KLG - Earnings call transcript Q3 2024

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Operator

Good morning. Thank you for attending today's WK Kellogg Co Q3 Earnings Call. My name is Tamia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Karen Duke, Vice President of Finance and Investor Relations.

You may proceed.

Karen Duke

operator. you, Thank thank review and joining today us Good our you third a of quarter for morning, for results. Officer. Slide McKinstray, I'm joined Chief Chief statements Dave and our Pilnick, our Financial disclaimer. our this morning Executive by Officer; Gary X forward-looking shows Chairman and

are materially today, as As from the those aware, projections Actual statements. statements are performance projected. future forward-looking certain results for made you such company's could differ

the the Factors disclaimer including these information as results could to factors concerning listed refer please the further those on For as cause to slide filings, well in section. factors differ, SEC that our Risk

As we financial we'll measure, today, results. included noted non-GAAP be for adjusts as GAAP certain items discuss reported, our results which in respective referencing the our unless

on For periods a basis. prior to adjusted the presented are standalone spin-off, results

and the adjusted results on to periods to presented and on standalone our adjusted XXXX For are an referred basis compared spin-off, results. after

You the will can reconciliation Gary. each earnings non-GAAP of over call our release measure to to GAAP to appendix non-GAAP and find turn the definitions and the in within now presentation. I

Gary Pilnick

Karen, back then call turn Thank performance joining well time call. who our third performance detail quarter the Officer, on We'll for over and guidance, activation. year. our our Q&A. commercial outlook Dave the with discuss you I results call as will good everyone. will Thanks, Chief out our Today, in-market our Financial as close for financial morning, I'll half QX to McKinstray, provide and additional for the and

to largely we business performing by looking as say It's at that start Slide the fair Let's X. expected. is

in told sales improving improved half levels, levels deliver Last X.X%, in challenging our non-measured our environment improving, continued our allowing normal balance a and increased to was sales realization. service, a programming, which better the in due activation, performance customer back-to-school inventory of replenish you shipments. and emerged is of quarter, and commercial improve we impacted trajectory improvements lapping to sales to Canada, our our performance positively better we supply did QX price and second chain in of commercial expect quality performance the strength of For that the as Indeed, channels. stronger quarter, continues XXXX. retailers volume more to by driven by execution net team driven And

operational top with Our expansion. line gross discipline to performance, of along another and continued quarter led focus margin

we how quarter, in grew This the gross year. which our achieved of the XX point commitments EBITDA, versus performance challenging environment. we deliver a basis the is For XX.X% margin increase executing to this team with in versus are benefited pleased our year. Overall, and quarter XX.X%, prior financial last on ability

is net Our results full position QX X%. expected X% which guidance us and to our range our now reaffirm on sales guidance EBITDA, a today grow to to puts in XXXX year raise

retailers Let's patterns quarter. to with xAOC volume turn dollar and category category sales consumption and continue towards quarter Slide declining positive dollar as Nielsen channels. Club the the to The quarter lean and trends dollar Both focused cereal compared dollar sales by X.X% X to a in last value Shopping improved discuss saw and again to declined for growth. single-digits. U.S. our low measured volume performance.

quarter breadth, increased of digit affordability, double behavior, the backdrop display This cereal to is which consumption seeking to overall and our mix value U.S., strategy. growth. quarter, due demonstrating activations, while saw driven with the Each key by delivers. Year-to-date, up sequentially performance consumption I'll dollar customers cereal a talk TDPs. in through xAOC consumption volume growth more segments and strong were X%, merchandising seasonal positive deliver both continue providing stable X.X%. by to performed down for and value a successful Interestingly, display has about is planning to increased our approximately in of Nielsen the measured the In The moment. and improved dollar and category and category our price/mix, line execute consumers Granola the with positive activity in assumptions Premium down the X.X%

also maintain increased our share Canada, from the quality channel. In at to modestly introductions. August our strategy, right the This last team on back-to-school and good WK volume our sharing in back-to-school we'll working product how the integration detail. discuss turn example improved at a ideas and on effective by ensuring outperformed the in with unit solid turn of ways the gains saw more which with sequential versus share PPA the We continue improvement we're another across in brands, period and which new positive, We execution On saw fast expectations the delivered which position volume right focuses XX.X%, quarter, of early line September in quarter through of where driven and meeting business. during participating and we quarter. there new our consumer our benefiting of is the is market, product

position the XX.X%. points Canada For has market basis their increased XXX year, leading to

Caribbean Additionally, quarter. share reached executing and team the is well during our market a XX%

U.S. is for Caribbean us, you portfolio. the team's the X, Page smaller accomplishment see performance could certainly the noteworthy. On a of market While is our

Next said you more & X Core last our at the if is Natural easily our in understood Core groups, X, look we quarter, Organic. and As it performance portfolio

includes performance the and which in share. finally, the recent its of X Special performance down Core maintained Corn Corn quarter. sales. consistent the improve the Pops, group was group. In make-up continues to in like Core our to our & Flakes approximately basis Organic reminder, Raisin on six shown or of X represents brands of from which points Apple the brands Naked said, approximately the brands, quarter, grew a contains and XX benefit XX% brands This slide. our The share continue of are represents Natural Jacks, growing X fastest which of Kashi category. Flakes, our Bear our X Core we the Bran, That Frosted of and work K, with remain trajectory our of As our And largest iconic Next and sales XX% and

the brand While a take are the to our a plan Special more we campaign. getting launch and will for has time complete it new our commercial started to of team expectations, already with for perform XXXX Reason for the

Special of K, Excluding up XX and our Core points in year-to-date. share was QX basis is basis points of X XX up share

delivered and the Moving were to consumption Core, our Pops brands key in Jacks Next Corn and quarter. dollar activation back-to-school our during positive Apple

share, you Corn Flakes Corn from improved and have points XX In year-to-date, fact, when basis look of benefiting supply. Pops gained

the share execution supply commercial our strategy. by ahead pleased opportunity segment affirming starting and gained the nearly performs. We and sequential of WK. are that of with brands in the improved or us innovation a with impact we quarter Natural our for on consumption shelf, units the it and improvement Year-to-date, we're of improvement when in Organic positive along big Naked saw category. momentum sales to the Finally, held and positive volume, meaningful brand gives last spoke you driven is retail to about group is This & performance see supply signs our growing the the our portfolio growing build flat confidence and and improving showing maturing quarter, majority execution. meaningfully with dollar NNO many market. improved Bear and supply to is sales in in Continuing of as our have had

get back-to-school help to at our look of activity for let's cereal. time Parents around Back-to-school the looking are started Slide an year Now and transitioning new to routine brands on right. important X. morning centered our for is a the day

are first independent We back-to-school with pleased as company. our an programming

of needs we the ensuring with show in activations on feature parents commercial designed and in for teams consumers up Our mind, display.

approach elements. X Our end-to-end included

for digital Reading highlighting brands new promotion, our and what back-to-school call our our of children's with our First, which the in-store model we multi-brand products. marketing ran Feeding free includes purchase shoppers, books and campaigns

commercial to return idea back-to-school, of this through our OEE life and enabled supply. during to trust this full improved with time are successfully drove effectiveness, execute the refer in-store build equipment during customer helping key Next, service share. with Improvements and retailers. to unit this as believe this which We in year. allowing key to us was we programming and sales of by is finally, us brought increased our which meaningful force in-store display retailers, dollar overall increased And retail weeks

call, these types QX often a show take about let's drive spoke our at innovation consumers important we to a the Halloween largest X, Netflix. impulse. as role purchases Wednesday, of one everyday look XX% the on and play part ever to are in innovation an Slide engagement most excitement. On the seasonal such cereal. back watched on and these we the the On is into ideas half how for of Seasonal a most brought to Addams category and our story seasonal Offerings how Halloween holiday. tapping bought Family Add that, offerings spin-off activations with and items connect Wednesday have become and category, of incremental of the together

of display. In differentiated to display, what right from can offering our we the So is are market example item of demand to clearly we it's consumer. how have shoppers value critical percentage velocity drive the category the the great to This and third had was a deliver looking in highest quarter, the innovation sales Wednesday a bring the when highest and for. delivering

possible. our which to our and activations supply turn Slide performance, X Let's of look at makes all commercial

our to supply supply We that commercial We consistently and you have investing saw chain. we key know is out enhancing plan, that of this in quarter. a product and enabler spoken our integrated improved about play

delivered same planning when OEE. progressing our performance improved a of the the optimized levels service driven This can time, while is deliver, engagement team and to at and meaningful impact QX of in type we're Our longer-term example XXXX, priorities. our an focus increase by strategic in compared near-term

look chain chain we reminder, the consolidation a capital our network and this about key over providing we future. pass last strategic business. quarter, of as foundation call the updates and will supply many drive can to our product sustainable to provided in advance foundation, our is the into so plan to we strengthening forward is further a now the investment, advantage priority. I Dave. journey, modernization We consumer details Supply more companies priority for build strategic As longer-term our

David McKinstray

Thank you, Gary.

are that included reviewing results third results and charges XXXX and to have spin, Before quarterly to and initiative. restructuring presentation our related results include past, present press We've on which Kellanova highlight with have mentioned and an previous appendix are that realignment results, comparable this Further I'd provides provided upon based portfolio across at as XXXX earnings costs results, the release. a in reconciliations business, through in to spin-off. Similar We chain referred sales and that this beginning, increased adjusted supply on GAAP most to exist adjusted the non-GAAP GAAP Quantification quarter said and our exclude in the are presentation. intercompany the appendix been the to measures of to Karen cease quarter and the comparability these transparency been believe due standalone and our this basis. our our to and future arrangements in of with comparison incurred measure today's our investors our our release improves modernization like periods. the detail directly of the to of royalty presentation, results the

prior Now of Slide volume were our sales by versus driven a was quarter the declines $XXX for period. the offset results price growth Net X.X%. year realization X.X%, of at sales by X.X% looking third Net XX. on increase million,

and to to supply quarter of execution strong we Our supply, normal led in Gary service which disruptions from versus our brands retailer talked ago. Stepping impact back-to-school This more the benefited a and a inventory. on back on improved drawdown within moment volume QX trend on due about year, portfolio. experienced seasonal improved This XXXX, results. QX had levels twofold a returned we that customer second levels to certain our the

activation, improved which versus inventory, allowed see market end our which in First, quarter year. it second, you more last levels results. And retailers normal commercial improved it to maintain shipments of the in enabled our

year XX.X% top increase and non-measured for by third and line was trend to the $XX positively. prior which million, Additionally, performance our operational was driven quarter, versus discipline. channels Canada a quarter EBITDA in continued sales continue the

Turning consumer $XXX EBITDA to line prior X.X% increased were by our operational the efficiency. sales down year is year-to-date of our the in prior year guidance. sales challenging year primarily our versus performance full results. improved the with ongoing million X.X% driven period. environment, Year-to-date, versus period, Net Despite

on year, efficiency versus and focus third operational cost focused Turning for last in in to in versus of Gross margin we Slide believe XX.X%, identifying increase brand and highlights. point quarter XX. now from basis which remain high our ROI and is will margin was the I a by XXX EBITDA improvements. driven our on a the year, basis XX discipline gross which X.X%, was point QX initiatives, investing spend. operational improvement prior timing building margin resulted the continued results. increase We reflected

for below expense track was at now another in on to WK, puts financial other items, which was guidance the We full year. $X top QX while us we executing was majority performance negative Looking $X growth income brands. and Overall, our of our the we for line it believe solid achieve driven strong and interest firmly job volume quarter the by million growth saw delivered million. management great the our price/mix. team initiatives revenue back-to-school, line improvement, positive our did generated sequential a Operationally, across

were was flow and expenditures our and million, our we towards which agreements. own our sheet. $XX operations as cash infrastructure and Slide includes cash turn from investments supply Let's chain our cover up services to standing exiting flow transition capital balance million Year-to-date $XX year-to-date XX in progress to

have we shareowners. year-to-date, $XX million Additionally, in paid dividends to

million, Turning in sheet. the to million of the million, decrease net of versus in $XXX We debt quarter. ended of cash result a a $XX with capital resulting core This $X $XXX last third of debt decrease working million was quarter. quarter the and favorability equivalents of balance

XXXX to $XX approximate expect measured to QX with for approximately in accelerate Our our said Consistent net by leverage flow free supply exit with we trailing associated to X.Xx debt to currently expect cash of previously, we month EBITDA as ratio, XXXX is and with initiative leverage this chain we've we negative what be million, spend XX of X.Xx. continue year.

we supply fully expect and continue reminder, investments fund to a at peak commitments in modernization chain Xx to our have XXXX. As secured debt approximately to leverage

high income, create significant capacity Our flow, at capital very debt long-term with a business value. our execute we initiatives provides which along strong sufficient our from strategic cash to net converts base available percentage as

Slide to the expect sales lower at year. XX net guidance. Let's of Today, to range down continue guidance, XXXX turn to versus X% of X% up reaffirming be prior our to our which we we're end discuss to the

profit now be range EBITDA we expect and X%. Additionally, to We our are EBITDA our given year-to-date from strong prior X% raising of guidance guidance. XXXX X%, XXXX between to our delivery, up growth X%

one-time net point season. our our shift we're we quarter and also display towards general costs in be sales QX proud expect to QX, team lower merchandise line turn be for the back financial worth our to we the execute to reminder, lap over As now a some tends within Gary. to summary, expectations. I'll quarter. X growth call as that a our within deliver strategy the In in with of estimate approximately to sales ability holiday and of results retailers

Gary Pilnick

Thanks, Dave.

and this like to key our communities our X As and took quarter that I'd retail close, team, our we pause acknowledge place milestones partners. with

team a be start business. And several firsts It a not across remarkable how could sustainable this year XXX on our milestone been has old they're iconic First, celebrated up. our as Mission is filled this first I X. for and Tiger journey WK an we are proud more company organization who independent our business birthday October the signature demonstrates company. our of as second program. we transforming with

fastest than sports He all school company, I'll and pleased We're now experiences supporting is X in this became an reached QX, schoolers. equipment, we new cereal, mission Q&A. and that, delivering million significant to And we since WK states. By equally to XX in business. call the Our by local invested with of schools launching partnership Flakes the are year now another Tiger retailers build very the being and reached in for sports He we're with created communities. play growing is have example support middle a one more. Co we open middle those sports, for to Kellogg brands with nationwide on is delivered. doing our schools how Frosted and improve supply in to has school pleased communities. X,XXX And in Tony have funding access, expand a been has XXXX, in a great independent It it's and results programs milestone. the helping Since own good we results. With with facilities, does good stronger more Tony how also middle of almost

Operator

Instructions] [Operator from Kenneth question JPMorgan. Our first comes Goldman with

Kenneth Goldman

realize, have top I little now, top next the for early. are Any directional 'XX little calls through a or flattish a guidance know line should your might be we importantly, is outlook lines? tailwinds, just bottom right visibility guess, of most 'XX. it's for you And there headwinds challenged the considering I But curious, and any cadence but early on I growth year? again,

get -- now, and year? see you by things growth of going think, You're of opportunities not as going your flat Is there year. are quite be maybe next there, given to some top aiming line kind just you for I this challenges, offset to macro

Gary Pilnick

me. Thanks voice, Excuse for question, Ken. pardon the my

think we delivering where today we're for pleased where start I is, we're with XXXX.

heard with for actually and guidance respect EBITDA. to raising early. that reaffirming You our today line top It guidance is we're

You we're me your in But beginning of tell said what that let thinking question. about. the you

you organization, a business as year. When unplugging going our consider how growing in about our being I think we're we're we're next growth and with tailwinds first while can largely as we challenging we It's independent company consistent delivering this think about results think for well. year is these an for year environment the this As what it forward, year. transforming

to Next we're as like planning year, mature. those doing a the company. that We capabilities continue will

our I But year think as consistent again, So saying confidence the back next early. gives largely, next that come We'll But which you us in we're you appreciate more way well. detail, Ken. pleased February executing, it's being this with about see we could year year. for growth we're with more much

Kenneth Goldman

then shifts are seeing And you shifts I'm a But breakfast sort aisle. cereal obviously, some broader the macro guys larger more breakfast beverages the to from job and we're still of quickly, level, with some and category a category doing of brands. Okay. because alternatives the a your just in -- and seeing lot talking certainly we're here great toward other

see how the there? expanding cereal some just are curious, competitors in being rational So beyond how do landscape and just you competitive

Gary Pilnick

it, of know overall the that. Yes. would describe A categories. at need in at cereal, about is, a just cereal, of you look Ken things. to asked us TDPs about our talked category, that we providing are durable about other you good way deliver look I we about a growth before. things think the side value premium we proposition. Take it's if as we the There's couple well. But category, take Displays holding When backdrop the look in. large

we units So we category, up, we when think the at well. in how at holding as particular, this look particular in environment, look it's like

look our consumers Now is into thing believe one when look one that finding category. coming When the we at into our into in, about we we we we're consumers we lapsed our have there new consumers things category, think are at category, consumers, cereal. coming coming is of coming PPA, folks maybe

the but we we look persist, our what this see as we like continuing So deliver on we would we're into do now. well forward, provides what us what challenging seeing at right like need we're now. we when seeing It going right Again, believe environment XXXX. And model. that we to category,

Operator

of with Peter from Galbo next America. The comes Bank question

Peter Galbo

Dave, quarter. think comments, bit volume I positive retailer some inventory drive beginning, benefit in build quarter. in Gary, did Canada that in there's a of the of little your factors that of were the that of I also helping in you non-tracked variance you was Dave, all comments the terms in mentioned in this at and your the mention think

you So into us. continue just for assuming to just dimension XQ, could kind but And that wanted sure. hoping I'm of doesn't that make

David McKinstray

Yes, Peter.

insignificant a in last what I that chain bit led we is, not seen what challenge. inventory little the year, recall So retailer versus trended better. product over drawdown the weren't last the year, And this supplying to reiterate supply improvement a think we presentation had we the really because just said a that detailed and we've year, to fairly slide in was solely time I due last

didn't we build inventory quarter. So this

the from draw we on consistent of because QX. QX levels year. But rather last had was it are the inventory the of end of We a of deficit difference really, end that lapping to service

saw. So that the benefit was we

think don't we you numbers, on, about right, carry we that a at As you're expect you QX as kind our of of to But thing. course, one-time anticipate think had also will sales. it, perform. it's I the continue one-time investment of and there a play year net last in that We've is QX benefit to underlying mentioned business we to that into look

we get net those us the range So had that items will sales. back guidance X into on

Peter Galbo

Got it.

on it maybe point. rates Ken's Okay. No, And at follow reasonable least think similar question, I for that's super helpful. at to just of seems 'XX, up this growth

any below items, read Just kind be you anything early on helpful. early that's other rate an inflation whether have read if or any of year the the of line for next would

David McKinstray

the Yes. of an below on into all I of of on. rates couple full We'll that details be in overall everything else items, we'll in details Gary say February. roughly those things. come inflation, get growth a on mentioned later from some line we'll line deflation, back the would with

back February come detail. in us to with all that expect So

Operator

Lazar from Barclays. comes following Andrew The with

Andrew Lazar

of Special Core brands -- the guys bit of can we [ is that the a those see you of are K is back what's and X the sort those gaining of share. one talked big as others, the you think, sort and of collectively I share kind brand about holding ] of little

big standpoint brand, whatnot, sort more? of stabilize Maybe add more was years been if -- -- what's and the brand plan talked But about more bit maybe of I that's little bit a that, perhaps it's different color has a that getting for struggle and more a can that really it's activation commercial plans share I and start around you guess one know to just you going hoping there? confident you with a you're just happy a a could So could from I you forward? what's now. the a have you or bunch little

Gary Pilnick

that's Andrew. very fair, think I Yes,

the make faster X You are brands growing bps. XX down point is or that the Special rate. category at core K X

it's well. as Now XX down was been it QX bps -- in

would but where perform. performing stabilizing, the So it's not we we would to say it's expect brand

of of give I have. We little a think be detail we with, think bit couple activation starts then will good you that would the look me helpful. at let about -- with. be -- 'XX start do We It So let's different. complete plan feel we XXXX to begin

be First, there's that issues some culls. mechanical will were SKU lapping. There

distribution will a key promotion the XXXX. also to changed moved one so with Special retailers, mechanical XXXX. be our brand That's one away base We Those another, in from with issues K. moved gone from largely for of in

I next go know as the to promotion, for pretty XXXX. to light better that innovation, We to execution think brand, to in display, responds well. This feature, and to thing. feel year you'd we as we were you about is second to compare XXXX

key taste on, strategic consumer not pushing for a of that. think you is. When with you're to We is communicate your We've get variety effectively to those about Special The needs. is, of already it's offerings it is we're thing K, health. provides standing still. It the how think this match that do consumers. started do like a thing the brand that It's we we of And other intersection it. consumer. fair The piece The is well-positioned I how consumers. and very key at where

about campaign. for things. talked started a Special of a new couple We've with already We've a Reason. So

we because That's the can that's our that's do. is for reads marketing say that, on market. to reasons but we're consumers. muscle messaging. Special our You use in got looking thing getting are positive consumers understand the the that special feedback why right reach would Early different already to we're for. We've But to doing K key have some new

just better. So behind that what us. strategically, And we hope even to described is issues it hoping we're the team already. mechanical Execution, perform on I was are

about feel forward, we moving and the not better hope or and team So expect, we is XXXX. performing where would

Andrew Lazar

flexibility Got more it. trading some and you've smaller like calls that your allow in up to include cereal consumers that the of the in per set whatnot. smaller supply to what sizes the again chain overall unit talked product also about, higher on what is that's basket price it And be maybe I'm handle sizes? just you for sizes curious smaller ounce, then looks a margins, their recent of that And for some to right, might mentioned sort smaller needed today, of profitability type if that anything? down how maybe them but of size package price, picture and those of means

Gary Pilnick

our to that No. of saw right. data, Thank you growing the you When with at you PPA. is you, units, Andrew. about We happening public units about talked were couple ago, a that months and QX, and talked look you're we actually what's in part of

portfolio of offerings. a Now variety things. different your expands It PPA does

So PPA price and work between. lower sticker has done pound, and is in to get everything better it we way, And the really brilliantly. price the per coming doing. By that hard team is execute, the in we folks have a to the team like

up to in well space. this do growing maybe We're set Now smaller we're that because you asked units. about

all we're that we Our the And across like but the what you in hope to also, PPA. right over And like economics chain in of channel. pack reasons it's a right the And the for it. consumers the good the for our If business for is good It's we on right is That's us, supply like mind, category. as now. it working doing portfolio variety PPA I economics we for our good it's as for find we're there, could well. don't leave I about what well.

Operator

Palmer David with following The from Instructions] comes [Operator ISI. Evercore

David Palmer

on I earlier wanted an to ask answer. a clarification

X%? question minus the I that about you're top how 'XX that thinking think roughly -- that meant to there? does Ken's mean line, about similar Is it you 'XX. Is what was to on

Gary Pilnick

think thing I going to back Ken other I'm which to the So us, go gave it's early. is

similar about we're before, at just February. in come generally David, higher back speaking, like, for more in okay looks it you come that. now, the hope saying, you if level, about give can back we I don't mind, looking if something talked I We're it's February. growth So there a expect we'll we the what rates but leave you more we'll think algorithm to and

David Palmer

Yes. you first the I quarter. because same, do could you ease could maybe about you quarter, get -- remaining takes that the credibly how comparisons in argue trends puts multi-year organic same that you're into the sales thinking the first Fair to keep enough. wondering and positive if just multiyear I'm

might your if in you So that I ask you big about answer the going was -- to to maybe as offsets picture, you're be -- that. that maybe thinking what can some

Gary Pilnick

only what doing algorithm on X well our our our our seeing from level ability hearing commercial on. And run going what earlier business, is think that 'XX. is as us think about I on the organization talk feel well. of to say we're there more I of about capabilities growth about February, strategic as because the the key plan We're you be least, playbook we to get say we we good leave all forward, We us a we'll to the because lot we're happy we'll for inside as you're that very about 'XX that, it to you the commercial a complete transforming we're give as confidence at might think do would priorities. heard delivering detail. commitment. able I as when talk more rates the drive I feel executing execute, good what But well the is

a So of why that's us. for level confidence hearing think you're I David,

David Palmer

going said there's brands. and trade-up thoughts some that now. wellness just squeeze last while work Special an some you've about in Naked, -- category Bear bit trade-up can of driver brands in into for messaging mean Kashi Yes. I ask been the partly, XXXX? wellness of wellness a has the have category the there. I I mean, and remains are you within could a your brands -- I would to one sort just and maybe from on are do K wellness this you the healing that a if of sort for of best going that category What elusive of category that you feel and the some of your drive those and about one. I group news like premium progress, sort of

Gary Pilnick

growing this dollars. your our would And like space is space, be, with are volume agree Granola the premium and doing view we instincts. well. and We

Chief Growth in something So Doug that you of about category, to which it new that VanDeVelde. And last because if take say Bear what's also is a talking the at under turn. have here. but of We like got bit I bifurcation it's been brands public and granola interesting emerged We've over Naked in think could tha we've our look play it's you're also Officer, our the growing. year. little this is right, happening starting has a you under seeking, management, the right value data, premium to

team Our get improving. in brand, was What How fact, behind We QX. is largely that It's do supply? brand, that shelf, for chain. means there reliable flat In on we've it supply on said when performs. it which need is execute we it's it that. to

there's This So I think WK by as is played here for place even think could opportunity Natural the segment as we way. in it that category, better. We real a the before. well And the we play & have Organic you right.

Operator

from comes The Paribas. next BNP Gumport question Max with

Max Andrew Gumport

I wanted category. question the on cereal another ask to

you this you the But on you're that's and sales encouraged unit at data want seeing generally from price we're So just seems meal. consumer data But ask per I the given like supportive volume basis for its underlying I all cereal, we're it not different by other and feel basis. value, for that a on the by look food to quite an environment and seeing a seem categories. do categories decline, that should basis given to do be that if seeing the particularly in what if shift like U.S.

And is a environment so I we're think cereal not performance ask you want that the have you why seeing category in when from better the shifting value? just this to consumer

Gary Pilnick

that's Well, I Max. fair question, a think

be are to work agree we bit there value PPA doing. if little X category are performing with think there it's would tailwinds performing In saying way in this we are the you. a that we for consumers We consumers. fact, given the there this We coming that some that turn earlier, the But said category are it's down point back about seeking challenging environment. might around

should us, because volume. impact category to other and to have It's impacting you're it the an given work also well. But consider The to we've done. thing have on is going impact us think the I in right. that going the impact certainly an category as it's PPA the That's on we position have

providing tricky on environment, we When we it instincts quite we have benefit despite to But it's at for year, as backdrop the the it deliver look, from commitments, first we that is together, we're for there. this environment there. our fact pleased us this cereal piece environment, could deliver we're despite deliver I the a stakeholders. top on to the well. is want is, that think guidance that that. I should way reaffirming that The good that that out that think able tricky look our raising But for EBITDA category your you our value are to line, in

Operator

next from Securities. [Operator with Instructions] Moskow The question TD comes Robert

Robert Moskow

wanted ask it Gary, about through hope makes just I last I question. voice your -- this to

Gary Pilnick

it Sure, will.

Robert Moskow

these And environment? any you Yes, remember inflationary I'd us okay. is look there year number, pricing any like extent think anyway. were I you to change? have but year? ask been talk in would see for it would grains, give Do you could I your to you next wanted about year? you it's it What about Maybe in think what -- a this down. the this like if do Can how can that can't better imagine headwinds Dave

David McKinstray

haven't kind true, back couple things. what it. holds it we in think so One, these seen and XXXX levels. Rob, we've we've higher Yes. and But I stabilization of at gone of said a quantified

You're in a portfolio absolutely level. right

see the from benefited can down, you that. right, absolutely those we You're have come corn wheat the market, and market,

XXXX inflationary. think on side I other specific flip commodities were that, though remained the that there to of Now

And through. that sugar, that, we managed rice, so couple things you like a I'll of give

been the relatively at it's aggregate, stabilization in So high.

stickiness As X we some playing move the X to about the we about that inflation it. think through forward, There's that base years. over other of there's saw where takes But corn and to XXXX. think last puts as wheat within largely portfolio some the we been are and we as is

levels. it, And the so towards as at elevated we're more it's about thinking stabilization the

Robert Moskow

a lot again inflation And would about you to maybe talking Is labor companies there? for 'XX? visibility labor being -- other And you a be in is inflation of Do have factor. that are Okay. in numbers 'XX? expect your

David McKinstray

our at So number I I all of right? about other the I any and it level, spoke high. have, on as stabilization Rob, Yes. the costs, takes, net was think I pressures portfolio as at the we a and including benefit of any spoke the about puts commodities, it's

you pressure some what have saw costs naturally if And that's we brings commodities, some to, over may these on some of mean that that couple by I what place. So benefit have in you you remaining some elevated the elsewhere. years last of

Operator

with question final comes The Rob Jefferies. from Dickerson

Robert Dickerson

core for for been take just I I general kind right, question had some this of brands, of about they a the right? your have way, While respect wrong next activation plans around, year. time. Don't kind

pre-existing a core brands. an Wednesday the innovation with at be look from some product category it kind box, on a at right, that right? innovation within It's least. really Wednesday seem slide, of brand, like right, you that's that's within different dynamic maybe the do product, think with So could and assist components that away those kind different doesn't But marketed could then on share I there it, totally of

The to least I'm even category, the expect the because still declining. time volumes the curious, decline it like all long now, coming declined Wednesdays have So more kind say, also at like it's of though for they're in a retailers. just was being maybe, over are channels for volumes like years see, big category down a X And the a still in let's was little forth we track that should secular of better, pre-COVID.

So could like more to an maybe sense. even that there's category, occur just be and maybe that [ makes innovation just there I'm curious, ] like within needs broader lift the Wednesdays,

Gary Pilnick

say the Rob, you innovation through that. we're an importance end, ] you, innovation in XXX% to category. might of with you take We let it's and the power of this just and on me [

the they're X fastest X the the public, the at Flakes of Frosted look growing in cereal brands. brands you Raisin category, Bran. original If And and

go older they're back am. for you a around and big. biggest have our it's These brands brand, brand. I while, Flakes If our time, been growing in is than and Frosted they're fastest

right the the right happens very the -- your right just your happen. Now tie-ins, innovation. promotion, messaging, have to that the point, to doesn't It but right when you

Canada, it really line franchise We that a use a in different. for use So and use in the Flakes top bit U.S., Frosted Bran. brand. Raisin then chocolate. strawberry with we launched little driven has milkshake that Bran have and Frosted We is actually we it that in the

family, with So just it's what do the could and of Bran's imagine we part you Raisin else that. could

chain up supply as branded to Wednesday, I we marketing in then our sure with that is, also to important, to do. Now like seasonal that force. as point get match a as think thing we us do well sales we team that. your want have news, The to player, that we need it something excitement reliable else And our we make is key allows do direct to about a do, and out, is

it's you're and. think would So say an right. I But we

property. this love we So

on As drive we and business, is But would time. said, combination of it's packaging category. show things, The importantly, Bran drive I Netflix Flakes, the do most to all I other to we Raisin say think in you, Frosted execution but that watched the beautiful. our the

Robert Dickerson

little maybe Okay. could really kind category could say, maybe we that more be let's units. environment such [ distress consumer, front? so need more, further Fair the everyone nicely isn't more or category on of category, to a within kind improve of the you plays like the of buy a pool that we such competitive, overall we the maybe becoming to kind speak, the there increasingly overall, profit if right, the ] needs promotional experiencing incentivize is broader the cereal, to promotional of the just right, enough. promote then I and back potential we kind And feel think like more promotional buy the step Do guess bit a about kind consumer, category and of of

Gary Pilnick

When norms we're largely we think seeing when at what where -- right this we look marketplace, we us. hit But go period before we're in unusual. now. those we're at particularly back seeing and good at compare a take because previous look largely a the levels activity we can always about backwards we we that's happening is, it's not we're now. what's historic Rob, question. If we look as anything And to are and to COVID XXXX clean backwards, the

because of but up, are what Our we're supply. terms of not foot numbers were in on that's front lapping. our We

to we're more Now market. activate the able in

largely are XXXX up getting we're back to our think numbers while I levels. again, So

when of it's all we when category about promotion. the about well. get volume, category, We think of of And right, drives for things. think talks a category. promotion, our about balance good like and the think because return it's about he balance as Dave the price, It's it's that that Now you we those a that business amounts this, When profitability. talks drives

that's we category of think part we like the we're So it. a and how healthy doing

the you right our force, right If you of innovation, playbook look well sales right we're level right at with the the during QX, back-to-school. an the example gives executing of activation when that promotion,

way leads we the like the the in we promotion do, way that Dave and the organization. because So

Operator

it turn Thank Pilnick now will you. queued remarks. at currently to There I back Gary are closing for no questions other over this time.

Gary Pilnick

call I see look is our February. today. QX in trust much We you, so momentum for you our Thanks and our business with building forward delivering positive Thank sharing joining that us. joining can results. everybody results you for to

Operator

conference participation. This Thank you today's for call. concludes your

now lines. may disconnect You your

WK Kellogg (KLG) 7 Nov 242024 Q3 Earnings call transcript