Amit Banati: Yes. So it’s about $40 million to $50 million a quarter, right? So it will flow through all of 2024. I think as we stop providing those services to WKKC and as WKKC contracts for those services directly, those costs will drop off from Kellanova and the reimbursement will drop off as well. So the vast majority, as this thing kind of concludes, right, as we step down from the TSAs, we’d expect the cost to stop and the reimbursement to stop. I mean, I think a good example of that is warehousing. Right now, the warehousing, we are providing the warehousing. So we are incurring the costs and then WKKC is reimbursing that to us. Once the TSA is done, they’ll have their own warehousing and they’ll pay for the warehousing cost directly.
So the cost will stop, the reimbursement will stop. Is it a 100% 1:1? No. But I think the vast majority of that is variable. There is a small fixed element. And I think we’ve got plans to address that, and that’s included in the 15% by size target?
Michael Lavery: That’s really helpful color. I just wanted to make sure I understand it. When you were talking about the $1,850 to $1,900 EBIT guide and the comparisons that would fall in that – it sounds like some of the TSA drove, I think you said on a mid-teens growth rate, where without that, it’d be about mid-single digit. So is that 40 to 50, is there margin on that? Or how does it contribute to EBIT if it’s just a reimbursement?
Amit Banati: No, I think it’s just timing because the growth rate – so when you look at 2024, right, we are getting reimbursement for all four quarters. In 2023, we got reimbursement only in quarter four because that was when the spin happened. So the reason why it’s in the teens growth rate is in 2024, you’ve got four quarters in 2023, you’ve got one quarter. So it’s purely because of the way the timing of the spin and the difference coming from there.
Michael Lavery: And a portion of the comparison in the recast numbers not have. Okay, that’s perfect. Thank you so much.
Amit Banati: Yes.
Operator: Thank you. Our next question comes from Ken Goldman of JPMorgan. Your line is now open. Please go ahead.
Ken Goldman: Hi, thank you. I just wanted to make sure 100% because I think I’m still getting some questions about this. And you mentioned, Amit, that the operating profit number, the one — the $1,850 to $1,900 does include the headwind of 2% from FX. In the press release, it does say though that these impacts and you’re talking about mark-to-market adjustments and foreign currency translation are not included in the guidance provided. Am I just misinterpreting one of those? Or they seem to be in content with each other, but I’m sure I’m just missing something?
John Renwick: Yes, Ken, sorry, it’s just that our guidance is typically on growth rates, which are currency neutral. So the table just has that always, but we’ve elected to go with absolute dollars just to help you model, so ignore the labeling. There is a little bit of that currency impact that Amit talked about in those absolute figures.
Ken Goldman: Perfect. Thank you for that clarification. And then not to harp too much on the reimbursements, but – is it – and I know you’re not going to talk explicitly about 2025 yet, but it would seem that if you’re getting a, I don’t know, roughly $140 million benefit in 2024, that some of that kind of goes away because you didn’t have – and again, it’s not exactly maybe that much, it could depend on the timing of everything. But is it fair to say you’ll have some kind of headwind in 2025 as those roll off. Again, with the caveat that it’s too early to really discuss specifics.
Amit Banati: Yes. I think there are costs which we are getting reimbursed. So I wouldn’t characterize it as a benefit. We’re incurring the cost on behalf of WKKC as part of the services we are providing them, and they are reimbursing us for those expenses that we are incurring. We would expect those expenses to drop off. And there’s no markup on the service – so we would expect those expenses to drop off and then the reimbursement to drop off now is it a one-to-one? Not completely, but I’d say the vast majority of those – and I think like I mentioned in the warehouse example, that warehouse right now, we are paying for it, and we get reimbursement. Once they drop off, they’ll pay for it directly.
Ken Goldman: No, I get that. I think – and I’ll ask this off-line. I think I’m more asking about the growth percentage. I’ll ask it offline. I know – what type of clarification. Thank you.
Amit Banati: The growth percentage is related to the timing.
Ken Goldman: Yes. No I get it. I’ll ask later. It’s not worth holding it up the call for it. Thank you.
Operator: Thank you. I will now pass back to John Renwick for any concluding remarks.
John Renwick: Okay. Well, that is up to 10:30. If you do have follow-up questions, please do not hesitate to call us. And thank you everyone, for your interest.
Operator: Thank you for joining today’s call. You may now disconnect your lines.
