What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-17 compared with 2025-02-18 · 162 added, 158 removed, 518 unchanged (38% of the section changed)

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(i) North America Confectionery, (ii) North America Salty Snacks and (iii) International, as discussed in Note 13 to the Consolidated Financial Statements.

Our vision is to be a leading snacking powerhouse.

Our vision is to lead the future of snacking.

We aspire to be a leader in meeting consumers’ evolving snacking needs while strengthening the capabilities that drive our growth.

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The uncertain macroeconomic environment in many of these markets is expected to continue and we aim to ensure our investments in these international markets are appropriate relative to the size of the opportunity.

The Hershey Company | 2024 Form 10-K | Page 22

• Expand Competitive Advantage through Differentiated Capabilities .

In order to generate actionable insights, we must acquire, integrate, access and utilize vast sources of the right data in an effective manner.

We are working to leverage our advanced data and analytical techniques to gain a deep understanding of our consumers, our customers, our shoppers, our end-to-end supply chain, our retail environment and key economic drivers at both a macro and precision level, including digital transformation and new media models.

We are working to

The Hershey Company | 2025 Form 10-K | Page 22

leverage our advanced data and analytical techniques to gain a deep understanding of our consumers, our customers, our shoppers, our end-to-end supply chain, our retail environment and key economic drivers at both a macro and precision level, including digital transformation and new media models.

In addition, we are in the process of transforming our supply chain capabilities and enterprise resource planning system, which will enable employees to work more efficiently and effectively.

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These surveys are further supplemented with quarterly and informative enterprise summits and team “Ask Me Anything” meetings, which, in conjunction with the continuous listening surveys, generate stronger employee engagement with the Company’s strategy, initiatives and leadership.

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

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

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

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

gender pay equity and aggregate U.S.

salary people of color pay equity.

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

Through our focus on sustainability and social impact across our value chain, we continue to improve and focus on the lives of cocoa farmers and cocoa communities, the environmental priorities of climate change and the role of packaging in our business, responsibly and sustainably sourcing the inputs to our products and increasing investments in human rights and diversity initiatives and growing diverse representation across the organization.

In 2025, we maintained equitable pay achievements, including aggregate salary U.S.

gender pay equity.

◦ We continue to make progress on our sustainability strategy and continue to elevate these important initiatives for a greater global impact.

Through our focus on sustainability and social impact across our value chain, we continue to embed resilience into our enterprise, including how we source ingredients, operate with efficiency, and produce a portfolio of products for a range of consumer needs.

We operate our business with all stakeholders in mind and with a view toward long-term sustainability and value creation.

Hershey is a global confectionery leader known for making more moments of goodness through chocolate, sweets, mints and other great tasting snacks.

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Business Acquisitions

On November 18, 2025, we completed the acquisition of LesserEvil, LLC (“LesserEvil”), previously a privately held company that produces and sells organic popcorn and puffed snack products to retailers and distributors in the United States and Canada.

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

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 2024, U.S.

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

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

As such, for the year ended December 31, 2024,we continued to experience a dynamic macroeconomic environment, including price volatility related to select commodities, resulting in corresponding incremental costs and gross margin pressures, and net sales and net income declines.

Despite specific actions taken to mitigate these gross margin pressures, we continue to experience overall declines in consumer demands for our products, and higher prices for direct materials used to manufacture our products were, and continue to be, the primary incremental cost to our business (see Consolidated Results of Operations included in this MD&A).

We utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which experienced a market price increase of approximately 70% throughout 2024 (see Item 7A - Quantitative and Qualitative Disclosures about Market Risk included in this Annual Report on Form 10-K).

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

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

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

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

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

Throughout 2025, we experienced net sales growth, positive changes in consumer behavior, and price elasticity despite the persistent dynamic macro environment.

However, increasing inflationary pressures, including ongoing price volatility for select commodities and higher manufacturing costs, continued to challenge the business.

Despite a strategic pricing action in the third quarter combined with other specific actions taken to mitigate these gross margin pressures, our direct inputs 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 Item 7A - Quantitative and Qualitative Disclosures about Market Risk included in this Annual Report on Form 10-K).

Furthermore, changes in global trade policies, including tariffs on U.S.

imports, continue to increase global economic and political uncertainty.

For the year ended December 31, 2025, the imposition of tariffs on U.S.

imports and retaliatory tariffs, had a material negative impact on our results of operations and commodity prices.

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, evolving priorities of the U.S.

administration, such as leadership changes at the U.S.

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

Food and Drug Administration (“FDA”) in early 2025, as well as the Make America Healthy Again movement, subject the food industry 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, the FDA announced that it would be phasing out the approved use of petroleum-based synthetic dyes in food products.

Therefore, in an effort to be responsive to the evolving regulatory environment and to ensure consumers have options to fit their lifestyle while maintaining trust and confidence in our products, we announced our decision to remove all certified Food, Drug & Cosmetic colors from our great tasting snacks by the end of 2027.

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 December 31, 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;

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

Based on the length and severity of 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 | 2025 Form 10-K | Page 24

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Net sales were $11,692.6 million in 2025 compared to $11,202.3 million in 2024, an increase of $490.3 million, or 4.4%.

The net sales increase reflects a favorable price realization of approximately 6% primarily due to higher list prices across all three segments, as well as a benefit of approximately 1% from the 2024 acquisition of Sour Strips and the 2025 acquisition of LesserEvil.

The increase was partially offset by a volume decrease of approximately 1%, primarily driven by price elasticity impacts within the North America Confectionery and International segments, partially offset by strong results in North America Salty Snacks.

The increase was further offset by an unfavorable foreign currency exchange impact of less than 1%.

2024 compared with 2023

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

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

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

2023 compared with 2022

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

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

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

confection brands.

Marketplace Metrics

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retail takeaway increased 5.4% in the expanded multi-outlet combined plus convenience store channels (MULO+ w/ Convenience), which includes candy, mint, gum, salty snacks and grocery items.

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

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

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

confectionery retail business.

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

candy, mint and gum (“CMG”) consumer takeaway increased 4.9% and experienced a CMG market share decline of approximately 10 basis points.

Our Salty consumer takeaway increased 11.3% and experienced a Salty market share increase of approximately 40 basis points.

The Hershey Company | 2025 Form 10-K | Page 25

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

confectionery and salty snack retail businesses.

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

These metrics are based on measured market scanned purchases as reported by Circana, the Company’s market insights and analytics provider, and provide a means to assess our retail takeaway and market position relative to the overall category.

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2025 compared with 2024

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

The decrease included $637.9 million of favorable costs, driven by an incremental $563.0 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Item 7A - Quantitative and Qualitative Disclosures About Market Risk for more information) and lower costs, primarily related to lower sales volume, in line with the declines in net sales noted above.

Cost of sales were $7,769.9 million in 2025 compared to $5,901.4 million in 2024, an increase of $1,868.5 million, or 31.7%.

The increase was driven by $1,965.1 million of unfavorable costs, primarily related to $736.6 million in higher commodity costs, $287.2 million in higher supply chain costs, including tariffs, as well as $491.0 million of unfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Item 7A - Quantitative and Qualitative Disclosures About Market Risk for more information).

The increase was partially offset by $96.6 million of favorable cost savings due to lower sales volume and lower business realignment costs.

Gross margin was 33.5% in 2025 compared with 47.3% in 2024, a decrease of approximately 1,380 basis points.

The decrease was driven by higher commodity and tariff costs, unfavorable mark-to-market activity on our commodity derivative instruments and lower volume, which more than offset the benefits from net price realization, supply chain productivity, and net savings related to our Advancing Agility & Automation Initiative (“AAA Initiative”).

2024 compared with 2023

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

The decrease included $637.9 million of favorable costs, by an incremental $563.0 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases and lower costs, primarily related to lower sales volume, in line with the declines in net sales noted above.

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

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

SM&A Expenses

2025 compared with 2024

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

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

The increase was further driven by an incremental $97.7 million of unfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases.

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

Gross margin was 44.8% in 2023 compared with 43.2% in 2022, an increase of 160 basis points.

The increase was driven by favorable price realization and increased supply chain productivity.

The increase was partially offset by unfavorable activity on our mark-to-market impact from commodity derivative instruments, higher supply chain costs, including higher labor costs and increased waste.

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

Selling, Marketing and Administrative

SM&A expenses were $2,460.6 million in 2025 compared to $2,373.6 million in 2024, an increase of $87.0 million, or 3.7%.

The increase was driven by higher compensation and benefit costs and investments in advertising and related consumer marketing expenses.

Total advertising and related consumer marketing expenses increased 3.7%, driven by North America Salty Snacks.

SM&A expenses, excluding advertising and related consumer marketing, increased approximately 4.2% in 2025 driven by higher compensation costs, partially offset by net savings related to our AAA Initiative.

2024 compared with 2023

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

SM&A expenses were $2,373.6 million in 2024 compared to $2,436.5 million in 2023, a decrease of $62.9 million, or 2.6%.

The decrease was driven by lower corporate expenses.

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

2023 compared with 2022

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

The increase was driven by increased corporate expenses.

Total advertising and related consumer marketing expenses increased 12.2% driven by North America Confectionery and North America Salty Snacks.

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

The Hershey Company | 2025 Form 10-K | Page 26

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.

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

The 2024 costs related primarily to the Advancing Agility &

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

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

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

The 2023 and 2022 costs related primarily to the International Optimization Program, a program focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), in 2025, 2024 and 2023, we recorded business realignment costs of $20.6 million, $29.1 million and $0.4 million, respectively.

The 2025 and 2024 costs related to the AAA Initiative that the Board of Directors approved in February 2024.

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

The 2023 costs related to the International Optimization Program, a program focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward.

This program was completed in 2023.

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

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2025 compared with 2024

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

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

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

Operating profit was $1,441.5 million in 2025 compared to $2,898.2 million in 2024, a decrease of $1,456.7 million, or 50.3%.

The decrease was predominantly 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 12.3% in 2025 from 25.9% in 2024 by the same factors noted above in gross margin.

2024 compared with 2023

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

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

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

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

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

Interest Expense, Net

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Net interest expense was $190.2 million in 2025 compared to $165.7 million in 2024, an increase of $24.5 million, or 14.8%.

The increase was primarily due to higher short-term debt balances in 2024 compared to 2023, specifically related to outstanding commercial paper.

The increase in the expense was partially offset by a decrease in short-term foreign bank borrowings and an increase in interest income

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

The increase was partially offset by a decrease in short-term interest expense and an increase in interest income.

2024 compared with 2023

Net interest expense was $165.7 million in 2024 compared to $151.8 million in 2023, an increase of $13.9 million, or 9.1%.

The increase was primarily due to higher rates on short-term debt balances in 2023 versus 2022, specifically related to outstanding commercial paper borrowings, and higher rates on long-term debt balances, specifically related to the $350 million 4.25% Notes due in May 2028 and $400 million 4.50% Notes due in May 2033, each of which were issued in May 2023.

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

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

The increase in the expense was partially offset by a decrease in short-term foreign bank borrowings and an increase in interest income.

Other (Income) Expense, Net

2025 compared with 2024

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

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

Other (income) expense, net totaled an expense of $37.1 million in 2025 versus an expense of $258.6 million in 2024, a decrease of $221.5 million, or 85.7%.

The decrease in the net expense was primarily driven by a decrease of $218.8 million write-downs on equity investments qualifying for tax credits in 2025 versus 2024 and a decrease of $2.2 million in non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

The Hershey Company | 2025 Form 10-K | Page 27

2024 compared with 2023

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

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

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

Income Taxes and Effective Tax Rate

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Our effective income tax rate was 27.3% for 2025 compared with 10.2% for 2024.

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

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

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

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

2024 compared with 2023

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

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

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

Relative to the 21% statutory rate, both the 2024 and 2023 effective tax rates, relative to the 21% statutory rate, benefited from investment tax credits, partially offset by state taxes.

Net Income and Earnings Per Share-diluted

2025 compared with 2024

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

Earnings Per Share (“EPS”)-diluted was $10.92 in 2024 compared to $9.06 in 2023, an increase of $1.86, or 20.5%.

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

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

Net income was $883.3 million in 2025 compared to $2,221.2 million in 2024, a decrease of $1,337.9 million, or 60.2%.

Earnings Per Share (“EPS”)-diluted was $4.34 in 2025 compared to $10.92 in 2024, a decrease of $6.58, or 60.3%.

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 expenses.

2024 compared with 2023

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EPS-diluted was $10.92 in 2024 compared to $9.06 in 2023, an increase of $1.86, or 20.5%.

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

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

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

The Hershey Company | 2025 Form 10-K | Page 28

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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 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.

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, Kirk Tanner, 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.

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Unallocated corporate expense (1) 807.9 701.2 800.4

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

Unallocated mark-to-market losses (gains) on commodity derivatives (2) 423.2 (460.4) 58.9

Costs associated with business realignment activities 59.4 117.5 3.4

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2025 compared with 2024

Net sales of our North America Confectionery segment were $9,479.7 million in 2025 compared to $9,118.6 million in 2024, an increase of $361.1 million.

The increase was driven by favorable price realization of approximately 6%, primarily due to the pricing action announced in July 2025.

Volume declined approximately 2%, driven by price elasticity impacts in everyday core U.S.

Additionally, the 2024 acquisition of Sour Strips contributed a benefit of less than 1% and the impact from unfavorable foreign currency exchange rates was immaterial.

Our North America Confectionery segment income was $2,493.8 million in 2025 compared to $2,945.7 million in 2024, a decrease of $451.9 million, or 15.3%.

The decrease was driven primarily by higher commodity and tariff costs and unfavorable mix, partially offset by net price realization, supply chain productivity, net savings related to our AAA Initiative and reduced advertising and related consumer marketing expenses.

2024 compared with 2023

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

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There was no impact from foreign currency exchange rates.

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 3.5% during 2024 compared to 2023.

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

2023 compared with 2022

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

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

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

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

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

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 12.1% during 2023 compared to 2022.

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

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

The Hershey Company | 2025 Form 10-K | Page 30

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Net sales for our North America Salty Snacks segment were $1,271.3 million in 2025 compared to $1,135.7 million in 2024, an increase of $135.6 million, or 11.9% .

The increase reflected a volume increase of approximately 8%, primarily related to Dot’s Homestyle Pretzels and SkinnyPop , partially offset by a reduction of net sales to private label customers.

Price realization increased approximately 1% as a result of lower trade promotional activities.

Additionally, the 2025 acquisition of LesserEvil contributed a benefit of approximately 2%.

Our North America Salty Snacks segm ent income was $241.8 million in 2025 compared to $199.4 million in 2024, an increase of $42.4 million, or 21.3%.

The increase was primarily due to volume increases and net savings related to our AAA Initiative, partially offset by higher advertising and related consumer marketing expenses.

2024 compared with 2023

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

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

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

2023 compared with 2022

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

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

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

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

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

The Hershey Company | 2025 Form 10-K | Page 31

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The International segment includes all other countries where we currently manufacture, import, market, sell or distribute chocolate and non-chocolate confectionery and other products.

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

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

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 accounted for 8.1%, 8.5% and 8.5% of our net sales in 2025, 2024 and 2023, respectively.

International results for the years ended December 31, 2025, 2024 and 2023 were as follows:

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The decrease reflected an unfavorable impact from foreign currency exchange rates of approximately 3%, primarily driven by Mexico and Brazil, and a volume decrease of approximately 1%.

The decline was partially offset by favorable price realization of approximately 3%, primarily due to strategic pricing actions across key markets.

The net sales decrease was primarily attributable to Brazil and Latin America, and APAC and India, where sales declined 4.3% and 4.5%, respectively, partially offset by favorability in Europe, MEA, and World Travel Retail, where net sales increased 10.8%.

Our International segment income was $3.3 million in 2025 compared to $111.5 million in 2024, a decrease of $108.2 million, or 97.0%, driven by higher commodity and manufacturing costs, which more than offset favorable price realization, supply chain productivity, and net savings related to our AAA Initiative.

2024 compared with 2023

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

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

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

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

2023 compared with 2022

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

The increase reflected a favorable price realization of 4.7%, driven by price increases across the segment, a favorable impact from foreign currency exchange rates of 3.4%, primarily driven by Mexico, and a volume increase of 3.1%.

The net sales increase was primarily attributable to World Travel Retail, Mexico and Brazil & Latin America, where net sales increased 15.6%, 14.3% and 13.0%, respectively.

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

The Hershey Company | 2025 Form 10-K | Page 32

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

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

Unallocated corporate expense totaled $807.9 million in 2025 as compared to $701.2 million in 2024, an increase of $106.7, or 15.2%.

The increase was primarily driven by higher incentive compensation costs and other non-people operating costs, partially offset by decreased investments in capabilities and technology, as a result of the completion of the upgrade of a new ERP system across the enterprise in 2024.

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

We generated cash of $2.3 billion from operating activities in 2025, a decrease of $254.2 million compared to $2.5 billion in 2024.

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

• Net income adjusted for non-cash charges to operations (including depreciation, amortization, stock-based compensation, deferred income taxes, goodwill impairment charges, write-down of equity investments, unrealized gains and losses on derivative contracts and other charges) resulted in $363.0 million of lower cash flow in 2025 relative to 2024.

• Other assets and liabilities consumed cash of $155.6 million in 2025, compared to $138.2 million in 2024.

This $17.4 million fluctuation was primarily due to the timing of certain prepaid expenses and other current assets.

The Hershey Company | 2025 Form 10-K | Page 33

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

◦ Timing of income tax payments contributed to an increase in operating cash of $82.2 million in 2025, compared to cash consumed of $17.1 million in 2024.

This $99.3 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 $140.6 million for income taxes during 2025, compared to $201.8 million in the same period of 2024.

◦ In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, generated cash of $129.1 million in 2025, compared to generating cash of $102.2 million in 2024.

This $27.0 million increase was mainly driven by an increase in accounts payable and accrued liabilities due to the timing of vendor and supplier payments, partially offset by higher inventory levels.

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

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

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

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

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

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

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

• In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, consumed cash of $209.0 million in 2023, compared to $8.6 million in 2022.

This $200.4 million fluctuation was mainly driven by mainly driven by an increase in cash used by accounts receivable due to an increase in sales of U.S.

seasonal products and the timing of vendor and supplier payments.

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

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

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

• Other assets and liabilities consumed cash of $100.4 million in 2023, compared to $25.7 million in 2022.

This $74.7 million fluctuation was primarily due to our purchase of an irrevocable group annuity contract to settle a portion of our post retirement benefit obligation.

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

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

Pension and Post-Retirement Activity.

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

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

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

We used cash of $1.3 billion for investing activities in 2025 compared to $960.3 million in 2024, with the increase in cash spend driven by the acquisition of LesserEvil.

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

Primary investing activities include the following:

• Capital spending .

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

Capital expenditures, including capitalized software, capacity expansion, innovation and cost savings, were $454.6 million in 2025, $605.9 million in 2024 and $771.1 million in 2023.

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

We expect 2026 capital expenditures, including capitalized software, to approximate $425 million to $475 million, as capital spending as a percentage of sales is expected to remain at historical levels.

We intend to use our existing cash and internally generated funds to meet our 2026 capital requirements.

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

We invested approximately $285.5 million in 2024, $256.8 million in 2023 and $275.5 million in 2022 in projects qualifying for tax credits.

We received payments of approximately $11.9 million in 2025, compared to investing $285.5 million in 2024 and $256.8 million in 2023.

• Business acquisitions .

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

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

In 2022, we had no acquisition activity.

In 2025, we spent $756.1 million to acquire LesserEvil.

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

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

• Intangible assets.

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

• Other investing activities .

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Financing activities

Our cash flow from financing activities generally relates to the use of cash for purchases of our Common Stock and payment of dividends, offset by net borrowing activity and proceeds from the exercise of stock options.

Financing activities in 2024 used cash of $1.3 billion, compared to cash used of $1.1 billion in 2023.

We used cash of $1.4 billion for financing activities in 2022.

Our principal uses of cash for financing activities relates to the use of cash for payment of dividends and for purchases of our Common Stock, partially offset by net borrowing activity and proceeds from the exercise of stock options.

Financing activities used cash of $0.8 billion, $1.3 billion, and $1.1 billion, respectively, in 2025, 2024, and 2023.

The majority of our financing activity was attributed to the following:

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

In 2025, our short-term borrowings decreased $1.7 billion predominately through a decrease in U.S.

commercial paper, partially offset by an increase in foreign bank borrowings.

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

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

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

• Long-term debt borrowings and repayments .

In June 2025 and August 2025, we repaid $300 million of 0.900% Notes and $300 million of 3.200% Notes, respectively, due upon their maturity.

In February 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 $1,985 million.

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

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Proceeds from the issuance of the 2023 Notes, net of discounts and issuance costs, totaled $744.1 million.

In 2022, long-term debt activity was minimal.

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

The Hershey Company | 2025 Form 10-K | Page 35

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Total dividend payments to holders of our Common Stock and Class B Common Stock were $1,085.3 million in 2025, $1,084.8 million in 2024 and $889.1 million in 2023.

Dividends per share of Common Stock increased 23.0% to $5.480 per share in 2024 compared to $4.456 per share in 2023, while dividends per share of Class B Common Stock increased 23.0% in 2024.

Dividends per share of Common Stock were $5.480 per share in both 2025 and 2024, while dividends per share of Class B Common Stock were $4.980 per share in both 2025 and 2024.

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

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Total cash dividends paid $ 271.6 $ 271.2 $ 271.2 $ 271.3

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

Declaration date February 5, 2025 April 30, 2025 July 29, 2025 October 30, 2025

Record date February 17, 2025 May 16, 2025 August 15, 2025 November 17, 2025

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Total shares repurchased under pre-approved share repurchase programs — 2.0 1.0

(1) In February 2023 and 2022, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the School Trust, pursuant to which the Company purchased 1,000,000 shares in 2023 and 2022 of the Company’s Common Stock from the School Trust at a price equal to $239.91 per share, for a total purchase price of $239.9 million in 2023.

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

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

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

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In 2025 we received $21.3 million from employee exercises of stock options and paid $18.8 million of employee taxes withheld from share-based awards.

In 2024 we received $14.7 million from employee exercises of stock options and paid $32.8 million of employee

The Hershey Company | 2025 Form 10-K | Page 36

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

taxes withheld from share-based awards.

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

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A majority of this balance is distributable to the United States without material tax implications, such as withholding tax.

We intend to continue to reinvest the remainder of the earnings outside of the United States for which there would be a material tax implication to distributing for the foreseeable future and, therefore, have not recognized additional tax expense on these earnings.

We believe that our existing sources of liquidity are adequate to meet anticipated funding needs at comparable risk-based interest rates for the foreseeable future.

Acquisition spending and/or share repurchases could potentially increase our debt.

Operating cash flow and access to capital markets are expected to satisfy our various short- and long-term cash flow requirements, including acquisitions and capital expenditures.

We intend to continue to reinvest the remainder of the earnings outside of

the United States for which there would be a material tax implication to distributing for the foreseeable future and,

therefore, have not recognized additional tax expense on these earnings.

We maintain debt levels we consider prudent based on our cash flow, interest coverage ratio and percentage of debt to capital.

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Our total short- and long-term debt was $5.4 billion and $5.1 billion at December 31, 2025 and December 31, 2024, respectively.

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

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

As of December 31, 2024, the termination date of this agreement is April 26, 2028, however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent under the facility.

Our total deb t increased i n 2025 primarily due to the issuance of $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 and offset with a decrease of $1.1 billion in short-term debt, primarily driven by commercial paper, partially offset by the repayment of $300 million of 0.900% Notes and $300 million of 3.200% Notes due upon their maturity in June 2025 and August 2025, respectively.

As a source of short-term financing, we maintain a $1.875 billion unsecured revolving credit facility with the option to increase borrowings by an additional $1.0 billion with the consent of the lenders.

As of December 31, 2025, the termination date of this agreement is October 21, 2030;

however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent under the facility.

We may use these funds for general corporate purposes, including commercial paper backstop and business acquisitions.

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In millions of dollars Total Less than 1 year 1-3 years 3-5 years More than 5 years

Short-term debt (primarily U.S.

commercial paper) $ 1,307.0 $ 1,307.0 $ — $ — $ —

Short-term debt $ 218.5 $ 218.5 $ — $ — $ —

Long-term notes (excluding finance lease obligations) 5,143.6 500.0 1,043.6 1,150.0 2,450.0

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A 100 basis point decrease (increase) in the weighted-average pension discount rate would increase the annual net periodic pension benefit expense by approximately $5 million or decrease the annual net periodic pension benefit expense by $4 million, respectively, and the December 31, 2025 pension liability would increase by approximately $48 million or decrease by approximately $42 million, respectively.

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

Pension expense beyond 2025 will depend on future investment performance, our contributions to the pension trusts, changes in discount rates and various other factors related to the covered employees in the plans.

Pension income for defined benefit pension plans is expected to be approximately $1 million in 2026.

Pension income or expense beyond 2026 will depend on future investment performance, our contributions to the pension trusts, changes in discount rates and various other factors related to the covered employees in the plans.

What changed 10-K

Item 7. Management’s Discussion and Analysis