What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-05-25 compared with 2022-05-27 · 53 added, 52 removed, 242 unchanged (30% of the section changed)

8 unchanged sentences

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.

In fiscal year 2022, we continued to make progress towards building and enhancing our plant-based ingredients platform.

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.

We have been integrating and exploring opportunities for synergies between our acquired businesses, FruitSmart, Inc.

In fiscal year 2023, we continued to enhance and increase the capabilities of our plant-based ingredients platform.

We have been achieving operational synergies across the platform among our acquired businesses, FruitSmart, Inc.

(“FruitSmart”), acquired on January 1, 2020, Silva International, Inc.

(“Silva”), acquired on October 1, 2020, and Shank’s.

(“Silva”), acquired on October 1, 2020, and Shank’s Extracts, LLC (“Shank’s”), acquired on October 4, 2021.

We have also made considerable progress on our vision for the segment, providing a total solution-based approach for our customers that utilizes our broad spectrum of capabilities in fruits, vegetables and botanical extracts and flavorings.

We generated approximately $2.6 billion in consolidated revenues and earned $181.1 million in total operating income and $183.5 million in total segment operating income in fiscal year 2023.

14 unchanged sentences

Description of Business

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.

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

43 unchanged sentences

For the fiscal year ended March 31, 2023, our Tobacco Operations segment accounted for 88% of our revenues and 94% of our segment operating income.

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.

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, the Republic of South Africa, Singapore, Spain, Switzerland, the United Arab Emirates, the United States, and Zimbabwe.

In addition, our oriental tobacco joint venture, Socotab, L.L.C.

2 unchanged sentences

Our processing of leaf tobacco includes grading in the factories, blending, removal of non-tobacco material, separation of leaf from the stems, drying, packing to precise moisture targets for proper aging, as well as temporary storage.

This generally requires investments in factories and machinery in areas where the tobacco is grown.

This generally requires investments in factories and machinery in areas where tobacco is grown.

Processed tobacco that has been properly packed can be stored by customers for a number of years prior to use, but most processed tobacco is used within two to three years.

1 unchanged sentence

Africa, Brazil, and the United States produce approximately two-thirds of the flue-cured and burley tobacco grown outside of China.

We estimate that over the last five years we have handled, through leaf sales or processing, on average between 25% and 35% of the annual production of such tobaccos in Africa, between 35% and 45% and the United States, and between 15% and 25% in Brazil.

We estimate that over the last five years we have handled, through leaf sales or processing, on average between 25% and 35% of the annual production of such tobaccos in Africa, between 35% and 45% in the United States, and between 15% and 25% in Brazil.

These percentages can change from year to year based on the size, price, and quality of the crops.

14 unchanged sentences

We work with our farmers and customers continually throughout the crop season.

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.

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.

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.

6 unchanged sentences

During the tobacco season in many of the countries listed above, we advance funds, guarantee local loans, or do both, each in substantial amounts, for the eventual purchase of tobacco.

The majority of these seasonal advances and loan guarantees mature in one year or less upon the farmers’ delivery of contracted tobaccos.

The majority of these seasonal advances and loan guarantees mature in one year or less upon the farmers’ delivery of

contracted tobaccos.

Most advances to farmers are denominated in local currency, which is a source of foreign currency exchange rate risk.

21 unchanged sentences

Based upon historical experience, we usually expect that about 90% of such orders will be delivered during the following fiscal year.

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.

19 unchanged sentences

We provide comprehensive training, technical support in the field, and crop analytics through ongoing research and development.

We believe that our major customers increasingly require these services and that our programs increase the quality and value of the products and services we offer.

We also believe that our customers value the security of supply that we are able to provide due to our strong relationships with our farmer base and our global footprint.

Our major customers increasingly

require these services, and we believe our programs increase the quality and value of the products and services we offer.

Our customers value the security of supply that we are able to provide due to our strong relationships with our farmer base and our global footprint.

Ingredients Operations

6 unchanged sentences

No customer accounted for more than 10% of our Ingredients Operations segment revenues in fiscal year 2023.

We have been achieving operational synergies across the platform among our businesses and have also made considerable progress on our vision for the segment, providing a total solution-based approach to plant-based ingredients to our customers that utilizes our broad spectrum of capabilities in fruits, vegetables and botanical extracts and flavorings.

FruitSmart, Silva, and Shank's are the primary operations for the Ingredients Operations segment.

In December 2020, we announced the wind-down of Carolina Innovative Food Ingredients, Inc.

(“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.

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.

15 unchanged sentences

Shank’s has a strong presence within the botanical extracts, flavorings, and bottling marketplace, with significant vanilla expertise.

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.

In addition to pure vanilla extract products, Shank’s offers a robust portfolio of over 2,400 other botanical extracts, distillates, natural flavors and colors for industrial and private label customers worldwide.

Shank’s employs more than 200 people and has a 191,000 square foot manufacturing campus in Lancaster, Pennsylvania.

1 unchanged sentence

Sustainability

We believe we have a fundamental responsibility to our stakeholders to set high standards of social and environmental performance to support a sustainable supply chain and operations.

In 2018, Universal celebrated 100 years in business.

Our 100 year anniversary was an opportunity to look back at our accomplishments, and to look forward to our future.

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.

Since then we have produced annual sustainability reports, and we have committed to continuing our annual sustainability reporting.

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.

We have a fundamental responsibility to our stakeholders to set high standards of social and environmental performance to support a sustainable supply chain and operations.

Universal is proud of the commitment we made to stakeholders in 2019 to report annually on sustainability topics that impact our business so stakeholders could better understand how we meet the high standards we set.

In the same year, 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.

Since that time, we have made strategic acquisitions, witnessed a global pandemic, and further strengthened our approach to sustainability at the corporate level while continuing to report annually on sustainability.

Our commitment to sustainability encompasses a wide array of programs and initiatives.

As a global agri-products supplier operating in numerous countries around the world, we primarily focus our sustainability efforts on our own operations and the farmers from whom we purchase leaf tobacco and other food materials.

Sustainability efforts with respect to our facilities around the world involve the adoption and implementation of policies and procedures related to environmental impacts, workforce protections and programs such as those we address in “Human Capital Management” below, and other important considerations.

Sustainability efforts with respect to our supply chain also address environmental impacts, while also emphasizing important issues such as appropriate agricultural labor practices and other components of industry-recognized GAP.

Sustainability efforts with respect to our facilities around the world involve the adoption and implementation of policies and procedures related to environmental impacts,

workforce protections and programs such as those we address in “Human Capital Management” below, and other important considerations.

Sustainability efforts with respect to our supply chain emphasize important issues related to the countries and communities in which we operate.

Some of the most important issues include the protection of farm worker rights through appropriate agricultural labor practices, and the monitoring and reduction of environmental impacts through compliance with industry-recognized GAP” programs and our own environmental programs and initiatives.

Agricultural Labor Practices

Throughout the world, we work side-by-side with our contracted farmers to produce a sustainable tobacco crop that adheres to GAP, including appropriate agricultural labor practices.

We are committed to extending our human rights standards to our contracted farmers and their workers, so we monitor each contracted farmer for safe and fair working conditions on their farms.

Our global Agricultural Labor Practices (“ALP”) program code, or ALP Code, consists of seven principles that set forth human rights requirements for our contracted farmers to meet.

6 unchanged sentences

and compliance with local employment laws.

As part of our ALP program, we train contracted farmers on the ALP Code requirements and we monitor their compliance through multiple in-person farm visits during the growing season.

As part of our ALP program, we train contracted farmers on the ALP Code requirements and we monitor their compliance through multiple in-person farm visits during the tobacco growing season.

The significant investment of time and resources we commit each year to our ALP program evidences the importance of sustainable labor practices to our business.

1 unchanged sentence

Universal is committed to abiding by environmental laws and regulations, monitoring our supply chain activities, and cooperating with supply chain partners to implement strategies that mitigate and reduce environmental impacts that may be associated with our business.

We recognize three primary environmental risks related to our global footprint:

We recognize three primary environmental responsibilities throughout our global footprint:

responsible consumption of water and resources, responsible forestry management, and minimizing greenhouse gas emissions.

In fiscal year 2023, 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.

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.

In addition, we continued to work towards our Company’s science-based greenhouse gas emissions reduction target of 30% 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.”

1 unchanged sentence

Workforce Overview

We believe our employees are among our most important resources and rely on them to execute our business plan with integrity and efficiency.

Our employees are among our most important resources and rely on them to execute our business plan with integrity and efficiency.

Investing in human capital is critical to our continued success.

3 unchanged sentences

and keep our employees safe and healthy.

As of March 31, 2022, we employed more than 25,000 employees, located in over 30 different countries across five continents.

Approximately 55% of our employees are seasonal and approximately 45% of our employees are full time.

More than 48% of our employees are female and almost 17% of our managers are female.

As of March 31, 2023, we employed more than 28,000 employees, operating in over 30 different countries across five continents.

Approximately 60% of our employees are seasonal and approximately 40% are full-time employees.

Almost 50% of our employees are female and more than 18% of our managers are female.

Globally, Universal has twelve collective bargaining agreements in place, covering approximately 57% of our workforce.

1 unchanged sentence

The above percentages reflect our workforce on March 31, 2023.

We are a multinational and multicultural organization, with employees and operations located around the world, and we are committed to creating a diverse and inclusive workplace.

Less than 6% of our employees are located in the United States.

We are a multinational and multicultural organization, with employees and operations located around the world, and we are committed to maintaining a diverse and inclusive workplace.

Only around 5% of our employees are located in the United States.

Almost all of our employees are from the same country in which our operations are located.

4 unchanged sentences

Our Nominating and Corporate Governance Committee and our Compensation Committee both have important roles with respect to human capital management.

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.

We are committed to protecting the human rights of our employees and have policies in place to support this effort, including relating to whistleblowing, harassment, equal employment and compliance with local labor laws.

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, employee health and safety, and other policies related to our workforce.

The Compensation Committee has oversight of compensation, benefits, and retention and development processes of senior management, including an annual review of the Company's succession planning and leadership development program.

We are committed to protecting the human rights of our employees and have policies in place to support this effort, including those relating to whistleblowing, harassment, equal employment and compliance with local labor laws.

Our Board of Directors also adopted our Code of Conduct and Anti-Corruption Compliance Manual to promote ethical behavior throughout the Company and address violations of ethical standards.

4 unchanged sentences

The Board of Directors oversees our global compliance program and receives reports from our Chief Compliance Officer at each scheduled Board of Directors meeting.

Employee Benefits

In addition to offering competitive base salaries and wages, the Compensation Committee believes employee benefits are an essential component of our total compensation package.

Employee Compensation and Benefits

We offer our employees competitive base salaries and wages, and we have a salary administration process where we regularly review and adjust our employees’ total compensation and benefits when warranted to ensure they are competitive in our industry and are aligned with our performance.

In addition, we believe employee benefits are an essential component of our total compensation package.

Each of our global operations provides benefits that are designed to attract and retain our employees.

These benefits vary depending on the location, seniority and employment status of our employees, and can include medical insurance, long-term disability insurance, retirement benefits, and similar programs.

We periodically review and adjust our employees’ total compensation and benefits when necessary to ensure that they are competitive within our industry and are aligned with our performance.

We also support our employees outside of work through a variety of initiatives and strongly believe that our success relies on the prosperity of the communities in which we operate.

We fund various programs that enhance local economies and cultures.

In the United States, benefits to our employees include medical, dental, disability and life insurance, flexible spending accounts, and a 401(k) Retirement Plan with a 5% match and immediate vesting.

We provide a health care advocacy service to assist our employees with various medical needs as they make these decisions, and we provide a mental health and financial counseling program for our employees and their families.

We also offer other benefits which may vary by location, but which include performance, holiday, attendance and other bonus opportunities, a tuition assistance program (offering assistance up to 75%) as well as a 501(c)(3) matching gift program to benefit communities in which our employees work and reside.

We support our employees outside of work through a variety of initiatives and strongly believe that our success relies on the prosperity of the communities in which we operate.

We fund various programs that enhance local communities, economies and cultures.

For example, in numerous locations we support projects designed to impact our employees and their families such as establishing health clinics and wellness programs to assist our employees, administering after school care for schoolchildren, or funding local cultural events.

Ultimately, we recognize our impact extends beyond the workplace and are proud to engage as both active corporate citizens and leaders in our neighborhoods, communities, and countries.

We publicly disclose additional information about our community support activities each year in our Sustainability Report.

Talent Development and Training

2 unchanged sentences

These programs often include safety and technical job skill training as well as soft-skill programs focused on communication and change management.

Development of leadership skills remains a top priority and is specialized for all level of employees.

Development of leadership skills is also a priority and is specialized for different levels of employees.

For example, members of management in our global operations participate in our succession planning programs, which include the identification of employees who are offered development opportunities for career advancement.

To further develop leadership skills, we also maintain specific leadership programs for aspiring leaders and new supervisors, managers and directors.

Health and Safety

1 unchanged sentence

We are committed to the prevention of injury and illness in the workplace through strong health and safety management, employee empowerment and accountability, and strict compliance with health and safety regulations.

Our programs are designed to influence our Company’s culture through employee engagement and leadership behavior.

We pair our improved health and safety management system with a strong database reporting tool to allow all Universal facilities to track their local occupational health and safety performance and that of the entire company.

These reports allow our global teams to analyze the insights collected from our health and safety system immediately.

These reports allow our global teams to analyze the insights collected from our health and safety system immediately to support compliance and promote continuous improvement.

Additionally, we utilize other health and safety initiatives to ensure our facilities remain safe for our employees.

4 unchanged sentences

In addition to corporate audits, we encourage this regional cross-auditing to promote a collaborative framework and drive our employee safety programs forward.

We continue to closely monitor developments related to the ongoing COVID-19 pandemic and have taken and continue to take steps intended to mitigate the potential risks to us.

It is paramount that our employees who operate our businesses are safe and informed.

We have assessed and regularly update our existing business continuity plans for our business in the context of this pandemic.

For example, we have taken precautions with regard to employee and facility hygiene, imposed travel limitations on our employees, directed certain employee groups to work remotely whenever possible, and continue to assess protocols designed to protect our employees, customers, and the public.

Our commitment to our employees’ health and safety was effectively demonstrated in our global response to the COVID-19 pandemic.

Management at all levels of the Company closely monitored developments and took steps intended to mitigate the potential risks to our employees, including taking precautions with regard to employee and facility hygiene, imposing travel limitations on our employees, and directing certain employee groups to work remotely whenever possible.

Universal was committed to employee protection and limiting the physical and mental impacts of the pandemic as much as possible on our global workforce.

Research and Development

8 unchanged sentences

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.

What changed 10-K

Item 1. Business