Tootsie Roll Industries Inc 10-Q for FY2023 Q1

Tootsie Roll Industries Inc (TR)

10-Q 2023-05-10 For: 2023-03-31

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on May 10, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $162.09M; up 15.3% from $140.64M a year earlier
Net income: $13.4M; up 11.4% from net income of $12.03M 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 $0.69-4/9 per share	TR	New York Stock Exchange


Class		Outstanding

Common Stock, $0.69-4/9 par value		40,871,456
Class B Common Stock, $0.69-4/9 par value		29,462,777


		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	8-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4.	Controls and Procedures	20

Part II —	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 6.	Exhibits	22

Signatures		22



	March 31, 2023		December 31, 2022		March 31, 2022

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	37,992	$	53,270	$	86,800
Restricted cash		369		365		377
Investments		85,880		96,128		58,727
Accounts receivable trade, less allowances of $2,546, $2,335 and $2,378		59,392		58,556		51,954
Other receivables		3,707		4,299		4,137
Inventories:
Finished goods and work-in-process		63,610		43,595		40,592
Raw materials and supplies		45,637		40,671		27,127
Prepaid expenses		7,909		12,144		5,947
Total current assets		304,496		309,028		275,661

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,752		21,715		21,712
Buildings		142,542		142,462		130,184
Machinery and equipment		468,202		467,977		447,060
Construction in progress		8,535		4,325		20,796
Operating lease right-of-use assets		4,631		4,703		7,220
		645,662		641,182		626,972
Less - accumulated depreciation		433,718		429,139		416,839
Net property, plant and equipment		211,944		212,043		210,133

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		252,888		247,528		276,780
Prepaid expenses and other assets		450		465		602
Deferred income taxes		1,574		1,454		1,417
Total other assets		503,173		497,708		527,060
Total assets	$	1,019,613	$	1,018,779	$	1,012,854



	Quarter Ended
	March 31, 2023		March 31, 2022

Net product sales	$	160,711	$	139,291
Rental and royalty revenue		1,381		1,346
Total revenue		162,092		140,637
Product cost of goods sold		111,406		92,350
Rental and royalty cost		391		379
Total costs		111,797		92,729
Product gross margin		49,305		46,941
Rental and royalty gross margin		990		967
Total gross margin		50,295		47,908
Selling, marketing and administrative expenses		37,499		27,073
Earnings from operations		12,796		20,835
Other income (loss), net		4,780		(5,016)
Earnings before income taxes		17,576		15,819
Provision for income taxes		4,182		3,800
Net earnings		13,394		12,019
Less: net loss attributable to noncontrolling interests		(7)		(8)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	13,401	$	12,027

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.19	$	0.17
Dividends per share *	$	0.09	$	0.09

Average number of shares outstanding		70,242		71,079

Retained earnings at beginning of period	$	48,276	$	39,545
Net earnings attributable to Tootsie Roll Industries, Inc.		13,401		12,027
Cash dividends		(6,137)		(6,034)
Stock dividends		(52,317)		(42,634)
Retained earnings at end of period	$	3,223	$	2,904


										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, 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	2		2	(2)		(2)	—		—		—
Purchase and retirement of common shares and other	(37)		(26)	—		—	—		—		(1,578)
Balance at March 31, 2023	40,871	$	28,383	29,463	$	20,460	102	$	(1,992)	$	768,676

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	—		—	—		—	—		—		—
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



	Estimated Fair Value March 31, 2023
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	37,992	$	37,992	$	—	$	—
Available for sale securities		262,729		4,583		258,146		—
Foreign currency derivatives		(233)		—		(233)		—
Commodity derivatives		51		51		—		—
Trading securities		76,039		59,952		16,087		—
Total assets measured at fair value	$	376,578	$	102,578	$	274,000	$	—


	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 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 derivatives		400		-		400		—
Commodity derivatives		242		242		-		—
Trading securities		84,662		69,076		15,586		—
Total assets measured at fair value	$	422,949	$	157,382	$	265,567	$	—



	March 31, 2023
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency derivatives	$	17,260	$	13	$	(246)
Commodity derivatives		189		51		-
Total derivatives			$	64	$	(246)

	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)

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



	For Quarter Ended March 31, 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	$	(39)	$	(88)	$	—
Commodity derivatives		134		93		—
Total	$	95	$	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 derivatives	$	76	$	102	$	—
Commodity derivatives		145		27		—
Total	$	221	$	129	$	—



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2022	$	(23,795)	$	(8,809)	$	(215)	$	8	$	2,642	$	(30,169)
Other comprehensive earnings (loss) before reclassifications		1,296		1,890		(29)		101		—		3,258
Reclassifications from accumulated other comprehensive loss		-		-		66		(70)		(144)		(148)
Other comprehensive earnings (loss) net of tax		1,296		1,890		37		31		(144)		3,110
Balance at March 31, 2023	$	(22,499)	$	(6,919)	$	(178)	$	39	$	2,498	$	(27,059)

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)


Details about Accumulated Other	Quarter Ended				Location of (Gain) Loss
Comprehensive Income Components	March 31, 2023		March 31, 2022		Recognized in Earnings
Investments	$	(1)	$	(5)	Other income, net
Foreign currency derivatives		88		(102)	Other income, net
Commodity derivatives		(93)		(27)	Product cost of goods sold
Postretirement and pension benefits		(190)		(207)	Other income, net
Total before tax		(196)		(341)
Tax (expense) benefit		48		82
Net of tax	$	(148)	$	(259)



					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	36,835	$	43.50	Not Applicable	Not Applicable

Feb 1 to Feb 28	-		-	Not Applicable	Not Applicable

Mar 1 to Mar 31	-		-	Not Applicable	Not Applicable

Total	36,835	$	43.50	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	May 10, 2023	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	May 10, 2023	BY:	/S/G. HOWARD EMBER, JR.

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



	March 31, 2023		December 31, 2022		March 31, 2022

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	21,706	$	25,246	$	21,676
Bank loans		1,060		1,051		1,075
Dividends payable		250		6,154		171
Accrued liabilities		52,928		54,444		51,134
Postretirement health care benefits		658		658		616
Operating lease liabilities		726		791		1,037
Income taxes payable		-		1,790		4,550
Total current liabilities		77,328		90,134		80,259

NONCURRENT LIABILITIES:
Deferred income taxes		45,612		45,005		44,225
Postretirement health care benefits		9,292		9,303		12,617
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		3,825		3,747		3,512
Operating lease liabilities		3,962		3,952		6,183
Deferred compensation and other liabilities		80,699		76,256		89,052
Total noncurrent liabilities		150,890		145,763		163,089

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value - 120,000 shares authorized; 40,871, 39,721 and 40,487, respectively, issued		28,383		27,584		28,116
Class B common stock, $.69-4/9 par value - 40,000 shares authorized; 29,463, 28,607 and 28,626, respectively, issued		20,460		19,866		19,879
Capital in excess of par value		768,676		719,606		749,819
Retained earnings		3,223		48,276		2,904
Accumulated other comprehensive loss		(27,059)		(30,169)		(28,967)
Treasury stock (at cost) - 102, 99 and 99 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		791,691		783,171		769,759
Noncontrolling interests		(296)		(289)		(253)
Total equity		791,395		782,882		769,506
Total liabilities and shareholders’ equity	$	1,019,613	$	1,018,779	$	1,012,854



	Quarter Ended
	March 31, 2023		March 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	13,394	$	12,019
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		4,599		4,216
Deferred income taxes		10		208
Amortization of marketable security premiums		1,185		1,334
Changes in operating assets and liabilities:
Accounts receivable		(360)		3,092
Other receivables		645		(239)
Inventories		(24,432)		(12,051)
Prepaid expenses and other assets		1,033		1,829
Accounts payable and accrued liabilities		(4,845)		4,296
Income taxes payable		1,536		2,213
Postretirement health care benefits		(201)		(209)
Deferred compensation and other liabilities		(46)		99
Net cash (used in) provided by operating activities		(7,482)		16,807
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(5,049)		(5,948)
Purchases of trading securities		(1,010)		(737)
Sales of trading securities		528		205
Purchase of available for sale securities		(14,848)		(25,148)
Sale and maturity of available for sale securities		25,874		8,524
Net cash provided by (used in) investing activities		5,495		(23,104)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(1,604)		(1,152)
Dividends paid in cash		(12,291)		(12,075)
Proceeds from bank loans		1,110		1,178
Repayment of bank loans		(1,115)		(1,016)
Net cash used in financing activities		(13,900)		(13,065)
Effect of exchange rate changes on cash		613		313
Decrease in cash and cash equivalents		(15,274)		(19,049)
Cash, cash equivalents and restricted cash at beginning of year		53,635		106,226
Cash, cash equivalents and restricted cash at end of quarter	$	38,361	$	87,177
Supplemental cash flow information:
Income taxes paid/(received), net	$	2,303	$	1,571
Interest paid	$	58	$	2


Dated:	May 10, 2023	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	May 10, 2023	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer