The Hershey Company (HSY) Bundle
A Brief History of The Hershey Company
Founding and Early Years
The Hershey Company was founded in 1894 by Milton S. Hershey in Derry Township, Pennsylvania. The company began its journey as a producer of caramels before shifting focus to chocolate manufacturing.
Growth and Expansion
By 1900, Hershey had developed the first milk chocolate bar in the United States. The company saw rapid growth, leading to the establishment of the Hershey Chocolate Factory in 1905. By 1915, Hershey's annual sales reached $3 million.
Public Offering and Diversification
In 1927, Hershey was incorporated as The Hershey Chocolate Corporation and became publicly traded on the New York Stock Exchange. The company diversified its product line with the introduction of Reese's Peanut Butter Cups in 1928.
World War II and Post-War Era
During World War II, Hershey supplied chocolate for U.S. soldiers. Post-war, the company expanded its product offerings and entered new markets, including international territories.
Recent Developments and Financial Performance (2024)
As of September 29, 2024, The Hershey Company reported net sales of $8,314.7 million, a decrease of 2.3% from $8,507.9 million during the same period in 2023. This decline was attributed to a volume decrease of approximately 5%, partially offset by a favorable price realization of 3%.
Net income for the first nine months of 2024 was reported at $1,424.6 million, down from $1,512.7 million in the same period of 2023, reflecting a decrease of 5.8%. The diluted earnings per share (EPS) also saw a decline, falling to $7.00 from $7.36 year-over-year.
| Financial Metrics | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Net Sales (in millions) | $8,314.7 | $8,507.9 | -2.3% |
| Net Income (in millions) | $1,424.6 | $1,512.7 | -5.8% |
| Diluted EPS | $7.00 | $7.36 | -4.9% |
Operational Challenges
The company faced operational challenges, including increased commodity and supply chain costs. Gross margin for the first nine months of 2024 was 45.0%, down from 45.5% in 2023. Business realignment costs totaled $32.6 million during the first nine months of 2024, significantly higher than the previous year, as the company focused on improving efficiency through the Advancing Agility & Automation (AAA) initiative.
Stockholder Equity and Dividends
As of September 29, 2024, total stockholders' equity stood at $4,204.97 million, reflecting an increase from $4,099.09 million at the end of 2023. The company declared dividends of $1.370 per share for common stock and $1.245 per share for Class B common stock.
| Stockholder Equity | 2024 | 2023 |
|---|---|---|
| Total Stockholders' Equity (in millions) | $4,204.97 | $4,099.09 |
| Dividends per Share - Common Stock | $1.370 | $1.192 |
| Dividends per Share - Class B Common Stock | $1.245 | $1.083 |
Market Position and Future Outlook
The Hershey Company maintains a strong market position in the confectionery industry, despite recent challenges. The company continues to invest in innovation and efficiency improvements to adapt to the evolving market landscape. As of Q3 2024, Hershey’s effective tax rate was reported at 14.0%, down from 20.6% in the same period of the previous year.
A Who Owns The Hershey Company (HSY)
Shareholder Composition
As of 2024, The Hershey Company (HSY) has a diverse shareholder base comprising institutional investors, mutual funds, and individual shareholders. The largest institutional shareholders include:
| Institution | Ownership (%) | Shares Owned |
|---|---|---|
| The Vanguard Group, Inc. | 8.3% | 13,825,000 |
| BlackRock, Inc. | 7.5% | 12,500,000 |
| State Street Corporation | 4.5% | 7,500,000 |
| Milton Hershey School Trust | 9.5% | 15,000,000 |
| Other Institutional Investors | 70.2% | 116,500,000 |
Class Structure of Shares
The Hershey Company has two classes of common stock: Common Stock and Class B Common Stock. The ownership distribution is as follows:
| Class of Stock | Shares Issued | Voting Rights |
|---|---|---|
| Common Stock | 166,939,511 | 1 vote per share |
| Class B Common Stock | 54,613,514 | 10 votes per share |
Recent Stock Performance
As of September 29, 2024, The Hershey Company reported significant financial metrics:
| Metric | Value |
|---|---|
| Net Income (Q3 2024) | $446.3 million |
| Earnings Per Share (EPS) - Diluted (Q3 2024) | $2.20 |
| Total Revenue (Q3 2024) | $2,987.5 million |
| Dividends Paid per Share (Common Stock) | $1.370 |
| Dividends Paid per Share (Class B Common Stock) | $1.245 |
Recent Share Repurchase Activity
In 2024, The Hershey Company has engaged in share repurchase activities to enhance shareholder value:
| Activity | Amount ($ million) |
|---|---|
| Shares Repurchased from Milton Hershey School Trust | $239.9 |
| Shares Repurchased in Open Market | $494.2 |
Ownership by Geography
The geographic distribution of shareholders is predominantly from the United States, but the company also attracts foreign investors. As of September 29, 2024, approximately 85% of cash and cash equivalents were held by subsidiaries domiciled outside the United States.
| Geographic Region | Percentage of Ownership (%) |
|---|---|
| United States | 75% |
| Europe | 15% |
| Asia | 10% |
Key Financial Ratios
The Hershey Company maintains a strong financial position, as indicated by the following key ratios:
| Ratio | Value |
|---|---|
| Debt to Equity Ratio | 0.64 |
| Current Ratio | 0.85 |
| Return on Equity (ROE) | 27.5% |
| Gross Margin | 45.0% |
The Hershey Company (HSY) Mission Statement
Mission Statement Overview
The Hershey Company aims to bring sweet moments of Hershey happiness to the world every day, inspired by its commitment to quality, innovation, and sustainability. The company focuses on creating a positive impact on its consumers, employees, and communities while delivering shareholder value.
Financial Performance
As of the first nine months of 2024, Hershey's financial performance indicates a net income of $1,424.6 million, down from $1,512.7 million in the same period of 2023, reflecting a decrease of 5.8%. The earnings per share (EPS) diluted were $7.00, compared to $7.36 in 2023, a decrease of 4.9%.
Segment Performance
The company's operations are divided into three reportable segments: North America Confectionery, North America Salty Snacks, and International.
| Segment | Net Sales (Q3 2024) | Net Sales (Q3 2023) | Segment Income (Q3 2024) | Segment Income (Q3 2023) | Percent Change (Net Sales) |
|---|---|---|---|---|---|
| North America Confectionery | $2,477.3 million | $2,457.6 million | $724.8 million | $847.5 million | 0.8% |
| North America Salty Snacks | $291.8 million | $345.2 million | $54.0 million | $57.4 million | (15.5%) |
| International | $218.4 million | $227.2 million | Data Not Available | Data Not Available | (3.9%) |
Sales and Market Metrics
For the first nine months of 2024, total net sales were $8,314.7 million, compared to $8,507.9 million for the same period in 2023, a decrease of 2.3%. The decrease was attributed to a volume decline of approximately 5%, partially offset by price realization of approximately 3%.
Cost of Sales and Gross Margin
Cost of sales for the first nine months of 2024 was $4,572.2 million, a decrease of 1.3% from $4,633.2 million in the previous year. The gross margin was reported at 45.0%, down from 45.5% in the same period of 2023.
Operating Profit and Expenses
Operating profit for the first nine months of 2024 was $1,959.0 million, compared to $2,096.5 million in the prior year, reflecting a decrease of 6.6%. Selling, marketing, and administrative (SM&A) expenses were $1,750.9 million, a decrease of 1.5% from $1,777.8 million.
Debt and Liquidity
As of September 29, 2024, total outstanding short- and long-term debt amounted to $5.3 billion, with cash and cash equivalents totaling $615.0 million. The effective income tax rate was 18.6% for the first nine months of 2024.
Shareholder Returns
Dividends paid per share for common stock were $1.370 in the third quarter of 2024, compared to $1.192 in the same quarter of 2023. The company has continued its share repurchase program, with a total of 2,505,097 shares repurchased in the first nine months of 2024.
How The Hershey Company (HSY) Works
Overview of Operations
The Hershey Company operates primarily in the confectionery sector, focusing on chocolate and non-chocolate products. As of 2024, the company segments its operations into three main categories: North America Confectionery, North America Salty Snacks, and International.
Financial Performance
Hershey's financial performance for the first nine months of 2024 is as follows:
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Net Sales | $8,314.7 million | $8,507.9 million | Decrease of $193.2 million (2.3%) |
| Net Income | $1,424.6 million | $1,512.7 million | Decrease of $88.1 million (5.8%) |
| EPS-diluted | $7.00 | $7.36 | Decrease of $0.36 (4.9%) |
| Operating Profit | $1,959.0 million | $2,096.5 million | Decrease of $137.5 million (6.6%) |
| Gross Margin | 45.0% | 45.5% | Decrease of 50 basis points |
Segment Performance
The performance of Hershey's segments for the third quarter of 2024 is summarized below:
| Segment | Net Sales (Q3 2024) | Net Sales (Q3 2023) | Segment Income (Q3 2024) | Segment Income (Q3 2023) |
|---|---|---|---|---|
| North America Confectionery | $2,477.3 million | $2,457.6 million | $724.8 million | $847.5 million |
| North America Salty Snacks | $291.8 million | $345.2 million | $54.0 million | $57.4 million |
| International | $218.4 million | $227.2 million | Data not available | Data not available |
Cost of Sales and Expenses
Cost of sales and other expenses for the first nine months of 2024 compared to 2023 include:
| Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Cost of Sales | $4,572.2 million | $4,633.2 million |
| SM&A Expenses | $1,750.9 million | $1,777.8 million |
| Business Realignment Costs | $32.6 million | $0.4 million |
Liquidity and Capital Resources
As of September 29, 2024, Hershey's liquidity position is as follows:
| Metric | Amount |
|---|---|
| Cash and Cash Equivalents | $615.0 million |
| Total Debt | $5.3 billion |
| Short-term Debt | $904.8 million |
Cash Flow Summary
The cash flow figures for the first nine months of 2024 are:
| Cash Flow Category | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Operating Activities | $1,590.0 million | $1,565.6 million |
| Investing Activities | $(549.3) million | $(735.5) million |
| Financing Activities | $(847.0) million | $(784.4) million |
| Net Change in Cash | $213.0 million | $7.4 million |
Market Position
For the first nine months of 2024, Hershey's U.S. retail takeaway metrics indicate:
- Total U.S. retail takeaway decreased 0.1%.
- U.S. CMG consumer takeaway declined 0.9% with a market share decline of 76 basis points.
- Salty consumer takeaway increased 3.2% with a market share increase of 7 basis points.
Stockholder Equity
As of September 29, 2024, the stockholder equity figures are:
| Equity Category | Amount |
|---|---|
| Total Stockholders' Equity | $4,204.9 million |
| Retained Earnings | $5,172.7 million |
| Treasury Stock | $(2,280.1) million |
How The Hershey Company (HSY) Makes Money
Revenue Streams
The Hershey Company generates revenue primarily through its sales of confectionery products, which include chocolate and non-chocolate items, salty snacks, and international sales. As of the first nine months of 2024, the company's total net sales were $8,314.7 million, reflecting a decrease of 2.3% compared to $8,507.9 million in the same period of 2023.
| Segment | Net Sales (in millions) | Change (%) |
|---|---|---|
| North America Confectionery | $6,764.4 | (2.0) |
| North America Salty Snacks | $856.8 | (3.5) |
| International | $693.5 | (3.3) |
Segment Performance
The North America Confectionery segment accounted for approximately 82.9% of net sales in Q3 2024. This segment includes popular brands such as Hershey's, Reese's, and Kit Kat. However, it faced challenges with a volume decline of around 5% due to a decrease in everyday core U.S. confection brands, despite a favorable price realization of approximately 3% from price increases on certain products.
Cost of Sales and Gross Margin
In the first nine months of 2024, the cost of sales was $4,572.2 million, down from $4,633.2 million in the same period of 2023. The gross margin for this period was 45.0%, a slight decrease from 45.5% in 2023, primarily driven by higher commodity costs and supply chain expenses.
Operating Profit and Expenses
The operating profit for Hershey was $1,959.0 million in the first nine months of 2024, down from $2,096.5 million in the same period of 2023, representing a decrease of 6.6%. The operating profit margin decreased to 23.6% from 24.6% year-over-year.
| Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Operating Profit (in millions) | $1,959.0 | $2,096.5 |
| Operating Profit Margin (%) | 23.6 | 24.6 |
Net Income and Earnings Per Share
The net income for the first nine months of 2024 was $1,424.6 million, down from $1,512.7 million in the previous year, marking a decrease of 5.8%. The diluted earnings per share (EPS) also declined to $7.00 from $7.36.
Marketing and Advertising Expenses
Selling, marketing, and administrative (SM&A) expenses totaled $1,750.9 million in the first nine months of 2024, down from $1,777.8 million in the same period of 2023. This represents a decrease of 1.5% as the company reduced advertising costs while increasing focus on efficiency.
International Operations
Hershey's international segment generated net sales of $693.5 million in the first nine months of 2024 compared to $717.5 million in 2023. This segment's income also decreased significantly, down 35.8% to $82.0 million from $127.8 million, reflecting challenges in foreign markets and increased commodity costs.
| International Segment | Net Sales (in millions) | Segment Income (in millions) |
|---|---|---|
| 2024 | $693.5 | $82.0 |
| 2023 | $717.5 | $127.8 |
Financial Outlook
As of Q3 2024, Hershey's effective income tax rate was 14.0%, down from 20.6% in Q3 2023. The company continues to focus on strategic investments and operational efficiencies to adapt to market conditions and enhance profitability moving forward.
The Hershey Company (HSY) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- The Hershey Company (HSY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The Hershey Company (HSY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Hershey Company (HSY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.