This financial review discusses the Company's financial condition, results of
operations, liquidity and capital resources and other matters. Dollars are
presented in thousands, except per share amounts. This review should be read in
conjunction with the accompanying Condensed Consolidated Financial Statements
and related notes included in
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this Form 10-Q and with the Company's Consolidated Financial Statements and
related notes and Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the Company's Form 10-K for the year ended
December 31, 2021 (the "2021 Form 10-K").
Net product sales were $211,888 in third quarter 2022 compared to $183,090 in
third quarter 2021, an increase of $28,798 or 15.7%. Nine months 2022 net
product sales were $493,260 compared to $399,445 in nine months 2021, an
increase of $93,815 or 23.5%. Domestic (U.S.) net product sales in third quarter
and nine months 2022 increased 15.5% and 24.4%, respectively, compared to the
corresponding periods in the prior year, and, foreign net product sales,
including exports to foreign markets, increased 18.7% and 13.8%, respectively,
compared to the corresponding periods in the prior year. For the third quarter
and nine months 2022, domestic sales represented 91.6% and 91.9%, respectively,
of total consolidated net product sales.
The sales growth in third quarter and nine months 2022 was driven by an overall
increase in demand and higher sales price realization. Effective sales and
marketing programs, including pre-Halloween sales programs in the third quarter
2022, also contributed to higher sales. The Company had continuing improvement
in customer orders and sales throughout 2021 and into the first nine months of
2022 as consumers returned to more activities and lifestyles that they
experienced prior to the Covid-19 pandemic. These activities include planned
purchases of the Company's products for "sharing" and "give-a-way" occasions.
Many of the Company's products are consumed at group events, outings, and other
gatherings, including Halloween events, which had been curtailed or in some
cases eliminated in response to the Covid-19 pandemic. Third quarter and nine
months 2022 sales also exceeded third quarter and nine months 2019 sales by 16%
and 27%, respectively, which provides a sales comparison prior to the pandemic.
Although higher third quarter and nine months 2022 sales, including sales price
increases, contributed to improved net earnings compared to the corresponding
prior year periods in 2021, significantly higher input costs mitigated much of
the benefits of these higher sales. When compared to the same periods in prior
years, third quarter and nine months 2022 gross profit margins and net earnings
were adversely affected by significantly higher costs for ingredients, packaging
materials, freight and delivery, and many manufacturing supplies and services.
We also incurred additional production costs, including overtime and extended
operating shifts for plant manufacturing to meet this higher demand.
Supply chain challenges and limited availability of certain ingredients and
materials, as well as generally higher commodity markets, have driven up our
costs for many key ingredients and materials in 2022. Our input unit costs
increased significantly in the nine months 2022 period as most of our supply
contracts for ingredients, packaging materials and manufacturing supplies and
services expired at the end of 2021 and new supply agreements became effective
in early 2022 at higher market prices. In certain instances, we have expanded
our annual commitments for some ingredients from our suppliers to meet higher
demand, however, certain markets are very tight and this incremental expansion
has and will continue to result in yet higher unit costs for these additional
materials. Supplier and transportation delays also caused us to purchase limited
quantities of certain ingredients in the spot market at substantially higher
costs than our contracted prices. The adverse effects of higher energy costs,
including higher fuel surcharges, have also added to our input costs with
respect to both customer and supplier freight and delivery in 2022. These higher
energy costs have also increased our costs for utilities to operate our
manufacturing plants this year. We expect these higher input costs to continue
through the balance of 2022 and are seeing even higher costs for many
ingredients and materials in 2023. The Company uses the Last-In-First-Out (LIFO)
method of accounting for inventory and costs of goods sold which results in
lower current income taxes during such periods of increasing costs, but this
method does charge the most current costs to cost of goods sold and thereby
accelerates the realization of these higher costs.
Product cost of goods sold was $141,243 in third quarter 2022 compared to
$118,446 in third quarter 2021, and nine months 2022 product cost of goods sold
were $328,995 compared to $259,959 in nine months 2021. Product cost of goods
sold includes $41 and $(5) of certain deferred compensation expenses (credits)
in third quarter 2022 and 2021, respectively, and $(1,093) and $411 of certain
deferred compensation expenses (credits) in nine months 2022 and 2021,
respectively. These deferred compensation expenses (credits) principally result
from the changes in the market value of investments and investment income from
trading securities relating to compensation deferred in previous years and are
not reflective of current operating results. Adjusting for the aforementioned,
product cost of goods sold increased from $118,451 in third quarter 2021 to
$141,202 in third quarter 2022, an increase of $22,751 or 19.2%; and increased
from $259,548 in nine months 2021 to $330,088 in nine months 2022, an increase
of $70,540 or 27.2%.
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As a percentage of net product sales, adjusted product cost of goods sold was
66.6% and 64.7% in third quarter 2022 and 2021, respectively, an unfavorable
increase of 1.9 percentage points; and adjusted product cost of goods sold was
66.9% and 65.0% in nine months 2022 and 2021, respectively, an unfavorable
increase of 1.9 percentage points. Third quarter and nine months 2022 adjusted
product cost of goods sold as a percentage of sales were adversely affected by
increasing costs for ingredients, packaging materials, certain manufacturing
supplies and services, plant utilities, and labor and benefits for overtime and
extended work shifts as discussed above. Although the above discussed higher
costs for ingredients and packaging materials adversely affected results for
third quarter and nine months 2022, higher sales and production volumes did
provide some benefit as certain plant manufacturing overhead costs are generally
fixed and do not change significantly when volume increases. In addition,
certain cost and expense reductions, which include Company initiatives to reduce
costs, mitigated some of the cost increase in adjusted product cost of goods
sold in third quarter and nine months 2022 compared to the corresponding period
in the prior year.
Our supply chain has continued to present logistical challenges in 2022 in
addition to the economic headwinds discussed above. Supplier lead times have
expanded greatly and in certain instances our suppliers have been unable to meet
promised delivery dates. In some cases, we have been unable to secure timely
delivery of additional ingredients and packaging materials to meet our higher
demand in 2022 and have limited our customer sales order volumes of some
products as a result. We are continuing to focus on the supply chain and
possible delays and disruptions, but this area continues to have much less
predictability compared to past history. Although we are cautiously optimistic,
it is possible that supply chain disruptions could result in the temporary
shut-down of one or more manufacturing lines resulting in lost sales and profits
in 2022 and into 2023. Labor shortages at some of our plant locations have
contributed to some production limitations and continue to have some adverse
impact on the fulfillment of customer orders. Nonetheless, we have been able to
meet substantially all of our labor needs to date, including for our seasonal
increases in production, however, the current tight labor market has created
much more uncertainty than in the past.
Selling, marketing and administrative expenses were $35,957 in third quarter
2022 compared to $35,743 in third quarter 2021, and nine months 2022 selling,
marketing and administrative expenses were $83,704 compared to $94,930 in nine
months 2021. Selling, marketing and administrative expenses include $(2,680) and
$(103) of certain deferred compensation expenses (credits) in third quarter 2022
and 2021, respectively, and $(19,709) and $8,141 of certain deferred
compensation expenses in nine months 2022 and 2021, respectively. As discussed
above, these expenses (credits) principally result from changes in the market
value of investments and investment income from trading securities relating to
compensation deferred in previous years and are not reflective of current
operating results. Adjusting for the aforementioned deferred compensation
expenses (credits), selling, marketing and administrative expenses increased
from $35,846 in third quarter 2021 to $38,637 in third quarter 2022, an increase
of $2,791 or 7.8%; and selling, marketing and administrative expenses increased
from $86,789 in nine months 2021 to $103,413 in nine months 2022, an increase of
$16,624 or 19.2%. As a percentage of net product sales, adjusted selling,
marketing and administrative expenses decreased from 19.6% in third quarter 2021
to 18.2% in third quarter 2022, a favorable decrease of 1.4 percentage points as
a percent of net product sales, and adjusted selling, marketing and
administrative expenses decreased from 21.7% in nine months 2021 to 21.0% in
nine months 2022, a favorable decrease of 0.7 percentage points as a percent of
net sales. The lower expenses as a percentage of sales reflect the benefits of
higher sales, including price increases, against certain expenses that are
generally fixed and do not change significantly with changes in sales volumes.
Selling, marketing and administrative expenses include $19,060 and $17,743 for
customer freight, delivery and warehousing expenses in third quarter 2022 and
2021, respectively, an increase of $1,317 or 7.4%, and $49,754 and $40,319 in
nine months 2022 and 2021, respectively, an increase of $9,435 or 23.4%. These
expenses were 9.0% and 9.7% of net product sales in third quarter 2022 and 2021,
respectively, and were 10.1% of net product sales in both nine months 2022 and
2021. Customer freight and delivery unit costs, including the cost per pound
shipped, did increase in both third quarter and nine months 2022, however sales
price increases mitigated the adverse effects of these cost increases when
viewed as a percentage of net sales. Although unit freight and delivery costs
increased in third quarter 2022 compared to third quarter 2021, the quarterly
increase was less than earlier in 2022.
Earnings from operations were $35,585 in third quarter 2022 compared to $29,644
in third quarter 2021, and were $83,398 in nine months 2022 compared to $46,958
in nine months 2021. Earnings from operations include $(2,639) and $(108) of
certain deferred compensation expenses (credits) in third quarter 2022 and 2021,
respectively, and include $(20,802) and $8,552 of certain deferred compensation
expenses (credits) in nine months 2022 and 2021, respectively, which is
discussed above. Adjusting for these deferred compensation costs and expenses
(credits),
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adjusted earnings from operations were $32,946 and $29,536 in third quarter 2022
and 2021, respectively, an increase of $3,410 or 11.5%; and adjusted operating
earnings were $62,596 and $55,510 in nine months 2022 and 2021, respectively, an
increase of $7,086 or 12.8%. As a percentage of net product sales, these
adjusted operating earnings were 15.5% and 16.1% in third quarter 2022 and 2021,
respectively, an unfavorable decrease of 0.6 percentage points; and as a
percentage of net product sales, these adjusted operating earnings were 12.7%
and 13.9% in nine months 2022 and 2021, respectively, an unfavorable decrease of
1.2 percentage points as a percentage of net product sales. Although higher
third quarter and nine months 2022 sales contributed to improved operating
earnings compared to the corresponding prior year periods, higher input costs,
as discussed above, mitigated much of the benefits of increased sales.
In response to these higher input costs, many companies in the consumer products
industry have increased selling prices throughout 2021 and 2022. We have
followed with price increases as well with the objective of improving sales
price realization and restoring some of our margin declines. Price increases
were phased in principally beginning in second half 2021 and are continuing
through the balance of 2022 and into 2023. Although our price increases have
generally reflected the overall price increases in our industry, they have not
as yet resulted in restoring our margins to historical levels. Company
management believes that we should be able to make meaningful progress in
restoring our lost margins in 2023 when all of our price increases take full
effect. However, continuing increases in input costs and overall higher
inflation may inhibit us from accomplishing this objective. Although the Company
continues to monitor these higher input costs and price increases in the
industry, we are mindful of the effects and limits of passing on all of the
above-discussed higher input costs to consumers of our products.
Other income (loss), net was $(1,246) in third quarter 2022 compared to $1,750
in third quarter 2021, and $(17,399) in nine months 2022 compared to $11,810 in
nine months 2021. Other income, net for third quarter 2022 and 2021 includes net
gains (losses) and investment income of $(2,639) and $(108), respectively, on
trading securities which provide an economic hedge of the Company's deferred
compensation liabilities; and other income, net for nine months 2022 and 2021
includes net gains (losses) and investment income of $(20,802) and $8,552,
respectively, on trading securities. The investment losses in third quarter and
nine months 2022 reflect the overall declines in the equity markets during these
periods. These changes in market values were substantially offset by a like
amount of deferred compensation expense included in product cost of goods sold
and selling, marketing, and administrative expenses in the respective periods as
discussed above.
Management believes the comparisons presented in the preceding paragraphs, after
adjusting for changes in deferred compensation, are more reflective of the
underlying operations of the Company.
Other income (loss), net for third quarter 2022 and 2021 includes investment
income on available for sale securities of $548 and $714 in 2022 and 2021,
respectively; and other income, net for nine months 2022 and 2021 includes
investment income on available for sale securities of $1,617 and $2,100 in 2022
and 2021, respectively. Other income (loss), net also includes pre-tax gain on
foreign exchange of $730 and $742 in third quarter 2022 and 2021, respectively,
and $1,240 and $507 in nine months 2022 and 2021, respectively.
The consolidated effective tax rates were 22.7% and 21.3% in third quarter 2022
and 2021, respectively, and 23.4% and 23.0% in nine months 2022 and 2021,
respectively.
Net earnings attributable to Tootsie Roll Industries, Inc. were $26,577 (after
$16 net loss attributed to non-controlling interests) in third quarter 2022
compared to $24,733 (after $14 net loss attributed to non-controlling interests)
in third quarter 2021, and earnings per share were $0.39 and $0.36 in third
quarter 2022 and 2021, respectively, an increase of $0.03 per share, or 8.3%.
Nine months 2022 net earnings attributable to Tootsie Roll Industries, Inc. were
$50,593 (after $32 net loss attributed to non-controlling interests) compared to
nine months 2021 net earnings of $45,294 (after $20 net loss attributed to
non-controlling interests), and net earnings per share were $0.73 and $0.65 in
nine months 2022 and nine months 2021, respectively, an increase of $0.08 per
share or 12.3%. Earnings per share attributable to Tootsie Roll Industries, Inc.
for third quarter 2022 and nine months benefited from the reduction in average
shares outstanding resulting from purchases in the open market by the Company of
its common stock. Average shares outstanding decreased from 69,250 at third
quarter 2021 to 68,876 at third quarter 2022, and from 69,555 in nine months
2021 to 68,952 in nine months 2022.
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Goodwill and intangibles, principally trademarks, are assessed annually as of
December 31 or whenever events or circumstances indicate that the carrying
values may not be recoverable from future cash flows. The Company has not
identified any triggering events, as defined, or other adverse information that
would indicate a material impairment of its goodwill or intangibles in nine
months 2022. Although Company management has not identified any trigging events
at this time relating to its intangibles, the ultimate effects of the Covid-19
pandemic, including possible longer term effects on consumer lifestyles and
behavior, could change this assessment in the future, as outlined in the
Company's risk factors discussed on Form 10-K for the year ended December 31,
2021.
Beginning in 2012, the Company received periodic notices from the Bakery and
Confectionery Union and Industry International Pension Fund (Plan), a
multi-employer defined benefit pension plan for certain Company union employees,
that the Plan's actuary certified the Plan to be in "critical status", as
defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty
Corporation (PBGC); and that a plan of rehabilitation was adopted by the
trustees of the Plan in 2012. The Plan's status was changed to "critical and
declining status", as defined by the PPA and PBGC, for the plan year beginning
January 1, 2015, and this status continues to date. A designation of "critical
and declining status" implies that the Plan is expected to become insolvent in
the next 20 years.
Based on these updated notices, the Plan's funded percentage (plan investment
assets as a percentage of plan liabilities), as defined, were 48.5%, 48.3%, and
50.4% as of the most recent valuation dates available, January 1, 2021, 2020,
and 2019, respectively (these valuation dates are as of the beginning of each
Plan year). These funded percentages are based on actuarial values, as defined,
and do not reflect the actual market value of Plan investments as of these
dates. If the market value of investments had been used as of January 1, 2021
the funded percentage would be 52.8% (not 48.5%). As of the January 1, 2021
valuation date (most recent valuation available), only 15% of Plan participants
were current active employees, 54% were retired or separated from service and
receiving benefits, and 31% were retired or separated from service and entitled
to future benefits. The number of current active employee Plan participants as
of January 1, 2021 fell 6% from the previous year and 10% over the past two
years. When compared to the Plan valuation date of January 1, 2011 (just prior
to the Plan being certified to be in "critical status"), current active employee
participants have declined 52%, whereas participants who were retired or
separated from service and receiving benefits increased 3% and participants who
were retired or separated from service and entitled to future benefits increased
10%.
The Company has been advised that its withdrawal liability would have been
$104,300, $99,300 and $99,800 if it had withdrawn from the Plan during 2021,
2020 and 2019, respectively. The Company's relative share of the Plan's
contribution base, driven by employer withdrawals, has increased for the last
several years, and management believes that this trend could continue
indefinitely which will continue to add upward pressure on the Company's
withdrawal liability. Based on the above, including the Plan's projected
insolvency in the future, Management believes that the Company's withdrawal
liability could increase further in future years.
Based on the Company's updated actuarial study and certain provisions in ERISA
and the law relating to withdrawal liability payments, management believes that
the Company's liability would likely be limited to twenty annual payments of
$2,793 which have a present value in the range of $32,800 to $46,600 depending
on the interest rate used to discount these payments. While the Company's
actuarial consultant does not believe that the Plan will suffer a future mass
withdrawal (as defined) of participating employers, in the event of a mass
withdrawal, the Company's annual withdrawal payments would theoretically be
payable in perpetuity. Based on the Company's updated actuarial study, the
present value of such perpetuities is in the range of $45,764 to $142,447 and
would apply in the unlikely event that substantially all employers withdraw from
the Plan. The aforementioned is based on a range of valuations and interest
rates which the Company's actuary has advised is provided under the statute.
Should the Company actually withdraw from the Plan at a future date, a
withdrawal liability, which could be higher than the above discussed amounts,
could be payable to the Plan.
The amended rehabilitation plan, which also continues, required that employer
contributions include 5% compounded annual surcharge increases each year for an
unspecified period of time beginning in 2012 as well as certain plan benefit
reductions. In fourth quarter 2020, the Plan Trustees advised the Company that
the surcharges would no longer increase annually and therefore be "frozen" at
the rates and amounts in effect as of December 31, 2020 provided that the local
bargaining union and the Company executed a formal consent agreement by March
31, 2021. The Trustees advised that they have concluded that continuing
increases in surcharges would likely have a long-term adverse effect on the
solvency of the Plan. The Trustees concluded that further increases would result
in increasing financial
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hardships and withdrawals of participating employers, and that this change will
not have a material effect on the Plan's insolvency date. In first quarter 2021,
the local bargaining union and the Company executed this agreement which
resulted in the "freezing" of such surcharges as of December 31, 2020.
The Plan has advised the Company that it will be applying for benefits available
to financial troubled plans under the American Rescue Plan Act of 2021. Company
management understands that this legislation would provide financial assistance
from the PBGC to shore up financially distressed multi-employer plans to ensure
that they can remain solvent and continue to pay benefits to retirees through
2051 without any reduction in retiree benefits. Nonetheless, the Company's
actuary believes that given the Plan's projected insolvency date of 2031 as well
as other factors, that it still remains unclear if the Plan can remain solvent
through the targeted date of 2051. The Company's actuary also advised that the
regulations under the aforementioned PBGC financial assistance could result in a
higher withdrawal liability even with PBGC financial assistance. The Company is
currently unable to determine the ultimate outcome of the above discussed
multi-employer union pension matter and therefore is unable to determine the
effects on its consolidated financial statements, but the ultimate outcome could
be material to its consolidated results of operations or cash flows in one or
more future periods. See also Note 7 of the Company's Note to Consolidated
Financial Statements on Form 10-K for the year ended December 31, 2021.
The Company's pension expense for this Plan for nine months 2022 and 2021 was
$2,754 and $2,419, respectively ($3,156 and $2,866 for twelve months 2021 and
2020, respectively). The aforementioned expense includes surcharges (reflecting
the "frozen" surcharge rate) of $971 and $853 for nine months 2022 and 2021,
respectively ($1,112 and $1,010 for twelve months 2021 and 2020, respectively),
as required under the amended plan of rehabilitation.
The Company's labor contract at its principal manufacturing plant and
distribution center expired on September 30, 2022. However, this contract has
provisions for automatic extensions unless one of the parties provides a 60-day
notice that they will not extend. Both parties are currently continuing,
negotiations and operations under this automatic extension provision, which is
consistent with historical precedent.
The Company is focused on the longer term and is continuing to make investments
in plant manufacturing operations to meet new consumer and customer product
demands, achieve product quality improvements, and increase operational
efficiencies in order to provide genuine value to consumers. The Company
continues to actively monitor the Covid-19 pandemic, including existing and
developing variants and subvariants, and its potential impact on our operations
and financial results, prioritizing employee health and safety. The effects of
the Covid-19 pandemic are unprecedented, and therefore the Company is unable to
determine the related effects on its sales and net earnings for the balance of
2022 and beyond. Because the Company has a sizable investment in marketable
securities (see Liquidity and Capital Resources section below), the Company
continues to be well positioned financially to respond to any further adverse
effects of this pandemic in the short and intermediate-terms, as well as for a
longer period of time, if necessary.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows provided by operating activities were $30,596 and $32,153 in nine
months 2022 and 2021, respectively, an unfavorable decrease of $1,557. The
$1,557 decrease in cash flows from operating activities from 2021 to 2022
reflects significantly higher production and inventory levels, including the
effects of higher costs for materials as discussed above, resulting in more cash
used in inventories in nine months 2022. In addition, changes in net cash flows
in nine months 2022 reflects higher earnings as well as the timing of sales and
collections of accounts receivable.
Net cash used in investing activities was $52,963 in nine months 2022 compared
to $74,492 in nine months 2021. Cash flows used in investing activities reflect
$75,125 and $87,060 of purchases of available for sale securities during nine
months 2022 and 2021, respectively, and $38,439 and $34,510 of sales and
maturities of available for sale securities during nine months 2022 and 2021,
respectively. Nine months 2022 and 2021 investing activities include capital
expenditures of $17,552 and $22,930, respectively. The Company has committed
approximately $30,000 to a rehabilitation upgrade and expansion of one of its
manufacturing plants in the U.S. The Company spent approximately $15,000, $6,000
and $2,000 in 2021, 2020 and 2019, respectively, on the aforementioned project
and expects additional cash outlays for this project to approximate $4,000 and
$3,000 in 2022 and 2023, respectively. All capital expenditures have been or are
expected to be funded from the Company's cash flow from operations and internal
sources including available for sale securities.
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The Company's consolidated financial statements include bank borrowings of $949
and $956 at September 30, 2022 and 2021, respectively, all of which relate to
its Spanish subsidiary. The Company had no other outstanding bank borrowings at
September 30, 2022.
Financing activities include Company common stock purchases and retirements of
$8,024 and $30,184 in nine months 2022 and 2021, respectively. Cash dividends of
$18,438 and $18,100 were paid in nine months 2022 and 2021, respectively.
The Company's current ratio (current assets divided by current liabilities) was
3.2 to 1 at September 30, 2022 compared to 3.4 to 1 at December 31, 2021 and 2.9
to 1 at September 30, 2021. Net working capital was $222,547 at September 30,
2022 compared to $188,333 and $183,267 at December 31, 2021 and September 30,
2021, respectively. Included in net working capital is cash and cash equivalents
and short-term investments totaling $145,726 at September 30, 2022 compared to
$145,808 and $115,701 at December 31, 2021 and September 30, 2021, respectively.
In addition, long term investments, principally debt securities comprising
corporate bonds, were $241,308 at September 30, 2022, as compared to $291,175
and $280,326 at December 31, 2021 and September 30, 2021, respectively.
Aggregate cash and cash equivalents and short and long-term investments were
$387,034, $436,983, and $396,027, at September 30, 2022, December 31, 2021 and
September 30, 2021, respectively, including $67,659, $89,736, and $83,905 at
September 30, 2022, December 31, 2021 and September 30, 2021, respectively,
relating to trading securities which are used as an economic hedge for the
Company's deferred compensation liabilities. Investments in available for sale
securities, primarily high quality corporate bonds, that matured during nine
months 2022 and 2021 were generally used to purchase the Company's common stock
or were replaced with debt securities of similar maturities.
The Company periodically contributes to a VEBA trust, managed and controlled by
the Company, to fund the estimated future costs of certain employee health,
welfare and other benefits. The Company is currently using these VEBA funds to
pay the actual cost of such benefits through most of 2022. The VEBA trust held
$577, $3,941 and $5,308 of aggregate cash and cash equivalents at September 30,
2022, December 31, 2021 and September 30, 2021, respectively. This asset value
is included in prepaid expenses and long-term other assets in the Company's
Consolidated Statement of Financial Position. These assets are categorized as
Level 2 within the fair value hierarchy.
ACCOUNTING PRONOUNCEMENTS
See Note 1 of the Company's Condensed Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS
This discussion and certain other sections contain forward-looking statements
that are based largely on the Company's current expectations and are made
pursuant to the safe harbor provision of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements can be identified by the use of
words such as "anticipated," "believe," "expect," "intend," "estimate,"
"project," "plan" and other words of similar meaning in connection with a
discussion of future operating or financial performance and are subject to
certain factors, risks, trends and uncertainties that could cause actual results
and achievements to differ materially from those expressed in the
forward-looking statements. Such factors, risks, trends and uncertainties, which
in some instances are beyond the Company's control, include the overall
competitive environment in the Company's industry, supply chain disruptions and
availability of ingredients and materials, increasing input costs, inflationary
pricing pressures and consumer acceptance of resulting price increases, and
changes in assumptions and judgments discussed above under the heading
"Significant Accounting Policies and Estimates," and factors identified and
referred to above under the heading "Risk Factors" in this report and under the
heading "Risk Factors" in the Company's 2021 Form 10-K.
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TOOTSIE ROLL INDUSTRIES, INC. 
