Kellanova (K) Rallies on Q2 Earnings Beat, Raised Guidance

Core Insights - Kellanova's second-quarter 2024 results showed both revenue and earnings exceeding Zacks Consensus Estimates, with a year-over-year increase in earnings despite a decline in overall sales [1][3][4] - The company has raised its guidance for 2024 following a strong first half, indicating confidence in future performance [1][11] Financial Performance - Adjusted earnings per share (EPS) reached $1.01, a 12.2% increase year over year, surpassing the Zacks Consensus Estimate of 90 cents [3] - Net sales totaled $3,192 million, exceeding the Zacks Consensus Estimate of $3,149 million, but reflecting a 4.7% decline year over year due to unfavorable currency movements and the divestiture of the Russia business [4] - Organic net sales increased by 4%, indicating growth when excluding currency and divestiture impacts [4] Segment Performance - North America segment sales were $1,658 million, up 0.8% year over year, driven by improved volumes [6] - Europe segment revenues were $639 million, down 4.5% year over year, impacted by volume pressures and the divestiture of operations in Russia, although partially offset by price/mix growth [7] - Latin America revenues reached $333 million, up 2.3% year over year, supported by favorable price/mix and volumes, with organic sales increasing by 4% [8] - Asia Pacific and Middle East & Africa segment revenues totaled $564 million, down 20.8% year over year due to unfavorable foreign currency rates, but organic sales jumped 16% [8] Cash Flow and Guidance - The company reported cash and cash equivalents of $272 million and long-term debt of $5,007 million [9] - Kellanova generated net cash from operating activities of $740 million year-to-date, with free cash flow of $443 million [10] - For 2024, the company expects organic net sales growth of 3.5% or more, adjusted operating profit in the range of $1,875-$1,900 million, and adjusted EPS between $3.65-$3.75 [11][12]