Krispy Kreme Reports Second Quarter 2024 Financial Results
Second quarter Net Revenue grows 7.3%, Organic Revenue increases 7.8%
Updated 2024 guidance reflects sale of majority stake in Insomnia Cookies
Second Quarter Highlights (vs Q2 2023)
-
Net revenue grew 7.3% to
$438.8 million -
Organic revenue grew 7.8% to
$440.2 million -
GAAP net loss of
$4.9 million ($5.5 million net loss attributable to KKI) -
Adjusted EBITDA grew 12.1% to
$54.7 million , Adjusted EBITDA margin up 60 basis points year-over-year -
GAAP operating cash flow of
$33.2 million - Global Points of Access (“POA”) increased 2,981, or 23.2%, to 15,853
“Krispy Kreme had another strong quarter as our fresh doughnuts are becoming even easier to purchase and more available globally,” said
“Our points of access also grew, and we’re excited about upcoming launches in
“The recent sale of a majority stake in Insomnia Cookies allows us to focus on our core strategy of producing, selling, and distributing fresh doughnuts daily whilst also further improving our financial profile,” he said.
Financial Highlights |
|
Quarter Ended |
||||||||||
$ in millions, except per share data |
|
|
|
|
|
Change |
||||||
GAAP: |
|
|
|
|
|
|
||||||
Net revenue |
|
$ |
438.8 |
|
|
$ |
408.9 |
|
|
|
7.3 |
% |
Operating income |
|
$ |
6.9 |
|
|
$ |
5.6 |
|
|
|
21.5 |
% |
Operating income margin |
|
|
1.6 |
% |
|
|
1.4 |
% |
|
20 bps |
||
Net (loss)/income |
|
$ |
(4.9 |
) |
|
$ |
0.1 |
|
|
nm |
||
Net (loss)/income attributable to KKI |
|
$ |
(5.5 |
) |
|
$ |
0.2 |
|
|
nm |
||
Diluted (loss)/income per share |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
||||||
Non-GAAP(1): |
|
|
|
|
|
|
||||||
Organic revenue |
|
$ |
440.2 |
|
|
$ |
408.2 |
|
|
|
7.8 |
% |
Adjusted net income, diluted |
|
$ |
9.1 |
|
|
$ |
11.4 |
|
|
|
(20.1 |
)% |
Adjusted EBITDA |
|
$ |
54.7 |
|
|
$ |
48.8 |
|
|
|
12.1 |
% |
Adjusted EBITDA margin |
|
|
12.5 |
% |
|
|
11.9 |
% |
|
60 bps |
||
Adjusted diluted EPS |
|
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
(0.02 |
) |
Notes: |
|
(1) |
Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures. |
Key Operating Metrics |
|
Quarter Ended |
|||||||||
$ in millions |
|
|
|
|
|
Change |
|||||
Global Points of Access |
|
|
15,853 |
|
|
|
12,872 |
|
|
23.2 |
% |
Sales per Hub ( |
|
$ |
5.0 |
|
|
$ |
4.7 |
|
|
6.4 |
% |
Sales per Hub (International) TTM |
|
$ |
10.1 |
|
|
$ |
9.9 |
|
|
2.0 |
% |
Digital Sales as a Percent of Retail Sales |
|
|
22.2 |
% |
|
|
18.8 |
% |
|
340 bps |
Second Quarter 2024 Consolidated Results (vs Q2 2023)
Krispy Kreme’s second quarter results represent continued execution of its omni-channel strategy, with net revenue growth of 7.3% to
Total company organic revenue grew 7.8%, fueled by a 23.2% increase in POA, a digital sales increase of 22%, and an increase in DFD sales of 18%, driven by the success of global brand activations including the Dolly Parton Southern Sweets collection, and Kit Kat, among others.
Adjusted EBITDA in the quarter grew 12.1% to
Second Quarter 2024 Segment Results (vs Q2 2023)
International: In the International segment, net revenue grew
International Adjusted EBITDA decreased 12.3% to
Market Development: In the Market Development segment net revenue and organic revenue increased
Market Development Adjusted EBITDA grew 22.7% to
Balance Sheet and Capital Expenditures
During the second quarter of 2024, strong Adjusted EBITDA translated to GAAP Operating Cash Flow of
Subsequent to the quarter, the Company received
2024 Financial Guidance
-
Net Revenue of
$1,650 to$1,685 million - Organic Revenue growth of +5% to +7%
-
Adjusted EBITDA of
$215 to$220 million -
Adjusted Diluted EPS of
$0.24 to$0.28 - Income Tax rate between 28% and 30%
- Capital Expenditures of 7% to 8% of net revenue
-
Interest Expense, net of
$55 million to$60 million
The Company expects net leverage to trend towards 3.5x by year end, as we make progress towards our 2026 goal of approximately 2.0x to 2.5x net leverage.
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 andCookie 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
About
Headquartered in
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
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, Net Debt, 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.
Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts) |
||||||||||||||||
|
Quarter Ended |
|
Two Quarters Ended |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net revenues |
|
|
|
|
|
|
|
|||||||||
Product sales |
$ |
429,411 |
|
|
$ |
400,348 |
|
|
$ |
862,923 |
|
|
$ |
811,022 |
|
|
Royalties and other revenues |
|
9,398 |
|
|
|
8,534 |
|
|
|
18,584 |
|
|
|
16,810 |
|
|
Total net revenues |
|
438,809 |
|
|
|
408,882 |
|
|
|
881,507 |
|
|
|
827,832 |
|
|
Product and distribution costs |
|
107,846 |
|
|
|
111,106 |
|
|
|
214,861 |
|
|
|
228,939 |
|
|
Operating expenses |
|
212,504 |
|
|
|
189,165 |
|
|
|
417,699 |
|
|
|
380,573 |
|
|
Selling, general and administrative expense |
|
64,466 |
|
|
|
62,582 |
|
|
|
136,040 |
|
|
|
124,050 |
|
|
Marketing expenses |
|
12,416 |
|
|
|
9,770 |
|
|
|
24,531 |
|
|
|
19,623 |
|
|
Pre-opening costs |
|
967 |
|
|
|
1,104 |
|
|
|
2,072 |
|
|
|
1,868 |
|
|
Other (income)/expenses, net |
|
(849 |
) |
|
|
314 |
|
|
|
(649 |
) |
|
|
(4,949 |
) |
|
Depreciation and amortization expense |
|
34,600 |
|
|
|
29,196 |
|
|
|
68,186 |
|
|
|
57,135 |
|
|
Operating income |
|
6,859 |
|
|
|
5,645 |
|
|
|
18,767 |
|
|
|
20,593 |
|
|
Interest expense, net |
|
14,452 |
|
|
|
12,063 |
|
|
|
28,188 |
|
|
|
24,051 |
|
|
Other non-operating expense, net |
|
949 |
|
|
|
1,061 |
|
|
|
1,522 |
|
|
|
2,060 |
|
|
Loss before income taxes |
|
(8,542 |
) |
|
|
(7,479 |
) |
|
|
(10,943 |
) |
|
|
(5,518 |
) |
|
Income tax (benefit)/expense |
|
(3,611 |
) |
|
|
(7,563 |
) |
|
|
651 |
|
|
|
(7,246 |
) |
|
Net (loss)/income |
|
(4,931 |
) |
|
|
84 |
|
|
|
(11,594 |
) |
|
|
1,728 |
|
|
Net income/(loss) attributable to noncontrolling interest |
|
560 |
|
|
|
(139 |
) |
|
|
2,431 |
|
|
|
1,806 |
|
|
Net (loss)/income attributable to |
$ |
(5,491 |
) |
|
$ |
223 |
|
|
$ |
(14,025 |
) |
|
$ |
(78 |
) |
|
Net (loss)/income per share: |
|
|
|
|
|
|
|
|||||||||
Common stock — Basic |
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.08 |
) |
|
$ |
0.00 |
|
|
Common stock — Diluted |
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.08 |
) |
|
$ |
0.00 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|||||||||
Basic |
|
169,095 |
|
|
|
168,184 |
|
|
|
168,890 |
|
|
|
168,162 |
|
|
Diluted |
|
169,095 |
|
|
|
170,659 |
|
|
|
168,890 |
|
|
|
168,162 |
|
|
Condensed Consolidated Balance Sheets (in thousands, except per share data) |
||||||||
|
As of |
|||||||
|
(Unaudited)
|
|
|
|||||
ASSETS |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
28,625 |
|
|
$ |
38,185 |
|
|
Restricted cash |
|
483 |
|
|
|
429 |
|
|
Accounts receivable, net |
|
57,348 |
|
|
|
59,362 |
|
|
Inventories |
|
39,461 |
|
|
|
34,716 |
|
|
Taxes receivable |
|
18,143 |
|
|
|
15,526 |
|
|
Prepaid expense and other current assets |
|
24,110 |
|
|
|
25,363 |
|
|
Total current assets |
|
168,170 |
|
|
|
173,581 |
|
|
Property and equipment, net |
|
551,406 |
|
|
|
538,220 |
|
|
|
|
1,096,249 |
|
|
|
1,101,939 |
|
|
Other intangible assets, net |
|
927,714 |
|
|
|
946,349 |
|
|
Operating lease right of use asset, net |
|
456,124 |
|
|
|
456,964 |
|
|
Other assets |
|
23,823 |
|
|
|
23,539 |
|
|
Total assets |
$ |
3,223,486 |
|
|
$ |
3,240,592 |
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Current portion of long-term debt |
$ |
59,827 |
|
|
$ |
54,631 |
|
|
Current operating lease liabilities |
|
54,937 |
|
|
|
50,365 |
|
|
Accounts payable |
|
135,197 |
|
|
|
156,488 |
|
|
Accrued liabilities |
|
114,269 |
|
|
|
134,005 |
|
|
Structured payables |
|
129,344 |
|
|
|
130,104 |
|
|
Total current liabilities |
|
493,574 |
|
|
|
525,593 |
|
|
Long-term debt, less current portion |
|
894,979 |
|
|
|
836,615 |
|
|
Noncurrent operating lease liabilities |
|
453,338 |
|
|
|
454,583 |
|
|
Deferred income taxes, net |
|
115,800 |
|
|
|
123,925 |
|
|
Other long-term obligations and deferred credits |
|
36,538 |
|
|
|
36,093 |
|
|
Total liabilities |
|
1,994,229 |
|
|
|
1,976,809 |
|
|
Commitments and contingencies |
|
|
|
|||||
Shareholders’ equity: |
|
|
|
|||||
Common stock, |
|
1,694 |
|
|
|
1,686 |
|
|
Additional paid-in capital |
|
1,453,944 |
|
|
|
1,443,591 |
|
|
Shareholder note receivable |
|
(2,865 |
) |
|
|
(3,850 |
) |
|
Accumulated other comprehensive (loss)/income, net of income tax |
|
(12,594 |
) |
|
|
7,246 |
|
|
Retained deficit |
|
(304,840 |
) |
|
|
(278,990 |
) |
|
Total shareholders’ equity attributable to |
|
1,135,339 |
|
|
|
1,169,683 |
|
|
Noncontrolling interest |
|
93,918 |
|
|
|
94,100 |
|
|
Total shareholders’ equity |
|
1,229,257 |
|
|
|
1,263,783 |
|
|
Total liabilities and shareholders’ equity |
$ |
3,223,486 |
|
|
$ |
3,240,592 |
|
|
Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
||||||||
|
Two Quarters Ended |
|||||||
|
|
|
|
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|||||
Net (loss)/income |
$ |
(11,594 |
) |
|
$ |
1,728 |
|
|
Adjustments to reconcile net (loss)/income to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization expense |
|
68,186 |
|
|
|
57,135 |
|
|
Deferred and other income taxes |
|
(5,338 |
) |
|
|
(11,743 |
) |
|
Loss on extinguishment of debt |
|
— |
|
|
|
472 |
|
|
Impairment and lease termination charges |
|
448 |
|
|
|
7,808 |
|
|
Gain on disposal of property and equipment |
|
(3 |
) |
|
|
(151 |
) |
|
Gain on sale-leaseback |
|
— |
|
|
|
(9,646 |
) |
|
Share-based compensation |
|
14,634 |
|
|
|
10,369 |
|
|
Change in accounts and notes receivable allowances |
|
327 |
|
|
|
372 |
|
|
Inventory write-off |
|
1,038 |
|
|
|
10,244 |
|
|
Settlement of interest rate swap derivatives |
|
— |
|
|
|
7,657 |
|
|
Amortization related to settlement of interest rate swap derivatives |
|
(5,910 |
) |
|
|
(4,379 |
) |
|
Other |
|
858 |
|
|
|
996 |
|
|
Change in operating assets and liabilities, excluding foreign currency translation adjustments |
|
(47,121 |
) |
|
|
(24,609 |
) |
|
Net cash provided by operating activities |
|
15,525 |
|
|
|
46,253 |
|
|
CASH FLOWS USED FOR INVESTING ACTIVITIES: |
|
|
|
|||||
Purchase of property and equipment |
|
(60,735 |
) |
|
|
(54,290 |
) |
|
Proceeds from sale-leaseback |
|
— |
|
|
|
10,025 |
|
|
Purchase of equity method investment |
|
(3,506 |
) |
|
|
— |
|
|
Disbursement for loan receivable |
|
(1,086 |
) |
|
|
— |
|
|
Other investing activities |
|
166 |
|
|
|
163 |
|
|
Net cash used for investing activities |
|
(65,161 |
) |
|
|
(44,102 |
) |
|
CASH FLOWS FROM/(USED FOR) FINANCING ACTIVITIES: |
|
|
|
|||||
Proceeds from the issuance of debt |
|
365,000 |
|
|
|
989,198 |
|
|
Repayment of long-term debt and lease obligations |
|
(306,797 |
) |
|
|
(916,580 |
) |
|
Payment of financing costs |
|
— |
|
|
|
(5,000 |
) |
|
Proceeds from structured payables |
|
190,162 |
|
|
|
73,939 |
|
|
Payments on structured payables |
|
(190,811 |
) |
|
|
(126,920 |
) |
|
Capital contribution by shareholders, net of loans issued |
|
919 |
|
|
|
631 |
|
|
Distribution to shareholders |
|
(11,807 |
) |
|
|
(11,771 |
) |
|
Payments for repurchase and retirement of common stock |
|
(4,275 |
) |
|
|
(147 |
) |
|
Distribution to noncontrolling interest |
|
(2,146 |
) |
|
|
(11,246 |
) |
|
Net cash provided by/(used for) financing activities |
|
40,245 |
|
|
|
(7,896 |
) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(115 |
) |
|
|
(3,011 |
) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
(9,506 |
) |
|
|
(8,756 |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
38,614 |
|
|
|
35,730 |
|
|
Cash, cash equivalents and restricted cash at end of period |
$ |
29,108 |
|
|
$ |
26,974 |
|
|
|
|
|
|
|||||
Net cash provided by operating activities |
$ |
15,525 |
|
|
$ |
46,253 |
|
|
Less: Purchase of property and equipment |
|
(60,735 |
) |
|
|
(54,290 |
) |
|
Free cash flow |
$ |
(45,210 |
) |
|
$ |
(8,037 |
) |
|
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 |
|
Two Quarters Ended |
|||||||||||||
(in thousands) |
|
|
|
|
|
|
|
|||||||||
Net (loss)/income |
$ |
(4,931 |
) |
|
$ |
84 |
|
|
$ |
(11,594 |
) |
|
$ |
1,728 |
|
|
Interest expense, net |
|
14,452 |
|
|
|
12,063 |
|
|
|
28,188 |
|
|
|
24,051 |
|
|
Income tax (benefit)/expense |
|
(3,611 |
) |
|
|
(7,563 |
) |
|
|
651 |
|
|
|
(7,246 |
) |
|
Depreciation and amortization expense |
|
34,600 |
|
|
|
29,196 |
|
|
|
68,186 |
|
|
|
57,135 |
|
|
Share-based compensation |
|
7,648 |
|
|
|
4,824 |
|
|
|
14,634 |
|
|
|
10,369 |
|
|
Employer payroll taxes related to share-based compensation |
|
207 |
|
|
|
189 |
|
|
|
250 |
|
|
|
214 |
|
|
Other non-operating expense, net (1) |
|
949 |
|
|
|
1,061 |
|
|
|
1,522 |
|
|
|
2,060 |
|
|
Strategic initiatives (2) |
|
4,187 |
|
|
|
4,477 |
|
|
|
9,008 |
|
|
|
17,946 |
|
|
Acquisition and integration expenses (3) |
|
851 |
|
|
|
339 |
|
|
|
1,099 |
|
|
|
430 |
|
|
New market penetration expenses (4) |
|
572 |
|
|
|
241 |
|
|
|
1,038 |
|
|
|
335 |
|
|
Shop closure expenses, net (5) |
|
628 |
|
|
|
1,484 |
|
|
|
767 |
|
|
|
805 |
|
|
Restructuring and severance expenses (6) |
|
132 |
|
|
|
1,667 |
|
|
|
138 |
|
|
|
2,247 |
|
|
Gain on sale-leaseback |
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
(9,646 |
) |
|
Other (7) |
|
(958 |
) |
|
|
737 |
|
|
|
(973 |
) |
|
|
3,314 |
|
|
Adjusted EBITDA |
$ |
54,726 |
|
|
$ |
48,814 |
|
|
$ |
112,914 |
|
|
$ |
103,742 |
|
|
Quarter Ended |
|
Two Quarters Ended |
|||||||||||||
(in thousands) |
|
|
|
|
|
|
|
|||||||||
Segment Adjusted EBITDA: |
|
|
|
|
|
|
|
|||||||||
|
$ |
32,668 |
|
|
$ |
28,085 |
|
|
$ |
75,284 |
|
|
$ |
66,620 |
|
|
International |
|
21,655 |
|
|
|
24,702 |
|
|
|
42,191 |
|
|
|
43,684 |
|
|
Market Development |
|
12,875 |
|
|
|
10,495 |
|
|
|
24,775 |
|
|
|
22,046 |
|
|
Corporate |
|
(12,472 |
) |
|
|
(14,468 |
) |
|
|
(29,336 |
) |
|
|
(28,608 |
) |
|
Total Adjusted EBITDA |
$ |
54,726 |
|
|
$ |
48,814 |
|
|
$ |
112,914 |
|
|
$ |
103,742 |
|
|
Quarter Ended |
|
Two Quarters Ended |
|||||||||||||
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|||||||||
Net (loss)/income |
$ |
(4,931 |
) |
|
$ |
84 |
|
|
$ |
(11,594 |
) |
|
$ |
1,728 |
|
|
Share-based compensation |
|
7,648 |
|
|
|
4,824 |
|
|
|
14,634 |
|
|
|
10,369 |
|
|
Employer payroll taxes related to share-based compensation |
|
207 |
|
|
|
189 |
|
|
|
250 |
|
|
|
214 |
|
|
Other non-operating expense, net (1) |
|
949 |
|
|
|
1,061 |
|
|
|
1,522 |
|
|
|
2,060 |
|
|
Strategic initiatives (2) |
|
4,187 |
|
|
|
4,477 |
|
|
|
9,008 |
|
|
|
17,946 |
|
|
Acquisition and integration expenses (3) |
|
851 |
|
|
|
339 |
|
|
|
1,099 |
|
|
|
430 |
|
|
New market penetration expenses (4) |
|
572 |
|
|
|
241 |
|
|
|
1,038 |
|
|
|
335 |
|
|
Shop closure expenses (5) |
|
628 |
|
|
|
1,484 |
|
|
|
767 |
|
|
|
805 |
|
|
Restructuring and severance expenses (6) |
|
132 |
|
|
|
1,667 |
|
|
|
138 |
|
|
|
2,247 |
|
|
Gain on sale-leaseback |
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
(9,646 |
) |
|
Other (7) |
|
(958 |
) |
|
|
737 |
|
|
|
(973 |
) |
|
|
3,314 |
|
|
Amortization of acquisition related intangibles (8) |
|
7,397 |
|
|
|
7,368 |
|
|
|
14,817 |
|
|
|
14,641 |
|
|
Loss on extinguishment of 2019 Facility (9) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
472 |
|
|
Tax impact of adjustments (10) |
|
(6,777 |
) |
|
|
(9,464 |
) |
|
|
(7,001 |
) |
|
|
(14,120 |
) |
|
Tax specific adjustments (11) |
|
(226 |
) |
|
|
(1,758 |
) |
|
|
(815 |
) |
|
|
(2,315 |
) |
|
Net (income)/loss attributable to noncontrolling interest |
|
(560 |
) |
|
|
139 |
|
|
|
(2,431 |
) |
|
|
(1,806 |
) |
|
Adjusted net income attributable to common shareholders - Basic |
$ |
9,119 |
|
|
$ |
11,403 |
|
|
$ |
20,459 |
|
|
$ |
26,674 |
|
|
Additional income attributed to noncontrolling interest due to subsidiary potential common shares |
|
(11 |
) |
|
|
(4 |
) |
|
|
(30 |
) |
|
|
(7 |
) |
|
Adjusted net income attributable to common shareholders - Diluted |
$ |
9,108 |
|
|
$ |
11,399 |
|
|
$ |
20,429 |
|
|
$ |
26,667 |
|
|
Basic weighted average common shares outstanding |
|
169,095 |
|
|
|
168,184 |
|
|
|
168,890 |
|
|
|
168,162 |
|
|
Dilutive effect of outstanding common stock options, RSUs, and PSUs |
|
2,397 |
|
|
|
2,475 |
|
|
|
2,442 |
|
|
|
2,163 |
|
|
Diluted weighted average common shares outstanding |
|
171,492 |
|
|
|
170,659 |
|
|
|
171,332 |
|
|
|
170,325 |
|
|
Adjusted net income per share attributable to common shareholders: |
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
0.12 |
|
|
$ |
0.16 |
|
|
Diluted |
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
0.12 |
|
|
$ |
0.16 |
|
(1) |
Primarily foreign translation gains and losses in each period. |
|
(2) |
The quarter and two quarters ended |
|
(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 |
|
(5) |
Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. |
|
(6) |
The quarter and two quarters ended |
|
(7) |
The quarter and two quarters ended |
|
(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 |
|
(10) |
Tax impact of adjustments calculated applying the applicable statutory rates. The quarter and two quarters ended |
|
(11) |
The quarter and two quarters ended |
Segment Reporting (Unaudited) (in thousands, except percentages or otherwise stated) |
||||||||||||
|
Quarter Ended |
|
Two Quarters Ended |
|||||||||
|
|
|
|
|
|
|
|
|||||
Net revenues: |
|
|
|
|
|
|
|
|||||
|
$ |
289,304 |
|
$ |
267,417 |
|
$ |
585,239 |
|
$ |
548,761 |
|
International |
|
125,269 |
|
|
120,588 |
|
|
250,019 |
|
|
232,576 |
|
Market Development |
|
24,236 |
|
|
20,877 |
|
|
46,249 |
|
|
46,495 |
|
Total net revenues |
$ |
438,809 |
|
$ |
408,882 |
|
$ |
881,507 |
|
$ |
827,832 |
Q2 2024 Organic Revenue - QTD ( in thousands, except percentages) |
|
|
International |
|
Market Development |
|
|
|||||||||
Total net revenues in second quarter of fiscal 2024 |
$ |
289,304 |
|
|
$ |
125,269 |
|
|
$ |
24,236 |
|
|
$ |
438,809 |
|
|
Total net revenues in second quarter of fiscal 2023 |
|
267,417 |
|
|
|
120,588 |
|
|
|
20,877 |
|
|
|
408,882 |
|
|
Total Net Revenues Growth |
|
21,887 |
|
|
|
4,681 |
|
|
|
3,359 |
|
|
|
29,927 |
|
|
Total Net Revenues Growth % |
|
8.2 |
% |
|
|
3.9 |
% |
|
|
16.1 |
% |
|
|
7.3 |
% |
|
Less: Impact of shop optimization program closures |
|
(147 |
) |
|
|
— |
|
|
|
— |
|
|
|
(147 |
) |
|
Less: Impact of Branded Sweet Treats exit |
|
(486 |
) |
|
|
— |
|
|
|
— |
|
|
|
(486 |
) |
|
Adjusted net revenues in second quarter of fiscal 2023 |
|
266,784 |
|
|
|
120,588 |
|
|
|
20,877 |
|
|
|
408,249 |
|
|
Adjusted net revenue growth |
|
22,520 |
|
|
|
4,681 |
|
|
|
3,359 |
|
|
|
30,560 |
|
|
Impact of foreign currency translation |
|
— |
|
|
|
1,404 |
|
|
|
— |
|
|
|
1,404 |
|
|
Organic Revenue Growth |
$ |
22,520 |
|
|
$ |
6,085 |
|
|
$ |
3,359 |
|
|
$ |
31,964 |
|
|
Organic Revenue Growth % |
|
8.4 |
% |
|
|
5.0 |
% |
|
|
16.1 |
% |
|
|
7.8 |
% |
Q2 2024 Organic Revenue - YTD ( in thousands, except percentages) |
|
|
International |
|
Market Development |
|
|
|||||||||
Total net revenues in first two quarters of fiscal 2024 |
$ |
585,239 |
|
|
$ |
250,019 |
|
|
$ |
46,249 |
|
|
$ |
881,507 |
|
|
Total net revenues in first two quarters of fiscal 2023 |
|
548,761 |
|
|
|
232,576 |
|
|
|
46,495 |
|
|
|
827,832 |
|
|
Total Net Revenues Growth |
|
36,478 |
|
|
|
17,443 |
|
|
|
(246 |
) |
|
|
53,675 |
|
|
Total Net Revenues Growth % |
|
6.6 |
% |
|
|
7.5 |
% |
|
|
-0.5 |
% |
|
|
6.5 |
% |
|
Less: Impact of shop optimization program closures |
|
(463 |
) |
|
|
— |
|
|
|
— |
|
|
|
(463 |
) |
|
Less: Impact of Branded Sweet Treats exit |
|
(5,853 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,853 |
) |
|
Adjusted net revenues in first two quarters of fiscal 2023 |
|
542,445 |
|
|
|
232,576 |
|
|
|
46,495 |
|
|
|
821,516 |
|
|
Adjusted net revenue growth |
|
42,794 |
|
|
|
17,443 |
|
|
|
(246 |
) |
|
|
59,991 |
|
|
Impact of foreign currency translation |
|
— |
|
|
|
(432 |
) |
|
|
— |
|
|
|
(432 |
) |
|
Organic Revenue Growth |
$ |
42,794 |
|
|
$ |
17,011 |
|
|
$ |
(246 |
) |
|
$ |
59,559 |
|
|
Organic Revenue Growth % |
|
7.9 |
% |
|
|
7.3 |
% |
|
|
-0.5 |
% |
|
|
7.2 |
% |
Q2 2023 Organic Revenue - QTD (in thousands, except percentages) |
|
|
International |
|
Market Development |
|
|
|||||||||
Total net revenues in second quarter of fiscal 2023 |
$ |
267,417 |
|
|
$ |
120,588 |
|
|
$ |
20,877 |
|
|
$ |
408,882 |
|
|
Total net revenues in second quarter of fiscal 2022 |
|
244,665 |
|
|
|
110,558 |
|
|
|
20,022 |
|
|
|
375,245 |
|
|
Total Net Revenues Growth |
|
22,752 |
|
|
|
10,030 |
|
|
|
855 |
|
|
|
33,637 |
|
|
Total Net Revenues Growth % |
|
9.3 |
% |
|
|
9.1 |
% |
|
|
4.3 |
% |
|
|
9.0 |
% |
|
Less: Impact of shop optimization program 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 |
|
|
|
110,558 |
|
|
|
20,022 |
|
|
|
365,214 |
|
|
Adjusted net revenue growth |
|
32,783 |
|
|
|
10,030 |
|
|
|
855 |
|
|
|
43,668 |
|
|
Impact of acquisitions |
|
(3,023 |
) |
|
|
— |
|
|
|
877 |
|
|
|
(2,146 |
) |
|
Impact of foreign currency translation |
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
15 |
|
|
Organic Revenue Growth |
$ |
29,760 |
|
|
$ |
10,045 |
|
|
$ |
1,732 |
|
|
$ |
41,537 |
|
|
Organic Revenue Growth % |
|
12.7 |
% |
|
|
9.1 |
% |
|
|
8.7 |
% |
|
|
11.4 |
% |
Q2 2023 Organic Revenue - YTD (in thousands, except percentages) |
|
|
International |
|
Market Development |
|
|
|||||||||
Total net revenues in first two quarters of fiscal 2023 |
$ |
548,761 |
|
|
$ |
232,576 |
|
|
$ |
46,495 |
|
|
$ |
827,832 |
|
|
Total net revenues in first two quarters of fiscal 2022 |
|
492,584 |
|
|
|
215,051 |
|
|
|
40,142 |
|
|
|
747,777 |
|
|
Total Net Revenues Growth |
|
56,177 |
|
|
|
17,525 |
|
|
|
6,353 |
|
|
|
80,055 |
|
|
Total Net Revenues Growth % |
|
11.4 |
% |
|
|
8.1 |
% |
|
|
15.8 |
% |
|
|
10.7 |
% |
|
Less: Impact of shop optimization program 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 |
|
|
|
215,051 |
|
|
|
40,142 |
|
|
|
734,559 |
|
|
Adjusted net revenue growth |
|
69,395 |
|
|
|
17,525 |
|
|
|
6,353 |
|
|
|
93,273 |
|
|
Impact of acquisitions |
|
(6,103 |
) |
|
|
— |
|
|
|
1,770 |
|
|
|
(4,333 |
) |
|
Impact of foreign currency translation |
|
— |
|
|
|
5,794 |
|
|
|
— |
|
|
|
5,794 |
|
|
Organic Revenue Growth |
$ |
63,292 |
|
|
$ |
23,319 |
|
|
$ |
8,123 |
|
|
$ |
94,734 |
|
|
Organic Revenue Growth % |
|
13.2 |
% |
|
|
10.8 |
% |
|
|
20.2 |
% |
|
|
12.9 |
% |
|
Trailing Four Quarters Ended |
|
Fiscal Year Ended |
|||||||||
(in thousands, unless otherwise stated) |
|
|
2023 |
|
|
|||||||
|
|
|
|
|
|
|||||||
Revenues |
$ |
1,141,422 |
|
|
$ |
1,104,944 |
|
|
$ |
1,010,250 |
|
|
Non-Fresh Revenues (1) |
|
(3,760 |
) |
|
|
(9,416 |
) |
|
|
(38,380 |
) |
|
Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2) |
|
(400,618 |
) |
|
|
(399,061 |
) |
|
|
(404,430 |
) |
|
Sales from Hubs with Spokes |
|
737,044 |
|
|
|
696,467 |
|
|
|
567,440 |
|
|
Sales per Hub (millions) |
|
5.0 |
|
|
|
4.9 |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|||||||
International: |
|
|
|
|
|
|||||||
Sales from Hubs with Spokes (3) |
$ |
507,074 |
|
|
$ |
489,631 |
|
|
$ |
435,651 |
|
|
Sales per Hub (millions) (4) |
|
10.1 |
|
|
|
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) |
|
|
(4) |
International sales per Hub comparative data has been restated in constant currency based on current exchange rates. |
Global Points of Access (Unaudited) |
||||||
|
Global Points of Access |
|||||
|
Quarter Ended |
|
Fiscal Year Ended |
|||
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
229 |
|
228 |
|
229 |
|
|
70 |
|
66 |
|
70 |
|
Cookie Bakeries |
286 |
|
244 |
|
267 |
|
DFD Doors (2) |
7,497 |
|
6,320 |
|
6,808 |
|
Total |
8,082 |
|
6,858 |
|
7,374 |
|
International: |
|
|
|
|
|
|
|
46 |
|
44 |
|
44 |
|
|
502 |
|
466 |
|
483 |
|
Carts, Food Trucks, and Other (1) |
18 |
|
16 |
|
16 |
|
DFD Doors |
4,871 |
|
3,396 |
|
3,977 |
|
Total |
5,437 |
|
3,922 |
|
4,520 |
|
Market Development: |
|
|
|
|
|
|
|
117 |
|
111 |
|
116 |
|
|
1,033 |
|
873 |
|
968 |
|
Carts, Food Trucks, and Other (1) |
30 |
|
28 |
|
30 |
|
DFD Doors |
1,154 |
|
1,080 |
|
1,139 |
|
Total |
2,334 |
|
2,092 |
|
2,253 |
|
Total Global Points of Access (as defined) |
15,853 |
|
12,872 |
|
14,147 |
|
|
392 |
|
383 |
|
389 |
|
|
1,605 |
|
1,405 |
|
1,521 |
|
Total Cookie Bakeries |
286 |
|
244 |
|
267 |
|
|
2,283 |
|
2,032 |
|
2,177 |
|
Total Carts, Food Trucks, and Other |
48 |
|
44 |
|
46 |
|
Total DFD Doors |
13,522 |
|
10,796 |
|
11,924 |
|
Total Global Points of Access (as defined) |
15,853 |
|
12,872 |
|
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 |
|
(2) |
Includes over 160 McDonald’s shops located in |
Global Hubs (Unaudited) |
||||||
|
Hubs |
|||||
|
Quarter Ended |
|
Fiscal Year Ended |
|||
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
222 |
|
221 |
|
220 |
|
Doughnut Factories |
5 |
|
4 |
|
4 |
|
Total |
227 |
|
225 |
|
224 |
|
Hubs with Spokes |
151 |
|
143 |
|
149 |
|
Hubs without Spokes |
76 |
|
82 |
|
75 |
|
International: |
|
|
|
|
|
|
|
37 |
|
35 |
|
36 |
|
Doughnut Factories |
14 |
|
14 |
|
14 |
|
Total |
51 |
|
49 |
|
50 |
|
Hubs with Spokes |
51 |
|
49 |
|
50 |
|
Market Development: |
|
|
|
|
|
|
|
115 |
|
108 |
|
112 |
|
Doughnut Factories |
26 |
|
23 |
|
23 |
|
Total |
141 |
|
131 |
|
135 |
|
Total Hubs |
419 |
|
405 |
|
409 |
(1) |
Includes only |
Net Debt and Leverage (Unaudited) (in thousands, except leverage ratio) |
||||||||
|
|
|
2023 |
|||||
Current portion of long-term debt |
$ |
59,827 |
|
|
$ |
54,631 |
|
|
Long-term debt, less current portion |
|
894,979 |
|
|
|
836,615 |
|
|
Total long-term debt, including debt issuance costs |
|
954,806 |
|
|
|
891,246 |
|
|
Add back: Debt issuance costs |
|
3,847 |
|
|
|
4,371 |
|
|
Total long-term debt, excluding debt issuance costs |
|
958,653 |
|
|
|
895,617 |
|
|
Less: Cash and cash equivalents |
|
(28,625 |
) |
|
|
(38,185 |
) |
|
Net debt |
$ |
930,028 |
|
|
$ |
857,432 |
|
|
Adjusted EBITDA - trailing four quarters |
|
220,796 |
|
|
|
211,624 |
|
|
Net leverage ratio |
4.2 x |
|
4.1 x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807359325/en/
Investor Relations
ir@krispykreme.com
Financial Media
KrispyKremeIR@edelman.com
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