uvv-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED	JUNE 30, 2024
		OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM ______________TO_______________

Commission File Number: 001-00652

UNIVERSAL CORPORATION

(Exact name of registrant as specified in its charter)


Virginia			54-0414210
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

9201 Forest Hill Avenue,	Richmond,	Virginia	23235
(Address of principal executive offices)			(Zip Code)

804-359-9311

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of Exchange on which registered
Common Stock, no par value	UVV	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 5, 2024, the total number of shares of common stock outstanding was 24,692,747.

UNIVERSAL CORPORATION

FORM 10-Q

TABLE OF CONTENTS


Item No.		Page
	PART I - FINANCIAL INFORMATION
1.	Financial Statements	3
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
3.	Quantitative and Qualitative Disclosures About Market Risk	31
4.	Controls and Procedures	32
	PART II - OTHER INFORMATION
1.	Legal Proceedings	33
1A.	Risk Factors	33
2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
5.	Other Information	33
6.	Exhibits	34

	Signatures	35

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except share and per share data)


	Three Months Ended June 30,
		2024		2023
	(Unaudited)
Sales and other operating revenues		$	597,050	$	517,722
Costs and expenses
Cost of goods sold		501,129		431,210
Selling, general and administrative expenses		78,696		75,477



Operating income		17,225		11,035
Equity in pretax earnings (loss) of unconsolidated affiliates		140		(4,166)
Other non-operating income (expense)		464		725
Interest income		808		1,365
Interest expense		20,734		15,543
Income (loss) before income taxes and other items		(2,097)		(6,584)
Income taxes		727		(1,423)
Net income (loss)		(2,824)		(5,161)
Less: net loss (income) attributable to noncontrolling interests in subsidiaries		2,954		3,097
Net income (loss) attributable to Universal Corporation		$	130	$	(2,064)




Earnings per share:
Basic		$	0.01	$	(0.08)
Diluted		$	0.01	$	(0.08)

Weighted average common shares outstanding:
Basic		24,876,220		24,842,171
Diluted		25,066,106		24,842,171

Total comprehensive income (loss), net of income taxes		$	(8,350)	$	(795)
Less: comprehensive (income) loss attributable to noncontrolling interests		3,344		3,241
Comprehensive income (loss) attributable to Universal Corporation		$	(5,006)	$	2,446

Dividends declared per common share		$	0.81	$	0.80

See accompanying notes.

UNIVERSAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands of dollars)


	June 30,		June 30,		March 31,
	2024		2023		2024
	(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	101,700	$	80,518	$	55,593
Accounts receivable, net	435,941		375,564		525,262
Advances to suppliers, net	100,451		111,176		139,064
Accounts receivable—unconsolidated affiliates	60,991		73,286		5,385
Inventories—at lower of cost or net realizable value:
Tobacco	1,202,341		1,100,722		1,070,580
Other	187,743		198,730		193,518
Prepaid income taxes	23,576		21,640		19,484

Other current assets	85,712		93,153		93,655
Total current assets	2,198,455		2,054,789		2,102,541

Property, plant and equipment
Land	25,926		24,930		26,244
Buildings	326,988		312,014		323,969
Machinery and equipment	702,153		705,045		693,868
	1,055,067		1,041,989		1,044,081
Less accumulated depreciation	(680,011)		(685,042)		(678,201)
	375,056		356,947		365,880
Other assets
Operating lease right-of-use assets	30,582		36,890		32,510
Goodwill, net	213,810		213,893		213,869
Other intangibles, net	66,074		77,290		68,883
Investments in unconsolidated affiliates	75,531		73,466		76,289
Deferred income taxes	18,287		15,187		15,181
Pension asset	12,075		10,516		11,857
Other noncurrent assets	43,098		48,681		50,229
	459,457		475,923		468,818

Total assets	$	3,032,968	$	2,887,659	$	2,937,239

See accompanying notes.

UNIVERSAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands of dollars)


	June 30,		June 30,		March 31,
	2024		2023		2024
	(Unaudited)		(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable and overdrafts	$	581,087	$	359,832	$	417,217
Accounts payable	79,747		88,362		108,727
Accounts payable—unconsolidated affiliates	—		1,495		1,621
Customer advances and deposits	15,660		103,436		17,179
Accrued compensation	20,903		20,890		39,766
Income taxes payable	10,766		5,620		7,477
Current portion of operating lease liabilities	9,588		10,673		10,356
Accrued expenses and other current liabilities	128,305		127,564		109,015
Current portion of long-term debt	—		—		—
Total current liabilities	846,056		717,872		711,358

Long-term debt	617,502		616,948		617,364
Pensions and other postretirement benefits	43,386		42,725		43,251
Long-term operating lease liabilities	17,457		23,343		19,302
Other long-term liabilities	27,167		29,160		27,902
Deferred income taxes	37,901		44,432		39,139
Total liabilities	1,589,469		1,474,480		1,458,316

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 24,675,988 shares issued and outstanding at June 30, 2024 (24,636,600 at June 30, 2023 and 24,573,408 at March 31, 2024)	347,152		338,445		345,596
Retained earnings	1,153,026		1,114,822		1,173,196
Accumulated other comprehensive loss	(86,721)		(72,547)		(81,585)
Total Universal Corporation shareholders' equity	1,413,457		1,380,720		1,437,207
Noncontrolling interests in subsidiaries	30,042		32,459		41,716
Total shareholders' equity	1,443,499		1,413,179		1,478,923

Total liabilities and shareholders' equity	$	3,032,968	$	2,887,659	$	2,937,239

See accompanying notes.

UNIVERSAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of dollars)


	Three Months Ended June 30,
	2024		2023
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(2,824)	$	(5,161)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization	14,564		14,754

Net provision for losses (recoveries) on advances to suppliers	(751)		1,382
Inventory writedowns	4,371		2,327
Stock-based compensation expense	4,641		3,859
Foreign currency remeasurement (gain) loss, net	7,171		1,530
Foreign currency exchange contracts	(1,340)		7,803
Deferred income taxes	(3,983)		(2,406)
Equity in net loss (income) of unconsolidated affiliates, net of dividends	(154)		2,630

Restructuring payments	(253)		—


Other, net	644		5
Changes in operating assets and liabilities, net:
Accounts and notes receivable	78,524		23,457
Inventories	(135,456)		(263,171)
Other assets	8,510		4,240
Accounts payable	(28,706)		(1,110)
Accrued expenses and other current liabilities	(5,423)		7,833
Income taxes	(889)		(2,336)
Customer advances and deposits	(1,090)		100,473
Net cash provided (used) by operating activities	(62,444)		(103,891)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(22,749)		(17,960)


Proceeds from sale of property, plant and equipment	867		326

Net cash used by investing activities	(21,882)		(17,634)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of short-term debt, net	162,140		163,804


Dividends paid to noncontrolling interests	(8,330)		(4,164)




Dividends paid on common stock	(19,659)		(19,398)

Other	(3,397)		(2,893)
Net cash provided (used) by financing activities	130,754		137,349

Effect of exchange rate changes on cash, restricted cash and cash equivalents	(321)		4
Net increase (decrease) in cash, restricted cash and cash equivalents	46,107		15,828
Cash, restricted cash and cash equivalents at beginning of year	55,593		64,690

Cash, restricted cash and cash equivalents at end of period	$	101,700	$	80,518

See accompanying notes.

UNIVERSAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Universal Corporation, which together with its subsidiaries is referred to herein as “Universal” or the “Company,” is a global business-to-business agri-products supplier to consumer product manufacturers. The Company is the leading global leaf tobacco supplier and provides high-quality plant-based ingredients to food and beverage end markets. Because of the seasonal nature of the Company’s business, the results of operations for any fiscal quarter will not necessarily be indicative of results to be expected for other quarters or a full fiscal year. All adjustments necessary to state fairly the results for the period have been included and were of a normal recurring nature. This Form 10-Q 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, 2024 (the “2024 Annual Report on Form 10-K”).

Accounting Pronouncements to be Adopted in Future Years

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires additional disclosures about profitability measures utilized by the chief operating decision maker and significant segment expenses. ASU 2023-07 also requires all annual disclosures regarding profit or loss and assets to be included in interim disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods in fiscal years beginning after December 15, 2024, although early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its segment disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires additional disclosures reconciling the rates of different categories of income tax (i.e. federal, state, foreign, etc.) and a disaggregation of taxes paid and refunded. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and for interim periods in fiscal years beginning after December 15, 2025, although early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its income tax disclosures.

NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The majority of the Company’s consolidated revenue consists of sales of processed leaf tobacco to customers. The Company also earns revenue from processing leaf tobacco owned by customers and from various other services provided to customers. Additionally, the Company has fruit and vegetable processing operations, as well as flavor and extract services that provide customers with a range of ingredient products. Payment terms with customers vary depending on customer creditworthiness, product types, services provided, and other factors. Contract durations and payment terms for all revenue categories generally do not exceed one year. Therefore, the Company has applied a practical expedient to not adjust the transaction price for the effects of financing components, as the Company expects that the period from the time the revenue for a transaction is recognized to the time the customer pays for the related good or service transferred will be one year or less. Below is a description of the major revenue-generating categories from contracts with customers.

Tobacco Sales

The majority of the Company’s business involves purchasing leaf tobacco from farmers in the origins where it is grown, processing and packing the tobacco in its factories, and then transferring ownership and control of the tobacco to customers. On a much smaller basis, the Company also sources processed tobacco from third-party suppliers for resale to customers. The contracts for tobacco sales with customers create a performance obligation to transfer tobacco to the customer. Transaction prices for the sale of tobaccos are primarily based on negotiated fixed prices, but the Company does have a small number of cost-plus contracts with certain customers. Cost-plus arrangements provide the Company reimbursement of the cost to purchase and process the tobacco, plus a contractually agreed-upon profit margin. The Company utilizes the most likely amount methodology under the accounting guidance to recognize revenue for cost-plus arrangements with customers. Shipping and handling costs under tobacco sales contracts with customers are treated as fulfillment costs and included in the transaction price. Taxes assessed by government authorities on the sale of leaf tobacco products are excluded from the transaction price. At the point in time that the customer obtains control over the tobacco, which is typically aligned with physical shipment under the contractual terms with the customer, the Company completes its performance obligation and recognizes the revenue for the sale.

Ingredients Sales

The Company has diversified operations through the acquisition of established companies that offer customers a wide range of both liquid and dehydrated fruit and vegetable ingredient products, flavors, and e

SEC Form 10-Q filed by Universal Corporation