Operator: Greetings. Welcome to The Hershey Company's Q3 2026 question and answer session. To join the queue, please press star one on your telephone keypad. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Anoori Naughton, Vice President of Investor Relations for The Hershey Company. Thank you. You may begin.
Anoori Naughton: Good morning, everyone. Thank you for joining us today for The Hershey Company's Q3 2026 earnings Q&A session. I hope everyone has had the chance to read our press release and listen to our 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 a transcript and audio replay of this call. Please note that during today's Q&A session, we may make forward-looking statements that are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the company's future operations and financial performance. Actual results could differ materially from those projected. The company undertakes no obligation to update these statements based on subsequent events.
Anoori Naughton: A detailed listing of such risks and uncertainties can be found in today's press release in the company's SEC filings. Finally, 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 in consideration in isolation or as a substitute for 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's President and CEO, Kirk Tanner, and Hershey's Senior Vice President and CFO, Dave Poulet. Operator, we can kick it over for the first question.
Operator: Thank you. If you would like to ask a question, it is star one on your telephone keypad. You may press star two if you would like to remove your question from the queue. We ask that you please limit to one question and one follow-up question. Our first question is from Andrew Lazar with Barclays. Please proceed.
Andrew Lazar: Great. Thanks so much. Good morning, Kirk, Dave, and Anoori.
Kirk Tanner: Good morning, Andrew.
Anoori Naughton: Morning.
Andrew Lazar: Maybe to start, in your prepared remarks, you state Hershey still has visibility to sales growth in 2027, in line with your long-term algorithm of 2% to 4%. My question, I guess, is what gives you this level of visibility in light of the tougher macro backdrop? Is it increasingly likely we get there solely from carryover price, or should we expect maybe Hershey to get back to some even modest level of volume growth next year as the company more fully laps pricing?
Kirk Tanner: Yeah. Thanks, Andrew. I will take that one. We are confident in the actions we control and the results that are already delivering. So we are holding that 2% to 4% outlook. The consumer and macro backdrop, as you mentioned, will influence where we land in that range. I like to think about this in what we can control and what is out of our control. The things that we can control, our competitiveness is really driven by refresh media, innovation, programming. Let me talk a little bit about each. Our media that we have seen in the H1 of the year is working. We have got a good return on investment. We have seen our Hershey brand grow 7% in the last 13 weeks. We have three new campaigns. So we are getting momentum with the media that we are spending, and we are getting a higher return on investment.
Kirk Tanner: I like what we are doing there. Innovation, we have talked a lot about. We have had really good innovation this year on DOT'S Snack Mix. Hershey's Creme Bar is the number 1 innovation the last 4 weeks. Reese's Filled Pretzels, Reese's Oreo that we have talked about, that is the largest innovation over the last 52 weeks. When we look into 2027, we have a 50% increase on our innovation pipeline. We are going to be much more competitive on innovation. Programming, we talked about tentpole events like March Madness, s'mores, back to school. We have seen improvement on those and double-digit growth, so we have more programming against those big events next year. We also believe that our salty business can definitely produce more for us in 2027, both on the top line and the bottom line.
Kirk Tanner: I tell you, we have great RGM strategies that include low single-digit carryover pricing next year. Those things that are out of our control are consumer spending, which is certainly pressured by higher gas prices and overall cost inflation. As a result, if the category is a little lower than expected, then we would expect to be in the lower part of the range. That is kind of how we are thinking about next year.
Andrew Lazar: Thanks for that. Along the lines of the becoming increasingly competitive, I guess when we strip away the year-over-year timing and sort of macro dynamics, one of the pushbacks we get consistently, and I am sure you hear it too, is that Hershey, despite all of the activity this year in the market, is still losing market share. I guess, at its core, why do you think this is, and how should we expect share to progress as we exit this year into 2027? Thanks so much.
Kirk Tanner: You bet. Look, in the Q3, we saw retail performance was generally in line with expectation. We had some momentum. Profitable share, I will tell you, is at the center of our strategy. Stronger innovation pipeline in the right spaces and more all those things that I talked about, effective media, broader merchandising and distribution, those are things that are winning. When we look at this year, competitors have increased short-term, I would say short-term news-driven activity, and it has been an innovation opportunity in the category. That is what makes this category so rich and vibrant. I am confident the investments we have made in R&D innovation in our pipeline for 2027 and 2028 make us much more competitive. I have seen the innovation myself for 2028. It looks fantastic. 2027, like I said, is 50% more than 2026, and that is how this category is competitive.
Kirk Tanner: It is fresh ideas, innovation, and I feel really good where we are going with this space. It is in those spaces that matter most for The Hershey Company. It is in those areas like premium, sweets, functional, and better for you. So we have a complete package going into 2027.
[Company Representative] (The Hershey Company): Yeah just to add, right, we had some early strength in the quarter, and share performance did accelerate as we were in July and August until we ran into the tougher Reese's Oreo comparisons in September. That will continue through the balance of the year, and that is why we called that out in how we are thinking about Q4 performance relative to the category. But our performance will look good, continue to be strong on a two-year basis for complexion.
Andrew Lazar: Thank you for that.
Kirk Tanner: Thanks, Andrew.
Operator: Our next question is from David Palmer with Evercore ISI. Please proceed.
David Palmer: Thanks. Good morning.
Kirk Tanner: Good morning, David.
David Palmer: I'm sure you've heard from investors about Hershey's price gaps and how they might be too wide versus competitors, and how that might be the key driver of what's going on here with market share amid a category that might also be hitting some walls after years of cumulative price increases. Could you comment on whether there might be a price value issue, and what are your consumer insights showing you there? What are your retailer discussions telling you, and how does that inform your strategy from here on pricing?
Kirk Tanner: Yeah. Thanks, David. Look, I think pricing remains rational. This is how we're looking at it. The category overall is healthy. I think that it's not a category that promotional activity really drives to the bottom. It's not one of those tools that you see in this category. Category growth has been driven largely by innovation and new ideas. We are, though, investing in consumer value through pack and price, through targeted promotions.
Kirk Tanner: We're looking at areas like convenience as you see a consumer that's under pressure to give more value and drive pricing through bespoke promotions versus overall price decreases. It is much more about meeting the consumer where they're at with the right pack and price, and then leveraging innovation to drive excitement in the category. It's not about rolling back prices, because I think that if you look at the category, it is still rational and as we would expect.
David Palmer: Thanks for that. One of the other things that I wanted to ask you about is the pace of innovation. You mentioned how you are lapping Oreo Reese's, and that is tough. But the other thing we hear, and you can see it in the data, that your competitors have been really active on innovation, both in and out of chocolate, in the confectionery space. Could you talk about the 2027 pipeline? How does it look? Maybe you can comment on whether your pace of innovation and effectiveness of innovation might be different this next year than it was this year. Thanks.
Kirk Tanner: Yeah. Let me put a little color on that one. One thing, the last on the last question that you had is we do see unit growth and the trajectory on our volume and unit growth improving. So we are seeing that as expected, so from a pricing standpoint. Let us talk a little bit about innovation. We are innovating, like we talked about Hershey's Creme Bars is off to a really good start. It is the largest innovation in the category the last four weeks, but that is not the only innovation we have for Q4. We have Hershey's Rolls, which is a chocolate-covered wafer that is hitting the market. It is fantastic. We are also launching an opening price point on our Ice Breakers gum. So refreshment is growing, and we needed an entry price point, so we have a stick gum that we are launching this quarter.
Kirk Tanner: Hershey's Truffles and Caramels. We have Kit Kat seasonal shapes. We have a new Dot's Buffalo Snack Mix. We have a Reese's cocoa-filled pretzel, and we have SkinnyPop Parmesan Garlic, all happening in Q4. Now, when we roll over into 2027, some of our biggest innovation is going to happen in Q1. We have not talked about those innovations yet from a competitive standpoint. But the pipeline is robust, and it is on our core business. It addresses opportunities for us in sweets, in premium. We have more permissible salty coming out, and we have some functional innovation coming. So we are targeting those spaces. So overall, it is up 50%, and I think that is important. It is a significant step up for us, and it will contribute three times more to the growth in 2027.
David Palmer: Thank you.
Operator: Our next question is from Peter Galbo with Bank of America. Please proceed.
Peter Galbo: Hey, good morning. Thanks for taking the question. I wanted to go back to maybe expand on Andrew's question on organic sales into 2027. A bit of a math exercise, but just thinking about if we take kind of the implied Q4 of kind of flattish organic, looking at Q1 of 2027, obviously, we know the shorter Easter, that kind of being a bit of a headwind. We have the week that is shifting. I just want to understand kind of the shape or the direction of travel of how we might think about organic sales for next year as we contemplate wherever we are going to land in the range, low end, high end. But is it kind of more of a back half-weighted year versus some of the headwinds on exit rate in Q1?
Dave Poulet: Sure. So Q4, I will start with Q4. It is still being impacted by the tougher laps on Reese's Oreo and the C-store softness that we talked about. The innovation has built later. It will build later within the quarter, within Q4. You are going to see that carry into 2027. Then we are getting off to a strong start, as Kirk said. Some of the biggest ideas that we have next year will come early in the calendar. There is a value playbook that we are executing against. So you can think of that as both innovation and price pack activities, and those are intended to address C-store and some of the broader consumer value needs. So I would not interpret Q4 as a starting point for 2027.
Peter Galbo: Got it. Okay, thanks, Dave. That is helpful. Kirk, going back to your comments in the prepared remarks on 2027 earnings, still looking for double digit. I think there is obviously some things that have changed relative to the outlook when you provided it in March. So maybe you can just talk about the puts and takes for next year. What might push downside risk into those numbers, given where you stand today? Thanks very much.
Kirk Tanner: Yeah, you got it.
Peter Galbo: Yeah.
Kirk Tanner: I will let you take it, Dave.
Dave Poulet: All right.
Kirk Tanner: Why don't you talk about the EPS growth?
Dave Poulet: We do not see the initial EPS framework as completely off the table. We would need to see the environment improve. The areas we are focused on and looking for improvement are freight and logistics, more favorable commodity outlook. We are working on stronger returns from productivity in our demand-generating investments, and of course, there is always a healthier consumer. On the flip side, there would be more risk if there is deterioration in either consumer demand or the cost environment. Kirk called out, we are focused on what we can control. That means staying agile, using data to direct investment towards the highest return opportunities for us.
Peter Galbo: Great. Thanks so much.
Operator: Our next question is from Thomas Palmer with JPMorgan. Please proceed.
Thomas Palmer: Sorry. Thanks for the questions. I wanted to follow up on this last question from Pete, just on the 2027 puts and takes. To what extent does the outlook contemplate changes in marketing and/or pricing actions relative to the prior outlook? I know you just noted some potential flexibility there. Just wondering if there are any changes in that low double-digit outlook.
Dave Poulet: Sure. There is no change to the 2027 EPS framework, other than reflecting the higher freight logistics and non-cocoa input costs. We are going to continue to invest. Our posture remains the same. We will invest in growth levers, marketing, innovation, and merchandising, and we are doing that to support 2027, but also to prep for and support 2028. We will continue to leverage, as you think about EPS, continuous improvement, RGM, tech-enabled productivity levers, and there are a few big ones that maybe I will call out as we think about where we see big opportunity next year. One is digitization and factory automation. That is underway. There is a lot of white space we are going after over the next couple of years to drive manufacturing efficiencies. Decision intelligence, which is something that is broadly being rolled out, enabling things like working capital and waste reduction.
Dave Poulet: Logistics optimization, which will include lane and customer order management efficiencies, and so that is work that is underway that picks up next year and will carry forward into 2028.
Thomas Palmer: Great. Thanks for that. I also wanted to ask on Halloween. If I recall, a year ago, it was noted as being a bit soft, and I think the calendar was part of it, and so there was this expectation for more of a rebound this year, in part from the Saturday timing. Prepared remarks discuss more flat year-over-year. Just to clarify, how much is simply a reflection of the current macro environment? Or are there execution items we should be thinking about this year that maybe could be addressed next year?
Kirk Tanner: Yeah, let me take that one. Look, if you look at the Saturday Halloween, about 35% of the seasonal sales happened this week, so that is the impact. The biggest selling days are still ahead of us. The category is on track in that sense, in a compressed season, meaning Labor Day was late, and then you have a Saturday Halloween. So that is how that shapes up. The Hershey share is up in most classes of trade, and the execution is out there. If you look at the learnings that we had last year, the shipments are up. So the buy to start with was up, and we shipped it. The displays are in the marketplace, and we have got great partnerships with our customers. But these final days are important, and these big trick or treat packs, they are to our benefit.
Kirk Tanner: We have a share advantage in the larger packs, and that is what consumers are looking for the last few days. When we look at the consumer insights, participation intent is in line with last year. We need consumers to show up. We need them. The last few days are really critical. We are starting to see it, so we are keeping an eye on these last few days.
Thomas Palmer: Great. Thanks for all the details there.
Operator: Our next question is from Robert Moskow with TD Cowen. Please proceed.
Robert Moskow: Hi. I was hoping to maybe drill down a little bit on gross margin. There is a change in the guidance that implies, I think, an exit rate of about a 39% gross margin in Q4. For 2027, there has to be a substantial step-up. I want to know, is this exit rate informative of what to think about 2027 at all? Because I think you would have to be up over 200 basis points to hit these EPS numbers. Secondly, the volume is down quite a bit. There must be some impact from volume deleveraging on the business. I have heard that your capacity is flexible enough to adapt to that. Is that true? Is that why these two things can happen at the same time? Thanks.
Dave Poulet: Yeah, I will start with the exit rate. The big difference between Q4 and what we are going to see next year is the timing of cocoa hedges. You can expect things to look different next year as the different hedges roll through, and that is part of the algorithm. On the volume de-leverage, yeah, to an extent, there is an impact. But we expect that volume will get better. We are seeing it get better. That is also why the productivity initiatives are so important, and there is low-hanging fruit there.
Robert Moskow: Okay. Dave, can you be more specific about seeing it get better? Because the volume is down 10% in the quarter. Where are you seeing it get better? Is it the retail tracking is less bad as you exit Q3?
Dave Poulet: Yeah, I think we are going from high double-digit, high teens pricing in Q3 to single-digit pricing in Q4. We are investing in our brand. So, it is not just going to be elasticity. It is our job to drive demand. Where we have our programming and our investment focus, we are seeing the turn and improvement in volume trends. Yeah. When we look at specific brands like Hershey, Kit Kat, Cadbury, our Kisses line, we see meaningful unit trend improvement. So we will see that trend improvement will continue in Q4. It will continue in Q1 and Q2 of next year as well. So we will be on a trend of volume and unit improvement. It is not going to be exactly linear, but we are confident that we are going to see continuous progress built on the programming and execution that we have.
Dave Poulet: Look, it is our job to stimulate demand here, and we have got those plans to do that. So we will see continuous improvement on volume and unit growth. I will just add, we will provide more color on volume cadence in February's full year outlook. But we believe in top line growth even if volumes do not get fully back to positive.
Robert Moskow: Okay. Thank you.
Operator: Our next question is from Chris Carey with Wells Fargo Securities. Please proceed.
Chris Carey: Hi. Good morning, everyone.
Dave Poulet: Morning. Good morning.
Chris Carey: I wanted to ask first about cocoa. You gave some context on supply and demand. Obviously, we're looking at a more favorable position for next year. Just what are you seeing in the global crops currently and as we head into next year? I'm conscious we've seen a pick up in the forward curves as we kind of look out to 2028, but supply and demand feels in your favor. I want to get a bit more context on what you're seeing and how you're going to be approaching hedging over the next 12 months or so. I have a follow-up on the snacks business.
Dave Poulet: We're continuing to see El Niño speculation impact market prices. We don't expect cocoa to remain at current levels long term. Let me just talk about what we're seeing and how we're thinking about it. We're coming off of a historical surplus of 500,000 to 600,000 metric tons. Inventories are healthier. Supply is more diversified, and we're seeing production increase in new origins. We see satellite data and monitoring. It shows that cocoa acreage is continuing to rise in a number of regions in response to the high prices.
Dave Poulet: You're seeing examples of that in Ecuador, for example. Biggest export output on record in September. Industry is more agile. We believe the market is already pricing in a bigger global decline than last cycle, and we have yet to see the evidence really to support that. We're remaining disciplined in our approach as far as hedging, and we're leveraging the full toolkit, including flexible hedging instruments.
Chris Carey: Okay, great. On the snack side of the business, the supply recovery clearly just taking a bit longer than expected. Can you just give us a bit of context on why it's taking a bit longer and confidence levels that you can get back to where you want to be in the near term? Do you think that supply issues are starting to impact any of the consumption that we see, which is still obviously quite strong? Are you seeing any supply and out of stocks beginning to hit the business? Any context on how you would see that going forward? Thanks.
Kirk Tanner: Yeah. I would tell you that our overall, our salty business can contribute more to the top line and the bottom line, and will do so in 2027. Our service levels are improving. They're not exactly where we want them to be, but we've made the investments to catch up. Demand is definitely outstripping supply, but we are catching up and we've made those investments. We have manufacturing lines coming online in the H1 of next year. We've also invested in automation because a lot of the demand is showing up in single serve and multi-packs, and that just drives a little level of complexity that we needed to invest in automation so that we could deliver those packs that consumers want. I'm confident that we will get there.
Dave Poulet: A lot of this is behind us, but there's still this capacity coming online that'll give us good growth in 2027 on our salty business and a more efficient way to get to market. I'll add, as service improves, if you just think about this from a bottom-line standpoint as well, we expect to get more efficient use of freight logistics in the coming months. The higher rates will remain a headwind, but there's a number of things we're doing there. Kirk mentioned the fill rate improvement. There's a lot of work happening around shipping full to reduce our reliance on spot rate, which is important in salty because it has greater spot rate exposure there. Then I talked about it, but there's work going on around optimizing lanes and customer orders. That'll partly offset the bottom line, the inflation impact. I'll say-
Chris Carey: Okay.
Dave Poulet: You asked about constraints in terms of the impact on the full year, and I would say they have pulled growth down. But we are confident we're going to get those back in 2027, Kirk said.
Chris Carey: Okay. Understood. Thanks so much.
Operator: Our next question is from Leah Jordan with Goldman Sachs. Please proceed.
Leah Jordan: Good morning. Thank you for taking our question.
Dave Poulet: Good morning.
Leah Jordan: Dave, in an earlier question, highlighted potentially stronger productivity as a lever that could help offset some of the inflationary headwinds that have crept up this year as we look ahead to next year. Just seeing if you could provide an update on what opportunities you still see for productivity, what you would highlight, like efforts from this year that can wrap around and benefit next year. Then even somewhat related, how are you thinking about mitigation tools outside of hedging for cocoa at this point? Where are we on that journey as well? Thank you.
Dave Poulet: Sure. We have a strong pipeline. We have good visibility into productivity and operational levers. Just stepping back, we continue to stay focused on achieving mid 40% margin recovery over the long term. All the levers we have used historically, mix, RGM, productivity, we see operational improvement based on some of the things that we learned this year that will all contribute. The roadmap is, I would say, multifaceted, but technology is going to play a significant role. I mentioned some of those technology initiatives already earlier, the digitization of the factory, decision intelligence, logistics optimization.
Dave Poulet: I would just say, as far as cocoa, it is too early to comment on 2028. There is lots of time between now and then. But our strategies remain the same, and we continue using flexible hedging structures to capture favorable market moves. We have sourcing flexibility. We built a new chocolate paste making facility, and we can go straight to the origin as well, when appropriate to capture value. We have a lot of levers.
Leah Jordan: Okay, that is helpful. For my second question, just on brand investments, they are expected to step up here again in Q4. Should we think of that being more of the same of what you highlighted for Q3 or any updates to the brands and channels you are targeting? Just curious if there is any change in the approach as the consumer has been soft here recently.
Dave Poulet: Yeah, we are going to continue to invest. The full year brand investment is going to be around 10%, will carry forward some of the investment from Q3. We have new campaigns that are coming out right now. Cadbury, Fulfil, PayDay, are all getting new campaigns with strength and support as well, and those are ramping as we speak.
Leah Jordan: Great. Thank you.
Operator: Our next question is from Alexia Howard with Bernstein. Please proceed.
Alexia Howard: Good morning, everyone. Thank you for the question. Can I just ask about the prepared remark comment about improving unit volumes as price growth slows on non-seasonal items. Can you put any color around that on, we have seen it move from down double digits or down high single digits to a mid-single digit decline as that price growth has started to slow. Any commentary on that?
Kirk Tanner: Yeah. We are seeing that improvement as pricing moderates. We are seeing that improvement. We are seeing that improvement specifically on some of our big brands, Hershey, Kit Kat, Cadbury, our Kisses lineup. That continues to improve, and we will continue to see that improvement throughout next year. Some of that is built into some of the programming so that the path is not going to be exactly linear, but we are confident that the improvement will continue throughout 2027. Anything to add to that?
Dave Poulet: Yeah, in Q4 specifically, that is partly offset by tough comparisons. We talked about Reese's Oreo as being one of those.
[Company Representative] (The Hershey Company): Yeah. In Q3, the moderation in the net price realization was very modest. It only began late in the quarter, and you are going to see that continue into Q4 while the programming that we put in place is also ramping up. We will give you an update as we get through this quarter and we start to see more of that. We did see the bend in the trend, and that is the most important data point that we wanted to provide to you.
Alexia Howard: Thanks. Thank you for that. Can I just follow up on where you are at on advertising as a percent of sales, and where do you want to be over time? Is there further investment that will need to kick in next year?
Dave Poulet: Yeah. We are going to continue to invest behind brands, behind the innovation and programming that we have. We talked about an uptick in some of that programming and innovation next year, so we are going to carry forward the investments against those. The other thing we are working on, and you are seeing it come through, or we are seeing it come through, in our net performance and impact from brand investment is really the efficiency. Kirk mentioned an 8% improvement in ROI. We have a much more dynamic, more real-time market mix model that we are using to really leverage and stay agile as we are seeing what is working and where we have opportunities to drive efficiency. So we will keep that moving forward into next year.
Kirk Tanner: Yeah. I would just say our overall posture is to be incredibly competitive around driving awareness for our brands, effective media and marketing spend on top of our investment in R&D and innovation. I think those two key areas are important for us to drive demand, and we are focused on doing that. We like what we are seeing in our efficiency and the brand-building that we are doing, so we will continue to invest in those spaces at the levels that we are at.
Alexia Howard: Thank you. I will pass it on.
Operator: Our next question is from Peter Grom with UBS. Please proceed.
Peter Grom: Great. Thank you. Good morning, everyone. First, you touched on some. Good morning, guys. You touched on some of the category weakness in September and how that has persisted into October. Can you unpack a bit more around what you are seeing from a channel and category perspective? Has it gotten worse sequentially in October, or is it broadly similar to what you saw in September? I guess, just as we think about the guidance, what are you embedding from a category perspective through the balance of the year?
Kirk Tanner: Yeah. A couple things come on channel performance. I think the biggest outlier was C-stores. We saw a -5% for the category in C-stores. I am sorry, I am losing my voice now. We saw that continue into October, so that concern is still on C-stores. When you look at everywhere else, so everyday candy, mints, and gum, the category is a +3.7% in Q3.
Dave Poulet: You want me to take over?
Kirk Tanner: Yeah.
Dave Poulet: Yeah. Let me step back, and then I will talk a little bit more about your specific question. We are seeing the consumer more cautious on inflation, gas price. Because of gas prices and interest rates, there are strains on households. They are making more deliberate choices across channels, more in mass, more in e-com, more in club. C-store has been the challenge. Category is down 5% in September. We have seen that continue into October, and then as Kirk said, everywhere else, our business is actually up 3.7% in Q3. So, when we do step back, we see it as more of a channel and trip problem, not as much a category issue. We are focused on value levers, innovation, price pack architecture, surgical promotion, and we can talk more about that. Kirk, you can probably add some color on what we are doing there.
Kirk Tanner: Yeah. I really think the category is in a decent place with all these consumer headwinds. Obviously, we expected the C-store business to soften a little bit with gas prices, but we still see a robust category. It is resilient across the rest of the category, I mean, the rest of the channel. We feel good about where we are at. That informs kind of where we are going and how we feel about 2027 as well.
Peter Grom: Awesome. Dave, maybe just a quick clarification. Just on the 2027 commentary, just around the growth or EPS growth excluding the tariff refund, just to be clear, we should be taking that $0.25 out of the base or 2026 and then growing double digits from there. Is that the right way to think about it?
Dave Poulet: That is right.
Peter Grom: Okay. Thank you so much. I will pass it on.
Dave Poulet: Sure.
Operator: Our next question is from Michael Lavery with Piper Sandler. Please proceed.
Michael Lavery: Thank you. Good morning.
Kirk Tanner: Good morning.
Michael Lavery: I know a couple questions have touched on this already, but I want to come back to just your thoughts on next year and maybe just make sure I understand when you say that the growing pressure could restrain growth relative to your March expectations. Is that pointing more just kind of to the low end of where you landed originally, or really just trying to flag downside risk actually below it? Can you just maybe be specific about how to think about that wording?
Kirk Tanner: Yeah. Let me take the top line and then I will let Dave talk about EPS growth in the bottom line. From a top-line standpoint, we are sticking with the range that we guided to. If the consumer pressure remains or gets worse, then it is going to be in the lower part of the range. I think that is a practical approach to how we are seeing it. We are still seeing a resilient category. We are still seeing consistency. I like the growth drivers in innovation, et cetera. But if the pressures remain and some channels are still under a high level of pressure, then it is going to be in the lower part of the range. I will let Dave talk about how that impacts the bottom line and EPS.
Dave Poulet: Yes. If today's conditions remain, we could be shy of the original range or framework. We are going to continue to invest in the business for the long term, so we are going to invest behind growth and the things that we talked about earlier.
Michael Lavery: Okay. That is helpful. Then just back to your comment earlier, committed to mid-40s margin recovery over the long term. Any sense of how we should think about timing for that? When you say long term, is it likely further out, or is that within reach? What is the right way to frame just how that trajectory might unfold?
Dave Poulet: Yeah. Just starting 2027, we do expect meaningful margin improvement in 2027. That long-term ambition is 2028 forward. As I said, we have a rich productivity pipeline that we are going to continue to build and leverage to work towards that and continuous improvement in all those other levers that we typically leverage will be a part of that algorithm. What might affect the timing are the new pieces. So logistics and freight and some of the other input cost inflation, if that turns and improves sooner, you will see some margin move sooner. If it takes longer, it will take a little bit longer for us to get there.
Michael Lavery: Okay, thanks. I'll pass it on.
Operator: Our next question is from Nik Modi with RBC Capital Markets. Please proceed.
Nik Modi: Yeah, thank you. Good morning, everyone.
Dave Poulet: Good morning.
Nik Modi: Good morning. I wanted to kind of revisit some comments you made, I think, last quarter about distribution opportunities outside of the traditional channels. Maybe you can give us an update on that and could this be big enough to kind of help you kind of muscle through some of this downturn as we go into 2027?
Dave Poulet: Yeah. We talked about away from home being an opportunity, and that continues to be an opportunity. We are doubling down in that space. Yeah, and it is really across both our salty and our confection business. We are seeing good growth. We will continue to see growth. That will be a tailwind for us, including specialty retail away from home. Yes, we are creating new partnerships for distribution. It is an exciting space. We have a lot of passion for this. We know it is a great place for growth, but we importantly know it is really a good place for us to build brands. Expect more from us. That will be a tailwind going into 2027. I will say, we are continuing.
Nik Modi: Great. Yeah.
Dave Poulet: To strengthen our already strong partnerships in the core channels as well. We are focused on that as well.
Nik Modi: Great. Just a final one for me is just on agentic commerce. It just seems like adoption is getting a lot of traction, is picking up pretty quickly. Just curious, has Hershey conducted an agentic commerce audit in terms of how your brands show up across all these different platforms? Any thoughts on that would be interesting.
Dave Poulet: Oh, absolutely. This is a really important space, understanding. We spent a lot of time with some of our partners, too, to understand how this is showing up, how our brands show up, how we leverage this. Customers like Target, Amazon, Walmart, we are working directly with them. This is an important space for us and something that I think we are on the front foot with.
Nik Modi: Great. Thanks. I will pass it on.
Operator: Our final question will come from Scott Marks with Jefferies. Please proceed.
Scott Marks: Hey, good morning, all. Thanks very much for taking our questions. I have two questions that I wanted to touch on. The first, you spoke about the Hershey movie a little bit in your prepared remarks, talking about merchandising plans above initial expectations. Could you maybe help us understand what is the magnitude of uplift we should be expecting from that, and whether that is incremental to the business, or does it replace otherwise maybe non-seasonal or holiday-type merchandising activity in stores? Thanks.
Kirk Tanner: Yeah. We are really excited about this movie and the story that it is going to tell. Our Hershey brand right now is having an exceptional year. It started with how we opened up the year with the Olympics and then how we celebrated the 250-year anniversary. Now, at the end of the year, we are going to celebrate the movie. It comes out the day before Thanksgiving. We have been supported. Retailers have really gotten behind this.
Kirk Tanner: It is just an exciting American story that is relevant for our time. So we have seen a lot of support, and that is going to show up in-store with inventory and displays and a connection back to the movie. So you will see that. That will be an uplift. That will be a tailwind for the portfolio, and especially Hershey, which has already had a terrific year. We like the momentum that will build going into 2027.
Scott Marks: Thanks for the thoughts there. Just one last point of clarification from me. In the prepared remarks, you also noted a little bit of the shipment timing headwind in North America confectionery. I believe you got a little bit of benefit in Q3. Can you just remind us magnitude of benefit for Q2, what the headwind was in Q3? As we sit here today, is there anything we should keep in mind as it relates to Q4 aside from the extra shipping day? Thanks.
Dave Poulet: Yeah, I will take that one. For confectionery, that earlier ship of summer programs in Q2 was largely offset by that strong seasonal sell-in that we saw in Q3. For Q4, I would say that we think that the timing dynamics are largely a wash against that additional shipping day, as well as we will be lapping some lower levels of retailer inventories that occurred in Q4 of 2025. So I would say it is largely a wash on the shipment timing dynamics for Q4.
Scott Marks: Okay. Understood. Thanks very much.
Dave Poulet: All right. Thank you very much.
Operator: We have reached the end of our question and answer session. You may now disconnect your lines, and thank you for your participation.
