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- Goodwill Impairment (new) — $41.1M charge to fully write off Shank's goodwill in Q4 FY2026 reflects slower than anticipated sales growth and persistent customer market headwinds.
Universal Corp FY2026 operating income falls 28% on $41M Shank's impairment, inventory write-downs
Filed June 1, 2026 · Period ending March 31, 2026 · Compared to 10-K May 30, 2025 · ~2 min read
Key Financials
SEC XBRL| Metric | PriorMar 31, 2025 | CurrentMar 31, 2026 | Δ |
|---|---|---|---|
| Revenue | $2.92B | $2.89B | ▼ -1.3% |
| Net income | $95.0M | $32.6M | ▼ -65.7% |
| Diluted EPS | $3.78 | $1.30 | ▼ -65.6% |
| Operating income | $232.8M | $168.5M | ▼ -27.6% |
| Cash & equivalents | $260.1M | $62.2M | ▼ -76.1% |
| Long-term debt | $617.9M | $616.7M | ▼ -0.2% |
| Total assets | $2.99B | $2.77B | ▼ -7.5% |
As reported in XBRL by the filer · 10-K vs 10-K. Income figures cover the fiscal year; cash & assets are period-end balances. n/m = not meaningful (sign change; a % would mislead). about this table · verify on EDGAR →
Key Number Changes
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We generated approximately $2,947.3 million in consolidated revenues and earned $232.8 million in total operating income and $252.5 million in total segment operating income in fiscal year 2025.
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We generated approximately $2.9 billion in consolidated revenues and earned $168.5 million in total operating income and $214.8 million in total segment operating income in fiscal year 2026.
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As of March 31, 2025, we employed more than 28,500 employees, operating in over 30 different countries across five continents. Approximately 60% of our employees are seasonal and approximately 40% are full-time employees. Almost 50% of our employees are female and more than 20% of our managers are female. Globally, Universal has 13 collective bargaining agreements in place, covering approximately 40% of our workforce.
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As of March 31, 2026, we employed more than 25,000 employees, operating in over 30 different countries across five continents. Approximately 55% of our employees are seasonal and approximately 45% are full-time employees. Almost 42% of our employees are female and more than 23% of our managers are female. Globally, Universal has 13 collective bargaining agreements in place, covering approximately 30% of our workforce.
Prior filing · verify on EDGAR →
Tobacco Operations segment results reflected larger, higher quality, better yielding crops from Africa; higher sales of carryover crops; weather-reduced crop sizes in Brazil and the United States in fiscal year 2025; and $13.4 million of higher tobacco inventory write-downs, compared to fiscal year 2024.
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Fiscal year 2026 results were negatively impacted by a non-cash, goodwill impairment charge related to our Shank's operation, as well as increased tobacco inventory write-downs, primarily for non-wrapper, dark air-cured tobacco. ... Tobacco inventory write-downs of $43.4 million in fiscal year 2026, were up $24.7 million, compared to fiscal year 2025.
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As of March 31, 2025, we had $270 million available under the committed revolving credit facility that will mature in December 2027
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As of March 31, 2026, we had $730 million available under the committed revolving credit facility that will mature in December 2030
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Our operations generated about $327.0 million in operating cash flows in fiscal year 2025. That amount was about $401.6 million higher than the $74.6 million we used in fiscal year 2024, primarily on lower working capital requirements in fiscal year 2025, due to accelerated tobacco purchasing in Brazil in fiscal year 2024.
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Our operations generated about $129.1 million in operating cash flows in fiscal year 2026. That amount was about $197.9 million lower than the $327.0 million we generated in fiscal year 2025, primarily on lower working capital requirements in fiscal year 2025, due to certain tobacco purchases that would have typically been made in fiscal year 2025 having been made in fiscal year 2024.
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At March 31, 2025, cash balances totaled $260.1 million.
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At March 31, 2026, cash balances totaled $62.2 million.
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Our uncommitted tobacco inventories decreased by approximately $17.2 million to $164.0 million, or about 20% of tobacco inventory, at March 31, 2025, compared to March 31, 2024 levels. Uncommitted inventories at March 31, 2024, were $181.1 million, which represented 17% of tobacco inventory. While we target committed tobacco inventory levels of 80% or more of total tobacco inventory, the level of these uncommitted inventories is influenced by timing of farmer deliveries and purchases of new crops, as well as the receipt of customer orders.
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Our uncommitted tobacco inventories increased by approximately $58.3 million to $222.3 million, or about 27% of tobacco inventory, at March 31, 2026, compared to March 31, 2025 levels. Uncommitted inventories at March 31, 2025, were $164.0 million, which represented 20% of tobacco inventory. While we target committed tobacco inventory levels of 80% or more of total tobacco inventory, the level of these uncommitted inventories is influenced by timing of farmer deliveries and purchases of new crops, as well as the receipt of customer orders. Uncommitted tobacco levels were outside our target range at March 31, 2026, due to delayed customer purchase commitments, but we expect them to be within our range during fiscal year 2027.
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We currently plan to spend approximately $45 to $55 million in fiscal year 2026 on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.
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We currently plan to spend approximately $55 to $65 million in fiscal year 2027 on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.
Key Changes
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high
$41.1M goodwill impairment at Shank's (Ingredients segment) reflects slower sales growth, high fixed costs from expansion, and persistent customer market headwinds including tariff impacts and CPG sector softness.
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high
Tobacco inventory write-downs jumped $24.7M to $43.4M, driven by softer demand and longer sales cycles for non-wrapper dark air-cured tobacco; uncommitted inventory rose to 27% of total (vs. 20% target), expected to normalize in FY2027.
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high
Material weakness in inventory controls at tobacco subsidiary remediated; disclosure controls and internal control over financial reporting now effective after prior-year adverse auditor opinion.
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medium
New $780M revolving credit facility (up from $530M) extends maturity to Dec 2030; available capacity increased to $730M from $270M, providing enhanced liquidity headroom.
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medium
Operating cash flow fell $197.9M to $129.1M as working capital normalized after FY2024's accelerated Brazil tobacco purchases; cash balance declined to $62.2M from $260.1M.
Summary
Universal Corp's FY2026 results were dominated by a $41.1 million goodwill impairment at Shank's, its botanical extracts and flavors business, alongside sharply higher tobacco inventory write-downs. Total operating income fell from $232.8 million to $168.5 million, a 28% decline, while revenues slipped to approximately $2.9 billion from $2,947.3 million. The Shank's impairment reflects slower sales growth, high fixed costs from prior expansion investments, and persistent headwinds in the consumer-packaged-goods sector exacerbated by tariff impacts. Tobacco inventory write-downs surged $24.7 million to $43.4 million, primarily for non-wrapper dark air-cured tobacco facing softer demand and longer sales cycles. Uncommitted tobacco inventory rose to 27% of total (versus a 20% target), though management expects normalization during FY2027 as delayed customer commitments materialize. On the positive side, the company remediated the material weakness in inventory controls disclosed in FY2025, restoring effective internal controls and Form S-3 eligibility. A new $780 million revolving credit facility (up from $530 million) extends maturity to December 2030 and provides $730 million in available capacity, significantly enhancing liquidity. Operating cash flow declined $197.9 million to $129.1 million as working capital normalized after FY2024's accelerated Brazil tobacco purchases, reducing the cash balance to $62.2 million from $260.1 million. The company also resolved a long-standing Brazil VAT dispute favorably, eliminating a $3 million contingent liability. Watch next quarter for progress on reducing uncommitted tobacco inventory toward the 20% target and whether Ingredients Operations can stabilize after the Shank's impairment. The new tariff environment (including February 2026 Supreme Court ruling on IEEPA tariffs and subsequent administration actions) adds uncertainty to both customer demand and supply chain costs.Section-by-Section Diff
Business
Updated financial results, renamed subsidiary, expanded Ingredients Operations descriptions, added Chief Human Resources Officer role, and refined health/safety language.
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We generated approximately $2,947.3 million in consolidated revenues and earned $232.8 million in total operating income and $252.5 million in total segment operating income in fiscal year 2025.
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We generated approximately $2.9 billion in consolidated revenues and earned $168.5 million in total operating income and $214.8 million in total segment operating income in fiscal year 2026.
Consolidated revenues declined from $2,947.3 million to approximately $2.9 billion, total operating income fell from $232.8 million to $168.5 million, and total segment operating income decreased from $252.5 million to $214.8 million year-over-year. These represent material declines in both top-line and operating profitability.
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Under our corporate pillar, we continue to pursue strategies and initiatives to strengthen and support our organization for the future. These strategies and initiatives are expected to focus on efficient financial management, effective human capital management, optimal utilization of technology and operational synergies between our business segments.
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Under our corporate pillar, we pursue strategies and initiatives intended to strengthen and support our Company for the future. These strategies and initiatives are expected to focus on efficient financial management, effective human capital management, optimal utilization of technology, including artificial intelligence (“AI”), and operational synergies between our business segments.
The corporate strategy pillar now explicitly mentions "optimal utilization of technology, including artificial intelligence ('AI')" as a focus area, whereas the prior year referenced only "optimal utilization of technology." This adds AI as a named technology initiative.
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Universal’s climate transition plan includes reducing fossil fuel use, purchasing renewable forms of electricity, and enhancing operational efficiencies throughout our operations and value chain. These actions support the Company’s goal of reaching net-zero greenhouse gas (“GHG”) emissions across the value chain by 2050. Universal is actively transitioning to cleaner fuels around the world. Diesel and coal fuels are being replaced with electricity and biomass where possible to reduce our GHG emissions footprint. Renewable energy plays a significant role in our journey to net-zero, so we have developed plans to purchase Renewable Energy Credits where possible and have signed a Virtual Power Purchase Agreement (“VPPA”) for solar-powered energy that we expect to reduce our total scope 1 and 2 emissions in North America by 45%.
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Universal’s climate transition plan includes reducing fossil fuel use, purchasing renewable forms of electricity, and enhancing operational efficiencies throughout our operations and value chain. To align our carbon reduction strategy with industry standards, we updated our emissions reduction goals and received approval of near-term, long-term and net zero ... emissions targets from the Science Based Target Initiative (SBTI) during 2025. These actions support the Company’s goal of reaching net-zero greenhouse gas emissions across the value chain by 2050.
The current version adds that the company "received approval of near-term, long-term and net zero emissions targets from the Science Based Target Initiative (SBTI) during 2025." It removes the prior year's details about transitioning to cleaner fuels, replacing diesel and coal with electricity and biomass, and the VPPA for solar-powered energy expected to reduce North America scope 1 and 2 emissions by 45%.
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As of March 31, 2025, we employed more than 28,500 employees, operating in over 30 different countries across five continents. Approximately 60% of our employees are seasonal and approximately 40% are full-time employees. Almost 50% of our employees are female and more than 20% of our managers are female. Globally, Universal has 13 collective bargaining agreements in place, covering approximately 40% of our workforce.
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As of March 31, 2026, we employed more than 25,000 employees, operating in over 30 different countries across five continents. Approximately 55% of our employees are seasonal and approximately 45% are full-time employees. Almost 42% of our employees are female and more than 23% of our managers are female. Globally, Universal has 13 collective bargaining agreements in place, covering approximately 30% of our workforce.
Total employee count decreased from more than 28,500 to more than 25,000. The seasonal/full-time mix shifted from 60%/40% to 55%/45%. Female employee representation declined from almost 50% to almost 42%, while female managers increased from more than 20% to more than 23%. Collective bargaining coverage decreased from approximately 40% to approximately 30% of the workforce.
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This fiscal year we created the role of Chief Human Resources Officer to further strengthen Universal’s organizational capabilities. Reporting directly to our Chief Executive Officer, the Chief Human Resources Officer provides strategic direction and oversight for our global human resources function and human capital management programs, supporting the development, engagement, and long-term success of our workforce.
The company created a new Chief Human Resources Officer role during fiscal year 2026, reporting directly to the CEO. This role provides strategic direction and oversight for global human resources and human capital management programs.
Show 17 minor / wording changes
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Our primary subsidiaries are Universal Leaf Tobacco Company, Incorporated (“Universal Leaf”), which is associated with our Tobacco Operations segment, and Universal Global Ventures, Incorporated, which is associated with our Ingredients Operations segment.
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Our primary subsidiaries are Universal Leaf Tobacco Company, Incorporated, which is associated with our Tobacco Operations segment, and Universal Ingredients, Inc. (“Universal Ingredients”) (formerly Universal Global Ventures, Incorporated), which is associated with our Ingredients Operations segment.
The Ingredients Operations subsidiary was renamed from Universal Global Ventures, Incorporated to Universal Ingredients, Inc. The Tobacco Operations subsidiary reference also dropped the "Universal Leaf" short-form identifier. These are administrative naming updates.
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We contract directly with farmers and farmer organizations in many of the countries in which we operate.
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We contract directly with farmers and farmer organizations in most of the countries in which we operate.
The company changed "many of the countries" to "most of the countries," indicating broader direct farmer contracting coverage across its operating footprint.
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Similar to the tobacco side of our business, our Ingredients Operations source raw materials globally to provide our customers with a consistent, high-quality, and stable supply of plant-based ingredients. A variety of value-added manufacturing processes are then used in these businesses to convert such raw materials. We produce a wide spectrum of fruit and vegetable juices, concentrates, dehydrated products, botanical extracts, flavorings, and innovative, value-added ingredients utilizing products and capabilities across the entire Universal Ingredients platform.
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Similar to Universal’s Tobacco Operations, our Ingredients Operations source raw materials globally and utilize value-added manufacturing processes to provide customers with a consistent, high-quality, and reliable supply of plant-based ingredients. Through the Universal Ingredients platform, we produce and supply a broad portfolio of products, including fruit and vegetable juices and concentrates, purees, dehydrated products, botanical extracts, flavorings, colorings, and other customized, value-added ingredient solutions.
The Ingredients Operations overview was reworded to emphasize "reliable supply" instead of "stable supply," and now explicitly lists "colorings" and "customized, value-added ingredient solutions" as part of the product portfolio. The description is more structured and comprehensive.
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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. Its top products are not-from-concentrate apple juice as well as apple, blueberry, concord grape, and raspberry juice concentrates. We believe that FruitSmart is well positioned to benefit from growing consumer preferences for better-for-you premium ingredients, including custom blends, not-from-concentrate and dry products, and strong growth in targeted end markets including ciders, purees and nutraceuticals. FruitSmart is headquartered in the Yakima Valley in Washington State and has approximately 200 employees. FruitSmart operates two separate manufacturing facilities: one that produces liquid products and one that produces dry products. In fiscal year 2025, FruitSmart embarked on several automation projects that utilize robotics to increase efficiency, enhance capacity, and increase health and safety protocols.
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FruitSmart supplies a diversified portfolio of fruit- and vegetable-based ingredients to customers in the United States and international markets, including juices, concentrates, essences, purees, pomaces, fibers, seeds, and seed-based products. Core offerings include not-from-concentrate apple juice and a range of juice concentrates, including apple, blueberry, Concord grape, and raspberry. Headquartered in the Yakima Valley in Washington State, FruitSmart operates separate liquid and dry production facilities. The business focuses on operational efficiency, capacity utilization, and health and safety initiatives, while positioning its portfolio of products to benefit from increasing demand for premium, better-for-you, and functional ingredients.
The FruitSmart description was streamlined, removing employee count and the fiscal 2025 automation project details. The current version emphasizes "operational efficiency, capacity utilization, and health and safety initiatives" and "increasing demand for premium, better-for-you, and functional ingredients" without the prior year's specific automation and end-market examples.
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Silva procures over 60 types of dehydrated vegetables, fruits, and herbs from over 20 countries around the world and specializes in processing natural materials into custom designed dehydrated vegetable and fruit-based ingredients for a variety of end products. Its top five ingredients product categories are vegetable blends, peppers, spinach, carrots, and pumpkin. Headquartered in Momence, Illinois, Silva employs over 200 people and has a 380,000 square foot manufacturing facility. Silva has established a reputation as the go-to provider of clean, natural, specialty dehydrated vegetable and fruit-based ingredients due to its unique competencies and significant capacity to source, process, and manufacture materials. Silva also has longstanding relationships with suppliers and their farmers around the world and maintains strong quality control procedures to ensure a consistent, high-quality supply of ingredients.
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Silva procures over 70 types of dehydrated vegetables, fruits, and herbs and spices from over 20 countries around the world and specializes in processing natural materials into dehydrated vegetable- and fruit-based ingredients tailored for a range of food applications. Silva’s product portfolio includes vegetable blends and individual ingredients such as peppers, spinach, carrots, and pumpkin. Headquartered in Momence, Illinois, Silva operates a large-scale manufacturing facility and maintains strong supplier relationships and quality control processes to support consistent, high-quality supply of ingredients. Silva has established a strong position in clean-label, natural, and specialty dehydrated ingredients, providing solutions for diverse applications in the human food industry as well as the pet food market.
Silva now procures "over 70 types" of products (up from "over 60"), and the description removes employee count and facility square footage. The current version emphasizes "clean-label, natural, and specialty dehydrated ingredients" and explicitly mentions "the human food industry as well as the pet food market."
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Universal Ingredients–Shank’s offers a diversified portfolio of over 2,400 botanical extracts, distillates, natural flavors, and colors for industrial and private label customers worldwide, and is known for significant vanilla expertise. Universal Ingredients–Shank’s is also equipped to offer customers custom bottling and packaging for their products. Universal Ingredients–Shank’s employs more than 300 people at their 194,000 square foot manufacturing campus in Lancaster, Pennsylvania. In fiscal year 2025, Universal completed a major expansion project at the Lancaster, Pennsylvania facility. The project added an industry-leading combination of extraction, blending, and aseptic packaging. The investment also added refrigerated storage and enhanced capabilities to support additional customer demand and growth into new product categories and markets.
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Universal Ingredients–Shank’s provides a diversified portfolio of botanical extracts, distillates, natural and artificial flavors, and colors for industrial and private label customers worldwide, with particular expertise in vanilla. The business also offers custom formulation, bottling, and packaging services. The manufacturing campus in Lancaster, Pennsylvania includes extraction, blending, and aseptic processing and packaging capabilities, supported by refrigerated storage and expanded production capacity. Recent investments in this facility have enhanced the business’s ability to serve growth categories, including beverages, food service, and specialty applications, while enabling greater innovation and speed to market.
The current description removes the "over 2,400" product count, employee count, and facility square footage. It also removes the fiscal 2025 expansion project announcement and instead describes the facility's current capabilities and how "recent investments" have enhanced the business's ability to serve growth categories.
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To support Universal Ingredients, we have invested in building out our sales, marketing and product development teams focused on creating value across the entire platform. This platform-level support enables us to deliver unique, custom products to our customers. Our research and development function includes highly trained food scientists and professionals who are skilled in the creation of various food and beverages to showcase the value of our ingredients. Some examples of the concepts developed by our research and development group include ready-to-drink teas and coffees, carbonated soft drinks, nutritional smoothies, and bakery items. The commercial sales team consists of seasoned sales professionals who work closely with the research and development team. This platform team is tasked with becoming subject matter experts on the entire suite of products to help leverage the full potential of the ingredients portfolio and drive earnings growth. Longer term, we believe we will be able to enhance our overall product offerings and achieve significant operational synergies by leveraging Universal’s existing global sourcing capabilities, strong relationships with our farmer base, and agronomic expertise.
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To support the continued growth of Universal Ingredients, we have made investments in centralized sales, marketing, and product development capabilities that operate across the platform. Our research and development team, including our product development lab in Lancaster, Pennsylvania, is staffed with food scientists and technical professionals who collaborate with customers to develop and commercialize new products. These capabilities support a wide range of applications, including ready-to-drink beverages, coffees, teas, carbonated beverages, nutritional products, and bakery items. Our teams work closely with our research and development professionals to provide integrated solutions and to leverage the full breadth of the platform’s capabilities in bringing products to market.
The current version emphasizes "centralized sales, marketing, and product development capabilities" and describes the research and development team's collaboration with customers to "develop and commercialize new products." It removes the prior year's forward-looking language about achieving "significant operational synergies" and driving "earnings growth."
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Our Ingredients Operations primarily service the food and beverage industry, which is diverse and encompasses a variety of companies that cater to different market segments. These companies can range from small, privately held regional food and beverage brands to multinational food and beverage companies. The food and beverage market is segmented into many different categories including retailers, food service providers, consumer packaged goods companies, and beverage companies. Silva also has a large presence in the pet food market. With our most recent investments in our Lancaster, Pennsylvania facility, we will be focusing heavily on the food service, beverage and casual dining markets. Our investment in the research and development function in Lancaster, Pennsylvania, supports our ability to meet the demands of such a large and diverse group of customers.
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Our Ingredients Operations primarily serve the food and beverage industry, including multinational consumer packaged goods companies, food service providers, beverage manufacturers, and retailers, as well as regional and specialty brands. These customers operate across diverse end-markets and applications, spanning a wide range of distribution channels. Many customers across these end-markets place value on research and development, application expertise, and collaborative product innovation. To support these needs and anticipated growth, our recent investments, particularly in the Lancaster, Pennsylvania facility, have expanded our research and development and application capabilities, as well as production capacity in beverage, food service, and related channels. These investments enhance the platform’s ability to support customized formulations, rapid product development, and reinforce readiness to meet evolving customer demand over time.
The current version broadens the customer description to include "multinational consumer packaged goods companies, food service providers, beverage manufacturers, and retailers, as well as regional and specialty brands." It removes the specific mention of Silva's "large presence in the pet food market" and the forward-looking focus on "food service, beverage and casual dining markets."
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Universal Ingredients serves the human and pet food markets as well as the beverage market, one of the largest industrial categories in the United States. There are thousands of companies represented in the plant-based ingredients segment and hundreds that offer similar or competitive types of products. The market remains highly fragmented with many competitors being relatively small, privately-owned, entrepreneurial companies that lack corporate level support for product development, platform sales, and capital investments. We distinguish ourselves in this market by offering high-quality, innovative, customized product solutions with global sourcing capabilities and having strong, long-standing customer relationships.
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The plant-based ingredients market is large and highly fragmented, with thousands of participants ranging from small, privately-owned companies to large multinational suppliers. Many competitors focus on specific product categories or regional ... markets and may have more limited capabilities in areas such as product development, integrated sourcing, or large-scale capital investment. We compete by offering high-quality, customized ingredient solutions supported by global sourcing capabilities, value-added processing, and integrated platform-level sales, marketing, and product development. We believe our scale, breadth of capabilities, customer relationships, and continued investments in innovation and capacity position Universal Ingredients to compete effectively across its markets.
The current version describes the market as "large and highly fragmented" with competitors ranging from "small, privately-owned companies to large multinational suppliers," whereas the prior year emphasized "relatively small, privately-owned, entrepreneurial companies." The competitive positioning now emphasizes "integrated platform-level sales, marketing, and product development" and "continued investments in innovation and capacity."
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Universal released our 2024 Sustainability Report in December 2024, highlighting our efforts in strengthening supply chain resiliency, maintaining our strong partnerships with our farming communities, and advancing energy efficiency.
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Universal released our 2025 Sustainability Report in January 2026, highlighting our efforts in reducing emissions, conserving resources, advancing fair labor practices, and improving farmer livelihoods.
The 2025 Sustainability Report was released in January 2026 (versus December 2024 for the prior year's report). The current report highlights "reducing emissions, conserving resources, advancing fair labor practices, and improving farmer livelihoods," while the prior year emphasized "strengthening supply chain resiliency, maintaining our strong partnerships with our farming communities, and advancing energy efficiency."
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Our leaf technicians made over 1.8 million visits to more than 175,000 contracted farmers to maintain our visibility and traceability in our supply chain. Our operations continue to enhance transparency and collaboration with our stakeholders by reporting to the Sustainable Tobacco Program and training over 175,000 farmers on GAP and ALP to advance environmental and human rights best practices throughout our contracted farmer base.
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Our leaf technicians made over 2 million visits to more than 200,000 contracted farmers to maintain our visibility and traceability in our supply chain. Our operations continue to enhance transparency and collaboration with our stakeholders by reporting to the Sustainable Tobacco Program and training over 200,000 farmers on GAP and ALP to advance environmental and human rights best practices throughout our contracted farmer base.
Leaf technician visits increased from over 1.8 million to over 2 million, and the number of contracted farmers engaged grew from more than 175,000 to more than 200,000. Farmer training on GAP and ALP also increased from over 175,000 to over 200,000 farmers.
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Only around 4.8% of our employees are located in the United States.
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Less than 5% of our employees are located in the United States.
The company changed the U.S. employee percentage from "around 4.8%" to "less than 5%," a minor rounding or simplification of the same underlying figure.
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The Compensation and Human Resources Committee oversees administration of the Company’s human resource programs and has oversight of compensation, benefits, and retention and development processes of senior management, including an annual review of the Company’s succession planning and leadership development program.
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The Compensation and Human Resources Committee oversees administration of the Company’s human resource programs, including with respect to talent management, succession planning, and performance management.
The current version broadens the Committee's oversight to "talent management, succession planning, and performance management" across the organization, whereas the prior year emphasized "compensation, benefits, and retention and development processes of senior management" with an annual succession planning review.
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The Code and Manual have been translated into 16 languages and apply directly to all officers, directors, and non-seasonal employees in the Universal family of companies.
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The Code and Manual have been translated into 16 languages and apply directly to all officers, directors, and employees in the Universal family of companies.
The Code of Conduct and Anti-Corruption Compliance Manual now apply to "all officers, directors, and employees" (removing the "non-seasonal" qualifier), indicating broader coverage to include seasonal employees.
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The health and safety of our employees is at the forefront of our business efforts. We are committed to the prevention of injury and illness in the workplace through strong health and safety management, employee empowerment and accountability, and strict compliance with health and safety regulations. Our programs are designed to influence our Company’s culture through employee engagement and leadership behavior. We pair our health and safety management system with a strong database reporting tool to allow all Universal facilities to track their local occupational health and safety performance and that of the entire company. These reports allow our global teams to analyze the insights collected from our health and safety system immediately to support compliance and promote continuous improvement.
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The health and safety of our employees, contractors, and visitors is a core business priority and a fundamental component of Universal’s risk management framework. Universal is committed to preventing work-related injuries and illnesses through a structured health and safety management system that emphasizes leadership accountability, employee participation, and compliance with applicable laws and requirements. Health and safety expectations are embedded into operational decision-making and reinforced through governance, performance monitoring, and continual improvement processes. Our health and safety management system is designed to strengthen organizational safety culture by establishing clear expectations for leadership behavior, empowering employees to identify and address hazards, and reinforcing accountability at all levels of the organization. Standardized reporting and performance tracking tools enable facilities to monitor local performance while providing corporate leadership with timely, comparable insights across operations. This approach supports the identification of emerging risks, prioritization of corrective actions, and effective allocation of resources to reduce exposure and prevent harm.
The current version significantly expands the health and safety description, now covering "employees, contractors, and visitors" (not just employees), and framing health and safety as "a core business priority and a fundamental component of Universal's risk management framework." It emphasizes "leadership accountability," "governance," "performance monitoring," and "continual improvement processes" with more structured language about risk identification and resource allocation.
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Additionally, we utilize other health and safety initiatives to ensure our facilities remain safe for our employees. We established health and safety metrics across our tobacco factory and agronomy operations. Each factory carries out an in-depth data analysis of prior data and implements health and safety metrics for improvement and monitoring. By giving employees a goal to achieve and monitor, they will be more engaged in what they do and better able to help us succeed. Our “fresh eyes” approach to workplace safety involves inviting colleagues from different facilities to share in cross-auditing tasks. In addition to corporate audits, we encourage this regional cross-auditing to promote a collaborative framework and drive our employee safety programs forward.
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To support continuous improvement, key health and safety performance measures have been established across our tobacco processing and agronomy operations. We regularly evaluate historical performance, identify site-specific risk drivers, and implement measurable objectives. These measures are designed to support informed decision-making, strengthen prevention efforts, and promote accountability and long-term risk reduction. Performance is reviewed through established governance processes to ensure alignment with corporate expectations and to inform ongoing improvement planning. Assurance and shared learning are reinforced through corporate audits and regional cross-auditing initiatives. Our “fresh eyes” approach brings together employees from different locations to participate in peer reviews, promoting consistency, collaboration, and the exchange of best practices. This approach complements formal audits, broadens organizational perspective, and reinforces shared responsibility for safety performance across the organization.
The current version expands the description of health and safety performance measures, emphasizing "informed decision-making," "prevention efforts," "accountability," and "long-term risk reduction." It adds that "performance is reviewed through established governance processes" and that the "fresh eyes" approach "complements formal audits, broadens organizational perspective, and reinforces shared responsibility."
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Legal compliance is a fundamental aspect of our health and safety practices. Universal companies seek to adhere to full compliance with health and safety laws and regulations and cooperate with local authorities to maintain strong health and safety programs. As part of our commitment to a robust supply chain, our policies require our suppliers and partners to uphold healthy and safe work environments in compliance with all relevant regulations.
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Legal compliance remains a foundational requirement of our health and safety program. Universal companies are expected to comply with applicable occupational health and safety laws and regulations and to cooperate with regulatory authorities in maintaining effective and compliant programs. As part of our broader commitment to a responsible and resilient supply chain, our policies require suppliers and business partners to provide healthy and safe working environments and to meet applicable legal and contractual health and safety requirements. Through governance, monitoring, and engagement, we seek to apply health and safety expectations consistently across our operations and supply chain, supporting sustained improvement and long-term value creation.
The current version strengthens the legal compliance language, stating that Universal companies "are expected to comply" (versus "seek to adhere to full compliance") and "cooperate with regulatory authorities" (versus "local authorities"). It also expands the supply chain commitment to "a responsible and resilient supply chain" and adds that policies require suppliers to "meet applicable legal and contractual health and safety requirements." The current version emphasizes "governance, monitoring, and engagement" to apply expectations "consistently across our operations and supply chain."
Controls
Material weakness in inventory controls at tobacco subsidiary remediated; disclosure controls now effective after prior-year ineffectiveness.
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Based on this evaluation, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, concluded that, as a result of the material weakness in the Company’s internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective as of March 31, 2025.
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Based on this evaluation, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2026.
Management concluded disclosure controls were effective as of March 31, 2026, reversing the prior year's ineffective conclusion. The prior-year ineffectiveness was driven by the material weakness in inventory controls at a tobacco subsidiary, which has now been remediated.
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Based on this assessment, the Company’s management concluded that the Company’s internal control over financial reporting was not effective at the reasonable assurance level as of March 31, 2025, due to the material weakness described under “New Material Weakness” below.
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Based on this assessment, the Company’s management concluded that the Company’s internal control over financial reporting was effective at the reasonable assurance level as of March 31, 2026.
Management concluded internal control over financial reporting was effective as of March 31, 2026, reversing the prior year's ineffective conclusion. The improvement reflects successful remediation of the inventory-control material weakness identified in fiscal 2025.
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To remediate the material weakness described above, the Company successfully implemented the following remediation steps at the tobacco subsidiary: 1.Required enhanced documentation associated with management review controls and validation of the completeness and accuracy of key reports used across the inventory process, including physical inventory counts. 2.Designed and implemented additional reports to be utilized in inventory reconciliation controls at the subsidiary. Based on management’s evaluation of the effectiveness of the Company’s internal controls as of March 31, 2026, management concluded that the previously identified material weakness had been successfully remediated as of March 31, 2026.
Company completed remediation of the inventory-control material weakness during fiscal 2026 by implementing enhanced documentation for management review controls and additional inventory reconciliation reports at the tobacco subsidiary. Management concluded the weakness was successfully remediated as of March 31, 2026.
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The material weakness identified by the Company’s management resulted in Ernst & Young LLP issuing an adverse opinion on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2025.
The fiscal 2025 filing disclosed that Ernst & Young issued an adverse opinion on internal control effectiveness due to the material weakness. The fiscal 2026 filing does not contain similar language, consistent with the remediation of the material weakness and restoration of effective controls.
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To remediate the new material weakness described above, the Company will implement the following remediation steps at the tobacco subsidiary: 1.Require enhanced documentation associated with management review controls and validation of the completeness and accuracy of key reports used across the inventory process, including physical inventory counts. 2.Design and implement additional reports to be utilized in inventory reconciliation controls at the subsidiary. The Company believes these measures, once they have operated effectively for a sufficient period of time, will remediate the control deficiencies identified and strengthen its internal control over financial reporting. However, there may not be sufficient time for the Company to remediate the material weakness or, if remediated, to test the operating effectiveness of the remediated controls as of the Company’s next fiscal year end. As the Company continues to evaluate, and works to improve, its internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. The Company cannot assure you, however, when it will remediate such weakness, nor can it be certain whether additional actions will be required or the costs of any such actions. Moreover, the Company cannot assure you that additional material weaknesses will not arise in the future.
The forward-looking remediation plan disclosure from fiscal 2025 has been removed and replaced with completed remediation language, reflecting that the planned steps were successfully implemented during fiscal 2026.
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As previously disclosed under “Item 9A – Controls and Procedures” in Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the fiscal year ended March 31, 2024, in August 2024, shortly before filing the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, the Company’s management was made aware of embezzlement by a former senior finance employee at the Company’s Mozambique subsidiary, Mozambique Leaf Tobacco Ltda. (“MLT”). The Company promptly commenced an internal investigation regarding these allegations and related matters. With the assistance of outside advisors, the Company’s internal investigation identified approximately $7 million in the aggregate of unauthorized payments during fiscal years 2022 through 2025. The Company has identified approximately $16.7 million in the aggregate of unauthorized payments during fiscal years 2016 through 2025. As result of the discovery of the embezzlement, the Company’s management reassessed the design and effectiveness of its internal control over financial reporting. This reassessment identified certain control activities at MLT that were deficient in that they had failed to prevent or detect the embezzlement in a timely manner. Additionally, the Company’s management concluded that it was unable to rely on controls performed at MLT due to the lack of competence and integrity of certain individuals at MLT executing those controls. The Company’s management concluded that these control deficiencies collectively constituted a material weakness in the Company’s internal control over financial reporting as of March 31, 2024. Notwithstanding the material weakness, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s previously filed consolidated financial statements were fairly stated in all material respects in accordance with GAAP for each of the periods presented. Therefore, no restatement of any prior period financial statements was required. During the fiscal year ended March 31, 2025, the Company, with the oversight of the Audit Committee of the Board of Directors, designed and implemented measures pursuant to management’s overall internal control over financial reporting ... remediation plan and also completed testing of the design and operating effectiveness of all remediated controls. The remediation efforts included the following: 1.Discontinued employment of the employee who perpetrated the embezzlement in Mozambique and the employee’s supervisor and replaced those individuals. 2.Required recurring remedial internal control training to all internal control performers and owners, including journal entry review and reconciliation procedures. 3.Designed and implemented additional internal controls of banking systems access. Based on management’s evaluation of the effectiveness of the Company’s internal controls as of March 31, 2025, including newly remediated controls, management concluded that the previously identified material weakness had been successfully remediated as of March 31, 2025.
The detailed disclosure of the Mozambique embezzlement and its remediation has been removed from the fiscal 2026 filing. The fiscal 2025 filing reported that this material weakness was successfully remediated as of March 31, 2025, so the removal reflects the lifecycle completion of that discrete event.
MD&A
Removed FY2025 performance commentary and segment-specific achievements; retained core business description and non-GAAP measure disclosures.
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We have positioned our Company for long-term success by maximizing opportunities in the leaf tobacco business and investing in the growth of our plant-based ingredients platform. In fiscal year 2025, we continued to enhance and increase the capabilities across our two segments: Tobacco Operations and Ingredients Operations.
Prior filing included a forward-looking positioning statement about maximizing tobacco opportunities and investing in ingredients growth, with a summary of FY2025 capability enhancements. Current filing removes this framing entirely. This is a lifecycle removal — the statement described FY2025 initiatives that are now in the past and no longer current news.
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•Our Tobacco Operations segment delivered very strong results in fiscal year 2025 and maintained its position as the leading global leaf tobacco supplier. This segment primarily focuses on procuring and processing flue-cured, burley, dark air-cured, and oriental leaf tobacco for consumer product manufacturers.
Prior filing highlighted "very strong results" for Tobacco Operations in FY2025 and affirmed the segment's leading global position. Current filing retains the segment description but removes the FY2025 performance commentary. This is a lifecycle removal — the performance summary was specific to the completed fiscal year and naturally drops out in the next period's filing.
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•Our Ingredients Operations segment specializes in sourcing and processing vegetable and fruit ingredients, flavorings, and botanical extracts for consumer packaged goods manufacturers, retailers, and food and beverage companies. In fiscal year 2025, this segment continued to increase its capabilities through the growth of its sales, marketing, and product development teams and the completion of a major expansion project that furthers our ability to deliver innovative, custom products to our customers.
Prior filing described Ingredients Operations' FY2025 capability increases (team growth, major expansion project completion). Current filing retains a streamlined segment description but removes the FY2025-specific achievements. This is a lifecycle removal — the expansion project and team-growth narrative were tied to the completed fiscal year.
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Our Ingredients Operations segment specializes in sourcing and processing vegetable and fruit ingredients, flavorings, and botanical extracts for consumer packaged goods manufacturers, retailers, and food and beverage companies.
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Our Ingredients Operations segment, through the Universal Ingredients platform, produces and supplies a broad portfolio of products, including fruit and vegetable juices and concentrates, purees, dehydrated products, botanical extracts, flavorings, colorings, and other customized, value-added ingredient solutions to the food and beverage industry.
Current filing expands the Ingredients segment description to name the Universal Ingredients platform and enumerate a broader product portfolio (juices, concentrates, purees, dehydrated products, colorings) and customer base (food and beverage industry). Baseline used a shorter, more general description. This is a disclosure broadening, not a strategic shift — no new transaction or guidance is announced.
Notes
FY2026 results included $41M goodwill impairment at Shank's, increased inventory write-downs, new credit facility, and resolution of Brazil VAT dispute.
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A non-cash, goodwill impairment charge of $41.1 million was recognized in fiscal year 2026.
Company recorded a $41.1 million non-cash goodwill impairment charge in FY2026 to write off the full goodwill balance associated with Shank's, a component of the Ingredients Operations segment. The impairment reflects slower than anticipated sales growth, high fixed costs from expansion investments, and persistent customer market headwinds including tariff impacts and softness in the consumer-packaged-goods sector.
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Tobacco Operations segment results reflected larger, higher quality, better yielding crops from Africa; higher sales of carryover crops; weather-reduced crop sizes in Brazil and the United States in fiscal year 2025; and $13.4 million of higher tobacco inventory write-downs, compared to fiscal year 2024.
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Fiscal year 2026 results were negatively impacted by a non-cash, goodwill impairment charge related to our Shank's operation, as well as increased tobacco inventory write-downs, primarily for non-wrapper, dark air-cured tobacco. ... Tobacco inventory write-downs of $43.4 million in fiscal year 2026, were up $24.7 million, compared to fiscal year 2025.
Tobacco inventory write-downs increased to $24.7 million in FY2026, up $24.7 million from FY2025 levels. The increase was primarily driven by non-wrapper, dark air-cured tobacco due to softer than anticipated customer demand and longer sales/inventory cycles characteristic of this tobacco type. Total inventory write-downs (tobacco plus ingredients) increased $32.2 million year-over-year.
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On December 9, 2025, we entered into a new bank credit agreement that replaced our then-existing bank credit agreement. The new unsecured bank credit agreement established a funded $275 million five-year term loan, a funded $345 million seven-year term loan, and a five-year committed revolving loan facility of $780 million. Both term loans were fully funded at closing, require no amortization, and are prepayable without penalty prior to maturity.
Company executed a new bank credit agreement in December 2025, replacing the prior facility. The new agreement provides a $275 million five-year term loan, a $345 million seven-year term loan, and a $780 million five-year revolving credit facility. The prior facility had a $530 million revolver (maturing December 2027), a $275 million five-year term loan, and a $375 million seven-year term loan (maturing December 2029). The new facility increases revolving capacity by $250 million and extends maturities.
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As of March 31, 2025, we had $270 million available under the committed revolving credit facility that will mature in December 2027
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As of March 31, 2026, we had $730 million available under the committed revolving credit facility that will mature in December 2030
Available capacity under the committed revolving credit facility increased from $270 million at March 31, 2025 to $730 million at March 31, 2026, reflecting the new $780 million facility established in December 2025 with minimal draws. The maturity also extended from December 2027 to December 2030.
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In September 2014, tax authorities for the state of Parana issued an assessment for tax, interest, and penalties for periods from 2009 through 2014 totaling approximately $10 million. ... In December 2015, the Parana tax authorities withdrew the initial claim and subsequently issued a new assessment covering the same tax periods. The new assessment totaled approximately $3 million at the March 31, 2025 exchange rate, reflecting a substantial reduction from the original $10 million assessment. ... The range of reasonably possible loss is considered to be zero up to the full $3 million assessment. However, based on the strength of the subsidiary’s defenses, no loss within that range is considered probable at this time and no liability has been recorded at March 31, 2025.
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In July 2025, a final and indisputable favorable ruling was issued by the Brazilian National Treasury Attorney's office declaring the Parana assessment without merit, requiring the state to withdraw and cancel all claims made against the Company's Brazilian operating subsidiary.
The long-standing Brazil VAT assessment dispute with Parana state tax authorities was resolved favorably in July 2025. The Brazilian National Treasury Attorney's office issued a final ruling declaring the assessment without merit and requiring the state to withdraw all claims. The FY2025 filing disclosed a $3 million contingent liability; this is now fully resolved with no payment required.
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Our operations generated about $327.0 million in operating cash flows in fiscal year 2025. That amount was about $401.6 million higher than the $74.6 million we used in fiscal year 2024, primarily on lower working capital requirements in fiscal year 2025, due to accelerated tobacco purchasing in Brazil in fiscal year 2024.
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Our operations generated about $129.1 million in operating cash flows in fiscal year 2026. That amount was about $197.9 million lower than the $327.0 million we generated in fiscal year 2025, primarily on lower working capital requirements in fiscal year 2025, due to certain tobacco purchases that would have typically been made in fiscal year 2025 having been made in fiscal year 2024.
Operating cash flow decreased from $401.6 million in FY2025 to $197.9 million in FY2026, a decline of $197.9 million. The decrease reflects normalization of working capital after FY2024's accelerated Brazil tobacco purchases temporarily reduced FY2025 working capital needs. FY2026 working capital requirements returned to more typical levels.
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At March 31, 2025, cash balances totaled $260.1 million.
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At March 31, 2026, cash balances totaled $62.2 million.
Cash and cash equivalents decreased from $260.1 million at March 31, 2025 to $62.2 million at March 31, 2026, a decline of $197.9 million. The decrease reflects higher working capital requirements in FY2026 as tobacco purchasing patterns normalized after the prior year's accelerated Brazil purchases.
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Our uncommitted tobacco inventories decreased by approximately $17.2 million to $164.0 million, or about 20% of tobacco inventory, at March 31, 2025, compared to March 31, 2024 levels. Uncommitted inventories at March 31, 2024, were $181.1 million, which represented 17% of tobacco inventory. While we target committed tobacco inventory levels of 80% or more of total tobacco inventory, the level of these uncommitted inventories is influenced by timing of farmer deliveries and purchases of new crops, as well as the receipt of customer orders.
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Our uncommitted tobacco inventories increased by approximately $58.3 million to $222.3 million, or about 27% of tobacco inventory, at March 31, 2026, compared to March 31, 2025 levels. Uncommitted inventories at March 31, 2025, were $164.0 million, which represented 20% of tobacco inventory. While we target committed tobacco inventory levels of 80% or more of total tobacco inventory, the level of these uncommitted inventories is influenced by timing of farmer deliveries and purchases of new crops, as well as the receipt of customer orders. Uncommitted tobacco levels were outside our target range at March 31, 2026, due to delayed customer purchase commitments, but we expect them to be within our range during fiscal year 2027.
Uncommitted tobacco inventory increased from $164.0 million (20% of total) at March 31, 2025 to $222.3 million (27% of total) at March 31, 2026, an increase of $58.3 million. The company's target is 80%+ committed inventory; the 27% uncommitted level is outside the target range due to delayed customer purchase commitments. Management expects levels to return to target range during FY2027.
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In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Universal Corporation (the Company) has not maintained effective internal control over financial reporting as of March 31, 2025, based on the COSO criteria. ... Management has identified a material weakness in controls related to inventory, specifically controls related to the physical counts of inventory and the related inventory reconciliations at certain of its subsidiaries.
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In our opinion, Universal Corporation, (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on the COSO criteria.
The auditor's opinion on internal control over financial reporting improved from adverse (material weakness) at March 31, 2025 to unqualified (effective controls) at March 31, 2026. The FY2025 material weakness related to inventory physical counts and reconciliations at certain subsidiaries has been remediated.
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Excess and Obsolete Inventory – Tobacco ... Auditing Management’s estimate of the net realizable value of its inventory, specifically its adjustments for excess and obsolete dark air-cured tobacco inventory, involved a higher degree of auditor judgment as the estimate is dependent on expectations about current and expected market trends and economic conditions.
The auditor added a new critical audit matter in FY2026 related to excess and obsolete dark air-cured tobacco inventory. This was not a critical audit matter in FY2025. The addition reflects the $24.7 million increase in tobacco inventory write-downs in FY2026, primarily for non-wrapper, dark air-cured tobacco, which elevated the complexity and judgment required in auditing this estimate.
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We currently plan to spend approximately $45 to $55 million in fiscal year 2026 on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.
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We currently plan to spend approximately $55 to $65 million in fiscal year 2027 on capital projects for maintenance of our facilities and other investments to grow and improve our businesses.
FY2027 capital expenditure guidance increased to $55-65 million from the prior year's FY2026 guidance of $45-55 million, an increase of $10 million at the midpoint. The increase reflects ongoing facility maintenance and growth investments. Actual FY2026 capex was $53.5 million, within the prior guidance range.
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In March 2025, we completed a pension de-risking transaction or “pension lift-out” to transfer approximately $47 million of our Company-sponsored defined benefit pension plan obligations and assets to a third-party insurer through the purchase of a non-participating annuity. The obligations transferred to the third-party insurer covered the respective benefit obligations for a subset of retirees currently receiving benefit payments. The transaction triggered settlement accounting that required us to immediately recognize a portion of the accumulated comprehensive losses associated with the defined benefit pension plan. The non-cash pension settlement charge of $14.1 million was recognized in our consolidated statements of income for the fiscal year ended March 31, 2025.
The $14.1 million pension settlement charge disclosed in FY2025 was a one-time event related to the March 2025 pension lift-out transaction. No similar charge appears in FY2026, as expected for a completed transaction.
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Restructuring and impairment costs of $10.6 million in fiscal year 2025 were related to the previously announced consolidation of the Company’s European tobacco sheet operations.
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Restructuring and impairment costs of $10.6 million in fiscal year 2025 were related to the consolidation of the Company’s European tobacco sheet operations.
FY2025 included $10.6 million in restructuring and impairment costs for the consolidation of European tobacco sheet operations. FY2026 restructuring costs were only $1.8 million, a decrease of $8.8 million, indicating the European consolidation project is substantially complete.
Risk Factors
Material weakness remediated; Form S-3 eligibility restored; new tariff/geopolitical risks added; AI cybersecurity risks disclosed.
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We have identified a material weakness in our internal control over financial reporting and, if we are not able to remediate the material weakness, or if we identify additional material weaknesses in the future or otherwise fail to design and maintain effective internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent misstatements due to fraud or error. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2025. Based on this assessment, our management concluded that our internal control over financial reporting was not effective as of March 31, 2025 as a result of certain deficiencies that were determined to constitute a material weakness in our internal control over financial reporting. Specifically, we determined that the internal controls at one of our tobacco subsidiaries were not effectively documented and executed to ensure that the existence of all dark air-cured tobacco inventories subject to physical inventory counts were appropriately counted, and that the controls related to the compilation and reconciliation of the related inventory to ensure complete and accurate reporting of inventory in the consolidated financial statements were not effective.
The company disclosed a material weakness in internal controls over inventory at a tobacco subsidiary in the prior year. This entire risk factor section has been removed from the current filing, indicating the material weakness has been remediated.
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We are not currently eligible to use a Form S-3 registration statement, which could impair our capital-raising activities. As a result of our failure to timely file our Form 10-Q for the quarter ended September 30, 2024, and the Form 10-Q for the quarter ended December 31, 2024 with the SEC, we are not currently eligible to use a Form S-3 registration statement. Further, as a result of the late Form 10-Q filing for the quarter ended September 30, 2024 and the late Form 10-Q filing for the quarter ended December 31, 2024, we are also not currently a “well-known seasoned issuer,” as such term is used in the SEC’s regulations, which otherwise would allow us to, among other things, file automatically effective Form S-3 registration statements. Our eligibility to use a Form S-3 registration statement may not be restored until March 1, 2026, and then only if we have not had any other filing delinquency that would preclude Form S-3 eligibility and satisfies all other requirements for Form S-3 eligibility.
The prior year disclosed the company was ineligible to use Form S-3 registration statements due to late quarterly filings, which restricted capital-raising flexibility. This risk factor has been removed, indicating the company has restored its filing compliance and Form S-3 eligibility.
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Recently, the U.S. has announced or implemented significant new tariffs on imports from a wide range of countries, which has prompted retaliatory tariffs by a number of countries and a cycle of retaliatory tariffs by both the United States and other countries. In early April 2025, actions were taken by the United States and certain other countries to delay the effective date of certain of these tariffs; however, as of the date of this Annual Report a number of new tariffs remain in place. These actions have resulted in, and are expected to continue to result in, retaliatory measures on U.S. goods.
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In 2025, the U.S. implemented significant new tariffs on imports from a wide range of countries, which prompted retaliatory tariffs by a number of countries and a cycle of retaliatory tariffs by both the United States and other countries. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other methods to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. Global trade policy continues to evolve and there remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business.
The tariff risk disclosure has been updated to reflect a February 2026 Supreme Court ruling that struck down certain IEEPA-based tariffs, followed by the administration announcing new tariffs on all countries using alternative legal authority. The disclosure now emphasizes ongoing uncertainty about tariff duration, levels, and potential changes, replacing the prior discussion of April 2025 tariff delays.
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Additionally, the recent armed conflict involving Iran and related regional hostilities have contributed to heightened volatility and increases in logistical and supply chain costs, including fertilizer prices and fuel costs.
The company added disclosure of armed conflict involving Iran and regional hostilities as a new source of supply chain cost volatility, specifically citing impacts on fertilizer and fuel costs.
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However, technology is increasingly complex and cyber-attacks are increasingly sophisticated and frequent. For example, the rapid evolution and increased adoption of AI technologies may intensify cybersecurity risks for us and our service providers, key suppliers, and customers. Bad actors use increasingly advanced methods, including AI-enabled social engineering and deepfakes, automated credential‑stuffing, and other techniques, to attempt to compromise systems and to steal or misuse personal information, confidential information and intellectual property.
The company added new disclosure about AI-related cybersecurity risks, including AI-enabled social engineering, deepfakes, and automated credential-stuffing attacks. This reflects emerging threats from the rapid adoption of AI technologies by both the company and bad actors.
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Additionally, outsourcing certain functions and implementing new technologies may increase exposure to risks such as data breaches or internal control failures. Our vendors and other third‑party partners may incorporate AI tools into their offerings with or without disclosing this use to us. The providers of these AI tools may not meet existing—or rapidly evolving—regulatory or industry standards concerning privacy, data protection, security and responsible AI, which could increase the risk of unauthorized disclosure or loss of confidential information or intellectual property, negatively affect the accuracy or availability of systems we use, or otherwise harm our reputation and the perceived effectiveness of our security measures.
The company added disclosure about risks from third-party vendors incorporating AI tools into their offerings, potentially without disclosure, and the risk that these AI tools may not meet evolving privacy, data protection, and security standards.
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For example, multiple countries in which we operate have enacted or are in the process of enacting legislation to adopt the Global Anti-Base Erosion Model Rules (Pillar Two) issued by the Organization for Economic Co-operation and Development (the “OECD”). For those jurisdictions that have legislation with an effective enactment date of January 1, 2024, these rules apply beginning with the current fiscal reporting year. We continue to evaluate, interpret, and apply the new rules and will review any subsequent changes that may be retroactive.
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For example, multiple countries in which we operate have enacted or are in the process of enacting legislation to adopt the Global Anti-Base Erosion Model Rules (“Pillar Two”) issued by the Organisation for Economic Co-operation and Development. Based on our current analysis, we anticipate some exposure to a global minimum tax under Pillar Two, with transitional safe-harbor provisions limiting the impact in certain jurisdictions.
The company updated its Pillar Two tax disclosure to reflect its current analysis, now stating it anticipates "some exposure" to the global minimum tax with transitional safe-harbor provisions limiting impact. The prior disclosure focused on evaluation and interpretation of newly-effective rules; the current disclosure reflects a more concrete assessment of expected impact.
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As we adopt and integrate emerging technologies, we invest in protective capabilities and monitoring to address the new risks those technologies may create and the ways they may change our threat landscape.
The company added disclosure about its own adoption of emerging technologies (including AI) and the need to invest in protective capabilities and monitoring to address new risks created by these technologies.
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illicit trade in tobacco products, and
The company removed "illicit trade in tobacco products" from the list of factors influencing customer demand for leaf tobacco. This was one item in a bulleted list of demand factors and its removal does not indicate a change in the underlying risk landscape.
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Certain recommendations by the WHO, through the FCTC, could also cause shifts in customer usage of certain styles of tobacco. In countries such as Canada and Brazil and in the European Union, efforts have been taken to eliminate certain ingredients from the manufacturing process for tobacco products. The FCTC and national governments have also discussed formulating a strategy to place limitations on the level of nicotine allowed in tobacco and tobacco smoke.
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Certain recommendations by the WHO, through the FCTC, could also cause shifts in customer usage of certain styles of tobacco. The FCTC, national governments, and regional blocs, such as the European Union, have discussed formulating strategies to place limitations on the level of nicotine allowed in tobacco and tobacco smoke and eliminate certain ingredients from the manufacturing process for tobacco products.
The company broadened the description of ingredient-elimination efforts from specific country examples (Canada, Brazil, EU) to a more general statement about FCTC, national governments, and regional blocs discussing such strategies. The substance of the risk remains the same.
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Governments, the non-governmental community, and industry increasingly understand the importance of implementing comprehensive environmental, labor, and governance practices. Our commitment to sustainability remains at the core of our business, and we continue to implement what we believe are responsible sustainability practices. Government regulations, however, could result in new or more stringent forms of sustainability oversight and disclosures.
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Governments, the non-governmental community, and industry increasingly understand the importance of implementing comprehensive environmental, labor, and governance practices. Our commitment to sustainability remains at the core of our business, and we continue to implement what we believe are responsible sustainability practices. Increased government regulations, however, could result in new or more stringent forms of sustainability oversight and disclosures.
The company changed "Government regulations" to "Increased government regulations" in the sustainability risk disclosure, a minor wording adjustment that does not alter the substance of the risk.
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The European Union has recently adopted broad due diligence reporting requirements for all industries operating within Europe. The United States has called for a broader and more robust approach to labor compliance in foreign jurisdictions, which could include some of our strategic origins.
The company removed specific references to EU due diligence reporting requirements and U.S. labor compliance initiatives from the sustainability risk factor. The general discussion of due diligence procedures remains in both filings.
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Source-verified from EDGAR · Narrative written by AI · Jun 21, 2026 · How we verify