Hershey's CFO Steve Voskuil joins Yahoo Finance Live to discuss the company's earnings surpassing estimates even as commodity and labor inflation rises.
BRIAN SOZZI: Candy giant Hershey is out with better than expected sales and earnings. The company also struck an upbeat outlook for profits this year, despite being in a very inflationary environment, just like many others in the packaged goods space. Joining us now is Hershey CFO, Steve Voskuil. Steve, always nice to see you. Thanks for taking some time. We were in search of some good news in the markets today, and it's coming via Hershey. The results you put up today, does that reflect that we have become even more a nation of snackers during the pandemic?
STEVE VOSKUIL: Well, we certainly have. You know, we're very pleased to finish the year on a strong note. There aren't many years where you have the opportunity to deliver double digit top and bottom line growth, growth across all of our top 20 brands. I think average growth across that group was 12%. Record cash flow, record production. So all in all, very pleased with where we finished. And yes, we are ever more a nation of snackers.
BRIAN SOZZI: And Steve--
JULIE HYMAN: And--
BRIAN SOZZI: Oh, go ahead.
JULIE HYMAN: Go ahead. Go ahead, Sozz.
BRIAN SOZZI: No, I was just going to follow up on that. It looks like you were able to push through price increases in the most recent quarter. How much have you been able to push through in terms of price?
STEVE VOSKUIL: Yeah, so over the course of last year, through a series of price increases, we've been able to take our whole portfolio up mid to high single digits, depending on which part of the portfolio. We will take that benefit forward into 2022. And we're going to need it. You know, like many companies, we're facing the same sort of inflationary pressures across all the input costs that go into making Hershey and Reese's taste great.
JULIE HYMAN: David, it's Julie here. So when you look at those input costs, what do you see going forward? We know that costs have been going higher. What is this year going to look like? What kind of visibility do you have?
STEVE VOSKUIL: Yeah, we have pretty good visibility. We've got a hedging program. And as you'd imagine with as much as we consume of some of our ingredients, we need to purchase those well in advance and have some long-term contracts in place. Across the commodity space, the areas where we're seeing some of the biggest increases include sugar, dairy, nuts, specialty ingredients, and packaging materials. But if I step back and look more broadly, of course, we're seeing inflation in areas like labor and even services that are provided by third parties. When we look across all of those impacts for us, we see inflation pressures in the mid to high single digits for 2022.
BRIAN SOZZI: What had surprised me, Steve, is that a lot of retailers have been working down their inventories in many product lines, and that has impact the packaged goods space. Any signs that might alleviate this year and you'll see the likes of a Walmart and Target rebuilding how much stuff they stock in the stores?
STEVE VOSKUIL: Yeah, we believe it will. In fact, as we've contemplated our guidance for this year, we're assuming some level of build back of retailer and distributor inventory. Of course, we also need to build back some of our own inventory. But we're counting on some recovery. And that will allow us to get our customer service levels up higher and just do an even better job of serving our consumers.
BRIAN SOZZI: Is Hershey more-- should investors think of the company as a confectionary player or more increasingly as a salty goods player? You recently made that acquisition, $1.2 billion total, of Dot's Pretzels. That gets you into the pretzel space.
STEVE VOSKUIL: Yeah, that's right. I mean, more and more, we want to have that balance in our portfolio. We are, first and foremost, still a confection company built around those great brands that are our heritage. But several years ago, we began the first steps into building out that snacking portfolio on the savory side. And it includes the brand Skinny Pop and Pirate's Booty, and as you said, Brian, now Dot's as well.
And we're very excited about that part of our portfolio. It is seeing even more robust volume growth than we've seen on the confection side, as people look for savory snacks, as well as sweet snacks. And we look forward to seeing that portfolio continue to grow and expand and gain scale as we go through 2022.
BRIAN SOZZI: I should note that Hershey shares are now at a record high after this quarter and outlook from you guys. Lastly, Steve, I was reading an analyst note, and they said that you are expanding manufacturing for gummy products. What might you launch this year?
STEVE VOSKUIL: Yeah, so our Jolly Rancher gummy product has been doing great. We're going to launch some new flavors. One of those is called Very Berry. I have some in my desk. That will be one of the products that we bring out in the gummy space this year. And, you know, the sweet space and gummies in particular is a rapidly growing part of confection. And we want to continue to meet consumers' needs in that space.
BRIAN SOZZI: Anything with caffeine, Steve?
STEVE VOSKUIL: Nothing with caffeine. Not yet.
BRIAN SOZZI: Got to ask. All right, just got to ask for myself, personal interest question. Hershey's CFO Steve Voskuil, good luck this quarter. We'll talk to you soon.