Name: Hershey Co. (NYSE:HSY) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Hershey Co., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income including noncontrolling interest	1,644,817)	1,482,819)	1,275,413)	1,146,752)	1,171,051)
Depreciation and amortization	378,959)	315,002)	294,907)	291,544)	295,144)
Stock-based compensation expense	65,991)	66,711)	57,584)	51,899)	49,286)
Deferred income taxes	36,889)	13,374)	26,880)	(15,072)	36,255)
Impairment of long-lived assets	—)	—)	9,143)	112,485)	57,729)
Write-down of equity investments	188,286)	113,756)	125,579)	50,457)	50,329)
Other	120,818)	96,016)	113,470)	57,426)	37,278)
Accounts receivable, trade, net	(38,165)	(14,642)	(55,537)	40,252)	8,585)
Inventories	(186,963)	21,457)	(151,918)	(21,194)	(12,746)
Prepaid expenses and other current assets	(14,507)	8,619)	2,493)	13,593)	(39,899)
Accounts payable and accrued liabilities	216,479)	39,732)	41,470)	41,101)	(100,252)
Accrued income taxes	5,005)	(29,682)	(16,158)	(9,544)	75,568)
Contributions to pension and other benefit plans	(78,547)	(51,100)	(11,671)	(20,134)	(25,864)
Other assets and liabilities	(11,225)	20,822)	(11,998)	24,308)	(2,471)
Changes in assets and liabilities, net of business acquisitions and divestitures	(107,923)	(4,794)	(203,319)	68,382)	(97,079)
Adjustments to reconcile net income to net cash provided by operating activities	683,020)	600,065)	424,244)	617,121)	428,942)
Net cash provided by operating activities	2,327,837)	2,082,884)	1,699,657)	1,763,873)	1,599,993)
Capital additions, including software	(519,481)	(495,877)	(441,626)	(318,192)	(328,601)
Proceeds from sales of businesses, net of cash and cash equivalents divested	—)	—)	—)	—)	167,048)
Equity investments in tax credit qualifying partnerships	(275,534)	(128,417)	(87,211)	(80,230)	(52,641)
Business acquisitions, net of cash and cash equivalents acquired	—)	(1,601,073)	—)	(402,160)	(1,338,459)
Other investing activities	7,639)	2,539)	(2,443)	20,102)	49,759)
Net cash used in investing activities	(787,376)	(2,222,828)	(531,280)	(780,480)	(1,502,894)
Net increase (decrease) in short-term debt	(245,633)	869,030)	41,759)	(1,168,205)	645,805)
Long-term borrowings, net of debt issuance costs	—)	—)	989,876)	989,618)	1,199,845)
Repayment of long-term debt and finance leases	(4,741)	(439,444)	(704,467)	(6,151)	(910,844)
Repayment of tax receivable obligation	—)	—)	—)	—)	(72,000)
Cash dividends paid	(775,030)	(685,987)	(640,732)	(610,312)	(562,521)
Repurchase of common stock	(388,964)	(457,946)	(211,196)	(527,211)	(247,500)
Exercise of stock options	34,158)	49,821)	46,372)	240,806)	63,323)
Taxes withheld and paid on employee stock awards	(35,515)	(16,610)	(20,840)	—)	—)
Net cash provided by (used in) financing activities	(1,415,725)	(681,136)	(499,228)	(1,081,455)	116,108)
Effect of exchange rate changes on cash and cash equivalents	9,887)	(5,075)	(6,990)	3,326)	(5,388)
Increase (decrease) in cash and cash equivalents, including cash classified as held for sale	134,623)	(826,155)	662,159)	(94,736)	207,819)
(Increase) decrease in cash and cash equivalents classified as held for sale	—)	11,434)	(11,434)	—)	—)
Net increase (decrease) in cash and cash equivalents	134,623)	(814,721)	650,725)	(94,736)	207,819)
Cash and cash equivalents, beginning of period	329,266)	1,143,987)	493,262)	587,998)	380,179)
Cash and cash equivalents, end of period	463,889)	329,266)	1,143,987)	493,262)	587,998)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Operating cash flow demonstrates a consistent upward trajectory over the five-year period, reflecting strong underlying profitability and effective cash conversion. Net income grew steadily from 1.17 billion USD in 2018 to 1.64 billion USD in 2022, while net cash provided by operating activities increased from 1.60 billion USD to 2.33 billion USD in the same timeframe. This indicates that the company is generating cash from its core operations at a rate that exceeds its reported accounting profit.

Operating Cash Flow Drivers: Growth in operating cash is supported by rising net income and stable non-cash adjustments. Depreciation and amortization expenses trended upward, reaching 378.96 million USD in 2022. However, working capital movements showed significant volatility; notably, inventories exerted substantial downward pressure on cash flow in 2020 and 2022, with outflows of 151.92 million USD and 186.96 million USD, respectively.
Investing Strategy and Capital Expenditure: A pattern of increasing capital intensity is evident, as capital additions rose from 328.60 million USD in 2018 to 519.48 million USD in 2022. Strategic growth is further highlighted by major business acquisitions in 2018 and 2021, with cash outflows of 1.34 billion USD and 1.60 billion USD, respectively. Additionally, investments in tax credit qualifying partnerships grew significantly, reaching 275.53 million USD by 2022.
Financing and Shareholder Returns: The company maintains a consistent policy of returning capital to shareholders. Cash dividends paid increased annually, rising from 562.52 million USD in 2018 to 775.03 million USD in 2022. Share repurchases remained a primary use of cash, although the volume fluctuated, peaking at 527.21 million USD in 2019. To fund these returns and strategic acquisitions, the company utilized a mix of short-term and long-term debt, evidenced by significant long-term borrowings in 2018 and 2019.
Liquidity and Cash Position: The ending cash and cash equivalents balance exhibited significant volatility, influenced by the timing of large acquisitions and debt movements. The balance peaked at 1.14 billion USD at the end of 2020 before declining to 329.27 million USD in 2021 and recovering to 463.89 million USD by the end of 2022.

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