Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Krispy Kreme Reports First Quarter Results Showcasing a Robust Start to 2022 By: Krispy Kreme, Inc. via Business Wire May 11, 2022 at 06:40 AM EDT First quarter net revenue grew 15.8% with organic revenue growth of 15.0% compared to Q1 2021 GAAP net income of $6.5 million and Adjusted EBITDA of $48.9 million Company re-affirms 2022 guidance Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme” or the “Company”) today reported strong financial results for the first quarter ended April 3, 2022 with net revenue growing 15.8% year-over-year to $372.5 million while organic revenue grew 15.0% to $370.1 million with high growth across all three segments. Sales per Hub in the U.S. and Canada increased by 19.4% year over year to $4.3 million while International Sales per Hub leapt 49.2% to $9.7 million, driven by a 21% increase in global points of access and a significant increase in U.S. and Canada weekly sales per Delivered Fresh Daily (“DFD”) door. GAAP Net Income for the quarter was $6.5 million compared to a loss of $0.4 million a year ago while GAAP diluted Earnings Per Share for the quarter was $0.02 compared to a loss of $0.03 last year. Adjusted diluted Earnings Per Share was $0.08 for the quarter, compared to $0.11 last year primarily due to share dilution from an increased share count following the IPO. Adjusted EBITDA grew 5.4% in the quarter to $48.9 million led by a 90 basis point improvement in U.S. and Canada margins. Growth was driven by the performance and expansion of Krispy Kreme’s Omni-channel model, and strong performances across all three business segments. Global Points of Access, which reflect all locations where fresh doughnuts and cookies can be purchased, increased by 600 during the quarter, providing customers access to Krispy Kreme in more than 11,000 locations around the world. Commenting on the Company’s performance, President and CEO Mike Tattersfield stated, “Our results in the first quarter continue to demonstrate the benefits of our omni-channel model and global expansion strategy, which allow 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 limited time offerings such as our Twix and Rolo Doughnuts resonated strongly with consumers, highlighting the opportunities for premiumization and the gifting and sharing power of the brand.” Mike continued, “We continue to be well-positioned to deliver another year of double-digit revenue growth in 2022 despite macro-challenges. Our performance will continue to be driven by the expansion of our omni-channel model as we significantly expand our points of access and continue our transformation to the more profitable and capital efficient Hub and Spoke model in the U.S. and Canada. In addition to Switzerland and Chile, we are excited to announce plans to open in Jordan and Costa Rica this year with several other new countries in the pipeline as we work to expand our global footprint.” Financial Highlights $ in millions, except per share data Q1 2022 vs Q1 2021 Net Revenue $372.5 +15.8% Organic Revenue(1) $370.1 +15.0% GAAP Net Income/(Loss) $6.5 +$6.8 Adjusted Net Income(1) $16.1 -8.8% Operating Income $17.3 +26.4% Operating Income Margin 4.6% +30 bps Adjusted EBITDA(1) $48.9 +5.4% Adjusted EBITDA Margin(1) 13.1% -130 bps GAAP Diluted Income/(Loss) Per Share $0.02 +$0.05 Adjusted Diluted EPS(1,2) $0.08 -$0.03 Net Debt $689.2 -39.9% Notes: (1) Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures. (2) First Quarter 2022 Adjusted Diluted EPS was impacted by $(0.02) from share count dilution from the IPO Key Operating Metrics $ in millions, except access points Q1 2022 vs Q1 2021 vs Q4 2021 Global Points of Access 11,027 +20.9% +5.8% Sales per Hub (U.S. and Canada) TTM $4.3 +19.4% +7.5% Sales per Hub (International) TTM $9.7 +49.2% +6.6% Ecommerce as a Percent of Retail Sales 17.4% -210 bps +20 bps First Quarter 2022 Consolidated Results Krispy Kreme’s first quarter 2022 results reflect strong growth compared to the prior year. Net revenue grew 15.8% in the first quarter to $372.5 million and total company organic revenue grew 15.0% in the quarter. Organic revenue growth was driven by the International segment with a strong performance in all three business units, as well as an impressive DFD performance in the U.S. and Canada business. GAAP Net Income for the quarter was $6.5 million, compared to a GAAP Net Loss of $0.4 million in 2021. Adjusted EBITDA in the quarter grew 5.4% to $48.9 million. Operating margins grew 30 basis points to 4.6% while Adjusted EBITDA margin declined 130 basis points to 13.1% from the same quarter in 2021, driven by a favorable impact of 1.1% from a business interruption reimbursement a year ago and public company costs. Adjusted Net Income declined 8.8% to $16.1 million in the quarter. GAAP Diluted EPS in the quarter was $0.02 compared to a net loss of $0.03 in the same quarter last year with Adjusted Diluted EPS decreasing to $0.08 from $0.11 in the first quarter of 2021, largely as a result of an increased share count following the IPO. Weighted Diluted average shares outstanding for the first quarter of 2022 were 169.5 million, compared to 125.0 million in the first quarter of 2021 primarily as a result of the IPO. First Quarter 2022 Market Segment Results U.S. and Canada: In the U.S. and Canada segment net revenue grew 13.8% to $253.1 million, driven by the continued execution of our omni-channel strategy. Organic revenue increased 9.7% driven by increased points of access and strong performance in DFD, with weekly average sales per door growing by 26.9% compared to the prior year. Points of access increased 218 in quarter to 5,941, which represents a 14.3% increase in points of access from a year ago. U.S. and Canada Adjusted EBITDA increased 21.9% to $33.6 million with margin expansion of 90 basis points to 13.3% driven primarily by efficiencies from increased Sales per Hub, with pricing actions over the last year offsetting inflationary pressures. International: In the International segment, net revenue grew 31.1% to $87.2 million, with organic growth of 35.5%. Organic growth in the quarter was driven by successful limited time offerings, expansion of DFD and an increase in average sales per door. Growth was strong across all of our International segment business units including the UK and Ireland, Mexico, Australia and New Zealand. Points of access increased by 312 to 3,203. Foreign currency translation had a negative 4.4% impact on our International net revenue growth during the quarter. International Adjusted EBITDA increased by 12.4% over the prior year to $17.2 million, driven primarily by revenue growth from points of access expansion and efficiencies from our Hub and Spoke model, which led to a record $9.7 million Sales per Hub over the trailing twelve months. International Adjusted EBITDA margin was 19.8% for the quarter, compared to 23.1% a year ago when international Adjusted EBITDA margin was positively impacted by 5.2% from a business interruption reimbursement from COVID impact in 2020. Excluding that impact, International Adjusted EBITDA margins expanded by 180 basis points. Market Development: In the Market Development segment, net revenue declined 1.9% to $32.2 million driven by franchise acquisitions and a foreign currency translation impact of 3.5%. Organic revenue growth was 9.5% compared to the same period in 2021 driven by a strong performance in our franchise markets and in our equity-owned Japan market where we are implementing our omnichannel model with the expansion of eCommerce and the launch of delivered fresh daily. Market Development Adjusted EBITDA grew 3.6% to $11.3 million, with strong increases in Sales per Hub partially offset by domestic franchise acquisitions and foreign currency translation impacts. Adjusted EBITDA margins expanded 190 basis points to 35.0%. Balance Sheet & Capital Expenditures During the first quarter of 2022, the company invested $29.5 million in capital expenditures, primarily for growth including hot light theatres, cookie shops and DFD Doors. As of April 3, 2022, the Company had $31.6 million of cash and cash equivalents, $696.0 million of bank debt and $24.8 million of other debt-like items, for a total net debt of $689.2 million. Using a trailing four quarters Adjusted EBITDA of $190.5 million, current net leverage was 3.6x, substantially below pre-IPO levels. 2022 Financial Outlook Krispy Kreme re-affirms its previous guidance for the full year 2022: Net Revenue of $1.53 billion to $1.56 billion (+11% to +13%) Organic Revenue growth of 10% to 12% Adjusted EBITDA of $210 million to $218 million (+12% to +16%) Adjusted Net Income to Krispy Kreme shareholders, Diluted, of $65 million to $69 million (+18% to +24%) Adjusted Diluted EPS of $0.38 to $0.41 Approximately 170 million weighted average Diluted shares outstanding, compared to approximately 150 million in 2021 primarily driven by increased share count from the IPO Income Tax rate between 23% and 25% Capital Expenditures between $115 million to $120 million Net Leverage under 3.0x Krispy Kreme also reiterated the following long-term outlook: Organic Revenue growth of 9% to 11% Adjusted EBITDA growth of 12% to 14% Adjusted Net Income growth of 18% to 22% Net leverage of approximately 2.0x Definitions The following definitions apply to terms used throughout this press release: Global Points of Access: Reflects all locations at which fresh doughnuts or cookies can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors and Cookie Shops, at both Company-owned and franchise locations as of the end of the respective reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments. Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the respective reporting period. Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of the five most recent quarters. Fresh Revenues from Hubs with Spokes: Fresh Revenues include product sales generated from our Doughnut Shop business (including ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business. Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from those Hubs currently producing product for other shops, Carts and Food Trucks, and/or DFD Doors, but excluding Fresh Revenues derived from those Hubs not currently producing product for other shops, Carts and Food Trucks, and/or DFD Doors. Total Net Leverage Ratio: Calculated using Net Debt (including both bank debt and financing leases as part of debt) divided by Adjusted EBITDA. Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment. Conference Call Krispy Kreme will host a public conference call at 8:30 AM Eastern Time today to discuss its results for the first quarter of 2022. The conference call can be accessed by dialing (877) 312-1907, or (470) 495-9529 for international participants, and entering the conference ID 9178504. 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. 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 “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in the Prospectus, dated June 30, 2021, 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 3, 2022 (13 weeks) April 4, 2021 (13 weeks) Net revenues Product sales $ 364,052 $ 313,585 Royalties and other revenues 8,480 8,224 Total net revenues 372,532 321,809 Product and distribution costs 96,111 79,997 Operating expenses 168,726 147,541 Selling, general and administrative expense 53,711 49,537 Marketing expenses 10,159 9,507 Pre-opening costs 1,329 1,391 Other income, net (2,633 ) (3,245 ) Depreciation and amortization expense 27,841 23,401 Operating income 17,288 13,680 Interest expense, net 7,351 8,249 Interest expense — related party — 5,566 Other non-operating income, net (321 ) (442 ) Income before income taxes 10,258 307 Income tax expense 3,800 685 Net income/(loss) 6,458 (378 ) Net income attributable to noncontrolling interest 2,456 2,683 Net income/(loss) attributable to Krispy Kreme, Inc. $ 4,002 $ (3,061 ) Net income/(loss) per share: Common stock — Basic $ 0.02 $ (0.03 ) Common stock — Diluted $ 0.02 $ (0.03 ) Weighted average shares outstanding: Basic 167,261 124,987 Diluted 169,485 124,987 Krispy Kreme, Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amounts) As of (Unaudited) April 3, 2022 January 2, 2022 ASSETS Current assets: Cash and cash equivalents $ 31,615 $ 38,562 Restricted cash 676 630 Accounts receivable, net 44,705 47,491 Inventories 41,045 34,851 Taxes receivable 11,723 14,662 Prepaid expense and other current assets 19,894 20,701 Total current assets 149,658 156,897 Property and equipment, net 442,509 438,918 Goodwill 1,105,123 1,105,322 Other intangible assets, net 985,544 992,520 Operating lease right of use asset, net 432,374 435,168 Other assets 18,046 16,429 Total assets $ 3,133,254 $ 3,145,254 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ 36,667 $ 36,583 Current operating lease liabilities 49,474 50,359 Accounts payable 171,005 182,104 Accrued liabilities 105,727 140,750 Structured payables 132,374 116,361 Total current liabilities 495,247 526,157 Long-term debt, less current portion 680,693 680,307 Noncurrent operating lease liabilities 413,765 415,208 Deferred income taxes, net 149,605 145,418 Other long-term obligations and deferred credits 38,552 42,509 Total liabilities 1,777,862 1,809,599 Commitments and contingencies Shareholders’ equity: Common stock, $0.01 par value; 300,000 shares authorized as of both April 3, 2022 and January 2, 2022; 167,297 and 167,251 shares issued and outstanding as of April 3, 2022 and January 2, 2022, respectively 1,673 1,673 Additional paid-in capital 1,419,831 1,415,185 Shareholder note receivable (4,190 ) (4,382 ) Accumulated other comprehensive income/(loss), net of income tax 13,090 (2,478 ) Retained deficit (180,261 ) (178,409 ) Total shareholders’ equity attributable to Krispy Kreme, Inc. 1,250,143 1,231,589 Noncontrolling interest 105,249 104,066 Total shareholders’ equity 1,355,392 1,335,655 Total liabilities and shareholders’ equity $ 3,133,254 $ 3,145,254 Krispy Kreme, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Quarter Ended April 3, 2022 (13 weeks) April 4, 2021 (13 weeks) CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 6,458 $ (378 ) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization expense 27,841 23,401 Deferred income taxes (822 ) 593 Impairment and lease termination charges 218 1,151 Loss on disposal of property and equipment 24 116 Gain on sale-leaseback (2,374 ) — Share-based compensation 5,041 2,368 Change in accounts and notes receivable allowances (156 ) 180 Inventory write-off 251 870 Other (1,345 ) (2,798 ) Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments (6,745 ) 15,138 Net cash provided by operating activities 28,391 40,641 CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of property and equipment (29,460 ) (30,297 ) Proceeds from disposals of assets 8 43 Proceeds from sale-leaseback 3,000 — Acquisition of shops and franchise rights from franchisees, net of cash acquired — (33,568 ) Principal payments received from loans to franchisees 15 — Maturities of held-to-maturity debt securities — 169 Net cash used for investing activities (26,437 ) (63,653 ) CASH FLOWS (USED FOR)/FROM FINANCING ACTIVITIES: Proceeds from the issuance of debt 28,000 40,000 Repayment of long-term debt and lease obligations (28,697 ) (14,629 ) Proceeds from structured payables 74,180 65,550 Payments on structured payables (58,361 ) (64,418 ) 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 12,187 Distribution to shareholders (5,855 ) — Payments for repurchase and retirement of common stock (1,466 ) — Distribution to noncontrolling interest (1,362 ) (1,876 ) Net cash (used for)/provided by financing activities (6,627 ) 36,814 Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,228 ) (507 ) Net (decrease)/increase in cash, cash equivalents and restricted cash (6,901 ) 13,295 Cash, cash equivalents and restricted cash at beginning of period 39,192 37,483 Cash, cash equivalents and restricted cash at end of period $ 32,291 $ 50,778 Supplemental schedule of non-cash investing and financing activities: Increase in accrual for property and equipment $ 5,489 $ 1,123 Stock issuance under shareholder notes 191 446 Accrual for distribution to shareholders (5,855 ) — Reconciliation of cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 31,615 $ 50,650 Restricted cash 676 128 Total cash, cash equivalents and restricted cash $ 32,291 $ 50,778 Krispy Kreme, Inc. Reconciliation of Non-GAAP Financial Measures (Unaudited) (in thousands, except per share amounts) Quarter Ended (in thousands) April 3, 2022 April 4, 2021 Net income/(loss) $ 6,458 $ (378 ) Interest expense, net 7,351 8,249 Interest expense — related party(1) — 5,566 Income tax expense 3,800 685 Depreciation and amortization expense 27,841 23,401 Share-based compensation 5,041 2,368 Employer payroll taxes related to share-based compensation 55 — Other non-operating income, net(2) (321 ) (442 ) Acquisition and integration expenses(3) 517 2,152 Shop closure expenses(4) 230 — IPO-related expenses(5) — 3,476 Gain on sale-leaseback (2,374 ) — Other(6) 309 1,326 Adjusted EBITDA $ 48,907 $ 46,403 Quarter Ended (in thousands) April 3, 2022 April 4, 2021 Segment Adjusted EBITDA: U.S. and Canada $ 33,608 $ 27,563 International 17,244 15,348 Market Development 11,287 10,891 Corporate (13,232 ) (7,399 ) Total Adjusted EBITDA $ 48,907 $ 46,403 Quarter Ended (in thousands, except per share amounts) April 3, 2022 April 4, 2021 Net income/(loss) $ 6,458 $ (378 ) Interest expense — related party(1) — 5,566 Share-based compensation 5,041 2,368 Employer payroll taxes related to share-based compensation 55 — Other non-operating income, net(2) (321 ) (442 ) Acquisition and integration expenses(3) 517 2,152 Shop closure expenses(4) 230 — IPO-related expenses(5) — 3,476 Gain on sale-leaseback (2,374 ) — Other(6) 309 1,326 Amortization of acquisition related intangibles(7) 7,246 7,449 Tax impact of adjustments(8) (1,078 ) (4,022 ) Tax specific adjustments(9) — 131 Adjusted net income $ 16,083 $ 17,626 Net income attributable to noncontrolling interest (2,456 ) (2,683 ) Adjusted net income attributable to Krispy Kreme, Inc. $ 13,627 $ 14,943 Adjustment to adjusted net income attributable to common shareholders (374 ) (141 ) Adjusted net income attributable to common shareholders - Basic $ 13,253 $ 14,802 Additional income attributed to noncontrolling interest due to subsidiary potential common shares (40 ) (85 ) Adjusted net income attributable to common shareholders - Diluted $ 13,213 $ 14,717 Basic weighted average common shares outstanding 167,261 124,987 Dilutive effect of outstanding common stock options and RSUs 2,224 3,262 Diluted weighted average common shares outstanding 169,485 128,249 Adjusted net income per share attributable to common shareholders: Basic $ 0.08 $ 0.12 Diluted $ 0.08 $ 0.11 Consists of interest expense related to the Related Party Notes which were paid off in full during the quarter ended July 4, 2021. Primarily foreign translation gains and losses in each period. Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition and integration-related activities for the applicable period. Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company’s IPO. The quarters ended April 3, 2022 and April 4, 2021 consist primarily of legal expenses incurred outside the ordinary course of business. Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the Condensed Consolidated Statements of Operations. Tax impact of adjustments calculated applying the applicable statutory rates. The quarter ended April 3, 2022 also includes the impact of disallowed executive compensation expense. The quarter ended April 4, 2021 consists primarily of the effect of tax law changes on existing temporary differences. Krispy Kreme, Inc. Segment Reporting (Unaudited) (in thousands except percentages) Quarter Ended April 3, 2022 April 4, 2021 Net revenues: U.S. and Canada $ 253,127 $ 222,470 International 87,201 66,506 Market Development 32,204 32,833 Total net revenues $ 372,532 $ 321,809 Q1 2022 Organic Revenue (in thousands except percentages) U.S. and Canada International Market Development Total Company Total net revenues in first quarter of fiscal 2022 $ 253,127 $ 87,201 $ 32,204 $ 372,532 Total net revenues in first quarter of fiscal 2021 222,470 66,506 32,833 321,809 Total Net Revenues Growth 30,657 20,695 (629) 50,723 Total Net Revenues Growth % 13.8 % 31.1 % -1.9 % 15.8 % Impact of acquisitions (9,134) — 2,590 (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 % Q1 2021 Organic Revenue (in thousands except percentages) U.S. and Canada International Market Development Total Company Total net revenues in first quarter of fiscal 2021 $ 222,470 $ 66,506 $ 32,833 $ 321,809 Total net revenues in first quarter of fiscal 2020 170,450 60,659 30,107 261,216 Total Net Revenues Growth 52,020 5,847 2,726 60,593 Total Net Revenues Growth % 30.5 % 9.6 % 9.1 % 23.2 % Impact of acquisitions (31,705) — (2,139) (33,844) Impact of foreign currency translation — (4,963) — (4,963) Organic Revenue Growth $ 20,315 $ 884 $ 587 $ 21,786 Organic Revenue Growth % 11.9 % 1.5 % 1.9 % 8.3 % Sales per Hub Trailing Four Quarters Ended Fiscal Year Ended (in thousands, unless otherwise stated) April 3, 2022 January 2, 2022 January 3, 2021 U.S. and Canada: Revenues $ 959,070 $ 928,413 $ 782,717 Non-Fresh Revenues (1) (40,264 ) (37,311 ) (128,619 ) Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2) (405,551 ) (415,768 ) (323,079 ) Sales from Hubs with Spokes 513,255 475,334 331,019 Sales per Hub (millions) 4.3 4.0 3.5 International: Sales from Hubs with Spokes (3) $ 353,690 $ 332,995 $ 230,185 Sales per Hub (millions) 9.7 9.1 6.4 Includes legacy wholesale business revenues and Branded Sweet Treat Line revenues. Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes. Total International net revenues is equal to sales from Hubs with Spokes for that business segment. Krispy Kreme, Inc. Global Points of Access (Unaudited) Global Points of Access (1) Quarter Ended Fiscal Year Ended April 3, 2022 April 4, 2021 January 2, 2022 U.S. and Canada: (2) Hot Light Theater Shops 244 236 241 Fresh Shops 67 59 66 Cookie Shops 217 191 210 Carts, Food Trucks, and Other (3) 2 — 2 DFD Doors 5,411 4,712 5,204 Total 5,941 5,198 5,723 International: Hot Light Theater Shops 32 29 32 Fresh Shops 376 361 370 Carts, Food Trucks, and Other (3) 1 — 1 DFD Doors 2,794 2,185 2,488 Total 3,203 2,575 2,891 Market Development: (4) Hot Light Theater Shops 109 111 109 Fresh Shops 804 730 782 Carts, Food Trucks, and Other (3) 31 30 31 DFD Doors 939 474 891 Total 1,883 1,345 1,813 Total Global Points of Access (as defined) 11,027 9,118 10,427 Total Hot Light Theater Shops 385 376 382 Total Fresh Shops 1,247 1,150 1,218 Total Cookie Shops 217 191 210 Total Shops 1,849 1,717 1,810 Total Carts, Food Trucks, and Other 34 30 34 Total DFD Doors 9,144 7,371 8,583 Total Global Points of Access (as defined) 11,027 9,118 10,427 Excludes Branded Sweet Treat Line distribution points. Includes points of access that were acquired from a franchisee in Canada during the fourth quarter of fiscal 2021. These points of access were previously included in the Market Development segment. 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. They are primarily found in international locations, in airports, train stations, etc. Comparative data has been included in all periods presented above. Includes locations in Japan, which were acquired in the fourth quarter of fiscal 2020 and are now Company-owned. All remaining points of access in the Market Development segment relate to our franchise business. Krispy Kreme, Inc. Global Hubs (Unaudited) Hubs Quarter Ended Fiscal Year Ended April 3, 2022 April 4, 2021 January 2, 2022 U.S. and Canada: Hot Light Theater Shops (1) 241 232 238 Doughnut Factories 4 5 4 Total 245 237 242 Hubs with Spokes 125 113 126 International: Hot Light Theater Shops (1) 26 27 25 Doughnut Factories 11 11 11 Total 37 38 36 Hubs with Spokes 37 38 36 Market Development: Hot Light Theater Shops (1) 106 110 106 Doughnut Factories 27 25 27 Total 133 135 133 Total Hubs 415 410 411 Includes only Hot Light Theater Shops and excludes Mini Theaters. A Mini Theater is a Spoke location that produces hot some fresh doughnuts for itself and also receives doughnuts from another producing location. Krispy Kreme, Inc. Net Debt and Leverage (Unaudited) (in thousands) April 3, 2022 January 2, 2022 Current portion of long-term debt $ 36,667 $ 36,583 Long-term debt, less current portion 680,693 680,307 Total long-term debt, including debt issuance costs 717,360 716,890 Add back: Debt issuance costs 3,436 3,833 Total long-term debt, excluding debt issuance costs 720,796 720,723 Less: Cash and cash equivalents (31,615 ) (38,562 ) Net debt $ 689,181 $ 682,161 Adjusted EBITDA - trailing four quarters 190,449 187,945 Net leverage ratio 3.6 x 3.6 x View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006147/en/Contacts Investor Relations Rob Ballew, VP of Investor Relations rballew@krispykreme.com Financial Media Edelman for Krispy Kreme, Inc. Allie McLarty & Ashley Firlan, KrispyKremeIR@edelman.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Krispy Kreme Reports First Quarter Results Showcasing a Robust Start to 2022 By: Krispy Kreme, Inc. via Business Wire May 11, 2022 at 06:40 AM EDT First quarter net revenue grew 15.8% with organic revenue growth of 15.0% compared to Q1 2021 GAAP net income of $6.5 million and Adjusted EBITDA of $48.9 million Company re-affirms 2022 guidance Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme” or the “Company”) today reported strong financial results for the first quarter ended April 3, 2022 with net revenue growing 15.8% year-over-year to $372.5 million while organic revenue grew 15.0% to $370.1 million with high growth across all three segments. Sales per Hub in the U.S. and Canada increased by 19.4% year over year to $4.3 million while International Sales per Hub leapt 49.2% to $9.7 million, driven by a 21% increase in global points of access and a significant increase in U.S. and Canada weekly sales per Delivered Fresh Daily (“DFD”) door. GAAP Net Income for the quarter was $6.5 million compared to a loss of $0.4 million a year ago while GAAP diluted Earnings Per Share for the quarter was $0.02 compared to a loss of $0.03 last year. Adjusted diluted Earnings Per Share was $0.08 for the quarter, compared to $0.11 last year primarily due to share dilution from an increased share count following the IPO. Adjusted EBITDA grew 5.4% in the quarter to $48.9 million led by a 90 basis point improvement in U.S. and Canada margins. Growth was driven by the performance and expansion of Krispy Kreme’s Omni-channel model, and strong performances across all three business segments. Global Points of Access, which reflect all locations where fresh doughnuts and cookies can be purchased, increased by 600 during the quarter, providing customers access to Krispy Kreme in more than 11,000 locations around the world. Commenting on the Company’s performance, President and CEO Mike Tattersfield stated, “Our results in the first quarter continue to demonstrate the benefits of our omni-channel model and global expansion strategy, which allow 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 limited time offerings such as our Twix and Rolo Doughnuts resonated strongly with consumers, highlighting the opportunities for premiumization and the gifting and sharing power of the brand.” Mike continued, “We continue to be well-positioned to deliver another year of double-digit revenue growth in 2022 despite macro-challenges. Our performance will continue to be driven by the expansion of our omni-channel model as we significantly expand our points of access and continue our transformation to the more profitable and capital efficient Hub and Spoke model in the U.S. and Canada. In addition to Switzerland and Chile, we are excited to announce plans to open in Jordan and Costa Rica this year with several other new countries in the pipeline as we work to expand our global footprint.” Financial Highlights $ in millions, except per share data Q1 2022 vs Q1 2021 Net Revenue $372.5 +15.8% Organic Revenue(1) $370.1 +15.0% GAAP Net Income/(Loss) $6.5 +$6.8 Adjusted Net Income(1) $16.1 -8.8% Operating Income $17.3 +26.4% Operating Income Margin 4.6% +30 bps Adjusted EBITDA(1) $48.9 +5.4% Adjusted EBITDA Margin(1) 13.1% -130 bps GAAP Diluted Income/(Loss) Per Share $0.02 +$0.05 Adjusted Diluted EPS(1,2) $0.08 -$0.03 Net Debt $689.2 -39.9% Notes: (1) Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures. (2) First Quarter 2022 Adjusted Diluted EPS was impacted by $(0.02) from share count dilution from the IPO Key Operating Metrics $ in millions, except access points Q1 2022 vs Q1 2021 vs Q4 2021 Global Points of Access 11,027 +20.9% +5.8% Sales per Hub (U.S. and Canada) TTM $4.3 +19.4% +7.5% Sales per Hub (International) TTM $9.7 +49.2% +6.6% Ecommerce as a Percent of Retail Sales 17.4% -210 bps +20 bps First Quarter 2022 Consolidated Results Krispy Kreme’s first quarter 2022 results reflect strong growth compared to the prior year. Net revenue grew 15.8% in the first quarter to $372.5 million and total company organic revenue grew 15.0% in the quarter. Organic revenue growth was driven by the International segment with a strong performance in all three business units, as well as an impressive DFD performance in the U.S. and Canada business. GAAP Net Income for the quarter was $6.5 million, compared to a GAAP Net Loss of $0.4 million in 2021. Adjusted EBITDA in the quarter grew 5.4% to $48.9 million. Operating margins grew 30 basis points to 4.6% while Adjusted EBITDA margin declined 130 basis points to 13.1% from the same quarter in 2021, driven by a favorable impact of 1.1% from a business interruption reimbursement a year ago and public company costs. Adjusted Net Income declined 8.8% to $16.1 million in the quarter. GAAP Diluted EPS in the quarter was $0.02 compared to a net loss of $0.03 in the same quarter last year with Adjusted Diluted EPS decreasing to $0.08 from $0.11 in the first quarter of 2021, largely as a result of an increased share count following the IPO. Weighted Diluted average shares outstanding for the first quarter of 2022 were 169.5 million, compared to 125.0 million in the first quarter of 2021 primarily as a result of the IPO. First Quarter 2022 Market Segment Results U.S. and Canada: In the U.S. and Canada segment net revenue grew 13.8% to $253.1 million, driven by the continued execution of our omni-channel strategy. Organic revenue increased 9.7% driven by increased points of access and strong performance in DFD, with weekly average sales per door growing by 26.9% compared to the prior year. Points of access increased 218 in quarter to 5,941, which represents a 14.3% increase in points of access from a year ago. U.S. and Canada Adjusted EBITDA increased 21.9% to $33.6 million with margin expansion of 90 basis points to 13.3% driven primarily by efficiencies from increased Sales per Hub, with pricing actions over the last year offsetting inflationary pressures. International: In the International segment, net revenue grew 31.1% to $87.2 million, with organic growth of 35.5%. Organic growth in the quarter was driven by successful limited time offerings, expansion of DFD and an increase in average sales per door. Growth was strong across all of our International segment business units including the UK and Ireland, Mexico, Australia and New Zealand. Points of access increased by 312 to 3,203. Foreign currency translation had a negative 4.4% impact on our International net revenue growth during the quarter. International Adjusted EBITDA increased by 12.4% over the prior year to $17.2 million, driven primarily by revenue growth from points of access expansion and efficiencies from our Hub and Spoke model, which led to a record $9.7 million Sales per Hub over the trailing twelve months. International Adjusted EBITDA margin was 19.8% for the quarter, compared to 23.1% a year ago when international Adjusted EBITDA margin was positively impacted by 5.2% from a business interruption reimbursement from COVID impact in 2020. Excluding that impact, International Adjusted EBITDA margins expanded by 180 basis points. Market Development: In the Market Development segment, net revenue declined 1.9% to $32.2 million driven by franchise acquisitions and a foreign currency translation impact of 3.5%. Organic revenue growth was 9.5% compared to the same period in 2021 driven by a strong performance in our franchise markets and in our equity-owned Japan market where we are implementing our omnichannel model with the expansion of eCommerce and the launch of delivered fresh daily. Market Development Adjusted EBITDA grew 3.6% to $11.3 million, with strong increases in Sales per Hub partially offset by domestic franchise acquisitions and foreign currency translation impacts. Adjusted EBITDA margins expanded 190 basis points to 35.0%. Balance Sheet & Capital Expenditures During the first quarter of 2022, the company invested $29.5 million in capital expenditures, primarily for growth including hot light theatres, cookie shops and DFD Doors. As of April 3, 2022, the Company had $31.6 million of cash and cash equivalents, $696.0 million of bank debt and $24.8 million of other debt-like items, for a total net debt of $689.2 million. Using a trailing four quarters Adjusted EBITDA of $190.5 million, current net leverage was 3.6x, substantially below pre-IPO levels. 2022 Financial Outlook Krispy Kreme re-affirms its previous guidance for the full year 2022: Net Revenue of $1.53 billion to $1.56 billion (+11% to +13%) Organic Revenue growth of 10% to 12% Adjusted EBITDA of $210 million to $218 million (+12% to +16%) Adjusted Net Income to Krispy Kreme shareholders, Diluted, of $65 million to $69 million (+18% to +24%) Adjusted Diluted EPS of $0.38 to $0.41 Approximately 170 million weighted average Diluted shares outstanding, compared to approximately 150 million in 2021 primarily driven by increased share count from the IPO Income Tax rate between 23% and 25% Capital Expenditures between $115 million to $120 million Net Leverage under 3.0x Krispy Kreme also reiterated the following long-term outlook: Organic Revenue growth of 9% to 11% Adjusted EBITDA growth of 12% to 14% Adjusted Net Income growth of 18% to 22% Net leverage of approximately 2.0x Definitions The following definitions apply to terms used throughout this press release: Global Points of Access: Reflects all locations at which fresh doughnuts or cookies can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors and Cookie Shops, at both Company-owned and franchise locations as of the end of the respective reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments. Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the respective reporting period. Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of the five most recent quarters. Fresh Revenues from Hubs with Spokes: Fresh Revenues include product sales generated from our Doughnut Shop business (including ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business. Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from those Hubs currently producing product for other shops, Carts and Food Trucks, and/or DFD Doors, but excluding Fresh Revenues derived from those Hubs not currently producing product for other shops, Carts and Food Trucks, and/or DFD Doors. Total Net Leverage Ratio: Calculated using Net Debt (including both bank debt and financing leases as part of debt) divided by Adjusted EBITDA. Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment. Conference Call Krispy Kreme will host a public conference call at 8:30 AM Eastern Time today to discuss its results for the first quarter of 2022. The conference call can be accessed by dialing (877) 312-1907, or (470) 495-9529 for international participants, and entering the conference ID 9178504. 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. 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 “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in the Prospectus, dated June 30, 2021, 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 3, 2022 (13 weeks) April 4, 2021 (13 weeks) Net revenues Product sales $ 364,052 $ 313,585 Royalties and other revenues 8,480 8,224 Total net revenues 372,532 321,809 Product and distribution costs 96,111 79,997 Operating expenses 168,726 147,541 Selling, general and administrative expense 53,711 49,537 Marketing expenses 10,159 9,507 Pre-opening costs 1,329 1,391 Other income, net (2,633 ) (3,245 ) Depreciation and amortization expense 27,841 23,401 Operating income 17,288 13,680 Interest expense, net 7,351 8,249 Interest expense — related party — 5,566 Other non-operating income, net (321 ) (442 ) Income before income taxes 10,258 307 Income tax expense 3,800 685 Net income/(loss) 6,458 (378 ) Net income attributable to noncontrolling interest 2,456 2,683 Net income/(loss) attributable to Krispy Kreme, Inc. $ 4,002 $ (3,061 ) Net income/(loss) per share: Common stock — Basic $ 0.02 $ (0.03 ) Common stock — Diluted $ 0.02 $ (0.03 ) Weighted average shares outstanding: Basic 167,261 124,987 Diluted 169,485 124,987 Krispy Kreme, Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amounts) As of (Unaudited) April 3, 2022 January 2, 2022 ASSETS Current assets: Cash and cash equivalents $ 31,615 $ 38,562 Restricted cash 676 630 Accounts receivable, net 44,705 47,491 Inventories 41,045 34,851 Taxes receivable 11,723 14,662 Prepaid expense and other current assets 19,894 20,701 Total current assets 149,658 156,897 Property and equipment, net 442,509 438,918 Goodwill 1,105,123 1,105,322 Other intangible assets, net 985,544 992,520 Operating lease right of use asset, net 432,374 435,168 Other assets 18,046 16,429 Total assets $ 3,133,254 $ 3,145,254 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ 36,667 $ 36,583 Current operating lease liabilities 49,474 50,359 Accounts payable 171,005 182,104 Accrued liabilities 105,727 140,750 Structured payables 132,374 116,361 Total current liabilities 495,247 526,157 Long-term debt, less current portion 680,693 680,307 Noncurrent operating lease liabilities 413,765 415,208 Deferred income taxes, net 149,605 145,418 Other long-term obligations and deferred credits 38,552 42,509 Total liabilities 1,777,862 1,809,599 Commitments and contingencies Shareholders’ equity: Common stock, $0.01 par value; 300,000 shares authorized as of both April 3, 2022 and January 2, 2022; 167,297 and 167,251 shares issued and outstanding as of April 3, 2022 and January 2, 2022, respectively 1,673 1,673 Additional paid-in capital 1,419,831 1,415,185 Shareholder note receivable (4,190 ) (4,382 ) Accumulated other comprehensive income/(loss), net of income tax 13,090 (2,478 ) Retained deficit (180,261 ) (178,409 ) Total shareholders’ equity attributable to Krispy Kreme, Inc. 1,250,143 1,231,589 Noncontrolling interest 105,249 104,066 Total shareholders’ equity 1,355,392 1,335,655 Total liabilities and shareholders’ equity $ 3,133,254 $ 3,145,254 Krispy Kreme, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Quarter Ended April 3, 2022 (13 weeks) April 4, 2021 (13 weeks) CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 6,458 $ (378 ) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization expense 27,841 23,401 Deferred income taxes (822 ) 593 Impairment and lease termination charges 218 1,151 Loss on disposal of property and equipment 24 116 Gain on sale-leaseback (2,374 ) — Share-based compensation 5,041 2,368 Change in accounts and notes receivable allowances (156 ) 180 Inventory write-off 251 870 Other (1,345 ) (2,798 ) Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments (6,745 ) 15,138 Net cash provided by operating activities 28,391 40,641 CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of property and equipment (29,460 ) (30,297 ) Proceeds from disposals of assets 8 43 Proceeds from sale-leaseback 3,000 — Acquisition of shops and franchise rights from franchisees, net of cash acquired — (33,568 ) Principal payments received from loans to franchisees 15 — Maturities of held-to-maturity debt securities — 169 Net cash used for investing activities (26,437 ) (63,653 ) CASH FLOWS (USED FOR)/FROM FINANCING ACTIVITIES: Proceeds from the issuance of debt 28,000 40,000 Repayment of long-term debt and lease obligations (28,697 ) (14,629 ) Proceeds from structured payables 74,180 65,550 Payments on structured payables (58,361 ) (64,418 ) 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 12,187 Distribution to shareholders (5,855 ) — Payments for repurchase and retirement of common stock (1,466 ) — Distribution to noncontrolling interest (1,362 ) (1,876 ) Net cash (used for)/provided by financing activities (6,627 ) 36,814 Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,228 ) (507 ) Net (decrease)/increase in cash, cash equivalents and restricted cash (6,901 ) 13,295 Cash, cash equivalents and restricted cash at beginning of period 39,192 37,483 Cash, cash equivalents and restricted cash at end of period $ 32,291 $ 50,778 Supplemental schedule of non-cash investing and financing activities: Increase in accrual for property and equipment $ 5,489 $ 1,123 Stock issuance under shareholder notes 191 446 Accrual for distribution to shareholders (5,855 ) — Reconciliation of cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 31,615 $ 50,650 Restricted cash 676 128 Total cash, cash equivalents and restricted cash $ 32,291 $ 50,778 Krispy Kreme, Inc. Reconciliation of Non-GAAP Financial Measures (Unaudited) (in thousands, except per share amounts) Quarter Ended (in thousands) April 3, 2022 April 4, 2021 Net income/(loss) $ 6,458 $ (378 ) Interest expense, net 7,351 8,249 Interest expense — related party(1) — 5,566 Income tax expense 3,800 685 Depreciation and amortization expense 27,841 23,401 Share-based compensation 5,041 2,368 Employer payroll taxes related to share-based compensation 55 — Other non-operating income, net(2) (321 ) (442 ) Acquisition and integration expenses(3) 517 2,152 Shop closure expenses(4) 230 — IPO-related expenses(5) — 3,476 Gain on sale-leaseback (2,374 ) — Other(6) 309 1,326 Adjusted EBITDA $ 48,907 $ 46,403 Quarter Ended (in thousands) April 3, 2022 April 4, 2021 Segment Adjusted EBITDA: U.S. and Canada $ 33,608 $ 27,563 International 17,244 15,348 Market Development 11,287 10,891 Corporate (13,232 ) (7,399 ) Total Adjusted EBITDA $ 48,907 $ 46,403 Quarter Ended (in thousands, except per share amounts) April 3, 2022 April 4, 2021 Net income/(loss) $ 6,458 $ (378 ) Interest expense — related party(1) — 5,566 Share-based compensation 5,041 2,368 Employer payroll taxes related to share-based compensation 55 — Other non-operating income, net(2) (321 ) (442 ) Acquisition and integration expenses(3) 517 2,152 Shop closure expenses(4) 230 — IPO-related expenses(5) — 3,476 Gain on sale-leaseback (2,374 ) — Other(6) 309 1,326 Amortization of acquisition related intangibles(7) 7,246 7,449 Tax impact of adjustments(8) (1,078 ) (4,022 ) Tax specific adjustments(9) — 131 Adjusted net income $ 16,083 $ 17,626 Net income attributable to noncontrolling interest (2,456 ) (2,683 ) Adjusted net income attributable to Krispy Kreme, Inc. $ 13,627 $ 14,943 Adjustment to adjusted net income attributable to common shareholders (374 ) (141 ) Adjusted net income attributable to common shareholders - Basic $ 13,253 $ 14,802 Additional income attributed to noncontrolling interest due to subsidiary potential common shares (40 ) (85 ) Adjusted net income attributable to common shareholders - Diluted $ 13,213 $ 14,717 Basic weighted average common shares outstanding 167,261 124,987 Dilutive effect of outstanding common stock options and RSUs 2,224 3,262 Diluted weighted average common shares outstanding 169,485 128,249 Adjusted net income per share attributable to common shareholders: Basic $ 0.08 $ 0.12 Diluted $ 0.08 $ 0.11 Consists of interest expense related to the Related Party Notes which were paid off in full during the quarter ended July 4, 2021. Primarily foreign translation gains and losses in each period. Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition and integration-related activities for the applicable period. Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company’s IPO. The quarters ended April 3, 2022 and April 4, 2021 consist primarily of legal expenses incurred outside the ordinary course of business. Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the Condensed Consolidated Statements of Operations. Tax impact of adjustments calculated applying the applicable statutory rates. The quarter ended April 3, 2022 also includes the impact of disallowed executive compensation expense. The quarter ended April 4, 2021 consists primarily of the effect of tax law changes on existing temporary differences. Krispy Kreme, Inc. Segment Reporting (Unaudited) (in thousands except percentages) Quarter Ended April 3, 2022 April 4, 2021 Net revenues: U.S. and Canada $ 253,127 $ 222,470 International 87,201 66,506 Market Development 32,204 32,833 Total net revenues $ 372,532 $ 321,809 Q1 2022 Organic Revenue (in thousands except percentages) U.S. and Canada International Market Development Total Company Total net revenues in first quarter of fiscal 2022 $ 253,127 $ 87,201 $ 32,204 $ 372,532 Total net revenues in first quarter of fiscal 2021 222,470 66,506 32,833 321,809 Total Net Revenues Growth 30,657 20,695 (629) 50,723 Total Net Revenues Growth % 13.8 % 31.1 % -1.9 % 15.8 % Impact of acquisitions (9,134) — 2,590 (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 % Q1 2021 Organic Revenue (in thousands except percentages) U.S. and Canada International Market Development Total Company Total net revenues in first quarter of fiscal 2021 $ 222,470 $ 66,506 $ 32,833 $ 321,809 Total net revenues in first quarter of fiscal 2020 170,450 60,659 30,107 261,216 Total Net Revenues Growth 52,020 5,847 2,726 60,593 Total Net Revenues Growth % 30.5 % 9.6 % 9.1 % 23.2 % Impact of acquisitions (31,705) — (2,139) (33,844) Impact of foreign currency translation — (4,963) — (4,963) Organic Revenue Growth $ 20,315 $ 884 $ 587 $ 21,786 Organic Revenue Growth % 11.9 % 1.5 % 1.9 % 8.3 % Sales per Hub Trailing Four Quarters Ended Fiscal Year Ended (in thousands, unless otherwise stated) April 3, 2022 January 2, 2022 January 3, 2021 U.S. and Canada: Revenues $ 959,070 $ 928,413 $ 782,717 Non-Fresh Revenues (1) (40,264 ) (37,311 ) (128,619 ) Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2) (405,551 ) (415,768 ) (323,079 ) Sales from Hubs with Spokes 513,255 475,334 331,019 Sales per Hub (millions) 4.3 4.0 3.5 International: Sales from Hubs with Spokes (3) $ 353,690 $ 332,995 $ 230,185 Sales per Hub (millions) 9.7 9.1 6.4 Includes legacy wholesale business revenues and Branded Sweet Treat Line revenues. Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes. Total International net revenues is equal to sales from Hubs with Spokes for that business segment. Krispy Kreme, Inc. Global Points of Access (Unaudited) Global Points of Access (1) Quarter Ended Fiscal Year Ended April 3, 2022 April 4, 2021 January 2, 2022 U.S. and Canada: (2) Hot Light Theater Shops 244 236 241 Fresh Shops 67 59 66 Cookie Shops 217 191 210 Carts, Food Trucks, and Other (3) 2 — 2 DFD Doors 5,411 4,712 5,204 Total 5,941 5,198 5,723 International: Hot Light Theater Shops 32 29 32 Fresh Shops 376 361 370 Carts, Food Trucks, and Other (3) 1 — 1 DFD Doors 2,794 2,185 2,488 Total 3,203 2,575 2,891 Market Development: (4) Hot Light Theater Shops 109 111 109 Fresh Shops 804 730 782 Carts, Food Trucks, and Other (3) 31 30 31 DFD Doors 939 474 891 Total 1,883 1,345 1,813 Total Global Points of Access (as defined) 11,027 9,118 10,427 Total Hot Light Theater Shops 385 376 382 Total Fresh Shops 1,247 1,150 1,218 Total Cookie Shops 217 191 210 Total Shops 1,849 1,717 1,810 Total Carts, Food Trucks, and Other 34 30 34 Total DFD Doors 9,144 7,371 8,583 Total Global Points of Access (as defined) 11,027 9,118 10,427 Excludes Branded Sweet Treat Line distribution points. Includes points of access that were acquired from a franchisee in Canada during the fourth quarter of fiscal 2021. These points of access were previously included in the Market Development segment. 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. They are primarily found in international locations, in airports, train stations, etc. Comparative data has been included in all periods presented above. Includes locations in Japan, which were acquired in the fourth quarter of fiscal 2020 and are now Company-owned. All remaining points of access in the Market Development segment relate to our franchise business. Krispy Kreme, Inc. Global Hubs (Unaudited) Hubs Quarter Ended Fiscal Year Ended April 3, 2022 April 4, 2021 January 2, 2022 U.S. and Canada: Hot Light Theater Shops (1) 241 232 238 Doughnut Factories 4 5 4 Total 245 237 242 Hubs with Spokes 125 113 126 International: Hot Light Theater Shops (1) 26 27 25 Doughnut Factories 11 11 11 Total 37 38 36 Hubs with Spokes 37 38 36 Market Development: Hot Light Theater Shops (1) 106 110 106 Doughnut Factories 27 25 27 Total 133 135 133 Total Hubs 415 410 411 Includes only Hot Light Theater Shops and excludes Mini Theaters. A Mini Theater is a Spoke location that produces hot some fresh doughnuts for itself and also receives doughnuts from another producing location. Krispy Kreme, Inc. Net Debt and Leverage (Unaudited) (in thousands) April 3, 2022 January 2, 2022 Current portion of long-term debt $ 36,667 $ 36,583 Long-term debt, less current portion 680,693 680,307 Total long-term debt, including debt issuance costs 717,360 716,890 Add back: Debt issuance costs 3,436 3,833 Total long-term debt, excluding debt issuance costs 720,796 720,723 Less: Cash and cash equivalents (31,615 ) (38,562 ) Net debt $ 689,181 $ 682,161 Adjusted EBITDA - trailing four quarters 190,449 187,945 Net leverage ratio 3.6 x 3.6 x View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006147/en/Contacts Investor Relations Rob Ballew, VP of Investor Relations rballew@krispykreme.com Financial Media Edelman for Krispy Kreme, Inc. Allie McLarty & Ashley Firlan, KrispyKremeIR@edelman.com
First quarter net revenue grew 15.8% with organic revenue growth of 15.0% compared to Q1 2021 GAAP net income of $6.5 million and Adjusted EBITDA of $48.9 million Company re-affirms 2022 guidance
Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme” or the “Company”) today reported strong financial results for the first quarter ended April 3, 2022 with net revenue growing 15.8% year-over-year to $372.5 million while organic revenue grew 15.0% to $370.1 million with high growth across all three segments. Sales per Hub in the U.S. and Canada increased by 19.4% year over year to $4.3 million while International Sales per Hub leapt 49.2% to $9.7 million, driven by a 21% increase in global points of access and a significant increase in U.S. and Canada weekly sales per Delivered Fresh Daily (“DFD”) door. GAAP Net Income for the quarter was $6.5 million compared to a loss of $0.4 million a year ago while GAAP diluted Earnings Per Share for the quarter was $0.02 compared to a loss of $0.03 last year. Adjusted diluted Earnings Per Share was $0.08 for the quarter, compared to $0.11 last year primarily due to share dilution from an increased share count following the IPO. Adjusted EBITDA grew 5.4% in the quarter to $48.9 million led by a 90 basis point improvement in U.S. and Canada margins. Growth was driven by the performance and expansion of Krispy Kreme’s Omni-channel model, and strong performances across all three business segments. Global Points of Access, which reflect all locations where fresh doughnuts and cookies can be purchased, increased by 600 during the quarter, providing customers access to Krispy Kreme in more than 11,000 locations around the world. Commenting on the Company’s performance, President and CEO Mike Tattersfield stated, “Our results in the first quarter continue to demonstrate the benefits of our omni-channel model and global expansion strategy, which allow 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 limited time offerings such as our Twix and Rolo Doughnuts resonated strongly with consumers, highlighting the opportunities for premiumization and the gifting and sharing power of the brand.” Mike continued, “We continue to be well-positioned to deliver another year of double-digit revenue growth in 2022 despite macro-challenges. Our performance will continue to be driven by the expansion of our omni-channel model as we significantly expand our points of access and continue our transformation to the more profitable and capital efficient Hub and Spoke model in the U.S. and Canada. In addition to Switzerland and Chile, we are excited to announce plans to open in Jordan and Costa Rica this year with several other new countries in the pipeline as we work to expand our global footprint.” Financial Highlights $ in millions, except per share data Q1 2022 vs Q1 2021 Net Revenue $372.5 +15.8% Organic Revenue(1) $370.1 +15.0% GAAP Net Income/(Loss) $6.5 +$6.8 Adjusted Net Income(1) $16.1 -8.8% Operating Income $17.3 +26.4% Operating Income Margin 4.6% +30 bps Adjusted EBITDA(1) $48.9 +5.4% Adjusted EBITDA Margin(1) 13.1% -130 bps GAAP Diluted Income/(Loss) Per Share $0.02 +$0.05 Adjusted Diluted EPS(1,2) $0.08 -$0.03 Net Debt $689.2 -39.9% Notes: (1) Non-GAAP figures – please refer to Reconciliation of Non-GAAP Financial Measures. (2) First Quarter 2022 Adjusted Diluted EPS was impacted by $(0.02) from share count dilution from the IPO Key Operating Metrics $ in millions, except access points Q1 2022 vs Q1 2021 vs Q4 2021 Global Points of Access 11,027 +20.9% +5.8% Sales per Hub (U.S. and Canada) TTM $4.3 +19.4% +7.5% Sales per Hub (International) TTM $9.7 +49.2% +6.6% Ecommerce as a Percent of Retail Sales 17.4% -210 bps +20 bps First Quarter 2022 Consolidated Results Krispy Kreme’s first quarter 2022 results reflect strong growth compared to the prior year. Net revenue grew 15.8% in the first quarter to $372.5 million and total company organic revenue grew 15.0% in the quarter. Organic revenue growth was driven by the International segment with a strong performance in all three business units, as well as an impressive DFD performance in the U.S. and Canada business. GAAP Net Income for the quarter was $6.5 million, compared to a GAAP Net Loss of $0.4 million in 2021. Adjusted EBITDA in the quarter grew 5.4% to $48.9 million. Operating margins grew 30 basis points to 4.6% while Adjusted EBITDA margin declined 130 basis points to 13.1% from the same quarter in 2021, driven by a favorable impact of 1.1% from a business interruption reimbursement a year ago and public company costs. Adjusted Net Income declined 8.8% to $16.1 million in the quarter. GAAP Diluted EPS in the quarter was $0.02 compared to a net loss of $0.03 in the same quarter last year with Adjusted Diluted EPS decreasing to $0.08 from $0.11 in the first quarter of 2021, largely as a result of an increased share count following the IPO. Weighted Diluted average shares outstanding for the first quarter of 2022 were 169.5 million, compared to 125.0 million in the first quarter of 2021 primarily as a result of the IPO. First Quarter 2022 Market Segment Results U.S. and Canada: In the U.S. and Canada segment net revenue grew 13.8% to $253.1 million, driven by the continued execution of our omni-channel strategy. Organic revenue increased 9.7% driven by increased points of access and strong performance in DFD, with weekly average sales per door growing by 26.9% compared to the prior year. Points of access increased 218 in quarter to 5,941, which represents a 14.3% increase in points of access from a year ago. U.S. and Canada Adjusted EBITDA increased 21.9% to $33.6 million with margin expansion of 90 basis points to 13.3% driven primarily by efficiencies from increased Sales per Hub, with pricing actions over the last year offsetting inflationary pressures. International: In the International segment, net revenue grew 31.1% to $87.2 million, with organic growth of 35.5%. Organic growth in the quarter was driven by successful limited time offerings, expansion of DFD and an increase in average sales per door. Growth was strong across all of our International segment business units including the UK and Ireland, Mexico, Australia and New Zealand. Points of access increased by 312 to 3,203. Foreign currency translation had a negative 4.4% impact on our International net revenue growth during the quarter. International Adjusted EBITDA increased by 12.4% over the prior year to $17.2 million, driven primarily by revenue growth from points of access expansion and efficiencies from our Hub and Spoke model, which led to a record $9.7 million Sales per Hub over the trailing twelve months. International Adjusted EBITDA margin was 19.8% for the quarter, compared to 23.1% a year ago when international Adjusted EBITDA margin was positively impacted by 5.2% from a business interruption reimbursement from COVID impact in 2020. Excluding that impact, International Adjusted EBITDA margins expanded by 180 basis points. Market Development: In the Market Development segment, net revenue declined 1.9% to $32.2 million driven by franchise acquisitions and a foreign currency translation impact of 3.5%. Organic revenue growth was 9.5% compared to the same period in 2021 driven by a strong performance in our franchise markets and in our equity-owned Japan market where we are implementing our omnichannel model with the expansion of eCommerce and the launch of delivered fresh daily. Market Development Adjusted EBITDA grew 3.6% to $11.3 million, with strong increases in Sales per Hub partially offset by domestic franchise acquisitions and foreign currency translation impacts. Adjusted EBITDA margins expanded 190 basis points to 35.0%. Balance Sheet & Capital Expenditures During the first quarter of 2022, the company invested $29.5 million in capital expenditures, primarily for growth including hot light theatres, cookie shops and DFD Doors. As of April 3, 2022, the Company had $31.6 million of cash and cash equivalents, $696.0 million of bank debt and $24.8 million of other debt-like items, for a total net debt of $689.2 million. Using a trailing four quarters Adjusted EBITDA of $190.5 million, current net leverage was 3.6x, substantially below pre-IPO levels. 2022 Financial Outlook Krispy Kreme re-affirms its previous guidance for the full year 2022: Net Revenue of $1.53 billion to $1.56 billion (+11% to +13%) Organic Revenue growth of 10% to 12% Adjusted EBITDA of $210 million to $218 million (+12% to +16%) Adjusted Net Income to Krispy Kreme shareholders, Diluted, of $65 million to $69 million (+18% to +24%) Adjusted Diluted EPS of $0.38 to $0.41 Approximately 170 million weighted average Diluted shares outstanding, compared to approximately 150 million in 2021 primarily driven by increased share count from the IPO Income Tax rate between 23% and 25% Capital Expenditures between $115 million to $120 million Net Leverage under 3.0x Krispy Kreme also reiterated the following long-term outlook: Organic Revenue growth of 9% to 11% Adjusted EBITDA growth of 12% to 14% Adjusted Net Income growth of 18% to 22% Net leverage of approximately 2.0x Definitions The following definitions apply to terms used throughout this press release: Global Points of Access: Reflects all locations at which fresh doughnuts or cookies can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors and Cookie Shops, at both Company-owned and franchise locations as of the end of the respective reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments. Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the respective reporting period. Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of the five most recent quarters. Fresh Revenues from Hubs with Spokes: Fresh Revenues include product sales generated from our Doughnut Shop business (including ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business. Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from those Hubs currently producing product for other shops, Carts and Food Trucks, and/or DFD Doors, but excluding Fresh Revenues derived from those Hubs not currently producing product for other shops, Carts and Food Trucks, and/or DFD Doors. Total Net Leverage Ratio: Calculated using Net Debt (including both bank debt and financing leases as part of debt) divided by Adjusted EBITDA. Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment. Conference Call Krispy Kreme will host a public conference call at 8:30 AM Eastern Time today to discuss its results for the first quarter of 2022. The conference call can be accessed by dialing (877) 312-1907, or (470) 495-9529 for international participants, and entering the conference ID 9178504. 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. 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 “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in the Prospectus, dated June 30, 2021, 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 3, 2022 (13 weeks) April 4, 2021 (13 weeks) Net revenues Product sales $ 364,052 $ 313,585 Royalties and other revenues 8,480 8,224 Total net revenues 372,532 321,809 Product and distribution costs 96,111 79,997 Operating expenses 168,726 147,541 Selling, general and administrative expense 53,711 49,537 Marketing expenses 10,159 9,507 Pre-opening costs 1,329 1,391 Other income, net (2,633 ) (3,245 ) Depreciation and amortization expense 27,841 23,401 Operating income 17,288 13,680 Interest expense, net 7,351 8,249 Interest expense — related party — 5,566 Other non-operating income, net (321 ) (442 ) Income before income taxes 10,258 307 Income tax expense 3,800 685 Net income/(loss) 6,458 (378 ) Net income attributable to noncontrolling interest 2,456 2,683 Net income/(loss) attributable to Krispy Kreme, Inc. $ 4,002 $ (3,061 ) Net income/(loss) per share: Common stock — Basic $ 0.02 $ (0.03 ) Common stock — Diluted $ 0.02 $ (0.03 ) Weighted average shares outstanding: Basic 167,261 124,987 Diluted 169,485 124,987 Krispy Kreme, Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amounts) As of (Unaudited) April 3, 2022 January 2, 2022 ASSETS Current assets: Cash and cash equivalents $ 31,615 $ 38,562 Restricted cash 676 630 Accounts receivable, net 44,705 47,491 Inventories 41,045 34,851 Taxes receivable 11,723 14,662 Prepaid expense and other current assets 19,894 20,701 Total current assets 149,658 156,897 Property and equipment, net 442,509 438,918 Goodwill 1,105,123 1,105,322 Other intangible assets, net 985,544 992,520 Operating lease right of use asset, net 432,374 435,168 Other assets 18,046 16,429 Total assets $ 3,133,254 $ 3,145,254 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ 36,667 $ 36,583 Current operating lease liabilities 49,474 50,359 Accounts payable 171,005 182,104 Accrued liabilities 105,727 140,750 Structured payables 132,374 116,361 Total current liabilities 495,247 526,157 Long-term debt, less current portion 680,693 680,307 Noncurrent operating lease liabilities 413,765 415,208 Deferred income taxes, net 149,605 145,418 Other long-term obligations and deferred credits 38,552 42,509 Total liabilities 1,777,862 1,809,599 Commitments and contingencies Shareholders’ equity: Common stock, $0.01 par value; 300,000 shares authorized as of both April 3, 2022 and January 2, 2022; 167,297 and 167,251 shares issued and outstanding as of April 3, 2022 and January 2, 2022, respectively 1,673 1,673 Additional paid-in capital 1,419,831 1,415,185 Shareholder note receivable (4,190 ) (4,382 ) Accumulated other comprehensive income/(loss), net of income tax 13,090 (2,478 ) Retained deficit (180,261 ) (178,409 ) Total shareholders’ equity attributable to Krispy Kreme, Inc. 1,250,143 1,231,589 Noncontrolling interest 105,249 104,066 Total shareholders’ equity 1,355,392 1,335,655 Total liabilities and shareholders’ equity $ 3,133,254 $ 3,145,254 Krispy Kreme, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Quarter Ended April 3, 2022 (13 weeks) April 4, 2021 (13 weeks) CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 6,458 $ (378 ) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization expense 27,841 23,401 Deferred income taxes (822 ) 593 Impairment and lease termination charges 218 1,151 Loss on disposal of property and equipment 24 116 Gain on sale-leaseback (2,374 ) — Share-based compensation 5,041 2,368 Change in accounts and notes receivable allowances (156 ) 180 Inventory write-off 251 870 Other (1,345 ) (2,798 ) Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments (6,745 ) 15,138 Net cash provided by operating activities 28,391 40,641 CASH FLOWS USED FOR INVESTING ACTIVITIES: Purchase of property and equipment (29,460 ) (30,297 ) Proceeds from disposals of assets 8 43 Proceeds from sale-leaseback 3,000 — Acquisition of shops and franchise rights from franchisees, net of cash acquired — (33,568 ) Principal payments received from loans to franchisees 15 — Maturities of held-to-maturity debt securities — 169 Net cash used for investing activities (26,437 ) (63,653 ) CASH FLOWS (USED FOR)/FROM FINANCING ACTIVITIES: Proceeds from the issuance of debt 28,000 40,000 Repayment of long-term debt and lease obligations (28,697 ) (14,629 ) Proceeds from structured payables 74,180 65,550 Payments on structured payables (58,361 ) (64,418 ) 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 12,187 Distribution to shareholders (5,855 ) — Payments for repurchase and retirement of common stock (1,466 ) — Distribution to noncontrolling interest (1,362 ) (1,876 ) Net cash (used for)/provided by financing activities (6,627 ) 36,814 Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,228 ) (507 ) Net (decrease)/increase in cash, cash equivalents and restricted cash (6,901 ) 13,295 Cash, cash equivalents and restricted cash at beginning of period 39,192 37,483 Cash, cash equivalents and restricted cash at end of period $ 32,291 $ 50,778 Supplemental schedule of non-cash investing and financing activities: Increase in accrual for property and equipment $ 5,489 $ 1,123 Stock issuance under shareholder notes 191 446 Accrual for distribution to shareholders (5,855 ) — Reconciliation of cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 31,615 $ 50,650 Restricted cash 676 128 Total cash, cash equivalents and restricted cash $ 32,291 $ 50,778 Krispy Kreme, Inc. Reconciliation of Non-GAAP Financial Measures (Unaudited) (in thousands, except per share amounts) Quarter Ended (in thousands) April 3, 2022 April 4, 2021 Net income/(loss) $ 6,458 $ (378 ) Interest expense, net 7,351 8,249 Interest expense — related party(1) — 5,566 Income tax expense 3,800 685 Depreciation and amortization expense 27,841 23,401 Share-based compensation 5,041 2,368 Employer payroll taxes related to share-based compensation 55 — Other non-operating income, net(2) (321 ) (442 ) Acquisition and integration expenses(3) 517 2,152 Shop closure expenses(4) 230 — IPO-related expenses(5) — 3,476 Gain on sale-leaseback (2,374 ) — Other(6) 309 1,326 Adjusted EBITDA $ 48,907 $ 46,403 Quarter Ended (in thousands) April 3, 2022 April 4, 2021 Segment Adjusted EBITDA: U.S. and Canada $ 33,608 $ 27,563 International 17,244 15,348 Market Development 11,287 10,891 Corporate (13,232 ) (7,399 ) Total Adjusted EBITDA $ 48,907 $ 46,403 Quarter Ended (in thousands, except per share amounts) April 3, 2022 April 4, 2021 Net income/(loss) $ 6,458 $ (378 ) Interest expense — related party(1) — 5,566 Share-based compensation 5,041 2,368 Employer payroll taxes related to share-based compensation 55 — Other non-operating income, net(2) (321 ) (442 ) Acquisition and integration expenses(3) 517 2,152 Shop closure expenses(4) 230 — IPO-related expenses(5) — 3,476 Gain on sale-leaseback (2,374 ) — Other(6) 309 1,326 Amortization of acquisition related intangibles(7) 7,246 7,449 Tax impact of adjustments(8) (1,078 ) (4,022 ) Tax specific adjustments(9) — 131 Adjusted net income $ 16,083 $ 17,626 Net income attributable to noncontrolling interest (2,456 ) (2,683 ) Adjusted net income attributable to Krispy Kreme, Inc. $ 13,627 $ 14,943 Adjustment to adjusted net income attributable to common shareholders (374 ) (141 ) Adjusted net income attributable to common shareholders - Basic $ 13,253 $ 14,802 Additional income attributed to noncontrolling interest due to subsidiary potential common shares (40 ) (85 ) Adjusted net income attributable to common shareholders - Diluted $ 13,213 $ 14,717 Basic weighted average common shares outstanding 167,261 124,987 Dilutive effect of outstanding common stock options and RSUs 2,224 3,262 Diluted weighted average common shares outstanding 169,485 128,249 Adjusted net income per share attributable to common shareholders: Basic $ 0.08 $ 0.12 Diluted $ 0.08 $ 0.11 Consists of interest expense related to the Related Party Notes which were paid off in full during the quarter ended July 4, 2021. Primarily foreign translation gains and losses in each period. Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition and integration-related activities for the applicable period. Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company’s IPO. The quarters ended April 3, 2022 and April 4, 2021 consist primarily of legal expenses incurred outside the ordinary course of business. Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the Condensed Consolidated Statements of Operations. Tax impact of adjustments calculated applying the applicable statutory rates. The quarter ended April 3, 2022 also includes the impact of disallowed executive compensation expense. The quarter ended April 4, 2021 consists primarily of the effect of tax law changes on existing temporary differences. Krispy Kreme, Inc. Segment Reporting (Unaudited) (in thousands except percentages) Quarter Ended April 3, 2022 April 4, 2021 Net revenues: U.S. and Canada $ 253,127 $ 222,470 International 87,201 66,506 Market Development 32,204 32,833 Total net revenues $ 372,532 $ 321,809 Q1 2022 Organic Revenue (in thousands except percentages) U.S. and Canada International Market Development Total Company Total net revenues in first quarter of fiscal 2022 $ 253,127 $ 87,201 $ 32,204 $ 372,532 Total net revenues in first quarter of fiscal 2021 222,470 66,506 32,833 321,809 Total Net Revenues Growth 30,657 20,695 (629) 50,723 Total Net Revenues Growth % 13.8 % 31.1 % -1.9 % 15.8 % Impact of acquisitions (9,134) — 2,590 (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 % Q1 2021 Organic Revenue (in thousands except percentages) U.S. and Canada International Market Development Total Company Total net revenues in first quarter of fiscal 2021 $ 222,470 $ 66,506 $ 32,833 $ 321,809 Total net revenues in first quarter of fiscal 2020 170,450 60,659 30,107 261,216 Total Net Revenues Growth 52,020 5,847 2,726 60,593 Total Net Revenues Growth % 30.5 % 9.6 % 9.1 % 23.2 % Impact of acquisitions (31,705) — (2,139) (33,844) Impact of foreign currency translation — (4,963) — (4,963) Organic Revenue Growth $ 20,315 $ 884 $ 587 $ 21,786 Organic Revenue Growth % 11.9 % 1.5 % 1.9 % 8.3 % Sales per Hub Trailing Four Quarters Ended Fiscal Year Ended (in thousands, unless otherwise stated) April 3, 2022 January 2, 2022 January 3, 2021 U.S. and Canada: Revenues $ 959,070 $ 928,413 $ 782,717 Non-Fresh Revenues (1) (40,264 ) (37,311 ) (128,619 ) Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2) (405,551 ) (415,768 ) (323,079 ) Sales from Hubs with Spokes 513,255 475,334 331,019 Sales per Hub (millions) 4.3 4.0 3.5 International: Sales from Hubs with Spokes (3) $ 353,690 $ 332,995 $ 230,185 Sales per Hub (millions) 9.7 9.1 6.4 Includes legacy wholesale business revenues and Branded Sweet Treat Line revenues. Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes. Total International net revenues is equal to sales from Hubs with Spokes for that business segment. Krispy Kreme, Inc. Global Points of Access (Unaudited) Global Points of Access (1) Quarter Ended Fiscal Year Ended April 3, 2022 April 4, 2021 January 2, 2022 U.S. and Canada: (2) Hot Light Theater Shops 244 236 241 Fresh Shops 67 59 66 Cookie Shops 217 191 210 Carts, Food Trucks, and Other (3) 2 — 2 DFD Doors 5,411 4,712 5,204 Total 5,941 5,198 5,723 International: Hot Light Theater Shops 32 29 32 Fresh Shops 376 361 370 Carts, Food Trucks, and Other (3) 1 — 1 DFD Doors 2,794 2,185 2,488 Total 3,203 2,575 2,891 Market Development: (4) Hot Light Theater Shops 109 111 109 Fresh Shops 804 730 782 Carts, Food Trucks, and Other (3) 31 30 31 DFD Doors 939 474 891 Total 1,883 1,345 1,813 Total Global Points of Access (as defined) 11,027 9,118 10,427 Total Hot Light Theater Shops 385 376 382 Total Fresh Shops 1,247 1,150 1,218 Total Cookie Shops 217 191 210 Total Shops 1,849 1,717 1,810 Total Carts, Food Trucks, and Other 34 30 34 Total DFD Doors 9,144 7,371 8,583 Total Global Points of Access (as defined) 11,027 9,118 10,427 Excludes Branded Sweet Treat Line distribution points. Includes points of access that were acquired from a franchisee in Canada during the fourth quarter of fiscal 2021. These points of access were previously included in the Market Development segment. 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. They are primarily found in international locations, in airports, train stations, etc. Comparative data has been included in all periods presented above. Includes locations in Japan, which were acquired in the fourth quarter of fiscal 2020 and are now Company-owned. All remaining points of access in the Market Development segment relate to our franchise business. Krispy Kreme, Inc. Global Hubs (Unaudited) Hubs Quarter Ended Fiscal Year Ended April 3, 2022 April 4, 2021 January 2, 2022 U.S. and Canada: Hot Light Theater Shops (1) 241 232 238 Doughnut Factories 4 5 4 Total 245 237 242 Hubs with Spokes 125 113 126 International: Hot Light Theater Shops (1) 26 27 25 Doughnut Factories 11 11 11 Total 37 38 36 Hubs with Spokes 37 38 36 Market Development: Hot Light Theater Shops (1) 106 110 106 Doughnut Factories 27 25 27 Total 133 135 133 Total Hubs 415 410 411 Includes only Hot Light Theater Shops and excludes Mini Theaters. A Mini Theater is a Spoke location that produces hot some fresh doughnuts for itself and also receives doughnuts from another producing location. Krispy Kreme, Inc. Net Debt and Leverage (Unaudited) (in thousands) April 3, 2022 January 2, 2022 Current portion of long-term debt $ 36,667 $ 36,583 Long-term debt, less current portion 680,693 680,307 Total long-term debt, including debt issuance costs 717,360 716,890 Add back: Debt issuance costs 3,436 3,833 Total long-term debt, excluding debt issuance costs 720,796 720,723 Less: Cash and cash equivalents (31,615 ) (38,562 ) Net debt $ 689,181 $ 682,161 Adjusted EBITDA - trailing four quarters 190,449 187,945 Net leverage ratio 3.6 x 3.6 x View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006147/en/
Investor Relations Rob Ballew, VP of Investor Relations rballew@krispykreme.com Financial Media Edelman for Krispy Kreme, Inc. Allie McLarty & Ashley Firlan, KrispyKremeIR@edelman.com
