The Hershey Company 2026 Q3 Earnings Call

Good morning, everyone. Thank you for joining us today for The Hershey Company's third quarter 2026 earnings Q&A session. I hope everyone has had the chance to read our press release and listen to our prerecorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the prerecorded remarks. At the conclusion of today's live Q&A session, we will also post a transcript and audio replay of this call. Please note that 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 in the company's SEC filings. Finally, please note that we may refer to certain non-GAAP financial measures that we believe provide useful information for investors. This information is not intended to be in consideration in isolation or as a substitute for 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 President and CEO, Kirk Tanner, and Hershey's Senior Vice President and CFO, Dave Poultre. Operator, we can kick it over for the first question.

Yeah. Thanks, Andrew. I'll take that one. Look, we're confident in the actions we control and the results that are already delivering. We are holding that 2%-4% outlook. Now, the consumer and macro backdrop, as you mentioned, will influence where we land in that range. I like to think about this in what we can control and what's out of our control. The things that we can control, our competitiveness is really driven by refresh media, innovation, programming. Let me talk a little bit about each. Our media that we've seen in the first half of the year is working, we've got a good return on investment. We've seen our Hershey's brand grow 7% in the last 13 weeks. We have three new campaigns. We're getting momentum with the media that we're spending, and we're getting a higher return on investment.

I like what we are doing there. Innovation, we have talked a lot about. We have had really good innovation this year on Dot's Snack Mix. Hershey's Creme Bar is the number 1 innovation in the last 4 weeks. Reese's Filled Pretzels, Reese's Oreo that we have talked about, that is the largest innovation over the last 52 weeks. When we look into 2027, we have a 50% increase on our innovation pipeline. We are going to be much more competitive on innovation. Programming. We talked about tent pole events like March Madness, S'mores, Back to School. We have seen improvement on those and double-digit growth, so we have more programming against those big events next year. We also believe that our salty business can definitely produce more for us in 2027, both on the top line and the bottom line.

I tell you, we have great RGM strategies that include low single-digit carryover pricing next year. Those things that are out of our control are consumer spending, which is certainly pressured by higher gas prices and overall cost inflation, and as a result, if the category is a little lower than expected, then we would expect to be in the lower part of the range. That is how we are thinking about next year.

Thanks so much. You bet.

Look, in the third quarter, we saw retail performance was generally in line with expectation. We had some momentum. Profitable share, I will tell you, is at the center of our strategy. Stronger innovation pipeline in the right spaces and more, all those things that I talked about, effective media, broader merchandising and distribution, those are things that are winning. When we look at this year, competitors have increased short-term, I would say short-term news-driven activity, and it has been an innovation opportunity in the category. That is what makes this category so rich and vibrant. I am confident the investments we have made in R&D innovation in our pipeline for 2027 and 2028 make us much more competitive. I have seen the innovation myself. For 2028, it looks fantastic. 2027, like I said, is 50% more than 2026. That is how this category is competitive.