Good afternoon. My name is Elaine and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter Fiscal Year 2017 Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Candace Formacek. You may begin your conference.

Thanks, Elaine and thank you all for joining us. George Freeman, our Chairman, President and CEO and David Moore, 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 August 3, 2017. 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, 2016 as well as our Form 10-K for the year ended March 31, 2017, which we expect to file with the SEC later this week. Such factors include, but are not limited to, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulations, changes in currency, 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 allocations 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…

[Operator Instructions] And your first question comes from the line of Ann Gurkin from Davenport & Company.

Hey.

Good afternoon everyone. I want to start with the crop outlook, the burley outlook, the further decline, is that a surprise and do you have any insight into the quality of those expectations behind the flue-cured and burley crops or is it too early?

I don’t think it was – I don’t think it’s a surprise on the burley and Africa quality. Yes, quality is good, average to good, primarily looking at Brazil.

Okay. And then some income statements, regarding margin, where can the business go long-term, if you think about peak operating margins for the business, where would that be for Universal now given dynamics globally?

Well, I am not sure exactly what dynamics you are talking about, Ann. I mean I think that we have always – and what we have been saying for a while is that we believe that there is still room for improvement and finding opportunities in the supply chain to enhance results and that as we see what the outcome is within our customer base and within the general industry over the coming years, we still believe there are opportunities for us to be important to our customers and to maintain our volumes currently. It’s hard to tell a long-term view. I think we look generally over the next few years. We are pleased that this year we have been able to maintain the volumes that we sold last year and we are continuing to work and develop opportunities with our customers continually.

I guess, given the statement in the press release about moving into ‘18, it’s tough for burley I guess [Technical Difficulty].

Sorry, Ann, you are cutting out. We missed that last statement.

[Technical Difficulty] is still uncertain, Kind of can that margin hold as we look at 2018, can it go higher, I mean, can you give any kind of comment on that?

We have – I missed, I still missed part of your statement. But if you are looking for outlook on margins for ‘18, we don’t typically provide estimates in that way. We are looking, it’s still very early in the season for 2018, we just opened up in Brazil through this quarter and we are working busily as we normally would, but I don’t think we have an outlook on specific margins, opportunities this year.

Ann, Brazil is – I mean, sort of on volume, Brazil is back to normal, but Malawi is down. But general, that’s sort of an offset on big picture.

Great. Let’s try the other way, on SG&A you had nice improvement in ‘17 versus ‘16, how should we think about that as we go into ‘18 or think about can you drop further improvement in the SG&A line over the next couple of years?

Ann, I think that we are always looking to find ways to improve our costs and so I won’t rule that out. At the same time, a lot of what you see in the movements are typically one-off kinds of things, our comparisons to prior year. So hopefully, we have tried to provide a color on that in these variances. Some of it is currency. You will always see that moving around.

Lord knows I can’t predict the currency.

But we do continually work on the fundamentals where we can of course.

Okay, great. And then on the balance sheet, the decline in customer advance is down to $11 million from $16 million last year, what is behind that number?

Ann, I don’t know if there is anything specific behind it. It’s sort of been in general decline for years and we don’t push it. We don’t really need the customers to pre-finance their purchases so…

Yes, it doesn’t really matter.

But it hasn’t been material in some time.

Okay, great. And then since I have you, how about the tax rate for ‘18?

We knew you would ask that one.

I ask this all the time.

Yes. I would only point out the exchange rate impact on deferred income taxes has some impact on the rate. But generally, I would expect it to be between 34% and 35% this year.

Okay, great. And then as you think about the business longer term and the move by tobacco companies to, I guess behind innovation to pursue non-combustible or heat-not-burn technologies, any read through on customer inventories or conversations about strategies how to position the business for what could be a change in kind of mix of customer products and demand for leaf, I mean can you help me out with that at all?

Well, I mean to the extent it’s – the non-combustible tobacco centered products seems to be a theme espoused by our major customers. And to the extent, they go down that route, we intend to be positioned to be – well, we will strive to be their supplier of choice, but we are moving with them as they make that transition.

So moving with them in terms of – uses less leaf per non-combustible device, so are you all in conversations about long-term strategy if that technology proves successful?

Yes, we are always in discussions with them. Ann and yes, it will use less, but there is a – perhaps it will use higher quality. So it’s not necessarily an all or nothing deal.

Okay, that’s great. That’s all I have. Thank you all very much.

Thanks Ann.

And you have a question from Steve Marascia from Capitol Securities.

Good afternoon everyone.

Good afternoon.

Just a simple question, I don’t know if this has already been asked in prior calls, but I was wondering if any of the machinations [ph] from the new White House team regarding potential trade operations or policies, have you all been able to look at that and see – figure out if that’s going to either positively or negatively impact you on any of the proposals or anything they have vaguely talked about?

No. I think when we – when there was discussions about ripping up NAFTA that we have operations in Mexico and they would have been affected by that, but you could argue that, that would have been offset here in the U.S. So I think in general, it would – where we would lose out, we would probably gain, so.

I think it’s hard to tell to you Steve, because without the details and without seeing the repercussions and what some of the push and pull might be in certain places, it’s really difficult to try to model that out. I understand the issue and getting that question, but for us, it really depends on a lot of things. And there are different ways that we conduct our business in different countries and our customers are global, so it’s hard to give a specific answer on that at this stage.

Has it affected your ability to make plans going forward based on the uncertainty what they might provide you or are you just progressing as is…?

No, because primarily the – I mean, really the U.S. is really a domestic market. I mean, there are some imports, but largely it’s a domestic market. And there are some U.S. exports, but again, in the scheme of business, they are not huge.

Not really. It might come down to the – any regulations that affect the importation of oriental tobacco…

Right, that’s probably the biggest.

Okay, thank you very much.

Thank you.

[Operator Instructions] And I am showing no further questions at this time.

That’s great. Thank you, Elaine and thank you everyone for joining us today.

Good night, everybody.

And this does conclude today’s conference call. You may now disconnect.