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Here's Why WK Kellogg Stock is Down 8% Despite Q3 Earnings Beat
KLGWK Kellogg Co(KLG) ZACKS·2024-11-11 13:16

Core Insights - WK Kellogg Co. reported a decline in both top and bottom lines for Q3 2024, with shares dropping 8.1% post-results, although both metrics exceeded Zacks Consensus Estimates [1][2] Financial Performance - Adjusted earnings per share were 31 cents, surpassing the Zacks Consensus Estimate of 26 cents, but down from 33 cents in the same quarter last year [1] - Net sales reached 689million,exceedingtheZacksConsensusEstimateof689 million, exceeding the Zacks Consensus Estimate of 674 million, but reflecting a 0.4% year-over-year decline [2] - Price/mix increased by 1.8%, while volume decreased by 1.1% in the third quarter [2] Profitability Metrics - Adjusted gross profit was 203million,upfrom203 million, up from 193 million year-over-year, with adjusted gross margin expanding by 150 basis points to 29.4% [3] - Adjusted EBITDA was 65million,an18.265 million, an 18.2% increase year-over-year, attributed to stronger top-line performance and operational discipline, with an adjusted EBITDA margin increase of 150 basis points to 9.5% [4] Cost Management - Selling, general and administrative expenses were 162 million, down 9.5% from 179millionintheprioryear,representing23.5179 million in the prior year, representing 23.5% of sales, a decrease of 240 basis points [5] Financial Position - As of the end of the quarter, the company had cash and cash equivalents of 47 million, long-term debt of 472million,andtotalequityof472 million, and total equity of 316 million [6] - Cash generated from operating activities for the year-to-date period was 98million[6]FutureGuidance−WKKelloggreiterateditsfull−yearadjustednetsalesgrowthguidance,projectingadeclineof198 million [6] Future Guidance - WK Kellogg reiterated its full-year adjusted net sales growth guidance, projecting a decline of 1% to growth of 1%, while upgrading adjusted EBITDA growth expectations to 5% to 6% from a previous range of 3% to 5% [8] - Adjusted EBITDA is expected to be between 271 million and 273million[8]InterestandDepreciation−Interestexpensesareanticipatedtobebetween273 million [8] Interest and Depreciation - Interest expenses are anticipated to be between 30 million and 35millionfortheyear,withdepreciationandamortizationexpensesexpectedtobeintherangeof35 million for the year, with depreciation and amortization expenses expected to be in the range of 75 million to $80 million [9]