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

WINSTON-SALEM, N.C.--(BUSINESS WIRE)--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 million related 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.

Category:

Wednesday, June 10, 2015 4:15 pm EDT

Dateline:

WINSTON-SALEM, N.C.

Public Company Information:

NYSE:
KKD

Contact:

Krispy Kreme
Media:
Darryl Carr, 336-726-8996
dcarr@krispykreme.com
or
Investor Relations:
Anita K. Booe, 336-703-6902
abooe@krispykreme.com