Tootsie Roll Posts 12% Profit Gain in Q2

Key Points

• - Revenue (GAAP) reached $153.2 million in Q2 2025, up 3.0% from the prior-year period (GAAP).

• - Net earnings (GAAP) rose 12.2% in the second quarter compared to the same period in 2024 as improved margins offset persistent cost pressures.

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Tootsie Roll Industries (NYSE:TR), the confectionery company behind well-known brands like Tootsie Roll, Tootsie Pops, and Dots, reported second quarter 2025 earnings on July 23, 2025. Headline results showed GAAP revenue of $153.2 million in Q2 2025, reflecting a 3.0% year-over-year increase (GAAP). Net earnings (GAAP) reached $17.5 million in Q2 2025, up from $15.6 million in the same period last year, while reported earnings per share (EPS) came in at $0.24 (GAAP), up from $0.21 in the prior period. There were no analyst consensus estimates available for the quarter, so results cannot be benchmarked against Wall Street expectations. The performance demonstrated meaningful progress on margins and profits, but ongoing headwinds from higher input costs tempered sales momentum and pointed to a cautious outlook for the remainder of fiscal 2025.

Company Business Overview and Recent Focus Areas

Tootsie Roll Industries produces and sells candy products, including chocolate-based confections, lollipops, chewy candy, and other sweets distributed primarily across the United States. Its brands—such as Tootsie Roll chocolate chews, Tootsie Pops lollipops, and Dots fruit-flavored gumdrops—are commonly found in grocery, drug, and convenience stores.

The business depends heavily on brand recognition, customer concentration, efficient cost management, and careful handling of volatile input materials like sugar and cocoa. Recent strategic initiatives have focused on managing higher costs through price increases and manufacturing efficiencies. Navigating seasonal patterns—especially the key Halloween period—and remaining compliant with regulatory requirements are also critical for ongoing performance.

Quarter Highlights: Revenue, Margins, and Cost Drivers

GAAP net sales in Q2 2025 ticked upward, breaking a string of muted results in the first half. Net sales (GAAP) totaled $153.2 million in Q2 2025, representing a 3.0% increase compared to the prior-year period (GAAP). Nevertheless, management specifically noted that first half GAAP net sales were essentially flat compared to 2024, highlighting that total net sales (GAAP) for the first half of 2025 amounted to $299.7 million versus $300.3 million in the first half of 2024.

Net earnings for the second quarter climbed 12.2%, considerably outpacing the rate of sales growth as margin gains took hold. The driving forces included improvements in gross profit margin from better price realization, higher manufacturing efficiencies, and targeted cost reductions. The company stated that “Successful marketing and sales programs contributed to higher sales in Q2 2025 compared to Q2 2024.” However, these gains were achieved against a backdrop of rising prices for key ingredients—especially cocoa and chocolate—which management expects will increase further during the remainder of 2025 and into 2026 as older, lower-cost inventory is replaced by new contracts at higher prices.

To offset these cost increases, the company implemented additional pricing actions and focused on cost efficiencies. It also reduced the number of shares outstanding through buybacks on the open market, which supported the higher earnings per share figure. Material headwinds extended beyond supply costs. Tariffs on imported ingredients, mentioned in the filing, contributed to new cost layers this period. Gross margin improvement benefitted from actions taken within plant operations and procurement, but management cautioned that the positive impacts from earlier cost contracts may reverse in coming quarters.

The effective income tax rate rose to 33.1% from 23.1% a year earlier (GAAP), with management attributing this to non-deductible deferred compensation items. Another notable factor in profitability was increased investment income from holdings in marketable securities and insurance recoveries. No specific breakouts by product line or region were given, and there was no disclosure of new major product launches or segment expansion during the quarter.

Looking Ahead: Guidance and Key Themes

Instead, the commentary highlighted persistent input cost inflation, especially for cocoa and chocolate, as a looming risk. The company expects higher input costs to adversely affect gross margins in the second half of 2025 and into 2026 as longer-term supply agreements roll off and new—more expensive—contracts take effect. For the remainder of the year, investors should track trends in ingredient pricing, shifts in customer buying from key partners such as Wal-Mart, and any new moves in price realization to judge the company’s ability to defend profitability against sustained industry-wide cost inflation.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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