Greetings and welcome to The Hershey Company First Quarter 2023 Question-and-Answer Session. At this time, all participants are in a listen-only mode. As a reminder this conference is being recorded. I'd now like to turn the call over to your host, Ms. Melissa Poole, Vice President of Investor Relations for The Hershey Company. Thank you. You may begin.

Good morning, everyone. Thank you for joining us today for The Hershey Company's first quarter 2023 earnings Q&A session. I hope everyone has had the chance to read our press release and listen to our pre-recorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the pre-recorded remarks. At the conclusion of today's live Q&A session we will also post a transcript and audio replay of this call. Please note that during today's Q&A session, we may make forward-looking statements that are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the company's future operations and financial performance. Actual results could differ materially from those projected. The company undertakes no obligation to update these statements based on subsequent events. A detailed listing of such risks and uncertainties can be found in today's press release and the company's SEC filings. Finally, please note that we may refer to certain non-GAAP financial measures that we believe will provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations to the GAAP results are included in this morning's press release. Joining me today are Hershey's Chairman and CEO, Michele Buck, and Hershey's Senior Vice President and CFO, Steve Voskuil. With that, I will turn it over to the operator for the first question.

Our first question comes from Andrew Lazar with Barclays. Please go ahead with your question.

Great. Thanks so much. Good morning, everybody.

Good morning.

Good morning.

Yes. First off, I wanted to ask a little bit about the guidance update on the top-line. The company beat by a few points on the top-line in the quarter. But when we take out the earlier summer shipments, which is really just timing, I guess, results on organic were only slightly ahead of the street view. But Hershey raised its sales growth guidance to the high end of the previous range for the full year. So I guess my question is, what are you seeing at this stage that gave you the confidence to shift the top-line guidance the way you did?

Yeah, thank you, Andrew. You're exactly right. For the first quarter, the timing impact was about half of the beat on the sales line and also strong performance in international. So those were the two big drivers and we look to the balance of year. Obviously, the timing is going to wash out in the second quarter, but we do expect to see a little bit better elasticities in the year to go period. We still see moderating versus some of the strong performance we've seen the last six to nine months. But a little bit more improvement and we're spaced that a little bit more on media investment that we also have incrementally in the year to go plan. So between, I would say, with the strength we saw in the international business, what we're seeing on the back of improved elasticities a little bit in the year to go period, that's what gives us the confidence in the raise, right?

Great. Thanks for that. And then, with the pull-forward of some shipments from Q2 into 1Q, along with the tougher, I guess, year ago organic sales and EPS growth comparisons in 2Q, I guess what are some of the key puts and takes to keep in mind when we're modeling for 2Q? Thanks so much.

Yeah, 2Q will be probably our most challenging quarter. I look to the balance of the year. We're going to have the timing piece shift back out, but then also recall last year it was a big inventory till quarter as well. And so, when you look at the laps, it's pretty tough lap. That combined with that point and a half coming out, we'll put more to the mid-single digit range, probably from a sales standpoint. And that will put more pressure on the EPS side than the rest of the quarters.

Great. Thanks so much.

Our next question comes from the line of Ken Goldman with JPMorgan. Please proceed with your question.

Hi, good morning. Two questions on capacity, if I could? First, I think your prior guidance, if I had it down right, was for five new lines to come on this year. I think you're calling for some more now. So am I reading that wrong or was one delayed? And then, I'm also curious to learn a little bit more about the Weaver acquisitions just in terms of how they may help you down the road in terms of added capacity or efficiency, obviously, bringing plants in house is generally a good thing for efficiency. But just in light of the fact that they already did make products for you. Just trying to get a little bit of a better sense of some of the benefits down the road for you. Thank you.

Sure. So there is no change to the number of lines. There are five lines and I think there's one that we just didn't specifically call out in our remarks. So, no difference there. Relative to Weaver, we feel very good about the acquisition. Weaver manufacturing is currently a component of SkinnyPop. We acquired two plants and really what it gives us are three things that give us sufficient capacity to be able to support growth for several years to come. And as you know, we are seeing very strong growth on SkinnyPop. It provides us with resiliency and also flexibility just so that we can continue to support the strong growth that we are seeing. As you know, as you look across our business for strategic categories and businesses that we are in, we do like to have at least some degree of own manufacturing across our network. And we also feel pretty good about the investment return at the investments that we made. We believe, given the quality of the assets, the fact that the facilities are on the newer side that it is faster and cheaper than if we needed to build this on our own.

Thank you.

Sure.

Our next question comes from the line of Cody Ross with UBS. Please proceed with your question.

Good morning. Thank you for taking our question. You're implementing a high-single-digit price increase on 50% of your confection portfolio effective at the end of May. I believe that's correct what you announced at the Analyst Day. How much do you believe will benefit fiscal '23 versus fiscal '24? And can you explain the mechanics of the benefit by the year?

Yeah, at the high level it's going to have, as we talked about in the Investor Conference more impact in '24 than it is in '23. That’s based on partly the implementation date and then also the fact that we have protection in place for big promotions and programming for a good part of the year. And we're still working with retailers on the implementation. And so, all of that will continue. I think, by the time we get to the mid-year mark, I have more visibility both on balance of '23 and '24 impacts that we’ll be able to talk more about it at that time.

Great. Thank you. And then, just a quick question on gross margin. Your gross margin came in higher than both yours and the street’s expectation this quarter. You raised your outlook to expansion of 70 to 80 basis points for the year. What gives you confidence to raise your outlook this early in the year, especially in context of your retail partners, who are struggling to expand gross margin this year based on their guidance? Thank you.

Yeah, thank you. Yeah, it is early in the year I think, in general, we probably wouldn’t look at raising our guidance top-line or bottom-line this earlier in the year. On the gross margin side, though, a couple of things, one, it’s clearly we have some commodities that are getting more expensive than some cocoa and sugar in particular are moving in the wrong direction that we have a few smaller non-test ingredients that are a little bit more favorable right now than they were. Time will tell whether that's going to be able to stick around. But probably the biggest pieces than just freight and logistics improvements and if you recall last year at this time, when we did the call, that was one of the big, I'll say surprises on the downside was increasing and freight and logistics costs. And for the first quarter at least, we saw some improvement in that both on our supply chain but also contracted support for getting trucks to show up for appointments and freight costs and so forth. So, those are really the drivers in the first quarter that we captured in the outlook. Time will tell as the year goes on how the rest plays out. But that's what gives us the confidence is really just the first quarter performance.

Thank you very much. I’ll pass it along.

Our next question comes from the line of Nick Modi with RBC. Please proceed with your question.

Yeah, thank you. Good morning everyone. So just a quick clarification. Hey, good morning. On international, I saw the comment you put in the prepared remarks. But maybe any more context on exactly some of the specific initiatives outside of a recovery in travel. I'm just curious, on there was a very strong number relative to expectations. And then, if you could just touch on the market share commentary you made in the U.S., kind of what's driving some of that? You talked about the mix, but I was kind of unclear exactly what that was referencing.

Yeah, I mean if we look at the initiatives in international, we've seen category strength across the markets. We saw a stronger Easter season in Brazil than we had anticipated. We continue to see distribution gains in Mexico and also in India. So, across the board some strength there. We do expect some moderation going forward because we have some pretty strong laps. But our demand has really remained pretty, pretty resilient. And then, we're also seeing some impacts from timing as if you may recall in Q4, consumer demand outpaced our shipments and we've recovered some of that in the first quarter. And can you repeat your share question one more time?

Yeah, I was just hoping you could provide some context on the US share commentary you had in the prepared remarks and the press release? You had referenced I think in the prepared remarks, mix was a driver and I was just unclear. But if you could just provide any context on some of the market share trends that you are seeing?

Yeah, absolutely. So, we definitely - if we look at Easter, we had some impacts from supply constraints. We anticipate by Halloween and holiday, those will be behind us. But that impact affected us. And then also, we've continued to see very strong growth in sweets and then also that rebound of refreshments from some of the weaker trends in that post-COVID type of the year. So really mix as an impact.

Great. Thank you. I’ll pass it on.

Our next question comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your question.

Hi, good morning.

Good morning.

Good morning.

I was hoping that you could talk kind of generally about what you're seeing in the consumer demand environment? You've seen strong volumes despite strong pricing growth. So how are you thinking about the consumer and elasticities over the course of the year?

So, I'll start by talking a little bit about the trends and I’ll let Steve talk about elasticities. Certainly consumer behavior continues to evolve and we know that many consumers have made changes to their spending to respond to inflation in the marketplace. We certainly continue to see that food has performed well compared to other categories, specifically food at home as it's a much more affordable option for consumers versus dining out. And we also know snacks and candy continue to perform even better than broader food and elasticities in those categories have continued to remain pretty strong. And we do expect that we'll continue to see strengthen in those elasticities. We know the consumers are being increasingly mindful about where they shop. They are looking for more affordable options. Whether it is the channels in which they are shopping, whether it's private-label, whether it is deals and increased promotion. And we are constantly carefully monitoring those trends, just to make sure that our media and our in-store activations are really optimized, so that we can align to the trends that we're seeing. Steve, do you want to talk a little bit about elasticity - on the elasticity side?

We touched on this a little bit in the first question. We still expect elasticity to moderate as the year goes on, but in our outlook now a little bit less severely than we did in our original plan. And we'll see how the year plays out. But that's our current assumption.

Okay, thank you. And my second question is just on the ERP implementation within snacks. Can you touch on what benefits you expect to realize from it? And what impact is factored into your guidance for this year from the ERP implementation?

Sure. So, we have, we have the impact of the transition on the ERP baked into the guidance. We profiled that out across the quarters including some inventory build in advance of the changeover and then the changeover itself in the back half of the year. In terms of benefits, it's a critical ingredient to driving efficient scale across that businesses. We touched on that a bit in our investor conferences. Well, one of our goal is to drive scale efficiency on all parts of that business on the front-end, the supply chain side, and so forth. And this system is important to get them on the same system. The rest of the company will operate on so we can operate the back office efficiently. We can operate the front-end efficiently, have more inventory visibility that are planning capabilities. And so, so it is integral. We are excited about it. Everything to-date is on track and we'll look forward to getting that behind us later this year.

And Pam, I think we did on the last call. We might have called out the impact. It's about a half a point headwind for us for the full year related to that transition all focused in the fourth quarter results.

Right. Thank you.

Our next question comes from the line of David Palmer with Evercore ISI. Please proceed with your question.

Thanks. Good morning. In your prepared remarks, you mentioned – good morning - you mentioned that you'll be in a strong position to fully support consumer demand for the rest of ‘23. I wonder if you could give some color about that. It's obviously ahead of some of that 5% increase in production that you're expecting to add. So, is that the COVID era issues with labor constraints in your supply chain? Is that the upstream suppliers coming through? And I have a quick follow-up.

Yeah, I mean, I would say the recovery that we anticipate is really driven by the increasing investments that we've continued to make over the past several years in capacity. Obviously, some of them take some time to be able to get equipment, get it up and running etc. And so, that's the point at which we believe we start to get ahead. So, I think we've pretty consistently talked about in end of ‘23 and ‘24, that we anticipate being beyond many of these supply issues. But yes, I would say it’s predominantly, they've been focused on capacity. Certainly, in the early years there were some other industry dynamics as well. It's even - I'm not sure maybe your question, the 5%, just to clarify, that is actually the pound number not a sales number. I mean, we were clear enough in the remark. So that 5% growth in production pounds will be well ahead of what the guidance calls for volume and that's kind of how we catch up.

Got it. And in that capacity that you're ramping up with the three new Reese's plants and the one new Hershey plant, will that be more than the 5% into ‘24? Because it's ramping through the year. I am wondering what's the impact of capacity increases for 2024 do you think?

There will be a carryover into ‘24 from those, as well as some additional capacity expansions that we have coming online. So there will be a low-single-digit increase in pounds production available next year as well from carryover and some new initiatives.

Thank you very much.

Our next question comes from the line of Max Gumport with BNP Paribas. Please proceed with your question.

Hey, thanks for the question. I was hoping you could give us an update on what you're seeing with regard to the retailer pricing environment. It feels like we're seeing more headlines in the media talking about retailers pushing back to physically again packaged food manufacturers, but we're continuing to see companies like yourself getting strong pricing through in quarterly results. So just hoping you can give us some color on this debate that seems to be emerging. Thanks.

So we always partner very closely with our retail customers to try and do what we believe is best to meet consumer demand and also to drive category growth, which is good for both of us. So we continue to have very collaborative discussions with our retailers relative to our pricing implementations, which also includes a lot of discussion about with the right plans to have business reinvestment that will enable the support of very strong unit conversion.

Thanks and one follow-up on gross margin. I realized –in the year and that taking up guidance is a bit unusual and it speaks to the confidence you have in your outlook. But one question I'm getting is that, if we look at your gross margin results in the first quarter and think about what your guidance implies for the remainder of the year, it seems like it would imply some sequential step down in the gross margins through the year even after taking into account some seasonality. And so, I'm just curious what type of factors might be going into those assumptions there? Thanks.

Yeah, the big – I think the biggest factor is it is still early in the year. We still have a lot to play out and so we're certainly taking stock of the upsides that we saw in the first quarter. But we're still being cautious also on what is to come in or the world has changed a lot over these quarters there is still a lot of volatility potentially ahead. And so, we're factoring that. And then also, as we go forward, particularly in Q4 the laps get tougher. And so, that's the other factor weighing in the guidance.

Thanks very much.

Thank you.

Our next question comes from the line of Bryan Spillane with Bank of America. Please proceed with your question.

Hey, thanks operator. Good morning, everybody. I just wanted to ask a question about seasonal, you talked about the, - what part of what impacted market share on seasonals in the first quarter was capacity constraints. And I think, right, we've talked about more capacity available for seasonals as we move through the year. So if can you just kind of talk about that and how that sets up for especially the fall or the third and fourth quarter? And whether you feel like you'll be adequately supplied with seasonal products there?

Yeah, sure. So, absolutely. We believe that with the additional supply that we have ramping up as we go through the year, that we will be in good shape to have a very solid plan to meet Halloween and holiday demand. So, some of the issues that we encounter during Easter we should be passed in the back half.

Okay. Thank you.

Our next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

Thank you. Good morning. In the press release, you had mentioned just the ability to sustain momentum into 2024 and beyond, obviously it's early. But just kind of caught my eye that you would call that out, what are you seeing at that would you drive a reference that come up that far ahead and how much color can you give on how you're thinking about 2024 right now?

I mean we're not going to give a lot of – we are not really going to talk about 2024. I mean, at the very high level I’ll talk a little bit about the consumer piece and Steve can talk about the P&L component. But we feel good about the momentum that we're seeing on the business, certainly in terms of consumers’ engagement with the category. A lot of the underlying consumer behaviors that we're seeing sustain which continue to support performance. We're continuing to see good response to the investments that we’re making in media behind the business across all parts, really. I mean CMG, as well as our salty brands where we're just getting started on some of the investments in salty. And certainly, as we saw in the first quarter, strong momentum in international. So right now, we don't see any big signals that suggest to us any big hurdles on the top-line.

Yeah, I would agree. I just point to, as Michele said, capacity – having capacity available as we exit the year to be a little bit more on the gaps from that standpoint versus some of the limits we've had in the last couple of years the salty aspirations that we have talked a lot about that at the conference coming off of the back of the ERP and rolling into next year, we're excited about that. And then the commercial capabilities that we talked more about at the conference, as well that being able to help drive sustainable growth in the US business in particular. So, those are just some of the reasons that we feel pretty good about the momentum.

No, that's helpful color. Thank you. And just a follow-up on that, we got to see the – at the Investor Day obviously and just curious, if you have a sense of how big a lift do you think that can drive and maybe specifically at least what's factored into your thinking and guidance around that. And just sort of we've already seen obviously a very strong momentum there. How much further can it go? And then what - how you think about your expectations?

You know, I would say it's too early. We've just started the support on air. We feel very good about all the work that we've done in terms of understanding the dots consumer and the consumers’ relationship with dots. And so we feel good about the messaging direction, the creative execution and certainly it's scored incredibly well and the responsiveness that we tend to see across our snacking categories with advertising investments. So more to come and we'll share more as we have actual in-market results on that. But we think that will clearly only help us given that we haven't been investing in that brand in the past.

Okay. Great, thanks so much.

Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.

All right, great. Thanks so much. Two kind of easy questions. The first is just in international, obviously impressive on the volume side, but really don’t see any incremental pricing year-over-year. So I am just curious let me clearly it's intentional just kind of curious as to why that's intentional why we're not seeing much pricing in international that’s kind of given the cost complex and kind of what you've been able to push through in the US? And then I have a quick follow-up.

Sure, we are pursuing a price strategy in international. It's just more modest of what we're seeing so far. And it’s offset by some of the other laps that we had in the quarter. They are having some impact on how much of that price is coming through, but we should see more price come through in the next three quarters.

Okay, fair enough. And then, just quickly back to you Steve too, buying the incremental popcorn facilities, which I get, but clearly not that much cash outlay - cash outlay for those facilities and if we think - kind of think about where the top-line probably headed into ‘24 and CapEx gets a little bit better next year markets been decent, there should be a step up in free cash flow while the balance sheet is strong. So, and I know you kind of always reiterate kind of your standard issue capital deployment priorities. But would you say kind of at this point given all the CapEx that's being spent on the on the new facilities or the new lines and then the recent - the acquisition of the new popcorn facilities they kind of broadly speaking you feel like you're probably in a pretty good spot in terms of kind of what you need to grow. And therefore it is there a possibility for, let's say you know, other cash deployment whether being around the dividend or buyback the what have you? Thanks.

Sure. Yeah, great question. So we – we do - the short answer is, yeah, we do feel good with that additional capacity in place or coming in place for the Weaver acquisition will be very helpful to support the growth of that business for a time to come. And I also like the fact that, we're buying well-maintained state-of-the-art manufacturing facility. What we're not doing that is still much more capital efficient than building from whole cloth. And so, it is capital efficient to pick up assets this way, as well. So, as we look to the future, I feel good about the capacity that we're going to have installed on both the confection business and the salty business. And that will have an impact on free cash flow as we look to the future.

Alright. Fair enough. Thank you.

Thank you.

Our next question comes from the line of Jonathan Feeney with Consumer Edge. Please proceed with your question.

Thanks very much. Could you comment on the role of fate, not just recent distribution growth, but distribution growth over the last 12 to 18 months in the salty snack business driving at really outsized volume growth? Because, I guess, I'm trying to understand how when you take these products whether it's dots most recently or others into new markets, is there a necessity to care like, you have all this great innovation into Hershey capabilities and then that kind of seasons and it slows down. What data or insight can you offer to help us understand that and may be if you think about what a sustainable organic volume growth looks like for salty snack going forward? Thanks.

Yes, absolutely. So, clearly distribution is job one, when we buy a business like this. I mean, that's one of our key strengths and we want to fully utilize it. So on dots in particular, there were really opportunities to kind of fill in on distribution. Previously, they really didn't have a very large Walmart business and they were underdeveloped in the northeast. So that's been a big area of focus and that certainly has driven - has been a key driver of the business. But we've also seen increases in velocity at the same time, given the very strong repeat potential that we see from consumers behind this product. Then as you think about the growth trajectory, over time, I would kind of describe it as it basically will evolve in terms of what the drivers are. So as we fill out the distribution, we start to really employ our category management capability relative to optimizing the shelf. As you saw in March, we then start to apply our media capability with advertising behind the brand to really increase awareness and household penetration. And then beyond that, the other kind of key focus is relative to price pack architecture and other drivers. So, I think we will see the revenue coming from it will continue, but we will apply the other capabilities we have to really generate that. And as we mentioned at Investor Day, we do anticipate seeing growth in that 15% kind of range for the next few years. And then, but a deceleration from the twenty plus percent that we've seen more recently.

Thank you very much.

Thank you.

Our next question comes from the line of John Baumgartner with Mizuho Securities USA. Please proceed with your question.

Good morning. Thanks for the question.

Good morning.

Maybe just building on John's question, Michelle sticking with the salty snacks distribution. And another focus here is building availability in mass and grocery, but the ACV opportunity seems pretty significant in C stores, as well. Are there any considerations whether it's dislodging competitors or, the routes to market that you – in the DSD model given the velocities that didn’t make the path to building ACV in C stores a bit slower for these categories. Just you how are you thinking about closing that distribution gap in C stores over time? Thank you.

Well, C store is really a core capability for the company for our base core CMG businesses. Certainly we realize its importance in reaching certain specific consumers and really certain specific occasions when consumers are out and about. So it is a priority for us. We have been focused on that. I think in SkinnyPop, we are certainly making progress. But there's more opportunity to go. And so, it'll remain a focus for us going forward. I don't know if I'd say that there is any key barrier. Certainly, there are folks who have DSD capability more broadly. But we've done a good job with our CMG business, where we don't have it building distribution in convenience stores. So, we feel very good about that. And then across our salty snacks network, we do have both warehouse and DSD capability. And we're really working right now to optimize how we best utilize each to maximize the potential of the business.

Okay. And then in terms of the popcorn assets that you're acquiring, in addition to just the pure growth in volume capacity, is there anything augment your capabilities whether it’s pack size or anything else in terms of opportunity there?

Yeah, and beyond just the capacity and one of the things that gives us the opportunity to optimize the supply chain network more broadly. So if you think to the future, other assets are potentially coming in, if you think about some of the strategies we talked about around price pack architecture, and being able to make sure we have the right packs and mixes to support the business going forward. So by having all of that in our hands, in our control, just gives us more flexibility and agility to deliver that growth plan.

Yeah. And as I mentioned earlier, we do have that gives capacity ahead of demand. So it gives us that trajectory for the next few years.

Thanks Michelle. Thanks Steve.

Thank you.

Our next question comes from the line of Jason English with Goldman Sachs. Please proceed with your question.

Hey, good morning, folks.

Good morning.

A couple quick questions. So, Colgate just recently did something similar in past we would think going out and buying some capacity. When that came into the floor, there was a lot of other products doing making it created some margins torsion near term. Is there anything to be aware of like a similar on that front with the Weaver acquisition?

No, I mean, bulk of the capacity is ready to eat popcorn. So it didn't really come with a big negative overhang.

That's right.

Other than that there will be excess unused capacity for a while, so that there's some fixed overhead there.

Yeah. Some fixed overhead and some transition cost that would be normal. But not a portfolio overhang like you're referencing, Jason.

Good to know. Thanks for that. And then, bigger picture question, You've got – as you mentioned elasticity has been very low. That's not a Hershey comment or even a confection comment, the industry comment because we have a lot of cross-price left, if you ever moving the same direction, it sounds like in ‘24 you’re kind of have to break from the past and push through quite a bit of pricing that it’s by where, we're not expecting a lot from the industry at large. So, how are you managing these cross-price elasticities? Which category should we be watching? And where you tend to see switching between confection? And I'll leave it there.

Yeah, I would say, first of all, it's a little early yet to be starting to think about the cross elasticity for ’24. You’re right. We're trying to think ahead in terms of the pricing strategy. We're also watching the commodity space like we talked about earlier and some of the upward movements on cocoa and sugar. And so, I think that's getting us in a good starting position. But then what happens to the other categories and peers is all yet to be seen. And we will be able to communicate more on that, obviously as you probably turn the corner and get to the back half. But Melissa do you want to add?

Yeah, that's the one piece I might add is just, ours is a kind of come through a little bit slower and more elongated because of the timing it takes for us to implement particularly with seasons. So, kind of, as we think about ‘24 pricing, we won't have an outsized price gap versus kind of pre-pandemic levels versus a lot of our competition. As you see many of them are posting high teens or 20% pricing versus up at 10%. So some of those just ours is a little bit more spread out. But we will certainly be watching it very closely and particularly within, snacking to look at where the share of stomach is going and how those cross elasticities progress.

Yeah, that's a good point. Thanks a lot. I’ll pass it on.

Our next question comes from the line of Chris Carey with Wells Fargo Securities. Please proceed with your question.

Hi, good morning. Thanks for the question. I just have a question on confection margins. Very strong in the quarter even despite a tough year ago compare, pricing is clearly building. How should we be thinking about confection margins not just this year, but certainly over time, as it seems like we're coming through very strongly with pricing and cost perhaps are easing. And so, again just your trajectory of confection margins would be helpful. And I think you had mentioned some inflation in cocoa and sugar, just remind us of your duration on those hedges and when we might be seeing that inflation coming through and just so we can kind of assess when the pricing might be needed to offset it? Thanks so much.

Sure, I'll take the last piece first. Just on cocoa and sugar we don't get specific on the duration of our hedging programs. Obviously, for those two commodities we do some hedging. But we don't share the duration. We do expect to see potentially more impact in ‘24 than ‘23. But we'll see how the markets play out. On pricing and just more generally as we talked about the investor conference, our goal is always have a mix of volume and price. That's part of the balance in our growth formula and as part of that we also want to see margin accretion over time for both sources. And so, confection margins have been strong, but even in the future, across all levers, pricing, including price pack, architecture and mix, and other things, we want to continue to put upward pressure on our margins because that's part of our growth formulas so.

And we continue to see some of our inputs rise, cocoa and sugar recently which is one of the reasons that we decided to lean into that more recent pricing action.

That’s right.

Okay, that's it for me. Thanks so much.

Thank you.

We have reached the end of the question and answer session. I’ll now turn the call back over to Melissa Poole for closing remarks.

Yes. Thanks so much for joining us this morning and all the great questions and the continued interest and investment in our company. So I'll be available today and in the coming weeks to answer any additional follow-ups you may have. Thanks so much. Have a great day.

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.