Universal Corp 10-Q for FY2026 Q1
Universal Corp /Va/ (UVV)
10-Q
2025-08-06
For: 2025-06-30
View Original
Added on
April 10, 2026
About this 10-Q
Universal Corp filed this 10-Q on August 6, 2025, covering the quarter ended June 30, 2025 (FY2026 Q1).
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $592.64M
- down 0.6% from $596.4M a year earlier
- Net income
- $8.5M
- up 6436.2% from net income of $130K a year earlier
- Diluted EPS
- $0.34
- up 3300.0% from $0.01 a year earlier
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 | ||||||||||||||
| 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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(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 | ||||||
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. Yes þ 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.
| þ | 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 4, 2025, the total number of shares of common stock outstanding was 24,886,204 .
UNIVERSAL CORPORATION
FORM 10-Q
TABLE OF CONTENTS
| Item No. | Page | |||||||
PART I - FINANCIAL INFORMATION | ||||||||
| 1. | ||||||||
| 2. | ||||||||
| 3. | ||||||||
| 4. | ||||||||
PART II - OTHER INFORMATION | ||||||||
| 1. | ||||||||
| 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
| 5. | ||||||||
6. | ||||||||
2
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, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Sales and other operating revenues | $ | $ | ||||||||||||||||||||||||
| Costs and expenses | ||||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||
| Restructuring and impairment costs | ||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||
| Equity in pretax earnings (loss) of unconsolidated affiliates | ||||||||||||||||||||||||||
| Other non-operating income (expense) | ||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Income (loss) before income taxes and other items | ( | |||||||||||||||||||||||||
| Income taxes | ||||||||||||||||||||||||||
| Net income (loss) | ( | |||||||||||||||||||||||||
| Less: net loss (income) attributable to noncontrolling interests in subsidiaries | ( | |||||||||||||||||||||||||
| Net income (loss) attributable to Universal Corporation | $ | $ | ||||||||||||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||||
Basic | $ | 0.34 | $ | 0.01 | ||||||||||||||||||||||
Diluted | $ | 0.34 | $ | 0.01 | ||||||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||
Basic | 24,999,570 | 24,876,220 | ||||||||||||||||||||||||
Diluted | 25,131,857 | 25,066,106 | ||||||||||||||||||||||||
| Total comprehensive income (loss), net of income taxes | $ | $ | ( | |||||||||||||||||||||||
| Less: comprehensive (income) loss attributable to noncontrolling interests | ( | |||||||||||||||||||||||||
| Comprehensive income (loss) attributable to Universal Corporation | $ | $ | ( | |||||||||||||||||||||||
| Dividends declared per common share | $ | $ | ||||||||||||||||||||||||
See accompanying notes.
3
UNIVERSAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
| June 30, | June 30, | March 31, | ||||||||||||||||||
| 2025 | 2024 | 2025 | ||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||||||||||
| Accounts receivable, net | ||||||||||||||||||||
| Advances to suppliers, net | ||||||||||||||||||||
| Accounts receivable—unconsolidated affiliates | ||||||||||||||||||||
| Inventories—at lower of cost or net realizable value: | ||||||||||||||||||||
| Tobacco | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Prepaid income taxes | ||||||||||||||||||||
| Other current assets | ||||||||||||||||||||
| Total current assets | ||||||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||
| Land | ||||||||||||||||||||
| Buildings | ||||||||||||||||||||
| Machinery and equipment | ||||||||||||||||||||
| Less accumulated depreciation | ( | ( | ( | |||||||||||||||||
| Other assets | ||||||||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||||||||
| Goodwill, net | ||||||||||||||||||||
| Other intangibles, net | ||||||||||||||||||||
| Investments in unconsolidated affiliates | ||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||
| Pension asset | ||||||||||||||||||||
| Other noncurrent assets | ||||||||||||||||||||
| Total assets | $ | $ | $ | |||||||||||||||||
See accompanying notes.
4
UNIVERSAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
| June 30, | June 30, | March 31, | ||||||||||||||||||
| 2025 | 2024 | 2025 | ||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Notes payable and overdrafts | $ | $ | $ | |||||||||||||||||
| Accounts payable | ||||||||||||||||||||
| Accounts payable—unconsolidated affiliates | ||||||||||||||||||||
| Customer advances and deposits | ||||||||||||||||||||
| Accrued compensation | ||||||||||||||||||||
| Income taxes payable | ||||||||||||||||||||
| Current portion of operating lease liabilities | ||||||||||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||||||||
| Current portion of long-term debt | ||||||||||||||||||||
| Total current liabilities | ||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Pensions and other postretirement benefits | ||||||||||||||||||||
| Long-term operating lease liabilities | ||||||||||||||||||||
| Other long-term liabilities | ||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||
| Total liabilities | ||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||
| Universal Corporation: | ||||||||||||||||||||
| Preferred stock: | ||||||||||||||||||||
Series A Junior Participating Preferred Stock, no par value, | ||||||||||||||||||||
Common stock, no par value, | ||||||||||||||||||||
| Retained earnings | ||||||||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ( | |||||||||||||||||
| Total Universal Corporation shareholders' equity | ||||||||||||||||||||
| Noncontrolling interests in subsidiaries | ||||||||||||||||||||
| Total shareholders' equity | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | $ | $ | |||||||||||||||||
See accompanying notes.
5
UNIVERSAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
| Three Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (Unaudited) | ||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net income (loss) | $ | $ | ( | |||||||||||
| Adjustments to reconcile net income (loss) to net cash used by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Net provision for losses (recoveries) on advances to suppliers | ( | |||||||||||||
| Inventory writedowns | ||||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Foreign currency remeasurement (gain) loss, net | ( | |||||||||||||
| Foreign currency exchange contracts | ( | ( | ||||||||||||
| Deferred income taxes | ( | ( | ||||||||||||
| Equity in net loss (income) of unconsolidated affiliates, net of dividends | ( | ( | ||||||||||||
| Restructuring and impairment costs | ||||||||||||||
| Restructuring payments | ( | ( | ||||||||||||
| Other, net | ( | |||||||||||||
| Changes in operating assets and liabilities, net: | ||||||||||||||
| Accounts and notes receivable | ||||||||||||||
| Inventories | ( | ( | ||||||||||||
| Other assets | ||||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued expenses and other current liabilities | ( | |||||||||||||
| Income taxes | ( | ( | ||||||||||||
| Customer advances and deposits | ( | |||||||||||||
| Net cash used by operating activities | ( | ( | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
| Purchase of property, plant and equipment | ( | ( | ||||||||||||
| Proceeds from sale of property, plant and equipment | ||||||||||||||
| Net cash used by investing activities | ( | ( | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
| Issuance of short-term debt, net | ||||||||||||||
| Dividends paid to noncontrolling interests | ( | ( | ||||||||||||
| Dividends paid on common stock | ( | ( | ||||||||||||
| Other | ( | ( | ||||||||||||
| Net cash provided by financing activities | ||||||||||||||
| Effect of exchange rate changes on cash, restricted cash and cash equivalents | ( | |||||||||||||
| Net increase (decrease) in cash, restricted cash and cash equivalents | ( | |||||||||||||
| Cash, restricted cash and cash equivalents at beginning of year | ||||||||||||||
| Cash, restricted cash and cash equivalents at end of period | $ | $ | ||||||||||||
See accompanying notes.
6
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 Quarterly Report on 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, 2025.
Accounting Pronouncements to be Adopted in Future Years
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.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires additional disclosures about certain types of costs and expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, although early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
NOTE 2. RESTRUCTURING AND IMPAIRMENT COSTS
Universal regularly reviews its business for opportunities to realize efficiencies, reduce costs, and realign its operations in response to business changes. Restructuring and impairment costs are periodically incurred in connection with those activities.
Tobacco Operations
During the second quarter of fiscal year 2025, the Company began consolidating its European sheet tobacco operations into the Company's facility in the Netherlands, by initiating a wind-down of activities at its sheet facility in Germany. During the three months ended June 30, 2025, the Company recognized an additional $1.0 million of impairment costs. Additionally, during the three months ended June 30, 2025, the Company also incurred $0.1 million of termination and impairment costs in other areas of the Tobacco Operations segment.
A summary of the restructuring and impairment costs recorded for the three months ended June 30, 2025 and 2024 were as follows:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||||||||||||||
| Restructuring costs: | ||||||||||||||||||||||||||
| Employee termination benefits | $ | $ | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total restructuring costs | ||||||||||||||||||||||||||
| Impairment costs: | ||||||||||||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||||||||
| Total impairment costs | ||||||||||||||||||||||||||
| Total restructuring and impairment costs | $ | $ | ||||||||||||||||||||||||
NOTE 3. 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
7
customers. Additionally, the Company has fruit and vegetable processing operations, as well as flavor and extract services that provide customers with a range of food 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 regions 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 tobacco 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.
Ingredient Sales
The Company has diversified operations through acquisition of established companies that offer customers a wide range of both liquid and dehydrated fruit and vegetable ingredient products, flavors, and botanical extracts. These operations procure raw materials from domestic and international growers and suppliers and through a variety of processing steps including sorting, cleaning, pressing, mixing, extracting, and blending to manufacture finished goods utilized in both human and pet food. The contracts for food ingredients with customers create a performance obligation to transfer the manufactured finished goods to the customer. Transaction prices for the sale of food ingredients are primarily based on negotiated fixed prices, but the Company does have cost-plus contracts with certain customers. The Company utilizes the most likely amount methodology under the accounting guidance to recognize revenue for cost-plus arrangements with customers. At the point in time that the customer obtains control over the finished product, 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.
Processing Revenue
Processing and packing of customer-owned tobacco and ingredients is a short-duration process. Processing charges are primarily based on negotiated fixed prices per unit of weight processed. Under normal operating conditions, customer-owned raw materials that are placed into the production line exits as processed and packed product and is then later transported to customer-designated transfer locations. The revenue for these services is recognized when the performance obligation is satisfied, which is generally when processing is completed. The Company’s operating history and contract analyses indicate that customer requirements for processed tobacco and food ingredients products are consistently met upon completion of processing.
Other Sales and Revenue from Contracts with Customers
From time to time, the Company enters into various arrangements with customers to provide other value-added services that may include blending, chemical and physical testing of products, storage, logistics, sorting, and tobacco cutting services for select manufacturers. These other arrangements and operations are a much smaller portion of the Company’s business, and are separate and distinct contractual agreements from the Company’s tobacco and food ingredients sales or third-party processing arrangements with customers. The transaction prices and timing of revenue recognition of these items are determined by the specifics of each contract.
8
Disaggregation of Revenue from Contracts with Customers
The following table disaggregates the Company’s revenue by significant revenue-generating category:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| (in thousands of dollars) | 2025 | 2024 | ||||||||||||||||||||||||
| Tobacco sales | $ | $ | ||||||||||||||||||||||||
| Ingredient sales | ||||||||||||||||||||||||||
| Processing revenue | ||||||||||||||||||||||||||
| Other sales and revenue from contracts with customers | ||||||||||||||||||||||||||
| Total revenue from contracts with customers | ||||||||||||||||||||||||||
| Other operating sales and revenues | ||||||||||||||||||||||||||
| Consolidated sales and other operating revenues | $ | $ | ||||||||||||||||||||||||
Other operating sales and revenue consists principally of interest on advances to tobacco suppliers and dividend income from unconsolidated affiliates.
NOTE 4. OTHER CONTINGENT LIABILITIES AND OTHER MATTERS
Other Contingent Liabilities
Other Contingent Liabilities (Letters of credit)
The Company had other contingent liabilities totaling approximately $1 million at June 30, 2025, primarily related to outstanding letters of credit.
Value-Added Tax Assessments in Brazil
The Company’s local operating subsidiaries pay significant amounts of value-added tax (“VAT”) in connection with their operations, which generate tax credits that they normally are entitled to recover through offset, refund, or sale to third parties. In Brazil, VAT is assessed at the state level when green tobacco is transferred between states. The Company’s Brazilian operating subsidiary pays VAT when tobaccos grown outside the state of Rio Grande do Sul are transferred to the factory for processing. The subsidiary received assessments for additional VAT plus interest and penalties from tax authorities for the state of Parana based on audits of the subsidiary’s VAT filings for specified periods. Management of the subsidiary and outside counsel challenged the Parana assessment claims. In July 2025, a final and indisputable favorable ruling was issued by the Brazilian National Treasury Attorney's office declaring the Parana assessment without merit, requiring the state to withdraw and cancel all claims made against the Company's Brazilian operating subsidiary.
Other Legal and Tax Matters
Various subsidiaries of the Company are involved in litigation and tax examinations incidental to their business activities. While the outcome of these matters cannot be predicted with certainty, management is vigorously defending the matters and does not currently expect that any of them will have a material adverse effect on the Company’s business or financial position. However, should one or more of these matters be resolved in a manner adverse to management’s current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material.
Advances to Suppliers
In many sourcing regions where the Company operates, it provides agronomy services and seasonal advances of seed, seedlings, fertilizer, and other supplies to tobacco farmers for crop production, or makes seasonal cash advances to farmers for the procurement of those inputs. These advances are short term, are repaid upon delivery of tobacco to the Company, and are reported in advances to suppliers in the consolidated balance sheets. In several regions, the Company has made long-term advances to tobacco farmers to finance curing barns and other farm infrastructure. In some years, due to low crop yields and other factors, individual farmers may not deliver sufficient volumes of tobacco to fully repay their seasonal advances, and the Company may extend repayment of those advances into future crop years. The long-term portion of advances is included in other noncurrent assets in the consolidated balance sheets. Both the current and the long-term portions of advances to suppliers are reported net of allowances recorded when the Company determines that amounts outstanding are not likely to be collected. Short-term and long-term advances to suppliers totaled $98 million at June 30, 2025, $120 million at June 30, 2024, and $189 million at March 31, 2025. The related valuation allowances totaled $18 million at June 30, 2025 and March 31, 2025 and $19 million at June 30, 2024, and were estimated based on the Company’s historical loss information and crop projections. The allowances were increased by net provisions of $0.1 million in the three-month period ended June 30, 2025 and decreased by net recoveries of
9
$0.8 million in the three-month period ended June 30, 2024. These net recoveries and provisions are included in selling, general, and administrative expenses in the consolidated statements of income. Interest on advances is recognized in earnings upon the farmers’ delivery of tobacco in payment of principal and interest.
Recoverable Value-Added Tax Credits
In many foreign countries, the Company’s local operating subsidiaries pay significant amounts of VAT on purchases of unprocessed and processed tobacco, crop inputs, packing materials, and various other goods and services. In some countries, VAT is a national tax, and in other countries it is assessed at the state level. Items subject to VAT vary from jurisdiction to jurisdiction, as do the rates at which the tax is assessed. When tobacco is sold to customers in the country of origin, the operating subsidiaries generally collect VAT on those sales. The subsidiaries are normally permitted to offset their VAT payments against the collections and remit only the incremental VAT collections to the tax authorities. When tobacco is sold for export, VAT is normally not assessed. In countries where tobacco sales are predominately for export markets, VAT collections generated on downstream sales are often not sufficient to fully offset the subsidiaries’ VAT payments. In those situations, unused VAT credits can accumulate. Some jurisdictions have procedures that allow companies to apply for refunds of unused VAT credits from the tax authorities, but the refund process often takes an extended period of time and it is not uncommon for refund applications to be challenged or rejected in part on technical grounds. Other jurisdictions may permit companies to sell or transfer unused VAT credits to third parties in private transactions, although approval for such transactions must normally be obtained from the tax authorities, limits on the amounts that can be transferred may be imposed, and the proceeds realized may be heavily discounted from the face value of the credits. Due to these factors, local operating subsidiaries in some countries can accumulate significant balances of VAT credits over time. The Company reviews these balances on a regular basis and records valuation allowances on the credits to reflect amounts that are not expected to be recovered, as well as discounts anticipated on credits that are expected to be sold or transferred. At June 30, 2025, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $78 million ($68 million at June 30, 2024 and $64 million at March 31, 2025). The related valuation allowances totaled approximately $21
Stock Repurchase Program
A stock repurchase program, which was authorized by the Company's Board of Directors, became effective and was publicly announced on November 7, 2024. This stock repurchase program authorized the purchase of up to $100 million in common stock in open market or privately negotiated transactions at prices not exceeding prevailing market rates through November 15, 2026, subject to market conditions and other factors. The program had $100 million of remaining capacity for repurchases of common stock at June 30, 2025.
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NOTE 5. EARNINGS PER SHARE
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| (in thousands, except share and per share data) | 2025 | 2024 | ||||||||||||||||||||||||
| Basic Earnings (Loss) Per Share | ||||||||||||||||||||||||||
| Numerator for basic earnings (loss) per share | ||||||||||||||||||||||||||
| Net income (loss) attributable to Universal Corporation | $ | $ | ||||||||||||||||||||||||
| Denominator for basic earnings (loss) per share | ||||||||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||
| Basic earnings (loss) per share | $ | $ | ||||||||||||||||||||||||
| Diluted Earnings (Loss) Per Share | ||||||||||||||||||||||||||
| Numerator for diluted earnings (loss) per share | ||||||||||||||||||||||||||
| Net income (loss) attributable to Universal Corporation | $ | $ | ||||||||||||||||||||||||
| Denominator for diluted earnings (loss) per share: | ||||||||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||||||||||||
| Employee and outside director share-based awards | ||||||||||||||||||||||||||
| Denominator for diluted earnings (loss) per share | ||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | $ | ||||||||||||||||||||||||
NOTE 6. INCOME TAXES
The Company operates in the United States and many foreign countries and is subject to the tax laws of many jurisdictions. Changes in tax laws or the interpretation of tax laws can affect the Company’s earnings, as can the resolution of pending and contested tax issues. The Company's consolidated effective income tax rate is affected by various factors, including the mix and timing of domestic and foreign earnings, discrete items, and the effect of exchange rate changes on taxes.
Numerous countries in which Company operates have enacted or are in the process of enacting legislation to adopt a global minimum effective tax rate described in the Global Anti-Base Erosion framework rules, or Pillar Two, issued by the Organization for Economic Co-operation and Development (“OECD”). The Pillar Two legislation includes establishing a 15 % global minimum tax rate on a country-by-country. The Company performed an assessment of the potential impact on income taxes from enactment of the Pillar Two legislation.
On July 4, 2025, the One, Big, Beautiful Bill Act (“OBBBA”), (Public Law 119-21), was signed into law. The Company is still evaluating the potential impacts of the OBBBA; however, the Company does not anticipate it will have a material impact on the Company’s financial statements.
Three months ended June 30, 2025
The Company's consolidated effective income tax rate for the three months ended June 30, 2025 was 27.1 %.
Three months ended June 30, 2024
11
NOTE 7. GOODWILL AND OTHER INTANGIBLES
The Company's changes in goodwill at June 30, 2025 and 2024 consisted of the following:
| (in thousands of dollars) | Three Months Ended June 30, | ||||||||||
| 2025 | 2024 | ||||||||||
| Balance at beginning of fiscal year | $ | $ | |||||||||
Foreign currency translation adjustment | ( | ||||||||||
| Balance at end of period | $ | $ | |||||||||
The Company's intangible assets primarily consist of capitalized customer-related intangibles, trade names, proprietary developed technology and noncompetition agreements. The Company's intangible assets subject to amortization consisted of the following at June 30, 2025 and 2024 and at March 31, 2025:
| (in thousands, except useful life) | June 30, 2025 | ||||||||||||||||||||||||||||
| Useful Life (years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||
| Customer relationships | — | $ | $ | ( | $ | ||||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||||||||
| Developed technology | ( | ||||||||||||||||||||||||||||
| Noncompetition agreements | ( | ||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||||||||
| Useful Life (years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||
| Customer relationships | — | $ | $ | ( | $ | ||||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||||||||
| Developed technology | ( | ||||||||||||||||||||||||||||
| Noncompetition agreements | — | ( | |||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||||||||
| March 31, 2025 | |||||||||||||||||||||||||||||
| Useful Life (years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||
| Customer relationships | — | $ | $ | ( | $ | ||||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||||||||
| Developed technology | ( | ||||||||||||||||||||||||||||
| Noncompetition agreements | — | ( | |||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||||||||
Intangible assets are amortized on a straight-line basis over the asset's estimated useful economic life, as noted above.
The Company's amortization expense for intangible assets for the three months ended June 30, 2025 and 2024 was:
| (in thousands of dollars) | Three Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Amortization Expense | $ | $ | |||||||||||||||||||||
12
As of June 30, 2025, the expected future amortization expense for intangible assets was as follows:
| Fiscal Year (in thousands of dollars) | |||||
2026 (excluding the three months ended June 30, 2025) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 and thereafter | |||||
| Total expected future amortization expense | $ | ||||
NOTE 8. DERIVATIVES AND HEDGING ACTIVITIES
Universal is exposed to various risks in its worldwide operations and uses derivative financial instruments to manage two specific types of risks – interest rate risk and foreign currency exchange rate risk. Interest rate risk has been managed by entering into interest rate swap agreements, and foreign currency exchange rate risk has been managed by entering into forward and option foreign currency exchange contracts. However, the Company’s policy also permits other types of derivative instruments. In addition, foreign currency exchange rate risk is also managed through strategies that do not involve derivative instruments, such as using local borrowings and other approaches to minimize net monetary positions in non-functional currencies. The disclosures below provide additional information about the Company’s hedging strategies, the derivative instruments used, and the effects of these activities on the consolidated statements of income and comprehensive income and the consolidated balance sheets. In the consolidated statements of cash flows, the cash flows associated with all of these activities are reported in net cash provided (used) by operating activities.
Cash Flow Hedging Strategy for Interest Rate Risk
In December 2022, the Company entered into receive-floating/pay-fixed interest rate swap agreements that were designated and qualify as hedges of the exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on two outstanding non-amortizing bank term loans that were funded as part of a new bank credit facility in December 2022. Although no significant ineffectiveness is expected with this hedging strategy, the effectiveness of the interest rate swaps is evaluated on a quarterly basis. At June 30, 2025, the total notional amount of the interest rate swaps was $310 million, which corresponded to a portion of the aggregate outstanding balance of the term loans.
Previously, the Company had receive-floating/pay-fixed interest rate swap agreements that were designated and qualified as cash flow hedges for two non-amortizing bank loans that were repaid concurrent with the entry into the Company's bank credit facility in December 2022. Those swap agreements, which had an aggregate notional amount of $370 million corresponding to a portion of the principal balance on the repaid loans, were terminated concurrent with the inception of the new swap agreements. The fair value of the previous swap agreements, approximately $11.8 million, was received from the counterparties upon termination and is being amortized from accumulated other comprehensive loss into earnings as a reduction of interest expense through the original maturity dates of those agreements. As of June 30, 2025, $1.4 million remained in accumulated other comprehensive loss to be amortized through December 31, 2025.
Cash Flow Hedging Strategy for Foreign Currency Exchange Rate Risk Related to Sales of Crop Inputs, Forecast Purchases of Tobacco, and Related Processing Costs
The majority of the tobacco production in most countries outside the United States where Universal operates is sold in export markets at prices denominated in U.S. dollars. However, sales of crop inputs (such as seeds and fertilizers) to farmers, purchases of tobacco from farmers, and most processing costs (such as labor and energy) in those countries are usually denominated in the local currency. Changes in exchange rates between the U.S. dollar and the local currencies where tobacco is grown and processed affect the ultimate U.S. dollar sales of crop inputs and cost of processed tobacco. From time to time, the Company enters into forward and option contracts to buy U.S. dollars and sell the local currency at future dates that coincide with the sale of crop inputs to farmers. In the case of forecast purchases of tobacco and the related processing costs, the Company enters into forward and option contracts to sell U.S. dollars and buy the local currency at future dates that coincide with the expected timing of a portion of the tobacco purchases and processing costs. These strategies offset the variability of future U.S. dollar cash flows for sales of crop inputs, tobacco purchases, and processing costs for the foreign currency notional amount hedged. These hedging strategies have been used mainly for tobacco purchases, processing costs, and sales of crop inputs in Brazil.
13
The aggregate U.S. dollar notional amounts of forward and option contracts entered into for these purposes during the three-month periods in fiscal years 2026 and 2025 was as follows:
| Three Months Ended June 30, | ||||||||||||||
| (in millions of dollars) | 2025 | 2024 | ||||||||||||
| Tobacco purchases | $ | $ | ||||||||||||
| Processing costs | ||||||||||||||
Total | $ | $ | ||||||||||||
Fluctuations in exchange rates and in the amount and timing of fixed-price orders from customers for their purchases from individual crop years routinely cause variations in the U.S. dollar notional amount of forward contracts entered into from one year to the next. Contracts related to tobacco purchases and crop input sales were designated and qualified as hedges of the future cash flows associated with the forecast purchases of tobacco. As a result, changes in fair values of the forward contracts have been recognized in comprehensive income as they occurred, but only recognized in earnings as a component of cost of goods sold upon sale of the related tobacco to third-party customers. The Company de-designates ineffective tobacco purchases and crop input sales hedges to selling, general, and administrative expense when the forecasted tobacco purchases or crop input sales are no longer expected to occur.
The table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of June 30, 2025 for cash flows hedges of tobacco purchases and crop input sales are expected to be recognized in earnings.
| Hedging Program | Crop Year | Geographic Location(s) | Fiscal Year Earnings | ||||||||
| Tobacco purchases | 2026 | Brazil | 2027 | ||||||||
| Tobacco purchases | 2025 | Brazil | 2026 | ||||||||
| Crop input sales | 2026 | Brazil | 2027 | ||||||||
| Crop input sales | 2025 | Brazil | 2026 | ||||||||
Forward contracts related to processing costs have not been designated as hedges, and gains and losses on those contracts have been recognized in earnings on a mark-to-market basis.
Hedging Strategy for Foreign Currency Exchange Rate Risk Related to Net Local Currency Monetary Assets and Liabilities of Foreign Subsidiaries
Most of the Company’s foreign subsidiaries transact the majority of their sales in U.S. dollars and finance the majority of their operating requirements with U.S. dollar borrowings, and therefore use the U.S. dollar as their functional currency. These subsidiaries normally have certain monetary assets and liabilities on their balance sheets that are denominated in the local currency. Those assets and liabilities can include cash and cash equivalents, accounts receivable and accounts payable, advances to farmers and suppliers, deferred income tax assets and liabilities, recoverable value-added taxes, operating lease liabilities, and other items. Net monetary assets and liabilities denominated in the local currency are remeasured into U.S. dollars each reporting period, generating gains and losses that the Company records in earnings as a component of selling, general, and administrative expenses. The level of net monetary assets or liabilities denominated in the local currency normally fluctuates throughout the year based on the operating cycle, but it is most common for monetary assets to exceed monetary liabilities, sometimes by a significant amount. When this situation exists and the local currency weakens against the U.S. dollar, remeasurement losses are generated. Conversely, remeasurement gains are generated on a net monetary asset position when the local currency strengthens against the U.S. dollar. To manage a portion of its exposure to currency remeasurement gains and losses, the Company enters into forward contracts to buy or sell the local currency at future dates coinciding with expected changes in the overall net local currency monetary asset position of the subsidiary. Gains and losses on the forward contracts are recorded in earnings as a component of selling, general, and administrative expenses for each reporting period as they occur, and thus directly offset the related remeasurement losses or gains in the consolidated statements of income for the notional amount hedged. The Company does not designate these contracts as hedges for accounting purposes. The contracts are generally arranged to hedge the subsidiary's projected exposure to currency remeasurement risk for specified periods of time, and new contracts are entered as necessary throughout the year to replace previous contracts as they mature. The Company is currently using forward currency contracts to manage its exposure to currency remeasurement risk in Brazil. The total notional amounts of contracts outstanding at June 30, 2025 and 2024, and March 31, 2025, were approximately $29.1 million, $75.4 million, and $17.7 million, respectively. To further mitigate currency remeasurement exposure, the Company’s foreign subsidiaries may utilize short-term local currency financing during certain periods. This strategy, while not involving the use of derivative instruments, is intended to minimize the subsidiary’s net monetary position by financing a portion of the local currency monetary assets with local currency monetary liabilities, thus hedging a portion of the overall position.
14
Several of the Company’s foreign subsidiaries transact the majority of their sales and finance the majority of their operating requirements in their local currency, and therefore use their respective local currencies as the functional currency for reporting purposes. From time to time, these subsidiaries sell tobacco to customers in transactions that are not denominated in the functional currency. In those situations, the subsidiaries routinely enter into forward exchange contracts to offset currency risk for the period of time that a fixed-price order and the related trade account receivable are outstanding with the customer. The contracts are not designated as hedges for accounting purposes.
Effect of Derivative Financial Instruments on the Consolidated Statements of Income
The table below outlines the effects of the Company’s use of derivative financial instruments on the consolidated statements of income:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| (in thousands of dollars) | 2025 | 2024 | ||||||||||||||||||||||||
| Cash Flow Hedges - Interest Rate Swap Agreements | ||||||||||||||||||||||||||
Derivative | ||||||||||||||||||||||||||
Effective Portion of Hedge | ||||||||||||||||||||||||||
| Gain (loss) recorded in accumulated other comprehensive loss | $ | ( | $ | |||||||||||||||||||||||
Gain (loss) reclassified from accumulated other comprehensive loss into earnings | $ | $ | ||||||||||||||||||||||||
Gain on terminated interest rate swaps amortized from accumulated other comprehensive loss into earnings | $ | $ | ||||||||||||||||||||||||
Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings | Interest expense | |||||||||||||||||||||||||
Ineffective Portion of Hedge | ||||||||||||||||||||||||||
| Gain (loss) recognized in earnings | $ | $ | ||||||||||||||||||||||||
| Location of gain (loss) recognized in earnings | Selling, general and administrative expenses | |||||||||||||||||||||||||
Hedged Item | ||||||||||||||||||||||||||
| Description of hedged item | Floating rate interest payments on term loans | |||||||||||||||||||||||||
| Cash Flow Hedges - Foreign Currency Exchange Contracts | ||||||||||||||||||||||||||
Derivative | ||||||||||||||||||||||||||
Effective Portion of Hedge | ||||||||||||||||||||||||||
| Gain (loss) recorded in accumulated other comprehensive loss | $ | $ | ( | |||||||||||||||||||||||
Gain (loss) reclassified from accumulated other comprehensive loss into earnings | $ | ( | $ | |||||||||||||||||||||||
Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings | Cost of goods sold | |||||||||||||||||||||||||
Ineffective Portion and Early De-designation of Hedges | ||||||||||||||||||||||||||
| Gain (loss) recognized in earnings | $ | $ | ||||||||||||||||||||||||
| Location of gain (loss) recognized in earnings | Selling, general and administrative expenses | |||||||||||||||||||||||||
Hedged Item | ||||||||||||||||||||||||||
Description of hedged item | Forecast purchases of tobacco in Brazil | |||||||||||||||||||||||||
| Derivatives Not Designated as Hedges - Foreign Currency Exchange Contracts | ||||||||||||||||||||||||||
| Gain (loss) recognized in earnings | $ | $ | ||||||||||||||||||||||||
| Location of gain (loss) recognized in earnings | Selling, general and administrative expenses | |||||||||||||||||||||||||
For the interest rate swap agreements, the effective portion of the gain or loss on the derivative is recorded in accumulated other comprehensive loss and any ineffective portion is recorded in selling, general and administrative expenses.
15
For the forward foreign currency exchange contracts designated as cash flow hedges of tobacco purchases and the crop input sales in Brazil, a net hedge loss of approximately $4.9 million remained in accumulated other comprehensive loss at June 30, 2025. That balance reflects gains and losses on contracts related to the 2026 and 2025 Brazil crop, and the 2026 and 2025 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through June 30, 2025. Based on the hedging strategy, as the gain or loss is recognized in earnings, it is expected to be offset by a change in the direct cost for the tobacco or by a change in sales prices if the strategy has been mandated by the customer. Generally, margins on the sale of the tobacco will not be significantly affected.
Effect of Derivative Financial Instruments on the Consolidated Balance Sheets
The table below outlines the effects of the Company’s derivative financial instruments on the consolidated balance sheets at June 30, 2025 and 2024, and March 31, 2025:
| Derivatives in a Fair Value Asset Position | Derivatives in a Fair Value Liability Position | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | Fair Value as of | Balance Sheet Location | Fair Value as of | |||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands of dollars) | June 30, 2025 | June 30, 2024 | March 31, 2025 | June 30, 2025 | June 30, 2024 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swap agreements | Other non-current assets | $ | $ | $ | Other long-term liabilities | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency exchange contracts | Other current assets | Accounts payable and accrued expenses | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency exchange contracts | Other current assets | $ | $ | $ | Accounts payable and accrued expenses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Substantially all of the Company's foreign exchange derivative instruments are subject to master netting arrangements whereby the right to offset occurs in the event of default by a participating party. The Company has elected to present these contracts on a gross basis in the consolidated balance sheets.
NOTE 9. FAIR VALUE MEASUREMENTS
Universal measures certain financial and nonfinancial assets and liabilities at fair value based on applicable accounting guidance. The financial assets and liabilities measured at fair value include money market funds, trading securities associated with deferred compensation plans, interest rate swap agreements, and forward foreign currency exchange contracts. The application of the fair value guidance to nonfinancial assets and liabilities primarily includes the determination of fair values for goodwill and long-lived assets when indicators of potential impairment are present.
Under the accounting guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The framework for measuring fair value is based on a fair value hierarchy that distinguishes between observable inputs and unobservable inputs. Observable inputs are based on market data obtained from independent sources. Unobservable inputs require the Company to make its own assumptions about the value placed on an asset or liability by market participants because little or no market data exists.
16
There are three levels within the fair value hierarchy:
| Level | Description | |||||||
| 1 | quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date; | |||||||
| 2 | quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and | |||||||
| 3 | unobservable inputs for the asset or liability. | |||||||
As permitted under the accounting guidance, the Company uses net asset value per share ("NAV") as a practical expedient to measure the fair value of its money market funds. The fair values for those funds are presented under the heading "NAV" in the tables that follow in this disclosure. In measuring the fair value of liabilities, the Company considers the risk of non-performance in determining fair value. Universal has not elected to report at fair value any financial instruments or any other assets or liabilities that are not required to be reported at fair value under current accounting guidance.
Recurring Fair Value Measurements
At June 30, 2025 and 2024, and at March 31, 2025, the Company had certain financial assets and financial liabilities that were required to be measured and reported at fair value on a recurring basis. These assets and liabilities are listed in the tables below and are classified based on how their values were determined under the fair value hierarchy or the NAV practical expedient:
| June 30, 2025 | ||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
| (in thousands of dollars) | NAV | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Trading securities associated with deferred compensation plans | ||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | ||||||||||||||||||||||||||||||||
Total financial assets measured and reported at fair value | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
Interest rate swap agreements | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Foreign currency exchange contracts | ||||||||||||||||||||||||||||||||
Total financial liabilities measured and reported at fair value | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
| (in thousands of dollars) | NAV | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Trading securities associated with deferred compensation plans | ||||||||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | ||||||||||||||||||||||||||||||||
Total financial assets measured and reported at fair value | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Total financial liabilities measured and reported at fair value | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
17
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
| (in thousands of dollars) | NAV | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Trading securities associated with deferred compensation plans | ||||||||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | ||||||||||||||||||||||||||||||||
Total financial assets measured and reported at fair value | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
Foreign currency exchange contracts | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Total financial liabilities measured and reported at fair value | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Money market funds
The fair value of money market funds, which are reported in cash and cash equivalents in the consolidated balance sheets, is based on NAV, which is the amount at which the funds are redeemable and is used as a practical expedient for fair value. These funds are not classified in the fair value hierarchy, but are disclosed as part of the fair value table above.
Trading securities associated with deferred compensation plans
Trading securities represent mutual fund investments that are matched to employee deferred compensation obligations. These investments are bought and sold as employees defer compensation, receive distributions, or make changes in the funds underlying their accounts. Quoted market prices (Level 1) are used to determine the fair values of the mutual funds.
Interest rate swap agreements
The fair values of interest rate swap agreements are determined based on dealer quotes using a discounted cash flow model matched to the contractual terms of each instrument. Since inputs to the model are observable and significant judgment is not required in determining the fair values, interest rate swaps are classified within Level 2 of the fair value hierarchy.
Foreign currency exchange contracts
The fair values of forward and option foreign currency exchange contracts are also determined based on dealer quotes using a discounted cash flow model matched to the contractual terms of each instrument. Since inputs to the model are observable and significant judgment is not required in determining the fair values, forward and option foreign currency exchange contracts are classified within Level 2 of the fair value hierarchy.
Long-term Debt
The following table summarizes the fair and carrying value of the Company’s long-term debt, and if applicable any current portion, at each of the balance sheet dates June 30, 2025, and 2024 and March 31, 2025:
| (in millions of dollars) | June 30, 2025 | June 30, 2024 | March 31, 2025 | ||||||||||||||
| Fair market value of long term obligations | $ | $ | $ | ||||||||||||||
| Carrying value of long term obligations | $ | $ | $ | ||||||||||||||
The Company estimates the fair value of its long-term debt using Level 2 inputs which are based upon quoted market prices for the same or similar obligations or on calculations that are based on the current interest rates available to the Company for debt of similar terms and maturities.
Nonrecurring Fair Value Measurements
Assets and liabilities that are measured at fair value on a nonrecurring basis primarily relate to long-lived assets, right-of-use operating lease assets and liabilities, goodwill and intangibles, and other current and noncurrent assets. These assets and liabilities fair values are also evaluated for impairment when potential indicators of impairment exist. Accordingly, the nonrecurring measurement of the fair value of these assets and liabilities are classified within Level 3 of the fair value hierarchy.
18
Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events, changes in business conditions, or other circumstances provide an indication that such assets may be impaired.
Consolidation of tobacco sheet operations
As discussed in Note 2, the Company initiated a plan to consolidate the European Sheet tobacco operations into the Company's facility in the Netherlands. The Company is in the process of winding down its operations in Germany, resulting in an impairment charge of $4.9 million for the long-lived assets in fiscal year 2025, to reduce their carrying value to fair value. The long-lived assets primarily consist of a processing facility, machinery and equipment, and administrative offices. After reassessing the fair value of the long-lived assets associated with the operations in Germany, an additional $1.0 million impairment charge was recognized during three-month period ended June 30, 2025
NOTE 10. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company sponsors several defined benefit pension plans covering eligible U.S. salaried employees and certain foreign and other employee groups. These plans provide retirement benefits based primarily on employee compensation and years of service. The Company also sponsors defined benefit plans that provide postretirement health and life insurance benefits for eligible U.S. employees attaining specific age and service levels, although postretirement life insurance is no longer provided for active employees.
The components of the Company’s net periodic benefit cost were as follows:
| Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||||||||
| Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||||||||
| (in thousands of dollars) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
| Net amortization and deferral | ( | ( | ||||||||||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ | ||||||||||||||||||||||
During the three months ended June 30, 2025, the Company made contributions of approximately $0.6 million to its pension plans. Additional contributions of $10.7 million are expected during the remaining nine months of fiscal year 2026.
NOTE 11. STOCK-BASED COMPENSATION
The Company's shareholders approved the Universal Corporation 2023 Stock Incentive Plan (“Plan”) under which officers, directors, and employees of the Company may receive grants and awards of common stock, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”), stock appreciation rights, incentive stock options, and non-qualified stock options. With the exception of new hires and promotions, the Company’s practice is to award grants of stock-based compensation to officers on an annual basis at the first regularly-scheduled meeting of the Compensation Committee of the Board of Directors (the “Compensation Committee”) in the fiscal year following the public release of the Company’s financial results for the prior fiscal year. The Compensation Committee administers the Plan consistently, following previously defined guidelines. In recent years, the Compensation Committee has awarded only grants of RSUs and PSUs. Awards of restricted stock, RSUs, and PSUs are currently outstanding.
RSUs awarded to officers and employees generally vest 3 years after the grant date. After vesting RSUs are paid out in shares of common stock. Under the terms of the RSU awards, grantees receive dividend equivalents in the form of additional RSUs that vest and are paid out on the same date as the original RSU grant. The PSUs vest at the end of a performance period of 3 years that begins with the year of the grant, are paid out in shares of common stock shortly after the vesting date, and do not carry rights to dividends or dividend equivalents prior to vesting. Shares ultimately paid out under PSU grants are dependent on the achievement of predetermined performance measures established by the Compensation Committee and can range from zero to 150 % of the stated award. The Company’s outside directors receive RSUs following the annual meeting of shareholders. RSUs awarded to outside directors vest 1 year after the grant date. Restricted shares vest upon the individual’s retirement from service as a director.
19
During the three-month periods ended June 30, 2025 and 2024, the Company issued the following stock-based awards, representing the regular annual grants to officers and outside directors of the Company:
| Three Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| RSUs: | ||||||||||||||
| Number granted | ||||||||||||||
| Grant date fair value | $ | $ | ||||||||||||
| PSUs: | ||||||||||||||
| Number granted | ||||||||||||||
| Grant date fair value | $ | $ | ||||||||||||
Fair value expense for stock-based compensation is recognized ratably over the period from grant date to the earlier of (1) the vesting date of the award or (2) the date the grantee is eligible to retire without forfeiting the award. For employees who are already eligible to retire at the date an award is granted, the total fair value of the award is recognized as expense at the date of grant. The Company accounts for forfeitures of stock-based awards as they occur. For the three-month periods ended June 30, 2025 and 2024, the Company recorded total stock-based compensation expense of approximately $7.6 million and $4.6 million, respectively. The Company expects to recognize stock-based compensation expense of approximately $2.2 million during the remaining nine months of fiscal year 2026.
NOTE 12. OPERATING SEGMENTS
Management regularly evaluates the Company’s global business activities, including product and service offerings to its customers, as well as senior management’s operational and financial responsibilities. Assessments include an analysis of how its Chief Operating Decision Maker (“CODM”) measures business performance and allocates resources. As a result of this analysis, senior management has 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 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 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, Inc. (“FruitSmart”), Silva International, Inc. (“Silva”), and Shank’s Extracts, LLC d/b/a Universal Ingredients–Shank’s (“Universal Ingredients–Shank’s”) are the primary operations for the Ingredients Operations segment. FruitSmart supplies a broad set of juices, concentrates, pomaces, purees, fruit fibers, seeds, seed powders, and other value-added products to food, beverage, and flavor companies throughout the United States and internationally. Silva procures dehydrated vegetables, fruits, and herbs from around the world and specializes in processing natural materials into custom designed dehydrated vegetable and fruit-based ingredients for a variety of end products. Universal Ingredients–Shank’s offers a diversified portfolio of botanical extracts, distillates, natural flavors, and color for industrial and private label customers worldwide, and is known for their significant vanilla expertise. Universal Ingredients–Shank’s is also equipped to offer customers custom bottling and packaging for their products.
Universal incurs corporate 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.
20
Management believes this method of allocation is currently representative of the value of the related services provided to the operating segments. The CODM, which has been identified as a group comprised of the Company’s Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer, currently evaluates the performance of the operating segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates (“Segment Operating Income”). The CODM also uses Segment Operating Income for planning, forecasting, and allocating capital and other resources to the operating segments.
Reportable segment data as of, or for, each period presented in the consolidated statements of income and comprehensive income, the consolidated balance sheets, and the consolidated statements of cash flows is as follows:
| Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||||
| Tobacco Operations | Ingredients Operations | Consolidated | Tobacco Operations | Ingredients Operations | Consolidated | ||||||||||||||||||||||||||||||
| Sales and other operating revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cost of goods sold | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Corporate overhead allocated to the segments | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Equity in pretax earnings (loss) of unconsolidated affiliates(1) | |||||||||||||||||||||||||||||||||||
| Segment operating income | |||||||||||||||||||||||||||||||||||
Deduct: Equity in pretax (earnings) loss of unconsolidated affiliates(1) | ( | ( | |||||||||||||||||||||||||||||||||
Restructuring and impairment costs (2) | ( | ||||||||||||||||||||||||||||||||||
| Consolidated operating income | $ | $ | |||||||||||||||||||||||||||||||||
(1)Equity in pretax earnings (loss) of unconsolidated affiliates is included in segment operating income (Tobacco Operations), but is reported below consolidated operating income and excluded from that total in the consolidated statements of income and comprehensive income.
(2)Restructuring and impairment costs are excluded from segment operating income, but are included in consolidated operating income in the consolidated statements of income and comprehensive income. See Note 2 for additional information.
| Segment Assets | Accounts Receivable, net | ||||||||||||||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | March 31, 2025 | June 30, 2025 | June 30, 2024 | March 31, 2025 | ||||||||||||||||||||||||||||||
| Tobacco Operations | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Ingredients Operations | |||||||||||||||||||||||||||||||||||
| Consolidated total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Goodwill, net | Intangibles, net | ||||||||||||||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | March 31, 2025 | June 30, 2025 | June 30, 2024 | March 31, 2025 | ||||||||||||||||||||||||||||||
| Tobacco Operations | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Ingredients Operations | |||||||||||||||||||||||||||||||||||
| Consolidated total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Capital Expenditures | Depreciation and Amortization | ||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Tobacco Operations | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Ingredients Operations | |||||||||||||||||||||||||||||||||||
| Consolidated total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
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NOTE 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
| Three Months Ended June 30, | ||||||||||||||
| (in thousands of dollars) | 2025 | 2024 | ||||||||||||
| Foreign currency translation: | ||||||||||||||
| Balance at beginning of year | $ | ( | $ | ( | ||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation: | ||||||||||||||
| Net gain (loss) on foreign currency translation | ( | |||||||||||||
| Less: Net (gain) loss on foreign currency translation attributable to noncontrolling interests | ( | |||||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation, net of income taxes | ( | |||||||||||||
| Balance at end of period | $ | ( | $ | ( | ||||||||||
| Foreign currency hedge: | ||||||||||||||
| Balance at beginning of year | $ | ( | $ | ( | ||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation: | ||||||||||||||
Net gain (loss) on derivative instruments (net of tax (expense) benefit of $( | ( | |||||||||||||
Reclassification of (gain) loss to earnings (net of tax expense (benefit) of $ | ( | ( | ||||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation, net of income taxes | ( | |||||||||||||
| Balance at end of period | $ | ( | $ | ( | ||||||||||
| Interest rate hedge: | ||||||||||||||
| Balance at beginning of year | $ | $ | ||||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation: | ||||||||||||||
Net gain (loss) on derivative instruments (net of tax (expense) benefit of $ | ( | |||||||||||||
Reclassification of (gain) loss to earnings (net of tax expense (benefit) of $ | ( | ( | ||||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation, net of income taxes | ( | |||||||||||||
| Balance at end of period | $ | $ | ||||||||||||
| Pension and other postretirement benefit plans: | ||||||||||||||
| Balance at beginning of year | $ | ( | $ | ( | ||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation: | ||||||||||||||
Amortization included in earnings (net of tax expense (benefit) of $ | ( | ( | ||||||||||||
| Other comprehensive income (loss) attributable to Universal Corporation, net of income taxes | ( | ( | ||||||||||||
| Balance at end of period | $ | ( | $ | ( | ||||||||||
| Total accumulated other comprehensive loss at end of period | $ | ( | $ | ( | ||||||||||
(1) Gain (loss) on foreign currency cash flow hedges related to forecast purchases of tobacco and crop input sales is reclassified from accumulated other comprehensive income (loss) to cost of goods sold when the tobacco is sold to customers. See Note 8 for additional information.
(2) Gain (loss) on interest rate cash flow hedges is reclassified from accumulated other comprehensive income (loss) to interest expense when the related interest payments are made on the underlying debt, or as amortized to interest expense over the period to original maturity for terminated swap agreements. See Note 8 for additional information.
(3) This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost. See Note 10 for additional information.
22
NOTE 14. CHANGES IN SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS IN SUBSIDIARIES
A reconciliation of the changes in Universal Corporation shareholders’ equity and noncontrolling interests in subsidiaries for the three months ended June 30, 2025 and 2024 is as follows:
| Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||
| (in thousands of dollars) | Universal Corporation | Non-controlling Interests | Total | Universal Corporation | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||
| Balance at beginning of three-month period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Changes in common stock | ||||||||||||||||||||||||||||||||||||||
| Accrual of stock-based compensation | ||||||||||||||||||||||||||||||||||||||
Withholding of shares from stock-based compensation for grantee income taxes | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Dividend equivalents on RSUs | ||||||||||||||||||||||||||||||||||||||
| Changes in retained earnings | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Cash dividends declared | ||||||||||||||||||||||||||||||||||||||
| Common stock | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Dividend equivalents on RSUs | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Other changes in noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
Dividends paid to noncontrolling shareholders | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, the terms “we,” “our,” “us” or “Universal” or the “Company” refer to Universal Corporation together with its subsidiaries. This Quarterly Report on Form 10-Q ("Form 10-Q") and the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain “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 relate to the Company’s financial condition, results of operation, and future business plans, operations, opportunities, and prospects. In addition, the Company and its representatives may from time to time make written or oral forward-looking statements, including statements contained in other filings with the Securities and Exchange Commission (the "SEC") and in reports to shareholders. 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: product purchased not meeting quality and quantity requirements; reliance on a few large customers; anticipated levels of demand for and supply of our products and services; tobacco growing conditions and customer requirements; major shifts in customer requirements for leaf tobacco; higher inflation rates, tariffs and other pressures on costs; weather and other conditions; exposure to certain legal, regulatory and financial risks related to climate change; industry-specific risks related to our plant-based ingredients businesses; disruption of our supply chain for our plant-based ingredients; success in pursuing strategic investments or acquisitions and integration of new businesses and the impact of these new businesses on future results; our ability to maintain effective information technology systems and safeguard confidential information; our inability to attract, develop, retain, motivate, and maintain good relationships with our workforce; our dependence on a seasonal workforce; epidemics, pandemics or similar widespread public health concerns; government efforts to regulate the production and consumption of tobacco products; government actions on the sourcing of leaf tobacco; economic and political conditions in the countries in which we and our customers operate, including the ongoing impacts from international conflicts; sustainability considerations from governments and other stakeholders; changes in tax laws in the countries where we do business; material weaknesses in our internal control over financial reporting; our inability to use a Form S-3 registration statement; failure of our customers or suppliers to repay extensions of credit; changes in exchange rates; changes in interest rates; and low investment performance by our defined benefit pension plan assets and changes in pension plan valuation assumptions. For a further description of factors that may cause actual results to differ materially from such forward-looking statements, see Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. We caution investors not to place undue reliance on any forward-looking statements as these statements speak only as of the date when made, and we undertake no obligation to update any forward-looking statements made in this report, except as required by law. This Form 10-Q should be read in conjunction with our 2025 Form 10-K.
Amounts described as net income (loss) and earnings (loss) per diluted share in the following discussion are attributable to Universal Corporation and exclude earnings related to non-controlling interests in subsidiaries. Any references to 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) are references to non-GAAP financial measures. These measures are not financial measures calculated in accordance with generally accepted accounting principles ("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. Reconciliations 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 below to the extent these non-GAAP financial measures are referenced. In addition, we have provided a reconciliation of the total for segment operating income (loss) to consolidated operating income (loss) in Note 12. "Operating Segments" 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, can provide investors with important information that is useful in understanding our business results and trends. References to net debt, net capitalization, and net debt to net capitalization ratio are also references to non-GAAP financial measures. These measures are not financial measures calculated in accordance with GAAP and should not be considered substitutes for total debt, total capitalization, total debt to total capitalization ratio, or any other operating or financial performance measures calculated in accordance with GAAP, and may not be comparable to similarly-titled measures reported by other companies. Reconciliations of net debt to total debt and net capitalization to total capitalization are provided in Other Items below. We believe these non-GAAP measures are meaningful indicators of liquidity and financial position.
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Results of Operations
Overview
Universal Corporation is off to a good start for fiscal year 2026. During our seasonally smaller first fiscal quarter ended June 30, 2025, consolidated revenues decreased slightly, by $3.3 million, and operating income increased by $16.6 million, compared to the same period in fiscal year 2025. Improved operating income for our Tobacco Operations segment, up 147%, or $21.2 million, was driven by a favorable product mix, despite lower carryover crop sales. The reduction in carryover crop sales in the quarter ended June 30, 2025, resulted from significant shipment volumes completed earlier in fiscal year 2025. Current flue-cured and burley tobacco crop sizes have increased significantly, and we are seeing more typical buying patterns with green tobacco purchases largely completed in Brazil and Africa. Customer demand remains firm, following several years of short tobacco supply, and our uncommitted tobacco inventory levels were low, at about 11%, as of June 30, 2025.
Revenues for our Ingredients Operations segment were up 5%, or $4.0 million, on increased sales volumes in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024. Segment results for the quarter ended June 30, 2025, were impacted by a less favorable product mix, some curtailed demand due to tariff uncertainty, and higher fixed costs as we work to fill our recently expanded production facility. We are continuing to see interest in our new value-added products and capabilities. Supported by a foundational customer for our expanded Universal Ingredients facility, we are diligently working on converting customer interest from existing and new customers into increased volumes for that facility. Our focus for a successful fiscal year 2026 is growing Universal Ingredients organically, while also maximizing and optimizing our tobacco business and strengthening our organization.
| FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| (in millions of dollars, except per share data) | 2025 | 2024 | |||||||||||||||||||||||||||||||||
| Consolidated Results | |||||||||||||||||||||||||||||||||||
| Sales and other operating revenue | $ | 593.8 | $ | 597.1 | |||||||||||||||||||||||||||||||
| Cost of goods sold | $ | 479.6 | $ | 501.1 | |||||||||||||||||||||||||||||||
| Gross profit margin percentage | 19.2 | % | 16.1 | % | |||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 79.2 | $ | 78.7 | |||||||||||||||||||||||||||||||
| Restructuring and impairment costs | $ | 1.1 | $ | — | |||||||||||||||||||||||||||||||
| Operating income | $ | 33.8 | $ | 17.2 | |||||||||||||||||||||||||||||||
| Adjusted operating income (non-GAAP)* | $ | 34.9 | $ | 17.2 | |||||||||||||||||||||||||||||||
| Net income attributable to Universal Corporation | $ | 8.5 | $ | 0.1 | |||||||||||||||||||||||||||||||
| Adjusted net income attributable to Universal Corporation (non-GAAP)* | $ | 9.6 | $ | 0.1 | |||||||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | 0.34 | $ | 0.01 | |||||||||||||||||||||||||||||||
| Adjusted diluted earnings (loss) per share (non-GAAP)* | $ | 0.38 | $ | 0.01 | |||||||||||||||||||||||||||||||
| Segment Results | |||||||||||||||||||||||||||||||||||
| Tobacco operations sales and other operating revenues | $ | 504.7 | $ | 512.0 | |||||||||||||||||||||||||||||||
| Tobacco operations operating income | $ | 35.7 | $ | 14.5 | |||||||||||||||||||||||||||||||
| Ingredients operations sales and other operating revenues | $ | 89.1 | $ | 85.1 | |||||||||||||||||||||||||||||||
| Ingredients operations operating income (loss) | $ | 1.7 | $ | 2.9 | |||||||||||||||||||||||||||||||
| *See Reconciliation of Certain non-GAAP Financial Measures in Other Items below. | |||||||||||||||||||||||||||||||||||
Quarter Ended June 30, 2025, compared to Quarter Ended June 30, 2024
Consolidated Results
Revenues decreased by 1%, or $3.3 million, and operating income increased by 96%, or $16.6 million, in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, primarily driven by performance in our Tobacco Operations segment.
Selling, general, and administrative expenses were up by 1%, or $0.5 million, primarily due to higher compensation costs of $5.5 million and legal and professional fees of $3.7 million, which were largely offset by favorable foreign currency
25
comparisons of $7.3 million and lower tobacco sales commissions of $2.8 million in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024.
Adjusted operating income was up by $17.7 million, and adjusted net income attributable to Universal Corporation was up by $9.5 million, in the first quarter of fiscal year 2026, compared to the same period in the prior fiscal year, on a favorable product mix in the Tobacco Operations segment.
Tobacco Operations Segment
Revenues decreased by 1%, or $7.3 million, for the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, primarily on an 8% decline in tobacco sales volumes, largely due to lower sales of carryover crop tobacco. Less carryover tobacco was available for sale in the first quarter of fiscal year 2026, due to significant shipment volumes earlier in fiscal year 2025. Operating income for the Tobacco Operations segment increased by 147%, or $21.2 million, for the first quarter of fiscal year 2026, compared to first quarter of fiscal year 2025, on a favorable product mix in Asia. Selling, general, and administrative expenses were lower by approximately $1.8 million for the segment mainly due to favorable foreign currency comparisons of $7.2 million, partially offset by higher compensation costs of $2.3 million and higher legal and professional fees of $2.5 million in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024. Uncommitted tobacco inventory levels remained low at about 11% of total tobacco inventory as of June 30, 2025.
Ingredients Operations Segment
Revenues for the Ingredients Operations segment increased by 5%, or $4.0 million, for the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, on higher sales volumes. Operating income for the segment decreased by 42%, or $1.2 million, due to a less favorable product mix, some curtailed demand due to tariff uncertainty, and higher fixed costs, including depreciation, from our recently expanded Universal Ingredients production facility.
Additional Items
Cost of goods sold decreased by 4%, or $21.5 million, in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, largely on lower sales volumes and product mix in the Tobacco Operations segment.
Interest expense was down by 14%, or $3.0 million, in the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024, primarily on lower interest rates.
Restructuring and impairment costs of $1.1 million in the quarter ended June 30, 2025, were primarily related to the previously announced consolidation of the Company’s European tobacco sheet operations.
The consolidated effective tax rate for the three months ended June 30, 2025, was 27.1%. The consolidated tax rate for the three months ended June 30, 2024, was 34.7%. The consolidated effective tax rate for the three months ended June 30, 2024, was higher than the consolidated tax rate for the three months ended June 30, 2025, due to limitation of deductibility of certain compensation amounts.
Sustainability
As part of its broader renewable energy strategy, Universal recently completed its annual third-party assessment and verification of Scope 1, 2, and relevant Scope 3 emissions data. This important assessment ensures alignment with established standards and provides transparency into Universal's emission reduction efforts. A demonstration of how the Company is aligning operations with global sustainability standards is the recently commissioned biomass boiler in Zimbabwe. The new boiler, once operational, will reduce coal use over time and contribute to long-term emissions reduction.
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Other Items
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 June 30, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | |||||||||||||||||||||
| As Reported: Consolidated operating income | $ | 33,813 | $ | 17,225 | |||||||||||||||||||
Restructuring and impairment costs(1) | 1,122 | — | |||||||||||||||||||||
| As Adjusted operating income (non-GAAP) | $ | 34,935 | $ | 17,225 | |||||||||||||||||||
| Adjusted Net Income Attributable to Universal Corporation and Adjusted Diluted Earnings Per Share Reconciliation | |||||||||||||||||||||||
(in thousands except for per share amounts) | Three Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| As Reported: Net income attributable to Universal Corporation | $ | 8,497 | $ | 130 | |||||||||||||||||||
Restructuring and impairment costs(1) | 1,122 | — | |||||||||||||||||||||
| Total of non-GAAP adjustments to income before income taxes | 1,122 | — | |||||||||||||||||||||
| Non-GAAP adjustments to income taxes | |||||||||||||||||||||||
Income tax benefit from restructuring and impairment costs(2) | (35) | — | |||||||||||||||||||||
| Total of income tax impacts for non-GAAP adjustments to income before income taxes | (35) | — | |||||||||||||||||||||
| As adjusted: Net income attributable to Universal Corporation (non-GAAP) | $ | 9,584 | $ | 130 | |||||||||||||||||||
| As reported: Diluted earnings per share | $ | 0.34 | $ | 0.01 | |||||||||||||||||||
| As adjusted: Diluted earnings per share (non-GAAP) | $ | 0.38 | $ | 0.01 | |||||||||||||||||||
(1) 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.
(2) The income tax effect of non-GAAP adjustments was determined based on the timing and nature of the specific non-GAAP adjustments and their relevant jurisdictional income tax rates (foreign, state, and local) and the applicable U.S. federal income tax rates. The Company considers current and deferred income tax rates to calculate the impact to income taxes for the non-GAAP adjustments.
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The following table reconciles total debt to net debt and net capitalization:
| Net Debt and Net Capitalization Reconciliation | ||||||||||||||||||||
| June 30, | June 30, | March 31, | ||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | |||||||||||||||||
| Add: Notes payable and overdrafts | $ | 621,275 | $ | 581,087 | $ | 455,039 | ||||||||||||||
| Add: Long-term obligations | 618,057 | 617,502 | 617,918 | |||||||||||||||||
| Add: Current portion of long-term obligations | — | — | — | |||||||||||||||||
| Total Debt | 1,239,332 | 1,198,589 | 1,072,957 | |||||||||||||||||
| Add: Customer advances and deposits | 4,557 | 15,660 | 3,763 | |||||||||||||||||
| Less: Cash and cash equivalents | 178,435 | 101,700 | 260,115 | |||||||||||||||||
| Net Debt (non-GAAP) | $ | 1,065,454 | $ | 1,112,549 | $ | 816,605 | ||||||||||||||
| Add: Total Universal Corporation shareholders' equity | 1,458,917 | 1,413,457 | 1,458,556 | |||||||||||||||||
| Net Capitalization (non-GAAP) | $ | 2,524,371 | $ | 2,526,006 | $ | 2,275,161 | ||||||||||||||
| Net Debt/Net Capitalization (non-GAAP) | 42 | % | 44 | % | 36 | % | ||||||||||||||
Liquidity and Capital Resources
Overview
Our liquidity and operating capital resource requirements are predominantly short term in nature and primarily relate to working capital for tobacco crop purchases. Working capital needs are seasonal within each geographic region. The geographic dispersion and the timing of working capital needs permit us to predict our general level of cash requirements, although tobacco crop sizes, prices paid to farmers, shipment and delivery timing, and currency fluctuations affect requirements each year. Peak working capital requirements are generally reached during the first and second fiscal quarters. Each geographic area follows a cycle of buying, processing, and shipping tobacco to customers, and in many regions, we also provide agricultural materials to farmers during the growing season. The timing of the elements of each cycle is influenced by such factors as local weather conditions and individual customer shipping requirements, which may change the level or the duration of crop financing. Despite a predominance of short-term needs, we maintain a portion of our total debt as long-term to reduce liquidity risk. We also periodically have large cash balances that we utilize to meet our working capital requirements.
Our first fiscal quarter is usually a period of significant working capital investment in both Africa and South America as tobacco crops are delivered by farmers. Our working capital needs followed this pattern in the quarter ended June 30, 2025, and we funded these working capital needs using a combination of cash on hand, short-term borrowings, customer advances, and operating cash flows. In contrast, in the quarter ended June 30, 2024, certain tobacco purchases that would have typically been made in that fiscal quarter had been made earlier due to market conditions, which reduced required working capital investments in quarter ended June 30, 2024.
Operating Activities
Net cash used by our operations was $205.1 million during the quarter ended June 30, 2025. That amount was $142.7 million higher than during the same period in fiscal year 2025, primarily on lower working capital requirements in the quarter ended June 30, 2024. Tobacco inventory levels increased by $413.4 million from March 31, 2025 levels to $1.2 billion at June 30, 2025, on seasonal leaf tobacco purchases. Tobacco inventory levels at June 30, 2025, were relatively flat, up $17.4 million, compared to June 30, 2024 levels. We generally do not purchase material quantities of tobacco on a speculative basis, and we target committed inventory levels of 80% or more of total tobacco inventory. Our level of committed inventory percentages is influenced by timing of farmer deliveries of new crops, as well as the receipt of customer orders. In addition, when we contract directly with tobacco farmers, we are often obligated to buy all stalk positions, which may contain less marketable leaf styles. As of June 30, 2025, our uncommitted tobacco inventories were $134.7 million, or about 11% of total tobacco inventory, compared to $164.0 million, or about 20% of our tobacco inventory as of March 31, 2025, and $154.8 million, or about 13% of our tobacco inventory as of June 30, 2024.
Our balance sheet accounts reflected seasonal patterns in the quarter ended June 30, 2025, on deliveries of tobacco crops by farmers in both Africa and South America. Accounts receivable decreased by $201.7 million from March 31, 2025 levels, on tobacco crop shipments offset in part by collections on receivables. Advances to suppliers were $79.2 million at June 30, 2025, a reduction of $90.2 million from March 31, 2025, as tobacco crops were delivered in payment on some of those balances, net of
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new balances for upcoming tobacco crops. Accounts receivable--unconsolidated affiliates were $120.6 million higher as of June 30, 2025, compared to March 31, 2025, on tobacco crop purchases. Notes payable and overdrafts were up $166.2 million from March 31, 2025 levels, on seasonal working capital needs.
Accounts receivable--unconsolidated affiliates were $66.7 million higher as of June 30, 2025, compared to the same period in the prior fiscal year, on larger tobacco crop sizes. Accounts payable were $119.8 million at June 30, 2025, up $40.1 million, compared to June 30, 2024, largely on the timing of tobacco crop purchases. Notes payable and overdrafts and cash and cash equivalents were up $40.2 million and $76.7 million, respectively, as of June 30, 2025, compared to June 30, 2024, largely due to a lower use of cash and cash equivalents to fund working capital needs.
Investing Activities
Our capital allocation strategy focuses on four strategic priorities: strengthening and investing for growth in our leaf tobacco business; increasing our strong dividend; exploring growth opportunities for our ingredients business; and returning excess capital to our shareholders. In deciding where to invest capital resources, we look for opportunities where we believe we can earn an adequate return as well as leverage our assets and expertise or enhance our farmer base. Our capital expenditures are generally limited to those that add value, replace or maintain equipment, increase efficiency, or position us for future growth. During the quarters ended June 30, 2025 and 2024, we invested about $12.1 million and $22.7 million, respectively, in our property, plant and equipment. Depreciation expense was approximately $11.0 million and $11.7 million for the quarters ended June 30, 2025 and 2024, respectively. Typically, our capital expenditures for maintenance projects are less than $30 million per fiscal year. In addition, from time to time, we undertake projects that require capital expenditures when we identify opportunities to improve efficiencies, invest in sustainability projects, add value for our customers, and position ourselves for future growth. We currently expect to spend approximately $45 to $55 million over the next twelve months on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.
Our Board of Directors approved our current share repurchase program in November 2024. The program authorizes the purchase of up to $100 million of our common stock through November 15, 2026. Under the current authorization, we may purchase shares from time to time on the open market or in privately negotiated transactions at prices not exceeding prevailing market rates. Repurchases of shares under the repurchase program may vary based on management discretion, as well as changes in cash flow generation and availability. During the three months ended June 30, 2025, we did not purchase any shares of common stock. As of June 30, 2025, our available authorization under our current share repurchase program was $100 million.
Financing Activities
At June 30, 2025, we had $1.2 billion in total debt outstanding, an increase of $40.7 million compared to June 30, 2024. We consider the sum of notes payable and overdrafts, long-term debt (including any current portion), and customer advances and deposits, less cash, cash equivalents, and short-term investments on our balance sheet to be our net debt. We also consider our net debt plus shareholders' equity to be our net capitalization. Net debt decreased by $47.1 million to $1.1 billion at June 30, 2025, compared to June 30, 2024. Net debt as a percentage of net capitalization was 42% at June 30, 2025, down from 44% at June 30, 2024, and up from 36% at March 31, 2025.
As of June 30, 2025, we had $178.4 million in cash and cash equivalents, $355 million available under our committed revolving credit facility that will mature in December 2027, and we, together with our consolidated affiliates, had approximately $86 million in available, uncommitted credit lines. The financial covenants under our committed revolving credit facility require us to maintain certain levels of tangible net worth and observe restrictions on debt levels. Based on our June 30, 2025 financial statement, we were in compliance with all financial covenants of our debt agreements as of June 30, 2025. We have no long-term debt maturing until fiscal year 2028.
Our seasonal working capital requirements for our tobacco business typically increase significantly between March and September and decline after mid-fiscal year. Available capital resources from our cash balances, committed revolving credit facility, and uncommitted credit lines are expected to exceed our normal working capital needs and currently anticipated capital expenditure requirements over the next twelve months and beyond.
Derivatives
From time to time, we use interest rate swap agreements to manage our exposure to changes in interest rates. At June 30, 2025, the fair value of our outstanding interest rate swap agreements was a liability of about $0.6 million, and the notional amount swapped was $310 million. We entered into these agreements to eliminate the variability of cash flows in the interest payments on
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a portion of our variable-rate term loans. Under the swap agreements we receive variable rate interest and pay fixed rate interest. The swaps are accounted for as cash flow hedges.
We also use derivative instruments from time to time to hedge certain foreign currency exposures, primarily related to forecasted purchases of tobacco, related processing costs, and crop input sales, as well as our net monetary balance sheet exposures in local currency. We generally account for our hedges of forecasted tobacco purchases as cash flow hedges. As of June 30, 2025, the fair value of our open hedges for forecasted tobacco purchases was a net asset of approximately $0.5 million. We had forward contracts outstanding that were not designated as hedges, and the fair value of those contracts was a net liability of approximately $0.3 million as of June 30, 2025.
Critical Accounting Estimates
A summary of our critical accounting policies is included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our 2025 Form 10-K. Our critical accounting policies have not changed from those reported in the 2025 Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Company's market risk during the three months ended June 30, 2025. For a discussion of the Company's exposure to market risk, refer to the Company's market risk disclosures set forth in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of the 2025 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. The Company’s Chief Executive Officer and Chief Financial Officer evaluated, with the participation of the Company’s management, the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)), as of the end of the period covered by this Form 10-Q. Based on this evaluation, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, concluded that, as a result of the material weakness in the Company’s internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective.
Management’s Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to management and the Board of Directors regarding the preparation and fair presentation of the consolidated financial statements. Due to inherent limitations, internal control over financial reporting may not prevent or detect all errors or misstatements in the financial statements, and even control procedures that are determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions.
As required by Exchange Act Rule 13a-15(c), the Company’s Chief Executive Officer and Chief Financial Officer, with the participation of other members of management, assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2025. The evaluation was based on the criteria set forth in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 COSO Framework”). Based on its assessment, the Company’s management concluded that the Company’s internal control over financial reporting was not effective at the reasonable assurance level as of March 31, 2025, due to the material weakness described below.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis.
The Company’s management determined that the internal controls at one of the Company’s tobacco subsidiaries were not effectively documented and executed to ensure that the existence of all dark air-cured tobacco inventories subject to physical inventory counts were appropriately counted, and that the controls related to the compilation and reconciliation of the related inventory to ensure complete and accurate reporting of inventory in the consolidated financial statements were not effective.
While the material weakness did not result in a material misstatement of the Company’s consolidated financial statements for the fiscal year ended March 31, 2025 or the quarter ended June 30, 2025, there is a reasonable possibility that these deficiencies could have resulted in a material misstatement of the Company’s annual or interim consolidated financial statements that would not be prevented or detected on a timely basis.
Notwithstanding the material weakness, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s consolidated financial statements included in the Form 10-K were fairly stated in all material respects in accordance with generally accepted accounting principles in the United States of America for each of the periods presented. Therefore, no restatement of any prior period financial statements was required.
Remediation Plan
To remediate the material weakness described above, the Company is in the process of implementing the following remediation steps at the tobacco subsidiary:
1.Require enhanced documentation associated with management review controls and validation of the completeness and accuracy of key reports used across the inventory process, including physical inventory counts.
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2.Design and implement additional reports to be utilized in inventory reconciliation controls at the subsidiary.
The Company believes these measures, once they have operated effectively for a sufficient period of time, will remediate the control deficiencies identified and strengthen its internal control over financial reporting. However, there may not be sufficient time for the Company to remediate the material weakness or, if remediated, to test the operating effectiveness of the remediated controls as of the Company’s next fiscal year end. As the Company continues to evaluate, and works to improve, its internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. The Company cannot assure you, however, when it will remediate such weakness, nor can it be certain whether additional actions will be required or the costs of any such actions. Moreover, the Company cannot assure you that additional material weaknesses will not arise in the future.
Changes in Internal Control Over Financial Reporting
Except for the material weakness and implementation of the remediation plan described above, there were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other Legal Matters
Some of our subsidiaries are involved in litigation or legal matters incidental to their business activities. While the outcome of these matters cannot be predicted with certainty, we are vigorously defending them and do not currently expect that any of them will have a material adverse effect on our business or financial position. However, should one or more of these matters be resolved in a manner adverse to our current expectation, the effect on our results of operations for a particular fiscal reporting period could be material.
ITEM 1A. RISK FACTORS
There are no material changes to the risk factors previously disclosed in our 2025 Form 10-K. In evaluating our risks, readers should carefully consider the risk factors discussed in our 2025 Form 10-K, which could materially affect our business, financial condition or operating results, in addition to the other information set forth in this Form 10-Q and in our other filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY
The following table sets forth repurchased shares of our common stock during the three-month period ended June 30, 2025:
Period (1) | Total Number of Shares Repurchased | Average Price Paid Per Share (2) | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (3) | Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) | ||||||||||||||||||||||||||||||||||||||||
| April 1-30, 2025 | — | $ | — | — | $ | 100,000,000 | ||||||||||||||||||||||||||||||||||||||
| May 1-31, 2025 | — | — | — | 100,000,000 | ||||||||||||||||||||||||||||||||||||||||
| June 1-30, 2025 | — | — | — | 100,000,000 | ||||||||||||||||||||||||||||||||||||||||
| Total | — | $ | — | — | $ | 100,000,000 | ||||||||||||||||||||||||||||||||||||||
(1)Repurchases are based on the date the shares were traded. This presentation differs from the consolidated statement of cash flows, where the cost of share repurchases is based on the date the transactions were settled.
(2)Amounts listed for average price paid per share include broker commissions paid in the transactions.
(3)A stock repurchase program, which was authorized by the Company's Board of Directors, became effective and was publicly announced on November 7, 2024. This stock repurchase program authorized the purchase of up to $100 million in common stock in open market or privately negotiated transactions through November 15, 2026, subject to market conditions and other factors. The program had $100 million of remaining capacity for repurchases of common stock at June 30, 2025.
Our current dividend policy anticipates the payment of quarterly dividends in the future. However, the declaration and payment of dividends to holders of common stock is at the discretion of the Board of Directors and will be dependent upon our future earnings, financial condition, and capital requirements. Under certain provisions of our credit facilities, we must meet financial covenants relating to minimum tangible net worth and maximum levels of debt. If we were not in compliance with them, these financial covenants could restrict our ability to pay dividends. We were in compliance with all such covenants at June 30, 2025.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adop ted or terminated
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ITEM 6. EXHIBITS
10.1† | ||||||||
10.2† | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 101 | Interactive Data File (submitted electronically herewith).* | |||||||
| 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section and shall not be part of any registration or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
__________
*Filed herewith
† Management contract or compensatory plan or arrangement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UNIVERSAL CORPORATION | |||||||||||
(Registrant) | |||||||||||
| Date: | August 6, 2025 | /s/ Johan C. Kroner | |||||||||
| Johan C. Kroner, Senior Vice President and Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
| Date: | August 6, 2025 | /s/ Scott J. Bleicher | |||||||||
| Scott J. Bleicher, Vice President and Controller | |||||||||||
| (Principal Accounting Officer) | |||||||||||
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Exhibit 10.1
AMENDED AND RESTATED
UNIVERSAL CORPORATION
EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
The Company hereby amends and restates the Plan, effective as of May 29, 2025.
1.Purpose.
The purposes of the Plan are to promote the success of the Company; to provide designated Executive Officers with an opportunity to receive incentive compensation dependent upon that success; to attract, retain and motivate such individuals; and to provide Awards that encourage the creation of shareholder value by establishing a direct link between the achievement of designated Performance Goals (as defined below) and the incentive compensation of the designated Executive Officers.
2.Definitions.
“Award” means a cash-denominated incentive award made pursuant to the Plan.
“Award Formula” means one or more formulas or standards established by the Committee for purposes of determining an Award on the level of performance with respect to one or more Performance Goals or Performance Measures. Award Formulas may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.
“Award Schedule” means the Award Schedule established pursuant to Section 4.1.
“Beneficiary” means the person(s) designated by the Participant, in writing on a form provided by the Committee, to receive payments under the Plan in the event of his or her death while a Participant or, in the absence of such designation, the Participant’s estate.
“Board of Directors” means the Board of Directors of the Company.
“Change of Control” means and shall be deemed to have taken place if:
(a)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) hereof; or
(b)Individuals who, as of the date an Award Schedule is established, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of offices occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(c)Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(d)Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Compensation and Human Resources Committee of the Board of Directors.
“Common Stock” means the Common Stock of the Company. Awards under the Plan paid in Common Stock shall be awarded by the Committee under the Executive Stock Plan.
“Company” means Universal Corporation and its successors.
“Disability” means disability as defined under the Company’s long term disability plan or, if no such plan is in force at the time, as determined by the Committee.
“Economic Profit” means consolidated earnings before interest and taxes after certain adjustments minus a capital charge equal to the weighted average cost of capital times average funds employed.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.
“Executive Officer” means a person who is an executive officer of the Company or any Subsidiary for purposes of the Exchange Act.
“Executive Stock Plan” means the Universal Corporation 2023 Stock Incentive Plan, previously adopted by the shareholders at the 2023 Annual Meeting, as amended in the future, or any successor plan.
“Participant” means an Executive Officer selected from time to time by the Committee to participate in the Plan.
“Performance Goal” means the level of performance or matrix of levels of performance established by the Committee as the Performance Goal with respect to a Performance Measure. Performance Goals may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.
“Performance Measure” means any metric selected by the Committee to measure Company and/or business unit performance for a Performance Period, which may include, but are not limited to, one or more or a combination of the following: net income; total shareholder return; basic or diluted earnings per share; net revenues; gross profit; earnings before interest and taxes; income before income taxes; Economic Profit; return on assets return on funds employed and return on equity; each as determined in accordance with generally accepted accounting principles, where applicable, as consistently applied by the Company and, if so determined by the Committee, adjusted to omit the effects of extraordinary items, the gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions, accruals for Awards under the Plan and cumulative effects of changes in accounting principles. Performance Measures may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.
“Performance Period” means one or more periods of time, as the Committee may designate, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to payment in respect of an Award.
“Plan” means this Amended and Restated Universal Corporation Executive Officer Annual Incentive Plan, as amended and restated.
“Plan Year” means the Company’s fiscal year.
“Retirement” means retirement at the Company’s normal retirement age or early retirement with the prior written approval of the Company.
“Restricted Stock” means shares of Common Stock awarded to a participant subject to forfeiture or otherwise restricted. Awards under the Plan paid in Restricted Stock shall be awarded by the Committee under the Executive Stock Plan.
“Stock Unit” means an award stated with reference to a share of Common Stock that entitles the holder to receive a payment for each Stock Unit equal to the Fair Market Value (as defined in the Executive Stock Plan) of a share of Common Stock on the date of payment. Awards under the Plan paid in Stock Units shall be awarded by the Committee under the Executive Stock Plan. At the Committee’s discretion, the Participant’s rights in Stock Units may be forfeitable or otherwise restricted and may be paid in cash, Common Stock or a combination of cash or Common Stock.
“Subsidiary” means any corporation, partnership, joint venture or other entity during any period in which at least a 50% voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or an entity that is a successor to the Company) has a significant interest, as determined in the discretion of the Committee.
3.Participation.
3.1.Participants shall be selected by the Committee from among the Executive Officers. The selection of an Executive Officer as a Participant for a Performance Period shall not entitle such individual to be selected as a Participant with respect to any other Performance Period.
4.Awards.
4.1.Award Schedules. With respect to each Performance Period with respect to which an Award may be earned by a Participant under the Plan, the Committee shall establish for such Performance Period an Award Schedule for each Participant. The Award Schedule shall set forth the applicable Performance Period, Performance Measure(s), Performance Goal(s), and Award Formula(s) and such other information as the Committee may determine. Award Schedules may vary from Performance Period to Performance Period and from Participant to Participant.
4.2.Determination of Awards. A Participant shall be eligible to receive payment in respect of an Award only to the extent that the Performance Goal(s) for such Award are achieved and the Award Formula as applied against such Performance Goal(s) determines that all or some portion of such Participant’s Award has been earned for the Performance Period. As soon as practicable after the close of each Performance Period, the Committee shall meet to review and determine whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate that amount of the Award earned by each Participant for such Performance Period based upon such Participant’s Award Formula. The Committee shall then determine the actual amount of the Award to be paid to each Participant and, in so doing, may decrease, but not increase, the amount of the Award otherwise payable to the Participant based upon such performance. Anything in this Plan to the contrary notwithstanding, the maximum Award payable to any Participant with respect to each Plan Year (or portion thereof) contained within a Performance Period shall be $2,500,000.
4.3.Payment of Awards. At the Committee’s discretion, Awards may be paid in cash, Common Stock, Restricted Stock, Stock Units or a combination of cash, Common Stock, Restricted Stock or Stock Units. Payments shall be made as soon as practicable after the amount of the Award has been determined in accordance with Section 4.2 but in no event later than the last day such payment may be made while still qualifying for the short-term deferral exemption from Code Section 409A.
4.4.Change of Control. All Performance Goals shall be calculated, and other conditions to payment of Awards shall be deemed to be achieved or fulfilled, as of the time of a Change of Control. In the event of a Change of Control, the Company
shall promptly pay each Participant an amount equal to the greater of (A) the annual bonus the Participant would have earned under the Plan in effect on the date of the Change of Control using the Award Formula in effect for the Participant on such date, paid on a pro rata basis based on the percentage of the fiscal year completed as of the date the Change of Control occurred, and (B) 100% of the Participant’s target bonus opportunity in effect on the date of the Change of Control. In addition, if at the time of a Change of Control there has been no determination or payment of an Award for the preceding Performance Period, the Company shall pay to each individual who was a Participant with respect to such prior Performance Period the full amount to which he or she would have been paid for such Performance Period and without reduction in Award payments for factors other than performance factors. Payments under this Section 4.4 shall be made not later than ten (10) days following the Change of Control.
4.5.Recoupment. If the Committee determines, in its sole discretion, that the Participant at any time has willfully engaged in any activity that the Committee determines was or is harmful to the Company, then the Committee may cause any Award to be forfeited in part or in whole or the Company may seek a recoupment of payments made under the Plan in part or in whole. In the event of a material restatement of financial statements, the Committee may cause any Award to be forfeited in part or in whole or the Company may seek a recoupment of payments made under the Plan in part or in whole. In addition, the Committee may cause any Award to be forfeited in part or in whole or the Company may seek a recoupment of payments made pursuant to the Plan in part or in whole in the event of the Participant’s ethical misconduct. In addition, any Award shall be subject to any recoupment policy the Company may adopt to conform to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other applicable law.
5.Termination of Employment.
5.1.Termination of Employment. Except as otherwise determined by the Committee or as otherwise provided in Section 4.4 or Section 5.2, no Award with respect to a Performance Period will be payable to any Participant who is not an employee of the Company on the last day of such Performance Period.
5.2.Death, Disability or Retirement. In the event that a Participant dies or his or her employment is terminated by reason of Disability or Retirement after an Award has been granted to the Participant but before it has been determined to be earned pursuant to Section 4.2, there shall be paid to the Participant (or, in the event of death, to the Participant’s Beneficiary or estate) a prorated amount equal to the Award payment that the Committee determines would have been paid to the Participant pursuant to Section 4.3, based on the performance for the entire Performance Period, had his or her employment continued, multiplied by a fraction, the numerator of which is the number of completed calendar months of employment during the Performance Period and the denominator of which is twelve.
6.Administration.
6.1.In General. The Committee shall have full and complete authority, in its sole and absolute discretion, (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any related document, (iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to make all determinations necessary or advisable in administering the Plan, and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan.
6.2.Determinations. The actions and determinations of the Committee or others to whom authority is delegated under the Plan on all matters relating to the Plan and any Awards shall be final and conclusive. Such determinations need not be uniform and may be made selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.
6.3.Appointment of Experts. The Committee may appoint such accountants, counsel, and other experts as it deems necessary or desirable in connection with the administration of the Plan.
6.4.Delegation. The Committee may delegate to others the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take all such other steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms and purposes, except that the Committee shall not delegate any authority with respect to decisions regarding Plan eligibility or the amount, timing or other material terms of Awards.
6.5.Books and Records. The Committee and others to whom the Committee has delegated such duties shall keep a record of all their proceedings and actions and shall maintain all such books of account, records and other data as shall be necessary for the proper administration of the Plan.
6.6.Payment of Expenses. The Company shall pay all reasonable expenses of administering the Plan, including, but not limited to, the payment of professional and expert fees.
7.Miscellaneous.
7.1.Nonassignability. No Award shall be assignable or transferable (including pursuant to a pledge or security interest) other than by will or by the laws of descent and distribution.
7.2.Withholding Taxes. Whenever payments under the Plan are to be made or deferred, the Company will withhold therefrom, or from any other amounts payable to or in respect of the Participant, an amount sufficient to satisfy any applicable governmental withholding tax requirements related thereto.
7.3.Amendment or Termination of the Plan. The Plan may be amended or terminated by the Committee in any respect except that no amendment may be made after the date on which an Executive Officer is selected as a Participant for a Performance Period that would adversely affect the rights of such Participant with respect to such Performance Period without the consent of the affected Participant.
7.4.Other Payments or Awards. Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
7.5.Payments to Other Persons. If payments are legally required to be made to any person other than the person to whom any amount is payable under the Plan, such payments will be made accordingly. Any such payment will be a complete discharge of the liability of the Company under the Plan.
7.6.Unfunded Plan. Nothing in this Plan will require the Company to purchase assets or place assets in a trust or other entity to which contributions are made or otherwise to segregate any assets for the purpose of satisfying any obligations under the Plan. Participants will have no rights under the Plan other than as unsecured general creditors of the Company.
7.7.Limits of Liability. Neither the Company nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, will have any liability to any party for any action taken or not taken in good faith under the Plan.
7.8.No Right of Employment. Nothing in this Plan will be construed as creating any contract of employment or conferring upon any Participant any right to continue in the employ or other service of the Company or any Subsidiary or limit in any way the right of the Company or any Subsidiary to change such person’s compensation or other benefits or to terminate the employment or other service of such person with or without cause.
7.9.Section Headings. The section headings contained herein are for convenience only, and in the event of any conflict, the text of the Plan, rather than the section headings, will control.
7.10.Invalidity. If any term or provision contained herein is to any extent invalid or unenforceable, such term, or provision will be reformed so that it is valid, and such invalidity or unenforceability will not affect any other provision or part hereof.
7.11.Applicable Law. The Plan will be governed by the laws of the Commonwealth of Virginia, as determined without regard to the conflict of law principles thereof.
7.12.Section 409A. The Company shall not be liable to any Participant or any other person if the Internal Revenue Service or any court or other authority having jurisdiction over such matter determines for any reason that any Award or payment to be made under this Plan is subject to taxes, penalties or interest as a result of failing to comply with Sections 409A of the Code.
Exhibit 31.1
CERTIFICATION
I, Preston D. Wigner, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Universal Corporation for the period ended June 30, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | August 6, 2025 | /s/ Preston D. Wigner | ||||||
| Preston D. Wigner | ||||||||
| Chairman, President, and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Exhibit 31.2
CERTIFICATION
I, Johan C. Kroner, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Universal Corporation for the period ended June 30, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | August 6, 2025 | /s/ Johan C. Kroner | ||||||
| Johan C. Kroner | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Universal Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Preston D. Wigner, certify, to the best of my knowledge and belief, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | August 6, 2025 | /s/ Preston D. Wigner | ||||||
| Preston D. Wigner | ||||||||
| Chairman, President, and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Universal Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Johan C. Kroner, certify, to the best of my knowledge and belief, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | August 6, 2025 | /s/ Johan C. Kroner | ||||||
| Johan C. Kroner | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.