HERSHEY CO Q4 FY2024 earnings call

• Michele Buck and Steve Voskuil discussed balancing top-and-bottom-line growth in 2026, using levers like pricing, productivity, SG&A efficiency, and monitoring cocoa prices. • Mentioned watching consumer elasticity, with a prudent stance on minus one elasticity assumption. • Spoke about international segment differences, with smaller impact and different approach to pricing. • Highlighted strong 4Q international performance, noting competitive activity in Brazil and Mexico. • Discussed innovation in the sweets portfolio, including new launches like Jolly Rancher and Shaq-a-licious Gummies, and upcoming innovations. • Addressed GLP-1 impact, stating no material effects seen, and continued evolution of portfolio based on consumer preferences. • Noted timing benefit in 4Q related to new ERP system, with precision in cost allocation. • Discussed search for new CEO, with robust process underway to find a suitable successor.

No specific financial performance by product segment with absolute terms and revenue contribution % provided in the transcript.

• Aim for balanced top-and-bottom-line growth in 2026, using full suite of levers to manage cocoa price, including pricing, productivity, and SG&A efficiency. • Expect EPS back on algorithm, with consideration of various factors like cocoa price normalization. • Baked historic elasticities at minus one level into guidance, watching for upside but taking prudent stance. • Considered greater elasticities in international markets but with different approach due to smaller segment size.

• Risks related to cocoa price volatility, consumer elasticity affecting pricing reception, and intense competitive activity in international markets.

Q: Andrew Lazar asked about context for balanced growth in 2026 and ability to take pricing with elevated cocoa levels.

A: Steve Voskuil said they'll use full suite of levers, including pricing, productivity, and SG&A efficiency, and Michele Buck noted watching elasticity and considering cocoa normalization in pricing decisions.

Q: Ken Goldman inquired about what informs the minus one elasticity assumption and its application to international segment.

A: Michele Buck said it's a prudent stance for volatile consumer market, and they considered greater elasticities in international but with different approach due to smaller segment size.

Q: Max Gumport followed up on elasticities and international competitive activity.

A: Steve Voskuil talked about strong 4Q international performance, high competitive activity in Brazil and Mexico, and expecting competition to increase in 2025.

Q: Robert Moskow asked about gross margin phasing and competitors' pricing actions.

A: Steve Voskuil said gross margin pressure is higher in back-half, and Michele Buck noted category is rational with major players taking pricing, including private label.

Q: Alexia Howard asked about sales outlook for 2025 and GLP-1 impact.

A: Michele Buck mentioned international pressure, retailer inventory, and one fewer shipping day, and noted no material GLP-1 impact with multiple data sources supporting no disproportionate less consumption by users.

Q: Peter Galbo asked about top line phasing and cocoa market participation.

A: Steve Voskuil talked about shipping day impact on top line, and Michele Buck noted looking at alternatives for cocoa supply chain to take advantage of market dislocations.

Q: Todd Palmer inquired about elasticity assumption starting point and GLP-1 impact.

A: Michele Buck explained derivation of elasticity assumption and no material GLP-1 impact.

Q: Jim Salera asked about innovation in sweets and retail partnerships.

A: Michele Buck discussed new innovation in sweets, incremental distribution opportunities, and underdevelopment in sweets category.

Q: Leah Jordan asked about market share declines in everyday chocolate and C-store channel.

A: Michele Buck said everyday is improving, innovation is important, and C-store channel is pressured but seeing improvements with planogram changes.

Q: Michael Lavery asked about cocoa reformulation and cellular agriculture.

A: Steve Voskuil talked about formulation changes with consumer focus, and Michele Buck noted watching cellular agriculture as long-term potential.

Q: Chris Carey asked about gross margin and CEO transition.

A: Steve Voskuil explained gross margin components, and Michele Buck discussed CEO search process and focus on delivering 2025 plan.

Q: Rob Dickerson asked about 2026 growth and hedging.

A: Steve Voskuil said expecting balanced growth in 2026 with operating assumptions including cocoa price backtracking, and hedging timing not commented on due to competitive reasons.

Q: John Baumgartner asked about U.S. chocolate category declines and health wellness.

A: Michele Buck discussed mix evolution, channel shifts, and growth in zero sugar and protein products.

Q: David Palmer asked about seasons growth and convenience channel.

A: Michele Buck said seasons expected to be strong with late Easter elongating season, and convenience channel expected to be in line with forecast but with continued softness until lap of pressures.