Krispy Kreme, Inc. (DNUT) Earnings

Management highlights

Turnaround has four pillars: using existing facilities for more locations, expanding margins by simplifying business and reducing costs, achieving sustainable profitable growth in US by adding high-volume doors with strategic partners and leveraging digital channel, and fully outsourcing US logistics. Financial results: Net revenue was $367 million in Q1 2026, down 2.2% y/y; system-wide sales were $485.3 million, increasing 0.7% in constant currency; adjusted EBITDA was $33.1 million, up 38% y/y. Also, re-franchising in Japan and Western US improved financial flexibility, reduced capital intensity, and achieved positive free cash flow. International expansion plan: Plan to open three to four new international franchise markets this year, including one later this year.

Guidance

Expect net revenue of $1.25 billion to $1.35 billion. System-wide sales expected to increase 2% to 4% in constant currency from 2025. Project at least 100 shops opening this year, nearly all franchised. Expect adjusted EBITDA of $140 million to $150 million. Capital expenditures are $50 to $60 million, a decrease of ~50% from last year. Positive free cash flow of more than $15 million. Net leverage ratio below 5.5 times.

Segment performance

US segment: Organic revenue declined 4% year over year due to strategic closure of underperforming fresh delivery doors. Adjusted EBITDA increased 61% to $25.5 million, up from $15.9 million in the first quarter last year, and adjusted EBITDA margin increased 480 basis points year-over-year. International segment: Organic revenue increased by 0.4%, primarily due to growth in Canada and Mexico. Adjusted EBITDA for international segment was down 2.9% to $14.5 million. Market development segment: Organic revenue declined 4.3% as growth in royalty revenues from international markets was more than offset by lower equipment sales in the quarter. Adjusted EBITDA for the market development segment rose 5.3% to $11.6 million. Adjusted EBITDA margin decreased year-over-year 60 basis points to 57.5% driven by changes in the regional mix of product sales.

Analyst Q&A

• Q: We have appreciated the 2026 guidance for both revenues and adjusted EBITDA goes to show how far we've come from last year. As you continue to execute on additional international re-franchising deals, so over what's already been announced, how do you expect that to impact the guidance, just trying to think through the puts and takes for those kinds of deals?

  A: Hey, Dan, how are you? Thanks for the question. So, yeah, look, as we get more deals done, we will update the guidance. The guidance we gave include the two deals that we have already done, so exclude WKS and Japan, and provide some clarity on the analyzed impact of both of around $50 million. As we get more deals done, we will update both numbers for revenue and EBITDA.

• Q: Us consumer trends have been mixed based on business type in this kind of complex macro environment. Can you just dig in a little more into your us customer trends? Are you seeing strength in certain regions and how did demand trend by month in one queue? And do you have any insights on, on April trends?

  A: Yeah. Hi, Dan. Yeah, this is certainly a dynamic, broader consumer environment. But at Krispy Kreme, you know, we continue to see strong demand for our differentiated fresh doughnuts. For example, the original glazed in dozens, where we are driving value with our second dozen promotions, has performed well through the quarter. And we also saw in those gifting and sharing moments like Valentine's and the Artemis II doughnut, which is a real buzzworthy event, we saw strong demand, so strong that we actually even had to expand availability. So we certainly saw weather disruption in January here in the southeast, the home of Krispy Kreme. But overall, we saw a strong performance through the quarter and continue to see that in April, especially around these buzzworthy moments.