UNIVERSAL CORP /VA/ (UVV Q4 FY2025 earnings call

• Strategy Pillars: Focus on maximizing and optimizing Tobacco Operations, growing Ingredients Operations, and strengthening the organization.
• Tobacco Operations: Geographically diverse, with local expertise and global relationships, aiming to support customers in optimizing supply chains and next-gen products.
• Ingredients Operations: Grew through acquisitions and investments, with operating income up in 2025 despite market headwinds, and completed major expansion in Lancaster, PA.
• Dividend: Declared 55th annual dividend increase, with quarterly dividend of $0.82 per share.

Tobacco Operations Segment

• Fourth Quarter 2025: Segment operating income was $45.8 million, down from $73.5 million in the same quarter of fiscal 2024. Driven mainly by lower sales volumes, partially offset by better pricing.
• Full Year 2025: Segment operating income was $240.2 million, up from $222.4 million in fiscal 2024. Higher sales prices partially offset by lower volumes.

Ingredients Operations Segment

• Fourth Quarter 2025: Segment operating income was $4.4 million, up from a $1 million loss in the same quarter of fiscal 2024. Driven mainly by higher sales volumes.
• Full Year 2025: Segment operating income was $12.3 million, up from $3.9 million in fiscal 2024. Higher sales volumes were the main driver.

• Tobacco 2026: Global flue-cured production expected to increase ~20% and burley ~30% in current growing season, moving market from undersupply to balanced/slight oversupply.
• Ingredients 2026: Shift from platform building to organic growth, with strong customer interest in new innovative products developed from the Lancaster, PA expansion.

• Mozambique Investigation: Higher legal and professional fees in SG&A due to the embezzlement investigation.
• Tobacco Crop Uncertainty: Timing and extent of tobacco crop production in the U.S. remain too early to determine.
• Tariffs: Impact on business, especially for Ingredients and potential shifts in customer sourcing.
• Nicotine Market Volatility: Uncertainty around demand for nicotine derived from tobacco leaf and potential impact of synthetic nicotine.

Q: How should I think about SG&A for fiscal '26?

A: Can't provide forward-looking guidance on SG&A run rate, but components include legal fees related to Mozambique, variances in farmer advances and commissions, and foreign currency impacts. May invest in SG&A to build capabilities while seeking efficiencies.

Q: Are there ongoing legal expenses for the Mozambique situation in fiscal '26?

A: No, the Mozambique investigation has been completed.

Q: How to think about margins and growth in the Tobacco segment in fiscal '26?

A: Market moving from undersupply to balanced with lower prices; need to coordinate with customers to understand their inventory and resource allocation plans.

Q: Anticipated growth in tobacco volumes for fiscal '26?

A: Depends on customer inventory durations; Brazil's larger crop doesn't guarantee increased buying, but we'll buy our share if crops are larger.

Q: Profit outlook for the Ingredients segment?

A: Need to margin up on specialized products developed from Lancaster, PA investments; goal is to grow volume and scale to improve margins.

Q: Thoughts on the $100 million share repurchase program?

A: Capital allocation strategy prioritizes deleveraging, strategic investments; will use repurchase program when timing is right.

Q: Comments on nicotine pouches and their effect on tobacco leaf demand?

A: Nicotine market is volatile and cost-sensitive; we support customers in all product portfolios, but hard to predict long-term impact of synthetic nicotine.