Hershey(HSY) - 2025 Q4 - Annual Results

Financial Performance - Consolidated net sales for Q4 2025 were $3,091.0 million, an increase of 7.0% compared to Q4 2024[3] - Reported net income for Q4 2025 was $320.0 million, or $1.57 per diluted share, a decrease of 59.9% year-over-year[3] - Adjusted earnings per share for Q4 2025 were $1.71, a decrease of 36.4% compared to the previous year[3] - Reported net income for Q4 2025 was $320.0 million, down from $796.6 million in Q4 2024, with a diluted EPS of $1.57 compared to $3.92 in the prior year[33] - Non-GAAP net income for Q4 2025 was $347.8 million, compared to $546.4 million in Q4 2024, with a non-GAAP diluted EPS of $1.71 versus $2.69[36] Sales and Segment Performance - Hershey's North America Confectionery segment net sales reached $2,478.5 million in Q4 2025, a 5.3% increase year-over-year, with organic net sales up 5.0% driven by approximately 10 points of net price realization[21] - The North America Salty Snacks segment net sales were $357.0 million in Q4 2025, reflecting a significant 28.0% increase, with the acquisition of LesserEvil contributing approximately 10 percentage points to this growth[24] - Hershey's North America Confectionery segment income decreased to $722.0 million in Q4 2025, a decline of 10.7% year-over-year, resulting in a segment margin of 29.1%, down 520 basis points[23] - The North America Salty Snacks segment income increased to $75.3 million in Q4 2025, a 38.1% increase compared to the prior year, leading to a segment margin of 21.1%, up 160 basis points[26] - International segment net sales increased by 0.4% to $255.6 million in Q4 2025, but organic net sales decreased by 1.9% due to a 4-point decline in volume[27] - The International segment reported a loss of $31.6 million in Q4 2025, a decline of $61.1 million year-over-year, resulting in a segment margin of (12.4)%, down 24.0 percentage points[28] Cost and Expenses - Reported gross margin for Q4 2025 decreased by 17.0 percentage points to 37.0%, influenced by higher commodity costs and lower volume[15] - Selling, marketing, and administrative expenses increased by 12.1% in Q4 2025, driven by higher compensation and advertising investments[16] - Hershey's unallocated corporate expense was $236.3 million in Q4 2025, an increase of 20.9% or $40.9 million compared to the same period in 2024, driven by higher compensation costs[29] - The company incurred acquisition and integration-related costs of $34,930 in Q4 2025, a 134.2% increase from $14,912 in Q4 2024[52] - A goodwill impairment charge of $6,403 was recorded in Q4 2025, reflecting challenges in the International segment[52] Tax and Capital Expenditures - The effective tax rate for Q4 2025 was reported at 13.4%, compared to (10.2)% in Q4 2024[18] - The adjusted effective tax rate for Q4 2025 was 23.4%, reflecting fewer renewable energy tax credits compared to the prior year[18] - The company anticipates capital expenditures in the range of $425 million to $475 million for 2026[6] Future Outlook - For full-year 2026, the company expects net sales growth of 4% to 5%, with reported earnings per share projected to be between $7.77 and $8.19, an increase of 79% to 89% versus 2025[5] - The impact of acquisitions on net sales growth for 2026 is estimated to be approximately 150 basis points[5] Balance Sheet Highlights - Total assets increased to $13.74 billion in 2025 from $12.95 billion in 2024, representing a growth of approximately 6.1%[54] - Cash and cash equivalents rose to $925.86 million, up from $730.75 million, marking an increase of about 26.6%[54] - Inventories increased to $1.43 billion in 2025, compared to $1.25 billion in 2024, reflecting a growth of approximately 13.9%[54] - Total liabilities grew to $9.10 billion in 2025, up from $8.23 billion in 2024, indicating an increase of around 10.6%[54] - Long-term debt increased significantly to $4.68 billion in 2025 from $3.19 billion in 2024, a rise of approximately 46.7%[54] - Total stockholders' equity decreased slightly to $4.64 billion in 2025 from $4.71 billion in 2024, a decline of about 1.6%[54] - Accounts receivable decreased to $729.55 million in 2025 from $800.40 million in 2024, a decline of approximately 8.8%[54] - Current portion of long-term debt decreased to $503.33 million in 2025 from $604.97 million in 2024, a reduction of about 16.7%[54] - Prepaid expenses and other assets decreased significantly to $504.24 million in 2025 from $974.22 million in 2024, a decline of approximately 48.3%[54] - Deferred income taxes increased to $679.54 million in 2025 from $424.24 million in 2024, reflecting a growth of about 60.1%[54]