Tootsie Roll Industries reported second-quarter 2025 GAAP revenue of $153.2 million, marking a 3.0% increase year-over-year. This growth broke a string of muted results in the first half of the year. GAAP net earnings climbed 12.2% to $17.5 million, up from $15.6 million in the same period last year, while reported GAAP earnings per share reached $0.24, an increase from $0.21 in the prior period.
The company's profitability gains were driven by improvements in gross profit margin, which benefited from better price realization, higher manufacturing efficiencies, and targeted cost reductions. Successful marketing and sales programs also contributed to the higher sales in Q2 2025. These factors helped offset the impact of rising prices for key ingredients.
Despite the positive quarterly performance, management cautioned that significantly elevated cocoa and chocolate costs are expected to increase further during the remainder of 2025 and into 2026. These rising costs are anticipated to adversely affect gross margins as older, lower-cost inventory is replaced by new, higher-priced contracts. The company has implemented additional pricing actions and focused on cost efficiencies to mitigate these pressures.
Other factors impacting the quarter included tariffs on imported ingredients, which added new cost layers, and an increase in the effective income tax rate to 33.1% from 23.1% a year earlier, attributed to non-deductible deferred compensation items. Increased investment income from marketable securities and insurance recoveries also contributed to net earnings. The company reduced shares outstanding through buybacks, supporting the higher earnings per share figure.
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