Company: TR
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0001104659-25-108351
Chunk: 13

Company: TOOTSIE ROLL INDUSTRIES INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 2
Chunk 13
---
 deferred compensation expenses in third quarter 2025 and 2024, respectively, and $627 and $727 of certain deferred compensation expenses in nine months 2025 and 2024, respectively. These deferred compensation 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 expenses, product cost of goods sold increased from $148,026 in third quarter 2024 to $152,426 in third quarter 2025, an increase of $4,400 or 3.0%; and decreased from $350,003 in nine months 2024 to $345,741 in nine months 2025, a decrease of $4,262 or 1.2%. As a percentage of net product sales, adjusted product cost of goods sold was 66.1% and 66.1% in third quarter 2025 and 2024, respectively, an increase of 0.1 percentage points; and 65.2% and 66.8% in nine months 2025 and 2024, respectively, a decrease of 1.6 percentage points. Third quarter and nine months 2025 product cost of goods sold and gross profit margins benefited from higher price realization implemented to restore margins, improvements in plant manufacturing operating efficiencies, and certain cost reductions.

​

Many companies in the consumer products industry have increased selling prices in order to improve price realization in response to increasing input costs in recent years. We have implemented price increases as well during this period in order to mitigate certain input cost increases and recover our margin declines. 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 in nine months 2025 compared to 2024. Cocoa and chocolate prices continue at significantly elevated levels compared to historical prices in past years. We have experienced continuing higher costs for these ingredients during 2025 and expect this to continue in fourth quarter 2025 and into 2026 because many of our older supply contracts at lower prices expired in early 2025. Although the Company continues to monitor its input costs, we are mindful of the effects and limits when passing on the above-discussed higher input costs to our customers as well as the final consumers of our products.

​

The Company uses the Last-In-First-Out (LIFO) method of accounting for inventory and costs of