HERSHEY CO

Previous wording

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 June 30, 2024 (“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 2023 Annual Report on Form 10-K, and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, for information concerning the key risks to achieving future performance goals.

Current wording

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 29, 2024 (“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 2023 Annual Report on Form 10-K, as updated by our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, for information concerning the key risks to achieving future performance goals.

Previous wording

Throughout the first six months of 2024, U.S. consumer behavior has continued to shift and evolve, as cost fatigue and labor markets restrict income growth and constrain consumer spending and purchasing patterns. As a result, consumer behavior related to our products has shifted. As such, during the six months ended June 30, 2024, we continued to experience a dynamic macroeconomic environment, including price volatility related to select commodities, resulting in corresponding incremental costs and gross margin pressures, and net sales and net income declines. Despite specific actions taken to mitigate these gross margin pressures, higher prices for direct materials used to manufacture our products were, and continue to be, the primary incremental cost to our business (see Consolidated Results of Operations included in this MD&A). We utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which experienced a market price increase of approximately 75% since the beginning of the year (see Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

Current wording

Throughout the first nine months of 2024, U.S. consumer behavior has continued to shift and evolve, as cost fatigue and labor markets restrict income growth and constrain consumer spending and purchasing patterns. As a result, consumer behavior related to our products has shifted. As such, during the nine months ended September 29, 2024, we continued to experience a dynamic macroeconomic environment, including price volatility related to select commodities, resulting in corresponding incremental costs and gross margin pressures, and net sales and net income declines. Despite specific actions taken to mitigate these gross margin pressures, we continue to experience overall declines in consumer demands for our products, and higher prices for direct materials used to manufacture our products were, and continue to be, the primary incremental cost to our business (see Consolidated Results of Operations included in this MD&A). We utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which experienced a market price increase of approximately 70% since the beginning of the year (see Part I, Item 3 - Quantitative and Qualitative Disclosures about Market Risk included in this Quarterly Report on Form 10-Q).

Previous wording

Furthermore, certain geopolitical events, specifically the conflict between Russia and Ukraine, have increased global economic and political uncertainty. For the six months ended June 30, 2024, this conflict did not have a material impact on our commodity prices or supply availability. However, we are continuing to monitor for any significant escalation or expansion of economic or supply chain disruptions or broader inflationary costs, which may result in material adverse effects on our results of operations.

Current wording

Furthermore, certain geopolitical events, specifically the conflict between Russia and Ukraine, have increased global economic and political uncertainty. For the nine months ended September 29, 2024, this conflict did not have a material impact on our commodity prices or supply availability. However, we are continuing to monitor for any significant escalation or expansion of economic or supply chain disruptions or broader inflationary costs, which may result in material adverse effects on our results of operations.

Previous wording

Net sales were $5,327.2 million in the first six months of 2024 compared to $5,477.9 million during the same period of 2023, a decrease of $150.7 million, or 2.8%. The net sales decrease was driven by a volume decrease of approximately 6%, primarily due to a decrease in everyday core U.S. confection and decreases across the International segment, partially offset by an increase in salty snack brands. The net sales decrease was partially offset by a favorable price realization of approximately 3%, primarily due to higher list prices across our reportable segments. Foreign currency exchange rates resulted in a favorable impact of less than 1%.

Current wording

Net sales were $2,987.5 million in the third quarter of 2024 compared to $3,030.0 million in the same period of 2023, a decrease of $42.5 million, or 1.4%. The net sales decrease was driven by a volume decline of approximately 3%, due to declines across our reportable segments, primarily in salty snack brands. Foreign currency exchange rates resulted in an unfavorable impact of less than 1%. The net sales decrease was partially offset by a favorable price realization of approximately 2%, driven by higher list prices across reportable segments.

Previous wording

For the second quarter of 2024, our total U.S. retail takeaway declined 2.9% 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 U.S. candy, mint and gum (“CMG”) consumer takeaway declined 5.0% and experienced a CMG market share decline of 138 basis points. Our Salty consumer takeaway increased 8.0% in the second quarter of 2024 and experienced a Salty market share increase of 22 basis points.

Current wording

For the third quarter of 2024, our total U.S. retail takeaway declined 1.4% 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 U.S. candy, mint and gum (“CMG”) consumer takeaway declined 2.6% and experienced a CMG market share decline of 97 basis points. Our Salty consumer takeaway increased 2.8% in the third quarter of 2024 and experienced a Salty market share increase of 11 basis points.

Previous wording

Cost of sales were $2,817.4 million in the first six months of 2024 compared to $2,963.5 million in the same period of 2023, a decrease of $146.1 million, or 4.9%. The decrease was driven by an incremental $176.5 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information). The decrease was further driven by $156.8 million related to lower sales volume. The decrease was partially offset by $187.2 million driven by higher commodity costs, higher supply chain costs, unfavorable mix and an increase of $9.7 million of incremental business realignment costs.

Current wording

Cost of sales were $1,754.8 million in the third quarter 2024 compared to $1,669.7 million in the same period 2023, an increase of $85.1 million, or 5.1%. The increase was driven by $171.7 million of higher costs, primarily due to higher commodity costs from cocoa, higher supply chain costs, and incremental business realignment costs. The increase was partially offset by $71.4 million primarily related to lower sales volume, in line with the declines in net sales noted above. The increase was further offset by $15.2 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information).

Previous wording

Gross margin was 40.2% in the second quarter of 2024 compared to 45.5% in the same period of 2023, a decrease of 530 basis points. The decrease was driven by unfavorable activity on our mark-to-market impact from commodity derivative instruments, unfavorable commodity costs, increased business realignment costs and unfavorable mix. The decrease was partially offset by the decline in net sales, as noted above, and lower supply chain costs.

Current wording

Gross margin was 41.3% in the third quarter of 2024 compared to 44.9% in the same period of 2023, a decrease of 360 basis points. The decrease was driven by unfavorable commodity costs, higher supply chain costs, unfavorable mix, and increased business realignment costs. The decrease was partially offset by lower sales volume.

Previous wording

SM&A expenses were $541.0 million in the second quarter of 2024 compared to $571.8 million in the same period of 2023, a decrease of $30.8 million, or 5.4%. Total advertising and related consumer marketing expenses decreased 15.4% driven primarily by a decrease in the North America Confectionery segment. SM&A expenses, excluding advertising and related consumer marketing, decreased 0.8% in the second quarter of 2024 driven by lower compensation costs across segments, partially offset by $24.1 million of incremental business realignment costs, as well as higher investments in capabilities and technology.

Current wording

SM&A expenses were $591.9 million in the third quarter of 2024 compared to $624.4 million in the same period of 2023, a decrease of $32.5 million, or 5.2%. Total advertising and related consumer marketing expenses decreased 0.6% driven primarily by a decrease in the North America Confectionery segment, partially offset by an increase in North America Salty Snacks. SM&A expenses, excluding advertising and related consumer marketing, decreased 7.5% in the third quarter of 2024 driven by lower compensation costs across segments, partially offset by $20.0 million of incremental business realignment costs.

Previous wording

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 $4.9 million business realignment costs during the second quarter of 2024, versus a benefit of $0.3 million in the second quarter of 2023. The costs in 2024 related to the Advancing Agility & Automation (“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. The costs in 2023 related to the International Optimization Program, which completed in 2023. The International Optimization Program was focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward. 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.

Current wording

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 $27.6 million business realignment costs during the third quarter of 2024. There were no business realignments costs in the third quarter of 2023. The costs in 2024 related to the Advancing Agility & Automation (“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.

Previous wording

Operating profit was $287.9 million in the second quarter of 2024 compared to $560.6 million in the same period of 2023, a decrease of $272.7 million, or 48.7%. The decrease was primarily due to lower gross profit and higher business realignment costs, partially offset by lower SM&A expenses, as noted above. Operating profit margin decreased to 13.9% in 2024 from 22.5% in 2023 driven by the same factors noted above that resulted in lower gross margin for the period.

Current wording

Operating profit was $613.2 million in the third quarter of 2024 compared to $735.9 million in the same period of 2023, a decrease of $122.7 million, or 16.7%. The decrease was primarily due to lower gross profit and higher business realignment costs, partially offset by lower SM&A expenses, as noted above. Operating profit margin decreased to 20.5% in 2024 from 24.3% in 2023 driven by the same factors noted above that resulted in lower gross margin for the period.

Previous wording

Net interest expense was $41.4 million in the second quarter of 2024 compared to $36.7 million in the same period of 2023, an increase of $4.7 million, or 12.9%. The increase was primarily due to higher rates on short-term debt balances in 2024 versus 2023, specifically related to outstanding commercial paper borrowings.

Current wording

Net interest expense was $44.3 million in the third quarter of 2024 compared to $39.8 million in the same period of 2023, an increase of $4.5 million, or 11.5%. The increase was primarily due to higher short-term debt balances in 2024 versus 2023, specifically related to outstanding commercial paper and short-term foreign bank borrowings.

Previous wording

Other (income) expense, net was $0.6 million in the second quarter of 2024 versus net expense of $84.5 million in the second quarter of 2023, a decrease of $83.9 million, or 99.3%. The decrease in net expense was primarily driven by $77.4 million of lower write-downs on equity investments qualifying for tax credits in 2024 versus the second quarter of 2023, and a decrease of $7.1 million of non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

Current wording

Other (income) expense, net was $50.1 million in the third quarter of 2024 versus net expense of $42.7 million in the third quarter of 2023, an increase of $7.4 million, or 17.1%. The increase in net expense was primarily driven by $11.6 million of higher write-downs on equity investments qualifying for tax credits in 2024 versus the third quarter of

Previous wording

The effective income tax rate was 26.4% for the second quarter of 2024 compared with 7.4% for the second quarter of 2023. Relative to the 21% statutory rate, the 2024 effective tax rate was primarily impacted by state taxes, tax reserves and unfavorable foreign rate differential, partially offset by the benefit of employee share-based payments. Relative to the 21% statutory rate, the 2023 effective tax rate was impacted by investment tax credits and employee share-based payments partially offset by state taxes and tax reserves.

Current wording

The effective income tax rate was 14.0% for the third quarter of 2024 compared with 20.6% for the third quarter of 2023. Relative to the 21% statutory rate, the 2024 effective tax rate was primarily impacted by investment tax credits, partially offset by state taxes. Relative to the 21% statutory rate, the 2023 effective tax rate was impacted by investment tax credits, partially offset by state taxes and tax reserves.

Previous wording

Net income was $180.9 million in the second quarter of 2024 compared to $406.9 million in the same period of 2023, a decrease of $226.0 million, or 55.6%. EPS-diluted was $0.89 in the second quarter of 2024 compared to $1.98 in the second quarter of 2023, a decrease of $1.09, or 55.1%. The decrease in both net income and EPS-diluted was driven by lower gross profit and higher income taxes, partially offset by lower SM&A expenses and lower other income and expenses. Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding.

Current wording

Net income was $446.3 million in the third quarter of 2024 compared to $518.6 million in the same period of 2023, a decrease of $72.3 million, or 13.9%. EPS-diluted was $2.20 in the third quarter of 2024 compared to $2.52 in the third quarter of 2023, a decrease of $0.32, or 12.7%. The decrease in both net income and EPS-diluted was driven by lower gross profit, higher business realignment costs and higher other income and expenses, partially offset by lower income taxes and lower SM&A expenses. Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding.

Previous wording

For the first six months of 2024, our total U.S. retail takeaway increased 0.5% 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 declined 0.1% and experienced a CMG market share decline of 68 basis points. Our Salty consumer takeaway increased 3.2% and experienced a Salty market share increase of 5 basis points.

Current wording

For the first nine months of 2024, our total U.S. retail takeaway decreased 0.1% 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 declined 0.9% and experienced a CMG market share decline of 76 basis points. Our Salty consumer takeaway increased 3.2% and experienced a Salty market share increase of 7 basis points.

Previous wording

Cost of sales were $1,240.7 million in the second quarter 2024 compared to $1,358.2 million in the same period 2023, a decrease of $117.5 million, or 8.6%. The decrease was driven by $224.0 million related to lower sales volume, in line with the declines in net sales noted above, and lower supply chain costs. The decrease was partially offset by $74.6 million in higher commodity costs, primarily driven by cocoa, an increase of $8.1 million of incremental business realignment costs, as well as unfavorable mix. The decrease was further offset by $31.9 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).

Current wording

Cost of sales were $4,572.2 million in the first nine months of 2024 compared to $4,633.2 million in the same period of 2023, a decrease of $61.0 million, or 1.3%. The decrease was driven by $220.1 million of lower costs, primarily related to lower sales volume, in line with the declines in net sales noted above. The decrease was further driven by an incremental $191.7 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for more information). The decrease was partially offset by $350.8 million of higher costs, primarily driven by higher commodity costs from cocoa, higher supply chain costs, unfavorable mix and incremental business realignment costs.

Previous wording

Gross margin was 47.1% in the first six months of 2024 compared to 45.9% in the same period of 2023, an increase of 120 basis points. The increase was driven by favorable year-over-year mark-to-market impact from commodity derivative instruments, favorable price realization and volume declines. The increase was partially offset by higher supply chain costs, including higher logistics and labor costs, unfavorable product mix and increased business realignment costs.

Current wording

Gross margin was 45.0% in the first nine months of 2024 compared to 45.5% in the same period of 2023, a decrease of 50 basis points. The decrease was driven by higher commodity costs, higher supply chain costs, including higher logistics and labor costs, unfavorable product mix and increased business realignment costs. The decrease was partially offset by favorable year-over-year mark-to-market impact from commodity derivative instruments, favorable price realization and volume declines.

Previous wording

SM&A expenses were $1,159.0 million in the first six months of 2024 compared to $1,153.4 million in the same period of 2023, an increase of $5.6 million, or 0.5%. Total advertising and related consumer marketing expenses decreased 1.1%, driven by a decrease in North America Confectionery, partially offset by an increase in North America Salty Snacks. SM&A expenses, excluding advertising and related consumer marketing, increased approximately 1.2% in the first six months of 2024 driven by an increase of $37.6 million of incremental business realignment costs, as well as higher investments in capabilities and technology.

Current wording

SM&A expenses were $1,750.9 million in the first nine months of 2024 compared to $1,777.8 million in the same period of 2023, an decrease of $26.9 million, or 1.5%. Total advertising and related consumer marketing expenses decreased 0.9%, driven by a decrease in North America Confectionery, partially offset by an increase in North America Salty Snacks. SM&A expenses, excluding advertising and related consumer marketing, decreased approximately 1.8% in the first nine months of 2024 driven by a decrease in compensation costs, partially offset by an

Previous wording

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 $4.9 million during the first six months of 2024 versus $0.4 million in the first six months of 2023. The costs in 2024 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. The costs in 2023 related to the International Optimization Program, which completed in 2023. The International Optimization Program was focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward. 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.

Current wording

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 $32.6 million during the first nine months of 2024 versus $0.4 million in the first nine months of 2023. The costs in 2024 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. The costs in 2023 related to the International Optimization Program, which completed in 2023. The International Optimization Program was focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward. 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.

Previous wording

Operating profit was $1,345.9 million in the first six months of 2024 compared to $1,360.6 million in the same period of 2023, a decrease of $14.7 million, or 1.1%. The decrease was predominantly due to higher SM&A expenses, higher business realignment costs and lower gross profit, as noted above. Operating profit margin increased to 25.3% in the first six months of 2024 from 24.8% in the same period in 2023 driven by the same factors that resulted in higher gross margin for the period.

Current wording

Operating profit was $1,959.0 million in the first nine months of 2024 compared to $2,096.5 million in the same period of 2023, a decrease of $137.5 million, or 6.6%. The decrease was predominantly due to lower gross profit and higher business realignment costs, partially offset by lower SM&A expenses, as noted above. Operating profit margin decreased to 23.6% in the first nine months of 2024 from 24.6% in the same period in 2023 driven by the same factors that resulted in lower gross margin for the period.

Previous wording

Net interest expense was $81.2 million in the first six months of 2024 compared to $74.3 million in the same period of 2023, an increase of $6.9 million, or 9.2%. The increase was primarily due to higher rates on short-term debt balances in 2024 versus 2023, specifically related to outstanding commercial paper borrowings. The increase was further driven by higher rates on long-term debt balances in 2024 versus 2023, due to the $350 million 4.25% and $400 million 4.50% Notes issued in May 2023.

Current wording

Net interest expense was $125.5 million in the first nine months of 2024 compared to $114.1 million in the same period of 2023, an increase of $11.4 million, or 10.0%. The increase was primarily due to higher short-term debt balances in 2024 versus 2023, specifically related to outstanding commercial paper and short-term foreign bank borrowings.

Previous wording

Other (income) expense, net was $32.6 million in the firstsix months of 2024 versus a net expense of $87.5 million in the firstsix months of 2023, a decrease of $54.9 million, or 62.7%. The decrease in net expense was primarily driven by $46.0 million of lower write-downs on equity investments qualifying for tax credits in 2024 versus the first six months of 2023 and a decrease of $9.6 million of non-service cost components of net periodic benefit costs relating to pension and other post-retirement benefit plans.

Current wording

Other (income) expense, net was $82.7 million in the first nine months of 2024 versus a net expense of $130.2 million in the first nine months of 2023, a decrease of $47.5 million, or 36.5%. The decrease in net expense was primarily driven by $34.4 million of lower write-downs on equity investments qualifying for tax credits in 2024 versus the first nine months of 2023 and a decrease of $14.0 million of non-service cost components of net periodic benefit costs relating to pension and other post-retirement benefit plans.

Previous wording

Our effective income tax rate was 20.6% for the first six months of 2024 compared with 17.1% for the first six months of 2023. Relative to the 21% statutory rate, the 2024 effective tax rate was impacted by investment tax credits partially offset by state taxes. Relative to the 21% statutory rate, the 2023 effective tax rate was impacted by investment tax credits and employee share-based payments partially offset by state taxes and tax reserves.

Current wording

Our effective income tax rate was 18.6% for the first nine months of 2024 compared with 18.3% for the first nine months of 2023. Relative to the 21% statutory rate, the 2024 effective tax rate was impacted by investment tax credits partially offset by state taxes. Relative to the 21% statutory rate, the 2023 effective tax rate was impacted by investment tax credits and employee share-based payments partially offset by state taxes and tax reserves.

Previous wording

Net income was $978.3 million in the first six months of 2024 compared to $994.2 million in the same period of 2023, a decrease of $15.9 million, or 1.6%. EPS-diluted was $4.80 in the first six months of 2024 compared to $4.83 in the same period of 2023, a decrease of $0.03, or 0.6%. The decrease in both net income and EPS-diluted was driven by lower gross profit, higher income taxes and higher SM&A, partially offset by lower other income and expenses. Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs.

Current wording

Net income was $1,424.6 million in the first nine months of 2024 compared to $1,512.7 million in the same period of 2023, a decrease of $88.1 million, or 5.8%. EPS-diluted was $7.00 in the first nine months of 2024 compared to $7.36 in the same period of 2023, a decrease of $0.36, or 4.9%. The decrease in both net income and EPS-diluted was driven by lower gross profit and higher business realignment costs, partially offset lower other income and expenses, lower SM&A and lower income taxes. Our 2024 EPS-diluted benefited from lower weighted-average shares outstanding as a result of share repurchases pursuant to our Board-approved repurchase programs.

Previous wording

The North America Confectionery segment is responsible for our chocolate and non-chocolate confectionery market position in the United States and Canada. This includes developing and growing 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. While a less significant component, 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 trademarks and products to third parties around the world. North America Confectionery results, which accounted for 76.2% and 80.0% of our net sales for the three months ended June 30, 2024 and July 2, 2023, respectively, were as follows:

Current wording

The North America Confectionery segment is responsible for our chocolate and non-chocolate confectionery market position in the United States and Canada. This includes developing and growing 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. While a less significant component, 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 trademarks and products to third parties around the world. North America Confectionery results, which accounted for 82.9% and 81.1% of our net sales for the three months ended September 29, 2024 and October 1, 2023, respectively, were as follows:

Previous wording

Our North America Confectionery segment also includes licensing and owned retail. This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore. Our net sales for licensing and owned retail increased approximately 0.6% during the second quarter of 2024 compared to the same period of 2023.

Current wording

Our North America Confectionery segment also includes licensing and owned retail. This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore. Our net sales for licensing and owned retail decreased approximately 0.3% during the third quarter of 2024 compared to the same period of 2023.

Previous wording

Net sales of our North America Confectionery segment were $4,287.1 million in the first six months of 2024 compared to $4,445.2 million in the same period of 2023, a decrease $158.1 million, or 3.6%. The decrease was driven by volume declines of approximately 7%, primarily driven by a decrease in everyday core U.S. confection brands. The decrease was partially offset by favorable price realization of approximately 4%, due to list price increases on certain products across our portfolio.

Current wording

Net sales of our North America Confectionery segment were $6,764.4 million in the first nine months of 2024 compared to $6,902.9 million in the same period of 2023, a decrease $138.5 million, or 2.0%. The decrease was driven by volume declines of approximately 5%, primarily driven by a decrease in everyday core U.S. confection brands. The decrease was partially offset by favorable price realization of approximately 3%, due to list price increases on certain products across our portfolio.

Previous wording

Our North America Confectionery segment also includes licensing and owned retail. This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore. Our net sales for licensing and owned retail increased approximately 5.2% during the first six months of 2024 compared to the same period of 2023.

Current wording

Our North America Confectionery segment also includes licensing and owned retail. This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore. Our net sales for licensing and owned retail increased approximately 3.0% during the first nine months of 2024 compared to the same period of 2023.

Previous wording

Our North America Confectionery segment income was $1,412.7 million in the first six months of 2024 compared to $1,544.9 million the same period of 2023, a decrease $132.2 million or 8.6%. The decrease was primarily due to lower volume, higher commodity costs, higher supply chain costs and unfavorable product mix. The decrease was partially offset by favorable price realization and lower advertising and related consumer marketing costs.

Current wording

Our North America Confectionery segment income was $2,137.5 million in the first nine months of 2024 compared to $2,392.4 million the same period of 2023, a decrease $254.9 million or 10.7%. The decrease was primarily due to higher commodity costs, higher supply chain costs, and unfavorable product mix. The decrease was partially offset by favorable price realization, lower volume, and lower advertising and related consumer marketing costs.

Previous wording

The North America Salty Snacks segment is responsible for our grocery and snacks market positions, including our salty snacking products. North America Salty Snacks results, which accounted for 14.0% and 10.9% of our net sales for the three months ended June 30, 2024 and July 2, 2023, respectively, were as follows:

Current wording

The North America Salty Snacks segment is responsible for our grocery and snacks market positions, including our salty snacking products. North America Salty Snacks results, which accounted for 9.8% and 11.4% of our net sales for the three months ended September 29, 2024 and October 1, 2023, respectively, were as follows:

Previous wording

Net sales of our North America Confectionery segment were $1,579.8 million in the second quarter of 2024 compared to $1,993.1 million in the same period of 2023, a decrease of $413.3 million, or 20.7%. The decrease was driven by volume declines of approximately 22%, primarily driven by a decrease in everyday core U.S. confection as a result of accelerated shipments in the first quarter of 2024 in anticipation of our ERP system implementation, which was completed in the beginning of the second quarter of 2024. The decrease was partially offset by favorable price realization of approximately 1%, primarily due to list price increases on certain products across our portfolio.

Current wording

Net sales of our North America Salty Snacks segment were $291.8 million in the third quarter of 2024 compared to $345.2 million in the same period of 2023, a decrease of $53.4 million, or 15.5%. The decrease was driven by volume declines of approximately 17%, predominantly as a result of accelerated shipments in the third quarter of 2023 ahead of our ERP system implementation, which was completed in the beginning of the fourth quarter of 2023. The decrease was partially offset by favorable price realization of approximately 2%, due to list price increases primarily in Dot’s Homestyle Pretzels snacks.

Previous wording

The International segment includes all other countries where we currently manufacture, import, market, sell or distribute chocolate and non-chocolate confectionery and other products. We currently have operations and manufacture product in Mexico, Brazil, India and Malaysia, primarily for consumers in these regions, and also distribute and sell confectionery products in export markets of Latin America, as well as Europe, Asia, the Middle East and Africa (“AMEA”) and other regions. International results, which accounted for 9.9% and 9.0% of our net sales for the three months ended June 30, 2024 and July 2, 2023, respectively, were as follows:

Current wording

The International segment includes all other countries where we currently manufacture, import, market, sell or distribute chocolate and non-chocolate confectionery and other products. We currently have operations and manufacture product in Mexico, Brazil, India and Malaysia, primarily for consumers in these regions, and also distribute and sell confectionery products in export markets of Latin America, as well as Europe, Asia, the Middle East and Africa (“AMEA”) and other regions. International results, which accounted for 7.3% and 7.5% of our net sales for the three months ended September 29, 2024 and October 1, 2023, respectively, were as follows:

Previous wording

Net sales of our International segment were $204.8 million in the second quarter of 2024 compared to $224.8 million in the same period of 2023, a decrease $20.0 million, or 8.9%. The decrease was due to volume declines of approximately 16% across the segment, partially offset by growth in India and Europe. The decrease was partially offset by favorable price realization of approximately 5% across the segment, and a favorable impact from foreign currency exchange rates of approximately 2%, primarily driven by Mexico.

Current wording

Net sales of our International segment were $218.4 million in the third quarter of 2024 compared to $227.2 million in the same period of 2023, a decrease $8.8 million, or 3.9%. The decrease was due to an unfavorable impact from foreign currency exchange rates of approximately 4%, primarily driven by Mexico and Brazil, and volume declines of approximately 1% across the segment, partially offset by growth in Europe and LATAM. The decrease was partially offset by favorable price realization of approximately 1%, primarily driven by Europe and Mexico.

Previous wording

Our International segment generated income of $25.0 million in the second quarter of 2024 compared to $41.1 million in the second quarter of 2023, a decrease of $16.1 million, or 39.2%, driven primarily by volume declines and higher commodity costs, partially offset by favorable price realization.

Current wording

Our International segment generated income of $14.2 million in the third quarter of 2024 compared to $31.7 million in the third quarter of 2023, a decrease of $17.5 million, or 55.2%, driven primarily by volume declines and higher commodity costs, partially offset by favorable price realization and lower supply chain costs.

Previous wording

Net sales of our International segment were $475.1 million in the first six months of 2024 compared to $490.3 million the same period of 2023, a decrease $15.2 million, or 3.1%. The decrease was due to volume declines of approximately 10% across the segment, partially offset by growth in Europe. The decrease was partially offset by favorable price realization of approximately 4% across the segment, and a favorable impact from foreign currency exchange rates of approximately 2%, primarily driven by Mexico.

Current wording

Net sales of our International segment were $693.5 million in the first nine months of 2024 compared to $717.5 million the same period of 2023, a decrease $24.0 million, or 3.3%. The decrease was due to volume declines of approximately 6% across the segment, partially offset by growth in AMEA and Europe. The decrease was partially offset by favorable price realization of approximately 2% and a favorable impact from foreign currency exchange rates of less than 1%, primarily driven by Mexico.

Previous wording

Our International segment generated income of $67.8 million in the first six months of 2024 compared to $96.2 million in the first six months of 2023, a decrease of $28.4 million, or 29.5%, driven primarily by volume declines, increased commodity costs and unfavorable mix, partially offset by favorable price realization and lower supply chain costs.

Current wording

Our International segment generated income of $82.0 million in the first nine months of 2024 compared to $127.8 million in the first nine months of 2023, a decrease of $45.8 million, or 35.8%, driven primarily by volume declines, increased commodity costs and unfavorable mix, partially offset by favorable price realization and lower supply chain costs.

Previous wording

In the second quarter of 2024, unallocated corporate expense totaled $161.5 million, as compared to $186.6 million in the second quarter of 2023, a decrease of $25.1 million, or 13.5%. The decrease was primarily driven by lower acquisition and integration related costs and lower compensation costs, partially offset by higher investments in capabilities and technology.

Current wording

In the third quarter of 2024, unallocated corporate expense totaled $161.8 million, as compared to $199.3 million in the third quarter of 2023, a decrease of $37.5 million, or 18.8%. The decrease was primarily driven by lower compensation costs, partially offset by higher acquisition and integration related costs.

Previous wording

In the first six months of 2024, unallocated corporate expense totaled $334.4 million, as compared to $363.7 million in the first six months of 2023, a decrease of $29.3 million, or 8.1%. The decrease was primarily driven by lower acquisition and integration related costs, partially offset by incremental investments in capabilities and technology.

Current wording

In the first nine months of 2024, unallocated corporate expense totaled $496.2 million, as compared to $563.0 million in the first nine months of 2023, a decrease of $66.8 million, or 11.9%. The decrease was primarily driven by lower compensation costs and lower acquisition and integration related costs, partially offset by incremental investments in capabilities and technology.

Previous wording

At June 30, 2024, our cash and cash equivalents totaled $467.1 million, an increase of $65.1 million compared to the 2023 year-end balance. Additional detail regarding the net uses of cash are outlined in the following discussion. Additionally, at June 30, 2024, we had outstanding short- and long-term debt totaling $5.4 billion, of which $605.2 million was classified as the current portion of long-term debt. Of the $605.2 million, $300 million of 2.050% Notes are due upon maturity on November 15, 2024 and $300 million of 0.900% Notes are due upon maturity on June 1, 2025. We believe we can satisfy these debt obligations with cash generated from our operations, issuing new debt, and/or by borrowing on our unsecured credit facility.

Current wording

At September 29, 2024, our cash and cash equivalents totaled $615.0 million, an increase of $213.0 million compared to the 2023 year-end balance. Additional detail regarding the net uses of cash are outlined in the following discussion. Additionally, at September 29, 2024, we had outstanding short- and long-term debt totaling $5.3 billion, of which $904.8 million was classified as the current portion of long-term debt. Of the $904.8 million, $300 million of 2.050% Notes are due upon maturity on November 15, 2024, $300 million of 0.900% Notes are due upon maturity on June 1, 2025, and $300 million of 3.200% Notes are due upon maturity on August 21, 2025. We believe we can satisfy these debt obligations with cash generated from our operations, issuing new debt, and/or by borrowing on our unsecured credit facility.

Previous wording

Approximately 80% of the balance of our cash and cash equivalents at June 30, 2024 was held by subsidiaries domiciled outside of the United States. A majority of this balance is distributable to the United States without material tax implications, such as withholding tax. We intend to continue to reinvest the remainder of the earnings outside of the United States for which there would be a material tax implication to distributing for the foreseeable future and, therefore, have not recognized additional tax expense on these earnings. We believe that our existing sources of liquidity are adequate to meet anticipated funding needs at comparable risk-based interest rates for the foreseeable future. Acquisition spending and/or share repurchases could potentially increase our debt. Operating cash flow and access to capital markets are expected to satisfy our various short- and long-term cash flow requirements, including acquisitions and capital expenditures.

Current wording

Approximately 85% of the balance of our cash and cash equivalents at September 29, 2024 was held by subsidiaries domiciled outside of the United States. A majority of our cash and cash equivalents balance is distributable to the United States without material tax implications, such as withholding tax. We intend to continue to reinvest the remainder of this balance outside of the United States for which there would be a material tax implication to distributing for the foreseeable future and, therefore, have not recognized additional tax expense on these earnings. We believe that our existing sources of liquidity are adequate to meet anticipated funding needs at comparable risk-based interest rates for the foreseeable future. Acquisition spending and/or share repurchases could potentially increase our debt. Operating cash flow and access to capital markets are expected to satisfy our various short- and long-term cash flow requirements, including acquisitions and capital expenditures.