Executive Summary
Universal Corporation (UVV) reported robust financial performance for the fourth quarter of 2024, with a net income of $40.3 million, equating to $1.61 per diluted share. The year witnessed strong demand in the tobacco segment bolstered by favorable crop conditions in Africa, although higher green tobacco prices and tight supply affected operating efficiencies. The company highlighted progress in its ingredients business, with ongoing investments aimed at expanding its capacity and innovative product offerings. However, fiscal year-end total debts rose due to increased working capital requirements stemming from accelerated purchases necessary to maintain product supply. Management expects operational improvements to hit the bottom line in the coming fiscal year, contributing to stronger margins.
Key Performance Indicators
QoQ: -10.60% | YoY:21.53%
QoQ: -24.53% | YoY:25.98%
QoQ: -24.24% | YoY:-24.93%
QoQ: -24.30% | YoY:-25.35%
Key Insights
**Revenue:** $770.86 million (YoY +11.08%, QoQ -6.17%)
**Gross Profit:** $149.25 million (YoY +21.53%, QoQ -10.60%)
**Operating Income:** $66.01 million (YoY +25.98%, QoQ -24.53%)
**Net Income:** $40.32 million (YoY -24.93%, QoQ -24.24%)
**EPS:** $1.61 (YoY -25.35%, QoQ -24.30%)
**Cash Flow:** Net cash used by operating activities was -$27.895 million.
**Debt Levels:** Total Debt of $1.064 billion with a debt-to-equity ratio of 0.740, indicating high leverage.
**Current Ratio:** 2....
Financial Highlights
Revenue: $770.86 million (YoY +11.08%, QoQ -6.17%)
Gross Profit: $149.25 million (YoY +21.53%, QoQ -10.60%)
Operating Income: $66.01 million (YoY +25.98%, QoQ -24.53%)
Net Income: $40.32 million (YoY -24.93%, QoQ -24.24%)
EPS: $1.61 (YoY -25.35%, QoQ -24.30%)
Cash Flow: Net cash used by operating activities was -$27.895 million.
Debt Levels: Total Debt of $1.064 billion with a debt-to-equity ratio of 0.740, indicating high leverage.
Current Ratio: 2.96, reflecting solid short-term financial health with ample liquidity.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
770.86M |
11.08% |
-6.17% |
| Gross Profit |
149.25M |
21.53% |
-10.60% |
| Operating Income |
66.01M |
25.98% |
-24.53% |
| Net Income |
40.32M |
-24.93% |
-24.24% |
| EPS |
1.62 |
-25.35% |
-24.30% |
Key Financial Ratios
operatingProfitMargin
8.56%
operatingCashFlowPerShare
$-1.12
freeCashFlowPerShare
$-1.86
dividendPayoutRatio
48.7%
Management Commentary
Market Conditions:
- "We are currently seeing very tight tobacco supply and elevated green tobacco prices..." (George Freeman, CEO)
Business Strategy:
- "Our vision for our Ingredients business is to be a provider of a complete innovative suite of solutions and value-add products..." (George Freeman, CEO)
Operational Challenges:
- "Earnings in fiscal year 2024, however, were below expectations due to higher costs related to our infrastructure investments..." (George Freeman, CEO)
Future Outlook:
- "We expect our new product sales to increase and contribute to our future earnings." (George Freeman, CEO)
Dividend Announcement:
- "I’m really proud of that [dividend increase] and... the Board was proud to be able to make that announcement.” (George Freeman, CEO)
"We believe our leading market position, global footprint, and proven sustainability practices will continue to enable us to generate stable cash flow from our tobacco business."
— George Freeman, CEO
"Our vision for our Ingredients business is to be a provider of a complete innovative suite of solutions and value-add products."
— George Freeman, CEO
Forward Guidance
Management has set ambitious targets moving into FY 2025, particularly aiming to maximize opportunities in the tobacco sector while optimizing efficiency within the ingredients business. There is an expectation of improvement in new product sales within the ingredients platform as operational capabilities expand with the upgraded Lancaster facility. Inflationary pressures and high working capital demands from the tobacco supply strategy will be critical factors to monitor. Management predicts a natural unwinding of working capital impacts over the next two years and communicates confidence in achieving revenue growth, though short-term profitability challenges are anticipated due to elevated operational costs.