Krispy Kreme Reports First Quarter 2026 Financial Results Demonstrating Significant Progress on Turnaround

Reduces net leverage, expands adjusted EBITDA margin, and delivers positive free cash flow

Krispy Kreme, Inc. (NASDAQ:DNUT) ("Krispy Kreme", "KKI", or the "Company") today reported financial results for the quarter ended March 29, 2026.

First Quarter 2026 Highlights (vs Q1 2025)

• Net revenue of $367.0 million declined 2.2%, reflecting the strategic closure of underperforming doors completed in the third quarter of 2025
• Systemwide sales of $485.3 million increased 0.7% in constant currency excluding sales attributable to the now-ended McDonald's USA partnership
• GAAP net loss of $22.7 million improved $10.7 million
• Adjusted EBITDA of $33.1 million increased 38.0%
• Cash provided by operating activities of $20.2 million increased $41.0 million, free cash flow of $11.4 million increased $58.1 million

"The first quarter highlighted significant progress across every pillar of our turnaround plan. We reduced net leverage, increased adjusted EBITDA margin by 260 basis points, and delivered positive free cash flow. We also closed two refranchising transactions, expanded access to our fresh doughnuts in the U.S. quarter-over-quarter, and accelerated the outsourcing of U.S. logistics, which is now complete. Strong consumer demand during recent holidays such as Valentine's Day and St. Patrick's Day also demonstrated that we remain a top choice for gifting, sharing, and celebrating," said Krispy Kreme CEO Josh Charlesworth.

"We expect this momentum to continue through 2026, driven by profitable growth in the U.S. with key strategic partners, higher digital sales, and international expansion. For the full year, we are issuing guidance for net revenue and adjusted EBITDA, updating our net leverage reduction target, and reaffirming our outlook for systemwide sales growth."

Turnaround Plan

The Company's comprehensive turnaround plan, announced in August 2025, is designed to deleverage the balance sheet and deliver sustainable, profitable growth. The four components of the plan, along with progress on each, are as follows:

1. Refranchising: Improve financial flexibility through refranchising international markets and the joint venture in the Western U.S.
   1. Refranchised the Company's operations in Japan in March 2026.
   2. Refranchised the joint venture in the Western U.S. in March 2026.
2. Improving Return on Invested Capital: Reduce capital intensity by using existing assets and focusing on franchise development.
   1. Capital expenditures decreased 66% in the first quarter of 2026 compared to the year-ago period.
   2. Opened 26 shops during the first quarter of 2026, nearly all of which are franchised.
   3. Entered into a franchise agreement to expand into the Netherlands in late 2026.
3. Expanding Margins: Expand margins through greater operational efficiency, including outsourcing U.S. logistics.
   1. Consolidated adjusted EBITDA margin increased from 6.4% to 9% year-over-year, including a 480 basis point increase in the U.S. segment.
   2. Completed outsourcing of U.S. logistics in April 2026.
4. Driving Sustainable, Profitable Growth: Pursue U.S. growth based upon sustainable and profitable revenue streams.
   1. Added 276 doors in the U.S. with strategic partners during the first quarter of 2026 on top of the 200 doors added in the fourth quarter of 2025.
   2. Average U.S. revenue per door per week ("APD") increased year-over-year 16.7% to $685.

First Quarter 2026 Consolidated Results (vs Q1 2025)

Krispy Kreme's results reflect continued progress in improving U.S. profitability and wider adoption of the capital-light international franchise model.

Net revenue was $367.0 million in the first quarter of 2026, a decline of 2.2% or $8.2 million. Organic revenue decreased by 2.6%, primarily driven by a global points of access decline of 2,857, or 15.9%, reflecting the strategic closure of underperforming doors, including approximately 2,400 doors attributable to the now-ended McDonald's USA partnership, that was completed in the third quarter of 2025. Systemwide sales were $485.3 million in the first quarter of 2026, a decline of 1.0% in constant currency. Excluding the impact of sales from the McDonald's USA doors in the year-ago period, systemwide sales increased 0.7%.

GAAP net loss improved to $22.7 million, compared to the prior year first quarter net loss of $33.4 million. GAAP loss per share, diluted improved to $0.16, compared to loss per share, diluted of $0.22 in the prior year first quarter.

Adjusted EBITDA increased 38.0% to $33.1 million. Adjusted EBITDA margin increased to 9.0% from 6.4%, positively impacted by productivity initiatives, SG&A savings, and the removal of costs relating to McDonald's USA.

Adjusted net loss, diluted, was $7.8 million, up from a loss of $8.8 million in the prior year first quarter, and adjusted EPS was $(0.05), consistent with the prior year first quarter.

Diluted weighted average common shares outstanding were 172.0 million, compared to 170.3 million for the prior year first quarter.

First Quarter 2026 Segment Results (vs Q1 2025 unless otherwise stated)

U.S.: In the U.S. segment, net revenue declined by 6.3% to $221.6 million, primarily due to strategic door closures, which also led to an organic revenue decline of 4.0% year-over-year. APD increased year-over-year 16.7% year-over-year and 3.8% quarter-over-quarter to $685, driven by the addition of higher volume doors with strategic partners along with the exit of lower volume, unprofitable doors.

U.S. adjusted EBITDA increased by 60.6% to $25.5 million. Adjusted EBITDA margin increased 480 basis points year-over-year to 11.5%. These results demonstrated meaningful improvement as a result of the turnaround plan initiatives.

International: In the International segment, net revenue increased by 4.7% to $125.3 million with a foreign currency translation benefit of $10.5 million, partially offset by the refranchising of Japan. Organic revenue increased by 0.4%, primarily due to growth in Canada and Mexico.

International segment adjusted EBITDA decreased by 2.9% to $14.5 million driven by the refranchising of Japan. Adjusted EBITDA margin decreased by 90 basis points to 11.6% due to lower adjusted EBITDA in Australia and Canada.

Market Development: In the Market Development segment, net revenue increased by 6.4% to $20.2 million, including the impact of refranchising. Organic revenue declined by 4.3%, as growth in royalty revenue was more than offset by the timing of equipment sales in the quarter.

Market Development adjusted EBITDA increased by 5.3% to $11.6 million. Adjusted EBITDA margin decreased 60 basis points to 57.5%, driven by changes in the regional mix of product sales.

Balance Sheet and Capital Expenditures

During the first quarter of 2026, the Company invested $8.8 million, or 2.4% of net revenue, in capital expenditures, primarily in the U.S. to support infrastructure repairs and maintenance. Overall, the Company has reduced investment in building new hubs in favor of leveraging existing excess capacity for growth where available.

As of the end of the first quarter of 2026, the Company's net leverage ratio was 5.5x, reflecting a 1.2x reduction compared to the fourth quarter of 2025. The Company had total available liquidity of $303 million as of March 29, 2026, which includes $74 million of cash and cash equivalents as well as undrawn capacity of $229 million under its credit facilities. The Company was in compliance with all financial covenants as of March 29, 2026.

Refranchising

On March 2, 2026, the Company closed its previously disclosed agreement for Unison Capital, Inc. to purchase its operations in Japan. Cash proceeds from this transaction were approximately $70 million and were used for debt pay down after transaction-related fees and expenses.

The Company expects one to two additional international refranchising deals in 2026 as it prioritizes identifying the right partners to maximize value and position itself for long-term profitable growth.

In the U.S., as previously disclosed, the Company reduced its ownership position in its Western U.S. joint venture ("WKS KK") with its long-standing partner WKS Restaurant Group, to a 20% minority stake. The transaction resulted in the WKS KK franchisee owning more than 70 shops across the Western U.S. and servicing approximately 1,000 fresh delivery locations with strategic partners. The franchisee agreed to develop additional shops and plans to expand Krispy Kreme's fresh delivery footprint over the next several years. The total amount payable to the Company in connection with the transaction is approximately $90 million, including $53 million in cash received at closing on March 23, 2026. Following transaction‑related fees and expenses, the cash proceeds were used to reduce net debt, with the remaining consideration structured as a note payable over time.

For fiscal 2025, approximately 25% of the Company's systemwide sales came from franchise-operated locations. Through refranchising efforts, Krispy Kreme expects nearly 50% of systemwide sales to be generated by franchisees beginning fiscal 2027.

2026 Financial Outlook

The Company is providing the following annual financial guidance, which includes the impact of the refranchising transactions described above but not any future transactions:

• Net revenue of $1.25 billion to $1.35 billion (new)
• Systemwide sales up 2% to 4% year-over-year in constant currency
• Open at least 100 shops, nearly all of which are expected to be franchised
• Adjusted EBITDA⁽¹⁾ of $140 million to $150 million (new)
• Capital expenditures of $50 million to $60 million
• Free cash flow⁽¹⁾ of more than $15 million (updated)
• Net leverage ratio⁽¹⁾ below 5.5x (updated)

Definitions

The following definitions apply to terms used throughout this press release:

• Systemwide Sales: Reflects global sales of all Krispy Kreme products, whether operated by the Company or franchisees, excluding mix, equipment, and royalty revenue. Sales from franchisees are reported to the Company by such franchisees and are not included in Company revenues. Growth in systemwide sales represents the change in one period from the same period in the prior year on a constant currency basis. The Company believes systemwide sales information is important because it is indicative of the health of the Company's brand and aids in understanding the Company's financial performance.
• Global Points of Access: Reflects all locations at which fresh doughnuts can be purchased. We define Global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, and fresh delivery doors (which includes Krispy Kreme branded cabinets and merchandising units within high traffic grocery and convenience stores, quick service or fast casual restaurants, club memberships, and drug stores), and other points at which fresh doughnuts can be purchased at both Company-owned and franchise locations as of the end of the applicable reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments and by asset type.
• Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any global point of access. We define hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the applicable reporting period.
• Hubs with Spokes: Reflects hubs currently producing fresh doughnuts for other Fresh Shops, Carts and Food Trucks, or fresh delivery doors, and excludes hubs not currently producing fresh doughnuts for other shops, Carts and Food Trucks, or fresh delivery doors.
• Sales Per Hub: Sales per hub equals fresh revenues from hubs with spokes, divided by the average number of hubs with spokes at the end of each of the five most recent quarters.
• Fresh Revenues from Hubs with Spokes: Fresh revenues is a measure focused on the Krispy Kreme doughnut business and includes product sales generated from our Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, fresh delivery doors, and digital channels and excludes sales from Cookie Bakeries and Branded Sweet Treats (through the date of the Insomnia Cookies Holdings, LLC ("Insomnia Cookies") deconsolidation and Branded Sweet Treats exit, respectively). Fresh revenues from hubs with spokes equals the fresh revenues derived from hubs with spokes.
• Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment.

Conference Call

Krispy Kreme will host a public conference call and webcast at 8:30 AM Eastern Time today to discuss its results for the first quarter 2026. A slide presentation will be available prior to the start time on the investor relations section of the Company's website at investors.krispykreme.com.

To listen to the live webcast and Q&A, visit the Krispy Kreme investor relations website at investors.krispykreme.com. A replay of the webcast will be available on the website within 24 hours after the call. This earnings press release and related materials will also be available on the investor relations section of the Company's website.

About Krispy Kreme

Headquartered in Charlotte, N.C., Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our iconic Original Glazed® doughnut is universally recognized for its hot-off-the-line, melt-in-your-mouth experience. Krispy Kreme operates in more than 40 countries through its unique network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing digital business. Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day and is reflected in the love we have for our people, our communities and the planet. Connect with Krispy Kreme Doughnuts at www.KrispyKreme.com, or on one of its many social media channels, including www.Facebook.com/KrispyKreme and www.X.com/KrispyKreme.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by use of forward-looking terminology, including terms such as "plan," "believe," "may," "continue," "guidance," "outlook," "could," "will," "should," "would," "anticipate," "estimate," "expect," "intend," "objective," "seek," "pursue," "strive," "look forward," or the negative of these words, comparable terminology, or other references to future periods; however, statements may be forward-looking whether or not these terms or their negatives are used. Forward-looking statements are not a representation by us that the future plans, estimates, or expectations contemplated by us will be achieved. Our actual results could differ materially from the forward-looking statements included in this press release. We consider the assumptions and estimates on which forward-looking statements are based to be reasonable, but they are subject to various risks and uncertainties relating to our operations, financial results, financial conditions, business, prospects, future plans and strategies, projections, liquidity, the economy, and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors could cause our actual results to differ materially from those contained in forward-looking statements including, without limitation: food safety issues, including risks of food-borne illnesses, tampering, contamination, and cross-contamination; impacts from any material failure, inadequacy, or interruption of our information technology systems, including breaches or failures of such systems or other cybersecurity or data security-related incidents; our ability to execute our business strategy, including our turnaround plan and growth through international development with strategic partners and profitable expansion of our fresh delivery and digital channels; our ability to realize the anticipated benefits from past or potential future strategic transactions (including refranchising); failure by our franchisees, subfranchisees, or third-party service providers to operate effectively and in compliance with our standards and applicable law; any harm to our reputation or brand image; negative impacts on our business due to changes in consumer spending habits, consumer preferences, or demographic trends; our ability to open new and maintain existing shops and points of access both domestically and internationally; disruptions to our and our franchisees' supply chain, including the loss of or failure to perform by single-source or limited suppliers, vendors, distributors, or manufacturers; our significant indebtedness and our ability to meet the financial and other covenants under our credit facilities; changes in the cost of raw materials and fuel or other commodities, including due to import and export requirements (including tariffs), inflation, fluctuations in foreign exchange rates, or heightened geopolitical tensions (including the recent Iran conflict); our ability to recruit and retain key personnel; failure to develop or maintain effective internal control over financial reporting or disclosure controls and procedures; adverse regulatory actions or publicity concerning food or occupational safety, food quality, health, and other issues or regulatory investigations, enforcement actions, or material litigation; and other risks and uncertainties described under the heading "Risk Factors" and elsewhere in our Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the "SEC") and in other filings the Company makes from time to time with the SEC. These forward-looking statements are made only as of the date of this document, and we undertake no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events, or otherwise, except as may be required by law.

Key Performance Indicators and Non-GAAP Measures

This press release includes certain financial information that is not presented in conformity with accounting principles generally accepted in the U.S. ("GAAP"). These non-GAAP and operating measures include organic revenue growth/(decline), adjusted EBITDA, adjusted EBITDA margin, adjusted net loss, diluted, adjusted EPS, free cash flow, net debt, fresh revenue from hubs with spokes, sales per hub and systemwide sales. We believe these non-GAAP and operating measures are useful in evaluating our operating performance. Management believes these measures are important indicators of operations because they exclude items that may not be indicative of our core operating results and provide a better baseline for analyzing trends in our underlying business, and they are consistent with how business performance is planned, reported and assessed internally by management and the Company's Board of Directors. We monitor the key business metrics and non-GAAP metrics set forth herein to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. These non-GAAP and operating measures are not standardized, and it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, the non-GAAP financial measures are not measurements of financial performance under GAAP or a substitute for results reported under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, we urge you to review our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC and not to rely on any single financial measure.

The Company does not provide reconciliations of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure because it is unable to predict with reasonable certainty or without unreasonable effort non-recurring items, such as those reflected in our reconciliation of historic numbers. The variability of these items is unpredictable and may have a significant impact on the forward-looking non-GAAP financial measures presented.

See "Reconciliation of Non-GAAP Financial Measures" below for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure.

Krispy Kreme, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

We define "Adjusted EBITDA" as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, and certain other non-recurring, infrequent, or non-core income and expense items. Adjusted EBITDA, both on a consolidated and at the segment level, is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods. "Adjusted EBITDA margin" reflects adjusted EBITDA as a percentage of net revenues.

We define "Adjusted Net Loss, Diluted" as net loss attributable to common shareholders, adjusted for interest expense, share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, the tax impact of adjustments, and certain other non-recurring, infrequent, or non-core income and expense items. "Adjusted EPS" is adjusted net loss, diluted converted to a per share amount.

Adjusted EBITDA, adjusted EBITDA margin, adjusted net loss, diluted, and adjusted EPS have certain limitations, including adjustments for income and expense items that are required by GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as share-based compensation. Our presentation of these non-GAAP measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using these non-GAAP measures supplementally.

Organic revenue growth/(decline) measures our revenue growth trends excluding the impact of acquisitions, divestitures, and foreign currency, and we believe it is useful for investors to understand the expansion of our global footprint through internal efforts. We define "organic revenue growth/(decline)" as the growth/(decline) in revenues, excluding (i) the impact of revenues of acquired shops owned by us for less than 12 months following their acquisition, (ii) the impact of foreign currency exchange rate changes, (iii) the impact of shop closures related to restructuring programs, (iv) the impact of the divestiture of shops through refranchising, and (v) the impact of revenues generated during the 53^rd week for those fiscal years that have a 53^rd week based on our fiscal calendar.

Fresh revenues from hubs with spokes and sales per hub are defined above.

Category: Financial News

Source: Krispy Kreme

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Investor Relations and Media

ICR for Krispy Kreme, Inc.

krispykreme@icrinc.com