Krispy Kreme, Inc. FIRST QUARTER 2025 EARNINGS PRESENTATION MAY 8, 2025 Krispy Kreme | 1Q25 Earnings 1 Cautionary Note Regarding Forward-Looking Statements Certain statements made in this presentation and the conference call that this presentation accompanies are 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," "contin ...

Exhibit 10.1 INCREMENTAL ASSUMPTION AGREEMENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT INCREMENTAL ASSUMPTION AGREEMENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of May 2, 2025 (this "Agreement"), by and among Krispy Kreme, Inc., a Delaware corporation ("PubCo"), Cotton Parent, Inc., a Delaware corporation ("Holdings"), Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the "Parent Borrower"), the other Loan Parties party hereto, the Lenders party hereto (which constitute all of the Lenders ...

Wall Street expects a year-over-year decline in earnings on lower revenues when Krispy Kreme (DNUT) reports results for the quarter ended March 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on May 8, 2025, might help the stock move higher if these key numbers are better than expectati ...

Core Insights - The article discusses the investment potential of Krispy Kreme (NASDAQ: DNUT), highlighting a positive outlook due to successful execution in its partnership with McDonald's [1] Group 1: Investment Philosophy - The company adopts a fundamentals-based approach to value investing, emphasizing the importance of long-term durability and affordability in stock selection [1] - There is a common misconception that low multiple stocks are inherently cheap; the company seeks firms with steady long-term growth and strong balance sheets [1] - While investing in successful companies carries risks, the potential for significant growth can sometimes outweigh immediate price concerns [1]

Core Viewpoint - Krispy Kreme's stock is facing significant challenges, with a recent analysis leading to a 14% decline in share price, raising concerns about its investment attractiveness [1]. Group 1: Analyst Insights - JPMorgan Chase's analyst Rahul Krotthapalli has dramatically reduced his price target for Krispy Kreme from $13 to $8 per share while maintaining an overweight (buy) recommendation [2]. - The analyst's revised outlook stems from doubts regarding Krispy Kreme's ability to effectively implement its "delivered fresh daily" strategy, which focuses on large wholesale accounts [3]. Group 2: Financial Performance - Krispy Kreme's disappointing fourth-quarter 2024 results revealed declining sales and non-GAAP profitability, with the company missing expectations for both metrics [4]. - The company has provided guidance indicating continued declines throughout 2025, further dampening investor sentiment [4]. Group 3: Market Trends - There is a growing health consciousness among American consumers, which poses a challenge for Krispy Kreme's business model, despite the cleverness of its strategy [5].

Group 1 - The article discusses the growth potential of Krispy Kreme (NASDAQ: DNUT) and questions whether the current market conditions represent a good entry point for investors [1] - The author has a strong background in restaurant stocks, with expertise in various segments including QSR, fast casual, casual dining, fine dining, and family dining [1] - The analysis employs advanced models and valuation techniques to provide insights and strategies for investors in the U.S. restaurant market [1] Group 2 - The author is involved in academic and journalistic initiatives, contributing to institutions that promote economic freedom [1] - Previous experience includes writing for Investing, focusing on topics like monetary policy and financial education [1]

Core Insights - Krispy Kreme's international operations are crucial for understanding its financial strength and growth potential [1][2] - The company's reliance on international markets presents both opportunities and risks, making it essential to monitor international revenue trends [9] Financial Performance - In the recent quarter, Krispy Kreme reported total revenue of $404.02 million, a decline of 10.4% year-over-year [4] - International revenue contributed $138.39 million, accounting for 34.25% of total revenue, which was a surprise of +3.38% compared to estimates [6] - Market Development generated $20.52 million, representing 5.08% of total revenue, which was an 18.8% decline from the expected $25.27 million [5] Revenue Breakdown - For the previous quarter, International revenue was $130.7 million (34.41%), and in the same quarter last year, it was $107.05 million (23.74%) [6] - Analysts predict total revenue of $392.32 million for the current fiscal quarter, with Market Development and International expected to contribute 5.8% ($22.88 million) and 33% ($129.36 million) respectively [7] - For the full year, total revenue is expected to be $1.62 billion, reflecting a 3% decline from the previous year, with Market Development and International projected to contribute $93.8 million and $540.46 million respectively [8] Market Context - The interconnected global economy influences Krispy Kreme's financial health and growth trajectory, highlighting the importance of international market penetration [2][3] - Analysts are closely monitoring international revenue trends to refine earnings estimates, considering the impact of geopolitical risks and currency fluctuations [10]

Core Viewpoint - Krispy Kreme's shares fell 32.2% following disappointing fourth-quarter earnings, a cyberattack, and cautious guidance for 2025 [1] Financial Performance - In Q4, Krispy Kreme reported revenue of $404 million, a decrease of 10.4% year-over-year, and adjusted non-GAAP EPS of $0.01, down 89%, both missing analyst expectations [2] - The company anticipates 2025 revenue between $1.55 billion and $1.65 billion, with adjusted EPS of $0.04 to $0.08, reflecting a decline from fiscal 2024's revenue of $1.67 billion and EPS of $0.11 [3] Guidance and Strategic Moves - The guidance accounts for the sale of the Insomnia Cookies brand, which will not contribute to 2025 revenue, and the company plans to refranchise more stores, expecting organic revenue growth of 5% to 7% [4] - Management highlighted a cautious consumer environment and external factors like California wildfires impacting the early 2025 outlook [5] Costs and Investments - Elevated costs are expected as Krispy Kreme addresses cybersecurity vulnerabilities and invests in a partnership with McDonald's, aiming for 6,000 locations by the end of 2025 and 12,000 by the end of 2026 [6] Market Position and Valuation - Following a significant decline since its IPO in mid-2021, Krispy Kreme shares are now valued at approximately 10 times enterprise value-to-EBITDA, based on projected adjusted EBITDA of $180 million to $200 million for 2025 [7] - Despite the low valuation for a growing franchise business, investors are advised to monitor management's handling of the cyber incident and the McDonald's partnership before making investment decisions [8]

Cybersecurity and Operational Risks - The company experienced operational disruptions due to unauthorized activity on its information technology systems, which materially affected business operations, including online ordering in parts of the U.S.[79] - The 2024 Cybersecurity Incident resulted in lost sales and increased expenses related to remediation, highlighting vulnerabilities in the company's cybersecurity measures[84]. - The company identified a material weakness in its internal control over financial reporting, which could impair the ability to produce timely and accurate financial statements[91]. - The company’s business interruption insurance may not fully cover losses from service disruptions caused by system failures, potentially leading to significant financial impacts[82]. - The company acknowledges the potential for future public health risks to impact operations, which may lead to workforce disruptions and affect guest traffic[170]. Financial Performance and Revenue - Total net revenues for the fiscal year ended December 29, 2024, were $1,665,397, a decrease of 1.2% compared to $1,686,104 in the previous year[322]. - Product sales amounted to $1,627,778, down from $1,651,166, reflecting a decline of 1.4% year-over-year[322]. - The company reported a net income of $3,815, a significant recovery from a net loss of $36,647 in the prior year[322]. - Operating loss for the year was $8,735, compared to an operating income of $13,145 in the previous year[322]. - The company reported a gain of $124.126 million from the divestiture of Insomnia Cookies, contributing positively to cash flows[334]. Customer and Market Dynamics - The company relies on a diverse customer base, with no single customer contributing more than 10% of total revenue in the fiscal years ending December 29, 2024, December 31, 2023, or January 1, 2023[98]. - The company competes in a highly competitive food service landscape, facing challenges from both local operators and well-capitalized national and international players[102]. - The company’s ability to maintain its competitive position depends on effectively responding to consumer preferences and managing operational complexities[103]. Supply Chain and Cost Management - The company relies on a single vendor for glaze flavoring, exposing it to risks of supply interruptions and price fluctuations[127]. - The company’s profitability is sensitive to changes in raw material costs, particularly flour, shortening, and sugar, which have been volatile in recent years[133]. - The company employs forward purchase contracts to mitigate commodity price risks, but these may not fully protect against fluctuations over extended timeframes[134]. - The company has implemented measures to manage inflationary cost increases, including rapid inventory turnover and adjusting product pricing[293]. Debt and Financial Obligations - The company has incurred significant indebtedness, which may constrain operational flexibility and increase interest expenses, potentially limiting funds for working capital and acquisitions[108]. - The company has entered into interest rate swaps on $500 million of its $824.5 million outstanding debt to mitigate the impact of changes in interest rates[295]. - A 100 basis point increase or decrease in the one-month SOFR would result in a $3.2 million increase or decrease in interest expense for a 12-month period based on unhedged debt[295]. - The company may face challenges in paying dividends due to financial performance, capital needs, and existing debt agreements, which could impact liquidity[185]. Regulatory and Compliance Issues - The company operates under various data privacy and security laws, including the GDPR, which impose strict requirements on data handling and could result in significant penalties for non-compliance[89]. - The company is subject to franchise laws that may affect its ability to develop new franchised shops and enforce contractual rights, potentially leading to a decline in franchise revenues[151]. - Changes in regulations regarding health and food quality could negatively impact public perception and consumer preferences towards the company's products[147]. Human Resources and Labor Costs - The company faces challenges in recruiting and retaining personnel, which could adversely affect operations and overall performance[140]. - Rising labor costs, including wages and employee benefits, may impact the company's financial condition and results of operations[141]. - Increased minimum wage regulations and healthcare legislation could lead to higher operational costs for the company[153]. Shareholder and Governance Matters - As of December 29, 2024, JAB Holdings B.V. held approximately 44% of the company's common stock, granting it substantial influence over corporate decisions[180]. - The concentration of voting power held by JAB may limit other shareholders' ability to influence significant corporate decisions, potentially affecting the market price of the common stock[182]. Asset Management and Financial Position - Total assets decreased to $3,072,030 from $3,240,592, representing a decline of 5.2%[327]. - Current liabilities decreased to $486,172 from $525,593, a reduction of 7.5%[327]. - Long-term debt, less current portion, increased slightly to $844,547 from $836,615, indicating a marginal rise of 0.2%[327]. - The company’s cash and cash equivalents decreased to $28,962 from $38,185, a decline of 24.0%[327]. Marketing and Brand Management - The company’s reputation and brand image are essential for success, and negative feedback on social media could severely harm its brand reputation[100]. - Marketing expenses for the fiscal year ended December 29, 2024, were approximately $47.7 million, an increase from $45.9 million in the previous year[358].

Core Viewpoint - Krispy Kreme's stock has experienced significant declines following disappointing Q4 earnings, leading analysts to lower their price targets substantially [1][2][3] Financial Performance - Krispy Kreme missed both revenue and earnings expectations in Q4, which has raised concerns among analysts [3] - The company's revenue guidance for 2025 is lower than its 2024 performance, contradicting previous expectations of strong demand and growth [3] Analyst Reactions - Piper Sandler analyst Brian Mullan reduced his price target for Krispy Kreme by 33% to $12 per share [2] - Morgan Stanley's analysts were more drastic, cutting their price target by 50% to $6 per share [2] Growth Concerns - The company is facing challenges due to a heavy debt load and thin profit margins, making growth essential for its investment appeal [4] - Despite potential growth opportunities, such as partnerships with McDonald's, the lack of significant sales growth is a concern for investors [4]