HSY 10-K & 10-Q changes, risk factors and insider trading

You should carefully read the following discussion of significant factors, events and uncertainties when evaluating our business and the forward-looking information contained in this Annual Report on Form 10-K. The events and consequences discussed in these risk factors could materially and adversely affect our business, operating results, liquidityliquidity, and financial condition. While we believe we have identified and discussed below the key risk factors affecting our business, these risk factors do not identify all the risks we face, and there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be significant that may have a material adverse effect on our business, performance or financial condition in the future.

Our Company’s reputation or brand image might be impacted as a result of issuesissues, concerns or concernsregulatory changes relating to the quality and safety of our products, ingredients or packaging, human and workplace rights, and other environmental, social or governance matters, which in turn could result in litigation or otherwise negatively impact our operating results.

In order to sell our iconic, branded products, we need to maintain a good reputation with our customers, consumers, suppliers, vendors and employees, among others. Issues related to the quality and safety of our products, ingredients or packaging could jeopardize our Company’s image and reputation. We have in the past recalled or removed certain products from store shelves, and may in the future need to do so again in the future. Negative publicity related to these types of concerns, or related to product contamination or product tampering, whether valid or not, could decrease demand for our products or cause production and delivery disruptions. In addition, negative publicity related to our environmental, social or governance practices could also impact our reputation with customers, consumers, supplierssuppliers, and vendors.

We might not be able to hire, engageengage, and retain the talented global human capital we need to drive our growth strategies.

Our future success depends upon our ability to identify, hire, develop, engageengage, and retain talented personnel across the globe. Competition for global talent is intense, and we might not be able to identify and hire the personnel we need to continue to evolve and grow our business. In particular, if we are unable to hire the right individuals to fill new or existing senior management positions as vacancies arise, our business performance may be adversely impacted.

Activities related to identifying, recruiting, hiringhiring, and integrating qualified individuals require significant time and attention. We may also need to invest significant amounts of cash and equity to attract talented new employees, and we may never realize returns on these investments.

Risks associated with climate change and other environmental impacts, and increased focus and evolving views of our customers, stockholders and other stakeholders on climate changeenvironmental issues, could negatively affect our business and operations.

Climate-relatedClimate and broader environmental-related changes can increase variability in, or otherwise impact, natural disasters, including weather patterns, with the potential for increased frequency and severity of significant weather events, natural hazards, rising mean temperature and sea levels, and long-term changes in precipitation patterns. Climate change or weather-related disruptions to our supply chain can impact the availability and cost of materials needed for manufacturing, which may increase insurance and other operating costs.

Increased focus on the financial impacts of environment and climate change has led to evolving legislative and regulatory efforts to combatdeal bothwith potential causes and adverse impacts of climate change, including regulation of GHG emissions. New or increasing lawsLaws and regulations related to GHG emissions and other climate changeor environmental related concerns may adversely affect us, our suppliers and our customers, and may require the Company to invest in additional capital investments to maintain compliance. Our value chain faces similar challenges as our products rely on agricultural ingredients and a global supply chain. Climate changeand posesbroader changes in the environment pose a significant and increasing risk to global food production systems and to the safety and resilience of the communities where we live, work and source our ingredients. The GHG impacts of land-use change are most pronounced in our cocoa supply chain, where we have already been working for several years to prevent deforestation and build climate and ingredient resilience. Additionally, any non-compliance with legislative and regulatory requirements could negatively impact our reputation and ability to do business.

Investors, customers, advisory services, government regulatorsregulators, and other market participants may be focused on the environmental or sustainability practices, disclosures and performance of companies. We believe our sustainability practices, disclosures and performance are focused on the most material risks and opportunities to our business and support our environmental goals and continue to evolve to meet the growing needs of our stakeholders. However, if our environmental goals do not meet investor or other external stakeholder expectations and standards, our access to capital may be negatively impacted. An enforcement action for non-compliance with regulations or reporting requirements could harm our reputation, financial position and ability to grow. A failure to meet investor or other external stakeholder expectations or standards may adversely affect our results of operations, ability to manage our liquidity, or ability to implement our strategies.

The Company publishes its environmental goals, with a particular focus on achieving an absolute reduction in our Scope 1 and 2 GHG emissions, Forest Land and Agriculture (“FLAG”) emissions, and non-FLAG emissions consistent with global environmental standards. The costs of our voluntary commitments may be greater than expected, and there can be no assurance the Company will achieve its goals, or meet the evolving sustainability expectations and standards of our investors or other external stakeholders. Any failure to achieve our goals, a perception of our failure to act responsibly with respect to the environment, or failure to respond to new or evolving legal and regulatory requirements or other sustainability concerns could adversely affect our business, reputation and increase risk of litigation.

The effects and costs of climateenvironmental change,impacts, or any failure to meet related requirements and expectations, could have a negative impact on our reputation, financial condition and results of operations.

We use many different commodities for our business, including cocoa products, sugar, corn products, dairy products, wheat products, peanuts, almonds, natural gasgas, and diesel fuel.

•Trade agreements among producing and consuming nationsnations, including tariffs;

•Other events beyond our control such as the impacts on the business or supply chain arising from theinternational ongoingconflicts conflictor betweengeopolitical Russia and Ukraine.tensions.

Although we use forward contracts and commodity futures and options contracts to hedge commodity prices where possible, commodity price increases ultimately result in corresponding increases in our raw material and energy costs. For example,the year ended December 31, 2025, in addition to higher commodity costs, our cost of sales during the year ended 2024increased compared to the same period of 20232024 experiencedas ana incrementalresult $563.0of $491.0 million of favorableunfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases, more than offsetting higher commodity costs.purchases. During the year ended 2024,2025, market prices for the majority of our exchange traded commodities increased,remained volatile, including cocoa,cocoa which has increaseddecreased approximatelyfrom 130%record sincehighs thebut beginningremains ofstructurally the year.elevated.

We may be able to pass some or all raw material, energyenergy, and other input cost increases to customers by increasing the selling prices of our products or decreasing the size of our products; however, higher product prices or decreased product sizes have in the past and may alsoin the future result in a reduction in sales volume and/or consumption. If we are not able to increase our selling prices or reduce product sizes (including if inflation outpaces our pricing elasticity) sufficiently, or in a timely manner, to offset future increased raw material, energy or other input costs, including packaging, freight, tariffs, direct labor, overhead and employee benefits, or if our sales volume decreases significantly, there could be a negative impact on our financial condition and results of operations.

•Our ability to react to changes in product category and channel consumption;

From time to time, we may evaluate potential acquisitions, divestitures or joint ventures that align with our strategic objectives. The success of such activity depends, in part, upon our ability to identify suitable buyers, sellers or business partners; perform effective assessments prior to contract execution; negotiate contract terms; and, if applicable, obtain government approval. These activities may present certain financial, managerial, staffing and talent, and operational risks, including diversion of management’s attention from existing core businesses; difficulties integrating or separating businesses from existing operations; and challenges presented by acquisitions or joint ventures which may not achieve sales levels and profitability that justify the investments made. If the acquisitions, divestituresdivestitures, or joint ventures are not successfully implemented or completed, there could be a negative impact on our financial condition, results of operations and cash flows.

Canada. The acquisition complements Hershey’s existing portfolio and increases manufacturing capacity. In 2024, we completed the acquisition of the Sour Strips brand from Actual Candy, LLC. Sour Strips is an emerging sour candy brand. In 2023, we completed the acquisition of certain assets that provide additional manufacturing capacity from Weaver Popcorn, a manufacturer of SkinnyPop popcorn, which helped us strengthen our supply chain capabilities. While we believe significant operating synergies can be obtained in connection with these acquisitions, achievement of these synergies will be driven by our ability to successfully leverage Hershey’s resources, expertise, capability-building, distribution locations and customer base. InIf addition,we are unable to successfully couple Hershey’s scale and expertise in brand building with the acquisitionsexisting operations of Dot’sour andacquired Pretzelsbrands, init may impact our ability to expand our snacking footprint at our desired pace.

In 2024,2025, 20232024 and 2022,2023, respectively, we derived approximately 12.8%,12.3%, 12.7%12.8% and 12.5%12.7% of our net sales from customers located outside of the United States. Additionally, approximately 15%16% of our total long-lived assets were located outside of the United States as of December 31, 2024.2025. As part of our strategy, we have made investments outside of the United States, particularly in Canada, Malaysia, Mexico, BrazilBrazil, and India. As a result, we are subject to risks and uncertainties relating to international sales and operations, including:

Some of the risks of operating internationally have negatively affected our financial condition and results of operations, including the imposition of tariffs on U.S. imports and associated retaliatory tariffs. If we are not able to achieve our projected international growth objectives and mitigate the numerous risks and uncertainties associated with our international operations, there could be a negative impact on our financial condition and results of operations.

Additionally, from time to time we implement business realignment activities to support key strategic initiatives designed to maintain sustainable long-term growth. For instance, in February 2024, the Board of Directors approved the AAA Initiative, which is a multi-year productivity program to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings. We cannot guarantee that we will be able to successfully implement these strategic initiatives and restructuring programs, that we will achieve or sustain the intended benefits under these programs, or that the benefits, even if achieved, will be adequate to meet our long-term growth and profitability expectations, which could in turn adversely affect our business.

Changes in governmental laws, regulations and policiespolicies, including taxes and tariffs, could increase our costs and liabilities or impact demand for our products.

Changes in U.S. and non-U.S. laws, regulations and policies and the manner in which they are interpreted or applied may alter our business environment. These negative impacts could result from changes in food and drug laws, laws related to advertising and marketing practices, accounting standards, taxation compliance and requirements, tariffs on U.S. imports and retaliatory tariffs in response, competition laws, employment laws, import/export requirementsrequirements, AI, and environmental laws, among others. For example, the European Union’s Deforestation Regulation (“EUDR”) will require the Company to conduct extensive diligence on seven commodities, including cocoa, palm oil and soy, as well as products derived from these commodities, such as chocolate, and the value chain, to ensure the goods do not result from recent deforestation, forest degradation, or breaches of local laws in order to sell such products in the European Union market or exported from it. The EUDR is scheduled to be effective in December 2025, following a one-year postponement. The EUDR, and other current or proposed regulations in markets in which we operate, are likely to increase our compliance costs, could depress sales in such markets if our products are not in compliance by applicable effective dates, and could result in fines and penalties or reputational harm if we do not fully comply. It is possible that we could become subject to additional liabilities in the future resulting from changes in laws and regulations that could result in an adverse effect on our financial condition and results of operations.

Political, economic and/or financial market conditions, including impacts on our business arising from the ongoing conflict between Russia and Ukraine,conditions could negatively impact our financial results.

Our operations are impacted by consumer spending levels and impulse purchases, which are affected by general macroeconomic conditions, consumer confidence, employment levels, the availability of consumer credit and interest rates on that credit, consumer debt levels, energy costs and other factors. Volatility in food and energy costs, sustained global recessions, broad political instability, rising unemployment, pandemic, or other outbreakoutbreaks of disease, climate change, weather, natural and other disasters, changing consumer demand, and declines in personal spending couldcan adversely impact our revenues, profitabilityprofitability, and financial condition.

Information technology is critically important to our business operations. We use information technology to manage all business processes including manufacturing, financial, logistics, sales, marketing and administrative functions. These processes collect, interpretinterpret, and distribute business data and communicate internally and externally with employees, suppliers, customerscustomers, and other third parties.

WeWe, and our third-party service providers, are regularly the target of cyber,rapidly ransomwareevolving cyber threats, including denial of service attacks, ransomware, spyware, misinformation, phishing/smishing/vishing attacks, business compromise attacks, typosquatting, automated attacks, employee errors, negligence or malfeasance, the use of malicious codes or worms, payment fraud, and other securityunauthorized threats.occurrences on, or conducted through, our or our third-party service providers' information systems and networks. Therefore, we continuously monitor and update our information technology networks and infrastructure to prevent, detect, addressaddress, and mitigate the risk of unauthorized access, misuse, computer virusesviruses, and other events that could have a security impact. We invest in industry standard security technology to protect the Company’s data and business processes against risk of data security breach and cyber attack. Our data security management program includes identity, trust, vulnerabilityvulnerability, and threat management business processes as well as adoption of standard data protection policies. We measure our data security effectiveness through industry-accepted methods and remediate significant findings. Additionally, we certify our major technology suppliers and any outsourced services through accepted security certification standards. We maintain and routinely test backup systems and disaster recovery, along with external network security penetration testing by an independent third party as part of our business resiliency preparedness. We also have processes in place to prevent disruptions resulting from our implementation of new software and systems. Employees are trained annually on cybersecurity wellness and our acceptable use policy and we have implemented phishing simulations to increase awareness and compliance. We also currently maintain a cyber insurance policy that provides coverage for security breaches; however, such insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attackscyber-attacks, and other related breaches.

We have been subject to cyber attacks, ransomwareransomware, and other security breaches, though these incidents historically have not had a significant impact on our business operations. The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time, and the sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so. AI technologies may amplify certain existing technology-related risks such as cybersecurity threats, data privacy concerns, and intellectual property challenges. Despite continued vigilance in these areas, disruptions in or failures of information technology systems are possible and could have a negative impact on our operations or business reputation. Failure of our systems, including failures due to cyber attacks, ransomware or other security breaches that would prevent the ability of systems to function as intended, could cause transaction errors, loss of customers and sales, and could have negative consequences to our Company, our employees and those with whom we do business. This in turn could have a negative impact on our financial condition and results or operations. In addition, the cost to remediate any damages to our information technology systems suffered as a result of a cyber attack, ransomware or other security breach could be significant.

We rely extensively on information systems and technology to manage our business and summarize operating results. We are inoperationalized the processfinal phase of aour multi-year implementation of a new global enterprise resource planning (“ERP”) system; specifically, in April 2024, we operationalized the final phase of our project by implementing ourthe new ERP system in the North America Confectionery segment and select business units included in our International segment. This ERP system replacesreplaced our legacy operating and financial systems and is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of the business. The ERP system implementation process has required, and will continue to require, the investment of significant personnel and financial resources as we support post-implementation efforts and system functionality. We may not be able to successfully support post-implementation efforts without experiencing delays, increased costscosts, and other difficulties. Any disruptions or difficulties in using our ERP system could result in harm to our business, including our ability to forecast, manufacture or facilitate the shipment of our product, record net sales and collect our outstanding receivables. If we are unable to successfully manage post-implementation efforts related to our new ERP system as planned, our financial positions, results of operations and cash flows could be negatively impacted. Additionally, if the ERP system does not operate as intended, the

Our vision is to belead athe leadingfuture snackingof powerhouse.snacking. We aspire to be a leader in meeting consumers’ evolving snacking needs while strengthening the capabilities that drive our growth. We are focused on four strategic imperatives to ensure the Company’s success now and in the future:

•Expand Competitive Advantage through Differentiated Capabilities. In order to generate actionable insights, we must acquire, integrate, access and utilize vast sources of the right data in an effective manner. We are working to leverage our advanced data and analytical techniques to gain a deep understanding of our consumers, our customers, our shoppers, our end-to-end supply chain, our retail environment and key economic drivers at both a macro and precision level, including digital transformation and new media models. In addition, we are in the process of transforming our supply chain capabilities and enterprise resource planning system, which will enable employees to work more efficiently and effectively.

◦We believe our employees are among our most important resources and are critical to our continued success. We utilize continuous listening surveys that are distributed throughout the year to all employees globally to hear their thoughts on the Company’s direction and their place in it. These continuous touchpoints allow for real-time feedback and action from the Company. These surveys are further supplemented with quarterly and informative enterprise summits and team “Ask Me Anything” meetings, which, in conjunction with the continuous listening surveys, generate stronger employee engagement with the Company’s strategy, initiatives and leadership. In 2025, we maintained equitable pay achievements, including aggregate salary U.S. gender pay equity.

◦We continue to make progress on our ESGsustainability prioritiesstrategy and continue to elevate these ESGimportant initiatives for a greater global impact. Through our focus on sustainability and social impact across our value chain, we continue to improveembed resilience into our enterprise, including how we source ingredients, operate with efficiency, and focusproduce ona the livesportfolio of cocoaproducts farmersfor a range of consumer needs. We operate our business with all stakeholders in mind and cocoawith communities,a theview environmentaltoward prioritieslong-term of climate changesustainability and thevalue role of packaging in our business, responsibly and sustainably sourcing the inputs to our products and increasing investments in human rights and diversity initiatives and growing diverse representation across the organization.creation.

Throughout 2024,2025, U.S.we experienced net sales growth, positive changes in consumer behaviorbehavior, and price elasticity despite the persistent dynamic macro environment. However, increasing inflationary pressures, including ongoing price volatility for select commodities and higher manufacturing costs, continued to shiftchallenge andthe evolve,business. as cost fatigue and labor markets restrict income growth and constrain consumer spending and purchasing patterns. AsDespite a result,strategic consumerpricing behavioraction related to our products has shifted. As such, forin the yearthird endedquarter Decembercombined 31,with 2024,we continued to experience a dynamic macroeconomic environment, including price volatility related to select commodities, resulting in corresponding incremental costs and gross margin pressures, and net sales and net income declines. Despiteother specific actions taken to mitigate these gross margin pressures, weour direct inputs continue to experience overall declines in consumer demands for our products, and higher prices for direct materials used to manufacture our products were, and continue to be,be the primary incremental cost to our business (see Consolidated Results of Operations included in this MD&A). We utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which experiencedcontinued ato experience elevated market priceprices increasecompared ofto approximatelyhistorical 70% throughout 2024levels (see Item 7A - Quantitative and Qualitative Disclosures about Market Risk included in this Annual Report on Form 10-K).

Based on the length and severity of the fluctuating macroeconomic environment, including price volatility for our commodities, the possibility of a recession, changes in consumer shopping and consumption behavior, and changes in geopolitical events, including the ongoingimposition conflictof between Russiatariffs and Ukraine,retaliatory tariffs, we may continue to experience increasing supply chain costs, higher inflation and other impacts to our business. We will continue to evaluate the nature and extent of these potential and evolving impacts on our business, consolidated results of operations, segment results, liquidity and capital resources.

For the full year 2024,2025, our total U.S. retail takeaway increased 0.8%5.4% in the expanded multi-outlet combined plus convenience store channels (MULO+ w/ Convenience), which includes candy, mint, gum, salty snacks and grocery items. Our U.S. candy, mint and gum (“CMG”) consumer takeaway increased 0.1%4.9% and experienced a CMG market share decline of 59approximately 10 basis points. Our Salty consumer takeaway increased 4.2%11.3% and experienced a Salty market share increase of 11approximately 40 basis points.

The CMG consumer takeaway and market share information reflect measured channels of distribution accounting for approximately 90% of our U.S. confectionery and salty snack retail business.businesses. These channels of distribution primarily include food, drug, mass merchandisers and convenience store channels, plus Wal-Mart Stores, Inc., partial dollar, club and military channels. These metrics are based on measured market scanned purchases as reported by Circana, the Company’s market insights and analytics provider, and provide a means to assess our retail takeaway and market position relative to the overall category.

Cost of sales were $7,769.9 million in 2025 compared to $5,901.4 million in 20242024, comparedan increase of $1,868.5 million, or 31.7%. The increase was driven by $1,965.1 million of unfavorable costs, primarily related to $6,167.2$736.6 million in 2023,higher acommodity decreasecosts, of$287.2 $265.8million million,in orhigher 4.3%.supply Thechain decreasecosts, includedincluding $637.9tariffs, as well as $491.0 million of favorable costs, driven by an incremental $563.0 million of favorableunfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Item 7A - Quantitative and Qualitative Disclosures About Market Risk for more information) and lower costs, primarily related to lower sales volume, in line with the declines in net sales noted above.. The decreaseincrease was partially offset by $372.1$96.6 million of higherfavorable costs,cost primarilysavings drivendue byto higherlower commoditysales costs from cocoa, higher supply chain costs, unfavorable mixvolume and incrementallower business realignment costs.

SM&A expenses were $2,436.5$2,460.6 million in 20232025 compared to $2,236.0$2,373.6 million in 2022,2024, an increase of $200.5$87.0 million, or 9.0%.3.7%. The increase was driven by increasedhigher corporatecompensation and benefit costs and investments in advertising and related consumer marketing expenses. Total advertising and related consumer marketing expenses increased 12.2%3.7%, driven by North America Confectionery and North America Salty Snacks. SM&A expenses, excluding advertising and related consumer marketing, increased approximately 7.5%4.2% in 20232025 driven by higher compensation costscosts, andpartially investmentsoffset inby capabilitiesnet andsavings technologyrelated acrossto segments.our AAA Initiative.

AutomationWe periodically undertake business realignment activities designed to increase our efficiency and focus our business in support of our key growth strategies. Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), in 2025, 2024 and 2023, we recorded business realignment costs of $20.6 million, $29.1 million and $0.4 million, respectively. The 2025 and 2024 costs related to the AAA Initiative that the Board of Directors approved in February 2024. The Advancing Agility & AutomationAAA Initiative, which is a multi-year productivity program to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings. The 2023 and 2022 costs related primarily to the International Optimization Program, a program focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward. This program was completed in 2023. Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in Note 9 to the Consolidated Financial Statements.

Operating profit was $2,560.9$1,441.5 million in 20232025 compared to $2,260.8$2,898.2 million in 2022,2024, ana increasedecrease of $300.1$1,456.7 million, or 13.3%.50.3%. The increasedecrease was predominantly due to higherlower gross profit,profit and higher SM&A expenses, partially offset by higherlower SM&Abusiness realignment expenses, as noted above. Operating profit margin decreased to 22.9%12.3% in 20232025 from 21.7%25.9% in 20222024 by the same factors noted above in gross margin.

Net interest expense was $165.7 million in 2024 compared to $151.8 million in 2023, an increase of $13.9 million, or 9.1%. The increase was primarily due to higher short-term debt balances in 2024 compared toversus 2023, specifically related to outstanding commercial paper. The increase in the expense was partially offset by a decrease in short-term foreign bank borrowings and an increase in interest income Net interest expense was $151.8 million in 2023 compared to $137.6 million in 2022, an increase of $14.2 million, or 10.3%. The increase was primarily due to higher rates on short-term debt balances in 2023 versus 2022, specifically related to outstanding commercial paper borrowings, and higher rates on long-term debt balances, specifically related to the $350 million 4.25% Notes due in May 2028 and $400 million 4.50% Notes due in May 2033, each of which were issued in May 2023. The increase in the expense was partially offset by an increase in interest income.

Our effective income tax rate was 14.3%27.3% for 20232025 compared with 14.2%10.2% for 2022.2024. Relative to the 21% statutory rate, the 20232025 effective tax rate was primarily impacted by state taxes and tax reserves. Relative to the 21% statutory rate, the 2024 effective rate benefited from investment tax credits, partially offset by state taxes. The 2022 effective rate, relative to the 21% statutory rate, benefited from investment tax credits, partially offset by state taxes.

Net income was $883.3 million in 2025 compared to $2,221.2 million in 20242024, compareda to $1,861.8 million in 2023, an increasedecrease of $359.4$1,337.9 million, or 19.3%.60.2%. Earnings Per Share (“EPS”)-diluted was $10.92$4.34 in 20242025 compared to $9.06$10.92 in 2023,2024, ana increasedecrease of $1.86,$6.58, or 20.5%.60.3%. The increasedecrease in both net income and EPS-diluted was driven primarily by higherlower gross profit, lowerhigher SM&A expensesexpenses, higher interest expense, and lowerhigher income taxes, partially offset by higherlower business realignment costs and higherlower other income and expenses. Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs.

Net income was $2,221.2 million in 2024 compared to $1,861.8 million in 2023 compared to $1,644.8 million in 2022,2023, an increase of $217.0$359.4 million, or 13.2%.19.3%. EPS-diluted was $9.06$10.92 in 20232024 compared to $7.96$9.06 in 2022,2023, an increase of $1.1,$1.86, or 13.8%.20.5%. The increase in both net income and EPS-diluted was driven primarily by higher gross profit, lower SM&A expenses and lower income taxes, partially offset by higher SM&Abusiness expenses,realignment higher income taxes,costs and higher other income and expenses. Our 20232024 EPS-diluted also benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs.

The summary that follows provides a discussion of the results of operations of our three segments: North America Confectionery, North America Salty Snacks and International. For segment reporting purposes, we use “segment income” to evaluate segment performance and allocate resources. Segment income excludes unallocated general corporate administrative expenses, unallocated mark-to-market gains and losses on commodity derivatives, business realignment and impairment charges, acquisition-related costs and other unusual gains or losses that are not part of our measurement of segment performance. These items of our operating income are largely managed centrally at the corporate level and are excluded from the measure of segment income reviewed by our Chief Operating Decision Maker, MicheleKirk Buck, Chairman of the Board,Tanner, President, and Chief Executive Officer, and used for resource allocation and internal management reporting and performance evaluation. Segment income and segment income margin, which are presented in the segment discussion that follows, are non-GAAP measures and do not purport to be alternatives to operating income as a measure of operating performance. We believe that these measures are useful to investors and other users of our financial information in evaluating ongoing operating profitability as well as in evaluating operating performance in relation to our competitors, as they exclude the activities that are not directly attributable to our ongoing segment operations. Refer to Note 13 Segment Information in our audited consolidated financial statements for reconciliations of net sales for our reportable segments to consolidated total net sales and of segment operating income to consolidated income before taxes.

Net sales for our North America Salty Snacks segment were $1,271.3 million in 2025 compared to $1,135.7 million in 2024 compared to $1,092.7 million in 2023,2024, an increase of $43.0$135.6 million, or 3.9%.11.9%. The increase reflected a volume increase of approximately 5%,8%, primarily related to Dot’s Homestyle Pretzels snacks.and The increase wasSkinnyPop, partially offset by unfavorablea pricereduction of net sales to private label customers. Price realization increased approximately 1% as a result of lower trade promotional activities. Additionally, the 2025 acquisition of LesserEvil contributed a benefit of approximately 1% driven primarily by SkinnyPop and Dot’s Homestyle Pretzels snacks.2%.

Our North America Salty Snacks segment income was $241.8 million in 2025 compared to $199.4 million in 2024 compared to $158.3 million in 20232024, an increase of $41.1$42.4 million, or 26.0%.21.3%. The increase was primarily drivendue byto highervolume volume, favorable commodity costs,increases and lowernet supplysavings chainrelated costs.to Theour increaseAAA wasInitiative, partially offset by higher advertising and related consumer marketing costs and unfavorable price realization.expenses.

OurNet sales for our North America Salty Snacks segment incomewere was $158.3$1,135.7 million in 20232024 compared to $159.9$1,092.7 million in 2022,2023, aan decreaseincrease of $1.6$43.0 million, or 1.0%.3.9%. The decreaseincrease wasreflected a volume increase of approximately 5% primarily due to increased advertising and related consumer marketing costs and costs related to theDot’s voluntaryHomestyle removalPretzels of certain Paqui branded items in 2023.snacks. The decreaseincrease was partially offset by favorableunfavorable price realization of approximately 1%, driven primarily by SkinnyPop and favorableDot’s productHomestyle mix.Pretzels snacks.

The International segment includes all other countries where we currently manufacture, import, market, sell or distribute chocolate and non-chocolate confectionery and other products. We currently,currently have operations and manufacture product in Mexico, Brazil, India and Malaysia, primarily for consumers in these regions, and also distribute and sell confectionery products in export markets of Latin America, as well as Europe, Asia,Asia-Pacific (“APAC”), the Middle East and Africa (“MEA”) and other regions. International results, whichresults accounted for 8.5%,8.1%, 8.5% and 8.2%8.5% of our net sales in 2024,2025, 20232024 and 2022,2023, respectively. International results for the years ended December 31, 2024,2025, 20232024 and 20222023 were as follows:

Unallocated corporate expense totaled $701.2$807.9 million in 20242025 as compared to $800.4$701.2 million in 2023,2024, aan decreaseincrease of $99.2 or,$106.7, or 12.4%.15.2%. The decreaseincrease was primarily driven by lowerhigher incentive compensation costs and benefitother non-people operating costs, partially offset by decreased investments in capabilities and technology, as a result of the completion of the upgrade of a new ERP system across the enterprise in 2024, and lower acquisition and integration related costs.2024.

This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of Hershey’s financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. This MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q for the quarterly period ended MarchJune 29,28, 2026 (“this Quarterly Report on Form 10-Q”). This discussion contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially. Refer to the Safe Harbor Statement below as well as the Risk Factors and other information contained in our 2025 Annual Report on Form 10-K for information concerning the key risks to achieving future performance goals.

Throughout the first threesix months of 2026, we experienced net sales growthgrowth, driven primarily by pricing actions, and positivecontinued consumer sentimentdemand for our brands, despite the persistent dynamic macromacroeconomic environment,environment whichand continuesongoing to put pressurepressures on our business. Specifically,Higher highermanufacturing, manufacturinglogistics, and supply chain costs continue to challenge the business and drive incremental cost to our businesscosts (see Consolidated Results of Operations included in this MD&A). Additionally, we utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which has continued to improve during the first threesix months of 2026 (see Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

Furthermore, changes in global trade policies, including tariffs on U.S. imports, and certain geopolitical events, specifically the conflict in the Middle East, continue to increase global economic and political uncertainty. We are continuing to monitor the ongoing regulations related to tariffs, specifically, goods imported into the U.S. from Canada, Mexico and other countries, as well as export markets, as it was ruled by the International Emergency Economic Powers Act on February 20, 2026, that while certain tariffs imposed by the current U.S. administration do remain in full effect, there are other tariffs imposed that were deemed to not have such authority to do so. Therefore, companies now may have considerations around refund requests and as such, the Company is currently assessing the potential for refunds and the impact of tariff refunds may have on our results of operations.business. As such, the scope and length of tariffs, including their effects on the broader economy and our business, remain uncertain, but we expect tariff expensecontinues to continue to negatively impact our results of operations.evolve. Additionally, we are actively monitoring the evolvingongoing conflict in the Middle East and the potential impact on our business. For the first threesix months of 2026, this conflict did not have a material impact on our commodity prices or supply availability. However, we are continuing to monitor for any significant escalation or expansion of economic or supply chain disruptions or broader inflationary costs, which may result in material adverse effects on our results of operations.

As of MarchJune 29,28, 2026, we believe we have sufficient liquidity to satisfy our key strategic initiatives and other material cash requirements in both the short-term and in the long-term; however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can operate effectively during the current economic environment. We continue to monitor our discretionary spending across the organization (see Liquidity and Capital Resources included in this MD&A).

Based on the length and severity of the fluctuating macroeconomic environment, including price volatility for our commodities, fluctuations in consumer shopping and consumption behavior, and ongoing changes in geopolitical events, including the imposition of tariffs, retaliatory tariffs and retaliatorytariff tariffs,refunds, as well as the conflict in the Middle East, we may continue to experience increasing supply chain costs, higher inflation and other impacts to our business. We will continue to evaluate the nature and extent of these evolving impacts on our business, consolidated results of operations, segment results, liquidity and capital resources.

Net sales were $3,104.2$2,787.3 million in the firstsecond quarter of 2026 compared to $2,805.4$2,614.7 million in the same period of 2025, an increase of $298.8$172.6 million, or 10.6%.6.6%. The net sales increase reflects a favorable price realization of approximately 10%12%, primarily related to pricing actions within the North America Confectionery and International segments. Additionally, the 2025 acquisition of LesserEvil contributed approximately a 2%3% benefit, with an additional 1% benefit being provided by foreign currency exchange rates.benefit. The increase was partially offset by a volume decrease of approximately 2%,8%, primarily driven by volume declines in North America Confectionery and International segments, which more than offset the volume growth in the North America Salty Snacks segment. There was minimal impact from foreign currency exchange rates.

For the firstsecond quarter of 2026, our total U.S. retail takeaway increaseddecreased 9.3%5.4% in the expanded multi-outlet combined plus convenience store channels (MULO+ w/ Convenience), which includes candy, mint, gum, salty snacks and grocery items. Our U.S. candy, mint and gum (“CMG”) consumer takeaway increaseddecreased 8.1%,8.6% despiteand experienced a CMG market share decline. Our Salty consumer takeaway, excluding LesserEvil, increased 9.8%6.5% in the firstsecond quarter of 2026 and experienced a Salty, excluding LesserEvil, market share increase.

Cost of sales were $1,881.4$1,524.0 million in the firstsecond quarter 2026 compared to $1,861.1$1,818.4 million in the same period of 2025, ana increasedecrease of $20.3$294.4 million, or 1.1%.16.2%. The increasedecrease was driven by $269.9 million of higher costs, predominantly due to unfavorable commodity and tariff costs. The increase was partially offset by declines of $249.6$523.7 million, primarily due to supplylower chainsales productivity andvolume, transformation program net savings and $24.9$117.4 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information). The decrease was partially offset by $229.3 million of higher costs, predominantly due to unfavorable supply chain costs and unfavorable mix.

Gross margin was 39.4%45.3% in the firstsecond quarter of 2026 compared to 33.7%30.5% in the same period of 2025, an increase of 5701,490 basis points. The increase was driven by favorable net price realization and net savings related to our AAA Initiative, partially offset by unfavorable supply chain and tariff costs and volume declines.

SM&A expenses were $576.0$620.6 million in the firstsecond quarter of 2026 compared to $558.7$603.2 million in the same period of 2025, an increase of $17.3$17.4 million, or 3.1%. Total advertising and related consumer marketing expenses increased 5.8%, driven by investments in advertising and related consumer marketing expenses in the North America Salty Snacks and International segments.2.9%. SM&A expenses, excluding advertising and related consumer marketing, increased 1.8%6.0% in the firstsecond quarter of 2026, driven by higher capability and technology investments, partially offset by lower compensation and benefit costs and lower consulting fees,costs, as well as net savings related to to our AAA Initiative versus the prior year. Advertising and related consumer marketing expenses decreased 3.3%, driven by efficiencies and timing of non-working media investment in the North America Confectionery segment.

We periodically undertake business realignment activities designed to increase our efficiency and focus our business in support of our key growth strategies. Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded business realignment costs of $6.0$0.1 million during the firstsecond quarter of 2026 versus $16.4$0.3 million in the firstsecond quarter of 2025. The costs related to the AAA Initiative, which commenced in 2024, focused on leveraging new technology to improve supply chain and manufacturing-related spend, and optimize selling, general and administrative expenses. Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in Note 9 to the Unaudited Consolidated Financial Statements.

Operating profit was $640.7$642.6 million in the firstsecond quarter of 2026 compared to $369.2$192.8 million in the same period of 2025, an increase of $271.5$449.8 million, or 73.5%.233.3%. The increase was primarily due to higher gross profitprofit, as well as lower business realignment expenses, partially offset by increased SM&A expenses, as noted above. Operating profit margin increased to 20.6%23.1% in 2026 from 13.2%7.4% in 2025, driven by the same factors noted above that resulted in higher gross margin for the period.

Net interest expense was $49.8$50.0 million in the firstsecond quarter of 2026 compared to $44.6$46.0 million in the same period of 2025, an increase of $5.2$4.0 million, or 11.6%.8.5%. The increase was primarily due to thean timingincrease ofin theshort-term Februarydebt, 2025slightly offset by lower long-term debt issuance.balances.

Other (income) expense, net was incomeexpense of $1.8$4.4 million in the firstsecond quarter of 2026 versus expenseincome of $0.9$2.3 million in the firstsecond quarter of 2025, a change of $2.7$6.7 million. The decreaseincrease in net expense was predominantly driven by aan decreaseincrease of $2.4$3.4 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans in the firstsecond quarter of 2026 versus the same period of 2025.2025 and a decrease in other corporate income of $3.3 million.

The effective income tax rate was 26.6%22.2% for the firstsecond quarter of 2026 compared with 30.7%57.9% for the firstsecond quarter of 2025. The 2025 effective tax rate was higher due to the impact of tax reserves and foreign rate differentials related to mark-to-market activity. Relative to the 21% statutory rate, the 2026 and 2025 effective tax ratesrate werewas primarily impacted by state taxes and foreign rate differential. Relative to the 21% statutory rate, the 2025 effective tax differential.rate was primarily impacted by state taxes, foreign rate differentials and tax reserves.

Net income was $435.1$457.7 million in the firstsecond quarter of 2026 compared to $224.2$62.7 million in the same period of 2025, an increase of $210.9$395.0 million, or 94.1%.629.7%. EPS-diluted was $2.13$2.26 in the firstsecond quarter of 2026 compared to $1.10$0.31 in the firstsecond quarter of 2025, an increase of $1.03,$1.95, or 93.6%.629.0%. The increase in both net income and EPS-diluted was driven by higher gross profit,profit and lower business realignment costs and lower other (income) expense,costs, partially offset by higher SM&A expenses, higher other (income) expense, higher interest expense, and higher income taxes. Higher income taxes were driven by higher income before income taxes, partially offset by a lower effective tax rate.

The summary that follows provides a discussion of the results of operations of our three segments: North America Confectionery, North America Salty Snacks and International. For segment reporting purposes, we use “segment income” to evaluate segment performance and allocate resources. Segment income excludes unallocated general corporate administrative expenses, unallocated mark-to-market gains and losses on commodity derivatives, business realignment and impairment charges, acquisition-related costs and other unusual gains or losses that are not part of our measurement of segment performance. These items of our operating income are largely managed centrally at the corporate level and are excluded from the measure of segment income reviewed by our Chief Operating Decision Maker, Kirk Tanner, President and Chief Executive Officer, and used for resource allocation and internal management reporting and performance evaluation.Officer. Segment income and segment income margin, which are presented in the segment discussion that follows, are non-GAAP measures and do not purport to be alternatives to operating income as a measure of operating performance. We believe that these measures are useful to investors and other users of our financial information in evaluating ongoing operating profitability as well as in evaluating operating performance in relation to our competitors, as they exclude the activities that are not directly attributable to our ongoing segment operations. Refer to Note 13 Segment Information in our auditedunaudited consolidated financial statements for reconciliations of net sales for our reportable segments to consolidated total net sales and of segment operating income to consolidated income before taxes.

The North America Confectionery segment is responsible for our chocolate and non-chocolate confectionery market position in the United States and Canada. This includes developing and growing our business in chocolate and non-chocolate confectionery, gum and refreshment products, protein bars, spreads, snack bites and mixes, as well as pantry and food service lines. While a less significant component, this segment also includes our retail operations, including Hershey’s Chocolate World stores in Hershey, Pennsylvania; New York, New York; Las Vegas, Nevada; Niagara Falls (Ontario) and Singapore, as well as operations associated with licensing the use of certain trademarks and products to third parties around the world. North America Confectionery results, which accounted for 80.2%78.0% and 82.0%79.8% of our net sales for the three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, were as follows:

Net sales of our North America Confectionery segment were $2,489.9$2,173.6 million in the firstsecond quarter of 2026 compared to $2,300.1$2,085.5 million in the same period of 2025, an increase of $189.8$88.1 million, or 8.3%.4.2%. The increase was driven by favorable price realization of approximately 12%,14%, primarily due to the pricing action announced in 2025. Volume declined approximately 10%, driven primarily by price elasticity. Additionally, there was ano minimal benefitimpact from foreign currency exchange rates. Volume declined approximately 4%, driven by price elasticity and one fewer shipping day, partially offset by the timing of shipments and strong innovation performance.

Our North America Confectionery segment income was $792.4$705.8 million in the firstsecond quarter of 2026 compared to $696.4$503.9 million in the same period of 2025, an increase of $96.0$201.9 million, or 13.8%.40.1%. The increase was driven primarily by higher net sales,price favorablerealization, mix,supply andchain productivity, net savings related to our AAA Initiative, lower commodity costs and tariff refunds, partially offset by volumehigher declines,logistic and increased commodity and tariff costs.expenses.

The North America Salty Snacks segment is responsible for our grocery and snacks market positions, including our salty snacking products. North America Salty Snacks results, which accounted for 11.3%13.9% and 9.9%12.1% of our net sales for the three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, were as follows:

Net sales of our North America Salty Snacks segment were $350.1$387.8 million in the firstsecond quarter of 2026 compared to $277.8$315.5 million in the same period of 2025, an increase of $72.3 million, or 26.0%.22.9%. The increase was predominantly due to the acquisition of LesserEvil in November 2025, which provided a benefit of approximately 20%.22%. Further, volume increased approximately 5%,4%, primarily driven by Dot’s and Reese’s FilledHomestyle Pretzels. Price realization wasdeclined flatapproximately in3% theprimarily firstdriven threeby monthshigher oftrade 2026promotional comparedactivities tofor theDot’s sameHomestyle periodPretzels ofand 2025.SkinnyPop.

Our North America Salty Snacks segment income was $34.3$62.6 million in the firstsecond quarter of 2026 compared to $41.9$66.5 million in the same period of 2025, a decrease of $7.6$3.9 million, or 18.1%.5.9%. The decrease was primarilydriven due toby higher supply chainlogistic costs, includinglower costsnet relatedprice torealization, aunfavorable voluntary temporary product withdrawal,mix, and increased SM&AA, expenses.partially offset by higher volume and supply chain productivity.

The International segment includes all other countries where we currently manufacture, import, market, sell or distribute chocolate and non-chocolate confectionery and other products. We currently have operations and manufacture product in Mexico, Brazil, India and Malaysia, primarily for consumers in these regions, and also distribute and sell confectionery products in export markets of Latin America, as well as Europe, Asia-Pacific (“APAC”), the Middle East and Africa (“MEA”) and other regions. International results, which accounted for 8.5%8.1% and 8.1%8.2% of our net sales for the three months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, were as follows:

Net sales of our International segment were $264.2$225.9 million in the firstsecond quarter of 2026 compared to $227.5$213.7 million in the same period of 2025, an increase of $36.7$12.2 million, or 16.1%.5.7%. The increase was due to favorable price realization of approximately 12%,10%, resulting from strategic pricing actions across key markets,markets. asThe wellincrease aswas also driven by a favorable impact from foreign currency exchange rates of approximately 6.8%.4%. The increase was partially offset by volume declines of approximately 2%, primarily drivendrive by price elasticity across markets.markets of approximately 8%.

Our International segment generated incomea loss of $15.3$5.1 million in the firstsecond quarter of 2026 compared to $28.7income of $19.8 million in income in the firstsecond quarter of 2025, a decrease of $13.4$24.9 million, or 46.8%,126.0%, driven by higher commodity and manufacturing costs and advertising investment, partially offset by favorable price realization, supply chain productivity, and net savings related to our AAA Initiative.

In the firstsecond quarter of 2026, unallocated corporate expense totaled $157.7$215.1 million, as compared to $160.4$181.5 million in the firstsecond quarter of 2025, aan decreaseincrease of $2.7$33.6 million, or 1.7%.18.5%. The decreaseincrease was primarily driven by continued investments in technology and higher acquisition and integration costs, partially offset by lower compensation and benefits costs, as well as consulting fees, partially offset by continued investments in technology.costs.

At MarchJune 29,28, 2026, our cash and cash equivalents totaled $877.0$791.2 million, a decrease of $48.8$134.7 million compared to the 2025 year-end balance. Additional detail regarding the net uses of cash are outlined in the following discussion. Additionally, at MarchJune 29,28, 2026, we had outstanding short- and long-term debt totaling $5.4$5.6 billion, of which $504.1$504.2 million was classified as the current portion of long-term debt. Of the $504.1$504.2 million, $500 million of 2.300% Notes are due upon maturity on August 15, 2026. We believe we can satisfy these debt obligations with cash generated from our operations, issuing new debt, and/or by borrowing on our unsecured credit facility.

ApproximatelyA 50%substantial of the balancemajority of our cash and cash equivalents at MarchJune 29,28, 2026 was held by subsidiaries domiciled outside of the United States. A majority of our cash and cash equivalents balance is distributable to the United States without material tax implications, such as withholding tax. We intend to continue to reinvest the remainder of this balance outside of the United States for which there would be a material tax implication to distributing for the foreseeable future and, therefore, have not recognized additional tax expense on these earnings. We believe that our existing sources of liquidity are adequate to meet anticipated funding needs at comparable risk-based interest rates for the foreseeable future. Acquisition spending and/or share repurchases could potentially increase our debt. Operating cash flow and access to capital markets are expected to satisfy our various short- and long-term cash flow requirements, including acquisitions and capital expenditures.

We generated cash of $468.8$888.1 million from operating activities in the first threesix months of 2026, an increase of $72.1$379.2 million compared to $396.7$508.9 million in the same period of 2025. This increase in net cash provided by operating activities was mainly driven by the following factors:

◦In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, consumed cash of $230.6$361.9 million in 2026, compared to generatingconsuming cash of $55.4$204.3 million in 2025. This $286.0$157.6 million fluctuation was mainly driven by an increase in trade accounts receivablereceivable, as a result of timing of sales and collections, partially offset by a decrease in accounts payable and accrued liabilities, due to the timing of vendor and supplier payments, partially offset byand lower inventory levels.

We used cash of $117.1$199.6 million for investing activities in the first threesix months of 2026, a decrease of $29.9$102.2 million compared to $147.0$301.8 million in the same period of 2025. This decrease in net cash used in investing activities was mainly driven by the following factors: