Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Universal Corporation Second Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Wushuang, Vice President and Treasurer. Please go ahead.

Good morning, and thank you for joining us. With me today is Preston Wigner, our Chairman, President and CEO; and Johan Kroner, our Chief Financial Officer. During the course of this call, we will be making forward-looking statements that are based on our current knowledge and some assumptions about the future. They are representative as of today only. Actual results, performance or achievements could differ materially from anticipated results, prospects, performance or achievements expressed or implied by such forward-looking statements, and we assume no obligation to update any forward-looking statements, except as required by law. For information on some of the risks and uncertainties related to these forward-looking statements, please refer to the reports we file with the SEC and under cautionary statements regarding forward-looking statements in our current earnings press release. Finally, some of the information we have for you today may be based on unaudited allocations and may be subject to reclassification. Our comments today may also include certain non-GAAP financial measures. For details regarding these measures, including a reconciliation of these non-GAAP measures to the most comparable GAAP measures, please refer to our current earnings press release and other public materials. This call is being webcast live and will be available for replay on our website through February 6, 2026, and by telephone through November 20, 2025. This call is copyrighted and may not be used without our permission. Other than the referenced replay, we have not authorized and disclaim responsibility for any recording, replay or distribution of any transcription of this call. I would like to now turn the call over to Preston.

Thank you, Wush. Good morning, everyone. Thank you for joining us today. We're pleased with our performance in the first half and second quarter of fiscal year 2026. We saw strong operational execution for both segments of our company, and we are working diligently to continue that performance through the second half of our fiscal year. Let's begin with our Tobacco Operations segment, which continues to perform well. Tobacco buying is largely complete in most key growing regions, and crop sizes are significantly larger this year following several years of smaller crops due to weather. Green tobacco prices have softened in certain regions compared to the prior fiscal year. Shipments are progressing smoothly, and we are shipping tobacco earlier than we did last year. Customer demand has remained firm following several years of undersupply despite significantly larger crops this fiscal year. As expected, carryover crop sales were lower for the 6-month period, reflecting significant shipment volumes earlier in the prior fiscal year. Uncommitted inventory levels remain low and well within our target range. We believe that tobacco supply and demand are generally balanced at this point in the fiscal year, and we expect tobacco to move into an oversupply position by year-end. We have historically performed well in slight oversupply market conditions. It allows us to meet customer needs while also pursuing opportunity sales. Our team is experienced in managing oversupply markets, and we are confident in our ability to navigate the change in market dynamics. Now turning to our Ingredients Operations segment. We maintained positive momentum with higher sales and volume in both the quarter and the 6-month period ended September 30. Interest in our new value-added products continues to grow, and we are maintaining an active pipeline. Universal Ingredients' enhanced production and operational capabilities are supporting this growth. Demand for our new products remains solid, while fixed cost, product mix and external challenges, including weakness in the consumer packaged goods industry and tariff uncertainty, had a negative impact on earnings. We are taking a proactive approach to meeting our customers' strategic needs, focusing on organic growth and converting customer interest into product sales so we can continue to build scale and generate returns on our investments. We believe the Ingredients segment is well positioned to capitalize on those investments and drive future growth. I'll turn it over to Johan to walk through our financial and operational performance in more detail. After that, I'll offer some additional thoughts and open the call for questions.

Thank you, Preston. Good morning, everyone. As Preston mentioned, we are pleased with our performance for the first half of fiscal year 2026 with improved results from our Tobacco Operations segment and higher sales volumes in our Ingredients Operations segment. For the first half of the fiscal year, consolidated revenue was up $40 million to $1.3 billion. This increase was driven by higher third-party tobacco processing volumes, accelerated current crop tobacco shipments and increased sales volumes in our Ingredients Operations segment. Operating income rose $16 million to $101 million, primarily due to a favorable product mix in the Tobacco Operations segment. Revenue increased $22 million, reflecting higher third-party processing volumes. Segment operating income was up $9 million due to a favorable product mix. While overall tobacco sales volumes were slightly down, about 1%, higher and early shipments of current crop tobacco largely offset lower shipments of carryover crop tobacco. Segment results reflected continued firm customer demand, a favorable product mix, larger current crop shipments, particularly from Brazil and African origins, and increased third-party processing volumes. These positives were partially offset by higher inventory write-downs. Turning to our Ingredients Operations segment. Revenue was up 11% on increased sales volumes. Operating income was lower, reflecting a less favorable product mix, higher fixed costs, including additional depreciation from our recently expanded production facility, and higher inventory write-downs. Finishing up, on the first half of fiscal year 2026, we are focused on managing our working capital. Additional purchases of tobacco due to larger crop size increased our inventory versus the same period last year. Despite that, net debt was down $52 million on September 30 compared to the same date last year. We had approximately $340 million available under our revolving credit facility as of September 30, and interest expense was down $4 million year-over-year. Now looking at our second quarter results. Consolidated revenue was up $43 million to $754 million, driven by higher tobacco ingredients sales volumes. Operating income decreased $1 million to $68 million, with higher sales volumes and lower restructuring and impairment costs slightly offset by unfavorable foreign currency comparisons, higher inventory write-downs and increased provisions for farmer advances. In the Tobacco Operations segment, revenue rose $29 million on a 3% increase in tobacco sales volumes. However, segment operating income declined by $12 million due to unfavorable foreign currency comparisons, higher inventory write-downs and a less favorable product mix. The Ingredients Operations segment delivered higher revenues on increased sales volumes. Operating income, however, was lower in the quarter despite those volumes, reflecting ongoing challenges in the consumer packaged goods industry, tariff uncertainty, higher fixed costs from our expanded facility and higher inventory write-downs. And finally, restructuring and impairment costs for the second quarter of fiscal year 2025 were $10.6 million. We did not have any restructuring and impairment costs in the second quarter of fiscal year 2026. I would like to now turn the conversation back to Preston.

Thank you, Johan. We are pleased with the first half of our fiscal year. We are absolutely committed to continuing our strong operational performance through the second half. We will also continue to find opportunities and the challenges. Our diverse global footprint, long-standing customer relationships, deep local expertise and the unique value Universal offers our customers support our strategic commitment to growth. Our Tobacco Operations team remains focused on maximizing and optimizing our tobacco business. This includes offering additional services to our customers and leveraging our deep experience to navigate changing market conditions, including the expected shift to an oversupply environment later this fiscal year. At the same time, our Ingredients platform is continuing its momentum and is focused on growth. With our expanded facility, we will capitalize on our investments in extraction, blending, aseptic packaging and other capabilities. We're also focused on strengthening and expanding our customer engagement. Our sales, marketing and product development teams proactively showcase our abilities and help convert customer interest into product sales. We remain committed to driving organic growth, creating value across the platform and delivering customized, differentiated solutions to our customers. As we continue to focus on delivering long-term value, our commitment to sustainability strengthens our operations and manages risk across our company. We continue to make meaningful progress in our transition to renewable and lower emission energy sources. We have significantly expanded our use of clean electricity as an important element of our carbon transition plan. This continued progress demonstrates our strong commitment to operational efficiency and environmental stewardship. Investing in clean energy, such as on-site installations at our operations in Italy, the Dominican Republic and the Philippines, supports our sustainability goals, strengthens the resilience of our operations and creates long-term value for our stakeholders. To wrap up, Universal continues to execute with discipline across key areas of our business. The first half of our fiscal year saw solid performance, advanced operational execution and meaningful progress in our sustainability efforts. These results reflect our commitment to long-term value creation, resilience and responsible growth and position us well for the second half of fiscal year 2026. Thank you again for joining us today. We'll now open the call for questions.

[Operator Instructions] Your first question comes from the line of Daniel Harriman of Sidoti.

Congrats on the quarter. I'll start off with two today, one for each segment, and I'll begin with Ingredients. Preston, you mentioned solid demand for your value-added products, but also obviously, mix, fixed costs and broader consumer weakness weighed on earnings. To the extent that you can, can you give us a sense of where utilization stands now at Lancaster and then how quickly you expect fixed cost absorption to improve as you continue to scale volume there? And then with tobacco, I was just hoping to kind of get your thoughts on -- with larger crops and softer green leaf pricing, as the new crop shipments continue to ramp, what are your thoughts and how confident are you on pricing discipline and margins through the back half of the year?

Thanks, Daniel. I'll start with Ingredients. Yes, that's -- with that new facility that we've enhanced the capabilities and the investments for our campus for our extracts business. The goal is to fill that facility and to build scale, not just there, but across the platform. And we are off to a good start from where we were just a year ago, ribbon cutting. I'm very pleased with the progress we've made to grow revenues, to get volume through there and to maintain and increase an active pipeline. A lot of that pipeline conversion is a long process, and it's a slog that our team fights on a daily basis. First, proactively making sure we're reaching out to customers to understand what their needs are, to meet with those customers and offer them the products and solutions that they need, as well as understanding their evolving needs and future needs and what can we produce for them that they may not use today, but they'll use in products going forward. And all of those projects in the pipeline move at different speeds. And we're very pleased with how we're converting the pipeline, how we're growing our products and our sales. And we're building scale. And yes, we've got to cover those additional costs, and that will take time. But as those product interest and pipeline interest turn into volume, I'm confident that we will continue to increase our scale, increase our volumes and sales, and we'll be able to cover those costs going forward. On the tobacco side, I'm very comfortable with where we are in the year. I'm very comfortable with what I see for the second half of the year for this year, certainly because we don't buy on a speculative basis. Our uncommitted inventory is low at 13%. And we have lots of tobacco we need to ship for the second half of the year. But I'm confident in our ability to convert that. It's going to be subject to timing on shipments. And assuming there's no unforeseen market disruptions, we'll get those shipments out. And I'm comfortable with pricing. I talked about green pricing, really large crops this year. Green pricing, as I mentioned, has softened in certain markets, but it's been a little bit of a variety in the different markets. Some markets have softened a little bit, some are stable from where they were last year. Some might even be up. Some markets were down, and then at the tail end of the buying season, they went back up, which is really a reflection of that -- still that firm demand. And with that firm demand and still pretty stable pricing, I'm very comfortable with where we're going. We just have to see how shipments end up throughout the third and the fourth quarter.

Your next question comes from the line of Ann Gurkin of Davenport.

So I wanted to start with the Ingredient segment. I'm surprised by the loss in the second quarter. I understand the reasons. So my first question is, you touched on a little bit about conversion and the pace of conversion from the customer interest versus your internal expectations. And is it a factor of end markets slower, customers are more challenged, maybe waiting to see how inventories are going to align or sales are going to align? Can you just talk about kind of the pace of conversion?

Sure. Yes, it's -- I think all those factors you mentioned impact the platform. Across the board, not just one part of our platform. And I'm very pleased with how we've navigated that through the quarter, through the first half, where we've had top line growth in a market that's really been difficult for CPG companies and lots of people in the industry to achieve growth with the types of headwinds that are out there. And some headwinds might affect us directly, like tariff, for example, on raw materials that we might bring in. And some are impacting us indirectly. If they're impacting our customers, then they potentially impact us. And we've seen some of that in the quarter. Our teams on the ground are very experienced in managing procurement and particularly with our dry vegetable ingredient company, navigating tariffs, which they've done in the past, balancing their procurement strategies and their inventory strategies to try to service their customers while also trying to protect margins and returns. But overall, for the project pipeline, that's hard to predict because everything is moving in sort of different speeds. Some things -- because of our broad kind of product portfolio, some things a customer needs are core products that we've got. And it might be something like vanilla. And with vanilla, vanilla pricing is an all-time low for the raw product. And so we might have very good margins on vanilla. But on a dollar basis, those are down because the raw material is down. Other areas, there might be opportunities for us to sell a product to a customer that's core for an existing line of our business, but we can add sales of other core products from other existing lines of our business through our platform commercial sales and having some commercial synergies across the platform to grow sales that way. And then for value-added products, some are new products to customers, some are existing products that we are trying to transform with additional products in the portfolio to make a value-added blend for customers. And if it's switching out an existing product that they're getting from another vendor to us, that might work at a certain pace. If it's a new product that we've offered that they aren't getting from somebody else and it's a customized solution that we're providing, that might take longer to get through the pipeline. So it's hard to convert the pipeline into weeks and months and years of conversion. It's a real mix. And the current environment does factor into that for our customers. If it impacts our customers, it potentially impacts us.

Great. So for the year, for Ingredients, can you deliver profits in line with what you delivered last year?

Yes. I think this year, I'm very happy with where we are for the first half. I'm very pleased with what I see moving forward and the work and the effort that's getting -- that's going into it. I'm very happy with what we've built and the resources that are helping us grow on the top line. We still have significant costs to cover. And as we've said, we're always focused on growing scale to cover those costs across the platform, not just for our Shank's expansion investment. So we're going to have to wait and see for the rest of the year how market conditions change, how the headwinds change, tariff variability. Are there going to be changes with the Supreme Court ruling and tariffs? What's that going to impact for our customers? How are they going to change their ordering and buying strategies? So it's still early in the year to figure out where we might be for Ingredients by the end of the year.

Great. Okay. Switching to Tobacco. Nice to see a stronger-than-expected quarter and margin than we were looking for on the Tobacco segment. And the end market demand or customer buying was stronger than we would have thought given the movement of the industry into balanced or slight oversupply situation. So I was wondering how much of the quarter upside in Tobacco was due to earlier shipments. Can you quantify that number?

We don't quantify the number. We did have accelerated shipments, and we still -- with larger crops and still firm demand, we still have a lot of tobacco left to ship in the second half. So again, with -- as always, shipping can impact quarter-to-quarter and fourth quarter into the first quarter. But we're very pleased with where we are and really optimistic for the second half of the year.

So the decline in the uncommitted inventory from, I think it was 20% last quarter to 13% this quarter, was that accelerated shipment? Was that all pulled forward in this accelerated shipment number? Or is there some other factor in that decline in uncommitted tobacco leaf inventory number?

And that's methodology, right? At the end of the day, depending on how you do it, but we want to be consistent. So year-over-year, that's the way we do it, quarter-by-quarter. So no, that's not really reflective of that. We're really happy with the 13%. And clearly, we're sitting on the slug of tobacco, inventory is still up. So we expect to ship a lot of that in the next 6 months.

Great. And for the full year, where do you anticipate that uncommitted inventory number being? Do you think you'll stay within your comfort range?

I think -- well, I think we'll stay within the comfort range. We're in the comfort range right now. Yes, there's still a lot to go, depends on shipping timing, making sure we get customer shipping instructions early enough to get it out for the year. But because we don't buy on a speculative basis, we are very comfortable with current levels and where we're going. But we do communicate on almost a daily basis with our customers to make sure that the tobacco ships as we end the year going into another year of large crops.

Great. SG&A was lower than we were looking for. Should we use that number in the back half?

You know well as anybody, Ann, that it all depends on a bunch of variables there. Even between the quarter and the 6 months, there were some things that were different. We had some favorable FX variances on one side, and then we had some other things going on. So it really depends on what the back end of the year brings, and we'll go from there. But there is just a lot of variables out there, exchange rates, what are they going to do going forward. We'll have to see.

And the same question for interest expense.

Interest expense, we're really trying to bring down that leverage. I think we -- year-over-year, we have done a good job there. It all depends on how quickly can we ship this tobacco and bring down that leverage even further.

Great. And then do you have a worldwide uncommitted leaf inventory number?

Yes. So the worldwide estimated unsold flue-cured and burley. Stocks were at 101 million kilos as of September 30, and that's up 76 million kilos from June 30 of this year.

Is that because of large oversupply?

Because of the large crops, right?

Yes, large crops.

Crop, sorry, large crops?

Yes. Yes, ma'am.

There are no further questions at this time. And with that, I will turn the call back over to Preston Wigner for final closing remarks. Please go ahead.

Thank you all for taking the time to join us today. We look forward to connecting again for the third quarter fiscal year 2026 earnings call.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.