Sign in

You're signed outSign in or to get full access.

TR

TOOTSIE ROLL INDUSTRIES INC (TR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest top-line growth with net sales of $153.19M (+3% YoY) and net earnings of $17.54M (+12% YoY); EPS rose to $0.24 (+14% YoY), supported by price realization and manufacturing efficiencies .
  • Sequentially, sales improved (+4.6% QoQ vs Q1’s $146.52M), but EPS eased to $0.24 from $0.25 as the effective tax rate jumped to 33.1% (vs 21.6% in Q1) and input-cost inflation continued to pressure margins under LIFO accounting .
  • Management flagged intensifying cocoa/chocolate cost headwinds into H2 2025 and 2026 as older supply contracts roll off; tariffs on certain non‑USMCA inputs also added to costs in Q2 .
  • Net earnings benefited from higher investment income and insurance recoveries; average shares outstanding declined YoY due to buybacks, aiding EPS .
  • Near-term stock catalysts include Halloween sell-through, cocoa price trajectory, and tariff clarity; ongoing capex aims to expand capacity and improve product quality/efficiencies .

What Went Well and What Went Wrong

What Went Well

  • Price realization and operations: “Second quarter and first half 2025 gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions.”
  • Sales programs: “Successful marketing and sales programs contributed to higher sales in second quarter 2025 compared to the prior year second quarter.”
  • Earnings drivers: Net earnings benefited from increased investment income and insurance recoveries; EPS also benefited from fewer shares outstanding following open-market repurchases .

What Went Wrong

  • Consumer price resistance: Management noted “customers and consumers became more resistant to higher prices,” pressuring first-half sales (-$0.57M vs 1H24) .
  • Input costs and LIFO: Cocoa/chocolate costs were “significantly elevated” and expected to rise further; LIFO accounting amplifies adverse earnings effects during inflationary periods .
  • Taxes and tariffs: Effective tax rate rose to 33.1% in Q2 (vs 23.1% in Q2 2024) due to nondeductible deferred compensation; higher tariffs on some inputs outside USMCA increased costs .

Financial Results

Quarterly Results (USD)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($)$191,356,000 $146,521,000 $153,190,000
Net Earnings ($)$22,509,000 $18,058,000 $17,544,000
EPS ($)$0.32 $0.25 $0.24
Average Shares Outstanding71,121,000 72,957,000 72,879,000
Gross Margin %39.10%*35.33%*36.42%*
EBIT Margin %20.97%*13.34%*14.66%*
Net Income Margin %11.64%*12.16%*11.31%*

*Values retrieved from S&P Global.

Q2 YoY Comparison (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025YoY Change
Net Sales ($)$148,819,000 $153,190,000 +3.0%
Net Earnings ($)$15,640,000 $17,544,000 +12.2%
EPS ($)$0.21 $0.24 +14.3%

Q2 vs Q1 2025 QoQ

MetricQ1 2025Q2 2025QoQ Change
Net Sales ($)$146,521,000 $153,190,000 +4.6%
Net Earnings ($)$18,058,000 $17,544,000 -2.8%
EPS ($)$0.25 $0.24 -3.6%

Segment breakdown

SegmentQ4 2024Q1 2025Q2 2025
Not disclosed (Company reports consolidated results)N/AN/AN/A

KPIs

KPIQ4 2024Q1 2025Q2 2025
Effective Tax Rate (%)23.8% (excl. DTA write-off) 21.6% 33.1%
Stock Dividend3% distributed Apr 4, 2025 ——

Note: Q4 2024 included a nonrecurring non-cash write-off of deferred tax assets ($11.01M) impacting reported tax expense and net earnings; adjusted net earnings would have been $33.52M (+14% YoY) absent the write-off .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q3–Q4 2025Not providedNot providedMaintained: No formal guidance
Gross MarginFY/Q3–Q4 2025Not providedManagement expects adverse margin effects in H2 due to higher cocoa/chocolate costs under LIFOIndicated headwind (qualitative)
Tax Rate2H 2025Not providedHigher effective tax rate due to nondeductible deferred compIndicated headwind (qualitative)
Tariffs2H 2025Not providedHigher tariffs on non‑USMCA inputs added costs; impact uncertainRisk reiterated
DividendsApr 4, 2025—3% stock dividend executed (for EPS share count adjustments)Action executed

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was available; themes below reflect press release narratives across periods.

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q1 2025)Current Period (Q2 2025)Trend
Input costs (cocoa/chocolate)Costs moved “significantly higher” in 2024; expected even higher in 2025 Elevated costs vs 2024; contract roll-offs to drive further increases into late 2025–2026 Worsening
Price realizationImplemented price increases to recover margins ; progress in Q1 margins Continued progress in Q2 margins from price realization Improving vs prior year
Manufacturing efficienciesImprovements benefited margins in Q4 and Q1 Q2 margins benefited from operating efficiencies Improving
LIFO accounting impactQ4 LIFO liquidation benefited earnings Higher costs expected to increasingly adversely affect margins as year progresses Headwind in 2H
Tariffs/macroUSMCA compliance noted; non‑USMCA inputs uncertain tariff impacts Higher tariffs added to Q2/H1 costs; clarity lacking Headwind
Investment income/otherIncreased investment income, leasing revenue, FX aided Q4 ; investment income + insurance recovery in Q1 Investment income + insurance recoveries aided Q2 earnings Supportive
Tax rateExcl. DTA write-off, Q4 ETR 23.8% ; Q1 ETR 21.6% Q2 ETR rose to 33.1% due to nondeductible deferred comp Headwind

Management Commentary

  • “Successful marketing and sales programs contributed to higher sales in second quarter 2025 compared to the prior year second quarter.” — Ellen R. Gordon
  • “Certain ingredients and packaging materials unit costs, including cocoa and chocolate, have increased… we expect to incur even higher costs… during the balance of 2025 and into 2026 as many of our older supply contracts expire.”
  • “Second quarter and first half 2025 gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions.”
  • “The Company’s effective income tax rates were 33.1% and 23.1% in second quarter 2025 and 2024 respectively… reflecting the adverse effect of certain deferred compensation that will not be deductible.”
  • “Certain ingredients… have foreign origins outside of USMCA and the related higher tariffs on these purchases added to our costs in second quarter and first half 2025.”

Q&A Highlights

No Q2 2025 earnings call or transcript was available; there were no public Q&A disclosures to highlight [List: earnings-call-transcript search returned none].

Estimates Context

Wall Street (S&P Global) consensus for TR’s Q2 2025 EPS and revenue was unavailable; as a result, formal “beat/miss” vs consensus cannot be determined (S&P Global data)*. Management’s narrative implies margin stabilization from price realization and efficiencies, but we expect sell-side models to factor higher H2 input costs and a structurally higher effective tax rate if nondeductible deferred comp persists .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 showed resilient EPS growth (+14% YoY) on modest sales growth (+3% YoY), supported by pricing and operational efficiency; however, the QoQ EPS dip underscores tax-rate and input-cost headwinds .
  • Cocoa/chocolate inflation is the central risk; with contracts resetting, gross margins likely face pressure in H2 2025–2026 under LIFO accounting despite ongoing efficiencies and price realization .
  • Effective tax rate elevated to 33.1% in Q2 due to nondeductible deferred comp; absent change, this could be a recurring drag vs prior-year levels near ~21–23% .
  • Tariffs on non‑USMCA inputs are adding to costs and remain an uncertainty until policy clarity improves; monitor for any tariff relief or supply re-sourcing .
  • Investment income and insurance recoveries supported earnings in Q2; these items are helpful but not core-operating drivers—focus remains on margin trajectory vs input costs .
  • Share count reduction aided EPS; continued buybacks could cushion EPS if margin pressure intensifies .
  • Near-term trading setup hinges on Halloween sell-through and commodity headlines (cocoa); medium-term thesis depends on balancing price realization and manufacturing efficiency against persistent input inflation and tax-rate headwinds .