HERSHEY, Pa., May 3, 2024 /PRNewswire/ -- The Hershey Company (NYSE: HSY) today announced net sales and earnings for the first quarter ended March 31, 2024 and reaffirmed its 2024 net sales and earnings outlook. "We are off to a strong start and remain on track to deliver our business strategies and financial commitments for the year," said Michele Buck, The Hershey Company President and Chief Executive Officer.  "Our investments in innovation, marketing and in-store execution are driving consumer engagement and improving market share performance across segments.  We are successfully operating in our new ERP system, a major milestone towards achieving our previously announced agility and efficiency targets.  As we continue to navigate recent volatility in the business, we remain committed to strategies that drive long-term growth and sustainable value creation." First-Quarter 2024 Financial Results Summary1 Consolidated net sales of $3,252.7 million, an increase of 8.9%. Organic, constant currency net sales increased 8.6%. Reported net income of $797.5 million, or $3.89 per share-diluted, an increase of 36.5%. Adjusted earnings per share-diluted of $3.07, an increase of 3.7%. ___________________________ 1 All comparisons for the first quarter of 2024 are with respect to the first quarter ended April 2, 2023   2024 Full-Year Financial Outlook The Company is reiterating its net sales growth, reported earnings per share and adjusted earnings per share outlook for the year. 2024 Full-Year Outlook Current Guidance Net sales growth 2% to 3% Reported earnings per share growth ~0% Adjusted earnings per share growth ~0%   Consistent with the previous outlook, the Company also expects: A reported and adjusted effective tax rate of approximately 13%; Other expense, which primarily reflects the write-down of equity investments that qualify for a tax credit, of approximately $220 million to $230 million; Interest expense of approximately $165 million to $175 million, reflecting a higher interest rate environment; Capital expenditures of approximately $600 million to $650 million, driven by core confection capacity expansion and continued investments in a digital infrastructure including the build and upgrade of a new enterprise resource planning ("ERP") system across the enterprise; and Advancing Agility & Automation Initiative savings of $100 million. Below is a reconciliation of projected 2024 and full-year 2023 earnings per share-diluted calculated in accordance with U.S. generally accepted accounting principles (GAAP) to non-GAAP adjusted earnings per share-diluted: 2024 (Projected) 2023 Reported EPS – Diluted $9.00 - $9.11 $9.06 Derivative mark-to-market losses — 0.29 Business realignment activities 0.50 - 0.56 0.01 Acquisition and integration-related activities 0.15 - 0.20 0.37 Tax effect of all adjustments reflected above (0.17) (0.14) Adjusted EPS – Diluted $9.59 $9.59   2024 projected earnings per share-diluted, as presented above, does not include the impact of mark-to-market gains and losses on our commodity derivative contracts that are reflected within corporate unallocated expense in segment results until the related inventory is sold since we are not able to forecast the impact of the market changes. First-Quarter 2024 Components of Net Sales Growth A reconciliation between reported net sales growth rates and organic constant currency net sales growth rates, along with the contribution from net price realization and volume, is provided below: Three Months Ended March 31, 2024 PercentageChange asReported Impact of Foreign Currency Exchange Percentage Change on ConstantCurrencyBasis OrganicPrice Organic Volume/Mix North America Confectionery 10.4 % — % 10.4 % 5.9 % 4.5 % North America Salty Snacks 1.9 % — % 1.9 % 1.7 % 0.2 % International 1.8 % 3.1 % (1.3) % 3.5 % (4.8) % Total Company 8.9 % 0.3 % 8.6 % 5.2 % 3.4 %   The Company presents certain percentage changes in net sales on a constant currency basis, which excludes the impact of foreign currency exchange.  To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rates in effect during the current period of the current fiscal year.  As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in the average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year. First-Quarter 2024 Consolidated Results Consolidated net sales increased 8.9% to $3,252.7 million in the first quarter of 2024.  Organic, constant currency net sales increased 8.6%, driven primarily by price realization. Volumes increased 3.4%, primarily due to an increase in everyday core U.S. confection as a result of accelerated shipments in anticipation of our ERP system implementation, which was completed in the beginning of the second quarter of 2024. Reported gross margin was 51.5% in the first quarter of 2024, compared to 46.3% in the first quarter of 2023, an increase of 520 basis points driven by price realization and derivative mark-to-market gains.  Adjusted gross margin was 44.9% in the first quarter of 2024, a decrease of 170 basis points compared to the first quarter of 2023, as higher commodity costs more than offset price realization and productivity gains. Selling, marketing and administrative expenses increased 6.3% in the first quarter of 2024 versus the first quarter of 2023, driven by media increases and capability and technology investments.  Advertising and related consumer marketing expenses increased 12.0% in the first quarter of 2024 versus the same period last year, with higher investments across segments.  Selling, marketing and administrative expenses, excluding advertising and related consumer marketing, increased 3.3% versus the first quarter of 2023 driven by wage and benefits inflation, as well as capability and technology investments. First-quarter 2024 reported operating profit was $1,058.1 million, an increase of 32.3%, resulting in a reported operating profit margin of 32.5%, an increase of 570 basis points versus the prior year period.  This increase was driven by sales growth, price realization, productivity and derivative mark-to-market gains which more than offset commodity inflation, higher brand investment, business realignment activities and acquisition and integration-related costs.  Adjusted operating profit of $861.0 million increased 3.7% versus the first quarter of 2023 driven by sales growth. Adjusted operating profit margin of 26.5% declined 130 basis points versus the first quarter of 2023, as price realization and productivity were more than offset by higher commodity costs and increased brand and capacity investments. The reported effective tax rate in the first quarter of 2024 was 19.1%, a decrease of 360 basis points versus the first quarter of 2023.  The adjusted effective tax rate was 20.4%, a decrease of 240 basis points versus the first quarter of 2023.  Both the reported and adjusted effective tax rate decreases were driven by an increase in renewable energy tax credits versus the year-ago period. The Company's first-quarter 2024 results, as prepared in accordance with GAAP, included items negatively impacting comparability of $197.1 million, or $0.82 per share-diluted.  For the first quarter of 2023, items positively impacting comparability totaled $30.7 million, or $0.11 per share-diluted. The following table presents a summary of items impacting comparability in each period (see Appendix I for additional information): Pre-Tax (millions) Earnings Per Share-Diluted Three Months Ended Three Months Ended March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023 Derivative mark-to-market (gains) losses $               (218.0) $                   10.2 $                 (1.06) $                   0.05 Business realignment activities 16.7 2.3 0.08 0.01 Acquisition and integration-related activities 4.2 18.1 0.02 0.09 Tax effect of all adjustments reflected above — — 0.14 (0.04) $               (197.1) $                   30.7 $                 (0.82) $                   0.11   Segment performance for the first quarter of 2024 versus the prior year period is detailed below. See the table on components of net sales growth and the schedule of supplementary information within this press release for additional information on segment net sales and profit. North America Confectionery Hershey's North America Confectionery segment net sales were $2,707.3 million in the first quarter of 2024, an increase of 10.4% versus the same period last year. Growth was driven primarily by accelerated shipments related to the Company's April ERP implementation, which came in ahead of expectations and is expected to reverse in the second quarter.  Excluding inventory, sales grew low single digits, in line with expectations, as gains from price realization were offset by conversion related volume declines. Hershey's U.S. candy, mint and gum (CMG) retail takeaway in the multi-outlet plus convenience store channels (MULO+C) increased 1.1% for the 12-week period ended April 14, 2024. This 12-week period includes the full Easter season in both the current and year ago periods, enabling more accurate year-over-year comparisons.  Hershey's CMG share declined 10 basis points compared to the prior year. Organic net sales growth outpaced retail takeaway due to accelerated shipments supporting the Company's ERP implementation in early April. The North America Confectionery segment reported segment income of $948.2 million in the first quarter of 2024, an increase of 6.8% versus the prior year period, resulting in a segment margin of 35.0% in the quarter, a decrease of 120 basis points. Segment income gains were driven by higher sales, while margin declines were driven by increased commodity costs outpacing price realization and productivity. North America Salty Snacks Hershey's North America Salty Snacks segment net sales were $275.1 million in the first quarter of 2024, an increase of 1.9% versus the same period last year driven primarily by price realization. Hershey's U.S. salty snack retail takeaway for the 12-week period ended March 31, 2024 in MULO+C declined 4.1% versus the prior year period.  SkinnyPop ready-to-eat popcorn takeaway declined 11%, reflecting continued category softness.  SkinnyPop ready-to-eat share declined 63 basis points in the quarter.  Dot's Homestyle Pretzels retail sales increased 11.9% in the quarter, resulting in a 136 basis point pretzel category share gain.  Net sales growth outpaced retail takeaway by approximately 600 points driven by strong gains in non-measured channels. North America Salty Snacks segment income was $38.7 million in the first quarter of 2024, a decrease of 17.3% versus the first quarter of 2023, resulting in a segment margin of 14.1%, a decrease of 320 basis points versus the prior year period. Declines were driven by increased supply chain costs and higher levels of advertising. International First-quarter 2024 net sales for Hershey's International segment increased 1.8% versus the same period last year to $270.3 million.  Organic, constant currency net sales decreased 1.3% as accelerated shipments related to the Company's April ERP implementation and growth in Europe and Latin America were offset ...