The Hershey Company (NYSE:HSY) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 08:30 am ET


The Hershey Company (NYSE:HSY) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning. My name is Phyllis and I will be your conference operator today. At this time, I would like to welcome everyone to The Hershey Company's Fourth Quarter and Year End 2014 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions).Thank you. Mr. Mark Pogharian, you may begin your conference.

Mark Pogharian

Thank you, Phyllis. Good morning, ladies and gentlemen. Welcome to The Hershey Company's fourth quarter 2014 conference call. J.P. Bilbrey, President and CEO and Bert Alfonso, President International and Head of Mergers & Acquisitions will provide you with an overview of our results followed by a Q&A session. Let me remind everyone listening that today's conference call may contain statements which are forward looking. These statements are based on current expectations, which are subject to risk and uncertainty. Actual results may vary materially from those contained in the forward-looking statements because of factors such as those listed in this morning's press release and in our 10-K for 2013 filed with the SEC.

If you have not seen the press release, a copy is posted on our corporate website in the Investor Relations section. Included in the press release is a consolidated balance sheet and a summary of consolidated statements of income prepared in accordance with GAAP. Within the Notes section of the press release, we have provided adjusted pro forma reconciliations of select income statement line items quantitatively reconciled to GAAP. The company uses these non-GAAP measures as key metrics for evaluating performance internally.

These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the company believes the presentation of earnings, excluding certain items, provides additional information to investors to facilitate the comparison of past and present operations. As a result, we will discuss 2014 fourth quarter results, excluding net pretax charges of $32.5 million or $0.30 per share diluted primarily related to a non-cash trademark impairment charge and loss on disposal of $24.8 million or $0.10 per share diluted and business realignment cost of $4.7 million or $0.02 per share diluted. Our discussion of any future projections will also exclude the impact of these net charges.

With that out of the way, let me turn the call over to J.P. Bilbrey.

J.P. Bilbrey.

Good morning all of you on the phone and webcast. In 2014, Hershey made progress against its strategic initiatives. U.S. CMG, xAOC plus C market share reached 31.4%, up 0.3 share points versus last year. We acquired Shanghai Golden Monkey which more than doubles the company's presence in China. We expanded into snacks and adjacencies with the launch of Hershey Spreads and the related Snacksters Graham Dippers. And we sourced 30% of our cocoa needs from certified and sustainable cocoa farms, putting us in a solid position to deliver on our 100% goal by 2020.

There are also challenges. In 2014 we believe lower retail store traffic, changes in consumer spending patterns