What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-21 compared with 2025-04-21 · 78 added, 74 removed, 717 unchanged (17% 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,

Three Months Ended September 30, Six Months Ended September 30,

2024 2023 2024 2023

29 unchanged sentences

(in thousands of dollars)

December 31, December 31, March 31,

September 30, September 30, March 31,

2024 2023 2024

31 unchanged sentences

(in thousands of dollars)

December 31, December 31, March 31,

September 30, September 30, March 31,

2024 2023 2024

22 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 24,715,625 shares issued and outstanding at December 31, 2024 ( 24,559,181 at December 31, 2023 and 24,573,408 at March 31, 2024)

Common stock, no par value, 100,000,000 shares authorized 24,715,625 shares issued and outstanding at September 30, 2024 ( 24,558,493 at September 30, 2023 and 24,573,408 at March 31, 2024)

349,064 339,241 345,596

9 unchanged sentences

(in thousands of dollars)

Nine Months Ended December 31,

Six Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

69 unchanged sentences

Tobacco Operations

During the nine months ended December 31, 2024, the Company began consolidating its European sheet tobacco operations into the Company's facility in the Netherlands, by initiating a wind-down of activities at its sheet facility in Germany, incurring $10.5 million of restructuring and impairment costs.

Additionally, during the nine months ended December 31, 2024, the Company also incurred $0.1 million of termination and impairment costs in other areas of the Tobacco Operations segment.

During the nine months ended December 31, 2023, the Company incurred $ 1.8 million of restructuring and impairment costs for its Global Labs Services ("GLS") facility in Wilson, NC.

During the six months ended September 30, 2024, the Company began consolidating its European sheet tobacco operations into the Company's facility in the Netherlands, by initiating a wind-down of activities at its sheet facility in Germany, incurring $10.5 million of restructuring and impairment costs.

Additionally, during the six months ended September 30, 2024, the Company also incurred $ 0.1 million of termination and impairment costs in other areas of the Tobacco Operations segment.

During the six months ended September 30, 2023, the Company incurred $ 1.8 million of restructuring and impairment costs for its Global Labs Services ("GLS") facility in Wilson, NC.

GLS provided testing for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors, and had capabilities for testing non-tobacco products.

The restructuring and impairment costs were net of approximately $0.2 million of income from the sale of GLS processes and procedures to a third-party buyer.

Additionally, during the nine months ended December 31, 2023, the Company also incurred $ 1.7 million of termination and impairment costs in other areas of the Tobacco Operations segment.

A summary of the restructuring and impairment costs recorded for the three and nine months ended December 31, 2024 and 2023 were as follows:

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

Additionally, during the six months ended September 30, 2023, the Company also incurred $ 0.8 million of termination and impairment costs in other areas of the Tobacco Operations segment.

A summary of the restructuring and impairment costs recorded for the three and six months ended September 30, 2024 and 2023 were as follows:

Three Months Ended September 30, Six Months Ended September 30,

(in thousands) 2024 2023 2024 2023

43 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 September 30, Six Months Ended September 30,

(in thousands of dollars) 2024 2023 2024 2023

10 unchanged sentences

Other Contingent Liabilities (Letters of credit)

The Company had other contingent liabilities totaling approximately $ 1 million at December 31, 2024, primarily related to outstanding letters of credit.

The Company had other contingent liabilities totaling approximately $ 1 million at September 30, 2024, primarily related to outstanding letters of credit.

Value-Added Tax Assessments in Brazil

4 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 $ 10 million.

Those amounts are based on the exchange rate for the Brazilian currency at December 31, 2024.

Those amounts are based on the exchange rate for the Brazilian currency at September 30, 2024.

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

4 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 $ 2 million (at the December 31, 2024 exchange rate).

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 September 30, 2024 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, 2024.

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 September 30, 2024.

The process for reaching a final resolution to the assessment is expected to be lengthy, and management is not currently able to predict when the 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 $ 172 million at December 31, 2024, $ 186 million at December 31, 2023, and $ 162 million at March 31, 2024.

The related valuation allowances totaled $ 15 million at December 31, 2024, $ 25 million at December 31, 2023, and $ 20 million at March 31, 2024, and were estimated based on the Company’s historical loss information and crop projections.

The allowances were decreased by net recoveries of $ 0.4 million in the nine-month period ended December 31, 2024 and increased by net provisions of approximately $ 10.0 million in the nine-month period ended December 31, 2023.

Short-term and long-term advances to suppliers totaled $ 151 million at September 30, 2024, $ 127 million at September 30, 2023, and $ 162 million at March 31, 2024.

The related valuation allowances totaled $ 11 million at September 30, 2024, $ 20 million at September 30, 2023, and $ 20 million at March 31, 2024, and were estimated based on the Company’s historical loss information and crop projections.

The allowances were decreased by net recoveries of $ 5.6 million in the six-month period ended September 30, 2024 and increased by net provisions of approximately $ 3.8 million in the six-month period ended September 30, 2023.

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

14 unchanged sentences

be sold or transferred.

At December 31, 2024, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 62 million ($ 63 million at December 31, 2023 and $ 72 million at March 31, 2024).

The related valuation allowances totaled approximately $ 21 million at December 31, 2024 and 2023, and March 31, 2024.

At September 30, 2024, the aggregate balance of recoverable tax credits held by the Company’s subsidiaries totaled approximately $ 63 million ($ 61 million at September 30, 2023 and $ 72 million at March 31, 2024).

The related valuation allowances totaled approximately $ 21 million at September 30, 2024 and 2023, and March 31, 2024.

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

2 unchanged sentences

This stock repurchase program authorized the purchase of up to $ 100 million in common stock in open market or privately negotiated transactions through November 15, 2024, subject to market conditions and other factors.

The program had $ 100 million of remaining capacity for repurchases of common stock at December 31, 2024.

The program had $ 95 million of remaining capacity for repurchases of common stock at September 30, 2024.

This stock repurchase program was replaced on November 6, 2024 when the Company's Board of Directors authorized a new stock repurchase program up to $ 100 million in common stock through November 15, 2026, subject to market conditions and other factors.

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 September 30, Six Months Ended September 30,

(in thousands, except share and per share data) 2024 2023 2024 2023

19 unchanged sentences

The Pillar Two legislation includes establishing a 15 % global minimum tax rate on a country-by-country basis and is effective for the Company's fiscal year 2025.

The Company performed an assessment of the potential impact on income taxes from enactment of the Pillar Two legislation.

performed an assessment of the potential impact on income taxes from enactment of the Pillar Two legislation.

Based on the assessment, the Company does not anticipate a material impact to the consolidated financial statements from the Pillar Two legislation in fiscal year 2025.

Three and nine months ended December 31, 2024

The Company's consolidated effective income tax rate for the three and nine months ended December 31, 2024 was 23.0 % and 25.9 %, respectively.

Three and nine months ended December 31, 2023

The Company's consolidated effective income tax rate for the three and nine months ended December 31, 2023 was 19.1 % and 19.8%, respectively.

Three and six months ended September 30, 2024

The Company's consolidated effective income tax rate for the three and six months ended September 30, 2024 was 28.6 % and 31.5 %, respectively.

Three and six months ended September 30, 2023

The Company's consolidated effective income tax rate for the three and six months ended September 30, 2023 was 21.5 % respectively.

GOODWILL AND OTHER INTANGIBLES

The Company's changes in goodwill at December 31, 2024 and 2023 consisted of the following:

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

The Company's changes in goodwill at September 30, 2024 and 2023 consisted of the following:

(in thousands of dollars) Six Months Ended September 30,

Balance at beginning of fiscal year $ 213,869 $ 213,922

Foreign currency translation adjustment

( 50 ) ( 31 )

Balance at end of period $ 213,872 $ 213,856

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, 2024 and 2023 and at March 31, 2024:

(in thousands, except useful life) December 31, 2024

The Company's intangible assets subject to amortization consisted of the following at September 30, 2024 and 2023 and at March 31, 2024:

(in thousands, except useful life) September 30, 2024

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

5 unchanged sentences

Total intangible assets $ 111,726 $ ( 48,463 ) $ 63,263

December 31, 2023

September 30, 2023

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

14 unchanged sentences

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, 2024 and 2023 was:

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

The Company's amortization expense for intangible assets for the three and six months ended September 30, 2024 and 2023 was:

(in thousands of dollars) Three Months Ended September 30, Six Months Ended September 30,

2023 2024 2023

2 unchanged sentences

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, 2024, the expected future amortization expense for intangible assets is as follows:

As of September 30, 2024, the expected future amortization expense for intangible assets is as follows:

Fiscal Year (in thousands of dollars)

2025 (excluding the nine months ended December 31, 2024)

2025 (excluding the six months ended September 30, 2024)

2029 and thereafter 32,403

10 unchanged sentences

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, 2024, 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 September 30, 2024, 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.

16 unchanged sentences

The aggregate U.S.

dollar notional amounts of forward and option contracts entered into for these purposes during the nine-month periods in fiscal years 2025 and 2024 was as follows:

Nine Months Ended December 31,

dollar notional amounts of forward and option contracts entered into for these purposes during the six-month periods in fiscal years 2025 and 2024 was as follows:

Six Months Ended September 30,

(in millions of dollars) 2024 2023

8 unchanged sentences

The Company de-designates ineffective tobacco purchases and crop input sales hedges to selling, general, and administrative expense when the forecasted tobacco purchases or crop input sales are no longer expected to occur.

The table below presents the expected timing of when the remaining accumulated other comprehensive gains and losses as of December 31, 2024 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 September 30, 2024 for cash flows hedges of tobacco purchases and crop input sales are expected to be recognized in earnings.

Hedging Program Crop Year Geographic Location(s) Fiscal Year Earnings

Tobacco purchases 2023 Brazil 2025

Tobacco purchases 2025 Brazil 2026

Crop input sales 2024 Brazil 2025

19 unchanged sentences

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, 2024 and 2023, and March 31, 2024, were approximately $ 66.7 million, $ 97.2 million, and $ 20.9 million, respectively.

The total notional amounts of contracts outstanding at September 30, 2024 and 2023, and March 31, 2024, were approximately $ 88.5 million, $ 101.1 million, and $ 20.9 million, respectively.

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

6 unchanged sentences

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 September 30, Six Months Ended September 30,

(in thousands of dollars) 2024 2023 2024 2023

28 unchanged sentences

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 and the crop input sales in Brazil, a net hedge loss of approximately $ 13.3 million remained in accumulated other comprehensive loss at December 31, 2024.

That balance reflects gains and losses on contracts related to the 2025 Brazil crop, and the 2025 and 2024 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through December 31, 2024.

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 and the crop input sales in Brazil, a net hedge loss of approximately $ 3.3 million remained in accumulated other comprehensive loss at September 30, 2024.

That balance reflects gains and losses on contracts related to the 2025 and 2023 Brazil crops, and the 2025 and 2024 Brazil crop input sales, less the amounts reclassified to earnings related to tobacco sold through September 30, 2024.

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, 2024 and 2023, and March 31, 2024:

The table below outlines the effects of the Company’s derivative financial instruments on the consolidated balance sheets at September 30, 2024 and 2023, and March 31, 2024:

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

1 unchanged sentence

Location Fair Value as of

(in thousands of dollars) December 31, 2024 December 31, 2023 March 31, 2024 December 31, 2024 December 31, 2023 March 31, 2024

(in thousands of dollars) September 30, 2024 September 30, 2023 March 31, 2024 September 30, 2024 September 30, 2023 March 31, 2024

Derivatives Designated as Hedging Instruments

31 unchanged sentences

Recurring Fair Value Measurements

At December 31, 2024 and 2023, and at March 31, 2024, 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 September 30, 2024 and 2023, and at March 31, 2024, 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, 2024

September 30, 2024

Fair Value Hierarchy

4 unchanged sentences

— 12,376 — — 12,376

Interest rate swap agreements

— — 6,310 — 6,310

Foreign currency exchange contracts

2 unchanged sentences

$ 148 $ 12,376 $ 144 $ — $ 12,668

Interest rate swap agreements

$ — $ — $ 2,629 $ — $ 2,629

Foreign currency exchange contracts

2 unchanged sentences

$ — $ — $ 9,599 $ — $ 9,599

December 31, 2023

September 30, 2023

Fair Value Hierarchy

45 unchanged sentences

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, 2024, and 2023 and March 31, 2024:

(in millions of dollars) December 31, 2024 December 31, 2023 March 31, 2024

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 September 30, 2024, and 2023 and March 31, 2024:

(in millions of dollars) September 30, 2024 September 30, 2023 March 31, 2024

Fair market value of long term obligations $ 615 $ 615 $ 618

20 unchanged sentences

Pension Benefits Other Postretirement Benefits

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

Three Months Ended September 30, Three Months Ended September 30,

(in thousands of dollars) 2024 2023 2024 2023

6 unchanged sentences

Pension Benefits Other Postretirement Benefits

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

Six Months Ended September 30, Six Months Ended September 30,

(in thousands of dollars) 2024 2023 2024 2023

5 unchanged sentences

$ 1,529 $ 997 $ 234 $ 167

During the nine months ended December 31, 2024, the Company made contributions of approximately $ 1.6 million to its pension plans.

Additional contributions of $ 1.3 million are expected during the remaining three months of fiscal year 2025.

During the six months ended September 30, 2024, the Company made contributions of approximately $ 1.4 million to its pension plans.

Additional contributions of $ 1.5 million are expected during the remaining six months of fiscal year 2025.

STOCK-BASED COMPENSATION

12 unchanged sentences

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

During the nine-month periods ended December 31, 2024 and 2023, 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 six-month periods ended September 30, 2024 and 2023, the Company issued the following stock-based awards, representing the regular annual grants to officers and outside directors of the Company:

Six Months Ended September 30,

Number granted 96,230 93,300

5 unchanged sentences

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

For the nine-month periods ended December 31, 2024 and 2023, the Company recorded total stock-based compensation expense of approximately $ 7.5 million and $ 10.6 million, respectively.

The Company expects to recognize stock-based compensation expense of approximately $ 0.7 million during the remaining three months of fiscal year 2025.

For the six-month periods ended September 30, 2024 and 2023, the Company recorded total stock-based compensation expense of approximately $ 6.6 million and $ 5.7 million, respectively.

The Company expects to recognize stock-based compensation expense of approximately $ 0.9 million during the remaining six months of fiscal year 2025.

OPERATING SEGMENTS

2 unchanged sentences

Through various operating subsidiaries located in tobacco-growing countries around the world and significant ownership interests in unconsolidated affiliates, the Company processes or sells flue-cured and burley tobaccos, dark air-cured tobaccos, and oriental tobaccos.

Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes, and dark air-cured tobaccos are used mainly in the manufacture of cigars, pipe tobacco, and smokeless tobacco products.

Some of these tobacco types are also increasingly used in the manufacturing of next generation tobacco products that are intended to provide consumers with an alternative to traditional combustible products.

Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes, and dark air-cured tobaccos are used mainly in the manufacturing of cigars, pipe tobacco, and smokeless tobacco products.

Some of these tobacco types are also increasingly used in the manufacture of next generation tobacco products that are intended to provide consumers with an alternative to traditional combustible products.

The Tobacco Operations segment also provides physical and chemical

11 unchanged sentences

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 September 30, Six Months Ended September 30,

(in thousands of dollars) 2024 2023 2024 2023

16 unchanged sentences

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, 2024 and 2023:

Nine Months Ended December 31,

Six Months Ended September 30,

(in thousands of dollars) 2024 2023

19 unchanged sentences

Net gain (loss) on derivative instruments (net of tax (expense) benefit of $ 1,779 and $( 4,769 ))

( 4,567 ) 13,295

Reclassification of (gain) loss to earnings (net of tax expense (benefit) of $ 1,224 and $ 1,522 ) (2)

16 unchanged sentences

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, 2024 and 2023 is as follows:

Three Months Ended December 31, 2024 Three Months Ended December 31, 2023

A reconciliation of the changes in Universal Corporation shareholders’ equity and noncontrolling interests in subsidiaries for the three and six months ended September 30, 2024 and 2023 is as follows:

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023

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

1 unchanged sentence

Changes in common stock

Repurchase of common stock — — — ( 1,373 ) — ( 1,373 )

Accrual of stock-based compensation 1,942 — 1,942 1,852 — 1,852

6 unchanged sentences

Common stock ( 20,020 ) — ( 20,020 ) ( 19,647 ) — ( 19,647 )

Repurchase of common stock — — — ( 3,371 ) — ( 3,371 )

Dividend equivalents on RSUs ( 288 ) — ( 288 ) ( 317 ) — ( 317 )

4 unchanged sentences

Balance at end of period $ 1,420,566 $ 37,438 $ 1,458,004 $ 1,384,189 $ 33,319 $ 1,417,508

Nine Months Ended December 31, 2024 Nine Months Ended December 31, 2023

Six Months Ended September 30, 2024 Six Months Ended September 30, 2023

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

17 unchanged sentences

Balance at end of period $ 1,420,566 $ 37,438 $ 1,458,004 $ 1,384,189 $ 33,319 $ 1,417,508

SUBSEQUENT EVENT

SUBSEQUENT EVENTS

Pension De-Risking

10 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