Fourth quarter Net Revenue growth of 11.4%
with Organic Revenue growth of 13.2%
GAAP Net Income of $1.9 million and Adjusted
EBITDA margin improvement of 40 basis points
Introduces 2024 guidance
Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme”, “KKI”, or the
“Company”) today reported financial results for the fourth quarter
and full year ended December 31, 2023.
Fourth Quarter Highlights (vs Q4
2022)
- Net revenue grew 11.4% to $450.9 million
- Organic revenue grew 13.2% to $446.0 million
- GAAP net income of $1.9 million
- GAAP net income attributable to KKI of $2.6 million
- Adjusted EBITDA increased 14.7% to $64.1 million
- Adjusted EBITDA margins improved 40 basis points to 14.2%
- Global Points of Access increased 2,310, or 19.5% to
14,147
“We reported strong double-digit fourth quarter and full-year
organic revenue growth in excess of our guide,” said Josh
Charlesworth, CEO. “Our growth was driven by strong consumer demand
in all sales channels and increased access to our fresh doughnuts
around the world. We improved profitability as we grew, showing the
productivity benefits of our unique Hub and Spoke operating
model.”
Josh continued, “Moving forward, we are modernizing the making
and moving of doughnuts to ensure high quality, profitable growth.
We are largely supplying expansion from existing capacity whilst
making selective investments in geographies which have limited
access to Krispy Kreme. This reflects our confidence in further
scaling the Delivered Fresh Daily network in new channels,
including Quick Service Restaurants. I look forward to us building
a bigger and better Krispy Kreme.”
Financial Highlights
Quarter Ended
Fiscal Years Ended
$ in millions, except per share data
December 31, 2023
January 1, 2023
Change
December 31, 2023
January 1, 2023
Change
GAAP:
Net revenue
$
450.9
$
404.6
11.4%
$
1,686.1
$
1,529.9
10.2%
Operating (loss)/income
$
(5.3
)
$
5.2
nm
$
13.1
$
29.0
(54.6)%
Operating (loss)/income margin
(1.2
)%
1.3
%
(250) bps
0.8
%
1.9
%
(110) bps
Net income/(loss)
$
1.9
$
(1.0
)
nm
$
(36.6
)
$
(8.8
)
nm
Net income/(loss) attributable to
KKI
$
2.6
$
(2.7
)
nm
$
(37.9
)
$
(15.6
)
nm
Diluted income/(loss) per share
$
0.02
$
(0.02
)
$
0.04
$
(0.23
)
$
(0.10
)
$
(0.13)
Non-GAAP:
Organic revenue(1)
$
446.0
$
394.0
13.2%
$
1,675.6
$
1,494.0
12.2%
Adjusted net income, diluted(1)
$
15.1
$
18.6
(18.8)%
$
46.2
$
49.6
(6.9)%
Adjusted EBITDA(1)
$
64.1
$
55.9
14.7%
$
211.6
$
190.7
11.0%
Adjusted EBITDA margin(1)
14.2
%
13.8
%
40 bps
12.6
%
12.5
%
10 bps
Adjusted diluted EPS(1)
$
0.09
$
0.11
$
(0.02)
$
0.27
$
0.29
$
(0.02)
Notes:
(1) Non-GAAP figures – please refer to Reconciliation of
Non-GAAP Financial Measures.
Key Operating Metrics
Fiscal Years Ended
$ in millions
December 31, 2023
January 1, 2023
Change
Global Points of Access
14,147
11,837
19.5%
Sales per Hub (U.S.) TTM
$
4.9
$
4.5
8.9%
Sales per Hub (International)
TTM
$
10.0
$
10.1
(1.0)%
Ecommerce as a Percent of Retail
Sales
19.3
%
18.0
%
130 bps
Fourth Quarter 2023 Consolidated
Results (vs Q4 2022)
Krispy Kreme’s fourth quarter results reflect continued
year-over-year growth as compared to the fourth quarter of 2022.
Net revenue grew 11.4% to $450.9 million, compared to $404.6
million. GAAP net income was $1.9 million, compared to a loss in
the prior year of $1.0 million. GAAP Diluted EPS was $0.02, an
improvement of $0.04 from the same quarter last year.
Total company organic revenue grew 13.2%, driven by high impact
global brand activations and seasonal offerings, increased Points
of Access and premiumization efforts. Ecommerce as a percent of
retail sales increased 130 basis points to 19.3% of sales.
Adjusted EBITDA in the quarter grew 14.7% to $64.1 million, with
Adjusted EBITDA margins expanding 40 basis points to 14.2%.
Adjusted Net Income, diluted declined 18.8% to $15.1 million in the
quarter. Adjusted Diluted EPS declined $0.02 to $0.09 from $0.11 in
the same quarter last year, due to increased depreciation and
amortization, as we expanded availability of our doughnuts and
Insomnia Cookies globally.
Full Year 2023 Consolidated Results (vs
FY 2022)
Krispy Kreme’s full year results reflect continued growth, as
net revenue grew 10.2% to $1.7 billion in 2023, compared to $1.5
billion in the prior year. GAAP net loss was $36.6 million,
compared to a loss of $8.8 million. GAAP Diluted Loss per Share was
$0.23 compared to a loss of $0.10.
Total company organic revenue grew 12.2% for the year, driven by
strong marketing activations, POA growth, and pricing actions.
Adjusted EBITDA grew 11.0% to $211.6 million. Adjusted Net Income,
diluted declined to $46.2 million from $49.6 million in the prior
period. Adjusted diluted EPS declined $0.02 to $0.27 from $0.29 in
the prior year, due to increased depreciation and amortization, as
we invested in our global expansion, including Insomnia Cookies’
international development, as well as higher tax rates as a greater
portion of earnings came from higher tax rate jurisdictions.
Diluted weighted average common shares outstanding for the full
year 2023 were 170.5 million, compared to 169.5 million for the
full year 2022.
Fourth Quarter 2023 Segment Results (vs
Q4 2022)
U.S.: In the U.S. segment, net revenue grew $25.2
million, or 9.3% with organic revenue growth of 13.7%. Organic
revenue growth was driven by successful marketing activations
including specialty offerings and seasonal events, the continued
expansion of our DFD strategy, and 16.3% organic growth at Insomnia
Cookies. Sales per hub in the U.S. increased 8.9% to $4.9 million
and DFD average sales per door per week increased 8.0% to $665,
driven by continued premiumization efforts and a significant
increase in DFD door count year over year. Ecommerce as a
percentage of U.S. Fresh retail doughnut sales increased 320 basis
points to 15.9%.
U.S. Adjusted EBITDA increased 19.4% to $42.1 million with
Adjusted EBITDA margin expansion of 120 basis points to 14.2%,
driven by the productivity benefits of our hub and spoke model,
labor optimization, and waste mitigation.
International: In the International segment, net revenue
grew $14.1 million, or 15.2%. International organic revenue grew
9.0%, driven by POA growth of 686, or nearly 20%, and continued
premiumization efforts.
International Adjusted EBITDA grew 7.8% to $22.1 million with
adjusted EBITDA margin declining approximately 140 basis points, as
strength in Australia was offset by lower volume in the U.K.
leading to deleveraging throughout the statement of operations.
Market Development: In the Market Development segment,
net revenue grew $7.0 million, or 17.2%. Organic growth in the
segment was 19.2%, driven by strong organic growth in Canada and
our International Franchise businesses, led by Turkey, South Korea,
and the Philippines. Additionally, Krispy Kreme opened in both
France and Ecuador during the quarter.
Market Development Adjusted EBITDA grew 21.1% to $16.9 million.
Adjusted EBITDA margins expanded 120 basis points to 35.4%, driven
by the expansion of our hub and spoke model in Japan and
Canada.
Balance Sheet and Capital
Expenditures
During the fourth quarter 2023, the Company invested $32.8
million in capital expenditures, driven primarily by investments in
the growth of our Hub and Spoke model alongside selective
remodeling activity and investments in information technology
capabilities. For the full year 2023, capital expenditures as a
percentage of revenue were 7.2%.
In 2023, the Company generated operating cash flow of $45.5
million, while reducing the use of vendor finance programs by $81.7
million.
As of December 31, 2023 the Company has total available
liquidity of $197.2 million, including $38.2 million of cash and
cash equivalents as well as undrawn capacity of roughly $159.0
million under available credit facilities. In 2023, the Company
extended maturities of its primary debt facility to 2028 and as of
December 31, 2023 has a net debt of $857.4 million.
2024 Financial Outlook
Krispy Kreme issues the following guidance for the full year
2024 (vs FY2023)
- Net Revenue growth of +5% to +7%
- Organic Revenue growth of +6% to +8%
- Adjusted EBITDA growth of +8% to +11%
- Adjusted Diluted EPS of $0.27 to $0.31
- Income Tax rate between 26% and 28%
- Capital Expenditures of 7% to 8% of net revenue
- Interest Expense, net of $55 million to $65 million
The above guidance assumes nominal impact from foreign exchange.
The Company continues to expect to reduce its net leverage in 2024,
as we make progress towards our 2026 goal of approximately 2.0x to
2.5x net leverage.
On October 3, 2023, the Company announced it is exploring
strategic alternatives for Insomnia Cookies. Guidance for the full
year 2024 includes operations from Insomnia Cookies.
Definitions
The following definitions apply to terms used throughout this
press release:
- Global Points of Access: Reflects all locations at which
fresh doughnuts or cookies can be purchased. We define global
points of access to include all Hot Light Theater Shops, Fresh
Shops, Carts and Food Trucks, DFD Doors and Cookie Shops, at both
Company-owned and franchise locations as of the end of the
respective reporting period. We monitor global points of access as
a metric that informs the growth of our omni-channel presence over
time and believe this metric is useful to investors to understand
our footprint in each of our segments.
- Hubs: Reflects locations where fresh doughnuts are
produced and processed for sale at any point of access. We define
Hubs to include self-sustaining Hot Light Theater Shops and
Doughnut Factories, at both Company-owned and franchise locations
as of the end of the respective reporting period.
- Sales Per Hub: Sales per Hub equals Fresh Revenues from
Hubs with Spokes, divided by the average number of Hubs with Spokes
at the end of the five most recent quarters.
- Fresh Revenues from Hubs with Spokes: Fresh Revenues
include product sales generated from our Doughnut Shop business
(including ecommerce and delivery), as well as DFD sales, but
excluding sales from Branded Sweet Treats. It also excludes all
Insomnia Cookies revenues as the measure is focused on the Krispy
Kreme business. Fresh Revenues from Hubs with Spokes equals the
Fresh Revenues derived from those Hubs currently producing product
for other shops, Carts and Food Trucks, and/or DFD doors, but
excluding Fresh Revenues derived from those Hubs not currently
producing product for other shops, Carts and Food Trucks, and/or
DFD doors.
- Free Cash Flow: Defined as cash provided by operating
activities less purchases of property and equipment.
Conference Call
Krispy Kreme will host a public conference call at 8:30 AM
Eastern Time today to discuss its results for the fourth 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 39 countries through its unique network of fresh
doughnut shops, partnerships with leading retailers, and a rapidly
growing Ecommerce and delivery business with more than 14,000 fresh
points of access. Our purpose of touching and enhancing lives
through the joy that is Krispy Kreme guides how we operate every
day and is reflected in the love we have for our people, our
communities and the planet. Connect with Krispy Kreme Doughnuts at
www.KrispyKreme.com, or on one of its many social media channels,
including www.Facebook.com/KrispyKreme and
www.Twitter.com/KrispyKreme.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties. The words “continue,” “towards,”
“expect,” “outlook,” “guidance,” “explore,” or similar words, or
the negative of these words, identify forward-looking statements.
Such forward-looking statements are based on certain assumptions
and estimates that we consider reasonable but are subject to
various risks and uncertainties and assumptions relating to our
operations, financial results, financial conditions, business,
prospects, growth strategy and liquidity. Accordingly, there are,
or will be, important factors that could cause our actual results
to differ materially from those indicated in these statements. The
inclusion of this forward-looking information should not be
regarded as a representation by us that the future plans, estimates
or expectations contemplated by us will be achieved. Our actual
results could differ materially from the forward-looking statements
included herein. Factors that could cause actual results to differ
from those expressed in forward-looking statements include, without
limitation, the risks and uncertainties described under the
headings “Cautionary Note Regarding Forward-Looking Statements” and
“Risk Factors” in our Annual Report on Form 10-K for the year ended
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.
Consolidated Statements of Operations (in thousands,
except per share amounts)
Fiscal Years Ended
December 31, 2023 (52
weeks)
January 1, 2023 (52
weeks)
January 2, 2022 (52
weeks)
(unaudited)
Net revenues
Product sales
$
1,651,166
$
1,497,882
$
1,353,466
Royalties and other revenues
34,938
32,016
30,925
Total net revenues
1,686,104
1,529,898
1,384,391
Product and distribution costs
443,243
406,227
354,093
Operating expenses
776,589
704,287
630,239
Selling, general and administrative
expense
266,863
223,198
222,394
Marketing expenses
45,872
42,566
39,489
Pre-opening costs
4,120
4,227
5,568
Other expenses/(income), net
10,378
10,157
(10,102
)
Depreciation and amortization expense
125,894
110,261
101,608
Operating income
13,145
28,975
41,102
Interest expense, net
50,341
34,102
32,622
Interest expense – related party
—
—
10,387
Other non-operating expense, net
3,798
3,036
2,191
Loss before income taxes
(40,994
)
(8,163
)
(4,098
)
Income tax (benefit)/expense
(4,347
)
612
10,745
Net loss
(36,647
)
(8,775
)
(14,843
)
Net income attributable to noncontrolling
interest
1,278
6,847
9,663
Net loss attributable to Krispy Kreme,
Inc.
$
(37,925
)
$
(15,622
)
$
(24,506
)
Net loss per share:
Common stock - Basic
$
(0.23
)
$
(0.10
)
$
(0.18
)
Common stock - Diluted
$
(0.23
)
$
(0.10
)
$
(0.18
)
Weighted average shares
outstanding:
Basic
168,289
167,471
147,655
Diluted
168,289
167,471
147,655
Quarter Ended
December 31, 2023 (13
weeks)
January 1, 2023 (13
weeks)
(unaudited)
Net revenues
Product sales
$
441,399
$
395,837
Royalties and other revenues
9,506
8,762
Total net revenues
450,905
404,599
Product and distribution costs
112,951
106,688
Operating expenses
200,636
184,027
Selling, general and administrative
expense
74,508
62,932
Marketing expenses
13,771
10,197
Pre-opening costs
1,193
713
Other expenses, net
16,429
8,357
Depreciation and amortization expense
36,752
26,479
Operating (loss)/income
(5,335
)
5,206
Interest expense, net
13,483
10,294
Other non-operating expense, net
767
953
Loss before income taxes
(19,585
)
(6,041
)
Income tax benefit
(21,468
)
(5,056
)
Net income/(loss)
1,883
(985
)
Net (loss)/income attributable to
noncontrolling interest
(727
)
1,734
Net income/(loss) attributable to
Krispy Kreme, Inc.
$
2,610
$
(2,719
)
Net income/(loss) per share:
Common stock - Basic
$
0.02
$
(0.02
)
Common stock - Diluted
$
0.02
$
(0.02
)
Weighted average shares
outstanding:
Basic
168,609
167,826
Diluted
170,678
167,826
Krispy Kreme, Inc.
Consolidated Balance Sheets (in thousands, except per
share data)
As of
December 31, 2023
January 1, 2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
38,185
$
35,371
Restricted cash
429
359
Accounts receivable, net
59,362
51,089
Inventories
34,716
46,239
Taxes receivable
15,526
18,263
Prepaid expense and other current
assets
25,363
26,953
Total current assets
173,581
178,274
Property and equipment, net
538,220
472,358
Goodwill
1,101,939
1,087,908
Other intangible assets, net
946,349
966,088
Operating lease right of use asset,
net
456,964
417,381
Other assets
23,539
26,528
Total assets
$
3,240,592
$
3,148,537
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
54,631
$
40,034
Current operating lease liabilities
50,365
43,160
Accounts payable
156,488
225,276
Accrued liabilities
134,005
104,424
Structured payables
130,104
103,575
Total current liabilities
525,593
516,469
Long-term debt, less current portion
836,615
739,052
Noncurrent operating lease liabilities
454,583
412,759
Deferred income taxes, net
123,925
143,124
Other long-term obligations and deferred
credits
36,093
38,258
Total liabilities
1,976,809
1,849,662
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value; 300,000
shares authorized as of both December 31, 2023 and January 1, 2023;
168,628 and 168,137 shares issued and outstanding as of December
31, 2023 and January 1, 2023, respectively
1,686
1,681
Additional paid-in capital
1,443,591
1,426,105
Shareholder note receivable
(3,850
)
(4,813
)
Accumulated other comprehensive
income/(loss), net of income tax
7,246
(9,151
)
Retained deficit
(278,990
)
(217,490
)
Total shareholders’ equity attributable
to Krispy Kreme, Inc.
1,169,683
1,196,332
Noncontrolling interest
94,100
102,543
Total shareholders’ equity
1,263,783
1,298,875
Total liabilities and shareholders’
equity
$
3,240,592
$
3,148,537
Krispy Kreme, Inc.
Consolidated Statements of Cash Flows (in
thousands)
Fiscal Years Ended
December 31, 2023 (52
weeks)
January 1, 2023 (52
weeks)
January 2, 2022 (52
weeks)
(unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss
$
(36,647
)
$
(8,775
)
$
(14,843
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization expense
125,894
110,261
101,608
Deferred and other income taxes
(18,486
)
(14,237
)
(3,496
)
Loss on extinguishment of debt
472
—
1,700
Impairment and lease termination
charges
24,909
18,297
3,507
Loss on disposal of property and
equipment
110
393
458
Gain on sale-leaseback
(9,646
)
(6,549
)
(8,673
)
Share-based compensation
24,196
18,170
22,923
Change in accounts and notes receivable
allowances
654
570
275
Inventory write-off
11,248
868
4,071
Settlement of interest rate swap
derivatives
7,657
8,476
—
Amortization related to settlement of
interest rate swap derivatives
(10,289
)
—
—
Other
2,155
2,232
594
Change in operating assets and
liabilities, excluding business acquisitions and foreign currency
translation adjustments:
Accounts, notes, and taxes receivable
(3,523
)
(9,485
)
(3,817
)
Inventories
780
(12,515
)
(301
)
Other current and noncurrent assets
(2,395
)
(1,691
)
(316
)
Operating lease assets and liabilities
5,111
(793
)
7,787
Accounts payable and accrued
liabilities
(74,471
)
32,015
30,240
Other long-term obligations and deferred
credits
(2,185
)
2,581
(493
)
Net cash provided by operating
activities
45,544
139,818
141,224
CASH FLOWS USED FOR INVESTING
ACTIVITIES:
Purchase of property and equipment
(121,427
)
(111,717
)
(119,497
)
Proceeds from disposals of assets
218
1,077
218
Proceeds from sale-leaseback
10,025
8,401
11,091
Acquisition of shops and franchise rights
from franchisees, net of cash acquired
—
(17,330
)
(46,330
)
Purchase of equity method investment
(1,424
)
(989
)
—
Principal payments received from loans to
franchisees
20
59
92
Disbursement for loan receivable
—
(975
)
—
Maturities of held-to-maturity debt
securities
—
—
1,019
Net cash used for investing
activities
(112,588
)
(121,474
)
(153,407
)
CASH FLOWS FROM/(USED FOR) FINANCING
ACTIVITIES:
Proceeds from the issuance of debt
1,175,698
149,000
695,000
Repayment of long-term debt and lease
obligations
(1,084,390
)
(101,181
)
(1,147,049
)
Payment of financing costs
(5,175
)
—
(1,700
)
Proceeds from structured payables
241,148
282,023
266,851
Payments on structured payables
(214,574
)
(294,457
)
(287,625
)
Payment of contingent consideration
related to a business combination
(925
)
(900
)
—
Capital contribution from shareholders,
net of loans issued
764
(288
)
120,532
Proceeds from IPO, net of underwriting
discounts (excluding unpaid issuance costs)
—
—
527,329
Payments of issuance costs in connection
with IPO
—
(12,458
)
—
Proceeds from sale of noncontrolling
interest in subsidiary
292
593
53,404
Distribution to shareholders
(23,558
)
(23,430
)
(48,187
)
Payments for repurchase and retirement of
common stock
(1,880
)
(4,019
)
(139,103
)
Distribution to noncontrolling
interest
(15,538
)
(11,721
)
(23,356
)
Net cash provided by/(used for)
financing activities
71,862
(16,838
)
16,096
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(1,934
)
(4,968
)
(2,204
)
Net increase/(decrease) in cash, cash
equivalents and restricted cash
2,884
(3,462
)
1,709
Cash, cash equivalents and restricted cash
at beginning of the fiscal year
35,730
39,192
37,483
Cash, cash equivalents and restricted
cash at end of the fiscal year
$
38,614
$
35,730
$
39,192
Net cash provided by operating
activities
$
45,544
$
139,818
$
141,224
Less: Purchase of property and
equipment
(121,427
)
(111,717
)
(119,497
)
Free cash flow
$
(75,883
)
$
28,101
$
21,727
Krispy Kreme, Inc. Reconciliation of
Non-GAAP Financial Measures (unaudited and 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
Fiscal Years Ended
(in thousands)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Net income/(loss)
$
1,883
$
(985
)
$
(36,647
)
$
(8,775
)
Interest expense, net
13,483
10,294
50,341
34,102
Income tax (benefit)/expense
(21,468
)
(5,056
)
(4,347
)
612
Depreciation and amortization expense
36,752
26,479
125,894
110,261
Share-based compensation
6,375
4,852
24,196
18,170
Employer payroll taxes related to
share-based compensation
85
220
395
312
Other non-operating expense, net (1)
767
953
3,798
3,036
Strategic initiatives (2)
5,216
2,635
29,057
2,841
Acquisition and integration expenses
(3)
32
944
511
2,333
New market penetration expenses (4)
367
828
1,380
1,511
Shop closure expenses (5)
16,979
11,606
17,335
19,465
Restructuring and severance expenses
(6)
2,251
4,321
5,050
7,125
Gain on sale-leaseback
—
(2,238
)
(9,646
)
(6,549
)
Other (7)
1,419
1,066
4,307
6,285
Adjusted EBITDA
$
64,141
$
55,919
$
211,624
$
190,729
Quarter Ended
Fiscal Years Ended
(in thousands)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Segment Adjusted EBITDA:
U.S.
$
42,101
$
35,269
$
130,979
$
112,283
International
22,067
20,479
76,503
75,512
Market Development
16,924
13,979
62,995
50,621
Corporate
(16,951
)
(13,808
)
(58,853
)
(47,687
)
Total Adjusted EBITDA
$
64,141
$
55,919
$
211,624
$
190,729
Quarter Ended
Fiscal Years Ended
(in thousands, except per share
amounts)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Net income/(loss)
$
1,883
$
(985
)
$
(36,647
)
$
(8,775
)
Share-based compensation
6,375
4,852
24,196
18,170
Employer payroll taxes related to
share-based compensation
85
220
395
312
Other non-operating expense, net (1)
767
953
3,798
3,036
Strategic initiatives (2)
5,216
2,635
29,057
2,841
Acquisition and integration expenses
(3)
32
944
511
2,333
New market penetration expenses (4)
367
828
1,380
1,511
Shop closure expenses (5)
16,979
11,606
17,335
19,715
Restructuring and severance expenses
(6)
2,251
4,321
5,050
7,125
Gain on sale-leaseback
—
(2,238
)
(9,646
)
(6,549
)
Other (7)
1,419
1,066
4,307
6,285
Amortization of acquisition related
intangibles (8)
7,346
7,149
29,373
28,456
Loss on extinguishment of 2019 Facility
(9)
—
—
472
—
Tax impact of adjustments (10)
(29,303
)
(8,720
)
(20,729
)
(14,609
)
Tax specific adjustments (11)
979
(2,248
)
(1,364
)
(2,876
)
Net income attributable to noncontrolling
interest
727
(1,734
)
(1,278
)
(6,847
)
Adjustment to adjusted net income
attributable to common shareholders
—
—
—
(374
)
Adjusted net income attributable to
common shareholders - Basic
$
15,123
$
18,649
$
46,210
$
49,754
Additional income attributed to
noncontrolling interest due to subsidiary potential common
shares
(13
)
(37
)
(28
)
(143
)
Adjusted net income attributable to
common shareholders - Diluted
$
15,110
$
18,612
$
46,182
$
49,611
Basic weighted average common shares
outstanding
168,609
167,826
168,289
167,471
Dilutive effect of outstanding common
stock options, RSUs, and PSUs
2,069
2,000
2,204
2,005
Diluted weighted average common shares
outstanding
170,678
169,826
170,493
169,476
Adjusted net income per share
attributable to common shareholders:
Basic
$
0.09
$
0.11
$
0.27
$
0.30
Diluted
$
0.09
$
0.11
$
0.27
$
0.29
(1)
Primarily foreign translation gains and
losses in each period.
(2)
Fiscal 2023 consists 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 (approximately $17.9
million of the total). Fiscal 2022 consists mainly of equipment
disposals, equipment relocation and installation, consulting and
advisory fees, and other costs associated with our shift of Branded
Sweet Treats manufacturing capability from Burlington, Iowa to
Winston-Salem, North Carolina.
(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)
Fiscal 2023 includes lease termination
costs, impairment charges, and loss on disposal of property, plant
and equipment, primarily associated with strategic shop exits,
primarily in the U.S. (approximately $16.0 million of the total).
Fiscal 2022 includes lease termination costs, impairment charges,
and loss on disposal of property, plant and equipment, primarily
associated with strategic shop exits. Fiscal 2022 expenses are also
inclusive of accelerated depreciation related to replacing a point
of sale system.
(6)
Fiscal 2023 and fiscal 2022 consist
primarily of costs associated with restructuring of the global
executive team.
(7)
Fiscal 2023, fiscal 2022, and fiscal 2021
consist primarily of legal and other regulatory expenses incurred
outside the ordinary course of business, including the net
settlement of approximately $3.3 million negotiated with TSW Foods,
LLC in fiscal 2022.
(8)
Consists of amortization related to
acquired intangible assets as reflected within depreciation and
amortization in the 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 Company’s adjusted
effective tax rate is 27.2%, 24.1%, and 22.4% for each of the
fiscal years 2023, 2022, and 2021, respectively. Fiscal 2023 also
includes the impact of disallowed executive compensation expense.
Fiscal 2022 includes the impact of disallowed executive
compensation expense and a discrete tax benefit related to a legal
accrual.
(11)
Fiscal 2023 consists 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. Fiscal 2022 consists of the recognition of previously
unrecognized tax benefits unrelated to ongoing operations, as well
as benefits attributable to multiple tax years due to lapse of the
statute of limitations. Fiscal 2022 also includes the effect of
discrete adjustments to the Company’s deferred tax liabilities that
are unrelated to the Company’s ongoing operations.
Krispy Kreme, Inc.
Segment Reporting (unaudited and in thousands, except
percentages or otherwise stated)
Quarter Ended
December 31, 2023
January 1, 2023
January 2, 2022
Net revenues:
U.S.
$
296,006
$
270,836
$
243,934
International
107,051
92,928
89,990
Market Development
47,848
40,835
36,673
Total net revenues
$
450,905
$
404,599
$
370,597
Q4 2023 Organic Revenue - QTD
(in thousands, except percentages)
U.S.
International
Market
Development
Total Company
Total net revenues Q4 2023 (13 weeks)
$
296,006
$
107,051
$
47,848
$
450,905
Total net revenues Q4 2022 (13 weeks)
270,836
92,928
40,835
404,599
Total Net Revenue Growth
25,170
14,123
7,013
46,306
Total Net Revenue Growth %
9.3
%
15.2
%
17.2
%
11.4
%
Less: Impact of shop optimization program
closures
(1,754
)
—
—
(1,754
)
Less: Impact of Branded Sweet Treats
exit
(8,841
)
—
—
(8,841
)
Adjusted net revenues Q4 2022
260,241
92,928
40,835
394,004
Adjusted Net Revenue Growth
35,765
14,123
7,013
56,901
Impact of foreign currency translation
—
(5,758
)
837
(4,921
)
Organic Revenue Growth
$
35,765
$
8,365
$
7,850
$
51,980
Organic Revenue Growth %
13.7
%
9.0
%
19.2
%
13.2
%
Q4 2022 Organic Revenue - QTD
(in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues Q4 2022 (13 weeks)
$
270,836
$
92,928
$
40,835
$
404,599
Total net revenues Q4 2021 (13 weeks)
243,934
89,990
36,673
370,597
Total Net Revenue Growth
26,902
2,938
4,162
34,002
Total Net Revenue Growth %
11.0
%
3.3
%
11.3
%
9.2
%
Less: Impact of shop optimization program
closures
(1,374
)
—
—
(1,374
)
Adjusted net revenues Q4 2021
242,560
89,990
36,673
369,223
Adjusted Net Revenue Growth
28,276
2,938
4,162
35,376
Impact of acquisitions
(2,652
)
—
769
(1,883
)
Impact of foreign currency translation
—
7,211
5,520
12,731
Organic Revenue Growth
$
25,624
$
10,149
$
10,451
$
46,224
Organic Revenue Growth %
10.6
%
11.3
%
28.5
%
12.5
%
Fiscal Years Ended
December 31, 2023
January 1, 2023
January 2, 2022
Net revenues:
U.S.
$
1,104,944
$
1,010,250
$
923,129
International
401,801
365,916
332,995
Market Development
179,359
153,732
128,267
Total net revenues
$
1,686,104
$
1,529,898
$
1,384,391
Full Year 2023 Organic Revenue -
YTD in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues in fiscal 2023 (52
weeks)
$
1,104,944
$
401,801
$
179,359
$
1,686,104
Total net revenues in fiscal 2022 (52
weeks)
1,010,250
365,916
153,732
1,529,898
Total Net Revenue Growth
94,694
35,885
25,627
156,206
Total Net Revenue Growth %
9.4
%
9.8
%
16.7
%
10.2
%
Less: Impact of shop optimization program
closures
(11,367
)
—
—
(11,367
)
Less: Impact of Branded Sweet Treats
exit
(24,577
)
—
—
(24,577
)
Adjusted net revenues in fiscal 2022
974,306
365,916
153,732
1,493,954
Adjusted Net Revenue Growth
130,638
35,885
25,627
192,150
Impact of acquisitions
(7,678
)
—
2,227
(5,451
)
Impact of foreign currency translation
—
(10,351
)
5,312
(5,039
)
Organic Revenue Growth
$
122,960
$
25,534
$
33,166
$
181,660
Organic Revenue Growth %
12.6
%
7.0
%
21.6
%
12.2
%
Full Year 2022 Organic Revenue -
YTD (in thousands, except percentages)
U.S.
International
Market Development
Total Company
Total net revenues in fiscal 2022 (52
weeks)
$
1,010,250
$
365,916
$
153,732
$
1,529,898
Total net revenues in fiscal 2021 (52
weeks)
923,129
332,995
128,267
1,384,391
Total Net Revenue Growth
87,121
32,921
25,465
145,507
Total Net Revenue Growth %
9.4
%
9.9
%
19.9
%
10.5
%
Less: Impact of shop optimization program
closures
(1,374
)
—
—
(1,374
)
Adjusted net revenues fiscal 2021
921,755
332,995
128,267
1,383,017
Adjusted Net Revenue Growth
88,495
32,921
25,465
146,881
Impact of acquisitions
(7,608
)
—
(9,884
)
(17,492
)
Impact of foreign currency translation
—
26,052
11,290
37,342
Organic Revenue Growth
$
80,887
$
58,973
$
26,871
$
166,731
Organic Revenue Growth %
8.8
%
17.7
%
20.9
%
12.1
%
Fiscal Years Ended
Sales per Hub
(in thousands, unless otherwise
stated)
December 31, 2023 (52
weeks)
January 1, 2023 (52
weeks)
January 2, 2022 (52
weeks)
U.S.:
Revenues
$
1,104,944
$
1,010,250
$
923,129
Non-Fresh Revenues (1)
(9,416
)
(38,380
)
(37,311
)
Fresh Revenues from Insomnia Cookies and
Hubs without Spokes (2)
(399,061
)
(404,430
)
(414,899
)
Sales from Hubs with Spokes
696,467
567,440
470,919
Sales per Hub (millions)
4.9
4.5
4.0
International:
Sales from Hubs with Spokes (3)
$
401,801
$
365,916
$
332,995
Sales per Hub (millions) (4)
10.0
10.1
8.7
(1)
Includes the exited Branded Sweet Treats
business revenues.
(2)
Includes Insomnia Cookies revenues and
Fresh Revenues generated by Hubs without Spokes.
(3)
Total International net revenues is equal
to Fresh Revenues from Hubs with Spokes for that business
segment.
(4)
International sales per Hub comparative
data has been restated in constant currency based on current
exchange rates.
Krispy Kreme, Inc.
Global Points of Access
Global Points of Access
(1)
Fiscal Years Ended
December 31, 2023
January 1, 2023
January 2, 2022
(unaudited)
U.S.: (2)
Hot Light Theater Shops
229
234
237
Fresh Shops
70
62
60
Cookie Bakeries
265
231
210
Carts, Food Trucks, and Other (3)
—
—
2
DFD Doors (5)
6,808
5,729
5,204
Total
7,372
6,256
5,713
International:
Hot Light Theater Shops
35
37
32
Fresh Shops
413
388
370
Carts, Food Trucks, and Other (3)
16
14
1
DFD Doors
3,693
3,032
2,488
Total
4,157
3,471
2,891
Market Development: (4)
Hot Light Theater Shops.
125
115
113
Fresh Shops
1,038
873
788
Cookie Bakeries
2
—
—
Carts, Food Trucks, and Other (3)
30
27
31
DFD Doors
1,423
1,095
891
Total
2,618
2,110
1,823
Total Global Points of Access (as
defined)
14,147
11,837
10,427
Total Hot Light Theater Shops
389
386
382
Total Fresh Shops
1,521
1,323
1,218
Total Cookie Bakeries
257
231
210
Total Shops
2,167
1,940
1,810
Total Carts, Food Trucks, and
Other
46
41
34
Total DFD Doors
11,924
9,856
8,583
Total Global Points of Access (as
defined)
14,147
11,837
10,427
(1)
Excludes the recently exited Branded Sweet
Treats distribution points.
(2)
Includes Points of Access that were
acquired from franchisees in the U.S. These Points of Access were
previously included in the Market Development segment prior to the
respective acquisition dates.
(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. As of
December 31, 2023, there were five Hot Light Theater Shops, 61
Fresh Shops, and 241 DFD Doors operating in Japan and four Hot
Light Theater Shops, nine Fresh Shops, and 43 DFD Doors operating
in Canada. As of January 1, 2023, there were five Hot Light Theater
Shops, 54 Fresh Shops, and 166 DFD Doors operating in Japan and
four Hot Light Theater Shops, six Fresh Shops, and 12 DFD Doors
operating in Canada.
(5)
Includes over 160 McDonald’s test shops
located in Louisville and Lexington, Kentucky and the surrounding
area as of December 31, 2023.
Krispy Kreme, Inc.
Global Hubs
Hubs
Fiscal Years Ended
December 31, 2023
January 1, 2023
January 2, 2022
(unaudited)
U.S.:
Hot Light Theater Shops (1)
220
228
234
Doughnut Factories
4
4
4
Total
224
232
238
Hubs with Spokes
149
133
123
Hubs without Spokes
75
99
115
International:
Hot Light Theater Shops (1)
30
28
25
Doughnut Factories
11
11
11
Total
41
39
36
Hubs with Spokes
41
39
36
Market Development:
Hot Light Theater Shops (1)
118
110
110
Doughnut Factories
26
27
27
Total
144
137
137
Total Hubs
409
408
411
(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 (in thousands, except leverage
ratio)
As of
December 31, 2023
January 1, 2023
(unaudited)
Current portion of long-term debt
$
54,631
$
40,034
Long-term debt, less current portion
836,615
739,052
Total long-term debt, including debt
issuance costs
891,246
779,086
Add back: Debt issuance costs
4,371
2,247
Total long-term debt, excluding debt
issuance costs
895,617
781,333
Less: Cash and cash equivalents
(38,185
)
(35,371
)
Net debt
$
857,432
$
745,962
Adjusted EBITDA - trailing four
quarters
211,624
190,729
Net leverage ratio
4.1
x
3.9
x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240212583415/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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