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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 205 added, 111 removed, 210 unchanged (60% of the section changed)

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

This MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2026 (“this Quarterly Report on Form 10-Q”).

This MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q for the quarterly period ended June 28, 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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TRENDS AFFECTING OUR BUSINESS

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).

Throughout the first six months of 2026, we experienced net sales growth, driven primarily by pricing actions, and continued consumer demand for our brands, despite the persistent dynamic macroeconomic environment and ongoing pressures on our business.

Higher manufacturing, logistics, and supply chain costs continue to challenge the business and drive incremental costs (see Consolidated Results of Operations included in this MD&A).

Additionally, we 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 six 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.

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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.

from Canada, Mexico and other countries, as well as export markets, and the impact of tariff refunds on our business.

As such, the scope and length of tariffs, including their effects on the broader economy and our business, continues to evolve.

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

For the first six 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;

As of June 28, 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, 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.

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, retaliatory tariffs and tariff refunds, 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

March 29, 2026 March 30, 2025 Percent Change

Three Months Ended Six Months Ended

June 28, 2026 June 29, 2025 Percent Change June 28, 2026 June 29, 2025 Percent Change

In millions of dollars except per share amounts

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Interest expense, net 50.0 46.0 8.5 % 99.8 90.7 10.1 %

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

Other (income) expense, net 4.4 (2.3) (288.3) % 2.6 (1.4) (285.3) %

Provision for income taxes 130.5 86.4 51.2 % 288.2 185.8 55.1 %

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NM = not meaningful

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%.

Results of Operations - Second Quarter 2026 vs.

Second Quarter 2025

Net sales were $2,787.3 million in the second quarter of 2026 compared to $2,614.7 million in the same period of 2025, an increase of $172.6 million, or 6.6%.

The net sales increase reflects a favorable price realization of approximately 12%, primarily related to pricing actions within the North America Confectionery and International segments.

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.

Additionally, the 2025 acquisition of LesserEvil contributed approximately a 3% benefit.

The increase was partially offset by a volume decrease of approximately 8%, primarily driven by volume declines in North America Confectionery and International segments, which more than offset the volume growth in the North America Salty Snacks segment.

There was minimal impact from foreign currency exchange rates.

Marketplace Metrics

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.

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

retail takeaway decreased 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 decreased 8.6% and experienced a CMG market share decline.

Our Salty consumer takeaway, excluding LesserEvil, increased 6.5% in the second 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.

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Cost of Sales and Gross Margin

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.

Cost of sales were $1,524.0 million in the second quarter 2026 compared to $1,818.4 million in the same period of 2025, a decrease of $294.4 million, or 16.2%.

The decrease was driven by $523.7 million, primarily due to lower sales volume, transformation program net savings and $117.4 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

The decrease was partially offset by $229.3 million of higher costs, predominantly due to unfavorable supply chain costs and unfavorable mix.

Gross margin was 45.3% in the second quarter of 2026 compared to 30.5% in the same period of 2025, an increase of 1,490 basis points.

The increase was driven by favorable net price realization and net savings related to our AAA Initiative, partially offset by unfavorable supply chain costs and volume declines.

SM&A Expenses

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.

SM&A expenses were $620.6 million in the second quarter of 2026 compared to $603.2 million in the same period of 2025, an increase of $17.4 million, or 2.9%.

SM&A expenses, excluding advertising and related consumer marketing, increased 6.0% in the second quarter of 2026, driven by higher capability and technology investments, partially offset by lower compensation and benefit costs, as well as net savings related to our AAA Initiative versus the prior year.

Advertising and related consumer marketing expenses decreased 3.3%, driven by efficiencies and timing of non-working media investment in the North America Confectionery segment.

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 $6.0 million during the first quarter of 2026 versus $16.4 million in the first quarter of 2025.

Excluding the portion recorded within Cost of Sales and SM&A expenses (as noted above), we recorded business realignment costs of $0.1 million during the second quarter of 2026 versus $0.3 million in the second 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 $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%.

Operating profit was $642.6 million in the second quarter of 2026 compared to $192.8 million in the same period of 2025, an increase of $449.8 million, or 233.3%.

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.

O perating profit margin increased to 23.1% in 2026 from 7.4% 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 $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.

Net interest expense was $50.0 million in the second quarter of 2026 compared to $46.0 million in the same period of 2025, an increase of $4.0 million, or 8.5%.

The increase was primarily due to an increase in short-term debt, slightly offset by lower long-term debt balances.

Other (Income) Expense, Net

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.

Other (income) expense, net was expense of $4.4 million in the second quarter of 2026 versus income of $2.3 million in the second quarter of 2025, a change of $6.7 million.

The increase in net expense was predominantly driven by an increase of $3.4 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans in the second quarter of 2026 versus the same period of 2025 and a decrease in other corporate income of $3.3 million.

Income Taxes and Effective Tax Rate

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 effective income tax rate was 22.2% for the second quarter of 2026 compared with 57.9% for the second quarter of 2025.

The 2025 effective tax rate was higher due to the impact of tax reserves and foreign rate differentials related to mark-to-market activity.

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

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

The Hershey Company | Q2 2026 Form 10-Q | Page 39

Net Income and Earnings Per Share-diluted

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.

Net income was $457.7 million in the second quarter of 2026 compared to $62.7 million in the same period of 2025, an increase of $395.0 million, or 629.7%.

EPS-diluted was $2.26 in the second quarter of 2026 compared to $0.31 in the second quarter of 2025, an increase of $1.95, or 629.0%.

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

Results of Operations - First Six Months 2026 vs.

First Six Months 2025

Net sales were $5,891.5 million in the first six months of 2026 compared to $5,420.1 million during the same period of 2025, an increase of $471.4 million, or 8.7%.

The net sales increase was driven by favorable price realization of approximately 11% within our North America Confectionery and International segments.

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

Further, there was a favorable foreign currency exchange impact of less than 1%.

The net sales increase was partially offset by a volume decrease of approximately 5%, driven by volume declines in North America Confectionery and International segments, which more than offset the volume growth in the North America Salty Snacks segment.

Marketplace Metrics

For the first six months of 2026, our total U.S.

retail takeaway increased 4.4% in the expanded multi-outlet combined plus convenience store channels (IRI MULO + C-Stores), which includes candy, mint, gum, salty snacks and grocery items.

CMG consumer takeaway increased 2.7%, despite a CMG market share decline.

Our Salty consumer takeaway increased 8.5% and experienced a Salty market share increase.

Cost of Sales and Gross Margin

Cost of sales were $3,405.4 million in the first six months of 2026 compared to $3,679.6 million in the same period of 2025, a decrease of $274.2 million, or 7.5%.

The decrease was driven by $762.9 million of lower costs, primarily related to $142.4 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), lower commodity costs and lower sales volume.

The decrease was partially offset by $488.8 million, primarily related to increased supply chain costs and unfavorable mix.

Gross margin was 42.2% in the first six months of 2026 compared to 32.1% in the same period of 2025, an increase of 1,010 basis points.

The increase was driven by favorable net price realization and net savings related to our AAA Initiative, partially offset by unfavorable supply chain costs and volume declines.

SM&A Expenses

SM&A expenses were $1,196.6 million in the first six months of 2026 compared to $1,161.9 million in the same period of 2025, an increase of $34.7 million, or 3.0%.

SM&A expenses, excluding advertising and related consumer marketing, increased 1.1% in the first six months of 2026 as compared to the first six months of 2025.

Advertising and related consumer marketing expenses increased 4.0%, driven by increased spending in the North America Salty Snacks and International segments, partially offset by decreased spending in the North America Confectionery segment.

The Hershey Company | Q2 2026 Form 10-Q | Page 40

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 $6.1 million during the first six months of 2026 versus $16.6 million in the first six months of 2025.

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

Operating Profit and Operating Profit Margin

Operating profit was $1,283.4 million in the first six months of 2026 compared to $562.0 million in the same period of 2025, an increase of $721.4 million, or 128.3%.

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

Operating profit margin increased to 21.8% in the first six months of 2026 from 10.4% in the same period in 2025, driven by the same factors that resulted in higher gross margin for the period.

Interest Expense, Net

Net interest expense was $99.8 million in the first six months of 2026 compared to $90.7 million in the same period of 2025, an increase of $9.1 million, or 10.1%.

The increase was primarily due to an increase in short-term debt, slightly offset by lower long-term debt balances.

Other (Income) Expense, Net

Other (income) expense, net was expense of $2.6 million in the first six months of 2026 versus income of $1.4 million in the first six months of 2025, a change of $4.0 million.

The increase in net expense was predominantly driven by a decrease in other corporate income of $3.0 million and an increase of $1.0 million of non-service cost components of net periodic benefit costs relating to pension and other post-retirement benefit plans.

Income Taxes and Effective Tax Rate

Our effective income tax rate was 24.4% for the first six months of 2026 compared with 39.3% for the first six months of 2025.

The 2025 effective tax rate was higher due to the impact of tax reserves and foreign rate differentials related to mark-to-market activity.

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

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

Net Income and Earnings Per Share-diluted

Net income was $892.8 million in the first six months of 2026 compared to $286.9 million in the same period of 2025, an increase of $605.9 million, or 211.2%.

EPS-diluted was $4.39 in the first six months of 2026 compared to $1.41 in the same period of 2025, an increase of $2.98, or 211.3%.

The increase in both net income and EPS-diluted was driven by higher gross profit, lower business realignment costs, partially offset by higher SM&A expenses, higher interest expense, higher other (income) 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 | Q2 2026 Form 10-Q | Page 41

SEGMENT RESULTS

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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, 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.

We believe that these measures are useful to investors and other users of our financial information in evaluating ongoing operating profitability as well as in evaluating operating performance in relation to our competitors, as they exclude the activities that are not directly attributable to our ongoing segment operations.

Refer to Note 13 Segment Information in our audited consolidated financial statements for reconciliations of net sales for our reportable segments to consolidated total net sales and of segment operating income to consolidated income before taxes.

Refer to Note 13 Segment Information in our unaudited consolidated financial statements for reconciliations of net sales for our reportable segments to consolidated total net sales and of segment operating income to consolidated income before taxes.

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

Three Months Ended

March 29, 2026 March 30, 2025

Three Months Ended Six Months Ended

June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025

In millions of dollars

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Total $ 2,787.3 $ 2,614.7 $ 5,891.5 $ 5,420.1

Segment Income:

Segment Income (Loss):

North America Confectionery $ 705.8 $ 503.9 $ 1,498.2 $ 1,200.3

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Unallocated corporate expense (1) 215.1 181.5 372.8 342.0

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

Unallocated mark-to-market (gains) losses on commodity derivatives (2) (102.9) 200.7 (72.7) 412.2

Costs associated with business realignment activities 8.4 15.1 21.7 41.0

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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 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

North America Confectionery results, which accounted for 78.0% and 79.8% of our net sales for the three months ended June 28, 2026 and June 29, 2025, respectively, were as follows:

Three Months Ended Six Months Ended

June 28, 2026 June 29, 2025 Percent Change June 28, 2026 June 29, 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 - 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%.

Results of Operations - Second Quarter 2026 vs.

Second Quarter 2025

Net sales of our North America Confectionery segment were $2,173.6 million in the second quarter of 2026 compared to $2,085.5 million in the same period of 2025, an increase of $88.1 million, or 4.2%.

The increase was driven by favorable price realization of approximately 14%, 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.

Volume declined approximately 10%, driven primarily by price elasticity.

Additionally, there was no impact from foreign currency exchange rates.

Our North America Confectionery segment income was $705.8 million in the second quarter of 2026 compared to $503.9 million in the same period of 2025, an increase of $201.9 million, or 40.1%.

The increase was driven primarily by net price realization, supply chain productivity, net savings related to our AAA Initiative, lower commodity costs and tariff refunds, partially offset by higher logistic expenses.

Results of Operations - First Six Months 2026 vs.

First Six Months 2025

Net sales of our North America Confectionery segment were $4,663.5 million in the first six months of 2026 compared to $4,385.6 million in the same period of 2025, an increase of $277.9 million, or 6.3%.

The increase was driven by favorable price realization of approximately 13%, primarily due to the pricing action announced in 2025.

Volume declined approximately 7%, driven primarily by price elasticity.

Additionally, there was no impact from foreign currency exchange rates.

Our North America Confectionery segment income was $1,498.2 million in the first six months of 2026 compared to $1,200.3 million in the same period of 2025, an increase of $297.9 million or 24.8%.

The increase was driven primarily by net price realization, supply chain productivity, net savings related to our AAA Initiative, and lower commodity costs, partially offset by higher logistic expenses.

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 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

North America Salty Snacks results, which accounted for 13.9% and 12.1% of our net sales for the three months ended June 28, 2026 and June 29, 2025, respectively, were as follows:

Three Months Ended Six Months Ended

June 28, 2026 June 29, 2025 Percent Change June 28, 2026 June 29, 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 - 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%.

Results of Operations - Second Quarter 2026 vs.

Second Quarter 2025

Net sales of our North America Salty Snacks segment were $387.8 million in the second quarter of 2026 compared to $315.5 million in the same period of 2025, an increase of $72.3 million, or 22.9%.

The increase was predominantly due to the acquisition of LesserEvil in November 2025, which provided a benefit of approximately 22%.

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%.

Further, volume increased approximately 4%, primarily driven by Dot’s Homestyle Pretzel s.

Price realization declined approximately 3% primarily driven by higher trade promotional activities for Dot’s Homestyle Pretzels and SkinnyPop.

Our North America Salty Snacks segment income was $62.6 million in the second quarter of 2026 compared to $66.5 million in the same period of 2025, a decrease of $3.9 million, or 5.9%.

The decrease was driven by higher logistic costs, lower net price realization, unfavorable mix, and increased SM&A, partially offset by higher volume and supply chain productivity.

Results of Operations - First Six Months 2026 vs.

First Six Months 2025

Net sales of our North America Salty Snacks segment were $737.9 million in the first six months of 2026 compared to $593.3 million in the same period of 2025, an increase of $144.6 million, or 24.4%.

The increase was predominantly due to the acquisition of LesserEvil in November 2025, which provided a benefit of approximately 21%.

Further, volume increased approximately 4%, primarily related to Dot’s Homestyle Pretzels.

The net sales increase was partially offset by price realization declines of approximately 1%, primarily driven by higher trade promotional activities for SkinnyPop .

Our North America Salty Snacks segment income was $96.9 million in the first six months of 2026 compared to $108.3 million in the same period of 2025, a decrease of $11.5 million, or 10.6%.

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

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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 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

International results, which accounted for 8.1% and 8.2% of our net sales for the three months ended June 28, 2026 and June 29, 2025, respectively, were as follows:

Three Months Ended Six Months Ended

June 28, 2026 June 29, 2025 Percent Change June 28, 2026 June 29, 2025 Percent Change

In millions of dollars

Net sales $ 225.9 $ 213.7 5.7 % $ 490.1 $ 441.2 11.1 %

Segment income 15.3 28.7 (46.8) %

Segment (loss) income (5.1) 19.8 (126.0) % 10.1 48.5 (79.2) %

Segment margin (2.3) % 9.3 % 2.1 % 11.0 %

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

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.

Results of Operations - Second Quarter 2026 vs.

Second Quarter 2025

Net sales of our International segment were $225.9 million in the second quarter of 2026 compared to $213.7 million in the same period of 2025, an increase of $12.2 million, or 5.7%.

The increase was due to favorable price realization of approximately 10%, resulting from strategic pricing actions across key markets.

The increase was also driven by a favorable impact from foreign currency exchange rates of approximately 4%.

The increase was partially offset by volume declines primarily drive by price elasticity across markets of approximately 8%.

Our International segment generated a loss of $5.1 million in the second quarter of 2026 compared to income of $19.8 million in the second quarter of 2025, a decrease of $24.9 million, or 126.0%, 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.

Results of Operations - First Six Months 2026 vs.

First Six Months 2025

Net sales of our International segment were $490.1 million in the first six months of 2026 compared to $441.2 million in the same period of 2025, an increase of $48.9 million, or 11.1%.

The increase was driven by a favorable price realization of approximately 11%, primarily due to strategic pricing actions across key markets.

The increase was further due to a favorable impact from foreign currency exchange rates of approximately 5%.

The increase was partially offset by volume declines of approximately 5% across certain key markets.

Our International segment generated income of $10.1 million in the first six months of 2026 compared to $48.5 million in the first six months of 2025, a decrease of $38.4 million, or 79.2%, driven by higher supply chain costs, higher commodity and manufacturing costs and unfavorable mix, which more than offset favorable price realization 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 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.

In the second quarter of 2026, unallocated corporate expense totaled $215.1 million, as compared to $181.5 million in the second quarter of 2025, an increase of $33.6 million, or 18.5%.

The increase was primarily driven by continued investments in technology and higher acquisition and integration costs, partially offset by lower compensation and benefits costs.

In the first six months of 2026, unallocated corporate expense totaled $372.8 million, as compared to $342.0 million in the first six months of 2025 , an increase of $30.9 million, or 9.0%.

The increase was primarily driven by continued investments in technology and higher acquisition and integration costs, partially offset by lower compensation and benefits costs.

LIQUIDITY AND CAPITAL RESOURCES

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

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

At June 28, 2026, our cash and cash equivalents totaled $791.2 million, a decrease of $134.7 million compared to the 2025 year-end balance.

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

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.

Additionally, at June 28, 2026, we had outstanding short- and long-term debt totaling $5.6 billion, of which $504.2 million was classified as the current portion of long-term debt.

Of the $504.2 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 March 29, 2026 was held by subsidiaries domiciled outside of the United States.

A substantial majority of our cash and cash equivalents at June 28, 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:

Three Months Ended

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

Six Months Ended

In millions of dollars June 28, 2026 June 29, 2025

Net cash provided by (used in):

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Operating activities

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.

We generated cash of $888.1 million from operating activities in the first six months of 2026, an increase of $379.2 million compared to $508.9 million in the same period of 2025.

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

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• 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.

◦ In the aggregate, select net working capital items, specifically, trade accounts receivable, inventory, accounts payable and accrued liabilities, consumed cash of $361.9 million in 2026, compared to consuming cash of $204.3 million in 2025.

This $157.6 million fluctuation was mainly driven by an increase in trade accounts receivable, as a result of timing of sales and collections, partially offset by a decrease in accounts payable and accrued liabilities, due to the timing of vendor and supplier payments, and lower inventory levels.

Investing activities

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.

We used cash of $199.6 million for investing activities in the first six months of 2026, a decrease of $102.2 million compared to $301.8 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, 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.

Capital expenditures, including capitalized software, capacity expansion, innovation and cost savings, were $204.4 million in the first six months of 2026 compared to $230.6 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.

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

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

• Other investing activities .

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

We received payments of approximately $8.5 million in the first six months of 2026, which is consistent with the same period of 2025 of approximately $9.0 million.

• Intangible assets .

We had no purchases of intangible assets in 2026.

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

The Hershey Company | Q2 2026 Form 10-Q | Page 43

• Other investing activities .

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

Financing activities

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:

We used cash of $828.1 million for financing activities in the first six months of 2026, an increase of $805.6 million compared to $22.5 million in the same period of 2025.

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

• Short-term borrowings, net.

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

During the first three months of 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.

During the first six months of 2026, we generated cash of $206.1 million predominately through the issuance of short-term commercial paper, partially offset by a decrease in short-term foreign bank borrowings.

During the first six months of 2025, we used cash of $1.2 billion predominately to reduce outstanding short-term commercial paper borrowings.

• Long-term debt borrowings and repayments .

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”).

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

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

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

We had minimal payment activity.

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

• Dividend payments .

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.

Total dividend payments to holders of our Common Stock and Class B Common Stock were $574.4 million during the first six months of 2026, an increase of $31.6 million compared to $542.8 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 29, 2026

In millions of dollars except per share amounts March 29, 2026 June 28, 2026

Dividends paid per share – Common stock $ 1.452 $ 1.452

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Total cash dividends paid $ 288.0 $ 286.4

Declaration date February 4, 2026

Record date February 17, 2026

Payment date March 16, 2026

Declaration date February 4, 2026 April 29, 2026

Record date February 17, 2026 May 15, 2026

Payment date March 16, 2026 June 15, 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.

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.

Details regarding our share repurchases are as follows:

Six Months Ended

In millions June 28, 2026 June 29, 2025

Shares repurchased in the open market under pre-approved share repurchase programs (1) $ 200.0 $ —

Shares repurchased in the open market to replace Treasury Stock issued for stock options and incentive compensation 239.4 —

Cash used for total share repurchases (excluding excise tax) $ 439.4 $ —

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

The Hershey Company | Q2 2026 Form 10-Q | Page 44

(1) In December 2023, our Board of Directors approved a $500 million share repurchase authorization.

As a result of the share repurchase authorization, approximately $270 million remains available for repurchases under our December 2023 share repurchase authorization.

In June 2026, our Board of Directors approved an additional $500 million share repurchase authorization.

This program is to commence after the existing 2023 authorization is completed and is to be utilized at management’s discretion.

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.

• Proceeds from exercised stock options and employee tax withholding.

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.

During the first six months of 2026, we received $16.1 million from employee exercises of stock options and paid $16.7 million of employee taxes withheld from share-based awards.

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

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

• Contingent consideration paid.

During the first six months of 2026, we paid $16.6 million of contingent consideration related to previous business combination activity.

During the first six months of 2025, there was no contingent consideration paid.

Recent Accounting Pronouncements

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• 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.”

• Such other matters as discussed in our 2025 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ending March 29, 2026, 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