Good afternoon. My name is Erica and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter Fiscal Year 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Ms. Candace Formacek, Vice President and Treasurer, you may begin your conference.

Thank you, Erica. And thank you all for joining us today. George Freeman, our Chairman, President and CEO; 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 August 22, 2019. 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, 2018, as well as our Form 10-K for the year-ended March 31, 2019, 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 regulation and taxation, 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…

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

Congratulations on a very strong year, very impressive. I want to just start out with your outlook for the crop sizes for fiscal ‘20. Can you give us any numbers or increased percentage ranges that support oversupply position?

Yes. And we just posted these to the website. So, you should be finding more of the detail there. We do have the world flue-cured increasing for the current crop year versus prior about 4%, 2.2 excluding -- 2.2%, I'm sorry; 4.2% is excluding PRC. And then, we have an increase in burley that’s a bit smaller, 1.5%.

Okay. That didn’t change a whole from the crop report posted in February. Is it customer demand softening, customer orders, what’s creating this oversupply?

Zimbabwe is huge.

I mean, some of it’s timing, Ann, of course you know. That quarter is a little bit -- was less further for a long in understanding what the outlook might be. So that is -- part of it is the timing of the year.

Okay. And then, in terms of your capital allocation strategy and your comments in your press release, is there any timing of more concrete news or any kind of decisions, any kind of timeline you can give us, besides making progress and you hired someone but is there any kind of…

No.

…or expect if that makes sense?

No. But, I think as we mentioned, we do have a pipeline and we do have some prospects that are interesting. And that’s……

[Multiple speakers] we can announce it. I think we wanted to make sure that everyone understood that we were working very diligently, and are pleased with the amounts of activity that we’re seeing.

Okay. Ann, just to put this up there, since your customers seem to be dipping their toe into cannabis, any update as to whether you will work with them in terms of venturing into that business?

Well, it’s still illegal. But if that were legal, we’d evaluate opportunities to see if they were in line with our core competencies. But, I do note, there are significant differences in the way you grow cannabis in a greenhouse and tobacco in a field.

How about your existing hemp?

Hemp, I think is probably closer to our core competencies.

And is your strategic update you had outlined on non-core businesses to represent 10% to 20% of earnings over five years, is there any change to that expectation?

No there’s not.

No.

Okay, great. And then, given the unfortunate weather events in Africa, congratulations on the navigating all that successfully. But, how do we think about fiscal ‘20 processing capacity utilization at plant, anything I should watch out for there?

No. I think, the -- we weren't really affected in our areas.

Yes. And there was -- we were really fortunate to have minimal impact, especially on crops that were stored and awaiting shipment. Clearly, there is some infrastructure damage happening in the region, but at this time we are really not expecting material effect from the cyclones on upcoming crop sizes or shipment timing.

Okay, great. And then, can you talk about the opportunity to increase market share over the next several years, does that remain an opportunity? And then, can you help me understand that increased business you got with the Philippines, should that be a positive to fiscal ‘20 numbers?

Yes. Ann, certainly, at the end of the day, that was a very good opportunity for us to expand there in the Philippines. We are of course the only ones in Philippines. So, it's a good win for us. And yes, we do believe that it will add to our earnings in fiscal year ‘20.

And we still see opportunities out there.

Right. And then, can you talk about worldwide uncommitted number?

Yes. The worldwide unsold fuel-cured and burley is 108 million kilos at 3/31/19 which is up 20 million from 12/31.

Okay. And then, Universal's uncommitted number? I'm sorry, I missed that.

I don't think we put that in there. It's coming on in the K. But, it's not out at one.

And then, just anything you can help me with fiscal 2019 -- so G&A was higher, which you talked about, was higher than my expectations for fiscal ‘19. How should I think about that for fiscal ‘20 if you can help me at all?

I think, Ann, it's the same. We did have a number of offsetting variable in there. I would say, we had higher revenues and unit volumes this year. And we did see our SG&A for the full year at a pretty flat percentage. And I think, over the longer haul, it’s moved just a bit but not really that dramatically.

Okay. And then, how should I think about the margin potential for the North American business in fiscal ‘20 versus ‘19? I know ‘19 was impacted by processing yields smaller crop or crop related -- weather related impact on the crop. How should I think about the potential for the margin in North America in fiscal ‘20?

As you can see in the year, the crop update that's going to come out, the crop is going to be about the same as last year. Of course, last year was weather affected, as you said. So, there certainly will be an impact on North America with regard to throughput through factory and overhead cost allocation will be impacted there.

Okay, great. And then, CapEx for fiscal ‘20?

CapEx for ‘20 is expected between $30 million and $40 million.

$30 million to $40 million? And then, any comment or direction on overall margin for the company for fiscal ‘20 versus ‘19? Can you hold that flat or can you show improvement -- gross margin? Sorry.

We don't really forecast our margins, Ann, as you know. [Multiple Speakers]. It’s really early in the season. We are still looking at what we think is going to be coming out next year. We're really just pleased with where we are this year, continually looking for opportunities even in the coming year and still feeling not speed about that. So, there are some things that affected our numbers this year that won't be repeated next year. So, we've got that information for you in this release.

Right. And I mean, it is a slow market this year. Things are just moving slower.

But it's early.

Yes, it’s early.

So, more to come next quarter.

And I don't know if this has any impact on you all, but the U.S., Mexico, Canada trade agreement, does that have any implications for you?

Well, we of course have businesses in Mexico. So, as far as impact, don't believe so. But, again, the U.S. crop is going to be short this year, certainly because of the Chinese import. So, we hope that the trade agreement will be resolved soon and the Chinese come back to our markets but we have a global footprint, so that includes Mexico, but I don't think that -- it will have an impact on us.

That’s great. Thank you all very much. Thank you. Thank you for your time.

Thank you, Ann.

And your next question comes from the line of Steve Marascia with Capitol Securities.

Hey, everyone.

Hello.

Just a quick question. You guys had about $20 million in restructuring and impairment costs for 2019. Do you expect -- what type of levels do you expect that to be in 2020?

We hope to have none. This was really specific related to our Tanzania operations. Of course that impairment was agreed to by our auditors, and we don't expect anymore. But, when we go into the year, we'll see if there's anything else out there.

Okay. Thank you very much.

Thank you.

And there are no further questions, at this time.

Great. Thank you all very much for joining us. And we'll talk with you next quarter. Thank you.

Thank you. This does conclude today's conference call. You may now disconnect.