Tootsie Roll Industries Inc 10-Q for FY2022 Q1

Tootsie Roll Industries Inc (TR)

10-Q 2022-05-10 For: 2022-03-31

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on May 10, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $140.64M; up 36.2% from $103.23M a year earlier
Net income: $12.03M; up 11.7% from net income of $10.77M 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		40,487,362
Class B Common Stock, $0.69-4/9 par value		28,625,601


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	16-21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	22

Part II —	Other Information

Item 1.	Legal Proceedings	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6.	Exhibits	23

Signatures		24



	March 31, 2022		December 31, 2021		March 31, 2021

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	86,800	$	105,840	$	136,291
Restricted cash		377		386		399
Investments		58,727		39,968		42,396
Accounts receivable trade, less allowances of $2,378, $2,281 and $1,672		51,954		54,921		34,620
Other receivables		4,137		3,920		3,183
Inventories:
Finished goods and work-in-process		40,592		31,431		42,166
Raw materials and supplies		27,127		24,074		26,111
Prepaid expenses		5,947		7,761		7,166
Total current assets		275,661		268,301		292,332

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,712		21,704		21,711
Buildings		130,184		130,158		123,836
Machinery and equipment		447,060		446,777		421,364
Construction in progress		20,796		15,344		19,575
Operating lease right-of-use assets		7,220		7,419		653
		626,972		621,402		587,139
Less - accumulated depreciation		416,839		412,496		399,566
Net property, plant and equipment		210,133		208,906		187,573

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		276,780		291,175		243,749
Split dollar officer life insurance		-		-		2,514
Prepaid expenses and other assets		602		603		3,557
Deferred income taxes		1,417		1,372		1,005
Total other assets		527,060		541,411		499,086
Total assets	$	1,012,854	$	1,018,618	$	978,991



	Quarter Ended
	March 31, 2022		March 31, 2021

Net product sales	$	139,291	$	101,795
Rental and royalty revenue		1,346		1,434
Total revenue		140,637		103,229
Product cost of goods sold		92,350		65,565
Rental and royalty cost		379		445
Total costs		92,729		66,010
Product gross margin		46,941		36,230
Rental and royalty gross margin		967		989
Total gross margin		47,908		37,219
Selling, marketing and administrative expenses		27,073		26,809
Earnings from operations		20,835		10,410
Other income (loss), net		(5,016)		3,816
Earnings before income taxes		15,819		14,226
Provision for income taxes		3,800		3,463
Net earnings		12,019		10,763
Less: net earnings (loss) attributable to noncontrolling interests		(8)		(4)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	12,027	$	10,767

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.17	$	0.15
Dividends per share *	$	0.09	$	0.09

Average number of shares outstanding		69,039		69,858

Retained earnings at beginning of period	$	39,545	$	32,312
Net earnings attributable to Tootsie Roll Industries, Inc.		12,027		10,767
Cash dividends		(6,034)		(5,925)
Stock dividends		(42,634)		(34,033)
Retained earnings at end of period	$	2,904	$	3,121


										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 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
Purchase and retirement of common shares and other	(33)		(23)	—		—	—		—		(1,129)
Balance at March 31, 2022	40,487	$	28,116	28,626	$	19,879	99	$	(1,992)	$	749,819

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
Purchase and retirement of common shares and other	(234)		(163)	-		—	—		—		(7,260)
Balance at March 31, 2021	40,002	$	27,779	27,821	$	19,320	96	$	(1,992)	$	732,165



	Estimated Fair Value March 31, 2022
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	86,800	$	86,800	$	-	$	-
Available for sale securities		250,845		1,264		249,581		-
Foreign currency forward contracts		400		-		400		-
Commodity futures contracts		242		242		-		-
Trading securities		84,662		69,076		15,586		-
Total assets measured at fair value	$	422,949	$	157,382	$	265,567	$	-


	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 March 31, 2021
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	136,291	$	136,291	$	-	$	-
Available for sale securities		207,874		3,144		204,730		-
Foreign currency forward contracts		755		-		755		-
Commodity futures contracts		670		670		-		-
Trading securities		78,271		65,532		12,739		-
Total assets measured at fair value	$	423,861	$	205,637	$	218,224	$	-



	March 31, 2022
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	5,340	$	400	$	-
Commodity futures contracts		2,861		242		-
Total derivatives			$	642	$	-

	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)

	March 31, 2021
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	5,593	$	755	$	-
Commodity futures contracts		4,362		675		(5)
Total derivatives			$	1,430	$	(5)



	For Quarter Ended March 31, 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	$	76	$	102	$	-
Commodity futures contracts		145		27		-
Total	$	221	$	129	$	-

	For Quarter Ended March 31, 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	$	79	$	103	$	-
Commodity futures contracts		397		668		-
Total	$	476	$	771	$	-



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2021	$	(24,882)	$	(1,286)	$	322	$	94	$	739	$	(25,013)
Other comprehensive earnings (loss) before reclassifications		569		(4,432)		57		111		-		(3,695)
Reclassifications from accumulated other comprehensive loss		-		(4)		(77)		(21)		(157)		(259)
Other comprehensive earnings (loss) net of tax		569		(4,436)		(20)		90		(157)		(3,954)
Balance at March 31, 2022	$	(24,313)	$	(5,722)	$	302	$	184	$	582	$	(28,967)

Balance at December 31, 2020	$	(24,581)	$	1,992	$	589	$	713	$	1,472	$	(19,815)
Other comprehensive earnings (loss) before reclassifications		(397)		(876)		61		301		-		(911)
Reclassifications from accumulated other comprehensive loss		-		-		(78)		(506)		(267)		(851)
Other comprehensive earnings (loss) net of tax		(397)		(876)		(17)		(205)		(267)		(1,762)
Balance at March 31, 2021	$	(24,978)	$	1,116	$	572	$	508	$	1,205	$	(21,577)


Details about Accumulated Other	Quarter Ended				Location of (Gain) Loss
Comprehensive Income Components	March 31, 2022		March 31, 2021		Recognized in Earnings
Investments	$	(5)	$	-	Other income, net
Foreign currency derivatives		(102)		(103)	Other income, net
Commodity derivatives		(27)		(668)	Product cost of goods sold
Postretirement and pension benefits		(207)		(351)	Other income, net
Total before tax		(341)		(1,122)
Tax (expense) benefit		82		271
Net of tax	$	(259)	$	(851)



					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

Jan 1 to Jan 31	-	$	-	Not Applicable	Not Applicable

Feb 1 to Feb 28	-		-	Not Applicable	Not Applicable

Mar 1 to Mar 31	33,068		34.79	Not Applicable	Not Applicable

Total	33,068	$	34.79	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	May 10, 2022	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	May 10, 2022	BY:	/S/G. HOWARD EMBER, JR.

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



	March 31, 2022		December 31, 2021		March 31, 2021

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	21,676	$	14,969	$	14,275
Bank loans		1,075		939		965
Dividends payable		171		6,042		168
Accrued liabilities		51,134		53,896		43,421
Postretirement health care benefits		616		616		544
Operating lease liabilities		1,037		1,072		611
Income taxes payable		4,550		2,434		5,957
Total current liabilities		80,259		79,968		65,941

NONCURRENT LIABILITIES:
Deferred income taxes		44,225		45,461		47,636
Postretirement health care benefits		12,617		12,619		12,947
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		3,512		3,415		3,483
Operating lease liabilities		6,183		6,347		42
Deferred compensation and other liabilities		89,052		94,511		82,856
Total noncurrent liabilities		163,089		169,853		154,464

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value - 120,000 shares authorized; 40,487, 39,344 and 40,002, respectively, issued		28,116		27,322		27,779
Class B common stock, $.69-4/9 par value - 40,000 shares authorized; 28,626, 27,793 and 27,821, respectively, issued		19,879		19,300		19,320
Capital in excess of par value		749,819		709,880		732,165
Retained earnings		2,904		39,545		3,121
Accumulated other comprehensive loss		(28,967)		(25,013)		(21,577)
Treasury stock (at cost) - 99, 96 and 96 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		769,759		769,042		758,816
Noncontrolling interests		(253)		(245)		(230)
Total equity		769,506		768,797		758,586
Total liabilities and shareholders’ equity	$	1,012,854	$	1,018,618	$	978,991



	Quarter Ended
	March 31, 2022		March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	12,019	$	10,763
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation		4,216		4,365
Deferred income taxes		208		174
Amortization of marketable security premiums		1,334		739
Changes in operating assets and liabilities:
Accounts receivable		3,092		6,326
Other receivables		(239)		487
Inventories		(12,051)		(8,883)
Prepaid expenses and other assets		1,829		572
Accounts payable and accrued liabilities		4,296		(1,204)
Income taxes payable		2,213		2,295
Postretirement health care benefits		(209)		(347)
Deferred compensation and other liabilities		99		50
Net cash provided by operating activities		16,807		15,337
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(5,948)		(3,787)
Purchases of trading securities		(737)		(1,835)
Sales of trading securities		205		582
Purchase of available for sale securities		(25,148)		(30,031)
Sale and maturity of available for sale securities		8,524		8,543
Net cash from (used in) investing activities		(23,104)		(26,528)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(1,152)		(7,423)
Dividends paid in cash		(12,075)		(11,874)
Proceeds from bank loans		1,178		1,070
Repayment of bank loans		(1,016)		(896)
Net cash used in financing activities		(13,065)		(19,123)
Effect of exchange rate changes on cash		313		(252)
Increase (Decrease) in cash and cash equivalents		(19,049)		(30,566)
Cash, cash equivalents and restricted cash at beginning of year		106,226		167,256
Cash, cash equivalents and restricted cash at end of quarter	$	87,177	$	136,690
Supplemental cash flow information:
Income taxes paid/(received), net	$	1,571	$	1,233
Interest paid	$	2	$	2


Dated:	May 10, 2022	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	May 10, 2022	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer