EXHIBIT 99.1
Tootsie Roll Industries, Inc.
7401 South Cicero Avenue
Chicago, IL 60629
Phone 773/838-3400
Fax 773/838-3534
Press Release
STOCK TRADED: NYSE FOR IMMEDIATE RELEASE
TICKER SYMBOL: TR Tuesday, February 12, 2019
CHICAGO, ILLINOIS - February 12, 2019 - Ellen R. Gordon,
Chairman, Tootsie Roll Industries, Inc. reported fourth
quarter and twelve months 2018 net sales and net earnings.
Fourth quarter 2018 net sales were $127,264,000 compared to
$125,179,000 in fourth quarter 2017, an increase of $2,085,000
or 1.7%. Fourth quarter 2018 net earnings were $12,175,000
compared to $31,985,000 in fourth quarter 2017, and net earnings
per share were $.19 and $.49 in fourth quarter 2018 and 2017,
respectively. The prior year fourth quarter 2017 net earnings
includes a favorable deferred income tax accounting adjustment
of $20,318,000 or $.31 per share resulting from the estimated
impact of the enactment of the U.S. Tax Cuts and Jobs Act (U.S.
tax reform) in December 2017. Adjusting for the effects of this
fourth quarter 2017 tax adjustment, comparable net earnings per
share were $.19 and $.18, an increase of $.01 or 5.6%.
Twelve months 2018 net sales were $515,251,000 compared to
$515,674,000 in twelve months 2017, a decrease of $423,000 or
0.1%. Twelve months 2018 net earnings were $56,893,000 compared
to $80,864,000 in twelve months 2017, and net earnings per share
were $.89 and $1.24 in twelve months 2018 and 2017, respectively.
Adjusting for the effects of the 2017 tax adjustment discussed
above, comparable net earnings per share were $.89 and $.93, a
decrease of $.04 or 4.3%.
Mrs. Gordon said, "Fourth quarter 2018 sales were up 1.7% compared
to fourth quarter 2017, which includes an increase of 3.4% in U.S.
sales in the quarter. The timing of certain foreign sales between
third and fourth quarter in the comparative 2018 and 2017
periods adversely affected fourth quarter consolidated 2018 sales.
Net earnings for fourth quarter and twelve months 2018 were
adversely affected by significant increases in freight and delivery
expenses. These expenses reflect higher freight rates driven by the
continuing imbalance between supply and demand for over-the-road
truck delivery as well as higher fuel costs. Freight and delivery
expenses began their significant acceleration in fourth quarter
2017, and therefore, this impact was less significant in the
comparative fourth quarters of 2018 and 2017, than for the twelve
months 2018 and 2017.
Increases in manufacturing wages and employee healthcare and other
benefit costs principally resulting from unfavorable experience
under our self-insurance programs, and higher legal and professional
fees had an adverse impact on fourth quarter and twelve months 2018
results. Costs relating to quality improvements in product packaging
and start-up of new manufacturing packaging lines being phased into
service during 2018 also had an unfavorable impact on twelve months
2018 gross profit margins when compared to 2017. The Company is
continuing its investments in its manufacturing operations and
products to meet new consumer and customer demands, achieve quality
improvements to increase consumer product acceptance, and realize
operational efficiencies and savings. Manufacturing efficiencies
driven by capital investments and ongoing cost containment
programs mitigated some of these higher input costs and expenses
discussed above.
Foreign subsidiary impairment charges adversely affected pretax
income by approximately $1,126,000 and $2,371,000 in fourth
quarter and twelve months 2018 and 2017, respectively.
Unfavorable foreign exchange also had some unfavorable impact
on fourth quarter and twelve months 2018 results when compared
to the prior year comparative periods. Earnings per share did
benefit from stock purchases in the open market resulting in
fewer shares outstanding in both fourth quarter and twelve
months 2018.
Fourth quarter and twelve months 2018 net earnings benefited
from a lower U.S. federal income tax rate resulting from U.S.
tax reform legislation enacted in December 2017. In connection
with this tax reform legislation, the Company recorded a net tax
benefit of $20,318,000, or $.31 per share, during fourth quarter
2017. This benefit reflected the estimated accounting adjustment
from the revaluation of the Company's net deferred income tax
liabilities as of December 31, 2017 to reflect the new lower
U.S. corporate income tax rate. As a result of this tax
legislative change, including the above discussed revaluation
of deferred tax liabilities, the Company's effective income
tax rate was 23.5% in fourth quarter 2018 compared to negative
110.9%, a net tax credit, in fourth quarter 2017; and 22.4% in
twelve months 2018 compared to 4.6% in twelve months 2017.
The confectionary industry has taken pricing actions to recover
many of the same input cost increases that we have and continue
to experience, including higher freight and delivery expenses.
The Company has also taken selective price increases, effective
at the beginning of 2019, to recover these same input cost
increases."
Safe Harbor Statement - The Company has included a non-GAAP
discussion regarding the impacts of tax reform. The Company
believes this discussion provides meaningful supplemental
information to both management and investors that is indicative
of the Company's core net results and facilitates comparison of
net results across reporting periods. The Company uses this
non-GAAP measure when evaluating its financial results as well
as for internal evaluation and analysis purposes. This non-GAAP
measure should not be viewed as a substitute for the Company's
GAAP results.
TOOTSIE ROLL INDUSTRIES, INC.
CONSOLIDATED SUMMARY OF SALES & EARNINGS
FOR THE PERIODS ENDED
DECEMBER 31, 2018 & 2017
FOURTH QUARTER ENDED
2018 2017
Net Product Sales $ 127,264,000 $ 125,179,000
Net Earnings $ 12,175,000 $ 31,985,000
Net Earnings Per Share * $ .19 $ .49
Average Shares Outstanding * 64,065,000 64,706,000
TWELVE MONTHS ENDED
2018 2017
Net Product Sales $ 515,251,000 $ 515,674,000
Net Earnings $ 56,893,000 $ 80,864,000
Net Earnings Per Share * $0.89 $1.24
Average Shares Outstanding * 64,216,000 65,048,000
*Based on average shares outstanding adjusted for 3% stock dividends
distributed April 06, 2018 and April 17, 2017.