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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Krispy Kreme Inc | NASDAQ:DNUT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.12 | 1.01% | 12.04 | 11.93 | 12.00 | 12.09 | 11.845 | 11.91 | 1,706,454 | 21:24:20 |
Net Revenue grew 7.9% and Organic Revenue grew 9.6% with strong momentum to start Q4 Reaffirms mid-to-high end of Revenue and Adjusted EBITDA guidance
Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme” or the “Company”) today reported financial results for the third quarter ended October 1, 2023.
Third Quarter Highlights (vs Q3 2022)
“Our third quarter results showed the strength of our team, business model, and the power of our brand. We delivered revenue and Adjusted EBITDA growth, while delivering Adjusted EBITDA margin expansion through our hub and spoke model. Our global expansion continued, and our doughnuts became available in two new markets, Switzerland and Kazakhstan, and Insomnia Cookies expanded internationally into Canada and the United Kingdom. Overall, Global Points of Access growth accelerated, increasing by 1,691 or 14.4% year-over-year to 13,394,” stated CEO Mike Tattersfield. “We delivered the joy that is Krispy Kreme through powerful specialty doughnut offerings including the popular M&Ms collection, which was available in 17 countries, our extremely successful limited time offering with Pumpkin Spice, and an innovative new partnership with Hailey Bieber to promote her Krispy Kreme inspired strawberry glazed peptide lip treatment.”
Mike continued, “The path forward for Krispy Kreme remains incredibly exciting. Momentum continues into the seasonally strong fourth quarter enhanced by continued growth in global Points of Access, and a robust Halloween Scooby-Doo offering. We expect to open in Ecuador and France in the fourth quarter taking our new market openings to seven in 2023. We are also excited about our continued partnership with McDonald’s, which we believe has validated the attractiveness of the quick-service restaurant channel. While nothing has been finalized, we are in advanced discussions about expanding the partnership and are making investments in the U.S. that reflect our confidence in further scaling our Delivered Fresh Daily network. I could not be more excited to watch Krispy Kreme become the most loved sweet treat brand in the world and follow the Company’s continued success as Josh Charlesworth takes on the CEO position in 2024.”
Financial Highlights
$ in millions, except per share data
Q3 2023
vs Q3 2022
Q1-Q3 2023
vs. Q1-Q3 2022
Net Revenue
$407.4
+7.9%
$1,235.2
+9.8%
Organic Revenue (1)
$400.3
+9.6%
$1,229.6
+11.8%
GAAP Net Loss
$(40.3)
(240.0)%
$(38.5)
(394.6)%
Adjusted Net Income, Diluted (1)
$4.4
(3.6)%
$31.1
0.5%
GAAP Operating (Loss)/Income
$(2.1)
(105.7)%
$18.5
(22.3)%
GAAP Operating (Loss)/Income Margin
(0.5)%
-20 bps
1.5%
-60 bps
Adjusted EBITDA (1)
$43.7
+13.5%
$147.5
+9.4%
Adjusted EBITDA Margin (1)
10.7%
+50 bps
11.9%
-10 bps
GAAP Diluted EPS
$(0.24)
$(0.16)
$(0.24)
$(0.16)
Adjusted Diluted EPS (1)
$0.03
$0.00
$0.18
$0.00
Notes:
(1) Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures.
Key Operating Metrics
$ in millions, except access points
Q3 2023
vs Q3 2022
vs Q2 2023
Global Points of Access
13,394
+14.4%
+4.1%
Sales per Hub (U.S.) TTM
$4.8
+9.1%
+2.1%
Sales per Hub (International) TTM
$9.9
0.0%
(4.8)%
Ecommerce as a Percent of Retail Sales
18.6%
+10 bps
-20 bps
Third Quarter 2023 Consolidated Results
Krispy Kreme’s third quarter 2023 results reflect continued year-over-year growth as compared to the third quarter of 2022. Net Revenue grew 7.9% to $407.4 million. Total Company Organic Revenue grew 9.6% in the quarter, led by the U.S., which delivered 10.2% organic growth in the quarter driven by growth across all sales channels, including Delivered Fresh Daily (“DFD”) doors, Doughnut Shops and Cookie Bakeries, and Ecommerce.
GAAP net loss for the quarter was $40.3 million, compared to a GAAP net loss of $11.8 million in 2022, due to the forecasted effective tax rate and attributable non-cash income tax expense. Adjusted Net Income, Diluted, decreased 3.6% to $4.4 million in the quarter. Adjusted EBITDA in the quarter grew in excess of revenue at 13.5% to $43.7 million, driven by improved profitability across each of our reportable segments. Adjusted EBITDA margins improved 50 basis points to 10.7% driven by efficiencies in and expansion of our hub and spoke model, as well as pricing actions taken throughout the quarter and from earlier in 2023. GAAP diluted EPS in the quarter was a $0.24 loss per share compared to a loss per share of $0.08 in the same quarter last year, while adjusted diluted EPS was flat compared to last year at $0.03 despite elevated interest rates.
Third Quarter 2023 Market Segment Results (vs Q3 2022)
U.S.: In the U.S. segment, net revenue grew $13.3 million, or approximately 5.4%, and organic revenue increased $23.9 million, or approximately 10.2%. Organic growth was driven by successful marketing activations, pricing actions, and the expansion of our DFD strategy. Sales per hub in the U.S. increased 9.1% to $4.8 million and DFD average sales per door increased 11.6% to $613 per week, with an additional 786 doors. Additionally, Ecommerce as a percent of retail sales grew 150 basis points, or $4.8 million.
U.S. Adjusted EBITDA increased 8.8% to $22.3 million with Adjusted EBITDA margin expansion of 30 basis points to 8.6%. This was primarily driven by the productivity benefits of the expansion of our hub and spoke model.
International: In the International segment, net revenue grew $14.2 million, or approximately 15.4%, aided by foreign currency translation impacts of $6.7 million from a weakening U.S. dollar. International organic revenue grew $7.5 million, or approximately 8.2%, with organic growth across all of our markets, driven by pricing and strong Points of Access growth of 416, or 12%.
International Adjusted EBITDA grew 17.3% to $21.4 million with Adjusted EBITDA margin expansion of 30 basis points to 20.2%, primarily driven by the U.K. and Australia where pricing and cost control initiatives continue to prove effective.
Market Development: In the Market Development segment, net revenue increased $2.3 million, or approximately 5.9%, despite lapping one-time franchise equipment sales and the impact of certain foreign currencies devaluing against the U.S. dollar. When adjusted for the impacts of acquisitions and foreign currency, Market Development organic revenue grew $3.5 million, or approximately 9.1%, driven by strong organic growth in Japan and Canada, and new markets openings including Kazakhstan and Switzerland.
Market Development Adjusted EBITDA grew 13.3% to $13.4 million with Adjusted EBITDA margin expansion of 220 basis points to 32.6% driven mainly by hub and spoke efficiencies in our company-owned Japan and Canada businesses.
Balance Sheet & Capital Expenditures
During the third quarter of 2023, the Company invested $34.3 million in capital expenditures, or 8.4% of revenue, primarily to support new store development, international expansion and the growth of our omni-channel strategy preparing for expansion in the QSR channel.
As of October 1, 2023 the Company had total available liquidity of $196.2 million, including $25.7 million of cash and cash equivalents plus undrawn capacity of $170.5 million under available credit facilities, and net debt of $849.8 million.
2023 Financial Outlook
With the exception of capital expenditures and interest expense, the Company is reiterating its outlook for the full year 2023 as follows:
As noted above, the Company continues to trend toward the middle to the higher end of the revenue and adjusted EBITDA ranges. Additionally, on October 3, 2023, the Company announced it is exploring strategic alternatives for Insomnia Cookies, which includes consideration of an all-cash sale. Guidance for the full year 2023 includes operations from Insomnia Cookies and, if a divestiture occurs, final results may reflect separation of Insomnia Cookies' operations.
Definitions
The following definitions apply to terms used throughout this press release:
Conference Call
Krispy Kreme will host a public conference call at 8:30 AM Eastern Time today to discuss its results for the third quarter of 2023. The conference call can be accessed by dialing 1 (800) 599-5188 and entering the conference ID 5487868. International participants can access the call via the corresponding number listed here and entering the conference ID 5487868. 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 more than 35 countries through its unique network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing Ecommerce and delivery business with more than 13,000 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,” 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 January 1, 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
Three Quarters Ended
October 1, 2023 (13 weeks)
October 2, 2022 (13 weeks)
October 1, 2023 (39 weeks)
October 2, 2022 (39 weeks)
Net revenues
Product sales
$
398,745
$
370,216
$
1,209,767
$
1,102,045
Royalties and other revenues
8,622
7,306
25,432
23,254
Total net revenues
407,367
377,522
1,235,199
1,125,299
Product and distribution costs
101,353
102,870
330,292
299,539
Operating expenses
195,380
177,592
575,953
520,260
Selling, general and administrative expense
68,305
54,801
192,355
160,266
Marketing expenses
12,478
10,995
32,101
32,369
Pre-opening costs
1,059
1,200
2,927
3,514
Other (income)/expenses, net
(1,102
)
2,964
(6,051
)
1,800
Depreciation and amortization expense
32,007
28,127
89,142
83,782
Operating (loss)/income
(2,113
)
(1,027
)
18,480
23,769
Interest expense, net
12,807
8,871
36,858
23,808
Other non-operating expense, net
971
1,648
3,031
2,083
Loss before income taxes
(15,891
)
(11,546
)
(21,409
)
(2,122
)
Income tax expense
24,367
294
17,121
5,668
Net loss
(40,258
)
(11,840
)
(38,530
)
(7,790
)
Net income attributable to noncontrolling interest
199
1,216
2,005
5,113
Net loss attributable to Krispy Kreme, Inc.
$
(40,457
)
$
(13,056
)
$
(40,535
)
$
(12,903
)
Net loss per share:
Common stock — Basic
$
(0.24
)
$
(0.08
)
$
(0.24
)
$
(0.08
)
Common stock — Diluted
$
(0.24
)
$
(0.08
)
$
(0.24
)
$
(0.08
)
Weighted average shares outstanding:
Basic
168,224
167,431
168,183
167,353
Diluted
168,224
167,431
168,183
167,353
Krispy Kreme, Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amounts)
As of
(Unaudited) October 1, 2023
January 1, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
25,711
$
35,371
Restricted cash
430
359
Accounts receivable, net
49,854
51,089
Inventories
35,063
46,239
Taxes receivable
17,886
18,263
Prepaid expense and other current assets
31,118
26,953
Total current assets
160,062
178,274
Property and equipment, net
517,528
472,358
Goodwill
1,092,000
1,087,908
Other intangible assets, net
949,463
966,088
Operating lease right of use asset, net
448,569
417,381
Other assets
19,581
26,528
Total assets
$
3,187,203
$
3,148,537
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
43,492
$
40,034
Current operating lease liabilities
49,408
43,160
Accounts payable
178,725
225,276
Accrued liabilities
164,577
104,424
Structured payables
88,838
103,575
Total current liabilities
525,040
516,469
Long-term debt, less current portion
827,429
739,052
Noncurrent operating lease liabilities
441,732
412,759
Deferred income taxes, net
109,925
143,124
Other long-term obligations and deferred credits
34,067
38,258
Total liabilities
1,938,193
1,849,662
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value; 300,000 shares authorized as of both October 1, 2023 and January 1, 2023; 168,594 and 168,137 shares issued and outstanding as of October 1, 2023 and January 1, 2023, respectively
1,686
1,681
Additional paid-in capital
1,437,488
1,426,105
Shareholder note receivable
(3,820
)
(4,813
)
Accumulated other comprehensive loss, net of income tax
(7,516
)
(9,151
)
Retained deficit
(275,698
)
(217,490
)
Total shareholders’ equity attributable to Krispy Kreme, Inc.
1,152,140
1,196,332
Noncontrolling interest
96,870
102,543
Total shareholders’ equity
1,249,010
1,298,875
Total liabilities and shareholders’ equity
$
3,187,203
$
3,148,537
Krispy Kreme, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)
Three Quarters Ended
October 1, 2023 (39 weeks)
October 2, 2022 (39 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(38,530
)
$
(7,790
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense
89,142
83,782
Deferred income taxes
12,634
(10,259
)
Loss on extinguishment of debt
472
—
Impairment and lease termination charges
7,711
7,255
Gain on disposal of property and equipment
(168
)
(244
)
Gain on sale-leaseback
(9,646
)
(4,311
)
Share-based compensation
17,821
13,318
Change in accounts and notes receivable allowances
504
378
Inventory write-off
10,522
388
Settlement of interest rate swap derivatives
7,657
—
Amortization related to settlement of interest rate swap derivatives
(7,334
)
—
Other
566
804
Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments
(47,319
)
(12,591
)
Net cash provided by operating activities
44,032
70,730
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment
(88,605
)
(75,002
)
Proceeds from disposals of assets
202
856
Proceeds from sale-leaseback
10,025
5,700
Acquisition of shops and franchise rights from franchisees, net of cash acquired
—
(17,335
)
Purchase of equity method investment
—
(989
)
Other investing activities
20
(931
)
Net cash used for investing activities
(78,358
)
(87,701
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt
1,044,698
121,500
Repayment of long-term debt and lease obligations
(965,250
)
(70,180
)
Payment of financing costs
(5,000
)
—
Proceeds from structured payables
145,099
219,459
Payments on structured payables
(159,571
)
(211,778
)
Payment of contingent consideration related to a business combination
(925
)
(900
)
Capital contribution by shareholders, net of loans issued
631
(288
)
Payments of issuance costs in connection with IPO
—
(12,458
)
Proceeds from sale of noncontrolling interest in subsidiary
—
410
Distribution to shareholders
(17,657
)
(17,570
)
Payments for repurchase and retirement of common stock
(1,609
)
(2,425
)
Distribution to noncontrolling interest
(12,883
)
(11,525
)
Net cash provided by financing activities
27,533
14,245
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(2,796
)
(7,967
)
Net decrease in cash, cash equivalents and restricted cash
(9,589
)
(10,693
)
Cash, cash equivalents and restricted cash at beginning of period
35,730
39,192
Cash, cash equivalents and restricted cash at end of period
$
26,141
$
28,499
Net cash provided by operating activities
$
44,032
$
70,730
Less: Purchase of property and equipment
(88,605
)
(75,002
)
Free cash flow
$
(44,573
)
$
(4,272
)
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
Three Quarters Ended
(in thousands)
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Net loss
$
(40,258
)
$
(11,840
)
$
(38,530
)
$
(7,790
)
Interest expense, net
12,807
8,871
36,858
23,808
Income tax expense
24,367
294
17,121
5,668
Depreciation and amortization expense
32,007
28,127
89,142
83,782
Share-based compensation
7,452
2,825
17,821
13,318
Employer payroll taxes related to share-based compensation
96
2
310
92
Other non-operating expense, net (1)
971
1,648
3,031
2,083
Strategic initiatives (2)
5,895
86
23,841
206
Acquisition and integration expenses (3)
49
790
479
1,389
New market penetration expenses (4)
678
313
1,013
683
Shop closure (income)/expenses, net (5)
(449
)
5,735
356
7,859
Restructuring and severance expenses (6)
552
2,328
2,799
2,804
Gain on sale-leaseback
—
(1,937
)
(9,646
)
(4,311
)
Other (7)
(426
)
1,300
2,888
5,219
Adjusted EBITDA
$
43,741
$
38,542
$
147,483
$
134,810
Quarter Ended
Three Quarters Ended
(in thousands)
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Segment Adjusted EBITDA:
U.S.
$
22,258
$
20,452
$
88,878
$
77,014
International
21,406
18,254
54,436
55,033
Market Development
13,371
11,797
46,071
36,642
Corporate
(13,294
)
(11,961
)
(41,902
)
(33,879
)
Adjusted EBITDA
$
43,741
$
38,542
$
147,483
$
134,810
Quarter Ended
Three Quarters Ended
(in thousands, except per share amounts)
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Net loss
$
(40,258
)
$
(11,840
)
$
(38,530
)
$
(7,790
)
Share-based compensation
7,452
2,825
17,821
13,318
Employer payroll taxes related to share-based compensation
96
2
310
92
Other non-operating expense, net (1)
971
1,648
3,031
2,083
Strategic initiatives (2)
5,895
86
23,841
206
Acquisition and integration expenses (3)
49
790
479
1,389
New market penetration expenses (4)
678
313
1,013
683
Shop closure (income)/expenses, net (5)
(449
)
5,735
356
8,109
Restructuring and severance expenses (6)
552
2,328
2,799
2,804
Gain on sale-leaseback
—
(1,937
)
(9,646
)
(4,311
)
Other (7)
(426
)
1,300
2,888
5,219
Amortization of acquisition related intangibles (8)
7,386
7,083
22,027
21,307
Loss on extinguishment of 2019 Facility (9)
—
—
472
—
Tax impact of adjustments (10)
22,694
(2,470
)
8,574
(5,889
)
Tax specific adjustments (11)
(28
)
—
(2,343
)
(628
)
Net income attributable to noncontrolling interest
(199
)
(1,216
)
(2,005
)
(5,113
)
Adjustment to adjusted net income attributable to common shareholders
—
—
—
(374
)
Adjusted net income attributable to common shareholders - Basic
$
4,413
$
4,647
$
31,087
$
31,105
Additional income attributed to noncontrolling interest due to subsidiary potential common shares
(7
)
(76
)
(14
)
(174
)
Adjusted net income attributable to common shareholders - Diluted
$
4,406
$
4,571
$
31,073
$
30,931
Basic weighted average common shares outstanding
168,224
167,431
168,183
167,353
Dilutive effect of outstanding common stock options, RSUs, and PSUs
2,421
1,822
2,249
2,006
Diluted weighted average common shares outstanding
170,645
169,253
170,432
169,359
Adjusted net income per share attributable to common shareholders:
Basic
$
0.03
$
0.03
$
0.18
$
0.19
Diluted
$
0.03
$
0.03
$
0.18
$
0.18
(1)
Primarily foreign translation gains and losses in each period.
(2)
The quarter and three quarters ended October 1, 2023 consist primarily of costs associated with global transformation and U.S. initiatives such as the decision to exit the Branded Sweet Treats business, including property, plant and equipment impairments, inventory write-offs, employee severance, and other related costs.
(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 and three quarters ended October 1, 2023 include 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 and three quarters ended October 1, 2023 and October 2, 2022 consist primarily of costs associated with restructuring of the global executive team.
(7)
The quarter and three quarters ended October 1, 2023 and October 2, 2022 consist primarily of legal and other regulatory expenses incurred outside the ordinary course of business.
(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 quarter and three quarters ended October 1, 2023 and October 2, 2022 also include the impact of disallowed executive compensation expense.
(11)
The quarter and three quarters ended October 1, 2023 consist of the recognition of a previously unrecognized tax benefit unrelated to ongoing operations, the effect of tax law changes on existing temporary differences, and a discrete tax benefit unrelated to ongoing operations.
Krispy Kreme, Inc. Segment Reporting (Unaudited) (in thousands, except percentages or otherwise stated)
Quarter Ended
Three Quarters Ended
October 1, 2023
October 2, 2022
October 1, 2023
October 2, 2022
Net revenues:
U.S.
$
260,177
$
246,830
$
808,938
$
739,414
International
106,130
91,934
294,750
272,988
Market Development
41,060
38,758
131,511
112,897
Total net revenues
$
407,367
$
377,522
$
1,235,199
$
1,125,299
Q3 2023 Organic Revenue - QTD (in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues in third quarter of fiscal 2023
$
260,177
$
106,130
$
41,060
$
407,367
Total net revenues in third quarter of fiscal 2022
246,830
91,934
38,758
377,522
Total Net Revenues Growth
13,347
14,196
2,302
29,845
Total Net Revenues Growth %
5.4
%
15.4
%
5.9
%
7.9
%
Less: Impact of shop optimization closures
(3,096
)
—
—
(3,096
)
Less: Impact of Branded Sweet Treats exit
(9,035
)
—
—
(9,035
)
Adjusted net revenues in third quarter of fiscal 2022
234,699
91,934
38,758
365,391
Adjusted net revenue growth
25,478
14,196
2,302
41,976
Impact of acquisitions
(1,575
)
—
457
(1,118
)
Impact of foreign currency translation
—
(6,677
)
765
(5,912
)
Organic Revenue Growth
$
23,903
$
7,519
$
3,524
$
34,946
Organic Revenue Growth %
10.2
%
8.2
%
9.1
%
9.6
%
Q3 2023 Organic Revenue - YTD (in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues in first three quarters of fiscal 2023
$
808,938
$
294,750
$
131,511
$
1,235,199
Total net revenues in first three quarters of fiscal 2022
739,414
272,988
112,897
1,125,299
Total Net Revenues Growth
69,524
21,762
18,614
109,900
Total Net Revenues Growth %
9.4
%
8.0
%
16.5
%
9.8
%
Less: Impact of shop optimization closures
(9,613
)
—
—
(9,613
)
Less: Impact of Branded Sweet Treats exit
(15,736
)
—
—
(15,736
)
Adjusted net revenues in first three quarters of fiscal 2022
714,065
272,988
112,897
1,099,950
Adjusted net revenue growth
94,873
21,762
18,614
135,249
Impact of acquisitions
(7,678
)
—
2,227
(5,451
)
Impact of foreign currency translation
—
(4,593
)
4,475
(118
)
Organic Revenue Growth
$
87,195
$
17,169
$
25,316
$
129,680
Organic Revenue Growth %
12.2
%
6.3
%
22.4
%
11.8
%
Q3 2022 Organic Revenue - QTD (in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues in third quarter of fiscal 2022
$
246,830
$
91,934
$
38,758
$
377,522
Total net revenues in third quarter of fiscal 2021
225,807
87,262
29,730
342,799
Total Net Revenues Growth
21,023
4,672
9,028
34,723
Total Net Revenues Growth %
9.3
%
5.4
%
30.4
%
10.1
%
Impact of acquisitions
(1,030
)
—
(3,862
)
(4,892
)
Impact of foreign currency translation
—
8,890
2,564
11,454
Organic Revenue Growth
$
19,993
$
13,562
$
7,730
$
41,285
Organic Revenue Growth %
8.9
%
15.5
%
26.0
%
12.0
%
Q3 2022 Organic Revenue - YTD (in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues in first three quarters of fiscal 2022
$
739,414
$
272,988
$
112,897
$
1,125,299
Total net revenues in first three quarters of fiscal 2021
679,195
243,005
91,594
1,013,794
Total Net Revenues Growth
60,219
29,983
21,303
111,505
Total Net Revenues Growth %
8.9
%
12.3
%
23.3
%
11.0
%
Impact of acquisitions
(4,955
)
—
(10,653
)
(15,608
)
Impact of foreign currency translation
—
18,843
5,769
24,612
Organic Revenue Growth
$
55,264
$
48,826
$
16,419
$
120,509
Organic Revenue Growth %
8.1
%
20.1
%
17.9
%
11.9
%
Sales per Hub
Trailing Four Quarters Ended
Fiscal Year Ended
(in thousands, unless otherwise stated)
October 1, 2023
January 1, 2023
January 2, 2022
U.S.:
Revenues
$
1,079,774
$
1,010,250
$
923,129
Non-Fresh Revenues (1)
(18,488
)
(38,380
)
(37,311
)
Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2)
(400,567
)
(404,430
)
(414,899
)
Sales from Hubs with Spokes
660,719
567,440
470,919
Sales per Hub (millions)
4.8
4.5
4.0
International:
Sales from Hubs with Spokes (3)
$
387,678
$
365,916
$
332,995
Sales per Hub (millions) (4)
9.9
9.9
8.6
(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 (1)
Quarter Ended
Fiscal Year Ended
October 1, 2023
October 2, 2022
January 1, 2023
U.S.: (2)
Hot Light Theater Shops
229
240
234
Fresh Shops
65
61
62
Cookie Bakeries
247
227
231
Carts, Food Trucks, and Other (3)
—
1
—
DFD Doors (5)
6,506
5,720
5,729
Total
7,047
6,249
6,256
International:
Hot Light Theater Shops
36
35
37
Fresh Shops
410
384
388
Carts, Food Trucks, and Other (3)
16
12
14
DFD Doors
3,393
3,008
3,032
Total
3,855
3,439
3,471
Market Development: (4)
Hot Light Theater Shops
122
111
115
Fresh Shops
989
809
873
Cookie Bakeries
2
—
—
Carts, Food Trucks, and Other (3)
29
29
27
DFD Doors
1,350
1,066
1,095
Total
2,492
2,015
2,110
Total Global Points of Access (as defined)
13,394
11,703
11,837
Total Hot Light Theater Shops
387
386
386
Total Fresh Shops
1,464
1,254
1,323
Total Cookie Bakeries
249
227
231
Total Shops
2,100
1,867
1,940
Total Carts, Food Trucks, and Other
45
42
41
Total DFD Doors
11,249
9,794
9,856
Total Global Points of Access (as defined)
13,394
11,703
11,837
(1)
Excludes the recently exited Branded Sweet Treats distribution points.
(2)
Includes Points of Access that were acquired from a franchisee in the U.S. in the third quarter of fiscal 2022. These Points of Access were previously included in the Market Development segment prior to the acquisition date.
(3)
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.
(4)
Includes locations in Japan and Canada, which are Company-owned. All remaining Points of Access in the Market Development segment relate to our franchise business.
(5)
Includes over 160 McDonald’s test shops located in Louisville and Lexington, Kentucky and the surrounding area as of October 1, 2023.
Krispy Kreme, Inc. Global Hubs (Unaudited)
Hubs
Quarter Ended
Fiscal Year Ended
October 1, 2023
October 2, 2022
January 1, 2023
U.S.:
Hot Light Theater Shops (1)
222
237
228
Doughnut Factories
4
4
4
Total
226
241
232
Hubs with Spokes
148
126
133
Hubs without Spokes
78
115
99
International:
Hot Light Theater Shops (1)
30
26
28
Doughnut Factories
11
11
11
Total
41
37
39
Hubs with Spokes
41
37
39
Market Development:
Hot Light Theater Shops (1)
115
107
110
Doughnut Factories
26
26
27
Total
141
133
137
Total Hubs
408
411
408
(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)
(in thousands, except leverage ratio)
October 1, 2023
January 1, 2023
Current portion of long-term debt
$
43,492
$
40,034
Long-term debt, less current portion
827,429
739,052
Total long-term debt, including debt issuance costs
870,921
779,086
Add back: Debt issuance costs
4,634
2,247
Total long-term debt, excluding debt issuance costs
875,555
781,333
Less: Cash and cash equivalents
(25,711
)
(35,371
)
Net debt
$
849,844
$
745,962
Adjusted EBITDA - trailing four quarters
203,402
190,729
Net leverage ratio
4.2 x
3.9 x
View source version on businesswire.com: https://www.businesswire.com/news/home/20231108513454/en/
Investor Relations Stephanie Daukus ir@krispykreme.com
Financial Media Edelman Smithfield for Krispy Kreme, Inc. Ashley Firlan & Ashna Vasa, KrispyKremeIR@edelman.com
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