Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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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 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, 2024 (the "2024 Form 10-K").

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Net product sales were $230,614 in third quarter 2025 compared to $223,891 in third quarter 2024, an increase of $6,723 or 3.0%. Nine months 2025 net product sales were $530,325 compared to $524,174 in nine months 2024, an increase of $6,151 or 1.2%. Domestic (U.S.) net product sales in third quarter and nine months 2025 increased by 3.8% and 2.4% compared to the corresponding period in the prior year; and foreign net product sales, including exports to foreign markets and the effects of foreign translations, decreased 6.1% and 12.2%, respectively, compared to the corresponding periods in the prior year. For the third quarter and nine months 2025, domestic sales represented 92.3% and 92.5%, respectively, of total consolidated net product sales. Successful marketing and sales programs contributed to higher domestic sales in third quarter 2025 compared to the prior year third quarter, however, the timing of sales, including seasonal sales, between second and third quarter 2025 did provide some additional benefit to third quarter 2025 when compared to third quarter 2024. The Company continued to face some challenges in nine months 2025 as customers and consumers became more resistant to higher prices, and these headwinds had some adverse effect on sales in nine months 2025.

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Product cost of goods sold was $152,741 in third quarter 2025 compared to $148,266 in third quarter 2024, and $346,368 in nine months 2025 compared to $350,730 in nine months 2024. Product cost of goods sold includes $315 and $240 of certain deferred compensation expenses in third quarter 2025 and 2024, respectively, and $627 and $727 of certain deferred compensation expenses in nine months 2025 and 2024, respectively. These deferred compensation expenses principally resulted 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. Excluding the adjustment for deferred compensation expenses, product cost of goods sold increased from $148,026 in third quarter 2024 to $152,426 in third quarter 2025, an increase of $4,400 or 3.0%; and decreased from $350,003 in nine months 2024 to $345,741 in nine months 2025, a decrease of $4,262 or 1.2%. As a percentage of net product sales, adjusted product cost of goods sold was 66.1% and 66.1% in third quarter 2025 and 2024, respectively, an increase of 0.1 percentage points; and 65.2% and 66.8% in nine months 2025 and 2024, respectively, a decrease of 1.6 percentage points. Third quarter and nine months 2025 product cost of goods sold and gross profit margins benefited from higher price realization implemented to restore margins, improvements in plant manufacturing operating efficiencies, and certain cost reductions.

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Many companies in the consumer products industry have increased selling prices in order to improve price realization in response to increasing input costs in recent years. We have implemented price increases as well during this period in order to mitigate certain input cost increases and recover our margin declines. Although we made progress in restoring our margins in third quarter and nine months 2025, certain ingredients and packaging materials unit costs, particularly cocoa and chocolate, have increased in nine months 2025 compared to 2024. Cocoa and chocolate prices continue at significantly elevated levels compared to historical prices in past years. We have experienced continuing higher costs for these ingredients during 2025 and expect this to continue in fourth quarter 2025 and into 2026 because many of our older supply contracts at lower prices expired in early 2025. Although the Company continues to monitor its input costs, we are mindful of the effects and limits when passing on the above-discussed higher input costs to our customers as well as the final consumers of our products.

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The Company uses the Last-In-First-Out (LIFO) method of accounting for inventory and costs of goods sold which generally results in lower current net earnings and income taxes during such periods of increasing costs and higher inflation. As a result, the above discussed higher input costs, including cocoa and chocolate, have had increasingly adverse effects on our gross profit margins this year.

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Selling, marketing and administrative expenses were $47,031 in third quarter 2025 compared to $41,825 in third quarter 2024; and $120,783 in nine months 2025 compared to $115,783 in nine months 2024. Selling, marketing

and administrative expenses include $7,019 and $4,560 of certain deferred compensation expenses in third quarter 2025 and 2024, respectively, and $13,963 and 13,855 of certain deferred compensation expenses in nine months 2025 and 2024, respectively. As discussed above, these expenses 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. Excluding the adjustment for deferred compensation expenses, selling, marketing and administrative expenses increased from $37,265 in third quarter 2024 to $40,012 in third quarter 2025, an increase of $2,747 or 7.4%; and increased from $101,928 in nine months 2024 to $106,820 in nine months 2025, an increase of $4,892 or 4.8%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 16.6% in third quarter 2024 to 17.4% in third quarter 2025, an unfavorable change of 0.8 percentage points; and from 19.4% in nine months 2024 to 20.1% in nine months 2025, an unfavorable change of 0.7 percentage points. These higher expenses as a percentage of sales principally reflect higher advertising expense as well as the adverse effects of higher wages, salaries, and benefits, and certain other expenses increasing at a higher rate than sales during these comparative periods. Many of our selling, marketing and administrative expenses are fixed and increase with wage and other inflationary increases and do not change significantly with changes in sales.

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Selling, marketing and administrative expenses include $15,434 and $15,442 for customer freight, delivery and warehousing expenses in third quarter 2025 and 2024, respectively, a decrease of $8 or 0.1%; and $42,397 and $42,897 in nine months 2025 and 2024, respectively, a decrease of $500 or 1.2%. These expenses were 6.7% and 6.9% of net product sales in third quarter 2025 and 2024, respectively; and 8.0% and 8.2% of net product sales in nine months 2025 and 2024, respectively. Customer freight and delivery unit costs were favorable in third quarter and nine months 2025 compared to the corresponding periods in 2024.

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As outlined in Note 1 to the consolidated financial statements, the Company records revenue from net product sales based on accounting guidance. Adjustments for estimated customer cash discounts upon payment, discounts for price adjustments, product returns, allowances and certain advertising and promotional costs, including consumer coupons, are variable consideration and are recorded as a reduction of net product sales revenue in the same period the related net product sales are recorded. These estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. The Company identified changes in business conditions in each of the periods presented that changed Management's estimated current and future liabilities for prior period obligations resulting in a reduction in accrued liabilities and an increase in net product sales of $200 and $3,725 in third quarter 2025 and 2024, respectively; and $1,600 and $5,965 in nine months 2025 and 2024, respectively.

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Earnings from operations were $32,367 in third quarter 2025 compared to $35,244 in third quarter 2024; and were $67,548 in nine months 2025 compared to $61,789 in nine months 2024. Earnings from operations include $7,334 and $4,800 of certain deferred compensation expenses in third quarter 2025 and 2024, respectively; and include $14,590 and $14,582 of certain deferred compensation expenses in nine months 2025 and 2024, respectively, which are discussed above. Adjusting for these deferred compensation expenses, adjusted earnings from operations were $39,701 and $40,044 in third quarter 2025 and 2024, respectively, a decrease of $343 or 0.9%; and $82,138 and $76,371 in nine months 2025 and 2024, respectively, an increase of $5,767 or 7.6%. As a percentage of net product sales, these adjusted operating earnings were 17.2% and 17.9% in third quarter 2025 and 2024, respectively, an unfavorable 0.7 percentage point change; and 15.5% and 14.6% in nine months 2025 and 2024, respectively, a favorable 0.9 percentage point change. The effects of the favorable changes in management's estimates of certain sales allowances, discounts, and promotions in the prior year 2024 comparative periods, as discussed above, have an adverse effect when compared to third quarter and nine months 2025 adjusted operating earnings. Improvement in gross profit margins, as discussed above, was the principal driver of the improvement in operating earnings in nine months 2025.

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Other income, net was $16,233 in third quarter 2025 compared to $7,188 in third quarter 2024; and $30,254 in nine months 2025 compared to $21,120 in nine months 2024. Other income, net also includes net gains and investment income of $7,334 and $4,800 for third quarter 2025 and 2024, respectively, and $14,590 and $14,582 in nine months 2025 and 2024, respectively, on trading securities which provide an economic hedge of the Company's deferred compensation liabilities on trading securities. The changes in net investment activity on trading securities in third quarter and nine months 2025 and 2024 reflect the overall favorable changes in the equity markets during these periods. These changes 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.

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Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred compensation, are useful to our investors and other users of our financial information in assessing the operations of the Company.

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Other income, net includes investment income from available for sale securities and cash equivalents of $8,614 and $2,367 for third quarter 2025 and 2024, respectively; and $15,560 and $6,344 in nine months 2025 and 2024, respectively. As discussed in Note 1 to the Consolidated Financial Statements, we determined that we were not accreting bond discounts to income as part of our investment portfolio and under-recognized income relating to available for sale investments. We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. Therefore, to correct the cumulative error, Other Income, net includes pre-tax out-of-period adjustments of $4,495 and $3,231, for third quarter and nine months 2025, respectively, which resulted from reclassifying unrealized gains from Accumulated other comprehensive loss. The increases in 2025 investment income also reflect the higher interest rate environment in 2025, including the maturities of prior investments at lower yields, as well as higher average balances held in third quarter and nine months 2025 compared to the corresponding period in the prior year. Other Income, Net includes an insurance recovery of $1,307 in nine months 2025 and pre-tax gains (losses) on foreign exchange of $91 and $6 in third quarter 2025 and 2024, respectively, and $(1,297) and $126 in nine months 2025 and 2024, respectively.

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The Company's effective income tax rates were 26.7% and 22.6% in third quarter 2025 and 2024, respectively, and 27.2% and 22.4% in nine months 2025 and 2024, respectively. These higher effective tax rates principally reflect the adverse effect of certain deferred compensation that will not be deductible for income taxes when paid in future periods.

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Net earnings attributable to Tootsie Roll Industries, Inc. were $35,659 (after $12 net loss attributed to non-controlling interests) in third quarter 2025 compared to $32,844 (after $11 net loss attributed to non-controlling interests) in third quarter 2024, and earnings per share were $0.49 and $0.45 in third quarter 2025 and 2024, respectively, an increase of $0.04 per share, or 8.9%. Nine months 2025 net earnings attributable to Tootsie Roll Industries, Inc. were $71,261 (after $43 net loss attributed to non-controlling interests) compared to nine months 2024 net earnings of $64,318 (after $16 net loss attributed to non-controlling interests), and net earnings per share were $0.98 and $0.87 in nine months 2025 and nine months 2024, respectively, an increase of $0.11 per share or 12.6%. Earnings per share attributable to Tootsie Roll Industries, Inc. for third quarter and nine months 2025 benefited from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock during the preceding twelve months. Average shares outstanding decreased from 73,497 at third quarter 2024 to 72,879 at third quarter 2025, and from 73,520 in nine months 2024 to 72,910 in nine months 2025.

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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 third quarter or nine months 2025. Although management has not identified any trigging events at this time relating to its intangibles, factors outlined in the Company's risk factors discussed on Form 10-K for the year ended December 31, 2024, could change this assessment in the future.

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Beginning in 2012, the Company has 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. In 2015, the Plan was reclassified to "critical and declining status", as defined by the PPA and PBGC, for the plan year beginning January 1, 2015. A designation of "critical and declining status" implies that the Plan is expected to become insolvent in the next 20 years. In 2016, the Company received new notices that the Plan's trustees adopted an updated Rehabilitation Plan effective January 1, 2016, and all annual notices through 2024 have continued to classify the Plan in the "critical and declining status" category. In June 2024, the PBGC announced that it had approved the Plan's application for Special Financial Assistance under the American Rescue Plan Act of 2021. The Plan was granted approximately $3.4 billion in Special Financial Assistance funds and

received those funds in July 2024. As a result of the Special Financial Assistance, the plan status changed to "critical status" for 2024, which continues in 2025.

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The Company's actuary believes that it still remains unclear if the Plan can remain solvent through the targeted date of 2051, even though a requirement of the American Rescue Plan Act of 2021 is that the Plan will remain in "critical status" through 2051 regardless of solvency. The regulations under the aforementioned PBGC financial assistance could result in a higher withdrawal liability even with PBGC financial assistance since those regulations require use of settlement interest rates to determine the present value of all, instead of a portion, of vested benefits in determining the Company's withdrawal liability. In addition, for withdrawal liability purposes, PBGC regulations require that the Special Financial Assistance be phased-in over a period of time instead of fully recognized immediately. While it is uncertain how the requirements imposed by the Special Financial Assistance will impact the Company's withdrawal liability in the future, the Company's actuary believes Plan withdrawals will continue to be limited to the twenty annual payments discussed below and that those payments will not likely be affected by Special Financial Assistance regulation.

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Based on these updated notices, the Plan's funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were 45.2%, 47.0%, and 49.3% as of January 1, 2024, 2023, and 2022, respectively (these valuation dates are as of the beginning of each Plan year and reflect the most recent information available). 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, 2024, the funded percentage would be 41.7% (not 45.2%). As of the January 1, 2024 valuation date (most recent valuation available), only 15% of Plan participants were current active employees, 55% were retired or separated from service and receiving benefits, and 30% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, 2024 rose 2% from the previous year and 1% 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 54%, whereas participants who were retired or separated from service and receiving benefits increased 1% and participants who were retired or separated from service and entitled to future benefits increased 2%.

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The Company has been advised that its withdrawal liability would have been $97,500, $102,200 and $96,000 if it had withdrawn from the Plan during 2024, 2023 and 2022, respectively (most recent information provided by the Plan). The most recent decrease in the withdrawal liability as advised by the Plan was primarily driven by an increase in the PBGC interest rates used to value a portion of the present value of vested benefits (the Plan uses a blended interest rate assumption). As discussed above, the Plan was granted $3.4 billion in Special Financial Assistance in July 2024. The withdrawal liability, since it is calculated as of the end of 2023 as if the Company were to have withdrawn in 2024, does not include any of the $3.4 billion Special Financial Assistance. After receiving the Special Financial Assistance, the Plan will be required to use PBGC interest rates to value all, instead of a portion, of the present value of vested benefits to provide an estimate of the Company's withdrawal liability. In addition, for withdrawal liability purposes, PBGC regulations require the Special Financial Assistance to be phased-in over a period of time instead of fully recognized immediately. The impact of the Special Financial Assistance on the withdrawal liability has not been assessed by the Plan as of the date of this report.

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Based on the Company's most recent actuarial estimates using the information provided by the Plan with respect to its 2024 withdrawal liability (based on most recent information provided to the Company) and certain provisions in ERISA and laws relating to withdrawal liability payments, management believes that the Company's liability had the Company withdrawn in 2024 would likely be limited to twenty annual payments of $2,664 which have a present value in the range of $31,262 to $37,654 depending on the interest rate used to discount these payments. While the Company's actuarial consultant did 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 same actuarial estimates, had a mass withdrawal occurred in 2024, the present value of such perpetuities is in the range of $43,650 to $69,266 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.

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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 also concluded that further increases would result in increasing financial 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.

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The Company's pension expense for this Plan for nine months 2025 and 2024 was $2,572 and $2,579, respectively. The aforementioned expense includes surcharges of $907 and $909 for nine months 2025 and 2024, respectively, as required under the amended plan of rehabilitation. The Company's twelve months pension expense for this Plan for 2024 and 2023 was $3,332 and $3,516 respectively, which includes surcharges of $1,174 and $1,239, respectively.

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During second quarter 2023, the Company and the union concluded negotiations and entered into a new labor contract which expires in September 2027. Under terms of the union contract the Company is obligated to continue its participation in the Plan during the contract period. The Company is 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 have a material adverse effect on the Company's consolidated results of operations or cash flows in one or more future periods. See also Note 7 of the Company's Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2024.

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Our operations and sales are principally in North America, and our cross-border transactions with Canada and Mexico qualify under the USMCA free-trade agreement. Certain ingredients, including cocoa, chocolate, and edible oils, as well as some packaging and other purchases, do have foreign origins outside of USMCA. Until such time that more clarity regarding tariffs, as well as possible retaliatory tariffs, is forthcoming, we are not able to ascertain the effects of more permanent tariffs on our business. Nonetheless, the Company has recently performed an internal analysis of the effects of the current tariffs, some of which are temporary, reciprocal, or "base-line" minimum 10% tariffs, that affect certain foreign sourced ingredients, packaging materials and supplies. Based on this analysis, Management believes that current tariffs are estimated to have approximately $6,900 of adverse annual (12 months) effects on our consolidated earnings from operations. When the permanent tariffs are finally determined, should they be above or below the current tariff rates, our estimated annual increase in tariff costs should be adjusted accordingly. There has been some discussion in the Trump administration that ingredients that cannot be sourced in the USA (e.g. cocoa) may be exempt from future tariffs. In addition, the Company does purchase manufacturing equipment from foreign sources, principally the European Union, and therefore, such purchases will become more costly due to new tariffs being imposed.

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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.

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LIQUIDITY AND CAPITAL RESOURCES

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Net cash flows provided by operating activities were $57,288 and $70,102 in nine months 2025 and 2024, respectively, an unfavorable decrease of $12,814. The decrease in cash flows from operating activities reflects improvements during the fourth quarter of 2024 in working capital management, primarily related to inventory and accounts receivable, that accelerated seasonal networking capital benefits. During the lower off-peak season, management effectively reduced year-end inventory and accounts receivable balances as of December 31, 2024 as compared to December 31, 2023 which caused a larger increase in working capital during the first nine months of 2025 as compared to the first nine months of 2024.

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Cash flows used in investing activities were $91,843 and $32,176 in nine months 2025 and 2024, respectively, a unfavorable increase of $59,667. The increase in cash flows from investing activities principally reflects an increase in purchases of available for sale securities, and a decrease in sales and maturities of available for sales investments. Nine months 2025 and 2024 investing activities also include capital expenditures of $21,914 and $13,911, respectively. The Company is currently pursuing a plant expansion, including additions to and replacement of certain processing and packaging lines, to better meet higher level of forecasted demand for certain products on a timelier and more cost-effective basis. The plant expansion is expected to take place over the next five years with most of the capital expenditures expected to occur in 2026 and 2027. The total cost of this expansion will approximate $75,000 to $85,000, which includes estimated normal and recurring capital expenditures over the five year period at this plant location, and is expected to be funded from the Company's cash flow from operations and internal sources.

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The Company's condensed consolidated financial statements include bank borrowings of $1,011 and $1,078 at September 30, 2025 and 2024, respectively, all of which relate to its Spanish subsidiary. The Company had no other outstanding bank borrowings at September 30, 2025 and 2024.

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Financing activities include Company common stock purchases and retirements of $6,483 and $2,196 in nine months 2025 and 2024, respectively. Cash dividends of $19,497 and $19,062 were paid in nine months 2025 and 2024, respectively.

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The Company's current ratio (current assets divided by current liabilities) was 2.8 to 1 at September 30, 2025 compared to 3.8 to 1 at December 31, 2024 and 3.6 to 1 at September 30, 2024. Net working capital was $196,184 at September 30, 2025 compared to $246,319 and $247,685 at December 31, 2024 and September 30, 2024, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling $119,830 at September 30, 2025 compared to $194,630 and $163,211 at December 31, 2024 and September 30, 2024, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were $436,532 at September 30, 2025, as compared to $332,338 and $318,344 at December 31, 2024 and September 30, 2024, respectively. Aggregate cash and cash equivalents and short and long-term investments were $556,362, $526,968, and $481,555, at September 30, 2025, December 31, 2024 and September 30, 2024, respectively, including $119,592, $105,067, and $103,876 at September 30, 2025, December 31, 2024 and September 30, 2024, respectively, relating to trading securities which are used as an economic hedge for the Company's deferred compensation liabilities.

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Investments in available for sale securities, primarily high-quality corporate bonds, that matured during nine months 2025 and 2024, were generally used in working capital, capital expenditures or were replaced with debt securities of similar maturities. The net unrealized gain (loss) on available for sale investments was approximately $1,600 and $4,300 at September 30, 2025 and 2024, respectively. The Company believes it is likely to hold most of these securities to maturity and therefore does not expect to ultimately realize a substantial portion of any of unrealized losses on individual investments (see also Item 3 below, QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK).

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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 funded $20,000 to the VEBA trust in 2023. No contribution was made during nine months 2025 or 2024. The Company has and will continue to use these VEBA funds to pay the actual cost of such benefits through part or all of 2027. The VEBA trust held $10,989, $13,926 and $16,345 of aggregate cash and cash equivalents at September 30, 2025, December 31, 2024 and September 30, 2024, respectively. This asset value is included in prepaid expenses and long-term other assets in the Company's Condensed Consolidated Statement of Financial Position. These assets primarily comprise cash and corporate bonds and are categorized as Level 1 and Level 2 within the fair value hierarchy.

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ACCOUNTING PRONOUNCEMENTS

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See Note 1 of the Company's Condensed Consolidated Financial Statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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See Note 1 of the Company's Condensed Consolidated Financial Statements for more information related to our use of estimates in the preparation of financial statements as well as information related to material changes in our significant accounting policies that were included in our 2024 Form 10-K.

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FORWARD-LOOKING STATEMENTS

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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 effects of U.S. tariffs as well as retaliatory tariffs and other import fees and surcharges by other countries, the ability to recover increases in input costs through price increases and restoring margins, the overall competitive environment in the Company's industry, successful distribution and sell-through during Halloween and other seasons, the availability of cocoa and chocolate at reasonable prices given that these markets are significantly elevated and volatile, and changes in assumptions, judgments and risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.

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The risk factors referred to above are believed to be significant factors, but not necessarily all of the significant factors that could cause actual results to differ from those expressed in any forward-looking statement. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made only as of the date of this report. The Company undertakes no obligation to update such forward-looking statements.

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