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Krispy Kreme Reports Financial Results for the First Quarter of Fiscal 2016

By: Krispy Kreme |  1,014 Shares     110 Reads

WINSTON-SALEM, N.C. - (BUSINESS WIRE) - June 10, 2015 - Krispy Kreme Doughnuts, Inc. (NYSE: KKD) (the “Company”) today reported financial results for the first quarter of fiscal 2016, ended May 3, 2015 and updated its adjusted EPS outlook for fiscal 2016 (ending January 31, 2016) to a range of $0.80 to $0.85.

First Quarter Fiscal 2016 Highlights Compared to the Year-Ago Period:

• Systemwide store count rose 17.3% since the first quarter of last year to 1,003 Company and franchise shops worldwide
• Systemwide domestic same store sales rose 5.2%, including a 4.3% gain at Company Stores; constant currency international franchise same store sales declined 1.7%
• Revenues increased 9.0% to $132.5 million from $121.6 million
• Operating income rose 6.8% to $17.3 million from $16.2 million
• Net income rose 10.5% to $10.7 million ($0.16 per share) compared to $9.7 million ($0.14 per share) in the first quarter last year
• Adjusted net income rose 5.0% to $16.6 million ($0.24 per share) from $15.8 million ($0.23 per share). Adjusted net income and adjusted EPS are non-GAAP measures (see the reconciliation of GAAP to adjusted earnings in the table accompanying this release) and reflect income tax expense only to the extent currently payable in cash
• Cash provided by operating activities was $17.1 million compared to $13.7 million in the first quarter last year
• The Company repurchased 391,300 shares of its common stock under the Board of Directors approved authorization for a total cost of $7.4 million of which $5.9 million was settled during the quarter.

President and Chief Executive Officer Tony Thompson commented: “Solid domestic same store sales growth and improved margin performance at our Company shops enabled us to exceed our internal projections for the first quarter, providing us a strong start to the fiscal year. Guests continued to respond favorably to our limited time offerings. This, combined with our more strategic use of promotional incentives, drove the higher profitability.”

Thompson added: “We continue to generate momentum in our franchise business, partnering with new and existing franchisees to spread the joy of Krispy Kreme within the US and throughout the world. We recently signed development agreements for new domestic shops in Arkansas, Montana, Illinois and Kentucky, while internationally we signed agreements in Cambodia, Guatemala, and South Africa as part of our goal to enter a total of six new countries this year. We continue to believe that Krispy Kreme is positioned well for earnings and cash flow growth and our intention is to return a portion of that to shareholders through on-going share repurchases.”

First Quarter Fiscal 2016 Segment Results

Company Stores revenues increased 12.8% to $90.7 million in the first quarter of fiscal 2016, driven by a 24.9% increase in retail sales as store operating weeks increased 18.9% and same store sales rose 4.3%. The Company opened two new factory shops in the first quarter. Company Stores segment operating income increased $2.7 million to $16.8 million from $12.7 million compared to last year driven by the Company Stores contribution margin increasing from 15.8% to 18.5% of sales. The margin increase primarily resulted from positive retail same store sales growth as well as the Company’s more strategic use of promotional incentives.

Domestic Franchise revenues increased 6.0% to $3.7 million, principally driven by higher royalties. Total sales by domestic franchisees rose 4.6%, and same store sales at Domestic Franchise shops increased 5.8%. The Domestic Franchise segment generated operating income of $2.1 million compared to $2.2 million in the first quarter last year.

International Franchise revenues increased 2.2% to $6.7 million. Royalty income rose due to an increase of 128 locations as compared to the first quarter last year. Sales by international franchise stores rose 5.4% to $121 million (15.2% excluding the effects of foreign exchange rate changes). Constant currency same store sales at international franchise stores declined 1.7%. International Franchise segment operating income improved to $4.9 million compared to $4.3 million in the first quarter last year.

KK Supply Chain revenues (including sales to Company stores) rose 5.3% to $63.5 million. External KK Supply Chain revenues rose 0.9% to $31.3 million. KK Supply Chain generated operating income of $10.9 million in the first quarter of fiscal 2016 compared to $11.3 million in the first quarter last year.

Full Year Outlook

Management maintains its outlook for adjusted net income for fiscal 2016 of between $55 million and $59 million (compared to $48.3 million in fiscal 2015) but has updated its outlook for adjusted net income per share to between $0.80 and $0.85 per share to reflect share repurchase activity completed during the first quarter (compared to adjusted net income per share of $0.70 in fiscal 2015). The Company’s previous range for fiscal 2016 adjusted net income per share was $0.79 to $0.85 per share.

The Company’s outlook reflects, among other things, the following assumptions:

• 10 to 12 net new Company shops
• 15 to 20 net new domestic franchise shops
• 95 to 110 net new international franchise shops
• Capital expenditures of between $35 million and $45 million including ongoing investments in technology
• Continued growth in domestic same store sales
• A reduction in agricultural commodity and fuel costs compared to fiscal 2015
• Negative effects of a stronger U.S. dollar

With the onset of the new fiscal year, the Company has made the following changes to the presentation of the Consolidated Statement of Income, segment financial information and the change in same store sales:

• Pre-opening costs related to Company Stores; gains and losses on commodity derivatives, net and gain on refranchisings, net of business acquisition charges are now separate line items on the Consolidated Statement of Income and are no longer in the respective business segments’ operating income.
• Company Stores contribution has been added to the Supplemental Financial and Operating Information in order to provide more transparency on Company Stores performance. Company Stores contribution represents Company Stores revenues less costs of food, beverage and packaging; labor and benefit costs; vehicle costs; occupancy and other store related costs and excludes depreciation and amortization expense; marketing expense and segment general and administrative expenses. Company Stores contribution is a non-GAAP financial measure. The Company believes that this is a useful measure to assess and evaluate the performance of Company shops.
• The Company is presenting the change in same store sales metric on a retail sales only basis. This metric now excludes fundraising sales. The Company believes this change will provide a more meaningful measurement of the change in same store sales and that this is a more relevant metric as the continued success of our retail model is largely dependent on the 90% of on-premises sales coming from the retail business.

All financial information included in this release reflect the above presentation changes. The Company has also provided revised historical quarterly and annual financial information to incorporate the changes discussed above in this release. These presentation changes had no impact on the Company’s consolidated operating income or consolidated net income.

Conference Call

The Company will host a conference call to review financial results for the first quarter of fiscal 2016 as well as its outlook for the balance of the year this afternoon at 5:00 p.m. (ET). A webcast of the conference call will be available at www.krispykreme.com. The conference call also can be accessed over the phone by dialing (877) 407-0784 or, for international callers, by dialing (201) 689-8560. An archived replay of the call will be available shortly after its conclusion by dialing (877) 870-5176, or (858) 384-5517 for international callers; the passcode is 13610458. The audio replay will be available through June 17, 2015.

About Krispy Kreme

Krispy Kreme is a leading branded specialty retailer and wholesaler of premium quality sweet treats and complementary products, including its signature Original Glazed® doughnut. Headquartered in Winston-Salem, NC, the Company has offered the highest quality doughnuts and great tasting coffee since it was founded in 1937. Today, there are over 1,000 Krispy Kreme shops in more than 20 countries around the world. Connect with Krispy Kreme at www.krispykreme.com.

Information contained in this press release, other than historical information, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions and expectations of our future economic performance, considering the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. The words “believe,” “may,” “forecast,” “could,” “will,” “should,” “would,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “strive” or similar words, or the negative of these words, identify forward-looking statements. Factors that could contribute to these differences include, but are not limited to: the quality of Company and franchise store operations and changes in sales volume; risks associated with the use and implementation of information technology; our ability, and our dependence on the ability of our franchisees, to execute on our and their business plans; our relationships with our franchisees; actions by franchisees that could harm our business; our ability to implement our domestic and international growth strategy; our ability to implement and operate our domestic shop model; political, economic, currency and other risks associated with our international operations; the price and availability of raw materials needed to produce doughnut mixes and other ingredients, and the price of motor fuel; our relationships with wholesale customers; reliance on third parties in many aspects of our business; our ability to protect our trademarks and trade secrets; changes in customer preferences and perceptions; risks associated with competition; risks related to the food service industry, including food safety and protection of personal information; compliance with government regulations relating to food products and franchising; and increased costs or other effects of new government regulations. These and other risks and uncertainties, which are described in more detail in the Company’s most recent Annual Report on Form 10-K and other reports and statements filed with the United States Securities and Exchange Commission, are difficult to predict, involve uncertainties that may materially affect actual results and may be beyond the Company’s control, and could cause actual results, performance or achievements to be materially different from those expressed or implied by any of these forward-looking statements. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

 

KRISPY KREME DOUGHNUTS, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
					Three Months Ended
					May 3,			May 4,
					2015			2014
					(In thousands, except per share amounts)
Revenues					$	132,474		$	121,580
Operating expenses:
	Direct operating expenses (exclusive of depreciation and
		amortization expense shown below)				103,772			96,390
	General and administrative expenses					7,554			7,047
	Depreciation and amortization expense					3,993			3,173
	Impairment charges and lease termination costs					4			8
	Pre-opening costs related to Company Stores					323			226
	(Gains) and losses on commodity derivatives, net					(447)			(1,444)
Operating income						17,275			16,180
Interest income and (expense) , net						(230)			28
Equity in losses of equity method franchisees						-			(57)
Other non-operating income and (expense), net						184			168
Income before income taxes						17,229			16,319
Provision for income taxes						6,563			6,663
Net income					$	10,666		$	9,656
Earnings per common share:
	Basic				$	0.16		$	0.15
	Diluted				$	0.16		$	0.14
Weighted average shares outstanding:
	Basic					66,603			66,522
	Diluted					68,573			69,746

 

KRISPY KREME DOUGHNUTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
			May 3,			February 1,
			2015			2015
			(In thousands)
	ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	58,642		$	50,971
Receivables				33,403			28,581
Inventories				16,352			18,194
Deferred income taxes				23,201			23,245
Other current assets				6,159			6,856
	Total current assets			137,757			127,847
Property and equipment				117,002			115,758
Goodwill and other intangible assets				30,027			30,070
Deferred income taxes				62,372			68,278
Other assets				10,070			10,760
	Total assets		$	357,228		$	352,713
	LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of lease obligations			$	332		$	333
Accounts payable and accrued liabilities				47,251			49,625
	Total current liabilities			47,583			49,958
Lease obligations, less current portion				10,231			9,354
Other long-term obligations and deferred credits				26,071			25,615
Commitments and contingencies
Total shareholders' equity				273,343			267,786
		Total liabilities and shareholders’ equity	$	357,228		$	352,713

 

KRISPY KREME DOUGHNUTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
					Three Months Ended
					May 3,			May 4,
					2015			2014
						(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income					$	10,666		$	9,656
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization expense					3,993			3,173
	Deferred income taxes					5,950			6,162
	Accrued rent expense					153			140
	Loss on disposal of property and equipment					34			42
	Share-based compensation					1,997			1,167
	Equity in losses of equity method franchisees					-			57
	Unrealized gains on commodity derivative positions					(1,060)			(1,402)
	Other					(79)			(2)
Net change in assets and liabilities						(4,509)			(5,332)
			Net cash provided by operating activities			17,145			13,661
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment						(4,546)			(6,869)
Proceeds from disposals of property and equipment						216			133
Acquisition of store from franchisee						(312)			-
Other investing activities						821			232
			Net cash used for investing activities			(3,821)			(6,504)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of lease obligations						(82)			(105)
Proceeds from exercise of stock options						519			6,232
Repurchase of common shares						(6,090)			(25,477)
			Net cash used for financing activities			(5,653)			(19,350)
Net increase (decrease) in cash and cash equivalents						7,671			(12,193)
Cash and cash equivalents at beginning of period						50,971			55,748
Cash and cash equivalents at end of period					$	58,642		$	43,555

KRISPY KREME DOUGHNUTS, INC.

NON-GAAP FINANCIAL INFORMATION
(Unaudited)

As of February 1, 2015, the Company had net deferred income tax assets of approximately $92 million, of which approximately $44 millionrelated to federal and state net operating loss carryovers. The Company’s federal net operating loss carryovers totaled approximately $159 million.

The Company has reported cumulative pretax income of over $160 million since the beginning of fiscal 2010, and the Company also has generated significant taxable income during this period. However, because of the Company’s utilization of its federal and state net operating loss carryovers and other deferred tax assets, the Company’s cash payments for income taxes have been relatively insignificant during this period. As a result, the provision for income tax expense has substantially exceeded cash payments for income taxes. Until such time as the Company’s net operating loss carryovers are exhausted or expire, GAAP income tax expense is expected to continue to substantially exceed the amount of cash income taxes payable by the Company.

The Company recorded a pretax charge of approximately $2.5 million in the fourth quarter of fiscal 2015 for the settlement of amounts due under an employment agreement with the Company’s former chief executive officer. That officer, who was most recently the Company’s Executive Chairman, transitioned from that role to the non-employee role of non-executive chairman of the board of directors in late January 2015. Charges of this nature are not expected to recur on a regular basis.

The following non-GAAP financial information and related reconciliation of adjusted net income to GAAP net income are provided to assist the reader in understanding the effects of the above facts and transactions on the Company’s results of operations. In addition, the non-GAAP financial information is intended to illustrate the material difference between the Company’s income tax expense and income taxes currently payable. These non-GAAP performance measures are consistent with other measurements made by management in the operation of the business which do not consider income taxes except to the extent to which those taxes currently are payable, for example, capital allocation decisions and incentive compensation measurements that are made on a pretax basis.

				Management's						Historical Periods
				Earnings Guidance						Three Months Ended						Year Ended
				Year Ending January 31, 2016						May 3,			May 4,			February 1,
				From			To			2015			2014			2015
				(In thousands, except per share amounts)
Net income, as reported				$	34,800		$	37,200		$	10,666		$	9,656		$	30,060
Charge for settlement of employment contract					-			-			-			-			2,464
Provision for deferred income taxes					20,200			21,800			5,950			6,162			15,729
Adjusted net income				$	55,000		$	59,000		$	16,616		$	15,818		$	48,253
Adjusted earnings per common share:
	Basic			$	0.83		$	0.89		$	0.25		$	0.24		$	0.73
	Diluted			$	0.80		$	0.85		$	0.24		$	0.23		$	0.70
Weighted average shares outstanding:
	Basic				66,500			66,500			66,603			66,522			66,360
	Diluted				69,100			69,100			68,573			69,746			68,929

 

KRISPY KREME DOUGHNUTS, INC.
SEGMENT INFORMATION
(Unaudited)
								Three Months Ended
								May 3,			May 4,
								2015			2014
								(In thousands)
Revenues:
	Company Stores:
		On-premises sales						$	50,096		$	41,086
		Consumer packaged goods - wholesale sales							40,621			39,362
					Company Stores revenues				90,717			80,448
	Domestic Franchise								3,709			3,499
	International Franchise								6,728			6,581
	KK Supply Chain:
				Total revenues					63,517			60,312
				Less – intersegment sales elimination					(32,197)			(29,260)
					External KK Supply Chain revenues				31,320			31,052
						Total revenues		$	132,474		$	121,580
Operating income:
	Company Stores							$	7,357		$	4,642
	Domestic Franchise								2,094			2,156
	International Franchise								4,904			4,280
	KK Supply Chain								10,949			11,310
				Total segment operating income					25,304			22,388
	General and administrative expenses								(7,554)			(7,047)
	Corporate depreciation and amortization expense								(595)			(371)
	Other operating expenses								120			1,210
				Consolidated operating income				$	17,275		$	16,180
Depreciation and amortization expense:
	Company Stores							$	3,169		$	2,584
	Domestic Franchise								17			46
	International Franchise								-			1
	KK Supply Chain								212			171
	Corporate								595			371
				Total depreciation and amortization expense				$	3,993		$	3,173

 

KRISPY KREME DOUGHNUTS, INC.
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION
(Unaudited)
							Three Months Ended
							May 3,				May 4,				Change
							2015				2014				vs LY
Company-operated stores (all domestic):
	Stores at beginning of period							111				95
	Opened							2				2
	Acquired (divested)							1				-
	Stores at end of period							114				97
Domestic Franchise stores:
	Stores at beginning of period							167				159
	Opened							2				5
	Closed							(2)				(1)
	Acquired (divested)							(1)				-
	Stores at end of period							166				163
International Franchise stores:
	Stores at beginning of period							709				574
	Opened							24				23
	Closed							(10)				(2)
	Stores at end of period							723				595
				Total systemwide store count				1,003				855
Systemwide Sales (in thousands):(1)
	Company stores						$	89,968			$	79,818			12.7%
	Domestic Franchise stores							91,772				87,711			4.6%
	International Franchise stores							120,750				114,511			5.4%
	International Franchise stores, in constant dollars(2)							120,750				104,801			15.2%
Company Stores Supplemental Information (in thousands):
	Company Stores revenues						$	90,717			$	80,448			12.8%
	Company Stores contribution(3)						$	16,817			$	12,709			32.3%
	Other segment expenses, net							9,460				8,067			17.3%
	Company Stores operating income						$	7,357			$	4,642			58.5%
	Company Stores contribution margin							18.5	%			15.8	%		270 basis points
Company Stores - Store Operating Weeks								1,467				1,234			18.9%
Change in Same Store Sales (retail sales only):(4)
	Company stores							4.3	%			(2.4)	%
	Domestic Franchise stores							5.8	%			4.1	%
	International Franchise stores							(9.2)	%			(4.8)	%
	International Franchise stores, in constant dollars(2)							(1.7)	%			(2.5)	%
Company Stores - Consumer Packaged Goods - wholesale sales:(5)
	Change in average weekly number of doors							0.8	%			(0.5)	%
	Change in average weekly sales per door							0.3	%			(2.8)	%

(1) Systemwide sales, a non-GAAP financial measure, include sales by both Company and franchise Krispy Kreme stores but exclude sales among Company and franchise stores. The Company believes systemwide sales data are useful in assessing consumer demand for the Company’s products, the overall success of the Krispy Kreme brand and, ultimately, the performance of the Company. All of the Company’s royalty revenues are computed as percentages of sales made by the Company’s domestic and international franchisees, and substantially all of KK Supply Chain’s external sales of doughnut mixes and other ingredients ultimately are determined by demand for the Company’s products at franchise stores. Accordingly, sales by the Company’s franchisees have a direct effect on the Company’s royalty and KK Supply Chain revenues, and therefore on the Company’s profitability. The Company’s consolidated financial statements appearing elsewhere herein include sales by Company stores, sales to franchisees by the KK Supply Chain business segment, and royalties and fees received from franchise stores based on their sales, but exclude sales by franchise stores to their customers.
(2) Computed on a pro forma basis assuming the average rate of exchange between the U.S. dollar and each of the foreign currencies in which the Company’s international franchisees conduct business had been the same in the comparable prior year period.
(3) Company Stores contribution represents Company Stores revenues less costs of food, beverage and packaging; labor and benefit costs; vehicle costs; occupancy and other store related costs and excludes depreciation and amortization expense; marketing expenses and segment general and administration expenses. The Company Stores contribution is a non-GAAP financial measure and the Company believes this is a useful measure to assess and evaluate the performance of its Company Stores segment.
(4) The change in “same store sales” represents the aggregate retail sales (excluding fundraising sales) during the current year period for all stores which had been open for 18 or more months during the current year period divided by the aggregate retail sales of such stores for the comparable weeks in the preceding year period. Once a store has been open for at least 18 consecutive months, its sales are included in the computation of same stores sales for all subsequent periods. In the event a store is closed temporarily (for example, for remodeling) and has no sales during one or more weeks, such store’s sales for the comparable weeks during the earlier or subsequent period are excluded from the same store sales computation.
(5) Company Stores consumer packaged goods - wholesale sales “average weekly number of doors” represents the average number of customer locations to which product deliveries are made during a week by Company Stores and “average weekly sales per door” represents the average weekly sales to each such location by Company Stores.

KRISPY KREME DOUGHNUTS, INC.

HISTORICAL FINANCIAL INFORMATION

The following tables provide historical financial information incorporating the fiscal 2016 changes to the Company’s presentation of the Consolidated Statement of Income, segment financial information and the change in same store sales as previously discussed. These tables include the Consolidated Statement of Income and segment financial information for fiscal 2014 and 2015 conformed to the fiscal 2016 presentation and the Company Stores contribution for fiscal 2014 and 2015. Additionally, the Company has provided quarterly tables showing the change in same store sales for Company, domestic franchise and international franchise shops for fiscal 2013 through fiscal 2015 using the revised retail sales presentation compared to the former on-premises sales presentation. These presentation changes had no impact on the Company’s consolidated operating income or consolidated net income.

KRISPY KREME DOUGHNUTS, INC.
FISCAL 2015 CONSOLIDATED STATEMENT OF INCOME CONFORMED TO FISCAL 2016 PRESENTATION
(Unaudited)
			Fiscal 2015
			Quarter Ended												Year Ended
			May 4,			August 3,			November 2,			February 1,			February 1,
			2014			2014			2014			2015			2015
			(In thousands, except per share amounts)
Revenues			$	121,580		$	120,516		$	122,871		$	125,367		$	490,334
Operating expenses:
	Direct operating expenses (exclusive of depreciation and
		amortization expense shown below)		96,390			99,067			101,067			99,420			395,944
	General and administrative expenses			7,047			6,737			5,553			9,221			28,558
	Depreciation and amortization expense			3,173			3,033			3,280			3,354			12,840
	Impairment charges and lease termination
		costs		8			38			4			905			955
	Pre-opening costs related to Company Stores			226			245			702			1,357			2,530
	(Gains) and losses on commodity derivatives, net			(1,444)			1,341			681			1,546			2,124
	(Gain) on refranchisings, net of business
		acquisition charges		-			431			(1,285)			-			(854)
Operating income				16,180			9,624			12,869			9,564			48,237
Interest income and (expense), net				28			(98)			(168)			(212)			(450)
Equity in losses of equity method franchisees				(57)			(61)			(53)			53			(118)
Other non-operating income and (expense), net				168			152			91			136			547
Income before income taxes				16,319			9,617			12,739			9,541			48,216
Provision for income taxes				6,663			3,865			4,633			2,995			18,156
Net income			$	9,656		$	5,752		$	8,106		$	6,546		$	30,060
Earnings per common share:
	Basic		$	0.15		$	0.09		$	0.12		$	0.10		$	0.45
	Diluted		$	0.14		$	0.08		$	0.12		$	0.10		$	0.44
Weighted average shares outstanding:
	Basic			66,522			66,008			66,407			66,503			66,360
	Diluted			69,746			68,725			68,654			68,590			68,929

 

KRISPY KREME DOUGHNUTS, INC.
FISCAL 2014 CONSOLIDATED STATEMENT OF INCOME CONFORMED TO FISCAL 2016 PRESENTATION
(Unaudited)
			Fiscal 2014
			Quarter Ended												Year Ended
			May 5,			August 4,			November 3,			February 2,			February 2,
			2013			2013			2013			2014			2014
			(In thousands, except per share amounts)
Revenues			$	120,625		$	112,729		$	114,231		$	112,746		$	460,331
Operating expenses:
	Direct operating expenses (exclusive of depreciation and
		amortization expense shown below)		96,262			94,140			93,936			92,315			376,653
	General and administrative expenses			6,055			5,655			5,730			7,709			25,149
	Depreciation and amortization expense			2,820			2,664			2,788			2,834			11,106
	Impairment charges and lease
		termination costs		8			4			1,531			(169)			1,374
	Pre-opening costs related to Company Stores			126			132			144			161			563
	(Gains) and losses on commodity derivatives, net			170			410			53			826			1,459
	(Gain) on refranchisings, net of business
		acquisition charges		-			(876)			(1,667)			-			(2,543)
Operating income				15,184			10,600			11,716			9,070			46,570
Interest income and (expense), net				(376)			(284)			210			9			(441)
Loss on retirement of debt				-			(967)			-			-			(967)
Equity in losses of equity method franchisees				(53)			(60)			(61)			(47)			(221)
Other non-operating income and (expense), net				(5)			(1)			29			96			119
Income before income taxes				14,750			9,288			11,894			9,128			45,060
Provision for income taxes				6,751			4,571			5,114			(5,632)			10,804
Net income			$	7,999		$	4,717		$	6,780		$	14,760		$	34,256
Earnings per common share:
	Basic		$	0.12		$	0.07		$	0.10		$	0.22		$	0.51
	Diluted		$	0.11		$	0.07		$	0.09		$	0.21		$	0.48
Weighted average shares outstanding:
	Basic			67,012			67,267			67,543			67,222			67,261
	Diluted			70,578			71,089			71,506			71,045			71,054

 

KRISPY KREME DOUGHNUTS, INC.
FISCAL 2015 SEGMENT INFORMATION CONFORMED TO FISCAL 2016 PRESENTATION
(Unaudited)
							Fiscal 2015
							Quarter Ended												Year Ended
							May 4,			August 3,			November 2,			February 1,			February 1,
							2014			2014			2014			2015			2015
							(In thousands)
Revenues:
	Company Stores:
		On-premises sales					$	41,086		$	38,820		$	42,392		$	45,064		$	167,362
		Consumer packaged goods - wholesale sales						39,362			39,715			40,187			38,680			157,944
					Company Stores revenues			80,448			78,535			82,579			83,744			325,306
	Domestic Franchise							3,499			3,296			3,274			3,381			13,450
	International Franchise							6,581			7,534			6,852			7,631			28,598
	KK Supply Chain:
				Total revenues				60,312			59,503			61,581			63,292			244,688
				Less – intersegment sales elimination				(29,260)			(28,352)			(31,415)			(32,681)			(121,708)
					External KK Supply Chain revenues			31,052			31,151			30,166			30,611			122,980
						Total revenues	$	121,580		$	120,516		$	122,871		$	125,367		$	490,334
Operating income:
	Company Stores						$	4,642		$	1,937		$	1,688		$	3,955		$	12,222
	Domestic Franchise							2,156			1,900			1,951			2,058			8,065
	International Franchise							4,280			5,111			5,048			5,587			20,026
	KK Supply Chain							11,310			9,830			10,210			11,376			42,726
				Total segment operating income				22,388			18,778			18,897			22,976			83,039
	General and administrative expenses							(7,047)			(6,737)			(5,553)			(9,221)			(28,558)
	Corporate depreciation and amortization
		expense						(371)			(362)			(373)			(383)			(1,489)
	Other operating expenses							1,210			(2,055)			(102)			(3,808)			(4,755)
				Consolidated operating income			$	16,180		$	9,624		$	12,869		$	9,564		$	48,237

 

KRISPY KREME DOUGHNUTS, INC.
FISCAL 2014 SEGMENT INFORMATION CONFORMED TO FISCAL 2016 PRESENTATION
(Unaudited)
							Fiscal 2014
							Quarter Ended												Year Ended
							May 5,			August 4,			November 3,			February 2,			February 2,
							2013			2013			2013			2014			2014
							(In thousands)
Revenues:
	Company Stores:
		On-premises sales					$	40,794		$	36,140		$	37,206		$	37,372		$	151,512
		Consumer packaged goods - wholesale sales						41,127			39,549			37,680			36,957			155,313
					Company Stores revenues			81,921			75,689			74,886			74,329			306,825
	Domestic Franchise							2,871			2,799			3,026			3,143			11,839
	International Franchise							6,445			6,057			6,205			6,900			25,607
	KK Supply Chain:
				Total revenues				59,811			57,201			58,304			55,913			231,229
				Less – intersegment sales elimination				(30,423)			(29,017)			(28,190)			(27,539)			(115,169)
					External KK Supply Chain revenues			29,388			28,184			30,114			28,374			116,060
						Total revenues	$	120,625		$	112,729		$	114,231		$	112,746		$	460,331
Operating income:
	Company Stores						$	5,440		$	1,046		$	2,743		$	1,792		$	11,021
	Domestic Franchise							1,439			1,526			1,489			1,962			6,416
	International Franchise							4,531			4,239			4,449			4,758			17,977
	KK Supply Chain							10,409			9,409			9,151			9,443			38,412
				Total segment operating income				21,819			16,220			17,832			17,955			73,826
	General and administrative expenses							(6,055)			(5,655)			(5,730)			(7,709)			(25,149)
	Corporate depreciation and amortization
		expense						(276)			(295)			(325)			(358)			(1,254)
	Other operating expenses							(304)			330			(61)			(818)			(853)
				Consolidated operating income			$	15,184		$	10,600		$	11,716		$	9,070		$	46,570

 

KRISPY KREME DOUGHNUTS, INC.
COMPANY STORES HISTORICAL SUPPLEMENTAL INFORMATION
(Unaudited)
				Fiscal 2015
				Quarter Ended																Year Ended
				May 4,				August 3,				November 2,				February 1,				February 1,
				2014				2014				2014				2015				2015
				(In thousands, except per share amounts)
Company Stores revenues				$	80,448			$	78,535			$	82,579			$	83,744			$	325,306
Company Stores contribution				$	12,709			$	10,532			$	10,565			$	13,163			$	46,969
Other segment expenses, net					8,067				8,595				8,877				9,208				34,747
Company Stores operating income				$	4,642			$	1,937			$	1,688			$	3,955			$	12,222
Company Stores contribution margin					15.8	%			13.4	%			12.8	%			15.7	%			14.4	%

 

				Fiscal 2014
				Quarter Ended																Year Ended
				May 5,				August 4,				November 3,				February 2,				February 2,
				2013				2013				2013				2014				2014
				(In thousands, except per share amounts)
Company Stores revenues				$	81,921			$	75,689			$	74,886			$	74,329			$	306,825
Company Stores contribution				$	13,755			$	8,916			$	10,765			$	9,849			$	43,285
Other segment expenses, net					8,315				7,870				8,022				8,057				32,264
Company Stores operating income				$	5,440			$	1,046			$	2,743			$	1,792			$	11,021
Company Stores contribution margin					16.8	%			11.8	%			14.4	%			13.3	%			14.1	%

 

Krispy Kreme Doughnuts, Inc.
Change in Same Store Sales
(Unaudited)
Company Stores
		Revised Presentation			Former Presentation
Period End		Retail Sales Only			On-Premises Sales
FY15
Q1		(2.4)%			(1.5)%
Q2		1.5%			1.1%
Q3		3.8%			3.3%
Q4		2.4%			1.7%
YTD		1.3%			1.2%
FY14
Q1		14.6%			12.2%
Q2		11.6%			10.5%
Q3		4.5%			4.4%
Q4		2.8%			2.4%
YTD		8.3%			7.4%
FY13
Q1		2.4%			2.1%
Q2		6.9%			6.2%
Q3		8.8%			7.5%
Q4		9.4%			8.1%
YTD		6.9%			5.9%

 

Domestic Franchise Stores
		Revised Presentation			Former Presentation
Period End		Retail Sales Only			On-Premises Sales
FY15
Q1		4.1%			4.5%
Q2		3.5%			3.8%
Q3		3.4%			3.9%
Q4		3.9%			4.7%
YTD		3.7%			4.2%
FY14
Q1		11.9%			11.8%
Q2		12.5%			12.0%
Q3		10.3%			11.0%
Q4		7.3%			7.0%
YTD		10.4%			10.4%
FY13
Q1		6.0%			6.2%
Q2		7.5%			8.1%
Q3		6.2%			6.5%
Q4		10.5%			11.0%
YTD		7.5%			7.9%

 

International Franchise Stores
Nominal Dollars (1)
		Revised Presentation			Former Presentation
Period End		Retail Sales Only			On-Premises Sales
FY15
Q1		(4.8)%			(4.5)%
Q2		(1.0)%			(1.0)%
Q3		(4.1)%			(4.1)%
Q4		(8.3)%			(8.1)%
YTD		(4.7)%			(4.6)%
FY14
Q1		(8.1)%			(8.0)%
Q2		(11.4)%			(11.2)%
Q3		(6.7)%			(6.4)%
Q4		(6.5)%			(6.5)%
YTD		(8.1)%			(8.0)%
FY13
Q1		(6.7)%			(6.5)%
Q2		(8.5)%			(8.4)%
Q3		(4.2)%			(4.3)%
Q4		(3.9)%			(3.6)%
YTD		(5.8)%			(5.7)%

 

International Franchise Stores
Constant Dollars (2)
		Revised Presentation			Former Presentation
Period End		Retail Sales Only			On-Premises Sales
FY15
Q1		(2.5)%			(2.2)%
Q2		(2.5)%			(2.4)%
Q3		(2.9)%			(2.9)%
Q4		(2.8)%			(2.6)%
YTD		(2.7)%			(2.6)%
FY14
Q1		(4.7)%			(4.5)%
Q2		(7.2)%			(7.1)%
Q3		(1.2)%			(0.9)%
Q4		(0.7)%			(0.8)%
YTD		(3.4)%			(3.3)%
FY13
Q1		(6.2)%			(6.0)%
Q2		(5.5)%			(5.3)%
Q3		(3.6)%			(3.8)%
Q4		(4.2)%			(3.9)%
YTD		(4.9)%			(4.8)%

(1) Computed using the average rate of exchange for the period between the U.S. dollar and each of the foreign currencies in which the Company's international franchisees conduct business.

(2) Computed on a pro forma basis assuming the average rate of exchange between the U.S. dollar and each of the foreign currencies in which the Company's international franchisees conduct business had been the same in the comparable prior year period.

SOURCE Krispy Kreme Doughnuts, Inc.

Contacts:

Darryl Carr
Krispy Kreme
Media Relations
336-726-8996
dcarr@krispykreme.com

Anita K. Booe
Krispy Kreme
Investor Relations
336-703-6902
abooe@krispykreme.com

###

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