Post Earnings Coverage as Hershey’s Adjusted EPS Surged 19.1%

Upcoming AWS Coverage on Mondelēz International Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 3, 2017 / Active Wall St. announces its post-earnings coverage on The Hershey Co. (NYSE: HSY). The Company reported its first quarter fiscal 2017 results on April 26, 2017. The Kisses and Reese’s Peanut Butter Cups’ maker reported fourth consecutive quarter growth in sales and also exceeded earnings expectations. Register with us now for your free membership at:

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One of Hershey’s competitors within the Confectioners space, Mondelēz International, Inc. (NASDAQ: MDLZ), announced on April 11, 2017, that it will release its Q1 2017 financial results on Tuesday, May 2, at 4 p.m. ET and will host a conference call at 5 p.m. ET that day. AWS will be initiating a research report on Mondelēz International in the coming days.

Today, AWS is promoting its earnings coverage on HSY; touching on MDLZ. Get our free coverage by signing up to

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Earnings Reviewed

For the three months ended April 02, 2017, Hershey’s consolidated net sales were $1.88 billion, up 2.8% compared with net sales of $1.83 billion for Q1 2016. Excluding favorable foreign currency translation, a 0.1 point benefit, net sales increased 2.7% versus the year ago comparable period. Net price realization was a 2.0% benefit due to lower levels of trade. Net volume increased 70 basis points, including the contribution from the barkTHINS acquisition of 90 basis points. The Company’s net sales numbers missed analysts’ consensus of $1.90 billion.

For Q1 2017, Hershey’s gross margin was 48.2% compared to gross margin of 44.7% in Q1 2016, The Company’s adjusted gross margin increased 70 basis points in the reported quarter, driven primarily by favorable trade, lower input costs and supply chain productivity and cost savings initiatives. The Company’s reported operating profit was $191.9 million in Q1 2017, down 43.5% on a y-o-y basis, resulting in operating profit margin of 10.2%. Hershey’s adjusted operating profit increased 10.5% for the reported quarter, resulting in operating profit margin of 23.2%, an increase of 170 basis points.

For Q1 2017, Hershey reported net income of $125.0 million, or $0.58 per share-diluted, compared with $229.8 million, or $1.06 per share-diluted, for the comparable period of 2016. On an adjusted basis, the Company posted net income of $282.1 million, or $1.31 per share-diluted, compared with $238.9 million, or $1.10 per share-diluted, for the year ago same period. Hershey’s earnings numbers surpassed Wall Street’s estimates of $1.26 per share.

Segment Results

Hershey’s North America (US and Canada) net sales were $1.68 billion in Q1 2017, an increase of 2.7% on a y-o-y basis. The segment’s volume increase 0.3% driven by seasonal growth, while net price realization was a 1.2% benefit due to lower direct trade. The barkTHINS brand acquisition and foreign currency exchange rates were a 1.0% and 0.2% benefit, respectively for the reported quarter

During Q1 2017, Hershey’s North America segment’s income increased 4.5% to $553.1 million compared to $529.4 million in Q1 2016. The increase in segment income was driven by a gross profit increase of approximately 3.5% on a y-o-y basis, partially offset by higher levels of selling expense, investments in greater go-to-market capabilities and increased depreciation and amortization.

For Q1 2017, Hershey’s International and Other segment’s net sales increased 3.7% to $202.5 million. Net price realization contributed an 8.7 points benefit, offset by volume decline of 4.5 points. Excluding the 0.5% impact of unfavorable foreign exchange rates, net sales increased 4.2%.

During the reported quarter, Hershey’s constant currency net sales growth in Mexico, Brazil, and India was approximately 15%. China net sales increased mid-single digits on a percentage basis compared to the year ago same period, driven by lower direct trade expense as gross sales declined on a y-o-y basis. International and Other segment delivered income of $1.7 million for Q1 2017 compared to a segment loss of $13.2 million in Q1 2016.

Balance Sheet & Cash Flow

At the end of Q1 2017, Hershey’s net trading capital increased $14 million compared to Q1 2016. Accounts receivable were higher by $52 million on a y-o-y basis due to higher Easter sales. The Company’s inventory has increased by $25 million and accounts payable increased by $63 million.

During Q1 2017, Hershey’s adjusted depreciation and amortization was $65 million, while the Company paid $128 million in dividends. Hershey did not repurchase any common shares in the reported quarter against the $500 million share repurchase authorization approved in January 2016. The Company has $100 million remaining in regards to this authorization.

Outlook

For FY17, Hershey is forecasting adjusted earnings per share-diluted to be around the high-end of its outlook of $4.72 to $4.81, a 7% to 9% increase on a y-o-y basis. The Company expects that CapEx will be in the $270 million to $290 million range.

Stock Performance

At the closing bell, on Tuesday, May 02, 2017, Hershey’s stock was marginally up by 0.01%, ending the trading session at $107.06. A total volume of 879.90 thousand shares were traded at the end of the day. In the last six months and previous twelve months, shares of the Company have surged 5.81% and 17.00%, respectively. Moreover, the stock gained 4.10% since the start of the year. The Company’s shares are trading at a PE ratio of 50.15 and have a dividend yield of 2.31%. At Tuesday’s closing price, the stock’s net capitalization stands at $22.60 billion.

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