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Hershey 8-K Report, Financial Results (Nov 7, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed November 7, 2024
Period End
November 7, 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 November 7, 2024. Cited figures are marked; the original filing is the authoritative source.

The Hershey Company (NYSE: HSY) reported third-quarter 2024 results for the period ended September 29, 2024, with consolidated net sales of $2,987.5 milliona, a decrease of 1.4%, and reported net income of $446.3 million, or $2.20 per share-diluted, a decrease of 12.7%.

Adjusted earnings per share-diluted were $2.34b, a decrease of 10.0%. Management attributed the weakness to historically high cocoa prices and a challenging consumer environment. Reported gross margin fell to 41.3% from 44.9%, driven by higher commodity costs, unfavorable input cost timing, fixed cost deleverage and unfavorable mix.

Reported operating profit was $613.2 millionc, down 16.7%, with an operating profit margin of 20.5%. The company lowered its 2024 full-year outlook. Net sales growth was revised from approximately 2% to flat, reported EPS growth from (3)% to (1)% down to (9)% to (6)%, and adjusted EPS growth from down slightly to down mid-single-digits.

Projected 2024 adjusted diluted EPS is $9.00 to $9.10d, compared with $9.59 in 2023. Management expects an effective tax rate of approximately 11%, interest expense of approximately $170 million, and capital expenditures of approximately $575 million to $600 million, with Agility & Automation Initiative savings of approximately $100 million. By segment, North America Confectionery net sales rose 0.8% to $2,477.3 million, but segment income fell 14.5%.

North America Salty Snacks net sales declined 15.5% to $291.8 million, largely due to lapping planned inventory increases ahead of an ERP implementation. International net sales fell 3.9% to $218.4 million, and segment income dropped 55.2% to $14.2 million. The balance sheet shows total assets of $12.62 billion as of September 29, 2024, and cash of $614.95 million.

02—Key points

Key Highlights

  1. Third-quarter net sales of $2,987.5 million, down 1.4%; organic, constant currency net sales down 1.0%.
  2. Reported diluted EPS of $2.20, down 12.7%; adjusted diluted EPS of $2.34, down 10.0%.
  3. Reported gross margin contracted to 41.3% from 44.9%, driven by higher commodity costs and unfavorable input cost timing.
  4. 2024 net sales outlook cut from approximately 2% growth to flat; reported EPS growth outlook lowered to (9)% to (6)%.
  5. Adjusted EPS outlook lowered to down mid-single-digits, with projected 2024 adjusted diluted EPS of $9.00 to $9.10.
  6. North America Confectionery segment income fell 14.5% to $724.8 million, with segment margin down 520 basis points to 29.3%.
  7. North America Salty Snacks net sales fell 15.5%, mainly from lapping planned inventory increases ahead of the ERP implementation.

03—Questions

Frequently Asked Questions

  1. Why did Hershey lower its 2024 outlook?

    The filing states the company is reducing its net sales growth, reported EPS and adjusted EPS outlook for the year. Management cited historically high cocoa prices and a challenging consumer environment as factors affecting year-to-date results.

  2. How did profitability change in the third quarter?

    Reported operating profit was $613.2 million, down 16.7%, and the reported operating profit margin was 20.5%, down 380 basis points. Higher commodity costs, unfavorable input cost timing, fixed cost deleverage and unfavorable mix more than offset price realization and productivity gains.

  3. What are the key full-year 2024 assumptions in the updated outlook?

    The company expects a reported and adjusted effective tax rate of approximately 11%, other expense of approximately $260 million to $270 million, interest expense of approximately $170 million, capital expenditures of approximately $575 million to $600 million, and Agility & Automation Initiative savings of approximately $100 million.

  4. Which segments drove the results?

    North America Confectionery net sales rose 0.8%, but segment income fell 14.5%. North America Salty Snacks net sales fell 15.5%, and International net sales fell 3.9% with segment income down 55.2%.

04—Continue

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