal Corporation |
$ |
6,830 |
$ |
6,357 |
||||||||||
|
Earnings per share: |
||||||||||||||
|
Basic |
$ |
0.28 |
$ |
0.26 |
||||||||||
|
Diluted |
$ |
0.27 |
$ |
0.26 |
||||||||||
|
See accompanying notes. |
|
UNIVERSAL CORPORATION |
||||||||||||||||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||||||||||||||||
|
(in thousands of dollars) |
||||||||||||||||||||
|
June 30, |
June 30, |
March 31, |
||||||||||||||||||
|
2022 |
2021 |
2022 |
||||||||||||||||||
|
(Unaudited) |
(Unaudited) |
|||||||||||||||||||
|
ASSETS |
||||||||||||||||||||
|
Current assets |
||||||||||||||||||||
|
Cash and cash equivalents |
$ |
86,566 |
$ |
84,688 |
$ |
81,648 |
||||||||||||||
|
Accounts receivable, net |
319,114 |
279,900 |
385,437 |
|||||||||||||||||
|
Advances to suppliers, net |
99,875 |
70,377 |
129,838 |
|||||||||||||||||
|
Accounts receivable—unconsolidated affiliates |
48,512 |
52,047 |
4,540 |
|||||||||||||||||
|
Inventories—at lower of cost or net realizable value: |
||||||||||||||||||||
|
Tobacco |
1,080,362 |
874,381 |
822,513 |
|||||||||||||||||
|
Other |
198,966 |
140,249 |
194,161 |
|||||||||||||||||
|
Prepaid income taxes |
11,370 |
17,804 |
13,095 |
|||||||||||||||||
|
Other current assets |
90,380 |
85,016 |
116,779 |
|||||||||||||||||
|
Total current assets |
1,935,145 |
1,604,462 |
1,748,011 |
|||||||||||||||||
|
Property, plant and equipment |
||||||||||||||||||||
|
Land |
23,872 |
23,439 |
23,959 |
|||||||||||||||||
|
Buildings |
294,179 |
293,734 |
293,935 |
|||||||||||||||||
|
Machinery and equipment |
669,967 |
661,753 |
668,451 |
|||||||||||||||||
|
988,018 |
978,926 |
986,345 |
||||||||||||||||||
|
Less accumulated depreciation |
(642,918) |
(627,279) |
(641,227) |
|||||||||||||||||
|
345,100 |
351,647 |
345,118 |
||||||||||||||||||
|
Other assets |
||||||||||||||||||||
|
Operating lease right-of-use assets |
41,099 |
31,281 |
40,243 |
|||||||||||||||||
|
Goodwill, net |
213,902 |
173,041 |
213,998 |
|||||||||||||||||
|
Other intangibles, net |
89,352 |
69,905 |
92,571 |
|||||||||||||||||
|
Investments in unconsolidated affiliates |
75,188 |
85,064 |
81,006 |
|||||||||||||||||
|
Deferred income taxes |
14,532 |
18,013 |
11,616 |
|||||||||||||||||
|
Pension asset |
12,704 |
11,764 |
12,667 |
|||||||||||||||||
|
Other noncurrent assets |
52,356 |
50,916 |
41,115 |
|||||||||||||||||
|
499,133 |
439,984 |
493,216 |
||||||||||||||||||
|
Total assets |
$ |
2,779,378 |
$ |
2,396,093 |
$ |
2,586,345 |
||||||||||||||
|
See accompanying notes. |
|
UNIVERSAL CORPORATION |
||||||||||||||||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||||||||||||||||
|
(in thousands of dollars) |
||||||||||||||||||||
|
June 30, |
June 30, |
March 31, |
||||||||||||||||||
|
2022 |
2021 |
2022 |
||||||||||||||||||
|
(Unaudited) |
(Unaudited) |
|||||||||||||||||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||
|
Current liabilities |
||||||||||||||||||||
|
Notes payable and overdrafts |
$ |
454,659 |
$ |
153,337 |
$ |
182,639 |
||||||||||||||
|
Accounts payable and accrued expenses |
235,618 |
158,013 |
272,042 |
|||||||||||||||||
|
Accounts payable—unconsolidated affiliates |
88 |
18 |
5,308 |
|||||||||||||||||
|
Customer advances and deposits |
19,438 |
9,307 |
13,724 |
|||||||||||||||||
|
Accrued compensation |
15,933 |
18,576 |
27,281 |
|||||||||||||||||
|
Income taxes payable |
5,708 |
5,919 |
7,427 |
|||||||||||||||||
|
Current portion of operating lease liabilities |
10,568 |
7,998 |
10,303 |
|||||||||||||||||
|
Current portion of long-term debt |
— |
— |
— |
|||||||||||||||||
|
Total current liabilities |
742,012 |
353,168 |
518,724 |
|||||||||||||||||
|
Long-term debt |
518,798 |
518,297 |
518,547 |
|||||||||||||||||
|
Pensions and other postretirement benefits |
51,528 |
55,622 |
52,890 |
|||||||||||||||||
|
Long-term operating lease liabilities |
28,727 |
20,826 |
29,617 |
|||||||||||||||||
|
Other long-term liabilities |
30,024 |
59,815 |
34,464 |
|||||||||||||||||
|
Deferred income taxes |
48,230 |
46,810 |
47,334 |
|||||||||||||||||
|
Total liabilities |
1,419,319 |
1,054,538 |
1,201,576 |
|||||||||||||||||
|
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 24,605,889 shares issued and outstanding at June 30, |
332,520 |
327,471 |
330,662 |
|||||||||||||||||
|
Retained earnings |
1,081,309 |
1,074,586 |
1,094,192 |
|||||||||||||||||
|
Accumulated other comprehensive loss |
(88,066) |
(98,232) |
(84,311) |
|||||||||||||||||
|
Total Universal Corporation shareholders’ equity |
1,325,763 |
1,303,825 |
1,340,543 |
|||||||||||||||||
|
Noncontrolling interests in subsidiaries |
34,296 |
37,730 |
44,226 |
|||||||||||||||||
|
Total shareholders’ equity |
1,360,059 |
1,341,555 |
1,384,769 |
|||||||||||||||||
|
Total liabilities and shareholders’ equity |
$ |
2,779,378 |
$ |
2,396,093 |
$ |
2,586,345 |
||||||||||||||
|
See accompanying notes. |
|
UNIVERSAL CORPORATION |
||||||||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||
|
(in thousands of dollars) |
||||||||||||||
|
Three Months Ended June 30, |
||||||||||||||
|
2022 |
2021 |
|||||||||||||
|
(Unaudited) |
||||||||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||
|
Net income |
$ |
2,801 |
$ |
3,912 |
||||||||||
|
Adjustments to reconcile net income to net cash used by operating activities: |
||||||||||||||
|
Depreciation and amortization |
14,129 |
12,058 |
||||||||||||
|
Net provision for losses (recoveries) on advances to suppliers |
(42) |
(328) |
||||||||||||
|
Foreign currency remeasurement (gain) loss, net |
(968) |
506 |
||||||||||||
|
Foreign currency exchange contracts |
9,920 |
1,127 |
||||||||||||
|
Restructuring and impairment costs |
— |
2,024 |
||||||||||||
|
Restructuring payments |
— |
(1,776) |
||||||||||||
|
Other, net |
7,001 |
(2,726) |
||||||||||||
|
Changes in operating assets and liabilities, net |
(258,612) |
(141,720) |
||||||||||||
|
Net cash provided (used) by operating activities |
(225,771) |
(126,923) |
||||||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||
|
Purchase of property, plant and equipment |
(15,070) |
(14,428) |
||||||||||||
|
Proceeds from sale of business, net of cash held by the business |
1,168 |
— |
||||||||||||
|
Proceeds from sale of property, plant and equipment |
292 |
1,589 |
||||||||||||
|
Net cash used by investing activities |
(13,610) |
(12,839) |
||||||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||
|
Issuance of short-term debt, net |
271,663 |
49,439 |
||||||||||||
|
Dividends paid to noncontrolling interests |
(5,145) |
(980) |
||||||||||||
|
Dividends paid on common stock |
(19,155) |
(18,876) |
||||||||||||
|
Other |
(1,892) |
(2,432) |
||||||||||||
|
Net cash provided (used) by financing activities |
245,471 |
27,151 |
||||||||||||
|
Effect of exchange rate changes on cash, restricted cash and cash equivalents |
(1,172) |
78 |
||||||||||||
|
Net decrease in cash, restricted cash and cash equivalents |
4,918 |
(112,533) |
||||||||||||
|
Cash, restricted cash and cash equivalents at beginning of year |
87,648 |
203,221 |
||||||||||||
|
Cash, restricted cash and cash equivalents at end of period |
$ |
92,566 |
$ |
90,688 |
||||||||||
|
Supplemental Information: |
||||||||||||||
|
Cash and cash equivalents |
$ |
86,566 |
$ |
84,688 |
||||||||||
|
Restricted cash (Other noncurrent assets) |
6,000 |
6,000 |
||||||||||||
|
Total cash, restricted cash and cash equivalents |
$ |
92,566 |
$ |
90,688 |
||||||||||
|
See accompanying notes. |
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, 2022.
NOTE 2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
|
Three Months Ended June 30, |
||||||||||||||
|
(in thousands, except share and per share data) |
2022 |
2021 |
||||||||||||
|
Basic Earnings Per Share |
||||||||||||||
|
Numerator for basic earnings per share |
||||||||||||||
|
Net income attributable to Universal Corporation |
$ |
6,830 |
$ |
6,357 |
||||||||||
|
Denominator for basic earnings per share |
||||||||||||||
|
Weighted average shares outstanding |
24,769,015 |
24,694,489 |
||||||||||||
|
Basic earnings per share |
$ |
0.28 |
$ |
0.26 |
||||||||||
|
Diluted Earnings Per Share |
||||||||||||||
|
Numerator for diluted earnings per share |
||||||||||||||
|
Net income attributable to Universal Corporation |
$ |
6,830 |
$ |
6,357 |
||||||||||
|
Denominator for diluted earnings per share: |
||||||||||||||
|
Weighted average shares outstanding |
24,769,015 |
24,694,489 |
||||||||||||
|
Effect of dilutive securities |
||||||||||||||
|
Employee and outside director share-based awards |
166,539 |
157,662 |
||||||||||||
|
Denominator for diluted earnings per share |
24,935,554 |
24,852,151 |
||||||||||||
|
Diluted earnings per share |
$ |
0.27 |
$ |
0.26 |
||||||||||
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 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 June 30, |
||||||||||||||
|
(in thousands of dollars) |
2022 |
2021 |
||||||||||||
|
SALES AND OTHER OPERATING REVENUES |
||||||||||||||
|
Tobacco Operations |
$ |
348,063 |
$ |
293,843 |
||||||||||
|
Ingredients Operations |
81,759 |
56,186 |
||||||||||||
|
Consolidated sales and other operating revenues |
$ |
429,822 |
$ |
350,029 |
||||||||||
|
OPERATING INCOME |
||||||||||||||
|
Tobacco Operations |
$ |
8,116 |
$ |
8,889 |
||||||||||
|
Ingredients Operations |
4,597 |
4,349 |
||||||||||||
|
Segment operating income |
12,713 |
13,238 |
||||||||||||
|
Deduct: Equity in pretax (earnings) loss of unconsolidated affiliates (1) |
553 |
(609) |
||||||||||||
|
Restructuring and impairment costs (2) |
— |
(2,024) |
||||||||||||
|
Consolidated operating income |
$ |
13,266 |
$ |
10,605 |
||||||||||
|
(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
