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. 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 unaudited consolidated financial statements for reconciliations of net sales for our reportable segments to consolidated total net sales and of segment operating income to consolidated income before taxes.

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

(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 81.1% and 82.2% of our net sales for the three months ended September 27, 2026 and September 28, 2025, respectively, were as follows:

Net sales of our North America Confectionery segment were $2,656.5 million in the third quarter of 2026 compared to $2,615.6 million in the same period of 2025, an increase of $40.9 million, or 1.6%. The increase was driven by favorable price realization of approximately 13%, primarily due to the pricing action announced in 2025. Volume declined approximately 11%, driven primarily by price elasticity. Additionally, there was no impact from foreign currency exchange rates.

Our North America Confectionery segment income was $949.7 million in the third quarter of 2026 compared to $571.5 million in the same period of 2025, an increase of $378.2 million, or 66.2%. The increase was driven primarily by net price realization, lower net commodity costs, tariff refunds, and supply chain productivity and net savings related to our AAA Initiative, partially offset by lower volumes and higher advertising and related consumer marketing investments.

Net sales of our North America Confectionery segment were $7,319.9 million in the first nine months of 2026 compared to $7,001.2 million in the same period of 2025, an increase of $318.7 million, or 4.6%. The increase was driven by favorable price realization of approximately 13%, primarily due to the pricing action announced in 2025. Volume declined approximately 8%, driven primarily by price elasticity. Additionally, there was minimal impact from foreign currency exchange rates.

Our North America Confectionery segment income was $2,447.9 million in the first nine months of 2026 compared to $1,771.8 million in the same period of 2025, an increase of $676.1 million, or 38.2%. The increase was driven primarily by net price realization, lower commodity costs, tariff refunds, and net savings related to our AAA Initiative, partially offset by lower volumes and higher advertising and related consumer marketing investments.

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 12.0% and 10.1% of our net sales for the three months ended September 27, 2026 and September 28, 2025, respectively, were as follows:

Net sales of our North America Salty Snacks segment were $392.7 million in the third quarter of 2026 compared to $321.0 million in the same period of 2025, an increase of $71.7 million, or 22.3%. The increase was predominantly due to the acquisition of LesserEvil in November 2025, which provided a benefit of approximately 20%. Further, volume increased approximately 1%, primarily driven by Dot’s Homestyle Pretzels. Price realization increased approximately 1% primarily driven by Dot’s Homestyle Pretzels and SkinnyPop.

Our North America Salty Snacks segment income was $47.4 million in the third quarter of 2026 compared to $57.7 million in the same period of 2025, a decrease of $10.4 million, or 17.9%. The decrease was driven by higher supply chain costs, increased net commodity costs and higher consumer marketing costs.

Net sales of our North America Salty Snacks segment were $1,130.6 million in the first nine months of 2026 compared to $914.3 million in the same period of 2025, an increase of $216.3 million, or 23.7%. The increase was predominantly due to the acquisition of LesserEvil in November 2025, which provided a benefit of approximately 21%. Further, volume increased approximately 3%, primarily related to Dot’s Homestyle Pretzels. The net sales increase was partially offset by price realization declines of approximately 1%, primarily driven by SkinnyPopand Pirates Booty.

Our North America Salty Snacks segment income was $144.3 million in the first nine months of 2026 compared to $166.1 million inthe same period of 2025, a decrease of $21.8 million, or 13.1%. The decrease was primarily due to higher supply chain costs, including costs related to a voluntary temporary product withdrawal, and increased SM&A expenses, partially offset by increased volume.

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 6.9% and 7.7% of our net sales for the three months ended September 27, 2026 and September 28, 2025, respectively, were as follows:

Net sales of our International segment were $226.4 million in the third quarter of 2026 compared to $244.8 million in the same period of 2025, a decrease of $18.4 million, or 7.5%. The decrease was due to volume declines of approximately 14%, primarily driven by price elasticity across markets. The decrease was partially offset by favorable price realization of approximately 4%, resulting from strategic pricing actions across key markets. The decrease was further offset by a favorable impact from foreign currency exchange rates of approximately 2%.

Our International segment generated a loss of $30.0 million in the third quarter of 2026 compared to a loss of $13.6 million in the third quarter of 2025, a decrease of $16.4 million, or 120.5%, driven by higher commodity and manufacturing costs and lower volumes, partially offset by favorable price realization, net savings related to our AAA Initiative, and favorable mix.

Net sales of our International segment were $716.4 million in the first nine months of 2026 compared to $686.0 million in the same period of 2025, an increase of $30.4 million, or 4.4%. The increase was driven by a favorable price realization of approximately 8%, primarily due to strategic pricing actions across key markets. The increase was also due to a favorable impact from foreign currency exchange rates of approximately 4%. The increase was partially offset by volume declines of approximately 8% across certain key markets.

Our International segment generated a loss of $19.9 million in the first nine months of 2026 compared to income of $34.9 million in the first nine months of 2025, a decrease of $54.8 million, or 157.0%, driven by higher supply chain costs and higher commodity and manufacturing costs, partially offset by favorable price realization, favorable mix, and net savings related to our AAA Initiative.

Unallocated Corporate Expense

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

In the third quarter of 2026, unallocated corporate expense totaled $249.5 million, as compared to $194.7 million in the third quarter of 2025, an increase of $54.8 million, or 28.1%. The increase was primarily driven by continued investments in technology and higher acquisition and integration costs, partially offset by lower compensation and benefits costs.

In the first nine months of 2026, unallocated corporate expense totaled $622.3 million, as compared to $536.7 million in the first nine months of 2025, an increase of $85.7 million, or 16.0%. The increase was primarily drivenby continued investments in technology and higher acquisition and integration costs, partially offset by lower compensation and benefits costs.