What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-10-30 · 130 added, 225 removed, 191 unchanged (65% 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 September 28, 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 March 29, 2026 (“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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and snack items such as spreads, bars, and snack bites and mixes, popcorn and pretzels.

Business Acquisitions

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 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.

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

Business Acquisition

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.

The Hershey Company | Q1 2026 Form 10-Q | Page 31

TRENDS AFFECTING OUR BUSINESS

Throughout the first nine months of 2025, we experienced net sales growth, positive changes in consumer behavior, and price inelasticity despite the persistent dynamic macroeconomic environment.

However, increasing inflationary pressures, including ongoing price volatility for select commodities and higher manufacturing costs, continued to challenge the business and led to a decrease in net income.

Despite a strategic pricing action in the third quarter combined with other specific actions taken to mitigate the gross margin pressures, our direct product 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 Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

Throughout the first three months of 2026, we experienced net sales growth and positive consumer sentiment for our brands, despite the persistent dynamic macro environment, which continues to put pressure on our business.

Specifically, higher manufacturing and supply costs continue to challenge the business and drive incremental cost to our business (see Consolidated Results of Operations included in this MD&A).

Additionally, w e utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which has continued to improve during the first three months of 2026 (see Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

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

imports, continue to increase global economic and political uncertainty.

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.

We expect tariff expense to negatively impact our full year results.

Additionally, leadership changes at the U.S.

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

Food and Drug Administration (“FDA”) earlier in 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 September 28, 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;

imports, and certain geopolitical events, specifically the conflict in the Middle East, continue to increase global economic and political uncertainty.

We are continuing to monitor the ongoing regulations related to tariffs, specifically, goods imported into the U.S.

from Canada, Mexico and other countries, as well as export markets, as it was ruled by the International Emergency Economic Powers Act on February 20, 2026, that while certain tariffs imposed by the current U.S.

administration do remain in full effect, there are other tariffs imposed that were deemed to not have such authority to do so.

Therefore, companies now may have considerations around refund requests and as such, the Company is currently assessing the potential for refunds and the impact refunds may have on our results of operations.

As such, the scope and length of tariffs, including their effects on the broader economy and our business, remain uncertain, but we expect tariff expense to continue to negatively impact our results of operations.

Additionally, we are actively monitoring the evolving conflict in the Middle East and the potential impact on our business.

For the first three months of 2026, this conflict did not have a material impact on our commodity prices or supply availability.

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

As of March 29, 2026, we believe we have sufficient liquidity to satisfy our key strategic initiatives and other material cash requirements in both the short-term and in the long-term;

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

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

Based on the length and severity of the fluctuating macroeconomic environment, including price volatility for our commodities, the possibility of a recession, changes in consumer shopping and consumption behavior, and changes in geopolitical events, including the imposition of tariffs and retaliatory tariffs, we may continue to experience increasing supply chain costs, higher inflation and other impacts to our business.

Based on the length and severity of the fluctuating macroeconomic environment, including price volatility for our commodities, fluctuations in consumer shopping and consumption behavior, and ongoing changes in geopolitical events, including the imposition of tariffs and retaliatory tariffs, as well as the conflict in the Middle East, 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.

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CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended Nine Months Ended

September 28, 2025 September 29, 2024 Percent Change September 28, 2025 September 29, 2024 Percent Change

Three Months Ended

March 29, 2026 March 30, 2025 Percent Change

In millions of dollars except per share amounts

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Interest expense, net 49.8 44.6 11.6 %

Other (income) expense, net 11.2 50.1 (77.6) % 9.8 82.7 (88.1) %

Other (income) expense, net (1.8) 0.9 NM

Provision for income taxes 157.6 99.5 58.5 %

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NM = not meaningful

Results of Operations - Third Quarter 2025 vs.

Third Quarter 2024

Net sales were $3,181.4 million in the third quarter of 2025 compared to $2,987.5 million in the same period of 2024, an increase of $193.9 million, or 6.5%.

Results of Operations - First Quarter 2026 vs.

First Quarter 2025

Net sales were $3,104.2 million in the first quarter of 2026 compared to $2,805.4 million in the same period of 2025, an increase of $298.8 million, or 10.6%.

The net sales increase reflects a favorable price realization of approximately 10% primarily related to pricing actions within the North America Confectionery and International segments.

Volume was slightly positive, driven by strong results in North America Salty Snacks and the timing of shipments in the International segment, partially offset by price elasticity impacts within the North America Confectionery segment.

Additionally, the 2024 acquisition of Sour Strips contributed a minimal benefit and there was no impact from foreign currency exchange rates.

Additionally, the 2025 acquisition of LesserEvil contributed a 2% benefit, with an additional 1% benefit being provided by foreign currency exchange rates.

The increase was partially offset by a volume decrease of approximately 2%, primarily driven by declines in North America Confectionery and International segments, which more than offset the volume growth in the North America Salty Snacks segment.

Marketplace Metrics

candy, mint and gum (“CMG”) consumer takeaway and market share information reflects 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 channels.

For the first quarter of 2026, our total U.S.

retail takeaway increased 9.3% 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 8.1%, despite a CMG market share decline.

Our Salty consumer takeaway, excluding LesserEvil, increased 9.8% in the first quarter of 2026 and experienced a Salty, excluding LesserEvil, market share increase.

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, 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.

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

retail takeaway increased 6.3% in the expanded multi-outlet combined plus convenience store channels (Circana MULO + C-Stores), which includes candy, mint, gum, salty snacks and grocery items.

Our CMG consumer takeaway increased 5.4%, despite a CMG market share decrease of 4 basis points.

Our Salty consumer takeaway increased 14.2% in the third quarter of 2025 and experienced a Salty market share increase of 48 basis points.

The Hershey Company | Q1 2026 Form 10-Q | Page 33

Cost of Sales and Gross Margin

Cost of sales were $2,144.1 million in the third quarter 2025 compared to $1,754.8 million in the same period of 2024, an increase of $389.3 million, or 22.2%.

The increase was driven by higher costs, primarily due to unfavorable commodity costs from cocoa and tariffs.

Mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases contributed a minimal impact (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

Gross margin was 32.6% in the third quarter of 2025 compared to 41.3% in the same period of 2024, a decrease of 870 basis points.

The decrease was driven by unfavorable commodity and tariff costs and unfavorable mix, partially offset by net price realization, supply chain productivity and net savings related to our AAA Initiative .

Cost of sales were $1,881.4 million in the first quarter 2026 compared to $1,861.1 million in the same period of 2025, an increase of $20.3 million, or 1.1%.

The increase was driven by $269.9 million of higher costs, predominantly due to unfavorable commodity and tariff costs.

The increase was partially offset by declines of $249.6 million, primarily due to supply chain productivity and transformation program net savings and $24.9 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

Gross margin was 39.4% in the first quarter of 2026 compared to 33.7% in the same period of 2025, an increase of 570 basis points.

The increase was driven by favorable net price realization partially offset by unfavorable supply chain and tariff costs and volume declines.

SM&A Expenses

SM&A expenses were $600.5 million in the third quarter of 2025 compared to $591.9 million in the same period of 2024, an increase of $8.6 million, or 1.5%.

Total advertising and related consumer marketing expenses decreased 5.0%, driven primarily by efficiencies in the North America Confectionery segment.

SM&A expenses, excluding advertising and related consumer marketing, increased 5.0% in the third quarter of 2025, driven by higher compensation and consulting costs, partially offset by net savings related to our AAA Initiative.

SM&A expenses were $576.0 million in the first quarter of 2026 compared to $558.7 million in the same period of 2025, an increase of $17.3 million, or 3.1%.

Total advertising and related consumer marketing expenses increased 5.8%, driven by investments in advertising and related consumer marketing expenses in the North America Salty Snacks and International segments.

SM&A expenses, excluding advertising and related consumer marketing, increased 1.8% in the first quarter of 2026, driven by higher capability and technology investments, partially offset by lower compensation and benefit costs and lower consulting fees, as well as net savings related to to our AAA Initiative versus the prior year.

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 $2.2 million during the third quarter of 2025 versus $27.6 million in the third quarter of 2024.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded business realignment costs of $6.0 million during the first quarter of 2026 versus $16.4 million in the first quarter of 2025.

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.

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Operating Profit and Operating Profit Margin

Operating profit was $434.6 million in the third quarter of 2025 compared to $613.2 million in the same period of 2024, a decrease of $178.6 million , or 29.1%.

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 13.7% in 2025 from 20.5% in 2024, driven by the same factors noted above that resulted in lower gross margin for the period.

Operating profit was $640.7 million in the first quarter of 2026 compared to $369.2 million in the same period of 2025, an increase of $271.5 million , or 73.5%.

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

Operating profit margin increased to 20.6% in 2026 from 13.2% in 2025, driven by the same factors noted above that resulted in higher gross margin for the period.

Interest Expense, Net

Net interest expense was $51.5 million in the third quarter of 2025 compared to $44.3 million in the same period of 2024, an increase of $7.2 million, or 16.2%.

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

Net interest expense was $49.8 million in the first quarter of 2026 compared to $44.6 million in the same period of 2025, an increase of $5.2 million, or 11.6%.

The increase was primarily due to the timing of the February 2025 debt issuance.

Other (Income) Expense, Net

Other (income) expense, net was $11.2 million in the third quarter of 2025 versus $50.1 million in the third quarter of 2024, a net decrease of $38.9 million, or 77.6%.

The decrease in net expense was predominantly driven by no write-downs on equity investments qualifying for tax credits in the third quarter of 2025 versus $49.6 million of write-downs on equity investments qualifying for tax credits in the third quarter of 2024, partially offset by an increase of $11.3 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 income of $1.8 million in the first quarter of 2026 versus expense of $0.9 million in the first quarter of 2025, a change of $2.7 million.

The decrease in net expense was predominantly driven by a decrease of $2.4 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans in the first quarter of 2026 versus the same period of 2025.

Income Taxes and Effective Tax Rate

The effective income tax rate was 25.7% for the third quarter of 2025 compared with 14.0% for the third quarter of 2024.

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

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

The Hershey Company | Q3 2025 Form 10-Q | Page 38

Net Income and Earnings Per Share-diluted

Net income was $276.3 million in the third quarter of 2025 compared to $446.3 million in the same period of 2024, a decrease of $170.0 million, or 38.1%.

EPS-diluted was $1.36 in the third quarter of 2025 compared to $2.20 in the third quarter of 2024, a decrease of $0.84, or 38.2%.

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 expenses.

Results of Operations - First Nine Months 2025 vs.

First Nine Months 2024

Net sales were $8,601.6 million in the first nine months of 2025 compared to $8,314.7 million during the same period of 2024, an increase of $286.9 million, or 3.4%.

The net sales increase was driven by favorable price realization of approximately 4% across our reportable segments.

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

Additionally, the 2024 acquisition of Sour Strips contributed a minimal benefit and there was an unfavorable foreign currency exchange impact of less than 1%.

Marketplace Metrics

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

retail takeaway increased 4.9% 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 4.4% and experienced a CMG market share decrease of 7 basis points.

Our Salty consumer takeaway increased 10.1% and experienced a Salty market share increase of 36 basis points.

Cost of Sales and Gross Margin

Cost of sales were $5,823.7 million in the first nine months of 2025 compared to $4,572.2 million in the same period of 2024, an increase of $1,251.5 million, or 27.4%.

The increase was driven by $1,309.7 million of higher costs, primarily related to $244.4 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 and tariffs.

The increase was partially offset by $58.2 million, primarily related to lower sales volume and lower business realignment costs.

Gross margin was 32.3% in the first nine months of 2025 compared to 45.0% in the same period of 2024, a decrease of 1,270 basis points.

The decrease was driven by higher commodity and tariff costs, unfavorable year-over-year mark-to-market impact from commodity derivative instruments, unfavorable product mix, and volume declines, partially offset by net price realization, supply chain productivity and net savings related to our AAA Initiative.

SM&A Expenses

SM&A expenses were $1,762.4 million in the first nine months of 2025 compared to $1,750.9 million in the same period of 2024, an increase of $11.5 million, or 0.7%.

Total advertising and related consumer marketing expenses increased 2.1%, driven by increased spending in the North America Confectionery and North America Salty Snacks segments.

SM&A expenses, excluding advertising and related consumer marketing, remained flat in the first nine months of 2025 as compared to the first nine months of 2024.

The effective income tax rate was 26.6% for the first quarter of 2026 compared with 30.7% for the first quarter of 2025.

Relative to the 21% statutory rate, the 2026 and 2025 effective tax rates were primarily impacted by state taxes and foreign tax differential.

The Hershey Company | Q1 2026 Form 10-Q | Page 34

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 $18.8 million during the first nine months of 2025 versus $32.6 million in the first nine 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 $996.6 million in the first nine months of 2025 compared to $1,959.0 million in the same period of 2024, a decrease of $962.4 million, or 49.1%.

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

Operating profit margin decreased to 11.6% in the first nine months of 2025 from 23.6% 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 $142.1 million in the first nine months of 2025 compared to $125.5 million in the same period of 2024, an increase of $16.6 million, or 13.2%.

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 $9.8 million in the first nine months of 2025 versus $82.7 million in the first nine months of 2024, a net income decrease of $72.9 million, or 88.1%.

The change was predominantly driven by no write-downs on equity investments qualifying for tax credits in the first nine months of 2025 versus $81.0 million of write-downs on equity investments qualifying for tax credits in the first nine months of 2024.

This was partially offset by an increase of $12.7 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 33.3% for the first nine months of 2025 compared with 18.6% for the first nine 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 $563.2 million in the first nine months of 2025 compared to $1,424.6 million in the same period of 2024, a decrease of $861.4 million, or 60.5%.

EPS-diluted was $2.77 in the first nine months of 2025 compared to $7.00 in the same period of 2024, a decrease of $4.23, or 60.4%.

T he decrease in both net income and EPS-diluted was driven by lower gross profit, higher interest expense, and higher taxes, partially offset by lower other expenses.

Net income was $435.1 million in the first quarter of 2026 compared to $224.2 million in the same period of 2025, an increase of $210.9 million, or 94.1%.

EPS-diluted was $2.13 in the first quarter of 2026 compared to $1.10 in the first quarter of 2025, an increase of $1.03, or 93.6%.

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

Higher income taxes were driven by higher income before income taxes, partially offset by a lower effective tax rate.

The Hershey Company | Q1 2026 Form 10-Q | Page 35

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

Three Months Ended Nine Months Ended

September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Three Months Ended

March 29, 2026 March 30, 2025

In millions of dollars

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Total $ 3,104.2 $ 2,805.4

Segment Income (Loss):

Segment Income:

North America Confectionery $ 792.4 $ 696.4

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Unallocated corporate expense (1) 157.7 160.4

Unallocated mark-to-market (gains) losses on commodity derivatives (2) (24.3) (31.1) 387.9 (195.7)

Unallocated mark-to-market losses on commodity derivatives (2) 30.2 211.5

Costs associated with business realignment activities 13.4 25.9

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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 82.2% and 82.9% of our net sales for the three months ended September 28, 2025 and September 29, 2024, respectively, were as follows:

Three Months Ended Nine Months Ended

September 28, 2025 September 29, 2024 Percent Change September 28, 2025 September 29, 2024 Percent Change

North America Confectionery results, which accounted for 80.2% and 82.0% of our net sales for the three months ended March 29, 2026 and March 30, 2025, respectively, were as follows:

Three Months Ended

March 29, 2026 March 30, 2025 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 - Third Quarter 2025 vs.

Third Quarter 2024

Net sales of our North America Confectionery segment were $2,615.6 million in the third quarter of 2025 compared to $2,477.3 million in the same period of 2024, an increase of $138.3 million, or 5.6%.

The increase was driven by favorable price realization of approximately 7%, primarily due to the pricing action announced in July.

Volume declined approximately 1%, driven by price elasticity impacts in everyday core U.S.

Additionally, the 2024 acquisition of Sour Strips contributed a minimal benefit and there was no impact from foreign currency exchange rates.

Our North America Confectionery segment income was $571.5 million in the third quarter of 2025 compared to $724.8 million in the same period of 2024, a decrease of $153.3 million, or 21.2%.

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.

Results of Operations - First Nine Months 2025 vs.

First Nine Months 2024

Net sales of our North America Confectionery segment were $7,001.2 million in the first nine months of 2025 compared to $6,764.4 million in the same period of 2024, an increase of $236.8 million, or 3.5%.

The increase was driven by favorable price realization of approximately 5%, primarily due to the pricing action announced in July.

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 $1,771.8 million in the first nine months of 2025 compared to $2,137.5 million the same period of 2024, a decrease of $365.7 million or 17.1%.

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

Results of Operations - First Quarter 2026 vs.

First Quarter 2025

Net sales of our North America Confectionery segment were $2,489.9 million in the first quarter of 2026 compared to $2,300.1 million in the same period of 2025, an increase of $189.8 million, or 8.3%.

The increase was driven by favorable price realization of approximately 12%, primarily due to the pricing action announced in 2025.

Additionally, there was a minimal benefit from foreign currency exchange rates.

Volume declined approximately 4%, driven by price elasticity and one fewer shipping day, partially offset by the timing of shipments and strong innovation performance.

Our North America Confectionery segment income was $792.4 million in the first quarter of 2026 compared to $696.4 million in the same period of 2025, an increase of $96.0 million, or 13.8%.

The increase was driven primarily by higher net sales, favorable mix, and net savings related to our AAA Initiative, partially offset by volume declines, and increased commodity and tariff costs.

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 10.1% and 9.8% of our net sales for the three months ended September 28, 2025 and September 29, 2024, respectively, were as follows:

Three Months Ended Nine Months Ended

September 28, 2025 September 29, 2024 Percent Change September 28, 2025 September 29, 2024 Percent Change

North America Salty Snacks results, which accounted for 11.3% and 9.9% of our net sales for the three months ended March 29, 2026 and March 30, 2025, respectively, were as follows:

Three Months Ended

March 29, 2026 March 30, 2025 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 - Third Quarter 2025 vs.

Third Quarter 2024

Net sales of our North America Salty Snacks segment were $321.0 million in the third quarter of 2025 compared to $291.8 million in the same period of 2024, an increase of $29.2 million, or 10.0%.

The increase was predominantly due to volume increases of approximately 11%, primarily driven by Dot’s Homestyle Pretzels, SkinnyPop and Pirates Booty .

The net sales increase was partially offset by unfavorable price realization of approximately 1% as a result of higher trade promotional activities.

Our North America Salty Snacks segment income was $57.7 million in the third quarter of 2025 compared to $54.0 million in the same period of 2024, an increase of $3.7 million, or 6.9%.

The increase was primarily due to volume increases, net savings related to our AAA Initiative and lower commodity costs.

Results of Operations - First Nine Months 2025 vs.

First Nine Months 2024

Net sales of our North America Salty Snacks segment were $914.3 million in the first nine months of 2025 compared to $856.8 million the same period of 2024, an increase of $57.5 million, or 6.7%.

The increase was driven by volume growth of approximately 6%, primarily related to Dot’s Homestyle Pretzels and SkinnyPop .

Price realization was flat in the first nine months of 2025 compared to the same period of 2024.

Our North America Salty Snacks segment income was $166.1 million in the first nine months of 2025 compared to $144.9 million the same period of 2024, an increase of $21.2 million, or 14.6%.

The increase was primarily due to volume increases and net savings related to our AAA Initiative , partially offset by higher supply chain costs.

Results of Operations - First Quarter 2026 vs.

First Quarter 2025

Net sales of our North America Salty Snacks segment were $350.1 million in the first quarter of 2026 compared to $277.8 million in the same period of 2025, an increase of $72.3 million, or 26.0%.

The increase was predominantly due to the acquisition of LesserEvil in November 2025, which provided a benefit of approximately 20%.

Further, volume increased approximately 5%, primarily driven by Dot’s and Reese’s Filled Pretzels.

Price realization was flat in the first three months of 2026 compared to the same period of 2025.

Our North America Salty Snacks segment income was $34.3 million in the first quarter of 2026 compared to $41.9 million in the same period of 2025, a decrease of $7.6 million, or 18.1%.

The decrease was primarily due to higher supply chain costs, including costs related to a voluntary temporary product withdrawal, and increased SM&A expenses.

International

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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 7.7% and 7.3% of our net sales for the three months ended September 28, 2025 and September 29, 2024, respectively, were as follows:

Three Months Ended Nine Months Ended

September 28, 2025 September 29, 2024 Percent Change September 28, 2025 September 29, 2024 Percent Change

International results, which accounted for 8.5% and 8.1% of our net sales for the three months ended March 29, 2026 and March 30, 2025, respectively, were as follows:

Three Months Ended

March 29, 2026 March 30, 2025 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 - Third Quarter 2025 vs.

Third Quarter 2024

Net sales of our International segment were $244.8 million in the third quarter of 2025 compared to $218.4 million in the same period of 2024, an increase of $26.4 million, or 12.1%.

The increase was due to favorable price realization of approximately 7%, primarily due to strategic pricing actions across key markets.

Volume increased approximately 6%, primarily attributable to Brazil, Europe and Mexico, partially offset by price elasticity across markets.

There was no impact from foreign currency exchanges rates.

Our International segment generated a lo ss of $13.6 million in the third quarter of 2025 compared to $14.2 million in income in the third quarter of 2024, a decrease of $27.8 million, or 195.8%, 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 .

Results of Operations - First Nine Months 2025 vs.

First Nine Months 2024

Net sales of our International segment were $686.0 million in the first nine months of 2025 compared to $693.5 million the same period of 2024, a decrease of $7.5 million, or 1.1%.

The decrease was due to an unfavorable impact from foreign currency exchange rates of approximately 5% , driven by Mexico and India.

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

Volume was flat in the first nine months of 2025 compared to the same period of 2024.

Our International segment generated income of $34.9 million in the first nine months of 2025 compared to $82.0 million in the first nine months of 2024, a decrease of $47.1 million , or 57.4%, 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 .

Results of Operations - First Quarter 2026 vs.

First Quarter 2025

Net sales of our International segment were $264.2 million in the first quarter of 2026 compared to $227.5 million in the same period of 2025, an increase of $36.7 million, or 16.1%.

The increase was due to favorable price realization of approximately 12%, resulting from strategic pricing actions across key markets, as well as a favorable impact from foreign currency exchange rates of approximately 6.8%.

The increase was partially offset by volume declines of approximately 2%, primarily driven by price elasticity across markets.

Our International segment generated income of $15.3 million in the first quarter of 2026 compared to $28.7 million in income in the first quarter of 2025, a decrease of $13.4 million, or 46.8%, driven by higher commodity and manufacturing costs and advertising investment, partially offset by favorable price realization, supply chain productivity, and net savings related to our AAA Initiative.

Unallocated Corporate Expense

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

In the third quarter of 2025, unallocated corporate expense totaled $194.7 million, as compared to $161.8 million in the third quarter of 2024, an increase of $32.9 million, or 20.3% .

The increase was primarily driven by higher compensation and benefits costs and consulting fees.

In the first nine months of 2025, unallocated corporate expense totaled $536.7 million, as compared to $496.2 million in the first nine months of 2024, an increase of $40.5 million, or 8.2%.

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

In the first quarter of 2026, unallocated corporate expense totaled $157.7 million, as compared to $160.4 million in the first quarter of 2025, a decrease of $2.7 million, or 1.7%.

The decrease was primarily driven by lower compensation and benefits costs, as well as consulting fees, partially offset by continued investments in technology.

LIQUIDITY AND CAPITAL RESOURCES

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

At September 28, 2025, our cash and cash equivalents totaled $1.2 billion, an increase of $432.3 million compared to the 2024 year-end balance.

At March 29, 2026, our cash and cash equivalents totaled $877.0 million, a decrease of $48.8 million compared to the 2025 year-end balance.

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

Additionally, at September 28, 2025, we had outstanding short- and long-term debt totaling $5.4 billion, of which $502.3 million was classified as the current portion of long-term debt.

Additionally, at March 29, 2026, we had outstanding short- and long-term debt totaling $5.4 billion, of which $504.1 million was classified as the current portion of long-term debt.

Of the $504.1 million, $500 million of 2.300% Notes are due upon maturity on August 15, 2026.

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 50% of the balance of our cash and cash equivalents at September 28, 2025 was held by subsidiaries domiciled outside of the United States.

Approximately 50% of the balance of our cash and cash equivalents at March 29, 2026 was held by subsidiaries domiciled outside of the United States.

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

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

Nine Months Ended

In millions of dollars September 28, 2025 September 29, 2024

Three Months Ended

In millions of dollars March 29, 2026 March 30, 2025

Net cash provided by (used in):

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Operating activities

We generated cash of $1,350.8 million from operating activities in the first nine months of 2025, a decrease of $239.2 million compared to $1,590.0 million in the same period of 2024.

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

We generated cash of $468.8 million from operating activities in the first three months of 2026, an increase of $72.1 million compared to $396.7 million in the same period of 2025.

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

• Other assets and liabilities consumed cash of $157.8 million in 2026, compared to $369.9 million in 2025.

This $212.1 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, consumed cash of $148.4 million in 2025, compared to $183.9 million in 2024.

This $35.5 million fluctuation was mainly driven by an increase in accounts payable and accrued liabilities due to the timing of vendor and supplier payments as well as an increase 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 $60.0 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 $158.9 million in 2025, compared to $138.5 million in 2024.

This $20.4 million fluctuation was primarily due to the variance in actual tax expense for 2025 relative to the timing of quarterly estimated tax payments.

• Net income adjusted for non-cash charges to operations (including depreciation, amortization, stock-based compensation, deferred income taxes, unrealized gains and losses on derivative contracts and other charges) resulted in $107.3 million of higher cash flow in 2026 relative to 2025.

• The variance in operating cash flows related to income taxes reflects timing differences between actual tax expense and quarterly estimated tax payments.

We paid cash of $24.4 million for income taxes during 2026, compared to $38.9 million in the same period of 2025.

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

◦ In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, consumed cash of $230.6 million in 2026, compared to generating cash of $55.4 million in 2025.

This $286.0 million fluctuation was mainly driven by an increase in trade accounts receivable and a decrease in accounts payable and accrued liabilities, due to the timing of vendor and supplier payments, partially offset by lower inventory levels.

Investing activities

We used cash of $382.2 million for investing activities in the first nine months of 2025, a decrease of $167.1 million compared to $549.3 million in the same period of 2024.

We used cash of $117.1 million for investing activities in the first three months of 2026, a decrease of $29.9 million compared to $147.0 million in the same period of 2025.

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

• Capital spending .

Capital expenditures, including capitalized software, primarily to support our ERP system implementation, capacity expansion, innovation and cost savings, were $316.5 million in the first nine months of 2025 compared to $471.4 million in the same period of 2024.

The decrease in our 2025 capital expenditures is largely driven by the wind down of our key strategic initiatives, including completion of the upgrade of a new ERP system across the enterprise in 2024.

We expect 2025 capital expenditures, including capitalized software, to be approximately $425 million, the lower end of our previously estimated range of $425 million to $450 million, as capital spending as a percentage of net sales is expected to return to historical levels.

Capital expenditures, including capitalized software, capacity expansion, innovation and cost savings, were $114.6 million in the first three months of 2026 compared to $145.5 million in the same period of 2025.

The decrease in our 2026 capital expenditures is largely driven by the wind down of our key strategic initiatives, as we expect 2026 capital expenditures, including capitalized software, to be in the range of approximately $425 million to $475 million, reflecting a trend towards 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 renewable energy tax credits.

We received payments of approximately $14.3 million in the first nine months of 2025, compared to investing $78.2 million in the same period of 2024.

The Hershey Company | Q3 2025 Form 10-Q | Page 42

• Intangible assets .

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

We received payments of approximately $3.6 million in the first three months of 2026, which is consistent with the same period of 2025.

• Other investing activities .

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

In the first three months of 2026 and 2025, our other investing activities were minimal.

The Hershey Company | Q1 2026 Form 10-Q | Page 37

Financing activities

We used cash of $536.4 million for financing activities in the first nine months of 2025, a decrease of $310.6 million compared to cash used of $847.0 million in the same period of 2024.

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

We used cash of $402.8 million for financing activities in the first three months of 2026, a decrease of $939.9 million compared to cash generated of $537.1 million in the same period of 2025.

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

• Short-term borrowings, net.

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

During the first nine months of 2025, we used cash of $1.1 billion to reduce short-term commercial paper borrowings and short-term foreign bank borrowings.

During the first nine months of 2024, we generated cash of $482.8 million predominately through the issuance of short-term commercial paper and an increase in short-term foreign bank borrowings.

During the first three months of 2026, we used cash of $48.0 million to reduce short-term foreign bank borrowings.

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

• Long-term debt borrowings and repayments .

During the first nine 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 three months of 2026, long-term debt borrowings and repayments were minimal.

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

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

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

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

We had minimal payment activity.

• Dividend payments .

Total dividend payments to holders of our Common Stock and Class B Common Stock were $814.0 million during the first nine months of 2025, a decrease of $0.4 million compared to $814.3 million in the same period of 2024.

Total dividend payments to holders of our Common Stock and Class B Common Stock were $288.0 million during the first three months of 2026, an increase of $16.4 million compared to $271.6 million in the same period of 2025.

Details regarding our 2026 cash dividends paid to stockholders are as follows:

Quarter Ended

In millions of dollars except per share amounts March 30, 2025 June 29, 2025 September 28, 2025

In millions of dollars except per share amounts March 29, 2026

Dividends paid per share – Common stock $ 1.452

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Total cash dividends paid $ 288.0

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

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

Payment date March 14, 2025 June 16, 2025 September 15, 2025

Declaration date February 4, 2026

Record date February 17, 2026

Payment date March 16, 2026

• Share repurchases .

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In addition, we periodically repurchase shares of Common Stock pursuant to Board-authorized programs intended to drive additional stockholder value.

Details regarding our share repurchases are as follows:

Nine Months Ended

In millions September 28, 2025 September 29, 2024

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

Shares repurchased in the open market to replace Treasury Stock issued for stock options and incentive compensation $ — $ 94.2

Cash used for total share repurchases (excluding excise tax) $ — $ 494.2

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

The Hershey Company | Q3 2025 Form 10-Q | Page 43

(1) In May 2021, our Board of Directors approved a $500 million share repurchase authorization, which was completed as of March 31, 2024.

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

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

As a result of the share repurchase authorization, approximately $470 million remains available for repurchases under our December 2023 share repurchase authorization.

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

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

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

We used cash for total share repurchases in the open market to replace Treasury Stock issued for stock options and incentive compensation of $69.3 million during the first three months of 2026.

We did not repurchase any shares during the first three months of 2025.

• Proceeds from exercised stock options and employee tax withholding.

During the first nine months of 2025, we received $17.3 million from employee exercises of stock options and paid $17.2 million of employee taxes withheld from share-based awards.

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

During the first three months of 2026, we received $15.0 million from employee exercises of stock options and paid $11.0 million of employee taxes withheld from share-based awards.

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

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

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

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

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

The Hershey Company | Q1 2026 Form 10-Q | Page 39

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

• 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 our Quarterly Report on Form 10-Q for the quarter ending March 30, 2025 and June 29, 2025, and this Quarterly Report on Form 10-Q, including Part II, Item 1A, ”Risk Factors.”

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

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

• Such other matters as discussed in our 2025 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, including Part II, Item 1A, ”Risk Factors.”

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis