RICHMOND, Va., May 25, 2022
/PRNewswire/ -- George C. Freeman, III, Chairman, President,
and Chief Executive Officer of Universal Corporation (NYSE:UVV),
stated, "I am proud of our fiscal year 2022 results which were
generally comparable to those in fiscal year 2021. During fiscal
year 2022, we continued to face a very challenging logistical
environment in many of our key tobacco regions. Strong performance
from our Ingredients Operations segment offset some challenges that
reduced results in our Tobacco Operations segment.
"Our plant–based ingredients platform is coming together nicely
and is exceeding our expectations. With the acquisition of Shank's
Extracts, LLC ("Shank's"), we are now positioned to offer our
customers a broad range of products, from fruit and vegetable
juices, concentrates, and dehydrated ingredients to botanical
extracts and flavorings. In fiscal year 2022, the Ingredients
Operations segment saw increased demand for organic-based products
and continued strong volumes for human and pet food categories as
well as for vanilla extracts.
"Ongoing shipping constraints reduced our Tobacco Operations
segment results for the year and quarter ended March 31, 2022, as a result of continued
limitations in worldwide shipping availability stemming from the
COVID-19 pandemic. Due to the logistical constraints in fiscal year
2021, we had carryover tobacco volumes which shipped in fiscal year
2022. Similar logistical constraints impacted fiscal year 2022
which led to an even larger amount of tobacco volumes, reflecting a
difference of about $70 million in
revenue, which did not ship in fiscal year 2022, compared to the
carryover volumes from fiscal year 2021. Tobacco shipment
volumes in fiscal year 2022 were also reduced due to smaller
African burley crops.
"We experienced volatile tobacco and currency markets in
Brazil during the fourth quarter
of fiscal year 2022. Appreciation of the Brazilian currency coupled
with strong demand for leaf tobacco led to unprecedented increases
in green prices for leaf tobacco and earlier purchasing of the 2022
Brazilian crop, resulting in disruptions to market dynamics. To
fulfill our customers' orders, leaf tobacco purchases from our
contracted farmers this season have been at the prevailing inflated
market price for all leaf tobacco regardless of the quality of leaf
tobacco. This resulted in larger inventory write downs in the
quarter ended March 31, 2022,
compared to the prior year's fourth quarter.
"As we move into fiscal year 2023, we are seeing strong demand
for our plant-based ingredients and tobacco products. We believe
leaf tobacco supply for flue-cured, burley, dark air-cured, and
oriental tobaccos to be in an undersupply position. At the same
time, we continue to see opportunities to increase market share and
expand the supply chain services we provide our customers. We
expect continued logistical constraints as well as higher costs,
particularly freight, raw materials, labor, fertilizer, and energy,
in both our tobacco and ingredients businesses. We are actively
working to mitigate these challenges, and I am confident that we
can deliver another good year.
"We remain focused on returning value to our shareholders and
promoting sustainability in our operations. We are extremely proud
to deliver value to our shareholders though dividend increases such
as our 52nd annual dividend increase announced today. Increasing
our strong dividend remains one of the strategic priorities of our
capital allocation strategy. We have also achieved some important
milestones in our sustainability efforts in fiscal year 2022,
notably releasing goals and targets around agricultural labor
practices and environmental performance and publishing our 2021
Sustainability Report in December. We were also named a 2021
Supplier Engagement Leader by CDP, earning recognition for our work
in engaging our suppliers on climate change. We look forward to
attaining new achievements with our sustainability programs in
fiscal year 2023."
FINANCIAL HIGHLIGHTS
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Fiscal Year Ended
March 31,
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Change
|
(in millions of dollars, except per share
data)
|
2022
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|
2021
|
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$
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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
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$
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2,103.6
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$
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1,983.4
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|
|
$
|
120.2
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|
|
6
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%
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Cost of goods
sold
|
1,694.7
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|
1,597.4
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|
|
97.3
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|
|
6
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%
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Gross Profit
Margin
|
19.44
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%
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19.46
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%
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|
---
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-2 bps
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Selling, general and
administrative expenses
|
240.7
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|
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219.8
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20.9
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|
|
10
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%
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Restructuring and
impairment costs
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10.5
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22.6
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(12.1)
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|
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(54)
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%
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Operating income (as
reported)
|
160.3
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|
|
147.8
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|
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12.5
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8
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%
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Adjusted operating
income (non-GAAP)*
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173.6
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172.9
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0.7
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0
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%
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Diluted earnings per
share (as reported)
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3.47
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3.53
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(0.06)
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(2)
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%
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Adjusted diluted
earnings per share (non-GAAP)*
|
3.79
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4.25
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(0.46)
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(11)
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%
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Segment Results
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Tobacco operations
sales and other operating revenues
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$
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1,835.8
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$
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1,841.8
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$
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(6.0)
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0
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%
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Tobacco operations
operating income
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157.8
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168.8
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(11.1)
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(7)
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%
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Ingredients operations
sales and other operating revenues
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267.8
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141.5
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126.3
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|
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89
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%
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Ingredients operations
operating income
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16.6
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0.4
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16.2
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4,418
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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 year ended March 31,
2022, was $86.6 million, or
$3.47 per diluted share, compared
with $87.4 million, or $3.53 per diluted share, for the year ended
March 31, 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 $10.8
million and $0.46,
respectively, for the year ended March 31,
2022, compared to the year ended March 31, 2021. Operating income of $160.3 million for the year ended March 31, 2022, increased by $12.5 million, compared to operating income of
$147.8 million for the year ended
March 31, 2021. Adjusted operating
income, detailed in Other Items below, of $173.6 million increased by $0.7 million for the year ended March 31, 2022, compared to adjusted operating
income of $172.9 million for the year
ended March 31, 2021.
Net income for the quarter ended March
31, 2022, was $25.8 million,
or $1.03 per diluted share, compared
with $39.4 million, or $1.58 per diluted share, for the quarter ended
March 31, 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 $15.3
million and $0.62,
respectively, for the quarter ended March
31, 2022, compared to the quarter ended March 31, 2021. Operating income of $57.1 million for the quarter ended March 31, 2022, decreased by $5.6 million, compared to operating income of
$62.7 million for the quarter ended
March 31, 2021. Adjusted operating
income, detailed in Other Items below, of $57.1 million decreased by $8.2 million for the fourth quarter of fiscal
year 2022, compared to adjusted operating income of $65.3 million for the fourth quarter of fiscal
year 2021.
Consolidated revenues increased by $120.2
million to $2.1 billion for
the year ended March 31, 2022,
compared to the year ended March 31,
2021, on the addition of the businesses acquired in the
Ingredients Operations segment and lower tobacco sales volumes
partially offset by higher average sales prices in the Tobacco
Operations segment. In the quarter ended March 31, 2022, consolidated revenues increased
by $29.4 million to $647.0 million, compared to the quarter ended
March 31, 2021, on the inclusion of
the Shank's acquisition in the Ingredients Operations segment and
higher tobacco sales prices.
TOBACCO OPERATIONS
Segment operating income for the Tobacco Operations segment
decreased by $11.1 million to
$157.8 million and by $9.0 million to $52.2
million, respectively, for the year and quarter ended
March 31, 2022, compared to the same
periods in fiscal year 2021. Tobacco Operations segment results
declined largely due to tobacco shipment timing as well as some
tobacco inventory write downs, partially offset by increased
value-added services to customers in the year and quarter ended
March 31, 2022, compared to the year
and quarter ended March 31, 2021.
Africa sales volumes were lower in
the year and quarter ended March 31,
2022, compared to the same periods in fiscal year 2021, on
smaller burley crops as well as slower shipment timing. Sales
volumes for Brazil were lower for
the year ended March 31, 2022,
compared to the year ended March 31,
2021, in part due to lack of vessel and container
availability. In addition, inventory write downs resulting from
volatile market conditions in Brazil negatively impacted results for the
year and quarter ended March 31,
2022. In Asia, although
trading volumes were down on higher freight costs, our operations
saw a more favorable product mix, as well as increased value-added
services for customers during the year and quarter ended
March 31, 2022, compared to the same
periods in the prior fiscal year. Our operations in Europe experienced significantly higher energy
costs in the quarter and year ended March
31, 2022, compared to the same periods in the prior fiscal
year. Selling, general, and administrative expenses for the Tobacco
Operations segment were higher in the year ended March 31, 2022, compared to the year ended
March 31, 2021, primarily due to
unfavorable foreign currency exchange comparisons, mainly
remeasurement, offset in part by the effects of currency hedging
activities. Revenues for the Tobacco Operations segment of
$1.8 billion for the year and
$567.2 million for the quarter ended
March 31, 2022, were relatively flat,
compared to the same periods in the prior fiscal year, as higher
tobacco sales prices largely offset lower sales volumes. Our
uncommitted tobacco inventory levels, about 16% of tobacco
inventory at March 31, 2022, remained
well within our target range.
INGREDIENTS OPERATIONS
Segment operating income for the Ingredients Operations segment
was $16.6 million and $6.0 million, respectively, for the year and
quarter ended March 31, 2022,
compared to segment operating income of $0.4
million and $5.1 million,
respectively, for the year and quarter ended March 31, 2021. Results for the segment include
our October 2020 acquisition of Silva
International, Inc. ("Silva") and our October 2021 acquisition of Shank's. For both the
year and quarter ended March 31,
2022, our Ingredients Operations saw strong volumes in both
human and pet food categories as well as some rebound in demand
from sectors that have been impacted by the ongoing COVID-19
pandemic. In addition, the segment saw strong sales of
organic-based products, certain dehydrated products, and botanical
extracts and flavorings. Selling, general, and administrative
expenses for the segment increased in the year and quarter ended
March 31, 2022, compared to the same
periods in the prior fiscal year, on the addition of the acquired
businesses. Revenues for the Ingredients Operations segment
increased by $126.3 million to
$267.8 million and by $25.2 million to $79.8
million, respectively, for the year and quarter ended
March 31, 2022, compared to the year
and quarter ended March 31, 2021,
primarily on the addition of the revenues for the acquired
businesses as well as increased sales prices.
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 have taken
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 is in part related to the
continued 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 is, 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.
THE CONFLICT IN UKRAINE
We are closely monitoring the tragic situation in Ukraine. Since Russia initiated its current military
operations in Ukraine in 2022,
business globally has been directly or indirectly impacted. The
region is an important supplier of fertilizer, oil, gas, and
agricultural products for export to countries around the world, and
disruptions in those exports have created or contributed to various
economic and commercial challenges including increased energy
costs, increased fertilizer costs, and other inflationary impacts.
In addition, business in Ukraine,
Russia and the surrounding region
has been impacted by the temporary suspension of business
operations by companies due to safety and security concerns, the
divestiture of assets and businesses in the region by their
international owners, and government imposition of sanctions
targeting Russia and others,
including "luxury goods" sanctions that prohibit the supply of
tobacco and tobacco products to Russia.
We do not have manufacturing facilities or material subsidiaries
in Ukraine or Russia. We do, however, have a number of
customers that have historically conducted business there, and some
of those customers have previously disclosed the temporary
suspension of operations in Ukraine or the divestiture of assets in
Russia. We have worked closely
with those customers to monitor and understand the impacts the
conflict in Ukraine has had on
their operations. In some cases we have worked with customers to
suspend tobacco orders until such time that customers believe it is
safe to reopen their facilities in Ukraine, and in other cases we have
coordinated with customers to cancel orders for tobacco destined to
Russia and ship some or all of
that tobacco to other countries in which those customers have
operations that need those quantities and qualities of tobacco.
At this time, we have not experienced any material direct impact
on our business from the ongoing Ukraine conflict. We are unable, however, to
estimate the duration or extent of any potential impact on our
business from the continuation or potential escalation of the
conflict. Such future impacts could be direct, such as the impact
of continued or increased governmental prohibitions against
shipping tobacco and tobacco products to Russia, or they could be indirect, such as
contributing to or increasing costs and other inflationary
pressures impacting our global operations and those of our supply
chain around the world. We will continue to monitor and evaluate
this complex and evolving situation.
OTHER ITEMS
Cost of goods sold in the year ended March 31, 2022, increased by 6% to $1.7 billion and by 6% to $524.7 million in the quarter ended March 31, 2022, compared with the same periods in
the prior fiscal year, as a result of the acquisitions in our
Ingredients Operations segment as well as variances in sales prices
and volumes shipped in the Tobacco Operations segment. Selling,
general, and administrative costs for the year and quarter ended
March 31, 2022, increased by
$20.9 million to $240.7 million and by $6.5
million to $65.2 million,
respectively, compared to the same periods in the prior fiscal
year, on additional costs from the acquisitions in the Ingredients
Operations segment combined with unfavorable foreign currency
comparisons. In fiscal year 2022, foreign currency comparisons were
approximately $8.1 million
unfavorable, compared to fiscal year 2021, mainly due to currency
remeasurement variances in Brazil,
the Philippines, and Indonesia, partially offset by the effects of
currency hedging programs. In the quarter ended March 31, 2022, foreign currency comparisons were
approximately $3.3 million favorable,
compared to the quarter ended March 31,
2021, as the effects of currency hedging programs offset
negative currency remeasurement variances. Interest expense for the
year and quarter ended March 31,
2022, increased by $2.8
million to $27.7 million and
by $1.1 million to $6.9 million, respectively, largely on higher
average debt balances and interest rates.
For the fiscal year and quarter ended March 31, 2022, the Company's effective tax rate
on pre-tax income was 27.2% and 37.2%, respectively. In the fiscal
year ended March 31, 2022, the
Company recognized a $1.7 million
income tax benefit related to a final tax ruling at a foreign
subsidiary and a $1.2 million benefit
due to finalizing the prior year U.S. tax return. Without these
income tax benefits, the adjusted effective tax rate for the fiscal
year ended March 31, 2022, would have
been 29.2%.
For the fiscal year and quarter ended March 31, 2021, the Company's consolidated
effective tax rate was 23.4% and 29.1%, respectively. For the
fiscal year ended March 31, 2021,
income tax expense included benefits of $4.4
million for final tax regulations regarding the treatment of
dividends paid by foreign subsidiaries and $2.9 million due to amending and finalizing prior
year U.S. tax returns. Without these income tax benefits, the
consolidated effective tax rate for the fiscal year ended
March 31, 2021, would have been
approximately 29.2%.
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)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As Reported:
Consolidated operating income
|
|
$
|
57,124
|
|
|
$
|
62,745
|
|
|
$
|
160,315
|
|
|
$
|
147,810
|
|
Purchase accounting
adjustments(1)
|
|
—
|
|
|
—
|
|
|
3,057
|
|
|
2,800
|
|
Transaction costs for
acquisitions(2)
|
|
—
|
|
|
—
|
|
|
2,310
|
|
|
3,915
|
|
Fair value adjustment
to contingent consideration for FruitSmart
acquisition(3)
|
|
—
|
|
|
—
|
|
|
(2,532)
|
|
|
(4,173)
|
|
Restructuring and
impairment costs(4)
|
|
—
|
|
|
2,598
|
|
|
10,457
|
|
|
22,577
|
|
Adjusted operating
income
|
|
57,124
|
|
|
65,343
|
|
|
$
|
173,607
|
|
|
$
|
172,929
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income and Diluted Earnings Per Share
Reconciliation
|
|
|
|
|
|
|
|
|
(in thousands except
for per share amounts)
|
|
Three Months Ended
March 31,
|
|
Fiscal Year Ended
March 31,
|
(all amounts reported
net of income taxes)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
As Reported: Net income
attributable to Universal Corporation
|
|
$
|
25,770
|
|
|
$
|
39,361
|
|
|
$
|
86,577
|
|
|
$
|
87,410
|
|
Purchase accounting
adjustments(1)
|
|
—
|
|
|
—
|
|
|
2,415
|
|
|
2,800
|
|
Transaction costs for
acquisitions(2)
|
|
—
|
|
|
—
|
|
|
2,195
|
|
|
3,915
|
|
Fair value adjustment
to contingent consideration for FruitSmart
acquisition(3)
|
|
—
|
|
|
—
|
|
|
(2,532)
|
|
|
(4,173)
|
|
Restructuring and
impairment costs(4)
|
|
—
|
|
|
1,700
|
|
|
7,879
|
|
|
17,800
|
|
Interest expense
related to an uncertain tax matter at a foreign
subsidiary
|
|
—
|
|
|
—
|
|
|
(470)
|
|
|
1,849
|
|
Income tax benefit from
dividend withholding tax liability reversal(5)
|
|
—
|
|
|
—
|
|
|
(1,686)
|
|
|
(4,421)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net income
attributable to Universal Corporation
|
|
$
|
25,770
|
|
|
$
|
41,061
|
|
|
$
|
94,378
|
|
|
$
|
105,180
|
|
|
|
|
|
|
|
|
|
|
As reported: Diluted
earnings per share
|
|
$
|
1.03
|
|
|
$
|
1.58
|
|
|
$
|
3.47
|
|
|
$
|
3.53
|
|
Adjusted: Diluted
earnings per share
|
|
$
|
1.03
|
|
|
$
|
1.65
|
|
|
$
|
3.79
|
|
|
$
|
4.25
|
|
|
|
(1)
|
The Company recognized
an increase in cost of goods sold in the third quarters of fiscal
year 2022 and 2021, relating to the expensing of fair value
adjustments to inventory associated with the acquisition accounting
for Shank's (effective October 4, 2021) and Silva (effective
October 1, 2020). The adjustment related to the Silva acquisition
is not deductible for U.S. income tax purposes.
|
(2)
|
The Company incurred
selling, general, and administrative expenses for due diligence and
other transaction costs associated with the acquisitions of Shank's
and Silva. A portion of these costs is not deductible for U.S.
income tax purposes.
|
(3)
|
The Company reversed
the contingent consideration liability for the FruitSmart
acquisition, as a result of certain performance metrics that did
not meet the required threshold stipulated in the purchase
agreement.
|
(4)
|
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. See
Note 4 for additional information.
|
(5)
|
The Company recognized
income tax benefits related to a favorable final income tax ruling
at a foreign subsidiary (fiscal year 2022) and final U.S. tax
regulations on certain dividends paid by foreign subsidiaries
(fiscal year 2021).
|
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, 2021, 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,
2021 and March 31, 2022, which
is expected to be filed later this week. 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 25, 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 August 25, 2022. A
taped replay of the call will be available through June 7, 2022, by dialing (866) 813-9403. The
confirmation number to access the replay is 134295.
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 March 31,
|
|
Fiscal Year Ended March 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Sales and other
operating revenues
|
|
$
|
646,973
|
|
|
$
|
617,590
|
|
|
$
|
2,103,601
|
|
|
$
|
1,983,357
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
524,676
|
|
|
493,610
|
|
|
1,694,675
|
|
|
1,597,354
|
|
Selling, general and
administrative expenses
|
|
65,173
|
|
|
58,637
|
|
|
240,686
|
|
|
219,789
|
|
Other income
|
|
—
|
|
|
—
|
|
|
(2,532)
|
|
|
(4,173)
|
|
Restructuring and
impairment costs
|
|
—
|
|
|
2,598
|
|
|
10,457
|
|
|
22,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
57,124
|
|
|
62,745
|
|
|
160,315
|
|
|
147,810
|
|
Equity in pretax
earnings of unconsolidated affiliates
|
|
1,039
|
|
|
896
|
|
|
6,095
|
|
|
2,985
|
|
Other non-operating
income (expense)
|
|
2,529
|
|
|
(432)
|
|
|
2,687
|
|
|
(440)
|
|
Interest
income
|
|
118
|
|
|
63
|
|
|
917
|
|
|
325
|
|
Interest
expense
|
|
6,947
|
|
|
5,814
|
|
|
27,747
|
|
|
24,954
|
|
Income before income
taxes
|
|
53,863
|
|
|
57,458
|
|
|
142,267
|
|
|
125,726
|
|
Income taxes
|
|
20,081
|
|
|
16,734
|
|
|
38,663
|
|
|
29,412
|
|
Net income
|
|
33,782
|
|
|
40,724
|
|
|
103,604
|
|
|
96,314
|
|
Less: net income
attributable to noncontrolling interests in subsidiaries
|
|
(8,012)
|
|
|
(1,363)
|
|
|
(17,027)
|
|
|
(8,904)
|
|
Net income attributable to Universal
Corporation
|
|
$
|
25,770
|
|
|
$
|
39,361
|
|
|
$
|
86,577
|
|
|
$
|
87,410
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.04
|
|
|
$
|
1.59
|
|
|
$
|
3.50
|
|
|
$
|
3.55
|
|
Diluted
|
|
$
|
1.03
|
|
|
$
|
1.58
|
|
|
$
|
3.47
|
|
|
$
|
3.53
|
|
UNIVERSAL
CORPORATION CONSOLIDATED BALANCE SHEETS (in
thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
81,648
|
|
|
$
|
197,221
|
|
Accounts receivable,
net
|
|
385,437
|
|
|
367,482
|
|
Advances to suppliers,
net
|
|
129,838
|
|
|
121,618
|
|
Accounts
receivable—unconsolidated affiliates
|
|
4,540
|
|
|
584
|
|
Inventories—at lower of
cost or net realizable value:
|
|
|
|
|
Tobacco
|
|
822,513
|
|
|
640,653
|
|
Other
|
|
194,161
|
|
|
145,965
|
|
Prepaid income
taxes
|
|
13,095
|
|
|
15,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current
assets
|
|
116,779
|
|
|
66,806
|
|
Total current
assets
|
|
1,748,011
|
|
|
1,555,358
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
Land
|
|
23,959
|
|
|
22,400
|
|
Buildings
|
|
293,935
|
|
|
284,430
|
|
Machinery and
equipment
|
|
668,451
|
|
|
658,826
|
|
|
|
986,345
|
|
|
965,656
|
|
Less accumulated
depreciation
|
|
(641,227)
|
|
|
(616,146)
|
|
|
|
345,118
|
|
|
349,510
|
|
Other assets
|
|
|
|
|
Operating lease
right-of-use assets
|
|
40,243
|
|
|
31,230
|
|
Goodwill,
net
|
|
213,998
|
|
|
173,051
|
|
Other intangibles,
net
|
|
92,571
|
|
|
72,304
|
|
Investments in
unconsolidated affiliates
|
|
81,006
|
|
|
84,218
|
|
Deferred income
taxes
|
|
11,616
|
|
|
12,149
|
|
Pension
asset
|
|
12,667
|
|
|
11,950
|
|
Other noncurrent
assets
|
|
41,115
|
|
|
52,154
|
|
|
|
493,216
|
|
|
437,056
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,586,345
|
|
|
$
|
2,341,924
|
|
UNIVERSAL
CORPORATION CONSOLIDATED BALANCE SHEETS (in
thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes payable and
overdrafts
|
|
$
|
182,639
|
|
|
$
|
101,294
|
|
Accounts payable and
accrued expenses
|
|
272,042
|
|
|
139,484
|
|
Accounts
payable—unconsolidated affiliates
|
|
5,308
|
|
|
1,282
|
|
Customer advances and
deposits
|
|
13,724
|
|
|
8,765
|
|
Accrued
compensation
|
|
27,281
|
|
|
29,918
|
|
Income taxes
payable
|
|
7,427
|
|
|
4,516
|
|
Current portion of
operating lease liabilities
|
|
10,303
|
|
|
7,898
|
|
Current portion of
long-term debt
|
|
—
|
|
|
—
|
|
Total current
liabilities
|
|
518,724
|
|
|
293,157
|
|
|
|
|
|
|
Long-term
debt
|
|
518,547
|
|
|
518,172
|
|
Pensions and other
postretirement benefits
|
|
52,890
|
|
|
57,637
|
|
Long-term operating
lease liabilities
|
|
29,617
|
|
|
19,725
|
|
Other long-term
liabilities
|
|
34,464
|
|
|
59,814
|
|
Deferred income
taxes
|
|
47,334
|
|
|
44,994
|
|
Total
liabilities
|
|
1,201,576
|
|
|
993,499
|
|
|
|
|
|
|
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, 24,550,019 shares issued and
outstanding (24,514,867 at March 31, 2021)
|
|
330,662
|
|
|
326,673
|
|
Retained
earnings
|
|
1,094,192
|
|
|
1,087,663
|
|
Accumulated other
comprehensive loss
|
|
(84,311)
|
|
|
(107,037)
|
|
Total Universal
Corporation shareholders' equity
|
|
1,340,543
|
|
|
1,307,299
|
|
Noncontrolling
interests in subsidiaries
|
|
44,226
|
|
|
41,126
|
|
Total shareholders'
equity
|
|
1,384,769
|
|
|
1,348,425
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,586,345
|
|
|
$
|
2,341,924
|
|
UNIVERSAL
CORPORATION CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
|
2022
|
|
2021
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
|
103,604
|
|
|
$
|
96,314
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
52,521
|
|
|
44,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
(recoveries) on advances and guaranteed loans to
suppliers
|
|
5,988
|
|
|
5,534
|
|
Inventory
write-downs
|
|
19,944
|
|
|
13,463
|
|
Stock-based
compensation expense
|
|
6,186
|
|
|
6,106
|
|
Foreign currency
remeasurement loss (gain), net
|
|
19,029
|
|
|
(8,475)
|
|
Foreign currency
exchange contracts
|
|
(13,210)
|
|
|
(1,567)
|
|
Deferred income
taxes
|
|
(2,473)
|
|
|
(2,335)
|
|
Equity in net income of
unconsolidated affiliates, net of dividends
|
|
(329)
|
|
|
(296)
|
|
Restructuring and
impairment costs
|
|
10,457
|
|
|
22,577
|
|
Restructuring
payments
|
|
(4,134)
|
|
|
(8,283)
|
|
Change in estimated
fair value of contingent consideration for FruitSmart
acquisition
|
|
(2,532)
|
|
|
(4,173)
|
|
Other, net
|
|
513
|
|
|
(1,373)
|
|
Changes in operating
assets and liabilities, net:
|
|
(150,682)
|
|
|
58,189
|
|
Net cash provided by operating
activities
|
|
44,882
|
|
|
220,414
|
|
|
|
|
|
|
Cash Flows From Investing
Activities:
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(53,203)
|
|
|
(66,154)
|
|
Purchase of business,
net of cash held by the business
|
|
(102,462)
|
|
|
(161,751)
|
|
Proceeds from sale of
property, plant and equipment
|
|
13,004
|
|
|
11,436
|
|
Other
|
|
—
|
|
|
(800)
|
|
Net cash used by investing
activities
|
|
(142,661)
|
|
|
(217,269)
|
|
|
|
|
|
|
Cash Flows From Financing
Activities:
|
|
|
|
|
Issuance (repayment) of
short-term debt, net
|
|
79,286
|
|
|
29,396
|
|
Issuance of long-term
debt
|
|
—
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to
noncontrolling interests in subsidiaries
|
|
(13,390)
|
|
|
(10,881)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common
stock
|
|
(3,053)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on
common stock
|
|
(76,436)
|
|
|
(75,177)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt issuance costs and
other
|
|
(3,167)
|
|
|
(1,949)
|
|
Net cash provided/(used) by financing
activities
|
|
(16,760)
|
|
|
91,389
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash
|
|
(1,034)
|
|
|
1,257
|
|
Net increase (decrease)
in cash and cash equivalents
|
|
(115,573)
|
|
|
95,791
|
|
Cash, restricted cash
and cash equivalents at beginning of year
|
|
203,221
|
|
|
107,430
|
|
Cash, Restricted Cash and Cash Equivalents at End of
Year
|
|
$
|
87,648
|
|
|
$
|
203,221
|
|
|
|
|
|
|
Supplemental Information:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
81,648
|
|
|
$
|
197,221
|
|
Restricted cash (Other noncurrent
assets)
|
|
6,000
|
|
|
6,000
|
|
Total cash, restricted cash and cash
equivalents
|
|
$
|
87,648
|
|
|
$
|
203,221
|
|
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, 2021.
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)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share
|
|
|
|
|
|
|
|
|
Numerator for basic earnings per
share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
25,770
|
|
|
$
|
39,361
|
|
|
$
|
86,577
|
|
|
$
|
87,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per
share
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,772,754
|
|
|
24,685,343
|
|
|
24,764,177
|
|
|
24,656,009
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.04
|
|
|
$
|
1.59
|
|
|
$
|
3.50
|
|
|
$
|
3.55
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share
|
|
|
|
|
|
|
|
|
Numerator for diluted earnings per
share
|
|
|
|
|
|
|
|
|
Net income attributable
to Universal Corporation
|
|
$
|
25,770
|
|
|
$
|
39,361
|
|
|
$
|
86,577
|
|
|
$
|
87,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per
share:
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
24,772,754
|
|
|
24,685,343
|
|
|
24,764,177
|
|
|
24,656,009
|
|
Effect of dilutive
securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee and
outside director share-based awards
|
|
180,816
|
|
|
175,935
|
|
|
158,719
|
|
|
132,557
|
|
Denominator for diluted
earnings per share
|
|
24,953,570
|
|
|
24,861,278
|
|
|
24,922,896
|
|
|
24,788,566
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
1.03
|
|
|
$
|
1.58
|
|
|
$
|
3.47
|
|
|
$
|
3.53
|
|
NOTE 3. SEGMENT INFORMATION
As a result of acquisitions of plant-based ingredients companies
in fiscal year 2020 and 2021, during the fiscal year ended
March 31, 2021 management evaluated
the Company's global business activities, including product and
service offerings to its customers, as well as senior management's
operational and financial responsibilities. This assessment
included an analysis of how its chief operating decision maker
measures business performance and allocates resources. As a result
of this analysis, senior management 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 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, 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 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 botanical extracts and flavorings and also
offers bottling and custom packaging for customers. In fiscal year
2021, the Company announced the wind-down of CIFI, a greenfield
operation that primarily manufactured both dehydrated and liquid
sweet potato products. See Note 4 for additional information about
the wind-down of CIFI.
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)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
SALES AND OTHER OPERATING
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
567,180
|
|
|
$
|
562,993
|
|
|
$
|
1,835,790
|
|
|
$
|
1,841,837
|
|
Ingredients
Operations
|
|
79,793
|
|
|
54,597
|
|
|
267,811
|
|
|
141,520
|
|
Consolidated sales and
other operating revenues
|
|
$
|
646,973
|
|
|
$
|
617,590
|
|
|
$
|
2,103,601
|
|
|
$
|
1,983,357
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
52,155
|
|
|
$
|
61,174
|
|
|
$
|
157,754
|
|
|
$
|
168,832
|
|
Ingredients
Operations
|
|
6,008
|
|
|
5,065
|
|
|
16,581
|
|
|
367
|
|
Subtotal
|
|
58,163
|
|
|
66,239
|
|
|
174,335
|
|
|
169,199
|
|
Deduct: Equity in
pretax earnings of unconsolidated affiliates (1)
|
|
(1,039)
|
|
|
(896)
|
|
|
(6,095)
|
|
|
(2,985)
|
|
Restructuring and
impairment costs (2)
|
|
—
|
|
|
(2,598)
|
|
|
(10,457)
|
|
|
(22,577)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Other
income (3)
|
|
—
|
|
|
—
|
|
|
2,532
|
|
|
4,173
|
|
Consolidated operating
income
|
|
$
|
57,124
|
|
|
$
|
62,745
|
|
|
$
|
160,315
|
|
|
$
|
147,810
|
|
|
|
(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.
|
(3)
|
Other income represents
the reversal of the contingent consideration liability associated
with the acquisition of FruitSmart.
|
NOTE 4. RESTRUCTURING AND IMPAIRMENT COSTS
During the fiscal years ended March 31, 2022, 2021, and
2020 Universal recorded restructuring and impairment costs related
to business changes and various initiatives to adjust certain
operations and reduce costs.
Fiscal Year Ended March 31,
2022
Tobacco Operations
As a result of efforts to exit the idled tobacco operations in
Tanzania, the Company reevaluated
the carrying values of property, plant, and equipment associated
with the Tanzania operations.
During the fiscal year ended March 31, 2022, the Company
determined the carrying value exceeded the estimated fair value of
those assets and recognized a $9.4
million impairment charge.
During the fiscal year ended March 31, 2022, the Company
also incurred $2.2 million of
termination costs for the Tobacco Operations segment.
Ingredients Operations
During the fiscal year ended March 31, 2022, the Company
recognized $1.2 million of net gains
on the sale of the remaining property, plant, and equipment
associated with the wind-down of the CIFI operations that was
announced in fiscal year 2021.
Fiscal Year Ended March 31,
2021
Tobacco Operations
During the fiscal year ended March 31, 2021, the Company
incurred $4.4 million of termination
and impairment costs associated with the restructuring of tobacco
buying and administrative operations in Africa, $1.2
million of combined termination costs in other regions, and
a $0.9 million charge for the
liquidation of an idled service entity in Tanzania. Total restructuring and impairments
costs related to the Tobacco Operations segment were $6.5 million for the fiscal year ended
March 31, 2021.
Ingredients Operations
In fiscal year 2021, the Company committed to a plan to
wind-down its subsidiary, Carolina Innovative Food Ingredients,
Inc. ("CIFI"), a sweet potato processing operation located in
Nashville, North Carolina. The
CIFI operation was a start-up project initially undertaken by the
Company in fiscal year 2015. The decision to wind down CIFI was
consistent with the Company's capital allocation strategy to focus
on delivering shareholder value through building and enhancing a
plant-based ingredients platform, which includes integrating and
exploring the synergies of recently acquired businesses, FruitSmart
and Silva. The Company determined that CIFI was not a strategic fit
for the platform's long-term objectives. CIFI's single-product
focused processing facility and ongoing international pricing
pressures, among other factors, created challenges that proved
insurmountable. As a result of the decision to wind down the CIFI
operations, the Company paid termination benefits totaling
approximately $0.6 million to
employees whose permanent positions were eliminated. In addition to
the termination costs, the Company recognized various other costs
associated with the wind-down of the CIFI facility. These costs
include impairments of property, plant, and equipment (including
the factory building), as well as inventory and supply write-downs.
The total restructuring and impairment charge incurred for the CIFI
wind-down was $16.1 million for the
fiscal year ended March 31, 2021.
Fiscal Year Ended March 31,
2020
Tobacco Operations
In fiscal year 2020, the Company recorded restructuring and
impairment costs totaling $7.5
million, primarily related to $3.4
million of employee termination benefits for a voluntary
workforce reduction at the Company's tobacco facilities in
North Carolina, $1.8 million of employee termination benefits for
the Company's operations in Africa, and a $2.2
million impairment charge for machinery used by the
Company's operations in Africa.
Restructuring and impairment costs were also incurred in connection
with downsizing efforts at several other locations around the
Company.
A summary of the restructuring and impairment costs
incurred during the fiscal years ended March 31, 2022, 2021,
and 2020 is as follows:
|
|
Fiscal Years Ended
March 31,
|
|
|
2022
|
|
2021
|
|
2020
|
Restructuring Costs:
|
|
|
|
|
|
|
Employee termination
benefits
|
|
$
|
2,174
|
|
|
$
|
5,237
|
|
|
$
|
5,356
|
|
Other
restructuring costs
|
|
(24)
|
|
|
3,468
|
|
|
—
|
|
|
|
2,150
|
|
|
8,705
|
|
|
5,356
|
|
Impairment Costs:
|
|
|
|
|
|
|
Property, plant, and equipment and
other noncurrent assets
|
|
8,307
|
|
|
13,872
|
|
|
2,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,307
|
|
|
$
|
13,872
|
|
|
$
|
2,187
|
|
Total restructuring and
impairment costs
|
|
$
|
10,457
|
|
|
$
|
22,577
|
|
|
$
|
7,543
|
|
A reconciliation of the Company's liability for employee
termination benefits and other restructuring costs for fiscal years
2020 through 2022 is as follows:
|
|
Employee
Termination
Benefits
|
|
Other Costs
|
|
Total
|
Balance at April 1, 2019
|
|
$
|
623
|
|
|
$
|
223
|
|
|
$
|
846
|
|
Fiscal Year 2020 Activity:
|
|
|
|
|
|
|
Costs charged to
expense
|
|
5,356
|
|
|
—
|
|
|
5,356
|
|
Payments and
write-offs
|
|
(2,564)
|
|
|
(223)
|
|
|
(2,787)
|
|
Balance at March 31,
2020
|
|
3,415
|
|
|
—
|
|
|
3,415
|
|
Fiscal Year 2021 Activity:
|
|
|
|
|
|
|
Costs charged to
expense
|
|
5,237
|
|
|
3,468
|
|
|
8,705
|
|
Payments and
write-offs
|
|
(7,282)
|
|
|
(2,855)
|
|
|
(10,137)
|
|
Balance at March 31,
2021
|
|
1,370
|
|
|
613
|
|
|
1,983
|
|
Fiscal Year 2022 Activity:
|
|
|
|
|
|
|
Costs charged to
expense
|
|
2,174
|
|
|
(24)
|
|
|
2,150
|
|
Payments and
write-offs
|
|
(3,544)
|
|
|
(589)
|
|
|
(4,133)
|
|
Balance at March 31, 2022
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Universal continually reviews its business for opportunities to
realize efficiencies, reduce costs, and realign its operations in
response to business changes. The Company may incur additional
restructuring and impairment costs in future periods as business
changes occur and additional cost savings initiatives are
implemented.
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SOURCE Universal Corporation