Earnings call transcript: Hershey Co beats Q2 2025 forecasts with strong revenue

Hershey Co (HSY) reported its second-quarter earnings for 2025, surpassing Wall Street expectations with an earnings per share (EPS) of $1.21 compared to the forecasted $0.99, marking a significant 22.22% surprise. Revenue also exceeded expectations, reaching 2.61 billion dollars against the forecast of 2.52 billion dollars. According to InvestingPro data, the company’s current valuation appears slightly above its Fair Value, with 14 analysts recently revising their earnings expectations downward for the upcoming period. Despite these positive results, Hershey’s stock saw a slight pre-market decline of 0.05%, closing at $186.13.

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Key Takeaways

• Hershey Co’s EPS exceeded forecasts by 22.22%, reaching $1.21.
• Revenue topped expectations at 2.61 billion dollars, a 3.57% surprise.
• Stock experienced a minor pre-market drop, closing at $186.13.
• Everyday chocolate sales rose by 6.7%, driving revenue growth.
• Strategic pricing and innovation are key focus areas moving forward.

Company Performance

Hershey Co demonstrated robust performance in the second quarter of 2025, with significant growth in its everyday chocolate category, which increased by 6.7%. This growth was supported by a strategic focus on pricing and innovation, which the company expects to impact its top-line results positively in the coming years. InvestingPro analysis reveals the company has maintained dividend payments for 55 consecutive years and raised dividends for 15 straight years, showcasing its commitment to shareholder returns. The company is also gaining market share in the instant consumables segment, positioning itself strongly against competitors.

Financial Highlights

• Revenue: 2.61 billion dollars, a 3.57% surprise over forecasts.
• Earnings per share (EPS): $1.21, a 22.22% surprise over forecasts.
• Everyday chocolate category growth: 6.7%.
• Mid-teens pricing impact expected in 2026.

Earnings vs. Forecast

Hershey Co’s actual EPS of $1.21 significantly outperformed the forecasted $0.99, resulting in a 22.22% earnings surprise. Similarly, the actual revenue of 2.61 billion dollars exceeded the expected 2.52 billion dollars, marking a 3.57% surprise. These results highlight a strong quarter for the company, continuing its trend of surpassing market expectations.

Market Reaction

Despite the strong earnings report, Hershey’s stock experienced a slight pre-market decline of 0.05%, closing at $186.13. This movement contrasts with the broader market trend, where positive earnings typically lead to stock price increases. The company maintains a healthy financial position with a current ratio of 1.53, indicating liquid assets exceed short-term obligations, and operates with a moderate level of debt according to InvestingPro analysis. The stock’s performance remains within its 52-week range, with a high of $208.03 and a low of $140.13.

Outlook & Guidance

Hershey Co is optimistic about future growth, driven by its strategic pricing and innovation focus. The company anticipates mid-teens pricing impacts in 2026, with potential for better-than-expected performance if cocoa costs decrease or tariff exemptions are granted. Hershey is also exploring new product launches, including a multipack innovation across its portfolio.

Executive Commentary

CEO Michelle Buck expressed confidence in the company’s strategic direction, stating, "We feel good about being on algorithm for ’26." She emphasized the importance of pricing as a strategic tool, saying, "Pricing is a strategic way to allow us to continue to invest in our brands." Buck also highlighted the value of innovation, noting, "Innovation is perceived as value from consumers who are looking for value."

Risks and Challenges

• Potential tax challenges creating a 250 basis point headwind.
• Supply chain complexities and the need for increased automation.
• Market volatility due to potential impacts of GLP-1 drugs and SNAP benefits.
• Tariff impacts and the need for mitigation strategies.
• Cocoa supply dynamics and market outlook uncertainties.

Q&A

During the earnings call, analysts inquired about the CEO transition to Kirk, pricing strategy, and elasticity expectations. The company addressed potential tariff mitigation strategies and explored the dynamics of cocoa supply, providing insights into its market outlook and strategic initiatives.

Full transcript - Hershey Co (HSY) Q2 2025:

Conference Operator: Greetings, and welcome to The Hershey Company Second Quarter twenty twenty five Question and Answer Session. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Anori Naughton, Vice President of Investor Relations for The Hershey Company. Thank you. You may begin.

Anori Naughton, Vice President of Investor Relations, Hershey Company: Good morning everyone and thank you for joining us today. I hope everyone has had the chance to read our press release and listen to our pre recorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the pre recorded remarks. At the conclusion of today’s live Q and A session, we will also post a transcript and audio replay of this call. Please note that during today’s Q and A session, we may make forward looking statements that are subject to various risks and uncertainties.

These statements, expectations and assumptions regarding the company’s future operations and financial performance. Actual results could differ materially from those projected. The company undertakes no obligation to update these statements based on subsequent events. A detailed listing of such risks and uncertainties can be found in today’s press release and the company’s SEC filings. Finally, please note that we may refer to certain non GAAP financial measures that we believe will provide useful information for investors.

The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations for the GAAP results are included in this morning’s press release. Joining me today are Hershey’s Chairman and CEO, Michelle Buck, and Hershey’s Senior Vice President and CFO, Steve Oskal. Before turning it over, I would personally like to thank you, Smee and Michelle, for being an inspiring force. Your clear vision and unwavering dedication to excellence have shaped this company and will continue to motivate us for years to come.

So with that, let’s get started with the first question. Operator?

Conference Operator: Our first question is from Andrew Lazar with Barclays. Please proceed.

Andrew Lazar, Analyst, Barclays: Great, thanks so much. Good morning, everybody.

Michelle Buck, Chairman and CEO, Hershey Company: Good morning.

Andrew Lazar, Analyst, Barclays: Hey. Michelle, congratulations to you. Best wishes going forward, and congratulations to Kirk as well as he prepares to take the helm in mid August.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Thank you. I guess

Andrew Lazar, Analyst, Barclays: my question, Michelle, is that oftentimes when a new CEO comes in, it can be seen as an opportunity to sort of rebase earnings and margins, you know, to set a company up for the next several years, particularly if it’s a situation where there’s been, let’s say, underinvestment. Kirk will obviously come in, get under the hood and make his own determination. But I guess from where you sit, if we put issues like cocoa and tariffs aside, do you see the underlying health of the business as in need of this sort of a reset? And I guess more importantly, what specifically did you and the board see in Kirk that made him the right choice?

Michelle Buck, Chairman and CEO, Hershey Company: Sure. So first of all, I’ll reiterate, certainly as Kirk walks in, he’ll have the opportunity to form his own opinion. But what I would share is, as you know, Hershey has been a company that has stated our belief in investments in brands and capability over time to consistently ensure that we can drive sustainable growth. And we have proven that we consistently do reinvest during periods of change. As we got hit by some of the record high cocoa prices early on, we stated that our approach was going to be taking a long term approach to ensure continued category health, and we’ve done that.

We’ve continued to spend on our brands. We’ve invested in technology, with our new ERP platform and then new AI and tech enabled capabilities that have driven significant efficiency, whether in the transformation program or other places. On top of that, we’re seeing top line momentum on the business. We have our profit recovery plans well underway, and we’ll talk more about that today. So as I look at the past eighteen months where we’ve faced headwinds, I then also look at the future where I would say, I see more opportunity given the fundamentals of COCO, the direction that they’re headed in, and perhaps even with tariffs.

So if I put all of that together, I don’t see a need to really reset. I think we’ve been consistently investing, and we have momentum on our side.

Andrew Lazar, Analyst, Barclays: Okay, thank you for that.

Anori Naughton, Vice President of Investor Relations, Hershey Company: As I look at Kirk

Steve Oskal, Senior Vice President and CFO, Hershey Company: Kirk.

Michelle Buck, Chairman and CEO, Hershey Company: Kirk and what made him the best candidate. I mean, Kirk has three decades of experience in consumer packaged goods at Pepsi, a leading talent house. He’s got very relevant experience in snacking. And then also in beverage, which has many corollaries to our business. It’s not only an iconic brand business, it’s also a pack type business, ubiquitous distribution across channels.

So a lot of similarities. He is also very focused on being consumer centric, customer centric, and the importance of culture in delivering results. So I think all of that and his kind of performance orientation will make him be a great person to continue moving forward our ambition to be a leading snacking powerhouse and continue to deliver sustainable growth.

Andrew Lazar, Analyst, Barclays: Great. Alright. Thank you for that. Then a quick one, Steve. Just it appears at least as a starting point in ’25, you’re looking for elasticity of roughly one to one on the new pricing that was recently announced.

Is this a reasonable expectation for ’26 as well, at least at this stage, just given the magnitude of the pricing being taken? Or how do you assess elasticity when it’s certainly a greater amount of pricing than you’ve typically taken in a situation like this? Thanks so much.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure. Yeah, as you can imagine, our teams have modeled this exhaustively, and I’d put up our strategic revenue management team against anyone. They’re very, very thoughtful in the way we approach this. And overall, the elasticities are probably a little bit more favorable than what we’ve seen in history, but part of that is because of the breadth, and there are parts, as we know, parts of our portfolio like seasons that are a little bit less elastic, there are other parts more elastic. And so as we set both the pricing assumption and the elasticity assumption, we did that with a very thoughtful modeled approach.

Now we’ll be watching it closely, but right now we feel we’ve got a good beat on how it will play out for this year and next year.

Robert Moskow, Analyst, TD Cowen: Great. Thank you.

Conference Operator: Our next question is from Max Gumford with DNB Paribas. Please Hey,

Max Gumford, Analyst, DNB Paribas: thanks for the question, and Michelle, congrats as well and hope you enjoy the retirement. Thank you. At CAGNY, you observed that if your realized COCO costs in ’26 matched your costs in ’24, then you could do $10 plus an adjusted EPS in ’26. And I realize we’re nowhere near that situation currently. And we also now need to factor in tariffs as well, which were not contemplated in that math.

That said, with the announced price increase, it does seem like your pricing will very much close the gap to the total COGS inflation that you have seen in recent years in dollar terms, which with regard to EPS might have an equivalent impact as costs falling back to 24 levels. And also your comment of the price increase and other initiatives supporting 500 basis points or more gross margin expansion in ’26 before considering partial offsets from COCA costs and tariffs would support that reasoning as well. So I’m hoping you could provide a bit of a finer point on how to read the impact of this pricing for next year and what it might mean for your P and L specifically if COCO futures were to hold at current levels? I realize there’s a lot in there, I’m hoping for a bit of an update on that. Thanks so much.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure, could definitely give some perspective. So you’re right, when we gave that back at CAGNY talked about $10 and $12 possibilities with assumptions from $25 and $24 carrying forward without inflation. Some things have changed since then, tariffs being the biggest one, right? Tariffs wasn’t contemplated at the time of that thinking and that will continue to be something that we have to work to optimize while also working to see if we can get relief, particularly on the cocoa component of that. But that aside, you know, this pricing move does make a material impact in the right direction of margin recovery for 2026.

It does not, by itself, recover all of the cocoa inflation that we have seen up to 2025. So it’s a big step in the right direction, but it’s not enough to fully compensate for COCO inflation up to this point. As we look forward, all of the other levers are going to continue to be important. We talked about in the prepared remarks smart complexity. You’ve seen us take our transformation savings up.

We’re going to continue to look at all of those levers to extract more cost savings and margin points so that we over time do fully recover our margin expectations. But this price increase, while significant, doesn’t get us all the way to flat year over year. Now having said that, some things do feel more optimistic than maybe they did, even on our last call. Cocoa has come back some, And like everyone, we’re trying to be thoughtful as we, execute our hedging program and plan for cocoa next year. It is still inflationary, from what we know today, but it’s taken a step in the right direction.

We’ll continue to optimize tariffs, but if we could get relief, then either tariffs or cocoa reverts back, either one of those could give us a path to something better than on algorithm earnings for 2026, which is a little bit different than probably we thought in our last conversation.

Max Gumford, Analyst, DNB Paribas: Great. And then just related to the pricing, how should we think about any need for incremental reinvestment next year to support that price increase and keep the consumer coming into your brands and your franchises

Steve Oskal, Senior Vice President and CFO, Hershey Company: despite Into our pricing assumption, and Michele touched on this already, we always want to make sure that we’re investing back in the brands, that we’re investing on competitive events with our customers. We’ve got a big innovation calendar already planned for next year. We’ve got some big tentpole events around Olympics and the Hershey movie, and so we feel like those will be fully funded and of course, we’ll be agile when we get into it. If we do see pressure in some spots or the elasticities are not what we expected, we can revisit.

Max Gumford, Analyst, DNB Paribas: Okay, thanks very much. I’ll leave it there.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Thank you.

Conference Operator: Our next question is from Megan Clapp with Morgan Stanley. Please proceed.

Megan Clapp, Analyst, Morgan Stanley: Hi, good morning and congratulations to Michelle as well. I wanted to ask about the non seasonal performance in CMG in the quarter. I think you talked to mid single digit growth in the quarter that’s better than we’d seen previously. And you still have a lot of activations planned for the second half. And I think you were expecting some incremental shelf space alongside some of those plans in the second half.

So maybe, A, you could just expand on what you’ve seen in that non seasonal portfolio in the second quarter and what’s driving the acceleration and then B, how you’re thinking about second half growth and kind of the puts and takes. Thank you.

Michelle Buck, Chairman and CEO, Hershey Company: Sure, so first of all, we’re feeling very good about what we’re seeing on overall chocolate category growth and there are really three key factors that we think are driving a lot of what we’re seeing. First of all, innovation. The consumer has really responded to innovation. As the consumer looks for value, significant innovation makes a difference and delivers value, and there’s been a lot of investment in innovation across the category. Secondly, we do know that our products provide emotional well-being and comfort during stressful times, and we’ve seen some correlations as we look at studies that are out relative to consumers’ mindset and emotional well-being and where we’re seeing growth tick up in the category.

We also had some periods where we were lapping some soft comps, and that helped us relative to every day as well, But I think those overall trends, tend to be some of the biggest drivers, and then certainly we also have seen some nice tick up from, how we approached instant consumables and some of the choices that we made to really partner with retailers to broaden shelf space and innovation on instant consumables, and we saw some very strong positive results and growth behind those programs, and we think as pricing hits the market that we will only see that growth kind of maintain and become a bit stronger. So we feel really good about what we’re seeing. That said, I would say we’re not sure that we will see the category stay at the same level of growth that we saw in Q2. Some of the year on year comps will get a little bit tougher.

Megan Clapp, Analyst, Morgan Stanley: Okay, that’s super helpful. Thank you. And then maybe just a follow-up for Steve to the answer to Max’s question. I think you said if relief and tariffs happen or COCA reverts back, you could get to better than on algo for ’26. So I guess is it fair to say at this point you do expect you could deliver on algo growth versus the updated 2025 guide in 2026?

Steve Oskal, Senior Vice President and CFO, Hershey Company: Yes, based on what we can see today and again, things like tariffs are rapidly moving, but based on what we can see today, yes, we see on algorithm earnings growth and top line growth for next year.

Megan Clapp, Analyst, Morgan Stanley: Awesome. Thank you. I’ll pass it

Conference Operator: question is from Peter Galbo with Bank of America. Please proceed.

Peter Galbo, Analyst, Bank of America: Hey. Good morning, Michelle and Steve. Thanks for the questions, and congrats to Michelle as well. Michelle, maybe I wanted to take the tariff discussion a little bit of a different direction. I think last quarter, you started hinting at some conversations that you all had been having as it relates to potential exemption.

I think the Commerce Secretary even made some comments yesterday about Coco potentially getting exemption or at least in his words. So just curious if you can give us an update there in terms of the discussions that you’re having and kind of how you’ve maybe seen that evolve relative to three months ago?

Michelle Buck, Chairman and CEO, Hershey Company: Sure. So I would say that we are even more optimistic now. As we’ve had conversations over the past several months, we have become increasingly comfortable that the government administration understands some of our concerns about the fact that cocoa can only be grown and sourced outside of The US, And so we feel good that they really understand that issue broadly, and we have started seeing more commentary, more publicly addressing that, like the comments that Secretary Letnick made just yesterday. And we believe that gives us a lot of optimism. We understand that there are still country negotiations that are underway that have to come to fruition, And so the whole COCO tariff has to be a broader part of that, but we are optimistic relative to the fact that there are now public statements being made about this issue.

Peter Galbo, Analyst, Bank of America: Great. Thanks for that, Michelle. And then if I can actually pivot to Halloween, I think in your prepared comments, again, there was a little bit of maybe a pull forward on shipments from Q3 into Q2. Just want to understand that dynamic. But then also, I believe you had pretty optimistic outlook for Halloween.

So just want to understand kind of what’s underlying that view as we get into that view? Thanks very much.

Michelle Buck, Chairman and CEO, Hershey Company: Yes. So I wouldn’t make too much of those accelerated shipments. We see shifts over the years between when Halloween shifts between Q2 and Q3. That’s not uncommon. Some years the customers want to set the category a little bit earlier and that’s actually a good thing for us.

We think we also may be seeing a bit of this mid summer lean in. There’s been a social media trend around summerween, which is earlier Halloween celebrations, which has really somewhat taken off with certain consumer groups. So we know that some customers are focused on that. As we talk to customers, we feel really good that there are plans in place to deliver another strong Halloween in ’25. Retailers are definitely excited to set the bar higher this year and continuing to deliver an exciting season for the customers.

Peter Galbo, Analyst, Bank of America: Great. Thanks very much.

Conference Operator: Our next question is from Jim Salera with Stephens Inc. Please proceed.

Peter Galbo, Analyst, Bank of America: Hey, guys. Good morning. Thanks for taking our question. I wanted to shift gears and maybe ask a little bit on the salty snacks piece of the portfolio because salty as a category has been pressured this year. And yet, it seems like you guys are seeing strength in both Dots and Skinny Pop, which I think play in kind of different value proposition, one obviously more better for you, one more indulgent.

Can you just speak to what you’re seeing there that’s allowing you to deliver kind of above category trends? And then maybe speak to any opportunities to increase multi back distribution because that was something you guys called out in the prepared remarks.

Michelle Buck, Chairman and CEO, Hershey Company: Yes. So first of all, both dots pretty much our entire portfolio in salty snacks does have a permissible and premium halo. Popcorn, clearly skinny buff is pretty obvious, but as you think about pretzels, pretzels are perceived as better for you than many other salty snacks. So even Dots has a bit of that permissibility halo. Across those businesses, we just continue to see strong consumer acceptance and momentum.

As we bought those businesses, they were relatively nascent, so continued to have upside in driving household penetration, just getting more consumers to be aware of the brands, continued opportunities to gain distribution. And now we’ve really dialed up the marketing with new packaging on Skinny Pop, our Jennifer Aniston program, exclusive flavors on dots like Buffalo that have generated a lot of consumer interest and fit into some important tentpole events around sports and football. Then price pack architecture has been another opportunity of just continuing to fill out all the sizes and price points. So between flavor innovation, price pack architecture, engaging with the consumer, there just continues to be momentum, and we’ve also launched some innovation that is kind of between the scenes, the scenes of those two, of some of our categories. So for example, Reese’s peanut butter filled pretzels, which has recently hit the market, which is a phenomenal product that leverages our sweet and salty together.

And then you hit multipacks, and I’d say that’s just another lever of growth. Frankly, multi packs are of significant size in salty snacks, and we’re really filling out our portfolio there, both in terms of single items as well as leveraging the breadth of our portfolio to deliver. So we’re continuing to expand the SKUs in that space and gain more distribution there.

Peter Galbo, Analyst, Bank of America: Great. And maybe just one more thought on multipacks. Are you able to leverage some of the innovations that you have and kind of package that together and sort of kind of an innovation centric multipack offering that would highlight some of the different innovations you have across the portfolio and make that a little bit more front and center and maybe allow the consumer to kind of try all your innovations in one package.

Michelle Buck, Chairman and CEO, Hershey Company: Yeah, we certainly can combine across the portfolio. For example, we’ve done a Reese’s one that we put together that included our Reese’s Animal Crackers, our Reese’s Pretzels. So yes, we’re doing a lot of consumer insight work to optimize what are the most compelling combinations across our portfolio, and we’ve really just gotten some of these multi packs into the market. So this is an area where there’s a lot of upside ahead of us.

Peter Galbo, Analyst, Bank of America: Great. I appreciate the color, Michelle. Thank you.

Conference Operator: Our next next question is from Robert Moskow with TD Cowen. Please proceed.

Robert Moskow, Analyst, TD Cowen: Hi, thanks. And I just want to extend my congratulations to you, Michelle, for such a great track record and creating so much value at Hershey over the years. I wish you the best.

Michelle Buck, Chairman and CEO, Hershey Company: Thank you.

Robert Moskow, Analyst, TD Cowen: You’re welcome. And I wanted to ask though about the instant consumable part of the business. I think you say in the press release or the transcript that everyday chocolate as a category was up 6.7%. Your everyday chocolate is up less than that. And I wanted to know how you would gauge your competitiveness in that segment of the market right now.

I thought this is the part where you felt like you had more work to do. Are you seeing any improvement? And then one other extra thing, I think you said that you thought that the category growth rate may not be as strong in the back half because of comparisons. Can you be more specific what those comparisons were? Recall from last year.

Thanks.

Michelle Buck, Chairman and CEO, Hershey Company: Yeah, so I’ll start instant consumables. We do feel like we have made progress there, and our numbers demonstrate that. In instant consumable, we are now gaining share and growing ahead of the category. We feel good about the actions we put in place relative to partnering on our gold standard planograms, which enabled us to expand distribution, get more breadth of our portfolio on the shelves to make the shelves even more productive, and we think that that will continue going forward. So we feel good about the program that we committed to and executed in the first half of the year.

Take home is where we have seen some pressure. That’s where we’ve had more pressure on the business, particularly from private label and some of the better for you and insurgent brands, and it’s one of the reasons that as we launch Oreo, we’re really focusing on take home because we believe innovation is what’s really needed to capture shelf space and to capture the consumers mind share of the take home set. Relative to year on year comparisons, the comparisons are particularly tough in Q4, as that’s when we really started to ramp up our big innovation for ’25 at the end of ’24, so that’s really what’s driving that lap.

Robert Moskow, Analyst, TD Cowen: Okay, thank you. Our

Conference Operator: next question is from Alexia Howard with Bernstein. Please proceed.

Alexia Howard, Analyst, Bernstein: Good morning, everyone, and congratulations, Michelle. Wishing you all the best for your retirement, and welcome to Kirk. First question, could you talk about the pace of innovation and how it stepped up over the last couple of years? It feels as though you’re really firing on all cylinders now, and I’m wondering if you’re able to quantify exactly how things have stepped up. And are you at the pace that you would like to be after maybe a quieter period during COVID

Michelle Buck, Chairman and CEO, Hershey Company: Yes, so you’re absolutely right about that. We have dialed up our innovation. We measure our innovation as a percent of net sales and try and target where we think we need to be to really fully leverage that innovation without overleveraging innovation at the expense of the core, because we know the core is highly profitable and want to make sure we’re focused on that. Our levels are up significantly versus 2019. What we’re seeing in the category frankly is a little bit more innovation is absolutely necessary in order to compete with particularly for shelf space, with some of the insurgent brands and also private label.

And innovation is also perceived as value from the consumers who are looking for value. So I do think that we’ve done a really nice job of getting to a good stride as we look to ’26, and also getting innovations out there that we do think can really play sustainable role in the category. If you think about the innovation that we’ve put forth in suites around Jolly Rancher, Robes, Freeze Dry, the Shaq brand, our M and A and Sour Strips, really strategic in terms of hitting new consumers and new occasions, and then also some really big innovation such as the Oreo one that we announced that we think gives us a good blend of news, incrementality, and disruption.

Alexia Howard, Analyst, Bernstein: Great, thank you. And as a follow-up, it seems to me that there may be some incremental headwinds to consumer demand in indulgent snacking as we enter 2026, The GLP one pill version coming out, potential snack benefit reduction at the individual state level in terms of what what snack can be spent on and soda and candy may be coming out of that. How are you thinking about that as a potential impact next year? Obviously, the innovation, the marketing, are obviously going to counter that, but is that something that we should be factoring in? Thank you and I’ll pass it on.

Michelle Buck, Chairman and CEO, Hershey Company: Yes, so I’d say first of all, relative to GLP-1s, we continue to see no material impact in ’twenty five. Certainly, are always monitoring very closely, but at this point, we’re not expecting it to be significant in ’26. We broadly look at the consumer trend as it relates to health and wellness. As you know, there’s been over time a continuous pressure of consumers being more and more interested in products that have those types of benefits, and as well we always watch kind of the national conversation around health and how that may evolve and change anything. So we’re closely monitoring that to make sure our portfolio has offerings that appeal to all consumers’ desires.

As it relates to SNAP, the way that the rollout is slated, we aren’t expecting material impact in ’twenty six and ’twenty seven. We frankly, given the choice of reducing SNAP or removing CMG, we’re less concerned with removing CMG because it does still give the consumer SNAP dollars to fund their groceries, but they can also choose to to spend on confection. As we look beyond ’27, it is something that we are monitoring to factor into our planning.

Alexia Howard, Analyst, Bernstein: Great. Thank you very much and wishing you all the best for the future. Thanks, Michelle.

Michelle Buck, Chairman and CEO, Hershey Company: Thank you.

Conference Operator: Our next question is from Leah Jordan with Goldman Sachs. Please proceed.

Anori Naughton, Vice President of Investor Relations, Hershey Company0: Thank you. Good morning. Just wanted to go back to the pricing discussion, see if you can, help us understand the phasing of the pricing actions you’re making in the back half and into ’26. And I guess ultimately, why does taking this magnitude of pricing make sense now given the assumption for 1% elasticity, as it’s often just better to keep people in the category versus trying to win them back later?

Michelle Buck, Chairman and CEO, Hershey Company: I mean, I’ll start and throw it over to you. Certainly, I think pricing makes sense as we look at the continuous pressures that we’ve had from cocoa pricing on our P and L. We are committed to margin recovery and pricing to cover inflation over time. So that is part of our long term strategy. We’ve said all along we were going to watch prices and certainly if we could delay taking an increase do so, but we think that’s important.

We also believe we’re still delivering and we know we’re still delivering compelling value across our portfolio. Over 75% of our items are under the $4 price point and frankly, we’re in pretty good shape on that as we look at where we are relative to the other snacking options in the marketplace. As we think about 2025 in particular in terms of impact of pricing, if you think about the rest of the year, we have about 40% of our second half orders that aren’t impacted by pricing, given the predominance of seasons in the back half. So between seasons and then also the support behind OREO and the momentum there, we’re not going to get a full impact in the back half. Steve, I don’t know if you want to talk about anything more broadly going forward.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Yes, would just say that for this year, the impact is about two points to the enterprise on the top line, and then obviously most of that’s going be in the fourth quarter. And then as we look to next year, it’s more mid teens impact, about 80% of the profit benefit will happen in 2026, with a little bit of flow through to ’27 on seasons. And the first season to be impacted will be Easter twenty six, so hopefully that gives you some idea of the profile.

Michelle Buck, Chairman and CEO, Hershey Company: The other thing I would just add is we view pricing as a strategic way to allow us to continue to invest in our brands and to drive the long term health of the category with new capabilities, etcetera.

Anori Naughton, Vice President of Investor Relations, Hershey Company: That’s very helpful. Thank you.

Conference Operator: Our next question is from David Palmer with Evercore ISI. Please proceed.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: Great. Thanks. Congrats, Michelle. And also, congrats to Kirk and welcome. Quick follow-up on the pricing, does that mid teens pricing, is that inclusive of tariff related pricing?

I’m assuming so and if so, what happens if we do see that exemption from COCO in the near term? Does that get adjusted? How should we think about that? I have a follow-up.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure. Just to be crystal clear, the pricing has nothing to do with tariffs. This is strictly a catch up on cocoa component. And as we said, we’re not fully caught up even on the ’25 inflation yet.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: Alright. So you’re are you currently having discussions where you’re talking about two different levels if we see, I mean, is there a dual track discussion happening on that through year end? Because I would imagine there’s one window. So how are you thinking about that?

Steve Oskal, Senior Vice President and CFO, Hershey Company: Yes, I think it’s too early. This is now in the market. As we talked about earlier, we want to make sure we execute this with excellence, see what the elasticities look like and then see what happens. We said we have some optimism relative to tariffs going forward, particularly on cocoa and we’ll continue to watch the cocoa markets. But too early to think about that next step.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: And you mentioned 80% of that would flow through next year in the previous answer. If we just were to back up and just look at that North American confectionery price mix flow through in ’26, what sort of flow through should we be expecting from that level of pricing in ’26?

Steve Oskal, Senior Vice President and CFO, Hershey Company: I think we’re going to begin to see mid teens again overall for USCMG. It’ll start from the first quarter and then obviously we talked about with Easter being the first season, there’ll be a pretty quick start with the new pricing next year for that business.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: Got it. So we should be expecting double digit price mix to be flowing through in ’26, starting in ’26.

Steve Oskal, Senior Vice President and CFO, Hershey Company: That’s right. Yep.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: Yeah. Yeah. Got it. Thank you very much.

Peter Galbo, Analyst, Bank of America: You bet.

Conference Operator: Our next question is from Michael Lavery with Piper Sandler. Please proceed.

Anori Naughton, Vice President of Investor Relations, Hershey Company2: Thank you. Good morning and congrats as well, Michelle.

Michelle Buck, Chairman and CEO, Hershey Company: Thank you.

Anori Naughton, Vice President of Investor Relations, Hershey Company2: Just wanted to come back to the color you gave on the 2026 gross margin recovery. Can you give a sense you’ve talked about how it reflects the pricing and the cost savings, but can you give a sense of what assumptions that reflects covered for 2026 at this point as well?

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure. Yes, we won’t share specifics on coverage for 2026 other than to say our policy hasn’t changed, we continue follow our policy. We still have an expectation, as we talked about, that COCO is ultimately going to come down, so we’re factoring that into our thinking around coverage and the structures that we’re using to hedge. But we are still, based on what we see today, seeing inflationary COCO for 2026 and again, part of that’s based on some of the hedging benefits that we carried into 2025 and off that base into 2026. Now we’ll watch closely what happens with cocoa in the balance of the year and that could move around, but right now we’re expecting it to be inflationary.

Anori Naughton, Vice President of Investor Relations, Hershey Company2: Okay, that’s helpful. And just as far as a follow-up on the tariff mitigation, you mentioned you’re not obviously pricing for that yet. You said that you will mitigate your tariff exposure over time if they endure. Is that just pricing or do you have other levers? What do those plans look like?

Steve Oskal, Senior Vice President and CFO, Hershey Company: Yes, right now we’re focused on what we can do in the supply chain. We’ve got the benefit of a very agile supply chain. We’ve invested a lot in agility, automation, a lot of cross border opportunities. And so we’re going to continue to optimize the supply chain part of this. We’ve done that some of that already.

I will say for this year, the impact is relatively small. But as we go forward, that’s going to be, I’ll say, the principal focus, until we see what happens with tariffs long term.

Anori Naughton, Vice President of Investor Relations, Hershey Company2: Would that be just a different country of origin shift or what supply chain flexibility is there to impact the tariffs?

Steve Oskal, Senior Vice President and CFO, Hershey Company: Yeah, mean there are impacts of where we manufacture, we’ve got capacity here in The U. S. For some things, it’s a mix of what we insourceoutsource and what countries that is located in. So it’s sort of all of those things.

Anori Naughton, Vice President of Investor Relations, Hershey Company2: Okay, great. Thanks so much.

Steve Oskal, Senior Vice President and CFO, Hershey Company: You bet.

Conference Operator: Our next question is from Scott Marks with Jefferies. Please proceed.

Anori Naughton, Vice President of Investor Relations, Hershey Company3: Hey, good morning. Thanks so much for taking our questions. And again, congrats, Michelle, on a great career. And congrats to Kirk coming in and taking over. Wanted to ask a little bit about the cocoa supply dynamics.

You made some comments in the prepared remarks around some investments in new origins. You made some comments about Ivory Coast seeing an increase in fertilizer usage. So just wondering, as we think about maybe the go forward supply, how much recoveries may be expected to come from that West Africa region relative to how much is expected to come from sources outside of the West Africa region?

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure. I mean, we talked about, I think overall, we feel there are good signs, on the cocoa market, some of which we’re seeing now and some we expect. You saw data recently that grinds have come down substantially sort of high single digits and could be heading lower. Butter ratios have come down from their peak suggesting some inventory building there potentially. The current crop, we continue to expect a modest surplus and see next year’s main crop looking quite strong.

So I’d say all of those feel good at this point. As we talked about in the prepared remarks, we’re seeing more fertilizer use, some better agriculture practices as it’s more profitable to farm cocoa. And then to your question, I think we’re going to continue to see the origins outside of West Africa continue to invest and play a larger role. Of course, we’ve been pivoting into that space already as many others have as well and I think those other origins have responded by investing more and, kind of picking up some of that mantle of a bigger role. We also have seen more recently speculators have reduced positions and so forth.

So I think we can get to a potential larger surplus without further recovery in West Africa and New Origins growing double digits and the ban continues to decline, so I think we could see more of a fall in the second half.

Anori Naughton, Vice President of Investor Relations, Hershey Company3: Got it. Appreciate the answer on that. And then last one from me. Just you had made some comments about convenience stores, obviously traffic still being down, but you were still able to grow parts of your instant consumables business there. Just wondering, as you think about maybe the go forward in C store, what kind of response have you had from convenience retailers in terms of some of your new initiatives and innovations?

And how are you thinking about the outlook for that space?

Michelle Buck, Chairman and CEO, Hershey Company: Yeah, I mean, we’ve had very strong results from the retailers relative to those new initiatives. As we shared in the script, some of the gold standard planogram has certainly resulted in significant category growth for retailers and we always go to the retailers with programs that we believe will not only grow our own business, but will actually grow their category because that’s a win win for both of us. And we know that we’ve seen significant high single digit growth in the categories where we’ve put those plans into place. So there’s a lot of momentum with the programming in place. On top of the momentum we already have, we have innovation coming in the second half, which should further advance the momentum and growth that we’re seeing on the portfolio there.

So despite, you know, even if there are continued declines in trips, think what we feel good about is that we’ve been able to still drive our business and drive conversion despite where trips are.

Anori Naughton, Vice President of Investor Relations, Hershey Company3: Thanks so much. We’ll pass it on.

Conference Operator: Our next question is from Chris Carey with Wells Fargo Securities. Please proceed.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: Hi. Good morning, everyone.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Good morning.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: One quick, modeling, you know, question and something more strategic. Yeah. On the on the modeling dynamic, which will just it has an impact on your model, the tax rate coming up for the year, some evolution of tax credits. Steve, is that a permanent dynamic going forward or is that unique to the year? Just maybe a couple of sound bites on what drove that evolution and how durable it is?

Then I have a follow-up.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure. Yes, happy to take that one. Tax has been a challenge. We talked about it in the first quarter call as well. And I think as we get to this point in the year, it’s been even more of a challenge.

It’s very hard to say what is in the tax world as much as changing right now, what is permanent. And so I can talk about what’s happening now and how we think about it for 2026 a little bit. But the biggest factors right now, a couple of things. One is, we’ve talked about before, our teams are being very creative in areas like coco sourcing and procurement, and those drive a great ROI for the company, but there are some tax consequences relative to our overall rate that are a bit dilutive, so that’s one factor. I would think about that as I don’t know that I’d say it’s sticky, but it’s certainly a piece for this year and I would imagine we’ll see some of that next year.

A second piece, and you mentioned the tax credit strategy, the tax credit strategy is impacted by two things. One is our income’s lower and so there are limits on how much tax credit availability we have with that income level. And second, with all the change in the world of tax right now, some of the returns we’re seeing on tax credits just aren’t up to the standard that we look for when we pick those investments. And I would see that as also being sticky. I think in the near term, there’s not going to be a big change, and that’s why you see the dial down between other income and expense and the tax rate kind of going in the opposite direction.

And all of those together probably give us a two fifty basis point headwind on economic tax rate, right now that I would expect to carry forward into 2026. So that’s way I think. Beyond that, it’s difficult to say. I mean, is an area that’s still, evolving pretty quickly.

Anori Naughton, Vice President of Investor Relations, Hershey Company1: Okay, very, very helpful. Regarding, you know, 2026, it’s a bit of a multi layered question, so apologies. But you have these great initiatives in place that are going to give you that what sounds like a gross 500 basis point benefit to gross margin. When you think about the offsets, which would get you in that sort of algorithm earnings growth next year, is there a way to frame how much you’re thinking about that, which is tariffs relative to lingering cocoa inflation relative to the pricing that you’re taking? And then just connected to that, one of your peers reported last night and we’re seeing some, I guess, impact some months forward of more substantial pricing, which has been taken in Europe and some of the elasticities which are starting to emerge.

Are you able leverage those pricing actions in market and the volume impacts that we’re beginning to see from the elasticity standpoint to, I guess, better serve you as you think about your own elasticities ahead of this kind of like substantial and appropriate price increase going into next year? So thanks for the gross margin and the elasticity. Appreciate it.

Steve Oskal, Senior Vice President and CFO, Hershey Company: Sure. Sure. Well, maybe helpful on the EPS side, taking the first part of your question and just kind of walk through some of the puts and takes on 26 EPS. And again, kind of starting to say, we can see a path now to being on algorithm and if a few things were to break, potential for more than that. But if I just step back on EPS, obviously we’re going to have pricing coming through next year, we’re going to have increased productivity and higher transformation savings.

That was one of the things we called out on the call this morning. We’ll see some greater scale in our core brands. So this is part of that smart complexity initiative that we referenced, being very thoughtful about how we leverage the core and drive the core, and that also leads to some margin accretion. And then we’ll continue to press on tariffs relative to the COCO exemption and that’s sort of out of our control, but continue to lean there. As we talked about on the last question, tax is going to remain high.

So I don’t see that, being any better next year.

Alexia Howard, Analyst, Bernstein: I think

Steve Oskal, Senior Vice President and CFO, Hershey Company: we’ll probably look at that as a push to next year. And then on the other side, the deltas, obviously, we talked about incremental COCO inflation. Elasticities, we’ll see, what we’re going to see there. But, along with those elasticities, we’ll have some absorption impact into the P and L. That is factored into our outlook in that 500 but basis that’s something we have to account for.

And then tariffs can also be a negative if they would happen to go the other way. So those are the kind of big moving pieces inside the puts and takes. On the elasticity question, I think right now we want to see how our assumptions in the market play out here. And like I talked about, I think in an earlier question, we’ll pivot if we need to, if we see something concerning on elasticity. We’re investing behind our brand, strong innovation agenda, so everything is in place to make this a success, working closely with our customers, but we’ll remain agile as we see this in the market.

Michelle Buck, Chairman and CEO, Hershey Company: Yeah, I mean, at the highest level, I think Steve said this before, but we feel good about being on algorithm for ’26. And as we look at the puts and takes in the marketplace, we think that there are multiple paths to us seeing EPS be well into that double digit range, pending what happens with tariffs and cocoa costs, which of course are the two biggest factors. That is with current cocoa and tariffs as they are that we achieve that on algo.

Anori Naughton, Vice President of Investor Relations, Hershey Company2: Thank you very much.

Conference Operator: Thank you. There are no further questions at this time. I would like to turn the conference back over to Ms. Naughton for closing remarks.

Anori Naughton, Vice President of Investor Relations, Hershey Company: Thank you all for joining us this morning and we look forward to connecting over the coming days.

Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.

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