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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-05-01 · 183 added, 114 removed, 234 unchanged (56% of the section changed)

1 unchanged sentence

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 March 30, 2025 (“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 June 29, 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.

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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.

The Company expects the acquisition to close by the end of 2025, pending the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and satisfaction of other customary closing conditions.

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

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TRENDS AFFECTING OUR BUSINESS

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.

Throughout the first six months of 2025, we saw positive consumer behavior shifts towards our products, as well as increased net sales;

however, we continued to experience a dynamic macroeconomic environment, including continued price volatility related to select commodities, resulting in corresponding incremental costs and gross margin pressures, 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).

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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.

For the six months ended June 29, 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.

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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;

As a result, the Company has announced the decision to remove all certified Food, Drug & Cosmetic colors from our great tasting snacks by the end of 2027, as a continued effort to ensure consumers have options to fit their lifestyle while maintaining trust and confidence in our products.

This did not have a material impact on our consolidated results for the six months ended June 29, 2025, and based on the Company’s initial assessment, the estimated costs associated with this removal are not expected to have a material impact on our financial position, results of operations or liquidity.

As of June 29, 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.

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CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended

March 30, 2025 March 31, 2024 Percent Change

Three Months Ended Six Months Ended

June 29, 2025 June 30, 2024 Percent Change June 29, 2025 June 30, 2024 Percent Change

In millions of dollars except per share amounts

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SM&A expense as a percent of net sales 23.1 % 26.1 % 21.4 % 21.8 %

Business realignment activities 16.4 — NM

Business realignment activities 0.3 4.9 (94.8) % 16.6 4.9 236.8 %

Operating profit 192.8 287.9 (33.0) % 562.0 1,345.9 (58.2) %

8 unchanged sentences

NM = not meaningful

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 our North America Confectionery segment.

Results of Operations - Second Quarter 2025 vs.

Second Quarter 2024

Net sales were $2,614.7 million in the second quarter of 2025 compared to $2,074.5 million in the same period of 2024, an increase of $540.2 million, or 26.0%.

The net sales increase reflects a volume increase of approximately 21%, related to everyday core U.S.

confection, as a result of planned inventory decreases in 2024 within the North America Confectionery and International segments after our ERP system implementation, which was completed in the beginning of the second quarter of 2024.

Additionally, the timing of the Easter season in 2025 versus 2024, and higher Halloween seasonal orders in the second quarter of 2025, were favorable volume drivers.

The net sales increase was further driven by favorable price realization of approximately 5% primarily related to higher list prices across the North America Confectionery and International segments.

The net sales increase was partially offset by foreign currency exchange rates, which resulted in an unfavorable impact of less than 1%.

Marketplace Metrics

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.

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.

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

retail takeaway increased 18.5% 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 increased 21.8% and experienced a CMG market share increase of 90 basis points.

Our Salty consumer takeaway increased 6.1% in the second quarter of 2025 and experienced a Salty market share increase of 26 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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Cost of Sales and Gross Margin

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.

Cost of sales were $1,818.4 million in the second quarter 2025 compared to $1,240.7 million in the same period of 2024, an increase of $577.7 million, or 46.6%.

The increase was driven by $592.0 million of higher costs, primarily due to unfavorable commodity costs from cocoa, as well as higher sales volume.

The increase was partially offset by declines of $14.3 million, primarily related to declines in business realignment expenses, $6.8 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), and favorable foreign exchange rates.

Gross margin was 30.5% in the second quarter of 2025 compared to 40.2% in the same period of 2024, a decrease of 970 basis points.

The decrease was driven by unfavorable commodity costs and higher supply chain costs, partially offset by higher sales volume, favorable price realization, and favorable activity on our mark-to-market impact from commodity derivative instruments.

SM&A Expenses

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 7.0% 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.

SM&A expenses were $603.2 million in the second quarter of 2025 compared to $541.0 million in the same period of 2024, an increase of $62.2 million, or 11.5%.

Total advertising and related consumer marketing expenses increased 35.5% driven primarily by an increase in the North America Confectionery segment.

SM&A expenses, excluding advertising and related consumer marketing, increased 2.2% in the second quarter of 2025 driven by higher compensation costs, partially offset by $11.1 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 $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.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded business realignment costs of $0.3 million during the second quarter of 2025 versus $4.9 million in the second quarter of 2024.

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

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

Operating Profit and Operating Profit Margin

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.

Operating profit was $192.8 million in the second quarter of 2025 compared to $287.9 million in the same period of 2024, a decrease of $95.1 million, or 33.0%.

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

Operating profit margin decreased to 7.4% in 2025 from 13.9% in 2024 driven by the same factors noted above that resulted in lower gross margin for the period.

Interest Expense, Net

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.

Net interest expense was $46.0 million in the second quarter of 2025 compared to $41.4 million in the same period of 2024, an increase of $4.6 million, or 11.3%.

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

Other (Income) Expense, Net

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.

Other (income) expense, net was net income of $2.3 million in the second quarter of 2025 versus net expense of $0.6 million in the second quarter of 2024, a net income increase of $2.9 million, or 507.0%.

The increase in net income was driven by a gain of $3.6 million on a previously held investment in 2025 versus the second 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 | Q2 2025 Form 10-Q | Page 38

Income Taxes and Effective Tax Rate

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.

The effective income tax rate was 57.9% for the second quarter of 2025 compared with 26.4% for the second quarter of 2024.

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

Relative to the 21% statutory rate, the 2024 effective tax rate was primarily impacted by state taxes, tax reserves and unfavorable foreign rate differential, partially offset by the benefit of employee share-based payments.

Net Income and Earnings Per Share-diluted

Net income was $62.7 million in the second quarter of 2025 compared to $180.9 million in the same period of 2024, a decrease of $118.2 million, or 65.3%.

EPS-diluted was $0.31 in the second quarter of 2025 compared to $0.89 in the second quarter of 2024, a decrease of $0.58, or 65.2%.

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

Results of Operations - First Six Months 2025 vs.

First Six Months 2024

Net sales were $5,420.1 million in the first six months of 2025 compared to $5,327.2 million during the same period of 2024, an increase of $92.9 million, or 1.7%.

The net sales increase was driven by favorable price realization of approximately 3% across our reportable segments.

The net sales increase was partially offset by a volume decrease of approximately 1%, primarily driven by the North America Confectionery segment, as well as unfavorable foreign currency exchange impact of approximately 1%.

Marketplace Metrics

For the first six months of 2025, our total U.S.

retail takeaway increased 4.4% 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 increased 4.0% and experienced a CMG market share increase of 7 basis points.

Our Salty consumer takeaway increased 8.0% and experienced a Salty market share increase of 31 basis points.

Cost of Sales and Gross Margin

Cost of sales were $3,679.6 million in the first six months of 2025 compared to $2,817.4 million in the same period of 2024, an increase of $862.2 million, or 30.6%.

The increase was driven by $980.1 million of higher costs, primarily related to $244.9 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) and unfavorable commodity costs from cocoa.

The increase was partially offset by $118.6 million of lower costs, primarily driven by lower supply chain costs and lower business realignment costs.

Gross margin was 32.1% in the first six months of 2025 compared to 47.1% in the same period of 2024, a decrease of 1,500 basis points.

The decrease was driven by higher commodity costs, unfavorable year-over-year mark-to-market impact from commodity derivative instruments, unfavorable product mix, and volume declines.

The decrease was partially offset by lower supply chain costs and decreased business realignment costs.

SM&A Expenses

SM&A expenses were $1,161.9 million in the first six months of 2025 compared to $1,159.0 million in the same period of 2024, an increase of $2.9 million, or 0.3%.

Total advertising and related consumer marketing expenses increased 6.0%, driven by increases in the North America Confectionery and North America Salty Snacks segments.

SM&A expenses, excluding advertising and related consumer marketing, decreased approximately 2.5% in the first six months of 2025 driven primarily by a decrease of $15.7 million of incremental business realignment costs, partially offset by higher compensation costs.

The Hershey Company | Q2 2025 Form 10-Q | Page 39

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 $16.6 million during the first six months of 2025 versus $4.9 million in the first six months 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 $562.0 million in the first six months of 2025 compared to $1,345.9 million in the same period of 2024, a decrease of $783.9 million, or 58.2%.

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

Operating profit margin decreased to 10.4% in the first six months of 2025 from 25.3% in the same period in 2024 driven by the same factors that resulted in lower gross margin for the period.

Interest Expense, Net

Net interest expense was $90.7 million in the first six months of 2025 compared to $81.2 million in the same period of 2024, an increase of $9.5 million, or 11.7%.

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

Other (Income) Expense, Net

Other (income) expense, net was a net income of $1.4 million in the first six months of 2025 versus a net expense of $32.6 million in the first six months of 2024, a net income increase of $34.0 million, or 104.3%.

The change was predominantly driven by no write-downs on equity investments qualifying for tax credits in the first six months of 2025 versus $31.4 million of write-downs on equity investments qualifying for tax credits in the first six months of 2024.

This was partially offset by an increase of $1.4 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 39.3% for the first six months of 2025 compared with 20.6% for the first six months of 2024.

Relative to the 21% statutory rate, the 2025 effective tax rate was primarily impacted by tax reserves, foreign rate 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.

Net Income and Earnings Per Share-diluted

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.

Net income was $286.9 million in the first six months of 2025 compared to $978.3 million in the same period of 2024, a decrease of $691.4 million, or 70.7%.

EPS-diluted was $1.41 in the first six months of 2025 compared to $4.80 in the same period of 2024, a decrease of $3.39, or 70.6%.

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 higher other income and lower income taxes.

The Hershey Company | Q2 2025 Form 10-Q | Page 40

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

Three Months Ended

March 30, 2025 March 31, 2024

Three Months Ended Six Months Ended

June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024

In millions of dollars

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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 82.0% 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

North America Confectionery results, which accounted for 24.2% and 29.4% of our net sales for the three months ended June 29, 2025 and June 30, 2024, respectively, were as follows:

Three Months Ended Six Months Ended

June 29, 2025 June 30, 2024 Percent Change June 29, 2025 June 30, 2024 Percent Change

In millions of dollars

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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.

Results of Operations - Second Quarter 2025 vs.

Second Quarter 2024

Net sales of our North America Confectionery segment were $2,085.5 million in the second quarter of 2025 compared to $1,579.8 million in the same period of 2024, an increase of $505.7 million, or 32.0%.

The increase was driven by volume increases of approximately 25%, primarily due to the planned inventory decreases in 2024 after our ERP system implementation, which was completed in the second quarter of 2024.

Additionally, the timing of the Easter season in 2025 versus 2024, and higher Halloween seasonal orders in the second quarter of 2025, were favorable volume drivers.

The increase was further driven by a favorable price realization of approximately 6%, primarily due to list price increases on certain products across our portfolio.

Our North America Confectionery segment income was $503.9 million in the second quarter of 2025 compared to $464.5 million in the same period of 2024, an increase of $39.4 million, or 8.5%.

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

Results of Operations - First Six Months 2025 vs.

First Six Months 2024

Net sales of our North America Confectionery segment were $4,385.6 million in the first six months of 2025 compared to $4,287.1 million in the same period of 2024, an increase of $98.5 million, or 2.3%.

The increase was driven by favorable price realization of approximately 4%, primarily driven by 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 income was $1,200.3 million in the first six months of 2025 compared to $1,412.7 million the same period of 2024, a decrease of $212.4 million or 15.0%.

The decrease was primarily due to higher commodity costs, higher supply chain costs, volume declines and higher advertising and related consumer marketing costs.

The decrease was partially offset by favorable price realization 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 9.9% 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

North America Salty Snacks results, which accounted for 21.1% and 18.0% of our net sales for the three months ended June 29, 2025 and June 30, 2024, respectively, were as follows:

Three Months Ended Six Months Ended

June 29, 2025 June 30, 2024 Percent Change June 29, 2025 June 30, 2024 Percent Change

In millions of dollars

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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.

Results of Operations - Second Quarter 2025 vs.

Second Quarter 2024

Net sales of our North America Salty Snacks segment were $315.5 million in the second quarter of 2025 compared to $289.9 million in the same period of 2024, an increase of $25.6 million, or 8.8%.

The increase was predominantly due to favorable price realization of approximately 5%, primarily driven by promotion rates, as well as volume increases of approximately 4%, primarily driven by Dot’s Homestyle Pretzels .

Our North America Salty Snacks segment income was $66.5 million in the second quarter of 2025 compared to $52.2 million in the same period of 2024, an increase of $14.3 million, or 27.4%.

The increase was primarily due to volume increases and favorable price realization and net savings from the execution of our AAA Initiative.

Results of Operations - First Six Months 2025 vs.

First Six Months 2024

Net sales of our North America Salty Snacks segment were $593.3 million in the first six months of 2025 compared to $565.0 million the same period of 2024, an increase of $28.3 million, or 5.0%.

The increase reflects a favorable price realization of approximately 5% primarily driven by promotion rates.

The increase was further driven by volume growth of approximately 4%, primarily related to Dot’s Homestyle Pretzels and SkinnyPop.

Our North America Salty Snacks segment income was $108.3 million in the first six months of 2025 compared to $90.9 million the same period of 2024, an increase of $17.4 million, or 19.2%.

The increase was primarily due to volume increases and favorable price realization, as noted above, and lower supply chain costs.

The increase was partially offset by higher 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 (“MEA”) and other regions.

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

We currently have operations and manufacture product in Mexico, Brazil, India and Malaysia, primarily for consumers in these regions, and also distribute and sell confectionery products in export markets of Latin America, as well as Europe, Asia-Pacific (“APAC”), the Middle East and Africa (“MEA”) and other regions.

International results, which accounted for 9.3% and 12.2% of our net sales for the three months ended June 29, 2025 and June 30, 2024, respectively, were as follows:

Three Months Ended Six Months Ended

June 29, 2025 June 30, 2024 Percent Change June 29, 2025 June 30, 2024 Percent Change

In millions of dollars

3 unchanged sentences

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.

Results of Operations - Second Quarter 2025 vs.

Second Quarter 2024

Net sales of our International segment were $213.7 million in the second quarter of 2025 compared to $204.8 million in the same period of 2024, an increase of $8.9 million, or 4.4%.

The increase was due to volume increases of approximately 9%, primarily attributable to MEA, and World Travel Retail, as well as favorable price realization of approximately 1%, driven by Mexico, Brazil and Latin America.

The increase was partially offset by unfavorable impact from foreign currency exchange rates of approximately 6%, driven by Mexico, Brazil and Latin America.

Our International segment generated income of $19.8 million in the second quarter of 2025 compared to $25.0 million in the second quarter of 2024, a decrease of $5.2 million, or 20.8%, driven primarily by unfavorable foreign currency exchange rates, as well as increased commodity and supply chain costs, partially offset by volume increases, favorable price realization, and net savings from the execution of our AAA Initiative.

Results of Operations - First Six Months 2025 vs.

First Six Months 2024

Net sales of our International segment were $441.2 million in the first six months of 2025 compared to $475.1 million the same period of 2024, a decrease of $33.9 million, or 7.1%.

The decrease was due to an unfavorable impact from foreign currency exchange rates of approximately 7%, driven by Mexico, Brazil and Latin America, and volume declines of approximately 1%, primarily attributable to APAC and India and Mexico, Brazil and Latin America.

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

Our International segment generated income of $48.5 million in the first six months of 2025 compared to $67.8 million in the first six months of 2024, a decrease of $19.3 million, or 28.4%, driven primarily by an unfavorable impact from foreign currency exchange rates, volume declines, higher supply chain costs, and increased commodity costs, partially offset by favorable price realization.

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 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.

In the second quarter of 2025, unallocated corporate expense totaled $181.5 million, as compared to $161.5 million in the second quarter of 2024, an increase of $20.0 million, or 12.4%.

The increase was primarily driven by higher compensation and benefits costs, partially offset by decreased investments in capabilities and technology, as a result of the completion of the upgrade of the Company’s ERP system across the enterprise in 2024, and lower acquisition and integration costs.

In the first six months of 2025, unallocated corporate expense totaled $342.0 million, as compared to $334.4 million in the first six months of 2024, an increase of $7.6 million, or 2.3%.

The increase was primarily driven by higher compensation and benefits costs, partially offset by lower investments in capabilities and technology, as a result of the completion of the upgrade of the Company’s ERP system across the enterprise in 2024, as well as lower acquisition and integration 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 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.

At June 29, 2025, our cash and cash equivalents totaled $0.9 billion, an increase of $181.6 million compared to the 2024 year-end balance.

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

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.

Additionally, at June 29, 2025, we had outstanding short- and long-term debt totaling $5.6 billion, of which $303.0 million was classified as the current portion of long-term debt.

Of the $303.0 million, $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 55% of the balance of our cash and cash equivalents at March 30, 2025 was held by subsidiaries domiciled outside of the United States.

Approximately 70% of the balance of our cash and cash equivalents at June 29, 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:

Three Months Ended

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

Six Months Ended

In millions of dollars June 29, 2025 June 30, 2024

Net cash provided by (used in):

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Operating activities

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.

We generated cash of $508.9 million from operating activities in the first six months of 2025, a decrease of $385.8 million compared to $894.7 million in the same period of 2024.

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

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This $400.9 million fluctuation was primarily driven by the timing of certain prepaid expenses and other current assets.

• In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, generated cash of $204.3 million in 2025, compared to consumed cash of $141.2 million in 2024.

This $63.1 million fluctuation was mainly driven by a decrease in accounts payable and accrued liabilities due to the timing of vendor and supplier payments and a decrease in accounts receivable, partially offset by higher inventory levels.

• 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 $20.0 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:

◦ Timing of income tax payments generated cash of $162.8 million in 2025, compared to $63.6 million in 2024.

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We paid cash of $65.5 million for income taxes during 2025 compared to $165.5 million in the same period of 2024.

• 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 $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.

We used cash of $301.8 million for investing activities in the first six months of 2025, a decrease of $87.9 million compared to $389.7 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, 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.

Capital expenditures, including capitalized software, primarily to support our ERP system implementation, capacity expansion, innovation and cost savings, were $230.6 million in the first six months of 2025 compared to $343.5 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.

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

We received payments of approximately $9.0 million in the first six months of 2025, compared to investing $46.1 million in the same period of 2024.

The Hershey Company | Q2 2025 Form 10-Q | Page 42

• Intangible assets .

In the first six months of 2025, we purchased the Fulfil brand in North America for $73.6 million.

• Other investing activities .

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

Financing activities

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:

We used cash of $22.5 million for financing activities in the first six months of 2025, a decrease of $430.4 million compared to cash used of $452.9 million in the same period of 2024.

This decrease in net cash used 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 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.

During the first six 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 six months of 2024, we generated cash of $610.0 million predominately through the issuance of short-term commercial paper, partially offset by a decrease in short-term foreign bank borrowings.

• Long-term debt borrowings and repayments .

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”).

During the first six 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.

Additionally, in June 2025, we repaid $300 million of 0.900% Notes due upon maturity.

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

• Dividend payments .

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.

Total dividend payments to holders of our Common Stock and Class B Common Stock were $542.8 million during the first six months of 2025, a decrease of $1.1 million compared to $543.9 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 30, 2025

In millions of dollars except per share amounts March 30, 2025 June 29, 2025

Dividends paid per share – Common stock $ 1.370 $ 1.370

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Total cash dividends paid $ 271.6 $ 271.2

Declaration date February 5, 2025

Record date February 17, 2025

Payment date March 14, 2025

Declaration date February 5, 2025 April 30, 2025

Record date February 17, 2025 May 16, 2025

Payment date March 14, 2025 June 16, 2025

• Share repurchases .

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Details regarding our share repurchases are as follows:

Three Months Ended

In millions March 30, 2025 March 31, 2024

Six Months Ended

In millions June 29, 2025 June 30, 2024

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

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• Proceeds from exercised stock options and employee tax withholding.

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.

During the first six months of 2025, we received $6.9 million from employee exercises of stock options and paid $16.2 million of employee taxes withheld from share-based awards.

During the first six months of 2024, we received $8.2 million from employee exercises of stock options and paid $30.0 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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• 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.”

• Such other matters as discussed in our 2024 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ending March 30, 2025, 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