Q3 2025 The Hershey Co Earnings Call

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 ignoring not and vice President of Investor Relations for the Hershey Company. Thank you you may begin.

Speaker #1: Being in the competitive pricing environment right now . Thanks very much .

Good morning, everyone.

Speaker #2: Yeah . Look , I think that's an important point . And , you know , had the opportunity to , you know , to look at the competitive landscape and look at our pricing cadence as it relates to the look .

Thank you for joining us today for the Hershey Company's third quarter 2025 earnings Q&A session. I Hope everyone has had the chance to read our press release and listen short prerecorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the prerecorded remarks at the conclusion of today's live Q&A session. We will also post the tree.

Speaker #2: We I think we put the most important thing for us is we put the consumer first . We look at our business , we do it on the cadence that makes sense for our business and our consumer , and we are working with our customers to make that happen in the most deliberate way .

Script, an 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.

Speaker #2: So that we can continue to deliver for our consumers . And that , I think , is really important . Now , the cadence , yeah , is probably a little different from historic purposes , but I look I look at it from a , you know , what is the best solution for the category .

Subsequent events, a detailed listing up such risks and uncertainties can be found in today's press release and the company's SEC filings.

Please note that we may refer to certain non-GAAP financial measures that we believe provide useful information for investors. This information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP reconciliations for the GAAP results are included in this morning's press release.

Joining me today are Hershey, President and CEO, Kirk Tanner, and Hershey, Senior Vice President and CFO, Steve thoughtful, but that well open it for the first question.

Thank you. Our first question is from Andrew Lazar with Barclays.

Great. Thanks, Good morning, everyone and welcome Kirk.

Thank you Andrew.

Good morning.

Maybe to start off I'd love to get a little bit deeper on your your commentary around 2026 companies looking for non algorithm top and Bottomline year. This is consistent with the commentary you provided last quarter.

Since then cocoa costs have moderated significantly, even though hershey still looks for year over year inflation.

Companies slightly lowered its tariff estimates and based on that I'm certainly appears to be continuing if not accelerating.

I think in the prepared remarks, you make mention of sort of earnings recovery over time.

You still need to see what elasticity that looks like is the pricing flows through so I guess I'm just curious how you sort of balance. These various factors as you think through how next year could shape up.

Because as you know there are some expectations out there for may be much more significant year over year EPS growth next year.

Yeah. Thank you Andrea I think that it's an important topic to get the morning started.

If I think about 26, I look at where we're at right now so the momentum in the business right now and I'm really delighted with the balanced growth that we're seeing across our portfolio. So I feel good about that before going into 2026, and I think it's important as you take that momentum into 2026.

I think you know defining what success looks like is really important for us for 2026 and for me that is looking at where the category is and how we're growing with or ahead of the category, while we build back that margin.

Its full potential now we won't do that just in one year, but we'll do that over a few years, but it's really important that we one we grow and we.

We're doing exceptional at the category level building back margin and so what what does that do it puts us on our long term algorithm that long term algorithm and the top you know that from a revenue standpoint of 2% to 4% that is sensible. We think that's where the category is going to be now in a shorter Easter.

Sure.

Category generally from a historical standpoint, it's been around 2%.

So when you think about the top line, that's where we land on Etfs back on algorithm I would say there is some potential for some upside, but we do all of this in 26 with the approach of playing for the long term. So we're gonna continues to innovate we're going to invest in our business, we're investing in our brands, while we build back margin.

<unk> and compete at the category level that is success for us in 2026.

That's really helpful. I appreciate that and then I'm just quickly I know it may be far too early to really opine on this with any accuracy, but I guess what are you seeing thus far from an elasticity standpoint, I know, there's more pricing still to flow through and I guess, what's your expectation for elasticity in the context of your guidance for next year. Thanks again.

Sure I'll take that one I mean, it's early days and so we'll know more in the next time, we talk category continues to be rational on everything we see so far nothing gives us concern is or is deviating from our expectations. Most of our pricing is reflected as he said you know other competitors' pricing still flowing through.

We saw early in the year other competitors taking prices. We saw premiums go up we saw private label go up and so everything.

Everything that we're seeing as our pricing is coming to shelf is lining up within expectations.

And is that next year that elasticity is the big assumption and I know, we've had some folks who say well are you being a bit cautious or conservative in the way you're thinking about that elasticity as we planned it at minus one but.

But we feel like it's an appropriate kind of center cut as we look at the plan for next year.

This year, it's been running a bit better with the price increase that we've taken into this year, but this year also has a few positives.

Along whether it's a long Easter merchandising benefits that we had early in the year the.

Significant innovation benefits and so when we adjust for those as we think about 'twenty six we think that minus one is the right place to plan for them, so, but we'll be watching the space closely nothing at this stage gives us concern.

Thanks, so much.

Our next question is from Max <unk> with BNP Paribas.

Great. Thanks, very much just following up on that you ought to see responses.

It's early but if you can just focus on the everyday business and give us a bit more color on what you're seeing in these in these first few weeks.

Particularly given the comments around double digit growth across the everyday business over the past quadric. What do you think that means for you as if you realize it's early realize youre planning on the minus one but just any incremental color on that would be helpful. Thank you.

Yeah, I would just say again no concerns on what we're seeing so far if you look at everyday CMG, where the price increases hit were up double digits in the last four weeks. So feel good about what we're seeing so far but more more to play you have a lot more to say the next time, we talk.

Great and then on competition I think theres been a narrative that some competitors are not following and you just touched on this but when.

When I looked at the data it's not as clear to me. That's the case I think if you look at your largest branded competitor while their pricing you might not be as high on a year over year basis. It looks like perhaps two are simply moving at different cadences with them moving harder earlier in the process I think if you go back to where you all are four years ago. It looks like you're actually still just.

I guess on pricing relative to that period, so with that backdrop I'm, hoping you can provide a bit more color on what you're seeing in the competitive pricing environment right now thanks very much.

Yeah look.

I think that's an important point.

I had the opportunity to you know.

Look at the competitive landscape and look at our pricing cadence as it relates to the look we I think we put the most important thing for us as we put the consumer first we look at our business. We do it on the cadence that makes sense for our business and our consumer and we were working with our customers to make that happen and the most deliberate.

Way, so that we can continue to deliver for our consumers and that I think is really important now the cadence yeah, it's probably a little different from historic purposes, but I look I look at it from a you know what is the best solution for the category our consumer.

And you know for our business.

And a pretty significant part of our price increase and you mentioned this was catching up to what happened earlier that competitors have done so.

There was a time in history, where everything moved in Lockstep. You know now I think everyone is more precise more strategic as the way they execute pricing and it leads to leads to different phasing, but overall were not concerned about price gaps across the portfolio.

And I would say you know one thing to look at as this category has been very resilient and rational and I think that's really important.

When you look across the industry. So that gives us the confidence that you know.

Where we're making the right decisions and we don't have concerns at this time.

Great. Thanks, very much I'll leave it there.

Our next question is from David Palmer with Evercore ISI.

Good morning.

And the in the prepared remarks, you noted the Halloween, it's been disappointing I want to get some color about how how much as you know.

What sort of level has it been disappointing.

Friday Halloween warm weather have you seen similar headwinds with those types of dynamics of what youre seeing here or do.

Kirk Tanner: Seeing in the competitive pricing environment right now. Thanks very much. Yeah, look, I think that's an important point. I think that's an important point and have the opportunity to look at the competitive landscape and look at our pricing cadence as it relates to the look. I think we put the most important thing for us is we put the consumer first. We look at our business. We do it on the cadence that makes sense for our business and our consumer. We were working with our customers to make that happen in the most deliberate way so that we can continue to deliver for our consumers. That, I think, is really important. The cadence is probably a little different from historic purposes, but I look at it from what is the best solution for the category, our consumer, and for our business.

You're reflecting on this do you think there might be something going on with the consumer the customers in terms of their focus on the seasons the competitive environment and then Relatedly you said that you're using this opportunity to analyze the trends into it with just the product lineup and marketing strategies for future seasons. So just curious about what you're thinking as you reflect on.

This so far.

David Thank you for the question.

I think it's a certainly timeline I'd start with you know we're pleased with the strength in the overall business with more balanced across our portfolio and you know we mentioned our everyday CMG business is growing double digits. The past four weeks. So there's certainly some interplay that we typically see we will stay the season did get off to a slow start.

And I think you have to look at historically when Halloween falls on a Friday and about a third of the business is sold the last week. So I think it's really important having said that yes. There are some opportunities for us I would say, it's not broad based but there are some opportunities for us to go to school on the consumer insights our customer.

Steven Voskuil: A pretty significant part of our price increase, you mentioned this was catching up to what happened earlier, that competitors have done. There was a time in history where everything moved in lockstep. Now I think everyone is more precise, more strategic as the way they execute pricing, and it leads to different phasing. Overall, we're not concerned about price gaps across the portfolio.

Inside so that we can improve on every season, including next year's Halloween. So we will look at.

Pack types offerings opening price points.

Kirk Tanner: Yeah, I would say one thing to look at is this category has been very resilient and rational. I think that's really important when you look across the industry. That gives us the confidence that we're making the right decisions and we don't have concerns at this time.

Product mix all of that through the lens of the consumer Yeah. I think this is an opportunity for us to go to school and get better with each season.

And just to follow up on you noted that cocoa is going to be inflationary in 'twenty six does it feel like.

Yeah. Been a pretty significant part of our price increase. And you mentioned this was catching up to what happened earlier, that competitors have done so there was a time in history where everything moved in lockstep you know now I think everyone is more precise more strategic as the way they execute pricing and it leads to um leads to different phases but overall we're not concerned about price gaps across the portfolio. Yeah and I would say, you know, 1 thing to look at is this category has been very resilient and rational I think that's really important uh when you look at across uh the industry so that gives us the confidence that

Retailers are sympathetic to where you are with your pricing.

We're making the right decisions and uh, we don't have concerns at this time.

Steven Voskuil: Great.

Kirk Tanner: Thanks very much. I'll leave it there. Our next question is from David Palmer with Evercore ISI.

And you you your input inflation you seem to have you.

Great. Thanks very much. I'll leave it there.

You know hedged very well in 25, maybe somebody didnt out there and their timing of their pricing might be mismatch in yours and so.

How our next question is, from David Palmer, with evercore isi.

Steven Voskuil: Good morning.

Kirk Tanner: In the prepared remarks, you noted Halloween's been disappointing. Love to get some color about how much is, by what sort of level has it been disappointing? You noted Friday Halloween, warm weather. Have you seen similar headwinds with those types of dynamics to what you're seeing here? Reflecting on this, do you think there might be something going on with the consumer, the customers, in terms of their focus on the seasons, the competitive environment? Relatedly, you said that you're using this opportunity to analyze the trends and to adjust the product lineup and marketing strategies for future seasons. Just curious about what you're thinking as you reflect on this so far. Yes, David, thank you for the question. I think it's certainly timely. I'd start with we're pleased with the strength in the overall business with more balance across our portfolio.

I'm wondering if you if there could be some noise out there with regard to two competitors in and other pricing actions that could affect near term results.

And I'll pass it on thank you yeah no. Thanks, David I think it's really important one that we have.

Relationships of trust with our customers and building those are critically important to me and our entire organization, we have that customer mindset and with this pricing. We have worked hand in hand, with our customers to find solutions to meet consumers, where they are I would say you know from our cocoa.

Yeah. Good morning. Um, in the prepared remarks, you noted Halloween's been disappointing. Um, I'd love to get some color about, you know, how much is, you know, by what sort of level has it been disappointing. And you've noted Friday Halloween, warm weather. Have you seen similar headwinds with those types of dynamics to what you're seeing here, or do you?

You reflecting on this, do you think there might be something going on with the consumer? The customer in terms of their focus on the seasons, the competitive environment, and then relatedly uh you said that you're using this opportunity to analyze the trends and to adjust the product lineup and marketing strategies for future Seasons. So just

Standpoint, you know, it's still a 70% higher than it was in 2023. So I think that just ground us all in where cocoa is today I know there is you know we're optimistic with some of the movement recently.

Curious about what you're thinking, uh, as you reflect on this so far.

Thank you for the question.

Kirk Tanner: We mentioned our everyday CMG business is growing double digits the past four weeks. There's certainly some interesting interplay that we typically see. The season did get off to a slow start. I think you have to look at historically when Halloween falls on a Friday, about a third of the business is sold the last week. I think it's really important. Having said that, there's some opportunities for us. I would say it's not broad based, but there's some opportunities for us to go to school on the consumer insights, our customer insights, so that we can improve on every season including next year's Halloween. We will look at pack types, offerings, opening price points, product mix, all that through the lens of the consumer. I think this is an opportunity for us to go to school and get better with each season.

But if you just look back that's really important to understand but I'd say you know with pricing very plan full approach and I have a fresh set of eyes on our approach and our communication to customers our partnership with customers and I've had the opportunity to talk to a lot of our customers myself.

I think it's, uh, certainly timeline. I'd start with, you know, we're pleased with the strength and the overall business with more balanced across our portfolio. And, you know, we mentioned our everyday CMG. Business is growing double digits the path 4 weeks. So there's certainly, some interplay that we, we typically see, we'll stay the season did get off to a slow start and I think you have to look at historically when Halloween falls on a Friday about

And you know that is something that's really important that we get that right with our customers.

Thank you.

Our next question is from Leah Jordan with Goldman Sachs.

Good morning, Thank you for taking my question.

I wanted to ask about innovation, it's obviously been working well this year, especially in the back half here. So as we look to 'twenty six could you provide some color on how youre thinking about the pipeline. There what are the key focus areas and how are you thinking about balancing growth.

A third of the business is still the last week so I think it's really important. Having said that, yeah, there's some opportunities for us. I would say it's not broad-based, but there's some opportunities for us to go to school on the consumer, insights our customer insights, so that we can improve on every season including next year's Halloween. So we will look at um, pack types offerings opening price points.

Product mix all that through the lens of the consumer. Yeah, I think this is an opportunity for us to go to school and get better with each season.

Kirk Tanner: Just to follow up on, you noted that cocoa is going to be inflationary in 2026. Does it feel like retailers are sympathetic to where you are with your pricing and your input inflation? You seem to have hedged very well in 2025. Maybe somebody didn't out there and their timing of their pricing might be mismatching yours. I'm wondering if there could be some noise out there with regard to competitors and other pricing actions that could affect near term results. I'll pass it on. Thank you. No, thanks David. I think it's a really important one that we have relationships of trust with our customers and building those are critically important to me and our entire organization. We have that customer mindset, and with this pricing, we have worked hand in hand with our customers to find solutions to meet consumers where they are.

In the core versus innovation into next year, especially as we're kind of lap some strength here in the back half.

Yeah, I think that's a really good question and innovation is so important to the category of consumers are continuously looking for at the the recent innovation that we put out with Reese's Oreo has been.

And just to follow up on, you know, that that cocoa is going to be inflationary in 26. Does it feel like retailers are sympathetic to where you are with your pricing and you you your input inflation? You you seem to have

Really the top driver of growth from an innovation standpoint in the category.

You know, heads very well in 25. Maybe somebody didn't out there and their timing of their pricing might be mismatching yours. And so

You know something to look at and be excited about but when I step back from that I look at our core business. Even in Q3, you know where our core business was you know close to 5% growth without Reese's Oreo and you know that that says something about the balance of what we expect now.

I'm wondering if there could be some noise out there with regard to competitors and other pricing actions that could affect near-term results.

And I'll pass it on. Thank you. Yeah, no, thanks David. I think it's really important 1 that we have. Um,

We're going to have the benefit of most of next year with resorts will continue to build on that momentum and find exciting ways to connect consumers with that innovation, having said that we have a robust pipeline in 2026 of innovation and 2027. So we feel like we're building this pipeline of innovation.

Kirk Tanner: I would say from a cocoa standpoint, it's still 70% higher than it was in 2023. I think that just grounds us all in where cocoa is today. I know there's, you know, we're optimistic with some of the movement recently, but if you just look back, that's really important to understand. With pricing, very planful approach. I have a fresh set of eyes on our approach and our communication to customers, our partnership with customers. I've had the opportunity to talk to a lot of our customers. That is something that's really important, that we get that right with our customers. Thank you. Our next question is from Leah Jordan with Goldman Sachs.

You know again engaging with consumers is important.

All while balancing your growth with your core business I think that is really important and that's kind of how we see we see this we cannot rely just on innovation to drive our business, it's a balance between the two.

Relationships to trust with our customers and building. Those are incredibly important to me and our entire organization. You know, we have that customer mindset and with this pricing, we have worked hand in hand with our customers to find solutions to meet consumers where they are. I would say, you know, from a cocoa standpoint, you know, it's still a 70% higher than it was in 2023. So I think that just grounds us all in where cocoa is today. I know there's, you know, we're optimistic with some of the movement recently.

If I look at Q3, we have struck that balance with a really good innovation.

That's very helpful. Thank you and maybe just a quick follow up here. It sounded like there was increased brand investments in the quarter, maybe you could just talk about where you're making those investments and what you're seeing and can better competitive environment broadly in and do you see a need to make.

If you just, you know, look back, that's really important to understand. But I'd say, you know, with the pricing, very planful approach. You know, I have a fresh set of eyes on our approach and, and our communication to customers our partnership with customers and have had the opportunity to talk to a lot of our customers myself. Um,

and you know, that is something that's really important that we get that right with our customers.

Thank you.

More investments just in the current environment. Thank you yeah, Yeah, I think it's important to invest I think theres, a smarter way to invest in brands as well right. So there's a more efficient way.

Our next question is from Leah, Jordan with Goldman Sachs.

Anoori Naughton: Good morning. Thank you for taking my question. I wanted to ask about innovation. It's obviously been working well this year, especially in the back half here. As we look to 2026, could you provide some color on how you're thinking about the pipeline there? What are the key focus areas, and how are you thinking about balancing growth in the core versus innovation into next year? Especially as we're going to lap some strength here in the back half.

You know invest in brands I think that obviously with Halloween and the holidays, we've invested in some digital.

Marketing to drive drive performance drive flow through et cetera, but will continue and I would say we've had some fun with some innovation with Reese's Oreo as well. So you know those those investments have given us some momentum and really are on strategy for how we think about our business going forward.

Kirk Tanner: Yeah, I think that's a really good question. Innovation is so important to the category. Consumers are continuously looking for it. The recent innovation that we put out with Reese's Oreo has been really the top driver of growth from an innovation standpoint in the category. It's something to look at and be excited about. When I step back from that, I look at our core business. Even in Q3, where our core business was close to 5% growth without Reese's Oreo, that says something about the balance. What we expect now, we're going to have the benefit of most of next year with Reese's Oreo and we'll continue to build on that momentum and find exciting ways to connect consumers with that innovation. Having said that, we have a robust pipeline in 2026 of innovation and 2027.

Good morning, thank you for taking my question. Um, I wanted to ask about Innovation, it's obviously been working well, this year, especially in the back half here. So as we look to 26, could you provide some color on how you're thinking about the pipeline there? What are the key Focus areas and how are you thinking about balancing growth, uh, in the core versus Innovation into next year, especially as we're kind of a lot, some strength here, in the back half

Great. Thank you.

Yeah.

Our next question is from Megan Clark with Morgan Stanley.

Hi, Good morning, welcome Kurt Thanks for taking my question I wanted to come back to the commentary on 2020 steps on Andrew's question at the beginning.

Yeah, I think that's a really good question. And Innovation is so important to the category consumers are continuously looking for it. The the recent, um, Innovation that we we put out with Reese's Oreo, has been, um, really the top driver of growth from an innovation, standpoint in the category. So something, you know, something to look at and and be excited about. But when I step back from that, I look at our Core Business. Even in Q3, you know, where our Core Business would,

Last quarter, there was a comment on the call that there were multiple paths to EPS being well into the double digit range in 2000, Twenty's decks I think the biggest factors mentioned at the time or what type of what happens with tariffs and cocoa Pos and you'll understand Kirk I think you said, there's still upside to the algo, but as you think about some of those Hudson.

Kirk Tanner: We feel like we're building this pipeline of innovation because that's, you know, again, engaging with consumers is important, all while balancing your growth with your core business. I think that is really important and that's kind of how we see this. We cannot rely just on innovation to drive our business. It's a balance between the two. If I look at Q3, we have struck that balance with a really good innovation.

Because today you know would you say that anything has changed that would have stuck to that view Cocos to obviously come down maybe are a bit more covered for 'twenty or 'twenty six though at this point and and you know broadly any visibility on potential tariff relief as well. Thank you yeah. Thanks Megan.

Again to comment on the potential upside for ETS.

Was, you know, close to 5% growth without Reese's Oreo and you know, that that says something about the balance of what we expect. Now we're going to have the, the benefit of most of next year with resources and we'll continue to build on that momentum and find exciting ways to connect consumers with that Innovation. Having said that we have a robust pipeline in 2026 of innovation and 2027. So we feel like we're building this pipeline of innovation because that's you know again engaging with consumers is important all, while balancing your growth with your core business. I think that is really important and that's kind of how we see we see this. We cannot rely just on Innovation to drive our business. It's a balance between the 2 and

I'll, let Steve kind of go through the puts and takes that yeah. Thanks for the question Megan Yes, Curt said earlier above algorithm performance definitely on the table. There's a handful of things that we're going to be watching really closely especially as we finalize the plan.

If I look at Q3 we we have struck that balance um with a really good innovation.

Anoori Naughton: That's very helpful, thank you. Maybe just a quick follow up here. It sounded like there was increased brand investments in the quarter. Maybe you could just talk about where you're making those investments and what you're seeing in the competitive environment broadly. Do you see a need to make more investments just in the current environment?

<unk> demand of course.

The health of the consumer right now big focus.

Right now we're optimistic on that for next year, but we'll be watching that we talked about innovation and feel really good about our innovation Oreo continuing a lot of tent pole events next year. So we think that's going to be a big year for innovation elasticity of course as we touched on in the in the question earlier and then as he said cocoa and tariff relief.

Steven Voskuil: Thank you.

Kirk Tanner: I think it's important to invest. I think there's a smarter way to invest in brands as well. Right. There's a more efficient way to invest in brands. I think that obviously with Halloween and the holidays, we've invested in some digital marketing to drive performance, drive flow through, et cetera. I would say we've had some fun with some innovation with Reese’s Oreo as well. Those investments have given us some momentum and really are on strategy for how we think about our business going forward.

It's very helpful. Thank you. And maybe just a quick follow-up. Here, it, it sounded like there was increased brand investments in the quarter. Uh, maybe you can just talk about where you're making those Investments and what you're seeing in can better competitive environment, broadly and and do you see a need um to make more investments just in the current environment? Thank you.

We're feeling you know marginally better about Coco I think when we talked last time. Since then it has moderated a bit and we're in the process of layering in our hedges. According to our program and we'll have more visibility when we talk next time, but net net you know feeling a bit better from a cocoa standpoint, and tariffs ongoing changes week to week.

Think you know the first prize we were hoping for a blanket exemption is probably not in the near term cards, but we've seen significant acceleration on trade deals and so now that cocoa and other commodities. If you can't make your are part of that third antics.

Yeah, yeah, I think it's important to invest. Um, I think there's a smarter way to invest in Brands as well, right. So there's a more efficient way, uh, to, you know, uh, invest in Brands. I think that obviously with Halloween and the holidays, we've invested in some digital, um, marketing to drive drive performance Drive, uh, flow through Etc. But we'll and and I would say we've had some fun with some Innovation with Reese's Oreo as well. So you know, those those Investments have given us some momentum and really are on strategy for how we think about our business going forward.

Anoori Naughton: Great, thank you.

Great. Thank you.

Kirk Tanner: Our next question is from Megan Klatt with Morgan Stanley.

Deals come in we're optimistic we could see some positivity there for now we modeled the $200 million incremental on tariff and still have in our model cocoa inflation for next year, but I would say that level of inflation is moderating and we'll know more when we talk next time.

Anoori Naughton: Hi, good morning. Welcome. Kirk, thanks for taking my question. I wanted to come back to the commentary on 2026 and Andrew's question. At the beginning last quarter there was a comment on the call that there were multiple paths to EPS being well into the double digit range in 2026. I think the biggest factors mentioned at the time were what happens with tariffs and cocoa costs. I understand, Kirk, I think you said there's still upside to the algo, but as you think about some of those puts and takes today, would you say that anything has changed that would affect that view? Cocoa's obviously come down. Maybe you're a bit more covered for 2026 though at this point, and broadly any visibility on potential tariff relief as well. Thank you.

Our next question is from Megan clatt with Morgan Stanley.

So overall not that much different from last quarter other than maybe a little bit more optimism on on tariffs and cocoa.

Awesome, that's super helpful. And then maybe just more near term on the implied for Q. It does seem like most of the increase in our full year Top line guide was driven by what you saw in the third quarter I think depending on rounding implied four he was maybe a little bit below where the street's modeling maybe part of that's due to the international shipment timing, but.

Hi, good morning, welcome, Kirk thanks for taking my question. Um, I wanted to come back to the commentary on 2026 and Andrew's question at the beginning. No, last quarter, there was a comment on the call that there were multiple paths to EPS being well into the double digit range in 2026. I think the biggest factors mentioned at the time, were what's what happens with tariffs, and, and cocoa costs. And you know, understand Kirk I think you said there's still upside to the algo, but as you think about some of those puts and takes today, you know, would you say that anything has has changed? That would affect that view, um, Koko's obviously come down. Maybe you're a bit more covered for 2026.

Could you just maybe.

Give us what you're expecting for the fourth quarter explicitly in and whether the outlook for North America confectionery confectionery has just changed at all just given the puts and takes between Halloween and everyday thanks.

Kirk Tanner: Yeah, thanks, Megan. Again, to comment on the potential upside for Epsilon, I'll let Steve kind of go through the puts and takes that you asked. Thanks for the question, Megan.

So at this point and and you know, broadly any visibility on potential Terror of relief as well. Thank you.

Yes, most of that impact is international shipment timing from a U S CMG standpoint.

Steven Voskuil: Yes, Kirk said earlier above algorithm performance definitely on the table. There's a handful of things that we're going to be watching really closely, especially as we finalize the plan. Consumer demand, of course, you know, the health of the consumer right now. Big focus right now. We're optimistic on that for next year, but we'll be watching that. We talked about innovation, feel really good about our innovation Oreo continuing a lot of tentpole events next year. We think that's going to be a big year for innovation elasticity. Of course, as we touched on in the question earlier, and then as we said Cocoa and tariff relief, we're feeling marginally better about Cocoa I think when we talked last time.

We see the momentum continuing and you know as Kirk said, we are <unk>.

<unk> some additional investment to help Halloween sell through and performance and also get holiday off to a good start.

So that's a little bit of why the EPS doesn't follow the sales on the back half or the guide up on EPS is a little softer than it is on the top line.

But you also have watch as we always do the timing of cocoa hedges, which was a favorable for Q3, we're not expecting quite that same level of favorable favorability as we close out the year. So.

Yes on the top line that international timing is probably the biggest thing we expect CMG momentum to continue.

Steven Voskuil: Since then it's moderated a bit, and we're in the process of layering in our hedges according to our program, and we'll have more visibility when we talk next time. Net net feeling a bit better from a Cocoa standpoint. Tariffs, ongoing changes week to week. I think the first prize we were hoping for, a blanket exemption, is probably not in the near term card, but we've seen significant acceleration on trade deals. Now that Cocoa and other commodities we can't make here are part of that third annex as those deals come in, we're optimistic we could see some positivity there for now. We modeled $200 million incremental on tariffs and still have in our model Cocoa inflation for next year. I would say that level of inflation is moderating, and we'll know more when we talk next time.

Awesome. Thanks, Steve.

Yep.

Our next question is from Tom Palmer with Jpmorgan.

Good morning, Thanks for the questions.

I'm going to maybe stick the Halloween for a second.

You noted the slower start to Halloween and that went Halloween falls on a Friday there can be this last week.

Waiting.

If we do get a third of your Halloween sales in the last week.

It would be more on track with with how Youre thinking about it or do you need even more of a kind of a disproportionate catch up when we think about this year and in particular I want to make sure like how this relates to kind of what's embedded in guidance. Thank you.

Bit about our Innovation Oreo. Continuing a lot of tentpole events next year. So we think that's going to be a, a big year for Innovation. Elasticity. Of course, as we touched on in the, in the question earlier. And then as we said, Coco and and tariff relief, uh, we're feeling, you know, marginally better about Coco. I think, when we talked last time uh, you know, since then it's moderated a bit and we're in the process of layering in our Hedges, according to our program and we'll have more visibility when we talk next time. But net net, you know, feeling a bit better from a cocoa standpoint and tariffs, you know, ongoing changes week to week. Uh, you know, I think, you know, the first prize, we were hoping for a blanket exemption is probably not in the near-term card but we've seen significant acceleration on trade deals. And so now that uh cocoa and other Commodities, we can't make you a part of that third Annex. Um, as those deals come in, we're optimistic. We could see some positivity there for now. We've we've modeled, you know, 200 million dollars incremental on tariffs and still have in our model cocoa inflation for next year. But I would say that

Steven Voskuil: Overall, not that much different from last quarter other than maybe a little bit more optimism on tariffs and Cocoa.

Level of inflation is moderating and we'll know more when we talk uh next time.

Anoori Naughton: Awesome. That's super helpful. Maybe just more near term on the implied Q4, it does seem like most of the increase in the full year Top Line Guide was driven by what you saw in the third. I think depending on rounding, implied Q4 is maybe a little bit below where the Street's modeling. Maybe part of that's due to the international shipment timing. Could you just maybe give us what you're expecting for the fourth quarter explicitly and whether the outlook for North America Confectionery has just changed at all, just given the puts and takes between Halloween and every day? Thanks.

Overall, it's not that much different from last quarter, other than maybe a little bit more optimism on tariffs and cocoa.

Yeah, I think that you know to get straight to it I think it still would be somewhat soft.

I think that we would walk away.

I'm, saying that Halloween by itself was is going to be a little soft in the season I do think there the interplay between our core brands is happening and we're seeing some of that and the insights that we're looking at I think that's obvious we also have a big innovation out there.

Awesome. That's super helpful and then maybe just more near-term on the uh implied for Q. It does seem like most of the increase in the full year. Topline guide was driven by what you saw in the third quarter. I think depending on rounding implied for. He was maybe a little bit below where the streets modeling maybe part of that's due to the international shipment timing, but could you could you just maybe

We have core packs that are performing well so the interplay between Halloween in the season in our core packages certainly is something that we're going to school on and we can talk about later, but let's see where the week comes in.

Kirk Tanner: Sure.

Steven Voskuil: Yeah. Most of that impact is international shipment timing. From a U.S. CMG standpoint, we see the momentum continuing. As Kirk said, we're directing some additional investment to help Halloween sell through in performance and also get holiday off to a good start. That's a little bit why the EPS doesn't follow the sales on the back half or the guide up on EPS is a little softer than it is on the top line. We also watch, as we always do, the timing of cocoa hedges, which was favorable for Q3. We're not expecting quite that same level of favorability as we close out the year. Yes, on the top line, that international timing is probably the biggest thing. We expect CMG momentum to continue.

Give us. You know what? You're expecting for the fourth quarter, explicitly and and whether the outlook for North America, can factory confectionery has just changed it all. Just given the puts and takes between Halloween and every day. Thanks.

And then we will share the insights and some of our action plans moving forward, but winning at the season is critically important to us.

We continue to build.

On our capabilities, you know through insights and the actions that we need to do to move the business forward.

Okay. Thank you for that.

And then just look I think on the cocoa commentary I want to clarify one at some point next year your cocoa costs likely turn deflationary, even if they are up for the full year and I'm curious your views on pricing as inflation eases I don't think you've historically given back pricing.

Anoori Naughton: Awesome. Thanks, Steve.

From the US CMG standpoint. Um, you know, we we see the momentum continuing, you know, as Kirk said, we're directing some additional investment, uh, to help Halloween, uh, sell through and performance and also get holiday off to a good start. Uh, so that's a little bit of why the the EPS doesn't follow the sales on the back half or the the guide up on EPS is a little softer than it is on the top line. Uh, but we also have watches. We always do the timing of cocoa Hedges, which was a favorable for Q3. We're not expecting quite that same level of favorability as we close out the year. So, but yeah, on the top line at International timing is is probably the biggest thing we expect CMG, momentum to continue.

Steven Voskuil: Beth.

Awesome. Thanks, Steve.

Kirk Tanner: Our next question is from Todd Palmer with JPMorgan. Good morning. Thanks for the questions. I'm going to maybe stick to Halloween for a second. You noted the slower start to Halloween and that when Halloween falls on a Friday there can be this last week waiting. If we do get a third of your Halloween sales in the last week, would it be more on track with how you're thinking about it or do.

But we are.

Our next question is from Tom Palmer with JP Morgan.

Facing kind of unusual levels of both inflation and potentially deflation so wanted.

Maybe a clarification on how youre thinking about it at this time.

Sure on the first part of your question, Yes, I mean, the expectation right now with where cocoa is I would hope as we get deeper into 'twenty six and you start to see some deflation again, well have a better picture of that profile. When we talk next time, but just based on what we're seeing right now and I'm looking year over year.

Good morning. Uh, thanks for the questions. Um, I'm gonna maybe stick to Halloween for a second. Um, you noted the slower start to Halloween and that when Halloween falls on a Friday, there can be this last week.

Steven Voskuil: You need even more of kind of.

And again, giving back price I guess start with a comment from earlier and we're still seeing cocoa up 70% from where we started the cocoa inflation journey and so we.

Kirk Tanner: A disproportionate catch-up when we think.

Steven Voskuil: About this year and I in particular.

Kirk Tanner: Want to make sure how this.

Steven Voskuil: Relates to kind of what's embedded in guidance.

Kirk Tanner: Thank you. Yeah, I think that to get straight to it, I think it still would be somewhat soft. I think that we would walk away saying that Halloween by itself is going to be a little soft in this season. I do think the interplay between our core brands is happening and we're seeing some of that in the insights that we're looking at. I think that's obvious. We also have a big innovation out there, and we have core packs that are performing well. The interplay between Halloween, the season, and our core packages certainly is something we're going to school on, and we can talk about that later. Let's see where the week comes in, and then we will share the insights and some of our action plans moving forward.

Haven't fully recovered from that and so and again pricing is not the only lever. We are driving the transformation program are driving savings. So we will continue to use every lever at our disposal to do that.

Waiting. Um, if we do get a third of your Halloween sales in the last week, would it be more on track with, with how you're thinking about it? Or do you need even more of of kind of a disproportionate catch up when we think about this year? And, and I, in particular want to make sure like how this relates to kind of what's embedded in guidance. Thank you.

But at the same time, we want to make sure that we're investing in our brands and that we're driving good partnership with retailers and making sure we're helping to again grow at or above the category. So we're gonna have a focus on balanced recovery as Kirk said earlier.

Understood. Thank you.

Our next question is from Peter Galbo with Bank of America.

Hey, good morning, Kirk and Steve. Thank you for the question Steve.

Yeah I think that you know to get straight to it. I think it it still would be somewhat soft. Um you know I I think that we would walk away um saying that Halloween by itself um was is going to be a little soft in this season. I do think there are the interplay between our core Brands is happening and we're seeing some of that in the insights that we're looking at. I think that's obvious. We also have a big innovation out there. Uh, and we have core packs that are performing well. So the interplay, um, between Halloween and of the season and our core packages certainly is something we're

Not to not to belabor, the the pricing dynamic point again, but I do think some of the hesitation maybe is stemming from the fact that you know one of your peers operating in Europe kind of talked about a need maybe to to solve some price gap issues. You. Obviously have a peer that competes both in the U S and Europe. So the.

Kirk Tanner: Winning at the season is critically important to us, and we continue to build on our capabilities through insights and the actions that we need to do to move the business forward. Okay, thank you for that. I think on the Cocoa commentary, I want to clarify one. At some point next year, your Cocoa costs likely turn deflationary, even if they're.

Translation of that dynamic happening in Europe back to the U S is there kind of a future where were the same thing happened. So maybe it would be helpful. Just.

We're going to school on and and we can talk about later but let's see where the the week comes in. Um, and then, you know, we will, you know, share the insights and some of our action plans moving forward, but winning at the season is critically important to us. And, you know, we continue to build um on our capabilities, you know, through insights and the actions that we need to do to to move the business forward.

You know compare and contrast, the structural factors that might make the U S market, where where you operate different.

Steven Voskuil: Up for the full year.

From that pricing standpoint.

Kirk Tanner: I'm curious your views on pricing as inflation eases. I don't think you've historically given back pricing, but we are facing kind of unusual levels of both inflation and potentially deflation. I wanted maybe a clarification on how you're thinking about it this time.

And I think that would help clarify a bit of the fear that's out there that you know hey, there's all this pricing was coming in the market, but with Coca coming down are they really going to be able to to kind of hold through.

Okay, thank you for that. Um and then just look I I think on the cocoa commentary I want to clarify 1 at some point next year, your cocoa costs. Likely turn deflationary even if they're up for the full year and I'm curious your views on on pricing is inflation eases. I don't think you've historically given back pricing but we are

Yeah, you bet. So I do think it's two different markets and I think we have to be careful kind of taking the assumptions from Rwanda and applying them to another.

Of both inflation and potentially deflation. So,

Steven Voskuil: Thanks.

Kirk Tanner: Sure.

Steven Voskuil: On the first part of your question, yeah, I mean, the expectation right now with where cocoa is, I would hope as we get deeper into 2026, we'd start to see some deflation again. We'll have a better picture of that profile when we talk next time. Just based on what we're seeing right now and looking year over year and again giving back price, I gotta start with a comment from earlier. We're still seeing cocoa up 70% from where we started the cocoa inflation journey, and we haven't fully recovered from that. Again, pricing is not the only lever. We are driving the transformation program. We're driving savings.

Wanted maybe a clarification on how you're thinking about it this time. Thanks.

The U S category CMG has been very resilient and it's been very rational.

And we just arent seeing today any major price gaps that are causing us concern.

Absolutely, we're watching consumer health or partnering closely with retailers to make sure that they can't do the category stays healthy.

Sure, on the first part of your question? Yeah, I mean, the expectation, right now with where cocoa is I would hope as we get deeper into 26, we'd start to see some deflation. Again, we'll have a better picture of that profile when we talk next time, but just based on what we're seeing right now and um, looking year-over-year.

And growing and we want to be part of that with our innovation and brand investment et cetera, but it is a different situation here than what you're seeing in Europe and that rationality here I guess, we have no no reason to believe that's not going to continue based on everything we're seeing even in the market right now.

Kirk Tanner: We will continue to use every lever at our disposal to do that.

Great Super helpful and clear.

Steven Voskuil: At the same time, we want to make sure that we're investing in our brands and that we're driving good partnership with retailers, making sure we're helping to again grow at or above the category. We're going to have a focus on balanced recovery, as Kirk said earlier.

And maybe as a follow up Steve I actually wanted to ask on an international I know you had the the shipment favorability dynamic, but it was actually a.

A loss, making quarter in that business. So.

That's just applying that forward right. If you don't have the favorability on shipments in Q4 like should we be expecting.

Kirk Tanner: Understood, thank you. Our next question is from Peter Galbo with Bank of America.

And again on giving back price I guess I'll start with a comment from earlier in we're still seeing cocoa up 70% from where we started the cocoa inflation journey and so uh you know we haven't fully recovered from that and so and again pricing is not the only lever, we are driving the transformation program we're driving savings so we will continue to use every lever at our disposal to do that. Um but at the same time we want to make sure that we're investing in Our Brands and that we're driving good partnership with retailers and making sure we're we're helping to, you know, again grow at or above the category. So we're going to have a focus on balance. Um, recovery is Kirk said earlier.

I don't know the next couple of quarters that you might still be playing catch up to get back to profitability or how we should think about that segment specifically yeah. Yeah.

Understood, thank you.

Steven Voskuil: Hey, good morning, Kirk and Steve. Thank you for the question. Steve, not to belabor the pricing dynamic point again, but I do think some of the hesitation maybe is stemming from the fact that one of your peers operating in Europe talked about a need maybe to solve some price gap issues. You obviously have a peer that competes both in the U.S. and Europe. The translation of that dynamic happening in Europe back to the U.S.—is there kind of a future where the same thing happens? It would be helpful to just compare and contrast the structural factors that might make the U.S. market where you operate different from that pricing standpoint.

our next question is from Peter, galbo, with Bank of America,

Yes, it's a great question, we don't always have time to talk about international I think yes, we're I mean, it's a challenging market because a lot of our businesses in international is cocoa, driven and and even cocoa intense in some markets where the percent of cocoa, it's part of the advertising and so it feels more of the brand from Coco will also eventually feel more of the recovery when we.

To get to the other side.

We've been more aggressive on pricing in international but because we're a smaller player in some of those markets and our products are positioned in a more premium way. The elasticity impacts are also more severe than what we modeled here in the U S.

That said, we are optimistic on the business and in fact, we're growing share in all of our almost one probably of our core markets right now we feel good about that.

Hey, good morning Kirk and Thief. Uh, thank you for the question. Um, Steve not to not to belabor the the the pricing Dynamic Point again but I I do think some of the the hesitation maybe is stemming from the fact that you know, 1 of your peers operating in Europe. Kind of talked about a need maybe to to solve some price Gap issues. You obviously have a peer that competes both in the US and Europe. So the translation of that Dynamic happening in Europe, back to the US, is there kind of a a future where where the same thing happens, so maybe it would be helpful, just

Had great results in Brazil, and again profitability isn't there right now, but we still are optimistic about the market and our ability to grow and eventually return to profitability. So despite the numbers we're optimistic on the future, but we have to work through the cohort challenges there a little bit more intensely than we do here in the U S.

Steven Voskuil: I think that would help clarify a bit of the fear that's out there that, you know, hey, there's all this pricing that's coming in the market with cocoa coming down, are they really going to be able to kind of hold through? Yeah, you bet. I do think it's two different markets and I think we have to be careful taking the assumptions from one and applying them to another. The U.S. category, CMG, has been very resilient, it's been very rational and we just aren't seeing today any major price gaps that are causing us concern. Obviously we're watching consumer health. We're partnering closely with retailers to make sure that the category stays healthy and growing and we want to be part of that with our innovation and brand investment, et cetera.

You know, compare and contrast just the structural factors that might make the US market where where you operate different, um, from that pricing standpoint and I think that would help clarify a bit of the the fear that's out there that, you know, hey, there's all this pricing that's coming in the market with cocoa coming down, are they really going to be able to to to kind of hold through?

Alright, thanks, guys.

Our next question is from Jim <unk> with Stephens, Inc.

Hey, good morning, Thanks for taking my question.

I wanted to maybe shift gears, a little bit and ask on salty snacks given the strong performance you guys saw there I think you mentioned in the prepared remarks.

Steven Voskuil: It is a different situation here than what you're seeing in Europe and that rationality here, I guess we have no reason to believe that's not going to continue based on everything we're seeing even in the market right now.

You did 14% year over year increase in consumption.

Yeah, you bet. So I do think it's 2 different markets and I think we have to be careful kind of taking the assumptions from 1 and applying them to another, uh, you know, the US category, uh, CMG isn't very resilient. It's been very rational um, and you know, we we just aren't seeing today any major price gaps that are causing us concern. Uh, obviously we're watching consumer health or, you know, partnering closely with retailers to make sure that that the category stays healthy and growing. And we want to be part of that with our Innovation and brand investment Etc. But it is a different

It's all share gains in salty it.

Particularly driven by volume, which is in pretty Stark contrast to a category that's been.

Kirk Tanner: Great. Super helpful and clear.

Situation here than what you're seeing in Europe. And that rationality here I guess we have no no reason to believe that's not going to continue based on everything. We're seeing even in the market right now.

Nina kind of at best this year can you just walk us through what are.

Steven Voskuil: Maybe as a follow up, Steve, I actually wanted to ask on International. I know you had the shipment favorability dynamic, but it was actually a loss making quarter in that business. I guess just applying that forward.

It kind of the driving factors, there and maybe any any commentary on <unk> about how we should think about that business kind of closing out the year and then you said you should be aware of maybe on the innovation side.

Kirk Tanner: Right.

Steven Voskuil: If you don't have the favorability on shipments in Q4, should we be expecting, I don't know, the next couple of quarters that you might still be playing catch up to get back to profitability or how we should think about that segment specifically? Yeah, it's a great question. We don't always have time to talk about international, I think. It's a challenging market because a lot of our business in international is Cocoa driven and even Cocoa intense in some markets where the % of Cocoa is part of the advertising and so it feels more the brunt from Cocoa. It'll also eventually feel more of the recovery when we get to the other side.

Yeah, Jim. Thank you for the question look our salt business I'm really excited about this you know we continue to build capabilities with our salty team in our salt business and I look at where we are in the category with our brands and how important that is so with skinny pop leading.

Great super helpful and clear. Um, and maybe as a follow up, Steve, I actually wanted to ask on on International. Um, I know you had the, the shipment favorability Dynamic, but it was actually a, a, a loss making quarter in in that business. So I guess just applying that forward, right? If you don't have the favorability on shipments in Q4, like, should we be expecting?

Hum in the popcorn category. It's of course went through a refresh its got a new look.

And it's delivering against growth. It's also we're working on portion control and multi pack is working so we see a lot there, but again, it's it's grounded in permissible snacking premium snacking and that makes a difference when I look at our pretzel business in dots.

Steven Voskuil: We've been more aggressive on pricing in international, but because we're a smaller player in some of those markets and our products are positioned in a more premium way, the elasticity impacts are also more severe than what we model here in the U.S. That said, we're optimistic on the business and in fact we're growing share in all but one probably of our core markets right now. We feel good about that. We've had great results in Brazil and yet profitability isn't there right now. We still are optimistic about the market and our ability to grow and eventually return to profitability. Despite the numbers, we're optimistic on.

That's really has made an impact on pretzels now dots is the leader in the pretzel category for a young brand that's pretty impressive it's hitting on a lot of marks with consumers. It is definitely.

I don't know the next couple of quarters that you might still be playing catch-up to, to get back to profitability or or how we should think about that segment, specifically. Thanks, yeah, yeah. It's a great question. We don't always have time to talk about International. I think, yeah, we're I mean, it's a challenging Market because a lot of our business and international is cocoa driven. And uh, and even Coco intense in some markets, where the percent of cocoa, uh, is part of the advertising and so it feels more the brunt from cocoa. It'll also eventually feel more of the recovery when we get to the other side. Uh we've been more aggressive on pricing and international but because we're a smaller player in some of those markets and our products are positioned in a more premium way. The elasticity impacts are also more severe than what we model here in the US.

The right in the right place in the category and it's helping the category grow and then I think we still have a lot of opportunity with pirate's booty. It's in Pos Pos is the third largest part of the category and we're just scratching the surface. So it's over a $4 $5 billion category, we have an opportunity to play in that with our mom preferred.

Kirk Tanner: The future is important, we have to work.

Steven Voskuil: Through the cocoa challenges there a little bit more intensely than we do here in the U.S. Great, thanks guys.

Uh, that said, uh, you know, we're optimistic on the business and in fact, we're growing share in, um, all of our all, but 1 probably of our core markets right now. We feel good about that. Uh, we've had great results in Brazil and yeah, profitability isn't there right now? But we still are optimistic about the market and our ability to grow and eventually returned to profitability. So despite the numbers, we're we're optimistic on the future, but we have to work through the cocoa challenges there. Um, a little bit more intensely than we do here in the US.

Great. Thanks guys.

<unk> loved brand. So the collection of brands that we have in the right places with permissible snacking allow us to grow ahead of the category will continue to build on that momentum will continue to look to ourselves business to scale that and build our capabilities, but you know having a lot of <unk>.

Kirk Tanner: Our next question is from Jim Salera with Stephens. Good morning, Kirk. Steve, thanks for taking our question. I wanted to maybe shift gears a little bit and ask on salty snacks, given the strong performance you guys saw there. I think you mentioned in the prepared remarks you did 14% year-over-year increase in consumption, saw share gains in salty, particularly driven by volume, which is.

Our next question is from Jim solero with Stevens Inc.

Good morning, Kirk Stieff. Thanks for taking our question.

Variance in this area I'm I'm really optimistic of where we can take the the salt business.

Great and maybe just any any commentary you can provide on <unk>.

Steven Voskuil: In pretty stark contrast to a category.

Kirk Tanner: That's been anemic kind of at best this year. Can you just walk us through what are kind of the driving factors there and maybe any commentary on Q4 about how we should think about that business kind of closing out the year and anything we should be aware of maybe on the innovation side? Yeah, Jim, thank you for the question. Look, our salty business, I'm really excited about this. We continue to build capabilities with our salty team and our salty business. I look at where we are in the category with our brands and how important that is. With SkinnyPop leading in the popcorn category, it of course went through a refresh, it's got a new look and it's delivering against growth. We're also working on portion control and Multi Pack is working. We see a lot there.

Innovation and to the extent that you can maybe point us in the direction for <unk> I mean should we expect.

Accumulation, where right now acceleration just any thoughts around that to close out the year. Yeah. Yeah. Yeah. We see we see the same them you know the momentum moving forward into 2026, we have some innovation on docs that.

Hi. It's all share, gains in salty, particularly driven by volume, which is in pretty stark contrast to a category. That's been, you know, anemic kind of a best this year. Do you just walk us through? You know, what are kind of the the driving factors there and maybe any any commentary on 4q about how we should think about that business? Kind of closing out uh the year and and and anything we should be aware of maybe on the Innovation side.

I'm really excited about we also have innovation on skinny pop.

And that you know and you know.

Across the portfolio.

We've looked at.

Multiple areas.

Our cross border kind of all three brands actually and there is a pipeline of innovation.

Cross our our portfolio so.

Yes more to come on on the launches of the innovation, but yeah, we have a pipeline that will drive growth and deliver in theirs.

Kirk Tanner: Again, it's grounded in permissible snacking, premium snacking, and that makes a difference when I look at our pretzel business in Dot's. Dot's really has made an impact on pretzels. Now Dot's is the leader in the pretzel category for a young brand. That's pretty impressive. It's hitting on a lot of marks with consumers. It is definitely in the right place in the category and it's helping the category grow. I think we still have a lot of opportunity with Pirate’s Booty, it's in Puffs. Puffs is the third largest part of the category and we're just scratching the surface. It's over a $4.5 billion category. We have an opportunity to play in that with a mom-preferred, loved brand. The collection of brands that we have in the right places with permissible snacking allow us to grow ahead of the category. We will continue to build on that momentum.

Some exciting things across Dod skinny pop and.

Pirate's booty.

Okay I appreciate the color I'll button.

Our next question is from Robert Moskow with TD Cowen.

Yeah, Jim, thank you for the questions. Look, our salty business. I'm really excited about this. You know, we continue to build capabilities with our salty, team and our salty business. And I look at where we are in the category With Our Brands and and how important that is. So with skinny pop leading, um, in the popcorn category, it's of course, went through a refresh. It's got a new look. Um, and it's delivering against growth. It's also we're working on portion control and multi-pack is working. So we see a lot there but again it's it's grounded in permissible snacking premium snacking and that makes a difference. When I look at our pretzel business in Dots. Dots really has made an impact on pretzels. Now dots is the leader in the pretzel category for a young brand.

Hi, Thanks for the question and welcome Kirk.

Two questions one is.

Steve when you were giving the factors that might determine whether there's double digit potential you mentioned several but is it fair to say that elasticity is probably the most the biggest and most determining factor.

And since it's hard to predict would you consider providing a wider range than normal for 2026 guidance to.

To take that into account and then I had a quick follow up.

Sure Yes, great question I would say elasticity, probably is the biggest thing I mean, obviously coco with huge as well, but elasticity is one we'll be watching very closely.

Kirk Tanner: We will continue to look to our salty business to scale that and build our capabilities. Having a lot of experience in this area, I'm really optimistic of where we can take the salty business.

What we see now like we talked about earlier I'm not concerned, but we'll be watching it closely.

The range is it's an interesting point I think that's something that we'll give some thought to between now and the time here and giving guidance.

That's pretty impressive. It's hitting on a lot of marks with consumers. It is definitely uh, the right in the right place in the category and it's helping the category grow and then I think we still have a lot of opportunity with Pirates Booty. It's in Puffs. Puffs is the third largest part of the category and we're just scratching the surface. So it's over a 4 and a half billion dollar category. We have an opportunity to play in that with a mom, preferred loved brand. So the collection of brands that we have in the right places with permissible snacking allow us to grow ahead of the category. You know, we'll continue to build on that momentum. You know, we'll continue to uh look to ourselves to business to scale that and, you know, build our capabilities. But you know having a lot of experience in this area. I'm I'm really optimistic of where we can take the the salty business.

Steven Voskuil: Great.

Kirk Tanner: Maybe just any commentary you could provide on innovation and to the extent that you can maybe point us in a direction for Q4. I mean, should we expect kind of continuation of where.

Depending on what we'll see I think we will see more on elasticity will have a better view of cocoa by that point.

Maybe tariffs maybe not but it's a good it's a good point some will probably think about.

Steven Voskuil: We're at now, acceleration?

Right? And maybe just any any commentary you could provide on, you know, in Innovation and and to the extent that you can maybe point us in a direction, you know, for 4 q. I mean, should we expect kind of

Kirk Tanner: Just any thoughts around that to close out the year? Yeah, yeah, we see the same momentum moving forward into 2026. We have some innovation on Dot's Pretzels that I'm really excited about. We also have innovation on SkinnyPop in that across the portfolio. We've looked at multiple areas across both, kind of all three brands actually. There is a pipeline of innovation across our portfolio. Yeah, more to come on the launches of the innovation. We have a pipeline that will drive growth and delivery, and there's some exciting things across Dot's Pretzels, SkinnyPop, and Pirate’s Booty.

Okay, Thanks and.

And doing a deeper dive into these price gaps that emerged are what we really found was some pretty sizable ones in king size.

The convenience channel. After you raised price between you and your biggest competitor, but I think your competitor raised prices. Since then so is it fair to say that that gap.

Continuation of where we're at now acceleration just any thoughts around? That to close out the year? Yeah, yeah we yeah we see we see the same moment, you know the momentum moving forward into 2026. We have some Innovation on dots that um I'm really excited about. We also have Innovation on skinny pop. Um,

Does exist, but it's just kind of temporary and will close soon.

Yes, I would say I don't want to get down to pack type by pack type retailers sort of detail.

But like I say, we have all of that we've seen what you're talking about on King size. We look at every packing a retailer right now there are some gaps in places some of those gaps are closing some of those gaps may hang around for a while but as we look at them in the aggregate.

You know, in in that, you know, in, you know, across the portfolio, we've we've looked at um, multiple areas uh, across both kind of all 3 Brands, actually and there is a pipeline of innovation um across our our portfolio. So

There's nothing that's concerning us at this stage.

Yeah, more to come on, on the launches of the Innovation. But yeah, we have a pipeline that will drive growth and delivery. And there's, uh, you know, some exciting things across dots skate pop, and

Um, Pirates, Booty.

Steven Voskuil: I appreciate the color.

Kirk Tanner: I'll hop back in the queue. Our next question is from Robert Moskow with TD Cowen. Hi, thanks for the question and welcome, Kirk. Two questions. One is, Steve, when you're giving the factors that might determine whether there's double digit potential, you mentioned several. Is it fair to say that elasticity is probably the most, the biggest and most determining factor? Since it's hard to predict, would you consider providing a wider range than normal for 2026 guidance to take that into account? I had a quick follow up.

Recall, there is this sort of give and take and we talked about it before about the cadence of the follow it can take a little while sometimes we choose to take a little while to follow and so this is part of the category, which is still rational it just doesn't fall on a perfect cadence all the time.

I appreciate the color all backing it, too.

Our next question is from Robert Moscow. With TD Cowen.

Great. Thank you.

Our next question is from Alexia Howard with Bernstein.

Good morning, everyone and thank you for the question I'm Welcome Kirk.

Can I ask about D. C store channel I think Robert Rob mentioned it it.

It seems as though you were having some trouble with that earlier in the year.

Seem to be in recovery I think over the last few months is that still going fairly strongly at this point and then I have a follow on.

Anoori Naughton: Sure.

Steven Voskuil: Yeah, great question. I would say elasticity probably is the biggest. I mean, obviously cocoa is huge as well, but elasticity is one we'll be watching very closely. From what we see now, like we talked about earlier, not concerned, but we'll be watching it closely on the range. It's an interesting point. I think that's something we'll give some thought to between the now time here and giving guidance. Depending on what we'll see, I think we will see more on elasticity. We'll have a better view of cocoa by that point. Maybe tariffs, maybe not, but it's a good point. Something we'll probably think about.

Hi, thanks for the question. And welcome Kirk. Um, 2 questions 1 is, uh, Steve, when you're giving, um, the factors that might determine whether there's double digit, potential, you mentioned several, but is it fair to say that elasticity is probably the most, the biggest and most determining factor and, and since it's, it's hard to predict, would you consider providing a wider range than normal for for 2026 guidance? Uh, to take that into account and then I had a quick follow-up.

Yeah. Thank you.

I appreciate the question I'm really passionate about the convenience channel.

<unk> had the opportunity to Vietnam X in Chicago and talked to a lot of our customers look I think about.

The performance of the category in convenience right now in CMG is performing at a plus six so pretty pretty healthy cadence a N C N G right now.

Sure. Yeah. Um, great question I would say elasticity probably is the, the biggest deal. I mean, obviously cocoa is huge as well, but elasticity, um, is 1. We'll be watching very closely. Um, you know, from what we see now, like we talked about earlier, um, not concerned but we'll be watching it closely on the Range. It's a, it's an interesting point. I think that's something. We'll give some thought to between the. Now, the time, uh, here and giving guidance

Think there are still some opportunities for us to get.

Get stronger and we are hyper focused on IC and our ability to execute and we've rolled out. These gold standard merchandising plans. We've built this innovation pipeline, we're building on tent pole moments all with the lens of delivering for all.

Kirk Tanner: Okay, thanks. In doing a deeper dive into these price gaps that emerged, what we really found was some pretty sizable ones in King Size in the convenience channel after you raised price between you and your biggest competitor. I think your competitor raised prices since then. Is it fair to say that that gap does exist, but it's just kind of temporary and will close soon?

Um, you know, depending on what we'll see, I think we will see more on elasticity. We'll have a better view of Coco by that point, um, you know, may may be tariffs, maybe not, but it's a good, it's a good point, something we'll probably think about

Our convenience customers. So there is a level of intensity that we're putting against the convenience channel because we know it is a priority. We now I see is a real priority for US is it's a big brand builder.

Steven Voskuil: Yeah, I would say I don't want to get down to pack type by pack type retailer sort of detail, but like I said, we have all of that. We've seen what you're talking about on King Size. We look at every pack and every retailer. Right now there are some gaps in places. Some of those gaps are closing, some of those gaps may hang around for a while, but as we look at them in the aggregate, there's nothing that's concerning us at this stage. Recall, you know, there is this sort.

I think your competitor raised prices since then. So, is it fair to say that? That gap does exist, but it's just kind of temporary and will close soon.

[noise] an area, where we can continue to grow our brands. So we're going to show up strong we like the momentum that we have we still think there's opportunity for us to get better and we will do we will do all that with the partnership with our convenience customers.

Thank you and as a follow up there's been a lot of questions on innovation are you able to put any numbers around that in terms of percentage of sales from new products introduced either over the last year or last three years and how that ramps over time, because it seems as though innovation dropped off in the years immediately after the pandemic.

Kirk Tanner: Of give and take, and we talked.

Steven Voskuil: About it before about the cadence of, you know, the follow can take a little while. Sometimes we choose to take a little while to follow. This is part of the category which is still rational. It just doesn't fall on a perfect cadence all the time.

Kirk Tanner: Great. Thank you. Our next question is from Alexia Howard with Bernstein.

Act type by pack type retailer sort of detail. Uh, but like I said, we we have all of that. We've seen what you're talking about on KingSize, we look at every packing, every retailer right now. There are some gaps in places, some of those gaps are closing. Some of those gaps may hang around for a while. But as we look at them in the aggregate, uh, you know, there's nothing that's concerning us at this stage, um, recall, you know, there there is this sort of give and take and we talked about it before about the Cadence of, you know, the follow-up can take a little while, sometimes we choose to take a little while to follow. And so, this is part of the category which, which is still rational. It just doesn't fall on a perfect, Cadence all the time.

Great. Thank you.

Yeah.

Yeah.

Innovation is such an important lever for sure, but I think being consistent with innovation is also important in balance with your core business I'd tell you one thing that I really liked about this last innovation that we launched with Reese's Oreo.

Anoori Naughton: Good morning, everyone, and thank you for the question and welcome.

Our next question is from Alexia Howard with Bernstein.

Kirk Tanner: Kirk.

Anoori Naughton: Can I ask about the C Store channel I think Rob mentioned? It seems as though you were having some trouble with that earlier in the year. It seemed to be in recovery, I think over the last few months. Is that still going fairly strongly at this point? I have a follow up.

Especially inconveniences, we're talking about that channel is we co merchandised it with our core our core brands and we saw our core brands elevate with innovation and I think that is just a testament to the execution that we have in the marketplace not just highlighting our our innovation, but bringing our core <unk>.

Kirk Tanner: Yes, thank you. I appreciate the question. I'm really passionate about the convenience channel. I just had the opportunity to be at NACS in Chicago and talk to a lot of our customers. Look, I think about the performance of the category in convenience right now and CMG is performing at a plus 6%, so pretty healthy cadence in CMG right now. I think there are still some opportunities for us to get stronger. We are hyper focused on IC and our ability to execute. We've rolled out these gold standard merchandising plans. We've built this innovation pipeline. We're building on tent pole moments, all with the lens of delivering for our convenience customers. There is a level of intensity that we're putting against the convenience channel because we know it is a priority.

Good morning, everyone. And thank you for the question and and welcome cook. Um, can I ask about the sea store Channel? I think, uh, Rob Rob mentioned it. Um, it seems as though you were having some trouble with that earlier in the year, it seemed to be in recovery. I think over the last few months is that still going fairly strongly, uh, at this point? And then I have a follow-up.

Long with it I think is a really good thing for us to do it's a fundamental that we believe in and so that I think takes.

Yeah. Thank you. You know. I appreciate the question. I'm really passionate about the convenience Channel. I just had the opportunity to be at next, uh, in Chicago and talk to a lot of our customers. Look. I think about

The total portfolio into account I think innovation is critical consumers are looking for it but if it can help build your core brands as well I think.

The performance of the category in convenience right now and CMG is performing at a plus 6. So pretty pretty healthy Cadence uh in CNG right now.

You're in a much better place.

Thank you I'll pass it on.

Our next question is from Scott <unk> with Jefferies.

Okay.

Hey, good morning, Thanks, so much for taking my questions.

You made some comments today about monitoring the consumer health and I think we've heard from some of your peers about.

More broadly just weakening U S consumer sentiment. So just wondering if you can share with us your thoughts around what exactly you're seeing with the consumer and how you are thinking about that as we head into the holidays in 2026.

Kirk Tanner: We know IC is a real priority for us as it's a big brand builder and an area where we can continue to grow our brand. We're going to show up strong. We like the momentum that we have. We still think there's opportunity for us to get better and we'll do all that with the partnership with our convenience customers.

Yeah, I think that.

I think that's an important topic and I've had the opportunity to talk to a lot of our customers as well as.

As well I.

The consumer certainly is continuing to be challenged as a challenging consumer market and theirs.

Anoori Naughton: Thank you. As a follow up, there's been a lot of questions on innovation. Are you able to put any numbers around that in terms of percentage of?

I think there are still some opportunities for us to to to, you know, get stronger and we are hyper focused on icy and our ability to execute and we've rolled out these gold standard merchandising plans. We've built this Innovation pipeline, we're building on tentpole moments, all with the lens of you know delivering for our convenience customers. So there is a level of intensity that we're putting against our the convenience Channel because we know it is a priority, we know I see is a real priority for us as it's a big brand Builder and an area where we can continue to grow our our brand. So we're going to show up strong. We like the momentum that we have. We still think there's opportunity for us to get better and we'll do, we'll do all that with the partnership with our convenience customers.

There's a lot of headlines that have been talked about driving that that concern, but I would say our category remains resilient.

Steven Voskuil: Sales from new products introduced either over.

Anoori Naughton: The last year or last three years and how that's ramped over time? Because it seemed as though innovation dropped off in the years immediately after the pandemic. Thank you and I'll pass it on.

I think that's an important thing to think about so the impact of consumers how that interacts with the category.

Steven Voskuil: Yeah.

Kirk Tanner: Innovation is such an important lever for sure. I think being consistent with innovation is also important in balance with your core business. I tell you one thing that I really liked about this last innovation that we launched with Reese’s Oreo, especially in convenience as we're talking about that channel, is we co-merchandised it with our core brands and we saw our core brands elevate with innovation. I think that is just a testament to the execution that we have in the marketplace. Not just highlighting our innovation, but bringing our core along with it, I think is a really good thing for us to do. It's a fundamental that we believe in. That, I think, takes the total portfolio into account. I think innovation is critical, consumers are looking for it.

And and how it is reacting to our business I think those are the dynamics, we look at but I would say you know a large part of the other consumer certainly under pressure our category is showing up resilient I think really importantly, and then as we look into 'twenty six we see the category.

Running at historic.

Levels with with those pressures so.

I feel really confident about.

Where we're at in light of a challenged consumer.

I appreciate that thanks, and then just a follow up question. We've also started to hear from some of your peers about expected headwinds from from changes to the snap program both.

Thank you. And as a follow-up there's been a lot of questions on Innovation. Are you able to put any numbers around that in terms of percentage of sales from new products introduced either over the last year or last 3 years and how that's ramped over time? Uh, because it seemed as though Innovation dropped off in the Years immediately after the pandemic. Thank you. And I'll pass it on. Yeah, I mean, I Innovation is such an important lever, uh, for sure, but I think being consistent with Innovation is also important in balance with your, your core business. I tell you 1 thing that I really liked about this last Innovation that we launched with Reese's Oreo, uh, especially inconvenience as we're talking about that channel, is we co- merchandised it with our core, our core Brands, and we saw our core Brands Elevate with Innovation. And I think that is just a testament to the execution that we have in the marketplace. Not just highlighting our our innovation.

Policy changes, which could be more structural and then maybe more more temporary government.

Shutdown related issues, just wondering if you can share with us some context around how you're thinking about potential snap headwinds for the business. Thanks.

Kirk Tanner: If it can help build your core brands as well, I think you're in a much better place.

Anoori Naughton: Thank you.

Steven Voskuil: I'll pass it on.

But bringing our core along with it. I think is a really good thing for us to do. It's a fundamental that we believe in and so that I think takes, you know, the total portfolio into account. I think Innovation is critical. Consumers are looking for it, but if it can help build your core, uh, Brands as well, I think, um, you know, you're you're in a much better place.

I think that's a it's an important one again a live discussion that we've had with our customers and understanding the impact overall of snap. If you just take a step back and look at snap about 2% of snap.

Thank you. I'll pass it on.

Kirk Tanner: Our next question is from Scott Marks with Jefferies.

Our next question is from Scott Marks with Jeffries.

Steven Voskuil: Hey, good morning.

Kirk Tanner: Thanks so much for taking our questions.

Steven Voskuil: You've made some comments today about monitoring.

Or in the category the CMG category specifically.

Kirk Tanner: The consumer health and I think we've heard from some of your peers about more broadly just weakening U.S. consumer sentiment. Just wondering if you can share with us your thoughts around what exactly you're seeing with the consumer and how you're thinking about that as we head into the holidays and 2026. I think that's an important topic and I've had the opportunity to talk to a lot of our customers as well. I think the consumer certainly is continuing to be challenged. It's a challenging consumer market and there's a lot of headlines that have been talked about driving that concern. I would say our category remains resilient. I think that's an important thing to think about. The impact of consumers, how that interacts with the category and how it's reacting to our business, I think those are the dynamics we look at.

Right now we've seen you know I would say, we haven't seen a large impact but its early days I think if you look into 'twenty six with the dynamics between the state and the federal government on snap we.

We expect it to be a minimal impact right now on the category, but it's something that we're continuously watching and trying to understand I think it comes down to the behaviors of consumers there and the snap program and how they choose to spend those dollars, but we will stay close but I would say in 'twenty six.

Hey, good morning. Thanks so much for taking our questions. Um you've made some comments today about monitoring the consumer health and I think we've heard from some of your peers about uh more broadly just weakening us consumer sentiment. So just wondering if you can share with us your thoughts around what exactly you're seeing with the consumer um and how you're thinking about that as we head into the holidays and 2026.

Yeah, It will have a minimal impact to the business from what we're seeing right now.

I appreciate it pass it on thanks.

Our next question is from Michael Lavery with Piper Sandler.

Thank you good morning, and thanks for the question.

Kirk Tanner: I would say in large part the consumer certainly is under pressure. Our category is showing up resilient, I think really importantly. As we look into 2026, we see the category running at historic levels with those pressures. I feel really confident about where we're at in light of a challenged consumer.

Just wanted to come back to cocoa and.

You said that you could get some benefit of cost fall further, but it sounds like you're maybe also a little bit decently committed.

Focus whats your hedges on visibility and less volatility.

Maybe could you just give a sense of how wide a range is still ahead of you you're forecasting it to be inflationary.

That might moderate a bit but would you be positioned such that it.

Steven Voskuil: Appreciate that, thanks.

The challenging consumer market and there's um uh there's a lot of headlines that have been talked about driving that that concern, but I would say our category remains resilient. Um I think that's an important thing to think about. So the impact of consumers how that interacts with the category um and and how it's reacting to our business, I think those are the Dynamics, we look at, but I would say, you know, large part the other consumer certainly Under Pressure. Our category is showing up resilient I think really importantly. And then as we look into 26, we, you know, we see the category, um, running it, uh, you know, a historic levels, um, with with those pressures. So I feel really confident about, uh, where we're at in light of a challenge consumer.

Kirk Tanner: Just a follow up question. We've also started to hear from some of your peers about expected headwinds from changes to the SNAP program, both policy changes which could be more structural and maybe more temporary government shutdown related issues. Just wondering if you can share with us some context around how you're thinking about potential SNAP headwinds for the business. Thanks. I think that's an important one. Again, a live discussion that we've had with our customers and understanding the impact overall of SNAP. If you just take a step back and look at SNAP, about 2% of SNAP dollars are in the category, the CMG category specifically. Right now we've seen, I would say we haven't seen a large impact, but it's early days.

Wouldn't be deflationary or just maybe give us a sense of.

Appreciate that, thanks and then just to follow up question. Um,

How wide a range of possibilities are still in front of you.

Sure I'd be happy too so the fundamental hedging program as he said Michael hasn't really changed.

We're hedged I would say to the normal level, we would be at this time of year given that we still believe you know Coca does have some room to fall based on the fundamentals that we've talked about in the past.

And so right now we see it on a full year basis, we see an inflationary, but there is a possibility of deflation at the way we've structured our program as many do we have a mix of some things that are price fixed and some things that allowed downside participation and so between the unhedged portion I'm looking forward and downside participation there is.

we've also started to hear from from some of your peers about, uh, expected headwinds from from changes to the snap program, both uh, policy changes, which could be more structural and then maybe more more temporary government, you know, shut down related issues. Uh, just wondering if you can share with us some context around how you're thinking about um, potential snap headwinds for the business. Thanks.

If we continue to see.

Fall in cocoa that we could see some deflationary, but a lot depends on timing and the magnitude.

Kirk Tanner: If you look into 2026 with the dynamics between the state and the federal government on SNAP, we expect it to be a minimal impact right now on the category, but it's something that we're continuously watching and trying to understand. I think it comes down to the behaviors of consumers that are in the SNAP program and how they choose to spend those dollars. We will stay close. I would say in 2026, it will have a minimal impact to the business from what we're seeing right now. Appreciate it. Pass it on. Thank you. Our next question is from Michael Lavery with Piper Sandler. Thank you. Good morning and thanks for the question.

Okay. That's helpful.

You've said in the past around 75% of your portfolio.

There's less than $4.

I guess, how does that look after this latest pricing.

And then is that sort of the key thresholds.

Your $3 from some other snack appear.

It appears as maybe a key focus point as well.

Maybe kind of where you are sitting today relative to maybe either one of those thresholds.

Yeah, I think that 75% of our units are below $4 I think.

Yeah, I think that's a, that's an important 1 again, a live discussion that, uh, We've we've had with our customers and um, understanding the impact overall of snap. If you just take a step back and look at snap about 2% of snap, uh, dollars are in the category, uh, the CMG category specifically, um, right now we've seen, you know, I would say, we haven't seen a, a large impact, but it's early days. I think, if you look into 26 with the Dynamics between the state and the federal government on snap, we, you know, we expected to be a minimal impact right now on the category but there's something that we're continuously watching and trying to understand. I think it comes down to the behaviors of consumers that are in the snap program and and how they choose to spend those dollars. But we will stay close, but I would say in 26, um, yeah, it will have a minimal impact to the business from what we're seeing right now.

Appreciate it. Pass it on, thanks.

It's an important to understand where consumers are with price points and.

Our next question is from Michael LaBrie with Piper Sandler.

You know with the offerings that we have what I would say that that's largely the case today.

Kirk Tanner: Just wanted to come back to cocoa and you said that you could get some benefit if costs fall further, but it sounds like you're maybe also a bit decently committed and that you're focused with your hedges on visibility and less volatility. Maybe you could just give a sense of how wide a range is still ahead of you. You're forecasting it to be inflationary. That might moderate a bit, but would you be positioned such that it wouldn't be deflationary or just maybe give us a sense of how wide a range of possibilities are still in front of you?

Thank you. Good morning and thanks for the question.

Okay, great. Thanks, so much.

Our next question is from Chris Terry with Wells Fargo.

Hey, good morning, everybody.

Okay.

Good morning, Chris.

We are we are late in the call. So I'm just going to ask a couple of clarifying questions if I could.

Just on this.

Conversation around algorithm.

For next year kind of similar commentary despite the lower cocoa.

Steven Voskuil: Sure, yeah.

Kirk Tanner: Be happy to.

Just wanted to come back to Coco and um you said that you could get some benefit if costs fall further but it sounds like you're maybe also a bit decently committed and and that you're focused with your Hedges on visibility and and less volatility. Maybe could you just give a sense of how wide a range is still ahead of you? Your your forecasting, it to be inflationary that might moderate a bit. But would you be positioned such that? It wouldn't be deflationary or just maybe give us a sense of how wide a range of possibilities are still in front of you.

Steven Voskuil: The fundamental hedging program, as you said, Michael, hasn't really changed. We're hedged, I would say, to the normal level we would be at this time of year, given that we still believe, you know, cocoa does have some risk, room to fall based on the fundamentals that we've talked about in the past. Right now we see it on a full year basis, we see it inflationary, but there is a possibility of deflation. The way we've structured our program, as many do, we have a mix of some things that are price fixed and some things that allow downside participation. Between the unhedged portion looking forward and downside participation, there is potential if we continue to see some fall in cocoa, that we could see some deflationary, but it just, a lot depends on timing and the magnitude.

Is it fair to say that you know if Coco had not come down you probably would have to take even more pricing in the next year and now you're basically not in that situation anymore.

And then yes.

Yes, correct, yes.

So all I can say.

Sure. Yeah, I'd be happy to. So the fundamental hedging program that you said, Michael hasn't really changed. Uh, we're we're hedged I would say to the normal level. We would be at this time of year. Given that we still believe, you know, cocoa does have some room to fall based on the fundamentals that we've talked about in the past.

No I don't think at this point, we're not focused on pricing. We've got you've got the price increase we've just announced rolling through.

But we continue to work all the other levers as well at our cocoa goes up down or sideways in terms of productivity driving our transformation savings continuous improvement et cetera. So.

Right now we're focused on driving more continuing the momentum in the business and making sure that we have the good execution on the pricing thats already in the market and focused on a balanced approach to driving the business for the long term.

Kirk Tanner: Okay, that's helpful. You've said in the past that around 75% of your portfolio is less than $4. I guess how does that look after this latest pricing? Is that sort of the key threshold? We hear $3 from some other snack peers as maybe a key focus point as well. Any sense of maybe kind of where you are sitting today relative to maybe either one of those thresholds? Yeah, I think that 75% of our units are below $4. I think it's important to understand where consumers are with price points and with the offerings that we have. I would say that that's largely the case today. Okay, great. Thanks so much. Our next question is from Chris Carey with Wells Fargo. Hey, good morning everybody. Good morning, Chris. We are late in the call, so I'm just going to ask a couple clarifying questions if I could.

And so, you know, right now as we see it on full year basis, we see it inflationary, but there is a possibility of deflation and the way we've structured our program, uh, as many do, you know, we have a mix of some things that are priced fixed and some things that allow downside participation. And so between the unhedged portion, um, looking forward and downside participation, you know, there is potential if we continue to see some fall and cocoa that we could see some deflationary, but it just a lot depends on timing in the magnitude.

Yes.

Is it I guess is it fair to say that if cocoa did not fall you would have to assess whether additional pricing would be needed.

And then just a quick.

So just just a quick clarification, there and then I think the tax rate it came up.

Obviously, there's been a sort of reorienting our tax rate can you just give a sense of what's going on there and you know medium term tax planning an opportunity.

Yeah. Okay, that's helpful. And you've said in the past that around, 75% of your portfolio is is less than 4 dollars. Um, I guess how does that look after this latest pricing? And then is that sort of the key threshold. We we hear 3 dollars from some other snack, uh, peers as maybe a key Focus Point as well. Um, any sense of maybe kind of where you are sitting today, relative to maybe either 1 of those thresholds?

Sure. So just back back to the first question in 2006, we would not anticipate taking more pricing, even if even if cocoa remain to prior levels now long term again, we have to manage over a long window so to be an algorithm.

I think that 75% of our units are below 4 dollars. I think, um,

We would continue to look at pricing as a long term lever, but not for 26, hopefully that that helps again cocoa, we're still executing and making sure the price increases that we've announced flow through.

You know, that's it's an important to understand where consumers are with price points and uh, you know, with uh, the offerings that we have that. I would say that that's largely the case today.

Okay, great. Thanks so much.

The tax rate yeah happy to talk about it it's been a bit of a change this year, it's probably been a topic every quarter and we have a couple of things that are happening.

Our next question is from Chris Carrie with Wells Fargo.

Couple of which are unusual to this year and one that we're still working through for next year, but on one hand, we have three things hitting the tax rate one some adjustments and reserves.

Hey, good morning everybody.

Good morning Chris. Um,

Kirk Tanner: On this conversation around algorithm for next year, kind of similar commentary, despite the lower cocoa, is it fair to say that if cocoa had not come down, you probably would have to take even more pricing in the next year and now you're basically not in that situation anymore? Yes, go ahead. Yes, go ahead.

Based on some legacy positions in legacy litigation, we didn't have any of that in the third quarter, but you recall on a couple of earlier quarters, we talked a little bit about.

Having some reserve adjustments.

Second piece is related to.

Some procurement strategy. So earlier in this year as we looked at different sourcing alternatives for cocoa, which we pursue drove great ROI, but had some less tax efficiency than our normal procurement strategies and then finally, the tax credit strategies, which we've talked about in the current environment.

We are, we are late in the call. So I'm just going to ask a couple clarifying questions if I could just on, you know, this uh, you know, conversation around algorithm, you know, for next year kind of similar commentary, despite the lower cocoa is it, is it fair to say that you know, if Coco had not come down, you probably would have to take even more prices in the next year and now, you're basically not in that situation there.

and then, um,

Steven Voskuil: I'll just say no. I don't think at this point we're not focused on pricing. We've got the price increase we've just announced rolling through, but we continue to work all the other levers as well, whether cocoa goes up, down, or sideways in terms of productivity, driving our transformation, savings, continuous improvement, et cetera. Right now we're focused on driving, continuing the momentum in the business and making sure that we have the good execution on the pricing that's already in the market and focused on a balanced approach to driving the business for the long term. Great. I guess.

Yeah. Go ahead. Yeah, go ahead. I just like no, I don't think at this point we're not.

We just havent found as many attractive tax credit investment opportunities again, we've got our ROI thresholds quality thresholds.

And with the movement in the investment universe for those they just haven't been as attractive given our thresholds. So those are the three things that have been impacting tax rate for this year, we will give more guidance on next year's tax rate and some of the factors there when we get to guidance later.

Chris I just wanted to share my point of view on 26, and the pricing questions that you asked.

Focused on pricing. You know, we've got we got the price increase, we've just announced rolling through, uh, but we continue to work all the other levers as well. Whether Coco goes uh up down or or sideways in terms of productivity driving, our transformation savings continuous Improvement. Um, Etc. So uh we right now we're focused on, you know, driving more continuing, the momentum in the business and and making sure that we have the good execution on the pricing, that's already in the market and focused on a balanced approach to driving the business for the long term.

Kirk Tanner: Is it fair to say that if cocoa did not fall, you would have to assess whether additional pricing would be needed, and then just a quick clarification there. I think the tax rate came up. Obviously, there's been a sort of reorientation of tax rate. Can you just give a sense of what's going on there and medium term tax planning and opportunity? Thanks. Sure.

I think if you go back to what we talked about what 26 looks like for a success standpoint, but certainly getting back on algorithm, we talked about the potential for EPS, but I think it's really important to get this message of costs. So we retain the flexibility to invest in our business. We're playing this for the long haul we have a lot of.

Great, is it I guess, is it fair to say that if Koko did not fall, you would have to assess whether additional pricing would be needed.

Steven Voskuil: Just back to the first question. In 2026, we would not anticipate taking more prices even if cocoa remained at prior levels. Long term, again, we have to manage over a long window. To be on algorithm, we would continue to look at pricing as a long-term lever, but not for 2026. Hopefully that helps. Again, cocoa, we're still executing and making sure the price increases that we've announced flow through the tax rate. Happy to talk about it. It's been a bit of a change this year. In fact, it's probably been a topic every quarter and we have a couple things that are happening, a couple of which are unusual to this year, and one that we're still working through for next year. On one hand, we have three things hitting the tax rate. One, some adjustments in reserves based on some legacy positions and legacy litigation.

Energy and enthusiasm in the business right now we want to keep that momentum. There's also a lot of great new ideas to drive growth in health for the business over the long term, while we recover our margins that are you know that we've gone backwards on so I think that balance I think is what I would leave you with is we still have that flexibility.

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We are enthusiastic about what we see with momentum, but also the opportunities that we have to invest in for the future. So certainly a balance of how we build the business.

Um, and then just a quick. Um, so just just a quick clarification there and then I, I think the tax rate came up. Um, obviously there's been a sort of reorientation of tax rate. Can you just give a sense of what's going on there and you know, medium-term tax planning and, and opportunity? Thanks sure. So, just back back to the first question in 26, we would not anticipate taking more prices, even as even as Coco, you know, remained at prior levels. Now long term, again, we have to manage, uh, over a Long window. So to be on algorithm, uh, you know, we would continue to look at pricing as a long-term lover, but enough for 26, I hopefully that that helps again, Coco. We're still executing and making sure the price increases that we've announced flow through.

Thanks, guys I appreciate it.

Our next question is from John Baumgartner with.

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Good morning, Thanks for the question.

Steven Voskuil: We didn't have any of that in the third quarter, but you'll recall in a couple of earlier quarters we talked a little bit about having some reserve adjustments. The second piece is related to some procurement strategies. Earlier in this year, as we looked at different sourcing alternatives for cocoa, which we pursued, drove great ROI but had some less tax efficiency than our normal procurement strategies. Finally, the tax credit strategies which we've talked about in the current environment, we just haven't found as many attractive tax credit investment opportunities. We've got ROI thresholds, quality thresholds, and with the movement in the investment universe for those, they just haven't been as attractive given our threshold. Those are the three things that have been impacting tax rate for this year.

Maybe just.

Thinking with convenient stores, Kurt just bigger picture I'd like to hear your observations of the retail landscape for competitive merchandising promo just you haven't seen it and you see it across multiple categories over the years.

The on tax rate. Yeah. Happy to talk about it. It's been a bit of a change this year. In fact, it's probably been a topic every quarter. And we have a couple things that are happening. Uh, a couple of which are unusual to this year and 1 that we're we're still working through for next year. But on the 1 hand, we have 3 things, hitting the tax rate 1, some adjustments in reserves um based on some Legacy positions and Legacy litigation. We didn't have any of that in the third quarter but you were calling a couple of earlier quarter if we talked a little bit about, um, having some Reserve adjustments. Now, the second piece is related to

Promo merge has evolved given the rise of smaller brands healthy snacks non CMG categories.

Just how has competition changed for high visibility merchandising, how do you see confectionary positioned today to compete and are there any changes you think hershey can make in terms of either existing spend levels or types of promotion.

Yeah, I think that's the right question and I think it is changing you know I think John you've asked a good question inconveniences.

If you spend time with the retailers, you'll see certainly new solutions to drive them.

Steven Voskuil: We'll give more guidance on next year's tax rate and some of the factors there when we get to guidance later.

You know the customer performance from from their standpoint, we've seen a lot of new merchandising strategies, a lot of new ways to deliver value for consumers across multiple categories and convenience I think it's really important that we play a growth driver role inside.

Kirk Tanner: Hey Chris, I just wanted to share my point of view on 2026 and the pricing questions that you asked. Look, I think if you go back to what we talked about, what 2026 looks like from a success standpoint, certainly getting back on algorithm, we talked about the potential for EPS, but I think that it's really important to get this message across. We retain the flexibility to invest in our business. We're playing this for the long haul. We have a lot of energy and enthusiasm in the business right now. We want to keep that momentum. There's also a lot of great new ideas to drive growth and health for the business over the long term while we recover our margin that we've gone backwards on. I think that balance is what I would leave you with. We still have that flexibility.

The store and that is delivered across our core innovation and how we deliver value in multiple transactions and things that consumers are doing I think that theres also new tools that are exciting so theres loyalty and.

Some procurement strategies. So earlier in this year, as we looked at different sourcing alternatives for Cocoa, uh, which we pursued drove a great Roi, but had some less tax efficiency than our normal procurement strategies and then finally, uh, the tax credit strategies, which we've talked about, you know, and the current environment. Uh, we just haven't found as many attractive tax, credit investment opportunities again, we've got Roi thresholds quality thresholds. And, uh, with the movement in the investment Universe for those, they just haven't been as attractive, given our thresholds. So those are the 3 things that have been impacting tax rate for this year. We'll give more guidance on next year's tax rate, um, and some of the factors there, when we get the guidance later, hey, Chris, I just wanted to share my point of view on 26 and the pricing questions that you asked. Look, I think you know if you go back to what we talked about what 26 looks like from a a success standpoint. It's certainly getting back on algorithm. We talked about the potential for eps.

Tools that retailers are using that we're participating in that drive personalization and loyalty. So theres. So many new fascinating ways to grow the business and again I'm Super passionate about this channel and our opportunities to build brand and build.

Kirk Tanner: We're enthusiastic about what we see with momentum, but also the opportunities we have to invest in for the future. Certainly a balance of how we build the business. Thanks, guys. I appreciate it. Our next question is from John Baumgartner with Mizuho Securities. Good morning. Thanks for the question. Maybe just sticking with convenience stores. Kirk, just, you know, bigger picture. I'd like to hear your observations of the retail landscape for competitive merchandising promo. Just you having seen it in your seat across multiple categories over the years, how promo merch has evolved given the rise of, you know, smaller brands, healthy snacks, non-CMG categories. Just how has competition changed for that high visibility merchandising? How do you see confectionery positioned today to compete? Are there any changes you think Hershey can make in terms of either existing spend levels or types of promotion?

But I think that it's a really important to get this message across. So we we retain the flexibility to invest in our business, we're playing this for the Long Haul. We have a lot of energy and enthusiasm in the business. Right now, we want to keep that momentum. There's also a lot of great new ideas to drive growth and health for the business, over the long term while we recover our margins that uh you know, that we've gone backwards on. So I think that balance I think is what I would leave you with is we still have that flexibility.

Momentum and it will be a focus point for us moving forward.

Thanks Mark.

Thanks, John.

Uh, we are enthusiastic about uh what we see with momentum but also the opportunities we have to invest in for the future. So certainly a, a balance of of how we build the business.

Thank you there are no further questions at this time I'd like to hand, the floor back over to Laurie Norton for any closing comments.

Thanks guys. I appreciate it.

Thank you everyone for joining us this morning, and we look forward to our follow up call. This afternoon.

Our next question is from John Baumgartner with the duo securities.

Good morning. Thanks for the question.

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

Kirk Tanner: Yeah, I think that's the right question and I think it is changing. John, you've asked a good question. In convenience, if you spend time with the retailers, you'll see certainly new solutions to drive the customer performance from their standpoint. We've seen a lot of new merchandising strategies, a lot of new ways to deliver value for consumers across multiple categories in convenience. I think it's really important that we play a growth driver role inside the store and that is delivered across our core innovation and how we deliver value in multiple transactions and things that consumers are doing. There are also new tools that are exciting. There are loyalty and tools that retailers are using that we're participating in that drive personalization and loyalty. There are so many new fascinating ways to grow the business.

Your help promo merch has evolved given the rise of, you know, smaller Brands, healthy snacks, non CMG categories. Um, just how is competition changed for high. Visibility merchandising, how do you see confectionery position today to compete? And are there, any changes you think Hershey can make in terms of either existing spend levels or types of promotion?

Yeah, I think that's the right question and I think it is changing, you know, I think John you've asked a good question and convenience is, you know, if you if you spend time with uh, the retailers, you'll see, um, certainly new Solutions uh, to drive. Um,

Kirk Tanner: I'm super passionate about this channel and our opportunities to build brand and build momentum and it will be a focus point for us moving forward. Thanks, Mark. Thanks, John. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Anoori Naughton for any closing comments.

You know, the, you know, customer performance uh, from from their standpoint, we've seen a lot of new merchandising strategies, a lot of new ways to deliver value for consumers. Across multiple categories inconvenience. I think it's really important that we play a growth driver, um, role inside the store and that is delivered across our core Innovation and how we deliver value in multiple transactions, and things that consumers are doing. I think that there's also new tools that are exciting, so, there's loyalty and, um, tools that retailers are using that, we're participating in the drive personalization and loyalty. So, there's so many new fascinating ways to grow the business. And again, I'm super passionate about this Channel and our opportunities to build brand and build, uh, momentum in it, it will

Be a focus point for us, uh, moving forward.

Thanks Mark.

Thanks John.

Anoori Naughton: Thank you, everyone, for joining us this morning. We look forward to our follow-up calls this afternoon. Thanks.

Thank you. There are no further questions at this time. I'd like to end the floor back over to a Nori non for any closing comments.

Thank you everyone, for joining us this morning. We look

This afternoon, thanks.

Kirk Tanner: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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