Company: TR
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001558370-25-007150
Chunk: 10

Company: TOOTSIE ROLL INDUSTRIES INC
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 10
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources and other matters. Dollars are presented in thousands, except per share amounts. This review should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes included in this Form 10-Q and with the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

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Net product sales were $146,521 in first quarter 2025 compared to $151,464 in first quarter 2024, a decrease of $4,943 or 3.3%. Domestic (U.S.) net product sales in first quarter 2025 decreased 1.8% compared to the corresponding period in the prior year and foreign net product sales, including exports to foreign markets, decreased 16.3% compared to the corresponding period in the prior year. For the first quarter 2025, domestic sales represented 91.4% of total consolidated net product sales. The Company continued to face a challenging market in first quarter 2025 as customers and consumers have become more resistant to higher price realization. These headwinds have had some adverse effect on sales in first quarter 2025.

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Product cost of goods sold was $95,500 in first quarter 2025 compared to $102,732 in first quarter 2024. Product cost of goods sold includes $(155) and $365 of certain deferred compensation (credits) expenses in first quarter 2025 and 2024, respectively. These deferred compensation (credits) expenses principally resulted from the changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Excluding the adjustment for deferred compensation (credits) expenses, product cost of goods sold decreased from $102,367 in first quarter 2024 to $95,655 in first quarter 2025, a decrease of $6,712 or 6.6%. As a percentage of net product sales, adjusted product cost of goods sold was 65.3% and 67.6% in first quarter 2025 and 2024, respectively, a favorable decrease of 2.3 percentage points