RICHMOND, Va., May 26, 2021 /PRNewswire/ -- George C. Freeman, III, Chairman, President, and
Chief Executive Officer of Universal Corporation (NYSE:UVV),
stated, "I am pleased to report that our net income and diluted
earnings per share, and our non-GAAP adjusted operating income for
fiscal year 2021, are all up over 20% compared to fiscal year 2020.
Strong leaf tobacco shipments in the second half of fiscal year
2021, the addition of our plant-based ingredients acquisitions, and
favorable foreign currency comparisons all contributed to this
improvement in our results. I am especially proud that we were able
to deliver these results in the midst of the COVID-19 pandemic, and
would like to thank our employees, growers, customers, and other
partners for their support, adaptability, and hard work that made
this a successful year.
"Leaf tobacco shipments, which started slowly in fiscal year
2021, accelerated in the second half of the fiscal year. We ended
the year with leaf tobacco volumes that were just slightly below
those in fiscal year 2020, in part due to some tobacco shipments
that were delayed and will ship in fiscal year 2022. Despite global
challenges including increased safety protocols, work-from-home
mandates, and travel restrictions that necessitated adjustment to
how we conduct our leaf tobacco business, we successfully delivered
the leaf tobacco desired by our customers.
"We also delivered on our capital allocation strategy objective
to build and enhance our plant-based ingredients platform through
the acquisition of Silva International in the third quarter of
fiscal year 2021. We are excited about the prospects for our
plant-based ingredients platform and continue to progress on our
integration process. In the fourth quarter of fiscal year 2021, our
Ingredients Operations segment performed well against its
objectives in both the human and pet food categories.
"In the quarter and year ended March 31,
2021, we benefited from positive net foreign currency
comparisons, mostly non-cash currency remeasurement, of
$21 million and $26 million, respectively, compared to the same
periods in fiscal year 2020. Certain currencies weakened
significantly in the fourth quarter of fiscal year 2020, largely
due to uncertain market conditions related to the burgeoning
COVID-19 pandemic. We ended our fiscal year 2021 with a strong
balance sheet and uncommitted leaf tobacco inventory levels just
over our target range, at 22%. In addition to our investments in
growth opportunities, we are also pleased to have announced our
51st annual dividend increase today, continuing our commitment to
delivering shareholder value.
"As we move into fiscal year 2022, we currently expect global
supply for flue-cured leaf tobacco to be in line with anticipated
demand and for burley leaf tobacco to be in a slight undersupply
position. We are continuing to monitor freight costs as the
COVID-19 pandemic disrupted shipping patterns, which has resulted
in cost increases due to limited container availability.
"We published our second annual Sustainability Report in fiscal
year 2021 on our website. The report showcases our strong
commitment to our sustainability programs and initiatives which
stems from our belief that sustainability is a key component of our
past and future success. In fiscal year 2022, we will continue to
deliver on our fundamental responsibility to our stakeholders to
set high standards of social and environmental performance to
support a sustainable supply chain."
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FINANCIAL
HIGHLIGHTS
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Fiscal Year Ended
March 31,
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Change
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(in millions of
dollars, except per share data)
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2021
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2020
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$
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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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1,983.4
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$
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1,910.0
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$
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73.4
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4
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%
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Cost of goods
sold
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1,597.4
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1,553.2
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44.2
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3
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%
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Gross Profit
Margin
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19.5
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%
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18.7
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%
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—
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80 bps
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Selling, general and
administrative expenses
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219.8
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222.9
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(3.1)
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(1)
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%
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Restructuring and
impairment costs
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22.6
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7.5
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15.0
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199
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%
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Operating income (as
reported)
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147.8
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126.4
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21.4
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17
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%
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Adjusted operating
income (non-GAAP)*
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172.9
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141.3
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31.7
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22
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%
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Diluted earnings per
share (as reported)
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3.53
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2.86
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0.67
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24
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%
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Adjusted diluted
earnings per share (non-GAAP)*
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4.25
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3.49
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0.76
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22
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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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1,841.8
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$
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1,887.1
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$
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(45.2)
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(2)
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%
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Tobacco operations
operating income
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168.8
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146.6
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22.2
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15
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%
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Ingredients
operations sales and other operating revenues
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141.5
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22.9
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118.6
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518
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%
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Ingredient operations
operating income
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0.4
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(8.5)
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8.9
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(104)
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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 fiscal year ended March 31, 2021, was $87.4
million, or $3.53 per diluted
share, compared with $71.7 million,
or $2.86 per diluted share, for the
fiscal year ended March 31, 2020.
Excluding restructuring and impairment costs and certain other
non-recurring items, detailed in Other Items below, net income and
diluted earnings per share increased by $17.6 million and $0.76, respectively, for fiscal year 2021,
compared to fiscal year 2020. Operating income of $147.8 million for the year ended March 31, 2021, increased by $21.4 million, compared to operating income of
$126.4 million for the year ended
March 31, 2020. Adjusted operating
income, detailed in Other Items below, of $172.9 million increased by $31.7 million for fiscal year 2021, compared to
adjusted operating income of $141.3
million for fiscal year 2020.
Net income for the quarter ended March
31, 2021, was $39.4 million,
or $1.58 per diluted share, compared
with net income of $15.6 million, or
$0.63 per diluted share, for the
quarter ended March 31, 2020.
Excluding restructuring and impairment costs and certain other
non-recurring items, detailed in Other Items below, net income and
diluted earnings per share increased by $14.3 million and $0.57, respectively, for the quarter ended
March 31, 2021, compared to the
quarter ended March 31, 2020.
Operating income for the fourth quarter of fiscal year 2021
increased by $31.2 million to
$62.7 million compared to
$31.5 million for the three months
ended March 31, 2020.
Consolidated revenues increased by $73.4
million to $2.0 billion for
the year ended March 31, 2021, and
decreased by $14.5 million to
$617.6 million for the three months
ended March 31, 2021, compared to the
same periods in fiscal year 2020, on the addition of businesses
acquired in calendar year 2020 in the Ingredients Operations
segment, offset in part by lower comparative leaf tobacco shipment
volumes.
TOBACCO OPERATIONS
Operating income for the Tobacco Operations segment increased by
$22.2 million to $168.8 million for the fiscal year and by
$16.1 million to $61.2 million for the quarter ended March 31, 2021, compared with the same periods
for fiscal year 2020. Favorable foreign currency remeasurement
comparisons and strong tobacco shipment volumes benefited Tobacco
Operations segment results for both the quarter and year ended
March 31, 2021. Tobacco shipment
volumes for fiscal year 2021, which were heavily weighted to the
second half of the fiscal year, ended up just slightly below
tobacco shipment volumes for fiscal year 2020.
In fiscal year 2021, compared to fiscal year 2020, sales volumes
were up in Brazil and the United States on higher sales of carryover
crop tobacco, while volumes decreased in Africa in part on weather reduced crop sizes
as well as some delayed shipments that will occur in fiscal year
2022. Selling, general, and administrative costs for the segment
were lower for fiscal year 2021, compared to fiscal year 2020,
largely on favorable net foreign currency remeasurement
comparisons, mainly in Indonesia
and Brazil. A favorable product
mix and continued strong wrapper demand also benefited Tobacco
Operations results in fiscal year 2021. Revenues for the Tobacco
Operations segment of $1.8 billion
for fiscal year 2021 were down $45.2
million, compared to fiscal year 2020, on slightly lower
leaf tobacco shipment volumes and sales prices.
In the quarter ended March 31,
2021, results for the Tobacco Operations segment were up
largely on favorable currency remeasurement comparisons, mainly in
Indonesia, Brazil, Mozambique, and Mexico compared to the quarter ended
March 31, 2020, when certain
currencies drastically weakened mainly due to market uncertainties
caused by the COVID-19 pandemic. Leaf tobacco shipments were
modestly lower in the quarter ended March
31, 2021, compared to the same quarter in the prior fiscal
year, largely due to reduced African volumes, including some
volumes that will ship in fiscal year 2022. An improved product mix
and continued strong wrapper demand benefited Tobacco Operations
segment results in the fourth quarter of fiscal year 2021, compared
to the fourth quarter of fiscal year 2020. Revenues for the Tobacco
Operations segment of $563.0 million
for the quarter ended March 31, 2021,
were down $49.2 million, compared to
the same period in the prior fiscal year, on lower tobacco shipment
volumes.
INGREDIENTS OPERATIONS
As part of our capital allocation strategy to build and enhance
our plant-based ingredients platform, we acquired two companies,
FruitSmart on January 1, 2020, and
Silva on October 1, 2020. We also
made the strategic decision to wind down our Carolina Innovative
Food Ingredients business in the quarter ended December 31, 2020.
Operating income for the Ingredients Operations segment was
$0.4 million and $5.1 million, respectively, for the fiscal year
and quarter ended March 31, 2021,
compared to an operating loss of $8.5
million and $4.1 million,
respectively, for the fiscal year and quarter ended March 31, 2020. Results for the segment included
costs from amortization of intangibles related to the acquisitions,
which totaled $6.4 million and
$2.4 million, respectively, in the
fiscal year and quarter ended March 31,
2021, as well as purchase accounting adjustments of
$2.8 million in year ended
March 31, 2021, and $2.7 million in the year and quarter ended
March 31, 2020, that also reduced our
results for the segment. Our Ingredients Operations saw some
changes in product mix during fiscal year 2021 due to changes in
customer demand resulting from the ongoing COVID-19 pandemic. While
demand for ingredients used in products for restaurants and social
venues declined, we saw demand increase for ingredients used in
grocery items and pet foods. In the fourth quarter of fiscal year
2021, we began to see demand for our products recover from certain
sectors, such as food service, which were negatively impacted by
COVID-19. Selling, general, and administrative expenses increased
in the fiscal year and quarter ended March
31, 2021, on the addition of the acquired businesses.
Revenues for the Ingredients Operations segment of $141.5 million for the fiscal year and
$54.6 million for the quarter ended
March 31, 2021, were up $118.6 million and $34.7
million, respectively, compared to the same periods in the
prior fiscal year, on the addition of the revenues for the acquired
businesses.
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,
including imposing stay-at-home orders and closing "non-essential"
businesses and their operations. We continue to closely monitor
developments related to the ongoing COVID-19 pandemic and have
taken and continue to take steps intended to mitigate the potential
risks 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 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 ongoing pandemic. To date, we have
not experienced a material impact to our supply chain, although the
ongoing COVID-19 pandemic resulted in delays in certain operations
during fiscal year 2021. In addition, our plant-based ingredients
platform has seen some shifts in product mix due to the ongoing
COVID-19 pandemic related to changes in customer demand. 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 continue to monitor the impacts of the ongoing 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 ongoing 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.
OTHER ITEMS
Cost of goods sold in the fiscal year and quarter ended
March 31, 2021, increased by 3% to
$1.6 billion and declined by 6% to
$493.6 million, respectively, both
compared with the same periods in the prior fiscal year, as a
result of variances in tobacco shipment volumes and green tobacco
prices as well as the acquisition of businesses in the Ingredients
Operations segment. Selling, general, and administrative costs for
the fiscal year and quarter ended March 31,
2021, decreased by $3.1
million to $219.8 million and
by $11.4 million to $58.6 million, respectively, compared to the same
periods in the prior fiscal year, as positive comparisons on
foreign currency remeasurement and exchange variances more than
offset additional costs from the business acquisitions in the
Ingredients Operations segment. The positive foreign currency
remeasurement and exchange variances, primarily in Indonesia, Brazil, Mozambique, and Mexico, totaled approximately $26 million and $21
million in the fiscal year and quarter ended March 31, 2021, respectively.
For the fiscal year and quarter ended March 31, 2021, our consolidated effective tax
rates were 23% and 29%, respectively. For the fiscal year ended
March 31, 2021, income tax expense
included a $4.4 million benefit for
final tax regulations regarding the treatment of dividends paid by
foreign subsidiaries and a $3.4
million benefit due to amending and finalizing prior year
returns. Without these benefits, the consolidated effective tax
rate for the fiscal year ended March 31,
2021, would have been approximately 30%.
Our consolidated effective tax rates for the fiscal year and
quarter ended March 31, 2020, were
approximately 34% and 31%, respectively. Income tax expense for the
fiscal year ended March 31, 2020
included a $2.8 million net tax
accrual for an unresolved tax matter at a foreign subsidiary and a
$1.5 million benefit due to amending
and finalizing prior year returns. Without the effect of these
items, the consolidated effective tax rate for the fiscal year
ended March 31, 2020, would have been
approximately 30%.
Reconciliation of Certain Non-GAAP Financial Measures
The following tables set forth certain non-recurring items
included in reported results to reconcile adjusted operating income
to consolidated operating income and adjusted net income to net
income attributable to Universal Corporation:
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Adjusted Operating
Income Reconciliation
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Fiscal Year Ended
March 31,
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(in
thousands)
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2021
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2020
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As Reported:
Consolidated operating income
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$
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147,810
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$
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126,367
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Purchase accounting
adjustments(1)
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2,800
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2,700
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Transaction costs for
acquisitions(2)
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3,915
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4,668
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Fair value adjustment
to contingent consideration for FruitSmart
acquisition(3)
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(4,173)
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Restructuring and
impairment costs(4)
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22,577
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7,543
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Adjusted operating
income
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$
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172,929
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$
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141,278
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Adjusted Net
Income and Diluted Earnings Per Share Reconciliation
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(in thousands except
for per share amounts)
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Fiscal Year Ended
March 31,
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(all amounts reported
net of income taxes)
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2021
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2020
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As Reported: Net
income attributable to Universal Corporation
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$
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87,410
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$
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71,680
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Purchase accounting
adjustments(1)
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2,800
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2,133
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Transaction costs for
acquisitions(2)
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3,915
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4,668
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Fair value adjustment
to contingent consideration for FruitSmart
acquisition(3)
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(4,173)
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—
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Restructuring and
impairment costs(4)
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17,800
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6,283
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Interest expense
related to an uncertain tax matter at a foreign
subsidiary
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1,849
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—
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Income tax benefit
from dividend withholding tax liability
reversal(5)
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(4,421)
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—
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Income tax settlement
for foreign subsidiary(6)
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—
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2,766
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Adjusted Net income
attributable to Universal Corporation
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$
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105,180
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$
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87,530
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As reported: Diluted
earnings per share
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$
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3.53
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$
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2.86
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Adjusted: Diluted
earnings per share
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$
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3.49
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$
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3.49
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(1)
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The Company
recognized an increase in cost of goods sold in fiscal year 2021
and 2020, relating to the expensing of a fair value adjustments to
inventory associated with the initial acquisition accounting for
Silva (effective October 1, 2020) and FruitSmart (effective January
1, 2020).
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(2)
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The Company incurred
selling, general, and administrative expenses for due diligence and
other transaction costs associated with the acquisitions of Silva
and FruitSmart. These costs are not deductible for U.S. income tax
purposes.
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(3)
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The Company reversed
a portion of 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.
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(4)
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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 attributable to
Universal Corporation, and Adjusted diluted earnings per share. See
Note 4 for additional information.
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(5)
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The Company
recognized an income tax benefit for final U.S. tax regulations on
certain dividends paid by foreign subsidiaries in a prior fiscal
year.
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(6)
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The Company
recognized an income tax settlement charge related to operations at
a foreign subsidiary.
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Additional information
Amounts described as net income (loss) and earnings (loss) per
diluted share in the previous discussion are attributable to
Universal Corporation and exclude earnings related to
non-controlling interests in subsidiaries. Adjusted operating
income (loss), adjusted net income (loss) attributable to Universal
Corporation, adjusted diluted earnings (loss) per share, and the
total for segment operating income (loss) referred to in this
discussion are non-GAAP financial measures. These measures are not
financial measures calculated in accordance with GAAP and should
not be considered as substitutes for operating income (loss), net
income (loss) attributable to Universal Corporation, diluted
earnings (loss) per share, cash from operating activities or any
other operating or financial performance measure calculated in
accordance with GAAP, and may not be comparable to similarly-titled
measures reported by other companies. A reconciliation of adjusted
operating income (loss) to consolidated operating (income),
adjusted net income (loss) attributable to Universal Corporation to
consolidated net income (loss) attributable to Universal
Corporation and adjusted diluted earnings (loss) per share to
diluted earnings (loss) per share are provided in Other Items
above. In addition, we have provided a reconciliation of the total
for segment operating income (loss) to consolidated operating
income (loss) in Note 3 "Segment Information" to the consolidated
financial statements. Management evaluates the consolidated Company
and segment performance excluding certain significant charges or
credits. We believe these non-GAAP financial measures, which
exclude items that we believe are not indicative of our core
operating results, provide investors with important information
that is useful in understanding our business results and
trends.
This release includes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers that any statements contained herein
regarding financial condition, results of operation, and future
business plans, operations, opportunities, and prospects for its
performance are forward-looking statements based upon management's
current knowledge and assumptions about future events, and involve
risks and uncertainties that could cause actual results,
performance, or achievements to be materially different from any
anticipated results, prospects, performance, or achievements
expressed or implied by such forward-looking statements. Such risks
and uncertainties include, but are not limited to, impacts of the
ongoing 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; 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, 2020, 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, 2020 and March
31, 2021, 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 26, 2021, 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 26, 2021. A taped
replay of the call will be available through June 9, 2021, by dialing (855) 859-2056. The
confirmation number to access the replay is 7935248.
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,
that sources and processes leaf tobacco and plant-based
ingredients. Tobacco has been the Company's principal focus since
its founding in 1918, and Universal is the leading global leaf
tobacco supplier. Through the Company's plant-based ingredients
platform, it provides a variety of value-added manufacturing
processes to produce high-quality, specialty vegetable- and
fruit-based ingredients for the food and beverage end markets.
Universal has been finding innovative solutions to serve its
customers and meet their agri-product needs for more than 100
years. The Company's revenues for the fiscal year ended
March 31, 2021, were $2.0 billion. Visit www.universalcorp.com for
more information on Universal Corporation and the latest Company
news.
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UNIVERSAL
CORPORATION
CONSOLIDATED
STATEMENTS OF INCOME
(in thousands of
dollars, except per share data)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Fiscal Year Ended
March 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Sales and other
operating revenues
|
|
$
|
617,590
|
|
|
$
|
632,094
|
|
|
$
|
1,983,357
|
|
|
$
|
1,909,979
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
493,610
|
|
|
522,934
|
|
|
1,597,354
|
|
|
1,553,167
|
|
Selling, general and
administrative expenses
|
|
58,637
|
|
|
70,078
|
|
|
219,789
|
|
|
222,902
|
|
Other
income
|
|
—
|
|
|
—
|
|
|
(4,173)
|
|
|
—
|
|
Restructuring and
impairment costs
|
|
2,598
|
|
|
7,543
|
|
|
22,577
|
|
|
7,543
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
62,745
|
|
|
31,539
|
|
|
147,810
|
|
|
126,367
|
|
Equity in pretax
earnings of unconsolidated affiliates
|
|
896
|
|
|
1,930
|
|
|
2,985
|
|
|
4,211
|
|
Other non-operating
income (expense)
|
|
(432)
|
|
|
(907)
|
|
|
(440)
|
|
|
986
|
|
Interest
income
|
|
63
|
|
|
169
|
|
|
325
|
|
|
1,581
|
|
Interest
expense
|
|
5,814
|
|
|
5,493
|
|
|
24,954
|
|
|
19,854
|
|
Income before income
taxes
|
|
57,458
|
|
|
27,238
|
|
|
125,726
|
|
|
113,291
|
|
Income
taxes
|
|
16,734
|
|
|
9,195
|
|
|
29,412
|
|
|
35,288
|
|
Net income
|
|
40,724
|
|
|
18,043
|
|
|
96,314
|
|
|
78,003
|
|
Less: net income
attributable to noncontrolling interests in subsidiaries
|
|
(1,363)
|
|
|
(2,478)
|
|
|
(8,904)
|
|
|
(6,323)
|
|
Net income
attributable to Universal Corporation
|
|
$
|
39,361
|
|
|
$
|
15,565
|
|
|
$
|
87,410
|
|
|
$
|
71,680
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.59
|
|
|
$
|
0.63
|
|
|
$
|
3.55
|
|
|
$
|
2.87
|
|
Diluted
|
|
$
|
1.58
|
|
|
$
|
0.63
|
|
|
$
|
3.53
|
|
|
$
|
2.86
|
|
|
See accompanying
notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED
BALANCE SHEETS
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
197,221
|
|
|
|
|
$
|
107,430
|
|
Accounts receivable,
net
|
|
367,482
|
|
|
|
|
340,711
|
|
Advances to
suppliers, net
|
|
121,618
|
|
|
|
|
133,778
|
|
Accounts
receivable—unconsolidated affiliates
|
|
584
|
|
|
|
|
11,483
|
|
Inventories—at lower
of cost or net realizable value:
|
|
|
|
|
|
|
Tobacco
|
|
640,653
|
|
|
|
|
707,298
|
|
Other
|
|
145,965
|
|
|
|
|
99,275
|
|
Prepaid income
taxes
|
|
15,029
|
|
|
|
|
12,144
|
|
|
|
|
|
|
|
|
Other current
assets
|
|
66,806
|
|
|
|
|
67,498
|
|
Total current
assets
|
|
1,555,358
|
|
|
|
|
1,479,617
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
|
|
|
Land
|
|
22,400
|
|
|
|
|
21,376
|
|
Buildings
|
|
284,430
|
|
|
|
|
256,488
|
|
Machinery and
equipment
|
|
658,826
|
|
|
|
|
634,395
|
|
|
|
965,656
|
|
|
|
|
912,259
|
|
Less accumulated
depreciation
|
|
(616,146)
|
|
|
|
|
(597,106)
|
|
|
|
349,510
|
|
|
|
|
315,153
|
|
Other
assets
|
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
31,230
|
|
|
|
|
39,256
|
|
Goodwill,
net
|
|
173,051
|
|
|
|
|
126,826
|
|
Other intangibles,
net
|
|
72,304
|
|
|
|
|
17,861
|
|
Investments in
unconsolidated affiliates
|
|
84,218
|
|
|
|
|
77,543
|
|
Deferred income
taxes
|
|
12,149
|
|
|
|
|
20,954
|
|
Pension
asset
|
|
11,950
|
|
|
|
|
—
|
|
Other noncurrent
assets
|
|
52,154
|
|
|
|
|
43,711
|
|
|
|
437,056
|
|
|
|
|
326,151
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,341,924
|
|
|
|
|
$
|
2,120,921
|
|
|
See accompanying
notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED
BALANCE SHEETS
(in thousands of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
2021
|
|
|
|
2020
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Notes payable and
overdrafts
|
|
$
|
101,294
|
|
|
|
|
$
|
78,033
|
|
Accounts payable and
accrued expenses
|
|
139,484
|
|
|
|
|
140,202
|
|
Accounts
payable—unconsolidated affiliates
|
|
1,282
|
|
|
|
|
55
|
|
Customer advances and
deposits
|
|
8,765
|
|
|
|
|
10,242
|
|
Accrued
compensation
|
|
29,918
|
|
|
|
|
23,710
|
|
Income taxes
payable
|
|
4,516
|
|
|
|
|
5,334
|
|
Current portion of
operating lease liabilities
|
|
7,898
|
|
|
|
|
9,823
|
|
Current portion of
long-term debt
|
|
—
|
|
|
|
|
—
|
|
Total current
liabilities
|
|
293,157
|
|
|
|
|
267,399
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
518,172
|
|
|
|
|
368,764
|
|
Pensions and other
postretirement benefits
|
|
57,637
|
|
|
|
|
70,680
|
|
Long-term operating
lease liabilities
|
|
19,725
|
|
|
|
|
25,893
|
|
Other long-term
liabilities
|
|
59,814
|
|
|
|
|
69,427
|
|
Deferred income
taxes
|
|
44,994
|
|
|
|
|
29,474
|
|
Total
liabilities
|
|
993,499
|
|
|
|
|
831,637
|
|
|
|
|
|
|
|
|
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, 24,514,867 shares issued
and outstanding (24,421,835 at March 31, 2020)
|
|
326,673
|
|
|
|
|
321,502
|
|
Retained
earnings
|
|
1,087,663
|
|
|
|
|
1,076,760
|
|
Accumulated other
comprehensive loss
|
|
(107,037)
|
|
|
|
|
(151,597)
|
|
Total Universal
Corporation shareholders' equity
|
|
1,307,299
|
|
|
|
|
1,246,665
|
|
Noncontrolling
interests in subsidiaries
|
|
41,126
|
|
|
|
|
42,619
|
|
Total shareholders'
equity
|
|
1,348,425
|
|
|
|
|
1,289,284
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,341,924
|
|
|
|
|
$
|
2,120,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIVERSAL
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands of
dollars)
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
2021
|
|
2020
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$
|
96,314
|
|
|
$
|
78,003
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
44,733
|
|
|
38,379
|
|
|
|
|
|
|
Provision for losses
(recoveries) on advances and guaranteed loans to
suppliers
|
|
5,534
|
|
|
937
|
|
Inventory
write-downs
|
|
13,463
|
|
|
10,319
|
|
Stock-based
compensation expense
|
|
6,106
|
|
|
5,631
|
|
Foreign currency
remeasurement loss (gain), net
|
|
(8,475)
|
|
|
16,422
|
|
Foreign currency
exchange contracts
|
|
(1,567)
|
|
|
499
|
|
Deferred income
taxes
|
|
(2,335)
|
|
|
(8,697)
|
|
Equity in net income
of unconsolidated affiliates, net of dividends
|
|
(296)
|
|
|
1,101
|
|
Restructuring and
impairment costs
|
|
22,577
|
|
|
7,543
|
|
Restructuring
payments
|
|
(8,283)
|
|
|
(2,787)
|
|
Change in estimated
fair value of contingent consideration for FruitSmart
acquisition
|
|
(4,173)
|
|
|
—
|
|
Other, net
|
|
(1,373)
|
|
|
(9,271)
|
|
Changes in operating
assets and liabilities, net:
|
|
58,189
|
|
|
(127,182)
|
|
Net
cash provided by operating activities
|
|
220,414
|
|
|
10,897
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(66,154)
|
|
|
(35,227)
|
|
Purchase of business,
net of cash held by the business
|
|
(161,751)
|
|
|
(80,180)
|
|
Proceeds from sale of
property, plant and equipment
|
|
11,436
|
|
|
8,547
|
|
Other
|
|
(800)
|
|
|
495
|
|
Net
cash used by investing activities
|
|
(217,269)
|
|
|
(106,365)
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
Issuance (repayment)
of short-term debt, net
|
|
29,396
|
|
|
24,114
|
|
Issuance of long-term
debt
|
|
150,000
|
|
|
—
|
|
Dividends paid to
noncontrolling interests in subsidiaries
|
|
(10,881)
|
|
|
(6,251)
|
|
Repurchase of common
stock
|
|
—
|
|
|
(33,457)
|
|
Dividends paid on
common stock
|
|
(75,177)
|
|
|
(75,368)
|
|
Debt issuance costs
and other
|
|
(1,949)
|
|
|
(3,184)
|
|
Net
cash provided/(used) by financing activities
|
|
91,389
|
|
|
(94,146)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
1,257
|
|
|
(512)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
95,791
|
|
|
(190,126)
|
|
Cash, restricted cash
and cash equivalents at beginning of year
|
|
107,430
|
|
|
297,556
|
|
Cash, Restricted
Cash and Cash Equivalents at End of Year
|
|
$
|
203,221
|
|
|
$
|
107,430
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
197,221
|
|
|
$
|
107,430
|
|
Restricted cash
(Other noncurrent assets)
|
|
6,000
|
|
|
—
|
|
Total cash,
restricted cash and cash equivalents
|
|
$
|
203,221
|
|
|
$
|
107,430
|
|
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, 2020.
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)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
|
|
|
|
|
|
|
|
Numerator for
basic earnings per share
|
|
|
|
|
|
|
|
|
Net income
attributable to Universal Corporation
|
|
$
|
39,361
|
|
|
$
|
15,565
|
|
|
$
|
87,410
|
|
|
$
|
71,680
|
|
|
|
|
|
|
|
|
|
|
Denominator for
basic earnings per share
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
24,685,343
|
|
|
24,751,819
|
|
|
24,656,009
|
|
|
24,982,259
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
1.59
|
|
|
$
|
0.63
|
|
|
$
|
3.55
|
|
|
$
|
2.87
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Share
|
|
|
|
|
|
|
|
|
Numerator for
diluted earnings per share
|
|
|
|
|
|
|
|
|
Net income
attributable to Universal Corporation
|
|
$
|
39,361
|
|
|
$
|
15,565
|
|
|
$
|
87,410
|
|
|
$
|
71,680
|
|
|
|
|
|
|
|
|
|
|
Denominator for
diluted earnings per share:
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
24,685,343
|
|
|
24,751,819
|
|
|
24,656,009
|
|
|
24,982,259
|
|
Effect of dilutive
securities
|
|
|
|
|
|
|
|
|
Employee and
outside director share-based awards
|
|
175,935
|
|
|
136,392
|
|
|
132,557
|
|
|
124,092
|
|
Denominator for
diluted earnings per share
|
|
24,861,278
|
|
|
24,888,211
|
|
|
24,788,566
|
|
|
25,106,351
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share
|
|
$
|
1.58
|
|
|
$
|
0.63
|
|
|
$
|
3.53
|
|
|
$
|
2.86
|
|
NOTE 3. SEGMENT INFORMATION
As a result of recent 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.
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 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)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
SALES AND OTHER
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
562,993
|
|
|
$
|
612,231
|
|
|
$
|
1,841,837
|
|
|
$
|
1,887,084
|
|
Ingredients
Operations
|
|
54,597
|
|
|
19,863
|
|
|
141,520
|
|
|
22,895
|
|
Consolidated sales
and other operating revenues
|
|
$
|
617,590
|
|
|
$
|
632,094
|
|
|
$
|
1,983,357
|
|
|
$
|
1,909,979
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tobacco
Operations
|
|
$
|
61,174
|
|
|
$
|
45,069
|
|
|
$
|
168,832
|
|
|
$
|
146,637
|
|
Ingredients
Operations
|
|
5,065
|
|
|
(4,057)
|
|
|
367
|
|
|
(8,516)
|
|
Subtotal
|
|
66,239
|
|
|
41,012
|
|
|
169,199
|
|
|
138,121
|
|
Deduct: Equity in
pretax earnings of unconsolidated affiliates
(1)
|
|
(896)
|
|
|
(1,930)
|
|
|
(2,985)
|
|
|
(4,211)
|
|
Restructuring and
impairment costs (2)
|
|
(2,598)
|
|
|
(7,543)
|
|
|
(22,577)
|
|
|
(7,543)
|
|
|
|
|
|
|
|
|
|
|
Add: Other income
(3)
|
|
—
|
|
|
—
|
|
|
4,173
|
|
|
—
|
|
Consolidated
operating income
|
|
$
|
62,745
|
|
|
$
|
31,539
|
|
|
$
|
147,810
|
|
|
$
|
126,367
|
|
(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 a portion of the contingent
consideration liability associated with the acquisition of
FruitSmart.
|
NOTE 4. RESTRUCTURING AND IMPAIRMENT COSTS
During the fiscal years ended March 31, 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,
2021
Tobacco Operations
In fiscal year 2021, the Company incurred $4.4 million of termination and impairment costs
associated with 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 is
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. Sales of existing inventory and certain
administrative activities at CIFI will continue into fiscal year
2022, but no manufacturing occurred subsequent to December 31, 2020. As a result of the decision to
wind down the CIFI operations, the Company incurred termination
costs totaling approximately $0.6
million for 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, 2021, and 2020 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years
Ended
March 31,
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
Restructuring
Costs:
|
|
|
|
|
|
|
Employee termination
benefits
|
|
$
|
5,237
|
|
|
$
|
5,356
|
|
|
|
Other restructuring
costs
|
|
3,468
|
|
|
—
|
|
|
|
|
|
8,705
|
|
|
5,356
|
|
|
|
Impairment
Costs:
|
|
|
|
|
|
|
Property, plant, and equipment and
other noncurrent assets
|
|
13,872
|
|
|
2,187
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,872
|
|
|
$
|
2,187
|
|
|
|
Total restructuring and
impairment costs
|
|
$
|
22,577
|
|
|
$
|
7,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Universal Corporation