Universal (NYSE:UVV) executives told investors the company delivered what management described as “solid performance” through the third quarter of fiscal 2026, while navigating a leaf tobacco market shifting toward oversupply and continued headwinds in its ingredients business tied to consumer packaged goods softness and tariffs.
Third-quarter and nine-month results
Chief Financial Officer Johan Kroner said consolidated revenue for the nine months ended December 31, 2025 was $2.21 billion, compared with $2.25 billion in the prior-year period. Operating income was $183.4 million versus $190.0 million a year earlier, and net income was $75.9 million compared with $85.7 million.
Tobacco: firm demand, shifting supply backdrop
Chairman, President, and CEO Preston Wigner said the tobacco operations segment produced “solid quarterly results” despite a difficult comparison to what he called an “extraordinary” fiscal 2025, when the industry was in an undersupply environment and Universal experienced accelerated shipments, high pricing, and favorable product mix.
For the first nine months of fiscal 2026, tobacco segment revenue was $1.94 billion versus $2.00 billion in the prior-year period, while segment operating income was $185.0 million compared with $194.4 million. In the third quarter, tobacco revenue was $779.9 million versus $853.9 million, and segment operating income was $84.0 million compared with $102.6 million.
On the call, Wigner said customer demand remained firm for most tobacco styles after several years of undersupply, even as the market moves toward oversupply. He cited large crops—particularly in Brazil and Africa—as providing opportunities to sustain sales, and noted increased third-party processing tied to the crop size.
He also pointed to several factors affecting year-over-year comparability in the quarter, including:
- Pricing that is “down slightly” from last year
- Additional write-downs in certain dark air-cured tobacco
- A less favorable mix compared with last year’s third quarter, when higher-margin dark tobacco shipped at higher volumes
- Shipment timing differences between quarters
Asked whether tobacco margins could exit fiscal 2026 in line with fiscal 2025, Wigner said the outcome would depend on mix and shipment timing in the fourth quarter, noting that some higher-margin tobacco that might otherwise have shipped in the third quarter could ship in the fourth.
On customer inventories, Wigner said Universal remains in “near-constant communication” and described customer duration positions as mixed: some customers have been buying what they need and restoring durations, while others still maintain lower durations and may decide later whether to return to historically higher levels as the market enters oversupply.
Wigner also provided an industry inventory datapoint, saying estimated unsold flue-cured and burley stock was about 102 million kilos at December 31, 2025, roughly unchanged from September 30, 2025.
Ingredients: investments, tariffs, and CPG softness pressure margins
Wigner said Universal continues to build its ingredients operations—an initiative launched in 2018 and expanded through three acquisitions in 2020 and 2021—while working to convert customer interest into sales and better absorb fixed costs from investments, including a Lancaster, Pennsylvania facility expansion completed just over a year ago.
Financially, the ingredients segment posted revenue of $265.2 million for the nine-month period, up from $249.0 million a year earlier, but segment operating income fell to $1.4 million from $7.9 million. In the third quarter, ingredients revenue was $81.3 million versus $83.3 million, and the segment recorded an operating loss of $0.1 million, compared with operating income of $3.7 million in the prior-year quarter.
Management attributed the weaker profitability to a combination of higher fixed costs tied to investment, product mix differences, and external headwinds. Wigner said softness in the broader consumer packaged goods sector has put pressure on customers and, in turn, tightened demand and pressured Universal’s pricing and margins. He added that tariff impacts—both direct and indirect—were “more pronounced” in the third quarter than in the first half.
Wigner described direct tariff impacts as higher costs on imported raw materials used in U.S. production that the company had difficulty fully passing through during the quarter. Indirect tariff impacts, he said, have affected customers’ product components or packaging costs, potentially weighing on their sales and reducing their orders from Universal.
Despite the backdrop, Wigner said ingredients sales are up 7% year to date versus last year. He also said sales of new, solutions-based value-added products have contributed to the increase and are becoming a significant portion of ingredients revenue, even as fixed costs compress margins. When asked about breaking down ingredients revenue by volume, price, and new customer wins, management said it does not provide that disclosure and noted results can be influenced by mix.
Looking ahead on tariffs, Wigner said the company is optimistic that higher-cost inventory carrying additional tariffs can move through the system in coming quarters, which he said would help. He also said the length and impact of market headwinds on customers was a notable surprise sequentially in the third quarter.
Balance sheet actions, leadership change, and sustainability update
Kroner said Universal refinanced and upsized its senior unsecured credit facility during the quarter, increasing the facility by $250 million. He said the new facility expands liquidity, lowers borrowing cost, and enhances financial flexibility to support long-term strategic priorities.
As of December 31, 2025, Universal’s net debt was $995 million compared with $945 million a year earlier. Liquidity availability—including cash and availability under committed and uncommitted lines—totaled $917 million.
Wigner also announced that Steven S. Diel was appointed CFO effective April 1. In response to a question about a prior CFO announcement, Wigner said the company filed an 8-K stating it withdrew its offer to Mr. Mittal and that the filing “speaks for itself.”
On sustainability, Wigner said the company’s annual sustainability report highlighted progress on environmental and social commitments, including nearly a six-fold year-over-year increase in renewable electricity consumption. He said approximately 17.7% of Universal’s global electricity is sourced from renewable energy, supporting science-based emissions targets and a goal of net-zero greenhouse gas emissions across the value chain by 2050. He also cited ongoing work in farming communities through Good Agricultural Practices and Agricultural Labor Practices programs.
Management said it remains focused on executing strategy into the fiscal fourth quarter, emphasizing resilience in tobacco amid shifting supply dynamics and continued efforts to scale the ingredients platform to improve earnings and margins over time.
About Universal (NYSE:UVV)
Universal Corporation (NYSE: UVV) is a global agribusiness company primarily engaged in the procurement, processing and sale of leaf tobacco. Headquartered in Richmond, Virginia, the company sources cured leaf tobacco from key growing regions in North and South America, Africa and Asia. Universal serves major multinational tobacco manufacturers by providing a full range of services including inventory management, quality control and logistics support to ensure a consistent and reliable supply of tobacco leaf.
In addition to its core leaf tobacco operations, Universal offers integrated supply-chain services that encompass warehousing, distribution and ingredient sourcing for smokeless and novel tobacco products.
