HERSHEY,
Pa., Aug. 1, 2024 /PRNewswire/ -- The Hershey
Company (NYSE: HSY) today announced net sales and earnings for the
second quarter ended June 30, 2024
and updated its 2024 net sales and earnings outlook.
"Today's operating environment remains dynamic with consumers
pulling back on discretionary spending," said Michele Buck, The Hershey Company President and
Chief Executive Officer. "Our business has been impacted by these
trends, but we are pleased to see continued growth in the
confection category and momentum building in our Salty Snacks
portfolio. Our second-half innovation is expected to bring energy
to our categories, and we are confident our evolving strategies
will meet consumers' changing needs and drive long-term
success."
Second-Quarter 2024 Financial Results
Summary1
- Consolidated net sales of $2,074.5
million, a decrease of 16.7%.
- Organic, constant currency net sales decreased 16.8%.
- Both consolidated and organic, constant currency net sales
reflected an ~9 point decline from planned inventory reductions
within North America Confectionery and International related to the
second quarter enterprise resource planning ("ERP") system
implementation, as well as an ~7 point decline from lower levels of
retailer inventory and seasonal shipment timing within North
America Confectionery that is expected to shift to the second half
of 2024.
- Reported net income of $180.9
million, or $0.89 per
share-diluted, a decrease of 55.1%.
- Adjusted earnings per share-diluted of $1.27, a decrease of 36.8%.
__________________________
|
1 All
comparisons for the second quarter of 2024 are with respect to the
second quarter ended July 2, 2023
|
2024 Full-Year Financial Outlook
The Company is updating its net sales growth, reported earnings
per share and adjusted earnings per share outlook for the year.
2024 Full-Year Outlook
|
|
Prior
Guidance
|
Current
Guidance
|
Net sales
growth
|
|
2% to 3%
|
~2%
|
Reported earnings per
share growth
|
|
~0%
|
Down 3% to Down
1%
|
Adjusted earnings per
share growth
|
|
~0%
|
Down
slightly
|
The Company also expects:
- A reported and adjusted effective tax rate of approximately
13%;
- Other expense, which primarily reflects the write-down of
equity investments that qualify for a tax credit, of approximately
$220 million to $230 million;
- Interest expense of approximately $165
million to $175 million,
reflecting a higher interest rate environment;
- Capital expenditures of approximately $600 million to $625
million, driven by core confection capacity expansion and
continued investments in a digital infrastructure, including the
build and upgrade of a new ERP system across the enterprise;
and
- Advancing Agility & Automation Initiative savings of
$100 million.
Below is a reconciliation of current projected 2024 and
full-year 2023 earnings per share-diluted calculated in accordance
with U.S. generally accepted accounting principles (GAAP) to
non-GAAP adjusted earnings per share-diluted:
|
2024
(Projected)
|
|
2023
|
Reported EPS –
Diluted
|
$8.83 -
$9.00
|
|
$9.06
|
Derivative
mark-to-market losses
|
—
|
|
0.29
|
Business realignment
activities
|
0.60 - 0.62
|
|
0.01
|
Acquisition and
integration-related activities
|
0.20 - 0.25
|
|
0.37
|
Tax effect of all
adjustments reflected above
|
(0.21)
|
|
(0.14)
|
Adjusted EPS –
Diluted
|
$9.49 -
$9.59
|
|
$9.59
|
2024 projected earnings per share-diluted, as presented above,
does not include the impact of mark-to-market gains and losses on
our commodity derivative contracts that are reflected within
corporate unallocated expense in segment results until the related
inventory is sold since we are not able to forecast the impact of
the market changes.
Second-Quarter 2024 Components of Net Sales
Growth
A reconciliation between reported net sales growth rates and
organic constant currency net sales growth rates, along with the
contribution from net price realization and volume, is provided
below:
|
Three Months Ended
June 30, 2024
|
|
Percentage
Change as
Reported
|
|
Impact of
Foreign
Currency
Exchange
|
|
Percentage
Change on
Constant
Currency
Basis
|
|
Organic
Price
(Rounded)
|
|
Organic
Volume/Mix
(Rounded)
|
North America
Confectionery
|
(20.7) %
|
|
— %
|
|
(20.7) %
|
|
1 %
|
|
(22) %
|
|
|
|
|
|
|
|
|
|
|
North America Salty
Snacks
|
6.4 %
|
|
— %
|
|
6.4 %
|
|
(3) %
|
|
9 %
|
|
|
|
|
|
|
|
|
|
|
International
|
(8.9) %
|
|
1.5 %
|
|
(10.4) %
|
|
5 %
|
|
(16) %
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
(16.7) %
|
|
0.1 %
|
|
(16.8) %
|
|
1 %
|
|
(18) %
|
The Company presents certain percentage changes in net sales on
a constant currency basis, which excludes the impact of foreign
currency exchange. To present this information for historical
periods, current period net sales for entities reporting in
currencies other than the U.S. dollar are translated into U.S.
dollars at the average monthly exchange rates in effect during the
corresponding period of the prior fiscal year, rather than at the
actual average monthly exchange rates in effect during the current
period of the current fiscal year. As a result, the foreign
currency impact is equal to the current year results in local
currencies multiplied by the change in the average foreign currency
exchange rate between the current fiscal period and the
corresponding period of the prior fiscal year.
Second-Quarter 2024 Consolidated Results
Consolidated net sales decreased 16.7% to $2,074.5 million in the second quarter of 2024.
Organic, constant currency net sales decreased 16.8%, driven by
retailer inventory reductions within North America Confectionery
and International primarily related to the second quarter ERP
system implementation, as well as seasonal shipment timing.
Reported gross margin was 40.2% in the second quarter of 2024,
compared to 45.5% in the second quarter of 2023, a decrease of 530
basis points driven by derivative mark-to-market losses, higher
commodity costs, and fixed cost deleverage that more than offset
price realization, productivity gains and input cost timing
favorability. Adjusted gross margin was 43.2% in the second
quarter of 2024, a decrease of 200 basis points compared to the
second quarter of 2023, as higher commodity costs and fixed cost
deleverage more than offset price realization, productivity gains,
and input cost timing favorability.
Selling, marketing and administrative expenses decreased
5.4% in the second quarter of 2024 versus the second quarter of
2023, primarily reflecting lower marketing expenses, partially
offset by increased business realignment costs. Advertising and
related consumer marketing expenses decreased 15.4% in the second
quarter of 2024 versus the same period last year, as investments
were down in-line with sales in North America Confectionery and
International. Selling, marketing and administrative expenses,
excluding advertising and related consumer marketing, decreased
0.8% versus the second quarter of 2023 as reduced compensation and
benefit costs more than offset higher capability and technology
investments.
Second-quarter 2024 reported operating profit was $287.8 million, a decrease of 48.7% versus the
second quarter of 2023, resulting in a reported operating profit
margin of 13.9%, a decrease of 860 basis points versus the prior
year period. This decrease was driven by volume declines,
derivative mark-to-market losses, and higher commodity costs, which
more than offset price realization and productivity gains. Adjusted
operating profit of $383.5 million
decreased 32.8% versus the second quarter of 2023 driven by sales
declines. Adjusted operating profit margin of 18.5% declined 440
basis points versus the second quarter of 2023, as higher commodity
costs and fixed cost headwinds more than offset price realization
and productivity.
The reported effective tax rate in the second quarter of 2024
was 26.4%, an increase of 1,900 basis points versus the second
quarter of 2023. The adjusted effective tax rate was 24.4%, an
increase of 1,610 basis points versus the second quarter of 2023.
Both the reported and adjusted effective tax rate increases were
driven by a decrease in renewable energy tax credits versus the
year-ago period.
The Company's second-quarter 2024 results, as prepared in
accordance with GAAP, included items positively impacting
comparability of $95.7 million, or
$0.38 per share-diluted. For the
second quarter of 2023, items positively impacting comparability
totaled $10.2 million, or
$0.03 per share-diluted.
The following table presents a summary of items impacting
comparability in each period (see Appendix I for additional
information):
|
Pre-Tax
(millions)
|
|
Earnings Per
Share-Diluted
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
June 30,
2024
|
|
July 2,
2023
|
|
June 30,
2024
|
|
July 2,
2023
|
|
|
|
|
|
|
|
|
Derivative
mark-to-market losses (gains)
|
$
53.4
|
|
$
(6.8)
|
|
$
0.26
|
|
$
(0.03)
|
Business realignment
activities
|
39.0
|
|
1.5
|
|
0.19
|
|
0.01
|
Acquisition and
integration-related activities
|
3.3
|
|
15.5
|
|
0.02
|
|
0.07
|
Tax effect of all
adjustments reflected above
|
—
|
|
—
|
|
(0.09)
|
|
(0.02)
|
|
$
95.7
|
|
$
10.2
|
|
$
0.38
|
|
$
0.03
|
Segment performance for the second quarter of 2024 versus the
prior year period is detailed below. See the table on components of
net sales growth and the schedule of supplementary information
within this press release for additional information on segment net
sales and profit.
North America Confectionery
Hershey's North America
Confectionery segment net sales were $1,579.8 million in the second quarter of 2024, a
decrease of 20.7% versus the same period last year. Approximately
11 points of the decline was related to the planned depletion of
retailer inventory built in the first quarter ahead of the
Company's April ERP system implementation. Approximately 8 to
9 points of the decline reflected retailer inventory and seasonal
shipment timing that is expected to shift to the second half of
2024. Excluding inventory and shipment timing, core business sales
declined low-single digits as approximately 1 point of price
realization was more than offset by volume declines related to
conversion, lower merchandising and the timing of planned summer
activities.
Hershey's U.S. candy, mint and
gum (CMG) retail takeaway in the multi-outlet plus convenience
store channels (MULO+ w/ Convenience2) decreased 2.7%
for the 12-week period ended July 14,
2024. This 12-week period excludes the full Easter season in
both the current and year ago periods, enabling more accurate
year-over-year comparisons. Hershey's CMG share declined 123 basis points
compared to the prior year. Organic net sales lagged retail
takeaway due to the planned ERP system-related inventory reduction,
as well as the timing of shipments related to retailer inventory
replenishment and Halloween.
The North America Confectionery segment reported segment income
of $464.5 million in the second
quarter of 2024, a decrease of 29.3% versus the prior year period,
resulting in a segment margin of 29.4% in the quarter, a decrease
of 360 basis points. Segment income declines were driven by reduced
sales and increased commodity costs, while margin declines were
driven by increased commodity costs and fixed cost headwinds
outpacing price realization, productivity and input cost
timing favorability.
__________________________
|
2 MULO+
w/Convenience expanded in the second quarter of 2024 to include
club, drug, and e-commerce customers previously classified as
unmeasured
|
North America Salty Snacks
Hershey's North America Salty
Snacks segment net sales were $289.9
million in the second quarter of 2024, an increase of 6.4%
versus the same period last year, driven by volume growth. Price
realization was an approximate 3-point headwind, reflecting planned
increases in promotional activity and the timing of trade expenses
impacting the second quarter.
Hershey's U.S. salty snack
retail takeaway for the 12-week period ended June 30, 2024 in MULO+ w/
Convenience2 increased 8.0% versus the prior year
period. SkinnyPop ready-to-eat popcorn takeaway declined
6.3%, reflecting continued category softness. SkinnyPop
ready-to-eat share declined 28 basis points in the quarter.
Dot's Homestyle Pretzels retail sales increased 42.3% in the
quarter, resulting in a 537-basis point pretzel category share
gain.
North America Salty Snacks segment income was $52.2 million in the second quarter of 2024, an
increase of 19.2% versus the second quarter of 2023, resulting in a
segment margin of 18.0%, an increase of 190 basis points versus the
prior year period. Segment income increases were driven by higher
sales and lower commodity costs, which more than offset higher
levels of marketing.
International
Second-quarter 2024 net sales for Hershey's International segment decreased 8.9%
versus the same period last year to $204.8
million. Organic, constant currency net sales decreased
10.4% driven by the planned depletion of inventory built in the
first quarter ahead of the Company's April ERP system
implementation and planned declines in Mexico related to the discontinuation of the
dairy beverage product line in 2023. Excluding these items, net
sales increased mid-single digits, driven by approximately 5 points
of price realization.
The International segment reported a $25.0 million profit in the second quarter
of 2024, reflecting a decrease of $16.1
million versus the prior year period driven by volume
declines and higher commodity costs, which more than offset higher
net pricing realization. This resulted in a segment margin of
12.2%, a decrease of 610 basis points versus the prior year
period.
Unallocated Corporate Expense
Hershey's unallocated corporate
expense in the second quarter of 2024 was $158.2 million, a decrease of $12.9 million, or 7.5%, versus the same period of
2023. This decrease was driven by lower compensation and benefit
costs partially offset by capability and technology investments,
including the upgrade of the Company's ERP system and related
amortization.
Live Webcast
At approximately 7 a.m. (Eastern
time) today, Hershey will
post a pre-recorded management discussion of its second-quarter
2024 results and business update to its website at
www.thehersheycompany.com/investors. In addition, at 8:30 a.m. (Eastern time) today, the Company will
host a live question and answer session with investors and
financial analysts. Details to access this call are available on
the Company's website.
Note: In this release, for the second quarter of
2024, Hershey references income
measures that are not in accordance with GAAP because they exclude
certain items impacting comparability, including gains and losses
associated with mark-to-market commodity derivatives, business
realignment activities and acquisition and integration-related
activities. The Company refers to these income measures as
"adjusted" or "non-GAAP" financial measures throughout this
release. These non-GAAP financial measures are used in evaluating
results of operations for internal purposes and are not intended to
replace the presentation of financial results in accordance with
GAAP. Rather, the Company believes exclusion of such items provides
additional information to investors to facilitate the comparison of
past and present operations. A reconciliation of the non-GAAP
financial measures referenced in this release to their nearest
comparable GAAP financial measures as presented in the Consolidated
Statements of Income is provided below.
Reconciliation of
Certain Non-GAAP Financial Measures
|
Consolidated
results
|
Three Months
Ended
|
In thousands except
per share data
|
June 30,
2024
|
|
July 2,
2023
|
Reported gross
profit
|
$
833,745
|
|
$
1,132,099
|
Derivative
mark-to-market losses (gains)
|
53,371
|
|
(6,780)
|
Business realignment
activities
|
8,099
|
|
(17)
|
Acquisition and
integration-related activities
|
—
|
|
539
|
Non-GAAP gross
profit
|
$
895,215
|
|
$
1,125,841
|
|
|
|
|
Reported operating
profit
|
$
287,821
|
|
$
560,665
|
Derivative
mark-to-market losses (gains)
|
53,371
|
|
(6,780)
|
Business realignment
activities
|
39,000
|
|
1,517
|
Acquisition and
integration-related activities
|
3,286
|
|
15,454
|
Non-GAAP operating
profit
|
$
383,478
|
|
$
570,856
|
|
|
|
|
Reported provision for
income taxes
|
$
64,980
|
|
$
32,537
|
Derivative
mark-to-market losses (gains)*
|
8,216
|
|
669
|
Business realignment
activities*
|
9,415
|
|
271
|
Acquisition and
integration-related activities*
|
790
|
|
3,707
|
Non-GAAP provision for
income taxes
|
$
83,401
|
|
$
37,184
|
|
|
|
|
Reported net
income
|
$
180,894
|
|
$
406,983
|
Derivative
mark-to-market losses (gains)
|
45,155
|
|
(7,449)
|
Business realignment
activities
|
29,585
|
|
1,246
|
Acquisition and
integration-related activities
|
2,496
|
|
11,746
|
Non-GAAP net
income
|
$
258,130
|
|
$
412,526
|
|
|
|
|
Reported EPS -
Diluted
|
$
0.89
|
|
$
1.98
|
Derivative
mark-to-market losses (gains)
|
0.26
|
|
(0.03)
|
Business realignment
activities
|
0.19
|
|
0.01
|
Acquisition and
integration-related activities
|
0.02
|
|
0.07
|
Tax effect of all
adjustments reflected above**
|
(0.09)
|
|
(0.02)
|
Non-GAAP EPS -
Diluted
|
$
1.27
|
|
$
2.01
|
|
* The tax effect for
each adjustment is determined by calculating the tax impact of the
adjustment on the Company's quarterly effective tax rate, unless
the nature of the item and/or the tax jurisdiction in which the
item has been recorded requires application of a specific tax rate
or tax treatment, in which case the tax effect of such item is
estimated by applying such specific tax rate or tax
treatment.
|
** Adjustments reported
above are reported on a pre-tax basis before the tax effect
described in the reconciliation above for non-GAAP provision for
income taxes.
|
In the assessment of our results, we review and discuss the
following financial metrics that are derived from the reported and
non-GAAP financial measures presented above:
|
Three Months
Ended
|
|
June 30,
2024
|
|
July 2,
2023
|
As reported gross
margin
|
40.2 %
|
|
45.5 %
|
Non-GAAP gross margin
(1)
|
43.2 %
|
|
45.2 %
|
|
|
|
|
As reported operating
profit margin
|
13.9 %
|
|
22.5 %
|
Non-GAAP operating
profit margin (2)
|
18.5 %
|
|
22.9 %
|
|
|
|
|
As reported effective
tax rate
|
26.4 %
|
|
7.4 %
|
Non-GAAP effective tax
rate (3)
|
24.4 %
|
|
8.3 %
|
|
|
(1)
|
Calculated as non-GAAP
gross profit as a percentage of net sales for each period
presented.
|
(2)
|
Calculated as non-GAAP
operating profit as a percentage of net sales for each period
presented.
|
(3)
|
Calculated as non-GAAP
provision for income taxes as a percentage of non-GAAP income
before taxes (calculated as non-GAAP operating profit minus
non-GAAP interest expense, net plus or minus non-GAAP other
(income) expense, net).
|
Appendix I
Details of the charges included in GAAP results, as summarized
in the press release (above), are as follows:
Derivative mark-to-market (gains) losses: The
mark-to-market (gains) losses on commodity derivatives are recorded
as unallocated and excluded from adjusted results until such time
as the related inventory is sold, at which time the corresponding
(gains) losses are reclassified from unallocated to segment income.
Since we often purchase commodity contracts to price inventory
requirements in future years, we make this adjustment to facilitate
the year-over-year comparison of cost of sales on a basis that
matches the derivative gains and losses with the underlying
economic exposure being hedged for the period.
Business realignment activities: We periodically undertake
restructuring and cost reduction activities as part of ongoing
efforts to enhance long-term profitability. During the first
quarter of 2024, we commenced the Advancing Agility &
Automation Initiative to improve supply chain and
manufacturing-related spend, optimize selling, general and
administrative expenses, leverage new technology and business
models to further simplify and automate processes, and generate
long-term savings. During the second quarter of 2024, business
realignment charges related primarily to third-party costs
supporting the design and implementation of the new organizational
structure, as well as severance and employee benefit costs. During
the fourth quarter of 2020, we commenced the International
Optimization Program to streamline resources and investments in
select international markets, including the optimization of our
China operating model to improve
efficiencies and provide a more sustainable and simplified base
going forward. During the second quarter of 2023, business
realignment charges related primarily to other third-party costs
related to this program, as well as severance and employee benefit
costs. This program was completed in 2023.
Acquisition and integration-related activities: During the
second quarter of 2024, we incurred integration-related costs
for the acquisition of two manufacturing plants from Weaver Popcorn
Manufacturing, Inc., and the integration of the 2021 acquisitions
of Dot's Pretzels, LLC ("Dot's") and Pretzels Inc. ("Pretzels")
into our North America Salty Snacks segment. During the second
quarter of 2023, we incurred costs related to the acquisition of
two manufacturing plants from Weaver Popcorn Manufacturing, Inc.,
the integration of the 2021 acquisitions of Dot's and Pretzels into
our North America Salty Snacks segment and costs related to
building and upgrading our new ERP system for implementation across
our North America Salty Snacks segment in the fourth quarter of
2023.
Tax effect of all adjustments: This line item reflects the
aggregate tax effect of all pre-tax adjustments reflected in the
preceding line items of the applicable table. The tax effect for
each adjustment is determined by calculating the tax impact of the
adjustment on the Company's quarterly effective tax rate, unless
the nature of the item and/or the tax jurisdiction in which the
item has been recorded requires application of a specific tax rate
or tax treatment, in which case the tax effect of such item is
estimated by applying such specific tax rate or tax treatment.
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including but not limited to our 2024 Full-year Financial Outlook
and other statements regarding our business outlook and financial
performance. Many of these forward-looking statements can be
identified by the use of words such as "anticipate," "assume,"
"believe," "continue," "estimate," "expect," "forecast," "future,"
"intend," "plan," "potential," "predict," "project," "strategy,"
"target" and similar terms, and future or conditional tense verbs
like "could," "may," "might," "should," "will" and "would," among
others. These statements are made based upon current expectations
that are subject to risk and uncertainty. Because actual results
may differ materially from those contained in the forward-looking
statements, you should not place undue reliance on the
forward-looking statements when deciding whether to buy, sell or
hold the Company's securities. Factors that could cause results to
differ materially include, but are not limited to: disruptions or
inefficiencies in our supply chain due to the loss or disruption of
essential manufacturing or supply elements or other factors; issues
or concerns related to the quality and safety of our products,
ingredients or packaging, human and workplace rights, and other
environmental, social or governance matters; changes in raw
material and other costs, along with the availability of adequate
supplies of raw materials and the Company's ability to successfully
hedge against volatility in raw material pricing; the Company's
ability to successfully execute business continuity plans to
address changes in consumer preferences and the broader economic
and operating environment; selling price increases, including
volume declines associated with pricing elasticity; market demand
for our new and existing products; increased marketplace
competition; failure to successfully execute and integrate
acquisitions, divestitures and joint ventures; changes in
governmental laws and regulations, including taxes; political,
economic, and/or financial market conditions, including with
respect to inflation, rising interest rates, slower growth or
recession, and other events beyond our control such as the impacts
on the business arising from the conflict between Russia and Ukraine; risks and uncertainties related to
our international operations; disruptions, failures or security
breaches of our information technology infrastructure and that of
our customers and partners (including our suppliers); our ability
to hire, engage and retain a talented global workforce, our ability
to realize expected cost savings and operating efficiencies
associated with strategic initiatives or restructuring programs;
complications with the design, implementation or usage of our new
enterprise resource planning system, including the ability to
support post-implementation efforts and maintain enhancements, new
features or modifications; and such other matters as discussed in
our Annual Report on Form 10-K for the year ended December 31,
2023, our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2024, and our other
filings with the U.S. Securities and Exchange Commission from time
to time. The Company undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in the Company's expectations.
The Hershey
Company
|
Consolidated
Statements of Income
|
for the periods
ended June 30, 2024 and July 2, 2023
|
(unaudited) (in
thousands except percentages and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2024
|
|
July 2,
2023
|
|
June 30,
2024
|
|
July 2,
2023
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$ 2,074,480
|
|
$ 2,490,280
|
|
$ 5,327,229
|
|
$ 5,477,894
|
Cost of
sales
|
|
1,240,735
|
|
1,358,181
|
|
2,817,403
|
|
2,963,473
|
Gross profit
|
|
|
833,745
|
|
1,132,099
|
|
2,509,826
|
|
2,514,421
|
|
|
|
|
|
|
|
|
Selling, marketing and
administrative expense
|
540,987
|
|
571,804
|
|
1,158,968
|
|
1,153,391
|
Business realignment
costs (benefits)
|
4,937
|
|
(370)
|
|
4,937
|
|
441
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
287,821
|
|
560,665
|
|
1,345,921
|
|
1,360,589
|
Interest expense,
net
|
|
41,373
|
|
36,661
|
|
81,195
|
|
74,346
|
Other (income) expense,
net
|
|
574
|
|
84,484
|
|
32,594
|
|
87,467
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
245,874
|
|
439,520
|
|
1,232,132
|
|
1,198,776
|
Provision for income
taxes
|
|
64,980
|
|
32,537
|
|
253,785
|
|
204,608
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
180,894
|
|
$
406,983
|
|
$
978,347
|
|
$
994,168
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
- Basic
|
- Common
|
$
0.92
|
|
$
2.03
|
|
$
4.93
|
|
$
4.96
|
|
- Diluted
|
- Common
|
$
0.89
|
|
$
1.98
|
|
$
4.80
|
|
$
4.83
|
|
- Basic
|
- Class B
|
$
0.83
|
|
$
1.88
|
|
$
4.48
|
|
$
4.57
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
- Basic
|
- Common
|
147,893
|
|
149,244
|
|
203,942
|
|
148,914
|
|
- Diluted
|
- Common
|
203,006
|
|
205,533
|
|
203,367
|
|
205,687
|
|
- Basic
|
- Class B
|
54,614
|
|
55,447
|
|
54,614
|
|
55,864
|
|
|
|
|
|
|
|
|
|
|
Key margins:
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
40.2 %
|
|
45.5 %
|
|
47.1 %
|
|
45.9 %
|
Operating profit
margin
|
|
13.9 %
|
|
22.5 %
|
|
25.3 %
|
|
24.8 %
|
Net margin
|
|
8.7 %
|
|
16.3 %
|
|
18.4 %
|
|
18.1 %
|
The Hershey
Company
|
Supplementary
Information – Segment Results
|
for the periods
ended June 30, 2024 and July 2, 2023
|
(unaudited) (in
thousands except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June 30,
2024
|
|
July 2,
2023
|
|
%
Change
|
|
June 30,
2024
|
|
July 2,
2023
|
|
%
Change
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Confectionery
|
|
$ 1,579,826
|
|
$ 1,993,079
|
|
(20.7) %
|
|
$ 4,287,136
|
|
$ 4,445,244
|
|
(3.6) %
|
North America Salty
Snacks
|
|
289,894
|
|
272,365
|
|
6.4 %
|
|
565,000
|
|
542,350
|
|
4.2 %
|
International
|
|
204,760
|
|
224,836
|
|
(8.9) %
|
|
475,093
|
|
490,300
|
|
(3.1) %
|
Total
|
|
$ 2,074,480
|
|
$ 2,490,280
|
|
(16.7) %
|
|
$ 5,327,229
|
|
$ 5,477,894
|
|
(2.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Confectionery
|
|
$
464,496
|
|
$
657,178
|
|
(29.3) %
|
|
$ 1,412,692
|
|
$ 1,544,928
|
|
(8.6) %
|
North America Salty
Snacks
|
|
52,204
|
|
43,753
|
|
19.2 %
|
|
90,910
|
|
90,545
|
|
0.4 %
|
International
|
|
25,010
|
|
41,101
|
|
(39.2) %
|
|
67,760
|
|
96,150
|
|
(29.5) %
|
Total segment
income
|
|
541,710
|
|
742,032
|
|
(27.0) %
|
|
1,571,362
|
|
1,731,623
|
|
(9.3) %
|
Unallocated corporate
expense (1)
|
|
158,232
|
|
171,176
|
|
(7.6) %
|
|
326,917
|
|
330,138
|
|
(1.0) %
|
Unallocated
mark-to-market (gains) losses on commodity derivatives
(2)
|
|
53,371
|
|
(6,780)
|
|
NM
|
|
(164,644)
|
|
3,464
|
|
NM
|
Costs associated with
business realignment initiatives
|
|
39,000
|
|
1,517
|
|
NM
|
|
55,666
|
|
3,866
|
|
NM
|
Acquisition and
integration-related activities
|
|
3,286
|
|
15,454
|
|
(78.7) %
|
|
7,502
|
|
33,566
|
|
(77.7) %
|
Operating
profit
|
|
287,821
|
|
560,665
|
|
(48.7) %
|
|
1,345,921
|
|
1,360,589
|
|
(1.1) %
|
Interest expense,
net
|
|
41,373
|
|
36,661
|
|
12.9 %
|
|
81,195
|
|
74,346
|
|
9.2 %
|
Other (income) expense,
net
|
|
574
|
|
84,484
|
|
(99.3) %
|
|
32,594
|
|
87,467
|
|
(62.7) %
|
Income before income
taxes
|
|
$
245,874
|
|
$
439,520
|
|
(44.1) %
|
|
$ 1,232,132
|
|
$ 1,198,776
|
|
2.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes
centrally-managed (a) corporate functional costs relating to legal,
treasury, finance and human resources, (b) expenses associated with
the oversight and administration of our global operations,
including warehousing, distribution and manufacturing, information
systems and global shared services, (c) non-cash stock-based
compensation expense and (d) other gains or losses that are not
integral to segment performance.
|
(2)
|
Net (gains) losses on
mark-to-market valuation of commodity derivative positions
recognized in unallocated derivative losses (gains).
|
NM - not
meaningful
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June 30,
2024
|
|
July 2,
2023
|
|
June 30,
2024
|
|
July 2,
2023
|
Segment income as a
percent of net sales:
|
|
|
|
|
|
|
|
|
North America Confectionery
|
|
29.4 %
|
|
33.0 %
|
|
33.0 %
|
|
34.8 %
|
North America Salty Snacks
|
|
18.0 %
|
|
16.1 %
|
|
16.1 %
|
|
16.7 %
|
International
|
|
12.2 %
|
|
18.3 %
|
|
14.3 %
|
|
19.6 %
|
The Hershey
Company
|
Consolidated Balance
Sheets
|
as of June 30,
2024 and December 31, 2023
|
(in thousands of
dollars)
|
|
|
|
|
Assets
|
June 30,
2024
|
|
December 31,
2023
|
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
$
467,058
|
|
$
401,902
|
Accounts receivable -
trade, net
|
846,440
|
|
823,617
|
Inventories
|
1,459,488
|
|
1,340,996
|
Prepaid expenses and
other
|
562,641
|
|
345,588
|
|
|
|
|
Total current
assets
|
3,335,627
|
|
2,912,103
|
|
|
|
|
Property, plant and
equipment, net
|
3,368,322
|
|
3,309,678
|
Goodwill
|
2,691,613
|
|
2,696,050
|
Other
intangibles
|
1,838,525
|
|
1,879,229
|
Other non-current
assets
|
1,140,255
|
|
1,061,427
|
Deferred income
taxes
|
41,332
|
|
44,454
|
|
|
|
|
Total assets
|
$
12,415,674
|
|
$
11,902,941
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
$
1,138,226
|
|
$
1,086,183
|
Accrued
liabilities
|
783,723
|
|
867,815
|
Accrued income
taxes
|
37,232
|
|
29,457
|
Short-term
debt
|
1,321,274
|
|
719,839
|
Current portion of
long-term debt
|
605,176
|
|
305,058
|
|
|
|
|
Total current
liabilities
|
3,885,631
|
|
3,008,352
|
|
|
|
|
Long-term
debt
|
3,489,393
|
|
3,789,132
|
Other long-term
liabilities
|
700,065
|
|
660,673
|
Deferred income
taxes
|
330,719
|
|
345,698
|
|
|
|
|
Total
liabilities
|
8,405,808
|
|
7,803,855
|
|
|
|
|
Total stockholders'
equity
|
4,009,866
|
|
4,099,086
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
12,415,674
|
|
$
11,902,941
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/hershey-reports-second-quarter-2024-financial-results-updates-2024-net-sales-and-earnings-outlook-302211745.html
SOURCE The Hershey Company