Kellanova (NYSE:K)

Currently payable income tax

The currently payable income tax showed a sharp decrease from 474 million US dollars in 2019 to 255 million US dollars in 2020. After this significant drop, the amount increased to 349 million US dollars in 2021 but declined again to 290 million US dollars in 2022. In 2023, the value slightly increased to 296 million US dollars. Overall, there is a fluctuating trend with a notable decrease from the beginning to the end of the period.

Deferred income tax expense

The deferred income tax figures exhibited considerable volatility over the years. Starting at a negative value of -153 million US dollars in 2019, it swung to a positive 68 million US dollars in 2020 and increased further to 125 million US dollars in 2021. Following this peak, deferred income tax returned to negative territory at -46 million US dollars in 2022 and marginally improved to -38 million US dollars in 2023. This pattern indicates variable timing differences affecting tax liabilities or assets, with no sustained directional trend.

Total income taxes

Total income taxes, representing the sum of current and deferred amounts, remained relatively stable but displayed some variability. The total was 321 million US dollars in 2019, slightly increasing to 323 million US dollars in 2020. It then rose sharply to 474 million US dollars in 2021, followed by a significant decline to 244 million US dollars in 2022. In 2023, there was a slight recovery to 258 million US dollars. These fluctuations reflect the combined impact of changes in both current payable and deferred tax expenses.

Summary

The analysis reveals that current income tax liabilities have generally declined from 2019 to 2023, despite some intermittent increases. Deferred taxes have exhibited high variability with alternating positive and negative values, suggesting fluctuating temporary differences and uncertain future tax impacts. The overall income tax expense displayed a peak in 2021 but otherwise followed a pattern of fluctuation without a consistent trend. These observations suggest the company’s tax obligations are influenced by varying operational and accounting factors affecting both current and deferred tax components.

The data reveals several notable trends relating to income tax components and the effective income tax rate over the five-year span.

U.S. Statutory Income Tax Rate

The U.S. statutory income tax rate remains constant at 21% throughout the entire period, providing a stable baseline for the analysis of other tax-related variances.

Foreign Rates Varying from U.S. Statutory Rate

This metric shows fluctuations, starting at -2.5% in 2019 and varying between -1.6% and -2.9% in subsequent years. The negative values indicate a foreign tax rate advantage relative to the U.S. rate, with a modest widening in 2023.

State Income Taxes, Net of Federal Benefit

State income taxes exhibit an upward trend overall, increasing from 1.3% in 2019 to 2.0% in 2023, with a peak at 1.9% in 2021 and a slight dip in 2022. This suggests increasing state-level tax burdens or changes in state tax policy impacts.

Cost (Benefit) of Remitted and Unremitted Foreign Earnings

This component generally rises over time, from 0.8% in 2019 to 1.7% in 2023, indicating growing costs associated with foreign earnings, perhaps due to increased repatriation taxes or changes in foreign income.

Revaluation of Investment in Foreign Subsidiary

A positive value of 2.5% appears only in 2019, with missing data thereafter. This one-time gain may reflect a revaluation event impacting tax calculations in that year.

Net Change in Valuation Allowance

This factor shows an upward trend from a negative -1.6% in 2019 to a peak of 3.4% in 2022 before slightly decreasing to 3.0% in 2023. This indicates increasing valuation allowances affecting deferred tax assets over time.

Statutory Rate Changes, Deferred Tax Impact

This impact remains minor but slightly positive throughout, peaking at 0.7% in 2021 and settling at 0.1% in 2023, suggesting limited effects from statutory rate changes.

U.S. Deemed Repatriation Tax

A significant negative adjustment of -2.0% occurs only in 2020, likely representing a one-time tax effect associated with repatriation policies.

Foreign Derived Intangible Income

The associated rate shows a gradual increase in negative impact beginning in 2020 (-0.4%) and reaching -1.8% in 2022, before easing to -1.3% in 2023. This trend reflects growing benefits or deductions from intangible income derived abroad.

Divestiture

A positive 2.9% appears solely in 2019, suggesting a one-time tax effect related to asset disposals.

Out-of-Period Adjustment

This adjustment is present only in 2019 at 3.0%, indicating a correction of prior-period tax estimates that year.

Other

The 'Other' category fluctuates considerably, beginning at -3.1% in 2019, approaching neutral in 2020 and 2021, falling again to -2.7% in 2022, then shifting to a positive 1.2% in 2023. This volatility reflects miscellaneous tax factors impacting the effective rate variously.

Effective Income Tax Rate

The effective tax rate oscillates over the period, starting high at 24.6% in 2019, dipping to 20.2% in 2020, rising again to 24.1% in 2021, then falling to 20.4% in 2022 before increasing to 24.8% in 2023. This variability corresponds with the interplay of various tax factors, including foreign rates, valuation allowances, and one-time adjustments.

Overall, the effective income tax rate shows a cyclical pattern tied closely to fluctuations in foreign tax rates relative to the U.S. baseline, changes in valuation allowances, one-time tax events such as repatriation and divestitures, and varying state tax impacts. The data suggests the company experiences periodic tax adjustments influenced by both domestic and international tax environments, with occasional discrete tax events significantly affecting the effective rate in specific years.

The financial data reveals several notable trends and fluctuations in various expense and asset categories over the analyzed periods.

Advertising and Promotion-related Expenses

These expenses showed a gradual increase from 11 million US dollars in 2019 to a peak of 15 million in 2022, followed by a decline to 12 million in 2023, indicating a temporary reduction after steady growth.

Wages and Payroll Taxes

The wages and payroll taxes rose significantly from 15 million in 2019 to 27 million in 2021, then decreased sharply to 19 million in 2022 and further to 15 million in 2023, reverting to the initial level observed in 2019. This suggests a cost-cutting or workforce adjustment effort in the later years.

Inventory Valuation

This category remained relatively stable around 16-17 million until 2021, then increased to 19 million in 2022 before declining again to its lowest value of 12 million in 2023, indicating some inventory management volatility.

Employee Benefits

Employee benefits fluctuated considerably, starting at 143 million in 2019, dropping sharply to 19 million in 2021, then recovering to 64 million in 2022 and further increasing to 99 million in 2023. This variability may reflect changes in benefit programs or workforce composition.

Operating Loss, Credit and Other Carryforwards

These carryforwards rose steadily from 279 million in 2019 to 363 million in 2021 and 2022, with a slight decrease to 350 million in 2023, showing an accumulation trend with some recent moderation.

Research and Development Capitalization

Data is available only for 2022 and 2023, showing an increase from 22 million to 40 million, indicating a growing investment in capitalizing R&D expenses in recent years.

Hedging Transactions

The values for hedging transactions showed marked volatility. A significant increase to 49 million in 2020 was followed by a sharp decline to 13 million in 2021, and absence of positive values in 2022 and 2023, replaced by negative values indicating possible losses or reversals.

Operating Lease Liabilities and Right-of-Use Assets

Operating lease liabilities increased gradually from 136 million in 2020 to 147 million in 2023. Correspondingly, the right-of-use assets remained fairly consistent but showed a slight decline over the years, suggesting stable but slowly changing lease commitments.

Deferred Compensation

Deferred compensation remained roughly stable around 18-19 million through 2019 to 2021, then rose to 27 million in 2022, before falling to 13 million in 2023, indicating some fluctuations in deferred employee payments.

Stock Options

Stock options increased steadily from 29 million in 2019 to 33 million in 2021, dipped to 28 million in 2022, then surged sharply to 43 million in 2023, reflecting variability in stock-based compensation or valuation changes.

Other Expenses

This category displayed significant volatility, increasing from 9 million in 2019 to 54 million in 2021, falling to 34 million in 2022, then rising again to 64 million in 2023, suggesting irregular or non-recurring costs.

Deferred Tax Assets and Valuation Allowance

Deferred tax assets increased substantially from 531 million in 2019 to 795 million in 2023, with a peak of 786 million in 2020 followed by some fluctuation. Conversely, the valuation allowance steadily increased in magnitude (more negative) from -146 million to -300 million, indicating a conservative approach to recognizing deferred tax assets.

Deferred Tax Assets Less Valuation Allowance

After a notable increase to 594 million in 2020, the net deferred tax assets declined to 454 million in 2021, then displayed a gradual increase to 495 million by 2023, reflecting balance between gross deferred taxes and allowances.

U.S. State Income Taxes (Net)

Net state income taxes, reflecting negative values, fluctuated with negative spikes at -6 million in 2019, recovering in 2020, then worsening to -27 million in 2022 and improving slightly to -9 million in 2023, indicating variability in state tax obligations or refunds.

Depreciation and Asset Disposals

Depreciation and asset disposal expenses increased progressively from -217 million in 2019 to a high of -286 million in 2022, then declined sharply to -177 million in 2023, suggesting changes in asset base or depreciation policies.

Trademarks and Other Intangibles

Values in this category were consistently negative, showing a relatively stable trend around -526 to -549 million from 2019 through 2022, followed by a decrease in magnitude to -466 million in 2023, which may indicate amortization or impairment adjustments.

Deferred Tax Liabilities

Deferred tax liabilities increased significantly in magnitude from -749 million in 2019 to a peak of -1037 million in 2022, then improved to -809 million in 2023, suggesting shifting tax obligations or changes in taxable temporary differences.

Net Deferred Tax Asset (Liability)

This net figure was negative throughout the periods, indicating overall deferred tax liabilities exceeding assets. The liability lessened somewhat from -570 million in 2022 to -314 million in 2023 after worsening from -308 million in 2020 to -507 million in 2021, showing some variability in tax positioning.

The analysis of the deferred tax accounts over the five-year period reveals distinct trends in both deferred tax assets and deferred tax liabilities. Deferred tax assets exhibited a gradual decline from US$231 million in late 2019 to US$183 million by the end of 2023. This steady decrease suggests a diminishing recognition of future tax benefits, which may imply changes in profitability forecasts, tax planning strategies, or the realization of previous loss carryforwards.

Conversely, deferred tax liabilities presented more variability, starting at US$595 million in 2019, decreasing slightly to US$562 million in 2020, then rising sharply to US$722 million in 2021 and further to US$760 million in 2022, before falling significantly to US$497 million in 2023. This fluctuation indicates changes in temporary differences related to taxable income, possibly linked to variations in asset valuation, depreciation schedules, or other timing differences affecting taxable income recognition.

Deferred Tax Assets

Experienced a downward trend over the period, declining by approximately 20.8% from 2019 to 2023.

This decrease may reflect reduced expected future tax benefits or utilization of prior tax losses and credits.

Deferred Tax Liabilities

Demonstrated volatility with an initial decline in 2020 followed by a substantial increase in 2021 and 2022, then a notable reduction in 2023.

The peak in 2022 suggests significant timing differences or reevaluation of liabilities, while the drop in 2023 may indicate settlement or reclassification events.

Overall, the contrasting trends between deferred tax assets and liabilities highlight shifting tax positions and potential adjustments in accounting estimates or fiscal policies affecting the company's tax expenses and commitments. The significant variation in deferred tax liabilities especially warrants attention for underlying operational or financial factors influencing these changes.

Total Assets

The reported total assets exhibited a generally increasing trend from 2019 through 2022, rising from 17,564 million US dollars to a peak of 18,496 million US dollars. However, there was a notable decline in 2023 to 15,621 million US dollars. The adjusted total assets mirrored this pattern, increasing steadily from 17,333 million US dollars in 2019 to 18,306 million US dollars in 2022, followed by a significant decrease to 15,438 million US dollars in the latest period.

Total Liabilities

Reported total liabilities demonstrated a relatively stable trend over the period, fluctuating slightly around 14,000 million US dollars before declining to 12,252 million US dollars in 2023. The adjusted liabilities followed a similar pattern, with a steady level near 13,600 million US dollars from 2019 to 2022, then falling to 11,755 million US dollars in 2023. This suggests a decrease in obligations or improved liability management in the most recent year.

Equity

Reported Kellanova equity showed consistent growth from 2,747 million US dollars in 2019 to 3,941 million US dollars in 2022, followed by a decline to 3,175 million US dollars in 2023. Adjusted equity values were consistently higher than reported figures, indicating the effect of the income tax adjustments. The upward trend from 3,111 million US dollars to 4,511 million US dollars in 2022 was similarly followed by a reduction to 3,489 million US dollars in 2023. The overall increase over the four years before the drop points to strengthened financial position, partially offset in the latest period.

Net Income

Reported net income attributable to Kellanova rose from 960 million US dollars in 2019 to 1,488 million US dollars in 2021, signifying a period of profitability improvement. However, the next two years saw a substantial decline, with net income falling to 960 million in 2022 and slightly decreasing further to 951 million in 2023. Adjusted net income showed a similar pattern but with overall higher values, peaking at 1,613 million in 2021 before dropping to 914 million and 913 million in the final years. This decline in net income after 2021 may indicate challenges affecting profitability or one-time impacts on earnings.

Overall Insights

Across all key financial items, the company experienced growth in assets, equity, and net income up to 2021-2022, followed by notable declines in 2023. This suggests a period of expansion and enhanced financial health until recent setbacks. The adjustments for deferred income tax consistently increased reported equity and net income figures, providing a more favorable financial portrayal. The contraction in 2023 assets, liabilities, and equity, together with reduced profitability, may warrant further investigation into operational efficiency, market conditions, or extraordinary events impacting the financial performance during the latest period.

Net Profit Margin Trends

Both reported and adjusted net profit margins experienced growth from 2019 to 2021, reaching respective peaks at 10.49% and 11.37%. However, in 2022, there was a notable decline to 6.27% (reported) and 5.97% (adjusted), followed by a slight recovery in 2023 to 7.25% and 6.96%, respectively. Adjusted margins consistently register below reported margins, yet their trends closely mirror each other.

Total Asset Turnover Trends

The total asset turnover ratios, both reported and adjusted, showed moderate improvement over the period. Initial values stood near 0.77 in 2019 and 2020, increasing incrementally each year to 0.83 and 0.84 reported, and 0.84 and 0.85 adjusted in 2022 and 2023 respectively. This indicates a gradual enhancement in asset utilization efficiency.

Financial Leverage Trends

Financial leverage ratios consistently declined from 2019 through 2022 for both reported and adjusted figures, moving from 6.39 and 5.57 down to 4.69 and 4.06, respectively. In 2023, a slight increase was observed to 4.92 reported and 4.42 adjusted, reflecting a modest uptick in leverage but still below earlier levels. Adjusted leverage remains consistently lower than reported leverage, suggesting some adjustments reduce the apparent leverage.

Return on Equity (ROE) Trends

ROE values rose significantly from 2019 to 2020, then stabilized around 40% in 2021 before declining sharply in 2022 to 24.36% (reported) and 20.26% (adjusted). The 2023 figures show a recovery to approximately 30% reported and 26% adjusted. Throughout the timeframe, adjusted ROE remains below reported ROE but follows similar trend patterns.

Return on Assets (ROA) Trends

ROA increased from 2019 through 2021, reaching a high of 8.19% reported and 8.98% adjusted. Like other profitability measures, ROA dropped in 2022 to just above 5% and partially rebounded in 2023 to around 6.1% reported and 5.9% adjusted. This pattern demonstrates fluctuations in overall asset profitability consistent with net profit margin trends.

Overall Insights

The company demonstrated improving profitability and efficiency metrics through 2021, followed by a broad weakening across most indicators in 2022. The partial recovery observed in 2023 suggests some stabilization but still below peak levels seen in 2021. Adjusted metrics tend to be slightly more conservative than reported ones, yet both sets reflect similar trend patterns. The decline and recovery cycle in 2022-2023 may indicate responsiveness to external or operational challenges impacting profit generation and asset utilization.

Reported Net Income Attributable to Kellanova

The reported net income displayed an overall upward trend from 2019 to 2021, increasing from 960 million USD to a peak of 1,488 million USD. However, this was followed by a notable decline in 2022 to 960 million USD and a slight further decrease to 951 million USD in 2023, indicating a contraction in profitability after the peak year.

Adjusted Net Income Attributable to Kellanova

The adjusted net income followed a similar positive trend from 2019 through 2021, growing from 807 million USD to 1,613 million USD. Subsequently, a significant decrease occurred in 2022 to 914 million USD, with a marginal decline to 913 million USD in 2023. The adjusted figures show a sharp rebound in 2020 and 2021 but also reflect challenges in sustaining income levels during the last two years.

Reported Net Profit Margin

The reported net profit margin improved consistently from 7.07% in 2019 to 10.49% in 2021, demonstrating enhanced operational profitability and efficiency. Thereafter, this margin contracted substantially to 6.27% in 2022 but experienced a slight recovery to 7.25% in 2023, suggesting some stabilization albeit at lower profitability levels compared to the earlier peak.

Adjusted Net Profit Margin

The adjusted net profit margin trend mirrors the reported margins closely but at slightly different levels, increasing from 5.94% in 2019 to 11.37% in 2021. It then declined sharply to 5.97% in 2022 and modestly improved to 6.96% in 2023. This pattern highlights a phase of strong margin expansion followed by notable contraction and a partial recovery in the most recent period.

Overall Observations

Both reported and adjusted net income and profit margin indicators exhibit a growth trajectory through 2021, indicating a period of robust financial performance. The subsequent sharp declines in 2022 across all these measures indicate a significant downturn or operational challenges impacting profitability. Although there was some degree of margin recovery in 2023, income levels remained subdued compared to the peak in 2021. The consistency in the trends between reported and adjusted data suggests that the adjustments did not materially change the overall financial direction, reinforcing the observed performance patterns.

Total Assets

The reported total assets exhibited a gradual increase from 17,564 million US dollars in late 2019 to a peak of 18,496 million US dollars by the end of 2022. However, there was a notable decline in 2023, where reported total assets decreased to 15,621 million US dollars, marking a significant contraction after several years of growth. The adjusted total assets showed a similar pattern, rising steadily from 17,333 million to 18,306 million between 2019 and 2022, followed by a sharp decline to 15,438 million in 2023. This parallel movement suggests that adjustments for deferred income tax had a consistent impact over the period without altering the overall trend.

Total Asset Turnover

The reported total asset turnover ratio remained relatively stable at 0.77 from 2019 to 2020, gradually increasing to 0.78 in 2021 and then experiencing a more marked rise to 0.83 in 2022. In 2023, the turnover ratio slightly improved further to 0.84. Adjusted total asset turnover ratios followed an analogous trajectory, starting at 0.78 in 2019 and moving incrementally higher each year to reach 0.85 by 2023. The increasing turnover ratios indicate a progressive improvement in asset efficiency, demonstrating that the company was generating more revenue for each unit of asset held, with the adjustment for deferred income tax having a minimal effect on the turnover calculation.

Summary Insights

Overall, the company experienced asset growth for four consecutive years, which was accompanied by a gradual enhancement in asset utilization efficiency as measured by total asset turnover. The sharp reduction in assets in 2023 is a noteworthy deviation from the prior trend and could indicate asset disposals, restructuring, or other financial adjustments. Despite this asset base reduction, the continuous improvement in asset turnover ratios suggests that the company managed to maintain or improve operational performance relative to its asset size. The consistent patterns between reported and adjusted figures imply stable tax-related adjustments, which do not significantly distort the analysis of asset trends and efficiency over the examined period.

Total Assets

The reported total assets show a gradual increase from 17,564 million USD in 2019 to a peak of 18,496 million USD in 2022, followed by a notable decline to 15,621 million USD in 2023. The adjusted total assets reflect a similar pattern, rising steadily from 17,333 million USD in 2019 to 18,306 million USD in 2022, then decreasing to 15,438 million USD in 2023. This indicates a generally expanding asset base over the initial four years, with a significant contraction in the latest year.

Equity

Reported equity increases consistently from 2,747 million USD in 2019 to 3,941 million USD in 2022, before declining to 3,175 million USD in 2023. Adjusted equity follows the same trend but with higher absolute values, rising from 3,111 million USD in 2019 to 4,511 million USD in 2022, then decreasing to 3,489 million USD in 2023. The adjusted figures suggest a stronger equity position throughout the period, although both reported and adjusted data reveal a decrease in equity in the last year.

Financial Leverage

Financial leverage based on reported figures decreases steadily from 6.39 times in 2019 to 4.69 times in 2022, then slightly increases to 4.92 times in 2023. Adjusted financial leverage demonstrates a similar downward trend, falling from 5.57 times in 2019 to 4.06 times in 2022, followed by a modest rise to 4.42 times in 2023. The reduction in financial leverage over the first four years suggests improved capital structure and lower reliance on debt, while the increase in 2023 indicates a slight reversal of this trend.

Overall Observations

The data reveal a progression of asset growth and stronger equity positions from 2019 through 2022, accompanied by a reduction in financial leverage, which points to a gradual strengthening of the company's financial stability. However, 2023 exhibits a reversal in these positive trends, with declines in both total assets and equity alongside a modest increase in leverage. This shift might reflect external economic pressures, strategic divestments, or other operational challenges impacting the company’s financial structure.

Net Income Trends

The reported net income attributable to the company exhibited an increasing trend from 2019 to 2021, rising from 960 million USD to a peak of 1,488 million USD. However, a significant decline is observed in 2022, dropping back to 960 million USD, followed by a slight decrease in 2023 to 951 million USD. The adjusted net income follows a similar pattern, starting at 807 million USD in 2019, increasing steadily to 1,613 million USD in 2021, and then declining sharply to 914 million USD in 2022, with a negligible further decrease to 913 million USD in 2023.

Equity Trends

Reported total equity shows consistent growth from 2,747 million USD in 2019 to 3,941 million USD in 2022. However, this trend reverses in 2023, where equity decreases to 3,175 million USD. Adjusted total equity mirrors this pattern, increasing from 3,111 million USD in 2019 to a high of 4,511 million USD in 2022 before declining to 3,489 million USD in 2023. The adjusted equity figures remain higher than the reported values throughout the period, indicating the adjustment factors tend to increase reported equity.

Return on Equity (ROE) Analysis

Reported ROE demonstrates robust performance between 2019 and 2021, maintaining near or above 40%, with a peak of 40.2% in 2020. However, it sharply declined to 24.36% in 2022 before recovering somewhat to 29.95% in 2023. The adjusted ROE pattern is similar but consistently lower than the reported ROE, starting at 25.94% in 2019, increasing to 38.57% in 2020 and 38.16% in 2021, followed by a drop to 20.26% in 2022 and a subsequent rise to 26.17% in 2023. The adjustment thus has a dampening effect on measured ROE values but the overall trend aligns with the reported figures.

Summary of Observed Patterns

Overall, the financial data indicate strong growth in profitability and equity from 2019 through 2021, reaching peaks in net income, equity, and ROE. The year 2022 marks a notable downturn across all metrics with significant reductions in net income, equity, and returns, suggesting challenges impacting financial performance during that period. Although a partial recovery is visible in 2023, levels do not revert to earlier peak values. Adjustments for deferred and income tax considerations systematically increase equity figures and reduce the apparent profitability ratios, providing a more conservative view of performance but preserving the general directional trends. These patterns suggest that external factors or company-specific events in 2022 affected operational outcomes, with incomplete recovery by the end of 2023.

Net Income Trends

Reported net income attributable to the company experienced growth from 2019 to 2021, rising from 960 million US dollars to a peak of 1488 million US dollars. However, a decline followed in 2022 and 2023, dropping back to 960 million and slightly below at 951 million US dollars, respectively. Adjusted net income shows a similar upward trend through 2021, increasing from 807 million to 1613 million US dollars, but it also declined notably in the subsequent years to 914 million in 2022 and 913 million in 2023.

Assets Development

Both reported and adjusted total assets steadily increased from the end of 2019 through to 2022, with reported assets moving from 17,564 million US dollars to 18,496 million and adjusted assets from 17,333 million to 18,306 million during the same period. In 2023, there was a significant reduction in total assets, with reported assets falling sharply to 15,621 million US dollars and adjusted assets declining to 15,438 million US dollars.

Return on Assets (ROA) Patterns

Reported ROA showed strong growth from 5.47% in 2019 to 8.19% in 2021, indicating improved asset efficiency and profitability. However, this was followed by a decrease in ROA to 5.19% in 2022, with a modest recovery to 6.09% in 2023. Adjusted ROA values display a slightly different pattern: rising from 4.66% in 2019 to 8.98% in 2021, peaking higher than the reported measure, but then dropping to 4.99% in 2022 and slightly increasing to 5.91% in 2023.

Overall Observations

The data depicts a period of growth and increasing profitability until 2021, followed by a notable contraction in both net income and asset base starting in 2022. This contraction also affected profitability ratios, as indicated by the declines in ROA levels. The adjusted figures, which account for reported and deferred income tax effects, mirror the reported data trends but generally show a higher peak profitability in 2021. The significant reduction in total assets in 2023 may suggest asset divestitures or revaluations, impacting income and return metrics in recent years.