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Krispy Kreme Reports First Quarter 2024 Financial Results and Reaffirms Full Year 2024 Guidance

First quarter Net Revenue grows 5.7%, Organic Revenue increases 6.7%

Delivered Fresh Daily expansion to accelerate with McDonald’s nationwide rollout

Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme”, “KKI”, or the “Company”) today reported financial results for the quarter ended March 31, 2024.

First Quarter Highlights (vs Q1 2023)

  • Net revenue grew 5.7% to $442.7 million
  • Organic revenue grew 6.7% to $440.9 million
  • GAAP net loss of $6.7 million
  • GAAP net loss attributable to KKI of $8.5 million
  • Adjusted EBITDA grew 5.9% to $58.2 million
  • Global Points of Access increased 2,404, or 19.4% to 14,814

“First-quarter results exceeded our expectations, driven by increased digital sales and strong consumer demand, highlighted by a record setting Valentine’s Day with specialty doughnuts available in 33 countries around the world,” said Josh Charlesworth, CEO.

“Our strategy of making fresh Krispy Kreme doughnuts more available globally is providing impressive results,” continued Charlesworth. “We are modernizing how we make and move doughnuts to ensure high quality, profitable growth. Our Delivered Fresh Daily expansion is accelerating into more grocers, convenience stores and quick service restaurants. We’re excited about our recently announced agreement with McDonald’s, which is expected to more than 12,000 new points of access in the U.S. by the end of 2026. We’ll support much of this nationwide rollout using existing capacity, while adding distribution with other major customers as we grow,” he said.

Financial Highlights

Quarter Ended

$ in millions, except per share data

March 31, 2024

 

April 2, 2023

 

Change

GAAP:

 

 

 

Net revenue

$

442.7

 

$

419.0

 

 

5.7%

Operating income

$

11.9

 

$

14.9

 

 

(20.3)%

Operating income margin

2.7

%

3.6

%

(90) bps

Net (loss)/income

$

(6.7)

 

$

1.6

 

nm

Net loss attributable to KKI

$

(8.5)

 

$

(0.3)

 

nm

Diluted loss per share

$

(0.05)

 

$

0.00

 

$

(0.05)

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

Organic revenue(1)

$

440.9

 

$

413.3

 

 

6.7%

Adjusted net income, diluted(1)

$

11.3

$

15.3

(25.8)%

Adjusted EBITDA(1)

$

58.2

 

$

54.9

 

 

5.9%

Adjusted EBITDA margin(1)

 

13.1

%

 

13.1

%

nm

Adjusted diluted EPS(1)

$

0.07

 

$

0.09

 

$

(0.02)

 

Notes:

(1) Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures.

Key Operating Metrics

 

Quarter Ended

$ in millions

 

March 31, 2024

 

April 2, 2023

 

Change

Global Points of Access

 

 

14,814

 

 

12,410

19.4%

Sales per Hub (U.S.) TTM

 

$

4.9

 

$

4.6

 

6.5%

Sales per Hub (International) TTM

 

$

10.2

 

$

9.8

 

4.1%

Digital Sales as a Percent of Retail Sales

23.0

%

19.6

%

340 bps

First Quarter 2024 Consolidated Results (vs Q1 2023)

Krispy Kreme’s first quarter results reflect continued year-over-year growth as the Company continued to execute upon our omni-channel strategy. Net revenue grew 5.7% to $442.7 million, compared to $419.0 million. GAAP net loss was $6.7 million compared to prior year net income of $1.6 million. GAAP diluted loss per share was $(0.05), a decline of $(0.05) from the same quarter last year.

Total company organic revenue grew 6.7%, fueled by a 19.4% increase in Points of Access and the success of global brand activations including Valentine’s Day and St. Patrick’s Day doughnuts among others. Digital sales as a percent of retail sales increased 340 basis points to 23.0% of sales, due to a focus on owned channel improvements and increasing product availability through third parties.

Adjusted EBITDA in the quarter grew 5.9% to $58.2 million, with Adjusted EBITDA margins flat at 13.1%. Adjusted Net Income, diluted declined 25.8% to $11.3 million in the quarter. Adjusted Diluted EPS declined to $0.07 from $0.09 in the same quarter last year, primarily driven by increased depreciation and amortization and interest expenses, as the Company continues to invest in global expansion.

First Quarter 2024 Segment Results (vs Q1 2023)

U.S.: In the U.S. segment, net revenue grew $14.6 million, or 5.2%, with organic revenue growth of 7.4%. Revenue growth was driven by increased Points of Access (“POA”) as we continue to accelerate our Delivered Fresh Daily strategy, combined with successful specialty doughnut collections linked to seasonal events. The gap between organic revenue growth and net revenue growth was primarily attributable to the exit of the Branded Sweet Treats business.

Sales per hub in the U.S. increased 6.5% to $4.9 million while DFD average sales per door per week remained stable at $640. Digital sales as a percentage of U.S. Fresh retail doughnut sales increased 480 basis points to 19.3% benefiting from successful marketing integrations and an expanded delivery radius.

U.S. Adjusted EBITDA increased 10.6% to $42.6 million with Adjusted EBITDA margin expansion of 70 basis points to 14.4% tied to labor and waste optimization and productivity benefits from the Company’s Hub and Spoke model.

International: In the International segment, which is now made up of all equity owned businesses including Japan and Canada, saw net revenue grow $12.8 million, or 11.4%. International organic revenue grew 9.8%, driven by record POA growth of 917, or nearly 24% growth, and successful marketing activations.

International Adjusted EBITDA grew 8.2% to $20.5 million with adjusted EBITDA margin declining approximately 50 basis points, as lower volumes in the U.K. continued to more than offset strength in Canada and Mexico.

Market Development: In the Market Development segment, which is now comprised of our franchise businesses both domestically in the U.S. and internationally, net revenue and organic revenue declined $3.6 million, or 14.1%, largely driven by a one-off timing impact of equipment sales in the prior year.

Market Development Adjusted EBITDA grew 3.0% to $11.9 million. Adjusted EBITDA margins expanded 900 basis points to 54.1%, due to the timing of lower margin equipment sales and the expansion of the Company’s Hub and Spoke model throughout international franchises.

Balance Sheet and Capital Expenditures

During the first quarter of 2024, the Company invested $29.1 million in capital expenditures, driven primarily by investments in the Hub and Spoke model in preparation for the U.S. expansion of our Delivered Fresh Daily network, information technology investments, and continued expansion at Insomnia Cookies.

As of March 31, 2024 the Company has total available liquidity of $133.6 million, including $33.1 million of cash and cash equivalents as well as undrawn capacity of roughly $100.5 million under available credit facilities. In 2023, the Company extended maturities of its primary debt facility to 2028 and as of March 31, 2024 has total debt of $946.2 million and net debt of $913.1 million.

2024 Financial Guidance

Krispy Kreme reaffirms the following guidance for the full year 2024 (vs FY2023)

  • Net Revenue growth of +5% to +7%
  • Organic Revenue growth of +6% to +8%
  • Adjusted EBITDA growth of +8% to +11%
  • Adjusted Diluted EPS of $0.27 to $0.31
  • Income Tax rate between 26% and 28%
  • Capital Expenditures of 7% to 8% of net revenue
  • Interest Expense, net of $55 million to $65 million

The above guidance assumes nominal impact from foreign exchange. The Company continues to expect to reduce its net leverage in 2024, as it makes progress towards its 2026 goal of approximately 2.0x to 2.5x net leverage.

On October 3, 2023, the Company announced it is exploring strategic alternatives for Insomnia Cookies. Guidance for the full year 2024 includes operations from Insomnia Cookies.

Definitions

The following definitions apply to terms used throughout this press release:

  • Global Points of Access: Reflects all locations at which fresh doughnuts or cookies can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors and Cookie Shops, at both Company-owned and franchise locations as of the end of the respective reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments.
  • Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the respective reporting period.
  • Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of the five most recent quarters.
  • Fresh Revenues from Hubs with Spokes: Fresh Revenues include product sales generated from our Doughnut Shop business (including digital), as well as DFD sales, but excluding sales from Branded Sweet Treats. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business. Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from those Hubs currently producing product for other shops, Carts and Food Trucks, and/or DFD doors, but excluding Fresh Revenues derived from those Hubs not currently producing product for other shops, Carts and Food Trucks, and/or DFD doors.
  • Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment.

Conference Call

Krispy Kreme will host a public conference call at 8:30 AM Eastern Time today to discuss its results for the first quarter of 2024. The conference call can be accessed by dialing 1 (800) 715-9871 and entering the conference ID 5985470. International participants can access the call via the corresponding number listed HERE and entering the conference ID 5985470. To listen to the live audio webcast and Q&A, visit the Krispy Kreme investor relations website at investors.krispykreme.com. A replay and transcript of the webcast will be available on the website within 24 hours after the call. Krispy Kreme’s earnings press release and related materials will also be available on the investor relations section of the Company’s website.

About Krispy Kreme

Headquartered in Charlotte, N.C., Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our iconic Original Glazed® doughnut is universally recognized for its hot-off-the-line, melt-in-your-mouth experience. Krispy Kreme operates in 39 countries through its unique network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing digital business with more than 14,000 fresh points of access. Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day and is reflected in the love we have for our people, our communities and the planet. Connect with Krispy Kreme Doughnuts at www.KrispyKreme.com, or on one of its many social media channels, including www.Facebook.com/KrispyKreme and www.Twitter.com/KrispyKreme.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. The words “continue,” “towards,” “expect,” “outlook,” “guidance,” “explore,” or similar words, or the negative of these words, identify forward-looking statements. Such forward-looking statements are based on certain assumptions and estimates that we consider reasonable but are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial conditions, business, prospects, growth strategy and liquidity. Accordingly, there are, or will be, important factors that could cause our actual results to differ materially from those indicated in these statements. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. Our actual results could differ materially from the forward-looking statements included herein. Factors that could cause actual results to differ from those expressed in forward-looking statements include, without limitation, the risks and uncertainties described under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed by us with the Securities and Exchange Commission (“SEC”) and described in the other filings we make from time to time with the SEC. We believe that these factors include, but are not limited to, the impact of pandemics, changes in consumer preferences, the impact of inflation, and our ability to execute on our omni-channel business strategy. These forward-looking statements are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statement to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Non-GAAP Measures

This press release includes certain non-GAAP financial measures including organic revenue growth, Adjusted EBITDA, Adjusted Net Income, Diluted, Adjusted Diluted EPS, Fresh Revenue from Hubs with Spokes and Sales per Hub, which differ from results using U.S. Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial measures are not universally consistent calculations, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC.

To the extent that the Company provides guidance, it does so only on a non-GAAP basis. The Company does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inability to predict the amount and timing of impacts outside of the Company’s control on certain items, such as net income and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

 

Krispy Kreme, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

 

 

Quarter Ended

 

March 31,

2024 (13 weeks)

 

April 2,

2023 (13 weeks)

Net revenues

 

 

 

Product sales

$

433,512

 

$

410,674

Royalties and other revenues

 

9,186

 

 

8,276

Total net revenues

 

442,698

 

 

418,950

Product and distribution costs

 

107,015

 

 

117,833

Operating expenses

 

205,195

 

 

191,408

Selling, general and administrative expense

 

71,574

 

 

61,468

Marketing expenses

 

12,115

 

 

9,853

Pre-opening costs

 

1,105

 

 

764

Other expenses/(income), net

 

200

 

 

(5,263)

Depreciation and amortization expense

 

33,586

 

 

27,939

Operating income

 

11,908

 

 

14,948

Interest expense, net

 

13,736

 

 

11,988

Other non-operating expense, net

 

573

 

 

999

(Loss)/income before income taxes

 

(2,401)

 

 

1,961

Income tax expense

 

4,262

 

 

317

Net (loss)/income

 

(6,663)

 

 

1,644

Net income attributable to noncontrolling interest

 

1,871

 

 

1,945

Net loss attributable to Krispy Kreme, Inc

$

(8,534)

 

$

(301)

Net loss per share:

 

 

 

Common stock — Basic

$

(0.05)

 

$

0.00

Common stock — Diluted

$

(0.05)

 

$

0.00

Weighted average shares outstanding:

 

 

 

Basic

 

168,685

 

 

168,141

Diluted

 

168,685

 

 

168,141

 

Krispy Kreme, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

 

 

As of

 

March 31,

2024

 

December 31,

2023

 

(unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

33,132

 

$

38,185

Restricted cash

 

480

 

 

429

Accounts receivable, net

 

57,287

 

 

59,362

Inventories

 

39,257

 

 

34,716

Taxes receivable

 

18,397

 

 

15,526

Prepaid expense and other current assets

 

25,461

 

 

25,363

Total current assets

 

174,014

 

 

173,581

Property and equipment, net

 

543,100

 

 

538,220

Goodwill

 

1,098,826

 

 

1,101,939

Other intangible assets, net

 

938,847

 

 

946,349

Operating lease right of use asset, net

 

456,810

 

 

456,964

Other assets

 

22,721

 

 

23,539

Total assets

$

3,234,318

 

$

3,240,592

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

60,326

 

$

54,631

Current operating lease liabilities

 

50,275

 

 

50,365

Accounts payable

 

128,555

 

 

156,488

Accrued liabilities

 

117,093

 

 

134,005

Structured payables

 

133,809

 

 

130,104

Total current liabilities

 

490,058

 

 

525,593

Long-term debt, less current portion

 

881,778

 

 

836,615

Noncurrent operating lease liabilities

 

454,265

 

 

454,583

Deferred income taxes, net

 

123,203

 

 

123,925

Other long-term obligations and deferred credits

 

37,127

 

 

36,093

Total liabilities

 

1,986,431

 

 

1,976,809

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Common stock, $0.01 par value; 300,000 shares authorized as of both March 31, 2024 and December 31, 2023; 168,731 and 168,628 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

1,687

 

 

1,686

Additional paid-in capital

 

1,449,773

 

 

1,443,591

Shareholder note receivable

 

(3,629)

 

 

(3,850)

Accumulated other comprehensive (loss)/income, net of income tax

 

(1,208)

 

 

7,246

Retained deficit

 

(293,430)

 

 

(278,990)

Total shareholders’ equity attributable to Krispy Kreme, Inc.

 

1,153,193

 

 

1,169,683

Noncontrolling interest

 

94,694

 

 

94,100

Total shareholders’ equity

 

1,247,887

 

 

1,263,783

Total liabilities and shareholders’ equity

$

3,234,318

 

$

3,240,592

 

Krispy Kreme, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

Quarter Ended

 

March 31, 2024

(13 weeks)

 

April 2, 2023

(13 weeks)

CASH FLOWS (USED FOR)/FROM OPERATING ACTIVITIES:

 

 

 

Net (loss)/income

$

(6,663)

 

$

1,644

Adjustments to reconcile net (loss)/income to net cash (used for)/provided by operating activities:

 

 

 

Depreciation and amortization expense

 

33,586

 

 

27,939

Deferred and other income taxes

 

214

 

 

(219)

Loss on extinguishment of debt

 

 

 

472

Impairment and lease termination charges

 

247

 

 

4,900

(Gain)/loss on disposal of property and equipment

 

(49)

 

 

33

Gain on sale-leaseback

 

 

 

(9,661)

Share-based compensation

 

6,986

 

 

5,545

Change in accounts and notes receivable allowances

 

113

 

 

334

Inventory write-off

 

411

 

 

7,115

Settlement of interest rate swap derivatives

 

 

 

7,657

Amortization related to settlement of interest rate swap derivatives

 

(2,955)

 

 

Other

 

788

 

 

(204)

Change in operating assets and liabilities, excluding foreign currency translation adjustments

 

(50,383)

 

 

(35,190)

Net cash (used for)/provided by operating activities

 

(17,705)

 

 

10,365

CASH FLOWS USED FOR INVESTING ACTIVITIES:

 

 

 

Purchase of property and equipment

 

(29,064)

 

 

(26,553)

Proceeds from sale-leaseback

 

 

 

10,025

Other investing activities

 

19

 

 

82

Net cash used for investing activities

 

(29,045)

 

 

(16,446)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from the issuance of debt

 

179,500

 

 

891,698

Repayment of long-term debt and lease obligations

 

(132,343)

 

 

(852,144)

Payment of financing costs

 

 

 

(5,000)

Proceeds from structured payables

 

101,287

 

 

44,757

Payments on structured payables

 

(97,416)

 

 

(70,480)

Capital contribution by shareholders, net of loans issued

 

232

 

 

Distribution to shareholders

 

(5,902)

 

 

(5,884)

Payments for repurchase and retirement of common stock

 

(804)

 

 

Distribution to noncontrolling interest

 

(977)

 

 

(1,139)

Net cash provided by financing activities

 

43,577

 

 

1,808

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(1,829)

 

 

(1,373)

Net decrease in cash, cash equivalents and restricted cash

 

(5,002)

 

 

(5,646)

Cash, cash equivalents and restricted cash at beginning of period

 

38,614

 

 

35,730

Cash, cash equivalents and restricted cash at end of period

$

33,612

 

$

30,084

 

 

 

 

Net cash (used for)/provided by operating activities

$

(17,705)

 

$

10,365

Less: Purchase of property and equipment

 

(29,064)

 

 

(26,553)

Free cash flow

$

(46,769)

 

$

(16,188)

Krispy Kreme, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

We define “Adjusted EBITDA” as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, and other certain non-recurring, infrequent or non-core income and expense items. Adjusted EBITDA is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods.

We define “Adjusted Net Income, Diluted” as net loss attributable to common shareholders, adjusted for interest expense, share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, the tax impact of adjustments, and other certain non-recurring, infrequent or non-core income and expense items. “Adjusted EPS” is Adjusted Net Income, Diluted converted to a per share amount.

Adjusted EBITDA, Adjusted Net Income, Diluted, and Adjusted EPS have certain limitations, including adjustments for income and expense items that are required by GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as share-based compensation. Our presentation of Adjusted EBITDA, Adjusted Net Income, Diluted, and Adjusted EPS should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted Net Income, Diluted, and Adjusted EPS supplementally.

 

Quarter Ended

(in thousands)

March 31, 2024

 

April 2, 2023

Net (loss)/income

$

(6,663)

 

$

1,644

Interest expense, net

 

13,736

 

 

11,988

Income tax expense

 

4,262

 

 

317

Depreciation and amortization expense

 

33,586

 

 

27,939

Share-based compensation

 

6,986

 

 

5,545

Employer payroll taxes related to share-based compensation

 

43

 

 

25

Other non-operating expense, net (1)

 

573

 

 

999

Strategic initiatives (2)

 

4,821

 

 

13,469

Acquisition and integration expenses (3)

 

248

 

 

91

New market penetration expenses (4)

 

466

 

 

94

Shop closure expenses/(income), net (5)

 

139

 

 

(679)

Restructuring and severance expenses (6)

 

6

 

 

580

Gain on sale-leaseback

 

 

 

(9,661)

Other (7)

 

(15)

 

 

2,577

Adjusted EBITDA

$

58,188

 

$

54,928

 

Quarter Ended

(in thousands)

March 31, 2024

 

April 2, 2023

Segment Adjusted EBITDA:

 

 

 

U.S

$

42,616

 

$

38,535

International

 

20,536

 

 

18,982

Market Development

 

11,900

 

 

11,551

Corporate

 

(16,864)

 

 

(14,140)

Total Adjusted EBITDA

$

58,188

 

$

54,928

 

Quarter Ended

(in thousands, except per share amounts)

March 31, 2024

 

April 2, 2023

Net (loss)/income

$

(6,663)

 

$

1,644

Share-based compensation

 

6,986

 

 

5,545

Employer payroll taxes related to share-based compensation

 

43

 

 

25

Other non-operating expense, net (1)

 

573

 

 

999

Strategic initiatives (2)

 

4,821

 

 

13,469

Acquisition and integration expenses (3)

 

248

 

 

91

New market penetration expenses (4)

 

466

 

 

94

Shop closure expenses/(income), net (5)

 

139

 

 

(679)

Restructuring and severance expenses (6)

 

6

 

 

580

Gain on sale-leaseback

 

 

 

(9,661)

Other (7)

 

(15)

 

 

2,577

Amortization of acquisition related intangibles (8)

 

7,420

 

 

7,273

Loss on extinguishment of 2019 Facility (9)

 

 

 

472

Tax impact of adjustments (10)

 

(224)

 

 

(4,656)

Tax specific adjustments (11)

 

(589)

 

 

(557)

Net income attributable to noncontrolling interest

 

(1,871)

 

 

(1,945)

Adjusted net income attributable to common shareholders - Basic

$

11,340

 

$

15,271

Additional income attributed to noncontrolling interest due to subsidiary potential common shares

 

(19)

 

 

(10)

Adjusted net income attributable to common shareholders - Diluted

$

11,321

 

$

15,261

Basic weighted average common shares outstanding

 

168,685

 

 

168,141

Dilutive effect of outstanding common stock options, RSUs, and PSUs

 

2,488

 

 

1,850

Diluted weighted average common shares outstanding

 

171,173

 

 

169,991

Adjusted net income per share attributable to common shareholders:

 

 

 

Basic

$

0.07

 

$

0.09

Diluted

$

0.07

 

$

0.09

 

(1) Primarily foreign translation gains and losses in each period.

(2) The quarter ended March 31, 2024 consists primarily of costs associated with global transformation, exploring strategic alternatives for the Insomnia Cookies business, and preparing for the McDonald’s U.S. expansion (with these specific initiatives aggregating to approximately $4.6 million of the total). The quarter ended April 2, 2023 consists primarily of costs associated with the decision to exit the Branded Sweet Treats business, including property, plant and equipment impairments, inventory write-offs, employee severance, and other related costs (approximately $13.4 million of the total).

(3) Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, and advisory fees incurred in connection with acquisition and integration-related activities for the applicable period.

(4) Consists of start-up costs associated with entry into new countries for which the Company’s brands have not previously operated, including the Insomnia Cookies brand entering Canada and the U.K.

(5) Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. The quarter ended April 2, 2023 includes gains related to the termination of leases at certain Krispy Kreme shops in the U.S. where the Company had already recognized impairment of the corresponding right of use assets in a prior period.

(6) The quarter ended April 2, 2023 consists primarily of costs associated with restructuring of the global executive team.

(7) The quarters ended March 31, 2024 and April 2, 2023 consist primarily of legal and other regulatory expenses incurred outside the ordinary course of business. The regulatory expenses incurred in the quarter ended April 2, 2023 relate to previous business acquisitions.

(8) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the Condensed Consolidated Statements of Operations.

(9) Includes interest expenses related to unamortized debt issuance costs from the 2019 Facility associated with extinguished lenders as a result of the March 2023 debt refinancing.

(10) Tax impact of adjustments calculated applying the applicable statutory rates. The quarters ended March 31, 2024 and April 2, 2023 also include the impact of disallowed executive compensation expense.

(11) The quarter ended March 31, 2024 consists of the recognition of a previously unrecognized tax benefit unrelated to ongoing operations and a discrete tax benefit unrelated to ongoing operations. The quarter ended April 2, 2023 consists of a discrete tax benefit unrelated to ongoing operations.

Krispy Kreme, Inc.

Segment Reporting (Unaudited)

(in thousands, except percentages or otherwise stated)

 

 

Quarter Ended

 

March 31, 2024

 

April 2, 2023

Net revenues:

 

 

 

U.S.

$

295,935

 

$

281,344

International

 

124,750

 

 

111,988

Market Development

 

22,013

 

 

25,618

Total net revenues

$

442,698

 

$

418,950

Q1 2024 Organic Revenue - QTD

(in thousands, except percentages)

U.S.

 

International

 

Market

Development

 

Total Company

Total net revenues in first quarter of fiscal 2024

$

295,935

$

124,750

$

22,013

$

442,698

Total net revenues in first quarter of fiscal 2023

 

281,344

 

 

111,988

 

 

25,618

 

 

418,950

Total Net Revenues Growth

 

14,591

 

 

12,762

 

 

(3,605)

 

 

23,748

Total Net Revenues Growth %

 

5.2 %

 

 

11.4 %

 

 

-14.1 %

 

 

5.7 %

Less: Impact of shop optimization program closures

 

(316)

 

 

 

 

 

 

(316)

Less: Impact of Branded Sweet Treats exit

 

(5,367)

 

 

 

 

 

 

(5,367)

Adjusted net revenues in first quarter of fiscal 2023

 

275,661

 

 

111,988

 

 

25,618

 

 

413,267

Adjusted net revenue growth

 

20,274

 

 

12,762

 

 

(3,605)

 

 

29,431

Impact of foreign currency translation

 

 

 

(1,836)

 

 

 

 

(1,836)

Organic Revenue Growth

$

20,274

 

$

10,926

 

$

(3,605)

 

$

27,595

Organic Revenue Growth %

 

7.4 %

 

 

9.8 %

 

 

-14.1 %

 

 

6.7 %

Q1 2023 Organic Revenue - QTD

(in thousands, except percentages)

U.S.

 

International

 

Market

Development

 

Total Company

Total net revenues in first quarter of fiscal 2023

$

281,344

 

$

111,988

 

$

25,618

 

$

418,950

Total net revenues in first quarter of fiscal 2022

 

247,919

 

 

104,493

 

 

20,120

 

 

372,532

Total Net Revenues Growth

 

33,425

 

 

7,495

 

 

5,498

 

 

46,418

Total Net Revenues Growth %

 

13.5 %

 

 

7.2 %

 

 

27.3 %

 

 

12.5 %

Less: Impact of shop optimization closures

 

(3,187)

 

 

 

 

 

 

(3,187)

Adjusted net revenues in first quarter of fiscal 2022

 

244,732

 

 

104,493

 

 

20,120

 

 

369,345

Adjusted net revenue growth

 

36,612

 

 

7,495

 

 

5,498

 

 

49,605

Impact of acquisitions

 

(3,080)

 

 

 

 

893

 

 

(2,187)

Impact of foreign currency translation

 

 

 

5,779

 

 

 

 

5,779

Organic Revenue Growth

$

33,532

 

$

13,274

 

$

6,391

 

$

53,197

Organic Revenue Growth %

 

13.7 %

 

 

12.7 %

 

 

31.8 %

 

 

14.4 %

 

Trailing Four

Quarters Ended

 

Fiscal Years Ended

Sales per Hub

(in thousands, unless otherwise stated)

March 31, 2024

 

December 31,

2023

 

January 1, 2023

U.S.:

 

 

 

 

 

Revenues

$

1,119,535

 

$

1,104,944

 

$

1,010,250

Non-Fresh Revenues (1)

 

(4,003)

 

 

(9,416)

 

 

(38,380)

Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2)

 

(395,102)

 

 

(399,061)

 

 

(404,430)

Sales from Hubs with Spokes

 

720,430

 

 

696,467

 

 

567,440

Sales per Hub (millions)

 

4.9

 

 

4.9

 

 

4.5

 

 

 

 

 

 

International:

 

 

 

 

 

Sales from Hubs with Spokes (3)

$

502,393

 

$

489,631

 

$

435,651

Sales per Hub (millions) (4)

 

10.2

 

 

10.0

 

 

9.7

 

(1) Includes the exited Branded Sweet Treats business revenues.

(2) Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes.

(3) Total International net revenues is equal to Fresh Revenues from Hubs with Spokes for that business segment.

(4) International sales per Hub comparative data has been restated in constant currency based on current exchange rates.

Krispy Kreme, Inc.

Global Points of Access (Unaudited)

 

 

Global Points of Access

 

Quarter Ended

 

Fiscal Year

Ended

 

March 31, 2024

 

April 2, 2023

 

December 31,

2023

U.S.:

 

 

 

 

 

Hot Light Theater Shops

229

 

228

 

229

Fresh Shops

71

 

67

 

70

Cookie Bakeries

277

 

239

 

267

DFD Doors (2)

7,198

 

6,081

 

6,808

Total

7,775

 

6,615

 

7,374

International:

 

 

 

 

 

Hot Light Theater Shops

45

 

43

 

44

Fresh Shops

490

 

458

 

483

Carts, Food Trucks, and Other (1)

16

 

16

 

16

DFD Doors

4,202

 

3,319

 

3,977

Total

4,753

 

3,836

 

4,520

Market Development:

 

 

 

 

 

Hot Light Theater Shops

117

 

106

 

116

Fresh Shops

1,010

 

835

 

968

Carts, Food Trucks, and Other (1)

30

 

28

 

30

DFD Doors

1,129

 

990

 

1,139

Total

2,286

 

1,959

 

2,253

Total Global Points of Access (as defined)

14,814

 

12,410

 

14,147

Total Hot Light Theater Shops

391

 

377

 

389

Total Fresh Shops

1,571

 

1,360

 

1,521

Total Cookie Bakeries

277

 

239

 

267

Total Shops

2,239

 

1,976

 

2,177

Total Carts, Food Trucks, and Other

46

 

44

 

46

Total DFD Doors

12,529

 

10,390

 

11,924

Total Global Points of Access (as defined)

14,814

 

12,410

 

14,147

 

(1) Carts and Food Trucks are non-producing, mobile (typically on wheels) facilities without walls or a door where product is received from a Hot Light Theater Shop or Doughnut Factory. Other includes a vending machine. Points of Access in this category are primarily found in international locations in airports, train stations, etc.

(2) Includes over 160 McDonald’s shops located in Louisville and Lexington, Kentucky and the surrounding area as of March 31, 2024.

Krispy Kreme, Inc.

Global Hubs (Unaudited)

 

 

Hubs

 

Quarter Ended

 

Fiscal Year

Ended

 

March 31, 2024

 

April 2, 2023

 

December 31,

2023

U.S.:

 

 

 

 

 

Hot Light Theater Shops (1)

221

 

221

 

220

Doughnut Factories

4

 

4

 

4

Total

225

 

225

 

224

Hubs with Spokes

154

 

137

 

149

Hubs without Spokes

71

 

88

 

75

International:

 

 

 

 

 

Hot Light Theater Shops (1)

36

 

34

 

36

Doughnut Factories

14

 

14

 

14

Total

50

 

48

 

50

Hubs with Spokes

50

 

48

 

50

Market Development:

 

 

 

 

 

Hot Light Theater Shops (1)

113

 

103

 

112

Doughnut Factories

26

 

24

 

23

Total

139

 

127

 

135

Total Hubs

414

 

400

 

409

 

(1) Includes only Hot Light Theater Shops and excludes Mini Theaters. A Mini Theater is a Spoke location that produces some doughnuts for itself and also receives doughnuts from another producing location.

Krispy Kreme, Inc.

Net Debt and Leverage (Unaudited)

(in thousands, except leverage ratio)

 

 

March 31, 2024

 

December 31, 2023

Current portion of long-term debt

$

60,326

 

$

54,631

Long-term debt, less current portion

 

881,778

 

 

836,615

Total long-term debt, including debt issuance costs

 

942,104

 

 

891,246

Add back: Debt issuance costs

 

4,109

 

 

4,371

Total long-term debt, excluding debt issuance costs

 

946,213

 

 

895,617

Less: Cash and cash equivalents

 

(33,132)

 

 

(38,185)

Net debt

$

913,081

 

$

857,432

Adjusted EBITDA - trailing four quarters

 

214,884

 

 

211,624

Net leverage ratio

4.2 x

 

4.1 x

 

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