QUOTE AND NEWS
Benzinga  Mar 17  Comment 
Below are the top confectioners stocks on the NYSE and the NASDAQ in terms of earnings per share. The trailing-twelve-month earnings per share at The Hershey Company (NYSE: HSY) is $3.77. Hershey's PEG ratio is 2.66. The trailing-twelve-month...
Forbes  Mar 4  Comment 
Looking at the universe of stocks we cover at Dividend Channel, on 3/6/15, Tootsie Roll Industries Inc (NYSE: TR), Sotheby's (NYSE: BID), and Aaron's, Inc. (NYSE: AAN) will all trade ex-dividend for their respective upcoming dividends. Tootsie...
Cheap Stocks  Jan 23  Comment 
Tootsie Roll Industries (TR) has been my long-time nemesis. I held a position in the stock for several years, seeing what I believed to be the enormous value in the brand  combined with aging insider-owners Melvin and Ellen Gordon. It seemed ripe...
CNNMoney.com  Jan 22  Comment 
Ellen Gordon, who has served as president of Tootsie Roll for 37 years, tapped as CEO following passing of her husband.
New York Times  Jan 22  Comment 
Mr. Gordon expanded the product line, buying brands like Charleston Chew and Junior Mints, and running the company with an iron grip.




 

Tootsie Roll (NYSE:TR) sells candy, including chocolate, bubble gum, lollipops, and its trademark Tootsie Roll truffles. TR also produces the number one selling (Junior Mint) and number two selling (Dots) movie theater candies. Along with being sold at movie theaters, TR products are given at holidays like Halloween and bought from stores like Wal-Mart (which accounted for 23.5% of Tootsie Roll sales in 2008).[1]

TR competes in the confectioners industry against large companies such as Hershey, Cadbury, and Mars. Candy is most popular during the holiday season (October to March), so these companies rely on the holiday season for annual sales. TR has a different strategy, which consists of selling its top movie theater candies in the summer months. Corn syrup and milk are primary ingredients in much of Tootsie's candy, so the company also contends with rising corn and milk prices. In response, TR has invested in more efficient manufacturing equipment.

Halloween is Tootsie Roll's best selling period with third quarter sales nearly double those of any other quarter in the year. In 2009 TR posted strong results in all major trade classes including grocery, mass merchandisers, warehouse clubs, dollar stores and drug chains. Especially popular at Halloween are TR large bags of Child’s Play and other mixed candy assortments, which are offered in a variety of merchandising presentations.

Company Overview

Tootsie Roll sells its products under the brands Tootsie Roll, Tootsie Roll Pops, Caramel Apple Pops, Child’s Play, Charms, Blow Pop, Blue Razz, Cella’s chocolate covered cherries,Tootsie Dots,Tootsie Crows, Junior Mints, Junior Caramels, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff cotton Dubble Bubble, Razzles, Cry Baby, Nik-L-Nip and EI Bubble.

Tootsie Roll’s products are marketed in a variety of packages designed to be suitable for display and sale in different types of retail outlets. They are distributed through approximately 100 candy and grocery brokers and by the Company itself to approximately 15,000 customers throughout the United States. These customers include wholesale distributors of candy and groceries, supermarkets, variety stores, dollar stores, chain grocers, drug chains, discount chains, cooperative grocery associations, warehouse and membership club stores, vending machine operators, the U.S. military and fund-raising charitable organizations.

The Company’s principal markets are in the United States, Canada and Mexico. The majority of production from the Company’s Canadian plants is sold in the United States. The majority of production from the Company’s Mexican plant is sold in Mexico.

Business and Financial Metrics

First Quarter 2010 Earnings[2]

Tootsie Roll announced first quarter 2010 sales of $103.244 million, compared to $94.054 million in the year-ago quarter, an increase of 10%. First quarter net earnings were $9.985 million, compared to $8.320 million in the year-ago quarter. Earnings per share increased 14% from the year ago quarter to $0.14.

Sales benefited from marketing programs and favorable foreign currency translation effects. However, earnings were adversely affected by higher ingredient costs, primarily sugar, increases in distribution costs such as fuel costs, and higher income taxes.

Confectionery Products

Tootsie Roll produces candy in the form of chocolates, caramels, bubble gum, lollipops, and other confections. These candies are packaged by TR and sold under brand names like Tootsie Roll (chocolate taffy and lollipops), Double Bubble (bubble gum), Charms (lollipops), and Junior Mints (mint chocolates). TR candy is sold at just about every consumer venue, from supermarkets such as Wal-Mart (23.5% of 2008 net sales)[1] to convenience stores such as 7-Eleven and vending machines.

Trends and Forces

TR focuses on niche theater candies to rely less on competitive holiday season.

Candy is in highest demand for holidays -- especially Halloween, Christmas, Easter, and Valentine's Day. Consumers buy candy as gifts for holidays. Thus, confectionery companies rely on the competitive five month holiday season for most of their annual sales. In this time range, TR competes with Hershey, Mars, and Cadbury -- companies who all have at least 500% more market cap than TR.[3]

TR focuses on the summer movie season for sales -- a strategy different from it's competitors who garner sales during the holiday season. TR has developed many niche products sold in movie theaters. TR has 10 of the top 50 theater and home video candies, including the top selling (Junior Mint) and second-highest selling (Dots).[4] Consumers go to the movies more frequently in the summer, when work is less strenuous and blockbuster films are shown. Thus, TR's highest revenues come in the summer when consumers are at the movie theaters.

TR invests in waste elimination and efficiency operations in response to rising corn and milk prices.

Corn for corn syrup is TR's highest volume commodity, as corn syrup is a key ingredient in their products. Milk is also an ingredient in TR products. Unfortunately for all confectionery companies, corn and milk prices have increased in the last decade. In response, TR competitively bids for commodities and buys in bulk. TR has invested in state of the art equipment to eliminate waste and increase manufacturing efficiency in operations.[5]

Although energy costs decreased during 2009 from the record levels of 2008, other commodity prices generally remained at historically high levels. Cost decreases in edible oils, dairy products and corn based sweeteners were largely offset by surging sugar prices. In packaging, decreases in the cost of films and folding cartons were more than offset by increases in corrugated and specialty papers.

TR is a smaller, independent company in an industry with a large 2008 acquisition.

In April of 2008, Mars candy acquired Wrigley for $23 billion to offer an expanded product line compared to Hershey -- its biggest competitor in the confectioners business.[6] Mars manufactures many popular candies, including M&M's, Snickers, and Skittles. Like Mars, Hershey has a name brand that sells during the most important time in the confectioners industry year -- the holiday season. With the acquisition of Wrigley, Mars offers name brand gum products. In response, Hershey wants to make similar additions to expand its product line and keep pace with Mars.[7] Like Wrigley, TR offers products different from the standard chocolate candies, including gum, lollipops, and mints. Also, TR manufactures niche movie theater candy, including the number one selling (Junior Mint) and number two selling (Dots) products.

Competition

Confectioners

Competition Tootsie Roll Industries (TR)[14] Rocky Mountain Chocolate Factory (RMCF)[15] Cadbury plc (CBY)[16] Hershey Foods (HSY)[17] Wm. Wrigley Jr. Company (WWY)[18] Imperial Sugar Company (IPSU)[19] Cosan Limited (CZZ)[20]
Market Cap $Mil 1,310.00 57.80 16,960.00 7,500.00 21,100.00 186.88 2,640.00
Revenue $Mil 497.42 31.90 7,971.00 4,946.72 5,389.10 875.53 1,679.10
Gross Profit $Mil 186.67 13.70 3,927.00 1,631.97 2,853.85 104.95 487.80
Net Profit Margin % 10.37% 15.56% 5.11% 4.33% 11.73% 4.97% 20.83%
Operating Margin % 14.24% 24.83% 9.89% 9.28% 17.87% 6.14% 13.87%
Famous Products Tootsie Rolls, Junior Mints, Dots, Charms Blowpops, Sugar Daddy, Charleston Chew RMCF Boxed Chocolates and Gift Sets Cadbury Creme Egg, Bubbilicious Gum, Trident Gum, Halls Cough Drops Hershey Chocolate Bars and Kisses, Almond Joy Candy, Bubble Yum Gum, Reese's Cups and Pieces, Kit Kat Bars, Milk Duds, Twizzlers, York Peppermint Patty Doublemint, Big Red, Juicy Fruit, Orbit, Winterfresh, and Big League Chew Gum, and Lifesavers Dixie Crystals and Imperial Confectionery, Granulated, and Brown Sugar. Cosan Granulated Sugar and Ethanol


References

  1. 1.0 1.1 Tootsie Roll 10-k 2009
  2. Tootsie Roll Industries, Inc. First Quarter 2010 Earnings Report
  3. Yahoo! Finance, Confectioners, Leaders & Laggards
  4. TR 2007 Annual Report
  5. TR 2007 Annual Report
  6. New York Times, "Mars to Buy Wrigley's for $23 billion," April 28, 2008
  7. Seeking Alpha, "Hershey Weighing a Sweet Deal with Tootsie," 06/26/08
  8. Yahoo! Finance Confectioners Industry, Leaders & Laggards
  9. Yahoo! Finance Confectioners Industry, Leaders & Laggards
  10. "Hershey website, "Products"
  11. Yahoo! Finance Confectioners Industry, Leaders & Laggards
  12. Imperial Sugar Company website, "Products"
  13. Yahoo! Finance Confectioners Industry, Leaders & Laggards
  14. TR 2007 10-k, Item 6: Selected Financial Data, page 8
  15. RMCF 2007 10-k, Item 6: Selected Financial Data, page 18
  16. CBY 2007 20-f, Item 3: Key Information, page 2
  17. HSY 2007 10-k, Item 6: Selected Financial Data, page 6
  18. WWY 2007 10-k, Item 6: Selected Financial Data, page 12
  19. IPSU 2007 10-k, Item 6: Selected Financial Data, page 20
  20. CZZ 2007 Prospectus, Presentation of Financial and Other Information, page 33
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