Name: TOOTSIE ROLL INDUSTRIES INC Q1 2025 Earnings Call
Start: 2025-04-24T00:00:00.000Z

Executive Summary

Q1 2025 revenue declined, but profitability improved: Total revenue $148.5m vs $153.2m in Q1 2024 (-3.1%), EPS $0.25 vs $0.22 (+14%) as gross margin expanded on price realization and factory efficiencies .
Management flagged continued cocoa/chocolate cost inflation as a key headwind with higher-cost contracts rolling in through 2025–2026, constraining the ability to pass through price hikes without demand elasticity .
Q1 net earnings also benefited from higher investment income and an insurance recovery; effective tax rate was 21.6% (vs 21.4% LY), with share count down y/y on buybacks supporting EPS .
No formal guidance was provided; near‑term narrative hinges on margin resilience versus input cost inflation and consumer price sensitivity, likely the principal stock reaction catalysts .

What Went Well and What Went Wrong

Margin restoration: “First quarter 2025 gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions.”
EPS and net earnings up despite lower sales: Net earnings $18.1m (+14% y/y), EPS $0.25 (+$0.03 y/y) aided by fewer shares outstanding and investment income .
Operational focus: Continuing investments “to meet new customer and consumer product demands… expand capacity… and increase operational efficiencies” underpin longer‑term positioning .

Demand elasticity to pricing: “Customers and consumers have become more resistant to higher prices… headwinds have had some adverse effect on sales in first quarter 2025.”
Input cost inflation: Cocoa/chocolate markets “significantly elevated” with even higher costs expected as older contracts expire and new higher‑cost contracts take effect .
LIFO dynamics/gross margin pressure over 2025: Use of LIFO means rising input costs will have “increasingly adverse effects” on gross margins as the year progresses .

Metric	Q1 2024	Q4 2024	Q1 2025
Total Revenue ($USD Millions)	$153.175	$193.372*	$148.455
Net Product Sales ($USD Millions)	$151.464	$191.356	$146.521
Net Earnings ($USD Millions)	$15.834	$22.509	$18.058
Diluted EPS ($USD)	$0.22	$0.32	$0.25
Gross Profit Margin %	32.66%	39.10%*	35.33%
EBIT Margin %	7.25% (11,110/153,175)	20.97%*	15.53% (23,060/148,455)
EBITDA Margin %	14.87%*	23.27%*	16.42%*
Net Income Margin %	10.33% (15,834/153,175)	11.64%*	12.16% (18,058/148,455)

*Values retrieved from S&P Global.

Metric	Q1 2024	Q1 2025
Net Product Sales ($USD Millions)	$151.464	$146.521
Rental & Royalty Revenue ($USD Millions)	$1.711	$1.934
Total Revenue ($USD Millions)	$153.175	$148.455

KPI	Q1 2024	Q1 2025
Effective Tax Rate	21.4%	21.6%
Average Shares Outstanding (thousands)	73,536	72,957
Dividends per Share ($)	$0.09	$0.09

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	N/A	No formal guidance provided; management notes continued pricing resistance and higher cocoa/chocolate costs expected through 2025–2026	Maintained “no formal”
Gross Margin	FY 2025	N/A	LIFO accounting plus higher input costs expected to have “increasingly adverse effects” on gross margins as year progresses	Lower risk flagged
Input Costs (Cocoa/Chocolate)	2025–2026	N/A	Higher costs expected as older contracts expire and new contracts at higher costs become effective	Raised cost outlook
Dividend per Share	Q1 2025	$0.09 (prior regular dividend)	$0.09	Maintained

Note: No Q1 2025 earnings call transcript was located; themes are derived from press releases.

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Price realization vs demand	Resistance to higher price realization; timing of seasonal sales affected results	Resistance persisted; lower volumes pressured results	Ongoing consumer resistance to higher prices; sales headwinds	Persistent headwind
Input costs (cocoa/chocolate)	Costs moved significantly higher; expected adverse effects in Q4’24 and 2025	Costs significantly higher; even higher in 2025 as older contracts expire	Significantly elevated; even higher expected through 2025–2026	Worsening cost outlook
Manufacturing efficiencies	Improvements aided margins	Improvements aided margins	Continued efficiencies helped gross margin	Sustained positive
Tax/effective rate	Q3 rate 22.6% vs 23.9% LY	Nonrecurring DTA write‑off; excluding, tax rates 23.8%/21.8% in Q4	Effective tax rate 21.6% (vs 21.4% LY)	Normalized lower
Other income (investments/leasing/FX/insurance)	Investment income, leasing revenue, FX favorable	Investment income and leasing revenue favorable; DTA write‑off impacted GAAP	Increased investment income and insurance recovery benefit	Mixed tailwinds
Tariffs/macro	Not highlighted	Not highlighted	Tariff uncertainty noted due to non‑USMCA origins of certain inputs; cannot ascertain effects yet	Emerging risk disclosure

“We continued to face a challenging market in first quarter 2025 as customers and consumers have become more resistant to higher prices.”
“Although we made progress in restoring our margins in first quarter 2025, cocoa and chocolate markets continue at significantly elevated levels… we expect to incur even higher cocoa and chocolate costs during the balance of 2025 and into 2026…”
“First quarter 2025 gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions.”
“First quarter 2025 net earnings benefited from increased investment income… and an insurance recovery.”
“We are focused on the longer term… continuing to make investments in plant manufacturing operations… and increase operational efficiencies…”

No earnings call/Q&A located for Q1 2025; no additional clarifications beyond press release and 10‑Q .

S&P Global consensus for Q1 2025 was not available for EPS or revenue; as such, estimate comparisons are unavailable. Values retrieved from S&P Global.
Actuals: Revenue $148.5m; EPS $0.25 .
Implication: With no consensus anchor, revisions will center on cost/margin trajectory rather than headline beats/misses; analysts may reassess margin durability under higher cocoa costs .

Margin improvement despite revenue decline underscores the effectiveness of pricing and efficiency actions, but sustainability will be tested as higher‑cost cocoa contracts flow through in 2H25–2026 .
Demand elasticity is visible; further price hikes risk volume pressure—watch mix, promotional intensity, and elasticity in upcoming seasonal periods .
LIFO accounting will amplify the impact of rising input costs on reported gross margin as the year progresses—expect sequential margin pressure absent offsetting efficiencies .
Other income tailwinds (investment income, insurance recovery) aided Q1; these are less repeatable—underlying operating leverage remains the key medium‑term driver .
Share repurchases reduced average shares outstanding and supported EPS; capital deployment may continue to cushion per‑share metrics in a choppy demand environment .
No formal guidance; management focus remains on operational investments and value positioning—narrative sensitivity is highest around cocoa inflation updates and pricing strategy .
Near‑term trading lens: stock likely reacts to margin commentary vs input cost trajectory; medium‑term thesis hinges on balancing price realization with volume stability and continued manufacturing efficiencies .