−Removed: We are a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents that sources and processes leaf tobacco and plant-based ingredients.
−Removed: Tobacco has been our principal focus since our founding in 1918, and we are the leading global leaf tobacco supplier.
−Removed: Through our plant-based ingredients platform, we provide a variety of value-added manufacturing processes to produce high-quality, specialty vegetable and fruit-based ingredients for the food and beverage end markets.
−Removed: The largest portion of our business involves procuring and processing flue-cured and burley leaf tobacco for manufacturers of consumer tobacco products.
+Added: We are a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents.
+Added: We strive to be the supplier of choice for our customers by leveraging our farmer base, our commitment to a sustainable supply chain, and our ability to provide high-quality, customized, traceable, value-added agri-products essential for our customers’ requirements.
+Added: We find innovative solutions to serve our customers and have been meeting their agri-product needs for more than 100 years.
+Added: Our principal focus since our founding in 1918 has been tobacco, and we are the leading global leaf tobacco supplier.
+Added: The largest portion of our business involves procuring and processing flue-cured, burley, and dark air-cured leaf tobacco for manufacturers of consumer tobacco products.
+Added: Through our plant-based ingredients platform, we provide a variety of value-added manufacturing processes to produce high-quality, specialty vegetable- and fruit-based ingredients as well as botanical extracts and flavorings for human and pet food end markets.
We do not manufacture any direct to consumer products.
−Removed: Rather, we support consumer product manufacturers by selling them processed raw products and performing related services for them.
−Removed: Recognizing that leaf tobacco is a mature industry, we have been positioning our company for the future by investing in strengthening our plant-based agri-product services platform, while maintaining our position as the leading global leaf tobacco supplier.
−Removed: In fiscal year 2021, we made considerable progress towards building and enhancing our plant-based ingredients platform.
−Removed: On October 1, 2020, we acquired Silva International, Inc.
−Removed: (“Silva”), a natural, specialty dehydrated vegetable, fruit, and herb processing company.
−Removed: We have been integrating and exploring opportunities for synergies between our recently acquired businesses, FruitSmart, Inc.
−Removed: (“FruitSmart”), acquired on January 1, 2020, and Silva.
+Added: Rather, we support consumer product manufacturers by selling them agri-products and performing related services for them .
+Added: Recognizing that leaf tobacco is a mature industry, we have been positioning our company for the future by investing in and strengthening our plant-based ingredients platform, while maintaining our position as the leading global leaf tobacco supplier.
+Added: In fiscal year 2022, we continued to make progress towards building and enhancing our plant-based ingredients platform.
+Added: On October 4, 2021, we acquired Shank’s Extracts, LLC (“Shank’s”), a specialty ingredient botanical extract and flavorings company with bottling and packaging capabilities.
+Added: We have been integrating and exploring opportunities for synergies between our acquired businesses, FruitSmart, Inc.
+Added: (“FruitSmart”), acquired on January 1, 2020, Silva International, Inc.
+Added: (“Silva”), acquired on October 1, 2020, and Shank’s.
We generated approximately $2.1 billion in consolidated revenues and earned $160.3 million in total operating income and $174.3 million in total segment operating income in fiscal year 2022.
Universal Corporation is a holding company that operates through numerous directly and indirectly owned subsidiaries.
−Removed: Universal Corporation’s primary subsidiaries are Universal Leaf Tobacco Company, Incorporated and Universal Global Ventures, Incorporated.
+Added: Universal Corporation’s primary subsidiaries are Universal Leaf Tobacco Company, Incorporated ("Universal Leaf"), which is associated with our Tobacco Operations segment, and Universal Global Ventures, Incorporated, which is associated with our Ingredients Operations segment.
See Exhibit 21, “Subsidiaries of the Registrant,” for additional subsidiary information.
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Description of Business
−Removed: Given the significant and strategic investments in our plant-based ingredients platform in fiscal years 2020 and 2021, we evaluated our operating segments for financial reporting purposes during the quarter ended December 31, 2020.
+Added: Given the significant and strategic investments in our plant-based ingredients platform, we evaluated our operating segments for financial reporting purposes during the quarter ended December 31, 2020.
Based on our evaluation, we determined that we conduct our operations across two primary reportable operating segments, Tobacco Operations and Ingredients Operations.
−Removed: The revised segments reflect how we manage our Company, allocate resources, and assess business performance.
+Added: The segments reflect how we manage our Company, allocate resources, and assess business performance.
Prior period segment information has been recast retrospectively to reflect these changes.
Tobacco Operations
−Removed: Our primary business is selecting, procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to manufacturers of consumer tobacco products throughout the world.
+Added: Our primary business is contracting, procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to manufacturers of consumer tobacco products throughout the world.
Procuring leaf tobacco involves contracting with, providing agronomy support to, and financing farmers in many origins.
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Rather, we support consumer product manufacturers by selling them processed leaf tobacco and performing related services for them.
−Removed: Through various operating subsidiaries and unconsolidated affiliates located in tobacco-growing origins around the world, we contract, purchase, process, and sell flue-cured and burley tobaccos, as well as dark air-cured and oriental tobaccos.
−Removed: Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes as well as in shisha, and dark air-cured tobaccos are used mainly in the manufacture of cigars, natural wrapped cigars and cigarillos, smokeless, and pipe tobacco products.
−Removed: Some of these tobacco types are also increasingly used in the manufacture of non-combustible tobacco products that are intended to provide consumers with an alternative to traditional combustible tobacco products.
+Added: Through various operating subsidiaries and unconsolidated affiliates located in tobacco-growing origins around the world, we contract, purchase, process, and sell flue-cured, burley, and dark air-cured tobaccos, as well as oriental tobaccos.
+Added: Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes as well as in shisha, while dark air-cured tobaccos are used mainly in the manufacture of cigars, natural wrapped cigars and cigarillos, smokeless, and pipe tobacco products.
+Added: Some of these tobacco types are also increasingly used in the manufacture of next generation tobacco products that are intended to provide consumers with a reduced-risk alternative to traditional combustible tobacco products.
We also provide value-added services to our customers, including blending, chemical and physical testing of tobacco, service cutting for select manufacturers, manufacturing reconstituted leaf tobacco, and managing just-in-time inventory.
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Our wholly-owned subsidiary, AmeriNic, Inc., produces liquid nicotine for next generation tobacco products.
−Removed: AmeriNic’s products are manufactured under stringent United States Pharmacopeia ("USP") standards.
−Removed: Global Laboratory Services, Inc., another wholly-owned subsidiary, provides testing for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors.
+Added: AmeriNic’s products are manufactured under stringent United States Pharmacopeia standards.
+Added: Global Laboratory Services, Inc., another wholly-owned subsidiary, provides testing for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors, and has capabilities for testing non-tobacco products.
Analytical services include chemical compound testing in finished tobacco products and mainstream smoke.
−Removed: We also have a business that recycles waste materials from tobacco production.
+Added: We also have a U.S.
+Added: based business that recycles waste materials from tobacco production.
We believe that by following several key operating principles in our tobacco operations we can continue to produce good financial returns and enhance shareholder value.
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With respect to our leaf tobacco business, we generate our revenues from product sales of processed, packed tobacco that we source, from processing fees for tobacco owned by third parties, and from fees for other services.
−Removed: Sales to our largest customers, with whom we have longstanding relationships, have accounted for more than two-thirds of our consolidated revenues for each of the past three fiscal years.
−Removed: Our sales consist primarily of flue-cured and burley tobaccos.
−Removed: For the fiscal year ended March 31, 2021, our Tobacco Operations segment accounted for 93% of our revenues and almost all of our segment operating income.
−Removed: We conduct our leaf tobacco business in varying degrees in a number of countries, including Bangladesh, Brazil, Canada, the Dominican Republic, Ecuador, France, Germany, Guatemala, Hungary, India, Indonesia, Italy, Malawi, Mexico, Mozambique, the Netherlands, Paraguay, the People’s Republic of China, the Philippines, Poland, Russia, Singapore, South Africa, Spain, Switzerland, Tanzania, the United Arab Emirates, the United States, and Zimbabwe.
+Added: Sales to our largest customers, with whom we have longstanding relationships, have accounted for more than 60% of our consolidated revenues for each of the past three fiscal years.
+Added: Our sales consist primarily of flue-cured, burley, and dark air-cured tobaccos.
+Added: For the fiscal year ended March 31, 2022, our Tobacco Operations segment accounted for 87% of our revenues and 90% of our segment operating income.
+Added: We conduct our leaf tobacco business in varying degrees in a number of countries, including Bangladesh, Brazil, Canada, the Dominican Republic, Ecuador, France, Germany, Guatemala, Hungary, India, Indonesia, Italy, Malawi, Mexico, Mozambique, the Netherlands, Paraguay, the People’s Republic of China, the Philippines, Poland, Russia, Singapore, South Africa, Spain, Switzerland, the United Arab Emirates, the United States, and Zimbabwe.
In addition, our oriental tobacco joint venture, Socotab, L.L.C.
−Removed: has operations in Bulgaria, Greece, the Republic of North Macedonia, and Turkey.
+Added: ("Socotab") has operations in Bulgaria, Greece, the Republic of North Macedonia, and Turkey.
Because unprocessed, or “green,” leaf tobacco is a perishable product, timely processing is an essential service to our customers.
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These percentages can change from year to year based on the size, price, and quality of the crops.
−Removed: We participate in the procurement, processing, storage, and sale of oriental tobacco through ownership of a 49% equity interest in Socotab, L.L.C., a leading supplier of oriental tobaccos.
+Added: We participate in the procurement, processing, storage, and sale of oriental tobacco through ownership of a 49% equity interest in Socotab, a leading supplier of oriental tobaccos.
In addition, we maintain a presence, and in certain cases, a leading presence, in all other major tobacco growing regions in the world.
−Removed: We believe that our leading position in the leaf tobacco industry is based on our volumes handled, our operating presence in all of the major sourcing areas, our ability to meet customer style, volume, and quality requirements, our expertise in dealing with large numbers of farmers, our long-standing relationships with customers, our development of processing equipment and technologies, and our financial position which enables us to make strategic investments in our business.
+Added: We believe that our leading position in the leaf tobacco industry is based on our volumes handled, our operating presence in all of the major sourcing areas, our ability to meet customer style, volume, and quality requirements, our experience in dealing with large numbers of farmers, our expertise in delivering a sustainable supply of compliant, traceable, competitively-priced leaf tobacco, our long-standing relationships with customers, our development of processing equipment and technologies, and our financial position which enables us to make strategic investments in our business.
The efficiencies that we offer our customers, due to our established network of operational expertise and infrastructure on the ground and our ability to market most styles and grades of leaf to a diverse customer base, are also key to our success.
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These discussions are key to our future crop production planning.
−Removed: Prior to planting each year, we use early customer indications for type, style, processing, and volume requirements for the
−Removed: upcoming season’s crop to help us determine our farmer contracting and grower input needs in our origins.
+Added: Prior to planting each year, we use early customer indications for type, style, processing, and volume requirements for the upcoming season’s crop to help us determine our farmer contracting and grower input needs in our origins.
We work with our farmers and customers continually throughout the crop season.
−Removed: As crops progress through the growing season, customers will inspect the crop, and a customer’s early indications may be refined based upon emerging crop qualities and quantities and market pricing expectations.
+Added: As crops progress through the growing season, customers will inspect the crop, and a customer’s early indications may be refined based upon emerging crop qualities and quantities and market pricing
+Added: expectations.
Ultimately, purchase agreements specifying quantity, quality, grade and price are executed, leading to inventory allocations of harvested green or processed leaf that we have acquired.
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dollars, which reduces our foreign currency exchange risk after the tobacco has been purchased.
−Removed: See Item 1A, “Risk Factors” for more information about our foreign currency exchange and other risks.
+Added: See Item 1A, “Risk Factors” for more information about our foreign currency exchange and other international business risks.
Our tobacco operations are seasonal in nature.
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Our largest customers are Altria Group Inc., British American Tobacco plc, China Tobacco International, Inc., Imperial Brands plc, Japan Tobacco, Inc., Philip Morris International, Inc., and Swedish Match AB.
−Removed: In the aggregate, these customers have accounted for more than two-thirds of our consolidated revenues for each of the past three fiscal years.
+Added: In the aggregate, these customers have accounted for more than 60% of our consolidated revenues for each of the past three fiscal years.
For the fiscal year ended March 31, 2022, each of British American Tobacco plc, Imperial Brands plc, and Philip Morris International, Inc., including their respective affiliates, accounted for 10% or more of our revenues.
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We had commitments from customers for approximately $694 million of the tobacco in our inventories at March 31, 2022.
−Removed: Based upon historical experience, we expect that about 90% of such orders will be delivered during fiscal year 2022.
+Added: Based upon historical experience, we usually expect that about 90% of such orders will be delivered during the following fiscal year.
+Added: However, we expect a lower percentage of such orders will be delivered in fiscal year 2023 due to COVID-related logistical challenges.
Most of our products require shipment via trucks and oceangoing vessels to reach customer destinations.
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As more fully described in Note 1 and Note 4 to the consolidated financial statements in Item 8 of this Annual Report, we recognize revenue from the sale of tobacco when we complete our contractual performance obligation for the transfer of the tobacco, which is generally when title and risk of loss is transferred to our customer.
−Removed: Individual shipments may be large, and since the customer typically specifies shipping dates, our financial results may vary significantly between reporting periods due to
−Removed: timing of sales.
+Added: Individual shipments may be large, and since the customer typically specifies shipping dates, our financial results may vary significantly between reporting periods due to timing of sales.
In some markets, including Brazil, Italy, the Philippines, Poland, and the United States, we process tobacco that is owned by our customers, and we recognize the revenue for that service when the processing is completed.
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(“Pyxus”) (formerly Alliance One International, Inc.).
−Removed: Pyxus operates in many of the countries where we operate.
−Removed: However, we are the only global leaf tobacco supplier in Hungary, Italy, Mexico, Mozambique, the Philippines, and Poland.
−Removed: We also have reconstituted tobacco sheet facilities and operations that handle dark air-cured tobacco.
+Added: Pyxus operates in some of the countries where we operate.
+Added: However, we are the only global leaf tobacco supplier with operations in the Dominican Republic, Ecuador, Hungary, Italy, Mexico, Mozambique, Paraguay, the Philippines, and Poland and that participates in the sale and production of dark air-cured tobaccos.
+Added: We also have reconstituted tobacco sheet facilities and operations that handle dark air-cured tobacco and other tobaccos.
We consider ourselves and Pyxus to be the only global leaf suppliers based on our worldwide scope of operations.
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Ingredients Operations
−Removed: Our ingredients businesses provide our business-to-business customers with a broad variety of plant-based ingredients for both human and pet consumption.
−Removed: A variety of value-added manufacturing processes are used in these businesses to convert raw materials into a wide spectrum of fruit and vegetable juices, concentrates, and dehydrated products.
+Added: Our ingredients businesses provide our business-to-business customers with a broad range of plant-based ingredients for both human and pet consumption.
+Added: A variety of value-added manufacturing processes are used in these businesses to convert raw materials into a wide spectrum of fruit and vegetable juices, concentrates, dehydrated products, botanical extracts, and flavorings.
Our plant-based ingredients platform serves the Food and Beverage market, one of the largest industrial categories in the United States.
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No customer accounted for more than 10% of our Ingredients Operations segment revenues in fiscal year 2022.
−Removed: FruitSmart, Silva, and Carolina Innovative Food Ingredients, Inc.
−Removed: (“CIFI”) are the primary operations for the Ingredients Operations segment.
−Removed: In December 2020, we announced the wind-down of CIFI, a greenfield operation that primarily manufactured both dehydrated and liquid sweet potato products having determined that CIFI is not a strategic fit for the long-term objectives of our plant-based ingredients platform.
−Removed: CIFI’s single-product focused processing facility and ongoing international pricing pressures, among other factors, created challenges that proved insurmountable.
−Removed: Sales of existing inventory and certain administrative activities at CIFI will continue into fiscal year 2022.
+Added: FruitSmart, Silva, and Shank's are the primary operations for the Ingredients Operations segment.
+Added: In December 2020, we announced the wind-down of Carolina Innovative Food Ingredients, Inc.
+Added: (“CIFI”), a greenfield operation that primarily manufactured both dehydrated and liquid sweet potato products having determined that CIFI is not a strategic fit for the long-term objectives of our plant-based ingredients platform.
+Added: Sales of remaining inventory, the sale of the CIFI manufacturing facility, and certain administrative activities at CIFI continued into fiscal year 2022.
FruitSmart supplies a broad set of juices, concentrates, pomaces, purees, fruit fibers, seed and seed powders, and other value-added products to food, beverage and flavor companies throughout the United States and internationally.
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Its top five ingredient product categories are vegetable blends, peppers, spinach, carrots, and pumpkin.
−Removed: Headquartered in Momence, Illinois, Silva employs over 200 people and has a 380,000 square foot
−Removed: manufacturing facility.
+Added: Headquartered in Momence, Illinois, Silva employs over 200 people and has a 380,000 square foot manufacturing facility.
Silva has established a reputation as the ‘go-to’ provider for ‘clean,’ natural, specialty dehydrated vegetable and fruit-based ingredients due to its unique competencies and significant capacity to source, process and manufacture materials.
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As a result, the business is well positioned to take advantage of increasing demand for natural and clean-label products across the end markets it serves, including within the attractive and growing savory and pet food end markets.
+Added: Shank’s produces botanical extracts, flavorings and has bottling capabilities.
+Added: Shank’s has a strong presence within the botanical extracts, flavorings, and bottling marketplace, with significant vanilla expertise.
+Added: In addition to pure vanilla extract products, Shank’s offers a robust portfolio of over 2,400 other extracts, distillates, natural flavors and colors for industrial and private label customers worldwide.
+Added: Shank’s employs more than 200 people and has a 191,000 square foot manufacturing campus in Lancaster, Pennsylvania.
+Added: The acquisition of Shank’s added flavors, custom packaging and bottling, and product development capabilities to our plant-based ingredients platform.
Sustainability
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We believe sustainability is a key component of our past and future success, and we highlighted our 100 year anniversary by publishing a Sustainability Review to promote our commitment to sustainability.
−Removed: We produced our first annual Sustainability Report the following year, and we have committed to annual sustainability reporting.
−Removed: Our Board of Directors further evidenced our commitment to sustainability by amending our Nominating and Corporate Governance Committee charter to give the Committee oversight of our Environmental, Social and Governance programs.
+Added: Since then we have produced annual sustainability reports, and we have committed to continuing our annual sustainability reporting.
+Added: Our Board of Directors further evidenced our commitment to sustainability by amending our Nominating and Corporate Governance Committee charter to give the Committee oversight of our Environmental, Social and Governance ("ESG") programs.
Our commitment to sustainability encompasses a wide array of programs and initiatives.
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In fiscal year 2020, several environmental projects and programs were expanded and implemented to further minimize our environmental footprint, including GAP program initiatives to address environmental risks on contracted farms.
−Removed: In addition, we publicly committed to set a science-based greenhouse gas emissions reduction target for our Company through the Science Based Targets Initiative.
+Added: In addition, we publicly committed to meet a science-based greenhouse gas emissions reduction target of 30% for our Company by 2030 through the Science Based Targets Initiative.
For a discussion of recent developments and trends in our businesses, along with factors that may affect our businesses see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 1A, “Risk Factors.”
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Our Nominating and Corporate Governance Committee and our Compensation Committee both have important roles with respect to human capital management.
−Removed: The Nominating and Corporate Governance Committee oversees and reviews our Environmental, Social, and Governance (“ESG”) programs, which include important policies and practices related to human rights, diversity and inclusion, prohibitions against discrimination, and other policies related to our workforce as well as our Board of Directors.
+Added: The Nominating and Corporate Governance Committee oversees and reviews our ESG programs, which include important policies and practices related to human rights, diversity and inclusion, prohibitions against discrimination, and other policies related to our workforce as well as our Board of Directors.
The Compensation Committee has oversight of compensation, benefits, and retention and development processes, including an annual review of the Company's succession planning and leadership development program.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.