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TheStreet Open House

Hershey Announces Fourth Quarter And Full-Year 2013 Results; Reaffirms Outlook For 2014

Stocks in this article: HSY

Note: In this release, Hershey references income measures that are not in accordance with U.S. generally accepted accounting principles (GAAP) because they exclude costs associated with business realignment and impairment, business acquisition closing and integration costs and non-service-related pension expenses (NSRPE). These non-GAAP financial measures are used in evaluating results of operations for internal purposes. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the Company believes exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. A reconciliation is provided below of earnings per share-diluted in accordance with GAAP as presented in the Consolidated Statements of Income to non-GAAP financial measures, which exclude business realignment and impairment charges, NSRPE and acquisition closing and integration costs.

 
Fourth Quarter Ended
December 31, 2013     December 31, 2012
  Percent   Percent
of Net of Net
In thousands except per share amounts Dollars   Sales Dollars   Sales
 
Gross Profit/Gross Margin $ 857,386 43.8% $ 755,208 43.1%
Project Next Century charges/(credits) included in cost of sales 193 (1,658 )
NSRPE included in cost of sales 1,358 1,680
Acquisition (credits) included in cost of sales       (57 )
Adjusted non-GAAP Gross Profit/Gross Margin $ 858,937   43.9% $ 755,173   43.1%
 
EBIT/EBIT Margin $ 308,305 15.8% $ 252,617 14.4%
Charges/(credits) included in cost of sales 1,551 (35 )
Project Next Century charges included in SM&A 308
NSRPE included in SM&A 1,079 5,873
Acquisition costs included in SM&A 3,042 1,400
Business Realignment & Impairment charges, net   5,298     16,734  
Adjusted non-GAAP EBIT/EBIT Margin $ 319,275   16.3% $ 276,897   15.8%
 
Net Income/Net Margin $ 186,075 9.5% $ 149,879 8.6%
Charges/(credits) included in cost of sales 1,551 (35 )
Charges included in SM&A 4,121 7,581
Business Realignment & Impairment charges, net 5,298 16,734
Tax impact of net charges   (1,418 )   (4,973 )
Adjusted non-GAAP Net Income/Net Margin $ 195,627   10.0% $ 169,186   9.7%
 
EPS - Diluted $ 0.82 $ 0.66
Charges included in SM&A 0.02 0.02
Business Realignment & Impairment charges, net   0.02     0.06  
Adjusted non-GAAP EPS - Diluted $ 0.86   $ 0.74  
 
 
Twelve Months Ended
December 31, 2013     December 31, 2012
  Percent   Percent
of Net of Net
In thousands except per share amounts Dollars   Sales Dollars   Sales
 
Gross Profit/Gross Margin $ 3,280,848 45.9% $ 2,859,882 43.0%
Project Next Century charges included in cost of sales 402 36,383
NSRPE included in cost of sales 5,374 8,607

Acquisition costs included in cost of sales

  310     4,080  
Adjusted non-GAAP Gross Profit/Gross Margin $ 3,286,934   46.0% $ 2,908,952   43.8%
 
EBIT/EBIT Margin $ 1,339,675 18.7% $ 1,111,148 16.7%
Charges included in cost of sales 6,086 49,070
Project Next Century charges included in SM&A 18 2,446
NSRPE included in SM&A 5,511 11,965
Acquisition costs included in SM&A 3,762 9,294

Business Realignment & Impairment charges, net

  18,665     44,938  
Adjusted non-GAAP EBIT/EBIT Margin $ 1,373,717   19.2% $ 1,228,861   18.5%
 
Net Income/Net Margin $ 820,470 11.5% $ 660,931 9.9%
Charges included in cost of sales 6,086 49,070
Charges included in SM&A 9,291 23,705

Business Realignment & Impairment charges, net

18,665 44,938
Tax impact of charges   (10,192 )   (38,604 )
Adjusted non-GAAP Net Income/Net Margin $ 844,320   11.8% $ 740,040   11.1%
 
EPS – Diluted $ 3.61 $ 2.89
Charges included in cost of sales 0.02 0.14
Charges included in SM&A 0.04 0.07
Business Realignment & Impairment charges, net   0.05     0.14  
Adjusted non-GAAP EPS – Diluted $ 3.72   $ 3.24  
 

In 2012, the Company recorded GAAP charges of $76.3 million, or $0.22 per share-diluted, attributable to the Project Next Century program and $20.6 million, or $0.06 per share-diluted, of NSRPE. Additionally, 2012 results were impacted by acquisition closing and integration costs related to the Brookside acquisition of $13.4 million, or $0.04 per share-diluted, and non-cash impairment charges of $7.5 million, or $0.03 per share-diluted, related to the discontinuance of the Tri-US, Inc. nutritional beverages business.

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