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Krispy Kreme Reports Strong First Quarter 2023 and Reiterates Full Year Guidance

First quarter net revenue grew 12.5% with organic revenue growth of 14.4%
Points of Access grew by 12.5% to 12,410 and Ecommerce revenue grew 23%
GAAP net income of $1.6 million and Adjusted EBITDA of $54.9 million

CHARLOTTE, N.C., May 11, 2023--(BUSINESS WIRE)--Krispy Kreme, Inc. (NASDAQ: DNUT) ("Krispy Kreme" or the "Company") today reported strong financial results for the first quarter ended April 2, 2023. Net revenue grew 12.5% year-over-year to $419.0 million and organic revenue grew 14.4% led by robust performances in the U.S. and Market Development segments. Sales per Hub in the U.S. increased 9% to $4.6 million, driven by an 12% increase in points of access and an 8% increase in U.S. sales per Delivered Fresh Daily ("DFD") door.

GAAP Net Income for the quarter was $1.6 million compared to Net Income of $6.5 million a year ago while GAAP diluted EPS for the quarter was $0.00 compared to diluted EPS of $0.02 last year. Adjusted diluted EPS increased 12.5% to $0.09 for the quarter, compared to $0.08 last year in the same period. Adjusted EBITDA grew 12.3% in the quarter to $54.9 million led by a 60 basis point improvement in U.S. margins.

Global Points of Access, which reflect all locations where fresh doughnuts and cookies can be purchased, increased by nearly 600 during the quarter, providing consumers with access to Krispy Kreme and Insomnia Cookies through more than 12,400 locations around the world.

Commenting on the Company’s performance, CEO Mike Tattersfield stated, "I’m proud of our performance in the first quarter that continued to demonstrate the strength of our omni-channel model, which allows us to meet consumer demand with premium, fresh doughnuts in a capital efficient manner. Our global Valentine’s Day and St. Patrick’s Day campaigns and specialty offerings such as Biscoff® Doughnuts resonated with consumers, showcasing the opportunities for premiumization as well as the gifting and sharing power of our brand."

Mike continued, "We also achieved our best ever quarter of Ecommerce revenue, representing a higher mix of revenue than during the pandemic and we see a long runway for further growth in this channel. Krispy Kreme continues to be well-positioned to deliver another year of strong growth driven by our capital efficient DFD model and our global expansion plans."

Financial Highlights

$ in millions, except per share data

Q1

2023

vs Q1

2022

Net Revenue

$419.0

+12.5%

Organic Revenue (1)

$422.5

+14.4%

GAAP Net Income

$1.6

(74.5)%

Adjusted Net Income, Diluted (1)

$15.3

+15.5%

GAAP Operating Income

$14.9

(13.5)%

GAAP Operating Income Margin

3.6%

-100 bps

Adjusted EBITDA (1)

$54.9

+12.3%

Adjusted EBITDA Margin (1)

13.1%

0 bps

GAAP Diluted EPS

$0.00

$(0.02)

Adjusted Diluted EPS (1)

$0.09

+$0.01

Notes:

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

Key Operating Metrics

$ in millions, except access points

Q1

2023

vs Q1

2022

Global Points of Access

12,410

+12.5%

Sales per Hub (U.S.) TTM

$4.6

+9.0%

Sales per Hub (International) TTM

$9.8

+8.5%

Ecommerce as a Percent of Retail Sales

19.6%

+220 bps

First Quarter 2023 Consolidated Results

Krispy Kreme’s first quarter 2023 results reflect strong growth compared to the prior year. Net revenue grew 12.5% to $419.0 million and total company organic revenue grew 14.4% in the quarter. Organic revenue growth was driven by strong growth from U.S. Krispy Kreme and Insomnia Cookies, as well as robust performances from our equity-owned Japan market and international franchise in our Market Development segment. Ecommerce revenue growth in the quarter was 23%.

GAAP Net Income for the quarter was $1.6 million, compared to a GAAP Net Income of $6.5 million in 2022. GAAP Net Income included a $13.4 million charge related to the previously disclosed exit of our small Branded Sweet Treats business that was largely non-cash, partially offset by a $9.7 million gain on a sale-leaseback. Inventory write-offs and employee severance associated with the exit of the Branded Sweet Treats business had a 180 basis point negative impact on Product and Distribution Costs in the first quarter of 2023.

Adjusted EBITDA in the quarter grew 12.3% to $54.9 million despite an approximately $2 million negative impact from the stronger U.S. dollar. Operating margins declined 100 basis points to 3.6%, while Adjusted EBITDA margins were flat at 13.1% from the same quarter in 2022, with an increase in Adjusted EBITDA margins from our U.S. and Market Development segments offset by a decrease in our International segment due to inflation. Adjusted Net Income, Diluted increased 15.5% to $15.3 million in the quarter. GAAP Diluted EPS in the quarter was $0.00 compared to $0.02 in the same quarter last year, while Adjusted Diluted EPS increased 12.5% to $0.09 from $0.08 in the first quarter of 2022.

First Quarter 2023 Market Segment Results

U.S.: In the U.S., segment net revenue grew 13.5% to $281.3 million, driven by the continued execution of our omni-channel strategy and growth of Insomnia Cookies. Organic revenue increased 13.7% driven by increased points of access, higher Ecommerce revenue, higher average weekly sales per DFD door as well as a strong performance in Insomnia Cookies, partially offset by a decrease in Branded Sweet Treats revenue. Average weekly DFD revenue per door hit a record in the quarter and was up 35% from the same period in 2021, as we continue to add new DFD partners and channels. Ecommerce revenue in the U.S. increased 32% compared to the prior year to 22.6% of sales. Excluding Branded Sweet Treats, organic revenue in the U.S. increased by 16.1%. Points of access increased by 359 in the quarter to 6,615, which represents an 11.5% increase from a year ago.

U.S. Adjusted EBITDA increased 18.9% to $38.5 million with Adjusted EBITDA margin expansion of 60 basis points to 13.7% driven primarily by efficiencies from increased Sales per Hub, improvements from the network optimization of our hubs without spokes as well as price increases, partially offset by cost inflation.

International: In the International segment, net revenue grew 3.5% to $90.3 million, with organic growth of 7.3%. Organic growth in the quarter was driven by a 12% increase in points of access compared to the prior year. Foreign currency translation had a negative 3.8% impact on net revenue growth during the quarter compared to a year ago. Points of access increased by 117 in the quarter to total 3,588.

International Adjusted EBITDA declined 21.3% over the prior year to $13.6 million, driven by cost inflation. Adjusted EBITDA margins declined 480 basis points to 15.0%. We have growing confidence in the U.K. market while Australia is currently seeing delayed and accelerated inflationary costs that hit most of our other markets in 2022.

Market Development: In the Market Development segment, net revenue increased 26.5% to $47.3 million driven by strong performances in our equity-owned Japan and Canada markets as well as our International Franchise business. Organic revenue growth was 35.5% compared to the same period in 2022.

Market Development Adjusted EBITDA grew 35.9% to $17.0 million, with strong margin improvement in our equity-owned Japan and Canada markets from hub and spoke efficiencies and strength in international franchise revenue more than offsetting inflation and the strong U.S. dollar. Adjusted EBITDA margins for the segment increased 250 basis points to 35.9% despite a negative impact from mix shift.

Balance Sheet & Capital Expenditures

During the first quarter of 2023, the company invested $26.6 million in capital expenditures, or 6.3% of revenue, primarily to support growth of our hot light theaters, cookie shops, and DFD Doors.

As of April 2, 2023, the Company had $29.7 million of cash and cash equivalents and net debt of $792.7 million. During the quarter, the company reduced its vendor financing programs including structured payables and supply chain financing by approximately $46.1 million. As previously disclosed, during the first quarter the Company successfully completed the refinancing of existing Term Loan A and Revolver facilities. The new $700 million Term Loan A and $300 million Revolver extends maturities until March 2028 at the same terms to existing facilities and welcomes several new creditors into our facilities. There was no change in the Company’s net debt as a result of this refinancing.

2023 Financial Outlook

Krispy Kreme re-affirms its previous guidance for the full year 2023 as follows:

  • Net Revenue of $1.65 billion to $1.68 billion, +8% to +10% vs 2022 (+9% to +11% in constant currency)

  • Organic Revenue growth of 9% to 11%

  • Adjusted EBITDA of $205 million to $215 million, +8% to +13% vs 2022 (+10% to +14% in constant currency)

  • Adjusted Net Income, diluted, of $52 million to $58 million, +5% to +17% vs 2022 (+9% to +21% in constant currency)

  • Adjusted Diluted EPS of $0.31 to $0.34, +7% to +17% vs 2022 (+10% to +21% in constant currency)

  • Income Tax rate between 24.5% to 26.0%

  • Capital Expenditures between $105 million to $115 million, or approximately 6.6% of revenue

  • Interest Expense, net between $39 million to $43 million

The above guidance continues to assume a negative 1% impact to 2023 revenue and a negative $3 million impact to 2023 Adjusted EBITDA from FX headwinds, with the impact entirely in the first half of the year. The Company expects to reduce its net leverage in 2023, 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 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 8:00 AM Eastern Time today to discuss its results for the first 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 over 30 countries through its unique network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing Ecommerce and delivery business with more than 12,000 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 "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, Adjusted Diluted EPS, Fresh Revenue from Hubs with Spokes and Sales per Hub, which differ from results using U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are not universally consistent calculations, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC.

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

Krispy Kreme, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

Quarter Ended

April 2,
2023 (13 weeks)

April 3,
2022 (13 weeks)

Net revenues

Product sales

$

410,674

$

364,052

Royalties and other revenues

8,276

8,480

Total net revenues

418,950

372,532

Product and distribution costs

117,833

96,111

Operating expenses

191,408

168,726

Selling, general and administrative expense

61,468

53,711

Marketing expenses

9,853

10,159

Pre-opening costs

764

1,329

Other income, net

(5,263

)

(2,633

)

Depreciation and amortization expense

27,939

27,841

Operating income

14,948

17,288

Interest expense, net

11,988

7,351

Other non-operating expense/(income), net

999

(321

)

Income before income taxes

1,961

10,258

Income tax expense

317

3,800

Net income

1,644

6,458

Net income attributable to noncontrolling interest

1,945

2,456

Net (loss)/income attributable to Krispy Kreme, Inc.

$

(301

)

$

4,002

Net (loss)/income per share:

Common stock — Basic

$

0.00

$

0.02

Common stock — Diluted

$

0.00

$

0.02

Weighted average shares outstanding:

Basic

168,141

167,261

Diluted

168,141

169,485

Krispy Kreme, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

As of

(Unaudited)

April 2, 2023

January 1, 2023

ASSETS

Current assets:

Cash and cash equivalents

$

29,675

$

35,371

Restricted cash

409

359

Accounts receivable, net

52,053

51,089

Inventories

36,389

46,239

Taxes receivable

15,970

18,263

Prepaid expense and other current assets

21,138

26,953

Total current assets

155,634

178,274

Property and equipment, net

475,510

472,358

Goodwill

1,093,898

1,087,908

Other intangible assets, net

963,549

966,088

Operating lease right of use asset, net

433,352

417,381

Other assets

22,904

26,528

Total assets

$

3,144,847

$

3,148,537

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt

$

40,216

$

40,034

Current operating lease liabilities

39,963

43,160

Accounts payable

205,154

225,276

Accrued liabilities

82,961

104,424

Structured payables

77,742

103,575

Total current liabilities

446,036

516,469

Long-term debt, less current portion

776,975

739,052

Noncurrent operating lease liabilities

432,008

412,759

Deferred income taxes, net

142,304

143,124

Other long-term obligations and deferred credits

40,374

38,258

Total liabilities

1,837,697

1,849,662

Commitments and contingencies

Shareholders’ equity:

Common stock, $0.01 par value; 300,000 shares authorized as of both April 2, 2023 and January 1, 2023; 168,176 and 168,137 shares issued and outstanding as of April 2, 2023 and January 1, 2023, respectively

1,682

1,681

Additional paid-in capital

1,431,649

1,426,105

Shareholder note receivable

(4,830

)

(4,813

)

Accumulated other comprehensive loss, net of income tax

(918

)

(9,151

)

Retained deficit

(223,674

)

(217,490

)

Total shareholders’ equity attributable to Krispy Kreme, Inc.

1,203,909

1,196,332

Noncontrolling interest

103,241

102,543

Total shareholders’ equity

1,307,150

1,298,875

Total liabilities and shareholders’ equity

$

3,144,847

$

3,148,537

Krispy Kreme, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Quarter Ended

April 2, 2023

(13 weeks)

April 3, 2022

(13 weeks)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

1,644

$

6,458

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

27,939

27,841

Deferred income taxes

(219

)

(822

)

Loss on extinguishment of debt

472

Impairment and lease termination charges

4,900

218

Loss on disposal of property and equipment

33

24

Gain on sale-leaseback

(9,661

)

(2,374

)

Share-based compensation

5,545

5,041

Change in accounts and notes receivable allowances

334

(156

)

Inventory write-off

7,115

251

Settlement of interest rate swap derivatives

7,657

Other

(204

)

(1,345

)

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

(35,190

)

(6,745

)

Net cash provided by operating activities

10,365

28,391

CASH FLOWS USED FOR INVESTING ACTIVITIES:

Purchase of property and equipment

(26,553

)

(29,460

)

Proceeds from sale-leaseback

10,025

3,000

Other investing activities

82

23

Net cash used for investing activities

(16,446

)

(26,437

)

CASH FLOWS FROM/(USED FOR) FINANCING ACTIVITIES:

Proceeds from the issuance of debt

891,698

28,000

Repayment of long-term debt and lease obligations

(852,144

)

(28,697

)

Payment of financing costs

(5,000

)

Proceeds from structured payables

44,757

74,180

Payments on structured payables

(70,480

)

(58,361

)

Payment of contingent consideration related to a business combination

(900

)

Capital contribution by shareholders

240

Payments of issuance costs in connection with IPO

(12,458

)

Proceeds from sale of noncontrolling interest in subsidiary

52

Distribution to shareholders

(5,884

)

(5,855

)

Payments for repurchase and retirement of common stock

(1,466

)

Distribution to noncontrolling interest

(1,139

)

(1,362

)

Net cash provided by/(used for) financing activities

1,808

(6,627

)

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

(1,373

)

(2,228

)

Net decrease in cash, cash equivalents and restricted cash

(5,646

)

(6,901

)

Cash, cash equivalents and restricted cash at beginning of period

35,730

39,192

Cash, cash equivalents and restricted cash at end of period

$

30,084

$

32,291

Krispy Kreme, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

Quarter Ended

(in thousands)

April 2,
2023

April 3,
2022

Net income

$

1,644

$

6,458

Interest expense, net

11,988

7,351

Income tax expense

317

3,800

Depreciation and amortization expense

27,939

27,841

Share-based compensation.

5,545

5,041

Employer payroll taxes related to share-based compensation

25

55

Other non-operating expense/(income), net (1)

999

(321

)

Strategic initiatives (2)

13,469

Acquisition and integration expenses (3)

91

517

New market penetration expenses (4)

94

110

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

(679

)

230

Restructuring and severance expenses (6)

580

Gain on sale-leaseback

(9,661

)

(2,374

)

Other (7)

2,577

199

Adjusted EBITDA

$

54,928

$

48,907

Quarter Ended

(in thousands)

April 2,
2023

April 3,
2022

Segment Adjusted EBITDA:

U.S

$

38,535

$

32,407

International

13,567

17,244

Market Development

16,966

12,488

Corporate

(14,140

)

(13,232

)

Total Adjusted EBITDA

$

54,928

$

48,907

Quarter Ended

(in thousands, except per share amounts)

April 2,
2023

April 3,
2022

Net income

$

1,644

$

6,458

Share-based compensation

5,545

5,041

Employer payroll taxes related to share-based compensation

25

55

Other non-operating expense/(income), net (1)

999

(321

)

Strategic initiatives (2)

13,469

Acquisition and integration expenses(3)

91

517

New market penetration expenses (4)

94

110

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

(679

)

230

Restructuring and severance expenses (6)

580

Gain on sale-leaseback

(9,661

)

(2,374

)

Other(7)

2,577

199

Amortization of acquisition related intangibles (8)

7,273

7,246

Loss on extinguishment of 2019 facility (9)

472

Tax impact of adjustments (10)

(4,656

)

(1,078

)

Tax specific adjustments (11)

(557

)

Net income attributable to noncontrolling interest

(1,945

)

(2,456

)

Adjustment to adjusted net income attributable to common shareholders

(374

)

Adjusted net income attributable to common shareholders - Basic

$

15,271

$

13,253

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

(10

)

(40

)

Adjusted net income attributable to common shareholders - Diluted

$

15,261

$

13,213

Basic weighted average common shares outstanding

168,141

167,261

Dilutive effect of outstanding common stock options and RSUs

1,850

2,224

Diluted weighted average common shares outstanding

169,991

169,485

Adjusted net income per share attributable to common shareholders:

Basic

$

0.09

$

0.08

Diluted

$

0.09

$

0.08

(1)

Primarily foreign translation gains and losses in each period.

(2)

The quarter ended April 2, 2023 consists primarily of costs associated with the decision to exit the Branded Sweet Treats business, including property, plant and equipment impairments, inventory write-offs, employee severance, and other related costs.

(3)

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

(4)

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

(5)

Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment.

(6)

The quarter ended April 2, 2023 consists primarily of costs associated with restructuring of the global and U.S. executive teams.

(7)

The quarters ended April 2, 2023 and April 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 previous business acquisitions.

(8)

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

(9)

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

(10)

Tax impact of adjustments calculated applying the applicable statutory rates. The quarters ended April 2, 2023 and April 3, 2022 also include the impact of disallowed executive compensation expense.

(11)

The quarter ended April 2, 2023 consists of a discrete tax benefit unrelated to ongoing operations.

Krispy Kreme, Inc.

Segment Reporting (Unaudited)

(in thousands except percentages or otherwise stated)

Quarter Ended

April 2, 2023

April 3, 2022

Net revenues:

U.S.

$

281,344

$

247,919

International

90,288

87,201

Market Development

47,318

37,412

Total net revenues

$

418,950

$

372,532

Q1 2023 Organic Revenue

(in thousands, except percentages)

U.S.

International

Market Development

Total Company

Total net revenues in first quarter of fiscal 2023

$

281,344

$

90,288

$

47,318

$

418,950

Total net revenues in first quarter of fiscal 2022

247,919

87,201

37,412

372,532

Total Net Revenue Growth

33,425

3,087

9,906

46,418

Total Net Revenue Growth %

13.5

%

3.5

%

26.5

%

12.5

%

Less: Impact of shop optimization closures

(3,187

)

(3,187

)

Adjusted net revenues in first quarter of fiscal 2022

244,732

87,201

37,412

369,345

Adjusted Net Revenue Growth

36,612

3,087

9,906

49,605

Impact of acquisitions

(3,080

)

893

(2,187

)

Impact of foreign currency translation

3,308

2,471

5,779

Organic Revenue Growth

$

33,532

$

6,395

$

13,270

$

53,197

Organic Revenue Growth %

13.7

%

7.3

%

35.5

%

14.4

%

Q1 2022 Organic Revenue

(in thousands, except percentages)

U.S.

International

Market Development

Total Company

Total net revenues in first quarter of fiscal 2022

$

247,919

$

87,201

$

37,412

$

372,532

Total net revenues in first quarter of fiscal 2021

222,470

66,506

32,833

321,809

Total Net Revenues Growth

25,449

20,695

4,579

50,723

Total Net Revenues Growth %

11.4

%

31.1

%

13.9

%

15.8

%

Impact of acquisitions

(3,926

)

(2,618

)

(6,544

)

Impact of foreign currency translation

2,935

1,161

4,096

Organic Revenue Growth

$

21,523

$

23,630

$

3,122

$

48,275

Organic Revenue Growth %

9.7

%

35.5

%

9.5

%

15.0

%

Sales per Hub

Trailing Four Quarters Ended

Fiscal Year Ended

(in thousands, unless otherwise stated)

April 2, 2023

January 1, 2023

January 2, 2022

U.S.:

Revenues

$

1,043,675

$

1,010,250

$

923,129

Non-Fresh Revenues (1)

(34,112

)

(38,380

)

(37,311

)

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

(414,432

)

(404,430

)

(414,899

)

Sales from Hubs with Spokes

595,131

567,440

470,919

Sales per Hub (millions)

4.6

4.5

4.0

International:

Sales from Hubs with Spokes (3)

$

369,003

$

365,916

$

332,995

Sales per Hub (millions) (4)

9.8

9.8

8.4

(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

April 2, 2023

April 3, 2022

January 1, 2023

U.S.: (2)

Hot Light Theater Shops

228

240

234

Fresh Shops

67

61

62

Cookie Shops

239

217

231

Carts, Food Trucks, and Other (3)

2

DFD Doors (5)

6,081

5,411

(4)

5,729

Total

6,615

5,931

6,256

International:

Hot Light Theater Shops

34

32

37

Fresh Shops

395

376

388

Carts, Food Trucks, and Other (3)

16

1

14

DFD Doors

3,143

2,794

(4)

3,032

Total

3,588

3,203

3,471

Market Development: (4)

Hot Light Theater Shops

115

113

115

Fresh Shops

898

810

873

Carts, Food Trucks, and Other (3)

28

31

27

DFD Doors

1,166

939

1,095

Total

2,207

1,893

2,110

Total Global Points of Access (as defined)

12,410

11,027

11,837

Total Hot Light Theater Shops

377

385

386

Total Fresh Shops

1,360

1,247

1,323

Total Cookie Shops

239

217

231

Total Shops

1,976

1,849

1,940

Total Carts, Food Trucks, and Other

44

34

41

Total DFD Doors

10,390

9,144

9,856

Total Global Points of Access (as defined)

12,410

11,027

11,837

(1)

Excludes the recently exited Branded Sweet Treats distribution points.

(2)

Includes Points of Access that were acquired from a franchisee in the U.S. in the third quarter of fiscal 2022. These Points of Access were previously included in the Market Development segment prior to the acquisition date.

(3)

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

(4)

Includes locations in Japan and Canada, which are Company-owned. All remaining Points of Access in the Market Development segment relate to our franchise business.

(5)

Includes over 160 McDonald’s test shops located in Louisville and Lexington, Kentucky and the surrounding area as of April 2, 2023.

Krispy Kreme, Inc.

Global Hubs (Unaudited)

Hubs

Quarter Ended

Fiscal Year Ended

April 2, 2023

April 3, 2022

January 1, 2023

U.S.:

Hot Light Theater Shops (1)

221

237

228

Doughnut Factories

4

4

4

Total

225

241

232

Hubs with Spokes

137

122

133

Hubs without Spokes

88

119

99

International:

Hot Light Theater Shops (1)

28

26

28

Doughnut Factories

11

11

11

Total

39

37

39

Hubs with Spokes

39

37

39

Market Development:

Hot Light Theater Shops (1)

109

110

110

Doughnut Factories

27

27

27

Total

136

137

137

Total Hubs

400

415

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)

April 2, 2023

January 1, 2023

Current portion of long-term debt

$

40,216

$

40,034

Long-term debt, less current portion

776,975

739,052

Total long-term debt, including debt issuance costs

817,191

779,086

Add back: Debt issuance costs

5,158

2,247

Total long-term debt, excluding debt issuance costs

822,349

781,333

Less: Cash and cash equivalents

(29,675

)

(35,371

)

Net debt

$

792,674

$

745,962

Adjusted EBITDA - trailing four quarters

196,750

190,729

Net leverage ratio

4.0 x

3.9 x

View source version on businesswire.com: https://www.businesswire.com/news/home/20230510005973/en/

Contacts

Investor Relations
Rob Ballew, VP of Investor Relations
ir@krispykreme.com

Financial Media
Edelman Smithfield for Krispy Kreme, Inc.
Allie McLarty & Ashley Firlan, KrispyKremeIR@edelman.com