Tootsie Roll Industries Inc 10-Q for FY2024 Q2

Tootsie Roll Industries Inc (TR)

10-Q 2024-08-08 For: 2024-06-30

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on August 8, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $150.74M; down 5.9% from $160.15M a year earlier
Net income: $15.64M; up 6.2% from net income of $14.73M a year earlier

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Virginia		22-1318955
(State of Incorporation)		(I.R.S. Employer Identification No.)


7401 South Cicero Avenue, Chicago, Illinois		60629
(Address of Principal Executive Offices)		(Zip Code)


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, par value $0.694 per share	TR	New York Stock Exchange


Class		Outstanding

Common Stock, $0.694 par value		41,212,986
Class B Common Stock, $0.694 par value		30,309,118


		Page No.

Part I —	Financial Information

Item 1.	Financial Statements꞉

	Condensed Consolidated Statements of Financial Position	3-4

	Condensed Consolidated Statements of Earnings and Retained Earnings	5

	Condensed Consolidated Statements of Comprehensive Earnings	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8-16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

Part II —	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 6.	Exhibits	25

Signatures		25



	June 30, 2024		December 31, 2023		June 30, 2023

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	45,623	$	75,915	$	26,047
Restricted cash		364		375		371
Investments		85,548		95,507		83,165
Accounts receivable trade, less allowances of $2,494 $2,245 and $2,488		45,565		55,568		49,802
Other receivables		7,049		9,165		7,174
Inventories:
Finished goods and work-in-process		84,410		51,240		92,370
Raw materials and supplies		44,889		43,681		47,557
Prepaid expenses		10,429		9,200		8,105
Total current assets		323,877		340,651		314,591

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,669		21,862		21,782
Buildings		144,802		144,949		142,613
Machinery and equipment		484,409		485,265		468,721
Construction in progress		18,803		11,277		13,370
Operating lease right-of-use assets		6,607		7,145		6,291
		676,290		670,498		652,777
Less - accumulated depreciation		455,555		447,520		438,456
Net property, plant and equipment		220,735		222,978		214,321

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		292,723		255,606		252,459
Prepaid expenses and other assets		15,474		15,189		2,693
Deferred income taxes		1,531		1,706		1,664
Total other assets		557,989		520,762		505,077
Total assets	$	1,102,601	$	1,084,391	$	1,033,989



	Quarter Ended				Year to Date Ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023

Net product sales	$	148,819	$	158,837	$	300,283	$	319,548
Rental and royalty revenue		1,917		1,308		3,628		2,689
Total revenue		150,736		160,145		303,911		322,237
Product cost of goods sold		99,732		107,075		202,464		218,481
Rental and royalty cost		529		460		944		851
Total costs		100,261		107,535		203,408		219,332
Product gross margin		49,087		51,762		97,819		101,067
Rental and royalty gross margin		1,388		848		2,684		1,838
Total gross margin		50,475		52,610		100,503		102,905
Selling, marketing and administrative expenses		35,040		37,857		73,958		75,356
Earnings from operations		15,435		14,753		26,545		27,549
Other income, net		4,900		4,804		13,932		9,584
Earnings before income taxes		20,335		19,557		40,477		37,133
Provision for income taxes		4,701		4,837		9,008		9,019
Net earnings		15,634		14,720		31,469		28,114
Less: net income (loss) attributable to noncontrolling interests		(6)		(6)		(5)		(13)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	15,640	$	14,726	$	31,474	$	28,127

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.22	$	0.20	$	0.44	$	0.39
Dividends per share *	$	0.09	$	0.09	$	0.18	$	0.18

Average number of shares outstanding		71,417		72,164		71,417		72,231

Retained earnings at beginning of period	$	6,147	$	3,223	$	62,949	$	48,276
Net earnings attributable to Tootsie Roll Industries, Inc.		15,640		14,726		31,474		28,127
Cash dividends		(6,428)		(6,293)		(12,669)		(12,430)
Stock dividends		—		—		(66,395)		(52,317)
Retained earnings at end of period	$	15,359	$	11,656	$	15,359	$	11,656


										Capital in
				Class B						Excess
	Common Stock			Common Stock			Treasury Stock			of Par
	Shares	Amount		Shares	Amount		Shares	Amount		Value
	(000’s)			(000’s)			(000’s)
Balance at March 31, 2024	41,211	$	28,619	30,311	$	21,049	105	$	(1,992)	$	802,253
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	2		1	(2)		(1)	—		—		—
Purchase and retirement of common shares and other	—		—	—		—	—		—		—
Balance at June 30, 2024	41,213	$	28,620	30,309	$	21,048	105	$	(1,992)	$	802,253

Balance at March 31, 2023	40,871	$	28,383	29,463	$	20,460	102	$	(1,992)	$	768,676
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	11		7	(11)		(7)	—		—		—
Purchase and retirement of common shares and other	(392)		(272)	—		—	—		—		(14,837)
Balance at June 30, 2023	40,490	$	28,118	29,452	$	20,453	102	$	(1,992)	$	753,839

Balance at December 31, 2023	39,999	$	27,777	29,445	$	20,448	102	$	(1,992)	$	737,453
Issuance of 3% stock dividend	1,196		830	882		613	3		—		64,800
Conversion of Class B common shares to common shares	18		13	(18)		(13)	—		—		—
Purchase and retirement of common shares and other	—		—	—		—	—		—		—
Balance at June 30, 2024	41,213	$	28,620	30,309	$	21,048	105	$	(1,992)	$	802,253

Balance at December 31, 2022	39,721	$	27,584	28,607	$	19,866	99	$	(1,992)	$	719,606
Issuance of 3% stock dividend	1,185		823	858		596	3		—		50,648
Conversion of Class B common shares to common shares	13		9	(13)		(9)	—		—		—
Purchase and retirement of common shares and other	(429)		(298)	—		—	—		—		(16,415)
Balance at June 30, 2023	40,490	$	28,118	29,452	$	20,453	102	$	(1,992)	$	753,839



	Estimated Fair Value June 30, 2024
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	45,623	$	45,623	$	—	$	—
Available for sale securities		279,543		4,049		275,494		—
Foreign currency derivatives		(43)		—		(43)		—
Commodity derivatives		(1,487)		(1,487)		—		—
Trading securities		98,728		81,058		17,670		—
Total assets measured at fair value	$	422,364	$	129,243	$	293,121	$	—


	Estimated Fair Value December 31, 2023
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	75,915	$	75,915	$	—	$	—
Available for sale securities		263,313		4,084		259,229		—
Foreign currency derivatives		302		—		302		—
Commodity derivatives		(2,526)		(2,526)		—		—
Trading securities		87,800		70,681		17,119		—
Total assets measured at fair value	$	424,804	$	148,154	$	276,650	$	—


	Estimated Fair Value June 30, 2023
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	26,047	$	26,047	$	—	$	—
Available for sale securities		254,305		4,510		249,795		—
Foreign currency derivatives		108		—		108		—
Commodity derivatives		(806)		(806)		—		—
Trading securities		81,319		65,065		16,254		—
Total assets measured at fair value	$	360,973	$	94,816	$	266,157	$	—



	June 30, 2024
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	5,168	$	—	$	(43)
Commodity derivatives		22,055		9		(1,496)
Total derivatives			$	9	$	(1,539)

	December 31, 2023
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	16,337	$	302	$	—
Commodity derivatives		28,247		16		(2,542)
Total derivatives			$	318	$	(2,542)

	June 30, 2023
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	12,021	$	154	$	(46)
Commodity derivatives		16,496		75		(881)
Total derivatives			$	229	$	(927)



	For Quarter Ended June 30, 2024
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	(114)	$	(100)	$	—
Commodity derivatives		(1,606)		(678)		—
Total	$	(1,720)	$	(778)	$	—

	For Quarter Ended June 30, 2023
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	292	$	(48)	$	—
Commodity derivatives		(857)		—		—
Total	$	(565)	$	(48)	$	—

	For Year to Date Ended June 30, 2024
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	(472)	$	(126)	$	—
Commodity derivatives		(48)		(1,087)		—
Total	$	(520)	$	(1,213)	$	—

	For Year to Date Ended June 30, 2023
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	253	$	(136)	$	—
Commodity derivatives		(723)		93		—
Total	$	(470)	$	(43)	$	—



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at March 31, 2024	$	(20,730)	$	(2,240)	$	(23)	$	(425)	$	1,762	$	(21,656)
Other comprehensive earnings (loss) before reclassifications		(2,009)		627		(86)		(1,214)		—		(2,682)
Reclassifications from accumulated other comprehensive loss		—		(2)		75		512		(121)		464
Other comprehensive earnings (loss) net of tax		(2,009)		625		(11)		(702)		(121)		(2,218)
Balance at June 30, 2024	$	(22,739)	$	(1,615)	$	(34)	$	(1,127)	$	1,641	$	(23,874)

Balance at March 31, 2023	$	(22,499)	$	(6,919)	$	(178)	$	39	$	2,498	$	(27,059)
Other comprehensive earnings (loss) before reclassifications		1,142		(247)		221		(648)		—		468
Reclassifications from accumulated other comprehensive loss		—		—		36		—		(143)		(107)
Other comprehensive earnings (loss) net of tax		1,142		(247)		257		(648)		(143)		361
Balance at June 30, 2023	$	(21,357)	$	(7,166)	$	79	$	(609)	$	2,355	$	(26,698)

Balance at December 31, 2023	$	(21,050)	$	(2,359)	$	228	$	(1,915)	$	1,883	$	(23,213)
Other comprehensive earnings (loss) before reclassifications		(1,689)		746		(357)		(35)		—		(1,335)
Reclassifications from accumulated other comprehensive loss		—		(2)		95		823		(242)		674
Other comprehensive earnings (loss) net of tax		(1,689)		744		(262)		788		(242)		(661)
Balance at June 30, 2024	$	(22,739)	$	(1,615)	$	(34)	$	(1,127)	$	1,641	$	(23,874)

Balance at December 31, 2022	$	(23,795)	$	(8,809)	$	(215)	$	8	$	2,642	$	(30,169)
Other comprehensive earnings (loss) before reclassifications		2,438		1,643		192		(547)		—		3,726
Reclassifications from accumulated other comprehensive loss		—		—		102		(70)		(287)		(255)
Other comprehensive earnings (loss) net of tax		2,438		1,643		294		(617)		(287)		3,471
Balance at June 30, 2023	$	(21,357)	$	(7,166)	$	79	$	(609)	$	2,355	$	(26,698)


Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023		Recognized in Earnings
Investments	$	(2)	$	—	$	(2)	$	(1)	Other income, net
Foreign currency derivatives		100		48		126		136	Other income, net
Commodity derivatives		678		—		1,087		(93)	Product cost of goods sold
Postretirement and pension benefits		(159)		(189)		(319)		(379)	Other income, net
Total before tax		617		(141)		892		(337)
Tax (expense) benefit		(153)		34		(218)		82
Net of tax	$	464	$	(107)	$	674	$	(255)



					(d) Approximate Dollar
	(a) Total			(c) Total Number of Shares	Value of Shares that
	Number of	(b) Average		Purchased as Part of	May Yet Be Purchased
	Shares	Price Paid per		Publicly Announced Plans	Under the Plans
Period	Purchased	Share		Or Programs	or Programs

Apr 1 to Apr 30	—	$	—	Not Applicable	Not Applicable

May 1 to May 31	—		—	Not Applicable	Not Applicable

Jun 1 to Jun 30	—		—	Not Applicable	Not Applicable

Total	—	$	—	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	August 8, 2024	BY:	/S/ ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	August 8, 2024	BY:	/S/ G. HOWARD EMBER, JR.

			G. Howard Ember, Jr.
			Vice President Finance and
			Chief Financial Officer



	June 30, 2024		December 31, 2023		June 30, 2023

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	20,009	$	15,816	$	22,156
Bank loans		1,046		1,088		1,051
Dividends payable		6,437		6,250		6,303
Accrued liabilities		57,206		61,690		59,655
Postretirement health care benefits		665		665		658
Operating lease liabilities		1,400		1,289		1,172
Income taxes payable		—		8,090		—
Total current liabilities		86,763		94,888		90,995

NONCURRENT LIABILITIES:
Deferred income taxes		45,277		45,477		45,662
Postretirement health care benefits		9,638		9,653		9,304
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		2,981		2,777		3,913
Operating lease liabilities		5,499		6,018		5,182
Deferred compensation and other liabilities		103,849		94,971		86,359
Total noncurrent liabilities		174,744		166,396		157,920

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $0.694 par value - 120,000 shares authorized; 41,213, 39,999 and 40,490, respectively, issued		28,620		27,777		28,118
Class B common stock, $0.694 par value - 40,000 shares authorized; 30,309, 29,445 and 29,452, respectively, issued		21,048		20,448		20,453
Capital in excess of par value		802,253		737,453		753,839
Retained earnings		15,359		62,949		11,656
Accumulated other comprehensive loss		(23,874)		(23,213)		(26,698)
Treasury stock (at cost) - 105, 102 and 102 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		841,414		823,422		785,376
Noncontrolling interests		(320)		(315)		(302)
Total equity		841,094		823,107		785,074
Total liabilities and shareholders’ equity	$	1,102,601	$	1,084,391	$	1,033,989



	Year to Date Ended
	June 30, 2024		June 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	31,469	$	28,114
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		9,162		9,205
Deferred income taxes		(486)		313
Amortization of marketable security premiums		1,103		2,325
Changes in operating assets and liabilities:
Accounts receivable		9,438		9,601
Other receivables		1,823		(3,338)
Inventories		(35,338)		(54,304)
Prepaid expenses and other assets		(657)		3,233
Accounts payable and accrued liabilities		798		353
Income taxes payable		(8,643)		(769)
Postretirement health care benefits		(334)		(378)
Deferred compensation and other liabilities		442		503
Net cash provided by (used in) operating activities		8,777		(5,142)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(8,421)		(10,723)
Purchases of trading securities		(1,587)		(1,358)
Sales of trading securities		442		528
Purchase of available for sale securities		(55,131)		(48,522)
Sale and maturity of available for sale securities		38,779		66,507
Net cash (used in) provided by investing activities		(25,918)		6,432
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		—		(16,548)
Dividends paid in cash		(12,634)		(12,531)
Proceeds from bank loans		1,039		1,997
Repayment of bank loans		(1,051)		(2,013)
Net cash used in financing activities		(12,646)		(29,095)
Effect of exchange rate changes on cash		(516)		588
Decrease in cash and cash equivalents		(30,303)		(27,217)
Cash, cash equivalents and restricted cash at beginning of year		76,290		53,635
Cash, cash equivalents and restricted cash at end of quarter	$	45,987	$	26,418
Supplemental cash flow information:
Income taxes paid/(received), net	$	17,728	$	9,521
Interest paid	$	137	$	120


	Date:	August 8, 2024

	By:	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


	Date:	August 8, 2024

	By:	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer


Dated:	August 8, 2024	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	August 8, 2024	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer