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Edited Transcript of UVV.N earnings conference call or presentation 5-Nov-20 10:00pm GMT

·23 min read

Q2 2021 Universal Corp Earnings Call Richmond Nov 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Universal Corp earnings conference call or presentation Thursday, November 5, 2020 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Airton L. Hentschke Universal Corporation - COO & Senior VP * Candace C. Formacek Universal Corporation - VP & Treasurer * George C. Freeman Universal Corporation - Chairman, President & CEO * Johan C. Kroner Universal Corporation - Senior VP & CFO ================================================================================ Conference Call Participants ================================================================================ * Ann Holden Gurkin Davenport & Company LLC, Research Division - Research Analyst * Chris Reynolds * Steven Francis Marascia Capitol Securities Management, Inc. - Director of Research ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Universal Corporation Second Quarter Fiscal Year 2021 Earnings Call. (Operator Instructions) Please be advised, today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Ms. Candace Formacek, the Vice President and Treasurer of UVV. Thank you. Please go ahead. -------------------------------------------------------------------------------- Candace C. Formacek, Universal Corporation - VP & Treasurer [2] -------------------------------------------------------------------------------- Thank you, Alyssa, and thank you all for joining us. George Freeman, our Chairman, President and CEO; Airton Hentschke, our Chief Operating Officer; and Johan Kroner, our Chief Financial Officer, are here with me today and 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 through February 5, 2020. Other than the replay, we have not authorized and disclaim responsibility for any recording, replay or distribution of any transcription of this call. This call is copyrighted and may not be used without our permission. Apologies, that was 2021, February 5, 2021. 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 and are representative as of today only. Actual results could differ materially from projected or estimated results, and we assume no obligation to update any forward-looking statements. This is a particular note during the current ongoing COVID-19 pandemic when the length and severity of the crisis and resulting economic and business impacts are so difficult to predict. For information on some of the factors that can affect our estimates, I urge you to read our 10-K for the year ended March 31, 2020, and the Form 10-Q for the most recently ended fiscal quarter. Such risks and uncertainties include, but are not limited to, the ongoing COVID-19 pandemic, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulation and taxation, changes in exchange rates and interest rates, industry consolidation and evolution and changes in market structure or sources. Finally, some of the information I have for you today is based on unaudited allocations and is subject to reclassification. In an effort to provide useful information to investors, our comments today may include non-GAAP financial measures. For details on these measures, including reconciliations to the most comparable GAAP measures, please refer to our current earnings press release. As we mentioned in our first fiscal quarter, timing factors related to COVID-19 continued to impact our results in the second quarter of fiscal year 2021. Our tobacco customer orders for crop year 2020 are strong, however, and the vast majority of these committed orders are packed awaiting shipment, with customer-mandated shipment timing heavily weighted to our fourth quarter of fiscal year 2021. In addition, our uncommitted inventories have come down significantly from the levels at the end of fiscal year 2020 and are at 16% of tobacco inventories as of September 30, 2020, which is well within our range -- target range. At this time, we believe our adjusted operating income for fiscal year 2021, excluding acquisitions, will materially exceed that of fiscal year 2020 barring any unforeseen events, including shipment delays due to lack of vessel or container availability, port congestion or COVID-19-related uncertainties. We are closely monitoring shipping conditions and currently expect to complete our scheduled shipments prior to our 2021 fiscal year-end. Turning to the details. Net income for the first half of fiscal year 2021, which ended September 30, 2020, of $14.8 million or $0.60 per diluted share compared with $30.1 million or $1.19 per diluted share for the same period of the prior fiscal year. Excluding certain nonrecurring items detailed in other items in today's earnings release, net income and diluted earnings per share declined by $23.9 million and $0.93, respectively, for the first half of fiscal year 2021 compared to the first half of fiscal year 2020. Operating income of $24.9 million for the 6 months ended September 30, 2020, also declined compared to operating income of $50.7 million for the 6 months ended September 30, 2019. For the second fiscal quarter ended September 30, 2020, net income was $7.5 million or $0.30 per diluted share compared with net income of $28.1 million or $1.11 per diluted share for the prior year's second fiscal quarter. Excluding certain nonrecurring items detailed in other items in today's earnings release, net income and diluted earnings per share declined by $19.6 million and $0.77, respectively, for the quarter ended September 30, 2020, compared to the quarter ended September 30, 2019. Operating income for the second quarter of fiscal year 2021 decreased to $16.4 million compared to $43.2 million for the 3 months ended September 30, 2019. Results for the 6 months and quarter ended September 30, 2020, reflected earnings declines in all segments, primarily on lower tobacco volumes due to scheduled tobacco shipments that will ship later in fiscal year 2021 compared to the same periods in the prior fiscal year. Consolidated revenues decreased by $80 million to $692.8 million for the first half of fiscal year 2021 and by $98.9 million to $377 million for the 3 months ended September 30, 2020, compared to the same periods in fiscal year 2020 on lower tobacco volumes and sales prices. Turning to the regions. Operating income for the Other Regions segment decreased by $20.8 million to $7.9 million for the 6 months and by $20.3 million to $12.2 million for the quarter ended September 30, 2020, compared with the same periods for fiscal year 2020. In both periods, volumes decreased in Africa, primarily due to later customer-mandated shipment timing delayed until our fourth fiscal quarter as well as weather-reduced crop sizes. In Brazil, sales volumes were up in the 6 months and second quarter of fiscal 2021 on higher sales of lower-margin carryover crop tobacco compared to the same periods in the prior fiscal year. Results for Asia were flat for the first half of fiscal year 2021 but declined for the second fiscal quarter on lower trading volumes largely from China and later shipment timing in the Philippines compared to fiscal year 2020. North America segment operating income of $1.7 million for the 6 months and $0.7 million for the quarter ended September 30, 2020, was down by $4.6 million and $4.8 million, respectively, compared to the same periods for the prior fiscal year as benefits from higher tobacco carryover volumes in the United States were outweighed by lower tobacco sales and processing volumes in Guatemala and effects of a smaller crop and later shipment timing in Mexico. The Other Tobacco Operations segment operating income of $11.6 million for the 6 months and $4 million for the quarter ended September 30, 2020, reflected decreases of $6.4 million and $3.5 million, respectively, compared to the same periods of fiscal year 2020. For the first half of fiscal 2021, results for our dark tobacco operations were down on reduced volumes and comparisons to lower costs in the prior year. In the second fiscal quarter, results for the dark tobacco operations were lower on reduced wrapper shipments compared to the quarter ended September 30, 2019. Results for our oriental joint venture were down for the 6 months and quarter ended September 30, 2020, compared to the same periods in the prior fiscal year on lower volumes and unfavorable foreign currency comparisons mainly from the Turkish lira. However, segment results in the first half and second quarter of fiscal 2021 benefited from the January 2020 acquisition of FruitSmart, our fruit and vegetable ingredients business. Selling, general and administrative costs for the first half of fiscal year 2021 decreased by $2.1 million to $101.8 million, mainly driven by positive foreign currency remeasurement exchange variances, primarily in Indonesia, the Philippines and Brazil, and lower travel costs, partially offset by operating and acquisition costs for our new agri product businesses and higher provisions for farmer advances compared with the same period in the prior year. Selling, general and administrative costs were flat for the second quarter of fiscal 2021 compared to the same period in the prior year on favorable net currency comparisons and lower compensation and travel costs offset by operating and acquisition costs for our new agri product businesses and higher provisions for farmer advances. Returning to the big picture. In the first half of fiscal year 2021, we experienced slowdowns in both tobacco processing and receipt of customer orders for leaf tobacco due to COVID-19. We implemented social distancing requirements in our factories, which slowed output and increased the time to process certain tobacco crops. Customer orders came in slower, in part due to the absence of customer on-site visits, which necessitated the mailing of product samples prior to order confirmation. Some customers have also requested shipping dates for their orders that are later in our fiscal year compared to prior fiscal years. We continue to monitor developments affecting our employees, customers and operations. We'll take additional steps to address the spread of COVID-19 and its impacts as necessary and remain thankful for the hard work of our employees and the continued support of our customers, growers and other partners during these challenging times. We have also been focused on and are very excited about our recent acquisition of Silva International. We believe this acquisition expands and enhances our plant-based ingredients platform and positions us for future success. Having made significant investments in the platform this calendar year, we expect to focus on integrating the companies, building on synergies among ingredients businesses and delivering long-term value and results to our shareholders. At the same time, we see opportunities in our core tobacco business such as demand for natural wrapper production and continue to position our company for success. At this time, we're available to take your questions. I'll turn it back to you, Alyssa, for any questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from the line of Ann Gurkin from Davenport. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [2] -------------------------------------------------------------------------------- I wanted to just start with the current political environment in the U.S., and it looks like we could have gridlock. Maybe a Biden presidency and maybe a Republican Senate, so maybe a gridlock. And I just was curious if you all -- what I should think about in terms of potential trade tariffs or lifting of tariffs or any kind of regulations I should think about in that political scenario, realizing it's not set, but that looks like the trend right now. I was just curious if you could comment on that. -------------------------------------------------------------------------------- George C. Freeman, Universal Corporation - Chairman, President & CEO [3] -------------------------------------------------------------------------------- I don't really see -- anticipate any issues with either administration -- with the administration, whoever it is. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [4] -------------------------------------------------------------------------------- Okay. Great. Okay. And then coming out of election, a number of states legalized marijuana and the Biden and Harris administration seems to support decriminalization of cannabis at the federal level. And I was just curious as to your thoughts on that potential scenario and how that could change your view on investing in cannabis or a segment of that or your view on how that could impact potential cigarette volume domestically. -------------------------------------------------------------------------------- George C. Freeman, Universal Corporation - Chairman, President & CEO [5] -------------------------------------------------------------------------------- Well, as we've mentioned before, we're just -- we're not really focusing on cannabis and hemp. We're sticking to our food -- our plant-based ingredients business. And again, as we mentioned, Candace mentioned earlier, right now, we're focusing on integration and building the synergies amongst our companies in that sector. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [6] -------------------------------------------------------------------------------- Okay. All right. I just have to ask. Okay. And then let's move to that business. Have you identified -- have you put a number on the synergies? Is there a synergy number we should focus on in terms of building the nontobacco -- or integrating the nontobacco businesses? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [7] -------------------------------------------------------------------------------- No, and it's too early to go there. It's -- we just bought Silva, and we're going through purchase accounting. We're looking at the synergies. Teams are talking. But no, we don't have a number for you. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [8] -------------------------------------------------------------------------------- Okay. And should we expect that you all will continue to add to that ingredient platform? Or are you at a point where you just want to integrate what you have right now before moving forward for any additional business? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [9] -------------------------------------------------------------------------------- Look, we got a live pipeline. But certainly, we spent quite a bit of money during the calendar year. And again, we need to integrate these businesses, look at them hard, see if there are synergies, and then we'll go from there. So we're probably taking a pause at this point in time. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [10] -------------------------------------------------------------------------------- And so versus the financial strategy you set out a couple of years ago, are you all running ahead of a time line in terms of investing in nontobacco businesses? Can you just update us kind of where we are on that strategy? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [11] -------------------------------------------------------------------------------- Yes. Yes, we are. At that point in time, when we made that announcement of the capital allocation strategy in May of 2018, we pointed out there that between 10% and 20% of EBITDA we wanted to come from this new platform in 5 years. And I believe that we have reached that point with an EPS accretion in fiscal year '22. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [12] -------------------------------------------------------------------------------- Okay. Okay. And I still get pushback on this, but why not just take that money and return it to shareholders? Why invest in nontobacco businesses? Can you just walk through the rationalization behind that strategy? I just get pushback on this. -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [13] -------------------------------------------------------------------------------- Well, Ann, look, we have organization that has been around for 100 years. We're proud of what we have. We believe that we have certain assets and capabilities that can be transferred or used in all the businesses. And based on that -- those assumptions, we have decided to look at all the things that we can do, and we have made the conscious decision to go into this plant-based ingredients space because we believe we can create shareholder value there. And that's what we are going for, and we have made these 2 acquisitions. They certainly will be accretive to us in the near future here. Certainly, with Silva in '22. So that all looks positive, and then that's a strategy that we believe we can deliver. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [14] -------------------------------------------------------------------------------- Okay. And then FruitSmart, how is that business tracking versus your internal expectations when you made the investment? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [15] -------------------------------------------------------------------------------- It's tracking slightly below what we had forecasted for this year. Partially because of COVID, volumes are actually up but there is a mix change. So a part of their business was cider business, which, again, was a higher-margin business. And that has completely dried up in a way with the bars and everything being closed. So there is a change in the mix there. But we're still very positive about -- very happy about how it's performing. And again, with the help of Silva and FruitSmart management, we believe there are synergies there that we can benefit from in the future. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [16] -------------------------------------------------------------------------------- Okay. Good luck. Okay. Given that a number of states are struggling financially, what is your view on the potential for higher excise taxes on cigarettes over the next 12 to 18 months? -------------------------------------------------------------------------------- George C. Freeman, Universal Corporation - Chairman, President & CEO [17] -------------------------------------------------------------------------------- I don't know. I hadn't really thought about it, but I don't see anything imminent. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [18] -------------------------------------------------------------------------------- Okay. Great. And then recent reports from your customers, it seems like cigarette volumes are tracking better than expected, which I view very much as a positive. And I was just curious, I know you don't comment on customer inventory levels, but in terms of supply and demand and with maybe industry volume tracking better than expected, how should we think about -- how -- like the global supply demand, inventory levels, potential for increased demand, pricing margins for you all over the next 12 to 18 months. Anything you can share there? -------------------------------------------------------------------------------- Airton L. Hentschke, Universal Corporation - COO & Senior VP [19] -------------------------------------------------------------------------------- Yes. Listen, I mean we follow it very closely, supply and demand worldwide. And yes, in some areas, we have seen some negative impact. In some areas, we have seen some positive impact. So on the supply side, supply and demand, we believe right now on the flue-cured, it is a little -- it's a slightly oversupply in the flue-cured. And the, burley where it stands right now, it's in balance. But if American-blend cigarettes continue to decline, we do believe that next year, we might have a slight oversupply on the burley side as well. I think what's important here to mention is that this year, the crops, in general, they came in a little bit below where we expected at the beginning of the year, but this -- it also offered us the opportunity to bring our uncommitted inventory down. And you have seen last -- I think it was a quarter -- 2 quarters ago, we had about 25% of our inventory was uncommitted. Right now, we have a level of 60%. So we are very proud we put a strategy in place, and we achieved that, yes. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [20] -------------------------------------------------------------------------------- That's great. Okay. I would just think -- I would think the scenario would be improving for you all with -- I know volumes are down, but down less than expected. So I would think customer inventories might be getting worked off faster than expected, which I would think would be a positive given the global leaf outlook you issued today, your outlook for the crop. So I was just curious on that point. But can you help me with the outlook for dark tobacco and oriental tobacco for those businesses this year? -------------------------------------------------------------------------------- Airton L. Hentschke, Universal Corporation - COO & Senior VP [21] -------------------------------------------------------------------------------- The dark tobacco business perspective is very good, and we have been investing in the wrapper for the mass cigar business and for the premium cigar business but also in the eco-cigar issue, which was a large expansion there. And we have invested quite a bit in the last few years, so we do see very positive there. And on the oriental side, we believe, right now, it is more or less in balance. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [22] -------------------------------------------------------------------------------- Okay. Okay. And then what are -- do you have opportunities to increase your share of leaf processing globally? I know you talked about maybe potential increased demand for wrapper, but anything on the leaf processing side? -------------------------------------------------------------------------------- Airton L. Hentschke, Universal Corporation - COO & Senior VP [23] -------------------------------------------------------------------------------- Yes. We are always looking at opportunities to become more efficient, and we do see opportunities to improve in that area there as well in offering processing services. Yes, we are working on that. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [24] -------------------------------------------------------------------------------- And the increased market share, increased business with customers or get new customers? -------------------------------------------------------------------------------- Airton L. Hentschke, Universal Corporation - COO & Senior VP [25] -------------------------------------------------------------------------------- Absolutely. Absolutely, yes. And we have seen our increase in market share over the last few years. I mean cigarette consumption in general, it's been down since 2013. And if you look at our overall volumes in the last few years, it's pretty stable. So yes, I mean, we are gaining market share. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [26] -------------------------------------------------------------------------------- Great. That's great. And then you talked about operating income up meaningfully versus fiscal '20. How does that compare to fiscal '19? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [27] -------------------------------------------------------------------------------- Of course, '19 was a very good year, and we had some [very old] crops there from both Africa as well as the U.S. So we really wanted to point out to you that it's going to be a material increase over last year because the orders are in -- tobacco is primarily packed. Tobacco inventory is committed, as you can see in our uncommitted inventory numbers. So the -- it's just -- it's forecast to ship later this year primarily in the fourth quarter. In addition, we do not expect to see some of the headwinds we encountered in the fourth quarter of fiscal year '20. So that's why we wanted to point that out. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [28] -------------------------------------------------------------------------------- Great. That's great. And then, Candace, do you have a worldwide uncommitted leaf inventory number? -------------------------------------------------------------------------------- Candace C. Formacek, Universal Corporation - VP & Treasurer [29] -------------------------------------------------------------------------------- Ann, it hasn't changed from the last time. That -- I won't get an update until later this month. We're still at the -- you had the June 30 number, 115 million kilos, right? Just indication of that, that's what it is still. -------------------------------------------------------------------------------- Ann Holden Gurkin, Davenport & Company LLC, Research Division - Research Analyst [30] -------------------------------------------------------------------------------- Okay. And then the crop change -- the outlook on the crop change in Africa, is that -- you talked about weather -- being related to weather. Is there anything else in that number? Or is it predominantly weather in terms of the crop size outlook? -------------------------------------------------------------------------------- Airton L. Hentschke, Universal Corporation - COO & Senior VP [31] -------------------------------------------------------------------------------- It was predominantly weather, yes. -------------------------------------------------------------------------------- Operator [32] -------------------------------------------------------------------------------- Our next question comes from the line of Steve Marascia of Capitol Securities. -------------------------------------------------------------------------------- Steven Francis Marascia, Capitol Securities Management, Inc. - Director of Research [33] -------------------------------------------------------------------------------- Just sort of a bigger picture question. I mean everybody is concerned about corona and the effects -- negative effects, but what do you foresee happening to your business assuming we get a good vaccine and think the world returns to normal? What would be the likely scenario for your business? -------------------------------------------------------------------------------- George C. Freeman, Universal Corporation - Chairman, President & CEO [34] -------------------------------------------------------------------------------- Well, I must admit that we've been operating pretty well even with all the restrictions in place. So I guess, I see us traveling a little bit more than we have in the past 6 months. But I think the business has not really been materially affected negatively by coronavirus. So when the threat recedes, I don't see any material appreciation due to that. -------------------------------------------------------------------------------- Steven Francis Marascia, Capitol Securities Management, Inc. - Director of Research [35] -------------------------------------------------------------------------------- All right. Regarding Silva -- I came in kind of late on the whole Silva story, but have you guys quantified how much revenues potentially it could add? Have you guys broken that out? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [36] -------------------------------------------------------------------------------- No, we have not. Steve, at this point in time, we have not done that. We are looking at segment reporting for SEC purposes, and we hope to have additional information like that in the future for you with regard to the platform. -------------------------------------------------------------------------------- Candace C. Formacek, Universal Corporation - VP & Treasurer [37] -------------------------------------------------------------------------------- And we had talked about the opportunity for the 10% to 20%. So I think that's the main figure that's out there for... -------------------------------------------------------------------------------- Steven Francis Marascia, Capitol Securities Management, Inc. - Director of Research [38] -------------------------------------------------------------------------------- Potentially, best case scenario adding 10% to 20% to your earnings down the road? -------------------------------------------------------------------------------- Candace C. Formacek, Universal Corporation - VP & Treasurer [39] -------------------------------------------------------------------------------- Yes. Our new entire platform. So that would be... -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [40] -------------------------------------------------------------------------------- And we have made the statement, Steve, that we have reached that goal between 10% and 20% with the acquisition of Silva in fiscal year '22. -------------------------------------------------------------------------------- Steven Francis Marascia, Capitol Securities Management, Inc. - Director of Research [41] -------------------------------------------------------------------------------- Okay. And then I was looking at your consolidated balance sheet numbers on Page 9 of the release and there was seem to be a bit of a jump. In terms of -- under the other assets, there was a decent jump of $45 million in the goodwill and other intangibles. Where did that come from? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [42] -------------------------------------------------------------------------------- That's FruitSmart. -------------------------------------------------------------------------------- Steven Francis Marascia, Capitol Securities Management, Inc. - Director of Research [43] -------------------------------------------------------------------------------- Okay. So that was the acquisition of FruitSmart then? -------------------------------------------------------------------------------- Johan C. Kroner, Universal Corporation - Senior VP & CFO [44] -------------------------------------------------------------------------------- Yes. I think the earlier jump, if you were looking year-over-year, then that's FruitSmart, yes. -------------------------------------------------------------------------------- Operator [45] -------------------------------------------------------------------------------- (Operator Instructions) We have no -- I'm sorry, we have a question from Chris Reynolds of Neuberger Berman. -------------------------------------------------------------------------------- Chris Reynolds, [46] -------------------------------------------------------------------------------- Okay. I have a question on the overall tobacco market, which -- in the United States, which seems to be growing a little -- or declining less than it had in the past. Is that a trend that you expect to continue? Or do you think a more reasonable decline might be in the 5% range or so over the next few years? That had been the average rate of decline prior to some slight improvement recently. -------------------------------------------------------------------------------- Airton L. Hentschke, Universal Corporation - COO & Senior VP [47] -------------------------------------------------------------------------------- No. Listen, we believe that it will continue the trend as it has been -- as we have seen in the last few years there, Chris. That's the way we look at the United States in the market. -------------------------------------------------------------------------------- Operator [48] -------------------------------------------------------------------------------- (Operator Instructions) Presenters, we have no further questions. You may continue. -------------------------------------------------------------------------------- Candace C. Formacek, Universal Corporation - VP & Treasurer [49] -------------------------------------------------------------------------------- Thank you. We appreciate all of your time today, and we look forward to our next quarterly call. Thank you, Alyssa, as well. -------------------------------------------------------------------------------- Operator [50] -------------------------------------------------------------------------------- This concludes today's call. You may now disconnect.