Operating Segments

3 Months Ended

Jun. 30, 2025

OPERATING SEGMENTS

Management regularly evaluates the Company’s global business activities, including product and service offerings to its customers, as well as senior management’s operational and financial responsibilities. Assessments include an analysis of how its Chief Operating Decision Maker (“CODM”) measures business performance and allocates resources. As a result of this analysis, senior management has determined the Company conducts operations across two reportable operating segments, Tobacco Operations and Ingredients Operations.

The Tobacco Operations segment activities involve contracting, procuring, processing, packing, storing, and shipping leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products throughout the world. Through various operating subsidiaries located in tobacco-growing countries around the world and significant ownership interests in unconsolidated affiliates, the Company processes and/or sells flue-cured and burley tobaccos, dark air-cured tobaccos, and oriental tobaccos. Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes, and dark air-cured tobaccos are used mainly in the manufacture of cigars, pipe tobacco, and smokeless tobacco products. Some of these tobacco types are also used in the manufacture of next generation tobacco products that are intended to provide consumers with an alternative to traditional combustible products. The Tobacco Operations segment also provides physical and chemical product testing for tobacco customers. A substantial portion of the Company’s Tobacco Operations’ revenues are derived from sales to a limited number of large, multinational cigarette and cigar manufacturers.

The Ingredients Operations segment provides its customers with a broad variety of plant-based ingredients for both human and pet consumption. The Ingredients Operations segment utilizes a variety of value-added manufacturing processes converting raw materials into a wide spectrum of fruit and vegetable juices, concentrates, dehydrated products, botanical extracts, and flavorings. Customers for the Ingredients Operations segment include large multinational food and beverage companies, smaller independent manufacturers, and retail organizations. FruitSmart, Inc. (“FruitSmart”), Silva International, Inc. (“Silva”), and Shank’s Extracts, LLC d/b/a Universal Ingredients–Shank’s (“Universal Ingredients–Shank’s”) are the primary operations for the Ingredients Operations segment. FruitSmart supplies a broad set of juices, concentrates, pomaces, purees, fruit fibers, seeds, seed powders, and other value-added products to food, beverage, and flavor companies throughout the United States and internationally. Silva procures dehydrated vegetables, fruits, and herbs from around the world and specializes in processing natural materials into custom designed dehydrated vegetable and fruit-based ingredients for a variety of end products. Universal Ingredients–Shank’s offers a diversified portfolio of botanical extracts, distillates, natural flavors, and color for industrial and private label customers worldwide, and is known for their significant vanilla expertise. Universal Ingredients–Shank’s is also equipped to offer customers custom bottling and packaging for their products.

Universal incurs corporate overhead expenses related to senior management, sales, finance, legal, and other functions that are centralized at its corporate headquarters, as well as functions performed at several sales and administrative offices around the world. These overhead expenses are currently allocated to the reportable operating segments, generally on the basis of projected annual financial and operational performance, including volumes planned to be purchased and/or processed.

Management believes this method of allocation is currently representative of the value of the related services provided to the operating segments. The CODM, which has been identified as a group comprised of the Company’s Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer, currently evaluates the performance of the operating segments based on operating income after allocated overhead expenses, plus equity in the pretax earnings of unconsolidated affiliates (“Segment Operating Income”). The CODM also uses Segment Operating Income for planning, forecasting, and allocating capital and other resources to the operating segments.

Reportable segment data as of, or for, each period presented in the consolidated statements of income and comprehensive income, the consolidated balance sheets, and the consolidated statements of cash flows is as follows:


	Three Months Ended June 30, 2025						Three Months Ended June 30, 2024
	Tobacco Operations		Ingredients Operations		Consolidated		Tobacco Operations		Ingredients Operations		Consolidated
Sales and other operating revenues	$	504,696	$	89,066	$	593,762	$	511,955	$	85,095	$	597,050
Cost of goods sold	(407,867)		(71,768)		(479,635)		(434,765)		(66,364)		(501,129)
Selling, general and administrative expenses	(44,754)		(12,037)		(56,791)		(46,548)		(12,779)		(59,327)
Corporate overhead allocated to the segments	(18,840)		(3,561)		(22,401)		(16,328)		(3,041)		(19,369)
Equity in pretax earnings (loss) of unconsolidated affiliates(1)	2,435		—		2,435		140		—		140
Segment operating income	35,670		1,700		37,370		14,454		2,911		17,365
Deduct: Equity in pretax (earnings) loss of unconsolidated affiliates(1)					(2,435)						(140)
Restructuring and impairment costs (2)					(1,122)						—

Consolidated operating income					$	33,813					$	17,225

(1)Equity in pretax earnings (loss) of unconsolidated affiliates is included in segment operating income (Tobacco Operations), but is reported below consolidated operating income and excluded from that total in the consolidated statements of income and comprehensive income.

(2)Restructuring and impairment costs are excluded from segment operating income, but are included in consolidated operating income in the consolidated statements of income and comprehensive income. See Note 2 for additional information.


	Segment Assets						Accounts Receivable, net
	June 30, 2025		June 30, 2024		March 31, 2025		June 30, 2025		June 30, 2024		March 31, 2025
Tobacco Operations	$	2,652,407	$	2,523,296	$	2,436,416	$	366,317	$	376,578	$	566,755
Ingredients Operations	536,900		509,672		553,136		57,840		59,363		59,121
Consolidated total	$	3,189,307	$	3,032,968	$	2,989,552	$	424,157	$	435,941	$	625,876

	Goodwill, net						Intangibles, net
	June 30, 2025		June 30, 2024		March 31, 2025		June 30, 2025		June 30, 2024		March 31, 2025
Tobacco Operations	$	97,796	$	97,742	$	97,772	$	45	$	65	$	47
Ingredients Operations	116,068		116,068		116,068		55,192		66,009		57,789
Consolidated total	$	213,864	$	213,810	$	213,840	$	55,237	$	66,074	$	57,836

					Capital Expenditures				Depreciation and Amortization
					Three Months Ended June 30,				Three Months Ended June 30,
					2025		2024		2025		2024
Tobacco Operations					$	7,402	$	9,135	$	8,216	$	9,881
Ingredients Operations					4,651		13,614		5,366		4,683
Consolidated total					$	12,053	$	22,749	$	13,582	$	14,564

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

UNIVERSAL CORP /VA/ 10-Q