Good day, everyone, and welcome to today's Universal Corporation first quarter fiscal year 2025 earnings call. At this time, all participants are in a listen-only mode, but later you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. Please note, this session is being recorded. I'll be standing by should you need any assistance, and it is now my pleasure to turn the floor over to Jennifer Rowe. Please go ahead. Thank you, Jim. Thank you 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 November seventh, 2024. 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. 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. 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, 2024. Such risks and uncertainties include, but are not limited to, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulation and taxation, changes in exchange rate and interest rates, industry consolidation and evolution, and changes in market structure or sources. Finally, some of the information that I have for you today may be based on unaudited allocations and is subject to reclassification. In an effort to provide useful information to investors, our comments today may also 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. Universal Corporation is off to a strong start for our fiscal year 2025. For the quarter ended June 30th, 2024, revenue was $597.1 million, up approximately 15% for both our tobacco and ingredient operations segments, while operating income was $17.2 million, up $6.2 million or 56% compared to the same quarter last fiscal year. Our revenue increase in the Tobacco Operations segment was driven by higher sales volumes and prices. Coming out of an exceptional fiscal year 2024, we benefited from continued strong demand from our tobacco customers. We believe this demand will continue to support solid results for the segment for fiscal year 2025. Our strategic decisions to accelerate tobacco crop purchasing allowed us to secure our contracted tobacco in certain dynamic markets, which has positioned us well to meet customer demand. As in previous fiscal years, we expect that tobacco shipment timing and related revenue recognition will be more heavily weighted towards the second half of fiscal year 2025. Our uncommitted tobacco inventory levels at June 30th, 2024, remained low at about 13%, and we believe that global leaf tobacco remains in an undersupply position. Looking ahead, we expect that recent elevated green tobacco prices will incentivize farmers to increase planting for the next season, potentially leading to more balanced markets in the coming years. We work closely with our contract farmers to provide guidance and support to promote increased production. During the quarter ended June 30th, 2024, our Ingredients Operations segment also delivered improved performance, primarily based on increased sales volumes. New product sales have increased across our ingredients platform, contributing to positive results. These increased sales, combined with general improvement in certain markets and recovery of demand for our core products, drove the 15% increase in sales revenue for the segment as compared to the same quarter last fiscal year. As expected, our debt level remained elevated at June 30th, 2024. As our committed tobacco inventories, which represented 87% of total tobacco inventories at June 30th, 2024, are processed and delivered to customers, we anticipate working capital to unwind during fiscal year 2025. Some financial highlights for the quarter ended June 30th, 2024. Net income for the quarter was $0.1 million, or $0.01 per diluted share. Net income increased by $2.2 million, and diluted earnings per share increased by $0.09 for the quarter ended June 30th, 2024, compared to the quarter ended June 30th, 2023. Operating income of $17.2 million for the quarter increased by $6.2 million. Selling, general, and administrative expenses were up $3.2 million in the quarter ended June 30th, 2024, largely on unfavorable foreign currency comparisons. Some highlights for our operating segments. Operating income for the Tobacco Operations segment increased by $5.6 million- $14.5 million for the quarter ended June 30th, 2024, compared to the quarter ended June 30th, 2023. Tobacco Operations segment operating income was up in the quarter ended June 30th, 2024, largely on higher carryover crop shipments, as well as higher earnings from our Oriental tobacco joint venture. Operating income for the Ingredients Operations segment was up $4.9 million for the quarter ended June 30th, 2024. Results for the Ingredients O perations segment for the quarter were up primarily due to increased sales volumes, which included higher sales of new products, as well as some increases in sales of core products, notably fruit juices. Accelerated purchasing by certain customers and lower inventory write-downs also increased results for the segment in the first quarter of fiscal year 2025, compared to the same period last fiscal year. Test runs and certifications of the processing lines for our Lancaster, Pennsylvania expansion project are progressing well, and the facility remains on track to become fully operational in the second half of this fiscal year. Along with the expansion project, we continue to focus on our commercial and research and development teams to enhance the capabilities and specialized products we are able to offer Universal Ingredients customers. We continue to expect the project to meaningfully contribute to our Ingredients Operations segment results in fiscal year 2026. Reducing our environmental impacts remains a key business goal for Universal. Setting Scope 1, 2, and 3 greenhouse gas emission targets with the Science Based Targets initiative in 2021, and committing to publicly disclosing our progress towards meeting those targets by 2030, are some of the ways we demonstrate our commitment to sustainability. The credibility of our disclosures is contingent on the accuracy of our emissions data and the methods we use to calculate them. We are pleased to announce that we received independent third-party verification of our Scope 1, and 2 emissions data, as well as our Scope 3 emissions data associated with tobacco purchased through our supply chain, and the methods we use to calculate our emissions. These important milestones reinforce our dedication to the public and transparent disclosure of our progress towards our goals and the importance of sustainability to Universal. For over a hundred years, Universal has successfully managed our business and generated strong cash flows over time under a wide range of market conditions. We continue to leverage our global footprint to alleviate the impact of localized disruptions, such as adverse weather. Our proactive approach to understanding and responding to the changing world in which we operate, and our deep understanding of our customers' needs, will serve us well as we continue our endeavor to deliver consistent results year- over- year. At this time, we are available to take your questions. To our phone audience joining today, if you would like to ask a question at this time, simply press star and one on your telephone keypad. Pressing star and one will place your line into a queue, and I will open your lines one at a time. A friendly reminder that if you're joining today on a speakerphone, please return to your handset prior to pressing star and one to ensure that your signal does reach our equipment. Once again, ladies and gentlemen, that is star and one. We'll hear first from Ann Gurkin with Davenport & Co. Good evening, everyone. Hey, Ann. Congratulations on a terrific start to your fiscal year. Thank you very much. You're welcome. I wanted to start with tobacco, and the update about estimated leaf production for 2025, and your comments we might move towards more of a balanced supply environment. So that outlook, combined with some comments from some of your top customers, indicating prices, tobacco leaf prices have been up but are expected to moderate going into 2025. I was wondering how I should think about the combination of those two factors as we look forward to fiscal 2026 and potential margins for your tobacco segment. Yeah, no, that's a very good point there. And, we are coming out of two, three crops of under supply, and that, of course, has generated an inflationary green price all around the globe. But what we are seeing now is, for 2025, different weather pattern, a mild La Niña, which means, you know, a little bit dry in South America and Brazil, and some more rain in Africa. So a mild La Niña should produce bigger crops, and we have positioned Universal Leaf to increase, as we are working with our farmers to increase our own tobacco production in the key markets, and that should bring a more balanced situation into the tobacco industry. So the combination of that more balanced scenario, how does that support your ability to price leaf and keep margins at attractive levels in fiscal 2026? We will definitely be looking at a reduction in this inflationary green price, green tobacco. And at the same time, you know, we would have also more volume to process in our facilities, reducing our overall fixed cost, and believe that we can definitely, in this scenario, maintain our margins. Okay, great. And then you talked about in the release about consolidating sheet production in Europe. Can you tell me what the potential cost savings are from that effort? And we can't go into exact numbers here. You know, certainly there will be some cost savings. The number currently for restructuring is between $10 million and $15 million. Most of that is non-cash, but we're still talking to the workers' council and then, and a number of other things that we need to look at to determine, you know, what the exact cost is gonna be of that restructuring. We do see some efficiencies there by bringing all that under one roof. You know, that facility wasn't exactly efficient, so certainly there are gonna be some benefits, but we need to see what that is going forward. Will those cost savings, potential cost savings, flow through in fiscal 2026? That's what we would expect. Yes, ma'am. Okay, great. And then are you having any issues obtaining shipping containers to move the leaf in the back half of fiscal 25? Yeah. Lately, we have seen some of the disruptions. We have seen increased freight and overall logistics costs in some geographies. Of course, it's a lot related to the situation in the Red Sea and the Middle East conflict there, but... Also some availability of containers. Yes. But I think, and over the COVID period, we managed much more, let's say, a stronger situation there. We worked very, very optimistic and very diligently with our customers, and we are being as proactive as we can to avoid any constraint on the supply chain. Great. And it's nice to see the strong results for the Oriental tobacco. How should I think about that, for the balance of the year? A lot of that has to do with, of course, last year, you know, specifically with regard to the Turkish market, you know, that, that currency there was whipping around. You know, they were paying some hefty interest rates on the local loans and everything. So, you know, it's a very good start for the Oriental, and we expect, you know, to see a nice pop-up from last year, because certainly last year they didn't do so well. But, you know, it's gonna be more in line with the past. Okay, great. Waiting in Richmond for Hurricane Debby, how should I think about that as it moves up the coast? Well, first of all, our thoughts and prayers are with all the communities that have been affected and potentially will be affected in the next couple of days. So what we know so far, there was a negative impact in some of the production areas in Georgia and Florida, but those are very small production areas. The balance of the production areas where the majority of the volume is located is too early to project as the- Yeah [crosstalk]...storm path and pattern continue to evolve. So we are closely monitoring the situation, and we will have a clear picture by this weekend. Great. Ann, I just wanna note that the, again, the U.S. represents less than 10% of our tobacco segment results, so. Okay, great. We will keep our fingers crossed. Okay, Jennifer, do you have uncommitted worldwide tobacco leaf numbers? Sure. The worldwide flue-cured and burley uncommitted stocks stood at 21 million kilos at the end of June. That's down 7 million kilos from the end of March. Okay. And then turning to ingredients, nice improvement sequentially on your ingredients segment. Nice to see that pick up, stronger than I was expecting. Thank you. How should I think about, the full year and potential margin for that segment? Q1 came in higher than I would have thought, so that's great to see. Yeah, and look, in the first quarter, they improved certainly from last year. That was primarily driven by a combination of, you know, sale of new products, under new contracts. You know, as our investments in the platform commercial sales team and R&D functions are finally starting to pay off there. And also the stabilization in some of the markets we serve and the recovery in the sales of our core products. So we saw it on both sides. Volume was up nicely. Keep in mind that pricing was down in that most of those areas because of, you know, the raw materials have come down quite a bit over the last year or so. For the year, we expect to see continued improvement, as customer contracts, you know, ramp up throughout the year. You know, we expect to see some benefits from the expansion project in Lancaster, but we don't expect to see meaningful impact until fiscal year 2026. So again, last year, we started out down. There were some inventory write-downs, so we didn't repeat that this year, so that is a nice pick up there. And again, we're seeing a nice pick up just on volume, and it's going in the right direction. So we expect that, and we hope to continue that momentum. That's great. So can you get margins back to that mid-single digit range by the end of the year, fiscal year? We certainly hope so. Congratulations. That's great. What are the new products? Can you give me an example? Boy, there is lots of things. We're putting out there. You know, we can't exactly. We have lots of NDA, so we can't exactly be specific about it, but, you know, we're putting in all kinds of flavors, flavors. Blends ... for a number of customers, different customers. And again, we have signed some, you know, beverages, we're producing all kinds of beverages at the moment. So it's really widespread, and we're throwing a wide net. Our guys are out there trying all kinds of different things. And again, we have been spending a lot of money on R&D and commercial, ramping that up. So we hope to see the fruit of that, you know, in the next couple of quarters and going into 2026. Great. And then it looks like you did pull some business forward into this quarter. Can you give me a dollar amount? No, I can't give you a dollar amount, but it was, you know, it was nice to, to see that. It, it was earlier than we had certainly anticipated. Those lines are now up and running. You know, we have gotten the, the approvals and the certifications for, the aseptic, both on the high and the low acid. So, and we have started to produce product for, for a number of customers, albeit, albeit slowly. So we, you know, again, hope to see that ramp up throughout the rest of the year and then really meaningful, into, fiscal year 2026. Great. Okay, great. SG&A for the full year, we have a range of $300 million-$310 million. Is that fair? Yeah, look, in the first quarter, we were up about $3 million. Yeah. Normally, we'll give you the variances there. Certainly, that was FX related, where we were up. Last year, the number was $311. We expect- Yeah ...to come in below that number for fiscal year 2025. Great. Interest expense was higher, and you outlined, the increased, partially due to the increased debt levels to carry the higher tobacco inventory. So how do I think about that interest expense in the back half as hopefully you ship and sell that tobacco? Yeah, exactly right. Then we'll have to see what interest rates do later in the year, whether or not the Fed actually is going to do something. So, you know, we do certainly expect to see the unwind leverage to come down later this year. Hopefully, you know, by buying that crop in Brazil earlier, we can ship it earlier as well. You know, we bought it slightly earlier in Africa, in certain origins as well. So hopefully, you know, we can speed that up a little bit and, you know, just bring that whole leverage down, and that will also help the interest expense later this year. Great. CapEx looks like it was moderated a little bit. Any reason for that? Yeah. Well, again, we made some hefty investments in Lancaster, so you know, that all is almost finished. So, we do expect that to come down over time. Great. And then congratulations on all your hard work on sustainability and your progress against your goals. That is nice to see. I guess along that same line, you've commented on working with farmers globally to grow additional crops. So I was wondering if you could just flesh that out a little bit as to opportunities for your farmer base to grow crops that maybe you could sell throughout your business, and at what point are you able to ramp up that, that program? As part of our farmer programs over the last couple of years, we have provided our farmer base, our contracted farmer base, with food crops. We have done that for quite some time already. So you know, that is really you know, a sustenance thing there. And we also, in certain markets, provide a market for those products to for them to sell it. So you know, we've been doing that for quite some time, and we're trying to you know, expand that. When you saw that video yesterday in the annual shareholders meeting, you know, that was specifically in Brazil, but we're doing that already in Africa for a number of years. So you know, we're just going to continue that where possible. It's still in a test mode. Is that fair right now? No, I don't think it's a test mode. I think we, you know, we're doing that in the markets where it's possible to do. And, you know, again, we're providing it to them for their own use. Now, if you are going to take it a step further and you want to look at what we can do on the ingredient side, yes, there is a test mode. We are in a number of origins. We're trying some things out, certain products that we currently use, that we're buying out of different markets, where there might be some issues in the future. Certainly, we love to apply our, you know, traceability and sustainability on the ingredient side as well. That's something that we're certainly looking at, and in the long term, think that we can achieve some, some really good results. That's great. That's great. Thank you. Thank you all for your time. Thank you. You're welcome. Thank you. Thank you. And again, to our phone audience, that is star and one, if you would like to ask a question. We'll pause for a moment to give our audience a chance. And Ms. Rowe, we have no signals from our audience. I'll turn it back to you for any additional or closing remarks. Thank you all for joining us on our call today. Ladies and gentlemen, this does conclude today's session, and we do thank you for your participation. You may now disconnect your lines. We hope you have a great day.