Krispy Kreme Inc (DNUT) Q3 2024 Earnings Call Highlights: Strategic Expansion Amidst ...

GuruFocus News
4 min read

In This Article:

  • Net Revenue: $380 million for the third quarter.

  • Organic Growth: 3.5% for the quarter.

  • Adjusted EBITDA: $34.7 million, a decline of 20.7%.

  • Adjusted EBITDA Margin: 9.1%.

  • US Segment Organic Revenue Growth: 2.5%.

  • US Segment Adjusted EBITDA: $13.9 million.

  • US Points of Access Growth: 13.7% year over year.

  • International Organic Revenue Growth: 4.2%.

  • International Adjusted EBITDA Margin: 17.4%.

  • Market Development Organic Revenue Growth: 8.6%.

  • Market Development Adjusted EBITDA Margin: 54.2%.

  • Adjusted Earnings Per Share: Loss of 1 cent.

  • Cash Flow from Operations: $18.8 million year-to-date.

  • Full Year Revenue Guidance: $1.65 billion to $1.685 billion.

  • Full Year Organic Revenue Growth Guidance: 5% to 7%.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Krispy Kreme Inc (NASDAQ:DNUT) successfully launched its nationwide rollout with McDonald's, starting in Chicago and expanding to Ohio and Indiana, aiming for nearly 2000 McDonald's locations by the end of 2024.

  • The company plans to expand its points of access from 16,000 to 35,000 across 50 countries within three years, indicating significant growth potential.

  • Krispy Kreme Inc (NASDAQ:DNUT) reported 15% growth in both delivered fresh daily and digital sales, showcasing strong consumer demand and digital engagement.

  • The company is restructuring its management to focus on profitable expansion in the US and adopting a capital-light franchise model internationally, which could enhance operational efficiency.

  • Krispy Kreme Inc (NASDAQ:DNUT) is modernizing its doughnut production and increasing distribution density to improve profitability, with successful examples like the Elk Grove facility in Chicago increasing production threefold.

Negative Points

  • Adjusted EBITDA declined by 20.7% due to the sale of a majority stake in Insomnia Cookies and underperformance in the UK, impacting overall profitability.

  • The company faced incremental vehicle accident claims in the US, resulting in nearly $3 million in additional expenses for the quarter.

  • Krispy Kreme Inc (NASDAQ:DNUT) experienced a decline in adjusted EBITDA margin to 9.1%, partly due to seasonal low volumes affecting cost absorption and margin.

  • The UK market underperformed, with a new management team being introduced to address challenges, indicating ongoing issues in this region.

  • Logistics costs were higher than expected, and the company is investing ahead of revenue in its US expansion, which may pressure margins in the short term.

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