Tootsie Roll Industries Inc 10-Q for FY2023 Q2

Tootsie Roll Industries Inc (TR)

10-Q 2023-08-08 For: 2023-06-30

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on August 8, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $160.15M; up 11.6% from $143.44M a year earlier
Net income: $14.73M; up 22.8% from net income of $11.99M 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		40,489,994
Class B Common Stock, $0.694 par value		29,452,448


		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	17-22

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, 2023		December 31, 2022		June 30, 2022

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	26,047	$	53,270	$	46,628
Restricted cash		371		365		355
Investments		83,165		96,128		76,462
Accounts receivable trade, less allowances of $2,488, $2,335 and $2,153		49,802		58,556		44,706
Other receivables		7,174		4,299		4,305
Inventories:
Finished goods and work-in-process		92,370		43,595		63,863
Raw materials and supplies		47,557		40,671		37,225
Prepaid expenses		8,105		12,144		7,213
Total current assets		314,591		309,028		280,757

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,782		21,715		21,691
Buildings		142,613		142,462		130,152
Machinery and equipment		468,721		467,977		446,438
Construction in progress		13,370		4,325		26,828
Operating lease right-of-use assets		6,291		4,703		7,019
		652,777		641,182		632,128
Less - accumulated depreciation		438,456		429,139		419,998
Net property, plant and equipment		214,321		212,043		212,130

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		252,459		247,528		258,075
Prepaid expenses and other assets		2,693		465		494
Deferred income taxes		1,664		1,454		1,397
Total other assets		505,077		497,708		508,227
Total assets	$	1,033,989	$	1,018,779	$	1,001,114



	Quarter Ended				Year to Date Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Net product sales	$	158,837	$	142,081	$	319,548	$	281,372
Rental and royalty revenue		1,308		1,359		2,689		2,705
Total revenue		160,145		143,440		322,237		284,077
Product cost of goods sold		107,075		95,402		218,481		187,752
Rental and royalty cost		460		386		851		765
Total costs		107,535		95,788		219,332		188,517
Product gross margin		51,762		46,679		101,067		93,620
Rental and royalty gross margin		848		973		1,838		1,940
Total gross margin		52,610		47,652		102,905		95,560
Selling, marketing and administrative expenses		37,857		20,674		75,356		47,747
Earnings from operations		14,753		26,978		27,549		47,813
Other income (loss), net		4,804		(11,137)		9,584		(16,153)
Earnings before income taxes		19,557		15,841		37,133		31,660
Provision for income taxes		4,837		3,860		9,019		7,660
Net earnings		14,720		11,981		28,114		24,000
Less: net loss attributable to noncontrolling interests		(6)		(8)		(13)		(16)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	14,726	$	11,989	$	28,127	$	24,016

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.21	$	0.17	$	0.40	$	0.34
Dividends per share *	$	0.09	$	0.09	$	0.18	$	0.18

Average number of shares outstanding		70,089		70,985		70,156		71,029

Retained earnings at beginning of period	$	3,223	$	2,904	$	48,276	$	39,545
Net earnings attributable to Tootsie Roll Industries, Inc.		14,726		11,989		28,127		24,016
Cash dividends		(6,293)		(6,201)		(12,430)		(12,235)
Stock dividends		-		-		(52,317)		(42,634)
Retained earnings at end of period	$	11,656	$	8,692	$	11,656	$	8,692


										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, 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 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 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

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



	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	$	-


	Estimated Fair Value December 31, 2022
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	53,270	$	53,270	$	-	$	-
Available for sale securities		272,448		1,889		270,559		-
Foreign currency derivatives		(282)		-		(282)		-
Commodity derivatives		10		10		-		-
Trading securities		71,208		56,049		15,159		-
Total assets measured at fair value	$	396,654	$	111,218	$	285,436	$	-


	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 derivatives		165		-		165		-
Commodity derivatives		100		100		-		-
Trading securities		72,480		56,964		15,516		-
Total assets measured at fair value	$	381,430	$	104,440	$	276,990	$	-



	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)

	December 31, 2022
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	7,264	$	-	$	(282)
Commodity derivatives		189		10		-
Total derivatives			$	10	$	(282)

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



	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 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 derivatives	$	(149)	$	86	$	-
Commodity derivatives		(80)		62		-
Total	$	(229)	$	148	$	-

	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)	$	-

	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 derivatives	$	(73)	$	188	$	-
Commodity derivatives		65		89		-
Total	$	(8)	$	277	$	-



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
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 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 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)

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)


Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022		Recognized in Earnings
Investments	$	-	$	(5)	$	(1)	$	(10)	Other income, net
Foreign currency derivatives		48		(86)		136		(188)	Other income, net
Commodity derivatives		-		(62)		(93)		(89)	Product cost of goods sold
Postretirement and pension benefits		(189)		(206)		(379)		(413)	Other income, net
Total before tax		(141)		(359)		(337)		(700)
Tax (expense) benefit		34		87		82		169
Net of tax	$	(107)	$	(272)	$	(255)	$	(531)



					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	-	$	-	Not Applicable	Not Applicable

May 1 to May 31	184,165		38.37	Not Applicable	Not Applicable

Jun 1 to Jun 30	207,626		37.86	Not Applicable	Not Applicable

Total	391,791	$	38.10	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	August 8, 2023	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	August 8, 2023	BY:	/S/G. HOWARD EMBER, JR.

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



	June 30, 2023		December 31, 2022		June 30, 2022

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	22,156	$	25,246	$	21,618
Bank loans		1,051		1,051		1,020
Dividends payable		6,303		6,154		6,210
Accrued liabilities		59,655		54,444		52,010
Postretirement health care benefits		658		658		616
Operating lease liabilities		1,172		791		1,000
Income taxes payable		-		1,790		-
Total current liabilities		90,995		90,134		82,474

NONCURRENT LIABILITIES:
Deferred income taxes		45,662		45,005		43,051
Postretirement health care benefits		9,304		9,303		12,601
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		3,913		3,747		3,584
Operating lease liabilities		5,182		3,952		6,019
Deferred compensation and other liabilities		86,359		76,256		76,870
Total noncurrent liabilities		157,920		145,763		149,625

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $0.694 par value - 120,000 shares authorized; 40,490, 39,721 and 40,379, respectively, issued		28,118		27,584		28,041
Class B common stock, $0.694 par value - 40,000 shares authorized; 29,452, 28,607 and 28,623, respectively, issued		20,453		19,866		19,877
Capital in excess of par value		753,839		719,606		746,026
Retained earnings		11,656		48,276		8,692
Accumulated other comprehensive loss		(26,698)		(30,169)		(31,368)
Treasury stock (at cost) - 102, 99 and 99 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		785,376		783,171		769,276
Noncontrolling interests		(302)		(289)		(261)
Total equity		785,074		782,882		769,015
Total liabilities and shareholders’ equity	$	1,033,989	$	1,018,779	$	1,001,114



	Year to Date Ended
	June 30, 2023		June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	28,114	$	24,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		9,205		8,451
Deferred income taxes		313		(233)
Amortization of marketable security premiums		2,325		2,792
Changes in operating assets and liabilities:
Accounts receivable		9,601		10,165
Other receivables		(3,338)		(745)
Inventories		(54,304)		(45,483)
Prepaid expenses and other assets		3,233		2,206
Accounts payable and accrued liabilities		353		3,214
Income taxes payable		(769)		(3,813)
Postretirement health care benefits		(378)		(431)
Deferred compensation and other liabilities		503		494
Net cash (used in) provided by operating activities		(5,142)		617
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(10,723)		(10,194)
Purchases of trading securities		(1,358)		(1,112)
Sales of trading securities		528		205
Purchase of available for sale securities		(48,522)		(57,731)
Sale and maturity of available for sale securities		66,507		25,993
Net cash provided by (used in) investing activities		6,432		(42,839)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(16,548)		(5,023)
Dividends paid in cash		(12,531)		(12,237)
Proceeds from bank loans		1,997		2,182
Repayment of bank loans		(2,013)		(2,018)
Net cash used in financing activities		(29,095)		(17,096)
Effect of exchange rate changes on cash		588		75
Decrease in cash and cash equivalents		(27,217)		(59,243)
Cash, cash equivalents and restricted cash at beginning of year		53,635		106,226
Cash, cash equivalents and restricted cash at end of quarter	$	26,418	$	46,983
Supplemental cash flow information:
Income taxes paid/(received), net	$	9,521	$	11,415
Interest paid	$	120	$	13


Dated:	August 8, 2023	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	August 8, 2023	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer