Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

0d2753e0f155b3ef790f246a186dfaeacefb2242339ca75dff7efe80e42e797a

Net sales (USD, thousands)

Cost of sales (USD, thousands)

Gross profit (USD, thousands)

Selling, marketing and administrative expense (USD, thousands)

Business realignment costs (USD, thousands)

Operating profit (USD, thousands)

Interest expense, net (USD, thousands)

Other (income) expense, net (USD, thousands)

Income before income taxes (USD, thousands)

Provision for income taxes (USD, thousands)

Net income (USD, thousands)

c673fbe534601827820b9336b9a591725485d4efd71c1e34e9260df7559e8f20

38805522f8791af4d0b0bff72d2e26f97c5e6241c8b96ee36d444461351c3c90

North America Confectionery

North America Salty Snacks

International

North America

International and Other

- Confectionery and Confectionery-Based

- Snacks Portfolio

Total Revenue

036f03c1dac20f829a71c96af06a5554e8660498386ac6210dc95a6885e6c041

Volume Growth for North America Salty Snacks (percentage)

Price Decline for North America Salty Snacks (percentage)

Volume Decline for International (percentage)

Price Increase for International (percentage)

Total Consolidated Volume Decline (percentage)

Total Consolidated Price Increase (percentage)

Market Price Increase for Cocoa (percentage)

Volume Decline for Consolidated Business (percentage)

Price Realization for Consolidated Business (percentage)

Total U.S. Retail Takeaway (percentage)

U.S. CMG Consumer Takeaway (percentage)

CMG Market Share Change (basis points)

Salty Consumer Takeaway (percentage)

Salty Market Share Change (basis points)

U.S. Candy, Mint and Gum Consumer Takeaway (percentage)

aaeb53c8de6eef8a2c7a8f2dfeaebf259c03091622aa777ba2fac824e35961cd

ccc596cc193f9bfaecbe9328f5e5fe8095bff93de160af3a72405a199bfe805d

5ba673e59ba1312b57e64b60bef9a2703ade7eea215a9e08ab0f8d08ea6e7df9

The jump in **cash and cash equivalents** in Q3 2024 was primarily driven by a strong cash flow performance from operations. Hershey generated **$1,590,000 thousand** from operating activities during the first nine months of 2024, which greatly bolstered its cash position. This increase was partly offset by significant outflows for **capital expenditures** and **financing activities**—including dividend payments and share repurchases—but the net effect was an overall increase, further aided by a modest positive impact from exchange rate changes.  **[0000047111-24-000055_hsy-20240929.htm:46]** **[0000047111-24-000055_hsy-20240929.htm:5]** 

Why did Cash and cash equivalents jump in Q3 2024?

The spike in **Short-term debt** during Q1 2024 resulted from a significant **net increase in short-term borrowing**. The increase, which amounted to **$569,809 thousand**, was primarily used to meet **operational and liquidity needs**, including funding for **seasonal working capital requirements, share repurchases, and other corporate purposes**.  **[0000047111-24-000023_hsy-20240331.htm:4]** **[0000047111-24-000020_exhibit991_2024xq1.htm:8]** **[0000047111-24-000023_hsy-20240331.htm:5]** **[0000047111-24-000023_hsy-20240331.htm:39]** 

What caused the spike in Short-term debt in Q1 2024?

The escalation in Q3 2024 was primarily due to the reclassification of portions of long-term debt that were maturing within the next 12 months. In particular, **$300 million of 2.050% Notes** maturing on **November 15, 2024**, along with **$300 million of 0.900% Notes** and **$300 million of 3.200% Notes** maturing on **June 1, 2025** and **August 21, 2025** respectively, were reclassified into the current portion, which significantly increased the reported figure.  **[0000047111-24-000053_exhibit991_2024xq3.htm:10]** **[0000047111-24-000055_hsy-20240929.htm:4]** **[0000047111-24-000055_hsy-20240929.htm:46]** **[0000047111-24-000055_hsy-20240929.htm:12]** 

Why did the Current portion of long-term debt escalate in Q3 2024?

The **long-term debt** was markedly lower in **Q3 2024** because a significant portion—**$904,819 thousand**—was reclassified to the **current portion of long-term debt** due to upcoming maturities within the next 12 months. Additionally, there was **no issuance of new long-term debt** during this period and a minor **repayment of $4,476 thousand** contributed to the reduction overall.  **[0000047111-24-000055_hsy-20240929.htm:4]** **[0000047111-24-000053_exhibit991_2024xq3.htm:10]** **[0000047111-24-000055_hsy-20240929.htm:12]** **[0000047111-24-000055_hsy-20240929.htm:46]** **[0000047111-24-000055_hsy-20240929.htm:5]** 

Why was Long-term debt markedly lower in Q3 2024?

99fc04b2efafa4e790999ba4379856f239f7d0e72bdadd2a835548cbfb341b86

The **net sales** in Q2 2024 were notably low due to several key factors. First, a planned **ERP system implementation** led to a deliberate reduction in inventory within North America Confectionery and International segments, contributing roughly **9 percentage points** to the decline.  **[20240801PH74179:0]** **[20240801PH74179:7]** **[HSY_3395777_4]**  Additionally, **retailers reduced their inventory levels** beyond expectations—by about **7 percentage points**—which compounded the lower sales, as seasonal shipment timings shifted to the latter half of 2024.  **[20240801PH74179:0]** **[20240801PH74179:7]** **[HSY_3395777_4]**  Furthermore, the **North America Confectionery segment** experienced a volume decline of approximately **22%**, influenced by accelerated shipments in Q1 2024, and the **International segment** faced an overall decline in net sales of **8.9%** due to volume declines of about **16%**.  **[0000047111-24-000045_hsy-20240630.htm:41]** **[20240801PH74179:1]** **[HSY_3395777_4]** 

Why were net sales so low in Q2 2024?

The drastic negative business realignment costs in Q4 2023 were driven by the **completion of the International Optimization Program in 2023**, which had previously generated significant expenses. This program, initiated in Q4 2020 to streamline resources and optimize operations in international markets, was completed in 2023, resulting in minimal additional costs during Q4 2023 compared to Q4 2022.  **[0000047111-24-000009_hsy-20231231.htm:40]** **[0000047111-24-000014_hsy-20240326.htm:113]** **[0000047111-24-000009_hsy-20231231.htm:11]** 

What drove the drastic negative business realignment costs in Q4 2023?

The surge in operating profit in Q1 2024 was driven by several factors. **Net sales increased by 8.9%**, supported by favorable price realization and higher volume, especially in the North America Confectionery and Salty Snacks segments. Additionally, **gross profit experienced a 21.3% growth** due to improved sales and a higher gross margin (rising from 46.3% to 51.5%). The company also managed **selling, marketing, and administrative expenses effectively**, with a lower increase of 6.3% compared to sales growth. Moreover, there was a **reduction in business realignment costs**, as these costs were eliminated in Q1 2024 compared to Q1 2023, and notable changes occurred in other income/expense items.  **[0000047111-24-000023_hsy-20240331.htm:33]** **[0000047111-24-000020_exhibit991_2024xq1.htm:7]** **[0000047111-24-000023_hsy-20240331.htm:2]** 

What factors contributed to the surge in operating profit in Q1 2024?

The sharp drop in net income in Q2 2024 was driven by several factors. **Lower gross profit** played a significant role, as gross profit decreased due to approximately a **22% decline in volume**—a result of accelerated shipments in Q1 ahead of the ERP system implementation—which subsequently reduced shipments in Q2; this was further compounded by **higher commodity costs** and an **unfavorable product mix**.  **[20240801PH74179:0]** **[0000047111-24-000045_hsy-20240630.htm:41]**  Additionally, an **increased effective tax rate**—rising to **26.4%** from **7.4%** in Q2 2023—significantly affected profitability because of reduced renewable energy tax credits, higher state taxes, and unfavorable foreign rate differentials.  **[0000047111-24-000045_hsy-20240630.htm:37]** **[20240801PH74179:2]**  Moreover, **higher operating expenses**, including **derivative mark-to-market losses** and fixed cost challenges, further contributed to the net income decline.  **[20240801PH74179:2]** 

Why did net income drop so sharply in Q2 2024?

Hershey’s gross profit declined steeply in Q2 2024 primarily due to a **significant drop in sales volume**—with net sales falling by **16.7%** as a result of accelerated shipments in Q1 2024 ahead of an ERP system implementation and an approximate **18% decline in the core U.S. confectionery segment**—which reduced shipments in Q2. Additionally, the company faced **higher commodity costs** (notably for cocoa, impacting gross profit by **$74.6 million**), **unfavorable mark-to-market derivative outcomes** (resulting in a **$31.9 million** adverse effect), an **unfavorable product mix**, and incurred **increased business realignment costs** of **$8.1 million** that further pressured the Q2 gross profit.  **[0000047111-24-000045_hsy-20240630.htm:35]** **[0000047111-24-000045_hsy-20240630.htm:41]** **[0000047111-24-000045_hsy-20240630.htm:36]** 

Why did gross profit decline steeply in Q2 2024?

684857e8d18266c1a06b11b69c569da066358241e553959701ff92f04293952d

United States

Other

- International

29fe34e5181697531eb2490a233a0d0d3e339fd4f7699c8b37f8c9a78d9b4497

Net income [USD, thousands]

Depreciation and amortization [USD, thousands]

Stock-based compensation expense [USD, thousands]

Write-down of equity investments [USD, thousands]

Unrealized gains on derivative contracts [USD, thousands]

Other (operating activities adjustments) [USD, thousands]

Contributions to pension and other benefit plans [USD, thousands]

Net cash provided by operating activities [USD, thousands]

Capital additions (including software) [USD, thousands]

Other investing activities [USD, thousands]

Net cash used in investing activities [USD, thousands]

Net increase in short-term debt [USD, thousands]

Repayment of long-term debt and finance leases [USD, thousands]

Cash dividends paid [USD, thousands]

Repurchase of common stock [USD, thousands]

Proceeds from exercised stock options [USD, thousands]

Taxes withheld and paid on employee stock awards [USD, thousands]

Net cash used in financing activities [USD, thousands]

Effect of exchange rate changes on cash and cash equivalents [USD, thousands]

Net increase (decrease) in cash and cash equivalents [USD, thousands]

Interest paid [USD, thousands]

Income taxes paid [USD, thousands]

Other assets and liabilities (operating activities) [USD, thousands]

Deferred income taxes [USD, thousands]

Equity investments in tax credit qualifying partnerships [USD, thousands]

Long-term borrowings, net of debt issuance costs [USD, thousands]

Cash and cash equivalents, beginning of period [USD, thousands]

Cash and cash equivalents, end of period [USD, thousands]

a2c8f6fa1449fc818ab356a4c23a4af40759bf2268ce62060d1272e4fde732f6

Hershey Co (HSY)

Financials