Universal Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, ladies and gentlemen, and welcome to the Universal Corporation Third Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Wednesday February 7, 2024. I would now like to turn the conference over to Jennifer Rowe, Assistant Treasurer at Universal Corporation. Please go ahead.
Jennifer Rowe: Thank you for joining us. George Freeman, our Chairman, President and CEO; Airton Hentschke, our Chief Operating Officer; and Johan Kroner, our Chief Financial Officer, are here with me today and will join me in answering questions after these brief remarks. This call is being webcast live and will be available on our website and on telephone taped replay. It will remain on our website through February 7, 2024. Other than the replay, we have not authorized and disclaim responsibility for any recording, replay or distribution of any transcription of this call. This call is copyrighted and may not be used without our permission. Before I begin to discuss our results, I caution you that we will be making forward-looking statements that are based on our current knowledge and some assumptions about the future and are representative as of today only.
Actual results could differ materially from projected or estimated results, and we assume no obligation to update any forward-looking statements. For information on some of the factors that can affect our estimates, I urge you to read our 10-K for the year ended March 31, 2023. Such risks and uncertainties include, but are not limited to, impacts of pandemic, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulation and taxation, changes in exchange rates and interest rates, industry consolidation and evolution and changes in market structure or sources. Finally, some of the information I have for you today is based on unaudited allocation and is subject to reclassification. In an effort to provide useful information to 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. Universal Corporation again delivered strong financial and operational performance in the third quarter of fiscal year 2024. Operating income and net income for the quarter were up 13% and 28%, respectively, relative to the third quarter of fiscal year 2023, which helped increase our operating income and net income for the nine months of fiscal year 2024 by 20% and 13% respectively, compared to the same period last fiscal year. Our tobacco business continued to perform very well, driven by a favorable product mix and strong demand from our customers. Improved margins, larger crops in Africa, and strong tobacco shipments in line with our expectations benefited our results in the nine months and quarter ended December 31, 2023, compared to the same period last fiscal year.
We continue to be encouraged by the solid progress the team is making to expand our ingredients business. The investments we have made to build out the research and development and corporate sales teams are starting to gain momentum and have positioned us for future growth. Some financial highlights for the nine months and quarter ended December 31, 2023. Net income for the nine months was $79.3 million, or $3.17 per diluted share, and was $53.2 million, or $2.12 per diluted share for the quarter ended December 31, 2023. Excluding certain non-recurring items detailed in today's press release, net income increased by $12.6 million, and diluted earnings per share increased by $0.49 for the nine months. And net income and diluted earnings per share increased by $12.1 million, or $0.49 per share respectively, for the quarter ended December 31, 2023, compared to the same period last fiscal year.
A field of tobacco plants growing in bright sunshine.
Operating income of $153.8 million for the nine months ended December 31, 2023, increased by $25.1 million, and operating income for the quarter of $87.5 million increased by $9.9 million. Selling general and administrative expenses were up $21 million in the nine months on higher compensation costs, and up $10.6 million in the quarter ended December 31, 2023, largely on higher compensation costs and unfavorable foreign currency comparisons compared to the same period last fiscal year. Some highlights for our segments. Operating income for the Tobacco Operations segment increased by $29.9 million to $148.9 million for the nine months, and by $10.5 million to $87.6 million for the quarter ended December 31, 2023 compared to the nine months and quarter ended December 31, 2022.
Tobacco Operations segment operating income was up largely on higher prices and a more favorable product mix, partially offset by lower tobacco sales volume. In the nine months and quarter ended December 31, 2023, African crops were larger, and carryover crop shipments from South America were significantly lower compared to the same period in fiscal year 2023. Operating income for the Ingredients Operations segment was $5 million and $2.2 million, respectively, for the nine months and quarter ended December 31, 2023. In the quarter ended December 31, 2023, operating income for Ingredients Operations segment was in line with results for the same quarter in the prior fiscal year, as incremental revenue and margins from the sale of new products offset the effects of market challenges for our core products and higher expenses resulting from the investments that we were making to position the segment for future growth.
Operating income for the segment for the nine months ended December 31, 2023 was lower as compared to the same period in the prior year, mainly as a result of lower operating income in the first quarter of the current fiscal year. Results for the first quarter of fiscal year 2024 were negatively impacted by customer inventory recalibration. As we enter our last quarter of fiscal year 2024, global leaf supply for all types of leaf tobacco continues to be tight, and as of December 31, 2023, our uncommitted tobacco inventory was at a low level of 8%. While we expect global leaf tobacco supply to remain tight in fiscal year 2025, in part due to El Nino weather conditions, we believe the strength of our diverse global footprint will help us satisfy our customers' leaf tobacco needs.
With our ingredients business, we are pleased with the progress. We are making on an expansion of our processing capabilities at our ingredients facility in Lancaster, Pennsylvania. We expect those resources to be fully operational in the third quarter of fiscal year 2025 and positively contributing to our earnings as soon as fiscal year 2026. Another important achievement in fiscal year 2024 has been the progress we made to advance the Universal's global sustainability agenda. These include the December publication of our 2023 sustainability report and our recently announced participation in a solar project that we believe will help us meet our target to reduce operational greenhouse gas emissions by 30% by 2030. We are pleased with our sustainability advances, and we continue to seek opportunities to further promote sustainability in our business.
We are proud of our performance thus far in fiscal year 2024. We believe our strategy of maximizing opportunities in our tobacco businesses by capitalizing on our industry-leading market position in the primary exporting region and our robust sustainability practices, while at the same time investing for growth in our ingredients business, continues to serve us well. Demand for leaf tobacco and our relationships with our longstanding and diverse customer base remain strong, and our position in the tobacco business can offer us opportunities in the future. We continue to make measured and thoughtful progress on our ingredients platform, and we are excited about the opportunities for our business. We believe that we are on the right path for a successful future.
At this time, we are available to take your questions.
