Universal Corp. (UVV) Reports Q2 EPS of $0.37

Universal Corp. (NYSE: UVV) reported Q2 EPS of $0.37, versus $1.14 reported last year. Revenue for the quarter came in at $377.03 million, versus $475.92 million reported last year.

George C. Freeman, III, Chairman, President, and Chief Executive Officer of Universal Corporation (NYSE: UVV), stated, "as we mentioned in our first fiscal quarter, timing factors related to COVID-19 continued to impact our results in the second quarter of fiscal year 2021. Our tobacco customer orders for crop year 2020 are strong, however, and the vast majority of these committed orders are packed awaiting shipment, with customer mandated shipment timing heavily weighted to our fourth quarter of fiscal year 2021. In addition, our uncommitted inventories have come down significantly from the levels at the end of fiscal year 2020 and are at 16% of tobacco inventories as of September 30, 2020, which is well within our target range. At this time, we believe our adjusted operating income for fiscal year 2021, excluding acquisitions, will materially exceed that of fiscal year 2020 barring any unforeseen events including shipment delays due to lack of vessel or container availability, port congestion, or COVID-19 related uncertainties. We are closely monitoring shipping conditions and currently expect to complete our scheduled shipments prior to our 2021 fiscal year end."

Mr. Freeman reported net income for the first half of fiscal year 2021, which ended on September 30, 2020, of $14.8 million, or $0.60 per diluted share, compared with $30.1 million, or $1.19 per diluted share, for the same period of the prior fiscal year. Excluding certain non-recurring items, detailed in Other Items below, net income and diluted earnings per share declined by $23.9 million and $0.93, respectively, for the first half of fiscal year 2021 compared to the first half of fiscal year 2020. Operating income of $24.9 million for the six months ended September 30, 2020, decreased by $25.8 million, compared to operating income of $50.7 million for the six months ended September 30, 2019.

For the second fiscal quarter ended September 30, 2020, net income was $7.5 million, or $0.30 per diluted share, compared with net income of $28.1 million, or $1.11 per diluted share, for the prior year's second fiscal quarter. Excluding certain non-recurring items, detailed in Other Items below, net income and diluted earnings per share declined by $19.6 million and $0.77, respectively, for the quarter ended September 30, 2020, compared to the quarter ended September 30, 2019. Operating income for the second quarter of fiscal year 2021 decreased to $16.4 million compared to $43.2 million for the three months ended September 30, 2019.

Segment operating income was $21.3 million for the first half of fiscal year 2021, a decrease of $31.8 million, and for the quarter ended September 30, 2020, was $16.9 million, a decrease of $28.6 million, both compared to the same periods last fiscal year. Results for the six months and quarter ended September 30, 2020, reflected earnings declines in all segments, primarily on lower tobacco volumes due to scheduled tobacco shipments that will ship later in fiscal year 2021, compared to the same periods in the prior fiscal year. Consolidated revenues decreased by $80.0 million to $692.8 million for the first half of fiscal year 2021, and by $98.9 million to $377.0 million for the three months ended September 30, 2020, compared to the same periods in fiscal year 2020, on lower tobacco volumes and sales prices.

Mr. Freeman continued, "in the first half of fiscal year 2021, we experienced slowdowns in both tobacco processing and receipt of customer orders for leaf tobacco due to COVID-19. We implemented social distancing requirements in our factories which slowed output and increased the time to process certain tobacco crops. Customer orders came in slower in part due to the absence of customer onsite visits which necessitated the mailing of product samples prior to order confirmations. Some customers have also requested shipping dates for their orders that are later in our fiscal year compared to prior fiscal years.

"We have also been focused on and are very excited about our recent acquisition of Silva International. We believe this acquisition expands and enhances our plant-based ingredients platform and positions us for future success. Having made significant investments in the platform this calendar year, we expect to focus on integrating the companies, building on synergies among our ingredients businesses, and delivering long-term value and results to our shareholders. At the same time, we see opportunities in our core tobacco business, such as demand for natural wrapper production, and continue to position our company for success."

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