[Part I — Financial Information](index=4&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) This section provides the company's unaudited interim financial statements and management's analysis for the first quarter of 2025 [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited Condensed Consolidated Financial Statements for Tootsie Roll Industries, Inc. for the quarter ended March 31, 2025 - The financial statements are unaudited and prepared in accordance with GAAP for interim reporting, to be read with the company's 2024 Form 10-K[16](index=16&type=chunk) - The company's operations are seasonal, with the third quarter historically being the largest for net product sales due to pre-Halloween demand[17](index=17&type=chunk) [Condensed Consolidated Statements of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) As of March 31, 2025, total assets were $1.14 billion, total equity increased to $879.0 million, and cash decreased to $119.5 million Key Balance Sheet Figures (in thousands) | Account | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | **Total current assets** | $329,116 | $333,605 | $328,540 | | **Total assets** | $1,141,700 | $1,147,181 | $1,093,453 | | **Total current liabilities** | $78,178 | $87,286 | $87,268 | | **Total liabilities** | $262,699 | $276,772 | $259,347 | | **Total equity** | $879,001 | $870,409 | $834,106 | [Condensed Consolidated Statements of Earnings and Retained Earnings](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Retained%20Earnings) For Q1 2025, net earnings increased to $18.0 million ($0.25 per share) from $15.8 million ($0.22 per share) in Q1 2024, despite a 3.3% revenue decrease Q1 2025 vs. Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Total revenue** | $148,455 | $153,175 | -3.1% | | **Total gross margin** | $52,450 | $50,028 | +4.8% | | **Earnings from operations** | $23,060 | $11,110 | +107.6% | | **Net earnings** | $18,041 | $15,835 | +13.9% | | **Net earnings per share** | $0.25 | $0.22 | +13.6% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly decreased to $3.6 million in Q1 2025 from $21.4 million in Q1 2024, primarily due to working capital changes Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $3,602 | $21,401 | | **Net cash used in investing activities** | $(3,673) | $(20,002) | | **Net cash used in financing activities** | $(19,253) | $(12,507) | | **Decrease in cash and cash equivalents** | $(19,298) | $(11,037) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, fair value measurements, derivative instruments, and the status of the multi-employer pension plan - The company uses derivative instruments, including foreign currency and commodity futures contracts, to manage exposure to price volatility, primarily for sugar and Canadian dollar exchange rates[31](index=31&type=chunk) - The Bakery and Confectionery Union and Industry International Pension Fund, a multi-employer plan, is in 'critical status', with an estimated withdrawal liability of **$97.5 million** for 2024, though management believes the actual liability would be limited to a present value between **$31.3 million** and **$37.7 million**[37](index=37&type=chunk)[39](index=39&type=chunk)[69](index=69&type=chunk) - The company leases certain buildings, land, and equipment, with total operating lease liabilities of **$6.1 million** as of March 31, 2025[45](index=45&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 challenges, including a 3.3% sales decline, improved gross margins, and anticipated high cocoa costs, while maintaining strong liquidity Q1 2025 vs Q1 2024 Sales Performance | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Product Sales** | $146,521 | $151,464 | -3.3% | | **Domestic Sales Change** | -1.8% | N/A | N/A | | **Foreign Sales Change** | -16.3% | N/A | N/A | - The company expects to incur significantly higher cocoa and chocolate costs through 2025 and 2026 as older, lower-priced supply contracts expire and are replaced by new contracts at elevated market prices[51](index=51&type=chunk) - A multi-year plant expansion is underway, with an estimated total cost of **$95 million to $100 million**, expected to be funded from cash flow from operations and internal sources[78](index=78&type=chunk) - The company's liquidity remains strong, with a current ratio of **4.2 to 1** and aggregate cash, cash equivalents, and investments totaling **$507.6 million** at the end of the quarter[80](index=80&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity price volatility, especially unprecedented cocoa prices, and uses hedging to mitigate these exposures - The cocoa market is experiencing unprecedented volatility and high prices, which is a primary market risk, leading to significantly higher costs for new supply contracts for 2025 and much of 2026[88](index=88&type=chunk) - The company hedges against commodity price changes (primarily sugar) and foreign exchange fluctuations (primarily Canadian dollar) using derivative contracts[88](index=88&type=chunk)[89](index=89&type=chunk) [Controls and Procedures](index=33&type=section&id=Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[91](index=91&type=chunk) - No material changes in internal control over financial reporting occurred during the first quarter of 2025[92](index=92&type=chunk) [Part II — Other Information](index=34&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) This section provides updates on risk factors, equity security purchases, and required exhibits [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors include potential impacts from tariffs and increasing regulatory scrutiny, such as the FDA's intention to phase out synthetic dyes - The imposition of tariffs on goods imported from outside the USMCA (e.g., cocoa, chocolate, edible oils) or on cross-border shipments within North America could have a negative impact on the business[95](index=95&type=chunk) - The food industry is subject to increasing laws and regulations, exemplified by the FDA's announced intention in April 2025 to phase out petroleum-based synthetic dyes in food products, the impact of which is still being evaluated[96](index=96&type=chunk) [Issuer Purchases of Equity Securities](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased 208,519 shares for approximately $6.5 million in Q1 2025, authorized by the board but not part of a formal program Q1 2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 to Jan 31 | 112,478 | $31.34 | | Feb 1 to Feb 28 | 88,662 | $30.70 | | Mar 1 to Mar 31 | 7,379 | $30.88 | | **Total** | **208,519** | **$31.05** | - The company does not have a formal stock purchase program; instead, the board periodically authorizes a dollar amount for share purchases[98](index=98&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO and CFO certifications and XBRL interactive data files - Filed exhibits include CEO and CFO certifications (Exhibits 31.1, 31.2, and 32) and Inline XBRL documents[102](index=102&type=chunk)

Financial Results - Tootsie Roll Industries, Inc. announced its financial results for Q1 2025, ending March 31, 2025[6]. - The company issued a press release detailing its operations and financial condition on April 23, 2025[6]. Report Classification - The report is classified as "furnished" and not "filed" under the Securities Exchange Act of 1934[7]. - The financial statements and exhibits related to the report include Exhibit 99.1, which contains the press release[8]. Management - G. Howard Ember, Jr. serves as the Vice President Finance and Chief Financial Officer of Tootsie Roll Industries, Inc.[12].

Group 1 - The article discusses the performance of Tootsie Roll Industries, highlighting its strong fundamental performance over the past two years [1] - The focus of the article is on the confectionery industry, particularly the growth and stability of Tootsie Roll Industries [1] Group 2 - Crude Value Insights provides an investment service centered on oil and natural gas, emphasizing cash flow and growth potential [2] - Subscribers have access to a stock model account and in-depth cash flow analyses of exploration and production firms [2]

Financial Performance - The Company reported consolidated net product sales of $715,530 for the twelve months of 2024, a decrease of $47,722 or 6.3% compared to 2023[71]. - Total revenue for 2024 was $723,217,000, a decrease of 6.0% from $769,365,000 in 2023[159]. - Net earnings attributable to Tootsie Roll Industries, Inc. were $86,827 in twelve months 2024, a decrease from $91,912 in 2023, representing a decline of 4.7%[90]. - Net earnings for 2024 were $86,808,000, a decrease of 5.7% compared to $91,886,000 in 2023[167]. - Net earnings per share for twelve months 2024 were $1.22, down from $1.28 in 2023, a decrease of $0.06 per share[90]. - Product gross margin for 2024 was $247,474,000, representing a slight decrease from $252,515,000 in 2023[159]. - Selling, marketing, and administrative expenses decreased by $2,337 or 1.5% to $152,675 in 2024 compared to 2023[76]. - The Company faced challenges in the Spanish market, with an operating loss of $611 in 2024, slightly improved from a loss of $828 in 2023[79]. Cash Flow and Investments - Cash flows from operating activities totaled $138,889 in 2024, an increase from $94,611 in 2023[67]. - The Company's total cash, cash equivalents, and investments increased to $526,968 as of December 31, 2024, up by $99,940 from $427,028 in 2023[68]. - Cash and cash equivalents increased to $138,841,000 in 2024 from $75,915,000 in 2023[163]. - The Company has invested in a diversified portfolio of highly rated marketable securities, primarily corporate bonds, with maturities generally of three to five years[39]. - The Company’s investments classified as available for sale total $283,060, with maturities structured to limit exposure to interest rate fluctuations[132]. - The Company recorded a favorable change of $5,665 in customer incentive program estimates in 2024, although such adjustments have not historically been material to operating results[114]. Operational Insights - The Company employs approximately 2,300 full-time employees, with seasonal increases in workforce primarily before Halloween[26]. - The Company’s sales are significantly impacted by seasonal demand, particularly during Halloween, Christmas, Easter, and Valentine's Day[35]. - The Company is exploring various programs to increase sales and profitability of its Spanish subsidiary, which is currently experiencing losses[39]. - The Company does not expend material amounts on research and development but focuses on improving existing products and production processes[23]. - The Company maintains ongoing cost reduction and productivity improvement programs, although the outcomes of these initiatives are not accurately predictable[124]. Risks and Challenges - The Company faces risks related to ingredient price volatility, competition, and changing consumer preferences that could adversely affect its financial condition[33]. - The Company is subject to risks related to operational interruptions from software or hardware failures, including potential cyber-attacks[37]. - The Company faces risks associated with climate change that could impact costs and availability of materials needed for manufacturing[37]. - The Company participates in a multi-employer union pension plan that is currently in "critical and declining status," which may lead to significant withdrawal liabilities in the future[39]. Shareholder Information - The Company paid cash dividends of $25,515 in 2024 and plans to continue issuing quarterly cash dividends[67]. - Shareholders' equity rose from $823,422 at December 31, 2023, to $870,743 as of December 31, 2024, reflecting net earnings of $86,827[69]. - The average number of shares outstanding decreased to 71,320 in 2024 from 71,903 in 2023[159]. - The Company repurchased $13,534 worth of common stock in 2024, compared to $33,114 in 2023[106]. - The Company issued a 3% stock dividend, resulting in an increase of 1,196 thousand shares in 2024, compared to 1,185 thousand shares in 2023[213]. Tax and Regulatory Matters - The effective income tax rate for twelve months 2024 was 31.6%, compared to 23.4% in 2023, reflecting the impact of deferred tax asset write-offs[90]. - The provision for income taxes in 2024 was $40,063, compared to $28,008 in 2023[204]. - The Company had unrecognized tax benefits of $2,114 in 2024, compared to $2,313 in 2023[209]. - The Company remains subject to examination by tax authorities for the years 2021 through 2023, with no examinations for years prior to 2020[211].

Financial Performance - Fourth quarter 2024 net sales were $191,356,000, a decrease of 2% from $195,368,000 in fourth quarter 2023[3] - Fourth quarter 2024 net earnings were $22,509,000, down 22% from $29,403,000 in fourth quarter 2023, resulting in earnings per share of $0.32 compared to $0.41[3] - Twelve months 2024 net sales totaled $715,530,000, a decline of 6% from $763,252,000 in twelve months 2023[4] - Twelve months 2024 net earnings were $86,827,000, a decrease of 5% from $91,912,000 in twelve months 2023, with earnings per share of $1.22 compared to $1.28[4] Tax and Adjustments - The company wrote off $11,010,000 of deferred tax assets in fourth quarter 2024, impacting net earnings[5] - Adjusted for the tax asset write-off, fourth quarter 2024 net earnings would have increased by 14% year-over-year[5] Operational Efficiency - Gross profit margins improved due to higher price realization and manufacturing efficiencies, despite lower sales volumes[7] - The company is focused on long-term investments in manufacturing operations to enhance product quality and operational efficiencies[10] Market Outlook - The company anticipates higher cocoa and chocolate costs in 2025 due to expiring supply contracts and new contracts at elevated prices[8] Other Income - Increased investment income and leasing revenue contributed positively to net earnings in fourth quarter 2024[9]

Financial Performance - Net product sales decreased to $223,891 in Q3 2024 from $248,336 in Q3 2023, a decline of 9.8%[63] - Domestic net product sales represented 91.6% of total consolidated net product sales in Q3 2024, with a decrease of 9.7% compared to the prior year[63] - Adjusted earnings from operations were $40,044 in Q3 2024, down 9.4% from $44,215 in Q3 2023[71] - Net earnings attributable to Tootsie Roll Industries, Inc. were $32,844 in Q3 2024, compared to $34,382 in Q3 2023, a decrease of 4.5%[78] Costs and Expenses - Product cost of goods sold decreased to $148,266 in Q3 2024 from $164,163 in Q3 2023, a decrease of 9.9%[64] - Selling, marketing, and administrative expenses increased to $41,825 in Q3 2024 from $39,300 in Q3 2023, an increase of 6.4%[66] - Cocoa and chocolate costs are expected to rise significantly, adversely affecting input costs and margins for the remainder of 2024 and into 2025[65] - The Company is exposed to significant increases in ingredient and packaging costs, particularly in cocoa and chocolate, which have reached unprecedented highs[105] Tax and Earnings Per Share - The consolidated effective tax rate decreased to 22.6% in Q3 2024 from 23.9% in Q3 2023, contributing to higher net earnings[77] - Average shares outstanding decreased from 71,696 in Q3 2023 to 71,379 in Q3 2024, impacting earnings per share positively[78] Future Outlook - The company expects adverse sales trends to continue through the remainder of 2024 and possibly into 2025[63] - The cocoa market is experiencing unprecedented volatility and remains a risk for the intermediate term and possibly longer[105] Pension and Employee Benefits - As of January 1, 2023, the Plan's funded percentage was 47.0%, down from 49.3% in 2022 and 48.5% in 2021, with a market value-adjusted percentage of 43.6%[81] - The number of current active employee Plan participants decreased by 1% from the previous year and 6% over the past two years, reflecting a 55% decline since January 1, 2011[83] - The Company's pension expense for the nine months ended 2024 was $2,579, compared to $2,785 for the same period in 2023, with surcharges of $909 and $982 respectively[87] - The Company received approximately $3.4 billion in Special Financial Assistance from the PBGC in July 2024, aimed at ensuring the Plan's solvency through 2051[88] - The Company expects to use VEBA funds to pay actual costs of employee benefits through part or all of 2027[101] Cash Flow and Investments - Net cash flows from operating activities increased by $30,496, totaling $70,102 for the nine months ended 2024 compared to $39,606 in 2023[94] - Cash used in investing activities was $(32,176) for the nine months ended 2024, with capital expenditures of $13,911 compared to $19,458 in 2023[95] - Aggregate cash and cash equivalents and investments totaled $481,555 at September 30, 2024, up from $427,028 at December 31, 2023[98] - The Company's current ratio was 3.6 to 1 at September 30, 2024, unchanged from December 31, 2023, and improved from 3.2 to 1 at September 30, 2023[97] Expansion Plans - The Company plans a plant expansion with an estimated cost of $70,000 to $80,000 over the next five years to meet projected demand[95] Market Risks - The Company is exposed to exchange rate fluctuations in the Canadian dollar, affecting raw material and packaging costs, as well as labor and local plant operating costs[106] - The Company invests principally in corporate bonds with an average maturity of three to five years to manage its interest rate risk[106] - The Company believes its policies limit exposure to significant interest rate fluctuations, with no material changes in market risks affecting disclosures made in the Form 10-K for the year ended December 31, 2023[107] - The net unrealized loss on available for sale investments was approximately $4,300 and $6,600 at September 30, 2024 and 2023, respectively, reflecting the increase in market interest rates[100] VEBA Trust - The VEBA trust held $16,345, $19,126, and $21,965 of aggregate cash and cash equivalents at September 30, 2024, December 31, 2023, and September 30, 2023, respectively[101] - The Company added $20,000 in additional funding to the VEBA trust in 2023, with no contributions made during the nine months of 2024[101] - The Company has entered into longer-range supply contracts for cocoa and chocolate needs in 2024 and much of 2025 at significantly higher costs than in recent years[105]

Financial Performance - Third quarter 2024 net sales were $223,891,000, a decrease of 10% from $248,336,000 in third quarter 2023[1] - Third quarter 2024 net earnings were $32,844,000, down from $34,382,000 in the same period last year, with earnings per share decreasing by 4% to $0.46[1][2] - Nine months 2024 net sales totaled $524,174,000, an 8% decrease from $567,884,000 in nine months 2023[2] - Nine months 2024 net earnings increased to $64,318,000, up from $62,509,000 in the prior year, with earnings per share rising by 3% to $0.90[2][10] Profitability and Margins - Gross profit margins improved due to higher price realization and manufacturing efficiencies, despite lower sales volumes impacting overall results[3] - The company implemented price increases to recover margin declines, particularly due to rising cocoa and chocolate costs expected to affect margins in the upcoming quarters[4] Income and Taxation - Increased investment income and higher leasing revenue contributed positively to net earnings in both the third quarter and nine months of 2024[5] - The effective income tax rates were 22.6% for third quarter 2024, down from 23.9% in 2023, and 22.4% for nine months 2024, down from 24.1% in 2023[5] Shareholder Metrics - Average shares outstanding decreased to 71,379,000 in third quarter 2024 from 71,696,000 in 2023, contributing to higher earnings per share[9] Strategic Focus - The company continues to focus on long-term investments in manufacturing operations to meet consumer demands and improve operational efficiencies[5]

Core Viewpoint - Tootsie Roll has shown improved execution and results since 2020, yet its share price remains stagnant, reflecting an undervaluation despite solid fundamentals and a strong dividend policy [1][11]. Company Overview - Tootsie Roll Industries, Inc. was established in 1896 and is a prominent producer of candy and chewing gum in the U.S., Canada, and Mexico, with well-known brands such as Tootsie Roll, Blow Pops, and Junior Mints [2]. - The company is controlled by Chairwoman and CEO Ellen R. Gordon, who holds approximately 57.1% of common stock and 84.5% of Class B shares, granting her majority ownership [2]. Revenue and Earnings Growth - Revenue and EPS were stagnant or declining prior to the pandemic, with a significant drop during COVID-19 due to social restrictions and supply chain issues; however, sales have rebounded since then [3]. - The company has experienced a surge in consumer demand for candy and chocolate from 2020 to 2023, aided by increased store traffic and a return to normal social patterns [3]. Financial Performance - Tootsie Roll's revenue reached a record $769.4 million in 2024, driven by price increases to counter inflation, although sales are expected to decline in 2024 due to consumer resistance to higher prices [4]. - Diluted GAAP EPS reached $1.28 in 2023, the highest in a decade, following a low of $0.79 in 2020, indicating substantial improvement [4]. - Despite a projected decline in sales, management's efforts to restore margins and improve manufacturing efficiencies are expected to stabilize profits [4]. Competitive Landscape - Tootsie Roll faces challenges in a confectionery industry dominated by larger competitors like Hershey, M&M Mars, and Nestle, limiting its ability to introduce new products or pursue M&A opportunities [6]. - The company has successfully navigated inflationary pressures and is currently more profitable than before the pandemic, although top-line growth remains a challenge [6]. Competitive Advantages - Tootsie Roll's iconic brands and strong consumer loyalty provide a competitive edge, alongside a robust balance sheet with no long-term debt and $130.12 million in cash and equivalents [7]. - The company typically performs well during economic downturns, maintaining revenue stability during past recessions [7]. Dividend Analysis - The decline in share price has resulted in a dividend yield of 1.21%, which is above the 5-year average of 1.05%, complemented by an annual 3% stock dividend [8][9]. - Tootsie Roll is recognized as a Dividend King, with a 58-year streak of dividend increases, supported by a modest payout ratio of 26% based on estimated 2024 EPS [9]. Valuation - The current share price is approximately $29.72, significantly below the estimated fair value of $40.80, indicating that Tootsie Roll is undervalued [10]. - Sensitivity calculations suggest a fair value range between $39.44 and $42.16, with the stock price representing about 70% to 75% of the fair value estimate [10]. Final Thoughts - Despite a flat share price over the years and concentrated ownership, Tootsie Roll's improved performance post-pandemic, attractive dividend policy, and competitive advantages make it a compelling long-term investment opportunity [11].

Sales and Revenue Performance - Net product sales decreased by 6.3% to $148,819 in Q2 2024 compared to $158,837 in Q2 2023, with domestic sales representing 92.3% of total sales[52] - Adjusted earnings from operations decreased by 8.9% to $17,927 in Q2 2024, with unfavorable results from the Mexican subsidiary partially offset by higher price realization[59] - Net earnings attributable to Tootsie Roll Industries, Inc. increased by 10.0% to $15,640 in Q2 2024, with earnings per share rising to $0.22[64] Cost Management and Efficiency - Adjusted product cost of goods sold decreased by 6.7% to $99,610 in Q2 2024, with gross profit margins benefiting from higher price realization and improved manufacturing efficiencies[53] - Selling, marketing, and administrative expenses decreased by 1.5% to $32,670 in Q2 2024, but increased as a percentage of net product sales to 22.0% due to lower sales[56] - Customer freight and delivery expenses decreased by 10.3% to $13,839 in Q2 2024, reflecting a more competitive freight market[57] Financial and Tax Performance - Other income, net increased to $4,900 in Q2 2024, driven by higher investment income on available-for-sale securities and favorable foreign exchange gains[62] - The consolidated effective tax rate decreased to 23.1% in Q2 2024, contributing to higher net earnings[63] - Net cash flows provided by operating activities were $8,777 in the first half of 2024, a favorable increase of $13,919 compared to $(5,142) in the first half of 2023[77] Pension and Employee Benefits - The Bakery and Confectionery Union and Industry International Pension Fund remains in "critical and declining status," with a funded percentage of 47.0% as of January 1, 2023[67] - The funded percentage of the Plan as of January 1, 2023, was 43.6% based on market value, down from 47.0% based on actuarial values[68] - The number of current active employee Plan participants as of January 1, 2023, fell 1% from the previous year and 6% over the past two years[68] - The Company's withdrawal liability would have been $102,200, $96,000, and $104,300 if it had withdrawn from the Plan during 2023, 2022, and 2021, respectively[69] - The Company's pension expense for the Plan in the first half of 2024 was $1,770, compared to $1,951 in the first half of 2023[72] - The Plan was granted approximately $3.4 billion in Special Financial Assistance funds in July 2024[73] Investments and Financial Position - The Company's current ratio was 3.7 to 1 at June 30, 2024, compared to 3.6 to 1 at December 31, 2023[80] - The Company's aggregate cash and cash equivalents and short and long-term investments were $423,894 at June 30, 2024[81] - Net unrealized loss on available for sale investments was approximately $1,600 at June 30, 2024, compared to $7,200 at June 30, 2023, reflecting the impact of rising market interest rates[82] - The company expects to hold most available for sale securities to maturity, anticipating minimal realization of unrealized losses[82] Supply Chain and Market Risks - The company has entered into longer-range supply contracts for cocoa and chocolate needs in 2024 and much of 2025 to mitigate supply risks and cost increases[87] - The cocoa and chocolate markets have reached unprecedented highs, posing a significant risk for the intermediate and possibly longer term[87] - The company's ingredient and packaging costs experienced significant increases in 2022 and 2023, with cocoa and chocolate markets remaining volatile[87] - The company's market risks, other than cocoa and chocolate, have not materially changed since the disclosures in the 2023 Form 10-K[89] Capital Expenditures and Future Plans - The Company is evaluating a plant expansion with an estimated total cost of $70,000 to $80,000 over the next five years[78] VEBA Trust and Employee Benefits Funding - The VEBA trust held $19,436 in cash and cash equivalents at June 30, 2024, up from $19,126 at December 31, 2023, and $1,942 at June 30, 2023[83] - The company added $20,000 in additional funding to the VEBA trust in 2023, with no contributions made during the first half of 2024[83] Foreign Exchange and Interest Rate Risks - The company is exposed to exchange rate fluctuations in the Canadian dollar, Mexican peso, and euro due to operations in Canada, Mexico, and Spain[88] - The company invests primarily in corporate bonds with an average maturity of three to five years to manage interest rate risk[88]

Sales Performance - Second quarter 2024 net sales were $148,819,000, a decrease of $10,018,000 or 6% compared to $158,837,000 in second quarter 2023[12]. - First half 2024 net sales totaled $300,283,000, down $19,265,000 or 6% from $319,548,000 in first half 2023[7]. Earnings Performance - Second quarter 2024 net earnings increased to $15,640,000, up from $14,726,000 in second quarter 2023, representing a 6.2% increase[12]. - First half 2024 net earnings were $31,474,000, compared to $28,127,000 in first half 2023, an increase of 8.3%[7]. - Net earnings per share for second quarter 2024 were $0.22, up from $0.20 in second quarter 2023, a 10% increase[12]. - First half 2024 net earnings per share were $0.44, compared to $0.39 in first half 2023, an increase of 12.8%[7]. Tax and Cost Management - The company's effective income tax rates decreased to 23.1% in second quarter 2024 from 24.7% in second quarter 2023, contributing to higher net earnings[3]. - The company implemented price increases to recover margin declines due to rising input costs, particularly cocoa and chocolate[8]. Operational Focus - The company is focused on long-term investments in manufacturing operations to meet consumer demands and improve operational efficiencies[14]. - Lower sales volumes negatively impacted gross profit margins despite improvements in manufacturing efficiencies and favorable freight costs[13].