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Tootsie Roll Industries(TR) - 2025 Q2 - Quarterly Results

Press Release Overview Tootsie Roll Industries, Inc. announced its second quarter and first half 2025 financial results Introduction Tootsie Roll Industries, Inc. announced its second quarter and first half 2025 net sales and net earnings on July 23, 2025 - Tootsie Roll Industries, Inc. reported second quarter and first half 2025 net sales and net earnings2 Financial Performance Highlights This section highlights the company's financial performance for the second quarter and first half of 2025 Second Quarter 2025 Performance In the second quarter of 2025, Tootsie Roll Industries reported a 3% increase in net sales and a 12.2% increase in net earnings, with EPS growing by 14% | Metric | Q2 2025 ($) | Q2 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $153,190,000 | $148,819,000 | $4,371,000 | 3% | | Net Earnings | $17,544,000 | $15,640,000 | $1,904,000 | 12.2% | | Net Earnings Per Share | $0.24 | $0.21 | $0.03 | 14% | First Half 2025 Performance For the first half of 2025, net sales slightly decreased by 0.2% compared to 2024, while net earnings increased by 13.1% and EPS grew by 14% | Metric | H1 2025 ($) | H1 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $299,711,000 | $300,283,000 | -$572,000 | -0.2% | | Net Earnings | $35,602,000 | $31,474,000 | $4,128,000 | 13.1% | | Net Earnings Per Share | $0.49 | $0.43 | $0.06 | 14% | Management Commentary and Business Outlook Management discusses sales, cost, and margin strategies, operational impacts, and strategic investments Sales and Pricing Strategy Successful marketing and sales programs drove higher Q2 2025 sales, but the first half faced challenges from consumer resistance to higher prices. The company has implemented price increases to mitigate rising input costs - Successful marketing and sales programs contributed to higher sales in second quarter 20255 - First half 2025 sales faced headwinds as customers and consumers became more resistant to higher prices5 - The company implemented price increases to mitigate input cost increases and recover margin declines6 Cost and Margin Management Gross profit margins in Q2 and H1 2025 benefited from higher price realization, improved plant efficiencies, and cost reductions. However, significantly elevated cocoa and chocolate costs are expected to adversely affect gross profit margins in the second half of 2025 and into 2026 as older supply contracts expire - Gross profit margins in second quarter and first half 2025 benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions7 - Cocoa and chocolate markets continue at significantly elevated levels, with even higher costs expected during the balance of 2025 and into 20266 - The Last-In-First-Out (LIFO) accounting method, combined with higher input costs (primarily cocoa and chocolate), will have increasingly adverse effects on gross profit margins in the second half of 20257 Other Financial Factors Net earnings were positively impacted by increased investment income and insurance recoveries. However, effective income tax rates were higher in Q2 and H1 2025 due to non-deductible deferred compensation. Earnings per share benefited from stock repurchases, resulting in fewer shares outstanding - Second quarter and first half 2025 net earnings benefited from increased investment income from marketable securities and insurance recoveries8 | Period | 2025 Effective Tax Rate (%) | 2024 Effective Tax Rate (%) | | :--- | :--- | :--- | | Second Quarter | 33.1% | 23.1% | | First Half | 27.7% | 22.3% | - Higher effective tax rates in 2025 reflect the adverse effect of certain deferred compensation that will not be deductible for income taxes8 - Earnings per share benefited from stock purchases in the open market, resulting in fewer shares outstanding8 Operational and Tariff Impacts The company's operations are primarily in North America, benefiting from the USMCA free-trade agreement. However, foreign-sourced ingredients and packaging from outside USMCA incur higher tariffs, which added to costs in Q2 and H1 2025, with future tariff effects remaining uncertain - Operations and sales are principally in North America, with cross-border transactions qualifying under the USMCA free-trade agreement9 - Higher tariffs on foreign-origin ingredients (e.g., cocoa, chocolate, edible oils) and packaging added to costs in second quarter and first half 20259 - The company is unable to ascertain the effects of tariffs on its business until more clarity regarding tariffs and possible retaliatory tariffs is forthcoming9 Strategic Investments and Forward-Looking Statements Tootsie Roll Industries is focused on long-term growth, continuing investments in plant manufacturing to meet demand, improve quality, expand capacity, and increase operational efficiencies. The release also includes a standard safe harbor statement, outlining various risk factors that could cause actual results to differ from forward-looking statements - The company is focused on the longer term and continues to make investments in plant manufacturing operations to meet new customer and consumer product demands, achieve product quality improvements, expand capacity, and increase operational efficiencies10 - The release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 199510 - Risk factors include the effects of U.S. tariffs and retaliatory tariffs, competitive environment, ability to recover input cost increases, successful seasonal distribution, and changes in assumptions discussed in the Annual Report on Form 10-K10 Consolidated Financial Summary This section provides a detailed consolidated summary of key financial metrics for Q2 and H1 2025 and 2024 Summary of Sales & Earnings This section provides a detailed consolidated summary of net sales, net earnings, net earnings per share, and average shares outstanding for the second quarter and first half of 2025 and 2024 TOOTSIE ROLL INDUSTRIES, INC. CONSOLIDATED SUMMARY OF SALES & EARNINGS Second Quarter Ended | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Sales | $153,190,000 | $148,819,000 | | Net Earnings | $17,544,000 | $15,640,000 | | Net Earnings Per Share* | $0.24 | $0.21 | | Average Shares Outstanding* | 72,879,000 | 73,536,000 | Six Months Ended | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Sales | $299,711,000 | $300,283,000 | | Net Earnings | $35,602,000 | $31,474,000 | | Net Earnings Per Share* | $0.49 | $0.43 | | Average Shares Outstanding* | 72,923,000 | 73,536,000 | *Based on average shares outstanding adjusted for 3% stock dividends distributed April 4, 2025 and April 5, 2024