HERSHEY CO

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:

(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.

(2)Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative losses (gains). See Note 13 to the Unaudited Consolidated Financial Statements.

North America Confectionery

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

Net sales of our North America Confectionery segment were $2,615.6 million in the third quarter of 2025 compared to $2,477.3 million in the same period of 2024, an increase of $138.3 million, or 5.6%. The increase was driven by favorable price realization of approximately 7%, primarily due to the pricing action announced in July. Volume declined approximately 1%, driven by price elasticity impacts in everyday core U.S. confection. Additionally, the 2024 acquisition of Sour Strips contributed a minimal benefit and there was no impact from foreign currency exchange rates.

Our North America Confectionery segment income was $571.5 million in the third quarter of 2025 compared to $724.8 million in the same period of 2024, a decrease of $153.3 million, or 21.2%. The decrease was driven primarily by higher commodity and tariff costs and unfavorable mix, partially offset by net price realization, supply chain productivity, net savings related to our AAA Initiative and reduced advertising and related consumer marketing expenses.

Net sales of our North America Confectionery segment were $7,001.2 million in the first nine months of 2025 compared to $6,764.4 million in the same period of 2024, an increase of $236.8 million, or 3.5%. The increase was driven by favorable price realization of approximately 5%, primarily due to the pricing action announced in July. Volume declined approximately 2%, driven by price elasticity impacts in everyday core U.S. confection. Additionally, the 2024 acquisition of Sour Strips contributed a benefit of less than 1% and the impact from unfavorable foreign currency exchange rates was immaterial.

Our North America Confectionery segment income was $1,771.8 million in the first nine months of 2025 compared to $2,137.5 million the same period of 2024, a decrease of $365.7 million or 17.1%. The decrease wasdriven primarily by higher commodity and tariff costs and unfavorable mix, partially offset by net price realization, supply chain productivity and net savings related to our AAA Initiative.

North America Salty Snacks

The North America Salty Snacks segment is responsible for our grocery and snacks market positions, including our salty snacking products. North America Salty Snacks results, which accounted for 10.1% and 9.8% of our net sales for the three months ended September 28, 2025 and September 29, 2024, respectively, were as follows:

Net sales of our North America Salty Snacks segment were $321.0 million in the third quarter of 2025 compared to $291.8 million in the same period of 2024, an increase of $29.2 million, or 10.0%. The increase was predominantly due to volume increases of approximately 11%, primarily driven by Dot’s Homestyle Pretzels, SkinnyPop and Pirates Booty. The net sales increase was partially offset by unfavorable price realization of approximately 1% as a result of higher trade promotional activities.

Our North America Salty Snacks segment income was $57.7 million in the third quarter of 2025 compared to $54.0 million in the same period of 2024, an increase of $3.7 million, or 6.9%. The increase was primarily due to volume increases, net savings related to our AAA Initiative and lower commodity costs.

Net sales of our North America Salty Snacks segment were $914.3 million in the first nine months of 2025 compared to $856.8 million the same period of 2024, an increase of $57.5 million, or 6.7%. The increase was driven by volume growth of approximately 6%, primarily related to Dot’s Homestyle Pretzels and SkinnyPop. Price realization was flat in the first nine months of 2025 compared to the same period of 2024.

Our North America Salty Snacks segment income was $166.1 million in the first nine months of 2025 compared to $144.9 millionthe same period of 2024, an increase of $21.2 million, or 14.6%. The increase was primarily due to volume increases andnet savings related to our AAA Initiative, partially offset by higher supply chain costs.

International

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-Pacific (“APAC”), the Middle East and Africa (“MEA”) and other regions. International results, which accounted for 7.7% and 7.3% of our net sales for the three months ended September 28, 2025 and September 29, 2024, respectively, were as follows:

Net sales of our International segment were $244.8 million in the third quarter of 2025 compared to $218.4 million in the same period of 2024, an increase of $26.4 million, or 12.1%. The increase was due to favorable price realization of approximately 7%, primarily due to strategic pricing actions across key markets. Volume increased approximately 6%, primarily attributable to Brazil, Europe and Mexico, partially offset by price elasticity across markets. There was no impact from foreign currency exchanges rates.

Our International segment generated a loss of $13.6 million in the third quarter of 2025 compared to $14.2 million in income in the third quarter of 2024, a decrease of $27.8 million, or 195.8%, driven by higher commodity and manufacturing costs, which more than offset favorable price realization, supply chain productivity, andnet savings related to our AAA Initiative.

Net sales of our International segment were $686.0 million in the first nine months of 2025 compared to $693.5 million the same period of 2024, a decrease of $7.5 million, or 1.1%. The decrease was due to an unfavorable impact from foreign currency exchange rates of approximately 5%, driven by Mexico and India. The decrease was partially offset by a favorable price realization of approximately 3%, primarily due to strategic pricing actions across key markets. Volume was flat in the first nine months of 2025 compared to the same period of 2024.

Our International segment generated income of $34.9 million in the first nine months of 2025 compared to $82.0 million in the first nine months of 2024, a decrease of $47.1 million, or 57.4%, driven by higher commodity and manufacturing costs, which more than offset favorable price realization, supply chain productivity, andnet savings related to our AAA Initiative.

Unallocated Corporate Expense

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

In the third quarter of 2025, unallocated corporate expense totaled $194.7 million, as compared to $161.8 million in the third quarter of 2024, an increase of $32.9 million, or 20.3%. The increase was primarily driven by higher compensation and benefits costs and consulting fees.

In the first nine months of 2025, unallocated corporate expense totaled $536.7 million, as compared to $496.2 million in the first nine months of 2024, an increase of $40.5 million, or 8.2%. The increase was primarily driven by higher compensation and benefits costs and consulting fees, partially offset by lower investments in capabilities and technology, as a result of the completion of our ERP system upgrade in 2024, as well as lower acquisition and integration costs.