Kellanova (K) Q2 2024 earnings summary

Executive summary

• Delivered strong Q2 2024 results with 4% organic net sales growth, double-digit operating profit and EPS growth, and full commercial activity restored post-spin-off and supply disruptions.

• Portfolio is more growth-oriented and profitable, with innovation momentum from launches like Pringles Mingles and Cheez-It supporting incremental sales.

• Sequential volume improvement in most regions, with North America and Latin America returning to growth; Nigeria remains a headwind due to currency-driven price increases.

• Raised full-year 2024 guidance for net sales, operating profit, EPS, and free cash flow, reflecting strong first-half performance and margin expansion.

• Completed the spin-off of the North America cereal business in October 2023; results from WK Kellogg Co now presented as discontinued operations.

Financial highlights

• Q2 2024 organic net sales grew 4% year-over-year to $3.19B; reported net sales declined 5% due to currency and divestitures.

• Q2 adjusted operating profit up 16% year-over-year to $502M; reported operating profit up 18% to $493M.

• Q2 adjusted EPS up 14% to $1.01; currency-neutral adjusted EPS up 14.4% to $1.03.

• Gross profit margin expanded to 36.4%–36.5%, up 340–370 bps year-over-year.

• Free cash flow for Q2 was $443M, up 45% year-over-year; YTD free cash flow $443M, up from $305M.

Outlook and guidance

• Full-year 2024 organic net sales growth guidance raised to above 3.5%.

• Adjusted operating profit guidance raised to $1.875–$1.9B; gross margin above 35%, operating margin above 14%.

• Adjusted EPS guidance increased to $3.65–$3.75; free cash flow outlook raised to just above $1B.

• Net cash from operations forecast above $1.7B; capex about $0.7B.

• Second-half assumptions remain prudent, with margin expansion moderating as prior-year comparisons normalize.