01—Abstract
Summary
Summary of the 10-Q filed July 30, 2025. Cited figures are marked; the original filing is the authoritative source.
The Hershey Company's Form 10-Q for the quarter ended June 29, 2025 shows a sharp earnings decline alongside higher sales.
Net sales were $2.61 billiona in the second quarter, up 26.0% from $2.07 billion a year earlier, while gross margin fell to 30.5% from 40.2% and operating profit dropped to $192.8 million from $287.9 million. Net income was $62.7 million, or $0.31 per diluted share, versus $180.9 million, or $0.89, in the prior-year quarter. The filing attributes the margin compression mainly to higher commodity costs, particularly cocoa, and to higher supply chain costs.
Six-month net sales were $5.42 billionb, up 1.7%, while six-month net income fell to $286.9 million from $978.3 million. Balance sheet and cash flow changes are notable. Total debt rose to about $5.6 billion, and the company issued $2.0 billion of long-term notes in the first quarter of 2025 while reducing short-term commercial paper borrowings by about $1.2 billion.
Inventories rose to $1.84 billionc from $1.25 billion at year-end, and operating cash flow was $508.9 million for the first six months, down from $894.7 million. Cash and equivalents increased to $912.3 million. Management said it believes liquidity is sufficient and that it expects 2025 capital expenditures of $425 million to $450 million.
The filing also discloses pending and subsequent events. Hershey agreed on March 31, 2025 to acquire LesserEvil, LLC, which it expects to close by the end of 2025 using cash and short-term borrowings.
The company is assessing the One Big Beautiful Bill Act, signed July 4, 2025. An executive employment agreement with Kirk Tanner, dated July 7, 2025, is incorporated by reference from a Form 8-K.
02—Key points
Key Highlights
- Net sales rose 26.0% to $2,614.7 million in Q2 2025, driven by volume increases of approximately 21% and price realization of approximately 5%.
- Gross margin fell to 30.5% in Q2 2025 from 40.2%, reflecting unfavorable commodity costs (notably cocoa) and higher supply chain costs.
- Operating profit declined 33.0% to $192.8 million in Q2 2025; net income fell 65.3% to $62.7 million, and diluted EPS was $0.31 versus $0.89.
- Six-month net sales were $5,420.1 million, up 1.7%, while six-month net income was $286.9 million versus $978.3 million in the prior year.
- Total short- and long-term debt was about $5.6 billion at June 29, 2025, after the company issued $2.0 billion of 2025 Notes in the first quarter.
- Operating cash flow for the first six months was $508.9 million, down from $894.7 million, mainly due to changes in other assets and liabilities and inventory growth.
- The pending LesserEvil, LLC acquisition is expected to close by the end of 2025, financed with cash on hand and short-term borrowings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Hershey kept $0.02.
- Revenue$2.61B100.0%
- Cost of revenue−$1.82B69.5%
- Gross profit$796.3M30.5%
- Operating costs−$603.5M23.1%
- Operating income$192.8M7.4%
- Interest, other & tax−$130.1M5.0%
- Net income$62.7M2.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 30, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $2.61B$2.07B | +26.0% |
| Cost of Revenue | $1.82B$1.24B | +46.6% |
| Gross Profit | $796.27M$833.75M | −4.5% |
| SG&A Expenses | $603.21M$540.99M | +11.5% |
| Operating Income | $192.81M$287.82M | −33.0% |
| Interest Expense | $60.45M$50.15M | +20.5% |
| Net Income | $62.72M$180.89M | −65.3% |
05—Questions
Frequently Asked Questions
Why did Hershey's profitability decline despite higher sales in the second quarter of 2025?
Net sales grew 26.0%, but cost of sales rose 46.6%, driven by $592.0 million of higher costs, primarily unfavorable cocoa commodity costs and higher volume. Gross margin fell to 30.5% from 40.2%, and SM&A expenses increased 11.5%, lowering operating profit to $192.8 million.
How much debt does Hershey carry and how has its debt structure changed?
Short- and long-term debt totaled about $5.6 billion at June 29, 2025. The company issued $2.0 billion of notes in the first quarter of 2025 and repaid $300 million of 0.900% Notes in June, while reducing commercial paper from $1,145.6 million to zero. Current portion of long-term debt was $303.0 million, including $300 million of 3.200% Notes due August 21, 2025.
What is the status of the LesserEvil acquisition?
On March 31, 2025, Hershey entered into a Merger Agreement to acquire LesserEvil, LLC, a maker of organic popcorn and puffed snacks in the United States and Canada. The company expects the deal to close by the end of 2025, subject to Hart-Scott-Rodino clearance and other customary conditions, and to finance it with cash on hand and short-term borrowings.
What did management say about cocoa and tariff risks?
Cocoa prices remained elevated, with the average cocoa futures price at $4.22 per pound in the first six months of 2025, about 22% above the 2024 annual average of $3.45. Management said tariffs did not have a material impact on results for the first six months, but the scope and duration of tariffs remain uncertain and could have material adverse effects.
06—Continue