Executive Summary

Q4 2024 delivered net sales of $640M (-1.8% YoY), adjusted EBITDA of $57M (+7.5% YoY), and adjusted diluted EPS of $0.42 (vs $0.29 YoY), driven by improved supply chain productivity despite volume decline and FX headwinds .
Full-year 2024 saw net sales of $2.71B (-2.0% YoY), adjusted EBITDA of $275M (+6.6% YoY vs standalone), and gross margin expansion to 29.8% (+90 bps YoY) on operational efficiencies; free cash flow was -$29M on back-half CapEx and working capital timing .
2025 guidance: organic net sales down ~1% and adjusted EBITDA growth of 4–6% ($286–$292M), with back-half weighting and explicit note that potential Canada/Mexico tariffs are excluded; Board raised the quarterly dividend 3% to $0.165/share .
Near-term trading catalysts: Q1 2025 headwinds from Easter timing and lapping a large retailer promotion (1.5–2.5 pts incremental pressure to the full-year sales cadence), tariff overhang, and continued promotional intensity in U.S. cereal category .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA grew 7.5% in Q4 (to $57M) and 6.6% for FY 2024 (to $275M), above raised guidance, on improved supply chain efficiency and reduced waste .
Gross margin expanded: Q4 adjusted gross margin to 30.5% (+130 bps YoY), FY 2024 to 29.8% (+90 bps YoY), reflecting operational discipline and OEE improvements; management highlighted progress toward a 14% EBITDA margin exiting 2026 .
Canada and Caribbean maintained/gained share (Canada Q4 share 39.2%; FY share 38.9% +90 bps; Caribbean +50 bps FY), underpinning stable top-line outside measured U.S. channels .

Management quotes:

“We delivered adjusted EBITDA growth above the top end of our guidance range.” — Gary Pilnick, CEO .
“Gross margin for the fourth quarter was 30.5%, a 130 basis point increase… driven by operational efficiency improvements.” — David McKinstray, CFO .
“We are on track to deliver [EBITDA margin] from 9% to approximately 14% as we exit 2026.” — Gary Pilnick, CEO .

What Went Wrong

Volumes remained pressured: Q4 volume -5.6% (price/mix +3.8%), with category promotional intensity impacting end-market performance; FX (weak CAD) was a 40 bps headwind to quarterly sales .
U.S. market share declined 40 bps to 27.4% for FY 2024, with Special K called out as an underperforming core brand, necessitating focused activation plans .
Free cash flow negative (-$29M FY) as modernization CapEx and TSA exit investments ramped; net debt rose to $495M at year-end (from $442M in Q3) with leverage at ~1.8x to fund strategic initiatives .

Financial Results

Quarterly Progression (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Net Sales ($USD Millions)	$672	$689	$640
Diluted EPS ($)	$0.36	-$0.13	$0.21
Adjusted Diluted EPS ($)	$0.31	$0.31	$0.42
Gross Margin (%) - Reported	29.1%	28.1%	31.3%
Gross Margin (%) - Adjusted	30.0%	29.4%	30.5%
Adjusted EBITDA Margin (%)	11.6%	9.5%	8.9%
Net Income ($USD Millions)	$31	-$11	$19

Q4 Year-over-Year

Metric	Q4 2023	Q4 2024
Net Sales ($USD Millions)	$651	$640
Diluted EPS ($)	$0.18	$0.21
Adjusted Diluted EPS ($)	$0.29	$0.42
Gross Margin (%) - Reported	28.6%	31.3%
Gross Margin (%) - Adjusted	29.2%	30.5%
Adjusted EBITDA ($USD Millions)	$53	$57
Adjusted EBITDA Margin (%)	8.2%	8.9%

Full-Year Results

Metric	FY 2023	FY 2024
Net Sales ($USD Millions)	$2,763	$2,708
Net Income ($USD Millions)	$110	$72
Adjusted Net Income ($USD Millions)	$171	$149
Adjusted EBITDA ($USD Millions)	$267	$275
Net Income Margin (%)	4.0%	2.6%
Adjusted EBITDA Margin (%)	9.7%	10.1%
Free Cash Flow ($USD Millions)	$272	-$29

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Price/Mix (%)	+2.1%	+1.8%	+3.8%
Volume (%)	-4.8%	-1.1%	-5.6%

Balance Sheet and Cash Flow	12/30/2023	09/28/2024	12/28/2024
Net Debt ($USD Millions)	$410	$442	$495
Cash & Equivalents ($USD Millions)	$89	$47	$40
Free Cash Flow ($USD Millions, FY)	$272	—	-$29

Note: Segment reporting not disclosed; results presented on a consolidated basis .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Net Sales Growth	FY 2024	(-1%) to +1% (lower end expected)	Delivered -1.1% vs standalone (at lower end)	Maintained, achieved at lower end
Adjusted EBITDA Growth	FY 2024	3–5%	5–6% (raised in Q3); delivered +6.6% vs standalone	Raised
Organic Net Sales Growth	FY 2025	—	~(-1%) (currency-neutral; excludes 53rd week)	New
Adjusted EBITDA Growth	FY 2025	—	4–6% ($286–$292M); incremental 53rd week EBITDA reinvested	New
Interest Expense ($M)	FY 2025	—	$35–$40	New
Depreciation & Amortization ($M)	FY 2025	—	$85–$90	New
Estimated Return on Pension Assets ($M)	FY 2025	—	$45–$50	New
Separation Costs ($M)	FY 2025	—	$25–$30	New
Business/Portfolio Realignment & Restructuring ($M)	FY 2025	—	$105–$115	New
Dividend	Current	$0.16/share (Q4 2024)	$0.165/share payable Mar 14, 2025 (3% increase)	Raised

Management noted tariffs with Mexico/Canada are excluded from 2025 guidance; potential impacts under scenario planning .

Earnings Call Themes & Trends

Topic	Q-2 (Q2 2024)	Q-1 (Q3 2024)	Current (Q4 2024)	Trend
Supply chain modernization	Announced plant consolidation; capex plan up to $390M; restructuring charges $230–$270M through 2027	Execution supporting volume improvement and raised EBITDA guidance	OEE/customer service improved; 2025 capital/cash: ~$200M project spend; base CapEx ~$70M; TSA exit ~$60M	Positive execution; spend back-half weighted
Category & promotions	Difficult environment; volume declines	Strong back-to-school; promo intensity continued	Elevated promotion in category; WK activity similar to prior year	Competitive intensity elevated
Pricing/mix vs volume	+2.1% price/mix; -4.8% volume	+1.8% price/mix; -1.1% volume	+3.8% price/mix; -5.6% volume; expect convergence later in 2025	Price realization persists; volumes pressured near term
Non-measured channels/regions	—	Canada/Caribbean strong	Canada Q4 share 39.2%; FY 38.9% (+90 bps); Caribbean +50 bps FY	Supportive to top line
Tariffs risk	—	—	Guidance excludes potential Mexico/Canada tariffs; scenario planning underway	New external risk
Innovation	—	—	Broader 2025 innovation (platforms: Glazed; Raisin Bran extensions; granola/cups)	Increasing breadth

Management Commentary

Strategic execution: “We’re investing up to $500 million while expanding margin by approximately 500 basis points as we exit 2026… execution is on track” — Gary Pilnick .
Guidance cadence: “Q1 2025 net sales and profit… will be negatively impacted by shipment timing (Easter later) and lapping a large retailer promotion (1.5–2.5 pts). EBITDA growth more back-half weighted” — David McKinstray .
Cash/CapEx: “2025 capital and one-time costs related to supply chain modernization ~ $200M; base CapEx ~$70M (~2.5% of net sales); TSA exit ~$60M” — David McKinstray .
Category backdrop: “U.S. cereal category dollar sales… down 1.3% with volume declining low single digits; WK U.S. in-market dollar sales down 2.8%; share 27.4%, down 40 bps” — Gary Pilnick .
Margin ambition: “We are on track to deliver… EBITDA margin from 9% to approximately 14% as we exit 2026” — Gary Pilnick .

Q&A Highlights

Shipments vs scanner: Q1 2025 shipments expected below scanner due to Easter timing; Q2–Q4 to track more closely, with uniform cadence to reach ~(-1%) full-year organic net sales .
Price/mix vs units: Units moving ahead of volume due to PPA and mix (e.g., cups); expect convergence of dollars, units, and volume by back half of 2025 .
Tariffs exposure: Network inputs cross borders; most U.S. demand served in U.S.; plan design intended for long-term resilience; impacts too fluid to quantify now .
CapEx mix for $200M project spend: “Large majority will be CapEx (90+%)” .
Share and brand performance: Broad core brand strength; Special K lagged and is a 2025 focus; Canada and Caribbean gained share .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q4 2024 were unavailable at time of analysis due to API request limits; consequently, we cannot quantify beats/misses vs Wall Street consensus for this quarter [GetEstimates error].
Given management’s commentary and delivery above raised EBITDA guidance, we expect some upward estimate revisions to 2025 EBITDA trajectory, but Q1 2025 sales/profit phasing guidance likely prompts near-term estimate trims and back-half weighting .

Key Takeaways for Investors

Margin story intact: FY 2024 adjusted EBITDA +6.6% vs standalone and gross margin +90 bps YoY; on track for ~14% EBITDA margin exiting 2026 — focus on sustained OEE and supply chain execution .
Near-term caution: Q1 2025 sales/profit to under-earn relative to annual cadence (Easter timing; promo lap); watch for back-half reacceleration and innovation contributions .
Tariffs are the wild card: Guidance excludes Canada/Mexico tariffs; scenario planning in progress — monitor policy developments for potential FX/input flows and cross-border impacts .
Capital deployment: 2025 project spend (~~$200M) mostly CapEx; base CapEx (~~$70M) and dividend (~$0.66 annualized) supported by base cash flow; leverage ~1.8x affords flexibility .
Category dynamics: Elevated promotions and private label pressure persist; WK targeting platforms/white spaces (cups, granola, natural & organic) to stabilize top line .
Brand mix focus: Special K recovery a 2025 priority; core brands largely holding/gaining share — marketing ROI and PPA execution remain key .
Watch FX and CAD: Translational FX was a Q4 headwind; ongoing volatility justifies shift to organic net sales guidance (currency-neutral) .

WK Kellogg Co (KLG)·Q4 2024 Earnings Summary