What changed in this filing

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Item 1. Financial Statements

2023-08-02 compared with 2023-02-08 · 125 added, 315 removed, 589 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended December 31, Nine Months Ended December 31,

2022 2021 2022 2021

(Unaudited) (Unaudited)

Three Months Ended June 30,

Sales and other operating revenues $ 517,722 $ 429,822

2 unchanged sentences

Selling, general and administrative expenses 75,477 66,452

Other income — — — ( 2,532 )

Restructuring and impairment costs — 8,433 — 10,457

Operating income 11,035 13,266

3 unchanged sentences

Interest expense 15,543 6,724

Income before income taxes and other items 63,614 57,660 95,826 88,404

Income (loss) before income taxes and other items ( 6,584 ) 6,164

Income taxes ( 1,423 ) 3,363

Net income 51,361 44,155 73,568 69,822

Net income (loss) ( 5,161 ) 2,801

net loss (income) attributable to noncontrolling interests in subsidiaries 3,097 4,029

Net income attributable to Universal Corporation $ 41,660 $ 34,940 $ 70,345 $ 60,807

Earnings per share:

Net income (loss) attributable to Universal Corporation $ ( 2,064 ) $ 6,830

Earnings (loss) per share:

$ ( 0.08 ) $ 0.28

11 unchanged sentences

(in thousands of dollars)

December 31, December 31, March 31,

June 30, June 30, March 31,

2023 2022 2023

31 unchanged sentences

(in thousands of dollars)

December 31, December 31, March 31,

June 30, June 30, March 31,

2023 2022 2023

3 unchanged sentences

Notes payable and overdrafts $ 359,832 $ 454,659 $ 195,564

Accounts payable and accrued expenses 208,187 221,374 272,042

Accounts payable 88,362 121,702 83,213

Accounts payable—unconsolidated affiliates 1,495 88 5,830

3 unchanged sentences

Current portion of operating lease liabilities 10,673 10,568 11,404

Accrued expenses and other current liabilities 127,564 113,916 106,533

Current portion of long-term debt — — —

10 unchanged sentences

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 24,555,361 shares issued and outstanding at December 31, 2022 ( 24,607,384 at December 31, 2021 and 24,550,019 at March 31, 2022)

Common stock, no par value, 100,000,000 shares authorized 24,636,600 shares issued and outstanding at June 30, 2023 ( 24,605,889 at June 30, 2022 and 24,555,361 at March 31, 2023)

338,445 332,520 337,247

9 unchanged sentences

(in thousands of dollars)

Nine Months Ended December 31,

Three Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 73,568 $ 69,822

Adjustments to reconcile net income to net cash used by operating activities:

Net income (loss) $ ( 5,161 ) $ 2,801

Adjustments to reconcile net income (loss) to net cash used by operating activities:

Depreciation and amortization 14,754 14,129

Net provision for losses (recoveries) on advances to suppliers 1,382 ( 42 )

Inventory writedowns 2,327 4,853

Stock-based compensation expense 3,859 3,682

Foreign currency remeasurement (gain) loss, net 1,530 ( 968 )

Foreign currency exchange contracts 7,803 9,920

Restructuring and impairment costs — 10,457

Restructuring payments — ( 3,787 )

Change in estimated fair value of contingent consideration for FruitSmart acquisition — ( 2,532 )

Deferred income taxes ( 2,406 ) ( 3,377 )

Equity in net loss (income) of unconsolidated affiliates, net of dividends 2,630 443

Other, net 5 1,400

Changes in operating assets and liabilities, net:

Net cash provided (used) by operating activities ( 183,850 ) ( 51,576 )

Accounts and notes receivable 23,457 68,032

Inventories ( 263,171 ) ( 281,844 )

Other assets 4,240 ( 16,739 )

Accounts payable ( 1,110 ) ( 50,200 )

Accrued expenses and other current liabilities 7,833 16,529

Income taxes ( 2,336 ) ( 581 )

Customer advances and deposits 100,473 6,191

Net cash used by operating activities ( 103,891 ) ( 225,771 )

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from sale of business, net of cash held by the business — 1,168

Purchase of business, net of cash held by the business — ( 102,462 )

Proceeds from sale of property, plant and equipment 326 292

2 unchanged sentences

Issuance of short-term debt, net 163,804 271,663

Issuance of long-term debt 123,481 —

Repayment of long-term debt ( 23,481 ) —

Dividends paid to noncontrolling interests ( 4,164 ) ( 5,145 )

Repurchase of common stock ( 3,448 ) —

Dividends paid on common stock ( 19,398 ) ( 19,155 )

Proceeds from termination of interest rate swap agreements 11,786 —

Debt issuance and other ( 6,337 ) ( 3,264 )

Other ( 2,893 ) ( 1,892 )

Net cash provided (used) by financing activities 137,349 245,471

Effect of exchange rate changes on cash, restricted cash and cash equivalents 4 ( 1,172 )

Net decrease in cash, restricted cash and cash equivalents ( 16,365 ) ( 97,916 )

Net increase (decrease) in cash, restricted cash and cash equivalents 15,828 4,918

Cash, restricted cash and cash equivalents at beginning of year 64,690 87,648

13 unchanged sentences

This 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, 2023 (the “2023 Annual Report on Form 10-K”) .

The business environment in most of the jurisdictions in which the Company operates continues to move towards pre-pandemic conditions.

Currently, management does not believe the ongoing COVID-19 pandemic will materially impact the Company's financial condition, results of operations and demand for its products and services.

ACCOUNTING PRONOUNCEMENTS

Pronouncements Adopted in the Current Period

In March 2020, the FASB issued Accounting Standards Update No.

2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04").

ASU 2020-04 provides optional expedients and exceptions related to contract modifications and hedge accounting to address the transitions from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

The guidance permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.

ASU 2020-04 also temporarily allows hedge relationships to continue without de-designation upon changes due to reference rate reform.

The Company adopted the new standard effective December 31, 2022.

There was no material impact to the consolidated financial statements from the adoption of ASU 2020-04.

BUSINESS COMBINATION

Acquisition of Shank's Extracts, LLC

On October 4, 2021, the Company acquired 100 % of the capital stock of Shank's Extracts, LLC.

(“Shank's”), a flavors and extracts processing company , for approximately $ 100 million in cash and $ 2.4 million of additional working capital on-hand at the date of acquisition.

The acquisition of Shank's diversifies the Company's product offerings and generates new opportunities for its plant-based ingredients platform.

A portion of the goodwill recorded as part of the acquisition was attributable to the assembled workforce of Shank's.

The goodwill and intangibles recognized for the Shank's acquisition are deductible for U.S.

income tax purposes.

The transaction was treated as an asset acquisition for U.S.

Federal tax purposes, resulting in a step-up of tax basis to fair value.

The Company determined the Shank's operations are not material to the Company’s consolidated results.

Therefore, pro forma information is not presented.

For the fiscal year ended March 31, 2022, the Company incurred $ 2.3 million of acquisition-related transaction costs for the purchase of Shank's.

The acquisition-related costs were expensed as incurred and recorded in selling, general, and administrative expense on the consolidated statements of income.

In November 2021, the Company acquired the land and buildings utilized by Shank's operations for $ 13.3 million.

The purchase of the land and buildings resulted in the elimination of the $ 8.5 million operating lease right-of-use asset and lease liability recognized on the acquisition date for Shank's.

The following table summarizes the final purchase price allocation of the assets acquired and liabilities assumed for the Shank's acquisition.

(in thousands of dollars)

October 4, 2021

Cash and cash equivalents $ 754

Accounts receivable, net 6,643

Inventory 15,792

Other current assets 415

Property, plant and equipment (net) 11,000

Operating lease right-of-use assets 8,531

Customer relationships 24,000

Developed technology 4,500

Non-compete agreements 3,000

Goodwill 41,061

Total assets acquired 115,696

Accounts payable and accrued expenses 6,159

Customer advances and deposits 351

Accrued compensation 655

Current portion of operating lease liabilities 8,531

Total liabilities assumed 15,696

Total assets acquired and liabilities assumed $ 100,000

Restricted Cash Release of Deferred Proceeds from Acquisition of Silva International, Inc.

During the three months ended December 31, 2022, the Company released $ 6.0 million, held in a third-party escrow account, to one of Silva's selling shareholders.

The amounts were held in escrow since the date of acquisition, as the employee had a post-combination service requirement with forfeitable payment provisions.

Therefore, under ASC Topic 805, "Business Combinations," the amounts held in escrow were treated as a contingent consideration arrangement and expensed as compensation expense in selling, general, and administrative expense on the consolidated statements of income.

As of December 31, 2022, all amounts have been released to the selling shareholder, who remains employed by the Company, and expensed in the Company's consolidated statements of income.

RESTRUCTURING AND IMPAIRMENT COSTS

Universal continually 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.

There were no restructuring and impairment costs incurred for the three and nine months ended December 31, 2022.

Tobacco Operations

As a result of efforts to exit the idled tobacco operations in Tanzania, the Company reevaluated the carrying values of property, plant, and equipment associated with the Tanzania operations.

During the three months ended December 31, 2021, the Company determined the carrying value exceeded the estimated fair value of those assets and recognized a $ 9.4 million impairment charge.

During the nine months ended December 31, 2022, the Company entered into a sales agreement to sell all

outstanding shares of common stock, which included all properties, of the idled companies in Tanzania.

See Note 6 for additional information about the sale of the idled tobacco operations in Tanzania.

During the three and nine months ended December 31, 2021, the Company also incurred $ 0.6 million and $ 2.2 million of termination costs for the Tobacco Operations segment, respectively.

Ingredients Operations

During the three and nine months ended December 31, 2021, the Company recognized net gains of $ 1.6 million and $ 1.2 million, respectively, for the sale of the remaining property, plant, and equipment associated with wind-down of Carolina Innovative Food Ingredients, Inc.

(“CIFI”), a sweet potato processing operation located in Nashville, North Carolina that was announced in fiscal year 2021.

A summary of the restructuring and impairment costs recorded for the three and nine months ended December 31, 2021 and were as follows:

Three Months Ended December 31, Nine Months Ended December 31,

(in thousands) 2021 2021

Restructuring costs:

Employee termination benefits $ 627 $ 2,174

Other — ( 24 )

Total restructuring costs 627 2,150

Impairment costs:

Property, plant and equipment 7,806 8,307

Total impairment costs 7,806 8,307

Total restructuring and impairment costs $ 8,433 $ 10,457

REVENUE FROM CONTRACTS WITH CUSTOMERS

17 unchanged sentences

Ingredient Sales

In recent fiscal years, the Company has diversified operations through the acquisition of established companies that offer customers a wide range of both liquid and dehydrated fruit and vegetable ingredient products, flavors, and extracts.

The Company has diversified operations through the acquisition of established companies that offer customers a wide range of both liquid and dehydrated fruit and vegetable ingredient products, flavors, and 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.

14 unchanged sentences

The following table disaggregates the Company’s revenue by significant revenue-generating category:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2023 2022

10 unchanged sentences

Other Contingent Liabilities (Letters of credit)

The Company had other contingent liabilities totaling approximately $ 1 million at December 31, 2022, primarily related to outstanding letters of credit.

The Company had other contingent liabilities totaling approximately $ 1 million at June 30, 2023, primarily related to outstanding letters of credit.

Value-Added Tax Assessments in Brazil

5 unchanged sentences

In September 2014, tax authorities for the state of Parana issued an assessment for tax, interest, and penalties for periods from 2009 through 2014 totaling approximately $ 11 million.

Those amounts are based on the exchange rate for the Brazilian currency at December 31, 2022.

Those amounts are based on the exchange rate for the Brazilian currency at June 30, 2023.

Management of the operating subsidiary and outside counsel believe that errors were made by the tax authorities for both states in determining all or significant portions of these assessments and that various defenses support the subsidiary’s positions.

With respect to the Santa Catarina assessments, the subsidiary took appropriate steps to contest the full amount of the claims.

As of December 31, 2022, a portion of the subsidiary’s arguments had been accepted, and the outstanding assessment had been reduced.

The reduced assessment, together with the related accumulated interest through the end of the current reporting period, totaled approximately $ 9 million (at the December 31, 2022 exchange rate).

As of June 30, 2023, a portion of the subsidiary’s arguments had been accepted, and the outstanding assessment had been reduced.

The reduced assessment, together with the related accumulated interest through the end of the current reporting period, totaled approximately $ 10 million (at the June 30, 2023 exchange rate).

The subsidiary is continuing to contest the full remaining amount of the assessment.

While the range of reasonably possible loss is zero up to the full $ 9 million remaining assessment with interest, based on the strength of the subsidiary’s defenses, no loss within that range is considered probable at this time and no liability has been recorded at December 31, 2022.

While the range of reasonably possible loss is zero up to the full $ 10 million remaining assessment with interest, based on the strength of the subsidiary’s defenses, no loss within that range is considered probable at this time and no liability has been recorded at June 30, 2023.

With respect to the Parana assessment, management of the subsidiary and outside counsel challenged the full amount of the claim.

2 unchanged sentences

In December 2015, the Parana tax authorities withdrew the initial claim and subsequently issued a new assessment covering the same tax periods, reflecting a substantial reduction from the original assessment.

In fiscal year 2020, the Parana tax authorities acknowledged the statute of limitations related to claims prior to December 2010 had expired and reduced the assessment to $ 3 million (at the December 31, 2022 exchange rate).

Notwithstanding the reduced assessment, management and outside counsel continue to believe that the new assessment is not supported by the underlying statutes and relevant case law and have challenged the full amount of the claim.

The range of reasonably possible loss is considered to be zero up to the full $ 3 million assessment.

However, based on the strength of the subsidiary's defenses, no loss within that range is considered probable at this time and no liability has been recorded at December 31, 2022.

However, based on the strength of the subsidiary's defenses, no loss within that range is considered probable at this time and no liability has been recorded at June 30, 2023.

In both states, the process for reaching a final resolution to the assessments is expected to be lengthy, and management is not currently able to predict when either case will be concluded.

11 unchanged sentences

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 $ 186 million at December 31, 2022, $ 147 million at December 31, 2021, and

$ 153 million at March 31, 2022.

The related valuation allowances totaled $ 21 million at December 31, 2022, $ 17 million at December 31, 2021, and $ 19 million at March 31, 2022, and were estimated based on the Company’s historical loss information and crop projections.

The allowances were increased by net provisions of approximately $ 6.1 million and $ 2.9 million in the nine-month periods ended December 31, 2022 and 2021, respectively.

These net provisions are included in selling, general, and administrative expenses in the consolidated statements of income.

Short-term and long-term advances to suppliers totaled $ 138 million at June 30, 2023, $ 120 million at June 30, 2022, and $ 199 million at March 31, 2023.

The related valuation allowances totaled $ 26 million at June 30, 2023, $ 17 million at June 30, 2022, and $ 24 million at March 31, 2023, and were estimated based on the Company’s historical loss information and crop projections.

The allowances were increased by net provisions of approximately $ 1.4 million in the three-month periods ended June 30, 2023 and decreased by net recoveries of $ 42 thousand in the three-month periods ended June 30, 2022.

These net provisions and recoveries 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.

9 unchanged sentences

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.

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 December 31, 2022, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 66 million ($ 65 million at December 31, 2021, and $ 67 million at March 31, 2022), and the related valuation allowances totaled approximately $ 24 million ($ 20 million at December 31, 2021, and $ 21 million at March 31, 2022).

At June 30, 2023, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 76 million ($ 77 million at June 30, 2022, and $ 64 million at March 31, 2023), and the related valuation allowances totaled approximately $ 22 million ($ 22 million at June 30, 2022, and $ 22 million at March 31, 2023).

The net balances are reported in other current assets and other noncurrent assets in the consolidated balance sheets.

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This stock repurchase plan authorized the purchase of up to $ 100 million in common and/or preferred stock in open market or privately negotiated transactions through November 15, 2024 or when funds for the program have been exhausted, subject to market conditions and other factors.

The program had $ 100 million of remaining capacity for repurchases of common and/or preferred stock at December 31, 2022.

The program had $ 100 million of remaining capacity for repurchases of common and/or preferred stock at June 30, 2023.

Sale of Idled Tanzania Operations

During the nine months ended December 31, 2022, the Company entered into a sales agreement to sell all outstanding shares of common stock, which included all properties, of the idled companies in Tanzania for $ 8.5 million.

The Company has received $ 3.2 million of the $ 8.5 million sales agreement as of December 31, 2022.

The remaining proceeds are expected to be received in installments by June 2023.

New Bank Credit Agreement

On December 15, 2022, the Company entered into a new bank credit agreement that replaced its existing bank credit agreement dated December 20, 2018.

In addition to extending the maturity dates of the underlying components of the facility, the new agreement includes a $ 530 million five-year revolving credit facility (expiring December 15, 2027), a $ 275 million five-year term loan (due December 15, 2027), and a $ 345 million seven-year term loan (due December 15, 2029).

At closing, the Company had a balance of $ 385 million outstanding under the revolving credit facility.

Both term loans were fully funded at closing, require no amortization, and are prepayable without penalty prior to maturity.

The new facility may be expanded to allow for additional borrowings of up to $ 200 million under certain conditions.

Borrowings under the revolving credit facility and the two term loans bear interest a variable rate benchmarked to the Secured Overnight Financing Rate ("SOFR") instead of LIBOR plus a

margin based on the Company’s credit measures.

The new credit agreement contains financial covenants that require the Company to maintain certain levels of tangible net worth and leverage.

Those covenants are substantially the same as the covenants in the prior bank credit agreement, and the Company was in compliance with the covenants at December 31, 2022.

During the three months ended December 31, 2022, the Company entered into two new receive-floating / pay-fixed interest rate swap agreements, hedging the variable interest payments on half of the principal value of each of the new term loans.

The swap agreements convert the variable benchmark rate to a fixed rate through December 15, 2027 for the five-year term loan, and through December 15, 2029 for the seven-year term loan.

With the swap agreements in place, the effective interest rates on the hedged portions of the $ 275 million five-year term loan and the $ 345 million seven-year term loan were 5.50 % and 5.65 %, respectively, at December 31, 2022.

Prior to the maturity of the swap agreements, those effective interest rates will change only if a change in the Company’s credit measures results in adjustments to the applicable credit spreads specified in the underlying loan agreement.

Compared to the prior credit agreement, there were only limited changes among the individual bank lenders participating in the new agreement.

Accordingly, under the applicable accounting guidance, a significant portion of the transaction was accounted for as a debt modification rather than a debt extinguishment.

As a result, only an immaterial amount of the unamortized debt issuance costs related to the prior credit agreement were charged to expense.

The remainder of those costs remained capitalized on the Company's consolidated balance sheet and will be amortized over the term of the new credit agreement.

Similarly, in the consolidated statement of cash flows, rather than presenting issuance of the entire $ 620 million of new term loans and repayment of $ 520 million of prior term loans, the amounts presented for the issuance and repayment of long-term debt reflect only the changes in the underlying principal positions among the participating bank lenders.

During the three months ended June 30, 2022, the Company entered into a sales agreement to sell all outstanding shares of common stock, which included all properties, of the idled companies in Tanzania for $ 8.5 million.

The Company had received $ 5.7 million of the $ 8.5 million sales agreement as of June 30, 2023.

The remaining $ 2.8 million outstanding proceeds were received in July 2023.

Restricted Cash Release of Deferred Proceeds from Acquisition of Silva International, Inc.

During the three months ended December 31, 2022, the Company released $ 6.0 million, held in a third-party escrow account, to one of Silva's selling shareholders.

The amounts were held in escrow since the date of acquisition, as the employee had a post-combination service requirement with forfeitable payment provisions.

As of December 31, 2022, all amounts have been released to the selling shareholder, who remains employed by the Company, and expensed in the Company's consolidated statements of income.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands, except share and per share data) 2023 2022

Basic Earnings Per Share

Numerator for basic earnings per share

Net income attributable to Universal Corporation $ 41,660 $ 34,940 $ 70,345 $ 60,807

Denominator for basic earnings per share

Basic Earnings (Loss) Per Share

Numerator for basic earnings (loss) per share

Net income (loss) attributable to Universal Corporation $ ( 2,064 ) $ 6,830

Denominator for basic earnings (loss) per share

Weighted average shares outstanding 24,842,171 24,769,015

Basic earnings per share $ 1.68 $ 1.41 $ 2.84 $ 2.46

Diluted Earnings Per Share

Numerator for diluted earnings per share

Net income attributable to Universal Corporation $ 41,660 $ 34,940 $ 70,345 $ 60,807

Denominator for diluted earnings per share:

Basic earnings (loss) per share $ ( 0.08 ) $ 0.28

Diluted Earnings (Loss) Per Share

Numerator for diluted earnings (loss) per share

Net income (loss) attributable to Universal Corporation $ ( 2,064 ) $ 6,830

Denominator for diluted earnings (loss) per share:

Weighted average shares outstanding 24,842,171 24,769,015

2 unchanged sentences

Denominator for diluted earnings per share 24,842,171 24,935,554

Diluted earnings per share $ 1.67 $ 1.40 $ 2.82 $ 2.44

Diluted earnings (loss) per share $ ( 0.08 ) $ 0.27

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.

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.

Three and Nine months ended December 31, 2022

The Company's consolidated effective income tax rate for the three and nine months ended December 31, 2022 was 19.3 % and 23.2 %, respectively.

In the nine months ended December 31, 2022, the Company sold its idled Tanzania operations and recognized $ 1.1 million of income taxes.

Without this item, the consolidated effective income tax rate for the nine months ended December 31, 2022 would have been approximately 22.0 %.

Three months ended June 30, 2023

The Company's consolidated effective income tax rate for the three months ended June 30, 2023 was a benefit of 21.6 %.

Three months ended June 30, 2022

The Company's consolidated effective income tax rate for the three months ended June 30, 2022 was 54.6 %.

In the three months ended June 30, 2022, the Company sold its idled Tanzania operations and recognized $1.1 million of income taxes.

Without this item, the consolidated effective income tax rate for the three months ended June 30, 2022 would have been approximately 36.2%.

Additionally, the sale of the Company's idled Tanzania operations resulted in a $ 1.8 million reduction to consolidated interest expense related to the removal of an uncertain tax position.

Three and Nine months ended December 31, 2021

The Company's consolidated effective income tax rate for the three and nine months ended December 31, 2021 was 23.4 % and 21.0 %, respectively.

The consolidated effective income tax rate for the three and nine months ended December 31, 2021 was affected by a $ 1.2 million benefit related to finalizing the prior fiscal year U.S.

The consolidated effective income tax rate for the nine months ended December 31, 2021 was affected by a $ 1.7 million benefit related to a final tax ruling at a foreign subsidiary.

Without these items, the consolidated effective income tax rate for the three and nine months ended December 31, 2021 would have been approximately 25.5 % and 24.3 %, respectively

GOODWILL AND OTHER INTANGIBLES

The Company's changes in goodwill at December 31, 2022 and 2021 consisted of the following:

(in thousands of dollars) Nine Months Ended December 31,

The Company's changes in goodwill at June 30, 2023 and 2022 consisted of the following:

(in thousands of dollars) Three Months Ended June 30,

Balance at beginning of fiscal year $ 213,922 $ 213,998

Acquisition of business (1)

Foreign currency translation adjustment

1 unchanged sentence

Balance at end of period $ 213,893 $ 213,902

(1) On October 4, 2021, the Company acquired 100 % of the capital stock of Shank's for approximately $ 100 million in cash and $ 2.4 million of additional working capital on-hand at the date of acquisition.

The Shank's acquisition resulted in $ 41.1 million of goodwill.

See Note 3 for additional information.

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 December 31, 2022 and 2021 and at March 31, 2022:

(in thousands, except useful life) December 31, 2022

The Company's intangible assets subject to amortization consisted of the following at June 30, 2023 and 2022 and at March 31, 2023:

(in thousands, except useful life) June 30, 2023

Useful Life (years) Gross Carrying Value Accumulated Amortization Net Carrying Value

5 unchanged sentences

Total intangible assets $ 111,637 $ ( 34,347 ) $ 77,290

December 31, 2021

June 30, 2022

Useful Life (years) Gross Carrying Value Accumulated Amortization Net Carrying Value

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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 and nine months ended December 31, 2022 and 2021 was:

(in thousands of dollars) Three Months Ended December 31, Nine Months Ended December 31,

2020 2022 2021

The Company's amortization expense for intangible assets for the three months ended June 30, 2023 and 2022 was:

(in thousands of dollars) Three Months Ended June 30,

Amortization Expense $ 2,827 $ 3,173

1 unchanged sentence

The amortization expense for other intangible assets is recorded in selling, general, and administrative expenses in the consolidated statements of income.

As of December 31, 2022, the expected future amortization expense for intangible assets is as follows:

As of June 30, 2023, the expected future amortization expense for intangible assets is as follows:

Fiscal Year (in thousands of dollars)

2023 (excluding the nine months ended December 31, 2022)

2024 (excluding the three months ended June 30, 2023)

2028 and thereafter 40,480

Total expected future amortization expense $ 77,290

The Company, as a lessee, enters into operating leases for land, buildings, equipment, and vehicles.

For all operating leases with terms greater than 12 months and with fixed payment arrangements, a lease liability and corresponding right-of-use asset are recognized in the balance sheet for the term of the lease by calculating the net present value of future lease payments.

On the date of lease commencement, the present value of lease liabilities is determined by discounting the future lease payments by the Company’s collateralized incremental borrowing rate, adjusted for the lease term and currency of the lease payments.

If a lease contains a renewal option that the Company is reasonably certain to exercise, the Company accounts for the original lease term and expected renewal term in the calculation of the lease liability and right-of-use asset.

The following table sets forth the right-of-use assets and lease liabilities for operating leases included in the Company’s consolidated balance sheet:

(in thousands of dollars) December 31, 2022 December 31, 2021 March 31, 2022

Operating lease right-of-use assets $ 42,337 $ 34,139 $ 40,243

Current portion of operating lease liabilities $ 11,160 $ 9,128 $ 10,303

Long-term operating lease liabilities 27,030 22,612 29,617

Total operating lease liabilities $ 38,190 $ 31,740 $ 39,920

The following table sets forth the location and amount of operating lease costs included in the Company's consolidated statements of income:

Three Months Ended December 31, Nine Months Ended December 31,

(in thousands of dollars) 2022 2021 2022 2021

Income Statement Location

Cost of goods sold $ 2,825 $ 2,805 $ 8,161 $ 8,104

Selling, general, and administrative expenses 2,853 2,536 8,074 7,102

Total operating lease costs (1)

$ 5,678 $ 5,341 $ 16,235 $ 15,206

(1) Includes variable operating lease costs.

The following table reconciles the undiscounted cash flows to the operating lease liabilities in the Company’s consolidated balance sheet:

(in thousands of dollars) December 31, 2022

Maturity of Operating Lease Liabilities

2023 (excluding the nine months ended December 31, 2022)

2028 and thereafter 8,821

Total undiscounted cash flows for operating leases $ 44,743

Imputed interest ( 6,553 )

Total operating lease liabilities $ 38,190

As of December 31, 2022, the Company had no leases that have not yet commenced.

The following table sets forth supplemental information related to operating leases:

Three Months Ended December 31, Nine Months Ended December 31,

(in thousands, except lease term and incremental borrowing rate) 2022 2021 2022 2021

Supplemental Cash Flow Information

Cash paid for amounts included in the measurement of operating lease liabilities $ 3,459 $ 3,219 $ 10,127 $ 8,836

Right-of-use assets obtained in exchange for new operating leases 1,638 3,843 12,363 12,894

Weighted Average Remaining Lease Term (years) 4.95 5.31

Weighted Average Collateralized Incremental Borrowing Rate 5.72 % 3.84 %

DERIVATIVES AND HEDGING ACTIVITIES

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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 (see Note 6 for additional information).

Although no significant ineffectiveness is expected with this hedging strategy, the effectiveness of the interest rate swaps is evaluated on a quarterly basis.

At December 31, 2022, 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.

At June 30, 2023, 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 closing on the new bank credit facility in December 2022.

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The fair value of the previous swap agreements, approximately $ 11.8 million, was received from the counterparties in December 2022 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.

In February 2019, the Company had receive-floating/pay-fixed interest rate swap agreements that were designated and qualified as cash flow hedges for the two non-amortizing bank loans that were repaid in December 2018 and carried over to hedge the variable interest payments for the two non-amortizing bank loans that were repaid in December 2022.

Those swap agreements were terminated in February 2019.

The fair value of the two swap agreements terminated in February 2019, approximately $ 5.4 million, was received in February 2019 from the counterparties upon termination and was amortized from accumulated other comprehensive loss into earnings as a reduction of interest expense through the original maturity dates of those agreements.

As of December 31, 2022, the entire deferred gain has been amortized.

Cash Flow Hedging Strategy for Foreign Currency Exchange Rate Risk Related to Sales of Crop Inputs, Forecast Purchases of Tobacco, and Related Processing Costs

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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 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.

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.

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The aggregate U.S.

dollar notional amount of forward and option contracts entered into for these purposes during the nine-month periods in fiscal years 2023 and 2022 was as follows:

Nine Months Ended December 31,

dollar notional amount of forward and option contracts entered into for these purposes during the three-month periods in fiscal years 2024 and 2023 was as follows:

Three Months Ended June 30,

(in millions of dollars) 2023 2022

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Crop input sales — —

$ 55.0 $ 188.0

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.

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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 table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of December 31, 2022 for cash flows hedges of tobacco purchases and crop input sales are expected to be recognized in earnings.

The table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of June 30, 2023 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

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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.

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 December 31, 2022 and 2021, and March 31, 2022, were approximately $ 91.8 million, $ 59.6 million, and $ 59.5 million, respectively.

The total notional amounts of contracts outstanding at June 30, 2023 and 2022, and March 31, 2023, were approximately $ 83.0 million, $ 110.1 million, and $ 42.8 million, respectively.

To further mitigate currency remeasurement exposure, the Company’s foreign subsidiaries may utilize short-term local currency financing during certain periods.

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The table below outlines the effects of the Company’s use of derivative financial instruments on the consolidated statements of income:

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2023 2022

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Gain on terminated interest rate swaps amortized from accumulated other comprehensive loss into earnings

$ — $ 353 $ — $ 1,061

Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings

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Gain (loss) reclassified from accumulated other comprehensive loss into earnings

$ 1,790 $ 2,274 $ 4,831 $ 3,563

Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings

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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.

For the forward foreign currency exchange contracts designated as cash flow hedges of tobacco purchases in Brazil and Africa, as well as the crop input sales in Brazil, a net hedge gain of approximately $ 3.8 million remained in accumulated other comprehensive loss at December 31, 2022.

That balance reflects gains and losses on contracts related to the 2023 and 2022 Brazil crops, and the 2023 and 2022 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through December 31, 2022.

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.

For the forward foreign currency exchange contracts designated as cash flow hedges of tobacco purchases in Brazil and Africa, as well as the crop input sales in Brazil, a net hedge gain of approximately $ 6.3 million remained in accumulated other comprehensive loss at June 30, 2023.

That balance reflects gains and losses on contracts related to the 2023 and 2022 Brazil crops, and the 2024 and 2023 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through June 30, 2023.

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 December 31, 2022 and 2021, and March 31, 2022:

The table below outlines the effects of the Company’s derivative financial instruments on the consolidated balance sheets at June 30, 2023 and 2022, and March 31, 2023:

Derivatives in a Fair Value Asset Position Derivatives in a Fair Value Liability Position

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Location Fair Value as of

(in thousands of dollars) December 31, 2022 December 31, 2021 March 31, 2022 December 31, 2022 December 31, 2021 March 31, 2022

(in thousands of dollars) June 30, 2023 June 30, 2022 March 31, 2023 June 30, 2023 June 30, 2022 March 31, 2023

Derivatives Designated as Hedging Instruments

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Recurring Fair Value Measurements

At December 31, 2022 and 2021, and at March 31, 2022, the Company had certain financial assets and financial liabilities that were required to be measured and reported at fair value on a recurring basis.

At June 30, 2023 and 2022, and at March 31, 2023, 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:

December 31, 2022

June 30, 2023

Fair Value Hierarchy

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$ — $ — $ 4,515 $ — $ 4,515

December 31, 2021

June 30, 2022

Fair Value Hierarchy

4 unchanged sentences

— 11,666 — — 11,666

Interest rate swap agreements

— — 4,345 — 4,345

Foreign currency exchange contracts

2 unchanged sentences

$ 334 $ 11,666 $ 13,034 $ — $ 25,034

Interest rate swap agreements

$ — $ — $ 16,658 $ — $ 16,658

Foreign currency exchange contracts

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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.

Acquisition-related contingent consideration obligations

The Company estimates the fair value of acquisition-related contingent consideration obligations by applying an income approach model that utilizes probability-weighted discounted cash flows.

The Company acquired FruitSmart, Inc.

("FruitSmart") in fiscal year 2020 and recognized a contingent consideration liability of $ 6.7 million on the date of acquisition.

Each period the Company evaluated the fair value of the acquisition-related contingent consideration obligations.

During the year ended March 31, 2021, the evaluation resulted in a reduction of $ 4.2 million of contingent consideration of the original $ 6.7 million liability recorded.

During the year ended March 31, 2022, the evaluation of the contingent liability resulted in a reduction of the remaining $ 2.5 million contingent consideration recorded.

Significant judgment is applied to this model and therefore the acquisition-related contingent consideration obligation was classified within Level 3 of the fair value hierarchy.

A reconciliation of the change in the balance of the acquisition-related contingent consideration obligation (Level 3) for the nine months ended December 31, 2022 and 2021 is provided below.

(in thousands of dollars) Nine Months Ended December 31,

Balance beginning of year $ — $ 2,532

Change in fair value of contingent consideration liability — ( 2,532 )

Balance at end of period $ — $ —

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 December 31, 2022, and 2021 and March 31, 2022:

(in millions of dollars) December 31, 2022 December 31, 2021 March 31, 2022

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, 2023, and 2022 and March 31, 2023:

(in millions of dollars) June 30, 2023 June 30, 2022 March 31, 2023

Fair market value of long term obligations $ 620 $ 517 $ 621

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Pension Benefits Other Postretirement Benefits

Three Months Ended December 31, Three Months Ended December 31,

(in thousands of dollars) 2022 2021 2022 2021

Service cost $ 1,549 $ 1,678 $ 33 $ 43

Interest cost 2,341 2,212 236 265

Expected return on plan assets ( 3,323 ) ( 3,373 ) ( 18 ) ( 21 )

Net amortization and deferral 1,001 976 ( 168 ) ( 115 )

Net periodic benefit cost

$ 1,568 $ 1,493 $ 83 $ 172

Pension Benefits Other Postretirement Benefits

Nine Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30, Three Months Ended June 30,

(in thousands of dollars) 2023 2022 2023 2022

5 unchanged sentences

$ 498 $ 1,557 $ 84 $ 82

During the nine months ended December 31, 2022, the Company made contributions of approximately $ 3.6 million to its pension plans.

Additional contributions of $ 0.5 million are expected during the remaining three months of fiscal year 2023.

During the three months ended June 30, 2023, the Company made contributions of approximately $ 0.3 million to its pension plans.

Additional contributions of $ 3.6 million are expected during the remaining nine months of fiscal year 2024.

STOCK-BASED COMPENSATION

Universal’s shareholders have approved the Executive Stock 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.

The Company's shareholders have approved the Universal Corporation 2017 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.

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 year.

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Restricted shares vest upon the individual’s retirement from service as a director.

During the nine-month periods ended December 31, 2022 and 2021, the Company issued the following stock-based awards, representing the regular annual grants to officers and outside directors of the Company:

Nine Months Ended December 31,

During the three-month periods ended June 30, 2023 and 2022, 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,

Number granted 71,750 65,405

8 unchanged sentences

The Company accounts for forfeitures of stock-based awards as they occur.

For the nine-month periods ended December 31, 2022 and 2021, the Company recorded total stock-based compensation expense of approximately $ 6.6 million and $ 5.3 million, respectively.

The Company expects to recognize stock-based compensation expense of approximately $ 1.2 million during the remaining three months of fiscal year 2023.

For the three-month periods ended June 30, 2023 and 2022, the Company recorded total stock-based compensation expense of approximately $ 3.9 million and $ 3.7 million, respectively.

The Company expects to recognize stock-based compensation expense of approximately $ 3.7 million during the remaining nine months of fiscal year 2024.

OPERATING SEGMENTS

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

FruitSmart manufactures fruit and vegetable juices, purees, concentrates, essences, fibers, seeds, seed oils, and seed powders.

FruitSmart manufactures fruit and vegetable juices, purees, concentrates, essences, fibers, seeds,

seed oils, and seed powders.

Silva is primarily a dehydrated product manufacturer of fruit and vegetable based flakes, dices, granules, powders, and blends.

Shank's manufactures flavors and botanical extracts and also offers bottling and custom packaging for customers.

The Company currently evaluates the performance of its segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates.

The Company currently evaluates the performance of its segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings (loss) of unconsolidated affiliates.

Operating results for the Company’s reportable segments for each period presented in the consolidated statements of income and comprehensive income were as follows.

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2023 2022

3 unchanged sentences

Consolidated sales and other operating revenues $ 517,722 $ 429,822

OPERATING INCOME

OPERATING INCOME (LOSS)

Tobacco Operations $ 8,883 $ 8,116

2 unchanged sentences

Equity in pretax (earnings) loss of unconsolidated affiliates (1)

( 345 ) ( 2,084 ) ( 208 ) ( 5,056 )

Restructuring and impairment costs (2)

— ( 8,433 ) — ( 10,457 )

Other income (loss) (3)

Consolidated operating income $ 11,035 $ 13,266

(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 4 for additional information.

(3) Other income represents the reversal of a portion of the contingent consideration liability associated with the acquisition of FruitSmart.

See Note 12 for additional information.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) attributable to the Company for the nine months ended December 31, 2022 and 2021:

Nine Months Ended December 31,

Three Months Ended June 30,

(in thousands of dollars) 2023 2022

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Reclassification of (gain) loss to earnings (net of tax expense (benefit) of $ 734 and $( 337 )) (2)

( 2,045 ) 1,268

Other comprehensive income (loss) attributable to Universal Corporation, net of income taxes 5,386 4,350

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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 and nine months ended December 31, 2022 and 2021 is as follows:

Three Months Ended December 31, 2022 Three Months Ended December 31, 2021

A reconciliation of the changes in Universal Corporation shareholders’ equity and noncontrolling interests in subsidiaries for the three months ended June 30, 2023 and 2022 is as follows:

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

(in thousands of dollars) Universal Corporation Non-controlling Interests Total Universal Corporation Non-controlling Interests Total

2 unchanged sentences

Accrual of stock-based compensation 3,859 — 3,859 3,682 — 3,682

Dividend equivalents on RSUs 294 — 294 266 — 266

Changes in retained earnings

Net income 41,660 9,701 51,361 34,940 9,215 44,155

Cash dividends declared

( 19,399 ) — ( 19,399 ) ( 19,193 ) — ( 19,193 )

Repurchase of common stock — — — — — —

Dividend equivalents on RSUs ( 294 ) — ( 294 ) ( 266 ) — ( 266 )

Other comprehensive income (loss) 12,351 370 12,721 1,721 ( 14 ) 1,707

Other changes in noncontrolling interests

Dividends paid to noncontrolling shareholders

— — — — ( 2,057 ) ( 2,057 )

Balance at end of period $ 1,360,792 $ 39,950 $ 1,400,742 $ 1,316,004 $ 43,238 $ 1,359,242

Nine Months Ended December 31, 2022 Nine Months Ended December 31, 2021

(in thousands of dollars) Universal Corporation Non-controlling Interests Total Universal Corporation Non-controlling Interests Total

Balance at beginning of year $ 1,340,543 $ 44,226 $ 1,384,769 $ 1,307,299 $ 41,126 $ 1,348,425

Changes in common stock

Repurchase of common stock ( 893 ) — ( 893 ) — — —

Accrual of stock-based compensation 6,630 — 6,630 5,289 — 5,289

Withholding of shares from stock-based compensation for grantee income taxes

2 unchanged sentences

Changes in retained earnings

Net income 70,345 3,223 73,568 60,807 9,015 69,822

Net income (loss) ( 2,064 ) ( 3,097 ) ( 5,161 ) 6,830 ( 4,029 ) 2,801

Cash dividends declared

( 58,244 ) — ( 58,244 ) ( 57,558 ) — ( 57,558 )

Repurchase of common stock ( 2,555 ) — ( 2,555 ) — — —

Common stock ( 19,710 ) — ( 19,710 ) ( 19,447 ) — ( 19,447 )

Dividend equivalents on RSUs ( 302 ) — ( 302 ) ( 266 ) — ( 266 )

6 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-Q

Item 1. Financial Statements