| Kellanova | |||||
| 財經資訊發布 | |||||
| 分析師聯絡方式： | |||||
| 約翰·倫威克，特許金融分析師 (269) 961-9050 | |||||
| 馬克西姆·克萊蒙，(269) 660-4224 | |||||
| 媒體聯繫人: | |||||
| 克里斯·巴納，(269) 961-3799 | |||||
家樂氏宣佈強勁的第三季業績
芝加哥，伊利諾州 - 2024年10月31日 - 家樂氏 (紐交所: K) 今天宣布了2024年第三季度的業績。
待處理交易:
根據2024年8月14日宣布，家樂氏公司、一家家族所有的全球領先寵物護理、零食和食品公司，與全球零食、國際穀物和麵條、北美植物基食品以及冷凍早餐食品領先公司家樂氏達成明確協議，根據協議，家樂氏將以每股83.50美元現金收購家樂氏。股東將在2024年11月1日就此提議的收購進行投票。該交易需要經過家樂氏股東批准以及其他習慣性的結束條件，包括監管批准，預計將在2025年上半年完成。
季度要點：
•第三季度淨銷售額受不利的貨幣轉換影響，但公司的有機基礎增長率超過了其長期目標區間。
•公司持續維持雙位數營業利潤增長，並且繼續比預期更快地提升利潤率。
•每股盈利持續保持雙位數增長勢頭，這要歸功於較高的營業利潤。
•由於即將與Mars, Incorporated合併，家樂氏將不再提供前瞻性指引。
「我們強勁的第三季業績再次反映了我們作為家樂氏更注重成長和盈利的組合的策略，“家樂氏的董事長，總裁，和首席執行官Steve Cahillane評論說。“這個表現也證明了一個家樂氏組織的才華和參與度，這個組織正在高水平地執行，為我們作為全球貨幣快速食品領域的一部分，與Mars一同迎接令人興奮的下一個篇章做好準備。」
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| 財務摘要: | 季度結束 | 截至年初至今累計期間結束 | ||||||||||||||||||||||||||||||||||||
| (以百萬為單位，每股數據除外) | 2024年9月28日 | 2023年9月30日 | % 變化 | 2024年9月28日 | 2023年9月30日 | % 變化 | ||||||||||||||||||||||||||||||||
| 已報告淨銷售額 | $ | 3,233 | $ | 3,255 | (0.7) | % | $ | 9,625 | $ | 9,948 | (3.2) | % | ||||||||||||||||||||||||||
| 有機淨銷售* | $ | 3,452 | $ | 3,255 | 6.1 | % | $ | 10,411 | $ | 9,900 | 5.2 | % | ||||||||||||||||||||||||||
| 已報告營業利潤 | $ | 456 | $ | 414 | 10.3 | % | $ | 1,342 | $ | 1,177 | 13.9 | % | ||||||||||||||||||||||||||
| 調整後營業利潤* | $ | 441 | $ | 380 | 16.1 | % | $ | 1,451 | $ | 1,226 | 18.3 | % | ||||||||||||||||||||||||||
| 貨幣中立調整後營業利潤* | $ | 453 | $ | 380 | 19.4 | % | $ | 1,492 | $ | 1,226 | 21.7 | % | ||||||||||||||||||||||||||
| 已報告每股稀釋盈利 | $ | 1.05 | $ | 0.57 | 84.2 | % | $ | 2.83 | $ | 2.09 | 35.4 | % | ||||||||||||||||||||||||||
| 調整後稀釋每股盈利 * | $ | 0.91 | $ | 0.77 | 18.2 | % | $ | 2.93 | $ | 2.45 | 19.6 | % | ||||||||||||||||||||||||||
| 匯率中立調整後稀釋每股盈利 * | $ | 0.92 | $ | 0.77 | 19.5 | % | $ | 2.99 | $ | 2.45 | 22.0 | % | ||||||||||||||||||||||||||
* 依非通用會計原則之財務指標。有關該措施的重要資訊，請參閱本公告中的「非通用會計財務措施」部分和「非通用金額調整對照表」。
第三季度綜合結果
2024年第三季度GAAP（或“報告”） 凈銷售 按年計算，由於顯著不利的外匯匯率抵銷了價格/混合和成交量的增加，2024年第三季度公司的淨銷售額減少了1%。在不考慮匯率影響的有機基礎上，公司的淨銷售額增加了6%。
在今年前九个月，报告的货币收入年比下降了3%，由于显著不利的外币翻译和去年的俄罗斯出售抵消了价格/混合上升。按照有机基础，也就是排除货币和出售的影响，公司的净销售额增长了5%。 凈銷售 在今年前九个月，报告的货币收入年比下降了3%，由于显著不利的外币翻译和去年的俄罗斯出售抵消了价格/混合上升。按照有机基础，也就是排除货币和出售的影响，公司的净销售额增长了5%。
報告 營業利潤 在第三季度，由於網羅有利的淨公允價值擺盪、毛利率持續改善以及對Kellogg Co提供過渡服務的費用補償，部分抵銷了與網絡優化項目和拟议的Mars合併有關的直接費用的情況下，營業利潤同比增長了10%。根據不含公允價值標記和一次性費用的調整基準，營業利潤增長了16%，並且在排除貨幣轉換因素後，營業利潤增長了19%。
全年前九個月，報告 營業利潤 按年增長 14%，反映毛利率改善、市場淨值正面，以及向 Wk Kellogg Co 提供的過渡服務的補償，部分由網絡優化項目有關的前期費用抵銷。經調整後，營業利潤增加了 18%，不包括貨幣換算，增加了 22%。
報告 每股盈利 第三季度由于營業利潤增加和一次性稅項積極變動，純利潤同比增長84％。损益平稳后，調整後每股收益增長18％，調整後每股收益不考慮貨幣兌換同比增長19％。
截至今年前九个月，每股报告收益同比增长35%。 由于更高的營業利潤和一次性税收項目正面影響，抵消了較高的利息費用。在調整後的基礎上，每股調整後營業收益增長了20%，並且在不考慮貨幣轉換的情況下，調整後每股收益增長了22%。
年初至今營運活動產生的自由現金流 現金提供自營業務活動 為$129,300萬，較去年同期的$140,000萬下降，其中包括後來分拆出售的Wk Kellogg Co。 資本支出為$44,000萬，較去年同期低，由於去年同期包括已分拆的Wk Kellogg Co.的資本支出。 自由現金流即年初至今現金提供營運活動減去資本支出後為$85,300萬，較去年同期減少$4,100萬。
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第三季業務表現
請參考本文件後面的段落表。
家樂氏在第三季度實現了有機淨銷售和貨幣中立以及調整基礎的營業利潤和每股收益增長。新興市場的成交量增長和貨幣驅動的價格/組合增長推動了公司大部分的有機淨銷售增長，盡管發達市場也在逐步改善的成交量表現上實現了有機增長，儘管行業需求恢復的速度比預期的慢。在生產率和成本通脹適度控制的支持下，家樂氏還進一步提高了利潤率。
北美洲的 第三季度，由於正價/混合價格的上升部分抵消了成交量輕微下降，北美洲的經報告和有機銷售額增長了1%。 N北美洲第三季度的報告營業利潤同比增長了24％，反映了毛利率的改善和為Wk Kellogg Co提供的轉型服務相關費用的補償。在調整後和貨幣中立調整的基礎上，營業利潤增長了27％。
在今年头九个月，报告和有机净销售额增长了1%，因去年收入增长管理措施的积极影响超过了略微下降的成交量。报告營業利潤增加了23%。反映毛利率提高和对Wk Kellogg Co提供的过渡服务费用的补偿以及分拆和网络优化项目相关的较高前期费用部分抵消。在调整和货币中立调整基础上，營業利潤增加了31%。
Europe's reported net sales increased 7% year on year in the third quarter, as revenue growth management actions and positive currency translation were only partially offset by a decline in volume that moderated from recent quarters. On an organic basis, net sales increased by 4%. Europe’s third-quarter reported operating profit increased by 4% year on year, reflecting higher net sales, improving gross profit margin, and positive currency translation, partially offset by one-time charges related to a network optimization project and increased brand building investment. On an adjusted basis, operating profit increased by 9%, and excluding currency translation it increased by 5%.
Through the first nine months of the year, reported net sales increased by 1% year on year, reflecting the positive impact of revenue growth management actions over the past year to cover cost inflation, as well as positive currency translation, partially offset by a modest and sequentially moderating decline in volume and last year's divestiture of operations in Russia. On an organic basis, net sales increased by 2%. Reported operating profit decreased by 18% year on year, reflecting up-front charges related to a network optimization project, last year's divestiture of operations in Russia, and higher brand building investment, partially offset by the positive impacts of higher net sales, increased productivity, and moderating cost inflation. On an adjusted basis, operating profit increased by 7%, and excluding currency translation, operating profit increased by 5%.
Latin America's third quarter reported net sales decreased by 6% year on year, as significantly adverse currency translation more than offset growth in both volume and price/mix. On an organic basis, net sales increased by 4%. Reported operating profit in the third quarter decreased by 26% year on year, reflecting significantly adverse currency translation, a negative swing in net mark-to-market, adverse mix and higher costs. Adjusted operating profit declined by 18% and currency-neutral adjusted operating profit decreased by 10%.
Through the first nine months of the year, reported net sales increased by 2% year on year, reflecting growth in both volume and price/mix, and partially offset by adverse foreign currency translation. On an organic basis, net sales increased by 4%. Reported operating profit increased by 4% year on year, reflecting a positive swing in mark-to-market and higher net sales, partially offset by adverse mix and higher costs. On an adjusted and currency neutral basis, operating profit decreased by 4%.
Asia Pacific, Middle East and Africa's ("AMEA's") third quarter reported net sales decreased by 10% year on year, due to significantly adverse foreign currency translation, principally related to the Nigerian Naira, whose devaluation moderated from recent quarters. This currency translation impact more than offset increases in both
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volume and price/mix. On an organic basis, net sales increased by 22%. AMEA's third-quarter reported operating profit increased by 5% year on year, as local-currency net sales growth and timing of investment more than offset the impact of significantly adverse foreign currency translation. On an adjusted basis, operating profit increased by 6%, and excluding currency translation it increased by 27%.
Through the first nine months of the year, reported net sales decreased by 18% year on year, due to significantly adverse foreign currency translation, principally related to the Nigerian Naira, and an elasticity-driven decrease in volume, which more than offset the impact of revenue growth management actions intended to cover that currency's devaluation. On an organic basis, net sales increased 19%. Reported operating profit decreased 2% year on year, due to significantly adverse foreign currency translation and higher brand building investment, partially offset by higher local-currency net sales. On an adjusted basis, operating profit declined by 1%. On an adjusted basis and excluding currency translation, operating profit increased 22%.
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About Kellanova
With $13 billion in net sales in 2023, Kellanova (NYSE: K) is a leader in global snacking, international
cereal and noodles, and North America frozen foods with a legacy stretching back more than 100 years.
Powered by differentiated brands including Pringles®, Cheez-It®, Pop-Tarts®, Kellogg's Rice Krispies
Treats®, RXBAR®, Eggo®, MorningStar Farms®, Special K®, Coco Pops®, and more, Kellanova’s vision is to
become the world’s best-performing snacks-led powerhouse, unleashing the full potential of our
differentiated brands and our passionate people.
At Kellanova, our purpose is to create better days and ensure everyone has a seat at the table through our
trusted food brands. We are committed to promoting sustainable and equitable food access by tackling the
crossroads of hunger, sustainability, wellbeing, and equity, diversity & inclusion. Our goal is to create Better
Days for 4 billion people by the end of 2030 (from a 2015 baseline). For more detailed information about our
commitments, our approach to achieving these goals, and methodology, please visit our website at https://
www.kellanova.com.
Non-GAAP Financial Measures
This filing includes non-GAAP financial measures that we provide to management and investors that exclude certain items that we do not consider part of on-going operations. Items excluded from our non-GAAP financial measures are discussed in the "Significant items impacting comparability" section of this filing. Our management team consistently utilizes a combination of GAAP and non-GAAP financial measures to evaluate business results, to make decisions regarding the future direction of our business, and for resource allocation decisions, including incentive compensation. As a result, we believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team and improves investors’ understanding of our underlying operating performance and in their analysis of ongoing operating trends. All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures.
Non-GAAP financial measures used include currency-neutral and organic net sales, adjusted and currency-neutral adjusted operating profit, adjusted and currency-neutral adjusted diluted EPS, currency-neutral adjusted gross profit, currency-neutral adjusted gross margin, adjusted other income (expense), adjusted effective income tax rate, net debt and free cash flow. We determine currency-neutral results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. These non-GAAP financial measures may not be comparable to similar measures used by other companies.
•Currency-neutral net sales and organic net sales: We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral net sales. In addition, we exclude the impact of acquisitions, divestitures, and foreign currency, resulting in organic net sales. We excluded the items which we believe may obscure trends in our underlying net sales performance. By providing these non-GAAP net sales measures, management intends to provide investors with a meaningful, consistent comparison of net sales performance for the Company and each of our reportable segments for the periods presented. Management uses these non-GAAP measures to evaluate the effectiveness of initiatives behind net sales growth, pricing realization, and the impact of mix on our business results. These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions.
•Adjusted: gross profit, gross margin, operating profit, operating margin, and diluted EPS from continuing operations: We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity
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contracts, certain equity investments and certain foreign currency contracts, a gain on interest rate swaps, and other costs impacting comparability resulting in adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.
•Currency-neutral adjusted: gross profit, gross margin, operating profit, operating margin, and diluted EPS from continuing operations: We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments and certain foreign currency contracts, a gain on interest rate swaps, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.
•Adjusted other income (expense): We adjust the GAAP financial measure to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded) and certain equity investments, losses resulting from divestitures, and other costs impacting comparability. We excluded the items which we believe may obscure trends in our underlying profitability. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company's other income (expense), excluding the impact of the items noted above, for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability.
•Adjusted effective income tax rate: We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments, and certain foreign currency contracts, a gain on interest rate swaps, and other costs impacting comparability. We excluded the items which we believe may obscure trends in our pre-tax income and the related tax effect of those items on our adjusted effective income tax rate, and other impacts to tax expense. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company's effective tax rate, excluding the pre-tax income and tax effect of the items noted above, for the periods presented. Management uses this non-GAAP measure to monitor the effectiveness of initiatives in place to optimize our global tax rate.
•Net debt: Defined as the sum of long-term debt, current maturities of long-term debt and notes payable, less cash and cash equivalents. With respect to net debt, cash and cash equivalents are subtracted from the GAAP measure, total debt liabilities, because they could be used to reduce the Company’s debt obligations. Company management and investors use this non-GAAP measure to evaluate changes to the Company's capital structure and credit quality assessment.
•Free Cash flow: Defined as net cash provided by operating activities reduced by expenditures for property additions. Free cash flow does not represent the residual cash flow available for discretionary expenditures. We use this non-GAAP financial measure of free cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition
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opportunities, and share repurchases once all of the Company’s business needs and obligations are met. Additionally, certain performance-based compensation includes a component of this non-GAAP measure.
These measures have not been calculated in accordance with GAAP and should not be viewed as a substitute for GAAP reporting measures.
Forward-Looking Statements Disclosure
This news release contains, or incorporates by reference, “forward-looking statements” with projections concerning and expectations, among other things, the proposed acquisition (the “Merger”) of Kellanova (the “Company”) by Mars, Incorporated, stockholder and regulatory approvals, expected benefits of the Merger and any other statements regarding the Company’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts. Forward looking statements include predictions of future results or activities and may contain the words “expects,” “believes,” “should,” “will,” “anticipates,” “projects,” “estimates,” “implies,” “can,” or words or phrases of similar meaning and may involve risks and uncertainties that could cause the Company’s actual results or activities to differ materially from these predictions. These risks and uncertainties include, but are not limited to: failure to obtain the required vote of the Company’s stockholders in connection with the Merger; the timing to consummate the Merger and the risk that the Merger may not be completed at all or the occurrence of any event, change, or other circumstances that could give rise to the termination of the merger agreement, including circumstances requiring a party to pay the other party a termination fee pursuant to the merger agreement; the risk that the conditions to closing of the Merger may not be satisfied or waived; the risk that a governmental or regulatory approval that may be required for the Merger is not obtained or is obtained subject to conditions that are not anticipated; potential litigation relating to, or other unexpected costs resulting from, the Merger; legislative, regulatory, and economic developments; risks that the proposed transaction disrupts the Company’s current plans and operations; the risk that certain restrictions during the pendency of the proposed transaction may impact the Company’s ability to pursue certain business opportunities or strategic transactions; the diversion of management’s time on transaction-related issues; continued availability of capital and financing and rating agency actions; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the Company’s common stock, credit ratings or operating results; and the risk that the proposed transaction and its announcement could have an adverse effect on the ability to retain and hire key personnel, to retain customers and to maintain relationships with business partners, suppliers and customers. The Company can give no assurance that the conditions to the Merger will be satisfied.
Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to update them publicly.
Additional information concerning these and other factors can be found in the Company's filings with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
[Kellanova Financial News]
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Additional Information about the Proposed Merger and Where to Find It
The Company has filed a definitive proxy statement and a form of proxy card with the SEC in connection with the solicitation of proxies for the special meeting of the Company’s stockholders (the “Definitive Proxy Statement”). Any vote in respect of resolutions to be proposed at the Company’s stockholder meeting to approve the merger or other responses in relation to the merger should be made only on the basis of the information contained in the Definitive Proxy Statement. Beginning on September 26, 2024, stockholders were mailed the Definitive Proxy Statement. Investors may obtain free copies of the Definitive Proxy Statement and other documents filed by the Company with the SEC at http://www.sec.gov, the SEC’s website, from the Company’s website (https://investor.Kellanova.com), or by directing a request to Investor Relations at https://investor. Kellanova.com.
THE COMPANY URGES INVESTORS TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER MATERIALS FILED WITH THE SEC OR INCORPORATED BY REFERENCE INTO THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE MERGER.
Participants in the Solicitation
The Company, its directors and certain of its officers and employees may be deemed to be participants in the solicitation of proxies from Company stockholders in connection with the merger. Information about the Company’s directors and executive officers is set forth under the captions “Proposal 1—The Merger—Interests of Kellanova’s Directors and Officers” and “Certain Beneficial Owners of Common Stock—Officer and Director Stock Ownership” in the Definitive Proxy Statement filed with the SEC on September 26, 2024, under the captions “Proposal 1—Election of Directors,” “Corporate Governance,” “Board and Committee Membership,” “2023 Director Compensation and Benefits,” “Directors’ Compensation Table,” “Compensation and Talent Management Committee Report—Compensation Discussion and Analysis,” “Executive Compensation,” “Retirement and Non-Qualified Defined Contribution and Deferred Compensation Plans,” “Potential Post-Employment Payments,” “Pay versus Performance,” “CEO Pay Ratio” and “Stock Ownership—Officer and Director Stock Ownership” in the definitive proxy statement for the Company’s 2024 annual meeting of shareowners filed with the SEC on March 4, 2024, under the caption “Executive Officers” of Item 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 filed with the SEC on February 20, 2024, in the Company’s Current Reports on Form 8-K filed with the SEC on January 12, 2024, February 22, 2024, and May 1, 2024 and in the Company’s January 12, 2024 press release found on its Investor Relations page at https://investor.Kellanova.com, relating to the appointment of President Kellanova North America and President, Kellanova Latin America. Additional information regarding ownership of the Company’s securities by its directors and executive officers is included in such persons' SEC filings on Forms 3 and 4. These documents may be obtained free of charge at the SEC’s web site at www.sec.gov and on the Investor Relations page of the Company’s website located at https://investor.Kellanova.com. Additional information regarding the interests of participants in the solicitation of proxies in connection with the merger may be set forth in other relevant materials the Company may file with the SEC.
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Kellanova and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share data)
| Quarter ended | Year ended | |||||||||||||||||||||||||
| (Results are unaudited) | September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | ||||||||||||||||||||||
| Net sales | $ | 3,233 | $ | 3,255 | $ | 9,625 | $ | 9,948 | ||||||||||||||||||
| Cost of goods sold | 2,057 | 2,145 | 6,257 | 6,760 | ||||||||||||||||||||||
| Selling, general and administrative expense | 720 | 696 | 2,026 | 2,011 | ||||||||||||||||||||||
| Operating profit | 456 | 414 | 1,342 | 1,177 | ||||||||||||||||||||||
| Interest expense | 75 | 75 | 241 | 218 | ||||||||||||||||||||||
| Other income (expense), net | 21 | (62) | 97 | (17) | ||||||||||||||||||||||
| Income from continuing operations before income taxes | 402 | 277 | 1,198 | 942 | ||||||||||||||||||||||
| Income taxes | 34 | 78 | 213 | 216 | ||||||||||||||||||||||
| Earnings (loss) from unconsolidated entities | 2 | (1) | 3 | 4 | ||||||||||||||||||||||
| Net income (loss) from continuing operations | 370 | 198 | 988 | 730 | ||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 3 | 1 | 10 | 10 | ||||||||||||||||||||||
| Income (loss) from discontinued operations, net of taxes | — | 72 | — | 204 | ||||||||||||||||||||||
| Net income (loss) attributable to Kellanova | $ | 367 | $ | 269 | $ | 978 | $ | 924 | ||||||||||||||||||
| Per share amounts: | ||||||||||||||||||||||||||
| Earnings Per Common Share - Basic | ||||||||||||||||||||||||||
| Earnings (loss) from continuing operations | $ | 1.07 | $ | 0.58 | $ | 2.86 | $ | 2.11 | ||||||||||||||||||
| Earnings (loss) from discontinued operations | $ | — | $ | 0.21 | $ | — | $ | 0.59 | ||||||||||||||||||
| Net Earnings (loss) Per Common Share - Basic | $ | 1.07 | $ | 0.79 | $ | 2.86 | $ | 2.70 | ||||||||||||||||||
| Earnings Per Common Share - Diluted | ||||||||||||||||||||||||||
| Earnings (loss) from continuing operations | $ | 1.05 | $ | 0.57 | $ | 2.83 | $ | 2.09 | ||||||||||||||||||
| Earnings (loss) from discontinued operations | $ | — | $ | 0.21 | $ | — | $ | 0.59 | ||||||||||||||||||
| Net Earnings (loss) Per Common Share - Diluted | $ | 1.05 | $ | 0.78 | $ | 2.83 | $ | 2.68 | ||||||||||||||||||
| Average shares outstanding: | ||||||||||||||||||||||||||
| Basic | 343 | 342 | 342 | 342 | ||||||||||||||||||||||
| Diluted | 347 | 345 | 345 | 345 | ||||||||||||||||||||||
| Actual shares outstanding at period end | 345 | 343 | ||||||||||||||||||||||||
9
Kellanova and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
| Year-to-date period ended | ||||||||||||||
| (unaudited) | September 28, 2024 | September 30, 2023 | ||||||||||||
| Operating activities | ||||||||||||||
| Net income | $ | 988 | $ | 934 | ||||||||||
| Adjustments to reconcile net income to operating cash flows: | ||||||||||||||
| Depreciation and amortization | 273 | 338 | ||||||||||||
| Impairment of property | 60 | — | ||||||||||||
| Postretirement benefit plan expense (benefit) | (32) | (105) | ||||||||||||
| Deferred income taxes | (13) | — | ||||||||||||
| Stock compensation | 66 | 62 | ||||||||||||
| Loss on Russia divestiture | — | 113 | ||||||||||||
| Other | 19 | 9 | ||||||||||||
| Distribution from postretirement benefit plan | 175 | — | ||||||||||||
| Postretirement benefit plan contributions | (55) | (13) | ||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||||
| Trade receivables | (191) | (229) | ||||||||||||
| Inventories | (16) | 69 | ||||||||||||
| Accounts payable | 144 | (32) | ||||||||||||
| All other current assets and liabilities | (125) | 254 | ||||||||||||
| Net cash provided by (used in) operating activities | 1,293 | 1,400 | ||||||||||||
| Investing activities | ||||||||||||||
| Additions to properties | (440) | (506) | ||||||||||||
| Issuance of notes receivable | — | (4) | ||||||||||||
| Purchases of marketable securities | (301) | — | ||||||||||||
| Sales of marketable securities | 145 | — | ||||||||||||
| Purchases of available for sale securities | — | (15) | ||||||||||||
| Sales of available for sale securities | — | 15 | ||||||||||||
| Settlement of net investment hedges | (7) | 29 | ||||||||||||
| Other | 14 | 9 | ||||||||||||
| Net cash provided by (used in) investing activities | (589) | (472) | ||||||||||||
| Financing activities | ||||||||||||||
| Net issuances (reductions) of notes payable | 12 | (115) | ||||||||||||
| Issuances of long-term debt | 619 | 896 | ||||||||||||
| Reductions of long-term debt | (654) | (227) | ||||||||||||
| Net issuances of common stock | 190 | 51 | ||||||||||||
| Common stock repurchases | — | (60) | ||||||||||||
| Cash dividends | (580) | (610) | ||||||||||||
| Other | (4) | (55) | ||||||||||||
| Net cash provided by (used in) financing activities | (417) | (120) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 8 | (8) | ||||||||||||
| Increase (decrease) in cash and cash equivalents | 295 | 800 | ||||||||||||
| Cash and cash equivalents at beginning of period | 274 | 299 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 569 | $ | 1,099 | ||||||||||
| Kellanova Defined Free Cash Flow: | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | 1,293 | $ | 1,400 | ||||||||||
| Additions to properties | (440) | (506) | ||||||||||||
| Free cash flow (operating cash flow less property additions) (a) | $ | 853 | $ | 894 | ||||||||||
(a) Free cash flow is defined as net cash provided by operating activities less capital expenditures. We use this non-GAAP financial measure to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities and share repurchase.
10
Kellanova and Subsidiaries
CONSOLIDATED BALANCE SHEET
(millions, except per share data)
| September 28, 2024 | December 30, 2023 | |||||||||||||
| (unaudited) | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | 569 | $ | 274 | ||||||||||
| Accounts receivable, net | 1,699 | 1,568 | ||||||||||||
| Inventories | 1,219 | 1,243 | ||||||||||||
| Other current assets | 368 | 245 | ||||||||||||
| Total current assets | 3,855 | 3,330 | ||||||||||||
| Property, net | 3,218 | 3,212 | ||||||||||||
| Operating lease right-of-use assets | 631 | 661 | ||||||||||||
| Goodwill | 5,045 | 5,160 | ||||||||||||
| Other intangibles, net | 1,799 | 1,930 | ||||||||||||
| Investments in unconsolidated entities | 101 | 184 | ||||||||||||
| Other assets | 1,114 | 1,144 | ||||||||||||
| Total assets | $ | 15,763 | $ | 15,621 | ||||||||||
| Current liabilities | ||||||||||||||
| Current maturities of long-term debt | $ | 678 | $ | 663 | ||||||||||
| Notes payable | 124 | 121 | ||||||||||||
| Accounts payable | 2,368 | 2,314 | ||||||||||||
| Current operating lease liabilities | 126 | 121 | ||||||||||||
| Accrued advertising and promotion | 670 | 766 | ||||||||||||
| Accrued salaries and wages | 267 | 278 | ||||||||||||
| Other current liabilities | 742 | 797 | ||||||||||||
| Total current liabilities | 4,975 | 5,060 | ||||||||||||
| Long-term debt | 5,051 | 5,089 | ||||||||||||
| Operating lease liabilities | 502 | 532 | ||||||||||||
| Deferred income taxes | 437 | 497 | ||||||||||||
| Pension liability | 554 | 613 | ||||||||||||
| Other liabilities | 486 | 461 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
| Common stock, $.25 par value | 105 | 105 | ||||||||||||
| Capital in excess of par value | 1,105 | 1,101 | ||||||||||||
| Retained earnings | 9,195 | 8,804 | ||||||||||||
| Treasury stock, at cost | (4,557) | (4,794) | ||||||||||||
| Accumulated other comprehensive income (loss) | (2,198) | (2,041) | ||||||||||||
| Total Kellanova equity | 3,650 | 3,175 | ||||||||||||
| Noncontrolling interests | 108 | 194 | ||||||||||||
| Total equity | 3,758 | 3,369 | ||||||||||||
| Total liabilities and equity | $ | 15,763 | $ | 15,621 | ||||||||||
11
Kellanova and Subsidiaries
Exhibit 1
Adjustments to Reconcile Reported Results to Currency-Neutral Adjusted Results
(millions, except per share data)
| Quarter ended September 28, 2024 | |||||||||||||||||||||||||||||
| (Results are unaudited) | Cost of goods sold | Selling, general and administrative expense | Operating profit | Interest expense | Other income (expense) | Income taxes | Earnings (loss) from unconsolidated entities and noncontrolling interests | Total adjustments | Per share amount: Diluted | ||||||||||||||||||||
| Mark-to-market (pre-tax) | $ | (61) | $ | 1 | $ | 60 | $ | — | $ | — | $ | — | $ | — | $ | 60 | $ | 0.17 | |||||||||||
| Separation costs (pre-tax) | 6 | 4 | (10) | — | — | — | — | (10) | (0.03) | ||||||||||||||||||||
| Network optimization (pre-tax) | 12 | — | (12) | — | — | — | — | (12) | (0.03) | ||||||||||||||||||||
| Proposed merger costs (pre-tax) | — | 22 | (22) | — | — | — | — | (22) | (0.06) | ||||||||||||||||||||
| Business and portfolio realignment (pre-tax) | — | 2 | (2) | — | — | — | — | (2) | (0.01) | ||||||||||||||||||||
| Income tax impact applicable to adjustments, net* | — | — | — | — | — | 5 | — | (5) | (0.02) | ||||||||||||||||||||
| Domestic tax benefit | — | — | — | — | — | (41) | — | 41 | 0.12 | ||||||||||||||||||||
| Foreign currency impact | (183) | (25) | (12) | 2 | (2) | (6) | 3 | (3) | (0.01) | ||||||||||||||||||||
| Adjustments to adjusted basis | $ | (226) | $ | 4 | $ | 2 | $ | 2 | $ | (2) | $ | (42) | $ | 3 | $ | 47 | $ | 0.13 | |||||||||||
| Quarter ended September 30, 2023 | |||||||||||||||||||||||||||||
| (Results are unaudited) | Cost of goods sold | Selling, general and administrative expense | Operating profit | Interest expense | Other income (expense) | Income taxes | Earnings (loss) from unconsolidated entities and noncontrolling interests | Total adjustments | Per share amount: Diluted | ||||||||||||||||||||
| Mark-to-market (pre-tax) | $ | (39) | $ | (1) | $ | 40 | $ | — | $ | 25 | $ | — | $ | — | $ | 64 | $ | 0.19 | |||||||||||
| Separation costs (pre-tax) | — | 6 | (6) | — | — | — | — | (6) | (0.02) | ||||||||||||||||||||
| Business and portfolio realignment (pre-tax) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
| Loss on divestiture (pre-tax) | — | — | — | — | (113) | — | — | (113) | (0.33) | ||||||||||||||||||||
| Income tax impact applicable to adjustments, net* | — | — | — | — | — | 13 | — | (13) | (0.04) | ||||||||||||||||||||
| Adjustments to adjusted basis | $ | (39) | $ | 5 | $ | 34 | $ | — | $ | (88) | $ | 13 | $ | — | $ | (68) | $ | (0.20) | |||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
*Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.
12
Kellanova and Subsidiaries
Exhibit 2
Adjustments to Reconcile Reported Results to Currency-Neutral Adjusted Results
(millions, except per share data)
| Year-to-date period ended September 28, 2024 | |||||||||||||||||||||||||||||
| (Results are unaudited) | Cost of goods sold | Selling, general and administrative expense | Operating profit | Interest expense | Other income (expense) | Income taxes | Earnings (loss) from unconsolidated entities and noncontrolling interests | Total adjustments | Per share amount: Diluted | ||||||||||||||||||||
| Mark-to-market (pre-tax) | $ | (58) | $ | (11) | $ | 69 | $ | — | $ | 13 | $ | — | $ | — | $ | 82 | $ | 0.24 | |||||||||||
| Separation costs (pre-tax) | 9 | 20 | (29) | — | — | — | — | (29) | (0.08) | ||||||||||||||||||||
| Network optimization (pre-tax) | 121 | — | (121) | — | — | — | — | (121) | (0.35) | ||||||||||||||||||||
| Proposed merger costs (pre-tax) | — | 22 | (22) | — | — | — | — | (22) | (0.06) | ||||||||||||||||||||
| Business and portfolio realignment (pre-tax) | — | 6 | (6) | — | — | — | — | (6) | (0.03) | ||||||||||||||||||||
| Income tax impact applicable to adjustments, net* | — | — | — | — | — | (20) | — | 20 | 0.06 | ||||||||||||||||||||
| Domestic tax benefit | — | — | — | — | — | (41) | — | 41 | 0.12 | ||||||||||||||||||||
| Foreign currency impact | (657) | (88) | (41) | 9 | (23) | (21) | 16 | (19) | (0.06) | ||||||||||||||||||||
| Adjustments to adjusted basis | $ | (585) | $ | (51) | $ | (151) | $ | 9 | $ | (10) | $ | (81) | $ | 16 | $ | (54) | $ | (0.16) | |||||||||||
| Year-to-date period ended September 30, 2023 | |||||||||||||||||||||||||||||
| (Results are unaudited) | Cost of goods sold | Selling, general and administrative expense | Operating profit | Interest Expense | Other income (expense) | Income taxes | Earnings (loss) from unconsolidated entities and noncontrolling interests | Total adjustments | Per share amount: Diluted | ||||||||||||||||||||
| Mark-to-market (pre-tax) | $ | 30 | $ | 4 | $ | (34) | $ | — | $ | 24 | $ | — | $ | — | $ | (10) | $ | (0.03) | |||||||||||
| Separation costs (pre-tax) | — | 14 | (14) | — | — | — | — | (14) | (0.04) | ||||||||||||||||||||
| Business and portfolio realignment (pre-tax) | — | 1 | (1) | — | — | — | — | (1) | — | ||||||||||||||||||||
| Loss on divestiture (pre-tax) | — | — | — | — | (113) | — | — | (113) | (0.33) | ||||||||||||||||||||
| Income tax impact applicable to adjustments, net* | — | — | — | — | — | (14) | — | 14 | 0.04 | ||||||||||||||||||||
| Adjustments to adjusted basis | $ | 30 | $ | 18 | $ | (49) | $ | — | $ | (88) | $ | (14) | $ | — | $ | (125) | $ | (0.36) | |||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
*Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.
13
Kellanova and Subsidiaries
Exhibit 3
Reconciliation of Non-GAAP Amounts - Reported Net Sales to Organic Net Sales
| Quarter ended September 28, 2024 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported net sales | $ | 1,673 | $ | 660 | $ | 311 | $ | 590 | $ | (1) | $ | 3,233 | ||||||||||||||||||||||||||
| Foreign currency impact | — | 22 | (32) | (209) | — | (219) | ||||||||||||||||||||||||||||||||
| Organic net sales | $ | 1,673 | $ | 638 | $ | 343 | $ | 799 | $ | (1) | $ | 3,452 | ||||||||||||||||||||||||||
| Quarter ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported net sales | $ | 1,654 | $ | 616 | $ | 329 | $ | 657 | $ | (1) | $ | 3,255 | ||||||||||||||||||||||||||
| Divestitures | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Organic net sales | $ | 1,654 | $ | 616 | $ | 329 | $ | 657 | $ | (1) | $ | 3,255 | ||||||||||||||||||||||||||
| % change - 2024 vs. 2023: | ||||||||||||||||||||||||||||||||||||||
| Reported growth | 1.1 | % | 7.2 | % | (5.5) | % | (10.2) | % | n/m | (0.7) | % | |||||||||||||||||||||||||||
| Foreign currency impact | (0.1) | % | 3.6 | % | (9.6) | % | (31.8) | % | n/m | (6.8) | % | |||||||||||||||||||||||||||
| Currency-neutral growth | 1.2 | % | 3.6 | % | 4.1 | % | 21.6 | % | n/m | 6.1 | % | |||||||||||||||||||||||||||
| Divestitures | — | % | — | % | — | % | — | % | n/m | — | % | |||||||||||||||||||||||||||
| Organic growth | 1.2 | % | 3.6 | % | 4.1 | % | 21.6 | % | n/m | 6.1 | % | |||||||||||||||||||||||||||
| Volume (tonnage) | (0.5) | % | (1.4) | % | 3.6 | % | 0.2 | % | n/m | 0.1 | % | |||||||||||||||||||||||||||
| Pricing/mix | 1.7 | % | 5.0 | % | 0.5 | % | 21.4 | % | n/m | 6.0 | % | |||||||||||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
14
Kellanova and Subsidiaries
Exhibit 4
Reconciliation of Non-GAAP Amounts - Reported Net Sales to Organic Net Sales
| Year-to-date period ended September 28, 2024 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported net sales | $ | 5,019 | $ | 1,898 | $ | 958 | $ | 1,754 | $ | (4) | $ | 9,625 | ||||||||||||||||||||||||||
| Foreign currency impact | (2) | 24 | (20) | (788) | — | (786) | ||||||||||||||||||||||||||||||||
| Organic net sales | $ | 5,021 | $ | 1,874 | $ | 978 | $ | 2,542 | $ | (4) | $ | 10,411 | ||||||||||||||||||||||||||
| Year-to-date period ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported net sales | $ | 4,985 | $ | 1,888 | $ | 938 | $ | 2,139 | $ | (2) | $ | 9,948 | ||||||||||||||||||||||||||
| Divestitures | — | 48 | — | — | — | 48 | ||||||||||||||||||||||||||||||||
| Organic net sales | $ | 4,985 | $ | 1,840 | $ | 938 | $ | 2,139 | $ | (2) | $ | 9,900 | ||||||||||||||||||||||||||
| % change - 2024 vs. 2023: | ||||||||||||||||||||||||||||||||||||||
| Reported growth | 0.7 | % | 0.5 | % | 2.2 | % | (18.0) | % | n/m | (3.2) | % | |||||||||||||||||||||||||||
| Foreign currency impact | — | % | 1.3 | % | (2.1) | % | (36.8) | % | n/m | (7.9) | % | |||||||||||||||||||||||||||
| Currency-neutral growth | 0.7 | % | (0.8) | % | 4.3 | % | 18.8 | % | n/m | 4.7 | % | |||||||||||||||||||||||||||
| Divestitures | — | % | (2.6) | % | — | % | — | % | n/m | (0.5) | % | |||||||||||||||||||||||||||
| Organic growth | 0.7 | % | 1.8 | % | 4.3 | % | 18.8 | % | n/m | 5.2 | % | |||||||||||||||||||||||||||
| Volume (tonnage) | (1.2) | % | (5.0) | % | 2.0 | % | (3.8) | % | n/m | (2.3) | % | |||||||||||||||||||||||||||
| Pricing/mix | 1.9 | % | 6.8 | % | 2.3 | % | 22.6 | % | n/m | 7.5 | % | |||||||||||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
15
Kellanova and Subsidiaries
Exhibit 5
Reconciliation of Non-GAAP Amounts - Reported Gross Profit to Currency-Neutral Adjusted Gross Profit
| Quarter ended | Year-to-date period ended | |||||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | |||||||||||||||||||||||
| Reported gross profit | $ | 1,176 | $ | 1,110 | $ | 3,367 | $ | 3,188 | ||||||||||||||||||
Mark-to-market | 61 | 39 | 58 | (30) | ||||||||||||||||||||||
| Separation costs | (6) | — | (9) | — | ||||||||||||||||||||||
| Network optimization | (12) | — | (121) | — | ||||||||||||||||||||||
Business and portfolio realignment | — | — | — | — | ||||||||||||||||||||||
| Adjusted gross profit | 1,133 | 1,071 | 3,439 | 3,218 | ||||||||||||||||||||||
Foreign currency impact | (36) | — | (130) | — | ||||||||||||||||||||||
| Currency-neutral adjusted gross profit | $ | 1,169 | $ | 1,071 | $ | 3,569 | $ | 3,218 | ||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
Kellanova and Subsidiaries
Exhibit 6
Reconciliation of Non-GAAP Amounts - Reported Gross Margin to Currency-Neutral Adjusted Gross Margin
| Quarter ended | Year-to-date period ended | |||||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | |||||||||||||||||||||||
| Reported gross margin | 36.4 | % | 34.1 | % | 35.0 | % | 32.0 | % | ||||||||||||||||||
Mark-to-market | 1.9 | % | 1.2 | % | 0.6 | % | (0.3) | % | ||||||||||||||||||
| Separation costs | (0.2) | % | — | % | (0.1) | % | — | % | ||||||||||||||||||
| Network optimization | (0.3) | % | — | % | (1.2) | % | — | % | ||||||||||||||||||
Business and portfolio realignment | — | % | — | % | — | % | — | % | ||||||||||||||||||
| Adjusted gross margin | 35.0 | % | 32.9 | % | 35.7 | % | 32.3 | % | ||||||||||||||||||
Foreign currency impact | 1.1 | % | — | % | 1.4 | % | — | % | ||||||||||||||||||
| Currency-neutral adjusted gross margin | 33.9 | % | 32.9 | % | 34.3 | % | 32.3 | % | ||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
16
Kellanova and Subsidiaries
Exhibit 7
Reconciliation of Non-GAAP Amounts - Reported Operating Profit to Currency-Neutral Adjusted Operating Profit
| Quarter ended September 28, 2024 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported operating profit | $ | 297 | $ | 101 | $ | 29 | $ | 65 | $ | (36) | $ | 456 | ||||||||||||||||||||||||||
| Mark-to-market | — | — | (2) | — | 62 | 60 | ||||||||||||||||||||||||||||||||
| Separation costs | (9) | — | — | — | (1) | (10) | ||||||||||||||||||||||||||||||||
| Network optimization | (7) | (5) | — | — | — | (12) | ||||||||||||||||||||||||||||||||
| Proposed merger costs | — | — | — | — | (22) | (22) | ||||||||||||||||||||||||||||||||
| Business and portfolio realignment | — | — | — | (1) | (1) | (2) | ||||||||||||||||||||||||||||||||
| Adjusted operating profit | $ | 312 | $ | 106 | $ | 31 | $ | 66 | $ | (74) | $ | 441 | ||||||||||||||||||||||||||
| Foreign currency impact | — | 4 | (3) | (13) | — | (12) | ||||||||||||||||||||||||||||||||
| Currency-neutral adjusted operating profit | $ | 312 | $ | 102 | $ | 34 | $ | 79 | $ | (74) | $ | 453 | ||||||||||||||||||||||||||
| Quarter ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported operating profit | $ | 240 | $ | 97 | $ | 40 | $ | 63 | $ | (26) | $ | 414 | ||||||||||||||||||||||||||
| Mark-to-market | — | — | 3 | — | 37 | 40 | ||||||||||||||||||||||||||||||||
| Separation costs | (5) | — | (1) | — | — | (6) | ||||||||||||||||||||||||||||||||
| Business and portfolio realignment | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Adjusted operating profit | $ | 245 | $ | 97 | $ | 38 | $ | 63 | $ | (63) | $ | 380 | ||||||||||||||||||||||||||
| % change - 2024 vs. 2023: | ||||||||||||||||||||||||||||||||||||||
| Reported growth | 23.6 | % | 3.8 | % | (25.9) | % | 4.9 | % | (39.1) | % | 10.3 | % | ||||||||||||||||||||||||||
| Mark-to-market | — | % | — | % | (9.9) | % | — | % | 15.9 | % | 4.3 | % | ||||||||||||||||||||||||||
| Separation costs | (1.1) | % | — | % | 1.8 | % | — | % | (2.1) | % | (1.0) | % | ||||||||||||||||||||||||||
| Network optimization | (2.7) | % | (5.1) | % | — | % | — | % | — | % | (3.1) | % | ||||||||||||||||||||||||||
| Proposed merger costs | — | % | — | % | — | % | — | % | (33.9) | % | (5.6) | % | ||||||||||||||||||||||||||
| Business and portfolio realignment | — | % | — | % | — | % | (1.0) | % | (1.1) | % | (0.4) | % | ||||||||||||||||||||||||||
| Adjusted growth | 27.4 | % | 8.9 | % | (17.8) | % | 5.9 | % | (17.9) | % | 16.1 | % | ||||||||||||||||||||||||||
| Foreign currency impact | — | % | 4.0 | % | (7.6) | % | (20.6) | % | (0.6) | % | (3.3) | % | ||||||||||||||||||||||||||
| Currency-neutral adjusted growth | 27.4 | % | 4.9 | % | (10.2) | % | 26.5 | % | (17.3) | % | 19.4 | % | ||||||||||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
17
Kellanova and Subsidiaries
Exhibit 8
Reconciliation of Non-GAAP Amounts - Reported Operating Profit to Currency-Neutral Adjusted Operating Profit
| Year-to-date period ended September 28, 2024 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported operating profit | $ | 971 | $ | 240 | $ | 102 | $ | 200 | $ | (171) | $ | 1,342 | ||||||||||||||||||||||||||
| Mark-to-market | — | — | 3 | — | 66 | 69 | ||||||||||||||||||||||||||||||||
| Separation costs | (24) | — | — | — | (5) | (29) | ||||||||||||||||||||||||||||||||
| Network optimization | (47) | (74) | — | — | — | (121) | ||||||||||||||||||||||||||||||||
| Proposed merger costs | — | — | — | — | (22) | (22) | ||||||||||||||||||||||||||||||||
| Business and portfolio realignment | (4) | — | — | (1) | (1) | (6) | ||||||||||||||||||||||||||||||||
| Adjusted operating profit | $ | 1,046 | $ | 314 | $ | 99 | $ | 201 | $ | (209) | $ | 1,451 | ||||||||||||||||||||||||||
| Foreign currency impact | — | 6 | — | (47) | — | (41) | ||||||||||||||||||||||||||||||||
| Currency-neutral adjusted operating profit | $ | 1,046 | $ | 308 | $ | 99 | $ | 248 | $ | (209) | $ | 1,492 | ||||||||||||||||||||||||||
| Year-to-date period ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
| (millions) | North America | Europe | Latin America | AMEA | Corporate | Kellanova Consolidated | ||||||||||||||||||||||||||||||||
| Reported operating profit | $ | 789 | $ | 293 | $ | 98 | $ | 204 | $ | (207) | $ | 1,177 | ||||||||||||||||||||||||||
| Mark-to-market | — | — | (2) | — | (32) | (34) | ||||||||||||||||||||||||||||||||
| Separation costs | (13) | — | (1) | — | — | (14) | ||||||||||||||||||||||||||||||||
| Business and portfolio realignment | — | — | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||
| Adjusted operating profit | $ | 802 | $ | 293 | $ | 102 | $ | 204 | $ | (175) | $ | 1,226 | ||||||||||||||||||||||||||
| % change - 2024 vs. 2023: | ||||||||||||||||||||||||||||||||||||||
| Reported growth | 23.1 | % | (18.3) | % | 3.6 | % | (1.6) | % | 17.0 | % | 13.9 | % | ||||||||||||||||||||||||||
| Mark-to-market | — | % | — | % | 6.1 | % | — | % | 51.9 | % | 8.8 | % | ||||||||||||||||||||||||||
| Separation costs | (1.1) | % | — | % | 1.4 | % | — | % | (2.8) | % | (1.1) | % | ||||||||||||||||||||||||||
| Network optimization | (5.9) | % | (25.3) | % | — | % | — | % | — | % | (9.8) | % | ||||||||||||||||||||||||||
| Proposed merger costs | — | % | — | % | — | % | — | % | (12.3) | % | (1.8) | % | ||||||||||||||||||||||||||
| Business and portfolio realignment | (0.4) | % | (0.1) | % | — | % | (0.3) | % | (0.2) | % | (0.5) | % | ||||||||||||||||||||||||||
| Adjusted growth | 30.5 | % | 7.1 | % | (3.9) | % | (1.3) | % | (19.6) | % | 18.3 | % | ||||||||||||||||||||||||||
| Foreign currency impact | — | % | 1.8 | % | (0.4) | % | (23.0) | % | 0.2 | % | (3.4) | % | ||||||||||||||||||||||||||
| Currency-neutral adjusted growth | 30.5 | % | 5.3 | % | (3.5) | % | 21.7 | % | (19.8) | % | 21.7 | % | ||||||||||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
18
Kellanova and Subsidiaries
Exhibit 9
Reconciliation of Non-GAAP Amounts - Reported Operating Margin to Currency-Neutral Adjusted Operating Margin
| Quarter ended | Year ended | |||||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | |||||||||||||||||||||||
| Reported operating margin | 14.1 | % | 12.7 | % | 13.9 | % | 11.8 | % | ||||||||||||||||||
Mark-to-market | 1.9 | % | 1.2 | % | 0.7 | % | (0.4) | % | ||||||||||||||||||
| Separation costs | (0.3) | % | (0.2) | % | (0.3) | % | (0.1) | % | ||||||||||||||||||
| Network optimization | (0.4) | % | — | % | (1.2) | % | — | % | ||||||||||||||||||
| Proposed merger costs | (0.6) | % | — | % | (0.3) | % | — | % | ||||||||||||||||||
Business and portfolio realignment | (0.1) | % | — | % | (0.1) | % | — | % | ||||||||||||||||||
| Adjusted operating margin | 13.6 | % | 11.7 | % | 15.1 | % | 12.3 | % | ||||||||||||||||||
Foreign currency impact | 0.5 | % | — | % | 0.8 | % | — | % | ||||||||||||||||||
| Currency-neutral adjusted operating margin | 13.1 | % | 11.7 | % | 14.3 | % | 12.3 | % | ||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
Kellanova and Subsidiaries
Exhibit 10
Reconciliation of Non-GAAP Amounts - Reported Other Income (Expense) to Adjusted Other Income (Expense)
| Quarter ended | Year-to-date period ended | ||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | ||||||||||||||||||||
| Reported other income (expense) | $ | 21 | $ | (62) | $ | 97 | $ | (17) | |||||||||||||||
| Mark-to-market | — | 25 | 13 | 24 | |||||||||||||||||||
| Loss on divestiture (pre-tax) | — | (113) | — | (113) | |||||||||||||||||||
| Adjusted other income (expense) | $ | 21 | $ | 26 | $ | 84 | $ | 72 | |||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
19
Kellanova and Subsidiaries
Exhibit 11
Reconciliation of Non-GAAP Amounts - Reported Income Taxes to Adjusted Income Taxes and Reported Effective Tax Rate to Adjusted Effective Tax Rate
| Quarter ended | Year-to-date period ended | |||||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | |||||||||||||||||||||||
| Reported income taxes | $ | 34 | $ | 78 | $ | 213 | $ | 216 | ||||||||||||||||||
Mark-to-market | 15 | 16 | 21 | (2) | ||||||||||||||||||||||
| Separation costs | (2) | (3) | (6) | (14) | ||||||||||||||||||||||
| Network optimization | (3) | — | (29) | — | ||||||||||||||||||||||
| Proposed merger costs | (5) | — | (5) | — | ||||||||||||||||||||||
| Business and portfolio realignment | — | — | (1) | 3 | ||||||||||||||||||||||
| Loss on divestiture | — | — | — | — | ||||||||||||||||||||||
| Domestic tax benefit | (41) | — | (41) | — | ||||||||||||||||||||||
| Adjusted income taxes | $ | 70 | $ | 65 | $ | 274 | $ | 229 | ||||||||||||||||||
| Reported effective tax rate | 8.6 | % | 28.2 | % | 17.8 | % | 23.0 | % | ||||||||||||||||||
Mark-to-market | 3.0 | % | (0.9) | % | 0.6 | % | — | % | ||||||||||||||||||
| Separation costs | (0.1) | % | (0.7) | % | — | % | (1.1) | % | ||||||||||||||||||
| Network optimization | (0.2) | % | — | % | (0.3) | % | — | % | ||||||||||||||||||
| Proposed merger costs | (0.3) | % | — | % | — | % | — | % | ||||||||||||||||||
| Business and portfolio realignment | 0.2 | % | — | % | — | % | 0.4 | % | ||||||||||||||||||
| Loss on divestiture | — | % | 10.2 | % | — | % | 2.5 | % | ||||||||||||||||||
| Domestic tax benefit | (12.1) | % | — | % | (3.7) | % | — | % | ||||||||||||||||||
| Adjusted effective tax rate | 18.1 | % | 19.6 | % | 21.2 | % | 21.2 | % | ||||||||||||||||||
Note: Tables may not foot due to rounding
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
Kellanova and Subsidiaries
Exhibit 12
Reconciliation of Non-GAAP Amounts - Reported Diluted Earnings Per Share to Currency-Neutral Adjusted Diluted Earnings Per Share
| Quarter ended | Year-to-date period ended | ||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | September 28, 2024 | September 30, 2023 | ||||||||||||||||||||
| Reported EPS from continuing operations | $ | 1.05 | $ | 0.57 | $ | 2.83 | $ | 2.09 | |||||||||||||||
| Mark-to-market (pre-tax) | 0.17 | 0.19 | 0.24 | (0.03) | |||||||||||||||||||
| Separation costs (pre-tax) | (0.03) | (0.02) | (0.08) | (0.04) | |||||||||||||||||||
| Network optimization (pre-tax) | (0.03) | — | (0.35) | — | |||||||||||||||||||
| Proposed merger costs | (0.06) | — | (0.06) | — | |||||||||||||||||||
| Business and portfolio realignment (pre-tax) | (0.01) | — | (0.03) | — | |||||||||||||||||||
| Loss on divestiture (pre-tax) | — | (0.33) | — | (0.33) | |||||||||||||||||||
| Income tax impact applicable to adjustments, net* | (0.02) | (0.04) | 0.06 | 0.04 | |||||||||||||||||||
| Domestic tax benefit | 0.12 | — | 0.12 | — | |||||||||||||||||||
| Adjusted EPS from continuing operations | $ | 0.91 | $ | 0.77 | $ | 2.93 | $ | 2.45 | |||||||||||||||
| Foreign currency impact | (0.01) | — | (0.06) | — | |||||||||||||||||||
| Currency-neutral adjusted EPS from continuing operations | $ | 0.92 | $ | 0.77 | $ | 2.99 | $ | 2.45 | |||||||||||||||
| Currency-neutral adjusted EPS growth | 19.5 | % | 22.0 | % | |||||||||||||||||||
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.
*Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.
20
Kellanova and Subsidiaries
Exhibit 13
Reconciliation of Non-GAAP Amounts - Reported Net Sales Growth to Organic Net Sales Growth
| Net sales % change - third quarter 2024 vs. 2023: | |||||||||||||||||
| Reported Net Sales | Foreign Currency | Currency-Neutral Net Sales | Divestitures | Organic Net Sales | |||||||||||||
| North America | |||||||||||||||||
| Snacks | 1.8 | % | — | % | 1.8 | % | — | % | 1.8 | % | |||||||
| Frozen | (2.3) | % | (0.1) | % | (2.2) | % | — | % | (2.2) | % | |||||||
| Europe | |||||||||||||||||
| Snacks | 10.0 | % | 3.5 | % | 6.5 | % | — | % | 6.5 | % | |||||||
| Cereal | 3.6 | % | 3.4 | % | 0.2 | % | — | % | 0.2 | % | |||||||
| Latin America | |||||||||||||||||
| Snacks | (4.7) | % | (9.3) | % | 4.6 | % | — | % | 4.6 | % | |||||||
| Cereal | (6.2) | % | (9.9) | % | 3.7 | % | — | % | 3.7 | % | |||||||
| AMEA | |||||||||||||||||
| Snacks | (8.2) | % | (3.4) | % | (4.8) | % | — | % | (4.8) | % | |||||||
| Cereal | (0.9) | % | (2.3) | % | 1.4 | % | — | % | 1.4 | % | |||||||
| Noodles and other | (19.8) | % | (78.7) | % | 58.9 | % | — | % | 58.9 | % | |||||||
Kellanova and Subsidiaries
Exhibit 14
Reconciliation of Non-GAAP Amounts - Reported Net Sales Growth to Organic Net Sales Growth
| Net sales % change - third quarter year-to-date 2024 vs. 2023: | |||||||||||||||||
| Reported Net Sales | Foreign Currency | Currency-Neutral Net Sales | Divestitures | Organic Net Sales | |||||||||||||
| North America | |||||||||||||||||
| Snacks | 1.0 | % | (0.1) | % | 1.1 | % | — | % | 1.1 | % | |||||||
| Frozen | (1.3) | % | (0.1) | % | (1.2) | % | — | % | (1.2) | % | |||||||
| Europe | |||||||||||||||||
| Snacks | 2.1 | % | 1.1 | % | 1.0 | % | (2.7) | % | 3.7 | % | |||||||
| Cereal | (1.5) | % | 1.4 | % | (2.9) | % | (2.4) | % | (0.5) | % | |||||||
| Latin America | |||||||||||||||||
| Snacks | (0.7) | % | (3.3) | % | 2.6 | % | — | % | 2.6 | % | |||||||
| Cereal | 4.1 | % | (1.4) | % | 5.5 | % | — | % | 5.5 | % | |||||||
| AMEA | |||||||||||||||||
| Snacks | (2.7) | % | (5.7) | % | 3.0 | % | — | % | 3.0 | % | |||||||
| Cereal | (4.5) | % | (5.8) | % | 1.3 | % | — | % | 1.3 | % | |||||||
| Noodles and other | (36.7) | % | (77.4) | % | 40.7 | % | — | % | 40.7 | % | |||||||
21
Kellanova and Subsidiaries
Exhibit 15
Reconciliation of Non-GAAP Amounts - Net Debt
| (millions, unaudited) | September 28, 2024 | December 31, 2023 | ||||||||||||
| Notes payable | $ | 124 | $ | 121 | ||||||||||
| Current maturities of long-term debt | 678 | 663 | ||||||||||||
| Long-term debt | 5,051 | 5,089 | ||||||||||||
| Total debt liabilities | 5,853 | 5,873 | ||||||||||||
| Less: | ||||||||||||||
| Cash and cash equivalents | (569) | (274) | ||||||||||||
| Net debt | $ | 5,284 | $ | 5,599 | ||||||||||
22
Significant items impacting comparability
Mark-to-market
We recognize mark-to-market adjustments for pension and postretirement benefit plans, commodity contracts, and certain foreign currency contracts as incurred. Actuarial gains/losses for pension plans are recognized in the year they occur. Mark-to-market gains/losses for certain equity investments are recorded based on observable price changes. Changes between contract and market prices for commodity contracts and certain foreign currency contracts result in gains/losses that are recognized in the quarter they occur. We recorded a pre-tax mark-to-market gain of $60 million and $82 million for the quarter and year-to-date period ended September 28, 2024, respectively. Included within the aforementioned was a pre-tax mark-to-market gain for a postretirement plan remeasurement of $13 million for the year-to-date period ended September 28, 2024. Additionally, we recorded a pre-tax mark-to-market loss of $64 million and a pre-tax mark-to-market gain of $10 million for the quarter and year-to-date period ended September 30, 2023, respectively. Included within the aforementioned was a pre-tax mark-to-market gain for a postretirement plan remeasurement of $24 million for the year-to-date period ended September 30, 2023.
Separation costs
The Company successfully completed the separation transaction on October 2, 2023. We incurred pre-tax charges related to the separation of $10 million and $29 million for the quarter and year-to-date period ended September 28, 2024, respectively. We recorded $6 million and $14 million for the quarter and year-to-date period ended September 30, 2023, respectively.
Network optimization
Costs related to reorganizations to increase the productivity and efficiency of the Company's supply chain. As a result, we incurred pre-tax charges, primarily related to severance and asset impairment, of $12 million and $121 million for the quarter and year-to-date period ended September 28, 2024, respectively.
Proposed merger costs
In August 2024, the Company entered into a definitive agreement under which Mars has agreed to acquire Kellanova, subject to customary closing conditions, including approval of the Company's shareowners and the receipt of required regulatory approvals. In conjunction with the agreement, we incurred pre-tax charges, primarily related to legal and consulting costs, of $22 million for the quarter and year-to-date period ended September 28, 2024.
Business and portfolio realignment
Costs related to reorganizations in support of our Deploy for Growth priorities and a reshaped portfolio; investments in enhancing capabilities prioritized by our Deploy for Growth strategy; and prospective divestitures and acquisitions. As a result, we recorded pre-tax charges, primarily related to reorganizations, of $2 million and $6 million for the quarter and year-to-date period ended September 28, 2024, respectively. Additionally, we recorded pre-tax charges of $1 million for the year-to-date period ended September 30, 2023.
Domestic tax benefit
In September 2024, the Company entered into an agreement to sell a foreign subsidiary in Egypt. In conjunction with the agreement, we recognized a tax benefit of $41 million for the quarter and year-to-date period ended September 28, 2024, related to the excess of tax basis over book on our investment in the subsidiary.
Loss related to divestiture
In July 2023, the Company completed the sale of the Russian business. As a result of completing the transaction, the Company recorded a non-cash loss on the transaction of approximately $113 million, primarily related to the release of historical currency translation adjustments.
Foreign currency translation
We evaluate the operating results of our business on a currency-neutral basis. We determine currency-neutral operating results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.
23