View Our Well Known Brands As Prized Assets to Be Corresponding Rewards
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Merrill Corp - Tootsie Roll Annual Report ED | 109761 | 01-Mar-19 16:29 | 19-4305-1.za | Sequence: 2 CHKSUM Content: No Content Layout: 4010 Graphics: 13495 CLEAN 30750 Tootsie Roll Covers.indd 1 3/4/21 2:19:02 PM Toppan Merrill - Tootsie Roll Annual Report ED | 105212 | 22-Feb-21 16:34 | 21-7065-1.ba | Sequence: 1 Toppan Merrill - Tootsie Roll Annual Report ED | 105212 | 22-Feb-21 16:34 | 21-7065-1.za | Sequence: 1 CHKSUM Content: 10894 Layout: 30412 Graphics: 63729 CLEAN CHKSUM Content: 9744 Layout: 48160 Graphics: 24428 CLEAN Corporate Profile Board of Directors Offices, Plants Tootsie Roll Industries, Inc. has been engaged in the Blue Razz, Cella’s chocolate covered cherries, Dots, Ellen R. Gordon Chairman of the Board and Executive Offices 7401 S. Cicero Ave. manufacture and sale of confectionery products for Crows, Junior Mints, Junior Caramels, Charleston Chief Executive Officer Chicago, Illinois 60629 over 120 years. Our products are primarily sold under Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff www.tootsie.com Virginia L. Gordon Private Investor the familiar brand names: Tootsie Roll, Tootsie Roll Pops, cotton candy, Dubble Bubble, Razzles, Cry Baby and (1)(2) Plants/Warehouses Illinois Caramel Apple Pops, Child’s Play, Charms, Blow Pop, Nik-L-Nip. Lana Jane Lewis-Brent President, Paul Brent Tennessee Designer, Inc., an art Massachusetts publishing, design and Wisconsin Corporate Principles licensing company Ontario, Canada (1)(2) Mexico City, Mexico We believe that the differences among companies are We invest in the latest and most productive equipment Barre A. Seibert Retired First Vice President, Barcelona, Spain attributable to the caliber of their people, and therefore to deliver the best quality product to our customers at Washington Mutual Bank we strive to attract and retain superior people for each the lowest cost. Paula M. Wardynski(1)(2) Former Senior Vice Foreign Sales Offices Mexico City, Mexico job. President—Finance, Ontario, Canada Barcelona, Spain We seek to outsource functions where appropriate and Twenty-First Century Fox We believe that an open family atmosphere at work to vertically integrate operations where it is financially (1) (2) combined with professional management fosters advantageous to do so. Audit Committee Compensation Committee cooperation and enables each individual to maximize Other Information his or her contribution to the Company and realize the We view our well known brands as prized assets to be corresponding rewards. aggressively advertised and promoted to each new Officers Stock Exchange New York Stock generation of consumers. Exchange, Inc. We do not jeopardize long-term growth for immediate, Ellen R. Gordon Chairman of the Board and (Since 1922) short-term results. We conduct business with the highest ethical Chief Executive Officer Stock Identification Ticker Symbol: TR standards and integrity which are codified in the Kenneth D. Naylor Vice President, We maintain a conservative financial posture in the Company’s “Code of Business Conduct and Ethics.” CUSIP No. 890516 10-7 Marketing & Sales deployment and management of our assets. Stock Transfer Agent and American Stock Transfer G. Howard Ember, Jr. Vice President, Finance & Stock Registrar and Trust Company We run a trim operation and continually strive to Chief Financial Officer Operations Center eliminate waste, minimize cost and implement Stephen P. Green Vice President, Manufacturing 6201 15th Avenue performance improvements. Brooklyn, NY 11219 Barry P. Bowen Treasurer & Assistant 1-800-710-0932 Secretary www.amstock.com Richard F. Berezewski Controller Independent Registered Grant Thornton LLP Public Accounting Firm 171 North Clark Street, Suite 200 Chicago, IL 60601 General Counsel Aronberg Goldgehn Davis & Garmisa 330 North Wabash Avenue Chicago, IL 60611 Annual Meeting May 3, 2021 Financial Highlights One James Center, Suite 200 901 East Cary Street December 31, Richmond, VA 23219 2020 2019 (in thousands except per share data) Net Product Sales . $467,427 $523,616 Net Earnings Attributable to Tootsie Roll Industries, Inc. 58,995 64,920 Working Capital . 250,851 273,786 Net Property, Plant and Equipment . 187,328 188,455 Shareholders’ Equity . 763,327 759,854 Average Shares Outstanding* . 66,512 67,416 Per Share Items* Net Earnings Attributable to Tootsie Roll Industries, Inc. $0.89 $0.96 Cash Dividends Paid . 0.36 0.36 *Adjusted for stock dividends. Printed on recycled paper. JOB: 21-7065-1 CYCLE#;BL#: 1; 0 TRIM: 8.50" x 11.00" AS: Chicago: 877-427-2185 JOB: 21-7065-1 CYCLE#;BL#: 1; 0 TRIM: 8.50" x 11.00" AS: Chicago: 877-427-2185 COLORS: Yellow, Cyan, ~note-color 2, Black, Magenta GRAPHICS: Tootsie_roll_candy_logo.eps V1.5 COLORS: Yellow, Cyan, ~note-color 2, Black, Magenta GRAPHICS: tootsie_com_4c_photo.eps, tr_listed_nyse_k_logo.eps, recycled_logo.eps V1.5 30750 Tootsie Roll Covers.indd 2 3/4/21 2:19:02 PM To Our Shareholders Ellen R. Gordon, Chairman and Chief Executive Officer Net product sales in 2020 were shut down, certain channels of $467.4 million, as compared to trade where the Company has 2019 net product sales of $523.6 historically sold its products. As million, a decline of $56.2 million the pandemic is global in nature, or 10.7%. Net earnings were these effects were experienced in $59.0 million in 2020 as compared all markets, domestic and foreign. to $64.9 million in 2019, a decline of $5.9 million or 9.1%. Earnings Response to the pandemic re- per share in 2020 were $0.89 sulted in in the disruption and compared to $0.96 in 2019, a de- changes in lifestyles, shopping cline of 7.3%. The lower percent- habits and daily work routines. age decline in earnings per share All of these elements dampened is due to fewer shares outstanding planned consumer purchases in 2020 as a result of stock buy- of the Company’s products for backs. sharing and give away occasions as well as impulse purchases of Sales and earnings were adverse- the Company’s products at retail ly impacted by the widespread outlets. Many of the Compa- effects of the Covid-19 pandemic, ny’s products are consumed at including mandates issued by group events, outings, parades state, local, federal and foreign and other gatherings which were governments and agencies. The significantly curtailed and in many “closing” of the economy curtailed, cases cancelled altogether due and at times completely to the potential for spreading the Covid-19 virus. The gum category, in which we compete with our Dubble Bubble brand, was impacted by the pan- demic in several ways. Sales of regular chewing gum generally declined throughout the category due to lessened concerns about fresh breath due to mask wearing and social distancing. Sales of Dub- ble Bubble were likewise affected but for a slightly different reason---as one consumer sagely reported, you can’t blow a bubble wearing a mask! Sales of gumballs, which are widely distributed in the bulk vending format under the Dubble Bubble brand, also declined to due sharply reduced foot traffic in retail outlets where gumball machines are typically found. Halloween is traditionally our largest selling season of the year with third quarter sales almost dou- ble that of any other quarter. As this season ap- proached, we watched with concern as trick-or-treat- ing and other seasonal festivities were in jeopardy of being cancelled altogether. Fortunately, the allure of this magical season prevailed to a certain extent. As this unfolded, retail sales of our iconic brands and popular assortments eventually picked up, and we achieved acceptable sell throughs at most retail outlets. Despite the challenging conditions in 2020, the Com- pany’s longstanding, conservative approach to its finances enabled us to continue operations without interruption. During 2020, we paid cash dividends of 36 cents per share and again distributed a 3% stock dividend. This was the seventy-eighth consecutive year the Company has paid cash dividends and the fifty-sixth consecutive year that a stock dividend was distributed. We also repurchased 982,316 shares of our common stock on the open market for an aggre- gate price of $32.1 million. Although the Covid-19 pandemic was extraordi- nary, challenges of one sort or another are endemic to business. As a value oriented confectioner, we always endeavor to keep our operations lean so that we can profitably deliver maximum value to retailers and consumers regardless of external circumstanc- es. Accordingly, we strive to implement measures that improve every aspect of our operations. We take a long-term view of our business, enacting only those measures that improve our operating results without jeopardizing the long-term strength of the Company and its well-known brands. In this regard, capital expenditures were $18.0 million in 2020. In addition to new state of the art production and packaging equipment at a number of our plants, a portion of this figure was directed to- ward infrastructure upgrades and capacity increases to support growing product lines. We also continue to invest in information technology and we remain committed to enhance productivity through the de- ployment of leading edge business software. We ended 2020 with $347.6 million in cash and investments, net of interest bearing debt and in- vestments that hedge deferred compensation liabil- ities. We remain poised to continue investing in our business, improving manufacturing productivity and quality, supporting our brands, paying dividends and repurchasing common stock. We also continue to seek appropriate complementary business acquisi- tions. During 2020, in response to the pandemic, we quickly implemented extensive new protocols and procedures to protect the health and safety of our employees. For the majority of our office staff, we instituted a remote work policy and shifted to virtual interactions for internal meetings as well as custom- er and vendor interactions.