Hershey Reaffirms Outlook for 2015 and Announces $250 Million Share Repurchase Authorization
In a presentation today at the Consumer Analyst Group of New York (CAGNY) conference, The Hershey Company (NYSE:HSY) reaffirmed its full-year 2015 financial outlook previously provided on January 29, 2015. Specifically, the company estimates full-year 2015 net sales will increase 5.5 percent to 7.5 percent, including a net benefit from acquisitions and divestitures1 of about 2.5 points and unfavorable foreign currency exchange of approximately 1 point. The company expects that 2015 gross margin expansion of 135 to 145 basis points will contribute to an increase in adjusted earnings per share-diluted of 8 percent to 10 percent, including dilution from acquisitions and divestitures of $0.03 to $0.05 per share.
The company also announced that its Board of Directors has approved an additional $250 million stock repurchase authorization to repurchase shares of its Common Stock. Purchases under the new authorization will commence after the current program is completed. Hershey is authorized to purchase its outstanding shares in open market and privately negotiated transactions. The program has no expiration date and acquired shares of the Common Stock will be held as treasury shares. Similar to prior programs, approved share repurchase authorizations are in addition to Hershey’s practice of buying back shares sufficient to offset those issued under incentive compensation plans.
1On December 30, 2014, the company entered into an agreement to sell its Mauna Loa macadamia nut business to Hawaiian Host, Inc. In 2014, the Mauna Loa business generated net sales of approximately $68 million. Also impacting the aforementioned net sales guidance are the 2014 acquisitions of Shanghai Golden Monkey and the Allan Candy Company, and the 2015 agreement to purchase Krave Jerky. Further information can be found in the investor relations section of the company’s website.
Note: In this release, Hershey references income measures that are not in accordance with U.S. generally accepted accounting principles (GAAP) because they exclude business realignment and non-cash impairment charges, business acquisition closing and integration costs, non-service related pension expense (NSRPE) and non-service related pension income (NSRPI). These non-GAAP financial measures are used in evaluating results of operations for internal purposes. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the company believes exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. Below is a reconciliation of earnings per share-diluted calculated in accordance with GAAP to non-GAAP adjusted earnings per share-diluted:
|Reported EPS – Diluted||$3.77||$4.14 – $4.25|
|Acquisition and Integration Charges||0.05||0.05 – 0.06|
|Business Realignment Charges||0.03||0.04 – 0.05|
|India Impairment Charges||0.06||—|
|Loss on Anticipated Mauna Loa Divestiture||0.08||—|
|NSRPE||—||0.04 – 0.05|
|Adjusted EPS – Diluted||$3.98||$4.30 – $4.38|
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Many of these forward-looking statements can be identified by the use of words such as “intend,” “believe,” “expect,” “anticipate,” “should,” “planned,” “projected,” “estimated,” and “potential,” among others. These statements are made based upon current expectations that are subject to risk and uncertainty. Because actual results may differ materially from those contained in the forward-looking statements, you should not place undue reliance on the forward-looking statements when deciding whether to buy, sell or hold the company’s securities. Factors that could cause results to differ materially include, but are not limited to: issues or concerns related to the quality and safety of our products, ingredients or packaging; changes in raw material and other costs; selling price increases, including volume declines associated with pricing elasticity; market demand for our new and existing products; increased marketplace competition; disruption to our manufacturing operations or supply chain; failure to successfully execute and integrate acquisitions, divestitures and joint ventures; changes in governmental laws and regulations, including taxes; political, economic, and/or financial market conditions; risks and uncertainties related to our international operations; disruptions, failures or security breaches of our information technology infrastructure; the impact of future developments related to civil antitrust lawsuits and the possible investigation by government regulators of alleged pricing practices by members of the confectionery industry in the United States; and such other matters as discussed in our Annual Report on Form 10-K for the year ended December 31, 2013. All information in this press release is as of February 18, 2015. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
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