WK Kellogg Q4 Earnings Beat Estimates, Volume Declines Y/Y

Core Insights - WK Kellogg Co. reported mixed fourth-quarter 2024 results, with a decline in top-line revenue but an increase in bottom-line earnings, surpassing consensus estimates [1][2] Financial Performance - Adjusted earnings per share were 42 cents, exceeding the Zacks Consensus Estimate of 25 cents, and up from 29 cents in the prior year [1] - Adjusted net sales were $640 million, missing the Zacks Consensus Estimate of $643 million, and reflecting a 1.8% year-over-year decline [2] - Adjusted gross profit increased to $195 million from $190 million year-over-year, with an adjusted gross margin expansion of 130 basis points to 30.5% [3] - Adjusted EBITDA rose 7.5% year-over-year to $57 million, with an adjusted EBITDA margin increase of 70 basis points to 8.9% [4] Cost Management - Selling, general and administrative expenses decreased by 1.2% to $163 million, representing 25.5% of sales, which is a slight increase from 25.3% [5] Cash and Debt Position - The company ended the quarter with cash and cash equivalents of $40 million, long-term debt of $460 million, and total equity of $317 million [6] - Cash generated from operating activities for the year was $100 million [6] Dividend Announcement - Management announced a 3% increase in the quarterly dividend from 16 cents to 16.5 cents per share, payable on March 14, 2025 [7] 2025 Guidance - First-quarter 2025 net sales and profit are expected to decline by 1.5-2.5% due to shipment timing and the lapping of a large retailer promotion [10] - For 2025, organic net sales are projected to decline by 1%, with anticipated low-single-digit price increases and a similar rate of volume decline [11] - Adjusted EBITDA is expected to grow by 4-6%, targeting $286-$292 million [12] Capital Expenditure Plans - The 2025 capital investment plan includes $70 million for base business CapEx and $200 million for supply-chain modernization, funded through cash flow and debt [13] Stock Performance - KLG stock has decreased by 2.9% over the past three months, compared to a 1.5% decline in the industry [14]