Tootsie Roll Industries(TR) - 2025 Q3 - Quarterly Report

Sales Performance - Net product sales in Q3 2025 were $230,614, an increase of $6,723 or 3.0% compared to Q3 2024[51] - Domestic net product sales increased by 3.8% in Q3 2025, representing 92.3% of total consolidated net product sales[51] - Net earnings attributable to Tootsie Roll Industries, Inc. in Q3 2025 were $35,659, an increase of $2,815 or 8.6% from Q3 2024[65] Costs and Expenses - Product cost of goods sold in Q3 2025 was $152,741, an increase of $4,400 or 3.0% from Q3 2024[52] - Selling, marketing, and administrative expenses in Q3 2025 were $47,031, an increase of $5,206 or 12.4% from Q3 2024[55] - Current tariffs are estimated to have an adverse annual effect of approximately $6,900 on the Company's consolidated earnings from operations[78] Earnings and Taxation - Adjusted earnings from operations in Q3 2025 were $39,701, a decrease of $343 or 0.9% compared to Q3 2024[59] - Effective income tax rates increased to 26.7% in Q3 2025 from 22.6% in Q3 2024, primarily due to non-deductible deferred compensation[64] Cash Flow and Investments - Cash flows provided by operating activities were $57,288 and $70,102 for the nine months of 2025 and 2024, respectively, reflecting a decrease of $12,814[80] - Cash flows used in investing activities increased to $91,843 in nine months 2025 from $32,176 in 2024, primarily due to increased purchases of available-for-sale securities[81] Company Initiatives and Future Outlook - The Company is pursuing a plant expansion with total costs expected to be between $75,000 and $85,000 over the next five years, funded from cash flow from operations[81] - The Company is focused on recovering increases in input costs through price increases to restore margins[89] - The overall competitive environment in the Company's industry remains a significant factor influencing future performance[89] - Successful distribution and sell-through during key seasons, such as Halloween, are critical for the Company's financial results[89] Financial Position and Liabilities - The Company's current ratio was 2.8 to 1 at September 30, 2025, down from 3.8 to 1 at December 31, 2024[83] - The Company expects its withdrawal liability, if it withdrew in 2024, to be limited to twenty annual payments of $2,664, with a present value range of $31,262 to $37,654[73] Market Conditions and Risks - The availability of cocoa and chocolate at reasonable prices is a concern due to elevated and volatile market conditions[89] - The Company acknowledges that actual results may differ materially from forward-looking statements due to various risks and uncertainties[90] - The Company has no obligation to update forward-looking statements made in the report[90] Trust Fund Information - The Company funded $20,000 to a VEBA trust in 2023, with no contributions made during the nine months of 2025 or 2024[85] - The VEBA trust held aggregate cash and cash equivalents of $10,989, $13,926, and $16,345 at September 30, 2025, December 31, 2024, and September 30, 2024, respectively[85] - The assets in the VEBA trust primarily comprise cash and corporate bonds, categorized as Level 1 and Level 2 within the fair value hierarchy[85]