Universal Corp. (UVV) Reports Q1 EPS of $0.02

Universal Corp. (NYSE: UVV) reported Q1 EPS of $0.02, versus $0.19 reported last year.

Mr. Freeman stated, "Our fiscal year 2021 is off to a slow but respectable start as nearly all of our origins continue to make good progress moving through their various tobacco growing and processing activities. The first fiscal quarter is generally the weakest of our fiscal year given seasonal timing. This fiscal year, as a result of the COVID-19 pandemic ("COVID"), we are also experiencing later openings of the tobacco buying seasons and slower processing due to social distancing and other local government safety requirements. We have also had some slower receipts of customer shipping instructions and orders. However, to date we have not seen a material impact to our supply chain or seasonal planting or harvesting requirements.

"Despite COVID related slowdowns, tobacco volumes in the first quarter of fiscal year 2021 exceeded those of the first quarter of fiscal year 2020. Volumes shipped out of Brazil in the quarter ended June 30, 2020, included inventory that had been uncommitted at March 31, 2020, reducing our overall uncommitted inventory levels. As of June 30, 2020, our uncommitted inventory levels had declined significantly from fiscal year end 2020 levels, and at 20.5%, are now just outside our target range. A large portion of the shipped Brazilian volume, however, was lower margin carryover crop which impacted results for the quarter. Results for the quarter ended June 30, 2020, were also impacted by several non-recurring items, including an adjustment to a contingent consideration for the acquisition of FruitSmart, interest expense associated with a disputed foreign tax matter, and an income tax benefit from issuance of final tax regulations for dividends paid by foreign subsidiaries.

"We have seen some reductions in projected global crop sizes for both burley and flue-cured tobaccos for crop year 2020. We believe that these reflect a positive adjustment to market conditions and that burley tobacco remains in a balanced supply position and that flue-cured tobacco is now in a slight oversupply position. We are also continuing to see very strong demand for natural wrapper tobaccos.

"We are prudently monitoring COVID developments around the world, and are projecting that our sales volumes for fiscal year 2021 will be weighted to the back half of the fiscal year in part due to COVID related processing slowdowns and later customer mandated shipment timing. We also have experienced some increased volatility in foreign currency rates, which we believe is related to the uncertainties from COVID.

"I am very proud of the success we continue to achieve while operating safely in more than 30 countries around the world during a time of unprecedented and disparate challenges. I believe our commitment to strong local management in our key operating areas has enabled us to react quickly and effectively to these new conditions. Our business is also built on relationships. Having these strong relationships with our customers and suppliers has allowed us to make the new remote interactions work well. I am very pleased and thankful for the hard work of our employees and the continued support of our customers, growers, and other partners during these challenging times.

"As we move forward in fiscal year 2021, we are focused on keeping our employees safe and running our business efficiently while positioning both our tobacco and non-tobacco businesses for future success. As part of our capital allocation strategy, we have made and will continue to explore disciplined investments in both tobacco opportunities and non-tobacco businesses that we believe will be able to deliver shareholder value."

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