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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-11-07 · 149 added, 226 removed, 199 unchanged (65% of the section changed)

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This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of Hershey’s financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year.

This MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2024 (“this Quarterly Report on Form 10-Q”).

This MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2025 (“this Quarterly Report on Form 10-Q”).

This discussion contains a number of forward-looking statements, all of which are based on current expectations.

Actual results may differ materially.

Refer to the Safe Harbor Statement below as well as the Risk Factors and other information contained in our 2023 Annual Report on Form 10-K, as updated by our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, for information concerning the key risks to achieving future performance goals.

Refer to the Safe Harbor Statement below as well as the Risk Factors and other information contained in our 2024 Annual Report on Form 10-K for information concerning the key risks to achieving future performance goals.

The MD&A is organized in the following sections:

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Business Acquisitions

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.

On March 31, 2025, we entered into a Merger Agreement to acquire LesserEvil, LLC, a privately held company that produces and sells organic popcorn and puffed snack products to retailers and distributors in the United States and Canada, which complements Hershey’s existing product portfolio.

The Company expects the acquisition to close by mid-2025 pending the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

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.

The Hershey Company | Q1 2025 Form 10-Q | Page 29

TRENDS AFFECTING OUR BUSINESS

Throughout the first nine months of 2024, U.S.

consumer behavior has 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, during the nine months ended September 29, 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% since the beginning of the year (see Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

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

For the nine months ended September 29, 2024, this conflict did not have a material impact on our commodity prices or supply availability.

However, we are continuing to monitor for any significant escalation or expansion of economic or supply chain disruptions or broader inflationary costs, which may result in material adverse effects on our results of operations.

As of September 29, 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;

Throughout the first three months of 2025, we experienced a dynamic macroeconomic environment, including shifts in consumer behavior and continued 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, 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 continued to experience elevated market prices compared to historical levels (see Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

Furthermore, certain geopolitical events, specifically changes in global trade policies including recently announced tariffs on U.S.

imports and the potential for additional tariffs, have increased global economic and political uncertainty.

For the three months ended March 30, 2025, the imposition of tariffs on U.S.

imports and retaliatory tariffs, did not have a material impact on our results of operations, commodity prices or supply availability.

However, we are continuing to monitor the ongoing negotiations related to tariffs, specifically, goods imported into the U.S.

from Canada, Mexico and other countries, as well as export markets, in which we have significant business operations, all of which may result in material adverse effects on our results of operations.

The scope and length of tariffs, including their effects on the broader economy and our business, remain uncertain.

These outcomes may be influenced by factors such as continued U.S.

negotiations with impacted countries, retaliatory measures from other nations, possible tariff exemptions, public sentiment toward U.S.

products and companies, and the domestic availability of lower-cost alternatives.

Additionally, with recent leadership changes at the U.S.

Department of Health and Human Services and the U.S.

Food and Drug Administration (“FDA”), as well as the Make America Healthy Again movement, the food industry is subject to increasing laws and regulations, including nutrition, food date labeling and traceability recordkeeping requirements, as well as changes in consumer expectations and behavior.

For example, in April 2025, it was announced that the FDA intends to phase out the approved use of petroleum-based synthetic dyes in food products.

While the Company has historically taken measures to remove certain food dyes from our products, and this did not have a material impact on our consolidated results for the three months ended March 30, 2025, the Company anticipates continued developments in food industry legislation and regulatory requirements, which may result in incremental costs to our business.

The significance of the impact remains uncertain at this time, as the Company continues to monitor and evaluate the evolving legal and regulatory landscape.

As of March 30, 2025, we believe we have sufficient liquidity to satisfy our key strategic initiatives and other material cash requirements in both the short-term and in the long-term;

however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can operate effectively during the current economic environment.

We continue to monitor our discretionary spending across the organization (see Liquidity and Capital Resources included in this MD&A).

Based on the length and severity of the fluctuating macroeconomic environment, including price volatility for our commodities, 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.

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 imposition of tariffs and retaliatory tariffs, we may continue to experience increasing supply chain costs, higher inflation and other impacts to our business.

We will continue to evaluate the nature and extent of these evolving impacts on our business, consolidated results of operations, segment results, liquidity and capital resources.

The Hershey Company | Q1 2025 Form 10-Q | Page 30

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 Percent Change September 29, 2024 October 1, 2023 Percent Change

Three Months Ended

March 30, 2025 March 31, 2024 Percent Change

In millions of dollars except per share amounts

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SM&A expense as a percent of net sales 19.9 % 19.0 %

Business realignment activities 27.6 — NM 32.6 0.4 NM

Business realignment activities 16.4 — NM

Operating profit 369.2 1,058.1 (65.1) %

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NM = not meaningful

Results of Operations - Third Quarter 2024 vs.

Third Quarter 2023

Net sales were $2,987.5 million in the third quarter of 2024 compared to $3,030.0 million in the same period of 2023, a decrease of $42.5 million, or 1.4%.

The net sales decrease was driven by a volume decline of approximately 3%, due to declines across our reportable segments, primarily in salty snack brands.

Results of Operations - First Quarter 2025 vs.

First Quarter 2024

Net sales were $2,805.4 million in the first quarter of 2025 compared to $3,252.7 million in the same period of 2024, a decrease of $447.3 million, or 13.8%.

The net sales decrease was driven by a volume decline of approximately 15%, primarily related to everyday core U.S.

confection, as a result of accelerated shipments in the first quarter of 2024 in anticipation of our enterprise resource planning (“ERP”) system implementation, which was completed in the beginning of the second quarter of 2024, and declines in our International reportable segment.

Foreign currency exchange rates resulted in an unfavorable impact of less than 1%.

The net sales decrease was partially offset by a favorable price realization of approximately 2%, driven by higher list prices across reportable segments.

For the purpose of correcting an inaccuracy in the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, with respect to second quarter 2024 performance, the North America Salty Snacks volume growth reported as “approximately 9%” should have stated “approximately 11%”, the North America Salty Snacks price decline reported as “approximately 3%” should have stated “approximately 5%”, the International volume declines reported as “approximately 16%” should have stated “approximately 12%”, and the International price increase reported as “approximately 5%” should have stated “approximately 1%.” As a result, the Total Consolidated volume decline reported as “approximately 18%” should have stated “approximately 17%” and the price increase reported as “approximately 1%” should have stated “less than 1%.”

The net sales decrease was partially offset by a favorable price realization of approximately 2%, driven by higher list prices across our North America Confectionery segment.

Marketplace Metrics

For the third quarter of 2024, our total U.S.

For the first quarter of 2025, our total U.S.

retail takeaway declined 6.7% in the expanded multi-outlet combined plus convenience store channels (Circana MULO + C-Stores), which includes candy, mint, gum, salty snacks and grocery items.

candy, mint and gum (“CMG”) consumer takeaway declined 9.0% and experienced a CMG market share decline of 46 basis points.

Our Salty consumer takeaway increased 2.8% in the third quarter of 2024 and experienced a Salty market share increase of 11 basis points.

The Hershey Company | Q3 2024 Form 10-Q | Page 37

Declines were primarily driven by the timing of Easter, which shifted into mid-April in 2025, compared to March in 2024.

Our Salty consumer takeaway increased 9.6% in the first quarter of 2025 and experienced a Salty market share increase of 37 basis points.

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

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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.

The Hershey Company | Q1 2025 Form 10-Q | Page 31

Cost of Sales and Gross Margin

Cost of sales were $1,754.8 million in the third quarter 2024 compared to $1,669.7 million in the same period 2023, an increase of $85.1 million, or 5.1%.

The increase was driven by $171.7 million of higher costs, primarily due to higher commodity costs from cocoa, higher supply chain costs, and incremental business realignment costs.

The increase was partially offset by $71.4 million primarily related to lower sales volume, in line with the declines in net sales noted above.

The increase was further offset by $15.2 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

Gross margin was 41.3% in the third quarter of 2024 compared to 44.9% in the same period of 2023, a decrease of 360 basis points.

The decrease was driven by unfavorable commodity costs, higher supply chain costs, unfavorable mix, and increased business realignment costs.

The decrease was partially offset by lower sales volume.

Cost of sales were $1,861.2 million in the first quarter 2025 compared to $1,576.6 million in the same period 2024, an increase of $284.6 million, or 18.0%.

The increase was driven by $618.9 million of higher costs, primarily due to unfavorable commodity costs from cocoa and $251.6 million of unfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

The increase was partially offset by $334.3 million, primarily related to lower sales volume and lower supply chain costs, in line with the declines in net sales noted above.

Gross margin was 33.7% in the first quarter of 2025 compared to 51.5% in the same period of 2024, a decrease of 1,790 basis points.

The decrease was driven by unfavorable activity on our mark-to-market impact from commodity derivative instruments, lower sales volume, unfavorable commodity costs, and unfavorable mix.

The decrease was partially offset by lower supply chain costs and favorable price realization.

SM&A Expenses

SM&A expenses were $591.9 million in the third quarter of 2024 compared to $624.4 million in the same period of 2023, a decrease of $32.5 million, or 5.2%.

SM&A expenses were $558.7 million in the first quarter of 2025 compared to $618.0 million in the same period of 2024, a decrease of $59.3 million, or 9.6%.

Total advertising and related consumer marketing expenses decreased 14.2% driven primarily by a decrease in the North America Confectionery segment, partially offset by an increase in North America Salty Snacks.

SM&A expenses, excluding advertising and related consumer marketing, decreased 7.5% in the third quarter of 2024 driven by lower compensation costs across segments, partially offset by $20.0 million of incremental business realignment costs.

SM&A expenses, excluding advertising and related consumer marketing, decreased 7.0% in the first quarter of 2025 driven by lower compensation costs across our reportable segments, as well as $4.6 million of incremental business realignment costs.

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.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded $27.6 million business realignment costs during the third quarter of 2024.

There were no business realignments costs in the third quarter of 2023.

The costs in 2024 related to the Advancing Agility & Automation (“AAA”) Initiative, which commenced in 2024, focused on leveraging new technology to improve supply chain and manufacturing-related spend, and optimize selling, general and administrative expenses.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded $16.4 million business realignment costs during the first quarter of 2025.

The costs in the first quarter of 2025 related to the Advancing Agility & Automation (“AAA”) Initiative, which commenced in 2024, focused on leveraging new technology to improve supply chain and manufacturing-related spend, and optimize selling, general and administrative expenses.

There were no business realignments costs in the first quarter of 2024.

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

Operating Profit and Operating Profit Margin

Operating profit was $613.2 million in the third quarter of 2024 compared to $735.9 million in the same period of 2023, a decrease of $122.7 million, or 16.7%.

Operating profit was $369.2 million in the first quarter of 2025 compared to $1,058.1 million in the same period of 2024, a decrease of $688.9 million, or 65.1%.

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

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Interest Expense, Net

Net interest expense was $44.3 million in the third quarter of 2024 compared to $39.8 million in the same period of 2023, an increase of $4.5 million, or 11.5%.

The increase was primarily due to higher short-term debt balances in 2024 versus 2023, specifically related to outstanding commercial paper and short-term foreign bank borrowings.

Net interest expense was $44.6 million in the first quarter of 2025 compared to $39.8 million in the same period of 2024, an increase of $4.8 million, or 12.1%.

The increase was primarily due to higher long-term debt balances in 2025 versus 2024, driven by the February 2025 debt issuance.

Other (Income) Expense, Net

Other (income) expense, net was $50.1 million in the third quarter of 2024 versus net expense of $42.7 million in the third quarter of 2023, an increase of $7.4 million, or 17.1%.

The increase in net expense was primarily driven by $11.6 million of higher write-downs on equity investments qualifying for tax credits in 2024 versus the third quarter of

The Hershey Company | Q3 2024 Form 10-Q | Page 38

2023, partially offset by a decrease of $4.3 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

Income Taxes and Effective Tax Rate

The effective income tax rate was 14.0% for the third quarter of 2024 compared with 20.6% for the third quarter of 2023.

Relative to the 21% statutory rate, the 2024 effective tax rate was primarily impacted by investment tax credits, partially offset by state taxes.

Relative to the 21% statutory rate, the 2023 effective tax rate was impacted by investment tax credits, partially offset by state taxes and tax reserves.

Net Income and Earnings Per Share-diluted

Net income was $446.3 million in the third quarter of 2024 compared to $518.6 million in the same period of 2023, a decrease of $72.3 million, or 13.9%.

EPS-diluted was $2.20 in the third quarter of 2024 compared to $2.52 in the third quarter of 2023, a decrease of $0.32, or 12.7%.

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

Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding.

Results of Operations - First Nine Months 2024 vs.

First Nine Months 2023

Net sales were $8,314.7 million in the first nine months of 2024 compared to $8,507.9 million during the same period of 2023, a decrease of $193.2 million, or 2.3%.

The net sales decrease was driven by a volume decrease of approximately 5%, due to declines across our reportable segments.

The net sales decrease was partially offset by a favorable price realization of approximately 3%, primarily due the North America Confectionery and International segments, partially offset by declines in North America Salty Snacks.

There was no foreign currency exchange impact.

Marketplace Metrics

For the first nine months of 2024, our total U.S.

retail takeaway decreased 0.1% in the expanded multi-outlet combined plus convenience store channels (IRI MULO + C-Stores), which includes candy, mint, gum, salty snacks and grocery items.

CMG consumer takeaway declined 0.9% and experienced a CMG market share decline of 76 basis points.

Our Salty consumer takeaway increased 3.2% and experienced a Salty market share increase of 7 basis points.

Cost of Sales and Gross Margin

Cost of sales were $4,572.2 million in the first nine months of 2024 compared to $4,633.2 million in the same period of 2023, a decrease of $61.0 million, or 1.3%.

The decrease was driven by $220.1 million of lower costs, primarily related to lower sales volume, in line with the declines in net sales noted above.

The decrease was further driven by an incremental $191.7 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

The decrease was partially offset by $350.8 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 45.0% in the first nine months of 2024 compared to 45.5% in the same period of 2023, a decrease of 50 basis points.

The decrease was driven by higher commodity costs, higher supply chain costs, including higher logistics and labor costs, unfavorable product mix and increased business realignment costs.

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

SM&A Expenses

SM&A expenses were $1,750.9 million in the first nine months of 2024 compared to $1,777.8 million in the same period of 2023, an decrease of $26.9 million, or 1.5%.

Total advertising and related consumer marketing expenses decreased 0.9%, driven by a decrease in North America Confectionery, partially offset by an increase in North America Salty Snacks.

SM&A expenses, excluding advertising and related consumer marketing, decreased approximately 1.8% in the first nine months of 2024 driven by a decrease in compensation costs, partially offset by an

Other (income) expense, net was $0.9 million in the first quarter of 2025 versus net expense of $32.0 million in the first quarter of 2024, a decrease of $31.1 million, or 97.0%.

The decrease in net expense was primarily driven by $31.4 million of lower write-downs on equity investments qualifying for tax credits in 2025 versus the first quarter of 2024, partially offset by an increase of $0.7 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

The Hershey Company | Q1 2025 Form 10-Q | Page 32

increase of $57.6 million of incremental business realignment costs, as well as higher investments in capabilities and technology.

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.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded business realignment costs of $32.6 million during the first nine months of 2024 versus $0.4 million in the first nine months of 2023.

The costs in 2024 related to the AAA Initiative, which commenced in 2024, focused on leveraging new technology to improve supply chain and manufacturing-related spend, and optimize selling, general and administrative expenses.

The costs in 2023 related to the International Optimization Program, which completed in 2023.

The International Optimization Program was focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward.

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

Operating Profit and Operating Profit Margin

Operating profit was $1,959.0 million in the first nine months of 2024 compared to $2,096.5 million in the same period of 2023, a decrease of $137.5 million, or 6.6%.

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

Operating profit margin decreased to 23.6% in the first nine months of 2024 from 24.6% in the same period in 2023 driven by the same factors that resulted in lower gross margin for the period.

Interest Expense, Net

Net interest expense was $125.5 million in the first nine months of 2024 compared to $114.1 million in the same period of 2023, an increase of $11.4 million, or 10.0%.

The increase was primarily due to higher short-term debt balances in 2024 versus 2023, specifically related to outstanding commercial paper and short-term foreign bank borrowings.

Other (Income) Expense, Net

Other (income) expense, net was $82.7 million in the first nine months of 2024 versus a net expense of $130.2 million in the first nine months of 2023, a decrease of $47.5 million, or 36.5%.

The decrease in net expense was primarily driven by $34.4 million of lower write-downs on equity investments qualifying for tax credits in 2024 versus the first nine months of 2023 and a decrease of $14.0 million of non-service cost components of net periodic benefit costs relating to pension and other post-retirement benefit plans.

Income Taxes and Effective Tax Rate

Our effective income tax rate was 18.6% for the first nine months of 2024 compared with 18.3% for the first nine months of 2023.

The effective income tax rate was 30.7% for the first quarter of 2025 compared with 19.1% for the first quarter of 2024.

Relative to the 21% statutory rate, the 2025 effective tax rate was primarily impacted by foreign tax differential and state taxes.

Relative to the 21% statutory rate, the 2024 effective tax rate was impacted by investment tax credits partially offset by state taxes.

Relative to the 21% statutory rate, the 2023 effective tax rate was impacted by investment tax credits and employee share-based payments partially offset by state taxes and tax reserves.

Net Income and Earnings Per Share-diluted

Net income was $1,424.6 million in the first nine months of 2024 compared to $1,512.7 million in the same period of 2023, a decrease of $88.1 million, or 5.8%.

EPS-diluted was $7.00 in the first nine months of 2024 compared to $7.36 in the same period of 2023, a decrease of $0.36, or 4.9%.

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

Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs.

Net income was $224.2 million in the first quarter of 2025 compared to $797.5 million in the same period of 2024, a decrease of $573.3 million, or 71.9%.

EPS-diluted was $1.10 in the first quarter of 2025 compared to $3.89 in the first quarter of 2024, a decrease of $2.79, or 71.7%.

The decrease in both net income and EPS-diluted was driven by lower gross profit, higher business realignment costs and higher interest expense, partially offset by lower other income and expenses, lower income taxes and lower SM&A expenses.

Our 2025 EPS-diluted benefited from lower weighted-average shares outstanding.

The Hershey Company | Q1 2025 Form 10-Q | Page 33

SEGMENT RESULTS

The summary that follows provides a discussion of the results of operations of our three reportable segments:

The summary that follows provides a discussion of the results of operations of our three segments:

North America Confectionery, North America Salty Snacks and International.

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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:

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Three Months Ended

March 30, 2025 March 31, 2024

In millions of dollars

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Unallocated corporate expense (1) 160.4 172.9

Unallocated mark-to-market (gains) losses on commodity derivatives (2) (31.1) 1.8 (195.7) 5.2

Unallocated mark-to-market losses (gains) on commodity derivatives (2) 211.5 (218.0)

Costs associated with business realignment activities 25.9 16.7

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Niagara Falls (Ontario) and Singapore, as well as operations associated with licensing the use of certain trademarks and products to third parties around the world.

North America Confectionery results, which accounted for 82.9% and 81.1% of our net sales for the three months ended September 29, 2024 and October 1, 2023, respectively, were as follows:

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 Percent Change September 29, 2024 October 1, 2023 Percent Change

North America Confectionery results, which accounted for 82.0% and 83.2% of our net sales for the three months ended March 30, 2025 and March 31, 2024, respectively, were as follows:

Three Months Ended

March 30, 2025 March 31, 2024 Percent Change

In millions of dollars

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Segment margin 30.3 % 35.0 %

Results of Operations - Third Quarter 2024 vs.

Third Quarter 2023

Net sales of our North America Confectionery segment were $2,477.3 million in the third quarter of 2024 compared to $2,457.6 million in the same period of 2023, an increase of $19.7 million, or 0.8%.

The increase was driven by favorable price realization of approximately 2%, primarily due to list price increases on certain products across our portfolio.

The increase was partially offset by volume declines of approximately 2%, primarily driven by a decrease in everyday core U.S.

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

This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore.

Our net sales for licensing and owned retail decreased approximately 0.3% during the third quarter of 2024 compared to the same period of 2023.

Our North America Confectionery segment income was $724.8 million in the third quarter of 2024 compared to $847.5 million in the same period of 2023, a decrease of $122.7 million, or 14.5%.

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

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

Results of Operations - First Nine Months 2024 vs.

First Nine Months 2023

Net sales of our North America Confectionery segment were $6,764.4 million in the first nine months of 2024 compared to $6,902.9 million in the same period of 2023, a decrease $138.5 million, or 2.0%.

The decrease was driven by volume declines of approximately 5%, primarily driven by a decrease in everyday core U.S.

confection brands.

The decrease was partially offset by favorable price realization of approximately 3%, due to list price increases on certain products across our portfolio.

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

This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore.

Our net sales for licensing and owned retail increased approximately 3.0% during the first nine months of 2024 compared to the same period of 2023.

Our North America Confectionery segment income was $2,137.5 million in the first nine months of 2024 compared to $2,392.4 million the same period of 2023, a decrease $254.9 million or 10.7%.

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.

Percentage changes may not compute directly as shown due to rounding of amounts presented above.

Results of Operations - First Quarter 2025 vs.

First Quarter 2024

Net sales of our North America Confectionery segment were $2,300.1 million in the first quarter of 2025 compared to $2,707.3 million in the same period of 2024, a decrease of $407.16 million, or 15.0%.

The decrease was driven by volume declines of approximately 18%, primarily due to a decrease in everyday core U.S.

confection as a result of accelerated shipments in the first quarter of 2024 in anticipation of our ERP system implementation, which was completed in the beginning of the second quarter of 2024.

The decrease was partially offset by favorable price realization of approximately 3%, primarily due to list price increases on certain products across our portfolio.

Our North America Confectionery segment income was $696.4 million in the first quarter of 2025 compared to $948.2 million in the same period of 2024, a decrease of $251.8 million, or 26.6%.

The decrease was predominantly due to lower volume and higher commodity costs, partially offset by lower supply chain costs, favorable price realization, lower advertising and related consumer marketing costs, and net savings from the execution of our AAA Initiative.

North America Salty Snacks

The North America Salty Snacks segment is responsible for our grocery and snacks market positions, including our salty snacking products.

North America Salty Snacks results, which accounted for 9.8% and 11.4% of our net sales for the three months ended September 29, 2024 and October 1, 2023, respectively, were as follows:

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 Percent Change September 29, 2024 October 1, 2023 Percent Change

North America Salty Snacks results, which accounted for 9.9% and 8.5% of our net sales for the three months ended March 30, 2025 and March 31, 2024, respectively, were as follows:

Three Months Ended

March 30, 2025 March 31, 2024 Percent Change

In millions of dollars

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Segment margin 15.1 % 14.1 %

Results of Operations - Third Quarter 2024 vs.

Third Quarter 2023

Net sales of our North America Salty Snacks segment were $291.8 million in the third quarter of 2024 compared to $345.2 million in the same period of 2023, a decrease of $53.4 million, or 15.5%.

The decrease was driven by volume declines of approximately 17%, predominantly as a result of accelerated shipments in the third quarter of 2023 ahead of our ERP system implementation, which was completed in the beginning of the fourth quarter of 2023.

The decrease was partially offset by favorable price realization of approximately 2%, due to list price increases primarily in Dot’s Homestyle Pretzels snacks.

Our North America Salty Snacks segment income was $54.0 million in the third quarter of 2024 compared to $57.4 million in the same period of 2023, a decrease of $3.4 million, or 5.9%.

The decrease was primarily due to volume declines, as noted above, and higher advertising and related consumer marketing costs.

The decrease was partially offset by lower supply chain costs, favorable commodity costs, and favorable price realization.

Results of Operations - First Nine Months 2024 vs.

First Nine Months 2023

Net sales of our North America Salty Snacks segment were $856.8 million in the first nine months of 2024 compared to $887.5 million the same period of 2023, a decrease $30.7 million, or 3.5%.

The decrease reflects volume declines of approximately 3%, primarily related to SkinnyPop and Paqui snacks, as well as accelerated shipments ahead of our ERP system implementation in 2023, partially offset by volume growth in Dot’s Homestyle Pretzels snacks.

The decrease was further driven by an unfavorable price realization of less than 1%.

Our North America Salty Snacks segment income was $144.9 million in the first nine months of 2024 compared to $147.9 million the same period of 2023, a decrease $3 million, or 2.0%.

The decrease was primarily due to volume declines, as noted above, and higher advertising and related consumer marketing costs.

The decrease was partially offset by favorable commodity costs, lower supply chain costs, and favorable price realization.

Percentage changes may not compute directly as shown due to rounding of amounts presented above.

Results of Operations - First Quarter 2025 vs.

First Quarter 2024

Net sales of our North America Salty Snacks segment were $277.8 million in the first quarter of 2025 compared to $275.1 million in the same period of 2024, an increase of $2.7 million, or 1.0%.

The increase was due to volume increases of approximately 4%, primarily driven by Dot’s Homestyle Pretzels .

The increase was partially offset by unfavorable price realization of approximately 3% across our portfolio.

Our North America Salty Snacks segment income was $41.9 million in the first quarter of 2025 compared to $38.7 million in the same period of 2024, an increase of $3.2 million, or 8.1%.

The increase was predominantly due to volume increases, as noted above, lower supply chain costs, and net savings from the execution of our AAA Initiative, partially offset by unfavorable price realization and increased advertising and related consumer marketing costs.

International

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 7.3% and 7.5% of our net sales for the three months ended September 29, 2024 and October 1, 2023, respectively, were as follows:

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 Percent Change September 29, 2024 October 1, 2023 Percent Change

International results, which accounted for 8.1% and 8.3% of our net sales for the three months ended March 30, 2025 and March 31, 2024, respectively, were as follows:

Three Months Ended

March 30, 2025 March 31, 2024 Percent Change

In millions of dollars

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Segment margin 12.6 % 15.8 %

Results of Operations - Third Quarter 2024 vs.

Third Quarter 2023

Net sales of our International segment were $218.4 million in the third quarter of 2024 compared to $227.2 million in the same period of 2023, a decrease $8.8 million, or 3.9%.

The decrease was due to an unfavorable impact from foreign currency exchange rates of approximately 4%, primarily driven by Mexico and Brazil, and volume declines of approximately 1% across the segment, partially offset by growth in Europe and LATAM.

The decrease was partially offset by favorable price realization of approximately 1%, primarily driven by Europe and Mexico.

Our International segment generated income of $14.2 million in the third quarter of 2024 compared to $31.7 million in the third quarter of 2023, a decrease of $17.5 million, or 55.2%, driven primarily by volume declines and higher commodity costs, partially offset by favorable price realization and lower supply chain costs.

Results of Operations - First Nine Months 2024 vs.

First Nine Months 2023

Net sales of our International segment were $693.5 million in the first nine months of 2024 compared to $717.5 million the same period of 2023, a decrease $24.0 million, or 3.3%.

The decrease was due to volume declines of approximately 6% across the segment, partially offset by growth in AMEA and Europe.

The decrease was partially offset by favorable price realization of approximately 2% and a favorable impact from foreign currency exchange rates of less than 1%, primarily driven by Mexico.

Our International segment generated income of $82.0 million in the first nine months of 2024 compared to $127.8 million in the first nine months of 2023, a decrease of $45.8 million, or 35.8%, driven primarily by volume declines, increased commodity costs and unfavorable mix, partially offset by favorable price realization and lower supply chain costs.

Percentage changes may not compute directly as shown due to rounding of amounts presented above.

Results of Operations - First Quarter 2025 vs.

First Quarter 2024

Net sales of our International segment were $227.5 million in the first quarter of 2025 compared to $270.3 million in the same period of 2024, a decrease $42.9 million, or 15.9%.

The decrease was due to volume declines of approximately 8% across the segment, as well as an unfavorable impact from foreign currency exchange rates of approximately 8%, primarily driven by Mexico, Brazil and Latin America.

The decrease was partially offset by favorable price realization of approximately 1%, primarily driven by Mexico, Brazil and Latin America.

Our International segment generated income of $28.7 million in the first quarter of 2025 compared to $42.8 million in the first quarter of 2024, a decrease of $14.1 million, or 32.9%, driven primarily by volume declines, an unfavorable impact from foreign currency exchange rates, partially offset by lower supply chain costs and net savings from the execution of our AAA Initiative.

Unallocated Corporate Expense

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, (d) acquisition and integration-related costs and (e) other gains or losses that are not integral to segment performance.

In the third quarter of 2024, unallocated corporate expense totaled $161.8 million, as compared to $199.3 million in the third quarter of 2023, a decrease of $37.5 million, or 18.8%.

The decrease was primarily driven by lower compensation costs, partially offset by higher acquisition and integration related costs.

In the first nine months of 2024, unallocated corporate expense totaled $496.2 million, as compared to $563.0 million in the first nine months of 2023, a decrease of $66.8 million, or 11.9%.

The decrease was primarily driven by lower compensation costs and lower acquisition and integration related costs, partially offset by incremental investments in capabilities and technology.

In the first quarter of 2025, unallocated corporate expense totaled $160.4 million, as compared to $172.9 million in the first quarter of 2024, a decrease of $12.5 million, or 7.2%.

The decrease was primarily driven by lower compensation and benefits costs, decreased investments in capabilities and technology, as a result of the completion of the upgrade of our new ERP system across the enterprise in 2024 and lower acquisition and integration related costs.

LIQUIDITY AND CAPITAL RESOURCES

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Commercial paper may also be issued, from time to time, to finance ongoing business transactions, such as the repayment of long-term debt, business acquisitions and for other general corporate purposes.

At September 29, 2024, our cash and cash equivalents totaled $615.0 million, an increase of $213.0 million compared to the 2023 year-end balance.

At March 30, 2025, our cash and cash equivalents totaled $1.5 billion, an increase of $784.5 million compared to the 2024 year-end balance.

Additional detail regarding the net uses of cash are outlined in the following discussion.

Additionally, at September 29, 2024, we had outstanding short- and long-term debt totaling $5.3 billion, of which $904.8 million was classified as the current portion of long-term debt.

Of the $904.8 million, $300 million of 2.050% Notes are due upon maturity on November 15, 2024, $300 million of 0.900% Notes are due upon maturity on June 1, 2025, and $300 million of 3.200% Notes are due upon maturity on August 21, 2025.

Additionally, at March 30, 2025, we had outstanding short- and long-term debt totaling $5.9 billion, of which $603.6 million was classified as the current portion of long-term debt.

Of the $603.6 million, $300 million of 0.900% Notes are due upon maturity on June 1, 2025 and $300 million of 3.200% Notes are due upon maturity on August 21, 2025.

We believe we can satisfy these debt obligations with cash generated from our operations, issuing new debt, and/or by borrowing on our unsecured credit facility.

Approximately 85% of the balance of our cash and cash equivalents at September 29, 2024 was held by subsidiaries domiciled outside of the United States.

Approximately 55% of the balance of our cash and cash equivalents at March 30, 2025 was held by subsidiaries domiciled outside of the United States.

A majority of our cash and cash equivalents balance is distributable to the United States without material tax implications, such as withholding tax.

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The following table is derived from our Consolidated Statements of Cash Flows:

Nine Months Ended

In millions of dollars September 29, 2024 October 1, 2023

Three Months Ended

In millions of dollars March 30, 2025 March 31, 2024

Net cash provided by (used in):

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Operating activities

We generated cash of $1,590.0 million from operating activities in the first nine months of 2024, an increase of $24.4 million compared to $1,565.6 million in the same period of 2023.

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 $183.9 million in 2024, compared to $449.6 million in 2023.

This $265.7 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.

• Timing of income tax payments contributed to an increase in operating cash of $138.5 million in 2024, compared to an increase of $83.2 million in 2023.

We generated cash of $396.7 million from operating activities in the first three months of 2025, a decrease of $172.5 million compared to $569.2 million in the same period of 2024.

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

• Other assets and liabilities consumed cash of $369.9 million in 2025, compared to $22.3 million in 2024.

This $347.6 million fluctuation was primarily driven by the timing of certain prepaid expenses and other current assets.

• Timing of income tax payments generated cash of $80.2 million in 2025, compared to $147.5 million in 2024.

This $67.4 million fluctuation was primarily due to the variance in actual tax expense for 2025 relative to the timing of quarterly estimated tax payments.

We paid cash of $38.9 million for income taxes during 2025 compared to $31.3 million in the same period of 2024.

• Other assets and liabilities consumed cash of $51.8 million in 2024, compared to $93.7 million in 2023.

This $42.0 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.

• 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, a write-down of equity investments, unrealized gains and losses on derivative contracts and other charges) resulted in $49.8 million of lower cash flow in 2025 relative to 2024.

• The decrease in cash provided by operating activities was partially offset by the following net cash inflows:

◦ In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, generated cash of $55.4 million in 2025, compared to consumed cash of $237.7 million in 2024.

This $293.0 million fluctuation was mainly driven by accounts receivable due to a decrease in sales, a decrease in accounts payable and accrued liabilities due to the timing of vendor and supplier payments, partially offset by higher inventory levels.

Investing activities

We used cash of $549.3 million for investing activities in the first nine months of 2024, a decrease of $186.2 million compared to $735.5 million in the same period of 2023.

We used cash of $147.0 million for investing activities in the first three months of 2025, a decrease of $80.6 million compared to $227.6 million in the same period of 2024.

This decrease in net cash used in investing activities was mainly driven by the following factors:

• Capital spending .

Capital expenditures, including capitalized software, primarily to support our ERP system implementation, capacity expansion, innovation and cost savings, were $471.4 million in the first nine months of 2024 compared to $548.6 million in the same period of 2023.

Capital expenditures, including capitalized software, capacity expansion, innovation and cost savings, were $145.5 million in the first three months of 2025 compared to $213.3 million in the same period of 2024.

The decrease in our 2025 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 2024 capital expenditures, including capitalized software, to approximate $575 million to $600 million, a slight decrease from our previously estimated range of $600 million to $625 million.

We expect 2025 capital expenditures, including capitalized software, to approximate $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 | Q3 2024 Form 10-Q | Page 42

• Investments in partnerships qualifying for tax credits .

We make investments in partnership entities that in turn make equity investments in projects eligible to receive federal historic and renewable energy tax credits.

We invested approximately $78.2 million in the first nine months of 2024, compared to $18.1 million in the same period of 2023.

• Business Acquisition .

In 2024, we had no acquisition activity.

In May 2023, we acquired Weaver for a cash purchase price of $165.8 million.

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

We received payments of approximately $3.6 million in the first three months of 2025, compared to investing $13.9 million in the same period of 2024.

• Other investing activities .

In the first nine months of 2024 and 2023, our other investing activities were minimal.

In the first three months of 2025 and 2024, our other investing activities were minimal.

The Hershey Company | Q1 2025 Form 10-Q | Page 35

Financing activities

We used cash of $847.0 million for financing activities in the first nine months of 2024, an increase of $62.6 million compared to $784.4 million in the same period of 2023.

This increase in net cash used in financing activities was mainly driven by the following factors:

We generated cash of $537.1 million for financing activities in the first three months of 2025, a increase of $758.8 million compared to cash used of $221.7 million in the same period of 2024.

This increase in net cash generated in financing activities was mainly driven by the following factors:

• Short-term borrowings, net.

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.

During the first nine months of 2024, we generated cash of $482.3 million predominately through the issuance of short-term commercial paper and an increase in short-term foreign bank borrowings.

During the first nine months of 2023, we generated cash of $126.1 million predominately through the issuance of short-term commercial paper, as well as an increase in short-term foreign bank borrowings.

During the first three months of 2025, we used cash of $1.2 billion to reduce short-term commercial paper borrowings and short-term foreign bank borrowings.

During the first three months of 2024, we generated cash of $569.9 million predominately through the issuance of short-term commercial paper, as well as an increase in short-term foreign bank borrowings.

• Long-term debt borrowings and repayments .

During the first nine months of 2024, we had no long-term debt borrowings or repayments activity.

During the first nine months of 2023, we issued $350 million of 4.250% Notes due in May 2028 and $400 million of 4.500% Notes due in May 2033 (the “2023 Notes”).

Proceeds from the issuance of the 2023 Notes, net of discounts and issuance costs, totaled $744,092.

Additionally, in May 2023 we repaid $250 million of 2.625% Notes and $500 million of 3.375% Notes due upon their maturity.

During the first three months of 2025, we issued $500 million of 4.550% Notes due in February 2028, $500 million of 4.750% Notes due in February 2030, $500 million of 4.950% Notes due in February 2032 and $500 million of 5.100% Notes due in February 2035 (together, the “2025 Notes”).

Proceeds from the issuance of the 2025 Notes, net of discounts and issuance costs, totaled $2.0 billion.

We had minimal repayment activity.

During the first three months of 2024, long-term debt borrowings and repayments were minimal.

• Dividend payments .

Total dividend payments to holders of our Common Stock and Class B Common Stock were $814.3 million during the first nine months of 2024, an increase of $163.0 million compared to $651.3 million in the same period of 2023.

Total dividend payments to holders of our Common Stock and Class B Common Stock were $271.6 million during the first three months of 2025, a decrease of $1.8 million compared to $273.4 million in the same period of 2024.

Details regarding our 2025 cash dividends paid to stockholders are as follows:

Quarter Ended

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

In millions of dollars except per share amounts March 30, 2025

Dividends paid per share – Common stock $ 1.370

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Total cash dividends paid $ 271.6

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

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

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

Declaration date February 5, 2025

Record date February 17, 2025

Payment date March 14, 2025

• Share repurchases .

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Details regarding our share repurchases are as follows:

The Hershey Company | Q3 2024 Form 10-Q | Page 43

Nine Months Ended

In millions September 29, 2024 October 1, 2023

Milton Hershey School Trust repurchase (1) $ — $ 239.9

Three Months Ended

In millions March 30, 2025 March 31, 2024

Shares repurchased in the open market under pre-approved share repurchase programs (1) — 400.0

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Total shares repurchased under pre-approved share repurchase programs — 2.0

(1) In February 2023, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Milton Hershey School Trust (the “School Trust”), pursuant to which the Company purchased 1,000,000 shares of the Company’s Common Stock from the Milton Hershey School Trust at a price equal to $239.91 per share, for a total purchase price of $239.9 million.

(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.

The Hershey Company | Q1 2025 Form 10-Q | Page 36

(1) In May 2021, our Board of Directors approved a $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.

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• Proceeds from exercised stock options and employee tax withholding.

During the first nine months of 2024, we received $13.8 million from employee exercises of stock options and paid $30.5 million of employee taxes withheld from share-based awards.

During the first nine months of 2023, we received $24.3 million from employee exercises of stock options and paid $34.1 million of employee taxes withheld from share-based awards.

During the first three months of 2025, we received $2.7 million from employee exercises of stock options and paid $12.6 million of employee taxes withheld from share-based awards.

During the first three months of 2024, we received $4.1 million from employee exercises of stock options and paid $26.4 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.

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The factors that could cause our actual results to differ materially from the results projected in our forward-looking statements include, but are not limited to the following:

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

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

• Disruption to our manufacturing operations or supply chain could impair our ability to produce or deliver finished products, resulting in a negative impact on our operating results;

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

• Increases in raw material and energy costs, along with the availability of adequate supplies of raw materials and our ability to successfully hedge against volatility in raw material pricing, could affect future financial results;

• Increases in raw material and energy costs along with the availability of adequate supplies of raw materials could continue to affect future financial results;

• Price increases may not be sufficient to offset cost increases and maintain profitability or may result in sales volume declines associated with pricing elasticity;

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• We may not fully realize the expected cost savings and/or operating efficiencies associated with our strategic initiatives or restructuring programs, which may have an adverse impact on our business;

• Changes in governmental laws and regulations could increase our costs and liabilities or impact demand for our products;

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

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

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• Disruptions, failures or security breaches of our information technology infrastructure could have a negative impact on our operations;

• Complications with the design, implementation or usage of our new enterprise resource planning system, including the ability to support post-implementation efforts and maintain enhancements, new features or modifications, could adversely impact our business and operations;

• Such other matters as discussed in our 2023 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarterly periods ending March 31, 2024 and June 30, 2024, and this Quarterly Report on Form 10-Q, including Part II, Item 1A, ”Risk Factors.”

• Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations;

• Such other matters as discussed in our 2024 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, including Part II, Item 1A, ”Risk Factors.”

We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date this Quarterly Report on Form 10-Q is filed.

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 2. Management’s Discussion and Analysis