Tootsie Roll Industries Inc 10-Q for FY2021 Q3

Tootsie Roll Industries Inc (TR)

10-Q 2021-11-09 For: 2021-09-30

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on November 9, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $184.17M; up 16.7% from $157.8M a year earlier
Net income: $24.73M; up 0.2% from net income of $24.67M 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)


Class		Outstanding

Common Stock, $0.69-4/9 par value		39,332,112
Class B Common Stock, $0.69-4/9 par value		27,804,714


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, par value $0.69-4/9 per share	TR	New York Stock Exchange


		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	16-22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	23

Part II —	Other Information

Item 1.	Legal Proceedings	24

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

Item 6.	Exhibits	24

Signatures		25



	September 30, 2021		December 31, 2020		September 30, 2020

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	76,210	$	166,841	$	108,264
Restricted cash		393		415		397
Investments		39,491		42,090		58,265
Accounts receivable trade, less allowances of $2,706, $1,694 and $2,260		80,877		41,209		67,377
Other receivables		3,392		3,894		3,588
Inventories:
Finished goods and work-in-process		46,887		35,583		45,822
Raw materials and supplies		24,948		23,996		25,359
Prepaid expenses		5,706		6,844		5,720
Total current assets		277,904		320,872		314,792

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,710		21,738		21,708
Buildings		123,844		123,883		122,514
Machinery and equipment		421,233		422,506		415,246
Construction in progress		39,687		14,347		15,720
Operating lease right-of-use assets		7,617		858		1,062
		614,091		583,332		576,250
Less - accumulated depreciation		407,765		396,004		391,332
Net property, plant and equipment		206,326		187,328		184,918

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		280,326		220,020		201,698
Split dollar officer life insurance		-		2,514		26,042
Prepaid expenses and other assets		1,614		4,525		5,744
Deferred income taxes		1,010		1,038		580
Total other assets		531,211		476,358		482,325
Total assets	$	1,015,441	$	984,558	$	982,035



	Quarter Ended				Year to Date Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020

Net product sales	$	183,090	$	156,962	$	399,445	$	339,561
Rental and royalty revenue		1,075		835		3,407		2,638
Total revenue		184,165		157,797		402,852		342,199
Product cost of goods sold		118,446		99,187		259,959		216,009
Rental and royalty cost		332		213		1,005		725
Total costs		118,778		99,400		260,964		216,734
Product gross margin		64,644		57,775		139,486		123,552
Rental and royalty gross margin		743		622		2,402		1,913
Total gross margin		65,387		58,397		141,888		125,465
Selling, marketing and administrative expenses		35,743		32,868		94,930		78,699
Earnings from operations		29,644		25,529		46,958		46,766
Other income (loss), net		1,750		5,863		11,810		10,096
Earnings before income taxes		31,394		31,392		58,768		56,862
Provision for income taxes		6,675		6,729		13,494		12,841
Net earnings		24,719		24,663		45,274		44,021
Less: net earnings (loss) attributable to noncontrolling interests		(14)		(10)		(20)		(22)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	24,733	$	24,673	$	45,294	$	44,043

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.37	$	0.36	$	0.67	$	0.64
Dividends per share *	$	0.09	$	0.09	$	0.27	$	0.27

Average number of shares outstanding		67,244		68,393		67,549		68,627

Retained earnings at beginning of period	$	6,846	$	4,588	$	32,312	$	40,809
Net earnings attributable to Tootsie Roll Industries, Inc.		24,733		24,673		45,294		44,043
Cash dividends		(6,033)		(5,962)		(18,027)		(17,800)
Stock dividends		-		-		(34,033)		(43,753)
Retained earnings at end of period	$	25,546	$	23,299	$	25,546	$	23,299


										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, 2021	39,700	$	27,569	27,821	$	19,320	96	$	(1,992)	$	722,617
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	16		11	(16)		(11)	—		—		—
Purchase and retirement of common shares and other	(384)		(266)	—		—	—		—		(12,737)
Balance at September 30, 2021	39,332	$	27,314	27,805	$	19,309	96	$	(1,992)	$	709,880

Balance at June 30, 2020	39,664	$	27,544	27,025	$	18,767	93	$	(1,992)	$	725,605
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	—		—	—		—	—		—		—
Purchase and retirement of common shares and other	(328)		(227)	-		—	—		—		(10,319)
Balance at September 30, 2020	39,336	$	27,317	27,025	$	18,767	93	$	(1,992)	$	715,286

Balance at December 31, 2020	39,073	$	27,134	27,012	$	18,758	93	$	(1,992)	$	706,930
Issuance of 3% stock dividend	1,163		808	809		562	3		—		32,495
Conversion of Class B common shares to common shares	16		11	(16)		(11)	—		—		—
Purchase and retirement of common shares and other	(920)		(639)	—		—	—		—		(29,545)
Balance at September 30, 2021	39,332	$	27,314	27,805	$	19,309	96	$	(1,992)	$	709,880

Balance at December 31, 2019	38,836	$	26,969	26,287	$	18,254	90	$	(1,992)	$	696,059
Issuance of 3% stock dividend	1,157		803	786		547	3		—		42,243
Conversion of Class B common shares to common shares	48		34	(48)		(34)	—		—		—
Purchase and retirement of common shares and other	(705)		(489)	—		—	—		—		(23,016)
Balance at September 30, 2020	39,336	$	27,317	27,025	$	18,767	93	$	(1,992)	$	715,286



	Estimated Fair Value September 30, 2021
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	76,210	$	76,210	$	-	$	-
Available for sale securities		235,912		2,313		233,599		-
Foreign currency forward contracts		504		-		504		-
Commodity futures contracts		352		352		-		-
Trading securities		83,905		70,762		13,143		-
Total assets measured at fair value	$	396,883	$	149,637	$	247,246	$	-


	Estimated Fair Value December 31, 2020
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	166,841	$	166,841	$	-	$	-
Available for sale securities		188,282		3,149		185,133		-
Foreign currency forward contracts		778		-		778		-
Commodity futures contracts, net		941		941		-		-
Trading securities		73,828		61,431		12,397		-
Total assets measured at fair value	$	430,670	$	232,362	$	198,308	$	-


	Estimated Fair Value September 30, 2020
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	108,264	$	108,264	$	-	$	-
Available for sale securities		193,843		3,173		190,670		-
Foreign currency forward contracts		539		-		539		-
Commodity futures contracts		415		415		-		-
Trading securities		66,120		53,504		12,616		-
Total assets measured at fair value	$	369,181	$	165,356	$	203,825	$	-



	September 30, 2021
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	3,995	$	504	$	-
Commodity futures contracts		2,730		352		-
Total derivatives			$	856	$	-

	December 31, 2020
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	6,391	$	778	$	—
Commodity futures contracts		4,010		941		—
Total derivatives			$	1,719	$	-

	September 30, 2020
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	7,483	$	539	$	-
Commodity futures contracts		4,010		415		-
Total derivatives			$	954	$	-



	For Quarter Ended September 30, 2021
					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 forward contracts	$	(107)	$	106	$	-
Commodity futures contracts		414		816		-
Total	$	307	$	922	$	-

	For Quarter Ended September 30, 2020
					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 forward contracts	$	194	$	82	$	-
Commodity futures contracts		416		(92)		-
Total	$	610	$	(10)	$	-

	For Year to Date Ended September 30, 2021
					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 forward contracts	$	66	$	340	$	-
Commodity futures contracts		1,558		2,147		-
Commodity option contracts		-		-		-
Total	$	1,624	$	2,487	$	-

	For Year to Date Ended September 30, 2020
					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 forward contracts	$	341	$	(185)	$	-
Commodity futures contracts		47		(247)		-
Total	$	388	$	(432)	$	-



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at June 30, 2021	$	(24,388)	$	793	$	543	$	572	$	939	$	(21,541)
Other comprehensive earnings (loss) before reclassifications		(495)		(496)		(82)		313		-		(760)
Reclassifications from accumulated other comprehensive loss		-		(29)		(81)		(618)		(266)		(994)
Other comprehensive earnings (loss) net of tax		(495)		(525)		(163)		(305)		(266)		(1,754)
Balance at September 30, 2021	$	(24,883)	$	268	$	380	$	267	$	673	$	(23,295)

Balance at June 30, 2020	$	(26,432)	$	2,647	$	324	$	(70)	$	1,627	$	(21,904)
Other comprehensive earnings (loss) before reclassifications		328		(350)		146		316		-		440
Reclassifications from accumulated other comprehensive loss		-		-		(62)		69		(255)		(248)
Other comprehensive earnings (loss) net of tax		328		(350)		84		385		(255)		192
Balance at September 30, 2020	$	(26,104)	$	2,297	$	408	$	315	$	1,372	$	(21,712)

Balance at December 31, 2020	$	(24,581)	$	1,992	$	589	$	713	$	1,472	$	(19,815)
Other comprehensive earnings (loss) before reclassifications		(302)		(1,655)		49		1,182		-		(726)
Reclassifications from accumulated other comprehensive loss		-		(69)		(258)		(1,628)		(799)		(2,754)
Other comprehensive earnings (loss) net of tax		(302)		(1,724)		(209)		(446)		(799)		(3,480)
Balance at September 30, 2021	$	(24,883)	$	268	$	380	$	267	$	673	$	(23,295)

Balance at December 31, 2019	$	(23,368)	$	882	$	10	$	92	$	2,139	$	(20,245)
Other comprehensive earnings (loss) before reclassifications		(2,736)		1,415		258		36		-		(1,027)
Reclassifications from accumulated other comprehensive loss		-		-		140		187		(767)		(440)
Other comprehensive earnings (loss) net of tax		(2,736)		1,415		398		223		(767)		(1,467)
Balance at September 30, 2020	$	(26,104)	$	2,297	$	408	$	315	$	1,372	$	(21,712)


Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020		Recognized in Earnings
Investments	$	(39)	$	-	$	(92)	$	-	Other income, net
Foreign currency derivatives		(106)		(82)		(340)		185	Other income, net
Commodity derivatives		(816)		92		(2,147)		247	Product cost of goods sold
Postretirement and pension benefits		(352)		(338)		(1,055)		(1,013)	Other income, net
Total before tax		(1,313)		(328)		(3,634)		(581)
Tax (expense) benefit		319		80		880		141
Net of tax	$	(994)	$	(248)	$	(2,754)	$	(440)



					Approximate Dollar
	(a) Total			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	29,000	$	33.98	Not Applicable	Not Applicable

Aug 1 to Aug 31	285,459		34.56	Not Applicable	Not Applicable

Sep 1 to Sep 30	70,000		30.73	Not Applicable	Not Applicable

Total	384,459	$	33.81	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	November 9, 2021	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	November 9, 2021	BY:	/S/G. HOWARD EMBER, JR.

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



	September 30, 2021		December 31, 2020		September 30, 2020

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	24,512	$	13,025	$	15,880
Bank loans		956		832		933
Dividends payable		6,042		5,948		5,970
Accrued liabilities		57,597		45,099		47,051
Postretirement health care benefits		544		544		598
Operating lease liabilities		1,102		780		948
Income taxes payable		3,884		3,793		6,694
Total current liabilities		94,637		70,021		78,074

NONCURRENT LIABILITIES:
Deferred income taxes		45,441		47,900		47,382
Postretirement health care benefits		12,971		12,943		13,312
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		3,177		3,351		3,402
Operating lease liabilities		6,515		78		114
Deferred compensation and other liabilities		88,684		79,665		71,513
Total noncurrent liabilities		164,288		151,437		143,223

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value - 120,000 shares authorized; 39,332, 39,073 and 39,336, respectively, issued		27,314		27,134		27,317
Class B common stock, $.69-4/9 par value - 40,000 shares authorized; 27,805, 27,012 and 27,025, respectively, issued		19,309		18,758		18,767
Capital in excess of par value		709,880		706,930		715,286
Retained earnings		25,546		32,312		23,299
Accumulated other comprehensive loss		(23,295)		(19,815)		(21,712)
Treasury stock (at cost) - 96, 93 and 93 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		756,762		763,327		760,965
Noncontrolling interests		(246)		(227)		(227)
Total equity		756,516		763,100		760,738
Total liabilities and shareholders’ equity	$	1,015,441	$	984,558	$	982,035



	Year to Date Ended
	September 30, 2021		September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	45,274	$	44,021
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation		12,793		13,777
Deferred income taxes		(1,444)		(319)
Amortization of marketable security premiums		2,645		965
Changes in operating assets and liabilities:
Accounts receivable		(39,947)		(22,875)
Other receivables		(291)		281
Inventories		(12,440)		(13,001)
Prepaid expenses and other assets		3,980		2,742
Accounts payable and accrued liabilities		22,182		9,462
Income taxes payable		(83)		5,964
Postretirement health care benefits		(1,026)		(845)
Deferred compensation and other liabilities		510		(16,084)
Net cash provided by operating activities		32,153		24,088
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(22,930)		(11,425)
Repayment of premiums on split dollar life insurance policies		2,514		-
Purchases of trading securities		(2,108)		(2,718)
Sales of trading securities		582		17,673
Purchase of available for sale securities		(87,060)		(82,862)
Sale and maturity of available for sale securities		34,510		67,215
Net cash from (used in) investing activities		(74,492)		(12,117)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(30,184)		(23,505)
Dividends paid in cash		(18,100)		(17,850)
Proceeds from bank loans		2,970		3,048
Repayment of bank loans		(2,798)		(2,900)
Net cash used in financing activities		(48,112)		(41,207)
Effect of exchange rate changes on cash		(202)		(1,443)
Increase (Decrease) in cash and cash equivalents		(90,653)		(30,679)
Cash, cash equivalents and restricted cash at beginning of year		167,256		139,340
Cash, cash equivalents and restricted cash at end of quarter	$	76,603	$	108,661
Supplemental cash flow information:
Income taxes paid/(received), net	$	15,237	$	6,904


Dated:	November 9, 2021	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	November 9, 2021	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer