WK Kellogg Co KLG shares are trading lower after the company reported second-quarter results.
The company reported quarterly earnings per share of 36 cents, missing the street view of 40 cents. Sales of $672 million missed the analyst consensus of $672.36 million.
Net sales for the second quarter fell 3.9% year-over-year, with adjusted net sales down 2.7% compared to standalone adjusted net sales.
The second-quarter net income margin was 4.7%, while the adjusted EBITDA margin was 11.6%.
"Our second quarter results are in line with expectations, and we are on track to achieve our full-year financial guidance despite a difficult business environment," said Gary Pilnick, chairman and chief executive officer.
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WK Kellogg Co unveiled its strategy and three-year financial targets at its Investor Day in August 2023.
On Tuesday, in line with this strategy, the company announced plans to invest up to $390 million in capital expenditures and expects to incur one-time cash restructuring and non-restructuring costs of about $110 million.
The company aims to achieve an approximately 14% adjusted EBITDA margin by 2026.
The company plans to consolidate its manufacturing footprint by closing its Omaha, Nebraska plant with phased production reductions starting in late 2025 and a full closure by the end of 2026.
Additionally, production in its Memphis, Tennessee facility will be scaled back starting late 2025 to create a more focused and streamlined operation.
These changes are expected to reduce headcount by about 550 people, offset by estimated headcount increases at plants with increased production.
Outlook: WK Kellogg reaffirms FY24 adjusted net sales guidance of $2.71 billion to $2.76 billion, aligning with the $2.71 billion estimate, and now anticipates reaching the lower end of the range.
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