Tootsie Roll Industries Inc 10-Q for FY2024 Q3

Tootsie Roll Industries Inc (TR)

10-Q 2024-11-08 For: 2024-09-30

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on November 8, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

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

Revenue: $225.93M; down 9.6% from $249.85M a year earlier
Net income: $32.84M; down 4.5% from net income of $34.38M 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		41,146,432
Class B Common Stock, $0.694 par value		30,298,695


		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, Use of Proceeds, and Issuer Purchases of Equity Securities	24

Item 6.	Exhibits	25

Signatures		25



	September 30, 2024		December 31, 2023		September 30, 2023

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	91,711	$	75,915	$	47,320
Restricted cash		378		375		360
Investments		71,500		95,507		88,080
Accounts receivable trade, less allowances of $2,913 $2,245 and $3,302		72,519		55,568		80,118
Other receivables		5,386		9,165		5,563
Inventories:
Finished goods and work-in-process		54,411		51,240		61,876
Raw materials and supplies		40,182		43,681		45,716
Prepaid expenses		7,317		9,200		7,027
Total current assets		343,404		340,651		336,060

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,647		21,862		21,758
Buildings		144,856		144,949		143,013
Machinery and equipment		484,119		485,265		468,292
Construction in progress		23,812		11,277		21,163
Operating lease right-of-use assets		6,313		7,145		5,991
		680,747		670,498		660,217
Less - accumulated depreciation		459,617		447,520		442,796
Net property, plant and equipment		221,130		222,978		217,421

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		318,344		255,606		243,205
Prepaid expenses and other assets		13,647		15,189		19,344
Deferred income taxes		1,431		1,706		1,617
Total other assets		581,683		520,762		512,427
Total assets	$	1,146,217	$	1,084,391	$	1,065,908



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

Net product sales	$	223,891	$	248,336	$	524,174	$	567,884
Rental and royalty revenue		2,043		1,516		5,671		4,205
Total revenue		225,934		249,852		529,845		572,089
Product cost of goods sold		148,266		164,163		350,730		382,644
Rental and royalty cost		599		489		1,543		1,340
Total costs		148,865		164,652		352,273		383,984
Product gross margin		75,625		84,173		173,444		185,240
Rental and royalty gross margin		1,444		1,027		4,128		2,865
Total gross margin		77,069		85,200		177,572		188,105
Selling, marketing and administrative expenses		41,825		39,300		115,783		114,656
Earnings from operations		35,244		45,900		61,789		73,449
Other income, net		7,188		(718)		21,120		8,866
Earnings before income taxes		42,432		45,182		82,909		82,315
Provision for income taxes		9,599		10,805		18,607		19,824
Net earnings		32,833		34,377		64,302		62,491
Less: net income (loss) attributable to noncontrolling interests		(11)		(5)		(16)		(18)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	32,844	$	34,382	$	64,318	$	62,509

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.46	$	0.48	$	0.90	$	0.87
Dividends per share *	$	0.09	$	0.09	$	0.27	$	0.27

Average number of shares outstanding		71,379		71,696		71,402		72,049

Retained earnings at beginning of period	$	15,359	$	11,656	$	62,949	$	48,276
Net earnings attributable to Tootsie Roll Industries, Inc.		32,844		34,382		64,318		62,509
Cash dividends		(6,416)		(6,252)		(19,085)		(18,682)
Stock dividends		—		—		(66,395)		(52,317)
Retained earnings at end of period	$	41,787	$	39,786	$	41,787	$	39,786


										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 June 30, 2024	41,213	$	28,620	30,309	$	21,048	105	$	(1,992)	$	802,253
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	10		7	(10)		(7)	—		—		—
Purchase and retirement of common shares and other	(77)		(53)	—		—	—		—		(2,166)
Balance at September 30, 2024	41,146	$	28,574	30,299	$	21,041	105	$	(1,992)	$	800,087

Balance at June 30, 2023	40,490	$	28,118	29,452	$	20,453	102	$	(1,992)	$	753,839
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	—		—	—		—	—		—		—
Purchase and retirement of common shares and other	(318)		(221)	—		—	—		—		(10,891)
Balance at September 30, 2023	40,172	$	27,897	29,452	$	20,453	102	$	(1,992)	$	742,948

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	28		20	(28)		(20)	—		—		—
Purchase and retirement of common shares and other	(77)		(53)	—		—	—		—		(2,166)
Balance at September 30, 2024	41,146	$	28,574	30,299	$	21,041	105	$	(1,992)	$	800,087

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	(747)		(519)	—		—	—		—		(27,306)
Balance at September 30, 2023	40,172	$	27,897	29,452	$	20,453	102	$	(1,992)	$	742,948



	Estimated Fair Value September 30, 2024
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	91,711	$	91,711	$	—	$	—
Available for sale securities		285,968		4,135		281,833		—
Foreign currency derivatives		187		—		187		—
Commodity derivatives		(227)		(227)		—		—
Trading securities		103,876		85,877		17,999		—
Total assets measured at fair value	$	481,515	$	181,496	$	300,019	$	—


	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 September 30, 2023
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	47,320	$	47,320	$	—	$	—
Available for sale securities		251,531		4,479		247,052		—
Foreign currency derivatives		(141)		—		(141)		—
Commodity derivatives		1,554		1,554		—		—
Trading securities		79,754		63,350		16,404		—
Total assets measured at fair value	$	380,018	$	116,703	$	263,315	$	—



	September 30, 2024
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	10,951	$	187	$	-
Commodity derivatives		18,682		489		(716)
Total derivatives			$	676	$	(716)

	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)

	September 30, 2023
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	10,498	$	1	$	(142)
Commodity derivatives		19,063		1,554		—
Total derivatives			$	1,555	$	(142)



	For Quarter Ended September 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	$	207	$	(25)	$	—
Commodity derivatives		803		(456)		—
Total	$	1,010	$	(481)	$	—

	For Quarter Ended September 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	$	(276)	$	(27)	$	—
Commodity derivatives		2,354		(6)		—
Total	$	2,078	$	(33)	$	—

	For Year to Date Ended September 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	$	(265)	$	(151)	$	—
Commodity derivatives		755		(1,543)		—
Total	$	490	$	(1,694)	$	—

	For Year to Date Ended September 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	$	(23)	$	(163)	$	—
Commodity derivatives		1,631		87		—
Total	$	1,608	$	(76)	$	—



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at June 30, 2024	$	(22,739)	$	(1,615)	$	(34)	$	(1,127)	$	1,641	$	(23,874)
Other comprehensive earnings (loss) before reclassifications		(1,370)		4,904		156		609		—		4,299
Reclassifications from accumulated other comprehensive loss		—		(4)		19		346		(122)		239
Other comprehensive earnings (loss) net of tax		(1,370)		4,900		175		955		(122)		4,538
Balance at September 30, 2024	$	(24,109)	$	3,285	$	141	$	(172)	$	1,519	$	(19,336)

Balance at June 30, 2023	$	(21,357)	$	(7,166)	$	79	$	(609)	$	2,355	$	(26,698)
Other comprehensive earnings (loss) before reclassifications		(543)		567		(209)		1,783		—		1,598
Reclassifications from accumulated other comprehensive loss		—		—		22		4		(144)		(118)
Other comprehensive earnings (loss) net of tax		(543)		567		(187)		1,787		(144)		1,480
Balance at September 30, 2023	$	(21,900)	$	(6,599)	$	(108)	$	1,178	$	2,211	$	(25,218)

Balance at December 31, 2023	$	(21,050)	$	(2,359)	$	228	$	(1,915)	$	1,883	$	(23,213)
Other comprehensive earnings (loss) before reclassifications		(3,059)		5,650		(201)		574		—		2,964
Reclassifications from accumulated other comprehensive loss		—		(6)		114		1,169		(364)		913
Other comprehensive earnings (loss) net of tax		(3,059)		5,644		(87)		1,743		(364)		3,877
Balance at September 30, 2024	$	(24,109)	$	3,285	$	141	$	(172)	$	1,519	$	(19,336)

Balance at December 31, 2022	$	(23,795)	$	(8,809)	$	(215)	$	8	$	2,642	$	(30,169)
Other comprehensive earnings (loss) before reclassifications		1,895		2,210		(17)		1,236		—		5,324
Reclassifications from accumulated other comprehensive loss		—		—		124		(66)		(431)		(373)
Other comprehensive earnings (loss) net of tax		1,895		2,210		107		1,170		(431)		4,951
Balance at September 30, 2023	$	(21,900)	$	(6,599)	$	(108)	$	1,178	$	2,211	$	(25,218)


Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023		Recognized in Earnings
Investments	$	(8)	$	—	$	(10)	$	(1)	Other income, net
Foreign currency derivatives		25		27		151		163	Other income, net
Commodity derivatives		456		6		1,543		(87)	Product cost of goods sold
Postretirement and pension benefits		(160)		(188)		(479)		(567)	Other income, net
Total before tax		313		(155)		1,205		(492)
Tax (expense) benefit		(74)		37		(292)		119
Net of tax	$	239	$	(118)	$	913	$	(373)



					(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

Jul 1 to Jul 31	—	$	—	Not Applicable	Not Applicable

Aug 1 to Aug 31	76,977		28.50	Not Applicable	Not Applicable

Sep 1 to Sep 30	—		—	Not Applicable	Not Applicable

Total	76,977	$	28.50	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

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

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

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

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



	September 30, 2024		December 31, 2023		September 30, 2023

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	20,572	$	15,816	$	22,696
Bank loans		1,078		1,088		1,018
Dividends payable		6,426		6,250		6,261
Accrued liabilities		65,044		61,690		72,329
Postretirement health care benefits		665		665		658
Operating lease liabilities		1,382		1,289		1,073
Income taxes payable		552		8,090		1,599
Total current liabilities		95,719		94,888		105,634

NONCURRENT LIABILITIES:
Deferred income taxes		46,754		45,477		46,021
Postretirement health care benefits		9,644		9,653		9,321
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		2,595		2,777		3,818
Operating lease liabilities		5,240		6,018		5,002
Deferred compensation and other liabilities		108,935		94,971		85,045
Total noncurrent liabilities		180,668		166,396		156,707

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $0.694 par value - 120,000 shares authorized; 41,146, 39,999 and 40,172, respectively, issued		28,574		27,777		27,897
Class B common stock, $0.694 par value - 40,000 shares authorized; 30,299, 29,445 and 29,452, respectively, issued		21,041		20,448		20,453
Capital in excess of par value		800,087		737,453		742,948
Retained earnings		41,787		62,949		39,786
Accumulated other comprehensive loss		(19,336)		(23,213)		(25,218)
Treasury stock (at cost) - 105, 102 and 102 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		870,161		823,422		803,874
Noncontrolling interests		(331)		(315)		(307)
Total equity		869,830		823,107		803,567
Total liabilities and shareholders’ equity	$	1,146,217	$	1,084,391	$	1,065,908



	Year to Date Ended
	September 30, 2024		September 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	64,302	$	62,491
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		13,717		13,783
Deferred income taxes		(883)		21
Amortization of marketable security premiums		1,560		3,188
Changes in operating assets and liabilities:
Accounts receivable		(18,459)		(20,580)
Other receivables		4,118		20
Inventories		(1,132)		(22,437)
Prepaid expenses and other assets		3,581		(15,472)
Accounts payable and accrued liabilities		10,256		14,023
Income taxes payable		(7,719)		4,134
Postretirement health care benefits		(488)		(551)
Deferred compensation and other liabilities		1,249		986
Net cash provided by operating activities		70,102		39,606
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(13,911)		(19,458)
Purchases of trading securities		(1,934)		(1,526)
Sales of trading securities		482		574
Purchase of available for sale securities		(82,391)		(65,616)
Sale and maturity of available for sale securities		65,578		86,259
Net cash (used in) provided by investing activities		(32,176)		233
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(2,196)		(27,550)
Dividends paid in cash		(19,062)		(18,825)
Proceeds from bank loans		2,885		2,922
Repayment of bank loans		(2,908)		(2,939)
Net cash used in financing activities		(21,281)		(46,392)
Effect of exchange rate changes on cash		(846)		598
Increase (decrease) in cash and cash equivalents		15,799		(5,955)
Cash, cash equivalents and restricted cash at beginning of year		76,290		53,635
Cash, cash equivalents and restricted cash at end of quarter	$	92,089	$	47,680
Supplemental cash flow information:
Income taxes paid, net	$	26,861	$	15,524
Interest paid	$	204	$	187


	Date:	November 8, 2024

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


	Date:	November 8, 2024

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


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


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