Krispy Kreme Reports Second Quarter 2023 Results, Reiterates Full Year Guidance
- Net revenue grew 9.0% year-over-year to $408.9 million
- Organic revenue grew 11.4%, led by the U.S.
- Adjusted EBITDA increased 3.1% to $48.8 million
- Global Points of Access grew by 12.8% to 12,872
- Adjusted diluted EPS decreased $0.01 to $0.07 for the quarter
Second quarter net revenue grew
Global Points of Access grew by
GAAP net income of
GAAP net income for the quarter was
Global Points of Access, which reflect all locations where fresh doughnuts and cookies can be purchased, increased by 462 during the quarter and 1,035 year-to-date, providing consumers with access to Krispy Kreme and Insomnia Cookies through 12,872 locations around the world.
Commenting on the Company’s performance, CEO Mike Tattersfield stated, “I am proud of the results we delivered in the second quarter, which were bolstered by our continued focus on expanding our hub and spoke model as we leaned heavily into our omni-channel and DFD capabilities as well as our international expansion strategy. We executed the strongest and largest National Doughnut Day in our history, which we now celebrate in a dozen countries. We are also pleased with our continued global expansion, as we opened three new markets during the quarter in
Mike continued, “We look forward to capitalizing on a strong start to the year in the back half of 2023 and delivering profitable growth as we focus on our capital efficient hub and spoke model and omni-channel strategy. We continue to expect to open in three to five additional markets in 2023, and recently opened in
Financial Highlights
$ in millions, except per share data |
Q2 2023 |
vs Q2 2022 |
1H 2023 |
vs. 1H 2022 |
Net Revenue |
|
+ |
|
+ |
Organic Revenue (1) |
|
+ |
|
+ |
GAAP Net Income |
|
+ |
|
(57.3)% |
Adjusted Net Income, Diluted (1) |
|
(13.1)% |
|
+ |
GAAP Operating Income |
|
(24.8)% |
|
(17.0)% |
GAAP Operating Income Margin |
|
-60 bps |
|
-80 bps |
Adjusted EBITDA (1) |
|
+ |
|
+ |
Adjusted EBITDA Margin (1) |
|
-70 bps |
|
-40 bps |
GAAP Diluted EPS |
|
|
|
|
Adjusted Diluted EPS (1) |
|
( |
|
|
Notes: |
||||
(1) Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures. |
||||
Key Operating Metrics
$ in millions, except access points |
Q2 2023 |
vs Q2 2022 |
vs Q1 2023 |
|
Global Points of Access |
12,872 |
+ |
+ |
|
Sales per Hub ( |
|
+ |
+ |
|
Sales per Hub (International) TTM |
|
+ |
(1.0)% |
|
Ecommerce as a Percent of Retail Sales |
|
+130 bps |
-80 bps |
Second Quarter 2023 Consolidated Results
Krispy Kreme’s second quarter 2023 results reflect strong growth compared to the prior year. Net revenue grew
GAAP net income for the quarter was
Adjusted EBITDA in the quarter grew
Second Quarter 2023 Market Segment Results
International: In the International segment, net revenue grew
International Adjusted EBITDA declined
Market Development: In the Market Development segment, net revenue increased
Market Development Adjusted EBITDA grew
Balance Sheet & Capital Expenditures
During the second quarter of 2023, the company invested
As of July 2, 2023 the company had total available liquidity of
2023 Financial Outlook
Krispy Kreme re-affirms its previous guidance for the full year 2023 as follows:
-
Net Revenue of
$1.65 billion $1.68 billion 8% to +10% vs 2022 (+9% to +11% in constant currency) -
Organic Revenue growth of
9% to11% -
Adjusted EBITDA of
$205 million $215 million 8% to +13% vs 2022 (+10% to +14% in constant currency) -
Adjusted Net Income, Diluted, of
$52 million $58 million 5% to +17% vs 2022 (+9% to +21% in constant currency) -
Adjusted Diluted EPS of
$0.31 $0.34 7% to +17% vs 2022 (+10% to +21% in constant currency) -
Income Tax rate between
24.5% to26.0% -
Capital Expenditures between
$105 million $115 million 6.6% of revenue -
Interest Expense, net between
$39 million $43 million
The above guidance continues to assume a negative
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 Ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. 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.
- Total Net Leverage Ratio: Calculated using Net Debt (including both bank debt and financing leases as part of debt) divided by Adjusted EBITDA.
- 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 second 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
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. The words “believe,” “may,” “could,” “will,” “should,” “anticipate,” “estimate,” “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
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 |
|
Two Quarters Ended |
||||||||||||
|
July 2, 2023 (13 weeks) |
|
July 3, 2022 (13 weeks) |
|
July 2, 2023 (26 weeks) |
|
July 3, 2022 (26 weeks) |
||||||||
Net revenues |
|
|
|
|
|
|
|
||||||||
Product sales |
$ |
400,348 |
|
|
$ |
367,777 |
|
|
$ |
811,022 |
|
|
$ |
731,829 |
|
Royalties and other revenues |
|
8,534 |
|
|
|
7,468 |
|
|
|
16,810 |
|
|
|
15,948 |
|
Total net revenues |
|
408,882 |
|
|
|
375,245 |
|
|
|
827,832 |
|
|
|
747,777 |
|
Product and distribution costs |
|
111,106 |
|
|
|
100,558 |
|
|
|
228,939 |
|
|
|
196,669 |
|
Operating expenses |
|
189,165 |
|
|
|
173,942 |
|
|
|
380,573 |
|
|
|
342,668 |
|
Selling, general and administrative expense |
|
62,582 |
|
|
|
51,754 |
|
|
|
124,050 |
|
|
|
105,465 |
|
Marketing expenses |
|
9,770 |
|
|
|
11,215 |
|
|
|
19,623 |
|
|
|
21,374 |
|
Pre-opening costs |
|
1,104 |
|
|
|
985 |
|
|
|
1,868 |
|
|
|
2,314 |
|
Other expenses/(income), net |
|
314 |
|
|
|
1,469 |
|
|
|
(4,949 |
) |
|
|
(1,164 |
) |
Depreciation and amortization expense |
|
29,196 |
|
|
|
27,814 |
|
|
|
57,135 |
|
|
|
55,655 |
|
Operating income |
|
5,645 |
|
|
|
7,508 |
|
|
|
20,593 |
|
|
|
24,796 |
|
Interest expense, net |
|
12,063 |
|
|
|
7,586 |
|
|
|
24,051 |
|
|
|
14,937 |
|
Other non-operating expense, net |
|
1,061 |
|
|
|
756 |
|
|
|
2,060 |
|
|
|
435 |
|
(Loss)/income before income taxes |
|
(7,479 |
) |
|
|
(834 |
) |
|
|
(5,518 |
) |
|
|
9,424 |
|
Income tax (benefit)/expense |
|
(7,563 |
) |
|
|
1,574 |
|
|
|
(7,246 |
) |
|
|
5,374 |
|
Net income/(loss) |
|
84 |
|
|
|
(2,408 |
) |
|
|
1,728 |
|
|
|
4,050 |
|
Net (loss)/income attributable to noncontrolling interest |
|
(139 |
) |
|
|
1,441 |
|
|
|
1,806 |
|
|
|
3,897 |
|
Net income/(loss) attributable to Krispy Kreme, Inc.. |
$ |
223 |
|
|
$ |
(3,849 |
) |
|
$ |
(78 |
) |
|
$ |
153 |
|
Net income/(loss) per share: |
|
|
|
|
|
|
|
||||||||
Common stock — Basic |
$ |
— |
|
|
$ |
(0.02 |
) |
|
$ |
— |
|
|
$ |
— |
|
Common stock — Diluted |
$ |
— |
|
|
$ |
(0.02 |
) |
|
$ |
— |
|
|
$ |
— |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
168,184 |
|
|
|
167,367 |
|
|
|
168,162 |
|
|
|
167,314 |
|
Diluted |
|
170,659 |
|
|
|
167,367 |
|
|
|
168,162 |
|
|
|
167,314 |
|
Krispy Kreme, Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amounts) |
|||||||
|
As of |
||||||
|
(Unaudited) July 2, 2023 |
|
January 1, 2023 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
26,635 |
|
|
$ |
35,371 |
|
Restricted cash |
|
339 |
|
|
|
359 |
|
Accounts receivable, net |
|
49,381 |
|
|
|
51,089 |
|
Inventories |
|
33,977 |
|
|
|
46,239 |
|
Taxes receivable |
|
17,354 |
|
|
|
18,263 |
|
Prepaid expense and other current assets |
|
31,635 |
|
|
|
26,953 |
|
Total current assets |
|
159,321 |
|
|
|
178,274 |
|
Property and equipment, net |
|
492,233 |
|
|
|
472,358 |
|
Goodwill |
|
1,099,393 |
|
|
|
1,087,908 |
|
Other intangible assets, net |
|
960,094 |
|
|
|
966,088 |
|
Operating lease right of use asset, net |
|
443,277 |
|
|
|
417,381 |
|
Other assets |
|
19,826 |
|
|
|
26,528 |
|
Total assets |
$ |
3,174,144 |
|
|
$ |
3,148,537 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Current portion of long-term debt |
$ |
40,722 |
|
|
$ |
40,034 |
|
Current operating lease liabilities |
|
42,932 |
|
|
|
43,160 |
|
Accounts payable |
|
216,407 |
|
|
|
225,276 |
|
Accrued liabilities |
|
96,199 |
|
|
|
104,424 |
|
Structured payables |
|
50,447 |
|
|
|
103,575 |
|
Total current liabilities |
|
446,707 |
|
|
|
516,469 |
|
Long-term debt, less current portion |
|
814,476 |
|
|
|
739,052 |
|
Noncurrent operating lease liabilities |
|
439,103 |
|
|
|
412,759 |
|
Deferred income taxes, net |
|
134,130 |
|
|
|
143,124 |
|
Other long-term obligations and deferred credits |
|
33,453 |
|
|
|
38,258 |
|
Total liabilities |
|
1,867,869 |
|
|
|
1,849,662 |
|
Commitments and contingencies |
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Common stock, |
|
1,682 |
|
|
|
1,681 |
|
Additional paid-in capital |
|
1,432,150 |
|
|
|
1,426,105 |
|
Shareholder note receivable |
|
(3,809 |
) |
|
|
(4,813 |
) |
Accumulated other comprehensive income/(loss), net of income tax |
|
7,784 |
|
|
|
(9,151 |
) |
Retained deficit |
|
(229,340 |
) |
|
|
(217,490 |
) |
Total shareholders’ equity attributable to Krispy Kreme, Inc. |
|
1,208,467 |
|
|
|
1,196,332 |
|
Noncontrolling interest |
|
97,808 |
|
|
|
102,543 |
|
Total shareholders’ equity |
|
1,306,275 |
|
|
|
1,298,875 |
|
Total liabilities and shareholders’ equity |
$ |
3,174,144 |
|
|
$ |
3,148,537 |
|
Krispy Kreme, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
|||||||
|
Two Quarters Ended |
||||||
|
July 2, 2023 (26 weeks) |
|
July 3, 2022 (26 weeks) |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net income |
$ |
1,728 |
|
|
$ |
4,050 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization expense |
|
57,135 |
|
|
|
55,655 |
|
Deferred income taxes |
|
(11,743 |
) |
|
|
(6,866 |
) |
Loss on extinguishment of debt |
|
472 |
|
|
|
— |
|
Impairment and lease termination charges |
|
7,808 |
|
|
|
1,991 |
|
Gain on disposal of property and equipment |
|
(151 |
) |
|
|
(499 |
) |
Gain on sale-leaseback |
|
(9,646 |
) |
|
|
(2,374 |
) |
Share-based compensation |
|
10,369 |
|
|
|
10,493 |
|
Change in accounts and notes receivable allowances |
|
372 |
|
|
|
193 |
|
Inventory write-off |
|
10,244 |
|
|
|
251 |
|
Settlement of interest rate swap derivatives |
|
7,657 |
|
|
|
— |
|
Amortization related to settlement of interest rate swap derivatives |
|
(4,379 |
) |
|
|
— |
|
Other |
|
996 |
|
|
|
(733 |
) |
Change in operating assets and liabilities, excluding foreign currency translation adjustments |
|
(24,609 |
) |
|
|
(8,238 |
) |
Net cash provided by operating activities |
|
46,253 |
|
|
|
53,923 |
|
CASH FLOWS USED FOR INVESTING ACTIVITIES: |
|
|
|
||||
Purchase of property and equipment |
|
(54,290 |
) |
|
|
(51,460 |
) |
Proceeds from sale-leaseback |
|
10,025 |
|
|
|
3,000 |
|
Disbursement for loan receivable |
|
— |
|
|
|
(720 |
) |
Other investing activities |
|
163 |
|
|
|
901 |
|
Net cash used for investing activities |
|
(44,102 |
) |
|
|
(48,279 |
) |
CASH FLOWS USED FOR FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from the issuance of debt |
|
989,198 |
|
|
|
53,000 |
|
Repayment of long-term debt and lease obligations |
|
(916,580 |
) |
|
|
(50,179 |
) |
Payment of financing costs |
|
(5,000 |
) |
|
|
— |
|
Proceeds from structured payables |
|
73,939 |
|
|
|
153,097 |
|
Payments on structured payables |
|
(126,920 |
) |
|
|
(133,530 |
) |
Payment of contingent consideration related to a business combination |
|
— |
|
|
|
(900 |
) |
Capital contribution by shareholders, net of loans issued |
|
631 |
|
|
|
(27 |
) |
Payments of issuance costs in connection with IPO |
|
— |
|
|
|
(12,458 |
) |
Proceeds from sale of noncontrolling interest in subsidiary |
|
— |
|
|
|
410 |
|
Distribution to shareholders |
|
(11,771 |
) |
|
|
(11,710 |
) |
Payments for repurchase and retirement of common stock |
|
(147 |
) |
|
|
(2,363 |
) |
Distribution to noncontrolling interest |
|
(11,246 |
) |
|
|
(9,496 |
) |
Net cash used for financing activities |
|
(7,896 |
) |
|
|
(14,156 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(3,011 |
) |
|
|
(4,473 |
) |
Net decrease in cash, cash equivalents and restricted cash |
|
(8,756 |
) |
|
|
(12,985 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
35,730 |
|
|
|
39,192 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
26,974 |
|
|
$ |
26,207 |
|
Krispy Kreme, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share amounts)
|
Quarter Ended |
|
Two Quarters Ended |
||||||||||||
(in thousands) |
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Net income/(loss) |
$ |
84 |
|
|
$ |
(2,408 |
) |
|
$ |
1,728 |
|
|
$ |
4,050 |
|
Interest expense, net |
|
12,063 |
|
|
|
7,586 |
|
|
|
24,051 |
|
|
|
14,937 |
|
Income tax (benefit)/expense |
|
(7,563 |
) |
|
|
1,574 |
|
|
|
(7,246 |
) |
|
|
5,374 |
|
Depreciation and amortization expense |
|
29,196 |
|
|
|
27,814 |
|
|
|
57,135 |
|
|
|
55,655 |
|
Share-based compensation |
|
4,824 |
|
|
|
5,452 |
|
|
|
10,369 |
|
|
|
10,493 |
|
Employer payroll taxes related to share-based compensation |
|
189 |
|
|
|
35 |
|
|
|
214 |
|
|
|
90 |
|
Other non-operating expense, net (1) |
|
1,061 |
|
|
|
756 |
|
|
|
2,060 |
|
|
|
435 |
|
Strategic initiatives (2) |
|
4,477 |
|
|
|
120 |
|
|
|
17,946 |
|
|
|
120 |
|
Acquisition and integration expenses (3) |
|
339 |
|
|
|
82 |
|
|
|
430 |
|
|
|
599 |
|
New market penetration expenses (4) |
|
241 |
|
|
|
260 |
|
|
|
335 |
|
|
|
370 |
|
Shop closure expenses, net (5) |
|
1,484 |
|
|
|
1,894 |
|
|
|
805 |
|
|
|
2,124 |
|
Restructuring and severance expenses (6) |
|
1,667 |
|
|
|
476 |
|
|
|
2,247 |
|
|
|
476 |
|
Gain on sale-leaseback |
|
15 |
|
|
|
— |
|
|
|
(9,646 |
) |
|
|
(2,374 |
) |
Other (7) |
|
737 |
|
|
|
3,720 |
|
|
|
3,314 |
|
|
|
3,919 |
|
Adjusted EBITDA |
$ |
48,814 |
|
|
$ |
47,361 |
|
|
$ |
103,742 |
|
|
$ |
96,268 |
|
|
Quarter Ended |
|
Two Quarters Ended |
||||||||||||
(in thousands) |
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Segment Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||||
|
$ |
28,085 |
|
|
$ |
24,155 |
|
|
$ |
66,620 |
|
|
$ |
56,562 |
|
International |
|
19,463 |
|
|
|
19,535 |
|
|
|
33,030 |
|
|
|
36,779 |
|
Market Development |
|
15,734 |
|
|
|
12,357 |
|
|
|
32,700 |
|
|
|
24,845 |
|
Corporate |
|
(14,468 |
) |
|
|
(8,686 |
) |
|
|
(28,608 |
) |
|
|
(21,918 |
) |
Adjusted EBITDA |
$ |
48,814 |
|
|
$ |
47,361 |
|
|
$ |
103,742 |
|
|
$ |
96,268 |
|
|
Quarter Ended |
|
Two Quarters Ended |
||||||||||||
(in thousands, except per share amounts) |
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||||||
Net income/(loss) |
$ |
84 |
|
|
$ |
(2,408 |
) |
|
$ |
1,728 |
|
|
$ |
4,050 |
|
Share-based compensation |
|
4,824 |
|
|
|
5,452 |
|
|
|
10,369 |
|
|
|
10,493 |
|
Employer payroll taxes related to share-based compensation |
|
189 |
|
|
|
35 |
|
|
|
214 |
|
|
|
90 |
|
Other non-operating expense, net (1) |
|
1,061 |
|
|
|
756 |
|
|
|
2,060 |
|
|
|
435 |
|
Strategic initiatives (2) |
|
4,477 |
|
|
|
120 |
|
|
|
17,946 |
|
|
|
120 |
|
Acquisition and integration expenses (3) |
|
339 |
|
|
|
82 |
|
|
|
430 |
|
|
|
599 |
|
New market penetration expenses (4) |
|
241 |
|
|
|
260 |
|
|
|
335 |
|
|
|
370 |
|
Shop closure expenses, net (5) |
|
1,484 |
|
|
|
2,144 |
|
|
|
805 |
|
|
|
2,374 |
|
Restructuring and severance expenses (6) |
|
1,667 |
|
|
|
476 |
|
|
|
2,247 |
|
|
|
476 |
|
Gain on sale-leaseback |
|
15 |
|
|
|
— |
|
|
|
(9,646 |
) |
|
|
(2,374 |
) |
Other (7) |
|
737 |
|
|
|
3,720 |
|
|
|
3,314 |
|
|
|
3,919 |
|
Amortization of acquisition related intangibles (8) |
|
7,368 |
|
|
|
6,978 |
|
|
|
14,641 |
|
|
|
14,224 |
|
Loss on extinguishment of 2019 Facility (9) |
|
— |
|
|
|
— |
|
|
|
472 |
|
|
|
— |
|
Tax impact of adjustments (10) |
|
(9,464 |
) |
|
|
(2,341 |
) |
|
|
(14,120 |
) |
|
|
(3,419 |
) |
Tax specific adjustments (11) |
|
(1,758 |
) |
|
|
(628 |
) |
|
|
(2,315 |
) |
|
|
(628 |
) |
Net loss/(income) attributable to noncontrolling interest |
|
139 |
|
|
|
(1,441 |
) |
|
|
(1,806 |
) |
|
|
(3,897 |
) |
Adjustment to adjusted net income attributable to common shareholders |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(374 |
) |
Adjusted net income attributable to common shareholders - Basic |
$ |
11,403 |
|
|
$ |
13,205 |
|
|
$ |
26,674 |
|
|
$ |
26,458 |
|
Additional income attributed to noncontrolling interest due to subsidiary potential common shares |
|
(4 |
) |
|
|
(83 |
) |
|
|
(7 |
) |
|
|
(122 |
) |
Adjusted net income attributable to common shareholders - Diluted |
$ |
11,399 |
|
|
$ |
13,122 |
|
|
$ |
26,667 |
|
|
$ |
26,336 |
|
Basic weighted average common shares outstanding |
|
168,184 |
|
|
|
167,367 |
|
|
|
168,162 |
|
|
|
167,314 |
|
Dilutive effect of outstanding common stock options and RSUs |
|
2,475 |
|
|
|
1,973 |
|
|
|
2,163 |
|
|
|
2,099 |
|
Diluted weighted average common shares outstanding |
|
170,659 |
|
|
|
169,340 |
|
|
|
170,325 |
|
|
|
169,413 |
|
Adjusted net income per share attributable to common shareholders: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.07 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.16 |
|
Diluted |
$ |
0.07 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.16 |
|
(1) |
Primarily foreign translation gains and losses in each period. | |
(2) |
The quarter and two quarters ended July 2, 2023 consist 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. | |
(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 |
|
(5) |
Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. | |
(6) |
The quarter and two quarters ended July 2, 2023 consist primarily of costs associated with restructuring of the global executive teams. | |
(7) |
The quarters and two quarters ended July 2, 2023 and July 3, 2022 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 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 quarter and two quarters ended July 2, 2023 and July 3, 2022 also include the impact of disallowed executive compensation expense. | |
(11) |
The quarter and two quarters ended July 2, 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 |
|
Two Quarters Ended |
||||||||
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
||||
Net revenues: |
|
|
|
|
|
|
|
||||
|
$ |
267,417 |
|
$ |
244,665 |
|
$ |
548,761 |
|
$ |
492,584 |
International |
|
98,332 |
|
|
93,853 |
|
|
188,620 |
|
|
181,054 |
Market Development |
|
43,133 |
|
|
36,727 |
|
|
90,451 |
|
|
74,139 |
Total net revenues |
$ |
408,882 |
|
$ |
375,245 |
|
$ |
827,832 |
|
$ |
747,777 |
Q2 2023 Organic Revenue - QTD (in thousands, except percentages) |
|
|
International |
|
Market Development |
|
Total Company |
||||||||
Total net revenues in second quarter of fiscal 2023 |
$ |
267,417 |
|
|
$ |
98,332 |
|
|
$ |
43,133 |
|
|
$ |
408,882 |
|
Total net revenues in second quarter of fiscal 2022 |
|
244,665 |
|
|
|
93,853 |
|
|
|
36,727 |
|
|
|
375,245 |
|
Total Net Revenues Growth |
|
22,752 |
|
|
|
4,479 |
|
|
|
6,406 |
|
|
|
33,637 |
|
Total Net Revenues Growth % |
|
9.3 |
% |
|
|
4.8 |
% |
|
|
17.4 |
% |
|
|
9.0 |
% |
Less: Impact of shop optimization closures |
|
(3,330 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,330 |
) |
Less: Impact of Branded Sweet Treats exit |
|
(6,701 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,701 |
) |
Adjusted net revenues in second quarter of fiscal 2022 |
|
234,634 |
|
— |
|
93,853 |
|
|
|
36,727 |
|
|
|
365,214 |
|
Adjusted Net Revenue Growth |
|
32,783 |
|
|
|
4,479 |
|
|
|
6,406 |
|
|
|
43,668 |
|
Impact of acquisitions |
|
(3,023 |
) |
|
|
— |
|
|
|
877 |
|
|
|
(2,146 |
) |
Impact of foreign currency translation |
|
— |
|
|
|
(1,224 |
) |
|
|
1,239 |
|
|
|
15 |
|
Organic Revenue Growth |
$ |
29,760 |
|
|
$ |
3,255 |
|
|
$ |
8,522 |
|
|
$ |
41,537 |
|
Organic Revenue Growth % |
|
12.7 |
% |
|
|
3.5 |
% |
|
|
23.2 |
% |
|
|
11.4 |
% |
Q2 2023 Organic Revenue - YTD (in thousands, except percentages) |
|
|
International |
|
Market Development |
|
Total Company |
||||||||
Total net revenues in first two quarters of fiscal 2023 |
$ |
548,761 |
|
|
$ |
188,620 |
|
|
$ |
90,451 |
|
|
$ |
827,832 |
|
Total net revenues in first two quarters of fiscal 2022 |
|
492,584 |
|
|
|
181,054 |
|
|
|
74,139 |
|
|
|
747,777 |
|
Total Net Revenues Growth |
|
56,177 |
|
|
|
7,566 |
|
|
|
16,312 |
|
|
|
80,055 |
|
Total Net Revenues Growth % |
|
11.4 |
% |
|
|
4.2 |
% |
|
|
22.0 |
% |
|
|
10.7 |
% |
Less: Impact of shop optimization closures |
|
(6,517 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,517 |
) |
Less: Impact of Branded Sweet Treats exit |
|
(6,701 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,701 |
) |
Adjusted net revenues in first two quarters of fiscal 2022 |
|
479,366 |
|
|
|
181,054 |
|
|
|
74,139 |
|
|
|
734,559 |
|
Adjusted Net Revenue Growth |
|
69,395 |
|
|
|
7,566 |
|
|
|
16,312 |
|
|
|
93,273 |
|
Impact of acquisitions |
|
(6,103 |
) |
|
|
— |
|
|
|
1,770 |
|
|
|
(4,333 |
) |
Impact of foreign currency translation |
|
— |
|
|
|
2,084 |
|
|
|
3,710 |
|
|
|
5,794 |
|
Organic Revenue Growth |
$ |
63,292 |
|
|
$ |
9,650 |
|
|
$ |
21,792 |
|
|
$ |
94,734 |
|
Organic Revenue Growth % |
|
13.2 |
% |
|
|
5.3 |
% |
|
|
29.4 |
% |
|
|
12.9 |
% |
Q2 2022 Organic Revenue - QTD (in thousands, except percentages) |
|
|
International |
|
Market Development |
|
Total Company |
||||||||
Total net revenues in second quarter of fiscal 2022 |
$ |
244,665 |
|
|
$ |
93,853 |
|
|
$ |
36,727 |
|
|
$ |
375,245 |
|
Total net revenues in second quarter of fiscal 2021 |
|
230,918 |
|
|
|
89,237 |
|
|
|
29,031 |
|
|
|
349,186 |
|
Total Net Revenues Growth |
|
13,747 |
|
|
|
4,616 |
|
|
|
7,696 |
|
|
|
26,059 |
|
Total Net Revenues Growth % |
|
6.0 |
% |
|
|
5.2 |
% |
|
|
26.5 |
% |
|
|
7.5 |
% |
Impact of acquisitions |
|
— |
|
|
|
— |
|
|
|
(4,172 |
) |
|
|
(4,172 |
) |
Impact of foreign currency translation |
|
— |
|
|
|
7,018 |
|
|
|
2,044 |
|
|
|
9,062 |
|
Organic Revenue Growth |
$ |
13,747 |
|
|
$ |
11,634 |
|
|
$ |
5,568 |
|
|
$ |
30,949 |
|
Organic Revenue Growth % |
|
6.0 |
% |
|
|
13.0 |
% |
|
|
19.2 |
% |
|
|
8.9 |
% |
Q2 2022 Organic Revenue - YTD (in thousands, except percentages) |
|
|
International |
|
Market Development |
|
Total Company |
||||||||
Total net revenues in first two quarters of fiscal 2022 |
$ |
492,584 |
|
|
$ |
181,054 |
|
|
$ |
74,139 |
|
|
$ |
747,777 |
|
Total net revenues in first two quarters of fiscal 2021 |
|
453,388 |
|
|
|
155,743 |
|
|
|
61,864 |
|
|
|
670,995 |
|
Total Net Revenues Growth |
|
39,196 |
|
|
|
25,311 |
|
|
|
12,275 |
|
|
|
76,782 |
|
Total Net Revenues Growth % |
|
8.6 |
% |
|
|
16.3 |
% |
|
|
19.8 |
% |
|
|
11.4 |
% |
Impact of acquisitions |
|
(3,926 |
) |
|
|
— |
|
|
|
(6,790 |
) |
|
|
(10,716 |
) |
Impact of foreign currency translation |
|
— |
|
|
|
9,953 |
|
|
|
3,205 |
|
|
|
13,158 |
|
Organic Revenue Growth |
$ |
35,270 |
|
|
$ |
35,264 |
|
|
$ |
8,690 |
|
|
$ |
79,224 |
|
Organic Revenue Growth % |
|
7.8 |
% |
|
|
22.6 |
% |
|
|
14.0 |
% |
|
|
11.8 |
% |
Sales per Hub |
Trailing Four Quarters Ended |
|
Fiscal Year Ended |
||||||||
(in thousands, unless otherwise stated) |
July 2, 2023 |
|
January 1, 2023 |
|
January 2, 2022 |
||||||
|
|
|
|
|
|
||||||
Revenues |
$ |
1,066,427 |
|
|
$ |
1,010,250 |
|
|
$ |
923,129 |
|
Non-Fresh Revenues (1) |
|
(27,381 |
) |
|
|
(38,380 |
) |
|
|
(37,311 |
) |
Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2) |
|
(412,241 |
) |
|
|
(404,430 |
) |
|
|
(414,899 |
) |
Sales from Hubs with Spokes |
|
626,805 |
|
|
|
567,440 |
|
|
|
470,919 |
|
Sales per Hub (millions) |
|
4.7 |
|
|
|
4.5 |
|
|
|
4.0 |
|
|
|
|
|
|
|
||||||
International: |
|
|
|
|
|
||||||
Sales from Hubs with Spokes (3) |
$ |
373,482 |
|
|
$ |
365,916 |
|
|
$ |
332,995 |
|
Sales per Hub (millions) (4) |
|
9.7 |
|
|
|
9.8 |
|
|
|
8.5 |
|
(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 |
||
|
July 2, 2023 |
|
July 3, 2022 |
|
January 1, 2023 |
|
|
|
|
|
|
Hot Light Theater Shops |
228 |
|
241 |
|
234 |
Fresh Shops |
66 |
|
60 |
|
62 |
Cookie Shops |
244 |
|
221 |
|
231 |
Carts, Food Trucks, and Other (3) |
— |
|
1 |
|
— |
DFD Doors (5) |
6,320 |
|
5,520 |
|
5,729 |
Total |
6,858 |
|
6,043 |
|
6,256 |
International: |
|
|
|
|
|
Hot Light Theater Shops |
35 |
|
34 |
|
37 |
Fresh Shops |
400 |
|
386 |
|
388 |
Carts, Food Trucks, and Other (3) |
16 |
|
2 |
|
14 |
DFD Doors |
3,219 |
|
3,003 |
|
3,032 |
Total |
3,670 |
|
3,425 |
|
3,471 |
Market Development: (4) |
|
|
|
|
|
Hot Light Theater Shops |
120 |
|
111 |
|
115 |
Fresh Shops |
939 |
|
784 |
|
873 |
Carts, Food Trucks, and Other (3) |
28 |
|
29 |
|
27 |
DFD Doors |
1,257 |
|
1,017 |
|
1,095 |
Total |
2,344 |
|
1,941 |
|
2,110 |
Total Global Points of Access (as defined) |
12,872 |
|
11,409 |
|
11,837 |
Total Hot Light Theater Shops |
383 |
|
386 |
|
386 |
Total Fresh Shops |
1,405 |
|
1,230 |
|
1,323 |
Total Cookie Shops |
244 |
|
221 |
|
231 |
Total Shops |
2,032 |
|
1,837 |
|
1,940 |
Total Carts, Food Trucks, and Other |
44 |
|
32 |
|
41 |
Total DFD Doors |
10,796 |
|
9,540 |
|
9,856 |
Total Global Points of Access (as defined) |
12,872 |
|
11,409 |
|
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 |
|
(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 |
|
(5) |
Includes over 160 McDonald’s test shops located in |
Krispy Kreme, Inc. Global Hubs (Unaudited) |
|||||
|
Hubs |
||||
|
Quarter Ended |
|
Fiscal Year Ended |
||
|
July 2, 2023 |
|
July 3, 2022 |
|
January 1, 2023 |
|
|
|
|
|
|
Hot Light Theater Shops (1) |
221 |
|
238 |
|
228 |
Doughnut Factories |
4 |
|
4 |
|
4 |
Total |
225 |
|
242 |
|
232 |
Hubs with Spokes |
143 |
|
124 |
|
133 |
Hubs without Spokes |
82 |
|
118 |
|
99 |
International: |
|
|
|
|
|
Hot Light Theater Shops (1) |
29 |
|
26 |
|
28 |
Doughnut Factories |
11 |
|
11 |
|
11 |
Total |
40 |
|
37 |
|
39 |
Hubs with Spokes |
40 |
|
37 |
|
39 |
Market Development: |
|
|
|
|
|
Hot Light Theater Shops (1) |
114 |
|
108 |
|
110 |
Doughnut Factories |
26 |
|
26 |
|
27 |
Total |
140 |
|
134 |
|
137 |
Total Hubs |
405 |
|
413 |
|
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) |
July 2, 2023 |
|
January 1, 2023 |
||||
Current portion of long-term debt |
$ |
40,722 |
|
|
$ |
40,034 |
|
Long-term debt, less current portion |
|
814,476 |
|
|
|
739,052 |
|
Total long-term debt, including debt issuance costs |
|
855,198 |
|
|
|
779,086 |
|
Add back: Debt issuance costs |
|
4,896 |
|
|
|
2,247 |
|
Total long-term debt, excluding debt issuance costs |
|
860,094 |
|
|
|
781,333 |
|
Less: Cash and cash equivalents |
|
(26,635 |
) |
|
|
(35,371 |
) |
Net debt |
$ |
833,459 |
|
|
$ |
745,962 |
|
Adjusted EBITDA - trailing four quarters |
|
198,203 |
|
|
|
190,729 |
|
Net leverage ratio |
4.2 x |
|
3.9 x |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230809107165/en/
Investor Relations
ir@krispykreme.com
Financial Media
Edelman Smithfield for Krispy Kreme, Inc.
Ashley Firlan & Ashna Vasa, KrispyKremeIR@edelman.com
Source: Krispy Kreme, Inc.
FAQ
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