HSY - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to The Hershey Company First Quarter 2022 Question-and-Answer Session Conference. At this time, all participants are on a listen-only mode.

As a reminder, this conference is being recorded. [Operator Instructions] I'd now like to turn the call over to your host, Ms. Melissa Poole, Vice President of Investor Relations for The Hershey Company. you. Thank ahead. go Please

Melissa Poole

press Thank on first joining session. quarter had of read everyone everyone. pre-recorded to The presentation, website. management I today Hershey has both our to chance Company’s XXXX are the and you morning, listen us our available for which for hope release our Good earnings Q&A

a from replay Q&A the and the assumptions future detailed undertakes conclusion the and At company's this company uncertainties addition, have the company's and session, these will performance. note today's no today's operations obligation In expectations filings. we found to Actual remarks. that we audio such various statements statements release posted based may Q&A of regarding pre-recorded a can are A transcript projected. also differ Please call. events. session, risk those be post on subsequent today's in subject update These to The of make transcript financial include live and and that materially of during risks uncertainties. statements listing of and results forward-looking we SEC could press

note that measures we for refer information GAAP in isolation in the results will substitute the press to we certain a for that is information of release. accordance non-GAAP this financial to morning's investors. presented to provide financial useful this are presentation Reconciliations considered be may believe The with information please intended Finally, included not in or GAAP. as

it for question. With Vice that, Chairman over Michele turn Senior and Steve CEO, Buck; Voskuil. and and Joining are will operator President the the to Hershey's me today first Hershey's I CFO,

Operator

question live. Instructions] from now questions. make [Operator is Lazar is sure Barclays. line not ahead. Andrew, the open floor of your Please is on end. The Ladies go and Please coming you're muted gentlemen, your Andrew for first

Andrew Lazar

you everybody. hear me? morning, Can Good

Operator

hear Yes, we you. can

Melissa Poole

Yes, yes, we can.

Andrew Lazar

way organic full sales like year of delivery over the by it meeting first in by Is haven't Great. our some so, And quarter, essentially the momentum you're if the And the you'll remainder to year lapse year guess, in raising pricing guess, Thank you. that is it? given unfolds. the you're the estimate, as why first the looking changed. the the start seems off I business? of I that at for realize expectations I

Michele Buck

Hey Andrew, few Steve kick a to off responses in well. good I'm morning. as going to and ask with jump it

first the is of all the on disruption that with So chain. the marketplace, significant record year I'd quarter in in in continue the momentum our situation, Ukraine-Russia see all, results to whether pretty it's And pleased we early still. as really volatility it the supply inflation, see But business. we and say we we are first continued the know,

levels. around to and for our of quarter, in our on the And historic first in marketplace. the raise, the another was was year. As to we'll was first about we QX the thought that within a perhaps and understand sales sales ability driven experience. we that clearly will the business that get government in better a business by Dot's But deliver dissect really that to large anticipate consumers our pressure of There related more see Dot's subsidies about quarter, it reduction those do majority of year that think could out what we been the look stronger realized the lot as elasticities, we component further our we the elasticities some inflation were moderation back in and is beat that the have continued that arms

that. pretty have We into visibility good

to we pretty try on-shelf made lastly, hard to and inventory to we've did really do been is we increase retail. the at feel good. out as like really build inventory, availability. to number a we QX that inventory in And then So and get We decision working look more there

look perspective, at realized want think sales much Steve, QX of from but as how relative comment the versus a half and to from year, situation. constant what strength So sales about will profit we we in the is we we that also impact do to stronger, the think back you more that

Steve Voskuil

Yes, come The benefit point quarter. top key was out line, half. hit all points. in first piece a on the the I the That'll three the you think to back inventory about

first quarter. I a we those go things, normalize We the forward soften the elasticities, performance. year elasticities to on on So of a that's in outlook Michele the that big top expect the guess, line. the one through do first the then And quarter quarter-by-quarter two of we the the unique drove bit biggest things saw touched that's bit see so as probably are little benefit

Andrew Lazar

higher somewhat environment, on profit sense full side? I you your the there And of on in Thank some be more are $X.XX. or to given than makes be Maybe obviously thought things other which to you. first want and Street process, the make but sure side, Great. process can keep conservative us discreet little that the in are the we an total just Are then similar to bit? guess, that thought one $X.XX that gap year trying second a in you quarter came would raising the mind more increasingly dynamic the sort a obviously bridge by some EPS for

Steve Voskuil

biggest – quarter volume Sure. that that volume Yes. to quarter X.X earnings. was in driver The earnings the first points through dropped for

that there unique some So the well. as were And factor. was pieces biggest

which an a benefit putting more is was inventory times I impact think there. which called of sort higher and a the of reflect giving the sheet on of out we has goods to the it balance remarks. couple We the the inflation in P&L in of cost cost value to see unusual thing. One reevaluation,

we to quarter little expect of inflation. XXX basis confection the won't the by but that a hedging we Europe, forward, place, to events year incremental go that exposure, Ukraine And have So the in in in said, we segment quarter look more Eastern that first forward. still impacted repeat was Eastern as we're to the the going commodities you bit sorry. this despite particularly that – inflation, points going In or as some incremental do have saw to

Andrew Lazar

Thank much. so you

Michele Buck

Thanks Andrew.

Operator

of next The coming Robert Please you. from is Credit go question Thank Suisse. Moskow ahead.

Robert Moskow

led Hi, and thanks for Easter the detail about of that. in There's capacity question. you activity remarks a during constraints market caused prepared share lose the that lot some the competitive that to your to

Halloween, the was point a ask for I your reason share? tipping a pandemic, is sufficiently up to so As can during you with the real you distribution Halloween we head into your And I position are in hold retailers. ramp that remember

You Goodwill a after of gained lot that.

that You are there's position of a distribution, in reversing? gained a that that risk you of no lot so

Michele Buck

Yes.

the the past some some have over share capacity clearly had Rob have gains two we in of nice and pressure. certainly years, So recently given contracted those

we widened XXX about points versus where and share levels. pre-pandemic strong our of has remains XX up pretty competitor we're our think basis basis points versus ahead about I largest pre-pandemic were next gap and clearly that

as new We our doing closely more well are build retailers to really everything building distribution as in to on supply relative our people capacity, with as Halloween now. and much working possible lines, we plans for right hiring centers, can investing

a have progress throughout Halloween. we we're the go hard we as although as year. through for to that expect the And the we continue will to working we opportunity year, challenges, supply they So maximize improve will

Robert Moskow

commitments give pretty color able are commit what Well, any to us early. as Halloween made you're now? probably Can to to right you

Michele Buck

those will we've that over This we we in past not the year their any in going Easter, just continue point are to I seasons as are would to time, the in guess, it our would say year. in overall, seen seasons give in we've is changes not believe seeing two on growth going but the any I throughout I exactly So this be. how that to more in competitors say we're years operating seen at strategies. numbers or see big specifics strengths really strengths we're what the what

continuing build a focus supply. on to it's really us So

a competitors decline marketplace Over pounds X% X% years, the our pounds. in two grew past versus the collectively we in had about

just are little the a tighter than on capacity we So supplying environment.

Robert Moskow

the Thanks for Okay. question.

Michele Buck

Thank you.

Operator

you. go Goldman Thank coming is ahead. of J.P. next Ken The from question Morgan. Please

Ken Goldman

we ask you for, curious, a were the people lot I your were extent fall gave I'm below key looking drivers little it the helpful of reasons rebound might if could be there? you. what of about to a there Steve, but sluggishness profitability what maybe bit explanation margins shortfall of see and all, to at thank a Salty And in did quickly expectations, how what what that was behind, one? considered a versus the little of Snacks. wanted Hi, if a

Steve Voskuil

well. as was from thanks Yes, side Yes, it sluggish Ken. our

expected. Some of the degradation we margin

brought Dot's we out, the piece that called that mix we obviously, as So portfolio. into

incremental We year, inflation Eastern the also into Snack falling portfolio raw more space. on Europe the higher in more for the events that seen for we've again Salty recently the planned are materials following the but

So as on to thinking see then was to also material the that quarter quarter. the so raw but could advertising growing we've I the say second also first part quarter. next couple starting offset just spend the relative through our part the the and through I than there, next we in as good through startup through And and improvement price in we bit done to smaller wheat, continue That to distribution surprise because business working in the say impact quarter. side. due cooking little a then that there's begin moderate oil business we'll some we will job began in the to the see to which some of of been first expected, a double-digits, that way a that strong new was center up And did first have higher and the is we'll to although quarter more oil, quarter, elasticity that expense plan go I'd it of increases think moderate. we're P&L a flowing expect get We're the piece with price of we in that bumpier the of process

the kind a DC of were that say the spend higher startup, things So we if that normally advertising inflation, in business. bit I'd incremental I the that probably unusual, see point and would to

Ken Goldman

quarter, missed the any gross for a what hard might parse are these there. in sort things you may Thank curious if it. out, to follow quick think know you. inventory that I an just have up. were there out to margin and And but roughly fill, I'm about is exclude to way called you first been the the have just estimate I of

Steve Voskuil

snacking new that a as is into on the bit we call optimize is didn't here what talked in division. far The little last it the sort would this remark have I might really been. opportunity to We and the go What of Yes. say back about well.

work well. all we the as the office pointed distribution and driving network of working be towards supply efficiencies look eventually efficiency. So center back at, efficiencies to even as that's doing we're course, chain through going with We're

And integration points of continue be we gain opportunity about so that of scale drop some and those to out more get we business as margin excited to the together.

Ken Goldman

much. so Thanks

Steve Voskuil

you. Thank

Operator

you. go is Sachs. Thank coming English Goldman of The ahead. Jason next from Please question

Jason English

good Hey, in. morning, me Thanks for folks. letting

Michele Buck

morning. Good

Steve Voskuil

Good morning.

Jason English

Couple questions.

think said margins, snack mix. a from degradation picked up. I manufacturing asset of first chunk So points I had you coming good basis you from imagine the that's about you XXX

and So that that snack question and move your shrink how start that in-source? items presumably and beginning on you're you asset much asset bps in that on migrate providers snack far in of as XXX remarks lean from can to prepared other mentioned you how outsource much how some over production you in network, and improve you producing utilization to that, can capacities

Steve Voskuil

us amortization incremental couple also a the makes amortization, with. so One, that the things Yes, inside there. deals that

a not all That's is be capacity for around related. it while of obviously. So to going

in did. we to As bit pretty be were well those first balance as plan will continue to mix than to one of Booty the combining the They manufacturing. of see leverage the assets we little is those to utilized got as quarter chains, that a the Pirate That's supply assets. bring we we able for see year. at opportunities we the But some are utilized. a look less – consolidated want And asset manufacturing into continue world-class more are sort of early to of assets. that reasons They've

as mitigation to drive mix volume we more And so, that impact some see continue system. to that assets through those expect we'd and leverage of

Jason English

I on, types Twizzler, back capacity a it's constraints. Got brand capacity like Kit on bit. are And are you you'd don't are the constraints? the back just share capacity a the constrained it. to just seem comments be snapshot like like, market Kat, to get of they – to which level your And pulled brands of attributed where brands Reese’s, brands data holding those or

Michele Buck

Yes.

different rub And home there's consumers opportunity in terms a pressure then we're Reese they of double-digits, the capacity – as strength primarily strong biggest of biggest a Reese of is biggest take and our our on on. dollar of a really our and spread obviously billion brands. now assorted know, of the growing size and record our brand a and is that's the far, that where had and home how Reese on is brands, at-home, – some consuming constraint in the across it's as it's some dollars but show that biggest of it in So growth over when been lot is bags, track has some given couple of take such brands focused some number of you it of up other by that's

Jason English

Got it.

Okay. on. it pass Thanks. I'll

Operator

The Bernstein. you. Alexia from Howard go Thank ahead. question Please is coming next of

Alexia Howard

Good morning, everyone.

Michele Buck

Good morning.

Steve Voskuil

Good morning.

Alexia Howard

is couple here. ACV obviously a the Dot's get opportunity, start talk the could I Pretzel where mean, is moment, so this you of acquisition, where guess I the distribution at we'll the something large about incredibly to? questions there. The remarks, how growth it could opportunity, is in that reported Okay, you that the year-on-year strong

Michele Buck

distribution are we to continuing on build so Yes, Dot's.

trying So as in East of classes focus some close and fill trades And of we're the the distribution the on and the the had particular in middle we've Coast, distribution the West the the brand, of skewed to also then gap clearly throughout. kind retailers to key Coast a on country. big acquiring in, remains to of

QX, growth build. we're a in believe distribution in So it's that been distribution. I constant on a We of had mid-XXs right and the lot now

the upside the some through we're we remains back that year. to now, part experiencing of drive there So continue

of result that. to So the well. as continues And household – we that gain low. be as brand, And more we the continue a as a household continue opportunity as awareness consumers about of out penetration find that see brand key

Alexia Howard

fewer Great. on the leads concerns ask have seeing been And you Can on. And C-store prices past about that that when to and in different. something this sales. if pass what then Thank about trips I it segment C-store spike you're a your can hits topic, in dynamics, and talk gasoline that time different case that's whether you. seeing there the that the I'll on around or you're therefore

Michele Buck

Yes.

seem what So to prices as tanks. seen their changes fully price we seeing in have not is filling consumer within higher behavior many manage some convenience stores, gas be trying have consumers we're the risen. that to by But

not impact. making filling they they're but haven't in trips reduce to-date, purchases a more their meaningful full. not And an way. seen as So just have And we non-gas

stores. Our business convenience in remains strong quite

reduction evolve impact and we the the expect relative continued So inflation on to really we haven't continue persistence earlier pressures do government in will on we as impact talked trends of consumers. seen some business and to that an our see of those we these about that subsidies

Alexia Howard

very it you Thank on. I'll pass Great. much.

Michele Buck

Thanks.

Operator

The you. coming go Bryan is from Bank question of ahead. Please Thank America. of next Spillane

Bryan Spillane

Thanks operator. Good morning, everyone.

Michele Buck

morning. Good

Bryan Spillane

just inflation one I in gross it's and margins. question around had

even can it help a past changed, kind be move or able So the to be you've able there's is that Like kind the as to for at come to with bit be your will this inflation pressure? on, you really of you to the growth little lever pricing of do based moving expectation saw you that mitigate we're incremental going forward, just year. this margins first more you margin mix, a efficiencies, just are looking quarter, mitigate pressure? fiscal on is what widened to as in we margin to of new to some understand begin potentially trying offset Is the going capacity, in

Steve Voskuil

those of Yes. all It’s really Bryan.

We’re more as from we of our And all and that certainly we efficiency driving get more to going coming manufacturing usual productivity at more assets look a and online. levers, see will scale standpoint.

be – time. at factor. we the our of But pricing it always So a strategy. We is all that’ll look part

cost what’s happening our – for And as about the cost very we’ll year. at to that we input plan and a from to continue think look both We’re sensitive consumer standpoint. next

Bryan Spillane

haven’t it or incremental pricing isn’t actions any you as the haven’t inflation. actions contemplated other But guidance embedded stands Okay. you that now, to in or offset

the inflation just now. right absorbing You’re

Steve Voskuil

What’s right. That’s in announced outlook now the the is we’ve that the right the pricing flowing already through that for year. P&L

Bryan Spillane

Okay. Thank Perfect. you. All right.

Operator

ahead. Piper Please is question of Thank Lavery from go you. coming Sandler. The next Michael

Michael Lavery

Thank you. Good morning.

Michele Buck

morning. Good

Steve Voskuil

Good morning.

Michael Lavery

things you gas can or a it. And out there to of the increases seeing about are out shifts little know patterns obviously as they’re Are I mix margin price are recognize mobility? factor seeing a impact make you’re How your harder products? this But consumers anything that’s just getting talk some terms may any buying really or more. some consumer notable the is that reopening that you tease consumable in bit the of what it more, where? and instant does higher of of

Michele Buck

inflation. seeing certainly we And its consumer it a same some things yes, It’s at-home some where before. up some we’re definitely frankly, the much of activities, seeing bit the was a mobility of has at it’s because time, what still returned price little not behaviors restaurants the lot are returned and of interest more totally in to of because interesting. haven’t COVID some of So, strong, as people pressure versus like dialed of

and of classes has quite C-store is But remain indicator quite strong, key food seeing mentioned of before, really really strong, been trips. seen consumers total each food the trends we say to meaningful a trade mobility. is we’ve dollar, which are most And class trade. try I C-store, I’d strong. consolidate our haven’t accelerated, we to mass, some a So across trips, impact but across looking of

Michael Lavery

better of And those were what’s about That right course But just and just on you Is expected of how rest year? and up than helpful. of that help segment to the to margins pretty international, some the That’s significant the over seasonality. of plays understand frame has driving how keep what’s that some us think the very to some way the it strong. can those gains? likely Or out Okay. year.

Steve Voskuil

has business really well. done The Yes.

of we had through markets point. good seeing still the core line growth, quarter, top our restructuring some was bits so that of last starting All a digit And China. we’re of then the first that the did in double

giving I the would benefit of a probably bit would be as is a their international that whole pricing say that’s going going to well. at first also a component the an So the executing But commend for looking quarter year-over-year incremental P&L structure and smart cost managing little I not to forward. and strategy team

Michael Lavery

much. Thanks great. so Okay,

Operator

Thank The you. Cody from is Ross ahead. UBS. next of Please go coming question

Cody Ross

everyone for thank and morning, taking our Good you questions.

year. You that pricing of rest additional you on just noted taking the plan don’t the

have that additional companies already most that? pricing. season this reported However, taking Why discuss is

Michele Buck

strategy We in realization. our very to pricing our confident remain ability price and get

Steve now we remains to this disposal and flowing at the We And make decisions you’re mentioned, with best all every pressure especially as the chain is for do always, business. right As situation. continue last also volatile look that to our continued will at we supply that always we business. evolve, the P&L as Ukraine-Russia year The pricing the a lever seeing know into the to through has cost side our announced what continued in environment.

Cody Ross

there you the commodities any balance then securing? you. can noted And do issues have that supply of you’re availability. you you securing Russian-Ukrainian year? you. call to any war having affecting Thank the difficulty out Are for And supply Got expect is

Steve Voskuil

and lot Europe year. Eastern pressure we and satisfy next be pressure this is but that if cooking part most other balance some challenge seen the the solutions Yes. commodity. out of that we’ve through stage Where to even the consumer we’ve year face taking is oil of we got ensure business – A last to able probably our that more the other space. resilient source and this a that on sources needs, working we of in foresee availability first, for At don’t

Operator

Chris We’ll on the Growe ahead. you. move Stifel. coming question, to which next from of go Please Thank is

Chris Growe

Hi. morning. Good

Michele Buck

Good morning.

Steve Voskuil

morning. Good

Chris Growe

I a morning. Good for you. just question had

happening so the more rebuild we some want the the like now, first do can the half, getting in half. to have Just second to guess able start some continue about I’m heavily And you’re in favored like and you follow-up where start it’s to on that to to to normally this market will you before you be fact when had in I and you you’re towards just the – going promote more inventory second a It thought what sounds more second I historically? build be point ultimately had half? is inventory at can quarter. to you quarter –

Steve Voskuil

Yes.

to We’re build to going continue inventory.

this to to more pulled was as – quarter We’re coming see got for and on catch Michele able we’ve lot we to more inventory. going a first want earlier, retail see our we the half. that to you online, ever. both expect of quarter should And build highest inventory improvement sequential to this But trade be continue internal see get up said online, year coming And first as own and and inventory. and capacity our we build capacity production

Chris Growe

this year? – like And this more marketing next more like then year? is start that Or can aggressively is

Steve Voskuil

make to going seasons. participating we’re fully in that sure we’re Well,

brand. we talked we’ll inventory more out the Just onto and our of we all that get And the as back as sure about can that see earlier we’re continue and we to half as quickly getting of of support products support with shelves so pickup the that the can Halloween as we of year. make to

Chris Growe

question on margin. the one Okay. And gross just follow-up

my that Is quarterly or to of the just plays have of little want year worse given quarter. will the how margin, expect it quarter? year. the bring of a differently a aggressive for me for any that dictate to just the remainder the the gross the Is decline, how You of in because inflation across first get rest have that QX QX? sense it for was estimates It the of I the you timing down by costs out caused strong weighted any now Is margin? increase year. more of that the gross progression sort here in a in to

Steve Voskuil

I’d it’s that. mostly say Yes.

we in but to bit little pressure plan, probably we last improve look the then quarter easier. As at most see a begins our two, because the get

I quarter pick a I’d had quarter, So worst. probably would two say to the if be

Chris Growe

Okay. much your time. Thanks so for

Operator

Thank you. The from next Steve Please Deutsche question Powers go coming of is ahead. Bank.

Steve Powers

Great. Thank actually. you. Two questions

to of just a first the to may XXX increasing to that mid contraction, conservative seems The one wrong, out and remarks gross think suggest combination my prepared single on math theme. call but build The then top margins dollars but equate the gross gross XXX profit be basis points of with margins. pretty top given line digits, line that your I

to hoping profit Thank more single declining mid the was growth bit to government could out categories just seeing occurring. inflation some from marks. what you’re the that’s dollar color some seeing goods that And how you digit then in as that I seeing secondly, So from the and forward. wanted you and in a on call going language that just assistance color certain you. all prepared we’re you’re get give monitoring consumer little specifically impact

Steve Voskuil

Sure.

margin question, on we’re are of line between that on the seeing what there’s On gross the seeing no what first the conservatism intentional part top we line. and

the digit work, on go single to that technically happy And I so should And kind take math gross mid see should will high that range side, but think if about more – profit X% growth. tie, growth detail. into it we we to want of mid but

Steve Powers

makes Mid to sense. high

to mid makes Sorry, high sense.

just the in Just the actually says mid. language text

So you thank clarifying. for

Steve Voskuil

Yep.

Michele Buck

as relative And at has And consumer. our on other going retail also to in a is as the been much of predictor how share other own. of categories, typically well looking the also label your takeaway a question, things are as couple strength market we constantly CPG to private that

our in We’re significant look we well. other in have where at as to but private categories category, fortunate do certainly not that’s that present label,

Steve Powers

that. it. you good. Okay. Very Appreciate Thank for

Operator

Consumer Feeney coming Please is question ahead. of Edge. next The you. go from Jonathan Thank

Jonathan Feeney

I’m us magnitude that Thanks. the morning. one. has for of I be not in better maybe you brands, first but the with category retailer retailers a magnitude quarter, and the significantly maybe that follow-up the question replacement year. across the the expected can’t The and competitors to wrong your all Good the this good. about But elasticity. that. than uptake guided imagine full inventory I to A would question is, this at only of on experience your in grown thought pricing mean,

So about year, that going question. your part it, because then the be that prepared how what seems is every may more that play to you – it had out and not that inventory pulling first remarks need called on you add data. prior first from people retailer the throughout guidance Easter to And does in that? be Easter you forward And shortages fill. the maybe fill talked I wonder, day and my of born certainly inventory your buying were Because doesn’t the forward product augment in opportunity to into my to just the of levels Thanks. out greater product.

Steve Voskuil

sell was day through inventory. trade high. And takeaway. every last will put Easter retailer the will bit Yes, that We more saw more Taking Easter on – the and first. pressure

So that will happen.

As we at we had look I full relative what seeing to shift still the restock. we’re we though, year a to fundamental able being – said, planned in not

we we through. earlier, a to the The more bit elasticity said full more pushed out. we volume in benefit As got for has year put the first quarter,

pick go year additional we to also, compensate we see expect – up But true. to that’s so we as have through help that the And production to degree. some

pressure a to in your put not Easter point, I the total. a little But going is inventory. big to through So sell trade change some net-net on think it’s bit on more

Jonathan Feeney

Thanks.

Operator

next of Thank ahead. from Mizuho Please is The question John Securities. you. go coming Baumgartner

John Baumgartner

Thanks question. the morning. Good for

Michele Buck

morning. Good

John Baumgartner

just of chocolate you be how in your non-chocolate or putting aside, standout of increases I appreciate But work against past can thinking are one And about constraints candy. whether capacity it share two the been sort has distribution Michele, the that years points, now that. over right hours, advertising the requiring given levers how world? in-store mean, sustain in the a Where past all – improves? more you to promotion, sales engagement more and it’s I force of resources the change years, investment. post-COVID grow two whether see those more as over upheavals capacity do

Michele Buck

Boy, in strong grow say, the to be able resources to the and really that building chain first is drive very to capacity demand. question against I’d supply my sustain are to answer

that’s think perspective. So probably a I that resources first foremost, need and have from the believe we sales I retail focus. we the

capability new much a about to against wouldn’t maintaining have and Our consumer and continue evolve I demand to to sales marketing engineers more capabilities. relationships retailers chain, with the strong now the people drive organization, hiring investment facilities, capability, us execute media say we’re focus we right helps maybe as it’s where I we we’ve focused to is. just maximize supply partner, of our retailers really manufacturing on that But the then better the really have think and invest capacity with with demand Certainly from consumers. that That’s work. really to in bundle people targeting a our total in continued

John Baumgartner

theme I guess, supply with And that on chain. just sticking

right you a guess, manufacturing weak a and term. needs on. done lot You’ve whether I still the lines, But center too do link think work of And supply is automation. it’s probably work where chain strong more adding of fulfilment there, so modernization, now,

there? increases guess, it does the of phase evolution next What sort is kind of outsize, I Just on capacity?

Michele Buck

our supply chain, scale each just opportunities have portfolio. parts our businesses system, more then of business, operate And now insights, continue yes at call And not where to facilities look go this other. more our look Well, across at connectivity have manufacturing the of is automation the is. clearly big basic a still say some whatever of And of automated executing future, we better and et talking and can business. then or an opportunities entire in kind for our to cetera. single automation, lever the capacity case are we certainly are us more as many the business, technology We that different we that at looking automation, point Salty us give of we we as to in what all allow the across pack efficiently, to gaining we

and the As just more of we’re Steve and It efficient work transformation. mentioned across efficient earlier, looks that’s that’s somewhat And the on like. distribution. supply manufacturing, of more a overall network really that optimizing is a doing what board chain lot

John Baumgartner

Okay. Thanks, Michele.

Michele Buck

Yes.

Operator

ISI. coming Palmer ahead. is question Please of from next The Evercore David you. go Thank

David Palmer

Thanks.

seeing the question that noise increases what a pricing, list It we like scanner competition when Just actual behind of you price lens we in think some there? it some about are perfect data. to the behind is. that Do into Hershey’s just comes although Hershey’s list looks quick don’t always a Or competitors see lately? pricing in

Michele Buck

items believe vary tends It’s the Yes. timeframe. of competitors behind. mix a it Easter different that Easter to I is noise don’t This category be are to and just across we where really during related line priced. the

that you’ll even go we really as think I see out. forward,

David Palmer

about that layer your as is, question general philosophy in And then sort on top talking what’s just constraints. you becoming outlook capacity more on you’re a capacity and of understandable the marketing for spend? and ROI. But are One more maybe thinking those advertising thought were of what digital but might the advertising, your some expensive increases layer maybe lately, then can some industry promotions down And lower you advertising your and there? given of

So just that be would helpful. on thoughts any

Michele Buck

Okay.

are big we in believers So, advertising.

in our highly funds It’s be then of the a a in the we street, to strong think have investors responsive margins well. as the I our using with are nature one model the impulsive model brands to in highest a in some of those gross and the strongest we’ve reinvest some industry. end we of believe category talked is lot and of and about pleased

we’re cost because as have Media will expand single capabilities, efficiencies helped and As high as to we digits to continue the can we believe we big year, we’ve and up invest of rest believers. also dollar our to be us efficiencies partnership you will we to capacity mid new the a look of we new result gotten a wherever control in more media. really the because

a relative I think to philosophy digital. perspective, question from about your

that’s We we’ve capabilities, offset know capabilities have being in better – decline target. don’t if list they’re because not And and seen if I built to return. new

we’re a thus stronger capability targeting and better so seeing And actually efficiency.

David Palmer

you. Thank

Operator

Ms. this turn call closing back like At to Poole comments. over I’d the time, for you. to Thank

Melissa Poole

for and for joining morning. you us tomorrow questions time I the will Thank throughout you this morning. you any for Thank available your day be this follow-up have. may

Operator

event. you This thank Ladies participation. today’s your and gentlemen, for concludes

You off this may rest day. of the your at webcast the lines disconnect enjoy your or log and time

The Hershey Company (HSY) 28 Apr 222022 Q1 Earnings call transcript