01—Abstract
Summary
Summary of the 10-Q filed October 29, 2026. Cited figures are marked; the original filing is the authoritative source.
The Hershey Company's Form 10-Q for the quarter ended September 27, 2026 shows strong top- and bottom-line growth versus the prior-year period.
Net sales for the third quarter were $3,275.5 milliona, up from $3,181.4 million, an increase of $94.1 million, or 3.0%. Growth was driven by favorable price realization of approximately 11%, partly offset by a volume decrease of approximately 10%. Gross margin rose to 46.1% from 32.6%, and operating profit increased to $817.7 million from $434.6 million.
Net income was $580.8 millionb, and diluted EPS was $2.88, compared with $1.36 a year earlier. For the first nine months, net sales were $9,167.0 million, up 6.6%, and net income was $1,473.6 million, with diluted EPS of $7.27. The filing attributes the margin improvement largely to lower commodity costs, tariff refunds, net savings from the Advancing Agility & Automation Initiative, and favorable mark-to-market activity on commodity derivatives.
Partially offsetting these benefits were higher freight and logistics costs, higher SM&A expense (up 15.4% in the quarter), and a segment loss in International. The North America Salty Snacks segment's income declined in the quarter, while North America Confectionery's segment income rose to $949.7 millionc. Cash from operations for the nine months was $1,638.8 million, and the company repurchased $439.4 million of common stock, repaid $500 million of notes, and paid $859.2 million in dividends.
Total debt was about $5.1 billiond, and cash and equivalents stood at $676.7 million at quarter end. Management cites ongoing risks, including tariffs, cocoa price volatility, supply chain costs, and the conflict in the Middle East, which the company says has not yet had a material impact on commodity prices or supply. The company also expects 2026 capital expenditures of approximately $425 million to $475 million, and it states that it believes it has sufficient liquidity for both short- and long-term needs.
02—Key points
Key Highlights
- Q3 2026 net sales of $3,275.5 million, up 3.0% from $3,181.4 million, with price realization of approximately 11% offsetting a volume decrease of approximately 10%.
- Q3 gross margin of 46.1%, compared with 32.6% in Q3 2025, driven by lower commodity costs, tariff refunds, AAA Initiative savings, and favorable derivative mark-to-market activity.
- Q3 operating profit of $817.7 million, up from $434.6 million, and net income of $580.8 million, up from $276.3 million.
- Diluted EPS of $2.88 for Q3 2026 versus $1.36 a year earlier; nine-month diluted EPS of $7.27 versus $2.77.
- North America Salty Snacks segment income fell to $47.4 million from $57.7 million in Q3, while the International segment posted a loss of $30.0 million.
- Nine-month cash from operations of $1,638.8 million; $439.4 million spent on share repurchases and $859.2 million on dividends.
- Total short- and long-term debt of about $5.1 billion; cash and cash equivalents of $676.7 million at September 27, 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Hershey kept $0.18.
- Revenue$3.28B100.0%
- Cost of revenue−$1.76B53.9%
- Gross profit$1.51B46.1%
- Operating costs−$693.4M21.2%
- Operating income$817.7M25.0%
- Interest, other & tax−$236.8M7.2%
- Net income$580.8M17.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed October 29, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $3.28B$3.18B | +3.0% |
| Cost of Revenue | $1.76B$2.14B | −17.7% |
| Gross Profit | $1.51B$1.04B | +45.7% |
| SG&A Expenses | $692.87M$600.54M | +15.4% |
| Operating Income | $817.65M$434.58M | +88.1% |
| Interest Expense | $56.06M$61.46M | −8.8% |
| Net Income | $580.81M$276.32M | +110.2% |
05—Questions
Frequently Asked Questions
What drove the large increase in third-quarter profitability?
Operating profit rose to $817.7 million from $434.6 million. The filing attributes the increase mainly to higher gross profit, which reflected favorable net price realization, lower commodity costs, tariff refunds, AAA Initiative savings, and $49.1 million of favorable mark-to-market activity on commodity derivatives. Lower business realignment costs also contributed, partly offset by higher SM&A expenses.
How did sales volume perform?
Volume declined approximately 10% in the third quarter, driven mainly by declines in North America Confectionery and International, which more than offset growth in North America Salty Snacks. Price realization of approximately 11% more than offset the volume decline, producing the 3.0% net sales increase.
What is the company doing with its cash and capital?
For the nine months, Hershey paid $859.2 million in dividends, repurchased $439.4 million of common stock, and repaid $500 million of 2.300% Notes at maturity. It had no new long-term borrowings in 2026. The filing notes a $270 million remaining balance under the December 2023 repurchase authorization and an additional $500 million authorization approved in June 2026. Capital expenditures for 2026 are expected to be $425 million to $475 million.
What risks does management highlight?
Management points to tariffs and related refunds, cocoa price volatility, higher supply chain and freight costs, pricing elasticity that may reduce volume, and the conflict in the Middle East. The company said the conflict had no material impact on commodity prices or supply for the first nine months of 2026, but it continues to monitor for escalation.
06—Continue