Earnings call transcript Q2 2023

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Operator

Greetings. And welcome to The Hershey Company Second Quarter 2023 Question-and-Answer Session. At this time, all participants are in a listen-only mode.

As a reminder, this conference is being recorded.

I’d now like to turn the call over to your host, Ms. of for President Hershey Vice Poole, Investor The Relations Company. Melissa you. Thank

begin. You may

Melissa Poole

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

will remarks. also we posted a Q&A a At prerecorded the have the live call. conclusion addition, audio In session, and of we post transcript this replay today’s of transcript of

may that forward-looking various note during statements regarding Please today’s uncertainties. and Q&A future and that to include session, we financial subject company’s and assumptions the make are expectations These statements risks operations performance.

those to no from press subsequent in company Actual release risks based of on found the differ projected. update filings. A statements uncertainties company’s results obligation detailed listing and today’s and events. such materially undertakes these be The can could SEC

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

and today me Voskuil. Steve CFO, President and are Vice Joining Hershey’s Senior Chairman Buck; and Michele Hershey’s CEO,

first question. I that, to will the With turn the it for Operator over

Operator

questions. with Our first Please [Operator Instructions] from your line Andrew Thank come Barclays. you. the of proceed with questions Lazar

Andrew Lazar

morning, much, Great. good and so Thanks everybody.

Michele Buck

Good Andrew. morning,

Andrew Lazar

originally volume second maybe full bit to sales you commentary ask better comments expect a than to a price planned. the bit volume growth want in sounds about year the bit pricing I the worse a and morning. versus like the is half Good outlook. be And regarding

questions two this. just on So

the are reflecting and a weaker that specifically second in how do is in the fully consumer volume due on then XH? than outlook the And more about be new half we competitive the you so both? much. think year-over-year between a volume actions volume, to in or could just Thanks or tougher the balance environment two First, anticipated down pricing or

Steve Voskuil

Yeah. that I am happy one, Andrew. take to

looking the is it driven math really right. is the we That’s half. impact the the look by are price piece, at way volume back it. or really price And at driven as is the extra we Your impact

attributable misstep we driven. is be look to as really majority back in yes, volume it down. a we the And at There’s but the expect price in QX, the just salty half, to But the to small portion vast probably year-over-year, very it price. reaction is

Andrew Lazar

so on. Great. Thanks much. will I pass it Great.

Operator

Thank you.

come from Bryan with Spillane proceed please. questions check next Our if questions. you line yourself Please Bank muted could of Bryan, your of with the America.

Melissa Poole

right. All

Bryan. to back come Let’s

Operator

Okay.

Please come of questions from Our JPMorgan. next with Ken with the your Goldman proceed questions. line

Ken Goldman

Hi. Thanks so much.

that and think just you to puts implementing and have do done trade what elasticity and deal for the in as with announced of how offset a about continues get you? high, manage to are about can’t cocoa price in start kind talk to considering you are high an wanted pricing been you You environment a great for it but the point at environment? yet. lot job think reasonable to to more. is inflation, is pricing know maybe how sense sugar obviously how do you think be hasn’t that ask consumer But what the list about I a to I takes inflationary too you to that up increase another maybe and

Steve Voskuil

and Cocoa mean, sugar you are high. I historically Sure. right. are

through is news talking XX-year York high commodity experience The a on and the good rushes cocoa a saw news managing up this about Exchange. I New have at morning think I article being down. got we

And not with it’s dealing lever, only that, about as is but lever. price talked past, so a at the the look in we as we

driving look our P&L, strategy. we is at general, the so part management other productivity, driving And revenue ongoing more parts driving efficiency of in and through of

said, will And have levers with so time be deal all applied, something this. usual and the the as not it’s like I to had first we

So more pretty than we are to we good this are specific at that are to going able stage. you right, being at navigate, and not get

Ken Goldman

in benign prior you on incremental are seeing, would in players Thank expectations? you the How have intense the innovation competitive, is then -- that real I innovation a guess, is guess, a comment such been confectionery say to just any It’s surprises I there about versus want I because, obviously, And tough is market, you. for more but it increased your what expected, North than the I in you America. what competitive environment, going there? am don’t have some getting in

Michele Buck

Yeah.

So up I base. would of the say innovation low a off relatively is

on based that. So it’s an impact having

focused many focused, focused with not lot on and been we the a as and core certainly, for years playing think of a big demand few role. been folks the past have have I meeting innovation on execution

seeing are area capacity And the as going think the to innovation increase go certainly that’s continuing levels, dial competitors as we time. the historic I at to forward, focused back more now start that we to up we and be same an on we in marketplace to are just are

Ken Goldman

you. Thank

Operator

you. Thank

the with line Our proceed questions questions. of from your Max come Gumport with BNP Please next Paribas.

Max Gumport

in sense and to additional increased year? could try for half and additions next capacity Hi. can the the in you. any second just this to these volumes are, With be Thank you also increases in XXXX? regard way there of the we Thanks Is us the capacity chocolate capacity those for get secured co-manufacturing a sizable question. how sweets for impactful year how dimensionalize help as

Steve Voskuil

we we the already X% at incremental somewhere and back and -- if that this coming that and I Yeah. of capacity sweets. range look in place across took then a kind coming you the in what’s the chocolate you gone year-over-year, We online capacity look said half, year are past think the the in have have that’s into of

Max Gumport

Great. Thanks very much.

Steve Voskuil

bet. You

Operator

you. Thank

questions. Piper Please proceed of Sandler. with Our from Lavery questions Michael next your come the with line

Michael Lavery

Hi. Good morning.

Michele Buck

Good morning.

Steve Voskuil

Good morning.

Michael Lavery

You even having the like snacks look and that and of you been maybe what’s little what just easy, the those how some sense in that those the to never and you rest there’s learned can be to of still? some that a what have or hiccups SAP have confident come, integration seen. give an smooth are on salty detail, you got seem talking mentioned you be those year have of a can or with specifically little just hiccups avoid more the and eye about to a smoother totally of have in sense you you But just transition

Michele Buck

of our to assume way QX the focuses are for I we I business in was planned at to that do put Yeah. see as front-load the volumes a be we performance expect our there we stellar really certainly, trying and overall, execution. and to would so down would mean, knowing in that be We this in that in we always the execution key on one hiccups enterprise plans. the planned that year, say focusing level

salty IT, over It is not but The business. the it. a area within teams of all across just effort, every functional are focused

been salty strong pretty far penetration well we repeat doing And have household on with so sales. growing, frequency,

well ups execute QX. feel the that the But back we of that. volatility be with able up are that. into year believe execute shift good That said, in do promotional to the and being like able have certainly will half We be about we we feel that’s to forward. geared to did there the downs We

Michele Buck

an looks are parts, low math, place? at hand. already in in right what’s X little in to of just that layers like Okay. you course, have bit what That’s it. and the ahead back in already or Is just I you single-digit, give guesses that maybe announcement so the seasons, impact already place just then or might sense to some or already Can with kind on points have have of as and some you timing have a close of effect It the the between delays a And of announced have some moving maybe a the what it, my of least we look helpful. you has to about just and got estimates further staggered of put XXXX? implementation, pricing, of put the

Michele Buck

So look to we we and have low high XXXX, single digits year in the pricing. as second of half single-digit this

Michael Lavery

And come, without anything be just that’s there’s be any to clarify, other that before -- still else might right? would that to

Michele Buck

That’s have announced. what we

Michael Lavery

Thanks Perfect. much. so

Operator

you. Thank

Please of line next Kaufman questions Stanley. with from Pamela the your Morgan questions. proceed come with Our

Pamela Kaufman

morning. Good

Steve Voskuil

Good morning.

Michele Buck

Good morning.

Pamela Kaufman

was from an is which XX% spend advertising Your this QX. quarter, up acceleration

for this there performance year marketing you and relative the margins to before? competitive to your are spend for Given in the seeing demand in what better-than-expected the plans are for any changes and environment, year gross

Steve Voskuil

invest leaning into be No investment to expected again, to especially and brands, that in this significant half, and have brand was increase fundamental we a year plan. changes. are as had a online and to We planned capacity get in executing to coming year we the we back if seasons,

Michele Buck

working planning because as more salty also were of mentioned, we our And front-load really to S/X. of

that accounted plans as our So well. for

Pamela Kaufman

And your label categories. then launches just Snacks private Salty in the in comments are prepared remarks, about there some

categories launches the in you face private that that are You little to. generally considering competition, very but alluded label

it? competition how how hear to categories curious label addressing your managing private are are in about thinking and Just you you

Michele Buck

Yeah.

-- we than private there incredibly strong certainly, our But continued have to have while more and label see do label So, well. salty in is brands private up remain a has CMG. considered in to that, have continued a bit, we ticked quite bit

been this there, entries category still it’s X% even we and marketplace has very look than private have year in within seen we of while category, as label, part activity at the remained increased are less small. the relatively the And there a confection the small

So now brands we we very continue But well that strong. certainly competing on marketplace make the invest don’t that. our sure to We we are leadership for in to our in about propositions granted. feel right how are take our

Pamela Kaufman

Thank you.

Operator

Thank you.

from come Capital the next Please Modi Markets. Nik questions. your line with questions Our with proceed of RBC

Nik Modi

morning, Good Thank Yeah. was… everyone. I you.

Michele Buck

morning, Nik. Good

Nik Modi

was chain of to you your you have to you visibility competitors? some back terms how and in how the just you of the this, orders. could maybe point as with wanted this it kind on third just curious, competitors opportunity Good about get can to of clarity do that as hoping morning. it take season their some am address -- relates missed cut I by your supply some Just quarter? I struggling do relates still Halloween you of have of think at of that advantage some securing

Michele Buck

Yeah.

So are big well. expecting marketing very displays certainly in that planning and support Halloween. have strong well planned that and We a we as participating strong are as are consumers customers know we to

Halloween. approach that taken certainly out an have good leaning will candy we be of So of there into We plenty there. feel

that. about good feeling So

the to in overall, overall at strengths back half look the pressure be stable relates a we we will think as share, of that our despite some on As everyday there seasons. it market approach around some but

Nik Modi

in just Great. the on if systems issues was? the Snacks, happened, then of what I like could just changeover, just you but provide clarify, terms in so can the Salty And you about what problem talked exactly details exactly execution

Michele Buck

I’d expect promotions key execution. those would Yeah. sales that all say, QX QX that have planned we is you had of we I then that some two supply had together One commercial we we that bringing and had and a basic like in issues and businesses mean, some around things. just transition as shifted occur have during to been chain to

ability We as connected and a lot it tend feel get is something so we as have they on needed execution well, around. weren’t very just very of it is be. and good to focused team confidence on to that to we that do things and focus our the back that in So

then the we said, the execution. as our that have the tied implementation the a and lot have the sales be build and really result as year, that, of in -- fix work a back of ability to will That fourth volatility is course, inventory we half through have to of confidence in quarter we anticipate lighter we as but of that’s going have mentioned, to

Nik Modi

pass it on. Thanks much. I so Great. will

Operator

Thank you.

Howard proceed Please Bernstein. questions. next line from Our of your questions Alexia with come the with

Alexia Howard

Good morning, everyone.

Michele Buck

Good morning.

Alexia Howard

I and when as Can those start trends market market positive first U.S. have share have some ask, to issues should of chocolate? to a about constraints It turn Do in caused you of again? though declines. capacity those share and sounds other view trends improve all, as

Michele Buck

half a start back to expect will we that in year. to believe that continue So things some We are to see the pressure of couple but impacting improvement, of see really there we share. the are

anticipated. had with mix, refreshment is than stronger category being So and around one sweets certainly we

and we should better Chocolate online. we as more be we in to level that and position to to continue improve have be focused more will our of are do a innovation even come on increasing capacity competitive

Alexia Howard

Great. And then a… as

Michele Buck

Go We have Yeah. ahead. increment in REIT [ph].

Alexia Howard

moving the transformation. expected was sorry. to Snacks, double-digit about I am Salty decline, I XXXX? the fourth No. a talked in going because of think, you I on to Is into say, persist that choppiness quarter to

Steve Voskuil

No.

Michele Buck

No.

Steve Voskuil

building Not be switchover at we the this QX QX switchover, and just getting the recovery. ready inventory Really it’s will stage. and will -- be the for

the by regular the So we or to glide we be a expect time on -- Yeah. very first would path. get back to quarter, close back to

Alexia Howard

you Thank pass it on. very much. Great. I will

Steve Voskuil

bet. You

Operator

Thank you.

Please your Our of next with line proceed questions Smith Matt come from Stifel. the with questions.

Matt Smith

Good Hi. morning.

Michele Buck

morning. Good

Matt Smith

a in little on Steve, to gross bit I wanted margin. dig

XXX expectations near You and basis with margin really for solid increased expansion the you points up half again the had year. a first margin

drivers So the first play, the relative expansion inflation are about to balance could increased the like, margin in what’s in relative initial to comparisons there at weighing talk second on tougher in that the factors your the pricing or relation promotion? and half. expansion and Is of the other of you to performance half expectations

Steve Voskuil

Sure. Yeah.

have performance with have we first that are and through half broken gross had a I things, pleased the We few our margin way. the think,

We inflation costs. material have packaging things and some logistics in and seen like even less

has strong. been Our productivity progress

I we on pricing where think really at productivity, have through. course, then, drop we and of good we feel the are mark had midyear about

the and half. as worked in So to degree go favor we will all of some back those to continue have our

more be at the look will taking are back cost have you impact the impact, that a weight. bit some we going volume half, fixed little to absorption If a of

the impact. year-over-year from of again, end And the again, beginning and we weights, smoothed of more year hedging, perspective, sugar, but bit we still by a but some and cocoa have year, have got commodities, hedging some for cost a against commodities, still out and inflationary smaller of still

and as be the job side. I we the overall, two the up But in still drags team doing our back is the biggest probably taking managing nice would again, Those look feel a confident half. cost guidance to

Matt Smith

the half. Snacks, gross that. understood second quarter Thank saying inventory you in a about build in with just you the if you There as were the nice ahead what cutover that benefit be as for right? follow-up, I margin third should Salty is And a of retailers

Steve Voskuil

Yeah. Yeah.

but we salty not build We is will get some get benefit. will some Again, salty. as inventory absorption Yeah. business, the in benefit biggest we

Matt Smith

pass Thanks for Okay. that. on. I will it

Steve Voskuil

you. Thank

Operator

Thank you.

proceed Our next questions your come from the line of Cody Ross questions. with UBS. with Please

Cody Ross

Good a couple morning. Thank taking questions. A and you for one of housekeeping term ones longer nature. my then in

think, inventory spoke the in headwinds one, First I quarter. about you

I quantify Is of last the that so, into think and forward they replenishment correct, us? pull for inventory XQ. one sales you the lapping can and year XQ each from if were

Steve Voskuil

It is correct.

In points XXX-basis-point the and to terms basis of out of magnitude. There’s about about the last breaking pieces. shift XXX to QX order we relative attribute

Cody Ross

XQ, ERP said business that, for should think, or the as expectation as to you. for you salty implementation. that one. far you last I quantify Other in just down due double sales digits us be And us one just magnitude? the give an then the question, Great. just Thank Can housekeeping guys

Steve Voskuil

In terms or... dollars of

Cody Ross

The dollars expecting are you the Yeah. that from implementation.

Melissa Poole

Yeah.

we As get that...

Michele Buck

That’s No. a Yeah. double-digit decline.

not any go than going we that. more to So specific

Cody Ross

I forward? step-up besides kind you what’s Thank more have in headlines branded lately more a of promotions in you. on you innovation, in the about your the the expectation pick of in and competitors news that, other Understood. are question, competitive. just label competitive And competitive been seen competitive said are going seeing environment. you becoming lot environment? then -- branded know There’s last any players seeing you up private and What

Michele Buck

I’d have But are I’d we rational Yeah. seen categories we we say, with the I competitors. mean, consistent have are always we good been in very competitive. is that seeing the is have pretty say, thing what what historically. overall, And

gotten as to We been stronger innovation. chains have supply of some innovation levels have people have higher and support seen able

seen mixed, have think, entries confection those label, We some private environment our and well. frankly, really have results somewhat the in of held been economic But salty. brands the I increases in up in certainly, and with both have

profitable to sustainable on continue focus growth. We driving

activity, change As much the it see categories other we for didn’t important been and as has have as display relates that to some so infection impulse-driven in and always perhaps seen. promotional category of promotion

So that’s been we stable we more to much for going will forward. anticipate us and continue

support, of the So what we we right will innovation, to continue marketing with is robustly to drive level our promotion. brands think invest

Cody Ross

very pass you I Thank Great. much. it will on.

Operator

Thank you.

with next proceed line Goldman of with come Jason Our questions Please English questions. from your Sachs. the

Jason English

in. fitting Good me questions. Hey, folks. Thanks Couple of for morning.

Michele Buck

Hi.

Jason English

it shift, promotion promotions Snacks, odd, retailers. locked are Salty well-advanced seems on First, in usually

this your retailer was at this you? you actually actually of planned was did activity or cancel a sales time for your and promotion issue an functions a not So on having finance like

Steve Voskuil

Yeah.

Michele Buck

Retailers Yeah. move to a not on was activity it cancel choice did promotion. but us, really our

So relative with to stocks. quickly we have levels our execution that we that. is had of service We than out to and then issues, temporary differently SkinnyPop piece some the and dots we with do market seen our improve. adjusted go team And broader

So that expect we second the half. don’t to impact of kind in see

Jason English

Okay.

what promotional canceled you retailer. on constraints of Is decision? because your supply So drove or that that activity

Michele Buck

No.

in It a that sense quarter really us. we made was have opportunity investing to for of third lot a the thought We S/X. shifted a in of promotion big advance

Jason English

of Okay. on had of of back couple Switching coming I to competitive line lines Mr. gears, activity. question earlier, question a other Goldman’s kind of

category share a category question. and recent seen of quite tremendous data. in a and driving two-part It’s Your market we release have a the focus bit weakened on amount actually has rather growth than

six were always seen out heavy it driven are comments, seven rather how more, than sort prepared volume we away and where share are constructive us the you back and competitive the would say, years, to do in accelerating the we environment assuming years you over release second, incenting promoting emphasis in value was manage based the duking by? five of attribute what of it be chocolate First, where have you much on And couple the risk been of you what a the I to getting declines category has you organization years, ago, on last do confection in years?

Michele Buck

the Yeah. significant the had in we category, at look pricing certainly, Well, we category. as have

volume well. We have as decline we and the moderate see price, and should XX% should over moderation time, some

So, certainly, price has played a factor.

would as being the as on the driving we always of drive leader, because category say if stand well market focused the we are the benefits. have greatest share, category I category, some we know we to

we with don’t best connect how certainly be customers So to our we overall the it business approach as to rather, consumers out, with category? in do what’s this duking and going partner drive to continue to but retail maximize

Steve Voskuil

promotion more that. got sophistication bad of race have lot how tools we And and no like deploying get things for to to today investments arms we returning a an there’s into the at ROIs and are look intent like

We want the -- remarks spending. with not talked we will have which about in to we innovation, just win

Melissa Poole

Yeah.

end and we which I new it helps months the the the increases, mentioned time, drove two had that of were call past, price some retailers different at increases We same we too. little, as kind or think, so, some is Jason, XX% hitting it, what if tail a three multiple of price in. some Michele kind of going ones of are lapping at

as down expect come would well. to declines to pricing So that we volume that with moderate and number the

couple next bit. months in that of would we to normalize expect So the a

Jason English

to revenue? or sales And you question. to But one cheat market I point that on share to are is it deliver in been to particular, the related with the just the Okay. the your sending going force organization, quick bonus component follow-up how is my am

Steve Voskuil

the market but bonuses, not delivering metrics we of of share and revenue, where... Today component how Yeah. it’s a most have it’s other and delivered around quality is about delivery

Melissa Poole

sales activity Sales enable based and balance margins sales. that between a profitable

Steve Voskuil

right. That’s

Jason English

it much. on. will you is it. helpful. That Got Thank very pass I

Steve Voskuil

You bet.

Operator

you. Thank

questions. of Consumer with questions Rattigan come your Please the from line Connor proceed next with Edge Our Research.

Connor Rattigan

for Thanks morning. Good question. the

view to demand I your elasticity So or of pricing environment just take about is and net to there newfound revenue the or package management drive meeting forward, bar price resizing be on some going think should capacity we existing is opportunity realization may allocate forward? strategic underlying an we to capacity guess of such going weights that as increasing advantage some opportunities, as

Michele Buck

Yeah.

and We salty strategic the pack very confection architecture and have both been focused on on price management categories. revenue

strategic ago, few look pricing pricing. from talked our a approach think more we I years pricing just evolving at how we to list about holistically

And opportunity. a it’s in these in particular, categories big

to real focus in and We that was acquired of businesses we opportunity. on underdeveloped it’s area as these continue salty confection certainly a there something

Connor Rattigan

will Thank Great. on. it pass you. I

Operator

you. Thank

proceed Our Please next questions questions. Rob Dickerson your Jefferies. come from the with of line with

Rob Dickerson

Steve, on take also much. that so two soften to I the inflated years I some given It but prepared next the cocoa when I act certain points kind has help I like, like you a this your wouldn’t just combine share point business sounds don’t two have promotional as price reaching of you little So to basically Thanks maybe complex feel want comments to like maybe like but that the Ken to be that that’s are sugar you in everyday input over if little from and just cost potential a hadn’t, questions. get remarks coming and just pricing by the would? that is or other the you the then the asked. activity promote, all sense can past that schedule, you of clearly the try there you some comments, a capacity of very you trying taken this on offset more Great. online is maybe back months. need the given more have really just few careful inflation have like you Thanks. and take capacity, such pressure offsets, softer, -- cocoa why I at with of let’s besides is? or the curious about more next but over where of which to but want want to like am circle point the comments have are you pricing year bit side maybe to market alleviate, to say, I think, to made, of kind kind to you materially driven kind you clearly, fairly pricing, also hit am of hedging maybe do just you is

Steve Voskuil

I think Yeah. kind we the look all share, considerations those about that we we And will at look we mean, -- take competition when and the beyond. we market XXXX are whole at at of at P&L, again, is what look we doing. look

commodities look And think we clearly, at are we and where they headed.

those And the so of the to want things more consider. we specific don’t XXXX but on construct will of I plan, the kind get are

Again, we navigated have this before.

think at of of is cocoa there’s those do in still will market. a in and be got levers our lot interesting reset speculation. disposal. have a Pricing I lot those the just sugar cases We and see one it and what revenue levers of to happens

an strategy are degree these markets fundamentals hedging not large driven gives smoothing up, and But watching will to we atypically and they because how element it’s see to our pretty high to of again, hold And be at levels a a by us that. degree. to protection

Rob Dickerson

plenty strong. be you expected And sales Michele, comment just then it on said quickly, Fair seasonal Okay. should candy, very Halloween sounds like enough. to Halloween be up of double-digit. the

And think, aren’t early want did number much. you be you Thanks to I just I this strong Halloween do why will so quite make there so think shipments, last year earlier one? just some two, so number coming? have So benefit I curious, it. shipments That’s sure then from am year, like,

Michele Buck

Sure.

advance because we plan the needing build So to the we for to of a customers inventory in visibility lot to seasons, get with season. relative

So we terms sell-through. is a being we strong in programs bought drive of have to good very lot visibility and have of what

gives that a of confidence. lot us So

We to really consumers focus kind in the during and and tailwind Halloween. lean and relative that kind times, these to are of seasons, think Halloween we like life, of that’s I another so customer enjoying into of conviction our difficult know economic simple why in partners things like our interested want particularly

Rob Dickerson

the there’s year Okay. then sound on doesn’t there ago? side, it to Fair relative the enough. like And delta shipment any

Steve Voskuil

No.

Michele Buck

No.

Rob Dickerson

Super. All right. Thank you.

Steve Voskuil

You bet.

Operator

you. Thank

Our your next with the questions Chris line Securities. questions. come Fargo Carey proceed with of Please Wells from

Chris Carey

morning, Hi. Good everyone.

Steve Voskuil

morning. Good

Michele Buck

Good morning.

Chris Carey

kind question around of a just So clarification salty.

We have programs, consumption, programs? it this in in to way, seen QX, scanner just supply clarify. to Was been of because namely as sounds in addressed in lack of kind am just data. if some apologies volume ramps of a form, supply recent has in trying shift Said understand the another promotional how some that want I to the of is of you So in but those I deceleration like any some balance And are of about and reported because shift of indicative demand? your you things? maybe saying consumption more I there’s promotional expect QX, just are in would results trends expect would understand you consumption to trends? pick realize up and think you about what QX we but underlying or perhaps what seeing

Michele Buck

Yeah.

that deceleration, drive in and did So promotional expect that declines QX forward. going to do yes, pick up we

Chris Carey

helpful enough. so Okay. much. That’s Thanks

Steve Voskuil

you. Thank

Operator

you. Thank

of line with Spillane America. Our of Bryan proceed the with your Please next from questions. come Bank questions

Bryan Spillane

Good morning, Thanks, guys. Operator. Hey.

Michele Buck

Good morning.

Bryan Spillane

elasticity quick on So a One, just two capital and ones one another for allocation. follow-up me. on

occasions? on first consumption there’s Michele, any in across elasticity, out box, So format there terms guess -- if differences to is versus differences pronounced terms call anything there elasticity large across of consumption channels where So of just or those I immediate in the any small channels?

Michele Buck

anything channels. don’t have significant seen across we I No. that think

Bryan Spillane

think rates of capital sheet. spending that Steve, couple competitive, up. with kind the us, that remind normalizes then, again, I not again of major there’s we interest affect as I going next would But dividend of just on increase and event allocation, And just guess, XX% over as capital noticed years about, that, dividend balance some think and and more strategic Okay. the can you assuming the obviously, the makes

of Just how Thanks. the pronounced a think thinking would couple dividends, to of years repurchases again, you that more are would going how it over as thinking are cash and you returning about be forward, would helpful? about about we more kind piece? be share it capital next become shareholders Just and allocation

Steve Voskuil

Sure. we the Conference. look capital talked fundamental for our at Yeah. and target ratio at look payout When I’d back Investor be changes happy to. that at It about allocation No you philosophy a in so you great our on. that and dividend increase. is

even would still, a this are been behind be increase we to little we historically. where bit with where and have We like

So reflects with last progress increase. pleased earnings that great but just years, over XX% the the the few

as to of here high right, really we are recently, be look cash capital to are better-returning gap some the other for so the to change. you we going spending example, And that’s and we repurchases, off we thoughtful our forward, stop don’t to look when spending have ways and moderates have shareholders not as capital is through for still with going had returning alternatives

Bryan Spillane

Okay. Thank you.

Steve Voskuil

You bet.

Operator

you. Thank

come questions next TD line Robert with the Please Cowen. Our your from questions. of proceed with Moskow

Robert Moskow

for different. Thank elasticity know Hi. the points retail. consumer affecting any have just behavior bags slightly I demand? you into especially price bags Halloween, those of within want in any like, if Bryan differences at $XX, some question. can Have you multi-serve about seen cost single-serve, heading look versus $XX to about the seen portfolio, in absolute elasticity the Similar to you observations

Michele Buck

to we have to So of the think what just pack seasons participate. that’s be relative mean, are elastic better, I and tend I nature piece. to see nothing is, going less over people perform material the size to to time tended

that’s biggest that the see. difference So we

Robert Moskow

Okay.

change of traffic -- like single-serve no -- real affected just and or demand the the absolute in any there? point by price bars up getting So so

Michele Buck

No.

Robert Moskow

Okay.

Michele Buck

seen. We have not

Robert Moskow

right. Thank Yeah. you. All

Operator

Thank you.

ISI. of questions. line proceed next Evercore come your Our questions David the with with from Please Palmer

David Palmer

organic us North sales drivers the Hi. America remind in Day, flattish of provided in growth a single-digit as you to that Analyst competition much. so volume Thanks. Confection single including sales the again manner? volume. you sustain Could of At at digits with guidance fulsome perhaps low low Thanks flat more your returns pricing

Steve Voskuil

of U.S. the the that’s it happening a this same looking say even we we we business. balance the be about competitive expect always or quarter of in year fundamental mean changes at time way. category would to for think algorithm I for the nothing Yes. that I or fundamentally way of any and sources the are changing so over of the think that nothing Confection that. it this There’s rest growth we

David Palmer

much. very Thanks

Steve Voskuil

Yeah.

Operator

to am to further for comments. I this I’d no Melissa time. back like Ms. hand questions call you. over Thank Poole closing the at any in showing the queue

Melissa Poole

Thanks this much was for it of Yeah. busy particularly us joining know morning so morning. earnings. I a

the all day ones have. later thanks you catching outstanding So questions to any and great up great with may today Have everyone. all look of you for a for forward

Operator

does appreciate participation. teleconference. This you. Thank conclude We today’s your

this time. at your may your the rest You Enjoy day. lines of disconnect

The Hershey Company (HSY) 27 Jul 232023 Q2 Earnings call transcript