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TR

TOOTSIE ROLL INDUSTRIES INC (TR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net sales increased 3% year over year to $230.614M, net earnings rose 9% to $35.659M, and EPS was $0.49 vs $0.45 in Q3 2024; management cited pre-Halloween programs, higher price realization, and manufacturing efficiencies as drivers .
  • Sequential profitability improved with net income margin up vs Q2 (15.32% in Q3 vs 11.31% in Q2)*; however, gross margin was pressured by elevated cocoa/chocolate costs and LIFO impacts, with management expecting continued pressure into Q4 2025 and 2026 .
  • Other income provided a non-operating tailwind, including a favorable $3.4M cumulative after-tax bond accretion adjustment and higher investment income; effective tax rate increased to 26.7% (vs 22.6% in Q3 2024) due to nondeductible deferred compensation .
  • Stock reaction catalyst: shares fell after the company warned of higher ingredient costs (cocoa/chocolate) continuing into late-2025/2026, sharpening investor focus on margin sustainability and pricing elasticity .

What Went Well and What Went Wrong

What Went Well

  • Successful pre-Halloween marketing and sales programs drove higher sales; management: “Successful marketing and sales programs, including pre-Halloween sales programs, contributed to higher sales in third quarter 2025” .
  • Pricing and operations: “Gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions” .
  • Non-operating support: net earnings benefited from higher investment income and a favorable $3.4M cumulative after-tax bond accretion adjustment on discounted bonds .

What Went Wrong

  • Input costs: “Certain ingredients and packaging materials unit costs, particularly cocoa and chocolate, have increased,” with markets at “significantly elevated levels,” and older low-cost contracts expiring in early 2025 .
  • Tariffs: purchases outside USMCA faced higher tariffs, adding to Q3 and YTD costs; management cannot currently ascertain tariff effects given uncertainty .
  • Demand elasticity: customers/consumers became more resistant to higher prices, creating headwinds for sales over the nine-month period .

Financial Results

Core P&L vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$223.891 $153.190 $230.614
Net Earnings ($USD Millions)$32.844 $17.544 $35.659
Diluted EPS ($USD)$0.45 $0.24 $0.49

Margins

MetricQ3 2024Q2 2025Q3 2025
Gross Profit Margin %34.11%*36.42%*34.12%*
EBIT Margin %17.69%*14.66%*17.01%*
EBITDA Margin %19.70%*17.63%*19.10%*
Net Income Margin %14.54%*11.31%*15.32%*

*Values retrieved from S&P Global.

KPIs

KPIQ3 2024Q2 2025Q3 2025
Effective Tax Rate22.6% 33.1% 26.7%
Average Shares Outstanding73.497M 72.879M 72.879M
Favorable bond accretion adjustment (after-tax)——$3.4M

Segment Breakdown

  • Not disclosed in the press releases/8-Ks reviewed; the company reports consolidated results only .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cocoa/chocolate input costsQ4 2025–2026Not providedExpect continued elevated ingredient costs as older contracts expired; pressure persisting into Q4 2025 and 2026 Qualitative caution (pressure)
Tariffs on non-USMCA inputsQ4 2025Not providedHigher tariffs have added to costs; impact uncertain until policy clarity Qualitative caution (uncertain)
Gross profit/marginsQ4 2025Not providedBenefits from pricing/efficiencies/cost reductions offset by elevated inputs and LIFO effects Qualitative mixed
OpEx/Tax RateQ4 2025Not providedHigher effective tax rate due to nondeductible deferred compensation Qualitative adverse
Dividends2025No new disclosure—No update provided

No formal numerical guidance ranges were provided; management commentary focused on cost trajectory, margin dynamics, and tariff uncertainties .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was found; public sources list N/A for conference call details . Below themes are derived from management’s press releases.

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Input costs (cocoa/chocolate)Elevated; expecting even higher costs as contracts roll to higher pricing Elevated; anticipated more adverse margin impact in H2 as older contracts expire Elevated; persistent into Q4 2025 and 2026; LIFO adversely affects margins Worsening
Pricing/price realizationImplemented increases; margin recovery in Q1 Continued margin recovery from pricing Higher price realization benefiting margins Improving
Manufacturing efficienciesOperational improvements supporting margins Continued efficiency benefits Ongoing efficiency gains Stable/Improving
Demand elasticity/price resistanceCustomer/consumer price resistance hurting sales Ongoing resistance impacting 1H sales Continued resistance impacting nine-month sales Persistent headwind
Tariffs/macroUncertainty around tariffs; foreign-origin inputs outside USMCA Higher tariffs adding costs; uncertainty persists Higher tariffs added to costs; impact uncertain Persistent headwind
Other income/portfolioHigher investment income; insurance recovery Higher investment income; insurance recovery Higher investment income; $3.4M bond accretion adjustment Supportive

Management Commentary

  • “Successful marketing and sales programs, including pre-Halloween sales programs, contributed to higher sales in third quarter 2025 compared to the prior year third quarter.”
  • “Although we made progress in restoring our margins in third quarter and nine months 2025, certain ingredients and packaging materials unit costs, particularly cocoa and chocolate, have increased… we expect this to continue in fourth quarter 2025 and into 2026.”
  • “Third quarter and nine months 2025 net earnings benefited from increased Other income, net which includes a favorable $3.4 million cumulative after-tax adjustment to record bond accretion… The Company’s effective income tax rates were 26.7% and 22.6% in third quarter 2025 and 2024 respectively.”
  • “Certain ingredients… do have foreign origins outside of USMCA and the related higher tariffs on these purchases added to our costs… we are not able to ascertain the effects of tariffs on our business.”

Q&A Highlights

  • No Q3 2025 earnings call transcript available; third-party listings show N/A for conference call details .
  • Accordingly, there were no publicly available analyst Q&A themes or clarifications to extract.

Estimates Context

MetricQ3 2025 ConsensusQ3 2025 Actual
EPS ($)N/A*$0.49
Revenue ($USD Millions)N/A*$230.614

*Consensus values retrieved from S&P Global; unavailable for TR. Values retrieved from S&P Global.

Implication: With consensus unavailable, the market will anchor on reported year-over-year growth, margin trajectory, and management’s cost outlook rather than beat/miss optics .

Key Takeaways for Investors

  • Q3 showed resilient top-line and EPS growth into Halloween season, supported by pricing and efficiencies; however, structural input cost pressures and LIFO effects temper margin visibility into Q4/2026 .
  • The $3.4M after-tax bond accretion adjustment and higher investment income lifted net earnings in Q3; strip out non-operating support when modeling forward profitability sensitivity to input costs .
  • Elevated effective tax rate due to nondeductible deferred compensation is a discrete headwind; consider a higher tax-rate assumption vs prior periods in near-term models .
  • Price elasticity remains a watchpoint—management repeatedly cites consumer/customer resistance; further price actions risk volume pressure, particularly if input costs remain high .
  • Tariff uncertainty adds exogenous risk to COGS; absent clarity, keep a conservative buffer on cost estimates and monitor policy headlines .
  • With formal guidance absent and consensus visibility low, trading likely pivots on margin narrative and holiday sell-through; negative surprises would stem from sharper cocoa/chocolate price spikes or tariff escalations .
  • Medium-term thesis: operational efficiencies and pricing can partially offset input inflation, but the pace of margin recovery hinges on commodity normalization and demand elasticity; stay focused on cost contract resets and inventory/LIFO dynamics .