Universal Corporation Reports Annual Results
Net income for the fourth quarter ended
Mr. Freeman stated, "We are pleased with our good results for fiscal year 2018. Net income remained steady at about
"Although our working capital requirements were higher in fiscal year 2018, we maintained our strong balance sheet. Our uncommitted inventory levels, at
"The next crop cycle, which will be reflected in our fiscal year 2019 results, has begun with green tobacco purchases in
"We are celebrating the 100th anniversary of our company this year. For one hundred years, we have had a rich history of adapting to change, finding innovative solutions to serve our customers and meet their leaf tobacco needs, and achieving results that benefit all of our stakeholders. Although we operate in a mature industry, our mission is to remain the world's leading independent leaf tobacco supplier. In recent years, we have increased our market share and enhanced the range of services we provide to certain customers, including direct buying, agronomic support, and specialized processing services. We are continually exploring options to capitalize on the strengths of our core competencies and seek growth opportunities in and related to tobacco and our global operations. As we move into our next 100 years, we will continue our commitment to leadership in setting industry standards, operating with transparency, providing products that are responsibly-sourced, and investing in and strengthening the communities where we operate."
The Company also announced an enhanced capital allocation strategy and an increased dividend in a separate press release today.
FLUE-CURED AND BURLEY LEAF TOBACCO OPERATIONS:
OTHER REGIONS:
Operating income for the Other Regions segment improved by
Segment operating income for the Other Regions segment for the quarter ended
OTHER TOBACCO OPERATIONS:
The Other Tobacco Operations segment operating income increased by
OTHER ITEMS:
Cost of goods sold declined by about 1% to
The consolidated effective income tax rates for the quarter and year ended
Going forward, our consolidated effective tax rate will be heavily dependent on the tax rates of the individual countries in which we operate, the mix of our pretax earnings from those countries, and the prevailing rates of exchange of their local currencies with the U.S. dollar. The mix of pretax earnings and local currency exchange rates in particular can change significantly between annual and quarterly reporting periods based on crop sizes, market conditions, and economic factors. We expect these changes will make our effective tax rate more volatile from year-to-year and quarter-to-quarter than it has been in the past. Based on our current mix of pretax earnings and current exchange rates, our average effective tax rate should generally be in the range of 28% to 32%. However, the actual effective tax rate could be above or below this level, with significant variations possible based on exchange rate changes.
In
Results for the year ended
Additional information
Amounts included in the previous discussion are attributable to
This information includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions readers that any statements contained herein regarding earnings and expectations for its performance are forward-looking statements based upon management's current knowledge and assumptions about future events, including anticipated levels of demand for and supply of its products and services; costs incurred in providing these products and services; timing of shipments to customers; changes in market structure; government regulation, including the impact of regulations on tobacco products; product taxation; changes in U.S. federal income tax rates and legislation; industry consolidation and evolution; changes in global supply and demand positions for tobacco products; and general economic, political, market, and weather conditions. Actual results, therefore, could vary from those expected. A further list and description of these risks, uncertainties, and other factors can be found in the Company's Annual Report on Form 10-K for the fiscal year ended
At
Headquartered in
UNIVERSAL CORPORATION |
||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||
(in thousands of dollars, except per share data) |
||||||||||||||||
Three Months Ended |
Fiscal Year Ended |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
Sales and other operating revenues |
$ |
607,496 |
$ |
650,030 |
$ |
2,033,947 |
$ |
2,071,218 |
||||||||
Costs and expenses |
||||||||||||||||
Cost of goods sold |
490,999 |
530,845 |
1,661,999 |
1,676,539 |
||||||||||||
Selling, general and administrative expenses |
56,219 |
58,868 |
200,461 |
211,969 |
||||||||||||
Restructuring and impairment costs |
- |
499 |
- |
4,359 |
||||||||||||
Operating income |
60,278 |
59,818 |
171,487 |
178,351 |
||||||||||||
Equity in pretax earnings of unconsolidated affiliates |
2,489 |
149 |
9,125 |
5,774 |
||||||||||||
Interest income |
324 |
281 |
1,686 |
1,397 |
||||||||||||
Interest expense |
3,705 |
3,844 |
15,621 |
16,284 |
||||||||||||
Income before income taxes |
59,386 |
56,404 |
166,677 |
169,238 |
||||||||||||
Income taxes |
25,064 |
19,954 |
50,509 |
56,732 |
||||||||||||
Net income |
34,322 |
36,450 |
116,168 |
112,506 |
||||||||||||
Less: net income attributable to noncontrolling interests in |
(3,804) |
(3,581) |
(10,506) |
(6,202) |
||||||||||||
Net income attributable to Universal Corporation |
30,518 |
32,869 |
105,662 |
106,304 |
||||||||||||
Dividends on Universal Corporation convertible perpetual |
- |
- |
- |
(11,061) |
||||||||||||
Cost in excess of carrying value on conversion/repurchase of |
- |
(74,353) |
- |
(74,353) |
||||||||||||
Earnings (loss) available to Universal Corporation common |
$ |
30,518 |
$ |
(41,484) |
$ |
105,662 |
$ |
20,890 |
||||||||
Earnings (loss) per share attributable to Universal Corporation |
||||||||||||||||
Basic |
$ |
1.21 |
$ |
(1.64) |
$ |
4.18 |
$ |
0.89 |
||||||||
Diluted |
$ |
1.20 |
$ |
(1.64) |
$ |
4.14 |
$ |
0.88 |
||||||||
See accompanying notes. |
UNIVERSAL CORPORATION |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(in thousands of dollars) |
||||||||
March 31, |
||||||||
2018 |
2017 |
|||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
234,128 |
$ |
283,993 |
||||
Accounts receivable, net |
377,119 |
439,288 |
||||||
Advances to suppliers, net |
122,786 |
103,750 |
||||||
Accounts receivable-unconsolidated affiliates |
2,040 |
2,373 |
||||||
Inventories-at lower of cost or market: |
||||||||
Tobacco |
679,428 |
565,943 |
||||||
Other |
69,301 |
68,087 |
||||||
Prepaid income taxes |
16,032 |
16,713 |
||||||
Other current assets |
88,209 |
81,252 |
||||||
Total current assets |
1,589,043 |
1,561,399 |
||||||
Property, plant and equipment |
||||||||
Land |
23,180 |
22,852 |
||||||
Buildings |
271,757 |
266,802 |
||||||
Machinery and equipment |
634,660 |
597,213 |
||||||
929,597 |
886,867 |
|||||||
Less accumulated depreciation |
(605,803) |
(569,527) |
||||||
323,794 |
317,340 |
|||||||
Other assets |
||||||||
Goodwill and other intangibles |
98,927 |
98,888 |
||||||
Investments in unconsolidated affiliates |
89,302 |
78,457 |
||||||
Deferred income taxes |
17,118 |
25,422 |
||||||
Other noncurrent assets |
50,448 |
41,899 |
||||||
255,795 |
244,666 |
|||||||
Total assets |
$ |
2,168,632 |
$ |
2,123,405 |
||||
See accompanying notes. |
UNIVERSAL CORPORATION |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(in thousands of dollars) |
||||||||
March 31, |
||||||||
2018 |
2017 |
|||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current liabilities |
||||||||
Notes payable and overdrafts |
$ |
45,421 |
$ |
59,133 |
||||
Accounts payable and accrued expenses |
163,763 |
153,515 |
||||||
Accounts payable-unconsolidated affiliates |
16,072 |
7,231 |
||||||
Customer advances and deposits |
7,021 |
11,007 |
||||||
Accrued compensation |
27,886 |
32,007 |
||||||
Income taxes payable |
7,557 |
5,103 |
||||||
Current portion of long-term debt |
- |
- |
||||||
Total current liabilities |
267,720 |
267,996 |
||||||
Long-term debt |
369,086 |
368,733 |
||||||
Pensions and other postretirement benefits |
64,843 |
80,689 |
||||||
Other long-term liabilities |
45,955 |
31,424 |
||||||
Deferred income taxes |
35,726 |
47,985 |
||||||
Total liabilities |
783,330 |
796,827 |
||||||
Shareholders' equity |
||||||||
Universal Corporation: |
||||||||
Preferred stock: |
||||||||
Series A Junior Participating Preferred Stock, no par value, 500,000 shares authorized, none issued or outstanding |
- |
- |
||||||
Common stock, no par value, 100,000,000 shares authorized, 24,930,725 shares issued and outstanding (25,274,506 at March 31, 2017) |
321,559 |
321,207 |
||||||
Retained earnings |
1,080,934 |
1,034,841 |
||||||
Accumulated other comprehensive loss |
(60,064) |
(69,559) |
||||||
Total Universal Corporation shareholders' equity |
1,342,429 |
1,286,489 |
||||||
Noncontrolling interests in subsidiaries |
42,873 |
40,089 |
||||||
Total shareholders' equity |
1,385,302 |
1,326,578 |
||||||
Total liabilities and shareholders' equity |
$ |
2,168,632 |
$ |
2,123,405 |
||||
See accompanying notes. |
UNIVERSAL CORPORATION |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands of dollars) |
||||||||
Fiscal Year Ended March 31, |
||||||||
2018 |
2017 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ |
116,168 |
$ |
112,506 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
34,836 |
35,911 |
||||||
Provision for losses (recoveries) on advances and guaranteed loans to suppliers |
3,730 |
(857) |
||||||
Inventory write-downs |
7,687 |
10,866 |
||||||
Stock-based compensation expense |
7,610 |
6,475 |
||||||
Foreign currency remeasurement loss (gain), net |
(184) |
9,269 |
||||||
Deferred income taxes |
(11,132) |
16,626 |
||||||
Equity in net income of unconsolidated affiliates, net of dividends |
(1,521) |
396 |
||||||
Restructuring and impairment costs |
- |
4,359 |
||||||
Other, net |
(6,167) |
(4,463) |
||||||
Changes in operating assets and liabilities, net: |
(67,782) |
59,227 |
||||||
Net cash provided by operating activities |
83,245 |
250,315 |
||||||
Cash Flows From Investing Activities: |
||||||||
Purchase of property, plant and equipment |
(34,037) |
(35,630) |
||||||
Proceeds from sale of property, plant and equipment |
5,194 |
2,174 |
||||||
Other |
(550) |
(398) |
||||||
Net cash used by investing activities |
(29,393) |
(33,854) |
||||||
Cash Flows From Financing Activities: |
||||||||
Issuance (repayment) of short-term debt, net |
(18,159) |
(5,349) |
||||||
Dividends paid to noncontrolling interests in subsidiaries |
(7,350) |
(4,200) |
||||||
Conversion of convertible perpetual preferred stock |
- |
(178,365) |
||||||
Repurchase of common stock |
(21,610) |
- |
||||||
Dividends paid on convertible perpetual preferred stock |
- |
(11,061) |
||||||
Dividends paid on common stock |
(54,699) |
(49,828) |
||||||
Other |
(2,828) |
(2,441) |
||||||
Net cash used by financing activities |
(104,646) |
(251,244) |
||||||
Effect of exchange rate changes on cash |
929 |
(671) |
||||||
Net (decrease) increase in cash and cash equivalents |
(49,865) |
(35,454) |
||||||
Cash and cash equivalents at beginning of year |
283,993 |
319,447 |
||||||
Cash and Cash Equivalents at End of Year |
$ |
234,128 |
$ |
283,993 |
||||
Non-cash Financing Transaction - The consolidated financial statements for the fiscal year ended March 31, 2017 include a non-cash |
||||||||
See accompanying notes. |
NOTE 1. BASIS OF PRESENTATION
NOTE 2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings (loss) per share:
Three Months Ended |
Fiscal Year Ended |
|||||||||||||||
(in thousands, except per share data) |
2018 |
2017 |
2018 |
2017 |
||||||||||||
Basic Earnings (Loss) Per Share |
||||||||||||||||
Numerator for basic earnings (loss) per share |
||||||||||||||||
Net income attributable to Universal Corporation |
$ |
30,518 |
$ |
32,869 |
$ |
105,662 |
$ |
106,304 |
||||||||
Less: Dividends on convertible perpetual preferred stock |
- |
- |
- |
(11,061) |
||||||||||||
Less: Cost in excess of carrying value on conversion or repurchase of |
- |
(74,353) |
- |
(74,353) |
||||||||||||
Earnings (loss) available to Universal Corporation common shareholders for |
$ |
30,518 |
$ |
(41,484) |
$ |
105,662 |
$ |
20,890 |
||||||||
Denominator for basic earnings (loss) per share |
||||||||||||||||
Weighted average shares outstanding |
25,125,776 |
25,273,741 |
25,274,975 |
23,433,860 |
||||||||||||
Basic earnings (loss) per share |
$ |
1.21 |
$ |
(1.64) |
$ |
4.18 |
$ |
0.89 |
||||||||
Diluted Earnings (Loss) Per Share |
||||||||||||||||
Numerator for diluted earnings (loss) per share |
||||||||||||||||
Earnings (loss) available to Universal Corporation common shareholders for |
$ |
30,518 |
$ |
(41,484) |
$ |
105,662 |
$ |
20,890 |
||||||||
Denominator for diluted earnings (loss) per share: |
||||||||||||||||
Weighted average shares outstanding |
25,125,776 |
25,273,741 |
25,274,975 |
23,433,860 |
||||||||||||
Effect of dilutive securities (if conversion or exercise assumed) |
||||||||||||||||
Employee and outside director share-based awards |
265,855 |
- |
233,169 |
336,228 |
||||||||||||
Denominator for diluted earnings (loss) per share |
25,391,631 |
25,273,741 |
25,508,144 |
23,770,088 |
||||||||||||
Diluted earnings (loss) per share |
$ |
1.20 |
$ |
(1.64) |
$ |
4.14 |
$ |
0.88 |
NOTE 3. SEGMENT INFORMATION
The principal approach used by management to evaluate the Company's performance is by geographic region, although the dark air-cured and oriental tobacco businesses are each evaluated on the basis of their worldwide operations. The Company evaluates the performance of its segments based on operating income (loss) after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates.
Operating results for the Company's reportable segments for each period presented in the consolidated statements of income were as follows:
Three Months Ended |
Fiscal Year Ended |
|||||||||||||||
(in thousands of dollars) |
2018 |
2017 |
2018 |
2017 |
||||||||||||
SALES AND OTHER OPERATING REVENUES |
||||||||||||||||
Flue-Cured and Burley Leaf Tobacco Operations: |
||||||||||||||||
North America |
$ |
97,247 |
$ |
169,769 |
$ |
308,691 |
$ |
416,438 |
||||||||
Other Regions (1) |
442,261 |
430,417 |
1,482,188 |
1,422,991 |
||||||||||||
Subtotal |
539,508 |
600,186 |
1,790,879 |
1,839,429 |
||||||||||||
Other Tobacco Operations (2) |
67,988 |
49,844 |
243,068 |
231,789 |
||||||||||||
Consolidated sales and other operating revenues |
$ |
607,496 |
$ |
650,030 |
$ |
2,033,947 |
$ |
2,071,218 |
||||||||
OPERATING INCOME |
||||||||||||||||
Flue-Cured and Burley Leaf Tobacco Operations: |
||||||||||||||||
North America |
$ |
9,333 |
$ |
13,747 |
$ |
23,220 |
$ |
35,151 |
||||||||
Other Regions (1) |
48,641 |
46,950 |
147,263 |
143,349 |
||||||||||||
Subtotal |
57,974 |
60,697 |
170,483 |
178,500 |
||||||||||||
Other Tobacco Operations (2) |
4,793 |
(231) |
10,129 |
9,984 |
||||||||||||
Segment operating income |
62,767 |
60,466 |
180,612 |
188,484 |
||||||||||||
Deduct: Equity in pretax earnings of unconsolidated affiliates (3) |
(2,489) |
(149) |
(9,125) |
(5,774) |
||||||||||||
Restructuring and impairment costs (4) |
- |
(499) |
- |
(4,359) |
||||||||||||
Consolidated operating income |
$ |
60,278 |
$ |
59,818 |
$ |
171,487 |
$ |
178,351 |
(1) |
Includes South America, Africa, Europe, and Asia regions, as well as inter-region eliminations. |
(2) |
Includes Dark Air-Cured, Special Services, and Oriental, as well as intercompany eliminations. Sales and other operating revenues for this reportable segment include limited amounts for Oriental because the business is accounted for on the equity method and its financial results consist principally of equity in the pretax earnings of the unconsolidated affiliate. |
(3) |
Equity in pretax earnings of unconsolidated affiliates is included in segment operating income (Other Tobacco Operations segment), but is reported below consolidated operating income and excluded from that total in the consolidated statements of income. |
(4) |
Restructuring and impairment costs are excluded from segment operating income, but are included in consolidated operating income in the consolidated statements of income. |
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SOURCE
Candace C. Formacek, Phone: (804) 359-9311, Fax: (804) 254-3584, Email: investor@universalleaf.com