The Hershey Company (HSY) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed sentiments: strong innovation pipeline and brand investment are positive, but concerns over cocoa costs and Halloween performance are negative. The Q&A highlights management's optimism in core markets despite international challenges. However, unclear responses on key issues like pricing gaps and elasticity assumptions add uncertainty. Given these mixed signals and lack of market cap data, a neutral stock price movement is expected.
Key Financial Performance
Revenue The Hershey Company reported a revenue of $2.91 billion for the third quarter of 2025, which represents a 7.5% increase year-over-year. This growth was driven by strong consumer demand and successful product innovations.
Gross Margin The gross margin for the quarter was 45.2%, a decrease of 1.3 percentage points compared to the same period last year. The decline was attributed to higher input costs and increased promotional spending.
Operating Income Operating income came in at $650 million, up 5% year-over-year. The increase was due to effective cost management and operational efficiencies.
Net Income Net income for the quarter was $480 million, reflecting a 4% increase from the prior year. This was primarily driven by higher operating income and a lower effective tax rate.
Earnings Per Share (EPS) Earnings per share were $2.35, up 6% year-over-year, supported by share repurchases and improved profitability.
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Operating Highlights
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Risk or Challenges
Forward-looking statements: The company acknowledges that forward-looking statements are subject to various risks and uncertainties, which could lead to actual results differing materially from projections.
Regulatory and compliance risks: The company highlights that detailed risks and uncertainties are listed in their SEC filings, indicating potential regulatory or compliance challenges.
Non-GAAP financial measures: The use of non-GAAP financial measures, while useful for investors, may pose challenges in providing a complete financial picture compared to GAAP measures.
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Guidance & Outlook
Forward-looking statements: During today's Q&A session, we may make forward-looking statements that are subject to various risks and uncertainties. These statements include 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.
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Shareholder Return Plan
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Key Q&A
Q:How does the company plan to balance various factors for 2026, including cocoa costs, elasticity, and pricing?
A:The company is focused on balanced growth across its portfolio and aims to grow with or ahead of the category while rebuilding margins over a few years. They plan to invest in their business and brands while targeting long-term algorithm growth of 2%-4% in revenue. EPS growth has potential upside, but the company is playing for the long term.
Q:What is the company's expectation for elasticity in the context of next year's guidance?
A:The company is planning for elasticity at minus 1 for next year, which they believe is an appropriate assumption. While elasticity has been better this year due to factors like a long Easter and innovation benefits, they expect minus 1 to be a reasonable baseline for 2026.
Q:What are the company's observations on elasticity in the everyday business over the past few weeks?
A:The company has observed double-digit growth in the everyday business over the past 4 weeks, with no concerns about elasticity so far. They plan to provide more updates in the future.
Q:What is the company's perspective on the competitive pricing environment?
A:The company believes the category remains resilient and rational. They focus on putting the consumer first and working with customers to ensure deliberate pricing strategies. While pricing cadences may differ, they are not concerned about price gaps across the portfolio.
Q:How has Halloween performed this year, and what adjustments is the company planning?
A:Halloween has been somewhat disappointing, with a slow start and challenges like warm weather and a Friday Halloween. The company is analyzing consumer and customer insights to improve future seasons, focusing on pack types, offerings, and product mix.
Q:What is the company's view on cocoa costs and their impact on pricing?
A:Cocoa costs are still 70% higher than in 2023, and while there has been some recent moderation, the company remains cautious. They emphasize building trust with customers and taking a planned approach to pricing.
Q:What is the company's approach to innovation for 2026?
A:The company has a robust innovation pipeline for 2026 and 2027, with a focus on balancing growth in the core business and innovation. Recent successes like REESE'S Oreo have driven growth, and the company plans to continue engaging consumers with new products.
Q:What are the company's plans for brand investments?
A:The company is investing in digital marketing and innovation, such as REESE'S Oreo, to drive performance and momentum. They aim to invest efficiently and strategically to support their brands.
Q:What factors could influence the company's EPS growth in 2026?
A:Key factors include consumer demand, innovation, elasticity, cocoa costs, and tariff relief. The company is optimistic about these factors but continues to monitor them closely.
Q:What is the company's outlook for the fourth quarter?
A:The company expects momentum in U.S. CMG to continue, with additional investments in Halloween and holiday performance. International shipment timing is a factor, and cocoa hedge timing may impact results.
Q:What is the company's perspective on the salty snacks business?
A:The salty snacks business is performing well, with brands like SkinnyPop, Dot's, and Pirate's Booty driving growth. The company is focused on permissible snacking and innovation to scale the business further.
Q:What is the company's view on the convenience store channel?
A:The company sees opportunities to improve execution and merchandising in convenience stores. They are focused on innovation, tentpole moments, and building partnerships with convenience customers.
Q:What is the company's perspective on consumer health and SNAP program changes?
A:The company acknowledges consumer challenges but notes that the category remains resilient. They expect minimal impact from SNAP program changes in 2026 but continue to monitor the situation.
Q:What is the company's approach to cocoa hedging and potential deflation?
A:The company uses a mix of price-fixed and downside-participation hedges, allowing for some benefit if cocoa costs fall further. They expect cocoa to be inflationary for the full year but see potential for deflation later in 2026.
Q:What is the company's perspective on innovation's contribution to sales?
A:Innovation is critical but must be balanced with core business growth. Recent innovations like REESE'S Oreo have driven growth while also elevating core brands.
Q:What is the company's perspective on pricing dynamics in the U.S. versus Europe?
A:The U.S. CMG category is resilient and rational, with no major price gaps causing concern. The company believes the U.S. market is structurally different from Europe and does not expect similar pricing challenges.
Q:What is the company's perspective on international business performance?
A:The international business faces challenges due to cocoa costs and elasticity impacts but is growing share in most core markets. The company remains optimistic about long-term growth and profitability.
Q:What is the company's perspective on the tax rate and medium-term planning?
A:The tax rate has been impacted by reserve adjustments, procurement strategies, and fewer tax credit opportunities. The company plans to provide more guidance on tax rate factors in the future.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on certain topics, such as the exact impact of Halloween performance on guidance, the precise elasticity assumptions for different product categories, and the detailed breakdown of pricing gaps in the convenience channel. Additionally, they did not provide a clear timeline for when cocoa costs might turn deflationary or the exact impact of SNAP program changes on the business.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Answer Session
Greetings Hershey
Hershey Answer
Hershey today
Instructions reminder
President Investor
QA session
Relations Hershey
Session Instructions
conference host
host Vice
today QA
HSY Transcript
The Hershey Company (HSY) Q1 2026 Earnings Call Prepared Remarks Transcript
Positive4-30
The earnings call reveals strong financial performance with a 10.6% increase in net sales and a 12.4% rise in EPS. Despite some risks such as commodity inflation and geopolitical uncertainties, the company demonstrates resilience through strategic investments and a focus on growth. The dividend increase and share repurchase indicate a commitment to shareholder returns. Overall, the positive elements outweigh the negatives, suggesting a likely positive stock price movement in the next two weeks.
The Hershey Company (HSY) Q1 2026 Earnings Call Transcript
Positive4-30
Despite not discussing operational updates or strategic initiatives, the financial performance was strong with a 10% YoY revenue increase and margin expansion. However, risks such as supply chain disruptions and competitive pressures were noted. The absence of a shareholder return plan discussion and potential strategic execution risks slightly temper the positive outlook. Overall, the strong financials, including EPS growth, suggest a positive stock price movement in the short term.
The Hershey Company (HSY) Q4 2025 Earnings Call Prepared Remarks Transcript
Unknown2-5
Despite strong financial performance with a 7% increase in net sales and a 6% dividend increase, concerns about cocoa inflation, macroeconomic volatility, and volume declines due to price elasticity could offset positive sentiments. The absence of share repurchases and a decrease in gross margin indicate mixed signals. The company's proactive approach to risks and strategic priorities for growth, however, provides a balanced outlook, resulting in a neutral sentiment.
The Hershey Company (HSY) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call reveals positive sentiment with better-than-expected financial elasticity, optimistic margin outlooks due to cocoa price declines, and strong brand investments. Despite some uncertainties in pricing impacts and SNAP changes, management's confidence in growth, especially in the Salty snacks and protein segments, suggests a positive market reaction. The flexibility in guidance and strategic campaigns for brand relevance further support a positive outlook.
HSY Report
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
