Hershey(HSY)2024-05-03 12:06Financial Performance - Net sales for Q1 2024 were 2,987.6 million in Q1 2023, driven by a 5.2% favorable price realization and a 3.4% volume increase[143]. - Gross profit increased to 1,382.3 million in Q1 2023, resulting in a gross margin of 51.5%, an increase of 520 basis points[143][148]. - Operating profit rose to 799.9 million in Q1 2023, with an operating profit margin of 32.5%[143][151]. - Net income for Q1 2024 was 587.2 million in Q1 2023, with diluted EPS rising to 2.85[143][155]. - Total segment income for the company was 989.6 million in Q1 2023, marking an increase of 4.0%[160]. Tax and Expenses - The effective income tax rate decreased to 19.1% in Q1 2024 from 22.7% in Q1 2023, influenced by investment tax credits[154]. - Selling, marketing, and administrative expenses increased to 581.6 million in Q1 2023[149]. - Unallocated corporate expenses decreased to 177.1 million in Q1 2023, a reduction of 2.4%[169]. - Net interest expense increased by 39.8 million in Q1 2024, primarily due to higher rates on long-term debt[152]. Sales and Market Performance - U.S. retail takeaway increased by 7.0% in Q1 2024, with candy, mint, and gum consumer takeaway rising by 8.1%[145]. - Net sales for the North America Confectionery segment increased to 2,452.2 million in Q1 2023, driven by a 5.9% favorable price realization and a 4.5% volume increase[160]. - North America Salty Snacks segment net sales rose to 270.0 million in Q1 2023, with a favorable price realization of 1.7%[164]. - International segment net sales reached 265.4 million in Q1 2023, supported by a 3.5% favorable price realization[167]. Cash Flow and Capital Expenditures - Cash and cash equivalents totaled 118.5 million compared to the end of 2023[170]. - Capital expenditures in Q1 2024 were 176.1 million in Q1 2023, primarily for ERP system implementation and capacity expansion[175]. - The company expects 2024 capital expenditures to approximate 650 million, driven by the completion of key strategic initiatives[175]. - Operating activities generated cash of 186.2 million from 273.4 million, an increase of 207.4 million in the same period of 2023[179]. - The company repurchased shares worth 239.9 million in the same period of 2023[181]. Strategic Initiatives and Risks - The company completed the acquisition of assets from Weaver Popcorn Manufacturing on May 31, 2023, enhancing manufacturing capacity[138]. - The company anticipates moderation in consumer spending for the remainder of 2024 due to cost fatigue and labor market constraints[139]. - The company may not fully realize the expected cost savings and/or operating efficiencies associated with its strategic initiatives or restructuring programs, which could adversely impact its business[188]. - Complications with the design, implementation, or usage of the new enterprise resource planning system could adversely impact the company's business and operations[188].