Ladies and gentlemen, hello and welcome to the Universal Corporation first quarter fiscal year 2023 earnings call. My name is Maxine, and I'll be coordinating the call today. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I will now hand you to your host, Candace Formacek, Vice President and Treasurer, to begin. Candace, please go ahead when you're ready.
Thank you, Maxine, and thank you all for joining us today. George Freeman, our Chairman, President, and CEO, Airton Hentschke, our Chief Operating Officer, and Johan Kroner, our Chief Financial Officer, are here with me today and will join me in answering questions after these brief remarks. This call is being webcast live and will be available on our website and on telephone taped replay. It will remain on our website through November 3rd, 2022. Other than the replay, we have not authorized and disclaim responsibility for any recording, replay, or distribution of any transcription of this call. This call is copyrighted and may not be used without our permission. Before I begin to discuss our results, I caution you that we will be making forward-looking statements that are based on our current knowledge and some assumptions about the future and are representative as of today only.
Actual results could differ materially from projected or estimated results, and we assume no obligation to update any forward-looking statements. This is of particular note during the current ongoing COVID-19 pandemic, when the length and severity of the crisis and resultant economic and business impacts are so difficult to predict. For information on some of the factors that can affect our estimates, I urge you to read our Form 10-K for the year ended March 31, 2022, as well as our Form 10-Q for the quarter ended June 30, 2022. Such risks and uncertainties include, but are not limited to, the ongoing COVID-19 pandemic, customer-mandated timing of shipments, weather conditions, political and economic environment, governmental re-regulation and taxation, changes in exchange rates and interest rates, industry consolidation and evolution, and changes in market structures or sources.
Finally, some of the information I have for you today is based on unaudited allocations and is subject to reclassification. In an effort to provide useful information to our investors, our comments today may include non-GAAP financial measures. For details on these measures, including reconciliations to the most comparable GAAP measures, please refer to our current earnings press release. We are pleased with our start to fiscal year 2023. In the quarter ended June 30, 2022, we continued to effectively navigate increased costs, particularly rising prices for green leaf tobacco and shipping constraints. We succeeded in getting a significant amount of carryover tobacco shipped out of Brazil, and our plant-based ingredients platform continued to exceed our expectations.
Results for our tobacco operations segment were down modestly in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, largely on unfavorable foreign currency comparisons due to the strong U.S. dollar. Demand for leaf tobacco remains strong and flue-cured burley, oriental, and wrapper tobacco remain in an undersupply position. We are also anticipating a reduction in African burley tobacco crop sizes due to weather conditions there. While we were able to ship a greater amount of carryover tobacco out of Brazil in the quarter ended June 30, 2022, compared to the same quarter in the prior fiscal year, we continue to face a challenging logistical environment. We are also continuing to see increased costs for leaf tobacco across virtually all markets. Our ingredients operations segment performed well in the first quarter of fiscal year 2023.
Sales for all of our businesses in this segment were up in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, with strong volumes for both human and pet food product categories. In our ingredients operations segment, we are also seeing rising costs for raw materials and the impact of higher freight costs. Synergies captured across the plant-based ingredients platform continue to make good progress. Our businesses are working together on new product development and strategies to serve the platform's diverse customers, which utilize our portfolio of plant-based ingredients and botanical extracts and flavoring offerings. Results for the ingredients operations segment for the quarter ended June 30, 2022 include our October 2021 purchase of Shank's Extracts, LLC. Shank's.
Turning to the results, net income for the quarter ended June 30, 2022 was $6.8 million or $0.27 per diluted share, compared with $6.4 million or $0.26 per diluted share for the quarter ended June 30, 2021. Excluding restructuring and impairment costs and certain other non-recurring items detailed in other items in today's earnings release, net income and diluted earnings per share decreased by $1.2 million and $0.05, respectively, for the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021. Operating income of $13.3 million for the quarter ended June 30, 2022 increased by $2.7 million compared to operating income of $10.6 million for the quarter ended June 30, 2021.
Adjusted operating income, also detailed in today's earnings release of $13.3 million, increased by $0.6 million for the first quarter of fiscal year 2023 compared to adjusted operating income of $12.6 million for the first quarter of fiscal year 2022. Consolidated revenues increased by $79.8 million to $429.8 million for the three months ended June 30, 2022 compared to the same period in fiscal year 2022 on higher carryover tobacco sales volumes and prices, as well as the addition of Shank's Extracts, LLC in October 2021 in the ingredients operations segment. Turning to the segment detail. The first fiscal quarter is historically a slow quarter for our tobacco businesses.
Operating income for the tobacco operations segment decreased by $0.8 million to $8.1 million for the quarter ended June 30, 2022, compared with the quarter ended June 30, 2021. Although tobacco sales volumes were up modestly, tobacco operations segment results were down largely on unfavorable foreign currency comparisons due to the strong US dollar in the quarter ended June 30, 2022 compared to the same quarter in the prior fiscal year. Carryover crop shipments were higher in Brazil in the quarter ended June 30, 2022 compared to the same quarter in the prior fiscal year, largely due to increased shipping availability. In Africa, carryover shipments were down in the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021 on smaller crops grown in fiscal year 2022.
Selling, general, and administrative expenses for the tobacco operations segment were higher in the quarter compared to the same quarter in the prior fiscal year, primarily on unfavorable foreign currency comparisons. Operating income for the ingredients operations segment was $4.6 million for the quarter ended June 30, 2022, compared to $4.3 million for the quarter ended June 30, 2021. Results for the segment improved year-over-year on the inclusion of the October 2021 Shank's acquisition. Sales for all our businesses in this segment were up in the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021, with continued strong volumes for both human and pet food product categories.
Selling, general, and administrative expenses for this segment increased in the quarter ended June 30, 2022, compared to the same quarter in the prior fiscal year on the addition of Shank's as well as higher labor costs. At Universal, we are committed to providing transparency around our sustainability efforts and goals. We recently completed our submission to the global nonprofit organization CDP regarding climate change, forestry, and water risk to provide more information on our achievements in these areas to our stakeholders. We are also excited to announce that we have engaged a third-party to aid in analyzing and communicating our climate change policy, as well as to provide independent third-party verification of our results. At this time, we are available to take your questions. Maxine, I'll send the call back to you for now.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you do change your mind, please press star followed by two. When preparing to ask your question, please ensure your line is unmuted. Our first question comes from Ann Gurkin from Davenport & Company. Your line is now open. Please go ahead.
Good evening, everybody.
Hey, Ann.
Good evening.
I wanted to start with operating margin comments, if there's anything you'll share. Operating margin for tobacco was lower than we're looking for to start the year, and I understand there are moving pieces, but I was just curious if you could help me think about how operating margin for tobacco for the year should end up. We have it flat right now, for fiscal 2023 versus 2022. Is that achievable?
Ann, you know, it's really early in the year, so we'll have to take a look at how things work themselves out. Of course, you know, there's always a mix factor that comes into play as well as currency. It's a bit early to go down that route to see where we're gonna end up. I think it's a very good start to the year and we're happy where we're at right now.
Okay. The same question for ingredients. We were under the impression that ingredients could deliver margin close to what we saw in the fourth quarter, so that high single-digit level. Understanding the inclusion of Shank's this quarter, and higher cost and freight, how should we think about how the year should unfold for margin for ingredients?
Yeah. Ann, we actually think that it held up really well. We're really, you know, satisfied with where those margins are. We saw that, of course, and we have been talking about, you know, those margin pressures, especially with the addition of the additional freight to get some of the raw materials over to the U.S., which is in inventory now, so that will roll out. You know, the orders are really good and the margins are holding up really well, so we're really happy where we're at.
Great. Are you raising prices on that ingredient business or is that a yearly contract kind of pricing mechanism?
No, we're raising prices wherever we can. You know, in some situations it appears that you're starting to hit a ceiling, but we are on some of the contracts, we're actually doing new pricing every other week.
Great. SG&A for the full year, I was holding it flat versus fiscal 2022. Is that still a reasonable expectation given what we're seeing with currency movement?
Yeah, that's gonna be very difficult to determine. Last year's first quarter was really low. You know, our fourth quarter, fiscal year 2022 was about the same what we had, this first quarter, you know.
Right.
We did have that.
Right.
Fairly large FX impact this quarter. You know, hopefully it will come down a little bit from that. Right now, you know, that first quarter last year was really low.
Okay. Can you help me think about how working capital should progress for this year versus last year? Will we see an improvement in working capital, and a benefit to cash flow in fiscal 2023?
What I can tell you, Ann, is that, you know, most of this working capital is caught up in inventory at the moment. Of course, only 15% of that is uncommitted, so we're really happy about that. As long as we can ship the stuff, you know, we'll have a nice turnaround, and we'll have some nice cash coming in, depending on what, you know, how early we're starting to buy in the March quarter. All that looks positive. Again, it all depends on, you know, can we get these shipments out. Most of it has been sold or certainly committed, being committed to, so we just have to get to shipping.
Great. Y'all commented that shipments are still. It's still difficult. Can you any update on vessel availability? Any movement? Any improvement there?
Yes, we have seen. It's not the same in every geographic location, but we have seen tremendous improvement in Brazil with container availability and vessel availability. The key for us, as we stated in the previous quarter, is to be as proactive as we can. Working with our customers once tobacco is packed and inspected, is to get these shipping instructions and book the vessels as soon as possible. We are working all these different areas, but it still remains a challenge, but we do see a better scenario going forward.
Fantastic. It looks like the current share repurchase authorization expires November of 2022. Any update on the likelihood of that getting renewed? It looks like there's maybe $96-$97 million remaining under that authorization. Any update there?
That determination will be made at the next board meeting, Ann.
Okay. Candace, may I get a worldwide uncommitted leaf number, please?
Yes. It is updated this time. It's 49 million kg as of June 30th, which is down 13 million kg from the 3/31/2023 numbers.
Okay. Any update on the U.S. tobacco crop? How does it look in the field right now? What is your view of the crop, the quality?
Right now, the tobacco looks good in the field. Weather conditions have been favorable. We considering that it continues the way it has been farming, this crop should be a good volume crop and also good quality crop. We're gonna start buying soon here. Considering no events on weather conditions, we should be in a good place in the tobacco, in the U.S. tobacco crop.
Fantastic. Look forward to the year. Thank you all for taking all these questions.
Thanks, Ann.
Thanks, Ann.
We have no further questions, so I'll hand it back to Candace for closing remarks.
Thank you, Maxine. Appreciate you joining us today. Thank you all, and we will talk to you next time.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.