On November 9, 2023, Krispy Kreme Inc (DNUT, Financial) disclosed its financial outcomes for the third quarter ending October 1, 2023. The company experienced revenue growth and expanded its global presence, though it reported a GAAP Net Loss. The company's CEO, Mike Tattersfield, expressed confidence in the brand's momentum and future, particularly as Josh Charlesworth prepares to assume the CEO role in 2024.
Performance and Challenges
Krispy Kreme Inc (DNUT, Financial) reported a 7.9% increase in Net Revenue to $407.4 million, while Organic Revenue grew by 9.6% to $400.3 million. Despite these gains, the company faced a GAAP Net Loss of $40.3 million, primarily due to a non-cash income tax expense accrual. Adjusted EBITDA saw a healthy increase of 13.5% to $43.7 million, with margins improving by 50 basis points to 10.7%. The company's expansion efforts were highlighted by the opening of new markets in Switzerland and Kazakhstan, and the international growth of Insomnia Cookies.
Financial Achievements
The company's Adjusted Net Income, Diluted, decreased slightly by 3.6% to $4.4 million in the quarter. GAAP Operating Loss was reported at $2.1 million, a significant shift from the prior year's loss. Adjusted EBITDA growth outpaced revenue growth, driven by improved profitability across all reportable segments and the hub and spoke model's efficiencies.
Segment Performance
In the U.S., net revenue grew by 5.4%, with organic revenue increasing by 10.2%. The U.S. Adjusted EBITDA increased by 8.8% to $22.3 million. Internationally, net revenue grew by 15.4%, with organic revenue growth of 8.2%. Adjusted EBITDA in the international segment grew by 17.3% to $21.4 million. The Market Development segment saw a net revenue increase of 5.9%, with Adjusted EBITDA growing by 13.3% to $13.4 million.
Balance Sheet and Capital Expenditures
The company invested $34.3 million in capital expenditures, primarily to support new store development and international expansion. Total available liquidity stood at $196.2 million, with net debt at $849.8 million.
2023 Financial Outlook
Krispy Kreme Inc (DNUT, Financial) reaffirmed its financial outlook for 2023, expecting Net Revenue of $1.65 billion to $1.68 billion and Adjusted EBITDA of $205 million to $215 million. Adjusted Net Income, Diluted, is projected to be between $52 million to $58 million, with Adjusted Diluted EPS of $0.31 to $0.34. The company anticipates capital expenditures to be approximately 7% to 8% of revenue, updated from 6.6%.
The company's strategic initiatives, including the potential sale of Insomnia Cookies, are expected to shape its financial trajectory for the remainder of the year. Krispy Kreme Inc (DNUT, Financial) continues to target the mid-to-high end of its revenue and Adjusted EBITDA guidance ranges, reflecting confidence in its growth strategy and operational execution.
For detailed financial tables and further information, investors and interested parties are encouraged to review the full earnings release and filings on the Krispy Kreme investor relations website.
Explore the complete 8-K earnings release (here) from Krispy Kreme Inc for further details.
