Q1 2021 Universal Corp Earnings Call
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<unk> earnings call at this time, all participants are no listen only mode. After just speak, especially patron there'll be a question answer session.
A question drink, especially if you want me to press Star One I guess also keep I hate to require assistance. Please press star.
Please be advised Somebody's conference is being recorded I would like to have the goal of what's your speakers today, let's Candace Formacek Vice President Treasurer. Please go ahead.
Thank you great.
Thank you all for joining us George Freeman, our chairman President and CEO I have to ski our Chief operating officer, Joe One kroner, our Chief Financial Officer Arc here with me today and will join me in answering questions. After these brief remarks.
Call is being webcast live and will be available on our website and on telephone taped replay. It will remain on our website through November 5th 2020 other than the replay we have not authorized and disclaim responsibility for any recording replay or distribution of any transcription up. This call. This call is copyrighted and may not be used with.
At our permission before I begin to discuss our results I caution you that we will be making forward looking statements that are based on our current knowledge in some assumptions about the future underrepresented it adds up today only.
Actual results could differ materially from projected are estimated result, and we assume no obligation to update any forward looking statements.
This is of particular note during the current ongoing Cabot 19 pandemic when the links in severity of the crisis and result in economic and business impacts are so difficult to predict.
For information on some of the factors that can affect our estimates I urge you to read our 10-K for the year ended March 31, 2020 on the form 10-Q for the most recently ended fiscal quarter.
Such risks and uncertainties include but are not limited to the ongoing private 19 pandemic customer mandated timing of shipments weather conditions, political and economic environment governmental realec regulation and taxation changes in exchange rates and interest rates industry consolidation that evolution and changes in market structure or source.
Finally, some of the information I hopped for you today is based on unaudited allocation and is subject to reclassification in an effort to provide useful information to investors. Our comments today may include non-GAAP financial measures for details on these measures, including reconciliations to the Mets comparable GAAP measures. Please refer to our current.
Earnings press release.
Our fiscal year 2021 is off to a slow but respectable start as nearly all of our origin continue to make good progress living through their various tobacco <unk>.
Processing activities.
This quarter is generally the weakest of our fiscal year given seasonal timing this fiscal year as a result of the Cabot 19 pandemic.
Or coated we're also experiencing later openings of the tobacco buying season and slower processing due to social distancing. Another local government safety requirements. We've also had some slower receipts of customer shipping instructions and orders. However, today, we have not seen immaterial impact to our supply chain or seasonal planting.
Or harvesting requirements.
Despite cabin related slowdown tobacco volumes in the first quarter fiscal year 2021 exceeded those of the first quarter of fiscal year 2020 volume shipped out of Brazil. When the quarter ended June 32020 included inventory, but had been uncommitted at March 31, 2020, reducing our overall uncommitted inventory.
Level.
As of June 32020, our uncommitted inventory levels had declined significantly from fiscal year end 2020 level and at 20.5% are now just outside our target range.
A large portion of the ship Brazilian volume, however, with lower margin carryover crop, which impacted results for the quarter.
Also the quarter ended June 32020 were also impacted by several nonrecurring items, including an adjustment to a contingent consideration for the acquisition of fruit smart interest expense associated with the disputed foreign tax matter on an income tax benefit from issuance of final tax regulations for dividends paid by foreign subsidiaries.
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Reported net income was 7.3 million or 29 cents per diluted share for the first quarter fiscal year 2021, which ended on June 32020.
Those results were up 5.2 million compared with net income of 2.1 million or eight cents per diluted share for the first quarter of fiscal year 2020.
Excluding certain non recurring items detailed in other items in today's earnings release net income in diluted earnings per share declined by 4.3 million and 17 cents respectively for the quarter ended June 32020, compared to the prior fiscal year.
Operating income of 8.5 million for the quarter ended June 32020 increased by 1 million compared to operating income of 7.5 million for the quarter ended June 32019.
Revenues of 350.8 million for the quarter ended June 32020 increased by 18.9 million or 6% on higher total sales volumes offset impart by lower sales and leaf prices as well as the less favorable mix.
In the region. The other regions segment operating loss of 4.3 million for the quarter ended June 32020 was.
<unk> million greater than prior years first quarter operating loss of 3.8 million.
Although volumes in Brazil increased and the first quarter fiscal year 2021 compared to the prior year a large portion of the sales consisted a previously uncommitted inventories of lower margin carryover crop tobacco.
In addition, some volumes in Brazil that were expected to be shipped in the quarter.
Were delayed on limited vessel availability at the port due to covered pandemic for the first quarter fiscal year 2021, compared to the same quarter in the prior fiscal year lower results in Brazil were partially offset by increases in Asia, largely due to higher volumes in the Philippines and higher volumes in Africa, Ontario.
Ever crop shipments delayed into the first quarter of fiscal 2021.
Operating income for the North America segment for the quarter ended June 32020 of 1 million was flat compared to the first quarter of the prior fiscal year as higher carryover volumes from the United States and lower expenses in Mexico, due to timing offset lower processing volumes in Guatemala, partly due to delays result.
Shifting from coded restrictions.
The other tobacco operations segment operating income of 7.6 million for the quarter ended June 32020 declined compared to operating income of 10.5 million for this segment in the same period last year results from our dark tobacco operations were lower on reduced volumes in part due to delays from coated and lower costs.
In the prior year.
In the first quarter fiscal year 2021 results for the Oriental joint venture were flat, while operating income for the segment benefited from the acquisition in January 2020, a pretty smart, our new fruit and vegetable processing business compared to the same quarter last year.
[noise] and other items the interest expense for the quarter ended June 32020 increased by 2.8 million to 6.8 million compared with the same quarter in the prior year largely on a nonrecurring interest expense items associated with an uncertain tax matter at a foreign subsidiary.
Selling general and administrative costs for the first quarter fiscal year 2021 decreased by 1.7 million compared to the same period in the prior year as benefits from positive net foreign currency Remeasurement, an exchange variances, primarily in Indonesia, and lower travel costs were offset impart by selling general and administrative costs.
For the fruit smart business acquired in the fourth quarter fiscal year 2020.
Looking forward, 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 the early tobacco remains in a balanced supply to position on that flue cured tobacco is now in a slight.
For supply position.
We're also continuing to see very strong demand for natural wrapper tobaccos.
We are prudently monitoring type of 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 covered related processing slow down 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 coated.
We are 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. We believe our commitment to strong local management is our key in our key operating areas has enabled us to react quickly and effectively to these new conditions. Our businesses also built on.
Relationships, having these strong relationships with our customers and suppliers has allowed us to make the new remote interactions work well, we're 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're focused on keeping our employees safe and running our business efficiently, while positioning, but that tobacco and non tobacco businesses for future success.
As part of our capital allocation strategy, we have made and we'll continue to explore disciplined investment and best tobacco opportunities and non tobacco businesses that we believe we'll be able to deliver shareholder value.
At this time, we are available to take your questions turn the call back to you great. Thank you.
Thank you as a reminder to ask the question well each best far again, the number one on your telephone keypad again, that's let me start them the number one on your telephone keypad.
Once again for the participants on the phone if you'd like to ask your question. Please press Star then the number one on your telephone keypad.
Centers. There are no question that this time you may proceed.
Okay. Thank you very much Grayson. Thank you all for joining us on our call today.
Bye.
Ladies and gentlemen, this concludes todays conference call I think all for joining assuming all disconnect.
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