UVV - Earnings call transcript Q1 2019

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Operator

Good afternoon. My name is Jerome and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Fiscal Year 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions]. [Operator Ms. you Thank President the Vice is and Formacek, floor Treasurer, yours. Candace

Candace Formacek

telephone our will all Jerome, remarks. and being us. on Other taped It available Moore, are and without here and used we will and on or Officer and you, brief today me be Chief any of for Kroner CEO; Financial through responsibility live XXXX. our Johan permission. webcast thank website on David our with distribution remain President X, have disclaimed Thank transcription copyrighted website may these elect Chairman, replay this than in replay. is you joining not answering This Financial after our any and Officer, call our our will replay, George recording, call. and be and for of and me Chief is not The join November authorized the Freeman, questions call

discuss caution no about only. the to based could are our knowledge from update results assumptions on some Before are estimated materially I as statements. and or of and results, representative results, forward-looking projected our that differ we begin you will future assume making statements I Actual to current forward-looking be we today that any and obligation

our to as taxation, our structure for well sources. weather environment, in not the of filed XX-K factors some For March evolution XX, industry XX-Q today. estimates, to, I SEC XXXX, XXXX are conditions, information the government year-ended changes of customer-mandated June or and as market consolidation currency, shipments, Such changes and factors read the was political with in on urge and economic year limited that regulation our for and can but timing you which include, affect XX, the ended Form

to investors, for to some to our measures. subject financial on information is include may an provide reclassification. allocations effort In I today the information based today non-GAAP Finally, and useful of you have unaudited is comments

GAAP fiscal For measures, Reported refer details or these to our on including net comparable the earnings of $X.XX increased million $X.XX XX, $XX.X per the release. for diluted to net first current income share, income $X.X million, of million, with the measures, please most compared share, diluted on ended first $X.X reconciliations XXXX, XXXX, press June of quarter per year fiscal quarter which year or for XXXX. of

year. segments, reversal earnings increased more higher to $X.X Other quarter share. recorded first $XXX.X the liability year XXXX million quarter million the Operations same a million, the increased benefit by The period up first income XXXX, last mix foreign withholding prior as included XXXX, fiscal were on that was to million June in America year declines total compared XX, earnings the fiscal of revenues fiscal net North favorable Other improvements processing for $X.XX the of income non-recurring or $X segment. per quarter volumes by the previously for and partially $X.X Regions taxes Tobacco of offset in income tax by product XX%, and year, dividend operating and tax diluted and compared a Revenues a from the reduced of Segment ended

believe will a good are what We off start strong to to we year. be a

fourth States. XXXX year in America in in segment the origins, where quarter results fiscal the several of were Our hampered shipping by from sales reduced higher volumes particularly our crop benefited first United in sales transportation quarter carryover delays from availability North

to see for also both are related and tobaccos wrapper continuing robust demand style value-added services. We processing

the sales fiscal currency more the the product XXXX, current from by continue shipments. million the States remeasurement Regions volumes. to in June supplier. for leading was impacted wrappers XXXX with loss year for segment the crop June prior were as $X million volumes to in improvements and on and increased volumes down these and carryover demand the America, carryover was the $X sales offset higher to We year's period, compared meet fiscal costs. crop South mainly segment Operating crop The quarter segment higher carryover to income were both delayed increased quarter sales, the $X.X gross margins, Other South America million, The transportation selling, of from million. than flat, for Europe operating some down and availability. were America. quarter and ended included higher in segment XX, losses. calendar Results on the wrapper offerings prior comparable processing prior higher $X.X XXXX, shipments for higher of Despite Asia volumes favorable million and earlier income XX, in but mix negatively have lower United administrative our the higher higher of volumes a volume from natural was crop year, first be $X.X due both reduced year results compared Africa, benefited for lower operating the quarter first North Europe and general for up mainly tobacco ended In sales

fiscal slightly XXXX and its during the shipped seasonally compared the were fiscal volumes, demand. year. of oriental relatively remeasurement for and Lira was In the Operations first for Turkish were first to of up year XXXX segment of $X due currency variances same of year about variance the this million year. as claim of increase the ended general, but first the June $X.X increase caused an sales, XX, $XX lower and in for costs segment wrapper for weak income favorable $X.X million, tobaccos the loss of and with joint benefit June in of sales million, quarter. remeasurement compared were last crop increased XXXX, XXXX, for incentive prior by accruals ended June primarily the reflected for period quarter for negative with in year. prior fiscal devaluation million fiscal flat the the up Mexico Results addition, fiscal XX, Selling, venture quarter the operations million fiscal costs, customer a about The tobacco the Other from and XX, percentage to Mozambique exchange $XX.X results higher ended quarter an quarter year higher XXXX, the quarter in a operating current Brazil, by The same first compensation year. administrative fiscal to foreign this currency of compared operating $XX.X compared the tobacco million, higher in dark sales strong on earlier prior to period Despite from Tobacco

a quarter on withholding taxes first of the previously a of $X.X the of pretax for of have the would the due reversal, net tax $X.X benefit or dividend Company cumulative approximately XXXX, retained to million, For reported approximately income for XX%. subsidiary. recorded the from withholding foreign quarter liability fiscal on reversing tax million earnings taxes been a a earnings dividend tax portion benefit Without rate of a expense effective consolidated a

complete progressing Brazil Looking well as forward our Africa. purchases and in crop underway anticipated in with purchasing are effectively

Africa, any year. and Burley burley coming significant We this in supply in volumes far higher thus recovered tobaccos and have production previous are flue-cured for disruptions estimates. somewhat are both than crop not sizes there seeing

be continue year, to will Although those date are pleased in with last expect our we to fiscal results it is and our still year. early achieved volumes above that our fiscal

We are shareholder that our the of sheet focused creation. our our commitment reflects capital sustainable on strategy and also enhanced value strength allocation demonstrates balance to

our provide May and increase identify take back are this as our In we our dividend to At available in conjunction we strategy, expand we additional opportunities exploring growth your I this in we four tobacco returning our where services that it capital in has and our in to our you with growth the with questions. questions. announced XXXX, assets continue strengthening ongoing increasing Jerome provide industries excess XX% will and As key to to strong for in value tobacco for core adjacent time, capabilities; customers we and over turn our success business; utilize priorities: core business. are our investing shareholders. line for would areas positioning can dividend; Company strategy

Operator

from question line Gurkin comes Company. Instructions] & from the [Operator of Ann Your Davenport

is Your now open. line

Ann Gurkin

everyone. evening, Good

George Freeman

are how you doing? Hi,

Ann Gurkin

on to congrats nice. very year, great the Good, a start

George Freeman

Thank very much. you

Ann Gurkin

If can about segment you Just year, think the about ask the talk year? timing outlook we want the for for the Or North some questions. think shipments, American number? for the full about an and segment should for underlying to the quarterly progression we what's American the North like how

George Freeman

to the then facilities And at tobacco than is of it It Not transport sure did probably probably and crop a rain, not but now so well, bit Ann. the whole going last bit going availability slow – problem the well, The normal. had of to which in the – early of it's The call, behind. down. lot is as a to in year, deliveries. crop later to issue the rain. like it's crops may U.S. it terms move bit run problem still a slow needed we And a it a come it's herein season to peak, create be will going in could a run down

Ann Gurkin

So Obviously, skewed? about? to should how I half, first if more we is second than half it that the is volumes, think think about shipment the

Candace Formacek

as half quarter in and would this was fiscal the prior more Well, year, carryover typically, can very it that year. the and half. have the the I current towards be region would affected of second fourth say, the But between Ann, by year volumes first it fewer

at So sort you what consideration. always into of to look that have takes

Ann Gurkin

terms Can that of should about and the of you America? but segment carryover, North Okay. share half given a North back margins, at trying for progression? If the help underlying the mix can would nice that to margin, margin the volume me of Great. an kind certainly number kind with I imagine outlook? year-over-year… it's not in then think this you we get And of Just the sort kind of American how at quarter. all, continues for all

Candace Formacek

will reported that that quarter-to-quarter crop comes Obviously, as in know I areas. this we Well, unusual the anything changes in different there from was was don't up them. for quarter particularly you see

So to a basis. state quarterly a it's bit little on hard

Ann Gurkin

And then Okay. the question. same

remeasurement? how – And all help underlying the For $XX the you a do million SG&A always it at year, do we full that number ask for think SG&A up currency back good for the run about I that? this, to think that me year? would to with is we about overall, full for how Can think company,

Candace Formacek

we big losses gains one in in like were put that the this the in as we what a Ann, there remind some amount year, actually think, is reasons I prior you was versus period. of Well, year, period is. It the to that usually current number. That's same

two So that the that $XX ran million. between into total us

from any better big baseline forward. year, other. have out And that or So there's going stable fairly currency of pull comparable that's quarter one think a course, we that would seen in when tip you I percentages, to the a particular might what in a we've otherwise, region change affect unless

George Freeman

And last I quarter level normal would the more a in at low. it's the think where SG&A just is level first of overall probably than year

Ann Gurkin

assume Okay, number that’s can then And lease that I uncommitted inventory update? in great. worldwide

Candace Formacek

this do. do. The is worldwide and – the X/XX about X% or kilos, XX, is June million I XX flue-cured I unsold level. is X down million burley which from is

Ann Gurkin

there? then All at the about implications about Zimbabwe talk talk anything tariffs you you you in political unrest, And right. that? up of the Can can from call are kind And any also all all?

George Freeman

I – mean, Hawaii. affected on my haven't there to in it hadn't they're in Zimbabwe, dealing Zimbabwe. I knowledge, are used heard business. anything. with pretty issues We political to haven't some we But know issues

tariffs, On the… the

Johan Kroner

U.S.-China it – our the business. tariffs, will it that U.S. believe likely I impact

George Freeman

Yes.

Johan Kroner

material. will be probably it But not

Ann Gurkin

Okay, great.

George Freeman

if Johan, was you that And know. didn't

Ann Gurkin

you a far capitalize this How how you Johan. to bit? out flush How define that are adjacent the Annual give you Can Meeting, that do that, be Welcome, far to on go? detail hired businesses? little then core at And to People the out any may strategy willing strategy. or Can competencies. support us just George, you more you talked behind about strategy?

George Freeman

clearly with people ag. beginning is process, He I – experience – he don't [ph] Yes. it, to as M&A. deal. it's And system, the Well, he –regarding want rig have Steve we view in strength would say. in is some have it's hired a but we I I the

in logistic. We have strengths

nuts. knowledge. country the of done the say is things done so of looked I with in stevia We – and think Clearly, have vanillas, sort We trials ground – and – at we've right certain it some probably would going now, I but what to would that's But value-added that guess ag-related it ag-related, be I is. with something it's be could something component. non-commodity to – had a if else,

Ann Gurkin

then put Okay. XXXX That noticed outlook. you crop I helps. And that out

the oversupply? year. numbers more versus been for do burley I thoughts are in of flat creating on about relatively you know yet. it to kind going that interested the how start last – burley kind think of an your the number? crops Is that was So grown the hasn't Or supply/demand balance for But outlook – just going like forward. the of I

Candace Formacek

Do the current XXXX you versus mean, for year year? Ann, crop crop

Ann Gurkin

XXXX, yes, right.

Candace Formacek

the – gone we into ground Africa hasn't yet. Well,

all think I depending we're burley So next plant a volumes may little out. on that African bit. shakes the change clearly, we how come We seeing that up year, what

George Freeman

the and Ann, have. it have the company done – has field better the of this And had buy, that comp, slight historically, you a better oversupply tobaccos and because been you truth, a owners you always selectivity you when the kicks markets

Ann Gurkin

year more have quality can the to one the have sorry, that and question, on this crop? you that delivered then And you sold customers, quality of of been that crops – the Great. comment you

David Moore

I has boy, good mean, quality I and that the Brazil exchange with pretty prices… think rate,

Johan Kroner

The in very of Brazil burley is good quality. a

– the is flue-cured the think okay. I that

Ann Gurkin

Okay, David, you. that’s all you. Thank best to great. the

David Moore

you. Thank

Ann Gurkin

Thanks. for all question. your you Thank

David Moore

a good Have evening.

Operator

we Thank queue. on any this question don't further At Presenters, you continue. Instructions] you. [Operator may time, have

Candace Formacek

We Okay, so Jerome. thank night. all great, today. much. Thank Good joining for our call you you

Operator

participating. And that all conference. you for concludes you. Thank Thank today's

now may You disconnect.

Universal (UVV) 7 Aug 182019 Q1 Earnings call transcript