Financial Data and Key Metrics Changes - The company reported a 26% increase in net sales compared to the same period last year, with organic constant currency net sales growth of 26.3% driven by net price realization of approximately five points and volume growth of approximately 21 points [26] - Adjusted gross margin decreased by five to ten basis points to 38.1% due to commodity inflation and incremental tariff expenses, although gross margin was higher than expected due to timing of cocoa hedges and lower tariff expenses [30][37] - Adjusted earnings per share declined by 4.7% year over year, impacted by incremental commodity costs and a higher tax rate [34] Business Line Data and Key Metrics Changes - North America Confectionery segment net sales grew by 32%, with volume increasing by 25%, benefiting from Easter timing and inventory changes related to ERP system implementation [27] - North America Salty Snacks segment net sales increased by 8.8%, with volume growth of over 4% driven by brands like Dots and Skinny Pop [28] - The International segment saw a 4.4% increase in net sales, but volume growth was below expectations due to category softness in Mexico and lower export demand [29] Market Data and Key Metrics Changes - Hershey's U.S. retail sales for candy, mint, and gum increased by 21.8%, outpacing the category growth of 17.9% [8] - The company gained approximately 90 basis points in market share, with everyday chocolate retail takeaway accelerating to 6.7% [9] - In the International segment, constant currency net sales increased double digits in Brazil, while growth in Europe was mid-single digits, led by the U.K. [18] Company Strategy and Development Direction - The company aims to be a leading snacking powerhouse, with a focus on balanced growth and mitigating cocoa inflation through productivity and strategic pricing [7][19] - Hershey announced a new price action on its U.S. Confection portfolio, which represents roughly 80% of total net sales, expected to deliver an estimated 16 points of pricing contribution [23] - The company is implementing a Smart Complexity initiative to simplify packaging and optimize manufacturing efficiency, raising its savings target to $400 million [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying trajectory of the business, expecting robust results to continue in the second half of the year [19] - The company anticipates adjusted earnings per share to decline between 36% and 38% for the year, reflecting higher cocoa costs and tariff expenses [37] - Management remains hopeful for improvements in tariff conditions over time, although no relief is planned for 2025 [36] Other Important Information - The company announced the appointment of Kirk Tanner as the new President and CEO, effective August 18, following Michele Buck's retirement [5][6] - Hershey's advertising and related consumer marketing expenses increased by 35.5% in the second quarter, reflecting the timing of expenses in prior years [30] - Capital expenditures for the second quarter were $231 million, with full-year expectations between $425 million and $450 million [34] Q&A Session Summary Question: What are the expectations for cocoa prices and inflation? - Management indicated that cocoa prices remain volatile and elevated, with expectations of inflation in cocoa input costs year over year in 2026 [20][21] Question: How is the company addressing tariff impacts? - The company has embedded incremental tariff costs in its full-year outlook and is taking steps to mitigate tariff exposures over time [36] Question: What is the outlook for the International segment? - The full-year constant currency segment net sales growth outlook for the International segment remains low single digits, with expectations for reacceleration in the second half [18]

Financial Data and Key Metrics Changes - The company reported a 26% increase in net sales compared to the same period last year, with organic constant currency net sales growth of 26.3% driven by net price realization of approximately five points and volume growth of approximately 21 points [29] - Adjusted gross margin decreased by five to ten basis points to 38.1% due to commodity inflation and incremental tariff expenses, although gross margin was higher than expected due to timing of cocoa hedges and lower tariff expenses [33][40] - Adjusted earnings per share declined by 4.7% year over year, impacted by incremental commodity costs and a higher tax rate [37] Business Line Data and Key Metrics Changes - North America Confectionery segment net sales grew by 32%, with volume increasing by 25%, benefiting from Easter timing and inventory changes related to ERP system implementation [30] - North America Salty Snacks segment net sales increased by 8.8%, with volume growth of over 4% driven by Dots and Skinny Pop [31] - International segment net sales increased by 4.4%, but volume growth was below expectations primarily due to category softness in Mexico and lower export market demand [32] Market Data and Key Metrics Changes - Hershey's U.S. retail sales for candy, mint, and gum increased by 21.8%, outpacing the category increase of 17.9% [8] - The company gained approximately 90 basis points of market share in the non-seasonal candy, mint, and gum category [9] - Constant currency net sales in Brazil increased by double digits, while growth in Europe was mid-single digits led by the U.K. [20] Company Strategy and Development Direction - The company aims to be a leading snacking powerhouse, with a focus on balanced growth and mitigating cocoa inflation through enhanced productivity and strategic pricing [7][21] - A new pricing action on the entirety of the U.S. Confection portfolio is expected to deliver an estimated 16 points of pricing contribution to overall company sales [25] - The company is implementing a Smart Complexity initiative to simplify packaging and optimize manufacturing efficiency, raising its savings target to $400 million [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying trajectory of the business, expecting robust results to continue in the second half of the year [21] - The company anticipates adjusted earnings per share to decline between 36% to 38% for the year due to higher cocoa costs and tariffs [40] - Management remains hopeful for improvements in tariff conditions but does not plan for relief in 2025 [39] Other Important Information - The company announced the appointment of Kirk Tanner as the new President and CEO, effective August 18 [5] - The Pokémon program has shown strong initial velocities, significantly outperforming other limited-time offers [14] - Capital expenditures in Q2 totaled $231 million, with full-year expectations between $425 million and $450 million [37] Q&A Session Summary Question: What are the expectations for the second half of the year? - Management expects an acceleration in performance to 2% to 4% growth, supported by strong innovation and merchandising plans [38] Question: How is the company addressing cocoa inflation? - The company is implementing pricing actions and hedging strategies to manage cocoa costs and restore margins over time [22][28] Question: What is the outlook for international markets? - The full-year constant currency segment net sales growth outlook for international markets remains low single digits, with expectations for reacceleration in the second half [20]