Core Insights - Krispy Kreme Inc. reported stronger-than-expected third-quarter earnings, indicating early success in its turnaround plan focused on margin expansion, deleveraging, and operational efficiency [1] Financial Performance - The company posted adjusted earnings of $0.01 per share, surpassing expectations of a $0.06 loss [2] - Revenue reached $375.3 million, slightly below the forecast of $378.68 million, but showing organic growth of 0.6% year-over-year [2] - Adjusted EBITDA increased by 17% year-over-year to $40.6 million, more than doubling from the second quarter of 2025 [3] - Margins improved to 10.8% from 9.1% a year earlier, driven by productivity initiatives, SG&A cost savings, and the cessation of expenses related to the discontinued McDonald's USA partnership [3] Strategic Initiatives - As part of its turnaround strategy, Krispy Kreme is refranchising international markets, closing underperforming stores, and emphasizing capital efficiency [4] - The total global points of access decreased by 6.1% to 14,851 as the company streamlined its operations to promote sustainable long-term growth [4]

Financial Performance - Net revenues for the quarter ended September 28, 2025, were $375.3 million, a decrease of 1.2% compared to $379.9 million for the same quarter in 2024[110] - The net loss attributable to Krispy Kreme, Inc. for the quarter was $19.4 million, compared to a net income of $39.6 million in the same quarter of 2024[110] - Adjusted EBITDA for the third quarter of fiscal 2025 was $40.6 million, representing a 17.0% increase from $34.7 million in the third quarter of fiscal 2024[110] - Total net revenues for Q3 fiscal 2025 were $375.3 million, a decline of $4.6 million or approximately 1.2% compared to Q3 fiscal 2024[141] - U.S. segment net revenue decreased by $12.2 million or approximately 5.3%, primarily due to a $10.0 million reduction from the divestiture of Insomnia Cookies[142] - International segment net revenue increased by $9.5 million or approximately 7.3%, driven by growth in Canada, Japan, and Mexico[143] - Market Development segment net revenue declined by $1.9 million or approximately 9.2%, with organic revenue down $1.1 million or approximately 5.3%[144] - Total net revenues for the first three quarters of fiscal 2025 were $1,130.2 million, a decline of $131.1 million or approximately 10.4% compared to the same period in fiscal 2024[156] Operational Changes - The company opened its first Hot Light Theater Shop in Spain in October 2025 and plans to open a shop in Uzbekistan in Q4 fiscal 2025[111] - The termination of the Business Relationship Agreement with McDonald's USA resulted in the exit of approximately 2,400 DFD Doors in the third quarter of fiscal 2025[115] - The company is focusing on expanding profit margins through operational efficiency improvements, including optimizing production and outsourcing U.S. logistics[112] - The company plans to continue outsourcing U.S. DFD deliveries to 3PL carriers, with expectations to expand this strategy through mid-fiscal 2026[124] - The company is converting certain legacy Hubs in the U.S. segment to add Spokes, enhancing its distribution efficiency[124] - The company plans to increase the number of quality Spokes through growth with DFD partners across the U.S. while strategically closing underperforming DFD Doors[137] Expenses and Losses - The company experienced an operating loss of $7,180,000 for the quarter, an improvement of 55.1% compared to an operating loss of $16,004,000 in the same quarter last year[139] - Selling, general and administrative expenses decreased by 30.5% to $49,393,000, down from $71,110,000 in the prior year[139] - The company reported a goodwill impairment of $4,805,000 during the quarter, which was not present in the same quarter last year[139] - The company incurred $11,858,000 in strategic initiatives costs during the quarter, slightly up from $11,426,000 in the previous year[139] - Operating expenses increased by $3.9 million or 2.0%, with operating expenses as a percentage of revenue rising from 50.6% to 52.2%[145] - Selling, general and administrative (SG&A) expenses decreased by $21.7 million or 30.5%, as a percentage of revenue dropping from 18.7% to 13.2%[146] Cash Flow and Debt - Cash and cash equivalents were $30.7 million as of September 28, 2025, indicating sufficient liquidity for at least the next twelve months[175] - The company no longer expects to pay quarterly cash dividends to align capital allocation with growth strategy[176] - Cash used for operations totaled $11.1 million for the first three quarters of fiscal 2025, a fluctuation of $29.9 million compared to the same period in fiscal 2024[179] - Cash provided by investing activities was $3.4 million for the first three quarters of fiscal 2025, a decrease of $41.3 million compared to the first three quarters of fiscal 2024, primarily due to the divestiture of Insomnia Cookies for $75.0 million[180] - Total long-term debt as of September 28, 2025, was $979.5 million, an increase from $900.9 million as of December 29, 2024[183] - The leverage ratio under the 2023 Facility was 4.5 to 1.00 as of the end of the third quarter of fiscal 2025, compared to 3.9 to 1.00 at the end of fiscal 2024[185] Revenue Growth and Market Impact - Organic revenue growth was 0.6% for the quarter ended September 28, 2025, and a decline of 0.4% for the three quarters ended on the same date[110] - Approximately 35% of total net revenues through the three quarters ended September 28, 2025, were attributable to subsidiaries with functional currencies other than the U.S. dollar, amounting to approximately $392.6 million[194] - A 10% increase or decrease in the average exchange rate of foreign currencies against the U.S. dollar would have resulted in a $39.3 million impact on total net revenues for the three quarters ended September 28, 2025[194]

Core Insights - Krispy Kreme's partnership with McDonald's has been deemed unsuccessful, leading the company to close 3,500 underperforming locations, including 2,400 McDonald's units, as part of its turnaround strategy [2][3] - The company aims to focus on successful partnerships with retailers like Kroger, Publix, Costco, and Walmart, while exiting locations with low foot traffic [3][4] - Krispy Kreme is not planning to pursue new QSR partnerships in the U.S. but is exploring successful collaborations in international markets, such as with KFC in the UAE [4][5] Business Strategy - The company is refining its Delivered Fresh Daily (DFD) partnerships and is moving towards a capital-light franchise model to enhance sales growth and unit development [5] - A recent menu revamp has been initiated, responding to consumer demand for more variety in doughnut offerings, including the return of previously discontinued flavors [6]

Financial Data and Key Metrics Changes - Adjusted EBITDA grew 17% year over year to $40.6 million, more than double the second quarter [15][17] - Net revenue for the quarter was $375.3 million, reflecting a 1.2% decline compared to last year, primarily due to the sale of a majority stake in Insomnia Cookies [17][18] - Free cash flow was positive at $15.5 million, with operating cash flow of $42.3 million during the third quarter [20][21] Business Line Data and Key Metrics Changes - U.S. segment organic revenue declined 2.2%, impacted by the exit of approximately 600 unprofitable doors [18][19] - International markets saw organic revenue growth of 6.2%, driven by Canada, Japan, and Mexico [19] - Market development segment organic revenue declined 5.3%, with adjusted EBITDA at $12 million, up 930 basis points year-over-year [20] Market Data and Key Metrics Changes - The U.S. market experienced a sequential increase in average weekly sales to $617 per door, an 18% increase due to door optimization [19] - International segment adjusted EBITDA increased by $0.4 million, or 1.7%, to $23.2 million, marking the first year-over-year growth in four quarters [19] Company Strategy and Development Direction - The company is focused on refranchising, improving returns on capital, expanding margins, and driving sustainable U.S. growth [6][23] - Plans to restructure the joint venture in the Western U.S. to reduce ownership to a minority stake, aiming to use proceeds for debt reduction [6][7] - Emphasis on leveraging existing assets and reducing capital intensity, with a significant reduction in CapEx spending planned for 2025 [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan, highlighting early progress in reducing net leverage and improving profitability [15][22] - The company is mindful of continued consumer softness but remains focused on deleveraging the balance sheet and capital-light franchise model [21][22] - Positive consumer response to specialty donut campaigns and a successful Halloween campaign reinforces confidence in long-term growth [34][46] Other Important Information - The company plans to fully outsource U.S. delivery by 2026, which is expected to provide more predictable costs and operational improvements [38] - A refresh of the everyday donut menu was announced, responding to consumer demand for variety while maintaining focus on core products [42][43] Q&A Session Summary Question: Continued strong trends in international markets for Q4 - Management confirmed ongoing strong momentum in international markets, particularly in Mexico and Japan, with growth expected to continue [26][27] Question: Learnings from U.S. expansion for international markets - Management highlighted the importance of the hub-and-spoke model and the learnings from U.S. expansion as they enter new international markets [28][29] Question: U.S. demand environment in Q3 - Management noted that exiting underperforming doors contributed to a small revenue decline but significantly improved EBITDA and cash flow, with a focus on high-volume, profitable doors [32][33] Question: Cost expectations and Q4 EBITDA outlook - Management expects sequential improvement in EBITDA for Q4 and positive cash flow, although specific guidance was not provided [35][55] Question: Implications of fully outsourcing U.S. delivery - Management indicated that outsourcing will lead to more predictable costs and operational improvements, reducing exposure to casualty losses [37][38] Question: Expanded core menu lineup - The menu refresh was prompted by consumer demand for variety, balancing choice with operational efficiency [40][42] Question: Competition and consumer spending trends - Management emphasized the strength of the brand and its unique position in the market, focusing on delivering exceptional donut experiences [45][46] Question: Changes in distribution network strategy - Management is focused on expanding convenience and access to the brand in high-traffic locations, having exited low-traffic doors [48][49]

Company Performance - Krispy Kreme reported quarterly earnings of $0.01 per share, exceeding the Zacks Consensus Estimate of a loss of $0.06 per share, and compared to a loss of $0.01 per share a year ago, indicating an earnings surprise of +116.67% [1] - The company posted revenues of $375.3 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.36%, although this represents a decline from year-ago revenues of $379.87 million [2] - Over the last four quarters, Krispy Kreme has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Outlook - Krispy Kreme shares have declined approximately 62% since the beginning of the year, contrasting with the S&P 500's gain of 15.6% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $387.25 million, and for the current fiscal year, it is -$0.31 on revenues of $1.52 billion [7] - The estimate revisions trend for Krispy Kreme was unfavorable prior to the earnings release, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Consumer Products - Staples industry, to which Krispy Kreme belongs, is currently ranked in the bottom 21% of over 250 Zacks industries, suggesting a challenging environment for the stock [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Financial Performance - Net revenue was $3753 million[7] - Organic revenue growth was 06%[7] - Adjusted EBITDA reached $406 million, a 17% increase[7] - Free cash flow amounted to $155 million[7] Strategic Initiatives - The company is implementing a turnaround plan focused on profitable U S expansion and international franchise growth[6] - The company aims to improve financial flexibility through refranchising international markets and restructuring the joint venture in the Western U S[8] - The company plans to expand margins through greater operational efficiency, including outsourcing U S logistics, with 54% already outsourced and 100% expected in 2026[9, 13] - The company added approximately 1,000 profitable doors YTD by expanding with high-return, national U S customers[13] Global Reach - Global points of access totaled 14,851[7] - International segment Adjusted EBITDA was $23157 million[18] Additional Information - The third quarter of 2025 includes $93 million of business interruption insurance recoveries related to the 2024 cybersecurity incident[7]

Financial Performance - Net revenue for Q3 2025 was $375.3 million, a decrease of 1.2% compared to Q3 2024[5] - GAAP net loss was $20.1 million, compared to a net income of $37.6 million in the same quarter last year[8] - Total net revenues for the quarter ended September 28, 2025, were $375.3 million, a decrease of 1.5% compared to $379.9 million for the same quarter in 2024[27] - For the quarter ended September 28, 2025, Krispy Kreme reported a net loss of $20.1 million compared to a net income of $37.6 million for the same quarter in 2024[39] - The company experienced a total net revenue decline of $131.1 million or 10.4% for the first three quarters of fiscal 2025 compared to the same period in 2024[42] Adjusted EBITDA - Adjusted EBITDA increased by 17% to $40.6 million, with an adjusted EBITDA margin of 10.8%, up from 9.1%[9] - Adjusted EBITDA for the quarter was $40,597 thousand, representing an increase from $34,699 thousand in the prior year, reflecting a growth of approximately 23%[37] - The U.S. segment's Adjusted EBITDA increased to $21,010 thousand from $13,922 thousand year-over-year, marking a growth of about 51%[38] - International segment Adjusted EBITDA was $23,157 thousand, slightly up from $22,779 thousand, indicating a growth of approximately 2%[38] Revenue Segments - U.S. segment net revenue declined by $12.2 million to $216.2 million, a decrease of approximately 5.3%[11] - International segment net revenue grew by $9.5 million, or approximately 7.3%, with organic revenue growth of 6.2%[13] - U.S. revenues decreased by 5.3% to $216.2 million in Q3 2025 from $228.4 million in Q3 2024, while international revenues increased by 7.3% to $140.2 million[42] - Organic revenue increased by $2.2 million, or approximately 0.6%, driven by growth in the International segment[7] - Organic revenue growth for the third quarter of fiscal 2025 was 0.6%, with U.S. organic revenue declining by 2.2% and international organic revenue growing by 6.2%[42] Cash Flow and Liquidity - Cash provided by operating activities was $42.3 million, resulting in free cash flow of $15.5 million[3] - Net cash provided by operating activities for the quarter was $42,282 thousand, a substantial increase from $3,262 thousand in the same quarter last year[31] - Free cash flow for the quarter was $15,544 thousand, contrasting with a negative free cash flow of $(22,880) thousand in the prior year[31] - Total available liquidity as of September 28, 2025, was $215.2 million, including $30.7 million in cash[17] Assets and Liabilities - Total assets decreased to $2.6 billion as of September 28, 2025, down from $3.1 billion as of December 29, 2024[29] - Current liabilities totaled $448.9 million, a decrease from $486.2 million at the end of the previous fiscal year[29] - The company’s long-term debt, less current portion, increased to $906.2 million from $844.5 million[29] - Net debt increased to $951,995,000 as of September 28, 2025, compared to $875,263,000 as of December 29, 2024, reflecting a rise of 8.7%[50] - The total long-term debt, including debt issuance costs, rose to $979,463,000 as of September 28, 2025, compared to $900,903,000 as of December 29, 2024, an increase of 8.7%[50] Impairment Charges - The company experienced a significant impairment charge of $411.9 million related to goodwill and other assets[27] - The company experienced a significant goodwill impairment of $355,958 thousand during the three quarters ended September 28, 2025[31] - The company reported a goodwill impairment of $356.0 million for the three quarters ended September 28, 2025[39] Operational Metrics - Global Points of Access decreased by 960, or 6.1%, to 14,851 due to strategic closures of unprofitable locations[3] - Total Global Points of Access decreased to 14,851 in Q3 2025 from 15,811 in Q3 2024, a decline of 6.1%[46] - The total number of U.S. DFD Doors decreased to 6,971 in Q3 2025 from 7,711 in Q3 2024, a reduction of 9.6%[46] - Total Hot Light Theater Shops in the U.S. remained stable at 235 in Q3 2025 compared to 236 in Q3 2024[46] - International Hot Light Theater Shops increased to 52 in Q3 2025 from 48 in Q3 2024, a growth of 8.3%[46] - Total Hubs decreased slightly to 421 in Q3 2025 from 423 in Q3 2024, a decline of 0.5%[48] - The number of Fresh Shops in the U.S. decreased to 69 in Q3 2025 from 71 in Q3 2024, a decline of 2.8%[46] - The total number of Fresh Shops globally increased to 1,718 in Q3 2025 from 1,638 in Q3 2024, a growth of 4.9%[46] Cybersecurity Costs - The company incurred $1.5 million in costs related to the remediation of a cybersecurity incident during the quarter ended September 28, 2025[40]

Core Viewpoint - Krispy Kreme is restructuring its distribution network to focus on selling doughnuts through major retailers such as Walmart and Costco [1] Company Strategy - The company aims to enhance its presence in retail channels by prioritizing partnerships with large retailers [1] Industry Implications - This shift may indicate a broader trend in the food and beverage industry where companies are increasingly relying on retail partnerships to drive sales [1]

Core Insights - Krispy Kreme's third quarter 2025 results indicate progress in its turnaround strategy, focusing on profitable U.S. expansion and capital-light international franchise growth [3][4]. Financial Highlights - Net revenue for Q3 2025 was $375.3 million, a decrease of 1.2% compared to $379.9 million in Q3 2024 [5][6]. - The company reported a GAAP net loss of $20.1 million, compared to a net income of $37.6 million in the same quarter last year [10][8]. - Adjusted EBITDA increased by 17% to $40.6 million, with an adjusted EBITDA margin of 10.8%, up from 9.1% [11][8]. Operational Performance - Organic revenue grew by 0.6%, primarily driven by the international segment, despite a decline in Global Points of Access by 6.1% [9][6]. - U.S. segment net revenue decreased by approximately 5.3% to $216.2 million, largely due to the previous year's sale of a majority stake in Insomnia Cookies [13][8]. - International segment net revenue increased by 7.3% to $138.8 million, with organic revenue growth of 6.2% [16][17]. Turnaround Strategy - The turnaround plan includes refranchising international markets, improving return on invested capital, expanding margins, and driving sustainable growth [7][4]. - The company aims to reduce capital spending while paying down debt and expects further improvement in adjusted EBITDA and positive free cash flow [3][4]. Balance Sheet and Liquidity - As of September 28, 2025, Krispy Kreme had total available liquidity of $215.2 million, including $30.7 million in cash and cash equivalents [20][19]. - The company invested $80.8 million in capital expenditures year-to-date, focusing on initiatives to enhance consumer access to products [19][20]. Market Development - The Market Development segment saw a decline in net revenue by 9.2% to $18.9 million, with organic revenue down approximately 5.3% [18][8]. - Adjusted EBITDA for this segment increased by 6.4% to $12 million, reflecting a margin improvement due to changes in revenue mix [18][8].

Core Viewpoint - Krispy Kreme's stock remains undervalued despite a recent price increase, trading significantly lower than its peers and historical highs [1][3][4] Financial Performance - The stock price has dropped approximately 60% year-to-date and 77% from its 2024 high, currently sitting around $3.59 [2][3] - The company reported a 13.5% decline in revenue to $379.8 million in its second-quarter earnings, with an unadjusted net loss of $441.1 million [5][6] - Adjusted EBITDA was down 63.3% year-over-year, indicating significant operational challenges [5] Valuation Metrics - Krispy Kreme's price-to-sales ratio is about 0.4, much lower than competitors like Starbucks (2.6) and McDonald's (8.4) [3] - The price-to-book ratio stands at 0.98, suggesting the market values the company below its asset value [4] Management and Future Outlook - Management has withdrawn full-year guidance due to market uncertainty and aims to "begin recouping profitability," which raises concerns about future performance [7] - The recent revenue decline was attributed to the end of a distribution partnership with McDonald's and the sale of the Insomnia Cookies business, although organic revenue still fell by 0.8% [6] Market Sentiment and Trading Behavior - Krispy Kreme's stock has experienced erratic price movements due to its status as a meme stock, with a recent surge of 26% driven by social media activity [8][9] - Despite the price increase, short interest in the stock has risen, indicating that more investors expect further declines [9][11]