TOOTSIE ROLL INDUSTRIES INC has recently released its 10-Q report. Tootsie Roll Industries, Inc. and its subsidiaries make and sell confectionery products in the United States, Canada, Mexico, and other markets. Its portfolio includes brands such as Tootsie Roll, Tootsie Pops, Charms, Blow-Pop, Junior Mints, Charleston Chew, Andes, Dubble Bubble, and several others, with sales reaching wholesalers, grocery and supermarket chains, drug and discount retailers, warehouse clubs, vending operators, e-commerce merchants, the U.S. military, and charitable fund-raising groups. Founded in 1896 and based in Chicago, the company remains focused on candy manufacturing and distribution.
In Item 2, management said the review covers financial condition, results of operations, liquidity, capital resources, and other matters, with figures stated in thousands except per-share amounts. Net product sales fell to $151,943 in the second quarter of 2026 from $153,190 a year earlier, down $1,247, or 0.8%, while first-half sales rose to $301,431 from $299,711, up $1,720, or 0.6%. Domestic sales made up 92.2% of second-quarter revenue and 92.4% of first-half revenue; U.S. sales fell 2.5% in the quarter but rose 0.3% in the half, while foreign sales increased 25.1% in the quarter and 3.4% in the half.
The company said second-quarter and first-half sales were affected by the timing of seasonal shipments shifting between the second and third quarters. It also said higher trade promotions reduced reported net sales because promotions are recorded as a reduction in sales, and the company continued to support brands with more promotions and advertising.
Product cost of goods sold rose to $100,965 in the second quarter from $98,127 a year earlier, and to $200,687 in the first half from $193,627. After adjusting for deferred compensation expenses, product cost of goods sold increased to $100,247 from $97,660 in the quarter and to $200,214 from $193,315 in the half. As a percentage of net product sales, adjusted product cost of goods sold rose to 66.0% from 63.8% in the quarter and to 66.4% from 64.5% in the half.
Management tied the higher cost burden to significantly higher cocoa and chocolate unit costs, plus elevated energy costs that lifted resin-based packaging and other material costs. The company said cocoa commodity prices have fallen from their 2025 highs but remain above historical levels, and it expects lower cocoa and chocolate costs to begin showing up in the second half of 2026 and into 2027.
Selling, marketing and administrative expenses climbed to $54,247 from $44,362 in the quarter and to $82,328 from $73,752 in the half. Excluding deferred compensation expenses, those costs rose to $39,014 from $33,959 in the quarter and to $72,285 from $66,808 in the half. As a share of sales, adjusted selling, marketing and administrative expenses increased to 25.7% from 22.2% in the quarter and to 24.0% from 22.3% in the half.
Customer freight, delivery and warehousing expenses increased to $15,424 from $13,047 in the quarter and to $28,960 from $26,963 in the half. The company said higher freight fuel surcharges, tied to elevated energy markets, pushed up customer freight and delivery unit costs, while higher marketing, advertising, and professional fees also added to the increase.
Operating results weakened sharply. Earnings from operations turned to a loss of $1,617 in the second quarter from income of $12,121 a year earlier, and fell to $21,596 in the first half from $35,181. Excluding deferred compensation expenses, adjusted operating earnings declined to $14,334 from $22,991 in the quarter and to $32,112 from $42,437 in the half.
Other income, net increased to $19,854 from $14,072 in the quarter and to $20,170 from $14,021 in the half, helped by gains and investment income on trading securities and higher investment income from available-for-sale securities and cash equivalents. Investment income from available-for-sale securities and cash equivalents rose to $4,468 from $3,485 in the quarter and to $10,495 from $6,946 in the half, reflecting higher average balances. Foreign exchange losses were $(619) in the quarter and $(658) in the half, compared with $(843) and $(1,387) a year earlier.
The effective income tax rate was 26.9% in the second quarter, down from 33.1%, and 25.9% in the first half, down from 27.7%. Net earnings attributable to Tootsie Roll Industries were $13,347 in the quarter, down from $17,544, and $31,008 in the first half, down from $35,602. Earnings per share fell to $0.18 from $0.23 in the quarter and to $0.41 from $0.47 in the half. Average shares outstanding were 75,035 in the quarter and 75,046 in the half, both slightly below the prior-year periods.
The company said it had not identified triggering events indicating a material impairment of goodwill or trademarks in the quarter or first half. It also said the Bakery and Confectionery Union and Industry International Pension Fund remained in critical status for 2026 after receiving $3.4 billion in Special Financial Assistance in 2024. Based on the latest information, the company said its withdrawal liability would have been $102,800 in 2025, compared with $97,500 in 2024 and $102,200 in 2023. Today the company's shares have moved 0.2% to a price of $39.83. For the full picture, make sure to review TOOTSIE ROLL INDUSTRIES INC's 10-Q report.
