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- **Tobacco Strength**: Earlier shipments and firm demand drove Tobacco revenue growth, with oversupply expected but manageable via low uncommitted inventory (13%).
- **Ingredients Growth**: Higher sales volumes in Ingredients offset by challenges in cost absorption and CPG industry weakness, though new product pipeline shows promise.
- **Financial Resilience**: Net debt down $52M, interest expense reduced, and focus on leveraging tobacco shipments to maintain financial flexibility.
- **Market Confidence**: Management confident in navigating oversupply in Tobacco and scaling Ingredients despite current challenges.

**【CEO Opening Remarks】**
- **Tobacco Operations**: Larger crop sizes (e.g., Brazil, African origins) led to earlier shipments, with green tobacco prices softening in certain regions. Despite oversupply expectations by year-end, customer demand remains firm, and uncommitted inventory is low (13%).
- **Ingredients Segment**: Sales and volume growth driven by new value-added products, though earnings were impacted by fixed costs, industry weakness, and tariff uncertainty.

**【CFO Financial Commentary】**
- **First Half FY2026**: Consolidated revenue up $40M to $1.3B, operating income rose $16M to $101M (Tobacco: +$9M from favorable mix; Ingredients: -$2M due to higher costs and write-downs). Net debt decreased $52M, and interest expense fell $4M YoY.
- **Second Quarter**: Consolidated revenue up $43M to $754M, but operating income dipped $1M due to foreign exchange impacts and higher write-downs in both segments.

**【Q&A Highlights】**
- **Ingredients Utilization**: New Lancaster facility progress is positive, with pipeline conversion ongoing. Fixed cost absorption will improve as scale grows, though challenges remain with consumer packaged goods (CPG) weakness.
- **Tobacco Pricing**: Confident in maintaining margins despite oversupply, with disciplined inventory management and low uncommitted stock (13%).
- **Financial Leverage**: Focus on reducing net debt through tobacco shipments, with interest expense expected to decline further.
- **Global Inventory**: Worldwide uncommitted leaf inventory at 101M kilos (up 76M from June), driven by large crops, but management remains confident in navigating market dynamics.

Universal Corporation (UVV) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

UVV

UVV fundamentals

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