
Part I — Financial Information This section provides the company's unaudited interim financial statements and management's analysis for the first quarter of 2025 Financial Statements 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-K16 - The company's operations are seasonal, with the third quarter historically being the largest for net product sales due to pre-Halloween demand17 Condensed Consolidated Statements of Financial Position 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 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 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 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 rates31 - 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 million373969 - The company leases certain buildings, land, and equipment, with total operating lease liabilities of $6.1 million as of March 31, 202545 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 prices51 - 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 sources78 - 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 quarter80 Quantitative and Qualitative Disclosures About Market Risk 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 202688 - The company hedges against commodity price changes (primarily sugar) and foreign exchange fluctuations (primarily Canadian dollar) using derivative contracts8889 Controls and Procedures 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 quarter91 - No material changes in internal control over financial reporting occurred during the first quarter of 202592 Part II — Other Information This section provides updates on risk factors, equity security purchases, and required exhibits Risk Factors 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 business95 - 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 evaluated96 Issuer Purchases of Equity Securities 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 purchases98 Exhibits 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 documents102