Tootsie Roll sold roughly the same amount of candy and kept much less of the sale.
Revenue edged down 0.6% to $154.2 million in the three months ended June 30, compared with the same three-month period a year earlier. Gross profit fell 6.8% to $52.6 million, pulling gross margin down to 34.1% from 36.4%.
The sharper change came below gross profit. Operating income swung from $12.1 million to a $1.6 million loss, while net income fell 23.9% to $13.3 million. At the latest close, Tootsie Roll shares were $39.77, up 0.1% on Aug. 6.
The balance sheet adds a second tension: cash dropped 48.5% to $62.1 million, while accounts receivable rose 7.5% to $52.3 million. Capital spending also rose 98.9% year over year, and free cash flow margin declined to negative 10.3%.
Tootsie Roll points first to the calendar. The company said its Halloween business typically requires inventory to be built in the second quarter for sales planned in the third quarter.
"Second quarter and first half 2026 sales were adversely impacted by the timing of sales, including seasonal sales, between second and third quarter 2026 when compared to the prior years’ corresponding quarterly periods."
Tootsie Roll Industries, 10-Q, Aug. 7, 2026
That gives the revenue decline a specific explanation, but it does not erase the cash movement. In a separate first-half disclosure, the company said operating cash flow was negative $10.9 million, compared with negative $4.9 million a year earlier, primarily because of the seasonal inventory build.
Management also described spending that is meant to change the factory, not merely stock the pantry.
"The Company is focused on the longer term and therefore is continuing to make investments in plant manufacturing operations to meet new consumer and customer product demands, achieve product quality improvements, expand capacity in certain product lines, and increase operational efficiencies in order to provide genuine value to consumers."
Tootsie Roll Industries, 10-Q, Aug. 7, 2026
The filing separately attributes higher fuel costs, principally freight fuel surcharges, to elevated energy markets. That helps explain pressure around the gross margin, while the increased capital spending and seasonal inventory explain why the cash picture moved more abruptly than sales.
The annual record supplies a useful baseline. Revenue reached $732.5 million in 2025, up 1.3%, with a 13.8% operating margin. The latest three months therefore show a slow-growing business with a larger operating and cash change than in the comparable period, even as net income remained positive.
Tootsie Roll’s next quarterly report will provide the next comparable read on third-quarter sales, inventory, gross margin, and cash after the Halloween selling period. For now, the unresolved tension is plain: sales are steady, but cash and operating income are not.
Source: Tootsie Roll Industries’ 10-Q filed Aug. 7, 2026, and comparable 2025 filing.