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Universal Corporation (UVV)
F4Q08 (Qtr End 03/31/08) Earnings Call
May 22, 2008 5:00 pm ET
Hart Roper - VP and CFO
Karen Whelan - VP and Treasurer
Ann Gurkin - Davenport & Company LLC
Chris Dechiario - ISI Capital
Dax Vlassis - Gates Capital Management
Steve Marascia - Anderson & Strudwick
Previous Statements by UVV
» Universal Corporation Q3 2009 Earnings Call Transcript
» Universal Corporation F3Q08 (Qtr. End 12/31/07) Earnings Call Transcript
» Universal Corp. F2Q07 (Qtr End 09/30/07) Earnings Call Transcript
Ms. Whelan, you may begin your conference.
Thank you, and thank you all for joining us today. Hart Roper, our Chief Financial Officer, is here with me, and he will join me in answering questions after these brief remarks.
This call is being webcast live and will be available on our website and on telephone-taped replay. It will remain on our website until August 42008. If you are listening to this call after that date or if you are reading a transcription, we have not authorized such recording or transcription.
It has been made available to you without our permission, review, or approval, and we take no responsibility for such presentation. Any transcription inaccuracies or omissions or failure to present available updates are the responsibility of the party who is providing it to you.
Before I begin to discuss our results, I caution you that we will be making forward-looking statements that are based on our current knowledge and some assumptions about the future events. I urge you to read our 10-K for the year March 31, 2007 for information on some of the factors that can affect our estimates.
Those factors can include such things as customer-mandated timing of shipments, weather conditions, political and economic environment, changes in currency, and changes in market structure or sources.
Finally, some of the information I have for you today is based on un-audited allocations and is subject to reclassification. We plan to file our 10-K next week and so you should also look for that. We will only discuss continuing operations today.
We had good year despite of a decline in the fourth quarter results. That decline was due in large part to earlier shipments this year that benefited our first three quarters. Our continuing operations earned $9.9 million for the quarter and that is $0.23 a diluted share, down considerably from last year.
This year is a perfect example of our continuing message that quarters are heavily influenced by the timing of shipments and that really indicate performance for the year. You recall that we have been talking about shipment timing all year long. South America, Europe, Africa and Asia all shipped earlier this year than last year.
However, in addition to that we recognized restructuring charges in the quarter totaling almost $10 million, $0.21 per diluted share that included employee separation expense and pension curtailment losses on certain small defined benefit plans.
We had impairment charges in last year's quarter as well about $15 million, $0.17 a share, primarily related to the our decision to end our direct involvement in our African flue-cured growing projects.
Our flue-cured and burley operations earned about $12 million in the fourth fiscal quarter, compared to last year's $38 million.
Revenue and operating income for North America improved significantly despite last year's one time sales of old crop burley. The improvement was due to higher volumes from normal operations.
The other regions segment of this group reported a loss of $4 million in the quarter, primarily due to lower volume. As we have said all along, African crops were smaller, and they were shipped earlier in the year, as were shipments of South America, European and Asian tobaccos.
South American operations realized a $6 million gain on the sale of surplus timberland, and an $8 million reduction of evaluation allowance for a Brazilian VAT tax. They also recognized a higher provision for farmer receivables there, and that offset most of the benefits.
In Africa, the benefits from lower charges for receivables and inventory evaluation were more than offset by the affect of lower volumes in the quarter, and those were particularly related to the timing of shipments of the smaller Malawi and Mozambique crops.
We also recorded about $8 million in charges to approve an obligation that was established by recent Malawi court rulings that requires employers there to provide severance benefits, in addition to company's pension benefits in employment termination situations.
Results for our other tobacco operations segment also declined in the fourth quarter, due to earlier shipments by our Special Services and Dark Tobacco groups, and currency effect, primarily in our oriental tobacco joint venture.
Now, turning to the full year, results from continuing operations were up, reflecting better results in all of our segments except North America, where as we said last year, one time sales of old crop burley in the United States made comparisons difficult.
We also recognized restructuring charges of about $13 million, $0.25 a share. Rationalizing operations in our African Group and Canada as well as the pension curtailment losses that I talked about in fourth quarter.
Last year, restructuring and impairment charges totaled $31 million that was $0.93 a share, related primarily to the value of farming operations in Africa. That is the overall picture, but looking at our flue-cured and burley operations this year, they earned a $178 million, up about $6 million, and as I said earlier, results of North America declined but some of the affects of those last year sales of old crop burley was offset by higher volumes and margins from normal operations this year. So, there was good news for the ongoing business. The other region segment of our flue-cured and burley operations had a good year with segment income of $12 million to $144 million.