UNIVERSAL CORP /VA/

Previous wording

Unless the context otherwise requires, the terms “we,” “our,” “us,” or “Universal” or the “Company” refer to Universal Corporation together with its subsidiaries. This Quarterly Report on Form 10-Q ("Form 10-Q") and the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Among other things, these statements relate to the Company’s financial condition, results of operation, and future business plans, operations, opportunities, and prospects. In addition, the Company and its representatives may from time to time make written or oral forward-looking statements, including statements contained in other filings with the Securities and Exchange Commission (the "SEC") and in reports to shareholders. These forward-looking statements are generally identified by the use of words such as we “expect,” “believe,” “anticipate,” “could,” “should,” “may,” “plan,” “will,” “predict,” “estimate,” and similar expressions or words of similar import. These forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results, performance, or achievements to be materially different from any anticipated results, prospects, performance, or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: product purchased not meeting quality and quantity requirements; reliance on a few large customers; anticipated levels of demand for and supply of our products and services; tobacco growing conditions and customer requirements; major shifts in customer requirements for leaf tobacco; higher inflation rates, tariffs and other pressures on costs; weather and other conditions; exposure to certain legal, regulatory and financial risks related to climate change; industry-specific risks related to our plant-based ingredients businesses; disruption of our supply chain for our plant-based ingredients; success in pursuing strategic investments or acquisitions and integration of new businesses and the impact of these new businesses on future results; our ability to maintain effective information technology systems and safeguard confidential information; our inability to attract, develop, retain, motivate, and maintain good relationships with our workforce; our dependence on a seasonal workforce; epidemics, pandemics or similar widespread public health concerns; government efforts to regulate the production and consumption of tobacco products; government actions on the sourcing of leaf tobacco; economic and political conditions in the countries in which we and our customers operate, including the ongoing impacts from international conflicts; sustainability considerations from governments an…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Unless the context otherwise requires, the terms “we,” “our,” “us,” or “Universal” or the “Company” refer to Universal Corporation together with its subsidiaries. This Quarterly Report on Form 10-Q (“Form 10-Q”) and the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Among other things, these statements relate to the Company’s financial condition, results of operation, and future business plans, operations, opportunities, and prospects. In addition, the Company and its representatives may from time to time make written or oral forward-looking statements, including statements contained in other filings with the Securities and Exchange Commission (the “SEC”) and in reports to shareholders. These forward-looking statements are generally identified by the use of words such as we “expect,” “believe,” “anticipate,” “could,” “should,” “may,” “plan,” “will,” “predict,” “estimate,” “forecast,” and similar expressions or words of similar import. These forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results, performance, or achievements to be materially different from any anticipated results, prospects, performance, or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: product purchased not meeting quality and quantity requirements; reliance on a few large customers; anticipated levels of demand for and supply of our products and services; shipment timing; tobacco growing conditions and customer requirements; major shifts in customer requirements for leaf tobacco; higher inflation rates, tariffs and other pressures on costs; weather and other conditions; exposure to certain legal, regulatory and financial risks related to climate change; industry-specific risks related to our plant-based ingredients businesses; disruption of our supply chain for our plant-based ingredients; success in pursuing strategic investments or acquisitions and integration of new businesses and the impact of these new businesses on future results; our ability to maintain effective information technology systems and safeguard confidential information; our inability to attract, develop, retain, motivate, and maintain good relationships with our workforce; our dependence on a seasonal workforce; epidemics, pandemics or similar widespread public health concerns; government efforts to regulate the production and consumption of tobacco products; government actions on the sourcing of leaf tobacco; economic and political conditions in the countries in which we and our customers operate, including the ongoing impacts from international conflicts; sustainability consi…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Revenue decreased by 12%, or $70.0 million, in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, primarily driven by lower tobacco sales volumes, down 9%, and tobacco sales prices, down 6%.

Current wording

Revenue decreased by 18%, or $132.3 million, in the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025, primarily driven by lower tobacco sales volumes, down 23%, reflecting a delayed tobacco market cycle, partially offset by a 3% increase in tobacco sales prices due to product mix.

Previous wording

Operating income decreased by 93%, or $31.5 million, in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, on a less favorable product mix and lower sales volumes in the Tobacco Operations segment and continued market headwinds and high fixed costs in the Ingredients Operations segment.

Current wording

Operating income decreased by 37%, or $25.0 million, in the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025, on lower sales volumes in the Tobacco Operations segment and continued challenging market conditions and high fixed costs in the Ingredients Operations segment.

Previous wording

Selling, general, and administrative expenses were up by 2%, or $1.6 million, primarily due to unfavorable foreign currency comparisons of $4.8 million and lower recoveries on advances to suppliers of $1.7 million, partially offset by lower compensation costs of $3.0 million and lower legal and professional fees of $1.2 million in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025.

Current wording

Selling, general, and administrative expenses were down by 6%, or $4.6 million, primarily due to an insurance recovery of $4 million, favorable foreign currency comparisons of $2.2 million, and lower legal and professional fees of $1.0 million, partially offset by lower recoveries on advances to suppliers of $1.7 million in the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025.

Previous wording

Adjusted operating income was down by $32.6 million and adjusted net income attributable to Universal Corporation was down by $14.6 million in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, largely on on a less favorable product mix and lower sales volumes in the Tobacco Operations segment and continued market headwinds and high fixed costs in the Ingredients Operations segment.

Current wording

Adjusted operating income was down by $27.7 million and adjusted net income attributable to Universal Corporation was down by $24.3 million in the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025, largely on lower sales volumes in the Tobacco Operations segment and continued challenging market conditions and high fixed costs in the Ingredients Operations segment.

Previous wording

Cost of goods sold decreased by 8%, or $38.9 million, in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, largely on lower tobacco sales volumes and green tobacco prices.

Current wording

Cost of goods sold decreased by 16%, or $100.0 million, in the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025, largely on lower tobacco sales volumes, partially offset by inflationary pressures on other costs of production including freight.

Previous wording

Interest expense was down by 7%, or $1.3 million, in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, on lower debt balances.

Current wording

Interest expense was down by 10%, or $2.0 million, in the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025, on mix of borrowing sources.

Previous wording

The consolidated effective tax rate for the three months ended June 30, 2026, was 35%. The consolidated tax rate for the three months ended June 30, 2025, was 27%. The consolidated effective tax rate for the three months ended June 30, 2026, was higher than the consolidated tax rate for the three months ended June 30, 2025, due to various factors, including the mix and timing of domestic and foreign earnings, discrete items including increased withholding taxes on undistributed earnings in Brazil, and the tax deductibility of certain items.

Current wording

The consolidated effective tax rate for the three months ended September 30, 2026, was 35%. The consolidated effective tax rate for the three months ended September 30, 2025, was 24%. The consolidated effective tax rate for the three months ended September 30, 2026, was higher than the consolidated effective tax rate for the three months ended September 30, 2025, due to various factors, including the mix and timing of domestic and foreign earnings, as well as the expiration of the Mozambique tax holiday in fiscal year 2026.

Previous wording

Our first fiscal quarter is historically a slow quarter for our tobacco business. Revenue decreased by 13%, or $67.6 million, for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, primarily on a 9% decrease in tobacco sales volumes due to lower sales of carryover crop tobacco and a 6% decrease in tobacco sales prices due to product mix and lower green tobacco prices. Operating income for the Tobacco Operations segment decreased by 90%, or $32.2 million, for the first quarter of fiscal year 2027, compared to the first quarter of fiscal year 2026, on a less favorable product mix in Asia and lower sales of carryover crop tobacco. Selling, general, and administrative expenses were higher by $1.3 million for the segment mainly due to unfavorable foreign currency comparisons of $4.4 million and lower recoveries on advances to suppliers of $1.7 million, partially offset by lower legal and professional fees of $2.3 million in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. Corporate overhead costs allocated to the segment were $2.2 million higher in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, due to a higher percentage allocation of the actual corporate overhead costs to the segment. The allocation of corporate overhead costs is based on projected annual financial and operational performance.

Current wording

Revenue decreased by 17%, or $192.7 million, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily on an 18% decrease in tobacco sales volumes due to a delayed tobacco market cycle this fiscal year. Tobacco sales prices were flat in the first half of fiscal year 2027, compared to the first half of fiscal year 2026, as product mix offset lower green tobacco prices. Operating income for the Tobacco Operations segment decreased by 53%, or $53.5 million, for the first half of fiscal year 2027, compared to the first half of fiscal year 2026, on lower tobacco sales volumes, which reflected oversupply conditions, particularly for flue-cured and burley tobacco, which led to slower green tobacco buying and customer commitments and delivery of shipping instructions. Selling, general, and administrative expenses were lower by $1.8 million for the segment mainly due to an insurance recovery of $4.0 million, lower compensation costs of $0.6 million, and lower legal and professional fees of $3.3 million, partially offset by lower recoveries on advances to suppliers of $3.4 million and unfavorable foreign currency comparisons of $2.3 million in the six months ended September 30, 2026, compared to the six months ended September 30, 2025. Corporate overhead costs allocated to the segment were $2.4 million higher in the six months ended September 30, 2026, compared to the six months ended September 30, 2025, due to a higher percentage allocation of the actual corporate overhead costs to the segment. The allocation of corporate overhead costs is based on projected annual financial and operational performance.

Previous wording

Revenue for the Ingredients Operations segment decreased by 3%, or $2.4 million, for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, as sales of certain products were negatively impacted by market headwinds. Operating income for the segment decreased by 139%, or $2.4 million, on product mix and high fixed costs as well as inventory write-downs of $1.4 million. Market headwinds included persistent weakness in the consumer-packaged-goods industry, supply restraints, particularly tight apple markets in the Pacific Northwest, inflationary pressures, and tariff volatility. Selling, general, and administrative expenses were lower by $1.5 million for the segment mainly due to lower compensation costs of $0.8 million and lower intangibles amortization expense of $0.6 million in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. Corporate overhead costs allocated to the segment were $0.4 million lower in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, due to a lower percentage allocation of the actual corporate overhead costs to the segment. The allocation of corporate overhead costs is based on projected annual financial and operational performance.

Current wording

Revenue for the Ingredients Operations segment decreased by 5%, or $9.7 million, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, as sales were negatively impacted by tight apple supplies and high raw material costs, partially offset by higher vanilla extract sales. Operating income for the segment decreased by $4.3 million, on product mix and increased raw material production costs, partially offset by a $0.3 million decrease in inventory write-downs. Market challenges included persistent weakness in the consumer-packaged-goods industry, supply restraints, particularly tight apple markets in the Pacific Northwest, inflationary pressures, and high raw material costs. Selling, general, and administrative expenses were lower by $2.6 million for the segment mainly due to lower compensation costs of $1.5 million in the six months ended September 30, 2026, compared to the six months ended September 30, 2025. Corporate overhead costs allocated to the segment were $1.0 million lower in the six months ended September 30, 2026, compared to the six months ended September 30, 2025, due to a lower percentage allocation of the actual corporate overhead costs to the segment. The allocation of corporate overhead costs is based on projected annual financial and operational performance.

Previous wording

Restructuring and impairment costs of $1.1 million in the quarter ended June 30, 2025.

Current wording

Restructuring income was $2.7 million in the six months ended September 30, 2026, on the sale of a previously closed sheet tobacco manufacturing facility. Restructuring and impairment costs were $1.1 million in the six months ended September 30, 2025.

Previous wording

(1) Restructuring and impairment costs are included in Consolidated operating income in the consolidated statements of income, but excluded for purposes of Adjusted operating income, Adjusted net income (loss) available to Universal Corporation, and Adjusted diluted earnings (loss) per share.

Current wording

(1) Restructuring and impairment (income) costs are included in Consolidated operating income in the consolidated statements of income, but excluded for purposes of Adjusted operating income, Adjusted net income (loss) attributable to Universal Corporation, and Adjusted diluted earnings (loss) per share.

Previous wording

Our first fiscal quarter is typically a period of significant working capital investment in Africa and South America as farmers deliver tobacco crops. For the quarter ended June 30, 2026, working capital investment remained significant, but was lower than in the quarter ended June 30, 2025, primarily due to an oversupply of tobacco, particularly flue-cured and burley tobacco, in the global market. As a result of these market conditions, green tobacco purchases were slower and green tobacco prices were lower than in the prior-year quarter, reducing our working capital requirements. We funded these requirements through a combination of cash on hand, short-term borrowings, customer advances, accounts receivable factoring, and operating cash flows.

Current wording

The first half of our fiscal year is typically a period of significant working capital investment in Africa, South America, and the United States as farmers deliver tobacco crops. We generally recover some of this investment in the second fiscal quarter as tobacco is shipped and accounts receivable are collected from customers. In fiscal year 2027, however, a global oversupply of tobacco, particularly flue-cured and burley tobacco, has delayed tobacco purchasing, processing, and shipping compared to fiscal year 2026. We expect fiscal year 2027 tobacco shipments to be heavily weighted to the second half of the fiscal year. As a result, we expect to recover more of our working capital investments later in fiscal year 2027 than in fiscal year 2026. We funded our working capital requirements through a combination of cash on hand, short-term borrowings, customer advances, accounts receivable factoring, and operating cash flows.

Previous wording

Net cash used by our operations was $117.1 million during the quarter ended June 30, 2026. That amount was $88.0 million lower than during the same period in fiscal year 2026, primarily on lower working capital requirements. Tobacco inventory levels at June 30, 2026, were down $54.2 million, compared to June 30, 2025 levels, on slower green tobacco purchases and lower green tobacco prices. We generally do not purchase material quantities of tobacco on a speculative basis, and we target committed inventory levels of 80% or more of total tobacco inventory. Our level of committed inventory percentages is influenced by timing of farmer deliveries of new crops, as well as the receipt of customer orders. In addition, when we contract directly with tobacco farmers, we are often obligated to buy all stalk positions, which may contain less marketable leaf styles. As of June 30, 2026, our uncommitted tobacco inventories were $275.1 million, or about 24% of total tobacco inventory, compared to $222.3 million, or about 27% of our tobacco inventory as of March 31, 2026, and $134.7 million, or about 11% of our tobacco inventory as of June 30, 2025. Uncommitted tobacco levels as a percentage of total tobacco inventory came down from March 31, 2026 levels in the quarter ended June 30, 2026, but remained elevated due to delayed customer purchase commitments. We expect our uncommitted tobacco inventory levels to be within our range of 20% or less of total tobacco inventory during fiscal year 2027.

Current wording

Net cash used by our operations was $213.8 million during the six months ended September 30, 2026. That amount was $41.4 million higher than during the same period in fiscal year 2026, primarily due to the delayed tobacco market cycle which is shifting cash generation by our tobacco operations to the second half of fiscal year 2027. Tobacco inventory levels at September 30, 2026, were up $48.0 million, compared to September 30, 2025 levels, on slower tobacco shipments, partially offset by lower green tobacco prices. We generally do not purchase material quantities of tobacco on a speculative basis, and we target committed inventory levels of 80% or more of total tobacco inventory. Our level of committed inventory percentages is influenced by timing of farmer deliveries of new crops, as well as the receipt of customer orders. In addition, when we contract directly with tobacco farmers, we are often obligated to buy all stalk positions, which may contain less marketable leaf styles. As of September 30, 2026, our uncommitted tobacco inventories were $229.5 million, or about 19% of total tobacco inventory, compared to $222.3 million, or about 27% of our tobacco inventory as of March 31, 2026, and $144.2 million, or about 13% of our tobacco inventory as of September 30, 2025. We expect our uncommitted tobacco inventory levels to come down from September 30, 2026 levels in the second half of fiscal year 2027.

Previous wording

Our balance sheet accounts reflected seasonal patterns in the quarter ended June 30, 2026, on deliveries of tobacco crops by farmers in Africa and South America. Accounts receivable decreased by $215.8 million from March 31, 2026 levels on collections on receivables, partially offset by tobacco crop shipments. Advances to suppliers were $102.9 million at June 30, 2026, a reduction of $74.3 million from March 31, 2026, as tobacco crops were delivered in payment on some of those balances, net of new balances for upcoming tobacco crops. Accounts receivable--unconsolidated affiliates increased by $92.2 million from March 31, 2026 levels, on tobacco crop purchases. Notes payable and overdrafts were up $279.4 million from March 31, 2026 levels on seasonal working capital needs.

Current wording

Our balance sheet accounts reflected seasonal patterns in the six months ended September 30, 2026, on deliveries of tobacco crops by farmers in Africa, South America, and the United States. Accounts receivable decreased by $126.7 million from March 31, 2026 levels on collections on receivables, partially offset by tobacco crop shipments. Advances to suppliers were $101.8 million at September 30, 2026, a reduction of $75.5 million from March 31, 2026, as tobacco crops were delivered in payment on some of those balances, net of new balances for upcoming tobacco crops. Accounts receivable--unconsolidated affiliates increased by $84.2 million from March 31, 2026 levels, on tobacco crop purchases. Notes payable and overdrafts were up $291.7 million from March 31, 2026 levels on seasonal working capital needs.

Previous wording

Accounts receivable were $76.1 million lower in the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, on lower sales of carryover crop tobacco. Advances to suppliers were $23.7 million higher and accounts payable were $28.8 million lower at June 30, 2026, compared to June 30, 2025, largely on slower purchases of green tobacco. Accounts receivable--unconsolidated affiliates were $23.2 million lower as of June 30, 2026, compared to the same period in the prior fiscal year, on the timing of tobacco shipments. Notes payable and overdrafts were down $54.3 million as of June 30, 2026, compared to June 30, 2025, due to lower working capital requirements.

Current wording

Accounts receivable and accounts receivable--unconsolidated affiliates were $9.5 million and $18.9 million lower, respectively, in the six months ended September 30, 2026, compared to the six months ended September 30, 2025, on the timing of tobacco shipments. Advances to suppliers were $19.8 million lower at September 30, 2026, compared to September 30, 2025, largely on the timing of advances. Notes payable and overdrafts were up $39.7 million as of September 30, 2026, compared to September 30, 2025, on the later timing of tobacco shipments.

Previous wording

Our capital allocation strategy focuses on four strategic priorities: strengthening and investing for growth in our leaf tobacco business; increasing our strong dividend; exploring growth opportunities for our ingredients business; and returning excess capital to our shareholders. In deciding where to invest capital resources, we look for opportunities where we believe we can earn an adequate return as well as leverage our assets and expertise or enhance our farmer base. Our capital expenditures are generally limited to those that add value, replace or maintain equipment, increase efficiency, or position us for future growth. During the quarters ended June 30, 2026 and 2025, we invested approximately $15.9 million and $12.1 million, respectively, in our property, plant and equipment. Depreciation expense was approximately $11.0 million for each of the quarters ended June 30, 2026 and 2025. Typically, our capital expenditures for maintenance projects are less than $30 million per fiscal year. In addition, from time to time, we undertake projects that require capital expenditures when we identify opportunities to improve efficiencies, invest in sustainability projects, add value for our customers, and position ourselves for future growth. We currently expect to spend approximately $55 to $65 million over the next twelve months on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.

Current wording

Our capital allocation strategy focuses on four strategic priorities: strengthening and investing for growth in our leaf tobacco business; increasing our strong dividend; exploring growth opportunities for our ingredients business; and returning excess capital to our shareholders. In deciding where to invest capital resources, we look for opportunities where we believe we can earn an adequate return as well as leverage our assets and expertise or enhance our farmer base. Our capital expenditures are generally limited to those that add value, replace or maintain equipment, increase efficiency, or position us for future growth. During the six months ended September 30, 2026 and 2025, we invested approximately $35.6 million and $21.1 million, respectively, in our property, plant and equipment. Depreciation expense was approximately $21.7 million and $22.0 million, respectively, for the six months ended September 30, 2026 and 2025. Typically, our capital expenditures for maintenance projects are less than $30 million per fiscal year. In addition, from time to time, we undertake projects that require capital expenditures when we identify opportunities to improve efficiencies, invest in sustainability projects, add value for our customers, and position ourselves for future growth. We currently expect to spend approximately $60 to $70 million over the next twelve months on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.

Previous wording

Our Board of Directors approved our current share repurchase program in November 2024. The program authorizes the purchase of up to $100 million of our common stock through November 15, 2026. Under the current authorization, we may purchase shares from time to time on the open market or in privately negotiated transactions at prices not exceeding prevailing market rates. Repurchases of shares under the repurchase program may vary based on management discretion, as well as changes in cash flow generation and availability. During the three months ended June 30, 2026, we purchased 51,741 shares of common stock at an aggregate cost of $2.7 million (average price per share $53.06). As of June 30, 2026, our available authorization under our current share repurchase program was $97.3 million.

Current wording

On November 4, 2026, our Board of Directors approved a new share repurchase program, which replaced the share repurchase program expiring November 15, 2026, for the purchase of up to $100 million of shares of our common stock through November 15, 2028. Under the new share repurchase program, we may purchase shares from time to time on the open market or in privately negotiated transactions at prices not exceeding prevailing market rates. Repurchases of shares under the repurchase program may vary based on management discretion, as well as changes in cash flow generation and availability. During the three months ended September 30, 2026, under the prior share repurchase program, we purchased 43,288 shares of common stock at an aggregate cost of $2.3 million (average price per share $52.08).

Previous wording

At June 30, 2026, we had $1.2 billion in total debt outstanding, a decrease of $55.5 million compared to June 30, 2025. We consider the sum of notes payable and overdrafts, long-term debt (including any current portion), and customer advances and deposits, less cash, cash equivalents, and short-term investments on our balance sheet to be our net debt. We also consider our net debt plus shareholders' equity to be our net capitalization. Net debt decreased by $51.6 million to $1.0 billion at June 30, 2026, compared to June 30, 2025. Net debt as a percentage of net capitalization was 42% at June 30, 2026, flat with 42% at June 30, 2025, and up from 37% at March 31, 2026.

Current wording

At September 30, 2026, we had $1.2 billion in total debt outstanding, an increase of $38.5 million compared to September 30, 2025. We consider the sum of notes payable and overdrafts, long-term debt (including any current portion), and customer advances and deposits, less cash, cash equivalents, and short-term investments on our balance sheet to be our net debt. We also consider our net debt plus shareholders' equity to be our net capitalization. Net debt increased by $82.3 million to $1.2 billion at September 30, 2026, compared to September 30, 2025. Net debt as a percentage of net capitalization was 45% at September 30, 2026, up from 42% at September 30, 2025, and up from 37% at March 31, 2026.

Previous wording

As of June 30, 2026, we had $174 million in cash and cash equivalents, $635 million available under our committed revolving credit facility that will mature in December 2030, and we, together with our consolidated affiliates, had approximately $279 million in available, uncommitted credit lines. The financial covenants under our committed revolving credit facility require us to maintain certain levels of tangible net worth and observe restrictions on debt levels. Based on our June 30, 2026 financial statements, we were in compliance with all financial covenants of our debt agreements as of June 30, 2026. We have no long-term debt maturing until fiscal year 2031.

Current wording

As of September 30, 2026, we had $47 million in cash and cash equivalents, $617 million available under our committed revolving credit facility that will mature in December 2030, and we, together with our consolidated affiliates, had approximately $281 million in available, uncommitted credit lines. The financial covenants under our committed revolving credit facility require us to maintain certain levels of tangible net worth and observe restrictions on debt levels. On October 9, 2026, we entered into an amendment under our bank credit agreement, which includes our committed revolving credit facility, that temporarily raised the leverage level we are required to maintain under the financial covenants of the bank credit agreement through the quarter ended March 31, 2027. As a result of the amendment to our bank credit agreement and based on our September 30, 2026 financial statements, we were in compliance with all financial covenants of our debt agreements as of September 30, 2026. We have no long-term debt maturing until fiscal year 2031.

Previous wording

From time to time, we use interest rate swap agreements to manage our exposure to changes in interest rates. At June 30, 2026, the fair value of our outstanding interest rate swap agreements was an asset of about $5.0 million, and the notional amount swapped was $310 million. We entered into these agreements to eliminate the variability of cash flows in the interest payments on a portion of our variable-rate term loans. Under the swap agreements we receive variable rate interest and pay fixed rate interest. The swaps are accounted for as cash flow hedges.

Current wording

From time to time, we use interest rate swap agreements to manage our exposure to changes in interest rates. At September 30, 2026, the fair value of our outstanding interest rate swap agreements was an asset of about $16.9 million, and the notional amount swapped was $310 million. We entered into these agreements to eliminate the variability of cash flows in the interest payments on a portion of our variable-rate term loans. Under the swap agreements we receive variable rate interest and pay fixed rate interest. The swaps are accounted for as cash flow hedges.

Previous wording

We also use derivative instruments from time to time to hedge certain foreign currency exposures, primarily related to forecasted purchases of tobacco, related processing costs, and crop input sales, as well as our net monetary balance sheet exposures in local currency. We generally account for our hedges of forecasted tobacco purchases as cash flow hedges. As of June 30, 2026, the fair value of our open hedges for forecasted tobacco purchases and crop inputs was a net liability of approximately $3.0 million. We had forward contracts outstanding that were not designated as hedges, and the fair value of those contracts was a net liability of approximately $1.1 million as of June 30, 2026.

Current wording

We also use derivative instruments from time to time to hedge certain foreign currency exposures, primarily related to forecasted purchases of tobacco, related processing costs, and crop input sales, as well as our net monetary balance sheet exposures in local currency. We generally account for our hedges of forecasted tobacco purchases as cash flow hedges. As of September 30, 2026, the fair value of our open hedges for forecasted tobacco purchases and crop inputs was a net asset of approximately $63 thousand. We had forward contracts outstanding that were not designated as hedges, and the fair value of those contracts was a net liability of approximately $0.6 million as of September 30, 2026.

Previous wording

A summary of our critical accounting policies is included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2025 Form 10-K. Our critical accounting policies have not changed from those reported in the 2026 Form 10-K.

Current wording

A summary of our critical accounting policies is included in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our 2026 Form 10-K. Our critical accounting policies have not materially changed from those reported in the 2026 Form 10-K.