| Kellanova | |||||
| 财经资讯发布 | |||||
| 分析师联络方式： | |||||
| 约翰·伦威克，特许金融分析师 (269) 961-9050 | |||||
| 马克西姆·克莱蒙，(269) 660-4224 | |||||
| 媒体联系人: | |||||
| 克里斯·巴纳，(269) 961-3799 | |||||
家乐氏宣布强劲的第三季业绩
芝加哥，伊利诺州 - 2024年10月31日 - 家乐氏 (纽交所: K) 今天宣布了2024年第三季度的业绩。
待处理交易:
根据2024年8月14日宣布，家乐氏公司、一家家族所有的全球领先宠物护理、零食和食品公司，与全球零食、国际谷物和面条、北美植物基食品以及冷冻早餐食品领先公司家乐氏达成明确协议，根据协议，家乐氏将以每股83.50美元现金收购家乐氏。股东将在2024年11月1日就此提议的收购进行投票。该交易需要经过家乐氏股东批准以及其他习惯性的结束条件，包括监管批准，预计将在2025年上半年完成。
季度要点：
•第三季度净销售额受不利的货币转换影响，但公司的有机基础增长率超过了其长期目标区间。
•公司持续维持双位数营业利润增长，并且继续比预期更快地提升利润率。
•每股盈利持续保持双位数增长势头，这要归功于较高的营业利润。
•由于即将与Mars, Incorporated合并，家乐氏将不再提供前瞻性指引。
「我们强劲的第三季业绩再次反映了我们作为家乐氏更注重成长和盈利的组合的策略，“家乐氏的董事长，总裁，和首席执行官Steve Cahillane评论说。“这个表现也证明了一个家乐氏组织的才华和参与度，这个组织正在高水平地执行，为我们作为全球货币快速食品领域的一部分，与Mars一同迎接令人兴奋的下一个篇章做好准备。」
1
| 财务摘要: | 季度结束 | 截至年初至今累计期间结束 | ||||||||||||||||||||||||||||||||||||
| (以百万为单位，每股数据除外) | 2024年9月28日 | 2023年9月30日 | % 变化 | 2024年9月28日 | 2023年9月30日 | % 变化 | ||||||||||||||||||||||||||||||||
| 已报告净销售额 | $ | 3,233 | $ | 3,255 | (0.7) | % | $ | 9,625 | $ | 9,948 | (3.2) | % | ||||||||||||||||||||||||||
| 有机净销售* | $ | 3,452 | $ | 3,255 | 6.1 | % | $ | 10,411 | $ | 9,900 | 5.2 | % | ||||||||||||||||||||||||||
| 已报告营业利润 | $ | 456 | $ | 414 | 10.3 | % | $ | 1,342 | $ | 1,177 | 13.9 | % | ||||||||||||||||||||||||||
| 调整后营业利润* | $ | 441 | $ | 380 | 16.1 | % | $ | 1,451 | $ | 1,226 | 18.3 | % | ||||||||||||||||||||||||||
| 货币中立调整后营业利润* | $ | 453 | $ | 380 | 19.4 | % | $ | 1,492 | $ | 1,226 | 21.7 | % | ||||||||||||||||||||||||||
| 已报告每股稀释盈利 | $ | 1.05 | $ | 0.57 | 84.2 | % | $ | 2.83 | $ | 2.09 | 35.4 | % | ||||||||||||||||||||||||||
| 调整后稀释每股盈利 * | $ | 0.91 | $ | 0.77 | 18.2 | % | $ | 2.93 | $ | 2.45 | 19.6 | % | ||||||||||||||||||||||||||
| 汇率中立调整后稀释每股盈利 * | $ | 0.92 | $ | 0.77 | 19.5 | % | $ | 2.99 | $ | 2.45 | 22.0 | % | ||||||||||||||||||||||||||
* 依非通用会计原则之财务指标。有关该措施的重要资讯，请参阅本公告中的「非通用会计财务措施」部分和「非通用金额调整对照表」。
第三季度综合结果
2024年第三季度GAAP（或“报告”） 净销售 按年计算，由于显著不利的外汇汇率抵销了价格/混合和成交量的增加，2024年第三季度公司的净销售额减少了1%。在不考虑汇率影响的有机基础上，公司的净销售额增加了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%。 净销售 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%。
报告 营业利润 在第三季度，由于网罗有利的净公允价值摆荡、毛利率持续改善以及对Kellogg Co提供过渡服务的费用补偿，部分抵销了与网络优化项目和拟议的Mars合并有关的直接费用的情况下，营业利润同比增长了10%。根据不含公允价值标记和一次性费用的调整基准，营业利润增长了16%，并且在排除货币转换因素后，营业利润增长了19%。
全年前九个月，报告 营业利润 按年增长 14%，反映毛利率改善、市场净值正面，以及向 Wk Kellogg Co 提供的过渡服务的补偿，部分由网络优化项目有关的前期费用抵销。经调整后，营业利润增加了 18%，不包括货币换算，增加了 22%。
报告 每股盈利 第三季度由于营业利润增加和一次性税项积极变动，纯利润同比增长84％。损益平稳后，调整后每股收益增长18％，调整后每股收益不考虑货币兑换同比增长19％。
截至今年前九个月，每股报告收益同比增长35%。 由于更高的营业利润和一次性税收项目正面影响，抵消了较高的利息费用。在调整后的基础上，每股调整后营业收益增长了20%，并且在不考虑货币转换的情况下，调整后每股收益增长了22%。
年初至今营运活动产生的自由现金流 现金提供自营业务活动 为$129,300万，较去年同期的$140,000万下降，其中包括后来分拆出售的Wk Kellogg Co。 资本支出为$44,000万，较去年同期低，由于去年同期包括已分拆的Wk Kellogg Co.的资本支出。 自由现金流即年初至今现金提供营运活动减去资本支出后为$85,300万，较去年同期减少$4,100万。
2
第三季业务表现
请参考本文件后面的段落表。
家乐氏在第三季度实现了有机净销售和货币中立以及调整基础的营业利润和每股收益增长。新兴市场的成交量增长和货币驱动的价格/组合增长推动了公司大部分的有机净销售增长，尽管发达市场也在逐步改善的成交量表现上实现了有机增长，尽管行业需求恢复的速度比预期的慢。在生产率和成本通胀适度控制的支持下，家乐氏还进一步提高了利润率。
北美洲的 第三季度，由于正价/混合价格的上升部分抵消了成交量轻微下降，北美洲的经报告和有机销售额增长了1%。 N北美洲第三季度的报告营业利润同比增长了24％，反映了毛利率的改善和为Wk Kellogg Co提供的转型服务相关费用的补偿。在调整后和货币中立调整的基础上，营业利润增长了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。报告营业利润增加了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，营业利润增加了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
3
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%.
4
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
5
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
6
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]
7
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.
8
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