SEC Form 10-Q filed by WK Kellogg Co

11/7/24 4:08:58 PM ET

$KLG

Packaged Foods

Consumer Staples

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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 September 28, 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

Delaware

92-1243173

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

One Kellogg Square,

Battle Creek

Michigan

49016-3599

(Address of principal executive offices)

(Zip Code)

269 - 401-3000

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 November 1, 2024 — 86,125,244 shares of the registrant's common stock were outstanding

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WK KELLOGG CO

INDEX


			Page
PART I — Financial Information
Item 1:
Financial Statements
Unaudited Consolidated Balance Sheet — September 28, 2024 and December 30, 2023			3
Unaudited Consolidated Statement of Income — quarter and year-to-date periods ended September 28, 2024 and September 30, 2023			4
Unaudited Consolidated Statement of Comprehensive Income – quarter and year-to-date periods ended September 28, 2024 and September 30, 2023			5
Unaudited Consolidated Statement of Equity — quarter and year-to-date periods ended September 28, 2024 and September 30, 2023			6
Unaudited Consolidated Statement of Cash Flows — quarter and year-to-date periods ended September 28, 2024 and September 30, 2023			8
Notes to Unaudited Consolidated Financial Statements			9
Item 2:
Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3:
Quantitative and Qualitative Disclosures about Market Risk			31
Item 4:
Controls and Procedures			32
PART II — Other Information
Item 1:
Legal Proceedings			33
Item 1A:
Risk Factors			33


Item 5:
Other Information			33
Item 6:
Exhibits			34
Signatures			35

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Part I – FINANCIAL INFORMATION

Item 1. Financial Statements.

WK KELLOGG CO

CONSOLIDATED BALANCE SHEET (Unaudited)

(millions, except per share data)


	September 28, 2024		December 30, 2023
Current assets
Cash and cash equivalents	$	47	$	89
Accounts receivable, net	199		244
Inventories	339		345
Other current assets	17		28
Total current assets	602		706
Property, net	764		739
Operating lease right-of-use assets	99		18
Goodwill	53		53
Other intangibles	57		57
Postretirement plan assets	300		283
Other assets	25		33
Total assets	$	1,900	$	1,889
Current liabilities
Notes payable	$	2	$	4
Current maturities of long-term debt	15		8
Accounts payable	508		541
Accrued advertising and promotion	92		121
Accrued salaries and wages	52		57
Other current liabilities	101		105
Total current liabilities	770		836
Long-term debt	472		487
Long-term operating lease obligations	83		12
Deferred income taxes	96		106
Pension liability	122		135

Other liabilities	41		13
Commitments and contingencies (Note 9)
Equity
Common stock, $0.0001 par value, 1,000,000,000 shares authorized Issued: 85,977,995 shares as of September 28, 2024 and 85,812,883 shares as of December 30, 2023	—		—
Capital in excess of par value	341		327
Retained earnings	11		1

Accumulated other comprehensive loss	(36)		(28)


Total equity	316		300
Total liabilities and equity	$	1,900	$	1,889

See accompanying Notes to Unaudited Consolidated Financial Statements.

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WK KELLOGG CO

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

(millions, except per share data)


	Quarter ended				Year-to-date period ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net sales	$	689	$	692	$	2,068	$	2,112
Cost of goods sold	495		496		1,475		1,544
Selling, general and administrative expense	162		179		468		497
Restructuring Costs	38		—		38		—
Operating profit (loss)	(6)		17		87		71
Interest expense	7		—		23		—
Other income (expense), net	(2)		38		8		53
Income (loss) before income taxes	(15)		55		72		124
Income taxes (benefit)	(4)		13		19		29
Net income (loss)	$	(11)	$	42	$	53	$	95


Per share amounts (a):
Basic earnings (loss)	$	(0.13)	$	0.49	$	0.62	$	1.10
Diluted earnings (loss)	(0.13)		0.49		0.60		1.10

Average shares outstanding:
Basic	86		86		86		86
Diluted	86		86		88		86
Actual shares outstanding at period end	86		86		86		86

(a)On October 2, 2023, Kellanova, the former parent company of WK Kellogg Co, distributed 85,631,304 shares of WK Kellogg Co common stock to Kellanova's shareowners in connection with its Spin-Off of WK Kellogg Co (the "Spin-Off"). See Note 1 "Accounting Policies" to the Unaudited Consolidated Financial Statements for more information. Basic and diluted earnings per share were retrospectively recast for the number of shares of WK Kellogg Co common stock outstanding immediately following the Spin-Off for the quarter and year-to-date period ended September 30, 2023.

See accompanying Notes to Unaudited Consolidated Financial Statements.

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WK KELLOGG CO

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

(millions)


	Quarter ended						Year-to-date period ended
	September 28, 2024						September 28, 2024
	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income (loss)	$	(15)	$	4	$	(11)	$	72	$	(19)	$	53
Other comprehensive income (loss):
Foreign currency translation adjustments:
Foreign currency translation adjustments during period	—		—		—		(6)		2		(4)


Cash flow hedges:
Net deferred gain (loss) on cash flow hedges	(2)		—		(2)		(2)		—		(2)

Postretirement and postemployment benefits:
Amount arising during the period:
Prior service cost	3		(1)		2		3		(1)		2
Reclassification to net income:

Prior service cost	(1)		1		—		(3)		1		(2)




Comprehensive income (loss)	$	(15)	$	4	$	(11)	$	64	$	(17)	$	47




	Quarter ended						Year-to-date period ended
	September 30, 2023						September 30, 2023
	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income	$	55	$	(13)	$	42	$	124	$	(29)	$	95
Other comprehensive income (loss):
Foreign currency translation adjustments:
Foreign currency translation adjustments during period	(1)		—		(1)		3		—		3















Comprehensive income	$	54	$	(13)	$	41	$	127	$	(29)	$	98

See accompanying Notes to Unaudited Consolidated Financial Statements.

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WK KELLOGG CO

CONSOLIDATED STATEMENT OF EQUITY (Unaudited)

(millions)


	Quarter ended September 28, 2024
	Common stock			Capital in excess of par value		Retained earnings		Accumulated other comprehensive income (loss)			Total equity
(unaudited)	shares	amount
Balance, June 29, 2024	86	$	—	$	335	$	37		$	(36)		$	336

Net income (loss)	—	—		—		(11)			—			(11)


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

Other comprehensive income (loss)	—	—		—		—			—			—
Stock compensation	—	—		5		(1)			—			4

Share issuance	—	—		1		—			—			1

Balance, September 28, 2024	86	$	—	$	341	$	11		$	(36)		$	316



	Year-to-date period ended September 28, 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	—	—		—		53			—			53


Dividends declared ($0.48 per share)	—	—		—		(41)						(41)

Other comprehensive income (loss)	—	—		—		—			(8)			(8)
Stock compensation				11		(2)			—			9

Stock issuance	—	—		3		—			—			3
Balance, September 28, 2024	86	$	—	$	341	$	11		$	(36)		$	316

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WK KELLOGG CO

CONSOLIDATED STATEMENT OF EQUITY (Unaudited)

(millions)


		Quarter ended September 30, 2023
	Net Kellanova investment	Capital in excess of par value		Retained earnings				Accumulated other comprehensive income (loss)			Total equity
(unaudited)
Balance, July 1, 2023		$	684	$	—	$	—		$	(34)		$	650

Net income		42		—		—			—			42
Net transfer (to)/from Kellanova		160		—		—			8			168
Distribution of WK Kellogg Co shares to Kellanova shareholders		(663)		—		—			—			(663)

Other comprehensive income (loss)		—		—		—			(1)			(1)



Balance, September 30, 2023		$	223	$	—	$	—		$	(27)		$	196



		Year-to-date period ended September 30, 2023
	Net Kellanova Investment	Capital in excess of par value		Retained earnings				Accumulated other comprehensive income (loss)			Total equity
(unaudited)
Balance, December 31, 2023		$	725	$	—	$	—		$	(38)		$	687

Net income		95		—		—			—			95
Net transfer (to)/from Kellanova		66		—		—			8			74

Distribution of WK Kellogg Co shares to Kellanova shareholders		(663)		—		—			—			(663)
Other comprehensive income		—		—		—			3			3



Balance, September 30, 2023		$	223	$	—	$	—		$	(27)		$	196

See accompanying Notes to Unaudited Consolidated Financial Statements.

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WK KELLOGG CO

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(millions)


	Year-to-date period ended
	September 28, 2024		September 30, 2023
Operating activities
Net income	$	53	$	95
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	59		49
Pension and postretirement plan benefit	(21)		(52)
Deferred income taxes	(7)		—
Stock compensation	11		3

Restructuring costs	38		—
Other	3		2
Pension plan contributions	(17)		(1)
Changes in operating assets and liabilities:
Trade receivables	56		(92)
Inventories	5		106
Accounts payable	(37)		9
Due to/from related parties	—		13
Income taxes payable	5		—
Accrued advertising and promotion	(28)		22
Accrued salaries and wages	(5)		22
All other current assets and liabilities	(26)		23
All other noncurrent assets and liabilities	9		(15)
Net cash provided by (used in) operating activities	98		184
Investing activities
Additions to properties	(96)		(93)










Other	2		—
Property damage recoveries from insurance proceeds	—		4
Net cash provided by (used in) investing activities	(94)		(89)
Financing activities
Proceeds from borrowings under the Credit Agreement	—		664
Repayment of borrowings under the Credit Agreement	(9)		—
Payment of financing fees	—		(7)

Repayment of notes payables, with maturities less than 90 days	(2)		—
Net transfer (to)/from Kellanova	—		(25)
Net issuances of common stock	3		—

Dividend to Kellanova	—		(663)
Dividends paid	(41)		—


Other	5		—
Net cash provided by (used in) financing activities	(44)		(31)
Effect of exchange rate changes on cash and cash equivalents	(2)		—
Increase (decrease) in cash and cash equivalents	(42)		64
Cash and cash equivalents at beginning of period	89		—
Cash and cash equivalents at end of period	$	47	$	64

Supplemental cash flow disclosures of non-cash investing activities:
Additions to properties included in accounts payable	$	20	$	27
Supplemental cash flow disclosures of non-cash financing activities:
Contribution of certain assets and liabilities to WK Kellogg Co by Kellanova	$	—	143

See accompanying Notes to Unaudited Consolidated Financial Statements.

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Notes to Unaudited Consolidated Financial Statements

for the quarter ended September 28, 2024 (unaudited)

Note 1 Accounting policies

Basis of presentation

On October 2, 2023 ("Spin-Off Date"), Kellanova (formerly known as Kellogg Company) completed the spin-off (the "Spin-Off") of its North American cereal business, resulting in a new independent public company, WK Kellogg Co (the "Company"). Prior to the Spin-Off, the Company historically operated as part of Kellanova.

For periods prior to the Spin-Off, the accompanying Unaudited Financial Statements were derived from the consolidated financial statements and accounting records of Kellanova. For all periods subsequent to the Spin-Off, the Unaudited Consolidated Financial Statements are based on actual results as a standalone company. Further information surrounding the Spin-Off and basis of presentation utilized for periods prior to the Spin-Off is included within Note 1 of the Company’s 2023 Annual Report on Form 10-K (the "2023 Annual Report").

In connection with the Spin-Off, the Company entered into several agreements with Kellanova that govern the relationship of the parties following the Spin-Off and allocate between WK Kellogg Co and Kellanova various assets, liabilities, and obligations, including, among other things, employee benefits, intellectual property, and tax related assets and liabilities. The agreements included a Separation and Distribution Agreement, Employee Matters Agreement, Supply Agreement, Master Ownership and License Agreements regarding Patents, Trademarks and Certain Related Intellectual Property, Tax Matters Agreement and Transition Services Agreement.

The allocation of expenses from Kellanova to the Company was reflected as follows in the Unaudited Consolidated Statement of Operations for the quarter and year-to-date ended September 30, 2023:


	Quarter ended		Year-to-date period ended
(millions)	September 30, 2023		September 30, 2023
Cost of goods sold	$	39	$	128
Selling, general and administrative	59		233
Other (income) expense, net	(32)		(43)
Total	$	66	$	318

The components of net parent investment for the year-to-date period ended September 30, 2023 were:


(millions)	September 30, 2023
Net transfers (to)/from Kellanova as reflected in the Unaudited Consolidated Statement of Cash Flow	$	(25)
Non-cash stock compensation expense	3
Non-cash pension and postretirement benefit	(47)
Non-cash contribution of assets and liabilities from parent	143
Net transfers from/(to) Kellanova as reflected in the Unaudited Consolidated Statement of Equity	$	74

The accompanying Unaudited Consolidated Financial Statements reflect the results of operations, financial position and cash flows of the Company prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The unaudited interim financial information of the Company included in this report reflects all adjustments, all of which are of a normal and recurring nature, that management believes are necessary for a fair statement of the results of operations, comprehensive income, financial position, equity and cash flows for the periods presented. This interim information should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes included within the 2023 Annual Report.

The balance sheet information at December 30, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the quarter and year-to-date period ended September 28, 2024 are not necessarily indicative of the results to be expected for other interim periods or the full year.

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Accounts payable - Supplier Finance Programs

The Company establishes competitive market-based terms with our suppliers, regardless of whether they participate in supplier finance programs, which generally range from 0 to 135 days depending on their respective industry and geography.

The Company has agreements with third parties to provide accounts payable tracking systems which facilitate participating suppliers’ ability to monitor and, if elected, sell payment obligations from the Company to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company has no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under the arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by the agreements for those payment obligations that have been sold by suppliers. The payment of these obligations by the Company is included in Net cash provided by (used in) operating activities in the Unaudited Consolidated Statement of Cash Flows. As of September 28, 2024, $133 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system. As of December 30, 2023, $142 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system.

Disaggregated net sales

The following table presents the Company's disaggregated net sales by country:


	Quarter ended				Year-to-date period ended
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
United States	$	601	$	605	$	1,813	$	1,859
Canada	78		78		229		225
Other	10		9		26		28
Total	$	689	$	692	$	2,068	$	2,112

Accounting standards to be adopted in future periods

Segment Reporting: Improvements to Reportable Segment Disclosures. In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard requires all public entities that are subject to segment reporting requirements to disclose additional information, including significant segment expenses and other segment items on an annual and interim basis. It also requires the disclosure of the title and the position of the chief operating decision maker and how the reported measures are used for making business decisions. This standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company intends to adopt the updated standard for the fiscal year ending December 28, 2024. The Company is currently evaluating the impact the adoption of this standard will have on its disclosures.

Income Taxes: Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard primarily expands the required disclosures surrounding the rate reconciliation and income taxes paid. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company intends to adopt the updated standard for the fiscal year ending January 3, 2026. The Company is currently evaluating the impact the adoption of this standard will have on its disclosures.

Disaggregation of Income Statement Expenses: In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”). This standard requires all public entities to provide additional disclosure about the nature of the expenses included in the income statement. The DISE will require disclosure about specific types of expenses included within the expense caption presented on the face of the income statement, as well as, additional disclosure about selling expenses. This standard is effective for fiscal years beginning after December 15,

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2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company intends to adopt the updated standard for the fiscal year ending January 1, 2028. The Company is currently evaluating the impact the adoption of this standard will have on its disclosures.

Note 2 Sale of accounts receivable

The Company has a program in which a discrete group of customers are allowed to extend their payment terms in exchange for the elimination of early payment discounts (Extended Terms Program).

The Company has a monetization agreement with an unaffiliated financial institution specifically designed to factor trade receivables with certain customers that participate in the Extended Terms Program. Under this monetization arrangement, from time to time, the Company sells these customers’ trade receivables at a discount on a non-recourse basis. A portion of the cash proceeds is subject to certain restrictions. Transfers under these agreements are accounted for as sales of receivables resulting in the receivables being de-recognized from the Unaudited Consolidated Balance Sheets. The monetization program provides for the continuing sale of certain receivables on a revolving basis until terminated by either party; however, the maximum receivables that may be sold at any time is approximately $350 million.

For all periods prior to the Spin-Off, the Company participated in Kellanova's monetization program and received an allocation of the recorded net loss on sale of receivables, based on the proportion of monetized receivables.

The Company has no retained interest in the receivables sold; however, the Company does have collection and administrative responsibilities for the receivables sold. The Company has not recorded any servicing assets or liabilities as of September 28, 2024 and December 30, 2023 for these agreements, as the fair value of these servicing arrangements as well as the fees earned were not material to the financial statements.

Accounts receivable sold of $320 million and $266 million remained outstanding under these arrangements as of September 28, 2024 and December 30, 2023, respectively. The proceeds from these sales of receivables are included in Net cash provided by (used in) operating activities in the Unaudited Consolidated Statement of Cash Flows in the period of sale. The recorded net loss on sale of receivables was $5 million and $14 million for the quarter and year-to-date period ended September 28, 2024, respectively, and $3 million and $11 million for the quarter and year-to-date period ended September 30, 2023, respectively. The recorded loss is included in Other income (expense), net ("OIE") in the Unaudited Consolidated Statement of Income.

A portion of cash received related to the accounts receivable monetization program is restricted as part of the Extended Terms collateralization agreement. As of September 28, 2024 and December 30, 2023, the amount of restricted cash was $16 million and $13 million, respectively, and is included in Cash and cash equivalents in the Unaudited Consolidated Balance Sheets.

Note 3 Equity

Earnings per share

Basic earnings (loss) per share is determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is similarly determined, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if all dilutive potential shares of common stock had been issued. Dilutive potential shares of common stock consist principally of unvested restricted stock units. Computations of diluted earnings per share should not give effect to any dilutive potential shares of common stock that would have the effect of increasing earnings per share (or decreasing the loss per share). Therefore as a result of the net loss for the quarter ended September 28, 2024, all potentially dilutive shares have been excluded from the calculation of dilutive earnings (loss) per share. For the year-to-date period ended September 28, 2024, the Company had approximately two million dilutive shares and zero anti-dilutive shares.

On the Spin-Off Date, Kellanova distributed 85,631,304 shares of the Company's common stock to Kellanova's shareowners in connection with the Spin-Off. For comparative purposes, weighted average shares outstanding for the quarter and year-to-date period ended September 30, 2023 have been retroactively recast to reflect the effects of the changes in equity structure resulting from the Spin-Off and assume the same basic weighted average shares as of the Spin-Off Date. For periods prior to the Spin-Off, it is assumed that there are no dilutive securities as there were no stock-based awards of the Company outstanding. Refer to the Unaudited Consolidated Statement of

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Income for basic and diluted earnings per share for the quarters and year-to-date periods ended September 28, 2024 and September 30, 2023.

Comprehensive income

Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by or distributions to shareowners. Other comprehensive income consists of foreign currency translation adjustments, fair value adjustments associated with cash flow hedges, which are recorded in interest expense within the statement of income, upon reclassification from Accumulated Other Comprehensive Income ("AOCI"), adjustments for net experience gains (losses), prior service credit (costs) related to employee benefit plans, which are recorded in OIE within the statement of income, upon reclassification from AOCI. The related tax effects of these items are recorded in Income taxes within the Unaudited Consolidated Statement of Income, upon reclassification from AOCI.

AOCI as of September 28, 2024 and December 30, 2023 consisted of the following:


(millions)	September 28, 2024		December 30, 2023
Foreign currency translation adjustments	$	(41)	$	(35)

Cash flow hedges — net deferred gain (loss)	(2)		—
Postretirement and postemployment benefits:

Prior service credit (cost)	7		7

Total accumulated other comprehensive income (loss)	$	(36)	$	(28)

Note 4 Restructuring

On July 31, 2024, the Board of Directors of the Company approved a reorganization plan in connection with the Company's strategic priority to modernize its supply chain. Under this reorganization plan, herein referred to as the restructuring plan, the Company will consolidate its manufacturing network by closing its Omaha, Nebraska plant, with a phased reduction in production beginning in late 2025 and full closure targeted by the end of 2026, and scaling back production (which includes a reduction in the number of manufacturing platforms) at its Memphis, Tennessee facility, commencing in late 2025. The restructuring plan was communicated to impacted employees on August 6, 2024 and remains subject to the satisfaction of certain collective bargaining obligations. The actions under the restructuring plan are expected to be completed by the end of fiscal year 2026.

These actions are expected to result in cumulative restructuring pretax charges of between $230 and $270 million, including between $30 and $40 million in cash costs for severance and other termination benefits and between $30 and $40 million in other cash restructuring costs related to equipment dismantlement and other transition costs. The Company estimates between $170 and $190 million in non-cash charges related primarily to accelerated depreciation and asset write-offs. These charges are expected to be incurred through 2027. The amounts expected to be incurred as a result of these actions, including the timing thereof, are estimates only and subject to a number of assumptions. Actual results may differ materially from the Company's current expectations. The Company may also incur additional charges or other cash expenditures not currently contemplated due to unanticipated events that may occur as a result of, or associated with, these actions.

For the quarter and year-to-date period ended September 28, 2024, the Company recorded total restructuring charges of $41 million. These charges comprised of $38 million recorded to Restructuring Costs and $3 million to Other income (expense).

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The table below provides the details for the charges incurred during 2024 and project costs to date:


(millions)	2024		Project costs to date
Employee related costs	$	20	$	20
Pension curtailment (gain) loss, net (a)	3		3
Asset related costs	16		16
Other costs	2		2
Total	$	41	$	41

(a) Restructuring costs do not include a $3 million remeasurement loss recorded to Other income (expense). See Note 5 for additional details.

Employee related costs consist of severance and other termination benefits. Pension curtailment (gain) loss consists of a curtailment loss that resulted from restructuring plan initiatives. Asset related costs consisted primarily of accelerated depreciation of $8 million and asset write-offs and impairments of $8 million. Other costs incurred consist primarily of legal and consulting fees.

At September 28, 2024 total project reserves were $22 million, related to expected severance payments and other costs of which a substantial portion will be paid in 2026. Employee related cost accruals are recorded to other current liabilities and other liabilities within the Unaudited Consolidated Balance Sheet. Other cost accruals are recorded to accounts payable and other current liabilities within the Unaudited Consolidated Balance Sheet. The following table provides details for exit cost reserves:


(millions)	Employee Related Costs		Pension curtailment (gain) loss, net		Asset Related Costs		Other Costs		Total
Liability as of December 30, 2023	$	—	$	—	$	—	$	—	$	—
2024 restructuring charges	20		3		16		2		41
Cash payments	—		—		—		—		—
Non-cash charges and other	—		(3)		(16)		—		(19)
Liability as of September 28, 2024	$	20	$	—	$	—	$	2	$	22

Note 5 Pension and postretirement benefits

The Company sponsors a pension plan in the United States and several plans in the United States and Canada that provide health care and other welfare benefits to retired employees who have met certain age and service requirements. These plans are described within the Notes to the Consolidated Financial Statements included in the 2023 Annual Report. Components of Company benefit plans (income) expense for the periods presented are included in the tables below. Excluding the service cost component, these amounts are included within OIE in the Unaudited Consolidated Statement of Income.

For the quarter and year-to-date period ended September 28, 2024, the Company recorded a $3 million loss on pension curtailment charges reflecting higher net prior service costs driven by restructuring plans discussed in Note 4. The curtailment loss, as well as the recognized (gain) loss, net from remeasurement, was recognized within OIE in the Company's Unaudited Consolidated Statement of Income.

The following tables present the pension expense and nonpension postretirement income directly attributable to the Company for the quarter and year-to-date period ended September 28, 2024:

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Pension


	Quarter ended		Year-to-date period ended
(millions)	September 28, 2024		September 28, 2024
Service cost	$	2	$	6
Interest cost	7		21
Expected return on plan assets	(9)		(27)
Amortization of unrecognized prior service cost	1		3
Recognized (gain) loss, net	3		3
Curtailment (gain) loss, net	3		3
Total pension expense	$	7	$	9

Other nonpension postretirement


	Quarter ended		Year-to-date period ended
(millions)	September 28, 2024			September 28, 2024
Service cost	$	1		$	3
Interest cost	6			18
Expected return on plan assets	(15)			(45)
Amortization of unrecognized prior service cost	(2)			(6)



Total postretirement benefit income	$	(10)		$	(30)

The following table summarizes the expenses that were allocated to the Company's plans prior to the Spin-Off:


		Quarter ended		Year-to-date period ended
(millions)		September 30, 2023		September 30, 2023

Pension plans:
Direct plan	Net periodic benefit cost	$	1	$	1
Shared plans (multiemployer)	Cost allocation - COGS	1		5
	Cost allocation - OIE	10		10
Total pension expense		$	12	$	16

Nonpension postretirement plans:
Direct plan	Net periodic benefit income	$	(6)	$	(6)
Shared plans (multiemployer)	Cost allocation - COGS	1		3
	Cost allocation - OIE	(44)		(65)
Total postretirement benefit (income)/expense		$	(37)	$	(52)

Pension

The components of net periodic benefit costs for the direct pension plans are:


	Quarter ended		Year-to-date period ended
(millions)	September 30, 2023		September 30, 2023
Service cost	$	1	$	1
Interest cost	3		3
Expected return on plan assets	(3)		(3)
Amortization of unrecognized prior service cost	—		—
Remeasurement (gain)/loss	—		—
Total pension expense	$	1	$	1

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Postretirement

The components of net periodic benefit costs for the direct nonpension postretirement plans are:


	Quarter ended		Year-to-date period ended
(millions)	September 30, 2023		September 30, 2023
Service cost	$	1	$	1
Interest cost	4		4
Expected return on plan assets	(10)		(10)
Amortization of unrecognized prior service cost	(1)		(1)
Remeasurement (gain)/loss	—		—
Total postretirement benefit income	$	(6)	$	(6)

Company contributions to employee benefit plans are summarized as follows:


(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
September 28, 2024	$	7	$	—	$	7
September 30, 2023	$	—	$	—	$	—
Year-to-date period ended:
September 28, 2024	$	17	$	—	$	17
September 30, 2023	$	1	$	—	$	1
Full year:
Fiscal year 2024 (projected) (a)	$	24	$	—	$	24
Fiscal year 2023 (actual)	$	—	$	—	$	—

(a)Projected 2024 amounts have been corrected from $0 million as previously disclosed in our 2023 Annual Report to $24 million.

Plan funding strategies may be modified in response to management's evaluation of tax deductibility, market conditions, and competing investment alternatives.

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Note 6 Operating leases

The Company leases certain warehouses, equipment, vehicles, and office space primarily through operating lease agreements. The Company recorded operating lease costs of $5 million and $12 million for the quarter and year-to-date period ended September 28, 2024, respectively. Operating lease costs for the quarter and year-to-date period ended September 30, 2023 were immaterial to the consolidated financial statements.


	Quarter ended				Year-to-date period ended
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4	$	—	$	9	$	—
Right-of-use assets obtained in exchange for operating lease liabilities
New leases	$	35	$	—	$	87	$	—
Modified leases	$	—	$	—	$	—	$	—

At September 28, 2024 future maturities of operating leases were as follows:


(millions)	Operating leases
2024 (remaining)	$	6
2025	22
2026	21
2027	20
2028	19
2029 and beyond	28
Total minimum payments	$	116
Less interest	(15)
Present value of lease liabilities	$	101

Weighted-average remaining lease term - operating leases	5.4 years
Weighted-average discount rate - operating leases	6.2%

During each of the first three quarters of 2024, the Company entered into lease agreements with unrelated third parties for distribution centers previously leased by Kellanova. The leases were either transferred to the Company or subleased directly from Kellanova as outlined in the Separation and Distribution Agreement. Payments for these leases are made on a monthly basis. Prior to the execution of these leases, use of the distribution centers was managed under the Transition Services Agreement.

The new sublease agreement executed in the third quarter of 2024 resulted in an increase to operating lease assets of $34 million, which is recorded within Operating lease assets on the Unaudited Consolidated Balance Sheet. This also resulted in an increase to operating lease liabilities of $34 million, of which $4 million is classified as short-term and included in Other current liabilities and $30 million is classified as Long-term operating lease obligations on the Unaudited Consolidated Balance Sheet.

For the year-to-date period ended September 28, 2024, the effect of the new lease agreements resulted in an increase to operating lease assets of $82 million, which is recorded within Operating lease assets on the Unaudited Consolidated Balance Sheet. These leases also resulted in an increase to operating lease liabilities of $82 million, of which $9 million is classified as short-term and included in Other current liabilities and $73 million is classified as Long-term operating lease obligations on the Unaudited Consolidated Balance Sheet.

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Note 7 Income taxes

The Company's consolidated effective tax rate for the quarter and year-to-date period ended September 28, 2024 was 27.8% and 26.1%, respectively. The consolidated effective tax rate for the quarter and year-to-date period ended September 30, 2023 was 23.9% and 23.7%, respectively. The Company's income tax expense is impacted by the level and mix of earnings among tax jurisdictions. The rate differed from the U.S. statutory rate in both periods primarily due to the impact of US state taxes.

Note 8 Derivative instruments

The Company is exposed to certain market risks such as changes in interest rates, foreign currency exchange rates, and price fluctuations, which exist as a part of its ongoing business operations. Management uses derivative and nonderivative financial and commodity instruments to manage these risks. Instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged. As a matter of policy, the Company does not engage in trading or speculative hedging transactions.

Prior to the Spin-Off, the Company participated in Kellanova's hedging program, which uses derivative and nonderivative financial and commodity instruments, including futures, options, and swaps, where appropriate, to manage risks. Since these derivative instruments were entered into and settled by Kellanova for both the Company and Kellanova's other businesses, no asset or liability was recorded on the Company's Unaudited Consolidated Balance Sheets prior to the Spin-Off. However, an appropriate allocation of the gains/losses and fees associated with entering into derivative instruments has been included in the Company's Unaudited Consolidated Statements of Income for each period presented prior to the Spin-Off.

After the Spin-Off, the Company has entered into its own derivative instruments. Derivative instruments are classified on the Unaudited Consolidated Balance Sheet based on the contractual maturity of the instrument or the timing of the underlying cash flows of the instrument for derivatives with contractual maturities beyond one year. Any collateral associated with derivative instruments is classified as Other assets or Other current liabilities on the Unaudited Consolidated Balance Sheet depending on whether the counterparty collateral is in an asset or liability position. Margin deposits related to exchange-traded commodities are recorded in accounts receivable, net on the Unaudited Consolidated Balance Sheet. On the Unaudited Consolidated Statement of Cash Flows, cash flows associated with derivative instruments are classified according to the nature of the underlying hedged item. Cash flows associated with collateral and margin deposits on exchange-traded commodities are classified as investing cash flows when the collateral account is in an asset position and as financing cash flows when the collateral account is in a liability position.

Total notional amounts of the Company’s derivative instruments as of September 28, 2024 and December 30, 2023 were as follows:


(millions)	September 28, 2024		December 30, 2023
Foreign currency exchange contracts	$	300	$	—
Commodity contracts	60		—
Interest rate contracts	250		—
Total	$	610	$	—

Following is a description of each category in the fair value hierarchy and the financial assets and liabilities of the Company that were included in each category at September 28, 2024 and December 30, 2023, measured on a recurring basis.

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. For the Company, level 1 financial assets and liabilities consist primarily of commodity derivative contracts.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. For the Company, level 2 financial assets and liabilities consist of interest rate swaps, over-the-counter commodity and currency contracts.

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The Company's calculation of the fair value of the interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and interest rate curve. Over-the-counter commodity derivatives are valued using an income approach based on the commodity index prices less the contract rate multiplied by the notional amount. Foreign currency contracts are valued using an income approach based on forward rates less the contract rate multiplied by the notional amount. The Company’s calculation of the fair value of level 2 financial assets and liabilities takes into consideration the risk of nonperformance, including counterparty credit risk.

The following table presents assets and liabilities that were measured at fair value in the Unaudited Consolidated Balance Sheet on a recurring basis as of September 28, 2024 and December 30, 2023:

Derivatives designated as hedging instruments


	September 28, 2024						December 30, 2023
(millions)	Level 1		Level 2		Total		Level 1		Level 2		Total










Liabilities:



Interest rate contracts:

Other liabilities	—		2		2		—		—		—



Total liabilities	$	—	$	2	$	2	$	—	$	—	$	—

Derivatives not designated as hedging instruments


	September 28, 2024						December 30, 2023
(millions)	Level 1		Level 2		Total		Level 1		Level 2		Total










Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—	$	4	$	4	$	—	$	—	$	—




Commodity contracts:
Other current liabilities	2		—		2		—		—		—

Total liabilities	$	2	$	4	$	6	$	—	$	—	$	—

During the quarter and year-to-date periods ended September 28, 2024 and September 30, 2023, the Company did not recognize any realized gains or losses associated with the interest rate swaps. These derivatives are accounted for as cash flow hedges and the related net gain or loss is recorded in AOCI and will be amortized to interest expense over the term of the related fixed rate debt.

The effect of derivative instruments on the Company's Unaudited Consolidated Statement of Income and Unaudited Consolidated Statement of Comprehensive Income for the quarters and year-to-date periods ended September 28, 2024 and September 30, 2023 was as follows:

Derivatives designated as hedging instruments


	Gain (loss) recognized in AOCI				Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023

Interest rate contracts	$	(2)	$	—	$	—	$	—	Interest expense

Quarter ended

Year-to-date period ended

September 28,
2024

September 30,
2023

September 28,
2024

September 30,
2023

(millions)

Interest Expense

Interest rate contracts:

—

Amount of gain (loss) reclassified from AOCI into income

—

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Derivatives not designated as hedging instruments

The effect of derivative instruments on the Company's Unaudited Consolidated Statement of Income for the quarters ended September 28, 2024 and September 30, 2023 was as follows:


	Gain (loss) recognized in cost of goods sold				Gain (loss) recognized in other income (expense), net
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Commodity contracts	$	(1)	$	1	$	—	$	—
Foreign currency derivatives	$	(4)	$	(3)	$	—	$	—

The effect of derivative instruments on the Company's Unaudited Consolidated Statement of Income for the year-to-date periods ended September 28, 2024 and September 30, 2023 was as follows:


	Gain (loss) recognized in cost of goods sold				Gain (loss) recognized in other income (expense), net
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Commodity contracts	$	(2)	$	(12)	$	—	$	—
Foreign currency derivatives	$	(6)	$	(2)	$	—	$	—

Counterparty credit risk concentration and collateral requirements

The Company could incur losses in the event of nonperformance by counterparties to over-the-counter ("OTC") financial and commodity derivatives contracts. Management believes risk of loss with respect to derivative contracts is limited due to the use of master netting agreements with credit-ratings based collateralization requirements for OTC derivatives and the use of exchange-traded commodity contracts. As of September 28, 2024, the Company was not in a material net asset position with any OTC derivatives counterparties.

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Note 9 Supplemental financial statement data

Unaudited Consolidated Balance Sheet


(millions)	September 28, 2024		December 30, 2023
Trade receivables	$	169	$	225
Allowance for expected credit losses	(1)		—

Other receivables	31		19
Accounts receivable, net	$	199	$	244
Raw materials	$	54	$	49
Manufacturing supplies	55		53
Materials in process	21		15
Finished goods	209		228
Inventories	$	339	$	345
Property, cost	$	2,745	$	2,676
Accumulated depreciation	(1,976)		(1,937)
Accumulated impairment	(5)		—
Property, net	$	764	$	739






Other third party	500		502
Kellanova (a)	8		39
Accounts payable	$	508	$	541
Obligations under Transition Services Agreement	12		52

Operating lease obligations	18		6
Income taxes payable	13		7
Other	58		40
Other current liabilities	$	101	$	105

(a)The $8 million and $39 million payable to Kellanova represents various items Kellanova paid on the Company's behalf, for which the Company owes reimbursement for amounts incurred related to the Spin-Off.

Note 10 Contingencies

The Company is subject to various legal proceedings, claims, and governmental inspections or investigations in the ordinary course of business covering matters such as general commercial, governmental regulations, antitrust and trade regulations, product liability, environmental, intellectual property, workers’ compensation, employment and other actions. These matters are subject to uncertainty and the outcome is not predictable with assurance. The Company uses a combination of insurance and self-insurance for a number of risks, including workers’ compensation, general liability, automobile liability and product liability.

The Company establishes accruals when appropriate for certain matters where losses are deemed probable and reasonably estimable. There are other claims and legal proceedings pending against the Company for which accruals have not been established. It is reasonably possible that some of these matters could result in an unfavorable judgment against the Company and could require payment of claims in amounts that cannot be estimated at September 28, 2024. Based upon current information, management does not expect any of the claims or legal proceedings pending against the Company, individually or in the aggregate, to have a material impact on the Company’s consolidated financial statements.

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WK KELLOGG CO

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Company, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Unaudited Consolidated Financial Statements and the accompanying notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Quarterly Report").

Business Overview

WK Kellogg Co is an iconic North American cereal company with a differentiated portfolio of brands that have delighted our consumers for over a century. As a leading manufacturer, marketer and distributor of branded ready-to-eat cereal, we endeavor to provide consumers with high-quality products while promoting consumer health and well-being. Our products are manufactured by us in the United States, Mexico, and Canada and marketed in the United States, Canada, and the Caribbean.

We believe our business' long-standing success is attributable to the strength of our brands, our category expertise, and over a century of institutional knowledge, all of which has created a diverse portfolio of cereals that are intended to enhance the lives of our consumers. Our product offerings are well diversified across the cereal sub-categories of taste, wellness and balance, with strong consumer appeal across the spectrum of ages and demographics. Iconic brands used in our business include Frosted Flakes, Special K, Froot Loops, Raisin Bran, Frosted Mini-Wheats, Rice Krispies, Kashi, Corn Flakes and Apple Jacks, among many others.

Our products are manufactured through our production platform consisting of six primary facilities and are sold through a variety of channels such as grocery stores, mass merchandisers, club stores, and drugstores.

Separation from Kellanova

On October 2, 2023, Kellanova (formerly known as Kellogg Company) completed the spin-off (the "Spin-Off") of its North American cereal business through the distribution of all of the shares of WK Kellogg Co (the "Company") common stock to Kellanova’s share owners at a ratio of one share of the Company's common stock for every four shares of Kellanova’s common stock. Prior to the Spin-Off, the Company underwent an internal reorganization that resulted in it becoming the holder, directly or through its subsidiaries, of the North American cereal business held by Kellanova. Prior to the Spin-Off, the Company was a wholly owned subsidiary of Kellanova.

In connection with the Spin-Off, the Company entered into several agreements with Kellanova that govern the relationship of the parties following the Spin-Off and allocate between the Company and Kellanova various assets, liabilities, and obligations, including, among other things, employee benefits, intellectual property, and tax related assets and liabilities. The agreements included a Separation and Distribution Agreement, Employee Matters Agreement, Supply Agreement, Master Ownership and License Agreements regarding Patents, Trademarks and Certain Related Intellectual Property, Tax Matters Agreement and Transition Services Agreement.

Basis of Presentation

Our MD&A references consumption and net sales in discussing our sales trends for certain brands. We record net sales upon delivery of shipments to our customers. Consumption refers to consumer purchases of our products from our customers.

Key Factors Affecting Our Business

We believe key industry and economic factors that are currently impacting our business, and which in the near term are expected to continue to impact our business, include the following:

Macroeconomic conditions. In recent years, geopolitical instability, including wars and conflicts, as well as other global events have resulted in certain impacts to the global economy, including market disruptions, supply chain challenges and inflationary pressures. We were able to mostly offset the dollar impact of this input-cost inflation

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through the execution of productivity initiatives and the implementation of revenue growth management actions to realize price. Additionally, from time to time, we may enter into a combination of fixed price contracts with suppliers and commodity derivative instruments to manage the impact of volatility in the price of raw materials. During the current year we have experienced increased supply chain stability and some level of commodity cost moderation while other input costs have continued to be inflationary.

The war in Ukraine and the related sanctions, along with the conflict in the Middle East, have increased global economic and geopolitical uncertainty. The Company is a North American-focused company with no direct exposure to Russia, Ukraine or the Middle East. However, sanctions imposed by the United States on Russian oil and gas imports, as well as disruption to Ukraine’s wheat and other agricultural supply due to the ongoing military conflict, could cause further inflation of our commodity costs.

Highly competitive environment. Our business is concentrated primarily in a single product category that faces intense competition. The principal aspects of our business where we experience competition include brand recognition, taste, nutritional value, price, promotion, innovation, shelf space and customer service. We have competition from both branded and private label product offerings. Our ability to successfully compete in the marketplace is dependent on our strategic execution on the items above.

Challenging retail environment. Our business is largely concentrated in the traditional retail grocery trade with a significant percentage of our sales coming from a small group of large U.S. retail customers. The U.S. retail environment continues to face further consolidation. We must leverage our marketing expertise, product innovation and category leadership position to respond to our customers and provide high service levels.

These factors contribute to a market environment of intense competition, constant product innovation and continuing cost pressure that creates a challenging commercial and economic environment. We continually evaluate these factors as we develop and execute our strategies.

Non-GAAP Financial Measures

The non-GAAP financial measures in this Quarterly Report are supplemental measures of our performance. These non-GAAP financial measures that we provide to management and investors exclude certain items that we do not consider part of on-going operations. Our management team utilizes a combination of GAAP and non-GAAP financial measures to evaluate business results, to make decisions regarding the future direction of our business, and for resource allocation decisions, including incentive compensation. As a result, we believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team and improves investors’ understanding of our underlying operating performance which is useful in the analysis of ongoing operating trends. All historical non-GAAP financial measures have been reconciled from the most directly comparable.GAAP financial measures.

As non-GAAP financial measures are not standardized, they may not be comparable to financial measures used by other companies or to non-GAAP financial measures having the same or similar names. In order to compensate for such limitations of non-GAAP measures, readers should review the reconciliations and should not consider these measures in isolation from, or as alternatives to, the comparable financial measures determined in accordance with GAAP.

•Adjusted Net Income: We adjust the GAAP net income (loss) for: mark-to-market impacts from commodity and foreign currency contracts, separation costs related to the Spin-Off, business, portfolio realignment and restructuring costs, other income (expense) and the tax impacts of these noted items. Management believes that this non-GAAP financial metric provide investors an additional basis to assess results over time.

•Adjusted Earnings Per Share (EPS): We adjust GAAP EPS for the per share affect of: mark-to-market impacts from commodity and foreign currency contracts, pre-tax separation costs related to the Spin-Off, business, portfolio realignment and restructuring costs, other incomes (expense) and the tax impacts of these noted items. Management believes that these metrics provide investors an additional basis to assess results over time.

•Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"): We adjust the GAAP net income (loss) for: interest expense, income tax expense (benefit), depreciation and amortization expense, mark-to-market impacts from commodity and foreign currency contracts, other income (expense),

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net, separation costs related to the Spin-Off and business, portfolio realignment and restructuring costs. Management believes that these metrics provide investors an additional basis to assess results over time.

•Adjusted gross profit and adjusted gross margin: We adjust GAAP gross profit and gross margin to exclude the effect of business, portfolio realignment and restructuring costs, separation costs related to the Spin-Off and mark-to-market impacts from commodity and foreign currency contracts. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives.

•Free cash flow: Free cash flow is defined as Net cash provided by (used in) operating activities reduced by expenditures for property additions. Cash flow does not represent the residual cash flow available for discretionary expenditures. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases once all of the Company’s business needs and obligations are met.

Significant items impacting comparability

Mark-to-market on foreign exchange and commodity hedges

The Company recognizes mark-to-market adjustments for commodity contracts and certain foreign currency contracts as incurred. Changes between contract and market prices for commodity contracts and certain foreign currency contracts result in gains/losses that are recognized in the quarter they occur. The Company recorded a pre-tax mark-to-market loss of $3 million and $5 million for the quarter and year-to-date period ended September 28, 2024. The Company recorded a pre-tax mark-to-market gain of $8 million and loss of $3 million for the quarter and year-to-date period ended September 30, 2023.

Separation costs

The Company incurred pre-tax charges related to the Spin-Off, primarily related to transition and spin-related employee costs under the Transition Services Agreement of $6 million and $22 million for the quarter and year-to-date period ended September 28, 2024. The Company recorded separation costs, primarily related to legal and consulting costs, of $28 million and $89 million for the quarter and year-to-date period ended September 30, 2023.

Business, portfolio realignment and restructuring costs

The Company incurred restructuring and non-restructuring costs related to a reconfiguration of its supply chain network designed to drive increased productivity, resulting in pre-tax charges of $42 million and $44 million for the quarter and year-to-date period ended September 28, 2024. The Company incurred pre-tax costs in connection with its business and portfolio realignment of $1 million and $2 million for the quarter and year-to-date period ended September 30, 2023.

Other income (expense), net

The Company excludes the impact of all non-operating items from its Adjusted EBITDA calculation, which primarily includes pension-related income (expense), net and financing fees. As a result, other expense of $2 million and other income of $8 million was excluded for the quarter and year-to-date period ended September 28, 2024. Other income of $38 million and $53 million was excluded for the quarter and year-to-date period ended September 30, 2023.

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Net income (loss)

The following tables provide an analysis of net income performance for the quarters and year-to-date periods ended September 28, 2024 and September 30, 2023:


	Quarter ended				Year-to-date period ended
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Reported net income (loss)	$	(11)	$	42	$	53	$	95
(Gain) loss on mark-to-market on foreign exchange and commodity hedges	3		(8)		5		3
Other (income) expense	2		(38)		(8)		(53)
Separation costs	6		28		22		89
Business, portfolio realignment and restructuring costs	42		1		44		2



Income tax impact applicable to adjustments, net	(15)		$	4	(21)		$	(8)
Adjusted net income	$	27	$	28	$	96	$	127

Note: Tables may not foot due to rounding.

Business, portfolio realignment and restructuring costs include approximately $38 million of restructuring costs.

Other (income) expense includes a $3 million pension curtailment loss driven by restructuring activities. In addition, Other (income) expense includes a $3 million pension remeasurement loss.

See Note 4 for further information on restructuring costs.


	Quarter ended				Year-to-date period ended
(millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Reported net income (loss)	$	(11)	$	42	$	53	$	95
Interest expense	7		—		23		—
Income tax expense (benefit)	(4)		13		19		29
Depreciation and amortization expense	21		17		59		49

EBITDA	$	12	$	72	$	153	$	174
(Gain) loss on mark-to-market foreign exchange and commodity hedges	3		(8)		5		3
Other (income) expense, net	2		(38)		(8)		(53)
Separation costs	6		28		22		89
Business, portfolio realignment and restructuring costs	42		1		44		2
Adjusted EBITDA	$	65	$	55	$	217	$	215

Note: Tables may not foot due to rounding.

Business, portfolio realignment and restructuring costs include approximately $38 million of restructuring costs.

Other (income) expense includes a $3 million pension curtailment loss driven by restructuring activities. In addition, Other (income) expense includes a $3 million pension remeasurement loss.

See Note 4 for further information on restructuring costs.

Reported Net income for the quarter and year-to-date period ended September 28, 2024 decreased approximately 126% and 44%, respectively, compared to prior year quarter and year-to-date period as a result of business and portfolio alignment costs related primarily to our supply chain modernization restructuring initiatives that commenced in the third quarter of 2024. After excluding the impacts of income tax expense, interest expense and depreciation, EBITDA for the quarter and year-to-date period ended September 28, 2024 decreased 83% and 12%, respectively, compared to the prior year quarter and year-to-date period driven by supply chain modernization initiatives. Adjusted EBITDA, which excludes the impacts of mark-to-market, other (income) expense, business, portfolio realignment and restructuring costs and separation costs, increased 19% and 1% for the quarter and year-to-date period respectively, compared to the prior period year quarter and year-to-date period reflecting the benefit of revenue growth management and increasing levels of operational effectiveness within our supply chain. Net income, EBITDA and adjusted EBITDA include the impacts of prior year insurance recoveries of $16 million for the year-to-date period.

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Margin performance

Our gross profit and gross profit margin performance for the quarters ended September 28, 2024 and September 30, 2023 were as follows:


Quarter ended	September 28, 2024				September 30, 2023				GM change vs. prior year (pts.)
(millions)	Gross Profit (a)		Gross Margin (b)		Gross Profit (a)		Gross Margin (b)
Reported	$	194	28.1	%	$	196	28.4	%	(0.3)
(Gain) loss on mark-to-market foreign exchange and commodity hedges	3		0.5	%	(8)		(1.1)	%	1.6
Separation costs	2		0.3	%	2		0.3	%	—

Business, portfolio realignment and restructuring costs	4		0.5	%	2		0.3	%	0.2

Adjusted	$	203	29.4	%	$	193	27.9	%	1.5

Note: Tables may not foot due to rounding.

(a) Gross profit is equal to net sales less cost of goods sold.

(b) Gross profit as a percentage of net sales.

Reported gross margin for the quarter decreased 30 basis points driven by unfavorable mark-to-market on foreign currency and commodity hedges compared to prior year quarter. Adjusted gross margin, which excludes mark-to-market impacts on commodities and foreign exchange hedges, business, portfolio realignment and restructuring costs and separation costs increased 150 basis points versus prior year quarter, driven by increased operational effectiveness within our supply chain.

Our gross profit and gross profit margin performance for the year-to-date periods ended September 28, 2024 and September 30, 2023 were as follows:


Quarter ended	September 28, 2024				September 30, 2023				GM change vs. prior year (pts.)
(millions)	Gross Profit (a)		Gross Margin (b)		Gross Profit (a)		Gross Margin (b)
Reported	$	593	28.7	%	$	568	26.9	%	1.8
(Gain) loss on mark-to-market foreign exchange and commodity hedges	5		0.2	%	3		0.1	%	0.1
Separation costs	8		0.4	%	19		0.9	%	(0.5)

Business, portfolio realignment and restructuring costs	6		0.2	%	3		0.1	%	0.1

Adjusted	$	611	29.5	%	$	592	28.1	%	1.4

Note: Tables may not foot due to rounding.

(a) Gross profit is equal to net sales less cost of goods sold.

(b) Gross profit as a percentage of net sales.

Reported gross margin for the year-to-date period increased 180 basis points versus the prior year driven by increased operational effectiveness within our supply chain. Adjusted gross margin increased 140 basis points versus the prior year-to-date period, which excludes mark-to-market impacts on commodities and foreign exchange hedges, business, portfolio realignment and restructuring costs and separation costs, driven by operational effectiveness within our supply chain.

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Earnings Per Share (EPS)


	Quarter ended				Year-to-date period ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Reported EPS	$	(0.13)	$	0.49	$	0.60	$	1.10
(Gain) loss on mark-to-market on foreign exchange and commodity hedges (pre-tax)	0.03		(0.09)		0.05		0.03

Other (income) expense	0.03		(0.45)		(0.09)		(0.61)
Separation costs (pre-tax)	0.07		0.33		0.25		1.04
Business, portfolio realignment and restructuring costs (pre-tax)	0.49		0.01		0.51		0.02


Income tax impact applicable to adjustments, net*	(0.18)		0.04		(0.24)		(0.10)



Adjusted EPS	$	0.31	$	0.33	$	1.09	$	1.48

Reported Earnings Per Share for the quarter and year-to-date period ended September 28, 2024 decreased $0.62 and $0.50 cents per share respectively as a result of supply chain modernization initiatives that commenced in the third quarter. Earnings per share was also impacted by lapping interest expense of zero in the prior year quarter and year-to-date periods on a carve out basis.

Adjusted Earnings Per Share, which excludes the impacts of mark-to-market, separation costs, business and portfolio realignment costs and other (income) expense and the tax impacts of these noted items for the quarter and year-to-date period ended September 28, 2024 decreased $0.02 and $0.39 cents per share. Adjusted Earnings Per Share was impacted by the lapping of interest expense of zero in the prior year quarter and year-to-date period on a carve out basis.

The per share impact of interest expense on both Earnings Per Share and Adjusted Earnings Per Share was $0.08 and $0.26 per share respectively for quarter and year-to-date period.

Net sales


	Quarter ended					Year-to-date period ended
(millions)	September 28, 2024			September 30, 2023		September 28, 2024			September 30, 2023
Net sales	$	689		$	692	$	2,068		$	2,112




























% change - 2024 vs. 2023:
Net sales increase (decrease)	(0.4)		%			(2.1)		%











Volume (tonnage)	(4.3)		%			(6.7)		%
Pricing/mix	3.9		%			4.6		%

Note: Tables may not foot due to rounding.

Net sales for the quarter and year-to-date period ended September 28, 2024 remained flat and decreased approximately, 2%, respectively, compared to the prior year quarter and year-to-date period. Volume declined approximately 4% and 7%, respectively compared to the prior periods, reflecting price elasticity. This decline in volume was partially offset by revenue growth management initiatives, resulting in a favorable price/mix of approximately 4% for the quarter and year-to-date period ended September 28, 2024.

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Selling, general and administrative expense


	Quarter ended					Year-to-date period ended
(millions)	September 28, 2024			September 30, 2023		September 28, 2024			September 30, 2023
Selling, general & administrative expense	$	162		$	179	$	468		$	497




























% change - 2024 vs. 2023:
Selling, general & administrative expense increase (decrease)	(9.5)		%			(5.8)		%

Selling, general and administrative expense for the quarter ended September 28, 2024 decreased approximately 9%, driven primarily by a decrease in Spin-Off related costs of $21 million when compared to the prior year quarter. Selling, general and administrative expense for the quarters ended September 28, 2024 and September 30, 2023 was 24% and 26% of net sales, respectively.

Selling, general and administrative expense for the year-to-date period ended September 28, 2024 decreased approximately 6%, driven primarily by a decrease in spin-off related costs of $55 million. which was partly offset by by an increase of overall costs to operate as a standalone entity. Selling, general and administrative expense for the year-to-date periods ended September 28, 2024 and September 30, 2023 was 23% and 24%, of net sales respectively.

Other income (expense), net

Other income (expense), net consists primarily of allocated pension and postretirement benefit plan related mark-to-market, interest cost, and expected return on plan assets.

For the quarter ended September 28, 2024, other income (expense), net decreased by 105% to $(2) million compared to $38 million in the quarter ended September 30, 2023. The decrease was driven by Pension and Postretirement benefit plan remeasurements included in other income (expense) which decreased to $(3) million for the quarter ended September 28, 2024 compared to $32 million for the quarter ended September 30, 2023. The plan remeasurements in the current year quarter were driven by the restructuring action impacts to the plan. Prior year quarter remeasurements were triggered by the separation and transfer of certain plan assets and obligations as a result of the Spin-Off. See Note 5 to the accompanying Unaudited Combined Financial Statements for more information.

For the year-to-date period ended September 28, 2024, other income (expense), net decreased by 85% to $8 million compared to $53 million in the year-to-date period ended September 30, 2023. This was driven by Pension and Postretirement benefit plan income included in other income (expense) which decreased by $35 million for the year-to-date period ended September 28, 2024. The decrease was due primarily to Pension and Postretirement plan remeasurement losses incurred in the current year-to-date period compared to the prior year-to-date period remeasurement gains.

Income taxes

The Company's consolidated effective tax rate for the quarter and year-to-date period ended September 28, 2024, excluding discrete tax items related to the restructuring action was 27.8% and 26.1%, respectively. The Company recorded a discrete tax benefit of approximately $12 million including $11 million related to the restructuring action during the quarter. The consolidated effective tax rate for the quarter and year-to-date period ended September 28, 2024, including discrete tax was 26.1% and 27.8%, respectively. The consolidated effective tax rate for the quarter and year-to-date period ended September 30, 2023 was 23.9% and 23.7%, respectively. The Company's income tax expense is impacted by the level and mix of earnings among tax jurisdictions. The rate differed from the US statutory rate in both periods primarily due to the impact of US state taxes.

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Restructuring

For the quarter and year-to-date period ended September 28, 2024, the Company recorded total restructuring charges of $41 million. These charges are comprised of $38 million recorded to restructuring expense and $3 million to OIE. These charges consisted of asset related costs which include accelerated depreciation and asset write-off and impairment charges, employee severance and other termination benefits, pension curtailment loss, and legal and consulting fees.

Liquidity and capital resources

In September of 2023, the Company entered into a Credit Agreement, consisting of a $500 million term loan (the "Term Loan"), a $250 million delayed draw term loan, and a $350 million equivalent multicurrency revolving credit facility (collectively, the “Credit Facility”). As of September 28, 2024, outstanding borrowings under the Credit Agreement were comprised of $472 million in aggregate remaining principal amount of the Term Loan, of which $15 million was recognized as the current portion, less upfront fees paid during debt issuance. As of September 28, 2024, there was an additional $600 million of borrowing capacity under the Credit Facility.

Our ability to fund our operating needs will depend on our future ability to continue to generate positive cash flow from operations and on our ability to obtain debt financing on acceptable terms. Management believes that our cash balances and funds provided by operating activities, along with borrowing capacity under the Credit Facility and access to capital markets, taken as a whole, provide (i) adequate liquidity to meet all of our current and long-term obligations when due, including third-party debt that was incurred in connection with the Spin-Off, (ii) adequate liquidity to fund capital expenditures primarily utilized in manufacturing our products, and (iii) flexibility to meet investment opportunities that may arise. However, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including (1) our credit ratings, including the lowering of any of our credit ratings, or absence of a credit rating, (2) the liquidity of the overall capital markets and (3) the future state of the U.S. and global economy and, accordingly, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms in the future, or at all.

We believe our operating cash flow, together with borrowings capacity under our Credit Facility, will be adequate to meet our operating, investing and financing needs in the foreseeable future, and at a minimum for the next 12 months. We plan to utilize such flexibility to drive an investment philosophy that balances capital investments in areas such as supply chain optimization, cost-saving projects and new capabilities, with the ability to further increase shareowner value through a combination of debt reduction, return of capital to our shareowners in the form of dividends as well as potential acquisitions. In the near term we may increase our indebtedness to fund important capital projects. Thereafter, however, we anticipate being able to reduce indebtedness as a way to increase our financial flexibility and enhance shareowner value.

Table of Content s

The following table sets forth a summary of our cash flows:


	Year-to-date period ended
(millions)	September 28, 2024		September 30, 2023
Net cash provided by (used in):
Operating activities	98		$	184
Investing activities	(94)		(89)
Financing activities	(44)		(31)
Effect of exchange rates on cash and cash equivalents	(2)		—
Net increase (decrease) in cash and cash equivalents	$	(42)	$	64

Operating activities

Net cash flow provided by (used in) operating activities for the year-to-date period ended September 28, 2024, decreased to $98 million, compared to $184 million in the prior year-to-date period. The change was primarily driven by the settlement of $32 million of transition payables balances due to Kellanova in the first quarter of 2024, pursuant to the Transition Services Agreement and a decrease in accrued advertising and promotional accruals when compared to prior year financial figures prepared on a carve out basis. Overall working capital components were flat and reflect increased accounts receivable monetization and the return to normalized inventory levels.

We measure free cash flow as net cash provided by operating activities, reduced by expenditures for property additions. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities and share repurchases. Our free cash flow metric is reconciled to the most comparable GAAP measure below:


	Year-to-date period ended
(millions)	September 28, 2024		September 30, 2023
Net cash provided by operating activities	$	98	$	184
Additions to properties	(96)		(93)
Free cash flow	$	2	$	91

Investing activities

Net cash used in investing activities was $94 million for the year-to-date period ended September 28, 2024 compared to $89 million in the prior year-to-date period due to differences in the timing of capital spending in the current year compared to the prior year.

Financing activities

Net cash used in financing activities for the year-to-date period ended September 28, 2024 was $44 million compared to net cash used in financing activities of $31 million during the prior year-to-date period. The increase is primarily driven by $41 million of dividend payments to shareowners in 2024, partly offset by $25 million in net transfers to Kellanova in the prior year.

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In August of 2024 the Board of Directors of the Company declared a dividend of $0.16 per share of common stock, paid on September 13, 2024 to shareowners of record as of the close of business on August 29, 2024.

Monetization and Supplier Finance Programs

The Company maintains a monetization agreement with an unaffiliated financial institution specifically designed to factor trade receivables with certain customers that have extended terms. Under this monetization arrangement, from time to time, the Company sells these customers’ trade receivables at a discount on a non-recourse basis. A portion of the cash proceeds is subject to certain restrictions. Transfers under these agreements are accounted for as sales of receivables resulting in the receivables being de-recognized in the Unaudited Consolidated Balance Sheet. The monetization program provides for the continuing sale of certain receivables on a revolving basis until the arrangement is terminated by either party; however, the maximum receivables that may be sold at any time is approximately $350 million. Prior to the Spin-Off, the Company participated in Kellanova's monetization program, which was structured similarly but resulted in a higher level of receivables allowed to be sold when compared to the current program in place.

The Company has no retained interest in the receivables sold; however, the Company does have collection and administrative responsibilities for the sold receivables. The Company has not recorded any servicing assets or liabilities as of September 28, 2024 and December 30, 2023 for these agreements as the fair value of these servicing arrangements as well as the fees earned were not material to the financial statements. Accounts receivable sold of $320 million and $266 million remained outstanding under these arrangements as of September 28, 2024 and December 30, 2023, respectively. The proceeds from these sales of receivables are included in Net cash provided by (used in) operating activities in the Unaudited Consolidated Statement of Cash Flows. The recorded net loss on sale of receivables was $5 million and $14 million for the quarter and year-to-date period ended September 28, 2024, respectively, and $3 million and $11 million for the quarter and year-to-date period ended September 30, 2023, respectively. The recorded loss is included in Other income (expense), net, on the Unaudited Consolidated Statement of Income.

The Company also has agreements with third parties to provide accounts payable tracking systems which facilitate participating suppliers’ ability to monitor and, if elected, sell payment obligations from the Company to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal is to capture overall supplier savings, in the form of payment terms or vendor funding, and the agreements facilitate the suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. The Company has no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under the arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by the agreements for those payment obligations that have been sold by suppliers.

The payment of these obligations by the Company is included in Net cash provided by (used in) operating activities in the Unaudited Consolidated Statement of Cash Flows. As of September 28, 2024, $133 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system. As of December 30, 2023, $142 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system.

Critical accounting estimates

We have included a summary of our critical accounting estimates in our 2023 Annual Report. There have been no material changes to the summary provided in that report.

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Forward-looking statements

This Quarterly Report contains a number of “forward-looking statements” with expectations concerning, among other things, sales, margins, advertising, promotion, merchandising, brand building, operating profit, and earnings per share; innovation; the results of the Spin-Off; our strategy, financial principles, and plans; initiatives, improvements and growth; investments; capital expenditures; asset write-offs and expenditures and costs related to productivity or efficiency initiatives; the impact and results of the restructuring; the impact of accounting changes and significant accounting estimates; our ability to meet interest and debt principal repayment obligations; minimum contractual obligations; future common stock repurchases or debt reduction; effective income tax rate; cash flow and core working capital improvements; interest expense; commodity and energy prices; and employee benefit plan costs and funding. Forward-looking statements include predictions of future results or activities and may contain the words “expect,” “believe,” “will,” “can,” “anticipate,” “estimate,” “project,” “should,” or words or phrases of similar meaning or the negative thereof. For example, forward-looking statements are found in several sections of this MD&A. Our actual results or activities may differ materially from these predictions.

Our future results could be affected by a variety of other factors, including, among others, a decline in demand for ready-to-eat cereals; supply chain disruptions and increases in costs and/or shortages of raw materials, labor, fuels and utilities as a result of geopolitical, economic and market conditions; consumers’ perception of our brands or company; business disruptions; our ability to drive our growth targets to increase revenue and profit; our failure to achieve our targeted cost savings and efficiencies from cost reduction initiatives; our failure to achieve the expected benefits from our supply chain modernization efforts; unanticipated costs and negative financial and other impacts of our planned network consolidation; strategic acquisitions, alliances, divestitures or joint ventures or organic growth opportunities we may pursue in the future; material disruptions at one of our facilities; our ability to attract, develop and retain the highly skilled people we need to support our business; a shortage of labor, our failure to successfully negotiate collectively bargained agreements, or other general inflationary pressures or changes in applicable laws and regulations that could increase labor costs; an increase in our post-retirement benefit-related costs and funding requirements caused by, among other things, volatility in the financial markets, changes in interest rates and actuarial assumptions; our inability to obtain sufficient capital to grow our business and to increase our revenues; an impairment of the carrying value of goodwill or other acquired intangibles; increases in the price of raw materials, including agricultural commodities, packaging, fuel and labor; increases in transportation costs and reduced availability of, or increases in, the price of oil or other fuels; competition, including with respect to retail and shelf space; the changing retail environment and the growing presence of alternative retail channels; the successful development of new products and processes; adverse changes in the global climate or extreme weather conditions; and other risks and uncertainties described in Part I, Item 1A of our 2023 Annual Report. Forward-looking statements speak only as of the date of this Quarterly Report, and we undertake no obligation to publicly update them except as required by law.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to certain market risks, which exist as a part of our ongoing business operations. We use derivative financial and commodity instruments, where appropriate, to manage these risks. As a matter of policy, we do not engage in trading or speculative transactions. Refer to Note 8 within the Notes to Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for further information on our derivative financial and commodity instruments.

Refer to disclosures contained within Part I, Item 7A of our 2023 Annual Report for information about market risk to which we are exposed. There have been no material changes in the Company’s market risk during the quarter ended September 28, 2024.

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Item 4. Controls and Procedures

Management of the Company, with the participation of its Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the period ending September 28, 2024. Based upon our evaluation, our CEO and our CFO have concluded that, as of the period ending September 28, 2024, our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO and our CFO, as appropriate, to allow timely decisions regarding required disclosure.

No changes in our internal controls over financial reporting during the quarter ended September 28, 2024 have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Table of Content s

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are subject to various legal proceedings, claims and governmental inspections, audits or investigations arising out of our business which cover matters such as general commercial, governmental regulations, antitrust and trade regulations, product liability, environmental, intellectual property, employment and other actions. We currently are not involved in any legal proceedings that we believe will result, individually or in the aggregate, in a material adverse effect upon our financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our 2023 Annual Report. The risk factors disclosed in the 2023 Annual Report in addition to the other information set forth in this Quarterly Report, could materially affect our business, financial condition, or results.

Item 5. Other Information

Insider Trading Arrangements

During the most recent fiscal quarter, none of our directors or officers subject to Section 16 of the Exchange Act adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act and/or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

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Item 6. Exhibits

(a)Exhibits:



31.1			Rule 13a-14(a)/15d-14(a) Certification of Gary Pilnick
31.2			Rule 13a-14(a)/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)

*Furnished herewith

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WK KELLOGG CO

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


WK KELLOGG CO

/s/ David McKinstray
David McKinstray
Chief Financial Officer

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

Date: November 7, 2024

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Date	Price Target	Rating	Analyst
7/10/2024	$24.00 → $17.00	Neutral → Underperform	BofA Securities
5/8/2024	$20.00	Neutral → Underperform	Exane BNP Paribas
12/14/2023	$13.00	Equal-Weight	Morgan Stanley
11/13/2023	$13.00	In-line	Evercore ISI
11/6/2023	$11.00	Underweight	Barclays
11/2/2023	$11.00	Neutral	JP Morgan
10/18/2023	$11.00	Market Perform	TD Cowen
10/16/2023	$11.50	Neutral	BofA Securities

SEC Form 10-Q filed by WK Kellogg Co

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