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

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

###

Share this Story:

Comments:

comments powered by Disqus

Franchise News Room »


News By Industry »


Featured Opportunities

Perkins Restaurant & Bakery
In today's market, the opportunity to buy a PerkinsĀ® couldn't be better for experienced restaurateurs interested in aligning with a concept that has...
Shakeaway
ShakeAway is a unique global company with stores popping up all over the world! Get involved in this fun, fast growing and profitable franchise now...
Roy Rogers Family Restaurants
There is no single factor that accounts for the powerful appeal of the Roy Rogers concept.
Jersey Mike's Subs
Jersey Mike's, a fast-casual sub sandwich franchise with more than 1,500 locations open and under development nationwide, believes that making a sub...
RetroFitness
Retro Fitness is well positioned for today's economy and to dominate the low cost segment by offering a high quality and value add product in...

Subscribe to Franchising.com Express

A Franchise Update Media Production
Franchise Update Media | P.O. Box 20547 // San Jose, CA 95160 // PH. (408) 402-5681
Copyright © 2001 - 2017. All Rights Reserved.

In Loving Memory Of Timothy Gardner (1987-2014)