Krispy Kreme Reports First Quarter 2025 Financial Results

First quarter Net Revenue of $375.2 million, Organic Revenue decreases 1.0%

Krispy Kreme, Inc. (NASDAQ: DNUT) (“Krispy Kreme”, “KKI”, or the “Company”) today reported financial results for the quarter ended March 30, 2025.

First Quarter Highlights (vs Q1 2024)

• Net revenue of $375.2 million
• Organic revenue declined 1.0% to $374.7 million
• GAAP net loss of $33.4 million
• Adjusted EBITDA of $24.0 million
• GAAP cash used for operating activities of $20.8 million
• Global Points of Access (“POA”) increased 3,168, or 21.4%, to 17,982

In the first quarter, Krispy Kreme spotlighted its most popular and most affordable Original Glazed doughnut to increasingly value-conscious consumers while also delivering buzzworthy Valentine’s and St. Patrick’s Day offerings. The Company continued to grow Delivered Fresh Daily and prepared for the early second quarter launch of outsourced U.S. logistics.

“Our ability to become a bigger Krispy Kreme requires that we become better, and we are taking swift and decisive action to pay down debt, de-leverage the balance sheet and drive sustainable, profitable growth,” said Krispy Kreme CEO, Josh Charlesworth. “While we expect the macro environment to remain challenging, we are focused on positive cash flow, higher returns on capital, and our two biggest opportunities: profitable U.S. expansion and capital-light international franchise growth.”

Notes:

(1) Non-GAAP figures - please refer to "Non-GAAP Measures" and “Reconciliation of Non-GAAP Financial Measures.”

First Quarter 2025 Consolidated Results (vs Q1 2024)

Krispy Kreme’s first quarter results reflect continued investment ahead of growth in the Company’s U.S. nationwide expansion and wider adoption of the capital-light international franchise model. Net revenue was $375.2 million in the first quarter of 2025, a decline of 15.3% or $67.5 million, primarily due to the $64.3 million reduction associated with the divestiture of a majority stake in Insomnia Cookies in the third quarter of fiscal 2024. In line with expectations, organic revenue declined $3.6 million, or approximately 1.0%, as growth in Global Points of Access and Delivered Fresh Daily (“DFD”) revenues were more than offset by expected consumer softness leading to a decline in doughnut shop transaction volume.

GAAP Net Loss was $33.4 million, compared to prior year net loss of $6.7 million. GAAP diluted loss per share was $0.20, compared to a loss of $0.05 in the same quarter last year.

Adjusted EBITDA declined to $24.0 million, with Adjusted EBITDA Margin declining to 6.4% as the Company invests ahead of growth and navigates a challenged global consumer backdrop linked to macroeconomic, weather, and inflationary factors. Adjusted Net Loss, diluted was $8.8 million in the quarter. Adjusted Diluted loss per share was $0.05 in the quarter.

First Quarter 2025 Segment Results (vs Q1 2024)

U.S.: In the U.S. segment, net revenue declined $59.4 million, or 20.1%, primarily due to the $64.3 million reduction associated with the sale of a majority stake in Insomnia Cookies. Organic revenue declined $6.1 million, or 2.6%, as Points of Access growth of 34.9% was more than offset by expected consumer softness. Average revenue per door per week (“APD”) declined to $587, reflecting shifting customer mix, with Sales Per Hub of $4.8 million.

U.S. Adjusted EBITDA decreased $26.7 million, or 62.7%, with margin declining 770 basis points to 6.7%, primarily driven by a decline in operating leverage, costs associated with our U.S. nationwide expansion, and an estimated $5.0 million in operational inefficiencies related to the 2024 Cybersecurity Incident.

International: In the International segment, net revenue declined $5.1 million, or approximately 4.1%, primarily due to foreign currency translation impacts of $8.4 million. International organic revenue grew $1.9 million, or approximately 1.5%, driven primarily by growth in Canada. Points of Access growth of 6.3% was partially offset by closures in Japan and Mexico to optimize the DFD network.

International segment Adjusted EBITDA declined $5.6 million, or 27.5%, with a margin decline of 400 basis points to 12.5% due to lower transaction volumes impacting operating leverage. Our new management team in the U.K. has embarked on a strategy to revitalize the brand’s consumer relevance by bringing back family-centric offerings and an updated price pack architecture.

Market Development: In the Market Development segment, net revenue declined $3.0 million, or approximately 13.7%, reflecting a $3.6 million impact of franchise acquisitions and lower equipment sales, offset by growth in new and existing markets. Market Development organic revenue increased $0.6 million, or 2.7%, driven by the successful expansion of our international franchise businesses including in the Middle East and the launch of DFD in France.

Market Development Adjusted EBITDA decreased $0.9 million, or 7.2%, while margin improved 400 basis points to 58.1% driven by revenue mix and greater contribution from international franchisees.

Balance Sheet and Capital Expenditures

During the first quarter of 2025, the Company invested $25.9 million, or 6.9% of net revenue, in capital expenditures, primarily in the U.S. to support bringing doughnuts closer to our consumers via nationwide expansion.

Subsequent to the end of the quarter, the Company amended its existing credit agreement to establish incremental term loan commitments in an aggregate principal amount of $125.0 million dollars. The Company expects to use the incremental capacity primarily to pay down its revolving credit facility. The amendment carries identical terms as the existing credit agreement regarding maturity date and interest rates.

Capital Allocation and Dividend Policy

As previously announced, the Company continues to evaluate opportunities to refranchise certain international markets including Australia and New Zealand, Japan, Mexico, and the U.K. and Ireland.

Following a review of the Company’s capital allocation strategy and investments available to fuel our growth, the Company has made the decision to no longer pay quarterly cash dividends to holders of the Company’s common stock. This decision provides greater financial flexibility, enabling debt paydown and a focus on profitable, high return growth.

Financial Outlook

As of March 30, 2025, Krispy Kreme doughnuts are now available in more than 2,400 McDonald’s restaurants. The Company is reassessing the deployment schedule together with McDonald’s while it works to achieve a profitable business model for all parties and does not expect to launch in any additional restaurants in the second quarter of 2025.

Krispy Kreme continues to believe in the long-term opportunity of profitable growth through the U.S. nationwide expansion including McDonald’s.

Given macroeconomic softness and the uncertainty around the McDonald’s deployment schedule, the Company is withdrawing its prior full year outlook and not updating it at this time. Regarding the second quarter of 2025, the Company expects to deliver:

• Net Revenue of $370 to $385 million
• Adjusted EBITDA(1) of $30 to $35 million

Notes:

(1) Non-GAAP figures. The Company does not reconcile forward-looking non-GAAP measures. See "Non-GAAP Measures."

Definitions

The following definitions apply to terms used throughout this press release:

• Global Points of Access: Reflects all locations at which fresh doughnuts can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors (which includes DFD branded cabinets and merchandising units within high traffic grocery and convenience stores, quick service or fast casual restaurants (“QSR”), club memberships, and drug stores) and Cookie Bakeries (through the date of the Insomnia Cookies divestiture), and other points at which fresh doughnuts can be purchased at both Company-owned and franchise locations as of the end of the applicable 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 and by asset type.
• 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 applicable reporting period.
• Hubs with Spokes: Reflects Hubs currently producing product for other Fresh Shops, Carts and Food Trucks, or DFD Doors, and excludes Hubs not currently producing product for other shops, Carts and Food Trucks, or DFD Doors.
• 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 each of the five most recent quarters.
• Fresh Revenues from Hubs with Spokes: Fresh Revenues is a measure focused on the Krispy Kreme doughnut business and includes product sales generated from our Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors, and digital channels and excludes sales from Cookie Bakeries and Branded Sweet Treats (through the date of the Insomnia cookies divestiture and Branded Sweet Treats exit, respectively). Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from Hubs with Spokes.
• 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 and webcast at 8:30 AM Eastern Time today to discuss its results for the first quarter of 2025. To register for the conference call, please use this link. After registering, confirmation will be sent through email, including dial-in details and unique conference call codes for entry. To listen to the live webcast and Q&A, visit the Krispy Kreme investor relations website at investors.krispykreme.com. A replay of the webcast will be available on the website within 24 hours after the call. This earnings press release and related materials will also be available on the investor relations section of the Company’s website.

Investor Relations
IR@KrispyKreme.com

Financial Media
ICR for Krispy Kreme, Inc.
KrispyKreme@icrinc.com

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 more than 40 countries through its unique network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing digital business with more than 17,900 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.X.com/KrispyKreme.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as “plan,” “believe,” “may,” “continue,” “guidance,” “could,” “will,” “should,” “would,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “strive” or, in each case, the negatives of these words, comparable terminology, or similar references to future periods; however, statements may be forward-looking whether or not these terms or their negatives are used. Forward-looking statements are not 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 in this press release. We consider the assumptions and estimates on which our forward-looking statements are based to be reasonable, but they are subject to various risks and uncertainties relating to our operations, financial results, financial conditions, business, prospects, future plans and strategies, projections, liquidity, the economy, and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors could cause our actual results to differ materially from those contained in forward-looking statements including, without limitation: food safety issues, including risks of food-borne illnesses, tampering, contamination, and cross-contamination; impacts from the 2024 Cybersecurity Incident or any other material failure, inadequacy, or interruption of our information technology systems, including breaches or failures of such systems or other cybersecurity or data security-related incidents; any harm to our reputation or brand image; changes in consumer preferences or demographic trends; changes in the cost of raw materials and other commodities, including due to import and export requirements (including tariffs), inflation, or foreign exchange rates; our ability to execute on our omni-channel business strategy; regulatory investigations, enforcement actions, or material litigation; and other risks and uncertainties described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2024, filed by us with the Securities and Exchange Commission (the “SEC”) and in other filings we make from time to time with the SEC. These forward-looking statements are made only as of the date of this document, and we undertake no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events, or otherwise, except as may be required by law.

Non-GAAP Measures

This press release includes certain financial information that is not presented in conformity with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures include organic revenue growth/(decline), Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted Net Income, Diluted, Adjusted EPS, Free Cash Flow, Net Debt, Fresh Revenue from Hubs with Spokes and Sales per Hub. These non-GAAP financial measures are not standardized, and it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names, 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 or a substitute for results reported under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, we urge you to review our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC and not to rely on any single financial measure.

The Company does not provide reconciliations of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure because it is unable to predict with reasonable certainty or without unreasonable effort non-recurring items, such as those reflected in our reconciliation of historic numbers. The variability of these items is unpredictable and may have a significant impact.

See “Reconciliation of Non-GAAP Financial Measures” below for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure.

Krispy Kreme, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share amounts)

We define “Adjusted EBITDA” as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, and certain other non-recurring, infrequent, or non-core income and expense items. Adjusted EBITDA is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods. “Adjusted EBITDA margin” reflects Adjusted EBITDA as a percentage of net revenues.

We define “Adjusted EBIT” as earnings before interest expense, net and income tax expense, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, and certain other non-recurring, infrequent, or non-core income and expense items. Adjusted EBIT is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods.

We define “Adjusted Net Income, Diluted” as net loss attributable to common shareholders, adjusted for share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, the tax impact of adjustments, and certain other non-recurring, infrequent, or non-core income and expense items. “Adjusted EPS” is Adjusted Net Income, Diluted converted to a per share amount.

Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Diluted, and Adjusted EPS have certain limitations, including adjustments for income and expense items that are required by GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as share-based compensation. Our presentation of these non-GAAP measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using these non-GAAP measures supplementally.

Organic revenue growth measures our revenue growth trends excluding the impact of acquisitions, divestitures, and foreign currency, and we believe it is useful for investors to understand the expansion of our global footprint through internal efforts. We define “organic revenue growth” as the growth in revenues, excluding (i) acquired shops owned by us for less than 12 months following their acquisition, (ii) the impact of foreign currency exchange rate changes, (iii) the impact of shop closures related to restructuring programs, (iv) the impact of the divestiture of Insomnia Cookies, and (v) revenues generated during the 53rd week for those fiscal years that have a 53rd week based on our fiscal calendar.

Fresh Revenues from Hubs with Spokes and Sales per Hub are defined above.

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