Universal (UVV) - 2026 Q1 - Quarterly Results

First Quarter Fiscal Year 2026 Results Overview Management Commentary The Chairman, President, and CEO expressed satisfaction with the strong start to fiscal year 2026, noting improved Tobacco Operations performance and higher Ingredients Operations sales volumes despite challenges - The Tobacco Operations segment's improved quarterly performance was driven by a favorable product mix, despite lower carryover crop sales; customer demand remains firm, and uncommitted tobacco inventory was low at about 11% as of June 30, 2025[3] - The Ingredients Operations segment achieved higher sales volumes, but results were negatively impacted by a less favorable product mix, some demand reduction due to tariff uncertainty, and higher fixed costs from an expanded production facility[4] - The primary focus for fiscal year 2026 is on the organic growth of Universal Ingredients, alongside maximizing and optimizing the tobacco business[5] Financial Highlights For the first quarter ended June 30, 2025, Universal Corporation reported revenues of $593.8 million, a slight decrease, but operating income significantly increased to $33.8 million, and diluted earnings per share rose substantially to $0.34 Consolidated Results for the Three Months Ended June 30 | (in millions of dollars, except per share data) | 2025 | 2024 | | :--- | :--- | :--- | | Sales and other operating revenue | $593.8 | $597.1 | | Operating income | $33.8 | $17.2 | | Adjusted operating income (non-GAAP)* | $34.9 | $17.2 | | Net income attributable to Universal Corporation | $8.5 | $0.1 | | Adjusted net income attributable to Universal Corporation (non-GAAP)* | $9.6 | $0.1 | | Diluted earnings (loss) per share | $0.34 | $0.01 | | Adjusted diluted earnings (loss) per share (non-GAAP)* | $0.38 | $0.01 | Key Performance Summary Consolidated revenues for Q1 2026 decreased by $3 million to $594 million due to lower tobacco sales volumes, while operating income grew by $17 million to $34 million from a favorable product mix - Consolidated revenues decreased by $3 million to $594 million[7] - Consolidated operating income increased by $17 million to $34 million, attributed to a favorable product mix in the Tobacco Operations segment[7] Segment Performance Tobacco Operations Segment The Tobacco Operations segment reported a $7 million revenue decrease but a significant $21 million operating income increase, driven by a favorable product mix despite an 8% sales volume decline, with potential oversupply anticipated for fiscal year 2026 Tobacco Operations Segment Performance (Q1 FY2026 vs Q1 FY2025) | Metric | Change | | :--- | :--- | | Revenues | Down $7 million | | Segment Operating Income | Up $21 million | | Tobacco Sales Volumes | Down 8% | | Tobacco Sales Prices | Up 2% | - Operating income increased due to a favorable product mix in Asia[7] - The outlook for fiscal year 2026 suggests flue-cured and burley tobacco crop sizes (excluding China) are expected to increase by about 25% and 45%, respectively, which may lead to an oversupply position by year-end[7][8] Ingredients Operations Segment The Ingredients Operations segment achieved higher revenues from increased sales volumes, but operating income declined due to an unfavorable product mix, reduced demand from tariff uncertainty, and higher fixed costs from facility expansion - Revenues were higher due to increased sales volumes[12] - Operating income was lower, reflecting an unfavorable product mix, curtailed demand from tariff uncertainty, and higher fixed costs from the expanded production facility[12] - The company continues to see high interest in its value-added products and is focused on organic growth[12] Financial Position and Other Items Balance Sheet, Liquidity, and Debt The company experienced increased working capital usage due to seasonal tobacco purchases, with a cash balance of $178.4 million, total debt up $40.7 million, and net debt down $47.1 million, with approximately $355 million available under its revolving credit facility Key Liquidity and Debt Metrics (Quarter-over-Quarter) | Metric | Value/Change | | :--- | :--- | | Cash Balance | $178.4 million (up $76.7M) | | Total Debt | Up $40.7 million | | Net Debt | Down $47.1 million | | Available Revolving Credit | ~$355 million | Sustainability Update Universal Corporation is actively pursuing its sustainability strategy, completing its annual third-party emissions assessment and commissioning a new biomass boiler in Zimbabwe to reduce coal consumption and contribute to long-term emissions reduction goals - Completed its annual third-party assessment and verification of Scope 1, 2, and relevant Scope 3 emissions data to ensure alignment with established standards[10] - Commissioned a new biomass boiler in Zimbabwe, which, once operational, will reduce coal use and contribute to long-term emissions reduction goals[10] Non-GAAP Financial Measures Reconciliation This section provides reconciliations for non-GAAP financial measures, showing Q1 FY2026 adjusted operating income of $34.9 million (excluding $1.1 million in restructuring costs), adjusted net income of $9.6 million, adjusted diluted EPS of $0.38, and net debt of $1.065 billion Adjusted Operating Income Reconciliation (in thousands) | | Three Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | As Reported: Consolidated operating income | $33,813 | $17,225 | | Restructuring and impairment costs | 1,122 | — | | As Adjusted operating income (non-GAAP) | $34,935 | $17,225 | Adjusted Diluted Earnings Per Share Reconciliation | | Three Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | As reported: Diluted earnings per share | $0.34 | $0.01 | | As adjusted: Diluted earnings per share (non-GAAP) | $0.38 | $0.01 | Net Debt Reconciliation (in thousands) | | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Debt | 1,239,332 | 1,072,957 | | Less: Cash and cash equivalents | 178,435 | 260,115 | | Net Debt (non-GAAP) | $1,065,454 | $816,605 | Consolidated Financial Statements (Unaudited) Consolidated Statements of Income For the three months ended June 30, 2025, Universal Corporation reported sales of $593.8 million, operating income of $33.8 million, and net income attributable to the company of $8.5 million, or $0.34 per diluted share, showing significant improvement year-over-year Consolidated Statements of Income Summary (in thousands) | | Three Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | Sales and other operating revenues | $593,762 | $597,050 | | Operating income | $33,813 | $17,225 | | Net income (loss) attributable to Universal Corporation | $8,497 | $130 | | Diluted earnings (loss) per share | $0.34 | $0.01 | Consolidated Balance Sheets As of June 30, 2025, total assets were approximately $3.19 billion, driven by seasonal tobacco inventory increases, while total liabilities rose to $1.69 billion due to higher notes payable, with shareholders' equity remaining stable at approximately $1.46 billion Key Balance Sheet Items (in thousands) | | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total current assets | $2,346,327 | $2,156,097 | | Inventories—Tobacco | $1,219,769 | $806,332 | | Total assets | $3,189,307 | $2,989,552 | | Total current liabilities | $942,688 | $750,161 | | Notes payable and overdrafts | $621,275 | $455,039 | | Total liabilities | $1,689,718 | $1,489,014 | | Total Universal Corporation shareholders' equity | $1,458,917 | $1,458,556 | Consolidated Statements of Cash Flows For Q1 FY2026, net cash used by operating activities significantly increased to $205.1 million due to seasonal business needs, while net cash provided by financing activities was $134.6 million, largely from short-term debt issuance Cash Flow Summary (in thousands) | | Three Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | Net cash used by operating activities | $(205,103) | $(62,444) | | Net cash used by investing activities | $(11,910) | $(21,882) | | Net cash provided by financing activities | $134,622 | $130,754 | | Net increase (decrease) in cash | $(81,680) | $46,107 | Notes to Consolidated Financial Statements Note 1. Basis of Presentation This note clarifies Universal Corporation's role as a global agri-products supplier of leaf tobacco and plant-based ingredients, emphasizing that quarterly results are not necessarily indicative of full-year performance due to business seasonality - The Company is a global business-to-business agri-products supplier, primarily dealing in leaf tobacco and plant-based ingredients[31] - Quarterly results are not necessarily indicative of full-year performance due to the seasonal nature of the business[31] Note 2. Earnings Per Share This note details the computation for basic and diluted earnings per share, both reported at $0.34 for the quarter ended June 30, 2025, based on $8.5 million net income and approximately 25.0 million weighted average shares Earnings Per Share Calculation (Q1 FY2026) | Metric | Value | | :--- | :--- | | Net income attributable to Universal Corporation | $8,497 (in thousands) | | Weighted average shares outstanding (Basic) | 24,999,570 | | Basic earnings per share | $0.34 | | Weighted average shares outstanding (Diluted) | 25,131,857 | | Diluted earnings per share | $0.34 | Note 3. Segment Information The company operates two reportable segments, Tobacco Operations and Ingredients Operations, with segment performance evaluated based on operating income, including allocated corporate overhead - The company's operations are divided into two reportable segments: Tobacco Operations and Ingredients Operations[33] - The Tobacco Operations segment involves contracting, procuring, processing, and shipping leaf tobacco for manufacturers of products like cigarettes, cigars, and next-generation tobacco products[34][35] - The Ingredients Operations segment converts raw materials into a wide spectrum of fruit and vegetable juices, concentrates, dehydrated products, and botanical extracts for food and beverage companies[36] Segment Operating Income (in thousands) | | Three Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | | Tobacco Operations | $35,670 | $14,454 | | Ingredients Operations | $1,700 | $2,911 | | Total Segment Operating Income | $37,370 | $17,365 |