klg-20240330

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-41755

WK Kellogg Co

State or other jurisdiction of incorporation or organization—

Delaware

IRS Employer Identification No.

92-1243173

Address of principal executive offices: One Kellogg Square, Battle Creek, MI Zip Code: 49016-3599

Registrant’s telephone number, including area code: 269-401-3000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $.0001 par value per share	KLG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of May 1, 2024 — 85,877,528 shares of the registrant's common stock were outstanding


			Page
PART I — Financial Information
Item 1:
Financial Statements
Unaudited Consolidated Balance Sheet — March 30, 2024 and December 30, 2023			3
Unaudited Consolidated Statement of Income — quarters ended March 30, 2024 and April 1, 2023			4
Unaudited Consolidated Statement of Comprehensive Income – quarters ended March 30, 2024 and April 1, 2023			5
Unaudited Consolidated Statement of Equity — quarters ended March 30, 2024 and April 1, 2023			6
Unaudited Consolidated Statement of Cash Flows — quarters ended March 30, 2024 and April 1, 2023			7
Notes to Unaudited Consolidated Financial Statements			8
Item 2:
Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3:
Quantitative and Qualitative Disclosures about Market Risk			22
Item 4:
Controls and Procedures			22
PART II — Other Information
Item 1A:
Risk Factors			23


Item 5 :
Other Information			23
Item 6:
Exhibits			24
Signatures			25


	March 30, 2024		December 30, 2023
Current assets
Cash and cash equivalents	$	70	$	89
Accounts receivable, net	244		244
Inventories	328		345
Other current assets	22		28
Total current assets	664		706
Property, net	735		739

Goodwill	53		53
Other intangibles	57		57
Postretirement plan assets	292		283
Other assets	87		51
Total assets	$	1,888	$	1,889
Current liabilities
Notes payable	$	2	$	4
Current maturities of long-term debt	8		8
Accounts payable	544		541
Accrued advertising and promotion	109		121
Accrued salaries and wages	36		57
Other current liabilities	90		105
Total current liabilities	789		836
Long-term debt	484		487
Deferred income taxes	107		106
Pension liability	133		135

Other liabilities	58		25
Commitments and contingencies (Note 9)
Equity
Common stock, $0.0001 par value, 1,000,000,000 shares authorized Issued: 85,808,508 shares in 2024 and 85,812,883 shares in 2023	—		—
Capital in excess of par value	329		327
Retained earnings	20		1

Accumulated other comprehensive loss	(32)		(28)


Total equity	317		300
Total liabilities and equity	$	1,888	$	1,889


	Quarter ended
	March 30, 2024		April 1, 2023
Net sales	$	707	$	720
Cost of goods sold	504		540
Selling, general and administrative expense	157		156
Operating profit	46		24
Interest expense	8		—
Other income (expense), net	6		8
Income before income taxes	44		32
Income taxes	11		8
Net income	$	33	$	24


Per share amounts (a):
Basic earnings	$	0.38	$	0.28
Diluted earnings	0.37		0.28

Average shares outstanding:
Basic	86		86
Diluted	87		86
Actual shares outstanding at period end	86		86


	Quarter ended
	March 30, 2024
	Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income	$	44	$	(11)	$	33
Other comprehensive income (loss):
Foreign currency translation adjustments:
Foreign currency translation adjustments during period	(3)		1		(2)





Postretirement and postemployment benefits:


Reclassification to net income:

Prior service cost	(1)		—		(1)




Comprehensive income	$	40	$	(10)	$	30




	Quarter ended
	April 1, 2023
	Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income	$	32	$	(8)	$	24
Other comprehensive income (loss):
Foreign currency translation adjustments:
Foreign currency translation adjustments during period	2		—		2















Comprehensive income	$	34	$	(8)	$	26


	Quarter ended March 30, 2024
	Common stock			Capital in excess of par value		Retained earnings		Accumulated other comprehensive income (loss)			Total equity
(unaudited)	shares	amount
Balance, December 30, 2023	86	$	—	$	327	$	1		$	(28)		$	300

Net income	—	—		—		33			—			33


Dividends declared ($0.16 per share)	—	—		—		(14)			—			(14)

Other comprehensive income (loss)	—	—		—		—			(4)			(4)
Stock compensation	—	—		1		—			—			1

Share issuance	—	—		1		—			—			1

Balance, March 30, 2024	86	$	—	$	329	$	20		$	(32)		$	317


		Quarter ended April 1, 2023
	Net Kellanova investment	Capital in excess of par value		Retained earnings				Accumulated other comprehensive income (loss)			Total equity
(unaudited)
Balance, December 31, 2022		$	725	$	—	$	—		$	(38)		$	687

Net income		24		—		—			—			24
Net transfer (to)/from Kellanova		(36)		—		—			—			(36)


Other comprehensive income		—		—		—			2			2



Balance, April 1, 2023		$	713	$	—	$	—		$	(36)		$	677


	Year-to-date period ended
	March 30, 2024		April 1, 2023
Operating activities
Net income	$	33	$	24
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	19		17
Postretirement plan benefit	(9)		(7)
Deferred income taxes	1		—
Stock compensation	1		1


Other	3		—
Pension plan contributions	(3)		—
Changes in operating assets and liabilities:
Trade receivables	2		7
Inventories	16		57
Accounts payable	(5)		(23)
Income taxes payable	4		—
Accrued advertising and promotion	(11)		(2)
Accrued salaries and wages	(21)		(8)
All other current assets and liabilities	(20)		(4)
Net cash provided by (used in) operating activities	10		62
Investing activities
Additions to properties	(9)		(31)












Net cash provided by (used in) investing activities	(9)		(31)
Financing activities

Repayment of borrowings under the Credit Agreement	(3)		—


Issuance (repayment) of notes payables, with maturities less than 90 days	(3)		—

Net issuances of common stock	1		—

Dividends paid	(14)		—

Net transfers (to) from Kellanova	—		(30)
Net cash provided by (used in) financing activities	(19)		(30)
Effect of exchange rate changes on cash and cash equivalents	—		—
Increase (decrease) in cash and cash equivalents	(18)		1
Cash and cash equivalents at beginning of period	88		—
Cash and cash equivalents at end of period	$	70	$	1

Supplemental cash flow disclosures of non-cash investing activities:
Additions to properties included in accounts payable	$	20	$	27


	Quarter ended
(millions)	April 1, 2023
Cost of goods sold	$	55
Selling, general and administrative	85
Other (income) expense, net	(6)
Total	$	134


(millions)	April 1, 2023
Net transfers (to)/from Kellanova as reflected in the Unaudited Combined Statement of Cash Flow	$	(30)
Non-cash stock compensation expense	1
Non-cash pension and postretirement benefit	(7)
Net transfers from/(to) Kellanova as reflected in the Unaudited Combined Statement of Changes in Equity	$	(36)


(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
March 30, 2024	$	3	$	—	$	3
April 1, 2023	$	—	$	—	$	—



Full year:
Fiscal year 2024 (projected) (a)	$	24	$	—	$	24
Fiscal year 2023 (actual)	$	—	$	—	$	—


Quarter ended	March 30, 2024				April 1, 2023				GM change vs. prior year (pts.)
(millions)	Gross Profit (a)		Gross Margin (b)		Gross Profit (a)		Gross Margin (b)
Reported	$	203	28.7	%	$	180	25.0	%	3.7
Mark-to-market	—		—	%	5		0.7	%	(0.7)
Separation costs	3		0.4	%	3		0.4	%	—

Business and portfolio realignment	1		0.1	%	—		—	%	0.1

Adjusted	$	207	29.2	%	$	188	26.1	%	3.1



10.1			WK Kellogg Co Annual Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2024).
10.2			Form of Restricted Share Unit Terms and Conditions (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2024).
10.3			Form of Performance Stock Unit Terms and Conditions (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2024).
10.4			WK Kellogg Co Executive Severance Benefit Plan (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2024).
10.5			WK Kellogg Co Change of Control Severance Policy for Key Executives (as amended, effective as of February 8, 2024) (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2024).
10.6			WK Kellogg Co Amended and Restated 2023 Long-Term Equity Incentive Plan (incorporated herein by reference to Annex B to the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 21, 2024).
31.1			Rule 13a-14(e)/15d-14(a) Certification of Gary Pilnick
31.2			Rule 13a-14(e)/15d-14(a) Certification of David McKinstray
32.1			Section 1350 Certification of Gary Pilnick
32.2			Section 1350 Certification of David McKinstray
101.INS			Inline XBRL Instance Document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


WK KELLOGG CO

/s/ David McKinstray
David McKinstray
Chief Financial Officer

/s/ Lisa Walter
Lisa Walter
Principal Accounting Officer; Corporate Controller


	Gain (loss) recognized in cost of goods sold				Gain (loss) recognized in other income (expense), net
(millions)	March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
Commodity Contracts	$	—	$	(6)	$	—	$	—
Foreign Currency derivatives	$	—	$	2	$	—	$	—

SEC Form 10-Q filed by WK Kellogg Co