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Hershey 8-K Report, Financial Results (May 3, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed May 3, 2024
Period End
May 3, 2024
Security
HSY
In the record · 2016–202610-K1110-Q358-K142

HSY filed 11 annual reports (10-K), 35 quarterly reports (10-Q) and 142 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jan ’18Jan ’18
  2. Leadership change8-K · Dec ’19Dec ’19
  3. Material agreement8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.

The Hershey Company (NYSE: HSY) reported first-quarter 2024 results for the period ended March 31, 2024, with consolidated net sales of $3,252.7 milliona, up 8.9%, and organic, constant currency net sales up 8.6%, driven primarily by price realization.

Reported net income was $797.5 millionb, or $3.89 per diluted share, up 36.5%, while adjusted diluted EPS was $3.07, up 3.7%. Management said the company is off to a strong start and reaffirmed its 2024 outlook: net sales growth of 2% to 3%, and both reported and adjusted EPS growth of approximately 0%. Reported results were boosted by derivative mark-to-market gains of $218.0 million pre-tax.

Adjusted gross margin fell 170 basis points to 44.9% as higher commodity costs more than offset price realization and productivity. North America Confectionery net sales rose 10.4% to $2,707.3 millionc, but the filing attributes much of that growth to accelerated shipments ahead of the April ERP system implementation, which it expects to reverse in the second quarter. Segment income declined in North America Salty Snacks (down 17.3%) and International (down 22.2%).

The balance sheet shows total assets of $12.39 billiond and total debt-related liabilities that rose, including short-term debt of $1.29 billion at March 31, 2024, up from $719.8 million at December 31, 2023. The filing furnishes the press release under Item 2.02 and states that it is not deemed filed under Section 18 of the Exchange Act.

02—Key points

Key Highlights

  1. Consolidated net sales of $3,252.7 million, up 8.9%; organic, constant currency net sales up 8.6%, with volume up 3.4% and price realization contributing 5.2%.
  2. Reported diluted EPS of $3.89, up from $2.85, while adjusted diluted EPS of $3.07 rose 3.7% from $2.96.
  3. Derivative mark-to-market gains of $218.0 million pre-tax drove the gap between reported and adjusted results; adjusted gross margin declined 170 basis points to 44.9%.
  4. North America Confectionery net sales rose 10.4% to $2,707.3 million, helped by accelerated shipments tied to the April ERP implementation, which the company expects to reverse in the second quarter.
  5. North America Salty Snacks segment income fell 17.3% to $38.7 million, and International segment income fell 22.2% to $42.8 million.
  6. 2024 outlook reaffirmed: net sales growth of 2% to 3%, reported and adjusted EPS growth of approximately 0%, and Agility & Automation savings of $100 million.
  7. Short-term debt increased to $1,289.6 million at March 31, 2024 from $719.8 million at December 31, 2023.

03—Questions

Frequently Asked Questions

  1. Did Hershey reaffirm its 2024 guidance?

    Yes. The company reiterated its 2024 net sales growth outlook of 2% to 3% and its reported and adjusted EPS growth outlook of approximately 0%. It also reaffirmed a reported and adjusted effective tax rate of approximately 13% and capital expenditures of approximately $600 million to $650 million.

  2. Why did reported EPS grow much faster than adjusted EPS?

    Reported diluted EPS of $3.89 includes a $1.06 per share benefit from derivative mark-to-market gains of $218.0 million pre-tax. Excluding these and other items affecting comparability, adjusted diluted EPS was $3.07, up 3.7%.

  3. How much of the sales growth came from timing effects?

    The filing states that North America Confectionery growth was driven primarily by accelerated shipments related to the April ERP implementation, which came in ahead of expectations and is expected to reverse in the second quarter. Excluding inventory, the segment's sales grew low single digits.

  4. What drove the decline in segment margins?

    North America Confectionery margin declined 120 basis points to 35.0%, driven by commodity costs outpacing price realization and productivity. North America Salty Snacks margin fell to 14.1% on supply chain costs and higher advertising, and International margin fell to 15.8% on higher commodity costs and brand investment.

04—Continue

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