The Hershey Company Third Quarter 2026 Earnings Q&A Session - HERSHEY CO

Greetings. Welcome to the Hershey Company's third quarter 2026 question and answer session. To join the queue, please press star 1 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, Adoree Norton, Vice President of Investor Relations for the Herssey Company. Thank you. You may begin. Good morning, everyone. Thank you for joining us today for the Hershey Company's third quarter 2026 earnings Q&A session. I hope everyone has had the chance to read our press release and listen to our pre-recorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the pre-recorded remarks. At the conclusion of today's live Q&As, we will also post a transcript and audio replay of this call. Please note that during 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. A detailed listing of such risks and uncertainies can be found in today's press release in the company's SEC filing. 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 Senior Vice President and CFO, Dave Houlaize. Operator, we can take it over for the first question. Thank you. If you would like to ask a question, it is star 1 on your telephone keypad. You may press star 2 if you would 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. Great. Thanks so much. Good morning, Kirk and Dave and Anuri. Good morning Andrew. Good morning. Maybe to start, in your prepared remarks, you state Hershey still has visibility to sales growth in 27 in line with your long-term algorithm of 2% to 4%. So my question, I guess, is what gives you this level of visibility in light of the tougher macro backdrop? And 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 lapsed pricing? Yeah, thanks, Andrew. I'll take that one. Look, we're confident in the actions we control and the results that are already delivering. So we are holding that two to four percent outlook. Now, 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's kind of 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've seen in the first half of the year is working. We've got a good return on investment. We're seeing our Hershey brand grow 7% in the last 13 weeks. We have three new campaigns. We are getting momentum with the media that we're spending. We' re getting a higher return on investments. I like what we're doing there. Innovation, we've talked a lot about. We've had really good innovation this year on Dot Snack Mix. Hershey Creme Bar is the number one innovation the last four weeks. Reese's Filled Pretzels, Reese's Oreo that we've talk about, that's the largest innovation over the last 52 weeks. But when we look into 27, we have a 50% increase on our innovation pipeline. We're 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 27, both on the top line and the bottom line. And I tell you, we have great RGM strategies that include low single-digit carryover pricing next year. Now, those things that are out of our control are consumer spending, which is certainly pressured by higher gas prices and overall cost inflation. And 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's kind of how we're thinking about next year." Thanks for that. And then along the lines of 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'm sure you hear it too, is the 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 27? Thanks so much. You bet. Look, in the third quarter, 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. And stronger innovation pipeline in the right spaces and 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'd say short-term news-driven activity. And it has been an innovation opportunity in the category. That's what makes this category so rich and vibrant. And I am confident the investments we've made in R&D innovation in our pipeline for 27 and 28 make us much more competitive. I've seen the innovation myself. For 28, it looks fantastic. 27, like I said, it's 50% more than 26. And that's how this category is competitive. It is fresh ideas, innovation, and I feel really good where we're going with this space. And it is in those spaces that matter most for the Hershey Company. It's in those areas like premium, suites, functional, and better for you. So we have a complete package going into 27. And 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 re-storio comparisons in September that will continue through the balance of the year. And that is why we've called that out in how we're thinking about Q4 performance relative to the category. But our performance will look good, continue to be strong on a two-year basis for construction. Thank you for that. Thanks, Andrew. Our next question is from David Palmer with Evercore ISI. Please proceed. Thanks. Good morning. 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. You know, 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, you know, how does that inform your strategy from here on pricing? 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. We're looking at areas like inconvenience 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. and thanks for that i you know one of the other things that i wanted to ask you about is the pace of innovation you know you're you mentioned how you're lapping oreo reeses and that's 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 you know how's it look you know 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 and thanks yeah yeah let me put a little color on that one you know one thing the last on the is that the last question that um that you had is we do see unit growth and unit the trajectory on our volume and unit growth improving so we're seeing that as expected so from a pricing standpoint. Let's talk a little bit about innovation. We are innovating. Like we talked about, Hershey Creme Bars is off to a really good start. It's the largest innovation in the category the last four weeks, but that's not the only innovation we have for Q4. We have Hershey Rolls, which is a chocolate-covered wafer that's hitting the market. It is fantastic. We're also launching an opening price point on our ice breakers gum so refreshment is growing and we we needed an entry price point so we have a stick gum that we're launching um this quarter hershey truffles and caramels we have kit kat seasonal shaves we've got a new um dots buffalo snack mix we have a reese's cocoa filled pretzel and we have skinny pop parmesan garlic all happening in quarter four Now, when we roll over into 27, we have some of our biggest innovation is going to happen in Q1. We haven't 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 suites, in premium. We have more permissible salty coming out, and we have some functional innovation coming. So we're targeting those spaces. So overall, it's up 50%, and I think that's important. It's a significant step up for us, and it will contribute three times more to the growth in 27. Thank you. Our next question is from Peter Gabba with Bank of America. Please proceed. Hey, good morning. Thanks for taking the question. I wanted to go back to maybe expand on Andrew's question on organic sales into 27, 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 27, obviously we know the shorter Easter, that kind of being a bit headwind. We have the week that's shifting. I just want to understand kind of the shape or the direction of travel, how we might think about organic sales for next year as we contemplate, you know, wherever we're going to land in the range, low end, high end, but just is it kind of more of a back half-weighted year versus some of the headwinds on exit rate and Q1? Sure. So fourth quarter, I'll start with fourth quarter. It's still being impacted by the tougher laps on Reese 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're going to see that carry into 2027. And then we're 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's a value playbook that we're executing against. So you can think of that as both innovation and price pack activities, and those are intended to address T-Store and some of the broader consumer value needs. So, you know, I wouldn't interpret Q4 as a starting point for 2027. Got it. Okay. Thanks, Dave. That's helpful. And Kirk, going back to your comments in the prepared remarks on 27 earnings, still looking for double digits. I think there's 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. Yeah, you got it. I'll let you take it, Dave. Why don't you talk about EPS growth? So we don't see the initial EPS framework as completely off the table. But we would need to see the environment improve. And, you know, the areas we're focused on and looking for improvement are freight and logistics, more favorable commodity outlook. We're working on stronger returns from productivity in our demand generating investments. And of course, there's always a healthier consumer. On the flip side, there would be more risk if there's deterioration in either consumer demand or the cost environment. You know, Kirk called out, we are focused on what we can control. So that means staying agile, using data to direct investment towards the highest return opportunities for us. Great. Thanks very much. Our next question is from Thomas Palmer with J.P. Morgan. Please proceed. Thanks for the questions. I wanted to follow up on this last question from Pete, just on the 27 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. Sure. There is no change to the 27 EPS framework other than reflecting the higher freight logistics and non-COCO input costs. So, you know, we're going to continue to invest. Our posture remains the same. We'll invest in growth levers, marketing, innovation, and merchandising. And we're doing that to support 27, 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's a few big ones that maybe I'll call out as we think about where we see big opportunity next year. So, you know, one is digitization and factory automation. That's underway. There's a lot of white space we're going after over the next couple of years to drive manufacturing efficiencies. Decision intelligence, which is something that's broadly being rolled out, enabling things like working capital and waste reduction. And then logistics optimization, which will include lane and customer order management efficiencies, and so that's work that's underway that picks up next year and will carry forward into 28. Right. 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 discussed more flat year over year. 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? 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's the impact. So the biggest selling days are still ahead of us. The category is on track, and that says in a compressed season, meaning Labor Day was late, and then you have a Saturday Halloween. So that's how that shapes up. The Hershey share is up in most classes of trade, and the execution is out there. If you look at kind of 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've got great partnerships with our customers. But these final days are important and these big trick-or-treat packs, they are to our benefit. We have a share advantage in the larger packs and that's what consumers are looking for the last few days. Now, when we look at the consumer insights, participation intent is in line with last year. Now we need, you know, we need consumers to show up. We need them. The last few days are really critical. We're starting to see it. So, you Know, we're keeping an eye on these last few Days. Great. Thanks for all the details there. Our next question is from Robert Moscow with TD Cowan. Please proceed. Hi. I was hoping to maybe drill down a little bit on gross margin. There's a change in the guidance that implies, I think, an exit rate of about a 39% gross margin in fourth quarter. and then you know for 2027 there has to be a substantial step up and so I want to know like is this exit rate does it is it informative of what to think about 2027 at all because I think you'd have to be up like over 200 basis points to hit you know these EPS numbers and then secondly the volume is down quite a bit, and there must be some impact from volume deleveraging on the business. I've heard that your capacity is flexible enough to adapt to that. So is that true? Is that why these two things can happen at the same time? Thanks. Yeah, I'll start with the exit rate. The big difference between the fourth quarter and what we're going to see next year is the timing of cocoa hedges. So, you can expect things to look different next year as the different hedges roll through, and that's part of the algorithm. On the volume deleverage, yeah, to an extent, there is an impact, but we expect that volume will get better. We're seeing it get better, and that is also why the productivity initiatives are so important, and there is low-hanging fruit there. Okay. Dave, can you be more specific about seeing it get better? Because, you know, the volume's down 10% in the quarter. Where are you seeing it get better is it the retail tracking is less bad as you exit third quarter? Yeah, I think, you Know, we're going from high double digit, you know, high teens pricing in Q3 to single digit pricing in Q4. And we're investing in our brand. So it's not just going to be elasticity. It's our job to drive demand. And where we have our programming and our investment focus, we're seeing the turn and improvement in volume trends. Yeah. When we look at specific brands like Hershey, KitKat, Cadbury's, our Kisses line, we see meaningful unit trend improvement. So we'll see that. That trend improvement will continue in Q4. It'll continue in Q1 and Q2 of next year as well. So we'll be on a trend of volume and unit improvement. It's not going to be exactly linear, but we're confident that we're going to see continuous progress built on the programming and execution that we have. And look, it is our job to stimulate demand here, and we have got those plans to do that. So, we'll see continuous improvement on volume and unit growth. And I'll 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 don't get fully back to positive. Okay. Thank you. Our next question is from Chris Carey with Wells Fargo Securities. Please proceed. Hi. Good morning, everyone. I wanted to ask first about COCO. You gave some context on supply and demand. Obviously, we're looking at more favorable position for next year. Just what are you seeing in the global crops currently as we head into next year? I'm conscious we've seen a pickup in the forward curves as we kind of look out to 2028, but supply and demand feels in your favor. So 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, and then I have a follow-up on the SACS business. We're continuing to see El Nino speculation impact market prices. We don't expect cocoa to remain at current levels long-term. And so let me just talk about what we're seeing and how we're thinking about it. So we're coming off of a historical surplus of 500 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. And you're seeing examples of that in Ecuador, for example, biggest export output on record in September. Industry is more agile. And so 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. So we're remaining disciplined in our approach as far as hedging, and we're leveraging the full toolkit, including flexible hedging instruments. Okay, great. On the SNAC 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? And then just do you think that supply issues are starting to impact any of the consumption that we see, which is still obviously quite strong, but are you seeing any supply and out of stocks beginning to hit the business and any context on how you would see that going forward? Thanks. Yeah, I would tell you that our overall, look, our salty business can contribute more to the top line and the bottom line, and we'll do so in 27. Our service levels are improving. They're not exactly where we want them to be, but we've made the investments to catch up. So demand is definitely outstripping supply, but work, we are catching up and we've made those investments. We have manufacturing lines coming online in the first half 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, you know, 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. And, you know, a lot of this is behind us, but there's still this capacity coming online that will give us good growth in 27 on our selfie business and a more efficient way to get to market. I'll add, you knows, 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. And then I talked about it, but there's work going on around optimizing lanes and customer orders. And that'll partly offset the bottom line, the inflation impact. I'll say, you know, 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. Okay, understood, thanks so much. Our next question is from Leah Jordan with Goldman Sachs. Please proceed. Good morning. Thank you for taking our question. So, Dave, in an earlier question, you know, 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. So, just seeing if you could provide an update on what opportunities you still see for productivity, you know what you would highlight, like efforts from this year that can wrap around and benefit next year? And then even somewhat related, you know, how are you thinking about mitigation tools outside of hedging for COCO at this point? Where are we on that journey as well? Thank you. Sure. So we have a strong pipeline. We've got 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. And so, you know, all the levers we've used historically, mix, you knows, 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. So, I mentioned some of those technology initiatives already earlier, the digitization of the factory, decision intelligence, logistics optimization. And then I just say, as far as COCO, it's too early to comment on 2028. There's 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. So we've got a lot of levers. okay that's helpful um and then for for my second question just on brand investments they're expected to step up here again in the fourth quarter should we think of that being more of the same of what you highlighted for 3q or any updates to the brands and channels you're targeting i'm just curious if there's a any change in the approach as the consumer has been soft here recently? Yeah, we're going to continue to invest. The full year brand investment is going to be around 10%. We'll carry forward some of the investment from Q3. We have new campaigns coming out that are coming out right now. Cadbury, Fulfill, Payday are all getting new campaigns with strength and support as well, and those are ramping as we speak. Great, thank you. Our next question is from Alexa Howard with Bernstein. Please proceed. Good morning, everyone. Thank you for the question. Can I just ask about the prepared remark comment about improving unit volumes as price growth flows on non-seasonal items. Can you put any color around that? We've 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 flow. Any commentary on that? Yeah, we are seeing that improvement. As pricing moderates, we're seeing that improve. We're seeing improvement specifically on some of our big brands, Hershey, KitKat, Cadbury, our Kisses lineup, that continues to improve and we'll continue to see that improvement throughout next year. And some of that is built into some of the programming so that the path isn't going to be exactly linear, but it is, we're confident that the improvement will continue throughout 27. Anything to add? Yeah, Q4 specifically, that's partly offset by tough comparisons. And so we talked about Reese Oreo as being one of those. Yeah, in Q3, the moderation in the net price realization was very modest. It only began late in the quarter. And you're going to see that continue into Q4, while the programming that we put in place is also ramping up. So we'll give you an update, you know, as we get through this quarter, and we start to see more of that. But we did see the bend in the trend. And that's the most important data point that we wanted to provide to you. Thank you for that. And then can I just follow up on where are you at on advertising as a percent of sales and where do you want to be over time? Is there further investment that we'll need to kick in next year? Yeah, we're 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. And so we're going to carry forward the investments against those. The other thing we're working on, and you're seeing it come through, or we're seeing it come true in our sort of net performance and impact from brand investment is really the efficiency. So Kirk mentioned an 8% improvement in ROI. We have a much more dynamic, more real-time market mix model that we're using to really leverage and stay agile as we're seeing what's working and where we have opportunities to drive efficiency. So we'll keep that moving forward into next year. Yeah, I would just say our overall posture is to be incredibly competitive around driving awareness for our brands, effective media and marketing spent 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're focused on doing that. We like what we're seeing in our efficiency and the brand building that we're doing, so we'll continue to invest in those spaces at the levels that we are at. Thank you. I'll pause it on. Our next question is from Peter Graham with UBS. Please proceed. Great. Thank you. Good morning, everyone. Good morning. 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're 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? And I guess just as we think about the guidance, what are you embedding from a category perspective through the balance of the year? Yeah, a couple of things come on channel performance. I think the biggest outlier was C-stores. We saw a minus five for the category in C-stars. I'm sorry, I'm moving my voice now. We saw that continue into October. So that that concern is still on C-Stores. But when you look at everywhere else, so everyday candy, mints and gum, the cat, the category is a plus three, seven in Q3. You want me to take over? Yeah. So let me step back and then I'll talk a little bit more about your specific question. So we are seeing the consumer more cautious on inflation because of gas prices and interest rates or strains on households. They are making more deliberate choices across channels, more in mass, more in e-com, more and club. C-Store has been the challenge, categories 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. And so we're focused on value levers, innovation, price pack architecture, surgical promotion. And I mean, we can talk more about that. You can probably add some color on what we're doing there. Yeah. No, I mean 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's resilient across, you know, the rest of the category. I mean, the res of the channel. So we feel good about where we're at. That informs kind of where we are going and how we feel about 2027 as well. Awesome. And then, Dave, maybe just a quick clarification. So 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 for $026 and then growing double digits from there. Is that the right way to think about it? That's right. Okay. Thank you so much. I'll pass it on. Sure. Our next question is from Michael Lavery with Piper Sandler. Please proceed. Thank you. Good morning. I know a couple of questions 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? Yeah, so let me take the top line, and then I'll let Dave talk about EPS growth in the bottom line. From a top line standpoint, you know, we're sticking with the range that we guided to. If the consumer pressure remains or gets worse, then it's going to be in the lower part of the range. I think that's a practical approach to how we're seeing it. We're still seeing a resilient category. We're 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's going to be in the lower part of the range. And I'll let Dave talk about how that impacts the bottom line and EPS. Yes, if today's conditions remain, we could be shy of the original range or framework. We're going to continue to invest in the business for the long term. So we're going invest behind growth in the things that we talked about earlier. Okay. Okay, that's helpful. And 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? And when you say long term is it likely further out or is that within reach? What's the right way to frame just how that trajectory might unfold? Yeah. So, you know, just start in 27. We do expect meaningful margin improvement in 2027. That long-term ambition is 28 forward. And as I said, we have a rich productivity pipeline that we're going to continue to build and leverage to work towards that. And, you know, continuous improvement and all those other levers that we typically leverage will 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 cost inflation, if that turns and improves sooner, you'll see some margin move sooner. If it takes longer, it'll take a little bit longer for us to get there. Okay, thanks. I'll pass them on. Our next question is from Nick Modi with RBC Capital Markets. Please proceed. Yeah, thank you. Good morning, everyone. Crook, I wanted to, good morning. I wanted kind of revisit some comments you made, I think, last quarter about distribution opportunities outside of the traditional channels. So 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? Yeah, we talked about away from home being an opportunity and that continues to be an opportunity. We're doubling down in that space. Yeah, and it's really across both our sulky and our confection business. So we're seeing good growth. We'll continue to see growth. That will be a tailwind for us, including specialty retail away from home. Yes, we're creating new partnerships for distribution. It's an exciting space. We have a lot of passion for this. We know it's a great place for growth, but we importantly know it really a good place for us to build brands. So expect more from us. That will be a tailwind going into 27. And I'll say, you know, we're continuing to strengthen our already strong partnerships in the core channels as well. So we're focused on that as well, right? And then just kind of a final one for me is just on agentic commerce. agentic commerce. I mean, it just seems like it's really adoption that's getting really kind of traction is picking up pretty quickly. And just curious, like has Hershey inducted an agentic commerce like audit, you know, in terms of how your brands show up across all these different platforms? Any thoughts on that would be interesting. Oh, absolutely. Yeah. I mean, 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. You know, customers like Target, Amazon, Walmart, we're working directly with them. This is an important space for us and something that, you know, I think we're on the front foot with. Great. Thanks, El Paso. our final question will come from scott marks with jeffries please proceed hey good morning all thanks very much for taking our questions have two two ones uh 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 uh merchandising plans above initial expectations could you maybe help us understand um you know what what's the magnitude of uplift we should be expecting from that and whether that's incremental to the business or does it replace, you know, otherwise maybe non-seasonal or holiday type merchandising activity in stores? Thanks. Yeah, we're really excited about this movie and the story that it's going to tell. I would look, I mean, our Hershey brand right now is having an exceptional year. And, you Know, 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're going to celebrate the movie it comes out um the day before thanksgiving and we've been supportive retailers really gotten behind this um and it's just an exciting american story that's relevant for our time so we've seen a lot of uh support and that's going to show up in-store with inventory and displays and a connection back to the movie so that you'll see that. That will be an uplift. That would be a tailwind for the portfolio and especially Hershey, which has already had a terrific year, but we like the momentum that will build going into 2027. Thanks for the thoughts there. And then just one last point of clarification from me. In the prepared amongst 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 Q2? And 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. Yeah, I'll take that one. So for confectionary, that earlier ship of summer programs in Q1 was was largely offset by that strong seasonal sell-in that we saw in Q3. So for Q4, I would say that we think that the timing dynamics are largely awash against that additional shipping day, as well as we will be lapping some lower levels of retailer inventories that occurred in Q4 of 25. So I would says it's largely awashed on the shipment timing dynamics for Q5. Okay, understood. Thanks very much. All right, thank you very much. We have reached the end of our question and answer session. You may now disconnect your lines and thank you for your participation.