Cereal Maker WK Kellogg Records 2% Decline In Q3 Revenue; Reaffirms Financial Outlook

WK Kellogg Co KLG reported a third-quarter FY23 sales decline of 1.9% year-on-year to $692 million, reflecting price elasticities that were anticipated. Standalone adjusted net sales fell 1.9% to $684 million.

On October 2, 2023, Kellogg Company completed the separation of its North America cereal business, resulting in two independent companies, Kellanova K (formerly Kellogg Company) and WK Kellogg.

Selling, general and administrative expenses increased 7.2% to $179 million. Operating income for the quarter jumped 142.8% to $17 million with an operating margin of 2.5%.

Adjusted EBITDA jumped 71.9% Y/Y to $55 million, and the standalone adjusted EBITDA margin expanded 310 basis points to 7.5%.

The company held $64 million in cash and equivalents as of September 30, 2023. The operating cash flow year-to-date totaled $184 million.

The company's EPS for the quarter was $0.49 versus $0.27 last year.

"We are off to a strong start and remain confident in our strategy and financial outlook," said Gary Pilnick, Chairman and Chief Executive Officer of WK Kellogg.

Outlook: WK Kellogg currently sees FY23 standalone adjusted net sales of $2.720 billion - $2.740 billion. The company sees FY23 standalone adjusted EBITDA margin of 9.1% - 9.2%.

WK Kellog reaffirmed FY24 adjusted net sales growth to be flat versus FY23 and sees adjusted EBITDA of $255 million - $265 million.

Price Action: KLG shares are trading higher by 4.3% at $10.91 on the last check Wednesday.