Earnings call transcript: Universal Corporation Q1 2025 sees stock drop after earnings

Universal Corporation (UVV) reported its first-quarter fiscal year 2026 earnings, revealing a mixed financial performance. The company posted earnings per share (EPS) of $0.38, aligning with market expectations, and revenue of $593.8 million, slightly down from the previous year. Despite these results, Universal’s stock fell by 5.59% to $54.52, reflecting investor concerns over future market conditions and operational challenges. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.49, indicating robust liquidity. The stock offers a notable dividend yield of 6.02%, supported by 33 consecutive years of dividend increases.

Key Takeaways

• Universal’s Q1 FY2026 revenue stood at $593.8 million, slightly declining from the previous year.
• EPS matched forecasts at $0.38, yet the stock price dropped 5.59% post-announcement.
• Operating income improved significantly to $33.8 million from $17.2 million in FY2025.
• The company is investing in sustainability and expanding its ingredients segment.

Company Performance

Universal Corporation’s Q1 FY2026 performance highlighted a stable yet challenging environment. While revenue slightly decreased from the prior year, the company saw a notable increase in operating income, reaching $33.8 million compared to $17.2 million in FY2025. The tobacco operations segment benefited from a favorable product mix, though the ingredients segment faced margin pressures despite higher revenues.

Financial Highlights

• Revenue: $593.8 million, down $3.3 million from the previous year.
• EPS: $0.38, up from $0.01 last year.
• Operating Income: $33.8 million, up from $17.2 million in FY2025.
• Net Income: $8.5 million, or $0.34 per share, compared to $100,000 or $0.01 per share last year.
• Net Debt: Reduced by $47 million to $1.1 billion.

Earnings vs. Forecast

Universal Corporation’s EPS of $0.38 met market expectations, while revenue came in at $593.8 million. The alignment with EPS forecasts indicates stable performance, yet the slight revenue decline and market conditions contributed to a negative stock reaction.

Market Reaction

Following the earnings announcement, Universal’s stock declined by 5.59% to $54.52. This drop comes despite the company meeting EPS expectations, suggesting investor concerns about future market conditions and operational challenges. The stock remains above its 52-week low of $49.4 but is significantly below its high of $67.33. InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value model, which considers multiple valuation metrics and growth factors. Discover more undervalued opportunities at Most Undervalued Stocks.

Outlook & Guidance

Looking ahead, Universal Corporation anticipates an oversupply of flue-cured and burley tobacco by year-end. The company is focused on converting customer interest into increased volumes and continues to invest in its ingredients segment growth. Universal remains committed to its sustainability goals, aiming for net-zero emissions by 2050.

Executive Commentary

CEO Preston Wigner emphasized the company’s commitment to sustainability, stating, "We believe sustainability is good for business and it gives us a competitive advantage." He also highlighted Universal’s strategic approach, saying, "We don’t buy tobacco on a speculative basis. We buy it with an understanding of what we believe our customers’ needs are."

Risks and Challenges

• Oversupply risk in the tobacco market could pressure prices and margins.
• Tariff uncertainties may continue to impact demand in the ingredients segment.
• Margin challenges in the ingredients segment due to higher revenues but lower profitability.
• Global market conditions and potential regulatory changes could affect performance.

Q&A

During the earnings call, analysts inquired about the impact of tariffs on the tobacco and ingredients businesses and the potential for margin challenges in the ingredients segment. CFO Johan Kroner’s upcoming retirement was confirmed, raising questions about leadership transitions.

Full transcript - Universal Corp (UVV) Q1 2026:

Desiree, Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Universal Corporation First Quarter Fiscal Year twenty twenty six 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.

I would now like to turn the conference over to Wu Xuang Ma, Vice President and Treasurer. You may begin.

Wu Xuang Ma, Vice President and Treasurer, Universal Corporation: Good morning and thank you for joining us. With me today are Preston Wigner, our Chairman, President and CEO and Johan Kroner, our Chief Financial Officer. During the course of this call, we will be making forward looking statements that are based on our current knowledge and some assumptions about the future. They are representative as of today only. Actual results, performance or achievements could differ materially from the anticipated results, prospects, performance or achievements expressed or implied by such forward looking statements.

And we assume no obligation to update any forward looking statements except as required by law. For information on some of the risks and uncertainties related to these forward looking statements, please refer to our reports we file with the SEC and under cautionary statements regarding forward looking statements in our current earnings press release. Finally, some of the information we have for you today may be based on unaudited allocations and may be subject to reclassification. Our comments today may also include certain non GAAP financial measures. For details regarding these measures, including reconciliation of these non GAAP measures to the most comparable GAAP measures, please refer to our current earnings press release and other public materials.

This call is being webcast live and will be available for replay on our website through 11/07/2025 and via telephone through 08/21/2025. This call is copyrighted and may not be used without our permission. Other than the reference to replay, we have not authorized and the disclaimed responsibility for any recording, replay or distribution of any transcription of this call. I would like to now turn the call over to Preston.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Thank you, Hoosh. Good morning, everyone. Thank you for joining us today. We are off to a good start to our fiscal year. On a consolidated basis, operating income increased $17,000,000 to $34,000,000 for the first fiscal quarter, while revenue was down slightly to $594,000,000 for the quarter.

Our tobacco operations segment delivered improved results driven primarily by a favorable product mix which offset lower tobacco sales volumes. Seasonally, our first fiscal quarter tends to be our smaller quarter. Tobacco sales volumes in the first quarter are generally driven by shipments of carryover tobacco from the prior fiscal year. Given strong customer demand last fiscal year, we shipped significant volumes of tobacco earlier in the prior year. As a result, carryover tobacco shipments and tobacco sales volumes were lower in the first quarter of the current fiscal year compared to the same quarter last year.

Blue currant and burley crop sizes are significantly larger this fiscal year and green tobacco purchases are largely completed in Brazil and Africa. Although it is still early, we expect the flue cured and burley tobacco will move to more balanced supply positions during the fiscal year. Given the current expected crop sizes, we believe it is likely that flu cured of burley tobacco will be in oversupply positions by the end of the fiscal year. Customer demand has remained firm despite larger crops and we believe this is a result of several years of short tobacco supply. At the June, our uncommitted tobacco inventories were low at about 11% of total tobacco inventory.

Turning to our Ingredients Operations segment. We maintained positive momentum in the 2026 with revenues and sales volumes both up in the quarter. Operating income was lower in the quarter. Segment results were impacted by a less favorable product mix, tariff uncertainty impacts on demand and higher fixed costs associated with our recently expanded production facility. As we work to fill our new facility, we continue to see interest in our new value added products.

Supported by a foundational customer for our expanded facility, we are focused on converting additional interest from both new and existing customers into increased volumes and margins. I will now hand it over to Johan to provide details of our financial and operational performance, after which I will offer additional thoughts and open the call for questions.

Johan Kroner, Chief Financial Officer, Universal Corporation: Thank you, Preston. Good morning, everyone. As Preston mentioned, we are off to a good start to our fiscal year twenty twenty six with improved results from our Tobacco Operations segment and higher revenue and sales volumes in our Ingredients Operations segment. For the 2026, sales and other operating revenues were $593,800,000 as compared to $597,100,000 for the same quarter last fiscal year. This was a slight decline of $3,300,000 mainly due to lower sales of carryover crop tobaccos.

Operating income for the quarter was $33,800,000 as compared to $17,200,000 for the same quarter in the fiscal year 2025. The increase of $16,600,000 was due to a favorable product mix in the tobacco operations segment. SG and A expenses were $79,200,000 during the quarter compared to $78,700,000 for the same quarter last year, an increase of $500,000 primarily due to higher compensation and legal and professional fees, which were largely offset by favorable foreign currency comparisons and lower tobacco sales commissions. Net income attributable to Universal Corporation was $8,500,000 for the first quarter or $0.34 per share on a fully diluted basis as compared to $100,000 or $01 per share for the same quarter in fiscal year twenty twenty five. Adjusted net income, which excludes certain nonrecurring items, was $9,600,000 or $0.38 per share on a fully diluted basis for the quarter as compared to $100,000 or $01 per share for the same quarter last year.

Segment operating income for the tobacco operations segment was $35,700,000 in the quarter as compared to $14,500,000 for the same quarter last year. The increase of $21,200,000 was mainly due to a favorable product mix in Asia. Segment operating income for the Ingredients Operations segment was $1,700,000 for the quarter as compared to $2,900,000 for the same quarter last year. The decrease of $1,200,000 was due to less favorable product mix, some curtailed demand due to tariff uncertainty and higher fixed costs including depreciation from our recently expanded Universal Ingredients production facility. The corporate overhead allocation to the segment was also higher in the quarter.

As of 06/30/2025, our net debt, which is defined as the sum of notes payable overdrafts and long term obligations, current portion, plus customer advances and deposits, less cash and cash equivalents was $1,100,000,000 $47,000,000 lower than as of June 30. We are focused on continuing to maintain a strong balance sheet and conservative debt levels. I would like to now turn it back over to Preston.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Thank you, Johan. It is still early in our fiscal year. Uncertainties remain for the rest of the fiscal year, including our customers’ procurement strategies and tariff impacts. We believe those challenges can present us with opportunities. Our global diversification, long term customer relationships, and local expertise will position us well to capitalize on those opportunities.

Our leaf tobacco team is experienced in managing changes in market conditions. We will continue pursuing opportunities to maximize and optimize our tobacco business, including offering and providing additional services to our customers. At the same time, we are dedicated to continuing our ingredient segment’s momentum. We are focused on driving organic growth, capitalizing on our investments in universal ingredients, and converting customer interest into product sales. Our expanded facility added an industry leading combination of extraction, blending, aseptic packaging, and other capabilities to our segment.

With our investment in sales, marketing, and product development teams, we are creating value across the entire Universal Ingredients business and delivering unique customized products to our customers. I also want to take a moment to acknowledge a recent leadership announcement. Johan will be retiring from his role as senior vice president and chief financial officer after more than thirty years with Universal. He will remain with the company through 07/01/2026 to support a seamless transition. We thank Johan for his dedicated service, and we value the financial discipline he’s instilled across the organization.

I look forward to working closely with you on for the next year. Finally, I’d like to highlight our ongoing commitment to sustainability. At Universal, we believe sustainability is good for business and it gives us a competitive advantage. It also represents good stewardship in the communities in which we operate. We recently completed our annual third party assessment and verification of scope one, two, and relevant scope three emissions.

This assessment is part of our broader emissions reduction efforts. It ensures alignment with established standards and provides transparency into our emission reduction efforts. It also helps us calculate the impact of projects, like our newly commissioned biomass boiler in Zimbabwe. Once operational, this new boiler will help reduce coal use over time and contribute to our goal of net zero greenhouse gas emissions in our value chain by the year 02/1950. Universal will continue integrating sustainability into our operational decision making.

Operator, please open the floor for questions.

Desiree, Conference Operator: Thank you. We will now begin the question and answer If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, seem to press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, And our first question comes from the line of Ann Gurkin with Davenport. Your line is open.

Ann Gurkin, Analyst, Davenport: Good morning, everyone.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Good morning, Ann. Good morning, Ann.

Ann Gurkin, Analyst, Davenport: Congratulations on a very solid start to your fiscal year. Nice to see.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Thank you.

Ann Gurkin, Analyst, Davenport: I was wondering if we could start with a conversation surrounding tariffs, both on tobacco and ingredients business. I guess starting with tobacco leaf imported into The U. S. From Brazil, I think would represent maybe 5% to 10% of tobacco sales for you all. Is that in the ballpark?

And how should I think about navigating the tariff situation, uncertainty, ability to pass along tariff costs to customers? Any kind of insight you can share on the tobacco tariff situation.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Sure. You know, with respect to Brazil imports, you know, I think those imports over the years, let’s say they’re around 35,000, 40,000 tons per year, which is a small portion of the total Brazil crop. And our portion of that is relatively small. You know, on the tobacco side, large majority of our business is obviously outside The United States, so it’s not a significant impact for imports in and out of The United States for us. In our diversified footprint and our broad customer base, they provide opportunities for us and solutions for our customers with with tariff impacts.

Now for our US customers, we can provide them with options if they need to shift purchases from high tariff origins like Brazil, including selling them US tobacco. And where we have tobacco in high tariff origins, we have a very broad global customer base, and we move that tobacco to them. You know, tariffs are still fluid. They continue to be monitored, and we remain in very close contact with our customers both on the tobacco side and on the ingredient side. On the ingredient side, you know, our ingredients business also has flexibility.

You know, we we evaluate and, and alter our buying strategies to account for tariffs, and we import raw materials, for example, from China for one of our operations. And we did buy forward to mitigate the tariff impacts for those, for those volumes that we bought. We also work with our customers on their buying strategies to mitigate tariffs. We’ve seen some tariff impacts when customers demand that are rising from challenges in their own supply chains, and we’ve worked with those customers to understand the impacts of those supply chains and the timing when they can increase their purchases from us. And we work very closely with both our tobacco and our ingredients customers in those tariffs.

If if the tariff costs are included in the pricing, then they’re included in the pricing. But we certainly try everything we can to work with our customers to mitigate those impacts of tariffs to avoid those situations. So overall, you know, global footprint and our customer base, broad customer base, and really solid customer relationships, they’re gonna help us pursue these opportunities that tariffs are gonna create, and we’re really well placed to take advantage of that.

Ann Gurkin, Analyst, Davenport: Great. Thank you for all that detail. That’s very helpful. I appreciate it. Speaking with tobacco, nice margin in the first quarter.

I understand the the positive contribution from the mix from Asia. How should I think about or can you help me think about, margin project projection in the second half of the fiscal year, reflecting custom orders and pricing and mix? And how should I think about that margin, really for the full year for the tobacco segment?

Preston Wigner, Chairman, President and CEO, Universal Corporation: Yeah. Of course. As we mentioned earlier in the call, you know, the first quarter is our seasonally low quarter. And so, you know, we certainly enjoyed an improved product mix for carryover sales for the quarter, but but it’s it’s a small quarter for us. You know, looking ahead, we have, been very happy with how things have progressed.

We have largely completed purchasing in Brazil and Africa, And, and those crops are are very large, and we expect very large crops all around the world. And with that, we would expect pricing to come down despite that firm demand to date. So that could create margin pressure that we would monitor and work with our customers. Additionally, if we’re handling larger volumes through our factories with those larger crops, that also helps reduce our per unit costs in our factory. So we’re very happy with where we are today with our uncommitted inventory levels and with the more traditional buying patterns that we’ve seen in especially in Brazil versus what we’ve seen in the prior season, with the accelerated buying, everything all at one grade.

You know, that gives us options to satisfy our customers’ needs while also protecting the margins that we recognize for the value that that we bring to our customers. There’s a value doing business with Universal. So it’s still really early in the season. There’s still a lot of tobacco to buy. There are markets that still are opening, and we’re gonna continue to monitor those dynamics in those markets and work hard with our customers to maintain good communication with them and to to protect the value that we bring to them.

Ann Gurkin, Analyst, Davenport: Super. And have you been able to increase, services or market share with customers?

Preston Wigner, Chairman, President and CEO, Universal Corporation: Yeah. That’s certainly a goal of ours. That’s that’s part of our corporate strategy of maximizing and optimizing tobacco is to increase volumes, increase market share, and take advantage of opportunities to increase services we provide for them. I’m not gonna talk about any customer in particular, but, we’re very happy with with where things are going so far early in the year. And we see we see benefits.

We still have a long way to go for the year, but we’re on the right track and we’re optimistic.

Ann Gurkin, Analyst, Davenport: Super. And then may get an update on the, progress of The US tobacco leaf crop?

Preston Wigner, Chairman, President and CEO, Universal Corporation: Yep. US tobacco crop is large. It’s more of a traditional crop. Buying is really just beginning, so it’s really sort of early in the process for that. They’ve had very good weather conditions, so it should be a really large crop in in pretty good quality.

Ann Gurkin, Analyst, Davenport: Super. Super. Switching to ingredients. So the margin was lower than we would have thought in the first quarter, and you’ve outlined the challenges, faced, by that segment in the first quarter. Guess also the same question, if you look out to the back half, had operating margins for the full year for ingredients in the mid single digit range and that seems aggressive given what we’ve seen in the first quarter, some customer challenges, specific customer challenges, maybe reduced purchases, some forward purchases that shifted into q four last year.

I guess, can you help me think about, about that margin progression where where it could end land at the end of, fiscal twenty six, please?

Preston Wigner, Chairman, President and CEO, Universal Corporation: Yeah. There’s certainly a lot of moving pieces with that. You know, we’re very happy with the momentum from increased revenue and volume, and we continue to make progress with our ingredient strategy. You know, we’re focused on continuing to increase volume of the value added products, especially through the new universal ingredient shanks expanded facility to increase sales and achieve returns on those investments. We did have those additional costs that impacted the first quarter performance and margin.

And our goal is to keep increasing volume through the facility as well as across the entire platform to reduce those per unit costs and provide us more opportunities to increase margins. Similar story on the tobacco side with increasing volumes going through our factories. We continue to see interest in the value added products and capabilities, and we’re absolutely dedicated to converting them with existing and new customers from existing business, new business, pipeline business to additional volumes and and improved margins.

Ann Gurkin, Analyst, Davenport: And you’ve set a terrific, terrific investment in the new facility as you referenced Shanks and then, the new capacity at the Shanks facility and the investment in added Salesforce. So you’ve set a platform to to drive these higher revenues, and that, is very exciting. I guess, are are you are you experiencing customer wins? Are you experiencing increased, business that should help, that you should be able to leverage those investments?

Preston Wigner, Chairman, President and CEO, Universal Corporation: We we certainly see those investments as key to our strategy. And, you know, in terms of what we saw in the first quarter with those types of headwinds, you know, there’s some some tariff impacts, for example. You know, we think we can work through with our customers. I believe some of that will end up being a timing issue for them if they’ve had tariff impacts in their supply chain versus tariff impacts with us, with our one facility where we’re bringing in raw material from China. But we have we’ve built this platform, and we’ve invested in those r and d commercial marketing resources and invested in expanding capabilities, not just in the Shanks facility, but in others, to give us that opportunity to provide platform products, leveraging the entire platform for customized value added products for our customers.

We are well set up for that. And now it’s a matter of executing on our plans, executing on our commercial strategies to increase those volumes and get pipeline projects from the pipeline to the factory floor and running volume for those factories. We’re very pleased with with our strategy, with our momentum, and we’re going to continue pushing hard for the rest of the year and the years beyond to keep increasing volume.

Ann Gurkin, Analyst, Davenport: So do you think that margin can increase in the back half of the year for the ingredient segment versus Q1?

Preston Wigner, Chairman, President and CEO, Universal Corporation: We we have work to do to continue to execute on our strategy and to get things out of the pipeline. Some pipeline projects take months, some might take a year, and they’re all in different phases. I’m optimistic for the rest of the year that we would continue to execute on our strategies and continue to drive volume growth and then have the margin opportunities as we continue to increase our volumes. It’s a lot of work, but we feel like we’ve got the right investments and the right teams and the right relationships with the customers and the right strategies to make that happen.

Ann Gurkin, Analyst, Davenport: Okay. Great. Well, we’ll see how the year plays out. Best wishes to Johan and his retirement. That’s fantastic.

Any update on, the announcement of a successor in terms of CFO?

Preston Wigner, Chairman, President and CEO, Universal Corporation: No. We’ve we’ve initiated the process, but no announcements to date. We will keep everybody informed, of course.

Ann Gurkin, Analyst, Davenport: Great. And then always ask about the use of cash. Any updates there?

Johan Kroner, Chief Financial Officer, Universal Corporation: In in what in what sense, Anne?

Preston Wigner, Chairman, President and CEO, Universal Corporation: Are you still there?

Johan Kroner, Chief Financial Officer, Universal Corporation: Technical difficulty. Give us one moment please.

Desiree, Conference Operator: And we’ll proceed to our next question comes from the line of Daniel Harriman with Sidoti and Company. Your line is open.

Daniel Harriman, Analyst, Sidoti and Company: Hey, Woosh, Preston, Johan. Good morning. Thank you so much for taking my questions and congrats on the quarter. I’ve got two questions this morning, and I understand you already hit on both of these in the prepared remarks and then the prior questions. But just for educational purposes, as someone newer to the story, at a high level, could you just walk us through how seasonality and crop carryover typically affect results as the year progresses?

Obviously, we know the impact from the first quarter. And then with the oversupply expected in the market, I was just hoping you might be able to comment a little bit on how you’re managing that risk of the oversupply while maintaining pricing and inventory discipline as the year goes on.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Sure, Daniel. You know, I think for carryover for us, you know, a lot of that is timing and a lot of that is mix, and it varies year to year. And, again, with with the first quarter being our seasonally low quarter, you know, we’re doing less selling and more buying. Small changes in mix, small changes in volume for carryover can make a big difference for the quarter. For us, with these short crops for the past few years, you know, we haven’t had much carryover to carryover.

You know, just like last year, as I said in my remarks, you know, there was such high demand. We shipped product earlier in the year, and we just had less carryover to sell into the fourth into the first quarter. In addition, because uncommitted inventories were so low at the end of the year because it’s an underspiped situation. You know, we didn’t have the flexibility that we like with additional uncommitted inventory to be able to make sales towards the end of a season or the end of a year for opportunity purchases with our customers. And now as we move into a more balanced supply and then as we said, you know, likely oversupply by the end of the fiscal year, the key for us is access to tobacco.

If we can access tobacco, we believe we can sell it given our strategies and our competitive advantages. Our diversified footprint gives us access to all the necessary crops to meet customer needs, And our strong relationships with our customers and our close communication with them help us to really mutually navigate market dynamics. Shifting from smaller crops and undersupplied to larger crops, imbalanced or oversupplied, those should logically reduce costs, create attractive opportunities, and they should reduce our working capital requirements. And as I mentioned earlier, we also benefit from increasing volumes through our factories, which reduces our per kilo costs. We generally prefer balanced to slight oversupply markets for all of those reasons.

We believe we have competitive advantages that make us a really valuable partner for our customers, especially in these changing market dynamics. It provides us more access and more flexibility to meet all of our customers’ evolving needs. And what’s also really key for us to remember is that we don’t buy tobacco on a speculative basis. We buy it with an understanding of what we believe our customers’ needs are so that when you do get into oversupply markets, because we don’t buy on a speculative basis, It mitigates that risk that we would end up a year with a lot of uncommitted inventory. And as oversupply continues, what you traditionally see is prices green prices to the farmer drop year over year until you get back into balance.

And what we’re very careful about is understanding what tobacco we have in inventory, how we’re going to move it so that we don’t end the year with large volumes of expensive tobacco going into another oversupply season. So we have there are some unique things for this current change in the market dynamics. You know, we’re going from historically high green prices that we just have never seen before, but but our teams around the world, we’re very experienced in dealing with changes and dynamics. These aren’t the first times we’ve seen shifts from undersupplied to oversupplied to balanced supply. And, again, based on our global diversified footprint, the advantages that give us, the flexibility that gives us, our strong teams on the ground who are experts in buying tobacco, how to buy it, when to buy it, we think we’re very well set up to take advantage of that and to help our customers and also to retain the value that we see in doing business with us.

Daniel Harriman, Analyst, Sidoti and Company: Great. That’s really helpful, and I appreciate your willingness to kinda take a step back there. But congrats on the quarter and best of luck moving forward.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Thank you, Daniel.

Desiree, Conference Operator: And we would like to call out Anne Gerken for any additional questions. Your line is now open.

Ann Gurkin, Analyst, Davenport: Well, thank you so much. I just wanted to follow-up on on the use of cash. I know you have an outstanding share repurchase program, and the use for investing in working capital needs and, ingredients business, although it sounds like you’re gonna grow that organically more at this point. That was my question.

Johan Kroner, Chief Financial Officer, Universal Corporation: Yeah. And the the the repurchase and and the 100,000,000 that we have out there, you know, we just renewed that and, you know, we just have it out there just in case the opportunity arises in any of the situations that you just mentioned. So currently, there are no big plans there, but because we have lots of all things to look at. But yes, it is out there just in case we need it.

Ann Gurkin, Analyst, Davenport: Okay, great. Thank you.

Johan Kroner, Chief Financial Officer, Universal Corporation: Thank you.

Desiree, Conference Operator: There are no further questions at this time. I would like to turn the call back over to Preston Wigner for closing remarks.

Preston Wigner, Chairman, President and CEO, Universal Corporation: Thank you, Desiree. Thank you all for joining our call today, and we look forward to speaking to you for our next quarter. Have a very good day.

Desiree, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining, and you may now disconnect.

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