WK Kellogg Co(KLG) - 2024 Q4 - Annual Report

Financial Performance - Net sales for the quarter ended June 29, 2024, were $672 million, a decrease of 4$700 million for the same period in 2023[7]. - Operating profit increased to $47 million for the quarter ended June 29, 2024, compared to$28 million in the same quarter of 2023, representing a 68% increase[7]. - Net income for the quarter was $31 million, up from$27 million in the prior year, reflecting a 15% increase[9]. - Basic earnings per share for the quarter were $0.37, compared to$0.32 in the same quarter of 2023, marking a 16% increase[7]. - The company reported a year-to-date net income of $64 million for the period ended June 29, 2024, compared to$53 million for the same period in 2023, an increase of 21%[9]. - Comprehensive income for the quarter was $39 million, compared to$37 million in the same quarter of 2023, indicating a 5.4% increase[9]. - Net income for the quarter ended June 29, 2024, was $64 million, an increase from$53 million in the same quarter of 2023, representing a 20.8% growth[19]. - EBITDA for the quarter ended June 29, 2024, increased 40% to $70 million compared to$50 million in the prior year[91]. - Adjusted EBITDA decreased 12% for the quarter ended June 29, 2024, to $78 million compared to$89 million in the prior year[89]. - Reported gross profit for the quarter ended June 29, 2024, was $196 million, with a gross margin of 29.1$149 million for the quarter ended June 29, 2024, down from $163 million in the same quarter of 2023, a reduction of 8.6$37 million from $140 million year-over-year, a decline of 73.6$5 million for the quarter ended June 29, 2024, compared to a loss of $4 million in the same quarter of 2023[34]. - The total pension expense for the quarter ended June 29, 2024, was$1 million, and for the year-to-date period, it was $2 million[41]. - The total postretirement benefit income for the quarter ended June 29, 2024, was$(10) million, and for the year-to-date period, it was $(20) million[42]. - The Company recorded operating lease costs of$4 million for the quarter and $7 million for the year-to-date period ended June 29, 2024[47]. - The Company incurred pre-tax charges of$2 million related to supply chain network reconfiguration for the quarter ended June 29, 2024[87]. - The company incurred pre-tax separation costs of $8 million for the quarter ended June 29, 2024, compared to$40 million for the same quarter in 2023, showing a significant reduction in costs[86]. Cash Flow and Liquidity - Cash and cash equivalents at the end of the period were $44 million, a decrease from$2 million at the end of the previous year[19]. - Free cash flow for the year-to-date period ended June 29, 2024, was $(10) million, a decrease from$80 million in the prior year[107]. - Net cash used in investing activities was $47 million for the year-to-date period ended June 29, 2024, compared to$56 million in the prior year[108]. - Net cash used in financing activities was $33 million for the year-to-date period ended June 29, 2024, down from$82 million in the prior year, primarily due to $27 million in dividend payments[109]. - As of June 29, 2024, borrowings under the Credit Facility were$490 million, with an additional $600 million of borrowing capacity available[101]. Market and Strategic Focus - The company is focused on expanding its market presence and enhancing product offerings through new strategies and technologies[7]. - The Company is focused on leveraging marketing expertise and product innovation to respond to a challenging retail environment characterized by consolidation among large U.S. retail customers[80]. - The Company plans to close its Omaha, Nebraska plant with full closure targeted by the end of 2026, as part of its strategic priority to modernize its supply chain[67]. - The Company expects cumulative restructuring pretax charges of between$230 million and $270 million due to the reorganization plan, including$30 million to $40 million in cash costs for severance and other termination benefits[68]. - The geopolitical instability, particularly the war in Ukraine and related sanctions, continues to create inflationary pressures on commodity costs, despite the company's lack of direct exposure to these regions[79]. - The company has implemented productivity initiatives and revenue growth management actions to offset input-cost inflation, demonstrating proactive financial management[78]. Equity and Dividends - The company declared dividends of$0.16 per share during the quarter, totaling $13 million[12]. - The Board of Directors declared a dividend of$0.16 per share, payable on September 14, 2024[109]. - The total equity as of June 29, 2024, was $336 million, up from$300 million at the end of December 30, 2023[12]. Derivative Instruments and Financial Instruments - The total notional amounts of the Company's derivative instruments as of June 29, 2024, were $328 million, including$251 million in foreign currency exchange contracts and $77 million in commodity contracts[56]. - The Company recognized a loss of$(1) million in cost of goods sold related to commodity contracts for the quarter ended June 29, 2024[59]. - The Company does not have any derivatives designated as hedging instruments, and the fair value of its financial assets and liabilities is measured on a recurring basis[58]. Inventory and Receivables - As of June 29, 2024, accounts receivable, net decreased to $217 million from$244 million as of December 30, 2023, reflecting a decline of approximately 11%[63]. - The Company’s inventories increased to $360 million as of June 29, 2024, compared to$345 million as of December 30, 2023, representing a rise of approximately 4%[63]. - Accounts receivable sold under monetization agreements amounted to $313 million as of June 29, 2024, compared to$266 million as of December 30, 2023[111].