01—Abstract
Summary
Summary of the 10-Q filed May 1, 2025. Cited figures are marked; the original filing is the authoritative source.
The Hershey Company's first-quarter 2025 Form 10-Q (quarter ended March 30, 2025) shows a sharp earnings decline.
Net sales were $2,805.4 milliona versus $3,252.7 million in the prior-year quarter, a decrease of 13.8%, driven by a volume decline of approximately 15% in the first quarter, partly offset by price realization of approximately 2%. Gross margin fell to 33.7% from 51.5%, reflecting $618.9 million of higher costs (primarily cocoa), $251.6 million of unfavorable mark-to-market activity on commodity derivatives, lower volume and unfavorable mix. Operating profit declined 65.1% to $369.2 million, and net income fell to $224.2 million from $797.5 million, with diluted EPS of $1.10 versus $3.89.
The company also recorded $16.4 millionb of business realignment costs tied to its Advancing Agility & Automation Initiative. Balance sheet and liquidity changed meaningfully during the quarter. Cash and cash equivalents rose to $1.5 billion from $730.7 million at year-end 2024, after the company issued $2.0 billion of net proceeds from four senior notes totaling $2.0 billion in principal, and reduced short-term debt to $144.6 million from $1,307.0 million by repaying commercial paper.
Long-term debt rose to $5,177.3 millionc (non-current portion) from $3,190.2 million. Operating cash flow was $396.7 million, versus $569.1 million a year earlier, and capital additions were $145.5 million. Quarterly dividends paid totaled $271.6 million, and no shares were repurchased in the quarter, compared with $494.2 million of repurchases in the prior-year period.
Management cited elevated cocoa prices (an average futures price of $4.30d per pound, up approximately 25% from the 2024 average), shifting consumer behavior, and tariff uncertainty as ongoing pressures. The filing states that tariffs did not have a material impact on results in the quarter, but it flags continued uncertainty. Management also said the pending LesserEvil acquisition, announced March 31, 2025, is expected to close by mid-2025, financed with cash on hand and short-term borrowings.
02—Key points
Key Highlights
- Net sales of $2,805.4 million, down 13.8% from $3,252.7 million, with volume declines of approximately 15% and price realization of approximately 2%.
- Gross margin contracted to 33.7% from 51.5%, driven by $251.6 million of unfavorable commodity derivative mark-to-market activity and $618.9 million of higher costs, primarily cocoa.
- Operating profit fell 65.1% to $369.2 million; diluted EPS was $1.10 versus $3.89 in the prior-year quarter.
- Net income of $224.2 million compared with $797.5 million, a decrease of 71.9%.
- Issued $2.0 billion of net proceeds from four senior notes in February 2025 (4.550% due 2028, 4.750% due 2030, 4.950% due 2032, 5.100% due 2035), and reduced short-term debt to $144.6 million from $1,307.0 million.
- Cash and cash equivalents increased to $1.5 billion; operating cash flow was $396.7 million versus $569.1 million, and no share repurchases were made in the quarter versus $494.2 million a year earlier.
- Agreed on March 31, 2025 to acquire LesserEvil, LLC, an organic popcorn and puffed snack company, expected to close by mid-2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Hershey kept $0.08.
- Revenue$2.81B100.0%
- Cost of revenue−$1.86B66.3%
- Gross profit$944.3M33.7%
- Operating costs−$575.0M20.5%
- Operating income$369.2M13.2%
- Interest, other & tax−$145.0M5.2%
- Net income$224.2M8.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 1, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $2.81B$3.25B | −13.8% |
| Cost of Revenue | $1.86B$1.58B | +18.0% |
| Gross Profit | $944.27M$1.68B | −43.7% |
| SG&A Expenses | $558.67M$617.98M | −9.6% |
| Operating Income | $369.22M$1.06B | −65.1% |
| Interest Expense | $54.92M$46.04M | +19.3% |
| Net Income | $224.20M$797.45M | −71.9% |
05—Questions
Frequently Asked Questions
Why did Hershey's profitability decline so sharply in the first quarter of 2025?
Gross margin fell to 33.7% from 51.5%. The filing attributes this to $251.6 million of unfavorable mark-to-market activity on commodity derivatives, $618.9 million of higher costs (primarily cocoa), lower sales volume and unfavorable mix, partly offset by lower supply chain costs and favorable price realization. Operating profit also absorbed $16.4 million of business realignment costs.
What drove the drop in net sales?
Net sales fell 13.8% to $2,805.4 million. The filing cites a volume decline of approximately 15%, primarily in everyday core U.S. confection, which it says reflects accelerated shipments in the first quarter of 2024 ahead of the ERP system implementation. International segment declines and the Easter timing shift into mid-April 2025 also contributed.
How is Hershey's balance sheet and debt position changing?
Total debt, including short-term debt and the current portion of long-term debt, was $5.9 billion at March 30, 2025. The company issued $2.0 billion of net proceeds from new notes and used cash to reduce commercial paper, which took short-term debt to $144.6 million from $1,307.0 million. Cash and cash equivalents rose to $1.5 billion. The filing states that the $603.6 million current portion of long-term debt includes two $300 million notes maturing in June and August 2025.
What is the outlook for capital spending and shareholder returns?
The filing expects 2025 capital expenditures, including capitalized software, of approximately $425 million to $450 million. Dividends paid in the quarter totaled $271.6 million. No shares were repurchased in the quarter, and approximately $470 million remains available under the December 2023 share repurchase authorization.
06—Continue