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DATE

Thursday, Feb. 5, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Kirk Tanner
  • Chief Financial Officer — Steven Voskuil
  • Vice President, Investor Relations — Anoori Naughton

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TAKEAWAYS

  • Net Sales Growth Guidance -- Management signaled expectations for 4%-5% net sales growth, providing runway for investment and innovation.
  • EPS Growth Outlook -- Full-year guidance targets 30%-35% earnings growth as momentum builds in both core categories.
  • Elasticity Assumption -- Steven Voskuil stated elasticity is planned at 0.8, with actuals currently tracking more favorably than projected.
  • Portfolio Price Points -- Kirk Tanner noted, "75% of our portfolio is still under $4," framing product accessibility as a driver of consumer retention.
  • 2025 Pricing Actions -- Price increases taken in 2025 do not fully offset the expected cocoa cost inflation for 2026, resulting in a recovery path for gross margin.
  • Cocoa Hedging Position -- Steven Voskuil confirmed cocoa is hedged above current spot prices and just above 2025 levels, with downside opportunity remaining for 2026 due to flexible hedging structures.
  • Gross Margin Guidance -- Management projects 41% gross margin for 2026, with further gains possible in 2027 if cocoa prices stabilize or decline.
  • Q4 Salty Snacks Performance -- Q4 saw 18% organic growth in the salty snack segment, driven by double-digit volume increases.
  • Marketing Investment -- The company is deploying a double-digit percentage increase in advertising and brand-building in 2026.
  • Salty Snacks Segment Growth -- Fiscal guidance indicates mid-single-digit top-line growth and double-digit EBIT improvement in the salty snacks segment.
  • International Segment -- Forecasts point to low single-digit organic sales decline but double-digit EBIT growth, attributed to pricing in premium, cocoa-intensive products and portfolio optimization.
  • Q4 Gross Margin Drivers -- Outperformance was primarily due to lower-than-expected tariffs on supplier materials, offset by LIFO and inventory revaluation headwinds.
  • Promotional Strategy -- Steven Voskuil stated, "all the pricing's been sold in, so that's not a risk," and expects category pricing to remain rational, with promotions used for targeted excitement.
  • Brand Innovation Pipeline -- Significant new product introductions are slated across major brands including Hershey's, Reese's, Dots, Skinny Pop, and Jolly Rancher.
  • Seasonal and Cultural Activation -- Management highlighted 10 cultural and seasonal events in 2026 to drive engagement and "almost always-on" brand presence.
  • SNAP Impact -- Only two out of twelve approved states have implemented SNAP waivers for candy to date, and the headwind is characterized as "manageable" and incorporated into the outlook.
  • Capital Allocation -- Share repurchases remain under consideration as tariff and cocoa-related cash pressures ease, with dividend growth and normalized CapEx reaffirmed as priorities.
  • Protein and Functional Snacking -- Management described a strong outlook for the protein business and ongoing investments in R&D for protein and fiber-based snacks, with openness to M&A to expand presence.

SUMMARY

Management at Hershey (HSY +8.58%) communicated confidence in multi-year growth supported by a balanced approach to margin recovery and brand investment, with clear flexibility to adjust capital deployment and commercial levers as market and macro conditions evolve. Guidance explicitly contemplates current elasticity trends, hedged cocoa costs, tariff outcomes, and early but monitored impacts from SNAP waiver adoption in select states.

  • Incremental gross margin improvement in 2026 is expected to be weighted toward the second and third quarters, with lingering inventory and tariff headwinds limiting first-quarter profitability.
  • Hershey intends to maintain volume and pricing agility, deploying promotional and marketing dollars as needed to sustain competitiveness amidst stable category dynamics.
  • International results reflect focused market participation, premium positioning, and selective pricing to balance current volume softness against long-term EBIT expansion.
  • Growth and engagement strategies include leveraging core brands in major cultural moments and an active innovation pipeline spanning both confectionery and snacks.

INDUSTRY GLOSSARY

  • Elasticity: A measure of demand sensitivity to price changes, commonly referenced as the ratio of percentage volume decline to percentage price increase in consumer goods industries.
  • LIFO (Last-In, First-Out): An inventory accounting method where the most recently acquired inventory is expensed first, affecting cost of goods sold and reported margin.
  • SNAP: Supplemental Nutrition Assistance Program, a U.S. federal aid initiative, with policy waivers affecting eligibility of products like confectionery in certain states.
  • CMG (Candy, Mint, Gum): Industry term encompassing the confectionery sub-segments of candy, mint, and gum, often grouped for product and market analysis.

Full Conference Call Transcript

Kirk Tanner: Hey, good morning, everyone. Thank you for joining us.

Kirk Tanner: Hey, before we get to questions, I just want to recognize our team and what they accomplished in 2025. Through skillful execution, we strengthened our market position, we invested for the future, and we closed out the year with real momentum. All while navigating serious headwinds like cocoa inflation and macro volatility. Heading into 2026, I am confident. Our portfolio is resilient. We're looking at 4% to 5% net sales growth and meaningful earnings recovery. That gives us runway to invest in innovation, brand building, and execution to drive growth. And we are going after it. Thanks for attending the call today, and we're ready to take your questions.

Operator: Thank you. As a reminder, it's star one to join the question queue. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.

Andrew Lazar: Great. Thanks so much. Good morning, everybody. Morning. Good morning, Kirk. Hi. Maybe to start, I appreciate, obviously, the chocolate category is typically not one that is a pass-through category. And that, you know, Hershey and others are still hedged well above where current spot rates are for cocoa at this point. But I guess just given the precipitous recent decline in the commodity, is there a risk maybe this time around that we could see some price deflation at some point? By either Hershey or competitors to sort of better match, you know, go forward cocoa costs? And I guess, how do you account for that sort of possibility in the guidance?

Kirk Tanner: Yes. Thank you for the question. Look, our competitors in the category are as sophisticated and large like ourselves, and they likely have coverage for more certainty in their business. And private label remains small here in the US. That's kind of the first point. But there's a big conversation around how we think about pricing and the price of cocoa, etcetera. I want to make a few points here. So first, we don't take pricing lightly, and we've been very patient and played the long game when cocoa markets surged to balance consumer needs. Our actions that we've taken are anchored in consumer insights, and the brands remain affordable and accessible. 75% of our portfolio is still under $4.

The pricing we took in '25, I think this is important, does not fully cover our cocoa cost inflation in 2026. So we're on a recovery path while also adding significant fuel to our growth with investments in marketing, innovation, R&D, really to keep that momentum on the top line going and keeping the category exciting for consumers and keep that growth moving into '26 and beyond. And then recently, you know, pricing on our snacks business, I think we're in really good shape. We had 18% growth on our snack business in Q4 on, excuse me, on double-digit volume growth. Let me get a drink. Sorry, Andrew.

Andrew Lazar: No. No. Take your time. Take your time.

Kirk Tanner: Yeah. So maybe...

Andrew Lazar: Yep. Yeah. That's, you know, kind of in a broad...

Kirk Tanner: Broad response to what we see in the market. Certainly, the deflationary momentum on cocoa takes future pricing pressure down. That's how I think about it.

Andrew Lazar: Got it. No. It's helpful. And then just a follow-up, I guess, regarding elasticity, it's great to see that it's thus far coming in more favorably than you anticipated. I guess I'm curious to what maybe do you owe this better outcome, you know, and is the company building in some flexibility in the plan? Should elasticity increase as we've seen maybe in some other markets for some other players? Thanks so much.

Kirk Tanner: Yes, let me start and I'll kick it over to Steve so that I think his voice might be stronger. Anyway, look, we're encouraged for what we've seen so far. So, you know, we announced pricing in July. We started taking pricing mid-September, and so we've gotten information and, you know, that it's informed and, you know, our information is informed on what we're seeing right now, and we're encouraged by what we're seeing right now. Yeah. And I would say, you know, elasticities don't stay static. It fluctuates over time. While we're experiencing elasticities right now that's favorable to our original outlook.

You know, we continue to plan for around 0.8 to account for these fluctuations as there's still some price pack changes to roll in. There are still some channels rolling shelf tags through. So it's gonna take a little bit longer, I think, for everything to fully adjust. Of course, our goal is to do better than that. So the strong activation calendar that we have, some of the investment that we have, you know, our goal is to do better, but the guide, you know, allows for some of that upside to flow through.

Andrew Lazar: Thanks so much. See you in March.

Kirk Tanner: You bet. Thanks, Andrew.

Operator: Thank you. Our next question comes from the line of Megan Christine Alexander with Morgan Stanley. Hi, good morning. Thanks so much. I'll maybe start with a question for Steve. To give Kirk maybe give you a little bit of a break. So another question on cocoa, but more related to the margin framework. So I think in the prepared remarks, you talked about...

Steven Voskuil: Stable rates across the broader commodity input basket, just...

Megan Christine Alexander: Just given the precipitous decline we've seen in cocoa, how should we think about cocoa within the framework? Were you able to kind of capture any benefit from what we've seen over the last month, or is this really a tailwind as we think about '27? And what I'm really just trying to get at is, you know, I think you're implying 41% gross margins in '26, obviously, a really nice recovery from '25, but still well below, you know, where you've been historically. So, you know, based on where cocoa's gone, is it kind of reasonable to expect continued progress kind of back towards those historical gross margin levels in '27?

Kirk Tanner: Thanks. Sure. Yes. Happy to take it. Hey. We're glad to see that the cocoa financial markets finally begun to reflect some of the fundamentals that we've been describing really for the last eighteen months. You know, we as we look out, we continue to anticipate a larger supply surplus in '25 and '26. Driven by supply expansion and some of those new origins we've talked about. As well as the contraction in global demand. So I'd say we're optimistic as we look to the future. That said, you know, there's market volatility still as prices are trying to find that new equilibrium.

And I think we still believe that new equilibrium is likely to be above what we've seen in historic levels. Our hedging program has in great shape for 2026. And we're hedged above current market levels. So if you kind of extend current market levels flat, you know, that would suggest that we still have some upside for further deflation in 2027. So we'll talk more about that as we get more 2027 and '28 perspective at the conference. But, you know, as we look ahead, we see more possibility for upside there in the future.

Megan Christine Alexander: Okay. Great. And maybe kind of a related question. A lot of discussion in the prepared remarks about the increased brand investment you're doing in 2026. Including a double-digit increase in advertising. So as you look out to '27, how should we think about kind of the durability of the increased brand investments you're making in '26? And as you mentioned, as gross margins hopefully kind of continue to expand as cocoa deflates, how do you think about kind of the need or desire for incremental reinvestment, you know, beyond what you're doing in '26?

Kirk Tanner: That are gonna lay a foundation for not just '26, but '27 and beyond while still delivering great growth. In the present. You know, we're really focused on fueling demand creation through things like scaling some investments in R&D and innovation, brand building, reap the retail sales team and the technology around that. That sets the portfolio up and really focuses on household penetration expansion and capturing new consumers, recapturing some of our lapsed consumers. So the investments are a mix of things they're gonna deliver today. But also things that are laying a foundation, multiyear foundation. And, again, as we look to '27, '27's also gonna be a year like '26 of driving growth, but also margin recovery.

So, you know, that balance will be present in '27 just like it is in '26. Yeah. We'll go in greater detail at our investor conference in March. Really unpack this brand building, our investments in R&D. You know, the solution here is to have sustainable long-term top-line growth, and those capabilities and investments that we make are really important, and we'll unpack that in March.

Megan Christine Alexander: Great. Thanks so much. Looking forward to it.

Operator: Thank you. Our next question comes from the line of Peter Galbo with Bank of America. Please proceed with your question.

Peter Galbo: Hey, good morning, guys. Thanks for the question. Good morning. Steve, I actually was hoping maybe we could unpack the quarter a little bit. You had some pretty nice upside in the gross margin, I think, even relative to your own expectations to the tune of, like, 150 basis points plus. I know you outlined maybe some of that in the prepared remarks of the buckets, but maybe you could just give us a little bit more detail on the upside in the quarter between kind of tariff cost saving, volume deleverage, where those kind of buckets stood?

Steven Voskuil: Sure. Yes. You're right. We had a few 100 basis points of better performance in gross margin than we expected in the fourth quarter. There are a couple of things in there. Obviously, volumes were strong, so we got a little bit more leverage. But probably the single biggest piece was tariffs. Now think about tariffs in two ways. Tariffs on our products, which we have high visibility to, and talk about that as, you know, some of that's still sitting in inventory to come out in Q1. But we also pay tariffs on some of our suppliers' items.

And that was an area where we had we anticipated paying more tariffs on some of our suppliers' materials than we ended up paying in the fourth quarter. And that was one of the, I'll say, surprise to the upside or the positive for the quarter. Offsetting that, we had a little bit of LIFO headwinds, inventory reval headwinds, but that was the biggest piece for the upside.

Peter Galbo: Got it. Okay. Thanks for that. And Kirk, you know, the prepared remarks had a notable on kind of Hershey and Reese's, you know, having a true campaign for the first time in eight years. I was commenting to Anoori this morning. Like, I've seen the Team USA ad. It's a great ad copy. But just, like, the impetus kinda for why now, you know, why this, why now on both those brands, again, given it's been some time would be helpful. Thanks very much.

Kirk Tanner: Yeah. Thanks for that question. Yeah. This is the year of Hershey's. We're investing in Reese's as well. But when you look at the campaign, it's your happy place with Hershey's. That really builds on the connection and love that consumers have for the brand. And staying relevant with consumers on big brands is so important to fuel our growth. We've got a full year planned on both Reese's and Hershey. You'll see innovation on both. There's big innovation coming out on Hershey. And then, of course, we have the movie celebrating Milton Hershey and really the great American story, success story of The Hershey Company. Coming out in the fall.

So it really is an action-packed year that really celebrates these two big brands, and that drives growth for us.

Peter Galbo: Great. Thanks very much.

Operator: Thank you. Our next question comes from the line of Peter Grom with UBS. Please proceed with your question.

Peter Grom: Great. Thank you. Good morning, everyone. I wanted to ask on the '26 guidance. And understanding a lot has changed over the last few months as it relates to cocoa, tariffs, the last... But I kind of wanted to bridge from the expectation last quarter of being on algorithms maybe being a little bit above that post tariffs to now kind of expecting 30% to 35% earnings growth. And I ask that more in context of trying to understand the degree of cushion or flexibility in the guidance just given the expectation for such strong growth.

Kirk Tanner: Yeah. Let me address just the momentum on the top line, and let Steve talk about the EPS portion. But if you think about what's different between now and, you know, when we talked last is the momentum in the business, and it's across the portfolio. So we've got real strength in our CMG business. We continue to see that. And then fundamentally, how we're investing in our brands delivering innovation, that gives us the confidence on the top line. And then our salty portfolio has been really, you know, has got a lot of tailwinds. It's really positioned with consumers in the right places.

Again, we saw 18% growth organic growth in quarter four in our salty business, and that's double-digit volume growth. So we see real health there. And the combination of our salty and sweet portfolio gives us the confidence to deliver the top line, which also, of course, helps our earnings. So that's different. Then on EPS, Steve can talk kinda through the levers there.

Steven Voskuil: Sure. You know, we're in a good spot to be in for a change where we have, you know, two of our biggest risks, cocoa, and tariffs, fully understood, you know, at least up to the moment. For the year. So that's a good place to start. On top of that, you know, since we last talked, we've got a better view. We get the new data every day on the elasticities. We feel better about what we're seeing. We haven't, as we said earlier, unbuilt all that potential upside into the plan, but we believe we've got a good, balanced outlook on elasticities. We've got strong operating plans with Kirk.

Kirk and I have been through in detail in the last few months and we're excited about those. And at the same time, we're balancing that with, you know, understanding the headwinds from the macros and making sure that we've got a balanced view of how those could play out for the year. As we think about the gives and takes that we sometimes focus on, you know, what's in our control, and what's outside our control, you know, in our control, as we said earlier, we want to do better on elasticities, and we've got strong programming and brand engagement to do that. We've got investments in innovation, media, in-store activation.

And then, you know, the ability, which we've done a great job of delivering on productivity and cost savings. So get very high confidence in that set of controllables. But there are things out of our control, you know, macro headwinds, which, again, I believe we got a prudent outlook for. Competitive response. Again, we're not seeing anything today that's causing concern, but these are the things that we will certainly keep an eye on. I think a key as we think about the '26 guide is that, you know, we have flexibility to respond to what's gonna change and challenge.

And so we've done a good job of being agile in '25, and we will do the same in 2026.

Peter Grom: Great. And then maybe just a follow-up on salty. There was a competitor this week that talked about, you know, affordability, price reductions, that they're seeing expanded shelf space. Distribution. I know that there's some subcategory differences but just curious how you see that playing out the category and maybe any implications for your business as well.

Kirk Tanner: Yeah. Our salty business has got a lot of momentum like we talked about. 18% double-digit growth for the full year and really healthy volume growth. Customers reward space on performance and velocity. That's fundamental of the category management. And so we are as well. We're expanding with our customers, and customers need our growth. If you think about the category, the salty category was relatively flat last year. We grew double digits. So we provided a lot of growth in the category. And we'll continue to do that with our customers. And we'll be rewarded with space gains and additions including, you know, support for the innovation that we bring out on our salty business.

So I feel really good about the fundamentals of where we are with our salty business and that momentum will continue.

Peter Grom: Great. Thank you so much. I'll pass it on.

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

David Palmer: Going to hit I want to hit on that line of questioning you heard earlier. You know, people right now are gonna be wrestling with how to think about earnings into '27, which is ridiculously early. I know. But, you know, people are gonna clearly be imagining, you know, $10 or more in earnings in '27 just thinking through where cocoa is today and likely it could be in the 4 thousands for that upcoming year just based on how you might be hedging this year into that year.

Just wondering, like, things that wouldn't maybe not make we don't wanna get ahead of ourselves in terms flow through, things that could hold back that flow through to get to those types of numbers, you know, price elasticity moving over 0.8, I would imagine, would be one. But other wish list types of reinvestments, any thoughts on that would be helpful, and I have a follow-up.

Kirk Tanner: Sure. As we said, we'll unpack this more in the Investor Day. You know, I agree with you. I think we all agree the external factors that as we look out seem to be improving. Cocoa, one of those. You know, we'd agree that today if you were to snap a chalk line, you'd probably say that looks like a potential tailwind for 2027. But it's still volatile. It still hasn't found its new normal. And, you know, we continue to watch it. On the other side, you know, we are gonna, as we said earlier, continue to make investments in the portfolio and products that are gonna set us up for, you know, multiyear performance.

And so we feel good about what we have in the 2026 plan. Some of those are gonna carry over into '27. We are always gonna balance the margin and the growth. So, you know, don't think about that investment as taking away that margin recovery, but it's a balancing factor. To make sure we enable long-term growth. And then as we talked about earlier, you know, we're gonna watch those macros very closely. You know, we'll get more data on SNAP. You know, we've got a lot of data coming in on GLP ones just like many of you do.

We have a team of people who does nothing but study and analyze these macros to understand the impact on our business. And so we have built in what we believe is the best information today into that guide. But that'll be a place we'll watch, as it develops over the course of this year and we get more data.

David Palmer: Thanks for that. And just, I know I wanna front run your Investor Day, but, you know, Kirk, you obviously have been in the CPG space for a while. You have fresh eyes on this business. You obviously have a chance to have a say in the plan for '26 and '27. You know, in terms of how we should think about the type of growth activations and the things that you're doing, the levers that we will see more of perhaps than that we've seen in the recent past. Any thoughts on that? Just tease the Analyst Day a bit. Thanks.

Kirk Tanner: Yeah. Let's tease it out. But, hey. Look. First of all, we'd love to see you all on March 31 in New York. We're excited to share that. I'm excited to share the plan. So, you know, 2026 is really the first chapter of our next generation of growth. And it really and what we'll kinda share with you is the portfolio that we're building, the look. We have a terrific portfolio today. We'll continue to invest in that portfolio, and we're gonna double down on our strengths. And those strengths will fuel that top-line growth while we return earnings to our shareholders. And we'll bring that to life in, you know, at the investment Day.

And we'll be very articulate about what investments we're making, what capabilities, and what outcomes we expect. But you'll see that really come to life. We're really excited to share that with you.

David Palmer: Thank you.

Operator: Thank you. Our next question comes from the line of Leah Jordan with Goldman Sachs. Please proceed with your question.

Leah Jordan: Good morning. Thank you for taking my question. There just seems to be a lot of attention and excitement about the innovation and activation plans in a lot of your commentary today. So seeing if you could provide more color on the plans you have for the coming year, key timing we should think about then I think, ultimately, how do you think about growth in innovation versus core for the coming year? Thank you.

Kirk Tanner: Yeah. I think it's a balance. You know, we just talked about some of the investments we're making on Hershey's and Reese's. I think that, you know, quality core growth is really important. And there's innovation in those places as well. But innovation is so important to the category. And we've had some really good innovation as of late. Reese's Oreo has been a really nice tailwind for us, and that continues through most of this year where we have, you know, two-thirds of the year will have, you know, that being a real positive to us. And then we have a pipeline of innovation that, you know, we're launching across our sweets and chocolate portfolio. That we're excited.

Plus, we have really good innovation on our salty business. And so innovation on our Hershey brand, Dots brand, Skinny Pop, Jolly Rancher, you'll see all that innovation. We'll share all that innovation, and our upcoming investor day, but it is robust. And then if you think about '27 and beyond, it's important that we have a pipeline of innovation that continues through '27. And that's why we're making continued investments in R&D so that we can be at, you know, come to the market faster with the most relevant consumer-facing ideas, and we'll share that pipeline as well.

Leah Jordan: Okay. Great. We'll look forward to that. I think for my follow-up, I just wanted to go back to the gross margin discussion. Specifically around this year and the cadence. You for the color on the 400 basis points we should expect for the full year a little bit of pressure in 1Q and improve thereafter. But any more color on the puts and takes we should think about in the magnitude of that improvement as we go through each quarter? Thank you.

Kirk Tanner: Sure. You bet. I could take that one. As we kinda look through the flow of the quarters, we're gonna see, you know, the first half is gonna be or excuse me. Q1 will be the strongest from a top line. Standpoint. We're going to carry the momentum out of the fourth quarter feel really good about our visibility in the first quarter on the top line. But margin and earnings are gonna be remain under pressure because we still are gonna have higher cost in mid-store inventory. We're still going to have tariffs in that inventory. So we'll see margin and earnings pressured in Q1. As we go to Q2, the top line growth's gonna moderate slightly.

But you're gonna see an inflection from a gross margin standpoint. And we expect to see, you know, double-digit EPS growth for the balance of the year. From there. Of course, we know we got tougher comps in the second half, but we factored that in as we think about this flow. So think about momentum carrying through the first half on the top line. Second quarter inflection from a profitability standpoint. And then, you know, we'd expect to see our brand investment up double digits across the quarters, and this reflects, you know, some of those investments we talked about earlier.

Leah Jordan: That's very helpful. Thank you.

Kirk Tanner: You bet.

Operator: Thank you. Our next question comes from the line of Max Andrew Gumport with BNP Paribas. Please proceed with your question.

Max Andrew Gumport: Hey, thanks for the question. Clearly, elasticity so far has been encouraging. And I'm not expressing my own view here, but one that I hear from some investors. I think there's a narrative out there that once you get through this pricing cycle, you'll be unable to grow your chocolate volumes for several years. It, you know, similar to what we're seeing other packaged food categories currently. I realize we're, you know, we're a long way away from that point in time, but I'm just curious what pushback you'd offer to that narrative and if there's any historical presence you're focused on. Thank you.

Kirk Tanner: Yeah. Let me break it down. Look. You know, we like where we're at with the really the big categories across our confection business and our salty business. The confection category has been very resilient over time, and it remains resilient. It is an emotional category that consumers look for. And if you think about where the growth is right now in retail, it really is around functional and emotional brands. And so that gives you confidence to see that continue to grow. And if you just look historically, it's been a very resilient category, so really good category. On the salty side of the business, I think it's really important to be in the right places in the category.

Permissible, better for you. Portion control, those are areas that continue to leverage growth. Consumers are willing to pay for that. That's where the growth is, and that's where our brands are positioned in the category. Give you a couple examples. Skinny Pop is doing exceptionally well. It's a real relevant. Popcorn's very relevant. In with consumers today and will be long term as we see, you know, those consumer trends and what they're looking for. Dot pretzels really shows how you can reinvent a category and drive growth. DOTS is now the number one pretzel in the category and it is about tying into the relevance what consumers are looking for.

That, of course, you're going to hear more about kind of the long term at and I'm really plugging this investor day, so I hope you're all I hope you're all coming. But we'll walk through kind of the long-term plan and how we see the categories and how we see the sustainability of that over the long-term horizon. And I think we'll have an opportunity there too to talk about how we can play offense on some of the categories that are gonna see more growth. So we know sweets, better for you, premium. Some of the functional products that we're gonna talk about.

I think we're gonna have a really story about what how they can lean into the volume story as well.

Max Andrew Gumport: Great. Thank you. And then in Europe, I realize you don't have much of a chocolate presence, but it's a market where we an interesting corollary. Because in Europe, we saw chocolate pricing get taken earlier in a sizable way. And, elasticities were quite encouraging as you're seeing in the US currently for your own chocolate business. But in the '25, we started to see price elasticity ramp up meaningfully in Europe ahead of where the industry expected them to be. So I'm sure you're studying consumer behavior over there. Even if you don't have much of a presence.

I'm curious what your learnings are that you've taken, and if there's any factors you're seeing that make me consumer in Europe how they approach chocolate, different from the US consumer. Thanks very much.

Kirk Tanner: Yeah. Yeah. Thanks for that question. Yes. And we are definitely studying that. Look. We've taken a very patient approach as we've, you know, the impact of cocoa and the pricing. So we've taken a very patient approach through the lens of the consumer. The categories, though, in the US look very different than Europe. There's more brand differentiation. So you look at the brands across the portfolio. There's a lot high level of differentiation. There's a variety across the portfolio, and the top players have higher market share. Europe has a concentration of chocolate tablet bars, and private label.

But there is a very distinguished difference between the brands in the US and the role of each of those brands play in the confection category. So there is a big difference. And the category skews premium. In Europe, and it's screwed it, you know, skews mainstream in the US. Relative affordability is still a key component of the category. Again, you know, we mentioned that 75% of our portfolio is under $4, very accessible to consumers.

Operator: Thank you. Our next question comes from the line of James Salera with Stephens Inc. Please proceed with your question.

James Salera: Hi, Steve. Good morning. Thanks for taking our question. Good morning. I wanted to ask a little bit around SNAP. As, you know, we roll into '26, there's some incremental rule changes, I think, both on work requirements and some states restricting what you can buy with SNAP dollars. Just walk us through, I guess, first, the overall percentage of your portfolio that is exposed to SNAP dollars and maybe how you're thinking about those changes in 2026 since you're all relatively new to the program?

Kirk Tanner: Yeah. Thanks, Jim. The SNAP let me just give you what we know on SNAP, and the is how we're seeing it. Look, our early assessment in the states where waivers are in place is still pretty noisy. It's been just since January, and we're looking at winter storm implications. And, really, the difference across retailers is they implement it. We've been proactively spending time with customers and consumers in these states to get ahead of the choices they're making. And we are readying our strategies to deliver for them. We have factored the SNAP waiver adoption into our outlook. And we'll continue to monitor that and provide updates over the course of the year.

So to date, only two states have implemented SNAP waivers for candy. Of the 12 states, that have waivers approved. So in total, throughout the course of the year, there'll be 12 states that are impacted, two states so far. We'll gather those insights, again, it's pretty early days, but it I would tell you it's a manageable headwind, and it's contemplated in our outlook.

James Salera: Great. And then shifting gears a little bit, you called out the, you know, 10 different cultural and seasonal events this year to boost engagement. Are you able to quantify how much of an incremental uplift we should see from kind of that more filled calendar relative to, you know, what, like, a normalized year would be?

Kirk Tanner: Yeah. I think it looks if you kind of look at our outlook, it's reflected in that outlook. Like it continues to make our top line robust. And because some of the kind of the background on this is we have excellence in executing seasons. So we gained share across the seasons last year. But what makes it so great is we have these consumer love brands coupled with great execution in the marketplace with our retail sales team. This gave us insight. It's like we have the opportunity to be a part of more cultural moments and the Olympics starting this weekend is really the first of those.

But we'll show up for NCAA final four, then we'll show up in the summer celebrating 250-year anniversary of our country. Our brands are expected by consumers to show up in these big cultural moments, and connecting our brands to these cultural moments gives us the license to have more activity throughout the year in these cultural moments in addition to seasons. And it has this almost always-on approach where you can see our brands, salty and our sweet brands together in the marketplace celebrating these moments. And kinda that's the background of that.

James Salera: Right. I appreciate the color. I'll hop back in the queue. Thank you.

Operator: Our next question comes from the line of Thomas Palmer with JPMorgan.

Thomas Palmer: Good morning. Thanks for the questions. Discussed plans for double-digit A&C increases. And then, lest I missed it, your answer to Andrew suggests that your pricing plans some of which have not rolled out, still hold. I did wanna ask on promotions. How do you consider the possibility of stepped-up promotions later this year? Maybe balancing the optionality of promotions versus allocating towards marketing dollars?

Kirk Tanner: Yeah. So let me ask let me answer the advertising and the investment we're making there. So we got great programming around building our big brands. Like we talked about, Hershey and Reese's, plus we have these programs, these cultural tempo moments that we will support throughout the course of the year. It is a balance of delivering pull and push. So you think about that demand creation, we're very cognizant and we have great return on these investments to deliver that. That delivers the top line. And then from an execution standpoint, I would tell you that the category remains very rational from a pricing standpoint.

We'll continue to leverage promotion to drive excitement with consumers and deliver that right price point for them. We'll, you know, be in concert with the execution across our seasons in these 10 pull moments throughout the year. But I would expect overall very rational category. Yep. And I would just say, on the first part of your question, you know, just to be clear, all the pricing's been sold in, so that's not a risk. There's nothing else. Pricing wise, that's gonna drop.

Thomas Palmer: Thanks for that. The prepared remarks, there was a comment about expected low single-digit sales growth for international. I wondered if maybe you could provide some color on expectations in the other two segments. And then also, there was a comment about profit recovery for international, and I wondered to what extent that might reflect incremental pricing actions because they were relatively modest as we look at 2025?

Kirk Tanner: Thank you.

Steven Voskuil: Sure. I can take maybe the segment piece first. So and just to share a couple headlines. So organic sales growth, on the confection segment around 3%. Salty snacks, mid-single digits. International, down low single digits. So that's the organic top line. From an EBIT standpoint, we've got all double-digit across the segments. Year over year. So that's kind of the highlights on the segments. On international, you know, we've taken a lot of price this year. And, you know, that's part of what we're seeing in terms of some of the volume impact from that. We play in the premium part of the market. We've got cocoa-intensive products.

And so we've been in some cases stronger on pricing in order to make sure we're setting up a good strong future P&L. We've been very thoughtful about trying to focus on the markets where we believe we have the best case to win. And making some choices on go to market to, you know, that, again, are thinking about the future and the profitability. Despite the challenges, we've had some wins in the international market. We'll talk about some of those and how we're expanding on those when we get to March. But we do have a mix of sort of recovering for cocoa.

Pricing, and then also optimizing the portfolio itself to make sure that as we look to the future, you know, we're investing behind our big brand like Reese and also our core markets with a streamlined route to market.

Kirk Tanner: Yeah. Let me add on a couple things on international. Look. I'm really bullish on the opportunity that we have internationally. I look at our track record right now just from how we're performing in the markets. Our key markets, and we're gaining share gaining share across Canada, Mexico, Brazil, The UK. I think those are really important proof points that we have the opportunity to do that. We're gonna bring a focused strategy on our international business in March that really articulates how we're gonna make investments and why we have a right to win in these markets. But more to come.

Thomas Palmer: Thank you.

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

Michael Lavery: Thank you. Good morning. Good morning. Want to come back to guidance. I know you laid out some of the flexibility or ways that, you know, you're trying to allow for risks and capture those. But curious not to get too greedy if there's expectations where you can point to potential upside and maybe also specifically how to think about buybacks. I know you said there weren't any in the last quarter, but you mentioned the authorization that remains. Are any of those included in the outlook for 2026?

Steven Voskuil: Sure. So I'll come on to buybacks. On the upside, we touched on some of these already. I mean, if elasticities were to hold in the sort of space they're in now, that would be a potential upside. Even the macros, although, you know, our outlook is to expect the macros like SNAP and GLP one to have a growing impact across the quarters, which I think is reasonable. If that is slower or less impact, I think that's upside to what we've tried to prudently build into the outlook. Things like the performance on innovation, media, all these in-store activations tent poles that we've talked about.

Again, our goal is to execute all those to try to beat the plan, but those would be potential upsides. And then, you know, as always, we want to exceed our productivity and cost savings goals. So we've got what I think are good challenging objectives there to go get, but our supply chain teams are fantastic, and they're gonna go hard against trying to beat those. So I think those are all the kind of things we would point to. When I look at it in total, I feel like we look at the guide, you know, it's balanced.

We're trying to recognize there are upsides and opportunities to beat in some areas, but also, you know, there are still some unknowns. That we wanna make sure we can contend with. And that's where the agility piece comes in. On buybacks, you know, what I'll just maybe just say our capital allocation strategy is kinda resetting back to normal. A little bit. And so, you know, without some of the pressure, cash pressure in particular on tariffs and cocoa.

And so, you know, as you can tell from the guide, you know, our focus in job one is to make sure we're funding the business and driving good, smart, long-term investment in the organic business, you know, maintaining a posture of agility relative to inorganic growth opportunities, you know, we're integrating LessRevo. That's going very well. We're gonna continue to look for those sort of opportunistic places. You see CapEx kinda normalizing again. Back into the space where it should be. You see us focused on, you know, working capital efficiency like we are every year driving savings. Dividend returning to growth, which is very important to us. And I'm pleased to see that.

And we feel good about leverage and where we're at and the trajectory on leverage. So all that kinda comes then down to the repurchase and as we've said in the past, you know, share repurchase is a great way to put tension in the capital allocation equation. Right? We're not gonna warehouse the shareholders' money if we can't wisely invest it the future, we're gonna give it back. And so that conversation is now back on the table because we're gonna have strong cash flow. We've got great investments supporting the business. And as the year progresses and we get a little bit more perspective on, on some of these, macros and everything else, we'll reintroduce that conversation.

Michael Lavery: No. That's great color. Thanks. And it sounds like you might be having an Investor Day soon, but and I'm sure you'll get into this in, obviously, much more detail. But as you lay out some of the investment opportunities and the reinvestments you're making this year, just at a high level, maybe can you give us a sense of how much we should expect a near-term impact versus longer-term and how that kinda fits into your thinking?

Kirk Tanner: Yes. I'm to punt the details of that site to the Investor Day. What I would say is all of these investments have something to do for us now and are going to things to do for us for the future. You can imagine investments in R&D. You know, the near term on R&D investment may not be as big as we're gonna see in '27 and '28. But even so, we'll get some early insights from that. And so we'll unpack that more, but you know, think of these as multiyear investments, but they do have benefits even as we get to especially the back end of this year. Yeah. Let me just add.

You know, these investments are all about driving growth. Top-line growth, sustainable growth, modernizing our portfolio. So those are fundamentally what's backing this growth is to fuel and keep heat on our brands with consumers, launch innovations that are relevant, and do the R&D so that we can continue to modernize our portfolio for the future, and staying relevant is so important. So it really is about fueling growth.

Michael Lavery: Okay. Great. Thanks so much.

Operator: Thank you. Our next question comes from the line of Alexia Howard with Bernstein. Please proceed with your question.

Alexia Howard: Good morning, everyone. We start with can I start with the price elasticity in international market? Versus the US? Do you have views on why the trends seem to be worse in the international markets and why they're better over here at the moment?

Kirk Tanner: Yeah. Excuse me. Yeah. Let me take that question. You know, we discussed a little bit. There's a big difference between the two categories for, you know, for starters. The category in the US is highly unique. The category is very differentiated. Across the portfolio. There's a lot of runway by brand across the landscape in our big confection category in the US versus a high chocolate tablet bar market in Europe along with the private, you know, the impact of private label. So you think about affordability also as a real big lever and the category is affordable. It skews mainstream, you know, our portfolio is still mostly under $4. That, I think, is a really big difference.

But the resiliency has been really positive for the category here in the US and, you know, what we've seen so far, we're encouraged by. I would say, you know, specific to our portfolio in international and the elasticities keeping in mind, we are premium market positioning. So we see some more elasticity there. We're relatively limited in scale in some regions and, you know, not a market leader. So those are factors with our portfolio in that drive higher elasticity.

Alexia Howard: Great. Thank you very much. I'll pass it on.

Operator: Thank you. Our next question comes from the line of Matt Smith with Stifel. Please proceed with your question.

Matt Smith: Hi. Good morning. Steve, you called out an increase in both marketing and operating costs through the year. It sounds like marketing up double digits is fairly evenly phased. But is there anything you need to call out on the operating costs? And with operating costs growing in line with sales, is this a level of investment that you as you exit 2026 allows some future leverage from SG&A? Thank you.

Steven Voskuil: Sure. So I think across the quarters, would guide to probably gonna be pretty even. There are gonna be some. And, again, I'll go back to things like R&D that will try, excuse me, build a little bit more in the back half. And we'll unpack that more when we get to Investor Day too. But I think overall, it should be up across the quarters. With respect to leverage in '27 and beyond, again, I'll go back and say, while we're investing in some of these investments, our multiyear investments to set up, you know, a future of growth, we are also aware of the margin recovery story that we need to continue in 2027.

So, you know, we have always two things going on at once. You know, we're looking to make smart long-term investments in the business, but at the same time, we want to fuel that investment with productivity and savings. And so we kinda say, hey. We're investing for demand creation. But we want to drive demand fulfillment efficiency. As well. And so and I we're very good at that, and so we're gonna continue to drive supply chain efficiencies. We're gonna drive efficiencies between the lines, like we've done with the transformation work. And continue to drive there too. So our goal is over time, we are gonna see leverage across all of those lines.

Matt Smith: Thank you. Looking forward to seeing you in March, and I'll pass it on.

Operator: Thank you. Our next question comes from the line of Robert Moskow with TD Cowen. Please proceed with your question.

Robert Moskow: Hi. I had a question about, like, just trying to understand how you forecast all of these macro factors at once. Like, you know, you have the SNAP cuts from a federal level. You have the waivers at state level. You have the GLPs, and then you have, you know, elasticity from higher pricing. And I think you've done a really good job of keeping things pretty conservative on the elasticity assumption. But it the models that your team is working on, Steve, like, can they figure out the cumulative impact of all these things at once? It sounds just like a lot to put into models that probably don't have a lot of historical precedence for that.

Steven Voskuil: Yeah. I mean, it is it's a challenge for sure. You know, in each one, I mean, we've said this before, you know, we've got we've got a small team on each of these, really trying to deep. And in the case, as Kirk said, in the case of SNAP, we have people on the ground working retailers to understand exactly how this is working out on shelf, what retailers are doing, what we're doing. And so, you know, we're trying to get firsthand information to build into these models. And then at the same time, we do try to run scenarios.

And to come up with a risk-balanced view across these macros to try to come up with an assumption for the outlook. And, you know, I know we'll be wrong. You know, I don't, you know, we've tried to be prudent and balanced in the way we look for and project these out. But, taking the best information that we have. You know, we get smarter. Every month that goes by, we'll have more data. And I expect that some of these programs, excuse me, some of these things like SNAP, more states get involved. GLP one's adoption gets easier. You know, we're trying to predict different ways it could play out.

And then, again, how our portfolio can play offense against some of those challenges.

Robert Moskow: Okay. And that was kinda my follow-up. You said that you're working with retailers in a couple of states where the waivers are happening. Like, can you be more specific on what playing offense means? Like, what kind of things can you do?

Kirk Tanner: Sure. You want me to take that one? Yeah. I can jump in? I like playing offense, so this is good. Exactly. Right. Yeah. I mean, it's a lot of it has to do with, yeah, when you work with customers, affordable price, you know, affordability, still remains a really important part and driving other channels too. So you know, we have a big convenience business driving our immediate consumption business, driving availability of those top SKUs are critically important. But I just go back to how do we drive the insights around the affordable price of a price points, unique packages, those are solutions, with our customers. Again, two states out of the 12 states have been implemented.

It's early days. We'll continue to, you know, discuss this as we get greater insights. And we'll talk about the tools that we're leveraging to, you know, curtail this headwind?

Robert Moskow: Very good. Thank you.

Operator: Thank you. Our next question comes from the line of Scott Marks with Jefferies. Please proceed with your question.

Scott Marks: Hey, good morning. Thanks so much for taking my questions. Two questions from me. The first one is on cocoa. I think previously you had said that you were hedged for '26. Above the rates you had locked in for '25. But that you also had some flexible hedging structures. So given the comments today around stable commodity basket, should we assume that means that your cocoa cost in '26 is actually in line with that of '25? Thanks.

Steven Voskuil: So, yep, so cocoa is up just a little versus 2025. And what we said before is it's hedged above current market levels. So it's not hedged materially above '25, just hedged above where cocoa's trading right now. We when we just like we did last year, you know, we've got a variety of hedging structures. And some of those structures allow us to participate in downside. So even in '26, we have a little opportunity. It's not like it was last year to participate in downside. But there's still a little bit there that if cocoa continues to decline, we'll have some potential.

And then, of course, as we look to '27, you know, placing hedges today would mean that we'd have deflation between '27 and '26. So we're watching that space. And, again, we've got a very structured hedging policy to take advantage of that.

Scott Marks: Understood. Thanks for that. And then second question, you know, today, there's obviously a lot of discussion around focusing with innovation and media behind some of the largest brands. And I think over the past maybe year, year and a half, there was maybe a little more emphasis on supporting some of the smaller brands within the chocolate portfolio as well. So wondering if you can just kind of share how you're thinking about some of those tail brands and how we should be thinking about investment in those going forward? Thanks.

Kirk Tanner: Yeah. This is really about, you know, world-class portfolio management. And we announced, obviously, Hershey's and Reese's big investment across those. That gives us a lot of momentum in the business and that drives a lot of growth. We do have a beautiful portfolio across our confection and salty brands, and there are other tools that we're leveraging to grow those brands. So we are paying attention to the entire portfolio and we're clear about each brand and the role it plays in our portfolio so that we can get to the consumers in a more targeted way. So it is a balance of both.

It's not a trade-off between our large brands and our smaller brands that have lots of potential. We're investing across our portfolio that's very deliberate about the opportunity each brand and the role it plays in our portfolio. Yeah. We'd like some of those small brands to become the next billion-dollar brands. And leveraging, we're gonna continue to leverage nonworking media to support new brands and occasions as well.

Scott Marks: Thanks very much. We'll pass it on.

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

Christopher Carey: Hi. Good morning, everyone. I just wanted to ask one follow-up on cocoa. Just as you think about 2027, how aggressive can you be about hedging the current drop? And if I heard it correctly, did I hear that you don't need to take pricing in 2027? That's how you're viewing current levels right now? And then I have a follow-up. Thanks.

Steven Voskuil: So there's a couple things in there. We're not gonna get specific about 2027 hedging. But we, you know, we will be very thoughtful. We have a program that gives us some structure in how we attack that. And but that's probably all we're gonna share relative to that. Relative to pricing, I think, you know, where cocoa is trading today, looking ahead to '27, it probably takes some pressure off pricing in the near term. You know, we've taken price. We're gonna execute. And activate against that. You know, in a broader sense, you know, pricing is part of a long-term strategy, but it's only one part.

You know, we have mix and innovation and, you know, other ways to drive value pack price pack architecture. And so in the long term, you know, we look at all those things. The mix. It's just we happen to be in a case more recently because of cocoa. To have to rely more on price.

Christopher Carey: Okay. Great. And then one quick follow-up would just be you think about volume, obviously, margins are recovering nicely. Do you have a view on where you want volumes to be as we look out over the next eighteen months? And when you think volumes can get back to kind of flattish to positive? Thanks.

Kirk Tanner: Yeah. I think Kirk kinda touched on this earlier. You know, as we get we're gonna be digesting the price increase in 2026, activating against it. As we get further out and we look to, you know, 2027 and beyond, you know, our goal is to get back to a more balanced mix of price and volume. And we know we've got parts in the portfolio that even with some of the macro headwinds, are set up for volume growth. You know, sweets, better for you, premiums, the function products. And that's not to say we can't get volume at the core.

Just to say that even if you look at the macro, macros, there are places where our portfolio can play stronger from a volume standpoint. So this is something we'll also unpack more when we're together in March as we look out past '26. But, you know, recovering volume. Know, we've got equipment ready to go to make more candy, and so we're anxious to be able to deploy it against volume.

Christopher Carey: Yeah. Let me just add a just a couple things. Yeah. Volume unit growth of occasion growth is really important to us. And we'll build on that and that we've got plans, of course, in '27 and '28 that we'll share. But it really is coming down to delivering that consumer occasion and driving growth in that. This morning about investing in your protein portfolio. And it's been six years since the acquisition of OneBar. So I imagine Hershey's gained some decent understanding of the category by now. How do you think about participating in protein as a theme? I mean, to what extent do you view protein as sort of a hedge to retain consumers gravitating to healthier snacks?

And I guess especially since we've seen numerous cases already of snacking flavors, you know, applied successfully in the protein space.

Kirk Tanner: Yeah. I think that's really a good question, really relevant for what we're talking about. Investing in our protein business, we have a really strong outlook for our protein business this year. We've invested in a lot of R&D around protein and fiber and things that our consumers are looking for. I look at the total snacking universe, and functional snacking is a reality. And we have to participate in that space, and we are. And we really like what we're building with one and fulfill. And we'll continue to add resources against that and see the growth coming through. Yeah. That is an area that we'll focus and build on. For the future.

Christopher Carey: And then maybe to follow-up on that, Kirk, just considering how Hershey built a salty snacks portfolio through M&A, I guess what's the feasibility or interest level to use balance sheet to expand similarly in protein? I mean, does your interest level rise to build a portfolio of brands and subcategories, or should we just think about future protein efforts really just anchored more to the one bar brand?

Kirk Tanner: Yeah. It's a big white space, and there's so much traction from consumers. I think you have to really be open to two. I mean, right? Growing organically, we see lots of potential for the brands that we have, but we're also open for those opportunities that build our portfolio. So I would say we're open for that approach. But, you know, the first thing, the things that we can control right now are let's grow these businesses, let's innovate in these spaces, let's get thriving brands, and then we'll be open for opportunities in the future.

Operator: Thank you. Our next question comes from the line of Bingqing Zhu with Rothschild and Company, Redburn. Please proceed with your question.

Bingqing Zhu: Hi. Good morning. Thanks for taking my question. My first one is trying to follow-up on the volume question. Because your 2020 guidance, 2.5%, 3.5% organic sales and 10% pricing, that embedded quite meaningful volume mix decline. I appreciate that still early in the year and the elasticity is favorable so far. But how much volume decline are you comp for those? Absorbing before you would reconsider pricing and maybe lean more towards promotion and price adjustment to support the volume. So and then I have a follow-up, please. Thank you.

Steven Voskuil: Sure. I mean, volume impact of the pricing that we have taken is embedded in the guide. Sam. So, you know, we accept that. We don't like it. We want as we said several times, you know, we want more volume growth. When we're together in March, we're gonna talk more about that. But the volume impact of elasticity that we have inside the plan has been factored in. In our plan, between marketing dollars, promotion dollars, investments, we believe we have the agility inside the plan to be able to deploy to protect sensitive areas and respond if we see a concern. Know, as we sit here today, as Kirk said, the market's been rational.

You know, the competitive our kind of competitive environment is stable. So we don't have any particular pockets of concern. Elasticities are as expected. And so if not a little better, and so but we're ready inside the plan to respond if we need to.

Bingqing Zhu: Okay. Thank you. Then I have a follow on pricing. So in the prepared remarks, you mentioned pricing to be 10% in 2026. If I recall, correctly, I think a few quarters back in Q2 when you announced the price increase that you expect to be mid-teens in '26. So that's a bit lower than what you previously guided. Can you provide more color on that, please? Does that mean you maybe roll back some pricing in your original plans? Or what does that mean? Thank you.

Steven Voskuil: Yeah. We haven't rolled back any pricing. It may be just a misunderstanding of, you know, if we're talking by segment or we're talking overall company. Pricing increase, that might be where the misunderstanding is. But we've realized that the pricing that we had announced earlier in 2025 as we said earlier, the more recently announced pricing is already in the market. So from a pricing standpoint, everything is on track. Nothing's been rolled back. And, you know, we're all in execution mode.

Bingqing Zhu: That's it. Thank you.

Operator: Thank you. Ladies and gentlemen, that concludes the question and answer session. I'll turn the floor back to management for any final comments.

Kirk Tanner: Thank you all for your questions, and we look forward to catching up with you over the coming days and weeks.

Anoori Naughton: Yeah, thank you very much.

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