Reports Preliminary Third Quarter Fiscal Year
2025 Results
Highlights Continued Strong Operational
Performance
Files Form 12b-25, Delays Third Quarter 2025
Earnings Release and Conference Call
Universal Corporation (NYSE:UVV) (“Universal” or the “Company”),
a global business-to-business agriproducts company, today is
providing a financial and operational update for the third quarter
of fiscal year 2025, including preliminary results for the
quarter.
Preston D. Wigner, Chairman, President, and Chief Executive
Officer of Universal Corporation, stated, “Universal achieved solid
results for the third quarter of fiscal year 2025, primarily driven
by the strength of our Tobacco Operations segment. Demand from our
tobacco customers remained robust, and our global procurement
efforts have been successful in securing the tobacco to meet this
need. Our Ingredients Operations segment also continued to perform
in line with our strategic plans, with sales of newly produced and
developed value-added products largely offsetting market-driven
pricing pressures experienced by certain of our traditional product
lines. The progress we are making in our ingredients business is a
direct result of the investments we have made over the last two
fiscal years, including in our enhanced ingredients facility.
Mr. Wigner continued, “Looking ahead, we are confident that
Universal is well positioned to finish fiscal year 2025 on a strong
footing. We will continue to maximize and optimize our tobacco
business, expand our ingredients business, and seek possible
opportunities in the future for both segments to work together and
provide even more value for our customers and shareholders.”
Preliminary Unaudited Financial Results
(in millions of dollars, except per
share data)
Three Months Ended December
31, 2024
Consolidated Results
Sales and other operating revenue
$
937.2
Operating income
100.7
Net Income attributable to Universal
Corporation
57.1
Basic earnings per share
2.28
Diluted earnings per share
2.27
Segment Results
Tobacco operations sales and other
operating revenues
$
854.8
Tobacco operations operating income
99.2
Ingredients operations sales and other
operating revenues
83.3
Ingredients operations operating
income
3.7
Highlights of the Quarter
Consolidated Results
- Revenues and operating income driven by increased tobacco and
ingredients sales volumes.
Tobacco Operations Segment
- Tobacco Operations segment results benefited from:
- Positive momentum due to increased customer demand and
successful tobacco procurement and marketing efforts;
- Higher quality, better yielding crops in Africa;
- Strong trading volumes combined with higher shipment volumes
and better-quality crops in Asia; and
- Accelerated shipment timing in the United States per certain
customers’ requests.
- Selling, general, and administrative expenses for the Tobacco
Operations segment included approximately $11 million in currency
remeasurement losses.
- Uncommitted tobacco inventory levels remained low at about 10%
at quarter end.
Ingredients Operations Segment
- Higher revenues on increased sales volumes.
- Margins for certain traditional products were strained by high
raw material costs and inflation-driven increases in consumer food
prices.
- Continued high level of interest in value-added products,
reflecting effectiveness of platform investments.
Select Balance Sheet Items, Liquidity, and Debt
- Cash and cash equivalents were approximately $215 million,
accounts receivable were approximately $651 million, total
inventories were approximately $1.1 billion, notes payable and
overdrafts were approximately $539 million, and long-term debt
(including any current portion) was approximately $618 million at
quarter end.
- Approximately $270 million was available under revolving credit
facility as of quarter end.
- Given strong leaf tobacco demand, tobacco shipments are
currently progressing in line with the Company's expectations.
Additionally, the Company expects larger flue-cured and burley
tobacco crops, as compared to last year in certain key origins,
particularly in Brazil, and therefore is not seeing the early,
accelerated green tobacco purchasing it saw in the prior season.
Cash collection from tobacco shipments and more normalized working
capital requirements support the Company's intention to reduce net
debt levels.
The preliminary unaudited financial results for the quarter
ended December 31, 2024, included in this press release represent
the most current information available to management and are not a
comprehensive statement of the financial results for this period.
Consequently, the preliminary unaudited financial results do not
present all necessary information for a complete understanding of
the Company’s financial condition as of December 31, 2024, or its
results of operations for the quarter ended December 31, 2024.
Actual results may differ from these preliminary unaudited results
due to developments that may arise between the date of this press
release and the time that financial results for the quarter ended
December 31, 2024 are finalized.
Sustainability Update
On December 19, 2024, Universal released its 2024 Sustainability
Report (the “Report”), highlighting its efforts in advancing energy
efficiency, strengthening supply chain resiliency and continuing to
be a strong partner for its farming communities. Responsible
business practices are integrated into Universal’s business
strategy, allowing the Company to cultivate sustainable growth as
good stewards of the environment. As a result of the Company’s
transition to cleaner fuels for its operations, 93.5% of the
tobacco Universal processes is coal-free as of 2024. This positive
change supports the Company’s goal of reducing its greenhouse gas
(GHG) emissions by 30% by 2030 from its 2020 baseline year. In
2024, the Company also trained over 175,000 farmers on Good
Agricultural Practices and Agricultural Labor Practices to advance
human rights standards throughout its supply chain. Universal also
adopted a Behavior-Based Safety program to cultivate a proactive
safety culture in its operations. The Report, with additional
details related to the Company’s responsible operations, can be
found on Universal’s website, www.universalcorp.com.
Other Corporate Developments
The Company has filed a Form 12b-25, Notification of Late
Filing, with the U.S. Securities and Exchange Commission (“SEC”) in
connection with its inability to timely file the Form 10-Q for its
third quarter of fiscal year 2025 ended December 31, 2024.
In August 2024, shortly before filing the Quarterly Report on
Form 10-Q for the quarter ended June 30, 2024, the Company’s
management was made aware of embezzlement by a former senior
finance employee at the Company’s Mozambique subsidiary, Mozambique
Leaf Tobacco Ltda. (“MLT”). The Company promptly commenced an
internal investigation regarding these allegations and related
matters. As previously reported, with the assistance of outside
advisors, the Company’s internal investigation identified
approximately $7 million in the aggregate of unauthorized payments
during fiscal years 2022 through 2025. In total, the Company has
identified approximately $16.7 million in the aggregate of
unauthorized payments during fiscal years 2016 through 2025.
With the assistance of outside advisors, the Company continues
to work diligently to complete the investigation, including a
review of the circumstances and timing around the discovery of the
embezzlement, as soon as possible. The Company is currently unable
to predict the outcome or time frame for completion of the
investigation.
As of the date of this press release, the Company does not
believe material adjustments to its previously issued financial
statements will be necessary or that the investigation will have a
material impact on its financial results for fiscal year 2025. The
Company is pursuing sources of recovery, including insurance.
As a result of the ongoing investigation, the process of
finalizing financial statements for the second and third quarters
of fiscal year 2025 could not be completed on a timely basis. The
Company intends to file all required reports as soon as practicable
after the conclusion of the investigation. As part of the
investigation, management is evaluating its design and
effectiveness of internal control over financial reporting. The
Company expects to report one or more material weaknesses in its
internal control over financial reporting, and the status of its
related remediation plan, in its filings to be made after the
completion of the investigation.
On February 10, 2025, the Company entered into a further consent
with respect to its revolving credit agreement that provided for,
among other things, an extension until June 16, 2025, for delivery
by the Company to the lenders of its quarterly financial statements
for the quarter ended September 30, 2024, and its quarterly
financial statements for the quarter ended December 31, 2024.
Earnings Release and Investor Conference Call
The Company is postponing its third quarter earnings release and
conference call to allow additional time to complete the Form 10-Q
for its third quarter of fiscal year 2025 ended December 31, 2024.
The Company intends to make a subsequent announcement to schedule a
date and time to discuss its quarterly earnings reports for the
second and third quarters of fiscal year 2025, once the filing date
of its Forms 10-Q is confirmed.
About Universal Corporation
Universal Corporation (NYSE: UVV) is a global agricultural
company with over 100 years of experience supplying products and
innovative solutions to meet our customers’ evolving needs and
precise specifications. Through our diverse network of farmers and
partners across more than 30 countries on five continents, we are a
trusted provider of high-quality, traceable products. We leverage
our extensive supply chain expertise, global reach, integrated
processing capabilities, and commitment to sustainability to
provide a range of products and services designed to drive
efficiency and deliver value to our customers. For more
information, visit www.universalcorp.com.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
INFORMATION
This release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Among other things, these statements include statements made in Mr.
Wigner’s quotations, statements regarding expectations with respect
to our fiscal year 2025 performance, our strategic plans,
ingredients business, tobacco business, including expectations with
respect to shipments and sales and purchases of tobacco crops, the
ongoing internal investigation including descriptions of its scope,
duration and impact, expectations about the Company’s reporting of
its results and filing its Forms 10-Q for the quarters ended
September 30, 2024 and December 31, 2024, the potential financial
statement impact of the investigated matter, and the preliminary
unaudited financial information for the quarters ending September
30, 2024 and December 31, 2024. These forward-looking statements
are generally identified by the use of words such as we “expect,”
“believe,” “anticipate,” “could,” “should,” “may,” “plan,” “will,”
“predict,” “estimate,” and similar expressions or words of similar
import. These forward-looking statements are 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, the uncertainty of the ultimate findings of the ongoing
internal investigation, as well as the timing of its completion and
costs and expenses arising out of the ongoing internal
investigation process and its results; the impact of the ongoing
internal investigation on us, our management and operations,
including financial impact as well as any litigation or regulatory
action that may arise from the ongoing internal investigation; the
impact of the internal investigation on our conclusions regarding
the design and effectiveness of our internal control over financial
reporting and our disclosure controls and procedures; our ability
to timely and adequately remediate any internal control failures
identified from the results of the internal investigation; our
ability to regain compliance with New York Stock Exchange listing
requirements; success in pursuing strategic investments or
acquisitions and integration of new businesses and the impact of
these new businesses on future results; product purchased not
meeting quality and quantity requirements; our reliance on a few
large customers; our ability to maintain effective information
technology systems and safeguard confidential information;
anticipated levels of demand for and supply of our products and
services; costs incurred in providing these products and services
including increased transportation costs and delays attributed to
global supply chain challenges; timing of shipments to customers;
higher inflation rates; changes in market structure; government
regulation and other stakeholder expectations; economic and
political conditions in the countries in which we and our customers
operate, including the ongoing impacts from international
conflicts; product taxation; industry consolidation and evolution;
changes in exchange rates and interest rates; impacts of regulation
and litigation on its customers; industry-specific risks related to
its plant-based ingredient businesses; exposure to certain
regulatory and financial risks related to climate change; changes
in estimates and assumptions underlying our critical accounting
policies; the promulgation and adoption of new accounting
standards, new government regulations and interpretation of
existing standards and regulations; and general economic,
political, market, and weather conditions. Actual results,
therefore, could vary from those expected. Please also refer to
such other factors as discussed in Part I, Item 1A. “Risk Factors”
of Universal’s Annual Report on Form 10-K for the fiscal year ended
March 31, 2024, and related disclosures in other filings which have
been filed with the SEC and are available on the SEC’s website at
www.sec.gov. All risk factors and uncertainties described herein
and therein should be considered in evaluating forward-looking
statements, and all of the forward-looking statements are expressly
qualified by the cautionary statements contained or referred to
herein and therein. Universal 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, except as
required by law.
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Universal Corporation Investor Relations Phone: (804) 359-9311
Fax: (804) 254-3584 Email: investor@universalleaf.com
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