Q1 2026 Krispy Kreme Inc Earnings Call

May 7, 2026

Speaker #1: Hello everyone. And thank you for standing by. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme First Quarter 2026 earnings call.

Operator: Hello, everyone, and thank you for standing by. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme Q1 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. I would now like to turn the call over to Christine McDevitt, Krispy Kreme Associate General Counsel. Please go ahead.

Speaker #1: All lines have been placed on mute to prevent any background noise. I would now like to turn the call over to Christine McDevitt, Krispy Kreme Associate General Counsel.

Speaker #1: Please go ahead.

Speaker #2: Hello, everyone, and welcome to Krispy Kreme's First Quarter 2026 earnings call. Thank you for joining us today. This morning, Krispy Kreme issued its earnings press release.

Christine McDevitt: Hello, everyone, welcome to Krispy Kreme's Q1 2026 earnings call. Thank you for joining us today. This morning, Krispy Kreme issued its earnings press release. The press release and an accompanying presentation are available on our investor relations website at investors.krispykreme.com. Joining me on the call are President and Chief Executive Officer, Josh Charlesworth, and Chief Financial Officer, Raphael Duvivier. After their prepared remarks, we will host a question and answer session. Before we begin, please note that during this call, we will be making forward-looking statements, including statements of expectations, future events, or future financial performance. Forward-looking statements are based on current expectations and are subject to risks and uncertainties.

Speaker #2: The press release and an accompanying presentation are available on our investor relations website at investors.krispykreme.com. Joining me on the call are President and Chief Executive Officer Josh Charlesworth, and Chief Financial Officer Raphael Duvivier.

Speaker #2: After they're prepared remarks, we will host a question-and-answer session. But before we begin, please note that during this call, we will be making forward-looking statements, including statements of expectations, future events, or future financial performance.

Speaker #2: Forward-looking statements are based on current expectations and are subject to risks and uncertainties. Actual results could differ materially from those contained in any forward-looking statements, because of factors described in the cautionary statements in today's earnings press release, our annual report on Form 10-K filed with the SEC, and in other SEC filings we make from time to time.

Christine McDevitt: Actual results could differ materially from those contained in any forward-looking statements because of factors described in the cautionary statements in today's earnings press release, our annual report on Form 10-K filed with the SEC, and in other SEC filings we make from time to time. We assume no obligation to update any forward-looking statement, except as may be required by law. Additionally, during this call, we will reference certain non-GAAP financial measures. Please refer to our earnings press release on our website for additional information regarding these non-GAAP measures, including a reconciliation to the closest comparable GAAP measure. Raphael will take us through our financial performance in a moment, but first, here's Josh.

Christine McDevitt: Actual results could differ materially from those contained in any forward-looking statements because of factors described in the cautionary statements in today's earnings press release, our annual report on Form 10-K filed with the SEC, and in other SEC filings we make from time-to-time. We assume no obligation to update any forward-looking statement, except as may be required by law. Additionally, during this call, we will reference certain non-GAAP financial measures. Please refer to our earnings press release on our website for additional information regarding these non-GAAP measures, including a reconciliation to the closest comparable GAAP measure. Raphael will take us through our financial performance in a moment, but first, here's Josh.

Speaker #2: We assume no obligation to update any forward-looking statement, except as may be required by law. Additionally, during this call, we will reference certain non-GAAP financial measures.

Speaker #2: Please refer to our earnings press release on our website for additional information regarding these non-GAAP measures, including a reconciliation to the closest comparable GAAP measure.

Speaker #2: Raphael will take us through our financial performance in a moment, but first, here's Josh.

Speaker #3: Thank you, Christine, and good morning, everyone. We are pleased with our significant progress in the first quarter as we continue to advance our turnaround to deleverage our balance sheet and drive sustainable, profitable growth.

Josh Charlesworth: Thank you, Christine, and good morning, everyone. We are pleased with our significant progress in Q1 as we continue to advance our turnaround to deleverage our balance sheet and drive sustainable, profitable growth. Krispy Kreme remains a compelling growth story, supported by strong consumer demand for our iconic fresh doughnuts. Unlocking that demand remains our priority, and we are doing so through our two largest opportunities, profitable US expansion and capital-light international franchise growth. This year, we expect system-wide sales to grow 2% to 4% compared to last year, to over $2 billion, driven primarily by international expansion. In the H2, we anticipate growth in the US as we lap the now ended partnership with McDonald's, which we exited last July.

Speaker #3: Krispy Kreme remains a compelling growth story supported by strong consumer demand for our iconic fresh donuts. Unlocking that demand remains our priority, and we are doing so through our two largest opportunities: profitable US expansion and capital light international franchise growth.

Speaker #3: This year, we expect system-wide sales to grow 2 to 4 percent compared to last year, to over $2 billion. Driven primarily by international expansion, in the back half of the year, we anticipate growth in the US as we lap the now ended partnership with McDonald's, which we exited last July.

Speaker #3: While we recognize that the broader macroeconomic environment remains dynamic, this outlook is driven by anticipated higher volumes points of access expansion and franchise development.

Josh Charlesworth: While we recognize that the broader macroeconomic environment remains dynamic, this outlook is driven by anticipated higher volumes, points of access expansion, and franchise development. Last year, approximately 25% of system-wide sales were generated by franchisees. After the refranchising transactions in Q1, the expected percent of franchise sales going forward has increased to 42%, reflecting strong progress toward our goal of reaching 50% of system-wide sales generated by franchisees entering 2027. Let's move to the four pillars of our turnaround plan and the progress we are making on each. Number one, refranchising. Number two, improving returns on capital. Number three, expanding margins. Number four, driving sustainable, profitable US growth. Our first pillar, refranchising, enables us to drive more profitable system-wide sales growth while accelerating new shop development through a capital-light model.

Speaker #3: Last year, approximately 25 percent of system-wide sales were generated by franchisees. After the refranchising transactions in the first quarter, the expected percent of franchise sales going forward has increased to 42 percent, reflecting strong progress toward our goal of reaching 50 percent of system-wide sales generated by franchisees entering 2027.

Speaker #3: Now, let's move to the four pillars of our turnaround plan, and the progress we are making on each. Number one: refranchising. Number two: improving returns on capital.

Speaker #3: Number three: expanding margins. And number four: driving sustainable, profitable US growth. Our first pillar, refranchising, enables us to drive more profitable system-wide sales growth while accelerating new shop development through a capital light model.

Speaker #3: In March, we completed two transactions advancing this strategy, contributing to a reduction in net debt. In Japan, we entered a refranchising agreement with Unison Capital, an experienced operator in the retail restaurant sector.

Josh Charlesworth: In March, we completed 2 transactions advancing this strategy, contributing to a reduction in net debt. In Japan, we entered a refranchising agreement with Unison Capital, an experienced operator in the retail restaurant sector. Krispy Kreme has a 20-year presence in Japan with approximately 90 shops and 300 fresh delivery points of access, and we are pleased to partner with Unison to support continued growth in this important market. Japan marks the first of the 2 to 3 international refranchising deals we are targeting in 2026. As we pursue refranchising across our other international markets, we remain focused on identifying the right partners to maximize value and position our brand for long-term growth. We also reduced our ownership in our Western US joint venture to a 20% minority stake with our long-standing partner, WKS Restaurant Group.

Speaker #3: Krispy Kreme has a 20-year presence in Japan with approximately 90 shops and 300 fresh delivery points of access, and we are pleased to partner with Unison to support continued growth in this important market.

Speaker #3: Japan marks the first of the two to three international refranchising deals we are targeting in 2026. As we pursue refranchising across our other international markets, we remain focused on identifying the right partners to maximize value and position our brand for long-term growth.

Speaker #3: We also reduced our ownership in our Western US joint venture to a 20 percent minority stake with our long-standing partner, WKS Restaurant Group. The WKS franchisee now operates more than 70 shops across the Western US and has agreed to develop new shops and further expand Krispy Kreme's fresh delivery footprint over the coming years.

Josh Charlesworth: The WKS franchisee now operates more than 70 shops across the Western US and has agreed to develop new shops and further expand Krispy Kreme's fresh delivery footprint over the coming years. The second pillar of our turnaround is improving returns on capital. Across the business, we are reducing capital intensity and improving utilization of existing assets, while our franchisees continue investing to support brand growth. The combination of these factors has resulted in a significant decrease in CapEx in Q1 compared to last year, which we expect to contribute to positive free cash flow in 2026. Our international development pipeline is an important driver for our capital-light growth. We are projecting more than 100 shop openings this year, nearly all through franchisees, as we continue expanding fresh delivery doors across grocery, convenience, club wholesalers, and quick service restaurants outside of the US.

Speaker #3: The second pillar of our turnaround is improving returns on capital. Across the business, we are reducing capital intensity and improving utilization of existing assets, while our franchisees continue investing to support brand growth.

Speaker #3: The combination of these factors has resulted in a significant decrease in CapEx in the first quarter compared to last year, which we expect to contribute to positive free cash flow in 2026.

Speaker #3: Our international development pipeline is an important driver for our capital light growth. We are projecting more than $100 shop openings this year, nearly all through franchisees, as we continue expanding fresh delivery doors across grocery, convenience, club wholesalers, and quick service restaurants outside of the US.

Speaker #3: In the first quarter, we opened 26 shops around the world. In April, we celebrated our first anniversary in Brazil and just yesterday we opened our second hotline theatre shop in São Paulo, supporting our growing hub-and-spoke network in this important market.

Josh Charlesworth: In Q1, we opened 26 shops around the world. In April, we celebrated our first anniversary in Brazil, and just yesterday, we opened our second Hot Light Theater shop in São Paulo, supporting our growing hub-and-spoke network in this important market. Today, the Krispy Kreme system consists of more than 2,100 locations, both company-owned and franchised across 42 countries, including the US. This year, we expect to add 3 to 4 new markets, including the Netherlands, which we recently announced. The first Hot Light Theater shop in the Netherlands is expected to open in late 2026 and will serve as both a retail shop and a production hub, anchoring a broader phased expansion to approximately 30 shops across the country over the next 5 years. The Netherlands represents our sixth Western European market, along with the UK, Ireland, France, Spain, and Switzerland.

Speaker #3: Today, the Krispy Kreme system consists of more than 2,100 locations, both company-owned and franchised, across 42 countries, including the US. This year, we expect to add 3 to 4 new markets, including the Netherlands, which we recently announced.

Speaker #3: The first hotline theatre shop in the Netherlands is expected to open in late 2026 and will serve as both a retail shop and a production hub, anchoring a broader phased expansion to approximately 30 shops across the country over the next five years.

Speaker #3: The Netherlands represents our sixth Western European market, along with the UK, Ireland, France, Spain, and Switzerland. In the US, we are prioritizing leveraging existing capacity to drive growth more efficiently.

Josh Charlesworth: In the US, we are prioritizing leveraging existing capacity to drive growth more efficiently. Our current network utilization is only about 25%, demonstrating that we can reach significantly more locations without incremental capacity investment. Walmart and Target, along with other strategic partners, remain meaningfully under-penetrated, and we have the capacity to support their growth through the same facilities that currently deliver to more than 7,400 fresh doors nationwide. The third pillar of our turnaround is expanding margins. We are simplifying the business and reducing costs across the P&L, resulting in a significant margin improvement in Q1, led by a strong increase in the US segment. In the US, we are making doughnuts more efficiently through improved production planning, labor optimization, and streamlined hub operations.

Speaker #3: Our current network utilization is only about 25 percent, demonstrating that we can reach significantly more locations without incremental capacity investment. Walmart and Target, along with other strategic partners, remain meaningfully underpenetrated and we have the capacity to support their growth through the same facilities that currently deliver to more than 7,400 fresh doors nationwide.

Speaker #3: The third pillar of our turnaround is expanding margins. We are simplifying the business and reducing costs across the P&L, resulting in a significant margin improvement in the first quarter, led by a strong increase in the US segment.

Speaker #3: In the US, we are making donuts more efficiently through improved production planning, labor optimization, and streamlined hub operations. Donuts are also being delivered more efficiently by improving route management and demand planning, and by optimizing production and delivery schedules to support cost-effective expansion.

Josh Charlesworth: Doughnuts are also being delivered more efficiently by improving route management and demand planning, by optimizing production and delivery schedules to support cost-effective expansion. In April, we completed the transition of our US fresh delivery network to third-party logistics partners ahead of schedule. Now that we have successfully outsourced our US logistics, we have greater cost predictability and reduced operational risk, enabling our teams to focus on what they do best: making fresh doughnuts. We expect the benefits of our logistics optimization to offset the impact of recent increases in fuel prices. As a result of the cost reduction initiatives implemented last year, we improved profitability in Q1, with shop and delivery labor and SG&A expenses declining more than 10% versus the year ago period. The fourth pillar of our turnaround is sustainable, profitable growth in the US.

Speaker #3: In April, we completed the transition of our U.S. fresh delivery network to third-party logistics partners, ahead of schedule. Now that we have successfully outsourced our U.S. logistics, we have greater cost predictability and reduced operational risk, enabling our teams to focus on what they do best: making fresh donuts.

Speaker #3: We expect the benefits of our logistics optimization to offset the impact of recent increases in fuel prices. As a result of the cost reduction initiatives implemented last year, we improved profitability in the first quarter with shop and delivery labor and SG&A expenses declining more than 10 percent versus the year-ago period.

Speaker #3: The fourth pillar of our turnaround is sustainable, profitable growth in the US. We know that when our donuts are available in the right places and in the right quantities with strategic partners, we can generate higher average weekly sales and improve profitability as we have done for three consecutive quarters.

Josh Charlesworth: We know that when our doughnuts are available in the right places and in the right quantities with strategic partners, we can generate higher average weekly sales and improve profitability as we have done for 3 consecutive quarters. After completing our door optimization in Q3 last year, we have returned to growth in the last 2 quarters, adding over 250 higher volume, higher margin doors in Q1 with strategic partners such as Publix, Sam's Club, and Target. We also launched in Jewel-Osco, which is part of the Albertsons family of brands. With our US logistics now fully outsourced and our optimized fresh delivery footprint in place, we believe we now have the right formula for profitable growth, stronger average weekly sales per door, supported by more predictable logistics.

Speaker #3: After completing our door optimization in the third quarter last year, we have returned to growth in the last two quarters, adding over 250 higher volume, higher margin doors, in quarter one, with strategic partners such as Publix, Sam's Club, and Target.

Speaker #3: We also launched in Julosko, which is part of the Albertsons family of brands. With our US logistics now fully outsourced and our optimized fresh delivery footprint in place, we believe we now have the right formula for profitable growth, stronger average weekly sales per door, supported by more predictable logistics.

Speaker #3: In my recent meetings with our strategic fresh delivery partners, it was encouraging to hear their enthusiasm for growing Krispy Kreme, e, not only through new locations but by strengthening the brand in existing doors.

Josh Charlesworth: In my recent meetings with our strategic fresh delivery partners, it was encouraging to hear their enthusiasm for growing Krispy Kreme, not only through new locations, but by strengthening the brand in existing doors. In support of this, we are working closely with them to enhance merchandising and in-store doughnut displays, while also improving our presence on their digital platforms. Other drivers of sustainable, profitable growth in the US are the Original Glazed, especially in dozens, our LTOs, and the digital channel. We're seeing strong results across each. Both Original Glazed and dozen sales are up, driven in part by second dozen promotional offers. Our innovative limited time offerings, which are often tied to seasonal and cultural events, continue to drive incremental traffic.

Speaker #3: In support of this, we are working closely with them to enhance merchandising and in-store donut displays, while also improving our presence on their digital platforms.

Speaker #3: Other drivers of sustainable, profitable growth in the US are the original glazed, especially in dozens, our LTOs, and the digital channel. We're seeing strong results across each.

Speaker #3: Both original glazed and dozen sales are up, driven in part by second dozen promotional offers. Our innovative, limited-time offerings, which are often tied to seasonal and cultural events, continue to drive incremental traffic.

Speaker #3: For example, we had record sales for both Valentine's Day and St. Patrick's Day, reinforcing Krispy Kreme as a top choice for gifting, sharing, and celebrating, while highlighting strong consumer demand for our fresh donuts.

Josh Charlesworth: For example, we had record sales for both Valentine's Day and St. Patrick's Day, reinforcing Krispy Kreme as a top choice for gifting, sharing, and celebrating, while highlighting strong consumer demand for our fresh doughnuts. We also saw an enthusiastic response to our Artemis II Doughnut, celebrating NASA's historic deep space crew mission. While we had originally planned to feature the doughnut for 3 days, we extended the promotion for the duration of the mission due to high demand. Our LTOs performed particularly well in our rapidly growing digital channel, which represented 23% of US retail sales in Q1. Our digital presence, including our loyalty program, which has over 17 million members, continues to drive engagement across all age groups, while also encouraging repeat transactions through customized rewards.

Speaker #3: We also saw an enthusiastic response to our Artemis II donut, celebrating NASA's historic deep space crew mission. While we had originally planned to feature the donut for three days, we extended the promotion for the duration of the mission due to high demand.

Speaker #3: Our LTOs perform particularly well in our rapidly growing digital channel, which represented 23 percent of US retail sales in the first quarter. Our digital presence, including our loyalty program, which has over 17 million members, continues to drive engagement across all age groups.

Speaker #3: While also encouraging repeat transactions through customized rewards. Beyond tapping into cultural moments to create relevant buzzworthy offerings, we also stay closely attuned to evolving consumer trends.

Josh Charlesworth: Beyond tapping into cultural moments to create relevant buzzworthy offerings, we also stay closely attuned to evolving consumer trends, including the increased use of GLP-1 and other weight loss medications. As part of our ongoing commitment to better understand our consumers, we conducted research which found that Krispy Kreme consumers who identify as users of these medications are just as likely as non-users to purchase sweet treats for holidays and special occasions, with the focus on quality and taste.

Speaker #3: Including the increased use of GLP-1 and other weight loss medications. As part of our ongoing commitment to better understand our consumers, we conducted research which found that Krispy Kreme consumers who identify as users of these medications are just as likely as non-users to purchase sweet treats for holidays and special occasions with the focus on quality and taste.

Speaker #3: With our differentiated fresh donuts, typically purchased two to three times per year primarily for sharing occasions, Krispy Kreme is well positioned in this context.

Josh Charlesworth: With our differentiated fresh doughnuts, typically purchased 2 to 3 times per year, primarily for sharing occasions, Krispy Kreme is well positioned in this context. While we continue to monitor this trend among other macro factors, we remain focused on expanding the ways consumers experience and share Krispy Kreme, including through our high-performing minis category, which currently features Minis Doughnuts, Doughnut Dots, and our new Mini Crullers, which is a mini cake doughnut sold through select fresh delivery partners. This new product further strengthens our assortment of smaller shareable treats and provides consumers with more variety.

Speaker #3: While we continue to monitor this trend among other macro factors, we remain focused on expanding the ways consumers experience and share Krispy Kreme, including through our high-performing, mini's category, which currently features donut minis and donut dots, and our new mini crawlers, which is a mini cake donut sold through select fresh delivery partners.

Speaker #3: This new product further strengthens our assortment of smaller, shareable treats and provides consumers with more variety. Overall, we are pleased to have carried last year's momentum into the first quarter.

Josh Charlesworth: Overall, we are pleased to have carried last year's momentum into the Q1, delivering the results our turnaround plan was designed to achieve, including improving financial flexibility through refranchising our operations in Japan and the Western US, reducing capital intensity by opening new shops with franchisees and reducing our CapEx, expanding margins through greater operational efficiency, including the full outsourcing of US logistics, and by driving sustainable profitable US growth through OG dozens, digital sales, and by adding new high volume doors with our strategic fresh delivery partners. With that, Raphael will now review our Q1 financials and provide an update on our 2026 full year outlook.

Speaker #3: Delivering the results our turnaround plan was designed to achieve. Including: improving financial flexibility through refranchising our operations in Japan and the Western US; reducing capital intensity by opening new shops with franchisees and reducing our capex; expanding margins through greater operational efficiency including the full outsourcing of US logistics and by driving sustainable, profitable US growth through OG dozens, digital sales, and by adding new high-volume doors with our strategic fresh delivery partners.

Speaker #3: With that, Raphael, we'll now review our first quarter financials and provide an update on our 2026 full-year outlook.

Speaker #1: Thank you, Josh. I'm pleased with our quarterly performance, which is driven by the discipline execution of the turnaround plan. We are focused on sustainable, profitable growth through quality sales and effective cost management across the P&L.

Raphael Duvivier: Thank you, Josh. I'm pleased with our quarterly performance, which is driven by the disciplined execution of the turnaround plan. We are focused on sustainable, profitable growth through quality sales and effective cost management across the P&L. We deleverage our balance sheet through refranchising activity and by delivering higher Adjusted EBITDA. We also generated free cash flow, our first positive free cash flow in a Q1 period since our 2021 IPO by continuing to reduce capital expenditures and better working capital management. Net revenue was $367 million in the Q1 2026, down 2.2% year over year, reflecting our strategic closure of underperforming doors completed in the Q3 2025.

Speaker #1: With the leverage our balance sheet to refranchising activity and by delivering higher adjusted EBITDA. We also generated free cash flow. Our first positive free cash flow in a Q1 period since our 2021 IPO by continuing to reduce capital expenditures and better working capital management.

Speaker #1: Net revenue was $367 million in the first quarter of 2026. Down 2.2 percent year over year, reflecting our strategic closure of underperforming doors completed in the third quarter of 2025.

Speaker #1: System-wide sales were $485.3 million in the first quarter of 2026. Increasing 0.7 percent in constant currency, excluding sales attributed to the now-ended, McDonald's USA partnership.

Raphael Duvivier: System-wide sales were $485.3 million in Q1 2026, increasing 0.7% in constant currency, excluding sales attributes to the now ended McDonald's USA partnership. Adjusted EBITDA of $33.1 million was an increase of 38% year-over-year, driven by productivity initiatives across our network and cost control at the corporate level. This represents the third consecutive quarter of Adjusted EBITDA growth year-over-year. At quarter-end, our net leverage ratio, which reflects our net debt divided by trailing four quarters Adjusted EBITDA, improved 1.2 times quarter-over-quarter to 5.5 times and reflected an improvement of 2 times since we announced the turnaround plan in August last year.

Speaker #1: Adjusted EBITDA of $33.1 million was one increase of 38 percent year over year, driven by productivity initiatives across our network and cost control at the corporate level.

Speaker #1: This represents the third consecutive quarter of adjusted EBITDA growth year over year. At quarter end, our net leverage ratio, which reflects our net debt divided by trailing four quarters' adjusted EBITDA, improved 1.2 times quarter over quarter to 5.5 times.

Speaker #1: And reflected an improvement of two times since we announced the turnaround plan in August last year. This is also below the forecasted six times we previously shared due to the timing of WKS refranchising as the proceeds help us further reduce our net debt.

Raphael Duvivier: This is also below the forecasted 6 times we previously shared due to the timing of WKS refranchising as the proceeds help us further reduce our net debt. We benefit from our turnaround initiatives, which led to the substantial improvement in Adjusted EBITDA. We continue to have healthy liquidity, which has now increased to more than $300 million. Our bank leverage now below 4 times, which lowers the interest rate on our primary credit facility by 25 basis points. In our US segment, organic revenue declined 4% year-over-year due to the strategic closure of underperforming fresh delivery doors in Q3 last year, including McDonald's, as we focus on quality growth. We have since replaced low volume doors with higher volume, higher margin doors with strategic partners.

Speaker #1: In addition, we benefit from a turnaround initiatives which led to the substantial improvement in adjusted EBITDA. We continue to have healthy liquidity, which has now increased to more than $300 million.

Speaker #1: Our bank leverage now below four times, which lowers the interest rate on our primary credit facility by 25 basis points. In our US segment, organic revenue declined 4 percent year over year due to the strategic closure of underperforming fresh delivery doors in the third quarter last year, including McDonald's, as we focus on quality growth.

Speaker #1: We have since replaced low-volume doors with higher volume, higher margin doors with strategic partners. Positioning Krispy Kreme products in the right place with the right partner at the right time resulted in substantially higher average weekly sales of $685.

Raphael Duvivier: Positioning Krispy Kreme products in the right place with the right partner at the right time resulted in substantially higher average weekly sales of $685, a 16.7% increase over year and a 3.8% increase quarter over quarter. Adjusted EBITDA for the US segment increased 61% to $25.5 million, up from $15.9 million in Q1 last year, reflecting traction from our turnaround plan. We benefited from cost controls and other initiatives related to efficiencies in our operating network, including completing the outsource of our US logistic networks, savings on SG&A, and the eliminations of costs related to the now ended McDonald's USA partnership. Adjusted EBITDA margin increased 480 basis points year over year.

Speaker #1: A 16.7 percent increase over a year, and a 3.8 percent increase quarter over quarter. Adjusted EBITDA for the US segment increased 61 percent to 25.5 million.

Speaker #1: Up from 15.9 million in the first quarter last year, reflecting traction from our turnaround plan. We benefited from cost controls and other initiatives related to efficiencies in our operating network, including completing the outsource of our US logistics networks, savings on SG&A, and the eliminations of costs related to the now-ended McDonald's USA partnership.

Speaker #1: Adjusted EBITDA margin increased 480 basis points year over year. In our international segment, organic revenue increased by 0.4 percent, primarily due to growth in Canada and Mexico.

Raphael Duvivier: In our 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, driven by the refranchising of our operations in Japan in early March. In our Market Development segment, organic revenue declined 4.3% as growth in royalty revenues from international markets, including India, Brazil, and Spain, 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 for the Market Development segment rose 5.3% to $11.6 million.

Speaker #1: Adjusted EBITDA for international segment was down 2.9 percent to 14.5 million dollars, driven by the refranchising of our operations in Japan in early March.

Speaker #1: In our market development segment, organic revenue declined 4.3 percent as growth in royalty revenues from international markets, including India, Brazil, and Spain, was more than offset by lower equipment sales in the quarter.

Speaker #1: Adjusted EBITDA for the market development segment rose 5.3 percent to 11.6 million dollars. Adjusted EBITDA for the market development segment rose 5.3 percent to 11.6 million dollars.

Speaker #1: Adjusted EBITDA margin decreased year over year 60 basis points to 57.5 percent, driven by changes in the regional mix of product sales. Our highly attractive franchise margin level supports our intention to advance our capital-light growth strategy.

Raphael Duvivier: Adjusted EBITDA margin decreased year over year 60 basis points to 57.5%, driven by changes in the regional mix of product sales. Our highly attractive franchise margin levels support our intention to advance our capital light growth strategy. As Josh mentioned, we plan to open 3 to 4 new international franchise markets this year, including the Netherlands, which will open later this year. Let me now discuss our financial guidance, which we have expanded with a full year range for net revenue and for Adjusted EBITDA. Both ranges include the impact of refranchising transactions we have already completed, but not any future transactions. We expect net revenue of $1.25 billion to $1.35 billion. System-wide sales are expected to increase 2% to 4% in constant currency from $1.96 billion in 2025.

Speaker #1: As Josh mentioned, we plan to open three to four new international franchise markets this year, including the Netherlands, which we'll open later this year.

Speaker #1: Let me now discuss our financial guidance, which we have expanded with a full-year range for net revenue and for adjusted EBITDA. Both ranges include the impact of refranchising transactions we have already completed, but not any future transactions.

Speaker #1: We expect net revenue of $1.25 billion to $1.35 billion. System-wide sales are expected to increase two to four percent in constant currency from 1.96 billion in 2025.

Speaker #1: We project at least 100 shop openings this year, nearly all franchised, including 26 shops that opened in the first quarter. We expect adjusted EBITDA of $140 million to $150 million dollars.

Raphael Duvivier: We project at least 100 shop openings this year, nearly all franchised, including 26 shops that opened in Q1. We expect Adjusted EBITDA of $140 million to $150 million. This range, as I said, includes the impact of refranchising transactions. We estimate that analyzing impact of EBITDA of refranchising Japan and WKS is approximately $15 million. Capital expenditures of $50 to $60 million, which reflects a decrease of approximately 50% from last year. Positive free cash flow of more than $15 million. Finally, net leverage ratio below 5.5x. Our Q1 demonstrated clear progress on our turnaround.

Speaker #1: This range, as I said, includes the impact of refranchising transactions. We estimate that annualized impact of EBITDA of refranchising Japan and WKS is approximately $15 million.

Speaker #1: Capital expenditures of 50 to 60 million dollars, which reflects a decrease of approximately 50 percent from last year. Positive free cash flow of more than $15 million dollars, and finally, net leverage ratio below 5.5 times.

Speaker #1: Our first quarter demonstrated clear progress on our turnaround. We are driving sustainable, profitable growth in the US and globally. The leverage in our balance sheets is due to expanding our capital-light model.

Raphael Duvivier: We are driving sustainable, profitable growth in the US and globally, deleveraging our balance sheets by expanding our capital-light model, increasing Adjusted EBITDA, and generating free cash flow through disciplined CapEx and tighter working capital management. In the quarters ahead, we intend to build on this approach and continue to deliver on the objectives outlined in our turnaround plan. I will now turn the call back over to Josh.

Speaker #1: Increasing adjusted EBITDA and generating free cash flow through disciplined CapEx and tighter working capital management. In the quarters ahead, we intend to build on this approach and continue to deliver on the objectives outlined in our turnaround plan.

Speaker #1: I will now turn the call back over to Josh.

Speaker #2: We continue to build momentum with our focus on sustainable, profitable growth and a stronger balance sheet. We are confident in the foundation we are laying for Krispy Kreme's next year of growth and the progress we have made shows we are well on our way.

Josh Charlesworth: We continue to build momentum with our focus on sustainable, profitable growth and a stronger balance sheet. We are confident in the foundation we are laying for Krispy Kreme's next era of growth, and the progress we have made shows we are well on our way. Operator, let's now open it up for Q&A, please.

Speaker #2: Operator, let's now open it up for Q&A, please.

Speaker #3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *1 to raise your hand.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Daniel Guglielmo with Capital One Securities. Your line is now open. Please go ahead.

Speaker #3: To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Daniel Guglielmo, with capital One Securities.

Speaker #3: Your line is now open. Please go ahead.

Speaker #4: Hi everyone. Thank you for taking my question. We appreciated the 2026 guidance for both revenues and adjusted EBITDA goes to show how far we've come from last year as we continue to execute on additional international refranchising deals.

Daniel Guglielmo: Hi, everyone. Thank you for taking my questions. We 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 refranchising deals, 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.

Speaker #4: 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.

Speaker #5: Hey Dan, how are you? Thanks for the question. So yeah, look, as we get more deals done, we'll update the guidance. The guidance we gave includes the two deals that we have already done.

Raphael Duvivier: Hey, Dan, how are you? Thanks for the question. Yeah, look, as we get more deals done, we'll update the guidance. The guidance we gave include the two deals that we have already done, so exclude WKS and Japan, and it provides some clarity on the annualized impact of both of around $50 million. As we get more deals done, we will update both numbers for revenue and EBITDA.

Speaker #5: So exclude WKS and Japan. And I provided some clarity on the analyze impact of both of around $50 million. As we get more deals done, we will update both numbers for revenue and EBITDA.

Daniel Guglielmo: Appreciate that. Thank you. Then US consumer trends have been mixed based on business type in this kinda 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 Q1, and do you have any insights on April trends? Thanks.

Speaker #4: Appreciate that. Thank you. And then 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?

Speaker #4: Are you seeing strength in certain regions? And how did demand trend by month in one Q? And do you have any insights on April trends?

Speaker #4: Thanks.

Speaker #6: Yeah, hi Dan. Yeah, this is certainly a dynamic broader consumer environment, but Krispy Kreme we've continued to see strong demand for our differentiated fresh donuts.

Josh Charlesworth: Hi, Dan. Yeah, this is certainly a dynamic, broader consumer environment. 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. We also saw in those gifting and sharing moments like Valentine's Day 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. We certainly saw, you know, weather disruption in January here in the southeast, the home of Krispy Kreme. Overall, we saw a strong performance through the quarter, and continue to see that in April, especially around these buzzworthy moments.

Speaker #6: For example, the original glazed in dozens where we are driving value with our second dozen promotions as performed well through the quarter. And we're also saw in those gifting and sharing moments like Valentine's and the Artemis II donut, which is a real buzzworthy event, we saw strong demand so strong that we actually even had to expand availability.

Speaker #6: So we certainly saw weather disruption in January. Here in the Southeast, the home of Krispy Kreme, but overall, we saw strong performance through the quarter.

Speaker #6: And we continued to see that in April, especially around these buzzworthy moments.

Speaker #4: Great. Thank you.

Daniel Guglielmo: Great. Thank you.

Speaker #3: As a reminder, if you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again.

Operator: As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Please stand by while we compile the Q&A roster.

Speaker #3: Please stand by while we compile the Q&A roster.

Speaker #6: Well, assuming there are no more questions, thank you everyone for joining the call. And we're making significant progress on our turnaround plan to deleverage the balance sheet and position Krispy Kreme for sustainable, long-term growth.

Josh Charlesworth: Well, assuming there are no more questions, thank you everyone for joining the call. We're making significant progress on our turnaround plan to deleverage the balance sheet and position Krispy Kreme for sustainable long-term growth. We look forward to continuing this momentum throughout 2026. Thank you again.

Speaker #6: And we look forward to continuing this momentum throughout 2026. Thank you again.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.