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Krispy Kreme Reports First Quarter Results Showcasing a Robust Start to 2022

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

 

  1. Consists of interest expense related to the Related Party Notes which were paid off in full during the quarter ended July 4, 2021.
  2. Primarily foreign translation gains and losses in each period.
  3. 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.
  4. Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment.
  5. Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company’s IPO.
  6. The quarters ended April 3, 2022 and April 4, 2021 consist primarily of legal expenses incurred outside the ordinary course of business.
  7. Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the Condensed Consolidated Statements of Operations.
  8. 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.
  9. 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

 

  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 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

  1. Excludes Branded Sweet Treat Line distribution points.
  2. 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.
  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. They are primarily found in international locations, in airports, train stations, etc. Comparative data has been included in all periods presented above.
  4. 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

  1. 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

 

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