HERSHEY,
Pa., July 27, 2023 /PRNewswire/ -- The Hershey
Company (NYSE: HSY) today announced net sales and earnings for the
second quarter ended July 2, 2023,
reaffirmed its 2023 net sales outlook, updated its full-year
reported earnings outlook to reflect additional acquisition costs,
and raised its full-year adjusted earnings outlook.
"Our categories continue to perform well as consumer demand for
great tasting snacks remains resilient across the globe," said
Michele Buck, The Hershey Company
President and Chief Executive Officer. "We delivered another
quarter of strong net sales growth, gross margin expansion and
double-digit earnings growth, enabling us to raise our full-year
adjusted earnings outlook and increase our dividend 15%. New
capacity and increased brand investment should enable us to sustain
this momentum in the second half as we provide consumers with even
more of their favorite snacks for seasonal celebrations and expand
distribution across segments and markets."
Second-Quarter 2023 Financial Results
Summary1
- Consolidated net sales of $2,490.3
million, an increase of 5.0%.
- Organic, constant currency net sales increased 5.0%.
- Reported net income of $407.0
million, or $1.98 per
share-diluted, an increase of 29.4%.
- Adjusted earnings per share-diluted of $2.01, an increase of 11.7%.
1
|
All comparisons for
the second quarter of 2023 are with respect to the second quarter
ended July 3, 2022
|
2023 Full-Year Financial Outlook
The Company is reiterating its net sales growth, reducing its
reported earnings-per-share and raising its adjusted
earnings-per-share outlook for the year.
2023 Full-Year Outlook
|
|
Prior
Guidance
|
Current
Guidance
|
Net sales
growth
|
|
~8%
|
~8%
|
Reported earnings per
share growth
|
|
~15%
|
13% - 15%
|
Adjusted earnings per
share growth
|
|
~11%
|
11% - 12%
|
The company also expects:
- A reported and adjusted effective tax rate of approximately
16%;
- Other expense, which primarily reflects the write-down of
equity investments that qualify for a tax credit, of approximately
$180 million to $190 million;
- Interest expense of approximately $155
million; and
- Capital expenditures of approximately $800 million to $850
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.
Below is a reconciliation of projected 2023 and full-year 2022
earnings per share-diluted calculated in accordance with U.S.
generally accepted accounting principles (GAAP) to non-GAAP
adjusted earnings per share-diluted:
|
2023
(Projected)
|
|
2022
|
Reported EPS –
Diluted
|
$9.03 -
$9.15
|
|
$7.96
|
Derivative
mark-to-market gains
|
—
|
|
0.38
|
Business realignment
activities
|
0.01
|
|
0.02
|
Acquisition and
integration-related activities
|
0.50 - 0.54
|
|
0.24
|
Other miscellaneous
losses
|
—
|
|
0.07
|
Tax effect of all
adjustments reflected above
|
(0.12)
|
|
(0.15)
|
Adjusted EPS –
Diluted
|
$9.46 -
$9.54
|
|
$8.52
|
2023 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 2023 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
July 2, 2023
|
|
Percentage
Change
as
Reported
|
|
Impact
of
Foreign
Currency
Exchange
|
|
Percentage
Change
on
Constant
Currency
Basis
|
|
Organic
Price
|
|
Organic
Volume/Mix
|
North America
Confectionery
|
4.4 %
|
|
(0.4) %
|
|
4.8 %
|
|
8.4 %
|
|
(3.6) %
|
|
|
|
|
|
|
|
|
|
|
North America Salty
Snacks
|
6.3 %
|
|
— %
|
|
6.3 %
|
|
6.6 %
|
|
(0.3) %
|
|
|
|
|
|
|
|
|
|
|
International
|
8.5 %
|
|
2.3 %
|
|
6.2 %
|
|
3.4 %
|
|
2.8 %
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
5.0 %
|
|
— %
|
|
5.0 %
|
|
7.7 %
|
|
(2.7) %
|
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 2023 Consolidated Results
Consolidated net sales increased 5.0% to $2,490.3 million in the second quarter of
2023. Organic, constant currency net sales increased 5.0%,
driven primarily by list price increases. Volumes declined, as
expected, due to the lapping of inventory replenishment in the
prior year period and the timing of summer promotion shipments
occurring more in the first quarter of 2023.
Reported gross margin was 45.5% in the second quarter of 2023,
compared to 42.1% in the second quarter of 2022, an increase of 340
basis points driven by price realization and derivative
mark-to-market gains. Adjusted gross margin was 45.2% in the second
quarter of 2023, an increase of 130 basis points compared to the
second quarter of 2022. Price realization, productivity and
favorable sales mix more than offset higher raw material costs,
labor inflation and volume deleverage.
Selling, marketing and administrative expenses increased 5.2% in
the second quarter of 2023 versus the second quarter of 2022,
driven by media increases and capability investments. Advertising
and related consumer marketing expenses increased 14.9% in the
second quarter of 2023 versus the same period last year, with
higher investments across segments. Selling, marketing and
administrative expenses, excluding advertising and related consumer
marketing, increased 1.3% versus the second quarter of 2022 driven
by wage and benefits inflation, as well as capability and
technology investments.
Second-quarter 2023 reported operating profit was $560.7 million, an increase of 22.8%, resulting
in a reported operating profit margin of 22.5%, an increase of 330
basis points versus the prior year period. This increase was driven
by price realization, productivity and derivative mark-to-market
gains, which more than offset higher inflation. Adjusted operating
profit of $570.9 million increased
8.3% versus the second quarter of 2022, resulting in an adjusted
operating profit margin of 22.9%, an increase of 70 basis
points. Price realization and productivity more than offset supply
chain investments and increased brand and capability
investments.
The reported effective tax rate in the second quarter of 2023
was 7.4%, a decrease of 1,440 basis points versus the second
quarter of 2022. The adjusted effective tax rate was 8.3%, a
decrease of 1,310 basis points versus the second quarter of 2022.
Both the reported and adjusted effective tax rate declines were
driven by an increase in renewable energy tax credits, which
occurred earlier in the year compared to prior years.
The company's second-quarter 2023 results, as prepared in
accordance with GAAP, included items positively impacting
comparability of $10.2 million, or
$0.03 per share-diluted. For the
second quarter of 2022, items positively impacting comparability
totaled $70.4 million, or
$0.27 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
|
|
July 2,
2023
|
|
July 3,
2022
|
|
July 2,
2023
|
|
July 3,
2022
|
|
|
|
|
|
|
|
|
Derivative
mark-to-market (gains) losses
|
$
(6.8)
|
|
$
40.8
|
|
$
(0.03)
|
|
$
0.20
|
Business realignment
activities
|
1.5
|
|
0.7
|
|
0.01
|
|
0.01
|
Acquisition and
integration-related activities
|
15.5
|
|
15.3
|
|
0.07
|
|
0.07
|
Other miscellaneous
losses
|
—
|
|
13.6
|
|
—
|
|
0.07
|
Tax effect of all
adjustments reflected above
|
—
|
|
—
|
|
(0.02)
|
|
(0.08)
|
|
$
10.2
|
|
$
70.4
|
|
$
0.03
|
|
$
0.27
|
Segment performance for the second quarter of 2023 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 $1,993.1 million in the second quarter of 2023,
an increase of 4.4% versus the same period last year. Organic,
constant currency net sales increased 4.8% as high single digit
price realization more than offset expected volume declines related
to inventory timing and price elasticity.
Hershey's U.S. candy, mint and
gum (CMG) retail takeaway for the 12-week period ended July 16, 20232 in the multi-outlet
plus convenience store channels (MULO+C) increased 9.6%, with
growth across segments and classes of trade. Hershey's CMG share declined approximately 80
basis points due to unfavorable category mix and increased
competitive innovation.
The North America Confectionery segment reported segment income
of $657.1 million in the second
quarter of 2023, an increase of 6.2% versus the prior year period,
resulting in a segment margin of 33.0% in the quarter, an increase
of 60 basis points. Gains were driven by sales growth and gross
margin expansion, which more than offset higher brand and
capability investments.
North America Salty Snacks
Hershey's North America Salty
Snacks segment net sales were $272.4
million in the second quarter of 2023, an increase of 6.3%
versus the same period last year driven by price realization.
Volume declined 30 basis points as shipments lagged consumption due
to execution driven inventory level declines and promotional
shipment shifts into the third quarter.
Hershey's U.S. salty snack
retail takeaway for the 12-week period ended July 16, 20232 in MULO+C increased
9.6%. SkinnyPop ready-to-eat popcorn takeaway
increased 7.4%, resulting in a segment share gain of 40 basis
points. Dot's Homestyle Pretzels retail sales increased
23.6%, resulting in a 120 basis point pretzel category share
gain.
North America Salty Snacks segment income of $43.8 million in the second quarter of 2023
represents an increase of 17.1% versus the second quarter of
2022. Price realization and improved supply chain performance
offset raw material inflation and higher brand and capability
investments. This resulted in a segment margin of 16.1%, an
increase of 150 basis points versus the prior year period.
2
|
The 12-week period
ending July 16, 2023 excludes the impact of the Easter
shift
|
International
Second-quarter 2023 net sales for Hershey's International segment increased 8.5%
versus the same period last year to $224.8
million. Organic, constant currency net sales increased 6.2%
with gains balanced across price and volume.
The International segment reported a $41.1 million profit in the second quarter
of 2023, reflecting an increase of $10.4
million versus the prior year period driven by sales growth
and margin expansion. This resulted in a segment margin of 18.3%,
an increase of 350 basis points versus the prior year period.
Unallocated Corporate Expense
Hershey's unallocated corporate
expense in the second quarter of 2023 was $171.2 million, an increase of $11.0 million, or 6.9%, versus the same period of
2022. This increase was driven by capability and technology
investments, including the upgrade of the company's ERP system and
related amortization, as well as higher compensation and benefit
cost.
Live Webcast
At approximately 7 a.m. (Eastern
time) today, Hershey will
post a pre-recorded management discussion of its second-quarter
2023 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
2023, 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, acquisition and integration-related
activities and other miscellaneous losses and benefits. 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
|
July 2,
2023
|
|
July 3,
2022
|
Reported gross
profit
|
$
1,132,099
|
|
$
999,999
|
Derivative
mark-to-market (gains) losses
|
(6,780)
|
|
40,838
|
Business realignment
activities
|
(17)
|
|
(23)
|
Acquisition and
integration-related activities
|
539
|
|
592
|
Non-GAAP gross
profit
|
$
1,125,841
|
|
$
1,041,406
|
|
|
|
|
Reported operating
profit
|
$
560,665
|
|
$
456,531
|
Derivative
mark-to-market (gains) losses
|
(6,780)
|
|
40,838
|
Business realignment
activities
|
1,517
|
|
699
|
Acquisition and
integration-related activities
|
15,454
|
|
15,270
|
Other miscellaneous
losses
|
—
|
|
13,568
|
Non-GAAP operating
profit
|
$
570,856
|
|
$
526,906
|
|
|
|
|
Reported provision for
income taxes
|
$
32,537
|
|
$
87,904
|
Derivative
mark-to-market (gains) losses*
|
669
|
|
6,427
|
Business realignment
activities*
|
271
|
|
169
|
Acquisition and
integration-related activities*
|
3,707
|
|
3,663
|
Other miscellaneous
losses*
|
—
|
|
3,256
|
Non-GAAP provision for
income taxes
|
$
37,184
|
|
$
101,419
|
|
|
|
|
Reported net
income
|
$
406,983
|
|
$
315,556
|
Derivative
mark-to-market (gains) losses
|
(7,449)
|
|
34,411
|
Business realignment
activities
|
1,246
|
|
530
|
Acquisition and
integration-related activities
|
11,746
|
|
11,607
|
Other miscellaneous
losses
|
—
|
|
10,312
|
Non-GAAP net
income
|
$
412,526
|
|
$
372,416
|
|
|
|
|
Reported EPS -
Diluted
|
$
1.98
|
|
$
1.53
|
Derivative
mark-to-market (gains) losses
|
(0.03)
|
|
0.20
|
Business realignment
activities
|
0.01
|
|
0.01
|
Acquisition and
integration-related activities
|
0.07
|
|
0.07
|
Other miscellaneous
losses
|
—
|
|
0.07
|
Tax effect of all
adjustments reflected above**
|
(0.02)
|
|
(0.08)
|
Non-GAAP EPS -
Diluted
|
$
2.01
|
|
$
1.80
|
|
* 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
|
|
July 2,
2023
|
|
July 3,
2022
|
As reported gross
margin
|
45.5 %
|
|
42.1 %
|
Non-GAAP gross margin
(1)
|
45.2 %
|
|
43.9 %
|
|
|
|
|
As reported operating
profit margin
|
22.5 %
|
|
19.2 %
|
Non-GAAP operating
profit margin (2)
|
22.9 %
|
|
22.2 %
|
|
|
|
|
As reported effective
tax rate
|
7.4 %
|
|
21.8 %
|
Non-GAAP effective tax
rate (3)
|
8.3 %
|
|
21.4 %
|
|
|
(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 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 and 2022, 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 as of the second quarter of 2023.
Acquisition and integration-related activities: 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 Pretzels, LLC ("Dot's") and Pretzels Inc. ("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. During the second quarter of 2022, we incurred costs related
to the integration of the 2021 acquisitions of Lily's Sweets, LLC,
Dot's and Pretzels.
Other miscellaneous losses: During the second quarter of
2022, we recorded a loss on the sale of non-operating assets
located in Pennsylvania.
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.
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; 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 or implementation of our new
enterprise resource planning system; and such other matters as
discussed in our Annual Report on Form 10-K for the year ended
December 31, 2022 and from time to time in our other filings
with the U.S. Securities and Exchange Commission. 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 July 2, 2023 and July 3, 2022
|
(unaudited) (in
thousands except percentages and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
July 2,
2023
|
|
July 3,
2022
|
|
July 2,
2023
|
|
July 3,
2022
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$ 2,490,280
|
|
$ 2,372,582
|
|
$ 5,477,894
|
|
$ 5,038,803
|
Cost of
sales
|
|
1,358,181
|
|
1,372,583
|
|
2,963,473
|
|
2,793,324
|
Gross profit
|
|
|
1,132,099
|
|
999,999
|
|
2,514,421
|
|
2,245,479
|
|
|
|
|
|
|
|
|
Selling, marketing and
administrative expense
|
571,804
|
|
543,468
|
|
1,153,391
|
|
1,067,684
|
Business realignment
(benefits) costs
|
(370)
|
|
—
|
|
441
|
|
274
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
560,665
|
|
456,531
|
|
1,360,589
|
|
1,177,521
|
Interest expense,
net
|
|
36,661
|
|
33,413
|
|
74,346
|
|
66,592
|
Other (income) expense,
net
|
|
84,484
|
|
19,658
|
|
87,467
|
|
30,065
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
439,520
|
|
403,460
|
|
1,198,776
|
|
1,080,864
|
Provision for income
taxes
|
|
32,537
|
|
87,904
|
|
204,608
|
|
231,830
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
406,983
|
|
$
315,556
|
|
$
994,168
|
|
$
849,034
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
- Basic
|
- Common
|
$
2.03
|
|
$
1.57
|
|
$
4.96
|
|
$
4.24
|
|
- Diluted
|
- Common
|
$
1.98
|
|
$
1.53
|
|
$
4.83
|
|
$
4.10
|
|
- Basic
|
- Class B
|
$
1.88
|
|
$
1.44
|
|
$
4.57
|
|
$
3.85
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
- Basic
|
- Common
|
149,244
|
|
146,362
|
|
148,914
|
|
146,248
|
|
- Diluted
|
- Common
|
205,533
|
|
206,449
|
|
205,687
|
|
206,861
|
|
- Basic
|
- Class B
|
55,447
|
|
59,114
|
|
55,864
|
|
59,530
|
|
|
|
|
|
|
|
|
|
|
Key margins:
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
45.5 %
|
|
42.1 %
|
|
45.9 %
|
|
44.6 %
|
Operating profit
margin
|
|
22.5 %
|
|
19.2 %
|
|
24.8 %
|
|
23.4 %
|
Net margin
|
|
16.3 %
|
|
13.3 %
|
|
18.1 %
|
|
16.8 %
|
The Hershey
Company
|
Supplementary
Information – Segment Results
|
for the periods
ended July 2, 2023 and July 3, 2022
|
(unaudited) (in
thousands except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
July 2,
2023
|
|
July 3,
2022
|
|
%
Change
|
|
July 2,
2023
|
|
July 3,
2022
|
|
%
Change
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Confectionery
|
|
$
1,993,079
|
|
$
1,909,101
|
|
4.4 %
|
|
$
4,445,244
|
|
$
4,126,145
|
|
7.7 %
|
North America Salty Snacks
|
|
272,365
|
|
256,297
|
|
6.3 %
|
|
542,350
|
|
482,419
|
|
12.4 %
|
International
|
|
224,836
|
|
207,184
|
|
8.5 %
|
|
490,300
|
|
430,239
|
|
14.0 %
|
Total
|
|
$
2,490,280
|
|
$
2,372,582
|
|
5.0 %
|
|
$
5,477,894
|
|
$
5,038,803
|
|
8.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Confectionery
|
|
$ 657,178
|
|
$ 618,864
|
|
6.2 %
|
|
$
1,544,928
|
|
$
1,400,749
|
|
10.3 %
|
North America Salty Snacks
|
|
43,753
|
|
37,433
|
|
17.1 %
|
|
90,545
|
|
58,734
|
|
54.2 %
|
International
|
|
41,101
|
|
30,700
|
|
34.0 %
|
|
96,150
|
|
72,679
|
|
32.3 %
|
Total segment
income
|
|
742,032
|
|
686,997
|
|
8.0 %
|
|
1,731,623
|
|
1,532,162
|
|
13.0 %
|
Unallocated corporate
expense (1)
|
|
171,176
|
|
160,091
|
|
6.9 %
|
|
330,138
|
|
297,368
|
|
11.0 %
|
Unallocated
mark-to-market (gains) losses on commodity derivatives
(2)
|
|
(6,780)
|
|
40,838
|
|
(116.6) %
|
|
3,464
|
|
13,459
|
|
(74.3) %
|
Costs associated with
business realignment initiatives
|
|
1,517
|
|
699
|
|
117.0 %
|
|
3,866
|
|
1,980
|
|
95.3 %
|
Acquisition and
integration-related activities
|
|
15,454
|
|
15,270
|
|
1.2 %
|
|
33,566
|
|
28,266
|
|
18.8 %
|
Other miscellaneous
losses
|
|
—
|
|
13,568
|
|
NM
|
|
—
|
|
13,568
|
|
NM
|
Operating
profit
|
|
560,665
|
|
456,531
|
|
22.8 %
|
|
1,360,589
|
|
1,177,521
|
|
15.5 %
|
Interest expense,
net
|
|
36,661
|
|
33,413
|
|
9.7 %
|
|
74,346
|
|
66,592
|
|
11.6 %
|
Other (income) expense,
net
|
|
84,484
|
|
19,658
|
|
329.8 %
|
|
87,467
|
|
30,065
|
|
190.9 %
|
Income before income
taxes
|
|
$ 439,520
|
|
$ 403,460
|
|
8.9 %
|
|
$
1,198,776
|
|
$
1,080,864
|
|
10.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
July 2,
2023
|
|
July 3,
2022
|
|
July 2,
2023
|
|
July 3,
2022
|
Segment income as a
percent of net sales:
|
|
|
|
|
|
|
|
|
North America Confectionery
|
|
33.0 %
|
|
32.4 %
|
|
34.8 %
|
|
33.9 %
|
North America Salty Snacks
|
|
16.1 %
|
|
14.6 %
|
|
16.7 %
|
|
12.2 %
|
International
|
|
18.3 %
|
|
14.8 %
|
|
19.6 %
|
|
16.9 %
|
The Hershey
Company
|
Consolidated Balance
Sheets
|
as of July 2,
2023 and December 31, 2022
|
(in thousands of
dollars)
|
|
|
|
|
Assets
|
July 2,
2023
|
|
December 31,
2022
|
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
$
446,161
|
|
$
463,889
|
Accounts receivable -
trade, net
|
764,269
|
|
711,203
|
Inventories
|
1,385,424
|
|
1,173,119
|
Prepaid expenses and
other
|
285,051
|
|
272,195
|
|
|
|
|
Total current
assets
|
2,880,905
|
|
2,620,406
|
|
|
|
|
Property, plant and
equipment, net
|
3,014,876
|
|
2,769,702
|
Goodwill
|
2,695,997
|
|
2,606,956
|
Other
intangibles
|
1,928,184
|
|
1,966,269
|
Other non-current
assets
|
961,741
|
|
944,989
|
Deferred income
taxes
|
43,973
|
|
40,498
|
|
|
|
|
Total assets
|
$
11,525,676
|
|
$
10,948,820
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Accounts
payable
|
$
1,014,058
|
|
$
970,558
|
Accrued
liabilities
|
828,207
|
|
832,518
|
Accrued income
taxes
|
16,009
|
|
6,710
|
Short-term
debt
|
859,773
|
|
693,790
|
Current portion of
long-term debt
|
8,010
|
|
753,578
|
|
|
|
|
Total current
liabilities
|
2,726,057
|
|
3,257,154
|
|
|
|
|
Long-term
debt
|
4,086,195
|
|
3,343,977
|
Other long-term
liabilities
|
714,532
|
|
719,742
|
Deferred income
taxes
|
304,107
|
|
328,403
|
|
|
|
|
Total
liabilities
|
7,830,891
|
|
7,649,276
|
|
|
|
|
Total stockholders'
equity
|
3,694,785
|
|
3,299,544
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
11,525,676
|
|
$
10,948,820
|
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SOURCE The Hershey Company