Release Date: May 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Universal Corp (UVV, Financial) reported a 7% increase in revenue and a 5% increase in operating income for fiscal year 2025 compared to fiscal year 2024.
- The company declared its 55th annual dividend increase, reflecting a strong commitment to returning value to shareholders.
- Universal Corp (UVV) successfully navigated weather-impacted tobacco crops and high green tobacco prices, demonstrating operational resilience.
- The Ingredients Operations segment showed significant improvement, with operating income increasing from a $1 million loss to $4.4 million in the fourth quarter.
- Universal Corp (UVV) completed a major expansion project in Lancaster, Pennsylvania, enhancing its capabilities in the Ingredients segment.
Negative Points
- Fourth-quarter sales and operating revenue decreased to $702.3 million from $770.9 million in the same quarter of fiscal year 2024, primarily due to timing shifts in tobacco shipments.
- Operating income for the fourth quarter fell to $42.8 million from $68.2 million in the same quarter of fiscal year 2024, driven by lower tobacco sales volumes.
- Net income attributable to Universal Corp (UVV) decreased to $9.3 million or $0.37 per share, compared to $40.3 million or $1.61 per share in the same quarter of fiscal year 2024.
- The company incurred a one-time pretax pension settlement charge of approximately $14 million during the quarter.
- Higher legal and professional fees were incurred due to the Mozambique embezzlement investigation, impacting SG&A expenses.
Q & A Highlights
Q: How should we think about SG&A expenses for fiscal 2026?
A: Johan Kroner, CFO, explained that while they can't provide specific guidance, fiscal year 2025 SG&A was about $305 million, down $5 million from the previous year. This included some one-off costs like legal fees related to the Mozambique investigation. Moving forward, they may invest in SG&A to build capabilities while seeking efficiencies to reduce costs.
Q: Will there be ongoing legal expenses related to the Mozambique investigation in fiscal 2026?
A: Johan Kroner confirmed that the Mozambique investigation is complete, and there will be no ongoing legal expenses related to it.
Q: How should we think about margins and growth in the tobacco segment for fiscal 2026?
A: Preston Wigner, Senior Vice President, noted that as the market moves from undersupply to a more balanced state, prices are expected to decrease. They are aligned with customers on this view and are working to understand customer needs to manage durations and inventory levels effectively.
Q: Do you anticipate growing volumes for the tobacco business in fiscal 2026?
A: Preston Wigner stated that volume growth will depend on customer decisions regarding inventory durations. While larger crops are expected, it doesn't automatically mean increased purchases. They will monitor customer needs throughout the crop season.
Q: What is the outlook for the Ingredients segment's profit, and is the target of 10% to 12% of EBITDA still valid?
A: Johan Kroner mentioned that they have made significant investments in the Ingredients segment, and the focus is now on leveraging these investments to improve margins and grow the business. The target remains a long-term goal, with efforts to increase sales and scale.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
