Universal Q1 Earnings Call Highlights

Universal Q1 Earnings Call Highlights

Universal reported a weak fiscal Q1 2027: Revenue fell 12% year over year to $524 million, operating income dropped to $2.3 million, and the company posted a $5 million net loss. Tobacco results were hurt by oversupply and delayed customer purchases: Tobacco revenue declined 13% to $437 million, though management expects shipments and demand to improve in the second half of the fiscal year. The ingredients business remained under pressure, posting an operating loss amid consumer-market headwinds and high fixed costs. Universal plans $55 million–$65 million in fiscal 2027 capital expenditures while maintaining focus on liquidity, dividends and operational investment.

Universal NYSE: UVV reported lower revenue and a net loss in the first quarter of fiscal 2027, as slower customer purchasing in an oversupplied leaf tobacco market and continued pressure in its ingredients business weighed on results. Consolidated revenue declined 12% year over year to $524 million, while operating income fell to $2.3 million from $33.8 million in the prior-year quarter. The company posted a net loss attributable to Universal of $5 million, compared with net income of $8.5 million a year earlier.

Chairman, President and CEO Preston Wigner said the first-quarter performance reflected conditions the company had anticipated, including a return to more typical seasonal patterns in its leaf tobacco business following what he described as an exceptional first quarter last year.

Tobacco Results Reflect Slower Buying Activity Universal's tobacco operations generated first-quarter revenue of $437 million, down 13% from the prior-year period. Segment operating income declined to $3.5 million from $35.7 million a year earlier. Chief Financial Officer Steve Diel said the company’s first fiscal quarter is typically seasonally slow, but the effect was more pronounced this year as customers delayed purchasing decisions amid oversupply in flue-cured and burley tobacco markets. He said Universal views the change as a timing issue and that expected customer demand for the full year remains consistent with its initial sales plan. Diel also cited lower carryover crop sales, a less favorable product mix and a $4.4 million negative operating-income variance from foreign-currency movements as factors affecting year-over-year comparisons. Wigner said shipments are expected to be weighted toward the second half of fiscal 2027. He said the company is focused on disciplined purchasing, monitoring green tobacco trends and maintaining appropriate inventory levels while navigating the oversupplied markets.

During the question-and-answer session, Wigner said farmer pricing has declined in most markets as expected amid the surplus. He said the company’s global sourcing operations, customer relationships and regional teams position it to serve customer needs and potentially gain market share. Universal estimated unsold flue-cured and burley stocks at approximately 180 million kilograms as of June 30, an increase of about 11 million kilograms from March 31. Diel said uncommitted inventory levels had declined since June 30 and that the company expects them to return to its 20% target as the season progresses. On dark air-cured tobacco, Wigner said wrapper demand remains strong, while non-wrapper tobacco remains generally oversupplied. He said Universal has introduced sales and inventory-management initiatives intended to reduce inventory, convert wrapper and non-wrapper stock to cash, limit purchases of lower-demand non-wrapp...