Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-1361 Tootsie Roll Industries, Inc. (Exact Name of Registrant as Specified in its Charter) Virginia 22-1318955 (State of ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-1361 Tootsie Roll Industries, Inc. (Exact Name of Registrant as Specified in its Charter) Virginia 22-1318955 (State of Inco ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-1361 Tootsie Roll Industries, Inc. (Exact Name of Registrant as Specified in its Charter) Virginia 22-1318955 (State of Inc ...

[PART I](index=3&type=section&id=PART%20I) [Business](index=3&type=section&id=ITEM%201.%20Business) Tootsie Roll Industries, Inc. is a confectionery manufacturer with over a century of history, marketing iconic brands across North America and experiencing seasonal sales with significant customer concentration - The company has over **100 years** of history in confectionery manufacturing, its sole business, featuring key trademarks like **TOOTSIE ROLL** and **ANDES**[8](index=8&type=chunk) - Products are distributed through brokers and directly to various channels including **wholesale distributors, supermarkets, and e-commerce merchants**[9](index=9&type=chunk) - Sales are seasonal, peaking in the **third quarter** due to pre-Halloween and back-to-school demand, requiring increased inventory and staffing[19](index=19&type=chunk) Major Customer Sales Concentration (as % of Net Product Sales) | Customer | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Wal-Mart Stores, Inc. | 23.0% | 22.7% | 23.5% | | Dollar Tree, Inc. | 12.4% | 12.1% | 11.7% | | McLane Company, Inc. | 20.4% | 21.0% | 22.1% | [Risk Factors](index=5&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces industry-wide risks such as pandemics, price volatility, and seasonality, alongside company-specific risks including pension liabilities, customer concentration, and reliance on a single manufacturing facility [Industry-Wide Risks](index=5&type=section&id=Risk%20factors%20which%20we%20believe%20affect%20all%20competitors%20in%20our%20industry) Industry-wide risks include pandemic impacts on consumer behavior, supply chain disruptions, ingredient price volatility, intense competition, and high sales seasonality around Halloween - Pandemics like **Covid-19** may negatively impact business through changes in consumer patterns or operational challenges affecting demand and distribution[25](index=25&type=chunk) - Halloween accounts for approximately **50% of third-quarter domestic net sales**, making the business highly susceptible to changes in consumer behavior or related mandates[30](index=30&type=chunk) - Exposure to price volatility and availability issues for principal ingredients, coupled with inflation and supply chain disruptions, may increase costs not fully recoverable from consumers[32](index=32&type=chunk) [Company-Specific Risks](index=8&type=section&id=Risk%20factors%20which%20we%20believe%20are%20principally%20specific%20to%20our%20Company) Company-specific risks include significant multi-employer pension plan liability, high dependence on major customers, reliance on a single manufacturing facility, and an expired union labor agreement - Participation in a multi-employer pension plan in **'critical and declining status'** poses a significant potential withdrawal liability, with insolvency expected within **20 years**[37](index=37&type=chunk) - The majority of products are manufactured at a **single Chicago facility**, creating risk of market share loss from disruptions[40](index=40&type=chunk) - Dependence on **McLane Company, Wal-Mart, and Dollar Tree**, which comprised approximately **37% of 2022 net product sales**, presents a significant risk if any customer is lost[40](index=40&type=chunk) - The union labor agreement at the **Chicago plant expired in September 2022**, and ongoing negotiations under a month-to-month extension could lead to a work stoppage materially affecting sales and profits[44](index=44&type=chunk) [Unresolved Staff Comments](index=10&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - No unresolved staff comments are reported[44](index=44&type=chunk) [Properties](index=11&type=section&id=ITEM%202.%20Properties) The company owns principal manufacturing, warehousing, and office facilities globally, including its Chicago headquarters, and holds commercial real estate for investment - The company owns principal manufacturing facilities in **Chicago (Corporate HQ), Tennessee, Massachusetts, Wisconsin, Mexico, Spain, and Canada**[45](index=45&type=chunk) - Beyond manufacturing plants, the company holds **four commercial real estate properties for investment** and owns **two warehouse facilities leased to third parties**[46](index=46&type=chunk) [Legal Proceedings](index=11&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, none of which are expected to materially affect its financial condition or results - Various legal proceedings in the ordinary course of business are not expected to materially affect the company's financial condition or results[47](index=47&type=chunk) [Mine Safety Disclosures](index=11&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - No mine safety disclosures are reported[49](index=49&type=chunk) [PART II](index=12&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=12&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE, Class B stock is convertible, and it historically issues quarterly cash and annual stock dividends - The company's common stock trades on the **NYSE**, while Class B common stock is convertible into common stock on a share-for-share basis[52](index=52&type=chunk) - Historically, the company has issued quarterly cash dividends (**$0.09 per share in 2022**) and an annual **3% stock dividend**[53](index=53&type=chunk) [RESERVED](index=13&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company maintains a strong financial position with increased sales in 2022, though profitability was impacted by higher costs and pension plan risks, while cash flow decreased due to inventory increases [Financial Condition](index=13&type=section&id=FINANCIAL%20CONDITION) The company's financial position remains strong despite a decrease in cash and investments to **$396.9 million** in 2022, driven by dividends, share repurchases, and capital expenditures Financial Position Summary (in thousands) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash, Cash Equivalents & Investments | $396,926 | $436,983 | | Net Working Capital | $218,894 | $188,333 | | Shareholders' Equity | $783,171 | $769,042 | - In 2022, cash was used for dividends (**$24.6 million**), share repurchases (**$31.9 million**), and capital expenditures (**$23.4 million**)[58](index=58&type=chunk) [Results of Operations](index=13&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated net product sales increased **20.4%** to **$681.4 million** in 2022, driven by demand and price increases, though gross profit margins were impacted by higher input costs 2022 vs. 2021 Performance (in thousands, except per share data) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Product Sales | $681,440 | $566,043 | 20.4% | | Earnings from Operations | $110,755 | $67,133 | 65.0% | | Adjusted Earnings from Operations* | $93,492 | $81,341 | 14.9% | | Net Earnings | $75,937 | $65,326 | 16.2% | | Net Earnings Per Share | $1.10 | $0.94 | 17.0% | - Sales growth resulted from increased demand and higher price realization as consumer activities normalized post-pandemic[63](index=63&type=chunk) - Gross profit margins were adversely affected by significantly higher costs for **ingredients, packaging, freight, and manufacturing supplies**, compounded by supply chain inefficiencies and labor shortages[64](index=64&type=chunk)[65](index=65&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Operating cash flow decreased to **$72.1 million** in 2022 due to increased inventories, while capital expenditures were **$23.4 million**, with plans for further expansion in 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | From Operating Activities | $72,051 | $85,298 | $74,710 | | From Investing Activities | ($68,589) | ($91,899) | $9,501 | | From Financing Activities | ($56,400) | ($54,146) | ($55,846) | - Operating cash flow decreased from 2021 to 2022 primarily due to increased inventories driven by higher demand and material costs[94](index=94&type=chunk) - Capital expenditures totaled **$23.4 million in 2022**, with an additional **$12 million planned for 2023** for the initial phase of a plant expansion to meet demand[96](index=96&type=chunk) [Critical Accounting Policies and Estimates](index=19&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Key accounting estimates involve revenue recognition, intangible asset valuation, and income taxes, requiring management judgment for variable considerations, impairment testing, and deferred tax realization - Revenue recognition necessitates estimates for variable consideration, such as **customer discounts, price adjustments, and promotional allowances**, which reduce reported revenue[102](index=102&type=chunk) - Goodwill and indefinite-lived trademarks are tested annually for impairment using a **qualitative 'step-zero' test** or **quantitative discounted cash flow analysis**[104](index=104&type=chunk) - Income tax accounting requires recognizing deferred taxes for temporary differences and establishing valuation allowances when deferred tax asset realization is not **'more-likely-than-not'**[109](index=109&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity prices, interest rates, and foreign currency, which it mitigates using derivative instruments and a laddered investment portfolio - The company is exposed to market risks from **commodity prices (sugar, corn, cocoa, oils), interest rates, investments, equity prices, and foreign exchange**[113](index=113&type=chunk)[114](index=114&type=chunk) - Commodity futures and foreign currency forward contracts are utilized as **cash flow hedges** to manage raw material purchase variability and foreign operation cash flows[118](index=118&type=chunk) - Interest rate risk is managed via a **'ladder' approach** for its investment portfolio, with **20% to 35%** maturing annually in high-quality corporate bonds with **three to five-year maturities**[110](index=110&type=chunk)[121](index=121&type=chunk) [Financial Statements and Supplementary Data](index=24&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents management's assertion of effective internal controls and the independent auditor's unqualified opinion on financial statements and controls, along with detailed consolidated financial statements and notes - Management concluded that internal control over financial reporting was effective as of **December 31, 2022**, based on **COSO criteria**[132](index=132&type=chunk) - Grant Thornton LLP issued an **unqualified opinion** on the fair presentation of financial statements and the effectiveness of internal control over financial reporting as of **December 31, 2022**[137](index=137&type=chunk) Consolidated Earnings Summary (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Revenue | $686,970 | $570,776 | $471,063 | | Earnings from Operations | $110,755 | $67,133 | $58,244 | | Net Earnings | $75,892 | $65,308 | $58,974 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=47&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure are reported[234](index=234&type=chunk) [Controls and Procedures](index=47&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of **December 31, 2022**, with no material changes to internal controls during the fourth quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the report period end[235](index=235&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the quarter ended **December 31, 2022**[237](index=237&type=chunk) [Other Information](index=48&type=section&id=ITEM%209B.%20Other%20Information) The company reports no other information - No other information is reported[238](index=238&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=48&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no disclosures concerning foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections are reported[239](index=239&type=chunk) [PART III](index=49&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=49&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors is incorporated by reference from the Proxy Statement, and the report lists executive officers, including the Chairman and CEO - Information on Directors and **Section 16(a) compliance** is incorporated by reference from the company's Proxy Statement[242](index=242&type=chunk) Executive Officers | Name | Position | Age | | :--- | :--- | :--- | | Ellen R. Gordon | Chairman of the Board and Chief Executive Officer | 91 | | G. Howard Ember Jr. | Vice President/Finance | 70 | | Stephen P. Green | Vice President/Manufacturing | 64 | | Kenneth D. Naylor | Vice President/Marketing and Sales | 63 | | Barry P. Bowen | Treasurer | 67 | | Henry G. Mills | Vice President/Business Development | 34 | [Executive Compensation](index=49&type=section&id=ITEM%2011.%20Executive%20Compensation) All executive and director compensation information is incorporated by reference from the company's Proxy Statement - Executive and director compensation information is incorporated by reference from the company's Proxy Statement[246](index=246&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=49&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on beneficial ownership by major shareholders and management is incorporated by reference from the Proxy Statement, and the company has no equity compensation plans - Security ownership information for beneficial owners and management is incorporated by reference from the Proxy Statement, and the company has no authorized equity compensation plans[248](index=248&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=50&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related person transactions is incorporated by reference from the Proxy Statement, and the board has determined its non-management directors are independent - The board has determined that its non-management directors, **Mr. Seibert, Ms. Wardynski, and Ms. Lewis-Brent**, are independent under **NYSE listing standards**[251](index=251&type=chunk) [Principal Accounting Fees and Services](index=50&type=section&id=ITEM%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on fees paid to the principal accountant and services rendered is incorporated by reference from the Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the 'Independent Auditor Fees and Services' section of the Proxy Statement[251](index=251&type=chunk) [PART IV](index=50&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=50&type=section&id=ITEM%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements from Item 8, the financial statement schedule, and all exhibits filed with the Form 10-K - This item lists financial statements, **Schedule II - Valuation and Qualifying Accounts**, and exhibits required by **Item 601 of Regulation S-K** included in the filing[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) [Form 10-K Summary](index=50&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) The company provides no Form 10-K summary - No Form 10-K summary is provided[255](index=255&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 mont ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-1361 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-1361 TOOTSIE ROLL INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of (IRS E ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-1361 Tootsie Roll Industries, Inc. (Exact Name of Registrant as Specified in its Charter) Virginia 22-1318955 (State of ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Tootsie Roll Industries, Inc. (Exact Name of Registrant as Specified in its Charter) Virginia 22-1318955 (State of Incorporation) (I.R.S. Employer Identification No.) 7401 South Cicer ...