Tootsie Roll Q3 2023 Earnings Report
Key Takeaways
Tootsie Roll Industries reported an increase in net sales and net earnings for the third quarter of 2023. Net sales rose by 17% to $248,336,000, and net earnings increased to $34,382,000, with earnings per share at $0.49.
Third quarter net sales increased by 17% compared to 2022, reaching $248,336,000.
Net earnings for the third quarter rose to $34,382,000, up from $26,577,000 in 2022.
Earnings per share increased by 32% to $0.49, compared to $0.37 in the third quarter of 2022.
Sales growth was driven by effective sales and marketing programs and higher sales price realization.
Tootsie Roll
Tootsie Roll
Forward Guidance
The company anticipates that the timing of sales between the third and fourth quarters of 2023 and 2022 will have some adverse effect on sales and earnings in fourth quarter 2023 when compared to fourth quarter 2022. The company believes that its overall unit costs for ingredients and packaging will be even higher in 2024 than in 2023, which may not allow them to fully restore their margins to historical levels.
Positive Outlook
- The company has been implementing price increases to improve sales price realization and offset higher input costs.
- Progress has been made in restoring margins, though not yet to historical levels.
- The company's supply chain improved significantly in 2023 compared to 2022.
- The company is focused on making investments in plant manufacturing operations to meet new consumer demands, improve product quality, expand capacity, and increase efficiencies.
- Earnings per share benefited from stock purchases in the open market, resulting in fewer shares outstanding.
Challenges Ahead
- The timing of sales between Q3 and Q4 in 2023 and 2022 is expected to adversely affect sales and earnings in Q4 2023 compared to Q4 2022.
- Significantly higher input costs mitigated much of the benefits of higher sales in Q3 and nine months 2023.
- Gross profit margins and net earnings were adversely affected by higher costs for ingredients, packaging materials, labor, and plant manufacturing operating supplies.
- Overall unit costs for ingredients and packaging are expected to be even higher in 2024 than in 2023.
- Continuing increases in input costs and overall high inflation may not allow the company to fully restore its margins to historical levels.