Fourth quarter net revenue grew 9.2% with
organic revenue growth of 12.5% Points of Access increased
to 11,837, up 14% from 2021 Introduces robust 2023
guidance
Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme” or the
“Company”) today reported financial results for the fourth quarter
and full year ended January 1, 2023. Net revenue in the quarter
grew 9.2%, inclusive of a negative 3.7% impact from foreign
currency exchange (“FX”) headwinds. Sales Per Hub grew 15.0% in the
U.S. and Canada to $4.6 million and 7.7% in International to $9.8
million. Organic revenue in the quarter grew 12.5% driven by double
digit organic growth in all three business segments. For the full
year 2022, net revenue grew 10.5%, inclusive of a negative 2.7%
impact from FX headwinds, and organic revenue grew 12.1%.
Our efforts to improve performance through our network
optimization and closing unprofitable shops led to expenses of
$12.4 million, over 90% non cash, which contributed to a GAAP Net
Loss of $1.0 million for the fourth quarter. The Company is already
seeing improved performance from our Hubs without Spokes in the
U.S.
Adjusted EBITDA grew 17%, or an even stronger 25% in constant
currency, and Adjusted EBITDA margins expanded 90 basis points in
the quarter compared to the same quarter a year ago, led by strong
performance from the U.S. and Canada and Market Development
segments and sequential improvement in our International segment.
GAAP Diluted Loss Per Share for the quarter was $0.02 compared to
income of $0.01 in the same quarter last year. Adjusted Diluted
Earnings Per Share was $0.11 for the quarter, up 38% compared to
the same quarter a year ago. Free cash flow in the fourth quarter
was $32.4 million.
Commenting on the performance, CEO Mike Tattersfield stated, “We
are pleased with the strong end to 2022, with notable progress on
expanding our omni-channel model, furthering our global growth
strategy and executing successfully on the initial phase of our hub
optimization efforts. Our global fresh, premium Halloween and
winter holiday specialty doughnuts resonated strongly with
consumers, helping drive a record of more than 1.6 billion
doughnuts sold in 2022. Our Ecommerce business also achieved
impressive growth of 23%, marking the best quarter in this channel
since the pandemic, led by growth in Insomnia Cookies and Krispy
Kreme in the U.S.”
Mike continued, “Looking to 2023, we are well-positioned to
deliver another year of terrific growth with a great start led by
premium offerings for celebrations. Our performance this year will
be led by continued expansion of our capital efficient omni-channel
model as we aim to grow our fresh points of access by 10% to 15% in
2023. We are particularly excited for our global growth this year
as we expect to open in five to seven new countries in 2023,
including in France, as we continue on our journey to being the
most loved sweet treat brand in the world.”
Financial Highlights
$ in millions, except per share
data
Q4 2022
vs Q4 2021
2022
vs 2021
Net Revenue
$404.6
9.2%
$1,529.9
10.5%
Organic Revenue (1)
$415.4
12.5%
$1,549.8
12.1%
GAAP Net Loss
$(1.0)
nm
$(8.8)
40.9%
Adjusted Net Income, Diluted
(1)
$18.6
38.9%
$49.6
(10.6)%
Operating Income
$5.2
(68.4)%
$29.0
(29.5)%
Operating Income Margin
1.3%
-310 bps
1.9%
-110 bps
Adjusted EBITDA (1)
$55.9
17.2%
$190.7
1.5%
Adjusted EBITDA Margin (1)
13.8%
+90 bps
12.5%
-110 bps
GAAP Diluted Loss Per Share
$(0.02)
$(0.03)
$(0.10)
$0.08
Adjusted Diluted EPS (1)
$0.11
$0.03
$0.29
$(0.08)
Notes: (1) Non-GAAP figures – please
refer to Reconciliation of Non-GAAP Financial Measures.
Key Operating Metrics
$ in millions, except access
points
Q4 2022
vs Q4 2021
Global Points of Access
11,837
13.5%
Sales per Hub (U.S. and Canada)
TTM
$4.6
15.0%
Sales per Hub (International)
TTM
$9.8
7.7%
Ecommerce as a Percent of Retail
Sales
18.3%
+260 bps
Fourth Quarter and Full Year 2022
Consolidated Results
Net revenue grew 9.2% in the quarter to $404.6 million, or 23.0%
on a two-year stack basis. Total company organic revenue grew 12.5%
in the quarter compared to the same quarter last year, and 26.4% on
a two-year stack basis. Organic revenue growth in the quarter was
strong across all segments due to the increase in Points of Access
and a strong Delivered Fresh Daily (“DFD”) performance.
For the full year 2022, net revenue grew 10.5% to $1.53 billion,
or 33.9% on a two-year stack basis. Organic revenue grew 12.1% in
2022, or 24.6% on a two-year stack basis, driven by Points of
Access growth and a 10% increase in sales per DFD door in the U.S.
and Canada.
GAAP Net Loss for the quarter was $1.0 million, compared to a
GAAP Net Income of $4.3 million a year ago. The decrease was driven
by expenses of $12.4 million, over 90% of which were non-cash,
associated with previously announced optimization efforts and shop
closures. Excluding that expense, GAAP Net Income would have
increased in the fourth quarter.
Adjusted EBITDA in the quarter grew 17.2% to $55.9 million, or
25.0% in constant currency, with Adjusted EBITDA margins expanding
90 basis points to 13.8%. Adjusted Net Income, diluted grew 38.9%
to $18.6 million in the quarter. GAAP Diluted Loss per Share in the
quarter was $0.02 compared to income of $0.01 in the same quarter
last year. Adjusted Diluted EPS increased 37.5% to $0.11 from $0.08
in the same quarter last year.
For the full year 2022, GAAP Net Loss was $8.8 million, an
improvement of 40.9% compared to 2021. GAAP Net Loss for the year
included $19.0 million in expense related to the previously
discussed optimization efforts, over 90% of which were non-cash.
Adjusted EBITDA grew 1.5% to $190.7 million in 2022, or 7.1% in
constant currency. Adjusted Net Income, diluted for 2022 declined
10.6% to $49.6 million. GAAP Diluted Loss per Share for the full
year 2022 was $0.10 compared to a loss of $0.18 in 2021. Adjusted
Diluted EPS for the year was $0.29.
Weighted diluted average shares outstanding for the fourth
quarter of 2022 were 169.8 million, compared to 169.1 million in
the same quarter last year. Weighted diluted average shares
outstanding for the full year 2022 were 169.5 million, compared to
150.3 million for the full year 2021, primarily as a result of the
IPO.
Fourth Quarter and Full Year 2022
Segment Results
U.S. and Canada: In the U.S. and Canada segment in the
fourth quarter, net revenue grew 11.1% to $276.9 million from
$249.2 million a year ago, driven by strong Points of Access
expansion over the last year and a record average weekly revenue
per door of approximately $620 driven by strong sales of specialty
doughnuts. Sales per Hub increased 15.0% to $4.6 million. Organic
revenue in the quarter increased 11.6% driven by our omni-channel
model, primarily the strength of DFD, as well as double digit
same-store sales growth from Insomnia Cookies. For the full year,
net revenue grew 11.3% to $1.0 billion while organic revenue
increased 9.1%.
U.S. and Canada Adjusted EBITDA in the fourth quarter increased
16.2% to $37.0 million, with margin expansion of 50 basis points to
13.3%, driven primarily by the strong performance of our Hub and
Spoke model from increased DFD doors and sales per door as well as
improved performance from our Hubs without Spokes as optimization
efforts highlighted at our Investor Day in December 2022 are
already producing results. Price increases were successfully
implemented on fresh doughnuts in October 2022 showing low levels
of elasticity. For the full year, U.S. and Canada Adjusted EBITDA
increased 10.1% to $118.5 million while margins were approximately
flat at 11.5%.
International: In the International segment, net revenue
in the fourth quarter grew 3.3% to $92.9 million, with the stronger
dollar reducing growth by 8.0%. Sales per Hub increased 7.7% to
$9.8 million. Organic growth of 11.3% in the quarter was driven by
successful specialty doughnut sales and expansion of DFD. The
company saw growth across all of our International markets,
including in the U.K. which saw sequential improvement compared to
the third quarter. For the full year, the International segment saw
net revenue increase 9.9% to $365.9 million, with organic growth of
17.7%, which excludes the impact of the stronger U.S. dollar.
International Adjusted EBITDA in the fourth quarter was
approximately flat over the prior year at $20.5 million, or an
increase of 13.5% in constant currency. International Adjusted
EBITDA margin was 22.0% for the quarter, down 110 basis points from
the prior year but an increase of 210 basis points from the prior
quarter. For the full year, International Adjusted EBITDA declined
7.3% to $75.5 million, or an increase of 3.8% in constant
currency.
Market Development: In the Market Development segment net
revenue in the fourth quarter grew 10.7% to $34.7 million or 20.9%
in constancy currency. Organic growth accelerated to 23.4% in the
quarter with strong performances across our global franchise
partners and our equity owned Japanese market. For the full year,
Market Development net revenue increased 6.4% to $130.9 million, or
13.7% in constant currency, while organic growth was 19.3%.
Market Development Adjusted EBITDA in the fourth quarter
increased 11.3% to $12.3 million, or 22.0% in constant currency,
led by strong increases in international franchise and our equity
owned Japan business, partially offset by domestic franchise
acquisitions. For the full year, Market Development Adjusted EBITDA
increased 8.8% to $44.4 million, or 17.1% in constant currency.
Balance Sheet and Capital
Expenditures
During the fourth quarter 2022, the company invested $36.7
million in capital expenditures, primarily to support Hub and Spoke
expansion. For the full year 2022, the Company invested $111.7
million in capital expenditures, or 7.3% of revenue, and $17.3
million for franchise acquisitions in the U.S.
As of January 1, 2023, the Company had $35.4 million of cash and
cash equivalents and net debt of $746.0 million. Free cash flow in
the fourth quarter was $32.4 million with the Adjusted EBITDA
generated from operating activities in excess of capital
expenditures reflecting the capital-efficient Hub and Spoke growth
model and free cash flow of $28.1 million for the full year
2022.
2023 Financial Outlook
Krispy Kreme issues the following guidance for the full year
2023
- Net Revenue of $1.65 billion to $1.68 billion, +8% to +10% vs
2022 (+9% to +11% in constant currency)
- Organic Revenue growth of 9% to 11%
- Adjusted EBITDA of $205 million to $215 million, +8% to +13% vs
2022 (+10% to +14% in constant currency)
- Adjusted Net Income, diluted, of $52 million to $58 million,
+5% to +17% vs 2022 (+9% to +21% in constant currency)
- Adjusted Diluted EPS of $0.31 to $0.34, +7% to +17% vs 2022
(+10% to +21% in constant currency)
- Income Tax rate between 24.5% to 26.0%
- Capital Expenditures between $105 million to $115 million, or
approximately 6.6% of revenue
- Interest Expense, net between $39 million to $43 million
The above guidance assumes a negative 1% impact to 2023 revenue
and a negative $3 million impact to 2023 Adjusted EBITDA from FX
headwinds, with the impact entirely in the first half of the year.
The Company expects to reduce its net leverage in 2023, as we make
progress towards our 2026 goal of approximately 2.0x to 2.5x net
leverage.
Definitions
The following definitions apply to terms used throughout this
press release:
- Global Points of Access: Reflects all locations at which
fresh doughnuts or cookies can be purchased. We define global
points of access to include all Hot Light Theater Shops, Fresh
Shops, Carts and Food Trucks, DFD Doors and Cookie Shops, at both
Company-owned and franchise locations as of the end of the
respective reporting period. We monitor global points of access as
a metric that informs the growth of our omni-channel presence over
time and believe this metric is useful to investors to understand
our footprint in each of our segments.
- Hubs: Reflects locations where fresh doughnuts are
produced and processed for sale at any point of access. We define
Hubs to include self-sustaining Hot Light Theater Shops and
Doughnut Factories, at both Company-owned and franchise locations
as of the end of the respective reporting period.
- Sales Per Hub: Sales per Hub equals Fresh Revenues from
Hubs with Spokes, divided by the average number of Hubs with Spokes
at the end of the five most recent quarters.
- Fresh Revenues from Hubs with Spokes: Fresh Revenues
include product sales generated from our Doughnut Shop business
(including ecommerce and delivery), as well as DFD sales, but
excluding sales from our legacy wholesale business and our Branded
Sweet Treat Line. It also excludes all Insomnia Cookies revenues as
the measure is focused on the Krispy Kreme business. Fresh Revenues
from Hubs with Spokes equals the Fresh Revenues derived from those
Hubs currently producing product for other shops, Carts and Food
Trucks, and/or DFD doors, but excluding Fresh Revenues derived from
those Hubs not currently producing product for other shops, Carts
and Food Trucks, and/or DFD doors.
- Free Cash Flow: Defined as cash provided by operating
activities less purchases of property and equipment.
Conference Call
Krispy Kreme will host a public conference call at 8:30 AM
Eastern Time today to discuss its results for the fourth quarter of
2022. The conference call can be accessed by dialing 1 (800)
599-5188 and entering the conference ID 5487868. International
participants can access the call via the corresponding number
listed HERE and entering the conference ID 5487868. To listen to
the live audio webcast and Q&A, visit the Krispy Kreme investor
relations website at investors.krispykreme.com. A replay and
transcript of the webcast will be available on the website within
24 hours after the call. Krispy Kreme’s earnings press release and
related materials will also be available on the investor relations
section of the Company’s website.
About Krispy Kreme
Headquartered in Charlotte, N.C., Krispy Kreme is one of the
most beloved and well-known sweet treat brands in the world. Our
iconic Original Glazed® doughnut is universally recognized for its
hot-off-the-line, melt-in-your-mouth experience. Krispy Kreme
operates in over 30 countries through its unique network of fresh
doughnut shops, partnerships with leading retailers, and a rapidly
growing Ecommerce and delivery business with nearly 12,000 fresh
points of access. Our purpose of touching and enhancing lives
through the joy that is Krispy Kreme guides how we operate every
day and is reflected in the love we have for our people, our
communities and the planet. Connect with Krispy Kreme Doughnuts at
www.KrispyKreme.com, or on one of its many social media channels,
including www.Facebook.com/KrispyKreme and
www.Twitter.com/KrispyKreme.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties. The words “believe,” “may,”
“could,” “will,” “should,” “anticipate,” “estimate,” “expect,”
“outlook,” “guidance,” or similar words, or the negative of these
words, identify forward-looking statements. Such forward-looking
statements are based on certain assumptions and estimates that we
consider reasonable but are subject to various risks and
uncertainties and assumptions relating to our operations, financial
results, financial conditions, business, prospects, growth strategy
and liquidity. Accordingly, there are, or will be, important
factors that could cause our actual results to differ materially
from those indicated in these statements. The inclusion of this
forward-looking information should not be regarded as a
representation by us that the future plans, estimates or
expectations contemplated by us will be achieved. Our actual
results could differ materially from the forward-looking statements
included herein. Factors that could cause actual results to differ
from those expressed in forward-looking statements include, without
limitation, the risks and uncertainties described under the
headings “Special Note Regarding Forward-Looking Statements” and
“Risk Factors” in the Prospectus, dated June 30, 2022, 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.
Consolidated Statements of
Operations
(in thousands, except per
share amounts)
Fiscal Years Ended
January 1, 2023 (52
weeks)
January 2, 2022 (52
weeks)
January 3, 2021 (53
weeks)
(unaudited)
Net revenues
Product sales
$
1,497,882
$
1,353,466
$
1,085,110
Royalties and other revenues
32,016
30,925
36,926
Total net revenues
1,529,898
1,384,391
1,122,036
Product and distribution costs
406,227
354,093
310,909
Operating expenses
704,287
630,239
488,061
Selling, general and administrative
expense
223,198
222,394
182,317
Marketing expenses
42,566
39,489
34,000
Pre-opening costs
4,227
5,568
11,583
Other expenses/(income), net
10,157
(10,102
)
10,488
Depreciation and amortization expense
110,261
101,608
80,398
Operating income
28,975
41,102
4,280
Interest expense, net
34,102
32,622
34,741
Interest expense – related party
—
10,387
22,468
Other non-operating expense/(income),
net
3,036
2,191
(1,101
)
Loss before income taxes
(8,163
)
(4,098
)
(51,828
)
Income tax expense
612
10,745
9,112
Net loss
(8,775
)
(14,843
)
(60,940
)
Net income attributable to noncontrolling
interest
6,847
9,663
3,361
Net loss attributable to Krispy Kreme,
Inc
$
(15,622
)
$
(24,506
)
$
(64,301
)
Net loss per share:
Common stock - Basic
$
(0.10
)
$
(0.18
)
$
(0.52
)
Common stock - Diluted
$
(0.10
)
$
(0.18
)
$
(0.52
)
Weighted average shares
outstanding:
Basic
167,471
147,655
124,987
Diluted
167,471
147,655
124,987
Quarter Ended
January 1, 2023 (13
weeks)
January 2, 2022 (13
weeks)
Net revenue
Product sales
$
395,837
$
364,334
Royalties and other revenues
8,762
6,263
Total net revenues
404,599
370,597
Product and distribution costs
106,688
96,927
Operating expenses
184,027
167,506
Selling, general and administrative
expense
62,932
58,977
Marketing expenses
10,197
7,868
Pre-opening costs
713
1,233
Other expenses/(income), net
8,357
(5,737
)
Depreciation and amortization expense
26,479
27,350
Operating income
5,206
16,473
Interest expense, net
10,294
7,394
Other non-operating expense, net
953
2,317
(Loss)/income before income
taxes
(6,041
)
6,762
Income tax (benefit)/expense
(5,056
)
2,479
Net (loss)/income
(985
)
4,283
Net income attributable to noncontrolling
interest
1,734
2,927
Net (loss)/income attributable to
Krispy Kreme, Inc.
$
(2,719
)
$
1,356
Net (loss)/income per share:
Common stock - Basic
$
(0.02
)
$
0.01
Common stock - Diluted
$
(0.02
)
$
0.01
Weighted average shares
outstanding:
Basic
167,826
167,246
Diluted
167,826
169,130
Krispy Kreme, Inc.
Consolidated Balance
Sheets
(in thousands, except per
share data)
As of
January 1, 2023
January 2, 2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
35,371
$
38,562
Restricted cash
359
630
Accounts receivable, net
51,089
47,491
Inventories
46,239
34,851
Taxes receivable
18,263
14,662
Prepaid expense and other current
assets
26,953
20,701
Total current assets
178,274
156,897
Property and equipment, net
472,358
438,918
Goodwill
1,087,908
1,105,322
Other intangible assets, net
966,088
992,520
Operating lease right of use asset,
net
417,381
435,168
Other assets
26,528
16,429
Total assets
$
3,148,537
$
3,145,254
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
40,034
$
36,583
Current operating lease liabilities
43,160
50,359
Accounts payable
225,276
182,104
Accrued liabilities
104,424
140,750
Structured payables
103,575
116,361
Total current liabilities
516,469
526,157
Long-term debt, less current portion
739,052
680,307
Noncurrent operating lease liabilities
412,759
415,208
Deferred income taxes, net
143,124
145,418
Other long-term obligations and deferred
credits
38,258
42,509
Total liabilities
1,849,662
1,809,599
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value; 300,000
shares authorized as of both January 1, 2023 and January 2, 2022;
168,137 and 167,251 shares issued and outstanding as of January 1,
2023 and January 2, 2022, respectively
1,681
1,673
Additional paid-in capital
1,426,105
1,415,185
Shareholder note receivable
(4,813
)
(4,382
)
Accumulated other comprehensive loss, net
of income tax
(9,151
)
(2,478
)
Retained deficit
(217,490
)
(178,409
)
Total shareholders’ equity attributable
to Krispy Kreme, Inc.
1,196,332
1,231,589
Noncontrolling interest
102,543
104,066
Total shareholders’ equity
1,298,875
1,335,655
Total liabilities and shareholders’
equity
$
3,148,537
$
3,145,254
Krispy Kreme, Inc.
Consolidated Statements of
Cash Flows
(in thousands)
Fiscal Years Ended
January 1, 2023 (52
weeks)
January 2, 2022 (52
weeks)
January 3, 2021 (53
weeks)
(unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss
$
(8,775
)
$
(14,843
)
$
(60,940
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization expense
110,261
101,608
80,398
Deferred income taxes
(14,237
)
(3,496
)
(36
)
Loss on extinguishment of debt
—
1,700
—
Impairment and lease termination
charges
18,297
3,507
4,701
Loss on disposal of property and
equipment
393
458
2,771
Gain on sale-leaseback
(6,549
)
(8,673
)
—
Share-based compensation
18,170
22,923
11,601
Change in accounts and notes receivable
allowances
570
275
1,047
Inventory write-off
868
4,071
726
Gain on contingent consideration related
to a business combination
—
—
(1,521
)
Settlement of interest rate swap
derivatives
8,476
—
—
Other
2,232
594
410
Change in operating assets and
liabilities, excluding business acquisitions and foreign currency
translation adjustments:
Accounts, notes, and taxes receivable
(9,485
)
(3,817
)
(11,942
)
Inventories
(12,515
)
(301
)
(15,353
)
Other current and noncurrent assets
(24,057
)
(316
)
434
Operating lease assets and liabilities
(793
)
7,787
(1,575
)
Accounts payable and accrued
liabilities
40,622
30,240
12,906
Other long-term obligations and deferred
credits
16,340
(493
)
5,048
Net cash provided by operating
activities
139,818
141,224
28,675
CASH FLOWS USED FOR INVESTING
ACTIVITIES:
Purchase of property and equipment
(111,717
)
(119,497
)
(97,826
)
Proceeds from disposals of assets
1,077
218
2,837
Proceeds from sale-leaseback
8,401
11,091
—
Acquisition of shops and franchise rights
from franchisees, net of cash acquired
(17,330
)
(46,330
)
(74,890
)
Purchase of equity method investment
(989
)
—
—
Principal payments received from loans to
franchisees
59
92
684
Disbursement for loan receivable
(975
)
—
—
Purchases of held-to-maturity debt
securities
—
—
(57
)
Maturities of held-to-maturity debt
securities
—
1,019
1,124
Net cash used for investing
activities
(121,474
)
(153,407
)
(168,128
)
CASH FLOWS (USED FOR)/FROM FINANCING
ACTIVITIES:
Proceeds from the issuance of debt
149,000
695,000
288,097
Repayment of long-term debt and lease
obligations
(101,181
)
(1,147,049
)
(225,541
)
Payment of financing costs
—
(1,700
)
—
Proceeds from structured payables
282,023
266,851
292,756
Payments on structured payables
(294,457
)
(287,625
)
(225,320
)
Payment of contingent consideration
related to a business combination
(900
)
—
(506
)
Capital contribution by shareholders, net
of loans issued
(288
)
120,532
—
Proceeds from IPO, net of underwriting
discounts (excluding unpaid issuance costs)
—
527,329
—
Payments of issuance costs in connection
with IPO
(12,458
)
—
—
Proceeds from sale of noncontrolling
interest in subsidiary
593
53,404
21,386
Distribution to shareholders
(23,430
)
(48,187
)
(42
)
Payments for repurchase and retirement of
common stock
(4,019
)
(139,103
)
—
Distribution to noncontrolling
interest
(11,721
)
(23,356
)
(11,389
)
Net cash (used for)/provided by
financing activities
(16,838
)
16,096
139,441
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(4,968
)
(2,204
)
2,045
Net (decrease)/increase in cash, cash
equivalents and restricted cash
(3,462
)
1,709
2,033
Cash, cash equivalents and restricted cash
at beginning of the fiscal year
39,192
37,483
35,450
Cash, cash equivalents and restricted
cash at end of the fiscal year
$
35,730
$
39,192
$
37,483
Net cash provided by operating
activities
$
139,818
$
141,224
$
28,675
Less: Purchase of property and
equipment
(111,717
)
(119,497
)
(97,826
)
Free cash flow
$
28,101
$
21,727
$
(69,151
)
Krispy Kreme, Inc.
Reconciliation of Non-GAAP
Financial Measures
(unaudited and in thousands,
except per share amounts)
Quarter Ended
Fiscal Years Ended
(in thousands)
January 1, 2023
January 2, 2022
January 1, 2023
January 2, 2022
Net (loss)/income
$
(985
)
$
4,283
$
(8,775
)
$
(14,843
)
Interest expense, net
10,294
7,394
34,102
32,622
Interest expense — related party (1)
—
—
—
10,387
Income tax (benefit)/expense
(5,056
)
2,479
612
10,745
Depreciation and amortization expense
26,479
27,350
110,261
101,608
Share-based compensation
4,852
5,950
18,170
22,923
Employer payroll taxes related to
share-based compensation
220
32
312
2,044
Other non-operating expense, net (2)
953
2,317
3,036
2,191
BST strategic initiatives (3)
2,635
—
2,841
—
Acquisition and integration expenses
(4)
944
1,592
2,333
5,255
New market penetration expenses (5)
828
—
1,511
—
Shop closure expenses (6)
11,606
2,766
19,465
2,766
Restructuring and severance expenses
(7)
4,321
340
7,125
1,733
IPO-related expenses (8)
—
313
—
14,534
Gain on sale-leaseback
(2,238
)
(8,673
)
(6,549
)
(8,673
)
Other (9)
1,066
1,589
6,285
4,653
Adjusted EBITDA
$
55,919
$
47,732
$
190,729
$
187,945
Quarter Ended
Fiscal Years Ended
(in thousands)
January 1, 2023
January 2, 2022
January 1, 2023
January 2, 2022
Segment Adjusted EBITDA:
U.S. and Canada
$
36,962
$
31,811
$
118,483
$
107,571
International
20,479
20,746
75,512
81,422
Market Development
12,286
11,042
44,421
40,824
Corporate
(13,808
)
(15,867
)
(47,687
)
(41,872
)
Total Adjusted EBITDA
$
55,919
$
47,732
$
190,729
$
187,945
Quarter Ended
Fiscal Years Ended
(in thousands)
January 1, 2023
January 2, 2022
January 1, 2023
January 2, 2022
Net (loss)/income
$
(985
)
$
4,283
$
(8,775
)
$
(14,843
)
Interest expense — related party (1)
—
—
—
10,387
Share-based compensation
4,852
5,950
18,170
22,923
Employer payroll taxes related to
share-based compensation
220
32
312
2,044
Other non-operating expense, net (2)
953
2,317
3,036
2,191
BST strategic initiatives (3)
2,635
—
2,841
—
Acquisition and integration expenses
(4)
944
1,592
2,333
5,255
New market penetration expenses (5)
828
—
1,511
—
Shop closure expenses (6)
11,606
2,766
19,715
2,766
Restructuring and severance expenses
(7)
4,321
340
7,125
1,733
IPO-related expenses (8)
—
313
—
14,534
Gain on sale-leaseback
(2,238
)
(8,673
)
(6,549
)
(8,673
)
Other (9)
1,066
1,589
6,285
4,653
Amortization of acquisition related
intangibles (10)
7,149
7,230
28,456
29,803
KKI Term Loan Facility interest and debt
issuance costs (11)
—
—
—
2,448
Tax impact of adjustments (12)
(8,720
)
(1,830
)
(14,609
)
(12,434
)
Tax specific adjustments (13)
(2,248
)
103
(2,876
)
3,936
Net income attributable to noncontrolling
interest
(1,734
)
(2,927
)
(6,847
)
(9,663
)
Adjustment to adjusted net income
attributable to common shareholders
—
317
(374
)
(1,468
)
Adjusted net income attributable to
common shareholders - Basic
$
18,649
$
13,402
$
49,754
$
55,592
Additional income attributed to
noncontrolling interest due to subsidiary potential common
shares
(37
)
(5
)
(143
)
(122
)
Adjusted net income attributable to
common shareholders - Diluted
$
18,612
$
13,397
$
49,611
$
55,470
Basic weighted average common shares
outstanding
167,826
167,246
167,471
147,655
Dilutive effect of outstanding common
stock options and RSUs
2,000
1,884
2,005
2,671
Diluted weighted average common shares
outstanding
169,826
169,130
169,476
150,326
Adjusted net income per share
attributable to common shareholders:
Basic
$
0.11
$
0.08
$
0.30
$
0.38
Diluted
$
0.11
$
0.08
$
0.29
$
0.37
(1)
Consists of interest expense related to the Related Party
Notes which were paid off in full during the second quarter of
fiscal 2021.
(2)
Primarily foreign translation gains and losses in each
period.
(3)
Fiscal 2022 consists mainly of equipment disposals,
equipment relocation and installation, consulting and advisory
fees, and other costs associated with our shift of Branded Sweet
Treat Line manufacturing capability from Burlington, Iowa to
Winston-Salem, North Carolina.
(4)
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-related activities for the
applicable period.
(5)
Consists of start-up costs associated with entry into new
countries for which the Company’s brands have not previously
operated, including the Insomnia Cookies brand entering Canada and
the U.K.
(6)
Includes lease termination costs, impairment charges, and
loss on disposal of property, plant and equipment.
(7)
Fiscal 2022 consists of costs associated with restructuring
of the global and U.S. executive teams. Fiscal 2021 consists of
severance and related benefits costs associated with the Company’s
realignment of the Company Shop organizational structure to better
support the DFD and Branded Sweet Treat Line businesses.
(8)
Includes consulting and advisory fees incurred in connection
with preparation for and execution of the Company’s IPO.
(9)
Fiscal 2022 and fiscal 2021 consist primarily of legal
expenses incurred outside the ordinary course of business,
including the net settlement of approximately $3.3 million
negotiated with TSW Foods, LLC in fiscal 2022.
(10)
Consists of amortization related to acquired intangible
assets as reflected within depreciation and amortization in the
Consolidated Statements of Operations.
(11)
Includes interest expense and debt issuance costs incurred
and recognized as expenses in connection with the extinguishment of
the KKI Term Loan Facility within four business days of receipt of
the net proceeds from the IPO.
(12)
Tax impact of adjustments calculated applying the applicable
statutory rates. The Company’s adjusted effective tax rate is 24.1%
and 22.4% for the fiscal years 2022 and 2021, respectively. Fiscal
2022 includes the impact of disallowed executive compensation
expense and a discrete tax benefit related to a legal accrual.
Fiscal 2021 includes the impact of disallowed executive
compensation expense incurred in connection with the IPO.
(13)
Fiscal 2022 consists of the recognition of previously
unrecognized tax benefits unrelated to ongoing operations, as well
as benefits attributable to multiple tax years due to lapse of the
statute of limitations. Fiscal 2022 also include the effect of
discrete adjustments to the Company’s deferred tax liabilities that
are unrelated to the Company’s ongoing operations. Fiscal 2021
consists primarily of the effect of tax law changes on existing
temporary differences.
Krispy Kreme, Inc.
Segment Reporting
(unaudited and in thousands,
except percentages or otherwise stated)
Quarter Ended
January 1, 2023
January 2, 2022
January 3, 2021
Net revenues:
U.S. and Canada
$
276,929
$
249,218
$
225,437
International
92,928
89,990
71,610
Market Development
34,742
31,389
28,568
Total net revenues
$
404,599
$
370,597
$
325,615
Q4 2022 Organic Revenue
U.S. and Canada
International
Market Development
Total Company
Total net revenues in fourth quarter of
fiscal 2022 (13 weeks)
$
276,929
$
92,928
$
34,742
$
404,599
Total net revenues in fourth quarter of
fiscal 2021 (13 weeks)
249,218
89,990
31,389
370,597
Total Net Revenue Growth
27,711
2,938
3,353
34,002
Total Net Revenue Growth %
11.1
%
3.3
%
10.7
%
9.2
%
Less: Impact of shop optimization program
closures
(1,374
)
—
—
(1,374
)
Adjusted net revenues in fourth quarter of
fiscal 2021
247,844
89,990
31,389
369,223
Adjusted Net Revenue Growth
29,085
2,938
3,353
35,376
Impact of acquisitions
(2,652
)
—
769
(1,883
)
Impact of foreign currency translation
2,299
7,211
3,221
12,731
Organic Revenue Growth
$
28,732
$
10,149
$
7,343
$
46,224
Organic Revenue Growth %
11.6
%
11.3
%
23.4
%
12.5
%
Q4 2021 Organic Revenue
U.S. and Canada
International
Market Development
Total Company
Total net revenues in fourth quarter of
fiscal 2021 (13 weeks)
$
249,218
$
89,990
$
31,389
$
370,597
Total net revenues in fourth quarter of
fiscal 2020 (14 weeks)
225,437
71,610
28,568
325,615
Total Net Revenue Growth
23,781
18,380
2,821
44,982
Total Net Revenue Growth %
10.5
%
25.7
%
9.9
%
13.8
%
Less: Impact of 53rd week
(15,615
)
(3,287
)
(1,603
)
(20,505
)
Adjusted net revenues in fourth quarter of
fiscal 2020
209,822
68,323
26,965
305,110
Adjusted Net Revenue Growth
39,396
21,667
4,424
65,487
Impact of acquisitions
(20,315
)
—
(2,591
)
(22,906
)
Impact of foreign currency translation
—
(624
)
543
(81
)
Organic Revenue Growth
$
19,081
$
21,043
$
2,376
$
42,500
Organic Revenue Growth %
9.1
%
30.8
%
8.8
%
13.9
%
Fiscal Years Ended
January 1, 2023
January 2, 2022
January 3, 2021
Net revenues:
U.S. and Canada
$
1,033,125
$
928,413
$
782,717
International
365,916
332,995
230,185
Market Development
130,857
122,983
109,134
Total net revenues
$
1,529,898
$
1,384,391
$
1,122,036
Full Year 2022 Organic Revenue
U.S. and Canada
International
Market Development
Total Company
Total net revenues in fiscal 2022 (52
weeks)
$
1,033,125
$
365,916
$
130,857
$
1,529,898
Total net revenues in fiscal 2021 (52
weeks)
928,413
332,995
122,983
1,384,391
Total Net Revenue Growth
104,712
32,921
7,874
145,507
Total Net Revenue Growth %
11.3
%
9.9
%
6.4
%
10.5
%
Less: Impact of shop optimization program
closures
(1,374
)
—
—
(1,374
)
Adjusted net revenues in fiscal 2021
927,039
332,995
122,983
1,383,017
Adjusted Net Revenue Growth
106,086
32,921
7,874
146,881
Impact of acquisitions
(24,391
)
—
6,899
(17,492
)
Impact of foreign currency translation
2,299
26,052
8,991
37,342
Organic Revenue Growth
$
83,994
$
58,973
$
23,764
$
166,731
Organic Revenue Growth %
9.1
%
17.7
%
19.3
%
12.1
%
Full Year 2021 Organic Revenue
U.S. and Canada
International
Market Development
Total Company
Total net revenues in fiscal 2021 (52
weeks)
$
928,413
$
332,995
$
122,983
$
1,384,391
Total net revenues in fiscal 2020 (53
weeks)
782,717
230,185
109,134
1,122,036
Total Net Revenue Growth
$
145,696
$
102,810
$
13,849
$
262,355
Total Net Revenue Growth %
18.6
%
44.7
%
12.7
%
23.4
%
Less: Impact of 53rd week
(15,615
)
(3,287
)
(1,603
)
(20,505
)
Adjusted net revenues in fiscal 2020
767,102
226,898
107,531
1,101,531
Adjusted Net Revenue Growth
161,311
106,097
15,452
282,860
Impact of acquisitions
(119,377
)
—
(4,175
)
(123,552
)
Impact of foreign currency translation
—
(22,391
)
543
(21,848
)
Organic Revenue Growth
$
41,934
$
83,706
$
11,820
$
137,460
Organic Revenue Growth %
5.5
%
36.9
%
11.0
%
12.5
%
Fiscal Years Ended
Sales per Hub
January 1, 2023 (52
weeks)
January 2, 2022 (52
weeks)
January 3, 2021 (53
weeks)
U.S. and Canada:
Revenues
$
1,033,125
$
928,413
$
782,717
Non-Fresh Revenues (1)
(38,380
)
(37,311
)
(128,619
)
Fresh Revenues from Insomnia Cookies and
Hubs without Spokes (2)
(407,558
)
(415,768
)
(323,079
)
Sales from Hubs with Spokes
587,187
475,334
331,019
Sales per Hub (millions)
4.6
4.0
3.5
International:
Sales from Hubs with Spokes (3)
$
365,916
$
332,995
$
230,185
Sales per Hub (millions)
9.8
9.1
6.4
(1)
Includes legacy wholesale business revenues and Branded
Sweet Treat Line revenues.
(2)
Includes Insomnia Cookies revenues and Fresh Revenues
generated by Hubs without Spokes.
(3)
Total International net revenues is equal to Fresh Revenues
from Hubs with Spokes for that business segment.
Krispy Kreme, Inc.
Global Points of
Access
Global Points of Access
(1)
Fiscal Years Ended
January 1, 2023
January 2, 2022
January 3, 2021
(unaudited)
U.S. and Canada: (2)
Hot Light Theater Shops
238
241
229
Fresh Shops
68
66
47
Cookie Shops
231
210
184
Carts, Food Trucks, and Other (3)
—
2
—
DFD Doors
5,741
5,204
4,137
Total
6,278
5,723
4,597
International:
Hot Light Theater Shops
37
32
28
Fresh Shops
388
370
359
Carts, Food Trucks, and Other (3)
14
1
—
DFD Doors
3,032
2,488
1,986
Total
3,471
2,891
2,373
Market Development: (4)
Hot Light Theater Shops
111
109
119
Fresh Shops
867
782
732
Carts, Food Trucks, and Other (3)
27
31
30
DFD Doors
1,083
891
465
Total
2,088
1,813
1,346
Total global points of access (as
defined)
11,837
10,427
8,316
Total Hot Light Theater Shops
386
382
376
Total Fresh Shops
1,323
1,218
1,138
Total Cookie Shops
231
210
184
Total Shops
1,940
1,810
1,698
Total Carts, Food Trucks, and
Other
41
34
30
Total DFD Doors
9,856
8,583
6,588
Total global points of access (as
defined)
11,837
10,427
8,316
(1)
Excludes Branded Sweet Treat Line distribution points.
(2)
Includes Points of Access that were acquired from
franchisees in the U.S. and Canada. These Points of Access were
previously included in the Market Development segment prior to the
respective acquisition dates.
(3)
Carts and Food Trucks are non-producing, mobile (typically
on wheels) facilities without walls or a door where product is
received from a Hot Light Theater Shop or Doughnut Factory. Other
includes a vending machine. Points of Access in this category are
primarily found in international locations, in airports, train
stations, etc.
(4)
Includes locations in Japan, which are Company-owned. All
remaining Points of Access in the Market Development segment relate
to our franchise business. As of January 1, 2023, there were five
Hot Light Theater Shops, 54 Fresh Shops and 166 DFD Doors in Japan
operating. As of January 2, 2022, there were four Hot Light Theater
Shops, 48 Fresh Shops and 105 DFD Doors in Japan operating.
Krispy Kreme, Inc.
Global Hubs
Hubs
Fiscal Years Ended
January 1, 2023
January 2, 2022
January 3, 2021
(unaudited)
U.S. and Canada:
Hot Light Theater Shops (1)
232
238
226
Doughnut Factories
4
4
5
Total
236
242
231
Hubs with Spokes
137
126
113
Hubs without Spokes
99
116
118
International:
Hot Light Theater Shops (1)
28
25
27
Doughnut Factories
11
11
9
Total
39
36
36
Hubs with Spokes
39
36
36
Market Development:
Hot Light Theater Shops (1)
106
106
116
Doughnut Factories
27
27
26
Total
133
133
142
Total Hubs
408
411
409
(1)
Includes only Hot Light Theater Shops and excludes Mini
Theaters. A Mini Theater is a Spoke location that produces some
doughnuts for itself and also receives doughnuts from another
producing location.
Krispy Kreme, Inc.
Net Debt and Leverage
(in thousands, except leverage
ratio)
As of
January 1, 2023
January 2, 2022
(unaudited)
Current portion of long-term debt
$
40,034
$
36,583
Long-term debt, less current portion
739,052
680,307
Total long-term debt, including debt
issuance costs
779,086
716,890
Add back: Debt issuance costs
2,247
3,833
Total long-term debt, excluding debt
issuance costs
781,333
720,723
Less: Cash and cash equivalents
(35,371
)
(38,562
)
Net debt
$
745,962
$
682,161
Adjusted EBITDA - trailing four
quarters
190,729
187,945
Net leverage ratio
3.9 x
3.6 x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230214005880/en/
Investor Relations Rob
Ballew, VP of Investor Relations rballew@krispykreme.com
Financial Media Edelman
Smithfield for Krispy Kreme, Inc. Allie McLarty & Ashley
Firlan, KrispyKremeIR@edelman.com
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