Hershey Q3 2026 Prepared Remarks Earnings Results & Report

Hershey EPS Results

• Actual EPS: $2.64
• Consensus EPS: $2.11
• Beat/Miss: Beat by +$0.53
• One Year Ago EPS: $1.30
• EPS Beat Rate: 8 of last 8 quarters

Hershey Revenue Results

• Actual Revenue: $3.28 billion
• Expected Revenue: $3.25 billion
• Beat/Miss: Beat by +$25.64 million
• YoY Revenue Growth: +3.00%

The Hershey (NYSE:HSY) Company is a global confectionery company best known for its chocolate and candy products. Milton S. Hershey established the Hershey Chocolate Company in 1894, and the company is headquartered in Hershey, Pennsylvania.

Its portfolio includes chocolate bars, packaged candy, gum, mints and other snacks. Well-known brands include Hershey’s, Reese’s, Kisses, Jolly Rancher and Ice Breakers; the company also sells salty snacks under brands such as SkinnyPop and Dot’s Pretzels.

Hershey sells its products primarily in North America and also serves consumers in international markets through its operations and distribution partners.

Hershey Q3 2026 Prepared Remarks Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Adjusted EPS rose 103% to $2.64 in Q3, supported by cocoa hedge timing, productivity savings, pricing, and approximately $57 million in tariff refunds. Full-year adjusted EPS growth guidance increased to 36%–38.5%, including tariff refunds.
• Positive Sentiment: Adjusted gross margin expanded 10.9 percentage points in Q3, and management expects full-year expansion of approximately 370 basis points, or about 330 basis points excluding tariff refunds, as cocoa costs normalize and productivity benefits build.
• Negative Sentiment: The company narrowed its full-year organic net sales growth outlook to approximately 3% because of increased consumer caution, weaker convenience-store trends, and ongoing supply constraints in salty snacks. Reported sales growth guidance remains approximately 5%, helped by the stronger-than-expected LesserEvil acquisition.
• Neutral Sentiment: Hershey cited encouraging brand and innovation momentum, including strong early performance from Hershey’s Creme-Filled Bars, continued strength from Reese’s Oreo, improved Halloween Reese’s velocities, and expanded retailer support for its One Hershey go-to-market programs.
• Positive Sentiment: Management expects a low-double-digit earnings recovery in 2027, supported by cocoa cost deflation and a projected record cocoa surplus, although freight, inflation, and consumer pressure could limit growth versus earlier expectations.

Presentation

[Anoori Naughton, VP of Investor Relations at The Hershey Company]

Good morning, and welcome to the prerecorded discussion of The Hershey Company's third quarter 2026 earnings results. I'm Anoori Naughton, Vice President of Investor Relations. Joining me today are Hershey's President and CEO, Kirk Tanner, and Hershey's Senior Vice President and CFO, Dave Hulays. In addition to these remarks, we will host an analyst Q&A session at 8:30 A.M. Eastern on the morning of October 29th. A replay of this webcast and our subsequent Q&A session will be available on the investor relations section of our website, along with their corresponding transcripts. During the course of today's discussion, management will 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.

[Anoori Naughton, VP of Investor Relations at The Hershey Company]

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 during today's discussion, we will 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 to the GAAP results are included in this morning's press release, which is available on the investor relations page of our website. It is now my pleasure to introduce our President and CEO, Kirk Tanner.

[Kirk Tanner, President and CEO at The Hershey Company]

Good morning, everyone, and thank you for joining us. As we enter the final quarter of 2026, we are making meaningful progress against the commitments we set out at the beginning of the year. We are delivering margin and earnings recovery as expected, increasing investment behind our brands and capabilities, and strengthening our portfolio for long-term growth. That progress reflects disciplined execution across the organization and resulted in solid third-quarter results. Net sales grew 3%, including 2.1% growth from LesserEvil, while organic net sales were up 0.8%. Adjusted EPS rose 103% year-over-year $2.64, including $0.22 from tariff refunds, and reflected cocoa cost recovery and hedge timing, pricing, brand reinvestment, and productivity benefits we expected. Our performance reinforces the resilience of our categories, agility of our team, and the power of our brands.

[Kirk Tanner, President and CEO at The Hershey Company]

At the same time, the operating environment has become more challenging as consumers manage the cumulative pressure of higher gas prices, inflation, and interest rates. As September progressed, we saw consumers become more deliberate about spending, particularly in channels most exposed to higher gas prices like convenience stores, where the U.S. candy, gum, and mint category declined nearly 5% in the month. That caution persisted into October, with growth moderating across snacking segments, though our categories are holding up comparatively well. We remain focused on executing our second-half demand creation plans and are encouraged by the early signs of momentum underway. I'll highlight four areas where we're seeing progress: innovation, media, go-to-market execution, and seasonal and cultural moments. First, our innovation is performing well and addressing important portfolio opportunities. The HERSHEY'S creme-filled bars are off to a strong start.

[Kirk Tanner, President and CEO at The Hershey Company]

It is the number one innovation in the category in the last four weeks, with velocities in the top quartile across our target channels. Earned impressions, earned media placements, and social engagement are all above expectation, especially among Gen Z consumers. Reese's Oreo continues to perform strongly in its second year, reaching 11% household penetration and a 44% repeat rate, evidence of the platform's durability. The item overindexes with Gen Z and remains highly incremental to the Reese's franchise. Second, our media effectiveness continues to improve as we strengthen creative quality and optimize the media mix to reach priority audiences. Through Q3, we launched new campaigns for CADBURY, PAYDAY, and FULFIL, joining the refreshed campaigns for HERSHEY'S and Reese's earlier this year. CADBURY's early signals are promising, with velocities, unit sales, and market share accelerating in the four weeks ending October 11th.

[Kirk Tanner, President and CEO at The Hershey Company]

We also modernized our Halloween marketing, leading with Reese's by embedding the brand in culture with more early season and social-led activation. Season to date, Reese's Halloween item velocities are up 13%, driving an 80 basis point gain in seasonal sales. These initiatives extend globally, with Reese's marketing supporting year-to-date share gains across all of our priority International markets. Third, our One Hershey go-to-market model is strengthening sales and execution across major programs. Retailers recognize its value and share our enthusiasm, with total snacking advisorships now extending to six retailers this year. Our Pokémon partnership helped drive 68% increase in back-to-school sales across both confection and our salty snacks. The November launch of the Hershey movie has also earned substantial customer support with merchandising plans well above initial expectations. Finally, our category remains central to seasonal and cultural traditions.

[Kirk Tanner, President and CEO at The Hershey Company]

Halloween participation is expected to be in line with 2025, though financial pressures could shape final purchase decisions. As expected, the compressed calendar is affecting the season's pace. We are optimistic that our enhanced assortment, new pack types and value price points, seasonal innovation, and increased investment will drive engagement in these final days leading into this weekend's celebrations. Consistent with our expectations, our actions are delivering healthy consumption trends on both a one-year and two-year basis. Hershey's third quarter U.S. retail sales of non-seasonal confectionery, mint and gum increased 2%, while two-year growth accelerated to nearly 4% from 2.5% in the first half. In fact, outside of c-store, Hershey's retail sales of non-seasonal candy mint and gum grew 3.7% versus last year, highlighting the relevance of the category, the reach of our distribution, and the strength of our brands and innovation.

[Kirk Tanner, President and CEO at The Hershey Company]

From a volume standpoint, while total confection volume is impacted by the strong Reese's Oreo launch last year, unit trends are improving as we begin to lap the 2025 pricing actions across our non-seasonal portfolio. In the third quarter, unit declines moderated across nearly half of our chocolate brands versus the first half, including top brands like HERSHEY'S, KIT KAT, CADBURY and HERSHEY'S KISSES. This is an important measure of consumer relevance and our ability to attract new and lapsed households. We expect retail unit and volume trends to improve further in Q4 as media, innovation, and merchandising programs gain momentum and non-seasonal pricing begins to lap. While previously announced, seasonal pricing will continue into 2027. Turning briefly to North America Salty Snacks, third quarter results remained constrained by supply challenges for DOT'S pretzels and multipacks.

[Kirk Tanner, President and CEO at The Hershey Company]

Service levels improved from the second quarter, but more slowly than expected, limiting sales and further pressuring operating profit. Importantly, consumer demand remains strong, with third quarter retail sales for the DOT'S brand up 9%. We are moving aggressively across the supply chain to meet that demand and expect continued progress with automation, added capacity, and stronger customer programming provided further support into 2027. For 2026, our outlook for net sales is now approximately 5% growth, the high end of our prior range, reflecting the strength of LesserEvil performance. However, we are narrowing our organic net sales outlook to approximately 3%, reflecting increased consumer macro and convenience channel pressure, as well as ongoing salty snack growth constraints. Our confidence in the underlying earnings recovery of our business remains unchanged. We continue to expect the adjusted EPS growth excluding tariff refunds that we guided to last quarter.

[Kirk Tanner, President and CEO at The Hershey Company]

We are increasing our adjusted EPS range, however, to reflect the benefit of tariff refunds received in the quarter. Stepping back, this continues to be a unique moment in Hershey's history. We have clear visibility into cocoa normalization and the margin and earnings recovery ahead. At the same time, investments are underway designed to support balanced, sustainable long-term growth. With that, I'll turn it over to Dave for more details on our financial results.

[Dave Hulays, SVP and CFO at The Hershey Company]

Thank you, Kirk, and good morning, everyone. Third quarter reported net sales increased 3% versus the prior year. The LesserEvil acquisition contributed 2.1 points to growth, and foreign currency translation was a 10 basis point benefit. Net price realization of approximately 11% in the third quarter was in line with expectations, reflecting our strategic pricing actions in North America Confectionery and International segments. Volume declined 10 points, primarily reflecting elasticity impacts in North America Confectionery and International, as well as shipment timing and planned portfolio optimization in International, partially offset by growth in North America Salty Snacks. North America Confectionery net sales increased 1.6%. Net price realization was approximately 13%, slightly ahead of expectations due to the pacing of promotional investments. Volume declined approximately 11%, reflecting elasticity and shipment timing dynamics, which offset strong seasonal shipments.

[Dave Hulays, SVP and CFO at The Hershey Company]

North America Salty Snacks net sales increased 22.3%, including an approximately 20-point contribution from the LesserEvil acquisition. LesserEvil continues to outperform our year-to-date expectations, and we are raising our outlook for its full year contribution to nearly 2 percentage points, up from 1.5 points. Organic constant currency net sales increased 2.3%, with net price realization up approximately 1% and volume growth of around 1%. Excluding LesserEvil, retail consumption increased 4%, led by multipacks, Reese's Filled Pretzels, DOT'S Snack Mix, and DOT'S Pretzels. Net sales growth also benefited from retailer inventory replenishment, partially offset by the planned reduction in private label production. As Kirk noted, demand continues to exceed supply. We are addressing this through automation initiatives and planned capacity expansion in 2027. We now expect North America Salty Snacks organic net sales to increase in the low single-digit range for the full year.

[Dave Hulays, SVP and CFO at The Hershey Company]

International net sales declined 7.5% in the third quarter, including an approximate two-point foreign currency tailwind. Net price realization was around 4%, reflecting previously announced pricing actions across key markets. Volume declined approximately 14%, driven by the timing of seasonal shipments versus the year ago period, planned optimization programs in select markets, and the impact of elasticity. We are narrowing our full year outlook to around 3% organic net sales growth for the total company, reflecting increased consumer macro and convenience channel pressure, as well as ongoing salty snacks growth constraints. For reported net sales, our outlook is now approximately 5% growth, reflecting LesserEvil's strong contribution and a modest benefit from foreign currency translation. Our investments are showing early results, and our fourth quarter media, merchandising, and innovation programs remain strong. Our Q4 outlook reflects an extra shipping day and healthier retailer inventories than last year.

[Dave Hulays, SVP and CFO at The Hershey Company]

These benefits are expected to be offset by lapping strong prior year results in North America Confectionery and North America Salty Snacks, softer c-store trends, and a more cautious consumer. Adjusted gross margin expanded 10.9 percentage points in the third quarter, driven by net price realization, productivity savings, tariff refunds, and net input cost deflation. Results exceeded expectations, reflecting the timing of cocoa hedges and approximately $57 million in tariff refunds.

[Dave Hulays, SVP and CFO at The Hershey Company]

These benefits more than offset higher freight and logistics expenses across all three segments. Including the tariff refunds, we now expect full year adjusted gross margin expansion of approximately 370 basis points. Excluding the tariff refunds, our full year adjusted gross margin expansion outlook is now around 330 basis points, which reflects the impact of the ongoing supply constraints on salty snacks and higher freight and logistics expenses. Advertising and related consumer marketing increased approximately 17% in the third quarter.

[Dave Hulays, SVP and CFO at The Hershey Company]

North America Confectionery and North America Salty Snacks investment increased double digits, reflecting investments in asset creation and production to support our 2027 media programs. Working media investments increased mid-single digits as we expanded national brand campaigns for CADBURY, PAYDAY, SkinnyPop, and FULFIL, as well as the Hershey's Creme Bar launch. For the full year, we expect brand investment to increase high single digits, reflecting a meaningful fourth quarter step-up supporting both 2026 and 2027 initiatives, net of year-to-date efficiencies. Adjusted operating expenses excluding advertising spend increased approximately 5%, driven primarily by incremental capability and technology investments. The adjusted tax rate was 24.4%, down 230 basis points year-over-year, which reflects higher pre-tax income, which reduced the impact of certain fixed tax items as well as foreign rate differentials. Our full year tax rate outlook is now approximately 25%.

[Dave Hulays, SVP and CFO at The Hershey Company]

Interest expense was $49 million in the third quarter, and our full year outlook is now approximately $200 million. Adjusted EPS increased 103% to $2.64 in the third quarter, ahead of expectations due to the benefit of cocoa hedge timing, which shifted, and was expected in Q4, tariff refunds, and productivity and cost savings, which more than offset increased logistics, freight, and manufacturing cost pressure. We now expect full year adjusted EPS growth in the range of 36%-38.5%, including tariff refunds received year-to-date. As Kirk Tanner mentioned, our adjusted EPS outlook excluding the benefit of tariff refunds is unchanged. Capital additions, including software, totaled $101 million in Q3, up $15 million year-over-year. Dividends paid were $285 million, a 5% increase.

[Dave Hulays, SVP and CFO at The Hershey Company]

We did not repurchase common shares during the quarter, leaving $270 million under the December 2023 authorization and $500 million under the June 2026 authorization. We remain disciplined and flexible in our capital allocation framework to support our long-term business and shareholder value creation and will remain opportunistic on share buybacks. Now, let me share a few additional details on how we are thinking about 2027. First, backed by resilient categories and strong investment in innovation, media, and programming, we still have visibility to 2027 top-line growth in line with our long-term algorithm. Second, our discussion of 2027 adjusted EPS growth will exclude the $66 million, or $0.25 per share benefit from 2026 tariff refunds. Based on what we know today, we continue to expect a low double-digit earnings recovery in 2027.

[Dave Hulays, SVP and CFO at The Hershey Company]

However, since we outlined our framework at Investor Day, freight and logistics, broader inflation, and consumer macro pressure have become more challenging and could restrain the growth relative to our March expectations. We will continue supporting our growth playbook while closely monitoring consumer trends, gas prices, and broader input cost inflation. Regarding cocoa, we have strong visibility into cost deflation in 2027. Our hedging portfolio provides price protection while preserving the opportunity to benefit from further market downside as global supply and demand conditions become clearer over the coming months. We believe current cocoa market pricing already reflects scenarios for global output well below trend despite balanced fundamentals. Importantly, the 2025/2026 crop was exceptionally strong, with current data indicating a record surplus of 500,000 metric tons-600,000 metric tons that will carry into the next season.

[Dave Hulays, SVP and CFO at The Hershey Company]

This supply underscores the growing diversification of supply as emerging origins expand production, as well as the benefits of increased fertilizer use and modern farming practices in West Africa. With elevated prices continuing to support these investments in production, we believe the cocoa market is structurally better positioned for the long term than it has been in recent years, and prices will eventually reflect this improvement. Lastly, one housekeeping item. In 2027, we will make our standard reporting calendar adjustment, which occurs every five to six years to balance quarterly reporting periods. As a result, one reporting week will shift from Q4 2027 to Q1 2027. We are advancing key initiatives to build momentum through the remainder of 2026 and enter 2027 from a position of strength.

[Dave Hulays, SVP and CFO at The Hershey Company]

We have expanded our confection innovation pipeline, we are investing to support salty snacks capacity and growth, and we are optimizing International to scale profitably. These disciplined investments in our brands, capabilities, technology, and people position us to deliver long-term shareholder value. With that, I will turn it back to Kirk Tanner for closing remarks.

[Kirk Tanner, President and CEO at The Hershey Company]

Thanks, Dave. Across the business, we are moving with urgency to capture the opportunities ahead by advancing innovation to reach new occasions and consumers, increasing the effectiveness of our media, and strengthening the seasonal and cultural moments across our portfolio that keep our brands distinctive and relevant. Together, these actions position us to sustain category leadership, strengthen our portfolio, and position HERSHEY'S to deliver attractive top and bottom-line growth over the long term. Thank you for your time this morning. We invite you to join our live Q&A webcast beginning at 8:30 A.M. Eastern. Thank you.

Participants

Executives

• Anoori Naughton, VP of Investor Relations
• Kirk Tanner, President and CEO
• Dave Hulays, SVP and CFO