Tootsie Roll Q2 Earnings Drop 22% on Higher Cocoa Costs and Operating Expenses
TR sits 19% above its 52-week low of $33.432 on light trading volume (0.2× avg).
Summary
Tootsie Roll reported Q2 2026 net earnings of $13.3 million, down 22% year-over-year, as higher cocoa costs and operating expenses squeezed margins. Cash reserves halved to $62 million amid heavy capital spending and seasonal inventory buildup.
Key Events · Earnings and Guidance · TR
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Earnings Decline
Q2 2026 net earnings attributable to Tootsie Roll fell 21.7% to $13.3 million ($0.18 per share) from $17.5 million ($0.23 per share) in Q2 2025. First half earnings dropped 12.8% to $31.0 million ($0.41 per share).
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Margin Compression
Product gross margin declined to 33.5% in Q2 2026 from 35.9% a year ago, driven by significantly higher cocoa and chocolate unit costs. Adjusted operating earnings fell 37.7% in the quarter.
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Cash Burn
Cash and cash equivalents dropped to $62.1 million from $127.2 million at year-end 2025, reflecting $10.9 million used in operations, $20.6 million in capital expenditures, and $13.3 million in dividends.
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Pension Liability Risk
The company's estimated withdrawal liability from a multi-employer pension plan stands at $102.8 million. Management warns the ultimate outcome could have a material adverse effect on future results or cash flows.
Analysis · TR · Manufacturing
Tootsie Roll's second-quarter earnings fell sharply as surging cocoa and chocolate costs compressed margins, while higher selling and administrative expenses further pressured profits. The company burned through over half its cash in six months, funding a major plant expansion and seasonal inventory build. A looming $102.8 million multi-employer pension withdrawal liability adds a significant long-term risk. The results confirm the cost headwinds flagged in the prior quarter's earnings release, but the magnitude of the margin decline and cash consumption is worse than the headline earnings drop suggests.
At the time of this filing, TR was trading at $39.79 on NYSE in the Manufacturing sector, with a market capitalization of approximately $3B. The 52-week trading range was $33.43 to $45.06. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.