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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to_______

Commission file number 1-183

THE HERSHEY COMPANY

(Exact name of registrant as specified in its charter)


Delaware						23-0691590
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

19 East Chocolate Avenue, Hershey, PA 17033

(Address of principal executive offices and Zip Code)

(717) 534-4200

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, one dollar par value

HSY

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common Stock, one dollar par value—148,171,608 shares, as of October 24, 2025.

Class B Common Stock, one dollar par value—54,613,514 shares, as of October 24, 2025.

THE HERSHEY COMPANY

Quarterly Report on Form 10-Q

For the Period Ended September 28, 2025

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION						2
Item 1. Financial Statements						2
Consolidated Statements of Income for the Three and Nine Months Ended September 28, 2025 and September 29, 2024						2
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 2 8 , 2025 and September 29 , 2024						3
Consolidated Balance Sheets as of September 2 8 , 2025 and December 31, 2024						4
Consolidated Statements of Cash Flows for the Nine Months Ended September 2 8 , 2025 and September 29 , 2024						5
Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 2 8 , 2025 and September 29 , 2024						6
Notes to Unaudited Consolidated Financial Statements						8
Note 1 - Summary of Significant Accounting Policies						8
Note 2 - Business Acquisitions						9
Note 3 - Goodwill and Intangible Assets						10
Note 4 - Short and Long-Term Debt						10
Note 5 - Derivative Instruments						12
Note 6 - Fair Value Measurements						14
Note 7 - Leases						16
Note 8 - Investments in Unconsolidated Affiliates						19
Note 9 - Business Realignment Activities						19
Note 10 - Income Taxes						20
Note 11 - Pension and Other Post-Retirement Benefit Plans						21
Note 12 - Stock Compensation Plans						22
Note 13 - Segment Information						24
Note 14 - Treasury Stock Activity						29
Note 15 - Contingencies						29
Note 16 - Earnings Per Share						30
Note 17 - Other (Income) Expense, Net						32

Note 18 - Supplemental Balance Sheet Information						33
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						35
Item 3. Quantitative and Qualitative Disclosures About Market Risk						46
Item 4. Controls and Procedures						48
PART II. OTHER INFORMATION						49
Item 1. Legal Proceedings						49
Item 1A. Risk Factors						49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						49
Item 3. Defaults Upon Senior Securities						49
Item 4. Mine Safety Disclosures						49
Item 5. Other Information						49
Item 6. Exhibits						51
Signatures						52


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Net sales	$	3,181,418	$	2,987,494	$	8,601,555	$	8,314,723
Cost of sales	2,144,084		1,754,775		5,823,681		4,572,178
Gross profit	1,037,334		1,232,719		2,777,874		3,742,545
Selling, marketing and administrative expense	600,540		591,920		1,762,419		1,750,888


Business realignment costs	2,211		27,635		18,840		32,572
Operating profit	434,583		613,164		996,615		1,959,085
Interest expense, net	51,474		44,316		142,131		125,511
Other (income) expense, net	11,199		50,101		9,808		82,695
Income before income taxes	371,910		518,747		844,676		1,750,879
Provision for income taxes	95,590		72,446		281,434		326,231


Net income	$	276,320	$	446,301	$	563,242	$	1,424,648

Net income per share—basic:
Common stock	$	1.40	$	2.26	$	2.85	$	7.19
Class B common stock	$	1.27	$	2.05	$	2.58	$	6.53

Net income per share—diluted:
Common stock	$	1.36	$	2.20	$	2.77	$	7.00
Class B common stock	$	1.27	$	2.05	$	2.59	$	6.53

Dividends paid per share:
Common stock	$	1.370	$	1.370	$	4.110	$	4.110
Class B common stock	$	1.245	$	1.245	$	3.735	$	3.735

See Notes to Unaudited Consolidated Financial Statements.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 2

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	For the Three Months Ended												For the Nine Months Ended
	September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
	Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount
Net income					$	276,320					$	446,301					$	563,242					$	1,424,648
Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Foreign currency translation gains (losses) during period	$	(2,190)	$	—	(2,190)		$	(4,231)	$	—	(4,231)		$	29,355	$	—	29,355		$	(36,073)	$	—	(36,073)

Pension and post-retirement benefit plans:
Net actuarial gain (loss) and service cost	14,418		(3,465)		10,953		65		(54)		11		14,351		(3,609)		10,742		303		(62)		241
Reclassification to earnings	13,479		(3,243)		10,236		2,540		(611)		1,929		19,244		(4,613)		14,631		7,618		(1,829)		5,789
Cash flow hedges:
Gains (losses) on cash flow hedging derivatives	400		(571)		(171)		1,779		599		2,378		(6,030)		771		(5,259)		5,636		277		5,913
Reclassification to earnings	2,206		(634)		1,572		560		(1,154)		(594)		5,672		(1,275)		4,397		4,210		(2,122)		2,088
Total other comprehensive income (loss), net of tax	$	28,313	$	(7,913)	20,400		$	713	$	(1,220)	(507)		$	62,592	$	(8,726)	53,866		$	(18,306)	$	(3,736)	(22,042)


Comprehensive income					$	296,720					$	445,794					$	617,108					$	1,402,606

See Notes to Unaudited Consolidated Financial Statements.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 3

THE HERSHEY COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	September 28, 2025		December 31, 2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,163,017	$	730,746
Accounts receivable—trade, net	966,411		800,402
Inventories	1,707,522		1,254,094

Prepaid expenses and other	561,155		974,215
Total current assets	4,398,105		3,759,457
Property, plant and equipment, net	3,426,678		3,458,853
Goodwill	2,711,338		2,705,753
Other intangibles	1,891,101		1,873,866
Other non-current assets	1,110,163		1,111,867
Deferred income taxes	42,041		37,065
Total assets	$	13,579,426	$	12,946,861
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,459,680	$	1,159,177
Accrued liabilities	952,330		807,341
Accrued income taxes	98,461		51,036
Short-term debt	214,959		1,306,976
Current portion of long-term debt	502,334		604,965
Total current liabilities	3,227,764		3,929,495
Long-term debt	4,677,086		3,190,210
Other long-term liabilities	639,160		688,259
Deferred income taxes	470,970		424,243
Total liabilities	9,014,980		8,232,207

Stockholders’ equity:
The Hershey Company stockholders’ equity
Preferred stock, shares issued: none in 2025 and 2024	—		—
Common stock, shares issued: 166,939,511 at September 28, 2025 and December 31, 2024	166,939		166,939
Class B common stock, shares issued: 54,613,514 at September 28, 2025 and December 31, 2024	54,614		54,614
Additional paid-in capital	1,407,685		1,377,226
Retained earnings	5,447,367		5,698,316
Treasury—common stock shares, at cost: 18,775,431 at September 28, 2025 and 19,169,956 at December 31, 2024	(2,262,135)		(2,278,551)
Accumulated other comprehensive loss	(250,024)		(303,890)


Total stockholders’ equity	4,564,446		4,714,654
Total liabilities and stockholders’ equity	$	13,579,426	$	12,946,861

See Notes to Unaudited Consolidated Financial Statements.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 4

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended
	September 28, 2025		September 29, 2024
Operating Activities
Net income	$	563,242	$	1,424,648
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	371,180		331,440
Stock-based compensation expense	46,453		32,573
Deferred income taxes	37,790		(25,623)


Write-down of equity investments	—		81,017

Unrealized losses (gains) on derivative contracts	541,137		(200,284)
Other	77,524		53,520
Changes in assets and liabilities, net of business acquisition:
Accounts receivable—trade, net	(156,979)		(330,777)
Inventories	(445,014)		27,676
Prepaid expenses and other current assets	(231,742)		(52,193)
Accounts payable and accrued liabilities	453,642		119,168
Accrued income taxes	158,869		138,503
Contributions to pension and other benefit plans	(9,978)		(10,100)
Other assets and liabilities	(55,310)		426
Net cash provided by operating activities	1,350,814		1,589,994
Investing Activities
Capital additions (including software)	(316,537)		(471,415)


Receipts (payments) related to equity investments in tax credit qualifying partnerships	14,261		(78,196)

Purchase of intangible assets	(73,597)		—
Other investing activities	(6,309)		287

Net cash used in investing activities	(382,182)		(549,324)
Financing Activities
Net (decrease) increase in short-term debt	(1,102,467)		482,767
Long-term borrowings, net of debt issuance costs	1,984,545		—
Repayment of long-term debt and finance leases	(604,641)		(4,476)


Cash dividends paid	(813,955)		(814,309)
Repurchase of common stock	—		(494,191)
Proceeds from exercised stock options	17,258		13,786
Taxes withheld and paid on employee stock awards	(17,182)		(30,546)

Net cash used in financing activities	(536,442)		(846,969)
Effect of exchange rate changes on cash and cash equivalents	81		19,348


Net increase in cash and cash equivalents	432,271		213,049
Cash and cash equivalents, beginning of period	730,746		401,902
Cash and cash equivalents, end of period	$	1,163,017	$	614,951
Supplemental Disclosure
Interest paid	$	156,433	$	128,875
Income taxes paid	110,558		180,338

See Notes to Unaudited Consolidated Financial Statements.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 5

HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended September 28, 2025 and September 29, 2024

(in thousands)

(unaudited)


	Preferred Stock		Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Common Stock		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
Balance, June 29, 2025	$	—	$	166,939	$	54,614	$	1,387,873	$	5,442,869	$	(2,267,253)	$	(270,424)	$	4,514,618
Net income									276,320						276,320
Other comprehensive income													20,400		20,400
Dividends (including dividend equivalents):
Common Stock, $1.370 per share									(203,828)						(203,828)
Class B Common Stock, $1.245 per share									(67,994)						(67,994)

Stock-based compensation							15,597								15,597
Exercise of stock options and incentive-based transactions							4,215				5,118				9,333





Balance, September 28, 2025	$	—	$	166,939	$	54,614	$	1,407,685	$	5,447,367	$	(2,262,135)	$	(250,024)	$	4,564,446


	Preferred Stock		Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Common Stock		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
Balance, June 30, 2024	$	—	$	166,939	$	54,614	$	1,325,876	$	4,997,269	$	(2,283,219)	$	(251,613)	$	4,009,866
Net income									446,301						446,301
Other comprehensive loss													(507)		(507)
Dividends (including dividend equivalents):
Common Stock, $1.370 per share									(202,860)						(202,860)
Class B Common Stock, $1.245 per share									(67,993)						(67,993)

Stock-based compensation							15,164								15,164
Exercise of stock options and incentive-based transactions							1,895				3,072				4,967
Repurchase of common stock (including excise tax)											31				31



Balance, September 29, 2024	$	—	$	166,939	$	54,614	$	1,342,935	$	5,172,717	$	(2,280,116)	$	(252,120)	$	4,204,969


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 6

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 28, 2025 and September 29, 2024

(in thousands)

(unaudited)


	Preferred Stock		Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Common Stock		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
Balance, December 31, 2024	$	—	$	166,939	$	54,614	$	1,377,226	$	5,698,316	$	(2,278,551)	$	(303,890)	$	4,714,654
Net income									563,242						563,242
Other comprehensive income													53,866		53,866
Dividends (including dividend equivalents):
Common Stock, $4.110 per share									(610,210)						(610,210)
Class B Common Stock, $3.735 per share									(203,981)						(203,981)

Stock-based compensation							46,799								46,799
Exercise of stock options and incentive-based transactions							(16,340)				16,416				76





Balance, September 28, 2025	$	—	$	166,939	$	54,614	$	1,407,685	$	5,447,367	$	(2,262,135)	$	(250,024)	$	4,564,446


	Preferred Stock		Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Common Stock		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
Balance, December 31, 2023	$	—	$	166,939	$	54,614	$	1,345,580	$	4,562,263	$	(1,800,232)	$	(230,078)	$	4,099,086
Net income									1,424,648						1,424,648
Other comprehensive loss													(22,042)		(22,042)
Dividends (including dividend equivalents):
Common Stock, $4.110 per share									(610,213)						(610,213)
Class B Common Stock, $3.735 per share									(203,981)						(203,981)

Stock-based compensation							33,173								33,173
Exercise of stock options and incentive-based transactions							(35,818)				19,058				(16,760)
Repurchase of common stock (including excise tax)											(498,942)				(498,942)




Balance, September 29, 2024	$	—	$	166,939	$	54,614	$	1,342,935	$	5,172,717	$	(2,280,116)	$	(252,120)	$	4,204,969

See Notes to Unaudited Consolidated Financial Statements.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 7

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share data or if otherwise indicated)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited consolidated financial statements provided in this report include the accounts of The Hershey Company (the “Company,” “Hershey,” “we” or “us”) and our majority-owned subsidiaries and entities in which we have a controlling financial interest after the elimination of intercompany accounts and transactions. We have a controlling financial interest if we own a majority of the outstanding voting common stock and minority shareholders do not have substantive participating rights, we have significant control through contractual or economic interests in which we are the primary beneficiary or we have the power to direct the activities that most significantly impact the entity’s economic performance. We use the equity method of accounting when we have a 20% to 50% interest in other companies and exercise significant influence. Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost method. Both equity method investments and cost, less impairment, investments are included as Other non-current assets in the Consolidated Balance Sheets.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. The financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, financial position, and cash flows for the indicated periods.

Operating results for the quarter ended September 28, 2025 may not be indicative of the results that may be expected for the year ending December 31, 2025 because of seasonal effects on our business. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (our “2024 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), an amount for other segment items with a description of the composition, and disclosure of the title and position of the CODM. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We adopted the provisions of this ASU in the fourth quarter of 2024 and applied the provisions retrospectively to each period presented in the consolidated financial statements. Adoption of the new standard did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public business entities on an annual basis to disclose specific categories in a tabular rate reconciliation and provide additional information for reconciling items that meet a five percent quantitative threshold. Additionally, the ASU requires all entities to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as individual jurisdictions where income taxes paid are equal to or greater than five percent of total income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and the update should be applied on a prospective basis, with a retrospective application permitted in the financial statements. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures. As a result, we intend to adopt the provisions of this ASU in the fourth quarter of 2025.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 8

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires entities to disclose certain additional expense information including, among other items, purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each Consolidated Statement of Income expense caption. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the update should be applied on a prospective basis, with a retrospective application permitted in the financial statements. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU modernizes the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. Under this ASU, costs are capitalized when management has authorized and committed funding and it is probable the project will be completed and the software used as intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted and the amendments in this update permit an entity to apply the new guidance using a prospective, retrospective or modified transition approach. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.

2. BUSINESS ACQUISITIONS

LesserEvil, LLC

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 Merger Agreement contains customary conditions, including, among others, (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) the absence of any law or order prohibiting the consummation of the transactions contemplated in the Merger Agreement and (iii) the accuracy, to specified degrees, of representations and warranties set forth therein and material compliance with covenants. If approved, the Company expects the acquisition to close by the end of 2025 and will be financed with cash on hand and short-term borrowings.

Sour Strips

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. The initial cash consideration paid for Sour Strips was deemed immaterial and consisted of cash on hand and short-term borrowings; however, the Company may be required to pay additional contingent consideration if certain defined targets are met over a multi-year period. Acquisition-related costs for the Sour Strips acquisition were immaterial.

The acquisition has been accounted for as a business combination and, accordingly, Sour Strips has been included within the North America Confectionery segment from the date of acquisition. The purchase consideration, inclusive of the acquisition date fair value of the contingent consideration, was allocated to minimal net assets acquired, goodwill and other intangible assets. The purchase price allocation has been finalized as of the second quarter of 2025 and includes an immaterial amount of measurement period adjustments. The measurement period adjustments to the initial allocation were based on more detailed information obtained about the specific assets acquired and liabilities assumed, specifically, post-closing adjustments to the working capital acquired.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired (including the identifiable intangible assets). The goodwill derived from this acquisition is expected to be deductible for tax purposes and reflects the value of leveraging our brand building expertise, commercial capabilities and retail relationships to accelerate growth.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 9

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Other intangible assets include trademarks valued at $41,800 and customer relationships valued at $41,300. Trademarks were assigned an estimated useful life of 22 years and customer relationships were assigned estimated useful lives ranging from 14 to 16 years.

3. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill by reportable segment for the nine months ended September 28, 2025 are as follows:


	North America Confectionery		North America Salty Snacks		International		Total
Balance at December 31, 2024	$	2,032,857	$	657,001	$	15,895	$	2,705,753

Measurement period adjustments	1,382		—		—		1,382

Foreign currency translation	3,215		—		988		4,203
Balance at September 28, 2025	$	2,037,454	$	657,001	$	16,883	$	2,711,338

The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset:


	September 28, 2025				December 31, 2024
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets subject to amortization:
Trademarks	$	1,801,222	$	(322,409)	$	1,721,159	$	(282,819)
Customer-related	553,561		(176,288)		552,594		(151,409)
Patents	7,821		(7,821)		7,579		(7,579)

Total	2,362,604		(506,518)		2,281,332		(441,807)

Intangible assets not subject to amortization:
Trademarks	35,015				34,341
Total other intangible assets	$	1,891,101			$	1,873,866

In 2025, the gross carrying amount of our intangible assets and corresponding accumulated amortization increased as a result of the purchase of the Fulfil brand in North America.

Total amortization expense for the three months ended September 28, 2025 and September 29, 2024 was $21,202 and $19,534, respectively. Total amortization expense for the nine months ended September 28, 2025 and September 29, 2024 was $62,958 and $58,627, respectively.

4. SHORT AND LONG-TERM DEBT

Short-term Debt

As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less. As of September 28, 2025, we maintained a $1.35 billion unsecured revolving credit facility with the option to increase the aggregate amount of the commitments by up to $500 million with the consent of the lenders (the “prior credit facility”). On October 21, 2025, we terminated the prior credit facility, which was scheduled to expire in April 2028, and entered into a new unsecured revolving credit facility (the “new credit facility”). The new credit facility allows the Company to borrow up to $1.875 billion with the option to increase the aggregate amount of the commitments by up to $1.0 billion with the consent of the lenders. The new credit facility is scheduled to expire on October 21, 2030; however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent under the facility.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 10

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The credit agreements governing the prior credit facility and the new credit facility contain certain financial and other covenants, customary representations, warranties and events of default. As of September 28, 2025, we were in compliance with all covenants pertaining to the prior credit facility, and we had no significant compensating balance agreements that legally restricted access to these funds. For more information, refer to the Consolidated Financial Statements included in our 2024 Annual Report on Form 10-K.

In addition to the revolving credit facility, we maintain lines of credit with domestic and international commercial banks. Commitment fees relating to our revolving credit facility and lines of credit are not material. Short-term debt consisted of the following:


	September 28, 2025			December 31, 2024
Short-term foreign bank borrowings against lines of credit	$	214,959		$	161,364
U.S. commercial paper	—			1,145,612
Total short-term debt	$	214,959		$	1,306,976
Weighted average interest rate on outstanding commercial paper	—		%	4.5		%

Long-term Debt

Long-term debt consisted of the following:


Debt Type and Rate	Maturity Date	September 28, 2025		December 31, 2024
0.900% Notes (1)	June 1, 2025	—		300,000
3.200% Notes (2)	August 21, 2025	—		300,000
2.300% Notes	August 15, 2026	500,000		500,000
7.200% Debentures	August 15, 2027	193,639		193,639
4.550% Notes (3)	February 24, 2028	500,000		—
4.250% Notes	May 4, 2028	350,000		350,000
2.450% Notes	November 15, 2029	300,000		300,000
4.750% Notes (3)	February 24, 2030	500,000		—
1.700% Notes	June 1, 2030	350,000		350,000
4.950% Notes (3)	February 24, 2032	500,000		—
4.500% Notes	May 4, 2033	400,000		400,000
5.100% Notes (3)	February 24, 2035	500,000		—
3.375% Notes	August 15, 2046	300,000		300,000
3.125% Notes	November 15, 2049	400,000		400,000
2.650% Notes	June 1, 2050	350,000		350,000
Finance lease obligations (see Note 7)		69,743		73,802
Net impact of interest rate swaps, debt issuance costs and unamortized debt discounts		(33,962)		(22,266)
Total long-term debt		5,179,420		3,795,175
Less—current portion		502,334		604,965
Long-term portion		$	4,677,086	$	3,190,210

(1) In June 2025, we repaid $300,000 of 0.900% Notes due upon their maturity.

(2) In August 2025, we repaid $300,000 of 3.200% Notes due upon their maturity.

(3) During the first quarter of 2025, we issued $500,000 of 4.550% Notes due in February 2028, $500,000 of 4.750% Notes due in February 2030, $500,000 of 4.950% Notes due in February 2032 and $500,000 of 5.100% Notes due in February 2035 (together, the “2025 Notes”). Proceeds from the issuance of the 2025 Notes, net of discounts and issuance costs, totaled $1,984,545. The 2025 Notes were issued under a shelf registration statement on Form S-3 filed in May 2024 that registered an indeterminate amount of debt securities.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 11

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Interest Expense

Net interest expense consists of the following:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Interest expense	$	61,456	$	51,906	$	176,817	$	148,099
Capitalized interest	(2,257)		(5,343)		(9,732)		(15,620)
Interest expense	59,199		46,563		167,085		132,479
Interest income	(7,725)		(2,247)		(24,954)		(6,968)
Interest expense, net	$	51,474	$	44,316	$	142,131	$	125,511

5. DERIVATIVE INSTRUMENTS

We are exposed to market risks arising principally from changes in foreign currency exchange rates, interest rates and commodity prices. We use certain derivative instruments to manage these risks. These include interest rate swaps to manage interest rate risk, foreign currency forward exchange contracts to manage foreign currency exchange rate risk, and commodities futures and options contracts to manage commodity market price risk exposures.

In entering into these contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. We mitigate this risk by entering into exchange-traded contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. We do not expect any significant losses from counterparty defaults.

Commodity Price Risk

We enter into commodities futures and options contracts and other commodity derivative instruments to reduce the effect of future price fluctuations associated with the purchase of raw materials, energy requirements and transportation services. We generally hedge commodity price risks for 3- to 24-month periods. Our open commodity derivative contracts had a notional value of $591,789 as of September 28, 2025 and $667,421 as of December 31, 2024.

Derivatives used to manage commodity price risk are not designated for hedge accounting treatment. Therefore, the changes in fair value of these derivatives are recorded as incurred within cost of sales. As discussed in Note 13, we define our segment income to exclude gains and losses on commodity derivatives until the related inventory is sold, at which time the related gains and losses are reflected within segment income. This enables us to continue to align the derivative gains and losses with the underlying economic exposure being hedged and thereby eliminate the mark-to-market volatility within our reported segment income.

Foreign Exchange Price Risk

We are exposed to foreign currency exchange rate risk related to our international operations, including non-functional currency intercompany debt and other non-functional currency transactions of certain subsidiaries. Principal currencies hedged include the euro, Canadian dollar, Japanese yen, British pound, Brazilian real, Malaysian ringgit, Mexican peso and Swiss franc. We typically utilize foreign currency forward exchange contracts to hedge these exposures for periods ranging from 3 to 18 months. The contracts are either designated as cash flow hedges or are undesignated. The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $240,306 at September 28, 2025 and $79,028 at December 31, 2024. The effective portion of the changes in fair value on these contracts is recorded in other comprehensive income and reclassified into earnings in the same period in which the hedged transactions affect earnings. The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $20,615 at September 28, 2025 and $123,014 at December 31, 2024. The change in fair value on these instruments is recorded directly in cost of sales or selling, marketing and administrative (“SM&A”) expense, depending on the nature of the underlying exposure.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 12

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Interest Rate Risk

In order to manage interest rate exposure, from time to time, we enter into interest rate swap agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions. These swaps, which are settled upon issuance of the related debt, are designated as cash flow hedges and the gains and losses that are deferred in other comprehensive income are being recognized as an adjustment to interest expense over the same period that the hedged interest payments affect earnings.

Equity Price Risk

We are exposed to market price changes in certain broad market indices related to our deferred compensation obligations to our employees. To mitigate this risk, we use equity swap contracts to hedge the portion of the exposure that is linked to market-level equity returns. These contracts are not designated as hedges for accounting purposes and are entered into for periods of 3 to 12 months. The change in fair value of these derivatives is recorded in selling, marketing and administrative expense, together with the change in the related liabilities. The notional amount of the contracts outstanding at September 28, 2025 and December 31, 2024 was $33,198 and $30,524, respectively.

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of September 28, 2025 and December 31, 2024:


	September 28, 2025				December 31, 2024
	Assets (1)		Liabilities (1)		Assets (1)		Liabilities (1)
Derivatives designated as cash flow hedging instruments:

Foreign exchange contracts	$	2,092	$	3,856	$	8,598	$	3,280






Derivatives not designated as hedging instruments:
Commodities futures and options (2)	3,214		4,528		514,623		14,321
Deferred compensation derivatives	2,249		—		460		—
Foreign exchange contracts	2,906		32		164		4,800
	8,369		4,560		515,247		19,121
Total	$	10,461	$	8,416	$	523,845	$	22,401

(1)Derivative assets are classified on our Consolidated Balance Sheets within prepaid expenses and other as well as other non-current assets. Derivative liabilities are classified on our Consolidated Balance Sheets within accrued liabilities and other long-term liabilities.

(2)As of September 28, 2025, amounts reflected on a net basis in assets were assets of $71,402 and liabilities of $68,188, which are associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period. The comparable amounts reflected on a net basis in liabilities at December 31, 2024 were assets of $533,115 and liabilities of $32,998. At September 28, 2025 and December 31, 2024, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 13

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Income Statement Impact of Derivative Instruments

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended September 28, 2025 and September 29, 2024 was as follows:


	Non-designated Hedges				Cash Flow Hedges
	Gains (losses) recognized in income (a)				Gains (losses) recognized in other comprehensive income (“OCI”)				Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b)
	2025		2024		2025		2024		2025		2024
Commodities futures and options	$	32,745	$	32,270	$	—	$	—	$	—	$	—
Foreign exchange contracts	212		621		400		1,779		(56)		1,714
Interest rate swap agreements	—		—		—		—		(2,150)		(2,274)
Deferred compensation derivatives	2,249		1,265		—		—				—
Total	$	35,206	$	34,156	$	400	$	1,779	$	(2,206)	$	(560)

The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended September 28, 2025 and September 29, 2024 was as follows:


	Non-designated Hedges				Cash Flow Hedges
	Gains (losses) recognized in income (a)				Gains (losses) recognized in other comprehensive income (“OCI”)				Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b)
	2025		2024		2025		2024		2025		2024
Commodities futures and options	$	(52,657)	$	191,734	$	—	$	—	$	—	$	—
Foreign exchange contracts	8,594		465		(6,030)		5,636		1,052		2,664
Interest rate swap agreements	—		—		—		—		(6,724)		(6,874)
Deferred compensation derivatives	7,012		4,312		—		—				—
Total	$	(37,051)	$	196,511	$	(6,030)	$	5,636	$	(5,672)	$	(4,210)

(a)Gains (losses) recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses.

(b)Gains (losses) reclassified from AOCI into income for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense.

The amount of pre-tax net loss on derivative instruments, including interest rate swap agreements and foreign currency forward exchange contracts expected to be reclassified into earnings in the next 12 months was approximately $10,730 as of September 28, 2025. This amount is primarily associated with interest rate swap agreements.

6. FAIR VALUE MEASUREMENTS

Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy:


Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market.
Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 – Based on unobservable inputs that reflect the entity’s own assumptions about the assumptions that a market participant would use in pricing the asset or liability.

We did not have any Level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 14

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of September 28, 2025 and December 31, 2024:


	Assets / Liabilities
	Level 1		Level 2		Level 3		Total
September 28, 2025:
Derivative Instruments:
Assets:
Foreign exchange contracts (1)	$	—	$	4,998	$	—	$	4,998


Commodities futures and options (3)	$	3,214	$	—	$	—	$	3,214
Liabilities:
Foreign exchange contracts (1)	$	—	$	3,888	$	—	$	3,888

Deferred compensation derivatives (2)	—		2,249		—		2,249
Commodities futures and options (3)	$	4,528	$	—	$	—	$	4,528
December 31, 2024:
Assets:
Foreign exchange contracts (1)	$	—	$	8,761	$	—	$	8,761

Deferred compensation derivatives (2)	$	—	$	460	$	—	$	460
Commodities futures and options (3)	$	514,623	$	—	$	—	$	514,623
Liabilities:
Foreign exchange contracts (1)	$	—	$	8,080	$	—	$	8,080


Commodities futures and options (3)	$	14,321	$	—	$	—	$	14,321

(1)The fair value of foreign currency forward exchange contracts is the difference between the contract and current market foreign currency exchange rates at the end of the period. We estimate the fair value of foreign currency forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences.

(2)The fair value of deferred compensation derivatives is based on quoted prices for market interest rates and a broad market equity index.

(3)The fair value of commodities futures and options contracts is based on quoted market prices.

Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of September 28, 2025 and December 31, 2024 because of the relatively short maturity of these instruments.

The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy. The fair values and carrying values of long-term debt, including the current portion, were as follows:


	Fair Value				Carrying Value
	September 28, 2025		December 31, 2024		September 28, 2025		December 31, 2024
Current portion of long-term debt	$	495,556	$	597,547	$	502,334	$	604,965
Long-term debt	4,361,035		2,734,322		4,677,086		3,190,210
Total	$	4,856,591	$	3,331,869	$	5,179,420	$	3,795,175


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 15

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Other Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, GAAP requires that, under certain circumstances, we also record assets and liabilities at fair value on a nonrecurring basis.

2024 Activity

In connection with the acquisition of Sour Strips in 2024, as discussed in Note 2, we used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow analysis and the relief-from-royalty, a form of the multi-period excess earnings, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Additionally, we estimated the fair value of the contingent consideration using a Monte Carlo simulation model.

7. LEASES

We lease office and retail space, warehouse and distribution facilities, land, vehicles, and equipment. We determine if an agreement is or contains a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are based on the estimated present value of lease payments over the lease term and are recognized at the lease commencement date.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. A limited number of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements generally do not contain residual value guarantees or material restrictive covenants.

For real estate, equipment and vehicles that support selling, marketing and general administrative activities, the Company accounts for the lease and non-lease components as a single lease component. These asset categories comprise the majority of our leases. The lease and non-lease components of real estate and equipment leases supporting production activities are not accounted for as a single lease component. Consideration for such contracts are allocated to the lease and non-lease components based upon relative standalone prices either observable or estimated if observable prices are not readily available.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 16

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The components of lease expense for the three months ended September 28, 2025 and September 29, 2024 were as follows:


		Three Months Ended
Lease expense	Classification	September 28, 2025		September 29, 2024
Operating lease cost	Cost of sales or SM&A (1)	$	15,651	$	13,678
Finance lease cost:
Amortization of ROU assets	Depreciation and amortization (1)	1,896		2,133
Interest on lease liabilities	Interest expense, net	1,096		1,140
Net lease cost (2)		$	18,643	$	16,951

The components of lease expense for the nine months ended September 28, 2025 and September 29, 2024 were as follows:


		Nine Months Ended
Lease expense	Classification	September 28, 2025		September 29, 2024
Operating lease cost	Cost of sales or SM&A (1)	$	45,677	$	39,159
Finance lease cost:
Amortization of ROU assets	Depreciation and amortization (1)	6,248		6,504
Interest on lease liabilities	Interest expense, net	3,345		3,489
Net lease cost (2)		$	55,270	$	49,152

(1)Supply chain-related amounts were included in cost of sales.

(2)Net lease cost does not include short-term leases, variable lease costs or sublease income, all of which are immaterial.

Information regarding our lease terms and discount rates were as follows:


	September 28, 2025		December 31, 2024
Weighted-average remaining lease term (years)
Operating leases	11.6		12.4
Finance leases	26.6		25.9

Weighted-average discount rate
Operating leases	3.8	%	3.7	%
Finance leases	6.3	%	6.3	%


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 17

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Supplemental balance sheet information related to leases were as follows:


Leases	Classification	September 28, 2025		December 31, 2024
Assets
Operating lease ROU assets	Other non-current assets	$	336,808	$	337,739

Finance lease ROU assets, at cost	Property, plant and equipment, gross	81,791		87,999
Accumulated amortization	Accumulated depreciation	(26,721)		(25,515)
Finance lease ROU assets, net	Property, plant and equipment, net	55,070		62,484

Total leased assets		$	391,878	$	400,223

Liabilities
Current
Operating	Accrued liabilities	$	46,291	$	40,636
Finance	Current portion of long-term debt	3,548		5,666
Non-current
Operating	Other long-term liabilities	299,750		304,767
Finance	Long-term debt	66,195		68,136
Total lease liabilities		$	415,784	$	419,205

The maturities of our lease liabilities as of September 28, 2025 were as follows:


	Operating leases		Finance leases		Total
2025 (rest of year)	$	14,962	$	2,184	$	17,146
2026	57,301		7,014		64,315
2027	54,206		4,944		59,150
2028	36,166		4,407		40,573
2029	32,621		4,245		36,866
Thereafter	227,184		133,646		360,830
Total lease payments	422,440		156,440		578,880
Less: Imputed interest	76,399		86,697		163,096
Total lease liabilities	$	346,041	$	69,743	$	415,784

Supplemental cash flow and other information related to leases were as follows:


	Nine Months Ended
	September 28, 2025		September 29, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	43,965	$	36,293
Operating cash flows from finance leases	3,345		3,489
Financing cash flows from finance leases	4,595		4,543

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	33,158	$	70,383
Finance leases	62		983


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 18

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

8. INVESTMENTS IN UNCONSOLIDATED AFFILIATES

We invest in partnerships that make equity investments in projects eligible to receive federal historic and renewable energy tax credits. The tax credits, when realized, are recognized as a reduction of tax expense under the flow-through method, at which time the corresponding equity investment is written-down to reflect the remaining value of the future benefits to be realized. The equity investment write-down is reflected within other (income) expense, net in the Consolidated Statements of Income (see Note 17).

Additionally, we acquire ownership interests in emerging snacking businesses and startup companies, which vary in method of accounting based on our percentage of ownership and ability to exercise significant influence over decisions relating to operating and financial affairs. These investments afford the Company the rights to distribute brands that the Company does not own to third-party customers primarily in North America. Net sales and expenses of our equity method investees are not consolidated into our financial statements; rather, our proportionate share of earnings or losses are recorded on a net basis within other (income) expense, net in the Consolidated Statements of Income.

Both equity method investments and cost, less impairment, investments are reported within other non-current assets in our Consolidated Balance Sheets. We regularly review our investments and adjust accordingly for capital contributions, dividends received and other-than-temporary impairments. Total investments in unconsolidated affiliates were $199,575 and $212,928 as of September 28, 2025 and December 31, 2024, respectively.

9. 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.

Advancing Agility & Automation Initiative

On February 2, 2024, the Board of Directors of the Company approved a multi-year productivity initiative (“Advancing Agility & Automation Initiative” or "AAA Initiative") to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings.

The Company estimates that the AAA Initiative will result in total pre-tax costs of $200,000 to $250,000 from inception through 2026. This estimate primarily includes program office execution and third-party costs supporting the design and implementation of the new organizational structure of $100,000 to $120,000, as well as implementation and technology capability costs of $55,000 to $70,000. Additionally, we expect to incur employee severance and related separation benefits of $45,000 to $60,000 as we facilitate workforce reductions and reallocate resources to further drive the Company’s strategic priorities. The cash portion of the total cost is estimated to be $175,000 to $225,000. At the conclusion of the program in 2026, ongoing annual savings are expected to be approximately $400,000.

Since inception through September 28, 2025, we recognized total costs associated with the AAA Initiative of $169,105. These charges predominantly included employee severance and related separation benefits related to workforce reductions and third-party costs supporting the design and implementation of the new organizational structure, as well as technology capability costs. The costs and related benefits of the AAA Initiative predominantly relates to the North America Confectionery segment and Corporate. However, segment operating results do not include these business realignment expenses because we evaluate segment performance excluding such costs.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 19

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Costs associated with business realignment activities are classified in our Consolidated Statements of Income as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Cost of sales	$	—	$	1,457	$	—	$	12,168
Selling, marketing and administrative expense	8,366		20,037		32,729		60,055
Business realignment costs	2,211		27,635		18,840		32,572
Costs associated with business realignment activities	$	10,577	$	49,129	$	51,569	$	104,795

Costs recorded by program during the nine months ended September 28, 2025 and September 29, 2024 related to these activities were as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Advancing Agility & Automation Initiative:
Severance and employee benefit costs	$	2,211	$	27,635	$	18,840	$	32,572
Other program costs	8,366		21,494		32,729		72,223
Total	$	10,577	$	49,129	$	51,569	$	104,795

The following table presents the liability activity for costs qualifying as exit and disposal costs for the nine months ended September 28, 2025:


	Total
Liability balance at December 31, 2024 (1)	$	10,417
2025 business realignment charges (2)	18,840
Cash payments	(20,557)
Liability balance at September 28, 2025 (1)	$	8,700

(1)The liability balances reflected above are reported within accrued liabilities and other long-term liabilities.

(2)The costs reflected in the liability roll-forward represent employee-related charges.

10. INCOME TAXES

The majority of our taxable income is generated in the United States and taxed at the United States statutory rate of 21%. The effective tax rates for the nine months ended September 28, 2025 and September 29, 2024 were 33.3% and 18.6%, respectively. Relative to the statutory rate, the 2025 effective tax rate was primarily impacted by tax reserves, foreign rate differential and state taxes.

The Company and its subsidiaries file tax returns in the United States, including various state and local returns, and in other foreign jurisdictions. We are routinely audited by taxing authorities in our filing jurisdictions, and a number of these disputes are currently underway, including multi-year controversies at various stages of review, negotiation and litigation in Mexico, Canada, Switzerland and the United States. The outcome of tax audits cannot be predicted with certainty, including the timing of resolution or potential settlements. If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. Based on our current assessments, we believe adequate provision has been made for all income tax uncertainties. We reasonably expect reductions in the liability for unrecognized tax benefits of approximately $15,594 within the next 12 months because of the expiration of statutes of limitations and settlements of tax audits.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 20

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA introduces changes to United States tax policy, trade regulations, and federal spending priorities. Key provisions include the extension and modification of tax provisions from the 2017 Tax Cuts and Jobs Act, modification of certain energy-related tax credits and incentives, and timing of deductions related to certain domestic expenses. The OBBBA did not have a material impact on the Company’s consolidated financial statements for the nine months ended September 28, 2025.

11. PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended September 28, 2025 and September 29, 2024 were as follows:


	Pension Benefits				Other Benefits
	Three Months Ended				Three Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Service cost	$	3,544	$	3,827	$	29	$	33
Interest cost	9,253		9,662		1,235		1,215
Expected return on plan assets	(12,029)		(12,800)		—		—
Amortization of prior service credit	(888)		(1,374)		(96)		(38)
Amortization of net loss	3,554		3,814		312		138
Settlement loss	10,597		—		—		—
Total net periodic benefit cost	$	14,031	$	3,129	$	1,480	$	1,348

We made contributions of $254 and $3,181 to our pension plans and other benefits plans, respectively, during the third quarter of 2025. In the third quarter of 2024, we made contributions of $1,134 and $3,498 to our pension plans and other benefit plans, respectively. The contributions in 2025 and 2024 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The components of net periodic benefit cost for the nine months ended September 28, 2025 and September 29, 2024 were as follows:


	Pension Benefits				Other Benefits
	Nine Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Service cost	$	10,583	$	11,512	$	85	$	100
Interest cost	27,722		28,995		3,695		3,646
Expected return on plan assets	(36,086)		(38,407)		—		—
Amortization of prior service credit	(2,667)		(4,120)		(288)		(113)
Amortization of net loss	10,661		11,435		941		416
Settlement loss	10,597		—		—		—
Total net periodic benefit cost	$	20,810	$	9,415	$	4,433	$	4,049

We made contributions of $1,366 and $8,612 to our pension plans and other benefits plans, respectively, during the first nine months of 2025. In the first nine months of 2024, we made contributions of $2,120 and $7,980 to our pension plans and other benefit plans, respectively. The contributions in 2025 and 2024 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 21

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

The non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans are reflected within other (income) expense, net in the Consolidated Statements of Income (see Note 17).

During the first nine months of 2025, we recognized pension settlement charges in The Hershey Retirement Plan for Salaried and Hourly Employees due to lump sum withdrawals by employees retiring or leaving the Company. The non-cash settlement charges, which represent the acceleration of a portion of the respective plan’s accumulated unrecognized actuarial loss, were triggered when the cumulative lump sum distributions exceeded the plan’s anticipated annual service and interest costs. In connection with the third quarter 2025 settlements, the related plan assets and liabilities were remeasured using a discount rate as of the remeasurement date that was 43 basis points lower than the rate as of December 31, 2024 and an expected rate of return on plan assets of 6.8%, which was consistent with the rate as of December 31, 2024.

12. STOCK COMPENSATION PLANS

Share-based grants for compensation and incentive purposes are made pursuant to the Equity and Incentive Compensation Plan (“EICP”). The EICP provides for grants of one or more of the following stock-based compensation awards to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent:

•Non-qualified stock options (“stock options”);

•Performance stock units (“PSUs”) and performance stock;

•Stock appreciation rights;

•Restricted stock units (“RSUs”) and restricted stock; and

•Other stock-based awards.

The EICP also provides for the deferral of stock-based compensation awards by participants if approved by the Compensation and Human Capital Committee of our Board and if in accordance with an applicable deferred compensation plan of the Company. Currently, the Compensation and Human Capital Committee has authorized the deferral of PSU and RSU awards by certain eligible employees under the Company’s Deferred Compensation Plan. Our Board has authorized our non-employee directors to defer any portion of their cash retainer, committee chair fees and RSUs awarded that they elect to convert into deferred stock units under our Directors’ Compensation Plan.

At the time stock options are exercised or PSUs and RSUs become payable, Common Stock is issued from our accumulated treasury shares. Dividend equivalents are credited on RSUs on the same date and at the same rate as dividends paid on our Common Stock. Dividend equivalents are charged to retained earnings and included in accrued liabilities until paid.

Awards to employees eligible for retirement prior to the award becoming fully vested are amortized to expense over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award. In addition, historical data is used to estimate forfeiture rates and record share-based compensation expense only for those awards that are expected to vest.

For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Pre-tax compensation expense	$	15,451	$	15,073	$	46,453	$	32,573
Related income tax benefit	3,294		2,572		15,478		6,352

Compensation expenses for stock compensation plans are primarily included in SM&A expense. As of September 28, 2025, total stock-based compensation expense related to non-vested awards not yet recognized was $99,229 and the weighted-average period over which this amount is expected to be recognized was approximately 2.0 years.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 22

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Stock Options

The exercise price of each stock option awarded under the EICP equals the closing price of our Common Stock on the New York Stock Exchange on the date of grant. Each stock option has a maximum term of 10 years. Grants of stock options provide for pro-rated vesting, typically over a four-year period. Expense for stock options is based on grant date fair value and recognized on a straight-line method over the vesting period, net of estimated forfeitures.

A summary of activity relating to grants of stock options for the period ended September 28, 2025 is as follows:


Stock Options	Shares	Weighted-Average Exercise Price (per share)	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at beginning of year	579,834	$106.73	2.7 years
Granted	5,165	$164.16
Exercised	(171,857)	$102.56


Outstanding as of September 28, 2025	411,667	$108.98	2.4 years	$	32,916
Options exercisable as of September 28, 2025	402,518	$107.01	2.2 years	$	32,828

The weighted-average fair value of options granted was $33.91 and $45.95 per share for the periods ended September 28, 2025 and September 29, 2024, respectively. The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions:


	Nine Months Ended
	September 28, 2025		September 29, 2024
Dividend yields	3.0	%	2.0	%
Expected volatility	22.3	%	21.3	%
Risk-free interest rates	4.2	%	4.3	%
Expected term in years	6.3		6.3

The total intrinsic value of options exercised was $12,265 and $13,327 for the periods ended September 28, 2025 and September 29, 2024, respectively.

Performance Stock Units and Restricted Stock Units

Under the EICP, we grant PSUs to select executives and other key employees. Vesting is contingent upon the achievement of certain performance objectives. We grant PSUs over three-year performance cycles. If we meet targets for financial measures at the end of the applicable three-year performance cycle, we award a resulting number of shares of our Common Stock to the participants. The number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with the terms established at the time of the award.

For PSUs granted, the target award is a combination of a market-based total shareholder return and performance-based components. For market-based condition components, market volatility and other factors are taken into consideration in determining the grant date fair value and the related compensation expense is recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided. For performance-based condition components, we estimate the probability that the performance conditions will be achieved each quarter and adjust compensation expenses accordingly. The performance scores of PSU grants during the nine months ended September 28, 2025 and September 29, 2024 can range from 0% to 250% of the targeted amounts.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 23

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

We recognize the compensation expenses associated with PSUs ratably over the three-year term. Compensation expenses are based on the grant date fair value because the grants can only be settled in shares of our Common Stock. The grant date fair value of PSUs is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s Common Stock on the date of grant for performance-based components.

During the nine months ended September 28, 2025 and September 29, 2024, we awarded RSUs to certain executive officers and other key employees under the EICP. We also awarded RSUs to non-employee directors.

We recognize the compensation expenses associated with employee RSUs over a specified award vesting period based on the grant date fair value of our Common Stock. We recognize expense for employee RSUs based on the straight-line method. The compensation expenses associated with non-employee director RSUs is recognized ratably over the vesting period, net of estimated forfeitures.

A summary of activity relating to grants of PSUs and RSUs for the period ended September 28, 2025 is as follows:


Performance Stock Units and Restricted Stock Units	Number of units	Weighted-average grant date fair value for equity awards (per unit)
Outstanding at beginning of year	538,803	$204.65
Granted	643,726	$168.32
Performance assumption change (1)	240,508	$235.97
Vested	(318,390)	$206.11
Forfeited	(110,222)	$196.37
Outstanding as of September 28, 2025	994,426	$189.15

(1)Reflects the net number of PSUs above and below target levels based on the performance metrics.

The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides weighted average assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.


	Nine Months Ended
	September 28, 2025			September 29, 2024
Units granted	643,726			357,272
Weighted-average fair value at date of grant	$	168.32		$	195.06
Monte Carlo simulation assumptions:
Estimated values	$110.81			$	84.13
Dividend yields	3.2		%	2.8		%
Expected volatility	22.2		%	18.5		%

The fair value of shares vested totaled $12,265 and $90,372 for the periods ended September 28, 2025 and September 29, 2024, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 242,602 units as of September 28, 2025. Each unit is equivalent to one share of the Company’s Common Stock.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 24

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

13. SEGMENT INFORMATION

The Company reports its operations through three segments: (i) North America Confectionery, (ii) North America Salty Snacks and (iii) International. This organizational structure aligns with how our CODM, Kirk Tanner, President and Chief Executive Officer, manages our business, including resource allocation and performance assessment, and further aligns with our product categories and the key markets we serve.

•North America Confectionery – This segment is responsible for our traditional chocolate and non-chocolate confectionery market position in the United States and Canada. This includes our business in chocolate and non-chocolate confectionery, gum and refreshment products, protein bars, spreads, snack bites and mixes, as well as pantry and food service lines. This segment also includes our retail operations, including Hershey’s Chocolate World stores in Hershey, Pennsylvania; New York, New York; Las Vegas, Nevada; Niagara Falls (Ontario) and Singapore, as well as operations associated with licensing the use of certain of the Company’s trademarks and products to third parties around the world.

•North America Salty Snacks – This segment is responsible for our salty snacking products in the United States. This includes ready-to-eat popcorn, baked and trans fat free snacks, pretzels and other snacks.

•International – International is a combination of all other operating segments that are not individually material, including those geographic regions where we operate outside of North America. 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 Asia, Latin America, Middle East, Europe, Africa and other regions.

For segment reporting purposes, the CODM uses “segment income” to evaluate segment performance and allocate resources, including considering budget-to-actual variances and prior year-to-actual variances on a monthly basis. 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 profit are managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM as well as the measure of segment performance used for incentive compensation purposes.

As discussed in Note 5, derivatives used to manage commodity price risk are not designated for hedge accounting treatment. These derivatives are recognized at fair market value with the resulting realized and unrealized (gains) losses recognized in unallocated derivative (gains) losses outside of the reporting segment results until the related inventory is sold, at which time the related gains and losses are reallocated to segment income. This enables us to align the derivative gains and losses with the underlying economic exposure being hedged and thereby eliminate the mark-to-market volatility within our reported segment income.

Certain manufacturing, warehousing, distribution and other activities supporting our global operations are integrated to maximize efficiency and productivity. As a result, assets and capital expenditures are not managed on a segment basis and are not included in the information reported to the CODM for the purpose of evaluating performance or allocating resources. We disclose depreciation and amortization that is generated by segment-specific assets, since these amounts are included within the measure of segment income reported to the CODM.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 25

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Our segment net sales and earnings for the three months ended September 28, 2025 and September 29, 2024 were as follows:


For the three months ended September 28, 2025	North America Confectionery		North America Salty Snacks		International		Total
Net sales	$	2,615,600	$	321,020	$	244,798	$	3,181,418
Cost of sales	1,752,225		206,267		209,843
SM&A expense	291,900		57,006		48,562
Total segment income (loss)	$	571,475	$	57,747	$	(13,607)	$	615,615
Unallocated corporate expense (1)							194,705
Unallocated mark-to-market gains on commodity derivatives							(24,250)
Costs associated with business realignment activities (see Note 9)							10,577
Operating profit							$	434,583
Interest expense, net (see Note 4)							51,474
Other (income) expense, net (see Note 17)							11,199
Income before income taxes							$	371,910


For the three months ended September 29, 2024	North America Confectionery		North America Salty Snacks		International		Total
Net sales	$	2,477,303	$	291,835	$	218,356	$	2,987,494
Cost of sales	1,446,950		181,729		154,012
SM&A expense	305,531		56,129		50,137
Total segment income	$	724,822	$	53,977	$	14,207	$	793,006
Unallocated corporate expense (1)							161,796
Unallocated mark-to-market gains on commodity derivatives							(31,083)
Costs associated with business realignment activities (see Note 9)							49,129
Operating profit							$	613,164
Interest expense, net (see Note 4)							44,316
Other (income) expense, net (see Note 17)							50,101
Income before income taxes							$	518,747

(1)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.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 26

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Our segment net sales and earnings for the nine months ended September 28, 2025 and September 29, 2024 were as follows:


For the nine months ended September 28, 2025	North America Confectionery		North America Salty Snacks		International		Total
Net sales	$	7,001,208	$	914,337	$	686,010	$	8,601,555
Cost of sales	4,342,071		581,440		512,239
SM&A expense	887,357		166,817		138,857
Total segment income	$	1,771,780	$	166,080	$	34,914	$	1,972,774
Unallocated corporate expense (1)							536,659
Unallocated mark-to-market losses on commodity derivatives							387,932
Costs associated with business realignment activities (see Note 9)							51,568
Operating profit							$	996,615
Interest expense, net (see Note 4)							142,131
Other (income) expense, net (see Note 17)							9,808
Income before income taxes							$	844,676


For the nine months ended September 29, 2024	North America Confectionery		North America Salty Snacks		International		Total
Net sales	$	6,764,439	$	856,835	$	693,449	$	8,314,723
Cost of sales	3,738,180		545,758		470,079
SM&A expense	888,745		166,190		141,403
Total segment income	$	2,137,514	$	144,887	$	81,967	$	2,364,368
Unallocated corporate expense (1)							496,215
Unallocated mark-to-market gains on commodity derivatives							(195,727)
Costs associated with business realignment activities (see Note 9)							104,795
Operating profit							$	1,959,085
Interest expense, net (see Note 4)							125,511
Other (income) expense, net (see Note 17)							82,695
Income before income taxes							$	1,750,879


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 27

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

Activity within the unallocated mark-to-market adjustment for commodity derivatives is as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in income	$	(32,745)	$	(32,270)	$	52,657	$	(191,734)
Net gains (losses) on commodity derivative positions reclassified from unallocated to segment income	8,495		1,187		335,275		(3,993)
Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses	$	(24,250)	$	(31,083)	$	387,932	$	(195,727)

As of September 28, 2025, the cumulative amount of mark-to-market gains on commodity derivatives that have been recognized in our consolidated cost of sales and not yet allocated to reportable segments was $22,299. Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pre-tax gains on commodity derivatives of $100,866 to segment operating results in the next twelve months.

Depreciation and amortization expense included within segment income presented above is as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
North America Confectionery	$	78,752	$	64,805	$	221,311	$	191,210
North America Salty Snacks	19,414		19,776		63,587		59,475
International	7,276		6,268		20,174		18,467
Corporate	22,342		22,406		66,108		62,288
Total	$	127,784	$	113,255	$	371,180	$	331,440

Additional information regarding our net sales disaggregated by geographical region is as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Net sales:
United States	$	2,799,716	$	2,640,336	$	7,552,700	$	7,273,235
All other countries	381,702		347,158		1,048,855		1,041,488
Total	$	3,181,418	$	2,987,494	$	8,601,555	$	8,314,723


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 28

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

14. TREASURY STOCK ACTIVITY

A summary of our treasury stock activity is as follows:

Nine Months Ended September 28, 2025

Dollars

In thousands

Shares issued for stock options and incentive compensation

(394,525)

(16,416)

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. 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.

15. CONTINGENCIES

The Company is subject to certain legal proceedings and claims arising out of the ordinary course of our business, which cover a wide range of matters including trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters, human and workplace rights matters and tax. While it is not feasible to predict or determine the outcome of such proceedings and claims with certainty, in our opinion, these matters, both individually and in the aggregate, are not expected to have a material effect on our financial condition, results of operations or cash flows.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 29

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

16. EARNINGS PER SHARE

We compute basic earnings per share for Common Stock and Class B common stock using the two-class method. The Class B common stock is convertible into Common Stock on a share-for-share basis at any time. The computation of diluted earnings per share for Common Stock assumes the conversion of Class B common stock using the if-converted method, while the diluted earnings per share of Class B common stock does not assume the conversion of those shares.


	Three Months Ended
	September 28, 2025				September 29, 2024
	Common Stock		Class B Common Stock		Common Stock		Class B Common Stock
Basic earnings per share:
Numerator:
Allocation of distributed earnings (cash dividends paid)	$	203,137	$	67,994	$	202,390	$	67,993
Allocation of undistributed earnings	3,889		1,300		131,726		44,192
Total earnings—basic	$	207,026	$	69,294	$	334,116	$	112,185

Denominator (shares in thousands):
Total weighted-average shares—basic	148,363		54,614		147,938		54,614

Earnings Per Share—basic	$	1.40	$	1.27	$	2.26	$	2.05

Diluted earnings per share:
Numerator:
Allocation of total earnings used in basic computation	$	207,026	$	69,294	$	334,116	$	112,185
Reallocation of total earnings as a result of conversion of Class B common stock to Common stock	69,294		—		112,185		—
Reallocation of undistributed earnings	—		(3)		—		(107)
Total earnings—diluted	$	276,320	$	69,291	$	446,301	$	112,078

Denominator (shares in thousands):
Number of shares used in basic computation	148,363		54,614		147,938		54,614
Weighted-average effect of dilutive securities:
Conversion of Class B common stock to Common shares outstanding	54,614		—		54,614		—
Employee stock options	176		—		283		—
Performance and restricted stock units	341		—		195		—
Total weighted-average shares—diluted	203,494		54,614		203,030		54,614

Earnings Per Share—diluted	$	1.36	$	1.27	$	2.20	$	2.05

The earnings per share calculations for the three months ended September 28, 2025 and September 29, 2024 excluded 12 and 12 stock options (in thousands), respectively, that would have been antidilutive.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 30

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)


	Nine Months Ended
	September 28, 2025				September 29, 2024
	Common Stock		Class B Common Stock		Common Stock		Class B Common Stock
Basic earnings per share:
Numerator:
Allocation of distributed earnings (cash dividends paid)	$	609,974	$	203,981	$	610,328	$	203,981
Allocation of undistributed earnings	(187,827)		(62,886)		457,433		152,906
Total earnings—basic	$	422,147	$	141,095	$	1,067,761	$	356,887

Denominator (shares in thousands):
Total weighted-average shares—basic	148,234		54,614		148,474		54,614

Earnings Per Share—basic	$	2.85	$	2.58	$	7.19	$	6.53

Diluted earnings per share:
Numerator:
Allocation of total earnings used in basic computation	$	422,147	$	141,095	$	1,067,761	$	356,887
Reallocation of total earnings as a result of conversion of Class B common stock to Common stock	141,095		—		356,887		—
Reallocation of undistributed earnings	—		135		—		(418)
Total earnings—diluted	$	563,242	$	141,230	$	1,424,648	$	356,469

Denominator (shares in thousands):
Number of shares used in basic computation	148,234		54,614		148,474		54,614
Weighted-average effect of dilutive securities:
Conversion of Class B common stock to Common shares outstanding	54,614		—		54,614		—
Employee stock options	187		—		300		—
Performance and restricted stock units	238		—		243		—
Total weighted-average shares—diluted	203,273		54,614		203,631		54,614

Earnings Per Share—diluted	$	2.77	$	2.59	$	7.00	$	6.53

The earnings per share calculations for the nine months ended September 28, 2025 and September 29, 2024 excluded 27 and 13 stock options (in thousands), respectively, that would have been antidilutive.


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 31

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

17. OTHER (INCOME) EXPENSE, NET

Other (income) expense, net reports certain gains and losses associated with activities not directly related to our core operations. A summary of the components of other (income) expense, net is as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Write-down of equity investments in partnerships qualifying for historic and renewable energy tax credits (see Note 8)	$	—	$	49,626	$	—	$	81,017
Non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans (see Note 11)	11,938		617		14,575		1,852

Other (income) expense, net	(739)		(142)		(4,767)		(174)
Total	$	11,199	$	50,101	$	9,808	$	82,695


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 32

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)

18. SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of certain asset accounts included within our Consolidated Balance Sheets are as follows:


	September 28, 2025		December 31, 2024
Inventories:
Raw materials	$	836,307	$	477,592
Goods in process	308,999		204,674
Finished goods	1,246,524		990,785
Inventories at First In First Out	2,391,830		1,673,051
Adjustment to Last In First Out	(684,308)		(418,957)
Total inventories	$	1,707,522	$	1,254,094

Prepaid expenses and other:
Prepaid expenses	$	133,955	$	269,792

Other current assets	427,200		704,423
Total prepaid expenses and other	$	561,155	$	974,215

Property, plant and equipment:
Land	$	195,803	$	194,502
Buildings	2,056,636		1,991,937
Machinery and equipment	4,422,893		4,147,530
Construction in progress	300,796		478,842
Property, plant and equipment, gross	6,976,128		6,812,811
Accumulated depreciation	(3,549,450)		(3,353,958)
Property, plant and equipment, net	$	3,426,678	$	3,458,853

Other non-current assets:
Pension	$	54,774	$	41,298
Capitalized software, net	347,570		367,087

Operating lease ROU assets	336,808		337,739
Investments in unconsolidated affiliates	199,575		212,928
Other non-current assets	171,436		152,815
Total other non-current assets	$	1,110,163	$	1,111,867


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THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(amounts in thousands, except share data or if otherwise indicated)


The components of certain liability and stockholders’ equity accounts included within our Consolidated Balance Sheets are as follows:
	September 28, 2025		December 31, 2024
Accounts payable:
Accounts payable—trade	$	803,839	$	807,918
Supplier finance program obligations	457,302		215,122
Other	198,539		136,137
Total accounts payable	$	1,459,680	$	1,159,177

Accrued liabilities:
Payroll, compensation and benefits	$	265,045	$	226,774
Advertising, promotion and product allowances	429,208		359,986
Operating lease liabilities	46,291		40,636

Other	211,786		179,945
Total accrued liabilities	$	952,330	$	807,341

Other long-term liabilities:
Post-retirement benefits liabilities	$	82,109	$	87,006
Pension benefits liabilities	31,664		33,837
Operating lease liabilities	299,750		304,767
Other	225,637		262,649
Total other long-term liabilities	$	639,160	$	688,259

Accumulated other comprehensive loss:
Foreign currency translation adjustments	$	(148,386)	$	(177,741)
Pension and post-retirement benefit plans, net of tax	(96,725)		(122,098)
Cash flow hedges, net of tax	(4,913)		(4,051)
Total accumulated other comprehensive loss	$	(250,024)	$	(303,890)


Table of Contents			The Hershey Company \| Q3 2025 Form 10-Q \| Page 34

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 discussion contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially. Refer to the Safe Harbor Statement below as well as the Risk Factors and other information contained in our 2024 Annual Report on Form 10-K for information concerning the key risks to achieving future performance goals.

The MD&A is organized in the following sections:

•Overview

•Trends Affecting Our Business

•Consolidated Results of Operations

•Segment Results

•Liquidity and Capital Resources

•Safe Harbor Statement

OVERVIEW

Hershey is a global confectionery leader known for making more moments of goodness through chocolate, sweets, mints and other great tasting snacks. We are the largest producer of quality chocolate in North America, a leading snack maker in the United States (“U.S.”) and a global leader in chocolate and non-chocolate confectionery. We market, sell and distribute our products under more than 90 brand names in approximately 70 countries worldwide.

Our principal product offerings include chocolate and non-chocolate confectionery products; gum and mint refreshment products and protein bars; pantry items, such as baking ingredients, toppings and beverages; and snack items such as spreads, bars, and snack bites and mixes, popcorn and pretzels.

Business Acquisitions


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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).

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; 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. 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
In millions of dollars except per share amounts
Net sales	$	3,181.4		$	2,987.5		6.5	%	$	8,601.6		$	8,314.7		3.4	%
Cost of sales	2,144.1			1,754.8			22.2	%	5,823.7			4,572.2			27.4	%
Gross profit	1,037.3			1,232.7			(15.8)	%	2,777.9			3,742.5			(25.8)	%
Gross margin	32.6		%	41.3		%			32.3		%	45.0		%
Selling, marketing & administrative (“SM&A”) expenses	600.5			591.9			1.5	%	1,762.4			1,750.9			0.7	%
SM&A expense as a percent of net sales	18.9		%	19.8		%			20.5		%	21.1		%

Business realignment activities	2.2			27.6			(92.0)	%	18.8			32.6			(42.2)	%
Operating profit	434.6			613.2			(29.1)	%	996.6			1,959.0			(49.1)	%
Operating profit margin	13.7		%	20.5		%			11.6		%	23.6		%
Interest expense, net	51.5			44.3			16.2	%	142.1			125.5			13.2	%
Other (income) expense, net	11.2			50.1			(77.6)	%	9.8			82.7			(88.1)	%
Provision for income taxes	95.6			72.5			31.9	%	281.4			326.2			(13.7)	%
Effective income tax rate	25.7%			14.0%					33.3%			18.6%


Net income	$	276.3		$	446.3		(38.1)	%	$	563.2		$	1,424.6		(60.5)	%
Net income per share—diluted	$	1.36		$	2.20		(38.2)	%	$	2.77		$	7.00		(60.4)	%

NOTE: Percentage changes may not compute directly as shown due to rounding of amounts presented above.
NM = not meaningful

Results of Operations - Third Quarter 2025 vs. Third Quarter 2024

Net Sales

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%. The net sales increase reflects a favorable price realization of approximately 6% 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.

Key U.S. Marketplace Metrics

The U.S. 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. 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.


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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.

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.

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. The costs related to the AAA Initiative, which commenced in 2024, focused on leveraging new technology to improve supply chain and manufacturing-related spend, and optimize selling, general and administrative expenses. Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in Note 9 to the Unaudited Consolidated Financial Statements.

Operating Profit and Operating Profit Margin

Operating profit was $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.

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.

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.

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.


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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

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%.

Key U.S. 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. Our U.S. 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.


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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. The costs related to the AAA Initiative, which commenced in 2024, focused on leveraging new technology to improve supply chain and manufacturing-related spend, and optimize selling, general and administrative expenses. Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in Note 9 to the Unaudited Consolidated Financial Statements.

Operating Profit and Operating Profit Margin

Operating profit was $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%. The 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.


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SEGMENT RESULTS

The summary that follows provides a discussion of the results of operations of our three segments: North America Confectionery, North America Salty Snacks and International. For segment reporting purposes, we use “segment income” to evaluate segment performance and allocate resources. 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.

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

In millions of dollars

Net Sales:

North America Confectionery

2,615.6

2,477.3

HERSHEY CO 10-Q