Tootsie Roll Industries Inc 10-Q for FY2022 Q2

Tootsie Roll Industries Inc (TR)

10-Q 2022-08-05 For: 2022-06-30

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on August 5, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $143.44M; up 24.2% from $115.46M a year earlier
Net income: $11.99M; up 22.4% from net income of $9.79M 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		40,378,647
Class B Common Stock, $0.69-4/9 par value		28,622,730


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	8-17

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	24

Item 4.	Controls and Procedures	24

Part II —	Other Information

Item 1.	Legal Proceedings	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 6.	Exhibits	25

Signatures		26



	June 30, 2022		December 31, 2021		June 30, 2021

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	46,628	$	105,840	$	96,617
Restricted cash		355		386		402
Investments		76,462		39,968		42,584
Accounts receivable trade, less allowances of $2,153, $2,281 and $1,767		44,706		54,921		36,133
Other receivables		4,305		3,920		3,652
Inventories:
Finished goods and work-in-process		63,863		31,431		57,811
Raw materials and supplies		37,225		24,074		30,473
Prepaid expenses		7,213		7,761		9,794
Total current assets		280,757		268,301		277,466

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,691		21,704		21,732
Buildings		130,152		130,158		123,880
Machinery and equipment		446,438		446,777		421,420
Construction in progress		26,828		15,344		28,280
Operating lease right-of-use assets		7,019		7,419		6,892
		632,128		621,402		602,204
Less - accumulated depreciation		419,998		412,496		403,996
Net property, plant and equipment		212,130		208,906		198,208

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		258,075		291,175		264,693
Split dollar officer life insurance		-		-		2,514
Prepaid expenses and other assets		494		603		2,771
Deferred income taxes		1,397		1,372		1,045
Total other assets		508,227		541,411		519,284
Total assets	$	1,001,114	$	1,018,618	$	994,958



	Quarter Ended				Year to Date Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021

Net product sales	$	142,081	$	114,560	$	281,372	$	216,355
Rental and royalty revenue		1,359		898		2,705		2,332
Total revenue		143,440		115,458		284,077		218,687
Product cost of goods sold		95,402		75,948		187,752		141,513
Rental and royalty cost		386		228		765		673
Total costs		95,788		76,176		188,517		142,186
Product gross margin		46,679		38,612		93,620		74,842
Rental and royalty gross margin		973		670		1,940		1,659
Total gross margin		47,652		39,282		95,560		76,501
Selling, marketing and administrative expenses		20,674		32,378		47,747		59,187
Earnings from operations		26,978		6,904		47,813		17,314
Other income (loss), net		(11,137)		6,244		(16,153)		10,060
Earnings before income taxes		15,841		13,148		31,660		27,374
Provision for income taxes		3,860		3,356		7,660		6,819
Net earnings		11,981		9,792		24,000		20,555
Less: net loss attributable to noncontrolling interests		(8)		(2)		(16)		(6)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	11,989	$	9,794	$	24,016	$	20,561

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.17	$	0.14	$	0.35	$	0.29
Dividends per share *	$	0.09	$	0.09	$	0.18	$	0.18

Average number of shares outstanding		68,945		69,570		68,989		69,712

Retained earnings at beginning of period	$	2,904	$	3,121	$	39,545	$	32,312
Net earnings attributable to Tootsie Roll Industries, Inc.		11,989		9,794		24,016		20,561
Cash dividends		(6,201)		(6,069)		(12,235)		(11,994)
Stock dividends		-		-		(42,634)		(34,033)
Retained earnings at end of period	$	8,692	$	6,846	$	8,692	$	6,846


										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, 2022	40,487	$	28,116	28,626	$	19,879	99	$	(1,992)	$	749,819
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	4		3	(4)		(3)	—		—		—
Purchase and retirement of common shares and other	(112)		(78)	1		1	—		—		(3,793)
Balance at June 30, 2022	40,379	$	28,041	28,623	$	19,877	99	$	(1,992)	$	746,026

Balance at March 31, 2021	40,002	$	27,779	27,821	$	19,320	96	$	(1,992)	$	732,165
Issuance of 3% stock dividend	—		—	—		—	—		—		—
Conversion of Class B common shares to common shares	—		—	—		—	—		—		—
Purchase and retirement of common shares and other	(302)		(210)	-		—	—		—		(9,548)
Balance at June 30, 2021	39,700	$	27,569	27,821	$	19,320	96	$	(1,992)	$	722,617

Balance at December 31, 2021	39,344	$	27,322	27,793	$	19,300	96	$	(1,992)	$	709,880
Issuance of 3% stock dividend	1,176		817	833		579	3		—		41,068
Conversion of Class B common shares to common shares	4		3	(4)		(3)	—		—		—
Purchase and retirement of common shares and other	(145)		(101)	1		1	—		—		(4,922)
Balance at June 30, 2022	40,379	$	28,041	28,623	$	19,877	99	$	(1,992)	$	746,026

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	—		—	—		—	—		—		—
Purchase and retirement of common shares and other	(536)		(373)	—		—	—		—		(16,808)
Balance at June 30, 2021	39,700	$	27,569	27,821	$	19,320	96	$	(1,992)	$	722,617



	Estimated Fair Value June 30, 2022
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	46,628	$	46,628	$	-	$	-
Available for sale securities		262,057		748		261,309		-
Foreign currency forward contracts		165		-		165		-
Commodity futures contracts		100		100		-		-
Trading securities		72,480		56,964		15,516		-
Total assets measured at fair value	$	381,430	$	104,440	$	276,990	$	-


	Estimated Fair Value December 31, 2021
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	105,840	$	105,840	$	-	$	-
Available for sale securities		241,407		1,282		240,125		-
Foreign currency forward contracts		426		—		426		-
Commodity futures contracts, net		124		124		—		-
Trading securities		89,736		76,196		13,540		-
Total assets measured at fair value	$	437,533	$	183,442	$	254,091	$	-


	Estimated Fair Value June 30, 2021
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	96,617	$	96,617	$	-	$	-
Available for sale securities		223,410		2,616		220,794		-
Foreign currency forward contracts		717		-		717		-
Commodity futures contracts		754		754		-		-
Trading securities		83,867		70,879		12,988		-
Total assets measured at fair value	$	405,365	$	170,866	$	234,499	$	-



	June 30, 2022
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	8,503	$	186	$	(21)
Commodity futures contracts		2,185		111		(11)
Total derivatives			$	297	$	(32)

	December 31, 2021
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	6,729	$	426	$	—
Commodity futures contracts		6,012		231		(107)
Total derivatives			$	657	$	(107)

	June 30, 2021
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	4,795	$	717	$	-
Commodity futures contracts		2,884		754		-
Total derivatives			$	1,471	$	-



	For Quarter Ended June 30, 2022
					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	$	(149)	$	86	$	-
Commodity futures contracts		(80)		62		-
Total	$	(229)	$	148	$	-

	For Quarter Ended June 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	$	94	$	131	$	-
Commodity futures contracts		747		663		-
Total	$	841	$	794	$	-

	For Year to Date Ended June 30, 2022
					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	$	(73)	$	188	$	-
Commodity futures contracts		65		89		-
Total	$	(8)	$	277	$	-

	For Year to Date Ended June 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	$	173	$	234	$	-
Commodity futures contracts		1,144		1,331		-
Total	$	1,317	$	1,565	$	-



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at March 31, 2022	$	(24,313)	$	(5,722)	$	302	$	184	$	582	$	(28,967)
Other comprehensive earnings (loss) before reclassifications		(106)		(1,849)		(113)		(61)		-		(2,129)
Reclassifications from accumulated other comprehensive loss		-		(4)		(65)		(47)		(156)		(272)
Other comprehensive earnings (loss) net of tax		(106)		(1,853)		(178)		(108)		(156)		(2,401)
Balance at June 30, 2022	$	(24,419)	$	(7,575)	$	124	$	76	$	426	$	(31,368)

Balance at March 31, 2021	$	(24,978)	$	1,116	$	572	$	508	$	1,205	$	(21,577)
Other comprehensive earnings (loss) before reclassifications		590		(283)		70		568		-		945
Reclassifications from accumulated other comprehensive loss		-		(40)		(99)		(504)		(266)		(909)
Other comprehensive earnings (loss) net of tax		590		(323)		(29)		64		(266)		36
Balance at June 30, 2021	$	(24,388)	$	793	$	543	$	572	$	939	$	(21,541)

Balance at December 31, 2021	$	(24,882)	$	(1,286)	$	322	$	94	$	739	$	(25,013)
Other comprehensive earnings (loss) before reclassifications		463		(6,281)		(56)		50		-		(5,824)
Reclassifications from accumulated other comprehensive loss		-		(8)		(142)		(68)		(313)		(531)
Other comprehensive earnings (loss) net of tax		463		(6,289)		(198)		(18)		(313)		(6,355)
Balance at June 30, 2022	$	(24,419)	$	(7,575)	$	124	$	76	$	426	$	(31,368)

Balance at December 31, 2020	$	(24,581)	$	1,992	$	589	$	713	$	1,472	$	(19,815)
Other comprehensive earnings (loss) before reclassifications		193		(1,159)		131		869		-		34
Reclassifications from accumulated other comprehensive loss		-		(40)		(177)		(1,010)		(533)		(1,760)
Other comprehensive earnings (loss) net of tax		193		(1,199)		(46)		(141)		(533)		(1,726)
Balance at June 30, 2021	$	(24,388)	$	793	$	543	$	572	$	939	$	(21,541)


Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		Recognized in Earnings
Investments	$	(5)	$	(53)	$	(10)	$	(53)	Other income, net
Foreign currency derivatives		(86)		(131)		(188)		(234)	Other income, net
Commodity derivatives		(62)		(663)		(89)		(1,331)	Product cost of goods sold
Postretirement and pension benefits		(206)		(352)		(413)		(703)	Other income, net
Total before tax		(359)		(1,199)		(700)		(2,321)
Tax (expense) benefit		87		290		169		561
Net of tax	$	(272)	$	(909)	$	(531)	$	(1,760)



					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

Apr 1 to Apr 30	54,848	$	36.10	Not Applicable	Not Applicable

May 1 to May 31	56,738		33.23	Not Applicable	Not Applicable

Jun 1 to Jun 30	-		-	Not Applicable	Not Applicable

Total	111,586	$	34.64	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	August 5, 2022	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	August 5, 2022	BY:	/S/G. HOWARD EMBER, JR.

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



	June 30, 2022		December 31, 2021		June 30, 2021

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	21,618	$	14,969	$	20,317
Bank loans		1,020		939		986
Dividends payable		6,210		6,042		6,077
Accrued liabilities		52,010		53,896		46,389
Postretirement health care benefits		616		616		544
Operating lease liabilities		1,000		1,072		818
Income taxes payable		-		2,434		468
Total current liabilities		82,474		79,968		75,599

NONCURRENT LIABILITIES:
Deferred income taxes		43,051		45,461		47,664
Postretirement health care benefits		12,601		12,619		12,956
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		3,584		3,415		3,608
Operating lease liabilities		6,019		6,347		6,074
Deferred compensation and other liabilities		76,870		94,511		88,971
Total noncurrent liabilities		149,625		169,853		166,773

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value - 120,000 shares authorized; 40,379, 39,344 and 39,700, respectively, issued		28,041		27,322		27,569
Class B common stock, $.69-4/9 par value - 40,000 shares authorized; 28,623, 27,793 and 27,821, respectively, issued		19,877		19,300		19,320
Capital in excess of par value		746,026		709,880		722,617
Retained earnings		8,692		39,545		6,846
Accumulated other comprehensive loss		(31,368)		(25,013)		(21,541)
Treasury stock (at cost) - 99, 96 and 96 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		769,276		769,042		752,819
Noncontrolling interests		(261)		(245)		(233)
Total equity		769,015		768,797		752,586
Total liabilities and shareholders’ equity	$	1,001,114	$	1,018,618	$	994,958



	Year to Date Ended
	June 30, 2022		June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	24,000	$	20,555
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		8,451		8,757
Deferred income taxes		(233)		378
Amortization of marketable security premiums		2,792		1,644
Changes in operating assets and liabilities:
Accounts receivable		10,165		5,040
Other receivables		(745)		64
Inventories		(45,483)		(28,665)
Prepaid expenses and other assets		2,206		(1,260)
Accounts payable and accrued liabilities		3,214		7,388
Income taxes payable		(3,813)		(3,068)
Postretirement health care benefits		(431)		(690)
Deferred compensation and other liabilities		494		635
Net cash provided by operating activities		617		10,778
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(10,194)		(12,327)
Purchases of trading securities		(1,112)		(1,959)
Sales of trading securities		205		582
Purchase of available for sale securities		(57,731)		(58,154)
Sale and maturity of available for sale securities		25,993		19,798
Net cash from (used in) investing activities		(42,839)		(52,060)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(5,023)		(17,181)
Dividends paid in cash		(12,237)		(12,034)
Proceeds from bank loans		2,182		2,032
Repayment of bank loans		(2,018)		(1,847)
Net cash used in financing activities		(17,096)		(29,030)
Effect of exchange rate changes on cash		75		75
Increase (Decrease) in cash and cash equivalents		(59,243)		(70,237)
Cash, cash equivalents and restricted cash at beginning of year		106,226		167,256
Cash, cash equivalents and restricted cash at end of quarter	$	46,983	$	97,019
Supplemental cash flow information:
Income taxes paid/(received), net	$	11,415	$	13,120
Interest paid	$	13	$	4


Dated:	August 5, 2022	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	August 5, 2022	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer