Financial Analysis

CREDIT FACILITIES Bank Credit Agreement On December 9, 2025, the Company entered into a new senior unsecured bank credit agreement that replaced its then existing bank credit agreement. In addition to extending the maturity dates of the underlying components of the facility, the new agreement includes a $780 million five-year revolving credit facility (expiring December 9, 2030), a $275 million five-year term loan (due December 9, 2030), and a $345 million seven-year term loan (due December 9, 2032). The new facility may be expanded to allow for additional borrowings of up to $300 million under certain conditions. Borrowings under the revolving credit facility bear interest at a variable rate benchmarked to the Secured Overnight Financing Rate (SOFR) plus a margin based on the Companys credit measures. In addition to interest, the Company pays a facility fee on the revolving credit facility. $50 million was outstanding under the revolving credit facility at March 31, 2026. The Company may request that the lenders extend the applicable maturity date for the revolving credit facility, the five-year term loan and/or the seven-year term loan for up to two one-year extensions, subject to satisfaction of certain terms and conditions and consent of the requisite number of lenders. The Companys obligations under the new bank credit agreement are guaranteed by its subsidiary, Universal Ingredients. The new credit agreement contains financial covenants that require the Company to maint …

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The following table disaggregates the Companys revenue by significant revenue-generating category: Fiscal Year Ended March 31, 2026 2025 2024 Tobacco sales $ 2,359,961 $ 2,460,496 $ 2,268,600 Ingredient sales 330,657 321,416 292,291 Processing revenue 119,076 73,597 82,976 Other sales and revenue from contracts with customers 75,384 67,415 77,777 Total revenue from contracts with customers 2,885,078 2,922,924 2,721,644 Other operating sales and revenues 39,392 24,360 26,929 Consolidated sales and other operating revenues $ 2,924,470 $ 2,947,284 $ 2,748,573 Other operating sales and revenues consists principally of interest on advances to tobacco suppliers and dividend income from unconsolidated affiliates. …

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EXECUTIVE STOCK PLANS AND STOCK-BASED COMPENSATION Executive Stock Plans The Companys shareholders have approved executive stock plans under which directors, officers, and employees of the Company may receive grants and awards of common stock, restricted stock, restricted stock units (RSUs), performance share units (PSUs), stock appreciation rights, incentive stock options, and non-qualified stock options. Currently, grants are outstanding under the 1997 Executive Stock Plan, the 2002 Executive Stock Plan, the 2007 Stock Incentive Plan, the 2017 Stock Incentive Plan, and the 2023 Stock Incentive Plan. Together, these plans are referred to in this disclosure as the Plans. Up to 1,250,000 shares may be issued under the 2023 Stock Incentive Plan, with no specific share limit for any of the award types. New awards may no longer be issued under the 1997, 2002, 2007, and 2017 Plans. The Companys practice is to award grants of stock-based compensation to officers at the first regularly-scheduled meeting of the Compensation and Human Resources Committee of the Board of Directors (the Compensation Committee) in the fiscal year following the public release of the Companys financial results for the prior fiscal year. The Compensation Committee administers the Plan consistently, following previously defined guidelines. In recent years, the Compensation Committee has awarded only grants of RSUs and PSUs. Outside directors automatically receive restricted stock units following each annual …

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FAIR VALUE MEASUREMENTS Universal measures certain financial and nonfinancial assets and liabilities at fair value based on applicable accounting guidance. The financial assets and liabilities measured at fair value include money market funds, trading securities associated with deferred compensation plans, interest rate swap agreements, forward foreign currency exchange contracts, and guarantees of bank loans to tobacco growers. The application of the fair value guidance to nonfinancial assets and liabilities primarily includes the determination of fair values for goodwill and long-lived assets when indicators of potential impairment are present. Under the accounting guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The framework for measuring fair value is based on a fair value hierarchy that distinguishes between observable inputs and unobservable inputs. Observable inputs are based on market data obtained from independent sources. Unobservable inputs require the Company to make its own assumptions about the value placed on an asset or liability by market participants because little or no market data exists. There are three levels within the fair value hierarchy. Level Description 1 quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date; 2 quoted pric …

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GOODWILL AND OTHER INTANGIBLES The Companys changes in goodwill at March 31, 2026 and 2025 consisted of the following: Fiscal Year Ended March 31, 2026 2025 Balance at beginning of year $ 213,840 $ 213,869 Goodwill impairment (1) (41,061) Foreign currency translation adjustment (84) (29) Balance at end of year $ 172,695 $ 213,840 (1) A $41.1 million non-cash goodwill impairment charge for Universal IngredientsShanks was recognized for the fiscal year ended March 31, 2026. There is no remaining goodwill related to Universal IngredientsShanks at March 31, 2026. See Note 1 for additional information. The Companys intangible assets primarily consist of capitalized customer-related intangibles, trade names, proprietary developed technology and noncompetition agreements. The Companys intangible assets subject to amortization consisted of the following at March 31, 2026 and 2025: March 31, 2026 (in thousands, except useful life) Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Customer relationships 11 - 13 $ 86,500 $ (40,885) $ 45,615 Trade names 5 11,100 (11,100) Developed technology 13 9,300 (6,358) 2,942 Noncompetition agreements 4 - 5 4,000 (4,000) Other 5 694 (647) 47 Total intangible assets $ 111,594 $ (62,990) $ 48,604 March 31, 2025 Useful Life (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value Customer relationships 11 - 13 $ 86,500 $ (33,155) $ 53,345 Trade names 5 11,100 (10,320) 780 Developed technology 13 9,300 …

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INCOME TAXES The Company operates in the United States and many foreign countries and is subject to the tax laws of multiple jurisdictions. Changes in tax laws or the interpretation of tax laws can affect the Companys earnings, as can the resolution of pending and contested tax issues. The Companys consolidated effective income tax rate is affected by a number of factors, including the mix of domestic and foreign earnings and the effect of exchange rate changes on local taxable income and deferred taxes in foreign countries. For fiscal years ended March 31, 2026, 2025, and 2024 the Companys U.S. federal statutory tax rate was 21.0%. The U.S. tax system is primarily territorial based after the enactment of the Tax Cuts and Jobs Act of 2017. The U.S. tax law imposes a tax on U.S. shareholders on certain low-taxed income earned by controlled foreign corporations, referred to as net controlled foreign corporation tested income (NCTI). The Company has made an accounting policy election to account for any additional tax resulting from the NCTI provisions in the year in which it is incurred and has not recorded any deferred taxes on temporary book-tax differences related to this income. The Company continues to assume repatriation of all undistributed earnings of its consolidated foreign subsidiaries and has therefore provided for expected foreign withholding taxes on the distribution of those earnings where applicable, net of any U.S. tax credit attributable to those withholding ta …

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LEASES The Company, as a lessee, enters into operating leases for land, buildings, equipment, and vehicles. For all operating leases with terms greater than 12 months and with fixed payment arrangements, a lease liability and corresponding right-of-use asset are recognized in the balance sheet for the term of the lease by calculating the net present value of future lease payments. On the date of lease commencement, the present value of lease liabilities is determined by discounting the future lease payments by the Companys collateralized incremental borrowing rate, adjusted for the lease term and currency of the lease payments. If a lease contains a renewal option that the Company is reasonably certain to exercise, the Company accounts for the original lease term and expected renewal term in the calculation of the lease liability and right-of-use asset. The following table sets forth the right-of-use assets and lease liabilities for operating leases included in the Companys consolidated balance sheet: March 31, 2026 March 31, 2025 Assets Operating lease right-of-use assets $ 37,272 $ 34,260 Liabilities Current portion of operating lease liabilities $ 11,172 $ 10,742 Long-term operating lease liabilities 24,359 20,608 Total operating lease liabilities $ 35,531 $ 31,350 The following table sets forth the location and amount of operating lease costs included in the Companys consolidated statement of income: Fiscal Year Ended March 31, 2026 2025 2024 Income Statement Location Cos …

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LONG-TERM DEBT The Companys long-term debt at March 31, 2026 and 2025 consisted of the following: March 31, 2026 2025 Senior bank term loans $ 620,000 $ 620,000 Less: current portion Less: unamortized debt issuance costs (3,273) (2,082) Long-term debt $ 616,727 $ 617,918 As discussed in Note 7, on December 9, 2025, the Company entered into a new bank credit agreement that replaced its then existing bank credit agreement. In addition to extending the maturity dates of the underlying components of the facility, the new agreement includes a $275 million five-year term loan and a $345 million seven-year term loan. Both term loans were fully funded at closing, require no amortization, and are repayable without penalty prior to maturity. Under the credit agreement, both term loans bear interest at a variable rate benchmarked to the SOFR plus a margin that is based on the Companys credit measures. As discussed in Note 10, the Company had receive-floating/pay-fixed interest rate swap agreements in place with respect to the prior term loans through December 15, 2027 for the five-year term loan and through December 15, 2029 for the seven-year term loan. These agreements were terminated concurrently with the repayment of the prior term loans and replaced with new interest rate swap agreements that will continue to convert a portion of the variable benchmark rate to a fixed rate on each term loan through their respective maturity dates. With the swap agreements in place, the effective in …

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Accounting Pronouncements Accounting Pronouncements Adopted in Fiscal Year 2026 In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosure (ASU 2023-09). ASU 2023-09 requires additional disclosures reconciling the rates of different categories of income tax (i.e. federal, state, foreign, etc.) and a disaggregation of taxes paid and refunded. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and for interim periods in fiscal years beginning after December 15, 2025. The Company adopted ASU 2023-09 in fiscal year 2026, incorporating additional income tax disclosures on a prospective basis in Note 5. Accounting Pronouncements Adopted in Fiscal Year 2025 In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosure (ASU 2023-0). ASU 2023-07 requires additional disclosures about profitability measures utilized by the chief operating decision maker and significant segment expenses. ASU 2023-07 also requires all annual disclosures regarding profit or loss and assets to be included in interim disclosures. The Company adopted ASU 2023-07 in fiscal year 2025, incorporating additional disclosures in Note 16 for significant segment expenses, including cost of goods sold, selling, general and administrative expenses, and allocated corporate overhead. Accounting Pronouncements to be Adopted in Fu …

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PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Defined Benefit Plans Description of Plans The Company sponsors several defined benefit pension plans covering salaried and certain hourly employees in the U.S., as well as certain foreign and other employee groups. These plans provide retirement benefits based primarily on employee compensation and years of service. Plan assets consist primarily of equity and fixed income investments. The Company also sponsors defined benefit plans that provide postretirement health and life insurance benefits for eligible U.S. employees and retirees who have attained specific age and service levels, although postretirement life insurance benefits were discontinued in fiscal year 2015 for all employees who were not already retired. The health benefits are funded by the Company as the costs of those benefits are incurred. The plan design includes cost-sharing features such as deductibles and coinsurance. The life insurance benefits are funded with deposits to a reserve account held by an insurance company. The Company has the right to amend or discontinue its pension and other postretirement benefit plans at any time. In the following disclosures, the term accumulated benefit obligation (ABO) represents the actuarial present value of estimated future benefit payments earned by participants in the Companys defined benefit pension plans as of the balance sheet date without regard to the estimated effect of future compensation increases on those ben …

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RESTRUCTURING AND IMPAIRMENT COSTS During the fiscal years ended March 31, 2026, 2025 and 2024, Universal recorded restructuring and impairment costs related to business changes and various initiatives to adjust certain operations and reduce costs. See Note 1 for goodwill impairment for the fiscal year ended March 31, 2026. Fiscal Year Ended March 31, 2026 Tobacco Operations During the fiscal year ended March 31, 2026, the Company recognized an additional $0.7 million of restructuring costs and $1.0 million of impairment costs related to the consolidation of its European sheet tobacco operations that began during the fiscal year ended March 31, 2025. The Company also incurred $0.1 million of termination and impairment costs in other areas of the Tobacco Operations segment during the fiscal year ended March 31, 2026. Fiscal Year Ended March 31, 2025 Tobacco Operations During the fiscal year ended March 31, 2025, the Company began consolidating its European sheet tobacco operations into the Companys facility in the Netherlands, by initiating a wind-down of activities at its sheet facility in Germany, incurring $10.5 million of restructuring and impairment costs. Additionally, during the fiscal year ended March 31, 2025, the Company also incurred $0.1 million of termination and impairment costs in other areas of the Tobacco Operations segment. Fiscal Year Ended March 31, 2024 Tobacco Operations During the fiscal year ended March 31, 2024, the Company incurred $1.8 million of res …

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REVENUE FROM CONTRACTS WITH CUSTOMERS The majority of the Companys consolidated revenue consists of sales of processed leaf tobacco to customers. The Company also earns revenue from processing leaf tobacco owned by customers and from various other services provided to customers. Additionally, the Company has fruit and vegetable processing operations, as well as flavor and extract services that provide customers with a range of food ingredient products. Payment terms with customers vary depending on customer creditworthiness, product types, services provided, and other factors. Contract durations and payment terms for all revenue categories generally do not exceed one year. Therefore, the Company has applied a practical expedient to not adjust the transaction price for the effects of financing components, as the Company expects that the period from the time the revenue for a transaction is recognized to the time the customer pays for the related good or service transferred will be one year or less. Below is a description of the major revenue-generating categories from contracts with customers. Tobacco Sales The majority of the Companys business involves purchasing leaf tobacco from farmers in the regions where it is grown, processing and packing the tobacco in its factories, and then transferring ownership and control of the tobacco to customers. On a much smaller basis, the Company also sources processed tobacco from third-party suppliers for resale to customers. The contract …

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OPERATING SEGMENTS Management regularly evaluates the Companys global business activities, including product and service offerings to its customers, as well as senior managements operational and financial responsibilities. Assessments include an analysis of how its Chief Operating Decision Maker (CODM) measures business performance and allocates resources. As a result of this analysis, senior management has determined the Company conducts operations across two reportable operating segments, Tobacco Operations and Ingredients Operations. The Tobacco Operations segment activities involve contracting, procuring, processing, packing, storing, and shipping leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products throughout the world. Through various operating subsidiaries located in tobacco-growing countries around the world and significant ownership interests in unconsolidated affiliates, the Company processes and/or sells flue-cured and burley tobaccos, dark air-cured tobaccos, and oriental tobaccos. Flue-cured, burley, and oriental tobaccos are used principally in the manufacture of cigarettes, and dark air-cured tobaccos are used mainly in the manufacture of cigars, pipe tobacco, and smokeless tobacco products. Some of these tobacco types are also used in the manufacture of next generation tobacco products that are intended to provide consumers with an alternative to traditional combustible products. The Tobacco Operations segment also provid …

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NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Universal Corporation, which together with its subsidiaries is referred to herein as Universal or the Company, is a global business-to-business agriproducts company. The Company is the leading global leaf tobacco supplier and provides high-quality plant-based ingredients to food and beverage end markets. The Company conducts its leaf tobacco business in over 30 countries, primarily in major tobacco-producing regions of the world. Consolidation The consolidated financial statements include the accounts of Universal Corporation and all domestic and foreign subsidiaries in which the Company maintains a controlling financial interest. Control is generally determined based on a voting interest of greater than 50%, such that Universal controls all significant corporate activities of the subsidiary. All significant intercompany accounts and transactions are eliminated in consolidation. The equity method of accounting is used for investments in companies where Universal Corporation has a voting interest of 20% to 50%. These investments are accounted for under the equity method because Universal exercises significant influence over those companies, but not control. The Company received $1.9 million dividends in fiscal year 2026, $4.2 million in fiscal year 2025, and no dividends in fiscal year 2024, from companies accounted for under the equity method. Investments where Universal has a voting interest of les …

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