What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-18 compared with 2024-02-20 · 163 added, 158 removed, 513 unchanged (38% of the section changed)

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◦ To expand our breadth in snacking and become a leading snacking powerhouse, we are focused on continuing to expand the boundaries of our core confection brands to capture new snacking occasions and increasing our exposure into new snack categories through acquisitions.

Our expansion into snacking was fueled by the acquisitions of Dot’s and Pretzels in December 2021 and the acquisition of Weaver in 2023, which are included in our North America Salty Snacks segment.

• Deliver Profitable International Growth .

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These continuous touchpoints allow for real-time feedback and action from the Company.

These surveys are further supplemented with quarterly and informative enterprise and team town halls, which, in conjunction with the continuous listening surveys, generate stronger employee engagement with the Company’s strategy, initiatives and leadership.

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.

◦ Our diverse and inclusive culture makes the difference across all areas of the business.

Our gender representation includes women occupying many of the top positions in the Company, including Chief Executive Officer and Chairman of the Board, Chief Accounting Officer and President, Salty Snacks, and approximately 50% representation across the Company.

In 2023, we maintained fair and equitable pay achievements, including 1:1 aggregate people of color pay equity (2021) and 1:1 aggregate gender pay (2020) for salaried employees in the United States.

Additionally, four of our 10 Board members are women (40% representation).

In 2024, we maintained fair and equitable pay achievements, including aggregate salary U.S.

gender pay equity and aggregate U.S.

salary people of color pay equity.

◦ We continue to make progress on our ESG priorities and continue to elevate these ESG initiatives for a greater global impact.

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and snack items such as spreads, bars, and snack bites and mixes, popcorn and pretzels.

Business Acquisitions and Divestitures

Business Acquisitions

On November 8, 2024, we completed the acquisition of the Sour Strips brand from Actual Candy, LLC.

Sour Strips is

an emerging sour candy brand and is available in a wide range of food distribution channels in the United States.

On May 31, 2023, we completed the acquisition of certain assets that provide additional manufacturing capacity from Weaver Popcorn Manufacturing, Inc.

(“Weaver”), a leader in the production and co-packing of microwave popcorn and ready-to-eat popcorn, and former co-manufacturer of the Company’s SkinnyPop brand.

In December 2021, we completed the acquisition of Pretzels Inc.

(“Pretzels”), previously a privately held company that manufactures and sells pretzels and other salty snacks for other branded products and private labels in the United States.

Pretzels is an industry leader in the pretzel category with a product portfolio that includes filled, gluten free and seasoned pretzels, as well as extruded snacks that complements Hershey’s snacks portfolio.

Based in Bluffton, Indiana, Pretzels operates three manufacturing locations in Indiana and Kansas.

Pretzels provides Hershey with deep pretzel category and product expertise and the manufacturing capabilities to support brand growth and future pretzel

The Hershey Company | 2024 Form 10-K | Page 23

Additionally, we completed the acquisition of Dot’s Pretzels, LLC (“Dot’s”), previously a privately held company that produces and sells pretzels and other snack food products to retailers and distributors in the United States, with Dot’s Homestyle Pretzels snacks as its primary product, which complements Hershey’s snacks portfolio.

In June 2021, we completed the acquisition of Lily’s Sweets, LLC (“Lily’s”), previously a privately held company that sells a line of sugar-free and low-sugar confectionery foods to retailers and distributors in the United States and Canada.

Lily’s products include dark and milk chocolate style bars, baking chips, peanut butter cups and other confection products that complement Hershey’s confectionery and confectionery-based portfolio.

In January 2021, we completed the divestiture of Lotte Shanghai Foods Co., Ltd.

(“LSFC”), which was previously included within the International segment results in our consolidated financial statements.

Total proceeds from the divestiture and the impact on our consolidated financial statements were immaterial.

TRENDS AFFECTING OUR BUSINESS

Throughout 2023, the rate of inflation has slowed;

however, negative macroeconomic conditions and future outlook, including fears of a pending recession, have negatively impacted consumer behaviors.

Net sales and net income increased during the year ended December 31, 2023;

however, this was primarily driven by price increases on certain products across our portfolio.

Additionally, we continued to experience corresponding incremental costs and gross margin pressures during the year ended December 31, 2023 (see Consol idated R esults of Operations included in this MD&A).

Despite specific actions taken to mitigate these gross margin pressures, higher prices for direct materials used to manufacture our products were, and continue to be, the primary incremental cost to our business.

We utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which experienced an average increase in market prices of approximately 32% during 2023.

We continue to monitor and use our risk management strategy where possible to hedge commodity prices in order to mitigate corresponding increases in our raw materials and energy costs.

Furthermore, certain geopolitical events, specifically the conflict between Russia and Ukraine, have increased global economic and political uncertainty.

For the year ended December 31, 2023, 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.

Throughout 2024, U.S.

consumer behavior continued to shift and evolve, as cost fatigue and labor markets restrict income growth and constrain consumer spending and purchasing patterns.

As a result, consumer behavior related to our products has shifted.

As such, for the year ended December 31, 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.

Despite specific actions taken to mitigate these gross margin pressures, we 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, 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 experienced a market price increase of approximately 70% throughout 2024 (see Item 7A - Quantitative and Qualitative Disclosures about Market Risk included in this Annual Report on Form 10-K).

Furthermore, certain geopolitical events, specifically the conflict between Russia and Ukraine, as well as the imposition of tariffs on U.S.

imports and retaliatory tariffs in response, have increased global economic and political uncertainty.

For the year ended December 31, 2024, neither the conflict between Russia and Ukraine, nor the imposition of tariffs on U.S.

imports and retaliatory tariffs, had a material impact on our commodity prices or supply availability.

However, we are continuing to monitor each of these events 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 December 31, 2024, 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;

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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 fluctuating levels of inflation, including price volatility for our commodities, the likelihood of a potential recession, changes in consumer shopping and consumption behavior, and changes in geopolitical events, including the ongoing conflict between Russia and Ukraine, we may experience increasing supply chain costs, higher inflation and other impacts to our business.

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 ongoing conflict between Russia and Ukraine, we may 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.

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SM&A expense as a percent of net sales 21.2 % 21.8% 21.5%

Business realignment costs 0.4 2.0 3.5 (77.8) % (43.6) %

Business realignment costs 29.1 0.4 2.0 NM (77.8) %

Operating profit 2,898.2 2,560.9 2,260.8 13.2 % 13.3 %

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Effective income tax rate 10.2 % 14.3 % 14.2 %

Net income including noncontrolling interest 1,861.8 1,644.8 1,482.8 13.2 % 10.9 %

Net gain (loss) attributable to noncontrolling interest — — 5.3 NM NM

Net income attributable to The Hershey Company $ 1,861.8 $ 1,644.8 $ 1,477.5 13.2 % 11.3 %

Net income $ 2,221.2 $ 1,861.8 $ 1,644.8 19.3 % 13.2 %

Net income per share—diluted $ 10.92 $ 9.06 $ 7.96 20.5 % 13.8 %

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Net sales were $11,202.3 million in 2024 compared to $11,165.0 million in 2023, an increase of $37.3 million, or 0.3%.

The net sales increase reflects a favorable price realization of 8.3% due to higher list prices across all segments and by a favorable impact from foreign currency exchange rates of 0.2%.

These increases were slightly offset by a volume decrease of 1.3% due to a decrease in consumer demand primarily in everyday core U.S.

confection brands.

The net sales increase reflects a favorable price realization of approximately 3% primarily due to higher list prices in the North America Confectionery and International segments, partially offset by declines in North America Salty Snacks.

The increase was partially offset by a volume decrease of approximately 2% due to declines in the North America Confectionery and International segments, partially offset by an increase in North America Salty Snacks.

The increase was further offset by a minimal unfavorable impact from foreign currency exchange rates.

2023 compared with 2022

Net sales were $11,165.0 million in 2023 compared to $10,419.3 million in 2022, an increase of $745.7 million, or 7.2%.

The net sales increase reflects a volume increase of 8.0% due to higher prices on certain products, a 4.3% benefit from net acquisitions and divestitures driven by the 2021 acquisitions of Lily’s, Dot’s and Pretzels and a volume increase of 4.0% due to an increase in consumer demand primarily in everyday core U.S.

confection brands and salty snack brands.

These increases were slightly offset by an unfavorable impact from foreign currency exchange rates of 0.2%.

The net sales increase reflects a favorable price realization of 8.3% due to higher list prices across all segments and by a favorable impact from foreign currency exchange rates of 0.2%.

The increase was slightly offset by a volume decrease of 1.3% due to a decrease in consumer demand primarily in everyday core U.S.

confection brands.

Marketplace Metrics

For the full year 2024, our total U.S.

retail takeaway increased 6.0% in the expanded multi-outlet combined plus convenience store channels (IRI MULO + C-Stores), which includes candy, mint, gum, salty snacks and grocery items.

retail takeaway increased 0.8% in the expanded multi-outlet combined plus convenience store channels (MULO+ w/ Convenience), which includes candy, mint, gum, salty snacks and grocery items.

candy, mint and gum (“CMG”) consumer takeaway increased 0.1% and experienced a CMG market share decline of 59 basis points.

Our Salty consumer takeaway increased 5.6% and experienced a Salty market share decline of 9 basis points.

The Hershey Company | 2023 Form 10-K | Page 25

The CMG consumer takeaway and market share information reflect measured channels of distribution accounting for approximate ly 90% of our U.S.

Our Salty consumer takeaway increased 4.2% and experienced a Salty market share increase of 11 basis points.

The CMG consumer takeaway and market share information reflect measured channels of distribution accounting for approximately 90% of our U.S.

confectionery retail business.

These channels of distribution primarily include food, drug, mass merchandisers and co nvenience store channels, plus Wal-Mart Stores, Inc., partial dollar, club and military channels.

These channels of distribution primarily include food, drug, mass merchandisers and convenience store channels, plus Wal-Mart Stores, Inc., partial dollar, club and military

The Hershey Company | 2024 Form 10-K | Page 25

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.

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2024 compared with 2023

Cost of sales were $6,167.2 million in 2023 compared to $5,920.5 million in 2022, an increase of $246.7 million, or 4.2%.

Cost of sales were $5,901.4 million in 2024 compared to $6,167.2 million in 2023, a decrease of $265.8 million, or 4.3%.

The decrease included $637.9 million of favorable costs, driven by an incremental $563.0 million of favorable 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 decrease was partially offset by $372.1 million of higher costs, primarily driven by higher commodity costs from cocoa, higher supply chain costs, unfavorable mix and incremental business realignment costs.

Gross margin was 47.3% in 2024 compared with 44.8% in 2023, an increase of 250 basis points.

The increase was driven by favorable year-over-year mark-to-market impact from commodity derivative instruments, favorable price realization and volume declines.

The increase was partially offset by higher commodity costs, unfavorable product mix and increased business realignment costs.

2023 compared with 2022

Cost of sales were $6,167.2 million in 2023 compared with $5,920.5 million in 2022, an increase of $246.7 million, or 4.2%.

The increase included $356.2 million of unfavorable costs driven by higher supply chain costs, including higher labor costs partially offset by lower logistics costs, and unfavorable mix.

The increase was further driven by an incremental $97.7 million of unfavorable 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).

These increases were partially offset by $207.2 million of favorable supply chain productivity and price realization.

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The increase was further driven by unfavorable mix and foreign exchange rates.

2022 compared with 2021

Cost of sales were $5,920.5 million in 2022 compared with $4,922.7 million in 2021, an increase of $997.8 million, or 20.3%.

The increase included $767.7 million of unfavorable costs driven by higher sales volume and higher supply chain inflation costs, including higher logistics and labor costs.

The increase was further driven by an incremental $40.8 million of unfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases.

Additionally, we incurred incremental costs of $263.3 million associated with our 2021 acquisitions of Dot’s and Pretzels.

These increases were offset by $74.0 million of favorable price realization and supply chain productivity.

Gross margin was 43.2% in 2022 compared with 45.1% 2021, a decrease of 190 basis points.

The decrease was driven by unfavorable year-over-year mark-to-market impact from commodity derivative instruments, higher supply chain inflation costs, including higher logistics and labor costs, and unfavorable product mix.

These declines were offset by favorable price realization and volume increases.

Selling, Marketing and Administrative

2024 compared with 2023

Selling, marketing and administrative (“SM&A”) expenses were $2,436.5 million in 2023 compared to $2,236.0 million in 2022, an increase of $200.5 million, or 9.0%.

Selling, marketing and administrative (“SM&A”) expenses were $2,373.6 million in 2024 compared to $2,436.5 million in 2023, a decrease of $62.9 million, or 2.6%.

The decrease was driven by lower corporate expenses.

Total advertising and related consumer marketing expenses declined 0.1%% driven by North America Confectionery, significantly offset by increased spending in North America Salty Snacks.

SM&A expenses, excluding advertising and related consumer marketing, decreased approximately 3.8% in 2024 driven by lower compensation and benefit costs across segments.

2023 compared with 2022

SM&A expenses were $2,436.5 million in 2023 compared to $2,236.0 million in 2022, an increase of $200.5 million, or 9.0%.

The increase was driven by increased corporate expenses.

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SM&A expenses, excluding advertising and related consumer marketing, increased approximately 7.5% in 2023 driven by higher compensation costs and investments in capabilities and technology across segments.

2022 compared with 2021

SM&A expenses were $2,236.0 million in 2022 compared to $2,001.4 million in 2021, an increase of $234.6 million, or 11.7%, driven by increased corporate expenses.

Total advertising and related consumer marketing expenses increased 2.7% driven by advertising increases in our confectionery brands and increased investment in our salty snacks portfolio, which were partially offset by cost efficiencies related to new media partners.

SM&A expenses, excluding advertising and related consumer marketing, increased approximately 16.3% in 2022 driven by an increase in acquisition and integration related costs, as well as higher compensation costs, investments in capabilities and technology and broad-based marketplace inflation.

The Hershey Company | 2023 Form 10-K | Page 26

Business Realignment Activities

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In 2024, 2023 and 2022, we recorded business realignment costs of $29.1 million, $0.4 million and $2.0 million, respectively.

The 2024 costs related primarily to the Advancing Agility &

The Hershey Company | 2024 Form 10-K | Page 26

Automation Initiative that the Board of Directors approved in February 2024.

The Advancing Agility & Automation 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.

Additionally, in February 2024, the Board of Directors approved the Advancing Agility & Automation 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.

Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in Note 9 to the Consolidated Financial Statements.

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Operating profit was $2,898.2 million in 2024 compared to $2,560.9 million in 2023, an increase of $337.3 million, or 13.2%.

The increase was predominantly due to higher gross profit, partially offset by higher SM&A expenses, as noted above.

The increase was predominantly due to higher gross profit and lower SM&A expenses partially offset by higher business realignment costs, as noted above.

Operating profit margin increased to 25.9% in 2024 from 22.9% in 2023 by the same factors noted above in gross margin.

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The increase was predominantly due to higher gross profit, partially offset by higher SM&A expenses, as noted above.

Operating profit margin decreased to 21.7% in 2022 from 22.8% in 2021 driven by these same factors.

Operating profit margin decreased to 22.9% in 2023 from 21.7% in 2022 by the same factors noted above in gross margin.

Interest Expense, Net

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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 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 and $400 million 4.50% Notes issued in May 2023.

The increase in the expense was partially offset by an increase in interest income.

The increase was primarily due to higher short-term debt balances in 2024 compared to 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

2023 compared with 2022

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 2022 versus 2021, specifically related to outstanding commercial paper borrowings.

The increase was partially offset due to lower average long-term debt balances, specifically resulting from the repayment of $84.7 million of 8.800% Debentures upon their maturity in February 2021 and $350 million of 3.100% Notes upon their maturity in May 2021.

The Hershey Company | 2023 Form 10-K | Page 27

The increase in the expense was partially offset by an increase in interest income.

Other (Income) Expense, Net

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Other (income) expense, net totaled an expense of $258.6 million in 2024 versus an expense of $237.2 million in 2023, an increase of $21.4 million, or 9.0%.

The increase in the net expense was primarily driven by an increase of $22.2 million of higher write-downs on equity investments qualifying for tax credits in 2023 versus 2022 and an increase of $9.5 million of higher non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

The increase in the net expense was primarily driven by an increase of $32.8 million of higher write-downs on equity investments qualifying for tax credits in 2024 versus 2023, partially offset by a decrease of $10.6 million of lower non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

2023 compared with 2022

Other (income) expense, net totaled an expense of $237.2 million in 2023 versus an expense of $206.1 million in 2022, an increase of $31.1 million, or 15.1%.

The increase in the net expense was primarily driven by an increase of $75.4 million of higher write-downs on equity investments qualifying for tax credits in 2022 versus 2021 and an increase of $13.3 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

The Hershey Company | 2024 Form 10-K | Page 27

Income Taxes and Effective Tax Rate

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Our effective income tax rate was 10.2% for 2024 compared with 14.3% for 2023 .

Relative to the 21% statutory rate, the 2023 effective tax rate benefited from investment tax credits, partially offset by state taxes.

Relative to the 21% s tatutory rate, the 2024 effective tax rate benefited from investment tax credits, partially offset by state taxes.

The 2023 effective rate, relative to the 21% statutory rate, benefited from investment tax credits, partially offset by state taxes.

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Relative to the 21% statutory rate, the 2023 effective tax rate benefited from investment tax credits, partially offset by state taxes.

The 2021 effective rate, relative to the 21% statutory rate, benefited from investment tax credits, partially offset by incremental tax reserves incurred as a result of an adverse ruling in connection with a non-U.S.

tax litigation matter, as well as state taxes.

Net Income Attributable to The Hershey Company and Earnings Per Share-diluted

The 2022 effective rate, relative to the 21% statutory rate, benefited from investment tax credits, partially offset by state taxes.

Net Income and Earnings Per Share-diluted

2024 compared with 2023

Net income was $2,221.2 million in 2024 compared to $1,861.8 million in 2023, an increase of $359.4 million, or 19.3%.

EPS-diluted was $9.06 in 2023 compared to $7.96 in 2022, an increase of $1.1, or 13.8%.

The increase in both net income and EPS-diluted was driven primarily by higher gross profit, partially offset by higher SM&A expenses, higher income taxes, and higher other income and expenses.

Our 2023 EPS-diluted also benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs..

Earnings Per Share (“EPS”)-diluted was $10.92 in 2024 compared to $9.06 in 2023, an increase of $1.86, or 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 business realignment costs and higher 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.

2023 compared with 2022

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EPS-diluted was $9.06 in 2023 compared to $7.96 in 2022, an increase of $1.1, or 13.8%.

The increase in both net income and EPS-diluted was driven primarily by higher gross profit and lower income taxes, partially offset by higher SM&A expenses and higher other income and expenses.

The increase in both net income and EPS-diluted was driven primarily by higher gross profit, partially offset by higher SM&A expenses, higher income taxes, and higher other income and expenses.

Our 2023 EPS-diluted also benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs.

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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 the Chief Operating Decision Maker and used for resource allocation and internal management reporting and performance evaluation.

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, Michele Buck, Chairman of the Board, 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.

Our segment results, including a reconciliation to our consolidated results, were as follows:

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Unallocated corporate expense (1) 701.2 800.4 735.5

Unallocated mark-to-market losses (gains) on commodity derivatives (2) 58.9 78.2 (24.4)

Unallocated mark-to-market (gains) losses on commodity derivatives (2) (460.4) 58.9 78.2

Costs associated with business realignment activities 117.5 3.4 4.4

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2024 compared with 2023

Net sales of our North America Confectionery segment were $9,123.1 million in 2023 compared to $8,536.5 million in 2022, a increase of $586.6 million, or 6.9%.

The increase reflected a favorable price realization of 9.0% due to price increases on certain products across our portfolio.

The increases were partially offset by a volume decrease of 1.9% driven by a decrease in everyday core U.S.

confection brands, and an unfavorable impact from foreign currency exchange rates of 0.2%.

Net sales of our North America Confectionery segment were $9,118.6 million in 2024 compared to $9,123.1 million in 2023, a decrease of $4.5 million.

The decrease was driven by volume declines of approximately 4% driven by a decrease in everyday core U.S.

confection brands.

The decrease was partially offset by a favorable price realization of approximately 4% due to price increases on certain products across our portfolio, and a minimal benefit from the 2024 acquisition of Sour Strips.

There was no impact from foreign currency exchange rates.

Our North America Confectionery segment also includes licensing and owned retail.

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Our net sales for licensing and owned retail increased approximately 3.5% during 2024 compared to 2023.

Our North America Confectionery segment income was $3,117.0 million in 2023 compared to $2,811.1 million in 2022, a increase of $305.9 million, or 10.9%.

The increase was primarily due to favorable price realization and supply chain productivity, partially offset by higher supply chain costs, including higher labor costs, as well as unfavorable product mix.

Our North America Confectionery segment income was $2,945.7 million in 2024 compared to $3,117.0 million in 2023, a decrease of $171.3 million, or 5.5%.

The decrease was primarily due to higher commodity costs, higher supply chain costs, and unfavorable product mix.

The decrease was partially offset by favorable price realization, lower volume, and lower advertising and related consumer marketing costs.

2023 compared with 2022

Net sales of our North America Confectionery segment were $8,536.5 million in 2022 compared to $7,682.4 million 2021, an increase of $854.1 million, or 11.1%.

The increase reflected a favorable price realization of 8.1% due to higher prices on certain products, a volume increase of 2.8% due to an increase in everyday core U.S.

confection brands, and a 0.4% benefit from the 2021 acquisition of Lily’s.

These increases were partially offset by an unfavorable impact from foreign currency exchange rates of 0.2%.

Net sales of our North America Confectionery segment were $9,123.1 million in 2023 compared to $8,536.5 million in 2022, an increase of $586.6 million, or 6.9%.

The increase reflected a favorable price realization of 9.0% due to price increases on certain products across our portfolio.

The increases were partially offset by a volume decrease of 1.9% driven by a decrease in everyday core U.S.

confection brands, and an unfavorable impact from foreign currency exchange rates of 0.2%.

Our North America Confectionery segment also includes licensing and owned retail.

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Our North America Confectionery segment income was $3,117.0 million in 2023 compared to $2,811.1 million in 2022, an increase of $305.9 million, or 10.9%.

The increase was primarily due to favorable price realization and volume increases, partially offset by higher supply chain inflation costs, including higher logistics and labor costs, as well as, unfavorable product mix.

The Hershey Company | 2024 Form 10-K | Page 30

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Net sales for our North America Salty Snacks segment were $1,135.7 million in 2024 compared to $1,092.7 million in 2023, an increase of $43.0 million, or 3.9%.

The increase reflected a volume increase of approximately 5%, primarily related to Dot’s Homestyle Pretzels snacks.

The increase was partially offset by unfavorable price realization of approximately 1% driven primarily by SkinnyPop and Dot’s Homestyle Pretzels snacks.

Our North America Salty Snacks segment income was $199.4 million in 2024 compared to $158.3 million in 2023 an increase of $41.1 million, or 26.0%.

The increase was primarily driven by higher volume, favorable commodity costs, and lower supply chain costs.

The increase was partially offset by higher advertising and related consumer marketing costs and unfavorable price realization.

2023 compared with 2022

Net sales for our North America Salty Snacks segment was $1,092.7 million in 2023 compared to $1,029.4 million in 2022, an increase of $63.3 million, or 6.1%.

The increase reflected a favorable price realization of 5.4% due to price increases on products across our portfolio, primarily SkinnyPop and Dot’s Homestyle Pretzels snacks, and a volume increase of 0.7%, primarily related to Dot’s Homestyle Pretzels snacks.

Our North America Salty Snacks segment income was $158.3 million in 2023 compared to $159.9 million in 2022, a decrease of $1.6 million, or 1.0%.

The decrease is primarily due to increased advertising and related consumer marketing costs and costs related to the voluntary removal of certain Paqui branded items in 2023.

The decrease was primarily due to increased advertising and related consumer marketing costs and costs related to the voluntary removal of certain Paqui branded items in 2023.

The decrease was partially offset by favorable price realization and favorable product mix.

2022 compared with 2021

Net sales for our North America Salty Snacks segment was $1,029.4 million in 2022 compared to $555.4 million in 2021, an increase of $474.0 million, or 85.3%.

The increase reflected a 64.0% benefit from the 2021 acquisitions of Dot’s and Pretzels, a favorable price realization of 12.0% due to higher prices on certain products and a volume increase of 9.3% primarily related to SkinnyPop and Pirates Booty snacks.

Our North America Salty Snacks segment income was $159.9 million in 2022 compared to $100.7 million in 2021, an increase of $59.2 million, or 58.8%.

The increase is primarily due to favorable price realization and volume increases, partially offset by higher supply chain inflation costs, including higher logistics and labor costs, as well as, unfavorable product mix.

The Hershey Company | 2024 Form 10-K | Page 31

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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, the Middle East and Africa (“AMEA”) and other regions.

International results, which accounted for 8.5%, 8.5% and 8.2% of our net sales in 2024, 2023 and 2022, respectively.

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2024 compared with 2023

Net sales of our International s egment were $948.0 million in 2024 compared to $949.2 million in 2023, a decrease of $1.2 million, or 0.1%.

The decrease reflected an unfavorable impact from foreign currency exchange rates of approximately 1%, primarily driven by Mexico and Brazil, and a volume decrease of approximately 1%.

The decline was partially offset by a favorable price realization of approximately 2%, driven by price increases across the segment.

The net sales decrease was primarily attributable Mexico, Brazil and Latin America, where sales declined 5.7%, partially offset by net sales increases in Europe, MEA, and World Travel Retail, where net sales increased 13.1%.

Our International segment income was $111.5 million in 2024 compared to $148.3 million in 2023, a decrease of $36.8 million, or 24.8%, primarily resulting from higher commodity costs and unfavorable foreign currency exchange rates, partially offset by favorable price realization and decreased supply chain costs.

2023 compared with 2022

Net sales of our International segment were $949.2 million in 2023 compared to $853.4 million in 2022, an increase of $95.8 million, or 11.2%.

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Our International segment income was $148.3 million in 2023 compared to $107.9 million in 2022, an increase of $40.4 million, or 37.4%, primarily resulting from favorable price realization, favorable foreign currency exchange rates, and minimal volume increases, partially offset by increased supply chain costs.

2022 compared with 2021

Net sales of our International segment were $853.4 million in 2022 compared to $733.5 million in 2021, an increase of $119.9 million, or 16.3% reflecting a volume increase of 11.9%, a favorable price realization of 4.1%, and a favorable impact from foreign currency exchange rates of 0.3%.

The volume increase was primarily attributed to solid marketplace growth in Brazil, Mexico and India, where net sales increased by 21.6%, 20.6% and 13.7%, respectively.

Our International segment also includes world travel retail, where net sales increased approximately 28.6%.

Our International segment income was $107.9 million in 2022 compared to $74.2 million in 2021, an increase of $33.7 million, or 45.4%, primarily resulting from volume increases, favorable price realization, and the execution of our International Optimization Program in China, as we streamline and optimize our China operating model.

The Hershey Company | 2024 Form 10-K | Page 32

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Unallocated corporate expense includes centrally-managed (a) corporate functional costs relating to legal, treasury, finance and human resources, (b) expenses associated with the oversight and administration of our global operations, including warehousing, distribution and manufacturing, information systems and global shared services, (c) non-cash stock-based compensation expense and (d) other gains or losses that are not integral to segment performance.

Unallocated corporate expense totaled $800.4 million in 2023 as compared to $735.5 million in 2022, an increase of $64.9 or, or 8.8%.

The increase was primarily driven by incremental investments in capabilities and technology, higher compensation costs, and an increase in acquisition and integration related costs.

Unallocated corporate expense totaled $701.2 million in 2024 as compared to $800.4 million in 2023, a decrease of $99.2 or, or 12.4%.

The decrease was primarily driven by lower compensation and benefit costs, 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.

Unallocated corporate expense totaled $800.4 million in 2023 as compared to $735.5 million in 2022, an increase of $64.9 million, or 8.8%.

The increase was primarily driven by an increase in acquisition and integration related costs, as well as higher compensation costs, investments in capabilities and technology and broad-based marketplace inflation.

The increase was primarily driven by incremental investments in capabilities and technology, higher compensation costs, and an increase in acquisition and integration related costs.

LIQUIDITY AND CAPITAL RESOURCES

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Effect of exchange rate changes on cash and cash equivalents 54.0 (38.2) 9.9

Cash classified as assets held for sale — — 11.4

(Decrease) increase in cash and cash equivalents $ (62.0) $ 134.6 $ (814.7)

Increase (decrease) in cash and cash equivalents $ 328.8 $ (62.0) $ 134.6

Operating activities

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We meet these needs primarily with cash on hand, bank borrowings or the issuance of commercial paper.

We generated cash of $2.32 billion from operating activities in 2023, a decrease of $4.6 million compared to $2.33 billion in 2022.

We generated cash of $2.5 billion from operating activities in 2024, an increase of $208.4 million compared to $2.3 billion in 2023.

The 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, generated cash of $102.2 million in 2024, compared to consuming cash of $209.0 million in 2023.

This $311.2 million fluctuation was mainly driven by a decrease in cash used by accounts receivable due to a decrease in sales of everyday core U.S.

confection brands, a decrease in accounts payable and accrued liabilities due to the timing of vendor and supplier payments, and lower inventory levels.

The Hershey Company | 2024 Form 10-K | Page 33

• Timing of income tax payments contributed to a decrease in operating cash of $17.1 million in 2024, compared to a decrease of $32.5 million in 2023.

This $15.4 million fluctuation was primarily due to the variance in actual tax expense for 2024 relative to the timing of quarterly estimated tax payments.

We paid cash of $201.8 million for income taxes during 2024, compared to $303.9 million in the same period of 2023.

• The increase in cash provided by operating activities was partially offset by the following net cash outflows:

◦ Net income adjusted for non-cash charges to operations (including depreciation, amortization, stock-based compensation, deferred income taxes, write-down of equity investments, unrealized gains and losses on derivative contracts and other charges) resulted in $92.4 million of lower cash flow in 2024 relative to 2023.

◦ Other assets and liabilities consumed cash of $138.2 million in 2024, compared to $100.4 million in 2023.

This $37.8 million fluctuation was primarily due to our 2023 purchase of an irrevocable group annuity contract to settle a portion of our post retirement benefit obligation, partially offset by the timing of certain prepaid expenses and other current assets.

We generated cash of $2.32 billion from operating activities in 2023, an increase of $4.6 million compared to $2.33 billion in 2022.

The decrease in net cash provided by operating activities was mainly driven by the following factors:

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• Timing of income tax payments contributed to a decrease in operating cash of $32.5 million in 2023, compared to an increase of $5.0 million in 2022.

This $37.5 million fluctuation was primarily due to the variance in actual tax

The Hershey Company | 2023 Form 10-K | Page 33

expense for 2023 relative to the timing of quarterly estimated tax payments.

This $37.5 million fluctuation was primarily due to the variance in actual tax expense for 2023 relative to the timing of quarterly estimated tax payments.

We paid cash of $303.9 million for income taxes during 2023 compared to $221.3 million in the same period of 2022.

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◦ Net income adjusted for non-cash charges to operations (including depreciation, amortization, stock-based compensation, deferred income taxes, write-down of equity investments and other charges) resulted in $256.7 million of higher cash flow in 2023 relative to 2022.

We generated cash of $2.3 billion from operating activities in 2022, an increase of $244.9 million compared to $2.1 billion in 2021.

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 $9 million in 2022 and generated cash of $47 million in 2021.

This $56 million fluctuation was mainly driven by a higher year-over-year build up of U.S.

inventories to satisfy product requirements and maintain sufficient levels to accommodate customer requirements, partially offset by the timing of vendor and supplier payments.

• Net income adjusted for non-cash charges to operations (including depreciation, amortization, stock-based compensation, deferred income taxes, write-down of equity investments and other charges) resulted in $348 million of higher cash flow in 2022 relative to 2021.

Pension and Post-Retirement Activity.

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Cash contributions to our pension and post retirement plans totaled $15.6 million, $27.6 million and $78.5 million in 2024, 2023 and 2022, respectively.

The Hershey Company | 2024 Form 10-K | Page 34

Investing activities

Our principal uses of cash for investment purposes relate to purchases of property, plant and equipment and capitalized software, as well as acquisitions of businesses, partially offset by proceeds from sales of property, plant and equipment.

We used cash of $1.2 billion for investing activities in 2023 compared to $0.8 billion in 2022, with the increase in cash spend driven by an increase of investments in capabilities and technology as well as a higher level of acquisition activity.

We used cash of $2.2 billion for investing activities in 2021, with the decrease in 2022 in cash spend driven by lower levels of acquisition activity, partially offset by higher capital spend and investment tax credits.

We used cash of $960.3 million for investing activities in 2024 compared to $1.2 billion in 2023, with the decrease in cash spend driven by a decrease of investments in capabilities and technology as well as a lower level of acquisition activity.

We used cash of $0.8 billion for investing activities in 2022, with the increase in 2023 in cash spend driven by an increase of investments in capabilities and technology as well as a higher level of acquisition activity.

Primary investing activities include the following:

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Capital expenditures, including capitalized software, primarily to support our ERP system implementation, capacity expansion, innovation and cost savings, were $605.9 million in 2024, $771.1 million in 2023 and $519.5 million in 2022.

For each of the years presented, our expenditures increased due to progress on capacity expansion projects and our ERP system implementation.

We expect 2024 capital expenditures, including capitalized software, to approximate $600 million to $650 million.

The decrease in our 2024 capital expenditures is largely driven by the wind down of our key strategic initiatives, including completion of the upgrade of a new ERP system across the enterprise in 2024.

We expect 2025 capital expenditures, including capitalized software, of approximately $425 million to $450 million, as capital spending as a percentage of sales is expected to return to historical levels.

We intend to use our existing cash and internally generated funds to meet our 2025 capital requirements.

The Hershey Company | 2023 Form 10-K | Page 34

• Investments in partnerships qualifying for tax credits .

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• Business acquisitions .

In 2024, we spent $75.5 million to acquire the Sour Strips brand from Actual Candy, LLC (November 2024).

In 2023, we spent $165.8 million to acquire Weaver (May 2023).

In 2022, we had no acquisition activity.

In 2021, we spent an aggregate $1.6 billion to acquire Lily's (June 2021), as well as Dot’s and Pretzels (December 2021).

Further details regarding our business acquisition activity is provided in Note 2 to the Consolidated Financial Statements.

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In addition to utilizing cash on hand, we use short-term borrowings (commercial paper and bank borrowings) to fund seasonal working capital requirements and ongoing business needs.

In 2024, our short-term borrowings increased $607.0 million predominately through the issuance of short-term commercial paper, partially offset by a decrease in short-term foreign bank borrowings.

In 2023, our short-term borrowings increased $26.0 million predominately through the issuance of short-term commercial paper, as well as an increase in short-term foreign bank borrowings.

In 2022, we used cash of $245.6 million to reduce a portion of our short-term commercial paper borrowings originally used to fund our 2021 acquisitions of Dot’s and Pretzels, partially offset by an increase in short-term foreign bank borrowings.

In 2021, we generated cash flow of $869.0 million predominantly through the issuance of short-term commercial paper.

• Long-term debt borrowings and repayments .

In November 2024, we repaid $300 million of 2.050% Notes due upon maturity.

In May 2023, we repaid $250 million of 2.625% Notes and $500 million of 3.375% Notes due upon their maturities.

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In 2022, long-term debt activity was minimal.

In February 2021 and May 2021, we repaid $84.7 million of 8.800% Debentures and $350 million of 3.100% Notes due upon their maturities, respectively.

In 2024, we expect our long-term debt repayments to approximate $300 million upon the maturity of $300 million of 2.050% Notes due in November 2024.

In 2025, we expect our long-term debt repayments to approximate $600 million upon the maturity of $300 million of 0.900% Notes due in June 2025 and $300 million of 3.200% Notes due in August 2025.

The Hershey Company | 2024 Form 10-K | Page 35

• Dividend payments .

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Quarter Ended

In millions of dollars except per share amounts April 2, 2023 July 2, 2023 October 1, 2023 December 31, 2023

In millions of dollars except per share amounts March 31, 2024 June 30, 2024 September 29, 2024 December 31, 2024

Dividends paid per share – Common stock $ 1.370 $ 1.370 $ 1.370 $ 1.370

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Total cash dividends paid $ 273.4 $ 270.5 $ 270.4 $ 270.5

Declaration date January 31, 2023 April 25, 2023 July 27, 2023 October 25, 2023

Declaration date February 7, 2024 May 2, 2024 July 31, 2024 November 6, 2024

Record date February 20, 2024 May 17, 2024 August 16, 2024 November 18, 2024

Payment date March 15, 2024 June 14, 2024 September 16, 2024 December 16, 2024

The Hershey Company | 2023 Form 10-K | Page 35

• Share repurchases .

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In 2022 the Company purchased the common stock at a price equal to $203.35 per share, for a total purchase price of $203.4 million.

As a result of the 2023 share repurchase, our July 2018 share repurchase authorization program was completed, and approximately $370.1 million remains available for repurchases under our May 2021 share repurchase authorization.

(2) In July 2018, our Board of Directors approved a $500 million share repurchase authorization.

In May 2021, our Board of Directors approved an additional $500 million share repurchase authorization.

As a result of the February 2023 Stock Purchase Agreement with Hershey Trust Company, as trustee for the School Trust, the July 2018 share repurchase authorization was completed and as of December 31, 2023, approximately $370.1 million remained available for repurchases under our May 2021 share repurchase authorization.

As a result of the 2023 share repurchase, our July 2018 share repurchase authorization program was completed.

(2) In July 2018, our Board of Directors approved a $500 million share repurchase authorization to repurchase shares of our Common Stock.

As a result of the February 2023 Stock Purchase Agreement with Hershey Trust Company, as trustee for the School Trust, the July 2018 share repurchase authorization was completed.

In May 2021, our Board of Directors approved an additional $500 million share repurchase authorization, which was completed as of March 31, 2024.

In December 2023, our Board of Directors approved an additional $500 million share repurchase authorization.

This program is to commence after the existing 2021 authorization is completed and is to be utilized at management’s discretion.

These share repurchase programs do not have an expiration date.

We expect 2024 share repurchases to be in line with our traditional buyback strategy.

This program commenced after the existing May 2021 authorization was completed and is to be utilized at management’s discretion.

Approximately $470 million remains available for repurchases under our December 2023 share repurchase authorization.

We are authorized to purchase our outstanding shares in open market and privately negotiated transactions.

The program has no expiration date and acquired shares of Common Stock will be held as treasury shares.

Purchases under approved share repurchase authorizations are in addition to our practice of buying back shares sufficient to offset those issued under incentive compensation plans.

• Proceeds from the exercise of stock options, including tax benefits.

In 2024 we received $14.7 million from employee exercises of stock options and paid $32.8 million of employee taxes withheld from share-based awards.

The Hershey Company | 2024 Form 10-K | Page 36

In 2023 we received $26.0 million from employee exercises of stock options and paid $35.0 million of employee taxes withheld from share-based awards.

In 2021 we received $33.2 million from employee exercises of stock options, net of employee taxes withheld from share-based awards.

In 2022 we received $34.2 million from employee exercises of stock options and paid $35.5 million of employee taxes withheld from share-based awards.

Variances are driven primarily by the number of shares exercised and the share price at the date of grant.

The Hershey Company | 2023 Form 10-K | Page 36

Financial Condition

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At December 31, 2023, our cash and cash equivalents totaled $401.9 million.

Our cash and cash equivalents at the end of 2023 decreased $62.0 million compared to the 2022 year-end balance as a result of the net uses of cash outlined in the previous discussion.

Our cash and cash equivalents at the end of 2024 increased $328.8 million compared to the 2023 year-end balance as a result of the net uses of cash outlined in the previous discussion.

Approximately 80% of the balance of our cash and cash equivalents at December 31, 2024 was held by subsidiaries domiciled outside of the United States.

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We use debt financing to lower our overall cost of capital which increases our return on stockholders’ equity.

Our total short- and long-term debt was $4.8 billion at December 31, 2023 and December 31, 2022.

Our total debt remained consistent in 2023 primarily due to the repayment of $250 million of 2.625% Notes and $500 million of 3.375% Notes due upon their maturity in May 2023 offset by the issuance of $350 million of 4.250% Notes due in May 2028 and $400 million of 4.500% Notes due in May 2033.

Our total short- and long-term debt was $5.1 billion and $4.8 billion at December 31, 2024 and December 31, 2023, respectively.

Our total debt increased in 2024 primarily due to an increase of $587 million in short-term debt, primarily driven by commercial paper, partially offset by the repayment of $300 million of 2.050% Notes due upon their maturity in November 2024.

As a source of short-term financing, we maintain a $1.35 billion unsecured revolving credit facility with the option to increase borrowings by an additional $500 million with the consent of the lenders.

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Furthermore, we have a current shelf registration statement filed with the SEC that allows for the issuance of an indeterminate amount of debt securities.

Proceeds from the debt issuances and any other offerings under the current registration statement may be used for general corporate requirements, including reducing existing borrowings, financing capital additions and funding contributions to our pension plans, future business acquisitions and working capital requirements.

Proceeds from the debt issuances and any other offerings under the current registration statement may be used for general corporate requirements, including reducing existing borrowings, funding the repurchase of shares of our common stock, financing capital additions and funding contributions to our pension plans, future business acquisitions and working capital requirements.

Our ability to obtain debt financing at comparable risk-based interest rates is partly a function of our existing cash-flow-to-debt and debt-to-capitalization levels as well as our current credit rating.

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Pension and Other Post-Retirement Benefits Plans

We sponsor various defined benefit pension plans.

The primary plans were The Hershey Company Retirement Plan (“Retirement Plan”) and the Hershey Company Retirement Plan for Hourly Employees (“Hourly Plan”).

These are cash balance plans that provide pension benefits for most U.S.

We sponsor a number of defined benefit pension plans.

The primary plan is The Hershey Retirement Plan for Salaried and Hourly Employees.

This is a cash balance plan that provides pension benefits for most U.S.

employees hired prior to January 1, 2007.

Effective December 31, 2023, the Hourly Plan merged into the Retirement Plan and the name was changed to The Hershey Retirement Plan for Salaried and Hourly Employees.

We also sponsor two primary other post-employment benefit (“OPEB”) plans, consisting of a health care plan and life insurance plan for retirees.

The health care plan is contributory, with participants’ contributions adjusted annually, and the life insurance plan is non-contributory.

We also sponsor two post-retirement benefit plans:

health care and life insurance.

The health care plan is contributory, with participants’ contributions adjusted annually.

The life insurance plan is non-contributory.

For accounting purposes, the defined benefit pension and OPEB plans require assumptions to estimate the projected and accumulated benefit obligations, including the following variables:

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We consider a number of factors when setting assumptions with respect to the long-term rate of return, including current and expected asset allocation and historical and expected returns on the plan asset categories.

The Hershey Company | 2023 Form 10-K | Page 40

allocations are regularly reviewed and periodically rebalanced to the targeted allocations when considered appropriate.

Actual asset allocations are regularly reviewed and periodically rebalanced to the targeted allocations when considered appropriate.

Investment gains or losses represent the difference between the expected return estimated using the long-term rate of return and the actual return realized.

For 2023, we increased the expected return on plan assets assumption to 6.7% from the 6.3% assumption used during 2022.

For 2024, we increased the expected return on plan assets

The Hershey Company | 2024 Form 10-K | Page 40

assumption to 6.8% from the 6.7% assumption used during 2023.

The historical average return (compounded annually) over the 20 years prior to December 31, 2024 was approximately 6.8%.

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This approach does not affect the measurement of our pension and other post-retirement benefit liabilities but generally results in lower benefit expense in periods when the yield curve is upward sloping.

A 100 basis point decrease (increase) in the weighted-average pension discount rate would increase (decrease) annual net periodic pension benefit expense by approximately $5 million and the December 31, 2023 pension liability would increase by approximately $57 million or decrease by approximately $49 million, respectively.

A 100 basis point decrease (increase) in the weighted-average pension discount rate would increase the annual net periodic pension benefit expense by approximately $5 million or decrease the annual net periodic pension benefit expense by $4 million, respectively, and the December 31, 2024 pension liability would increase by approximately $50 million or decrease by approximately $43 million, respectively.

Pension expense for defined benefit pension plans is expected to be approximately $13 million in 2025.

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Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

The Hershey Company | 2023 Form 10-K | Page 41

Goodwill and indefinite-lived intangible assets are not amortized, but instead, are evaluated for impairment annually or more often if indicators of a potential impairment are present.

Our annual impairment tests are conducted at the beginning of the fourth quarter.

The Hershey Company | 2024 Form 10-K | Page 41

We test goodwill for impairment by performing either a qualitative or quantitative assessment.

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At December 31, 2024, the net book value of our goodwill totaled $2.7 billion.

As it relates to our 2023 annual testing performed at the beginning of the fourth quarter, we tested all of our reporting units using a quantitative assessment.

As it relates to our 2024 annual testing performed at the beginning of the fourth quarter, we tested all of our reporting units using a qualitative assessment and determined that no quantitative testing was deemed necessary.

Based on our testing, all of our reporting units had an excess fair value well over their respective carrying values.

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We apply a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions.

Accordingly, we recognize the amount of tax benefit that has a greater than 50% likelihood of being ultimately

The Hershey Company | 2023 Form 10-K | Page 42

realized upon settlement.

Accordingly, we recognize the amount of tax benefit that has a greater than 50% likelihood of being ultimately realized upon settlement.

Future changes in judgments and estimates related to the expected ultimate resolution of uncertain tax positions will affect income in the quarter of such change.

While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our unrecognized tax benefits reflect the most likely outcome.

Accrued interest and penalties related to unrecognized tax benefits are included in income tax expense.

Accrued interest and penalties related to unrecognized tax benefits are

The Hershey Company | 2024 Form 10-K | Page 42

included in income tax expense.

We adjust these unrecognized tax benefits, as well as the related interest, in light of changing facts and circumstances, such as receiving audit assessments or clearing of an item for which a reserve has been established.

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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-K

Item 7. Management’s Discussion and Analysis