Kellogg(K) - 2025 Q1 - Quarterly Results

Financial Performance - Reported net sales for Q1 2025 were $3,083 million, a decrease of 3.6% compared to $3,200 million in Q1 2024[7] - Organic net sales increased by 0.7% year on year, reaching $3,222 million, despite category softness[6] - Reported operating profit rose by 9.3% to $430 million, primarily due to lapping prior-year restructuring charges[7] - Adjusted operating profit decreased by 13.1% to $441 million, reflecting higher costs and adverse business mix[7] - Reported diluted earnings per share increased by 11.5% to $0.87, driven by higher operating profit and a lower effective tax rate[7] - Net income attributable to Kellanova was $304 million, representing a 13.9% increase from $267 million in the same quarter last year[35] - Basic earnings per share rose to $0.88, compared to $0.78 for the same quarter in 2024, reflecting a 12.8% increase[35] - Reported gross profit for the quarter was $1,059 million, with a gross margin of 34.3%, compared to $1,030 million and 32.2% in the same quarter of 2024[46][48] - Adjusted operating profit for the quarter was $441 million, with a reported operating margin of 13.9%, up from $393 million and 12.3% in the prior year[51][54] - The company reported diluted earnings per share (EPS) of $0.87 for the quarter, compared to $0.78 in the same quarter of 2024, reflecting a growth of 11.6%[59] Cash Flow and Assets - Year-to-date net cash provided by operating activities was $116 million, down from $366 million in the prior year[12] - Free cash flow for the year-to-date was $(60) million, a decrease of $269 million from the previous year[12] - Cash and cash equivalents at the end of the period decreased to $330 million from $694 million at the beginning of the period[38] - The company reported a net cash used in investing activities of $152 million, compared to $333 million in the same period last year[37] - Total assets decreased to $15,474 million from $15,628 million at the end of the previous quarter[38] - Current liabilities decreased to $4,341 million from $4,660 million at the end of the previous quarter[38] - Long-term debt increased to $5,027 million from $4,998 million at the end of the previous quarter[38] - The company's total debt liabilities decreased from $5,743 million in December 2024 to $5,617 million in March 2025, resulting in a net debt of $5,287 million[63] Regional Performance - North America's reported net sales decreased by 4% due to volume decline in snacking and frozen categories[16] - Latin America's reported net sales decreased by 15% year on year, significantly impacted by negative foreign currency translation[18] - North America Snacks reported a net sales decline of 5.0%, while Frozen products saw a slight increase of 0.3% in the first quarter of 2025 compared to 2024[62] - Latin America Snacks experienced a significant decline of 8.9%, and Cereal products dropped by 18.6% in net sales for the same period[62] Currency Impact - The foreign currency impact on reported net sales was a decrease of $138 million, affecting various regions including North America and AMEA[43] - Currency-neutral adjusted EPS was $0.93, showing a decline of 7.9% compared to the previous year[59] - The company evaluates operating results on a currency-neutral basis to assess the impact of foreign currency translation on financial performance[68] Acquisition and Costs - The pending acquisition by Mars, Incorporated is expected to close within the first half of 2025, with shareowners approving the transaction[3] - Separation costs related to the company's transaction amounted to $5 million for the quarter ended March 29, 2025, down from $12 million in the prior year[65] - Network optimization efforts incurred pre-tax charges of $6 million in the first quarter of 2025, significantly lower than the $101 million recorded in the same quarter of 2024[66] - Proposed merger costs related to the acquisition agreement with Mars resulted in pre-tax charges of $6 million for the quarter ended March 29, 2025[67] - Pre-tax mark-to-market gains were recorded at $4 million for the quarter ended March 29, 2025, compared to $12 million for the same quarter in 2024[64]