Krispy Kreme(DNUT) - 2026 Q3 - Quarterly Report

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]