TOOTSIE ROLL INDUSTRIES INC (TR)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 net sales were $191,356,000 (-2% YoY) and EPS was $0.32 (-22% YoY), pressured by lower volumes and a nonrecurring, non-cash write-off of $11,010,000 in deferred tax assets that increased tax expense in the quarter .
• Excluding the deferred tax asset write-off, adjusted net earnings were $33,519,000, +14% YoY (vs. $29,403,000 in Q4 2023), reflecting margin restoration from higher price realization and improved manufacturing efficiencies; a LIFO liquidation also benefited operating and net earnings in Q4 .
• Management highlighted continuing resistance to higher pricing and significant cocoa/chocolate cost inflation, with even higher input costs expected in 2025 as older supply contracts expire and new higher-cost contracts take effect .
• No Q4 earnings call transcript was available; estimate comparisons were not possible because S&P Global consensus retrieval was unavailable due to quota limits, reducing near-term catalysts tied to “beat/miss” narratives .

What Went Well and What Went Wrong

What Went Well

• Gross profit margins benefited from higher price realization and improved manufacturing operating efficiencies, supporting underlying earnings despite lower volumes .
• Adjusted net earnings rose 14% YoY to $33,519,000, indicating operational improvements and cost actions are gaining traction even as headline EPS fell due to a non-cash tax item .
• Additional tailwinds included increased investment income, higher leasing revenue, and more favorable foreign exchange; EPS also benefited from fewer shares outstanding following open market stock purchases .

Management quote: “Fourth quarter and twelve months 2024 gross profit margins benefited from higher price realization and improvements in plant manufacturing operating efficiencies.”

What Went Wrong

• Customers and consumers demonstrated increased resistance to higher pricing, weighing on volumes in Q4 and FY24; lower volumes pressured results given fixed overhead that does not decline with sales .
• Cocoa and chocolate costs moved significantly higher in 2024 and are expected to be even higher in 2025 as older contracts roll off, representing a material margin headwind ahead .
• The Board’s revocation of its prior action related to deferred compensation deductibility led to the write-off of $11,010,000 in deferred tax assets, increasing tax expense and reducing reported net earnings and EPS in Q4 and FY24 .

Financial Results

Quarterly Performance (Sequential comparison, oldest → newest)

Narrative: Seasonal timing impacted sales between Q3 and Q4 vs prior-year comparatives; lower volume and fixed overhead burdened Q4 profitability, while margin restoration efforts and efficiencies helped offset .

Q4 YoY

Adjusted Q4 Earnings (to show nonrecurring tax impact)

Margins (disclosure context)

Guidance Changes

Note: No explicit numeric guidance ranges (revenue, EPS, margins, tax rate) were provided in Q4 materials .

Earnings Call Themes & Trends

(Company did not provide an earnings call/transcript; themes compiled from Q2, Q3, Q4 press releases)

Management Commentary

• “Throughout 2024 we faced a challenging market as customers and consumers became more resistant to higher price realization.”
• “Fourth quarter and twelve months 2024 gross profit margins benefited from higher price realization and improvements in plant manufacturing operating efficiencies.”
• “We will experience even higher cocoa and chocolate costs in 2025 as many of our older supply contracts expired and new contracts at higher costs become effective.”
• “We are focused on the longer term and therefore are continuing to make investments in plant manufacturing operations to meet new customer and consumer product demands, achieve product quality improvements, expand capacity in certain product lines, and increase operational efficiencies in order to provide genuine value to consumers.”

Q&A Highlights

• No Q4 2024 earnings call transcript was available, and we found no evidence of a call; thus, no Q&A discussion or clarifications to report .

Estimates Context

• We attempted to retrieve S&P Global (Capital IQ) consensus for Q4 2024 revenue and EPS, but data were unavailable due to daily request quota limits. As a result, comparisons to Wall Street consensus are not included.
• Implication: The absence of consensus limits headline “beat/miss” framing; the non-cash tax item materially distorts reported EPS, making adjusted figures more indicative of core performance .

Key Takeaways for Investors

• Reported EPS decline (-22% YoY) was driven by a nonrecurring, non-cash write-off of deferred tax assets; adjusted net earnings rose +14% YoY, signaling underlying margin improvement despite volume pressure .
• Cocoa/chocolate input inflation is the key 2025 risk; management expects “even higher” costs as legacy contracts roll, which could compress margins absent further price realization or incremental efficiencies .
• Q4 benefited from a LIFO liquidation, which is nonrecurring; investors should normalize for this benefit when modeling forward quarters .
• Efficiency initiatives and select tailwinds (investment income, leasing revenue, FX) have supported margins; sustaining these positives will be important as input cost pressure intensifies .
• Pricing resistance from customers/consumers continues; management is mindful of pass-through limits, pointing to a careful balance between price/mix and volume to defend margins .
• Without a call or guidance, near-term narrative rests on cost trends and operational execution; watch for contract cost rollover and any updates in subsequent filings on pricing and capacity investments .
• Consider focusing on adjusted profitability trends rather than reported EPS in Q4 to avoid distortion from the tax write-off; monitor effective tax rate normalization in future quarters .

Sources: Q4 2024 8-K press release and exhibits ; Q3 2024 8-K press release and summary ; Q2 2024 8-K press release and summary ; absence of call transcript corroborated via third-party earnings calendar page .