Greetings, and welcome to The Hershey Company first quarter 2022 question and answer session conference. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. If you would like to register a question today, you may do so by pressing star one on your telephone keypad. I'd now like to turn the call over to your host, Ms. Melissa Poole, Vice President of Investor Relations for The Hershey Company. Thank you. Please go ahead. Good morning, everyone. Thank you for joining us today for The Hershey Company's first quarter 2022 earnings Q and A session. I hope everyone has had the chance to read our press release and listen to our pre-recorded management presentation, 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 and A session, we will also post a transcript and audio replay of this call. Please note that during today's Q and 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 uncertainties can be found in today's press release and the company's SEC filings. Finally, please note that we may refer to certain non-GAAP financial measures that we believe will provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations to the GAAP results are included in this morning's press release. Joining me today are Hershey's Chairman and CEO, Michele Buck, and Hershey's Senior Vice President and CFO, Steve Voskuil. With that, I will turn it over to the operator for the first question. Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time and to allow all participants to ask their questions, we do ask that you please limit yourself to one question and one follow-up. You may re-queue for any additional questions that you may have. Again, that is star one to register questions at this time. The first question is coming from Andrew Lazar of Barclays. Please go ahead. Andrew, your line is live. Please make sure you're not muted on your end. Good morning, everybody. Can you hear me? Yes, we can hear you. Yes. Great. Thank you. I guess first off, by our estimate, it seems like you're raising full year organic sales by essentially the over-delivery in the first quarter, meaning expectations for the remainder of the year haven't changed. Is that the way you're looking at it? If so, I guess why is that, given the momentum in the business? I realize you'll start to lap some of the pricing as the year unfolds. Hey, Andrew. Good morning. Good morning. I'm gonna kick it off with a few responses and ask Steve to jump in as well. First of all, I'd say we are, you know, we're really pleased with our first quarter results and the momentum that we see on the business. It is pretty early into the year still, and as we all know, we continue to see significant volatility in the marketplace, you know, whether it's record inflation, the Ukraine-Russia situation, you know, continued disruption in supply chain. As we dissect the business in the first quarter, clearly, within the first quarter, the large majority of our sales were related to stronger elasticities, you know, that have been realized in the marketplace. We do anticipate as we look further out in the year, that we'll see some moderation on those elasticities, perhaps back to more historic levels. A lot of that is driven by that reduction in government subsidies and the continued inflation pressure that we think consumers will experience. You know, there was another component of our Q1 sales beat that was about, or our raise that was about, Dot's and our ability to really get our arms around the Dot's business and better understand what we thought it could deliver for the year. We have pretty good visibility into that. We feel like the number there is pretty good. Lastly, as we look at inventory, you know, we've been really working hard to build inventory, and we did get more inventory out to retail. We made a decision to do that in Q1 to really try and increase on-shelf availability. From a sales perspective, as we look at how we think that will impact back half of the year, you know, we think the strength in Q1 from sales is much stronger. Steve, do you wanna comment more about that and also relative to the cost and profit situation? Yeah. On the top line, I think you hit all the key points. You know, the inventory piece was about a three-point benefit to the first quarter, that'll come out in the back half. That's one of the unique things I guess, that drove the first quarter performance. Michele touched on the elasticities. You know, we saw a big benefit in the first quarter. We do expect to see elasticities normalize a bit as we go forward quarter by quarter through the year. Those are probably the two biggest things, that soften a little bit of the outlook on the top line. Great. Then I guess the second one would be sort of a similar thought process, but more on the EPS side. Obviously, the first quarter came in some $0.40 higher than the street and raising the full year by $0.07. Maybe can you bridge that gap for us a little bit? You know, are you trying to be just somewhat conservative in your thought process given obviously an increasingly dynamic environment, which makes total sense, or are there some other things that are more discrete that we wanna make sure to keep in mind on the profit side? Thank you. Sure. Yeah. The biggest driver for first quarter earnings was that, volume, 4.5 points of volume in the quarter that dropped through to earnings. That was the biggest factor. There were some unique pieces as well. I think we called out a couple in the remarks. One was inventory revaluation, which is sort of an unusual thing. We see it in times of higher inflation, which has the impact of giving a benefit to the P&L and putting more costs on the balance sheet to reflect the cost of goods of value there. So that was 100 basis points to the confection segment in this quarter that won't repeat going forward. As you said, we do expect more year-over-year inflation. You know, we, in the first quarter, saw a little bit of that incremental inflation. As we look forward, you know, despite the hedging that we have in place, we're still gonna have some incremental exposure, particularly to the commodities impacted by the events in Eastern Europe, sorry. Thank you so much. Thanks, Andrew. Thank you. The next question is coming from Robert Moskow of Credit Suisse. Please go ahead. Hi. Thanks for the question. There's a lot of detail in the prepared remarks about competitive activity that caused you to lose some market share during Easter and your capacity constraints that led to that. As we head into Halloween, are you in a position to ramp up sufficiently so that you can hold your share? The reason I ask is, you know, I remember during the pandemic, Halloween was a real tipping point for your distribution with retailers. You gained a lot of goodwill after that. You gained a lot of distribution. Are you in a position so that, you know, that there's no risk of that reversing? Yes, Rob, clearly, over the past two years, we have had some nice gains in share, and certainly those have contracted recently given some of the capacity pressure. I think we're up about 50 basis points versus where we were pre-pandemic. Our share versus our next largest competitor, that gap, has clearly widened and remains pretty strong, about 200 basis points ahead of pre-pandemic levels. You know, we are doing everything we can relative to building capacity, investing in new lines, distribution centers, hiring more people to build our supply as much as possible, and working really closely with retailers as well on our plans for Halloween right now. We expect that as we go through the year, we will continue to have supply challenges, although they will improve as we progress throughout the year. We're working hard to maximize the opportunity for Halloween. Well, Halloween commitments are probably made pretty early. Can you give us any color as to what you're able to commit to right now? You know, we believe that just as we've seen strength in the seasons over the past two years, that we will continue to see strength in the seasons throughout the year. This year, we've seen it in Easter, but at this point in time, we're not gonna give any more specifics on exactly what those growth numbers are going to be. I guess I would say overall, what I would say is we're not really seeing any big changes in how our competitors are operating or in their strategies. You know, really it's a focus on us continuing to build supply. Over the past two years, we grew pounds about 7% versus our competitors in the marketplace collectively had a 1% decline in pounds. We are just a little tighter on supplying capacity than the environment. Okay. Thanks for the question. Thank you. Thank you. The next question is coming from Ken Goldman of J.P. Morgan. Please go ahead. Hi, thank you. I wanted to ask about the margins and profitability in salty snacks. Steve, you gave a helpful explanation of a lot of the reasons behind, you know, maybe what could be considered a little sluggishness versus what people were looking for. I'm curious, you know, to what extent did it fall below your expectations, if at all? What were the key drivers of that shortfall, if there was one? You know, how quickly might we see a little bit of a rebound there? Yeah. Thanks, Ken. Yeah, it was sluggish from our side as well. You know, some of the margin degradation we expected, so the mix piece that we called out, obviously, as we brought Dots into that portfolio. We also planned on higher raw materials for the portfolio for the year. The incremental inflation that we've seen more recently, again, following the events in Eastern Europe, are falling more into the salty snack space. Thinking cooking oil, wheat, and then just the smaller business impact on oil price flowing through that P&L. That was, I could say, a surprise piece relative to the raw material side. We're also in the process of starting up a new distribution center that began in the first quarter, will continue through the second quarter. I'd say the startup there has been a little bit bumpier than we expected. Although we're working our way through it and expect to see improvement as we go through the next quarter. Then we did have also some higher advertising expense in the first quarter, and that will moderate. That was part of the plan to spend more in the first quarter, in part to offset some of the elasticity due to price increases there, which I think we've done a good job of because that business is growing to strong double digits. We'll see that begin to moderate as we get to the next couple of quarters. If I kinda point to the things that were a bit unusual, I'd say the DC startup, the incremental inflation, and probably higher advertising spend than we would normally see in that business. Thank you. Just a quick follow-up. I know these things are hard to sort of parse out, but is there any way to think about what the gross margin, you know, roughly might have been in the first quarter if you were to exclude the inventory fill? You may have called that out and I missed it. I'm just curious for an estimate there. Yeah, we didn't go that far in the remarks to sort of back into what it might have been. What I would say is, you know, we talked about this a little bit on the last call as well. The opportunity here is really to optimize the new snacking division. As we look at even the work we're doing with the distribution center, that's all pointed towards driving network efficiency. We're gonna be working through supply chain efficiencies and of course, eventually back office efficiencies as well. We continue to be excited about the opportunity to drop more margin out of that business as we gain scale and get some of those integration points together. Thanks so much. Thank you. Thank you. The next question is coming from Jason English of Goldman Sachs. Please go ahead. Hey, good morning, folks. Thanks for letting me in. Good morning. A couple questions. First, snack margins. I think you said you had about 500 basis points degradation from mix. I imagine a good chunk of that's coming from the manufacturing asset you picked up. Question on that, how much slack capacity is in that asset? You mentioned in prepared remarks that you're beginning to lean in and start producing some of your other snack items on that network. How much can you move over, and how far can you shrink that 500 basis points, as you improve asset utilization and presumably migrate production from outsourced providers to insource? Yeah. A couple things there. One, inside that mix is also the amortization, the incremental amortization that deals with. Not all of it is capacity related. That's gonna be around for a while, obviously. As we look at combining supply chains, you know, those assets are pretty well utilized. They were a little bit less utilized in the first quarter than will be for the balance of the year. But we continue to see opportunities to continue to leverage those assets. They've got some world-class manufacturing assets. That's one of the reasons we were able to bring a Pirate's Booty asset into that mix as early as we did. And we want, you know, the plan is to see more of that sort of consolidated manufacturing. You know, we'd expect to see some mitigation of that mix impact as we continue to leverage those assets and drive more volume through that system. Got it. Back to the comments on market share attributed to capacity constraints. You know, I just pulled your brand level data just to get a snapshot of like which brands are holding you back a bit. It's brands like KIT KAT, REESE'S PIECES, TWIZZLERS. Those don't seem like the types of brands you'd be capacity constrained on. Are they, or where are the capacity constraints? Yeah. Our biggest capacity constraint is really on REESE'S and some of our assorted bags, but primarily REESE'S. As you know, REESE'S is our biggest brand by far. You know, it's a couple billion dollars in size, and when it is growing double digits as it has been, and has had such a track record of strong growth, that is, you know, that's where some of the, you know, the biggest rub and the biggest dollar opportunity that we're focused on. Some of our other take-home brands, obviously, given the strength of consumers now consuming at home, there's a lot of pressure on some of the brands in terms of how they show up in take-home, and that's spread across a number of different brands. Got it. Okay. Thanks. I'll pass it on. Thank you. The next question is coming from Alexia Howard of Bernstein. Please go ahead. Good morning, everyone. Good morning. Okay. A couple of questions here. The Dot's pretzel acquisition, obviously incredibly strong growth, year-over-year, that you reported in the remarks. Could you talk about the distribution opportunity? Where is the ACV at the moment? Where could it get to? I mean, is this something that I guess how large is the opportunity? We'll start there. Yeah. We are continuing to build distribution on Dot's. Clearly, as we were acquiring the brand, the distribution remained skewed to kind of the West Coast, the middle of the country, and we've had a big focus on trying to, you know, close the distribution gap on the East Coast in particular, and then to also fill in some of the key retailers and classes of trade throughout. It's been a constant build. We had a lot of distribution growth in Q1, and I believe that we're in the mid-seventies right now on distribution. There remains some upside that we're experiencing now. We continue to drive through the back part of the year. You know, we continue to gain household penetration as a result of that. You know, as more consumers find out about the brand, household awareness of the brand continues to be low, and we see that as a key opportunity as well. Great. Can I ask about on a different topic, on the c-store dynamics, there have been concerns in the past that when gasoline prices spike, that leads to fewer trips and therefore that hits your c-store sales. Can you talk about what you're seeing in that segment and whether that's the case this time around or if you're seeing something different? Thank you, and I'll pass it on. Yep. We have seen some changes in consumer behavior within convenience stores as gas prices have risen. What we're seeing is that many consumers seem to be trying to manage the higher price by not fully filling their tanks. They're making more trips, but just not filling as full. To date, they have not really reduced their non-gas purchases in a meaningful way, and we haven't seen an impact. Our business remains quite strong in convenience stores, so we haven't really seen an impact on our business. Though we do expect that these trends will continue to evolve as we see some of those pressures we talked about earlier relative to reduction in government subsidies and the continued persistence of inflation and the impact on consumers. Great. Thank you very much. I'll pass it on. Thanks. Thank you. The next question is coming from Bryan Spillane of Bank of America. Please go ahead. Thanks, operator. Good morning, everyone. Good morning. I had just one question, and it's around inflation and gross margins. Can you just help a little bit with you know, based on the incremental inflation you saw in the first quarter, you've widened or you know, your expectation for gross margins, you know, changed. As we're kinda looking at this kind of moving even past the fiscal year, like what will you be able to do to begin to mitigate or offset that margin pressure? Is it going to be as same of this new capacity come on, there's more efficiencies? You know, is pricing potentially a lever in the mix? Just really trying to understand as we move forward, you know, are you gonna be able to mitigate that margin pressure? Yeah, it's really all of those, Bryan. We're certainly gonna look at all our usual levers, you know, driving productivity and efficiency from a manufacturing standpoint, and we will see more of that as we get more scale, more assets coming online. That'll be a factor. You know, pricing is always part of our strategy. We look at it all the time. We're very sensitive to both the consumer and what's happening from an input cost standpoint, and we'll continue to look at that as we think about our plans for next year. Okay. As it stands now, you haven't embedded in the guidance isn't any incremental pricing actions or other actions to offset that inflation. You're just absorbing the inflation right now. That's right. Right. What's in the outlook right now is the pricing that we've already announced that's flowing through the P&L for the year. Okay. Perfect. All right. Thank you. Thank you. The next question is coming from Michael Lavery of Piper Sandler. Please go ahead. Thank you. Good morning. Morning. Good morning. I know the gas price increases is a factor that may make it a little bit harder to tease this out or really recognize it, but can you talk about mobility and just some of the consumer, you know, patterns you're seeing there as things are reopening more, consumers are getting out more. How does that impact some of your, obviously, higher margin instant consumable products? Are you seeing any shifts or you know anything that's notable in terms of the mix of what they're buying and where? Yeah, we definitely are seeing consumer mobility, you know, has returned, is strong. It's interesting. It certainly dialed up versus what it was before, and at the same time, we're still seeing a lot of interest in some of the at-home behaviors where people haven't totally returned to some things like restaurants and some activities, frankly, not as much because of COVID, a little bit more because of some of the price pressure of inflation. We are seeing some consumers try to consolidate trips, but we haven't really seen a meaningful impact to our total trips. We've been looking across, you know, each class of trade. You know, I'd say food is strong, has accelerated. C-store I mentioned before, quite strong, which is a key indicator of mobility. Really across most classes of trade, dollar, mass, food, and c-store, the trends remain quite strong. Okay, that's helpful. Just on international, those margins were better than expected and very strong. That segment has some pretty significant seasonality, but can you just help us understand some of what's driving that and how to think about the rest of the year? Is it likely to keep up some of those gains, or what's the right way to frame how that plays out over the course of the year? Yeah. If you wanna- The business has done really well. You know, all of our core markets had double-digit top-line growth, so that was a good starting point. We're still seeing through the first quarter the last bits of some of the restructuring that we did in China. That's giving a little bit of an incremental benefit to the first quarter that I would say is probably not gonna be a year-over-year component going forward. I would also commend the international team for looking at the whole P&L and managing their cost structure and executing a smart pricing strategy as well. Okay, great. Thanks so much. Thank you. The next question is coming from Cody Ross of UBS. Please go ahead. Hey, good morning, everyone, and thank you for taking our question. You just noted that you don't plan on taking additional pricing the rest of the year. However, most companies that have already reported this season discussed taking up additional pricing. Why is that? You know, we remain very confident in our pricing strategy and our ability to get price realization. As Steve mentioned, what you're seeing in our P&L right now is the pricing that we announced last year flowing through into the business. We all know that this remains a volatile environment. You know, the cost side has continued to evolve, especially with continued supply chain pressure and also the Ukraine-Russia situation. As always, we will continue to look at every lever at our disposal as we always do to make the best decisions for the business. Gotcha. You noted the Russian-Ukrainian War is affecting supply availability. Are there any commodities you can call out that you're having difficulty securing? Do you expect to have any issues securing supply for the balance of the year? Thank you. Yeah. At this stage, taking the last part first, we don't foresee a challenge in availability for the balance of this year. Where we've probably seen the most pressure is in the cooking oil space. You know, a lot of that's sourced out of Eastern Europe. Our business is resilient, and we've got, you know, other sources and other solutions that we're working through to ensure that we be able to satisfy consumer needs, even if we face some more pressure next year on that commodity. Thank you. We'll move on to the next question, which is coming from Chris Growe of Stifel. Please go ahead. Hi, good morning. Good morning. Good morning. I just had a question for you, just to follow up on the fact you're able to rebuild some inventory this quarter. It sounds like you're gonna have some more in the second quarter now, and it's more heavily favored towards the first half. Before we had thought about that happening in the second half. Do you continue to build inventory in the second half? I guess what I'm ultimately getting to is when will you be at a point where you can start to market and promote more normally like you had historically? Yeah, we're gonna continue to build inventory. Again, you should see sequential improvement. You know, more for this year pulled into the first half, but we wanna continue to build inventory. As Michelle said earlier, we've got a lot of capacity coming online. The first quarter was our highest production quarter ever, and as we get more capacity coming online, we expect to see that build and be able to catch up both on our own internal inventory and trade and retail inventory. Can marketing start, like, more aggressively this year, or is this more like next year? Well, we're gonna make sure that we're fully participating in seasons, just as we talked about earlier with Halloween, and make sure that we're getting all of our product out of our inventory and onto the shelves as quickly as we can so that we can continue to support the brands. We'll see more of that support pick up as we get to the back half of the year. Okay. Just one follow question on the gross margin. You have a little more aggressive decline because of the increase in costs that you expect now for the year. Is that any differently weighted by quarter? Is Q2 any worse or Q3? It caused me to have to bring my estimates down for the remainder of the year for the gross margin, given how strong it was here in the first quarter. I just wanna get a sense of how that plays out across the rest of the year. Is it just the timing of inflation that will dictate sort of the quarterly progression in the gross margin? Yeah, I'd say it's mostly that. If we look at our plan, we probably see the most pressure in quarter two, but then begins to improve because the laps get a little bit easier. If I had to pick a quarter, I'd probably say quarter two would be the worst. Okay. Thanks so much for your time. Thank you. The next question is coming from Steve Powers of Deutsche Bank. Please go ahead. Great. Thank you. Two questions, actually. The first one, just to build on the gross margin theme. The prepared remarks suggest you have to call out the 120-140 basis points of contraction, but then equate that with gross profit dollars increasing mid-single digits. My math may be wrong, but I think given your top line, that seems a pretty conservative combination of top line and gross margin. Just wanted to get some color on that mid-single digit dollar profit growth language in the prepared remarks. Secondly, you call out seeing some impact in certain consumer goods categories from the inflation that we're all seeing and from the declining government assistance that's occurring. I was hoping you could just give a little bit more color as to what specifically you're seeing and how you're monitoring that going forward. Thank you. Sure. On the first part of that question, there's no intentional conservatism between what we're seeing on the top line and what we're seeing on the gross margin line. Technically we should see about 7% gross profit growth, kinda mid-high single digit range growth. I think that math will work, but happy to take that on the side if you wanna go into more detail. Yeah, mid to high makes sense. Just the language in the text actually just says mid, so thank you for clarifying. Yep. On your other question, you know, we are constantly looking at a couple things relative to, you know, the strength of retail takeaway in other, CPG categories as well as our own. How much market share is going to private label as that has, you know, typically also been a predictor of the consumer. We're fortunate in our category not to have significant private label, but certainly in other categories where that's present, we do look at that as well. Okay. Very good. Thank you for that. Appreciate it. Thank you. The next question is coming from Jonathan Feeney of Consumer Edge. Please go ahead. Hey, good morning. Thanks. A question and maybe a follow-up all in one. Question is, you guided us on the magnitude of this, retailer inventory, replenishment for the full year, but has that grown significantly with the better than expected experience in the first quarter, not only in your brands, but across the category to the elasticity? I can't imagine retailers and your competitors thought the uptake to this magnitude of pricing would be that good. I mean, maybe I'm wrong about that. My first part, my first question, and then how does Easter play into that? Because you called out in your prepared remarks that people were buying more every day product because of the shortages of Easter product, and that certainly seems to be borne out in the data. I wonder, doesn't that add to, you know, the retailer inventory need going forward and maybe, you know, augment the opportunity to fill to greater levels, you know, throughout the year, not just what you had talked about and you may be pulling it forward from your prior guidance on inventory fill? Thanks. Taking the last bit first. Yeah, Easter will, the Easter sell-through was high. We saw more everyday takeaway, and that will put more pressure on retailer and trade inventory. That will happen. As we look at the full year, though, I'd say we're not seeing a fundamental shift in what we had planned relative to being able to restock. As we said earlier, we got a benefit in the first quarter. We pushed more out. The elasticity has put For the full year, a bit more volume through. That's true. But also, you know, we expect to see additional production pick up as we go through the year to help compensate that to some degree. I think net-net, it's not a big change in total. But to your point, you know, the sell-through on Easter is gonna put a little bit more pressure on some trade inventory. Thanks. Thank you. The next question is coming from John Baumgartner of Mizuho Securities. Please go ahead. Good morning. Thanks for the question. Good morning. Michele, one standout over the past two years has been your increases in share of distribution points, whether it be chocolate or non-chocolate candy. I can appreciate the capacity constraints right now sort of work against that. Putting that aside, how are you thinking about the resources to sustain and grow as capacity improves? I mean, just given all the upheavals over the past two years, whether it's more promotion, more in-store sales force hours, more advertising investment, where or how do you see those levers of engagement requiring change in a post-COVID world? You know, boy, I'd say, you know, my first answer to that question is the resources to sustain and grow are in supply chain, building capacity to, you know, to really be able to drive against the very strong demand. Probably first and foremost, I think that's the focus. I believe we have the retail resources that we need from a sales perspective, our sales organization. From a marketing capability, you know, I wouldn't say it's maybe as much about people. We've continued to invest in capability with a new media partner, better targeting capabilities. Certainly that helps us to really maximize consumer demand. Then maintaining the strong relationships that we have with retailers and just continuing to evolve the total bundle of investment we have to drive against demand with our retailers and our consumers. right now, I think we're focused really on supply chain. Hiring more people in manufacturing facilities, yeah, engineers to execute the capacity work. That's really where the focus is. I guess just, you know, sticking with that theme on supply chain, you've done a lot of work there adding manufacturing lines, fulfillment center and so on. I guess, you know, weak link is probably too strong of a term, but where do you think the supply chain still needs more work right now, whether it's modernization, automation, just, you know, outside of physical increases on capacity? What sort of is kind of the next phase of, I guess, you know, evolution there? Well, clearly, as we are executing this capacity and looking at the future, you know, automation, yes, is a big lever across the business. We still have opportunities in some of our manufacturing facilities for what we call single point of automation. You know, say an automated case pack or whatever the basic automation is. We kind of go to the connectivity of all the different parts of our system talking to each other. Across our entire business, you know, not just supply chain, you know, we continue to look at opportunities where technology can, you know, allow us to operate more efficiently, give us better insight, et cetera. Certainly as we look at our salty business, now that we are gaining more scale and have many more businesses in that portfolio, as Steve mentioned earlier, you know, we're doing a lot of work on just optimizing the overall supply chain network and what that looks like. That's more efficient distribution. It is more efficient manufacturing, you know, really across the board, and that's somewhat of a transformation. Okay. Thanks, Michele. Yes. Thank you. The next question is coming from David Palmer of Evercore ISI. Please go ahead. Thanks. Just a quick question about scanner data. It looks like Hershey's behind some of the competitors in pricing, although we don't always see a perfect lens into what actual list pricing is. Do you think that Hershey is behind the competition when it comes to list price increases lately, or are we just seeing some noise in there? Yeah. I don't believe we are behind. This is a category where, you know, it tends to be line priced. It's really noise related to Easter and just the mix of items that vary across different competitors during the Easter timeframe. I think as we go forward, you'll see that really, you know, even out. Just a question on advertising and promotions. Those were down lately. That's sort of understandable, given the capacity constraints. You know, what's your outlook for advertising spend? Then maybe you can layer on top of that your general philosophy and what you're thinking there. One thought is, you know, you might layer in as your capacity increases, some more advertising. Some in the industry are talking about digital marketing becoming more expensive and maybe lower ROIs. Just any thoughts on that would be helpful. Okay. You know, we are big believers in advertising. I think we've talked a lot about our model is we are pleased to have, you know, some of the strongest gross margins in the industry, and we believe in a model and then using some of those funds to reinvest in our brands, and be one of the highest investors in the industry. It's a highly responsive category with a strong, you know, impulsive nature as well. As you look to the rest of the year, you know, we believe we will be up mid to high single digits. We will continue to invest as we expand capacity wherever we can because we're big believers. Media efficiencies have really helped us to control the dollar cost because as a result of a new partnership and also new capabilities, we've gotten more efficiencies in our media. I think from a philosophy perspective, relative to your question about digital, we have not seen a decline in lift and return, and I don't know if they're being offset because we've built new capabilities to better target. We're actually seeing a stronger targeting capability and thus better efficiency. Thank you. Thank you. At this time, I'd like to turn the call back over to Ms. Poole for closing comments. Thank you for joining us this morning. I will be available throughout the day and tomorrow for any follow-up questions you may have. Thank you for your time this morning. Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.