Krispy Kreme(DNUT)2025-02-25 17:38Financial Data and Key Metrics Changes - The company reported net revenue of 11 million revenue impact from a Cyber Security Incident [26][8][25] - Organic revenue grew by 1.8%, with an estimated 280 basis point headwind from the Cyber Security incident [27] - Adjusted EBITDA declined to 25.7 million and an adjusted EBITDA margin of 18.6% [30][31] Market Data and Key Metrics Changes - Global points of access grew by 24%, with over 2,800 new doors added in the U.S. through national partners [15][8] - The company anticipates reaching more than 23,000 points of access by year-end 2025 [21] - The capital-light international franchise business grew points of access by 8% in 2024, with plans to open in two to four new countries in 2025 [20][21] Company Strategy and Development Direction - The company is focusing on profitable U.S. DFD expansion and wider adoption of its capital-light international franchise model [39] - Plans include evaluating refranchising certain international markets and strengthening a performance-based culture [11][22] - The marketing strategy will spotlight the Original Glazed doughnut, targeting value-conscious consumers [13][110] Management's Comments on Operating Environment and Future Outlook - Management acknowledged consumer softness and adverse weather impacts in Q1 2025, but remains optimistic about long-term growth [37][50] - The company expects revenue growth in 2025, with organic revenue growth projected at 5% to 7% [35] - Management emphasized the importance of operational efficiency and leveraging existing capacity to drive profitability [57][39] Other Important Information - The Cyber Security Incident is expected to have a limited long-term impact on the business trajectory [25] - The company plans to outsource more than half of its U.S. logistics deliveries by year-end 2025 [19] - Capital expenditures are expected to track between 6% and 7% of net revenue, with interest expenses projected between 75 million [36] Q&A Session Summary Question: What are the expectations for OpEx expenses in 2025? - Management indicated that OpEx will be pressured in the first half of the year due to investments in operations leadership and logistics outsourcing, with expectations for leverage in the second half [44] Question: How will the company handle underperforming DFD locations? - The company will optimize low-performing doors as part of its strategy to ensure sustainable growth [47] Question: Why is the organic growth guidance lower than market expectations? - Management cited a choppy start to the year due to weather and consumer pressures, impacting traditional retail locations [50] Question: What is the impact of the Cyber Security Incident on 2025 guidance? - While not quantified, management acknowledged ongoing operational challenges from the incident affecting labor and materials management [72] Question: What are the plans for international refranchising? - The company is evaluating refranchising opportunities in several international markets to focus on expanding its U.S. footprint [90] Question: What is the expected impact of outsourcing logistics on EBITDA? - Management aims for EBIT neutrality during the transition to outsourced logistics, with potential cash benefits from negotiated payment terms [123]