What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-02-17 compared with 2025-02-18 · 40 added, 43 removed, 169 unchanged (33% of the section changed)

3 unchanged sentences

Risks Related to Our Business and Operations

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.

In order to sell our iconic, branded products, we need to maintain a good reputation with our customers, consumers, suppliers, vendors and employees, among others.

31 unchanged sentences

If we are not able to effectively retain and grow our talent, our ability to achieve our strategic objectives will be adversely affected, which may negatively impact our financial condition and results of operations.

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.

Climate-related changes can increase variability in, or otherwise impact, natural disasters, including weather patterns, with the potential for increased frequency and severity of significant weather events, natural hazards, rising mean temperature and sea levels, and long-term changes in precipitation patterns.

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

Climate and broader environmental-related changes can increase variability in, or otherwise impact, natural disasters, including weather patterns, with the potential for increased frequency and severity of significant weather events, natural hazards, rising mean temperature and sea levels, and long-term changes in precipitation patterns.

Climate change or weather-related disruptions to our supply chain can impact the availability and cost of materials needed for manufacturing, which may increase insurance and other operating costs.

Increased focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of GHG emissions.

New or increasing laws and regulations related to GHG emissions and other climate change related concerns may adversely affect us, our suppliers and our customers, and may require the Company to invest in additional capital investments to maintain compliance.

Increased focus on the financial impacts of environment and climate change has led to evolving legislative and regulatory efforts to deal with potential causes and adverse impacts of climate change, including regulation of GHG emissions.

Laws and regulations related to GHG emissions and other climate or environmental related concerns may adversely affect us, our suppliers and our customers, and may require the Company to invest in additional capital investments to maintain compliance.

Our value chain faces similar challenges as our products rely on agricultural ingredients and a global supply chain.

Climate change poses a significant and increasing risk to global food production systems and to the safety and resilience of the communities where we live, work and source our ingredients.

The GHG impacts of land-use change are most pronounced in our cocoa supply chain, where we have already been working for several years to prevent deforestation and build climate resilience.

Climate and broader changes in the environment pose a significant and increasing risk to global food production systems and to the safety and resilience of the communities where we live, work and source our ingredients.

The GHG impacts of land-use change are most pronounced in our cocoa supply chain, where we have already been working for several years to prevent deforestation and build climate and ingredient resilience.

Additionally, any non-compliance with legislative and regulatory requirements could negatively impact our reputation and ability to do business.

8 unchanged sentences

The Hershey Company | 2025 Form 10-K | Page 10

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

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

Risks Related to the Industry in Which We Operate

8 unchanged sentences

• Speculative influences;

• Trade agreements among producing and consuming nations;

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

• Supplier compliance with commitments;

3 unchanged sentences

• Changes in governmental agricultural programs and energy policies;

• Other events beyond our control such as the impacts on the business or supply chain arising from the ongoing conflict between Russia and Ukraine.

• Other events beyond our control such as the impacts on the business or supply chain from international conflicts or geopolitical tensions.

Although we use forward contracts and commodity futures and options contracts to hedge commodity prices where possible, commodity price increases ultimately result in corresponding increases in our raw material and energy costs.

For example, our cost of sales during the year ended 2024 compared to the same period of 2023 experienced an incremental $563.0 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases, more than offsetting higher commodity costs.

During the year ended 2024, market prices for the majority of our exchange traded commodities increased, including cocoa, which has increased approximately 130% since the beginning of the year.

For the year ended December 31, 2025, in addition to higher commodity costs, our cost of sales increased compared to the same period of 2024 as a result of $491.0 million of unfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases.

During the year ended 2025, market prices for the majority of our exchange traded commodities remained volatile, including cocoa which has decreased from record highs but remains structurally elevated.

We continue to monitor and use our risk management strategy where possible to hedge commodity prices in order to mitigate corresponding increases in our raw materials and energy costs, however, if we are unable to offset cost increases for major raw materials and energy, there could be a negative impact on our financial condition and results of operations.

1 unchanged sentence

We may be able to pass some or all raw material, energy, and other input cost increases to customers by increasing the selling prices of our products or decreasing the size of our products;

however, higher product prices or decreased product sizes may also result in a reduction in sales volume and/or consumption.

If we are not able to increase our selling prices or reduce product sizes (including if inflation outpaces our pricing elasticity) sufficiently, or in a timely manner, to offset increased raw material, energy or other input costs, including packaging, freight, tariffs, direct labor, overhead and employee benefits, or if our sales volume decreases significantly, there could be a negative impact on our financial condition and results of operations.

however, higher product prices or decreased product sizes have in the past and may in the future result in a reduction in sales volume and/or consumption.

If we are not able to increase our selling prices or reduce product sizes (including if inflation outpaces our pricing elasticity) sufficiently, or in a timely manner, to offset future increased raw material, energy or other input costs, including packaging, freight, tariffs, direct labor, overhead and employee benefits, or if our sales volume decreases significantly, there could be a negative impact on our financial condition and results of operations.

The Hershey Company | 2025 Form 10-K | Page 11

7 unchanged sentences

• Our ability to drive sustainable innovation and maintain a strong pipeline of new products in the confectionery and broader snacking categories;

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

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

• Our response to consumer demographics and trends, including but not limited to, trends relating to store trips and the impact of the growing digital commerce channel;

12 unchanged sentences

In addition, we may incur increased credit and other business risks because we operate in a highly competitive retail environment.

Furthermore, artificial intelligence (“AI”) technologies have developed rapidly, and our business may be adversely affected if we cannot successfully integrate AI into our business in a timely, cost-effective, and compliant manner.

Our competitors may incorporate AI into their business more successfully than us, which could have an adverse effect on our competitive position, reputation and operations.

Risks Related to Strategic Initiatives

9 unchanged sentences

If the acquisitions, divestitures, or joint ventures are not successfully implemented or completed, there could be a negative impact on our financial condition, results of operations and cash flows.

In November 2025, we completed the acquisition of LesserEvil, LLC, previously a privately held company that produces and sells organic popcorn and puffed snack products to retailers and distributors in the United States and

The Hershey Company | 2025 Form 10-K | Page 12

The acquisition complements Hershey’s existing portfolio and increases manufacturing capacity.

In 2024, we completed the acquisition of the Sour Strips brand from Actual Candy, LLC.

2 unchanged sentences

While we believe significant operating synergies can be obtained in connection with these acquisitions, achievement of these synergies will be driven by our ability to successfully leverage Hershey’s resources, expertise, capability-building, distribution locations and customer base.

In addition, the acquisitions of Dot’s and Pretzels in

The Hershey Company | 2024 Form 10-K | Page 12

2021 were important steps in our journey to expand our breadth in snacking, as they should enable us to bring scale and category management capabilities to a key sub-segment of the warehouse snack aisle.

If we are unable to successfully couple Hershey’s scale and expertise in brand building with the existing operations of our acquired brands, it may impact our ability to expand our snacking footprint at our desired pace.

19 unchanged sentences

• Failure to recruit, retain and build a talented and engaged global workforce.

Some of the risks of operating internationally have negatively affected our financial condition and results of operations, including the imposition of tariffs on U.S.

imports and associated retaliatory tariffs.

If we are not able to achieve our projected international growth objectives and mitigate the numerous risks and uncertainties associated with our international operations, there could be a negative impact on our financial condition and results of operations.

3 unchanged sentences

If we are not able to capture our share of the expanding digital commerce market, if we do not adequately leverage technology to improve operating efficiencies or if we are unable to develop the data analytics capabilities needed to generate actionable commercial insights, our business performance may be impacted, which may negatively impact our financial condition and results of operations.

Additionally, from time to time we implement business realignment activities to support key strategic initiatives designed to maintain long-term sustainable growth, such as the International Optimization Program, which we commenced in the fourth quarter of 2020 and completed in 2023.

This program was intended to increase our operating effectiveness and efficiency, to reduce our costs and/or to generate savings that can be reinvested in other areas of our business.

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

The Hershey Company | 2025 Form 10-K | Page 13

Initiative, which is a multi-year productivity program to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings.

Additionally, from time to time we implement business realignment activities to support key strategic initiatives designed to maintain sustainable long-term growth.

For instance, in February 2024, the Board of Directors approved the AAA Initiative, which is a multi-year productivity program to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings.

We cannot guarantee that we will be able to successfully implement these strategic initiatives and restructuring programs, that we will achieve or sustain the intended benefits under these programs, or that the benefits, even if achieved, will be adequate to meet our long-term growth and profitability expectations, which could in turn adversely affect our business.

Risks Related to Governmental and Regulatory Changes

Changes in governmental laws, regulations and policies 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.

Changes in U.S.

1 unchanged sentence

These negative impacts could result from changes in food and drug laws, laws related to advertising and marketing practices, accounting standards, taxation compliance and requirements, tariffs on U.S.

imports and retaliatory tariffs in response, competition laws, employment laws, import/export requirements and environmental laws, among others.

For example, the European Union’s Deforestation Regulation (“EUDR”) will require the Company to conduct extensive diligence on seven commodities, including cocoa, palm oil and soy, as well as products derived from these commodities, such as chocolate, and the value chain, to ensure the goods do not result from recent deforestation, forest degradation, or breaches of local laws in order to sell such products in the European Union market or exported from it.

The EUDR is scheduled to be effective in December 2025, following a one-year postponement.

The EUDR, and other current or proposed regulations in markets in which we operate, are likely to increase our compliance costs, could depress sales in such markets if our products are not in compliance by applicable effective dates, and could result in fines and penalties or reputational harm if we do not fully comply.

imports and retaliatory tariffs in response, competition laws, employment laws, import/export requirements, AI, and environmental laws, among others.

It is possible that we could become subject to additional liabilities in the future resulting from changes in laws and regulations that could result in an adverse effect on our financial condition and results of operations.

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

The EUDR is scheduled to be effective in December 2026, following a two-year postponement.

The EUDR, and other current or proposed regulations in markets in which we operate, are likely to increase our compliance costs, could depress sales in such markets if our products are not in compliance by applicable effective dates, and can result in fines and penalties or reputational harm if we do not fully comply.

Additionally, compliance with new and evolving laws, regulations or industry standards relating to AI may require significant investment and resources, and may limit our ability to use AI, which may result in reputational harm, legal liability or other adverse effects on our operations and overall business.

Political, economic and/or financial market conditions could negatively impact our financial results.

Our operations are impacted by consumer spending levels and impulse purchases, which are affected by general macroeconomic conditions, consumer confidence, employment levels, the availability of consumer credit and interest rates on that credit, consumer debt levels, energy costs and other factors.

Volatility in food and energy costs, sustained global recessions, broad political instability, rising unemployment, pandemic, or other outbreak of disease, climate change, weather, natural and other disasters, changing consumer demand, and declines in personal spending could adversely impact our revenues, profitability and financial condition.

Volatility in food and energy costs, sustained global recessions, broad political instability, rising unemployment, pandemic, or other outbreaks of disease, climate change, weather, natural and other disasters, changing consumer demand, and declines in personal spending can adversely impact our revenues, profitability, and financial condition.

Changes in financial market conditions may make it difficult to access credit markets on commercially acceptable terms, which may reduce liquidity or increase borrowing costs for our Company, our customers and our suppliers.

A significant reduction in liquidity could increase counterparty risk associated with certain suppliers and service providers, resulting in disruption to our supply chain and/or higher costs, and could impact our customers, resulting in a reduction in our revenue, or a possible increase in bad debt expense.

Additionally, in February 2022, Russia invaded Ukraine and this conflict is still ongoing.

In response, the U.S.

and other countries have imposed sanctions on Russia and may impose further sanctions that could damage or disrupt international commerce and the global economy.

With respect to the conflict between Russia and Ukraine, the situation remains dynamic and subject to rapid and possibly material change.

The Company’s efforts to manage and mitigate any direct or indirect effects from this conflict may ultimately be unsuccessful, and the effectiveness of these efforts depends on factors beyond our control, including the duration of the conflict and potential governmental actions.

The potential effects of the ongoing conflict between Russia and Ukraine may also impact many of the other risk factors described herein.

The Hershey Company | 2025 Form 10-K | Page 14

4 unchanged sentences

These processes collect, interpret, and distribute business data and communicate internally and externally with employees, suppliers, customers, and other third parties.

We are regularly the target of cyber, ransomware and other security threats.

We, and our third-party service providers, are regularly the target of rapidly evolving cyber threats, including denial of service attacks, ransomware, spyware, misinformation, phishing/smishing/vishing attacks, business compromise attacks, typosquatting, automated attacks, employee errors, negligence or malfeasance, the use of malicious codes or worms, payment fraud, and other unauthorized occurrences on, or conducted through, our or our third-party service providers' information systems and networks.

Therefore, we continuously monitor and update our information technology networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact.

10 unchanged sentences

The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time, and the sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so.

AI technologies may amplify certain existing technology-related risks such as cybersecurity threats, data privacy concerns, and intellectual property challenges.

Despite continued vigilance in these areas, disruptions in or failures of information technology systems are possible and could have a negative impact on our operations or business reputation.

4 unchanged sentences

We rely extensively on information systems and technology to manage our business and summarize operating results.

We are in the process of a multi-year implementation of a new global enterprise resource planning (“ERP”) system;

specifically, in April 2024, we operationalized the final phase of our project by implementing our new ERP system in the North America Confectionery segment and select business units included in our International segment.

This ERP system replaces our legacy operating and financial systems and is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of the business.

We operationalized the final phase of our multi-year implementation of a new global enterprise resource planning (“ERP”) system in April 2024, by implementing the new system in the North America Confectionery segment and select business units included in our International segment.

This ERP system replaced our legacy operating and financial systems and is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of the business.

The ERP system implementation process has required, and will continue to require, the investment of significant personnel and financial resources as we support post-implementation efforts and system functionality.

We may not be able to successfully support post-implementation efforts without experiencing delays, increased costs, and other difficulties.

Any disruptions or difficulties in using our ERP system could result in harm to our business, including our ability to forecast, manufacture or facilitate the shipment of our product, record net sales and collect our outstanding receivables.

If we are unable to successfully manage post-implementation efforts related to our new ERP system as planned, our financial positions, results of operations and cash flows could be negatively impacted.

Additionally, if the ERP system does not operate as intended, the

Any disruptions or difficulties in using our ERP system could result in harm to our business,

The Hershey Company | 2025 Form 10-K | Page 15

effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess those controls adequately could be further delayed.

including our ability to forecast, manufacture or facilitate the shipment of our product, record net sales and collect our outstanding receivables.

Additionally, if the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess those controls adequately could be further delayed.

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

What changed 10-K

Item 1A. Risk Factors