The drop in Total Net Revenues in Q3 2024 was primarily driven by a **$43.5 million reduction** due to the divestiture of Insomnia Cookies in July 2024. This decline, amounting to **$27.5 million** or roughly **6.8%**, was somewhat offset by a **$5.2 million gain** from shops acquired in Q3 2024 and **$12.6 million** of organic growth driven by omni-channel strategies, brand activations, and product premiumization efforts.  **[0001857154-24-000110_exh991q3pressrelease2024.htm:11]** **[0001857154-24-000113_dnut-20240929.htm:37]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:1]** 

What drove the drop in Total Net Revenues in Q3 2024?

The sharp decline in operating income in **Q3 2024** was driven by multiple factors. The **divestiture of Insomnia Cookies** significantly reduced revenue and operating leverage, contributing to a much larger loss compared to Q3 2023. In addition, **operating expenses increased by approximately 260 basis points** (from **48.0%** to **50.6%** of revenue) due primarily to **discounting** and **lower transaction volumes**. The U.S. segment also incurred **incremental costs** from **vehicle accident claims** and **start-up expenses** associated with the McDonald’s U.S. expansion. Finally, there was a notable increase in **SG&A expenses**—including **$11.3 million** in costs tied to the Insomnia Cookies divestiture execution—which, along with a **6.8% decline in total net revenue**, compounded the negative impact on operating income.  **[0001857154-24-000110_exh991q3pressrelease2024.htm:0]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:1]** **[0001857154-24-000113_dnut-20240929.htm:38]** **[0001857154-24-000113_dnut-20240929.htm:40]** 

Why did Operating Income worsen so sharply in Q3 2024?

The swing to a positive pre-tax income in Q3 2024 was primarily driven by a substantial **gain on the divestiture of Insomnia Cookies** which added **$87,128 thousand** to the pre-tax income. Despite experiencing a decline in **operating income** (dropping from **$18,480 thousand** to **$2,763 thousand**) and an increase in **interest expense** by **$7,610 thousand**, the large divestiture gain more than offset these negatives. Additionally, a decrease in **other non-operating expense** by **$1,916 thousand** also helped improve the pre-tax results.  **[0001857154-24-000113_dnut-20240929.htm:32]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:7]** **[0001857154-24-000113_dnut-20240929.htm:41]** 

What led to the swing to a positive pre-tax income in Q3 2024?

Krispy Kreme’s net income rebounded dramatically in Q3 2024 primarily due to the **gain on the divestiture of Insomnia Cookies**, which generated **$87,128 thousand** and more than offset prior losses. Additionally, **improved organic revenue growth (3.5%)** and other operational adjustments further supported the turnaround, despite some cost pressures and restructuring expenses. This combination of factors transformed a prior loss into a **net income of $37,572 thousand** in Q3 2024.  **[0001857154-24-000113_dnut-20240929.htm:32]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:8]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:0]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:1]** 

How did Net Income rebound so dramatically in Q3 2024?

The strong turnaround in earnings in Q3 2024 was driven by several key factors. First, the company recorded a significant **gain of $87,128 thousand on the divestiture of Insomnia Cookies** which substantially boosted the net income.  **[0001857154-24-000113_dnut-20240929.htm:1]** **[0001857154-24-000113_dnut-20240929.htm:36]**  Additionally, **lower income tax expenses**—a result of reduced pre-tax results and tax impacts from this divestiture—helped improve profitability.  **[0001857154-24-000113_dnut-20240929.htm:39]**  Moreover, despite a **6.8% decline in net revenues**, Krispy Kreme achieved **cost reductions in product and distribution costs (down 5.4%) and marketing expenses (down 14.4%)**, which contributed to a more favorable operating performance.  **[0001857154-24-000113_dnut-20240929.htm:36]**  Finally, the strategic **shift in business focus towards its core doughnut operations** further supported the improved earnings.  **[0001857154-24-000110_exh991q3pressrelease2024.htm:1]** 

What factors drove the strong turnaround in earnings attributable to Krispy Kreme in Q3 2024?

4126a4c45db00c3c956401fba109b1818d9ffc424babc9f10b3b56d39e122aa6

The jump in cash levels in Q4 2023 was driven by a mix of factors. **Net cash provided by operating activities contributed an inflow of $45,544 thousand** and **financing activities added $71,862 thousand** (including substantial proceeds from debt issuance), which helped offset the **$112,588 thousand used in investing activities** and a **$1,934 thousand negative impact from exchange rate changes**. Overall, these combined effects led to an increase in cash from **$35,371 thousand** to **$38,185 thousand**.  **[0001857154-24-000012_exh991q4pressrelease2023.htm:6]** **[0001857154-24-000018_dnut-20231231.htm:75]** **[0001857154-24-000012_exh991q4pressrelease2023.htm:8]** **[0001857154-24-000018_dnut-20231231.htm:81]** 

What drove the jump in cash levels in Q4 2023?

The decline in total assets in Q3 2024 was driven by several factors. **Goodwill** decreased by **$41,546 thousand** and **other intangible assets** declined by **$114,614 thousand**, significantly reducing the asset base. Additionally, **property and equipment, net** fell by **$48,438 thousand**, and **cash and cash equivalents** dropped by **$12,775 thousand**. Although there was a large increase in **investments in unconsolidated entities** by **$88,227 thousand**—primarily due to the divestiture and reclassification related to Insomnia Cookies—the overall impact, including the **$47,539 thousand** decrease in the **operating lease right-of-use asset, net**, contributed to the total decline in assets.  **[0001857154-24-000113_dnut-20240929.htm:2]** **[0001857154-24-000110_exh991q3pressrelease2024.htm:5]** 

What factors contributed to the decline in total assets in Q3 2024?

The **current portion of long-term debt** increased from **$54,631 thousand** as of December 31, 2023, to **$60,326 thousand** as of March 31, 2024**  **[0001857154-24-000063_dnut-20240331.htm:2]** **. However, the documents do not provide specific reasons for this change.  **[0001857154-24-000063_dnut-20240331.htm:2]** 

Why did the current portion of long-term debt increase in Q1 2024?

The **increase in long-term debt** in Q2 2024 was primarily driven by an **increase in borrowings under the revolving credit facility** (rising from **$155,000 thousand** at the end of 2023 to **$230,000 thousand** in Q2 2024) and an **increase in short-term lines of credit** (from **$11,000 thousand** to **$17,000 thousand**). These factors more than offset the reduction in the term loan balance, which decreased from **$682,500 thousand** to **$665,000 thousand** due to scheduled repayments.  **[0001857154-24-000090_dnut-20240630.htm:44]** **[0001857154-24-000090_dnut-20240630.htm:14]** 

What led to the increase in long-term debt in Q2 2024?

The **drop in accounts payable in Q1 2024** was primarily driven by a strategic decision to reduce obligations under the company’s vendor finance programs, specifically its **Supply Chain Financing (SCF) programs**. This intentional paydown of vendor-related debt led to a decrease from **$156,488 thousand at Q4 2023** to **$128,555 thousand at Q1 2024**, representing a reduction of **$27,933 thousand**.  **[0001857154-24-000063_dnut-20240331.htm:2]** **[0001857154-24-000061_exh991q1pressrelease2024.htm:5]** 

What explains the drop in accounts payable in Q1 2024?

8992250ae1e6d24858328a54c4ad156677008452d04ad6ef5f3aa81091b8a414

Total Net Revenues (USD, thousands)

Product Sales (USD, thousands)

Royalties and Other Revenues (USD, thousands)

Product and Distribution Costs (USD, thousands)

Operating Expenses (USD, thousands)

Selling, General and Administrative Expense (USD, thousands)

Marketing Expenses (USD, thousands)

Pre-Opening Costs (USD, thousands)

Other Income/(Expense), Net (USD, thousands)

Depreciation and Amortization Expense (USD, thousands)

Operating Income/(Loss) (USD, thousands)

Interest Expense, Net (USD, thousands)

Other Non-Operating Expense, Net (USD, thousands)

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Income Tax Expense/(Benefit) (USD, thousands)

Net Income/(Loss) (USD, thousands)

Net Income Attributable to Noncontrolling Interest (USD, thousands)

Net Income/(Loss) Attributable to Krispy Kreme, Inc. (USD, thousands)

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6ede79632ba3db2590d5b711833a2de597e7dd970fba9ae63ec72b1102f21429

Current Assets (USD, thousands)

Cash and Cash Equivalents (USD, thousands)

Accounts Receivable (USD, thousands)

Inventory (USD, thousands)

Non-Current Assets (USD, thousands)

Property, Plant, and Equipment (PP&E) (USD, thousands)

Goodwill (USD, thousands)

Intangible Assets (USD, thousands)

Current Liabilities (USD, thousands)

Accounts Payable (USD, thousands)

Short-term Debt (USD, thousands)

Accrued Expenses (USD, thousands)

Non-Current Liabilities (USD, thousands)

Long-term Debt (USD, thousands)

Lease Liabilities (USD, thousands)

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Shareholders' Equity (USD, thousands)

Retained Earnings (USD, thousands)

Common Stock (USD, thousands)

Additional Paid-in Capital (USD, thousands)

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Total Revenue (USD, thousands)

Cost of Goods Sold (COGS) (USD, thousands)

SG&A (USD, thousands)

Research and Development (R&D) (USD, thousands)

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EPS - Diluted (USD)

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Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

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Net Change in Cash (USD, thousands)

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U.S.

U.S. and Canada

- U.K.

- Australia/New Zealand

- Mexico

- All Other

International

Market Development

Total Revenue

d1f88e60c2ade1be8642532a1993e4c778f9f73fdb816284aee967c3d9ce9e4a

- Product Sales

- Royalties and Other

- Mix and Equipment Revenue from Franchisees

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Krispy Kreme (DNUT)

Financials