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Sep 30, 2020
Universal Corp Q2 2021 Earnings Report
Reported a decrease in net income and operating income due to timing factors related to COVID-19 and lower tobacco volumes.
Key Takeaways
Universal Corporation reported a decrease in net income and operating income for the second quarter of fiscal year 2021, primarily due to COVID-19 related timing factors impacting tobacco shipments and processing. The company is optimistic about meeting adjusted operating income targets for the fiscal year, excluding acquisitions, barring unforeseen shipping delays or COVID-19 related uncertainties.
Net income decreased to $7.5 million, or $0.30 per diluted share, compared to $28.1 million, or $1.11 per diluted share, for the prior year’s second fiscal quarter.
Operating income decreased to $16.4 million compared to $43.2 million for the three months ended September 30, 2019.
Consolidated revenues decreased by $98.9 million to $377.0 million for the three months ended September 30, 2020, compared to the same period in fiscal year 2020.
The company experienced slowdowns in tobacco processing and customer orders due to COVID-19, but customer orders for crop year 2020 are strong.
Forward Guidance
Universal Corporation expects 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.
Positive Outlook
- Strong tobacco customer orders for crop year 2020.
- Vast majority of committed orders are packed awaiting shipment.
- Uncommitted inventories have come down significantly and are within the target range.
- Focus on integrating the acquired Silva International.
- Opportunities in the core tobacco business, such as demand for natural wrapper production.
Challenges Ahead
- Timing factors related to COVID-19 continue to impact results.
- Potential shipment delays due to lack of vessel or container availability.
- Port congestion could impact shipment timing.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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