What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-01 compared with 2024-05-03 · 272 added, 143 removed, 818 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Net sales $ 2,074,480 $ 2,490,280 $ 5,327,229 $ 5,477,894

4 unchanged sentences

540,987 571,804 1,158,968 1,153,391

Business realignment costs — 811

Business realignment costs (benefits) 4,937 ( 370 ) 4,937 441

Operating profit

19 unchanged sentences

(in thousands)

For the Three Months Ended

March 31, 2024 April 2, 2023

Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount

For the Three Months Ended For the Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount

Net income $ 180,894 $ 406,983 $ 978,347 $ 994,168

15 unchanged sentences

(in thousands, except share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets:

27 unchanged sentences

Common stock, shares issued:

166,939,511 at March 31, 2024 and December 31, 2023

166,939,511 at June 30, 2024 and December 31, 2023

166,939 166,939

Class B common stock, shares issued:

54,613,514 at March 31, 2024 and December 31, 2023

54,613,514 at June 30, 2024 and December 31, 2023

54,614 54,614

2 unchanged sentences

Treasury—common stock shares, at cost:

19,332,210 at March 31, 2024 and 17,160,099 at December 31, 2023

19,281,035 at June 30, 2024 and 17,160,099 at December 31, 2023

( 2,283,219 ) ( 1,800,232 )

7 unchanged sentences

(in thousands)

Three Months Ended

March 31, 2024 April 2, 2023

Six Months Ended

June 30, 2024 July 2, 2023

Operating Activities

19 unchanged sentences

Equity investments in tax credit qualifying partnerships ( 46,053 ) ( 19,077 )

Business acquisitions, net of cash and cash equivalents acquired — ( 165,818 )

Other investing activities ( 222 ) ( 629 )

1 unchanged sentence

Financing Activities

Net increase (decrease) in short-term debt 569,809 ( 90,700 )

Net increase in short-term debt 609,999 165,984

Long-term borrowings, net of debt issuance costs — 744,092

Repayment of long-term debt and finance leases ( 3,029 ) ( 752,367 )

14 unchanged sentences

The Hershey Company | Q2 2024 Form 10-Q | Page 5

HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended June 30, 2024 and July 2, 2023

(in thousands)

Stock Class B

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive

(Loss) Income Total

Stockholders’

Balance, March 31, 2024

$ — $ 166,939 $ 54,614 $ 1,315,813 $ 5,087,126 $ ( 2,285,370 ) $ ( 230,835 ) $ 4,108,287

Net income 180,894 180,894

Other comprehensive loss ( 20,778 ) ( 20,778 )

Dividends (including dividend equivalents):

Common Stock, $ 1.370 per share

( 202,757 ) ( 202,757 )

Class B Common Stock, $ 1.245 per share

( 67,994 ) ( 67,994 )

Stock-based compensation 11,619 11,619

Exercise of stock options and incentive-based transactions ( 1,556 ) 2,130 574

Repurchase of common stock (including excise tax) 21 21

Balance, June 30, 2024

$ — $ 166,939 $ 54,614 $ 1,325,876 $ 4,997,269 $ ( 2,283,219 ) $ ( 251,613 ) $ 4,009,866

Stock Class B

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive

(Loss) Income Total

Stockholders’

Balance, April 2, 2023

$ — $ 164,439 $ 57,114 $ 1,285,412 $ 3,970,562 $ ( 1,781,155 ) $ ( 238,007 ) $ 3,458,365

Net income 406,983 406,983

Other comprehensive income 16,966 16,966

Dividends (including dividend equivalents):

Common Stock, $ 1.036 per share

( 152,734 ) ( 152,734 )

Class B Common Stock, $ 0.942 per share

( 53,801 ) ( 53,801 )

Conversion of Class B Common Stock into Common Stock 2,500 ( 2,500 ) —

Stock-based compensation 16,812 16,812

Exercise of stock options and incentive-based transactions ( 977 ) 3,140 2,163

Repurchase of common stock (including excise tax) 31 31

Balance, July 2, 2023

$ — $ 166,939 $ 54,614 $ 1,301,247 $ 4,171,010 $ ( 1,777,984 ) $ ( 221,041 ) $ 3,694,785

The Hershey Company | Q2 2024 Form 10-Q | Page 6

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2024 and April 2, 2023

For the Six Months Ended June 30, 2024 and July 2, 2023

(in thousands)

19 unchanged sentences

Repurchase of common stock (including excise tax) ( 498,973 ) ( 498,973 )

Balance, March 31, 2024

Balance, June 30, 2024

$ — $ 166,939 $ 54,614 $ 1,325,876 $ 4,997,269 $ ( 2,283,219 ) $ ( 251,613 ) $ 4,009,866

20 unchanged sentences

Repurchase of common stock (including excise tax) ( 242,108 ) ( 242,108 )

Balance, April 2, 2023

Balance, July 2, 2023

$ — $ 166,939 $ 54,614 $ 1,301,247 $ 4,171,010 $ ( 1,777,984 ) $ ( 221,041 ) $ 3,694,785

10 unchanged sentences

Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost method.

Both equity and cost method investments are included as Other non-current assets in the Consolidated Balance Sheets.

Both equity method investments and cost, less impairment, investments are included as Other non-current assets in the Consolidated Balance Sheets.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q.

1 unchanged sentence

The financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, financial position, and cash flows for the indicated periods.

Operating results for the quarter ended March 31, 2024 may not be indicative of the results that may be expected for the year ending December 31, 2024 because of seasonal effects on our business.

Operating results for the quarter ended June 30, 2024 may not be indicative of the results that may be expected for the year ending December 31, 2024 because of seasonal effects on our business.

These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (our “2023 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

18 unchanged sentences

This new standard was not applicable to the May 2023 acquisition of Weaver Popcorn Manufacturing, Inc.

(“Weaver”) due to no contract assets or liabilities (as discussed in Note 2 );

however, will be applied in relevant future acquisitions.

(“Weaver”) due to no contract assets or liabilities being acquired in this transaction (as discussed in Note 2 );

however, it will be applied in relevant future acquisitions.

The Hershey Company | Q2 2024 Form 10-Q | Page 8

32 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2024 are as follows:

The changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2024 are as follows:

North America Confectionery North America Salty Snacks International Total

2 unchanged sentences

Foreign currency translation ( 3,585 ) — ( 852 ) ( 4,437 )

Balance at March 31, 2024

Balance at June 30, 2024

$ 2,017,246 $ 657,001 $ 17,366 $ 2,691,613

4 unchanged sentences

The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

8 unchanged sentences

$ 1,838,525 $ 1,879,229

Total amortization expense for the three months ended March 31, 2024 and April 2, 2023 was $ 19,554 and $ 19,177 , respectively.

Total amortization expense for the three months ended June 30, 2024 and July 2, 2023 was $ 19,539 and $ 20,562 , respectively.

Total amortization expense for the six months ended June 30, 2024 and July 2, 2023 was $ 39,093 and $ 39,739 , respectively.

SHORT AND LONG-TERM DEBT

5 unchanged sentences

The credit agreements governing the credit facility contain certain financial and other covenants, customary representations, warranties and events of default.

As of March 31, 2024, we were in compliance with all covenants pertaining to the credit facility, and we had no significant compensating balance agreements that legally restricted access to these funds.

As of June 30, 2024, we were in compliance with all covenants pertaining to the credit facility, and we had no significant compensating balance agreements that legally restricted access to these funds.

For more information, refer to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K.

2 unchanged sentences

Short-term debt consisted of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Short-term foreign bank borrowings against lines of credit $ 175,812 $ 192,278

10 unchanged sentences

Maturity Date

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

2.050 % Notes

30 unchanged sentences

Net interest expense consists of the following:

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Interest expense $ 50,149 $ 43,893 $ 96,193 $ 86,399

19 unchanged sentences

We generally hedge commodity price risks for 3 - to 24 -month periods.

Our open commodity derivative contracts had a notional value of $ 206,349 as of March 31, 2024 and $ 94,917 as of December 31, 2023.

Our open commodity derivative contracts had a notional value of $ 92,330 as of June 30, 2024 and $ 94,917 as of December 31, 2023.

Derivatives used to manage commodity price risk are not designated for hedge accounting treatment.

7 unchanged sentences

The contracts are either designated as cash flow hedges or are undesignated.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 50,648 at March 31, 2024 and $ 80,068 at December 31, 2023.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 32,953 at June 30, 2024 and $ 80,068 at December 31, 2023.

The effective portion of the changes in fair value on these contracts is recorded in other comprehensive income and reclassified into earnings in the same period in which the hedged transactions affect earnings.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 10,339 at March 31, 2024 and $ 13,665 at December 31, 2023.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 6,899 at June 30, 2024 and $ 13,665 at December 31, 2023.

The change in fair value on these instruments is recorded directly in cost of sales or selling, marketing and administrative (“SM&A”) expense, depending on the nature of the underlying exposure.

7 unchanged sentences

The change in fair value of these derivatives is recorded in selling, marketing and administrative expense, together with the change in the related liabilities.

The notional amount of the contracts outstanding at March 31, 2024 and December 31, 2023 was $ 25,004 and $ 22,867 , respectively.

The notional amount of the contracts outstanding at June 30, 2024 and December 31, 2023 was $ 27,643 and $ 22,867 , respectively.

The Hershey Company | Q2 2024 Form 10-Q | Page 12

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

Assets (1) Liabilities (1) Assets (1) Liabilities (1)

9 unchanged sentences

Derivative liabilities are classified on our Consolidated Balance Sheets within accrued liabilities and other long-term liabilities.

(2) As of March 31, 2024, amounts reflected on a net basis in liabilities were assets of $ 54,461 and liabilities of $ 52,990 , which are associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period.

(2) As of June 30, 2024, amounts reflected on a net basis in assets were assets of $ 45,967 and liabilities of $ 45,050 , which are associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period.

The comparable amounts reflected on a net basis in liabilities at December 31, 2023 were assets of $ 29,881 and liabilities of $ 30,493 .

At March 31, 2024 and December 31, 2023, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

At June 30, 2024 and December 31, 2023, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

Income Statement Impact of Derivative Instruments

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended March 31, 2024 and April 2, 2023 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended June 30, 2024 and July 2, 2023 was as follows:

Non-designated Hedges Cash Flow Hedges

9 unchanged sentences

$ ( 37,413 ) $ ( 4,258 ) $ 2,522 $ ( 4,930 ) $ ( 1,796 ) $ ( 7,246 )

(a) Gains (losses) recognized in income for non-designated commodities futures and options contracts were included in cost of sales.

Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses.

(b) Gains (losses) reclassified from AOCI into income for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses.

Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense.

The Hershey Company | Q2 2024 Form 10-Q | Page 13

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

The amount of pre-tax net losses on derivative instruments, including interest rate swap agreements and foreign currency forward exchange contracts expected to be reclassified into earnings in the next 12 months was approximately $ 8,761 as of March 31, 2024.

The effect of derivative instruments on the Consolidated Statements of Income for the six months ended June 30, 2024 and July 2, 2023 was as follows:

Non-designated Hedges Cash Flow Hedges

Gains (losses) recognized in income (a) Gains (losses) recognized in other comprehensive income (“OCI”) Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b)

2024 2023 2024 2023 2024 2023

Commodities futures and options

$ 159,464 $ ( 17,051 ) $ — $ — $ — $ —

Foreign exchange contracts ( 156 ) 942 3,857 ( 6,656 ) 950 1,728

Interest rate swap agreements

— — — 3,173 ( 4,600 ) ( 10,981 )

Deferred compensation derivatives

3,047 2,879 — — — —

$ 162,355 $ ( 13,230 ) $ 3,857 $ ( 3,483 ) $ ( 3,650 ) $ ( 9,253 )

(a) Gains (losses) recognized in income for non-designated commodities futures and options contracts were included in cost of sales.

(b) Gains (losses) reclassified from AOCI into income for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses.

Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense.

This amount is primarily associated with interest rate swap agreements.

5 unchanged sentences

We did no t have any Level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented.

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of March 31, 2024 and December 31, 2023:

The Hershey Company | Q2 2024 Form 10-Q | Page 14

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of June 30, 2024 and December 31, 2023:

Assets / Liabilities

Level 1 Level 2 Level 3 Total

March 31, 2024:

June 30, 2024:

Derivative Instruments:

19 unchanged sentences

Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of March 31, 2024 and December 31, 2023 because of the relatively short maturity of these instruments.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of June 30, 2024 and December 31, 2023 because of the relatively short maturity of these instruments.

The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy.

1 unchanged sentence

Fair Value Carrying Value

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

Current portion of long-term debt $ 589,530 $ 297,842 $ 605,176 $ 305,058

22 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

The components of lease expense for the three months ended March 31, 2024 and April 2, 2023 were as follows:

The components of lease expense for the three months ended June 30, 2024 and July 2, 2023 were as follows:

Three Months Ended

Lease expense Classification March 31, 2024 April 2, 2023

Lease expense Classification June 30, 2024 July 2, 2023

Operating lease cost Cost of sales or SM&A (1) $ 13,266 $ 12,320

3 unchanged sentences

Net lease cost (2) $ 16,588 $ 15,246

The components of lease expense for the six months ended June 30, 2024 and July 2, 2023 were as follows:

Six Months Ended

Lease expense Classification June 30, 2024 July 2, 2023

Operating lease cost Cost of sales or SM&A (1) $ 25,481 $ 24,363

Finance lease cost:

Amortization of ROU assets Depreciation and amortization (1) 4,371 3,696

Interest on lease liabilities Interest expense, net 2,349 2,192

Net lease cost (2) $ 32,201 $ 30,251

(1) Supply chain-related amounts were included in cost of sales.

1 unchanged sentence

Information regarding our lease terms and discount rates were as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 6.3 % 6.2 %

The Hershey Company | Q2 2024 Form 10-Q | Page 17

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Supplemental balance sheet information related to leases were as follows:

Leases Classification March 31, 2024 December 31, 2023

Leases Classification June 30, 2024 December 31, 2023

Operating lease ROU assets Other non-current assets $ 341,162 $ 307,976

8 unchanged sentences

Total lease liabilities $ 421,087 $ 387,968

The Hershey Company | Q1 2024 Form 10-Q | Page 15

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The maturity of our lease liabilities as of March 31, 2024 were as follows:

The maturities of our lease liabilities as of June 30, 2024 were as follows:

Operating leases Finance leases Total

9 unchanged sentences

Supplemental cash flow and other information related to leases were as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Six Months Ended

June 30, 2024 July 2, 2023

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Finance leases 983 292

The Hershey Company | Q2 2024 Form 10-Q | Page 18

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

8 unchanged sentences

We regularly review our investments and adjust accordingly for capital contributions, dividends received and other-than-temporary impairments.

Total investments in unconsolidated affiliates were $ 190,419 and $ 207,177 as of March 31, 2024 and December 31, 2023, respectively.

The Hershey Company | Q1 2024 Form 10-Q | Page 16

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Total investments in unconsolidated affiliates were $ 215,759 and $ 207,177 as of June 30, 2024 and December 31, 2023, respectively.

BUSINESS REALIGNMENT ACTIVITIES

We periodically undertake business realignment activities designed to increase our efficiency and focus our business in support of our key growth strategies.

Costs associated with business realignment activities are classified in our Consolidated Statements of Income as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Cost of sales $ 2,612 $ 1,050

Selling, marketing and administrative expense 14,054 488

Business realignment costs — 811

Costs associated with business realignment activities $ 16,666 $ 2,349

Costs recorded by program during the three months ended March 31, 2024 and April 2, 2023 related to these activities were as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Advancing Agility & Automation Initiative

Other program costs 16,666 —

International Optimization Program:

Severance and employee benefit costs $ — $ 811

Other program costs — 1,538

Total $ 16,666 $ 2,349

Amounts classified as liabilities qualifying as exit and disposal costs primarily represent employee-related and certain third-party service provider charges, however, such amounts at March 31, 2024 are not significant.

Advancing Agility & Automation Initiative

On February 2, 2024, the Board of Directors of the Company approved a multi-year productivity initiative (“Advancing Agility & Automation” or "AAA") 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.

On February 2, 2024, the Board of Directors of the Company (the “Board” or “Board of Directors”) approved a multi-year productivity initiative (“Advancing Agility & Automation” or "AAA") 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 Company estimates that the AAA Initiative will result in total pre-tax costs of $ 200,000 to $ 250,000 from inception through 2026.

3 unchanged sentences

At the conclusion of the program in 2026, ongoing annual savings are expected to be approximately $ 300,000 .

Since inception through March 31, 2024, we recognized total costs associated with the AAA Initiative of $ 16,666 .

Since inception through June 30, 2024, we recognized total costs associated with the AAA Initiative of $ 55,666 .

These charges predominantly included third-party costs supporting the design and implementation of the new organizational structure, as well as technology capability costs.

3 unchanged sentences

In the fourth quarter of 2020, we commenced a program (“International Optimization Program”) to streamline resources and investments in select international markets, including the optimization of our China operating model that will improve our operational efficiency and provide for a strong, sustainable and simplified base going forward.

The International Optimization Program was originally expected to total pre-tax costs of $ 50,000 to $ 75,000 , with cash costs in the range of $ 40,000 to $ 65,000 , primarily related to workforce reductions of approximately 350 positions outside of the United States, costs to consolidate and relocate production, and third-party costs incurred to execute these activities.

The costs and related benefits of the International Optimization Program relate to the International segment.

However, segment operating results do not include these business realignment expenses because we evaluate

The Hershey Company | Q2 2024 Form 10-Q | Page 19

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

The costs and related benefits of the International Optimization Program relate to the International segment.

However, segment operating results do not include these business realignment expenses because we evaluate segment performance excluding such costs.

For the three months ended April 2, 2023, we recognized total costs associated with the International Optimization Program of $ 2,349 .

segment performance excluding such costs.

For the six months ended July 2, 2023, we recognized total costs associated with the International Optimization Program of $ 3,866 .

From program inception in 2020 through completion in 2023, we incurred pre-tax charges to execute the program totaling $ 53,799 .

Costs associated with business realignment activities are classified in our Consolidated Statements of Income as follows:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Cost of sales $ 8,099 $ ( 17 ) $ 10,712 $ 1,033

Selling, marketing and administrative expense 25,964 1,904 40,017 2,392

Business realignment costs (benefits) 4,937 ( 370 ) 4,937 441

Costs associated with business realignment activities $ 39,000 $ 1,517 $ 55,666 $ 3,866

Costs recorded by program during the three and six months ended June 30, 2024 and July 2, 2023 related to these activities were as follows:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Advancing Agility & Automation Initiative:

Severance and employee benefit costs 4,937 — 4,937 —

Other program costs 34,063 — 50,729 —

International Optimization Program:

Severance and employee benefit costs $ — $ ( 370 ) $ — $ 441

Other program costs — 1,887 — 3,425

Total $ 39,000 $ 1,517 $ 55,666 $ 3,866

Amounts classified as liabilities qualifying as exit and disposal costs primarily represent employee-related and certain third-party service provider charges;

however, such amounts at June 30, 2024 are not significant.

The majority of our taxable income is generated in the United States and taxed at the United States statutory rate of 21 %.

The effective tax rates for the three months ended March 31, 2024 and April 2, 2023 were 19.1 % and 22.7 %, respectively.

The effective tax rates for the six months ended June 30, 2024 and July 2, 2023 were 20.6 % and 17.1 %, respectively.

Relative to the statutory rate, the 2024 effective tax rate was primarily impacted by investment tax credits partially offset by state taxes.

8 unchanged sentences

The IRA enacted a 15% corporate minimum tax on certain corporations and an excise tax on share repurchases after December 31, 2022, and created and extended certain energy-related tax credits and incentives.

For the three months ended March 31, 2024 and April 2, 2023 the tax-related provisions of the IRA did not have a material impact on our consolidated financial statements, including our annual effective tax rate, or on our liquidity.

For the six months ended June 30, 2024 and July 2, 2023 the tax-related provisions of the IRA did not have a material impact on our consolidated financial statements, including our annual effective tax rate, or on our liquidity.

The Hershey Company | Q2 2024 Form 10-Q | Page 20

4 unchanged sentences

Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended March 31, 2024 and April 2, 2023 were as follows:

The components of net periodic benefit cost for the three months ended June 30, 2024 and July 2, 2023 were as follows:

Pension Benefits Other Benefits

Three Months Ended Three Months Ended

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Service cost $ 3,836 $ 3,769 $ 33 $ 55

3 unchanged sentences

Amortization of net loss (gain) 3,808 5,020 139 ( 333 )

Settlement loss — 4,389 — —

Total net periodic benefit cost $ 3,118 $ 9,666 $ 1,348 $ 1,819

We made contributions of $ 816 and $ 1,592 to the pension plans and other benefits plans, respectively, during the first three months of 2024.

In the first three months of 2023, we made contributions of $ 833 and $ 5,699 to our pension plans and other benefit plans, respectively.

We made contributions of $ 170 and $ 2,890 to the pension plans and other benefits plans, respectively, during the second quarter of 2024.

In the second quarter of 2023, we made contributions of $ 3,029 and $ 5,212 to our pension plans and other benefit plans, respectively.

The contributions in 2024 and 2023 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The components of net periodic benefit cost for the six months ended June 30, 2024 and July 2, 2023 were as follows:

Pension Benefits Other Benefits

Six Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Service cost $ 7,685 $ 7,522 $ 67 $ 109

Interest cost 19,333 20,560 2,431 4,190

Expected return on plan assets ( 25,607 ) ( 24,766 ) — —

Amortization of prior service credit ( 2,746 ) ( 2,829 ) ( 75 ) —

Amortization of net loss (gain) 7,621 9,987 278 ( 659 )

Settlement loss — 4,389 — —

Total net periodic benefit cost $ 6,286 $ 14,863 $ 2,701 $ 3,640

We made contributions of $ 986 and $ 4,482 to the pension plans and other benefits plans, respectively, during the first six months of 2024.

In the first six months of 2023, we made contributions of $ 3,862 and $ 10,911 to our pension plans and other benefit plans, respectively.

The contributions in 2024 and 2023 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans is reflected within other (income) expense, net in the Consolidated Statements of Income (see Note 17 ).

2 unchanged sentences

The EICP provides for grants of one or more of the following stock-based compensation awards to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent:

The Hershey Company | Q2 2024 Form 10-Q | Page 21

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

• Non-qualified stock options (“stock options”);

11 unchanged sentences

In addition, historical data is used to estimate forfeiture rates and record share-based compensation expense only for those awards that are expected to vest.

The Hershey Company | Q1 2024 Form 10-Q | Page 19

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Pre-tax compensation expense

2 unchanged sentences

Compensation expenses for stock compensation plans are primarily included in SM&A expense.

As of March 31, 2024, total stock-based compensation expense related to non-vested awards not yet recognized was $ 119,082 and the weighted-average period over which this amount is expected to be recognized was approximately 2.0 years.

As of June 30, 2024, total stock-based compensation expense related to non-vested awards not yet recognized was $ 88,119 and the weighted-average period over which this amount is expected to be recognized was approximately 1.8 years.

Stock Options

3 unchanged sentences

Expense for stock options is based on grant date fair value and recognized on a straight-line method over the vesting period, net of estimated forfeitures.

A summary of activity relating to grants of stock options for the period ended March 31, 2024 is as follows:

The Hershey Company | Q2 2024 Form 10-Q | Page 22

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

A summary of activity relating to grants of stock options for the period ended June 30, 2024 is as follows:

Stock Options Shares Weighted-Average

4 unchanged sentences

Exercised ( 84,715 ) $ 99.84

Outstanding as of March 31, 2024

Forfeited ( 1,555 ) $ 147.98

Expired ( 1,565 ) $ 147.98

Outstanding as of June 30, 2024

641,321 $ 106.56 3.0 years $ 49,944

Options exercisable as of March 31, 2024

Options exercisable as of June 30, 2024

627,491 $ 104.72 2.9 years $ 49,749

The weighted-average fair value of options granted was $ 45.95 and $ 57.65 per share for the periods ended March 31, 2024 and April 2, 2023, respectively.

The weighted-average fair value of options granted was $ 45.95 and $ 57.65 per share for the periods ended June 30, 2024 and July 2, 2023, respectively.

The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions:

Three Months Ended

March 31, 2024 April 2, 2023

Six Months Ended

June 30, 2024 July 2, 2023

Dividend yields

2 unchanged sentences

Expected term in years 6.3 6.3

The total intrinsic value of options exercised was $ 4,148 and $ 20,566 for the periods ended March 31, 2024 and April 2, 2023, respectively.

The Hershey Company | Q1 2024 Form 10-Q | Page 20

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The total intrinsic value of options exercised was $ 8,357 and $ 31,581 for the periods ended June 30, 2024 and July 2, 2023, respectively.

Performance Stock Units and Restricted Stock Units

7 unchanged sentences

For performance-based condition components, we estimate the probability that the performance conditions will be achieved each quarter and adjust compensation expenses accordingly.

The performance scores of PSU grants during the three months ended March 31, 2024 and April 2, 2023 can range from 0 % to 250 % of the targeted amounts.

The performance scores of PSU grants during the six months ended June 30, 2024 and July 2, 2023 can range from 0 % to 250 % of the targeted amounts.

We recognize the compensation expenses associated with PSUs ratably over the three-year term.

1 unchanged sentence

The grant date fair value of PSUs is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s Common Stock on the date of grant for performance-based components.

During the three months ended March 31, 2024 and April 2, 2023, we awarded RSUs to certain executive officers and other key employees under the EICP.

During the six months ended June 30, 2024 and July 2, 2023, we awarded RSUs to certain executive officers and other key employees under the EICP.

We also awarded RSUs to non-employee directors.

The Hershey Company | Q2 2024 Form 10-Q | Page 23

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

We recognize the compensation expenses associated with employee RSUs over a specified award vesting period based on the grant date fair value of our Common Stock.

1 unchanged sentence

The compensation expenses associated with non-employee director RSUs is recognized ratably over the vesting period, net of estimated forfeitures.

A summary of activity relating to grants of PSUs and RSUs for the period ended March 31, 2024 is as follows:

A summary of activity relating to grants of PSUs and RSUs for the period ended June 30, 2024 is as follows:

Performance Stock Units and Restricted Stock Units

7 unchanged sentences

( 29,136 ) $ 218.42

Outstanding as of March 31, 2024

Outstanding as of June 30, 2024

727,621 $ 215.28

(1) Reflects the net number of PSUs above and below target levels based on the performance metrics.

The Hershey Company | Q1 2024 Form 10-Q | Page 21

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors.

In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.

Three Months Ended

March 31, 2024 April 2, 2023

Six Months Ended

June 30, 2024 July 2, 2023

Units granted

6 unchanged sentences

Expected volatility 18.5 % 19.2 %

The fair value of shares vested totaled $ 84,998 and $ 97,304 for the periods ended March 31, 2024 and April 2, 2023, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 258,847 units as of March 31, 2024.

The fair value of shares vested totaled $ 87,723 and $ 100,915 for the periods ended June 30, 2024 and July 2, 2023, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 264,139 units as of June 30, 2024.

Each unit is equivalent to one share of the Company’s Common Stock.

31 unchanged sentences

Our segment net sales and earnings were as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

North America Confectionery $ 1,579,826 $ 1,993,079 $ 4,287,136 $ 4,445,244

8 unchanged sentences

Unallocated corporate expense (1) 161,518 186,630 334,419 363,704

Unallocated mark-to-market (gains) losses on commodity derivatives ( 218,015 ) 10,244

Unallocated mark-to-market losses (gains) on commodity derivatives 53,371 ( 6,780 ) ( 164,644 ) 3,464

Costs associated with business realignment activities (see Note 9 )

39,000 1,517 55,666 3,866

Operating profit 287,821 560,665 1,345,921 1,360,589

2 unchanged sentences

Other (income) expense, net (see Note 17 )

574 84,484 32,594 87,467

Income before income taxes $ 245,874 $ 439,520 $ 1,232,132 $ 1,198,776

1 unchanged sentence

Activity within the unallocated mark-to-market adjustment for commodity derivatives is as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in income $ ( 197,764 ) $ 10,614

Net losses on commodity derivative positions reclassified from unallocated to segment income ( 20,251 ) ( 370 )

Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ ( 218,015 ) $ 10,244

As of March 31, 2024, the cumulative amount of mark-to-market gains on commodity derivatives that have been recognized in our consolidated cost of sales and not yet allocated to reportable segments was $ 167,808 .

Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pre-tax losses on commodity derivatives of $ 24,574 to segment operating results in the next twelve months.

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in income $ 38,300 $ 6,437 $ ( 159,464 ) $ 17,051

Net gains (losses) on commodity derivative positions reclassified from unallocated to segment income 15,071 ( 13,217 ) ( 5,180 ) ( 13,587 )

Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ 53,371 $ ( 6,780 ) $ ( 164,644 ) $ 3,464

As of June 30, 2024, the cumulative amount of mark-to-market gains on commodity derivatives that have been recognized in our consolidated cost of sales and not yet allocated to reportable segments was $ 114,437 .

Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pre-tax gains on commodity derivatives of $ 18,642 to segment operating results in the next twelve months.

The Hershey Company | Q2 2024 Form 10-Q | Page 26

3 unchanged sentences

Depreciation and amortization expense included within segment income presented above is as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

North America Confectionery $ 63,984 $ 59,961 $ 126,405 $ 116,683

4 unchanged sentences

Additional information regarding our net sales disaggregated by geographical region is as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

United States $ 1,778,467 $ 2,158,439 $ 4,632,899 $ 4,776,362

3 unchanged sentences

A summary of our treasury stock activity is as follows:

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Shares Dollars

33 unchanged sentences

Three Months Ended

March 31, 2024 April 2, 2023

June 30, 2024 July 2, 2023

Common Stock Class B Common Stock Common Stock Class B Common Stock

19 unchanged sentences

Earnings Per Share—diluted $ 0.89 $ 0.83 $ 1.98 $ 1.88

The earnings per share calculations for the three months ended March 31, 2024 and April 2, 2023 excluded 12 and 8 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the three months ended June 30, 2024 and July 2, 2023 excluded 13 and 12 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q2 2024 Form 10-Q | Page 29

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

Six Months Ended

June 30, 2024 July 2, 2023

Common Stock Class B Common Stock Common Stock Class B Common Stock

Basic earnings per share:

Allocation of distributed earnings (cash dividends paid) $ 407,938 $ 135,988 $ 305,944 $ 107,602

Allocation of undistributed earnings 325,740 108,681 432,943 147,679

Total earnings—basic $ 733,678 $ 244,669 $ 738,887 $ 255,281

Denominator (shares in thousands):

Total weighted-average shares—basic 148,753 54,614 148,914 55,864

Earnings Per Share—basic $ 4.93 $ 4.48 $ 4.96 $ 4.57

Diluted earnings per share:

Allocation of total earnings used in basic computation $ 733,678 $ 244,669 $ 738,887 $ 255,281

Reallocation of total earnings as a result of conversion of Class B common stock to Common stock 244,669 — 255,281 —

Reallocation of undistributed earnings — ( 314 ) — ( 669 )

Total earnings—diluted $ 978,347 $ 244,355 $ 994,168 $ 254,612

Denominator (shares in thousands):

Number of shares used in basic computation 148,753 54,614 148,914 55,864

Weighted-average effect of dilutive securities:

Conversion of Class B common stock to Common shares outstanding 54,614 — 55,864 —

Employee stock options 308 — 486 —

Performance and restricted stock units 268 — 423 —

Total weighted-average shares—diluted 203,943 54,614 205,687 55,864

Earnings Per Share—diluted $ 4.80 $ 4.47 $ 4.83 $ 4.56

The earnings per share calculations for the six months ended June 30, 2024 and July 2, 2023 excluded 13 and 12 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q2 2024 Form 10-Q | Page 30

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

OTHER (INCOME) EXPENSE, NET

1 unchanged sentence

A summary of the components of other (income) expense, net is as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Write-down of equity investments in partnerships qualifying for historic and renewable energy tax credits (see Note 8 )

$ — $ 77,360 $ 31,391 $ 77,360

Non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans (see Note 11 )

597 7,661 1,235 10,872

Other (income) expense, net ( 23 ) ( 537 ) ( 32 ) ( 765 )

6 unchanged sentences

The components of certain asset accounts included within our Consolidated Balance Sheets are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Raw materials $ 549,310 $ 481,111

28 unchanged sentences

The components of certain liability and stockholders’ equity accounts included within our Consolidated Balance Sheets are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accounts payable:

22 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements