Q2 2026 Krispy Kreme Inc Earnings Call

Speaker #1: Hello.

Speaker #2: Hello everyone, and thank you for standing by. My name is Paige, and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme 2nd Quarter 2026 earnings call.

Speaker #2: All lines have been placed on mute to prevent any background noise. After the company's prepared remarks, they will host a question-and-answer session. If you would like to ask a question, press star 1 to raise your hand.

Speaker #2: I would now like to turn the call over to Steve West, Krispy Kreme Vice President of Investor Relations. Steve, please go ahead.

Speaker #3: Good morning, everyone, and welcome to Krispy Kreme's 2nd Quarter 2026 earnings call. Joining me are President and Chief Executive Officer Josh Charlesworth and Chief Financial Officer Rafael Duvivier.

Speaker #3: The 2nd Quarter earnings release and accompanying presentation are available on our investor relations website, at investors.krispycreme.com. This call will also be available on our website and contains forward-looking statements.

Speaker #3: Forward-looking statements, including those of expectations, future events, or financial performance, are based on current expectations and are subject to risks and uncertainties. Actual events or results could differ materially from those forward-looking statements due to factors described in the cautionary statements in our earnings release, annual report on Form 10-K filed with the SEC, and in other SEC filings we make from time to time.

Speaker #3: We assume no obligation to update any forward-looking statement except as may be required by law. Additionally, we will reference certain non-GAAP financial measures, information about these non-GAAP measures, and reconciliations to the closest comparable GAAP measures is available in our earnings release.

Speaker #3: Any reference to percentage growth when discussing 2nd Quarter results is a comparison to the 2nd Quarter of 2025, unless otherwise indicated. I will now turn the call over to Josh.

Speaker #4: Thank you, Steve, and good morning, everyone. 2nd Quarter highlighted continued significant progress on our turnaround to strengthen the balance sheet, reduce leverage, and drive sustainable, profitable growth.

Speaker #4: Our year-to-date results demonstrate the success of the actions we are taking to grow the business and improve profitability. We remain confident in our ability to deliver our 2026 financial targets and are maintaining our previously issued guidance.

Speaker #4: Krispy Kreme remains a compelling global growth story, supported by increasing consumer demand for our iconic fresh donuts, even in a dynamic macro environment. Unlocking that demand remains our priority.

Speaker #4: And we are doing so through our two largest opportunities: profitable U.S. expansion and capital light international franchise growth. In the 2nd Quarter, demand for our fresh, iconic donuts across the U.S.

Speaker #4: and international markets drove system-wide sales growth of 2.6%. Excluding the impact of the now-ended McDonald's USA partnership from last year. Overall, our goal remains to deliver system-wide sales of more than $2 billion in 2026.

Speaker #4: Adjusted EBITDA margin significantly increased by 340 basis points as our focus on optimizing operations and logistics, along with driving more profitable sales per door in fresh delivery, is translating into stronger financial performance.

Speaker #4: Now let's move to the four pillars of our turnaround plan and the progress we are making on each. One, refranchising; two, improving returns on capital; three, expanding margins; and four, driving sustainable, profitable U.S.

Speaker #4: 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. So far this year, we have completed 2 transactions that advanced this strategy, in Japan and the Western U.S.

Speaker #1: let's move to the four pillars of our turnaround plan and the progress we are making on each. One, refranchising; two, improving returns on capital; three, expanding margins; and four, driving sustainable, profitable U.S. growth.

Speaker #4: Both of which contributed to a reduction in net debt. Last year, approximately 25% of system-wide sales were generated by franchisees, today franchisees account for 42% of system-wide sales.

Speaker #1: sustainable, profitable U.S. pillar, refranchising, enables us to drive more profitable system-wide sales growth while accelerating new shop development through a capital-line model. So far this year, we have completed 2 transactions that advanced this strategy, in Japan and the Western U.S.

Speaker #4: Through additional refranchising efforts, our goal remains to reach approximately 50% of system-wide sales generated by franchisees beginning next year. As we evaluate additional refranchising opportunities, we remain focused on identifying the right partners both in international markets and the U.S., to maximize value and position our brand for long-term growth.

Speaker #4: The second pillar of our turnaround is improving returns on capital. Across the business, we are significantly reducing capital intensity, and improving our utilization of existing assets.

Speaker #4: While our franchisees invest to support brand growth. As a result, we reduced our capex in the first half of the year by 70% compared to last year.

Speaker #4: Which will contribute to achieving positive free cash flow in 2026. We are pleased to have entered into agreements for 3 new international franchise markets this year, including the Netherlands, Estonia, and Mauritius.

Speaker #4: Achieving our goal of 3 to 4 new markets in 2026. The continued strength of the Krispy Kreme brand is reflected in the interests we see from prospective franchise partners around the world, and we remain focused on pursuing additional opportunities to expand our global footprint through our capital light franchise model.

As a result, we reduced our capex in the first half of the Year by 70% compared to last year.

Speaker #4: Year to date, we have opened 59 new shops, driven by growth in Japan, Brazil, South Korea, and the Middle East, all but 2 of these shops were opened by franchisees and we remain on track to achieve our goal of opening at least 100 shops in 2026.

This will contribute to achieving positive, free cash flow in 2026.

We are pleased to have entered into agreements for 3 new international franchise markets this year.

Including the Netherlands.

Estonia and Mauritius achieving our goal of 3 to 4 new markets in 2026.

Speaker #4: While our international development pipeline remains an important driver of capital light growth, we are also focused on U.S. growth by leveraging existing manufacturing capacity to expand fresh delivery.

The continued strength of the Krispy, Kreme brand is reflected in the interests. We see from prospective franchisee Partners around the world and we remain focused on pursuing additional opportunities.

Speaker #4: Our current network utilization is only about 25%, demonstrating the opportunity to expand to more locations without incremental capacity investment. Walmart and Target, along with other strategic partners, are still significantly under-penetrated, and we can support additional growth through the same facilities that currently deliver to more than 7,600 doors nationwide.

To expand our global footprint through our capital-light franchise model.

Year. Today we have opened 59 new shops driven by growth in Japan.

Brazil, South Korea, and the Middle East.

All the 2 of these shops were opened by franchisees and we remain on track to achieve our goal of opening at least 100 shops in 2026.

Speaker #4: The third pillar of our turnaround is expanding margins. We are simplifying the business and reducing costs across the P&L. Resulting in significant margin improvement versus last year, driven by the U.S.

While our International Development pipeline remains an important driver of capital like growth. We are also focused on us growth by leveraging existing manufacturing capacity to expand fresh delivery.

Speaker #4: segment. In the U.S., we are making donuts more efficiently through enhanced production planning, labor optimization, and streamlined hub operations, all leading to a meaningful reduction in labor spend.

Our current Network utilization is only about 25%, demonstrating the opportunity to expand to more locations without incremental capacity investment.

Speaker #4: We continue to increase delivery efficiency through improved route management, demand planning, and the optimization of production and delivery schedules. Now that we have successfully outsourced our U.S.

Walmart and Target, along with other strategic partners, are still significantly underpenetrated, and we can support additional growth through the same facilities that currently deliver to more than 7,600 doors nationwide.

Speaker #4: logistics, we have greater cost predictability, and reduced operational risk, enabling our teams to focused on what they do best: making fresh donuts. After completing a successful test of a new AI-enabled platform for fresh delivery demand planning, we are now rolling it out across our company network.

The third pillar of our turnaround is expanding margins, we are simplifying. The business and reducing costs across the pnl.

Resulting in significant margin Improvement versus last year, driven by the US segment.

In the US, we are making donuts more efficiently to enhance production planning, labor optimization.

And streamlined Hub operations, all leading to a meaningful reduction in labor spend.

Speaker #4: Based on the preliminary results, we expect this advanced technology solution will reduce out-of-stocks on the shelf, while also minimizing returns. The fourth pillar of our turnaround is sustainable, profitable growth in the U.S., across our donut shops, digital channels, and fresh delivery partners.

We continue to increase delivery efficiency through improved, route, management demand planning and the optimization of production and delivery schedules.

Speaker #4: Our donut shops are the largest driver of sustainable profitable growth in the U.S., the strength of our donut shops has been driven by our recently expanded core menu, led by our iconic original-glazed donut, supported by 5 seasonal donut collections each year, and a steady cadence of innovative limited-time offerings.

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 donuts.

After completing a successful test of a new AI enabled platform for fresh delivery demand planning. We are now rolling it out across our company Network.

Speaker #4: Each plays a key role, but is the combination that makes them so successful. Our core menu provides consistency and value. Our seasonal collections deliver new flavors and variety.

based on the preliminary results, we expect this advanced technology solution will reduce out of stocks on the Shelf while also minimizing returns

Speaker #4: And our LTOs create excitement and cultural relevance. Together, they keep the brand fresh and engaging for consumers, stimulate curiosity, and drive sustained demand. We further support demand through targeted marketing and promotional programs that reinforce value and encourage larger purchases.

The fourth pillar of our turnaround is sustainable profitable growth in the US across our donut shops, digital channels, and fresh delivery partners.

Our doughnut shops are the largest driver of sustainable, profitable growth in the U.S. The strength of our doughnut shops has been driven by our recently expanded core menu, led by our iconic Original Glazed doughnut.

Speaker #4: Promotions such as our discounted second dozen offer provide value for consumers while driving donut sales and growth in average ticket size. Sales through our growing digital channel have grown 8% year over year, and now represent approximately 22% of total U.S.

Supported by 5 seasonal donut collections each year and a steady Cadence of innovative limited time offerings.

Each plays a key role, but it's the combination that makes them so successful.

Speaker #4: retail sales. This is driven by improvements in our proprietary digital platforms, including easier payment options and the growth of our loyalty program. This now includes nearly 18 million members in the U.S.

Our core menu provides consistency and value our seasonal collections deliver new flavors, and variety. And our lto create excitement and cultural relevance together. They keep the brand fresh and engaging for consumers, stimulate curiosity and drive sustained demand.

Speaker #4: who visit typically 30% more frequently than non-loyalty members. In fresh delivery, 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 profitability.

We further support demand to targeted marketing and promotional programs, that reinforce value and encourage larger purchases.

Promotions such as our discounted. Second dozen offer provide value for consumers. While driving donut sales and growth in average, ticket size.

Speaker #4: During the second quarter, we added more than 200 doors with strategic partners such as Walmart, Target, Kroger, and Sam's Club. A key component of our continued success in increasing average weekly sales per door is strengthening our relationships with these key strategic partners.

Sales through our growing. Digital channel have grown 8% year-over-year and now represent approximately 22% of total us retail sales.

This is driven by improvements in our proprietary digital platforms, including easier, payment options, and the growth of our loyalty program.

Speaker #4: Target is a great example of how deeper collaboration can unlock additional growth opportunities, and create value for both organizations. We are expanding our relationship with Target to enhance merchandising and checkout placement, and beginning in September, Krispy Kreme products will be available for purchase on target.com.

This now includes nearly 18 million members in the U.S., who visit typically 30% more frequently than non-loyalty members.

In fresh delivery, 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 profitability.

Speaker #4: We believe this expanded relationship reflects the confidence leading retailers have in the strength of our brand and creates additional opportunities to increase sales and expand our fresh delivery network.

During the second quarter, we added more than 200 doors with strategic Partners. Such as Walmart, Target Kroger and Sam's Club.

Speaker #4: Much of our progress in fresh delivery has been led by Sook Nicholas, who we recently announced as our Chief Commercial Officer. Her primary focus is to accelerate growth, expand key partnerships, strengthen customer relationships, and build world-class commercial capabilities across markets.

A key component of our continued success in increasing average, weekly sales per door is relationships with these key strategic partners.

Target is a great example of how deeper collaboration can unlock additional growth opportunities. And create value for both organizations,

Speaker #4: Additionally, we continue to stay closely attuned to evolving consumer trends, including the use of GLP-1 and other weight-loss medications. Last quarter, I discussed the conclusion from our research, which found Krispy Kreme consumers who use these medications are just as likely as non-users to purchase sweet treats for holidays and special occasions.

We are expanding our relationship with Target to enhance, merchandising and checkout placement and beginning. In September Krispy, Kreme products will be available for purchase on target.com.

We believe this expanded relationship, reflects the confidence leading retailers, have in the strength of our brand and creates additional opportunities, to increase sales, and expand, our fresh delivery Network.

Much of our progress in fresh delivery has been led by souks who we recently announced is our chief commercial officer.

Speaker #4: With our differentiated fresh donuts, typically purchased 2 to 3 times per year primarily for sharing occasions, we believe Krispy Kreme is well-positioned in this context.

Her primary focus is to accelerate growth. Expand key Partnerships.

Strength and customer relationships and build world-class commercial capabilities across markets.

Speaker #4: 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.

Additionally, we continue to stay closely attuned to evolving consumer Trends, including the use of glp1 and other weight loss medications.

Speaker #4: Featuring donut minis, donut dots, and mini crawlers is category offers consumers compelling value and greater variety. Overall, we are pleased with the continued progress on our turnaround.

last quarter, I discussed the conclusion from our research, which found Krispy Kreme consumers who use these medications

Are just as likely as non-users to purchase sweet treats for holidays and special occasions.

Speaker #4: Extending the momentum that began late last year. We believe the actions we have taken are positioning Krispy Kreme for sustainable, profitable growth for the long term, and delivering the results our turnaround plan was designed to achieve.

With our differentiated fresh donuts. Typically purchased 2 to 3 times per year, primarily for sharing occasions, We Believe Krispy Kreme is well, positioned in this context.

Speaker #4: Improved financial flexibility, reduced capital intensity, expanded margins through greater operational efficiency, and improved sustainable, profitable U.S. growth. With that, Raphael will now review our second quarter financials.

Well, 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.

Featuring donut minis, donut dots and mini crawlers. This category offers consumers, compelling value and greater variety.

Speaker #1: Thank you, Josh. I'm pleased with another quarter of improvements in our financial performance driven by the execution of our turnaround plan. We remain focused on sustainable, profitable growth through quality sales and effective cost management across the P&L.

Overall, we are pleased with the continued progress on our turnaround, extending the momentum. That began late last year.

Speaker #1: We continue to deliver the balance sheet through increased adjusted EBITDA and increase our profitability by expanding our adjusted EBITDA margin. Net revenue was $331 million in the second quarter, down 13%, reflecting our planned refranchising of the Western U.S.

We believe the actions. We are taking are positioning, Krispy Kreme for sustainable profitable growth for the long term and delivering the results. Our turnaround plan was designed to achieve

Improved Financial flexibility.

Reduced Capital intensity.

Expanded margins through greater operational efficiency and improved, sustainable, profitable U.S. growth.

With that, Raphael will now review our second quarter financials.

Speaker #1: and Japan. Excluding refranchising, we were essentially flat on our organic revenue basis. In fact, system-wide sales were $497 million up 2.6% in constant currency when excluding the impact from McDonald's USA in their prior year period.

Water of improvements in our financial performance, driven by the execution of a turnaround plan.

Speaker #1: This reflects the strength of Krispy Kreme brand around the world. Adjusted EBITDA of $28.8 million increased 43%, driven by productivity initiatives across our network and cost controls at the corporate level.

We remain focused on sustainable profitable growth through Quality Sales and effective cost management across the pnl. We continue to deliberate the balance sheet through increased adjusted debt and increase our profitability by expanding our adjusted, AB, do margin.

Speaker #1: This represents the fourth consecutive quarter of adjusted EBITDA growth and an acceleration versus our first quarter of adjusted EBITDA growth of 38%. During the quarter, our consolidated adjusted EBITDA margin improved 340 basis points to 8.7% through our intense focus on driving sustainable, profitable growth.

Net revenue was 331 million in the second quarter down 13%, reflecting our plan referencing of the western us and Japan.

Excluding with franchising. We were essentially flat on our organic Revenue basis.

In fact, systemwide sales were 497 million of 2.6% in constant currency, when excluding the impact from MacDonald's USA in their prior year period.

Speaker #1: In our U.S. segment, organic revenue increased 0.1%, driven by the strategic closure of underperforming fresh delivery doors. Excluding the McDonald's impact from last year, U.S.

This reflects the strength of Krispy Kreme brand around the world.

Speaker #1: organic revenue was up 4.4%, driven mostly by growth in digital and our retail shops. In fresh delivery, we have taken disciplined actions to improve the productivity of our doors.

I'll just leave it at an increase of $28.8 million, up 43%, driven by productivity initiatives across our network and cost controls at the corporate level.

This represents the fourth consecutive quarter of adjusted EBITDA growth and an acceleration versus our first quarter adjusted EBITDA growth of 38%.

Speaker #1: Our average weekly sales per door in the U.S. now inclusive of both company and franchise-operated doors were approximately $697, an increase of 33% year over year.

During the quarter, our Consolidated, adjusted the margin improved 340 basis points to 8.7% through our intense focus on driving sustainable profitable growth.

Speaker #1: Adjusted EBITDA for the U.S. segment increased 38% to 13.8 million. Reflecting continued traction from our turnaround plan, more than offsetting the impact of our refranchising efforts.

In our us segment, organic Revenue increased, 0.1% driven by the Strategic closure of underperforming fresh delivery doors.

Speaker #1: We benefited from cost control initiatives and increased efficiencies, including outsourcing our U.S. logistic network, savings in SG&A, and eliminating costs related to the now-ended McDonald's USA partnership.

School in the MacDonald's impact from last year, us organic Revenue was up 4.4% during the mostly by growth in digital. And our retail shops

Speaker #1: Those initiatives drove an adjusted EBITDA margin increase of about 370 basis points to 8%. In our international segment, organic revenue decreased 5.1%, due mostly to declines in UK and Australia, partially offset by growth in Canada.

Speaker #1: Adjusted EBITDA of $14.2 million declined 22% year over year, driven by the refranchising of Japan. Additionally, our adjusted EBITDA margin for the international business was 12.1%, which was 160 basis points lower year over year due mostly to a change in mix from the Japan refranchising.

In fresh delivery, we have taken discipline actions to improve the productivity of our doors. Our average weekly sales per door in the US. Now, inclusive of both company and franchise operated doors were approximately 697. An increase of 33% year-over-year adjusted up for the US segment. Increased 38% to 13.8, million reflecting continued traction from our turnaround plan, more than upsetting the impact of our refry efforts. We benefited from cost control initiatives and increase efficiencies, including Outsourcing, our us logistic Network Savings in sgna and eliminating costs related to the now ended MacDonald's USA partnership.

Speaker #1: In our market development segment, organic revenue increased 14.4%, driven by growth in royalty revenues from Middle East, Japan, and Brazil. Adjusted EBITDA increased 117% to 19.4 million, due to refranchising of the Western U.S.

Those initiatives drove an adjusted, a margin increase of about 370 basis. Point to 8%,

Speaker #1: and Japan and increased royalty revenue. Adjusted EBITDA margin decreased to 47.3%, driven by a higher domestic versus international revenue mix, associated with refranchising. Our adjusted earnings per share improved 12 cents year over year, about 2 cents of which was due to our refranchising deals.

In our International segment, organic Revenue, decreased 5.1% due, mostly to declines in UK and Australia. Partially offset by growth in Canada.

Of 14.2 million declined. 22% year-over-year driven by The Ref franchising of Japan.

Additionally, our just a margin for International Business was 12.1%, which was 160 basis points lower e over year due mostly to a change in mix from the Japan franchising.

Speaker #1: Moving to our balance sheet, we continue to deliver an end-of-the-quarter with a net leverage ratio of 5.4 times our trading four quarters of adjusted EBITDA.

Speaker #1: Our leverage ratio has improved by 1.3 turns versus our reported ratio of 6.7 times at the end of 2025, and more than 2 turns since last year's second quarter.

In our market development segment, organic revenue rose 14.4%, driven by growth in priority markets. Revenues from the Middle East, Japan, and Brazil, on an adjusted basis, increased 117% to $19.4 million, due to the refi of the Western US and Japan and increased royalty revenue.

Speaker #1: We are pleased with the progress, but continue to focus on reducing our leverage ratio through additional net debt reduction and adjusted EBITDA growth. Additionally, our free cash flow improved by more than 100 million dollars in the first half of 2026, as compared to the first half of last year, driven by focus on reducing our capital intensity.

I just debit on margin decreased to 47.3% driven by higher domestic versus International Revenue leaks associated with refrigeration.

Our adjusted earnings per share improved 12% year-over-year, about two cents of which was due to our refranchising deals.

Speaker #1: Capex year-to-date of $16.1 million decreased 70% versus the first half of 2025. We continue to focus our invested capital on repairs and maintenance of existing infrastructure, which is in line with our asset-light business model, and we believe we contribute meaningfully to free cash flow generation during the year.

Moving to our balance sheet, we continue to deleverage and ended the quarter with a net leverage ratio of 5.4 times. Our trailing 4 quarters of adjusted debt…

our leverage ratio has improved by 1.3 turns versus our reported ratio of 6.7 times at the end of 2025, and more than 2 turns, since last year's second quarter,

Speaker #1: Before providing our guidance update, I wanted to discuss our long-term refranchising philosophy. We believe our attractive franchise margins advance our capital-light growth strategy. As Josh mentioned, we added three international franchise markets this year, and we are working to add more.

We are pleased with the progress but continue to focus on reducing our leverage ratio to additional net debt reduction and adjusted abduct growth.

Additionally, our free cash flow improved by more than $100 million in the first half of 2026 compared to the first half of last year, driven by a focus on reducing our capital intensity.

Speaker #1: We also continue discussions to refranchise additional markets to trusted partners to grow our brand around the world. We believe this will lead to higher margins, reduced capex, and generate more free cash flow than owning the markets ourselves.

Speaker #1: While some refranchise deals can be diluted to the income statement, we believe it's important to view them from a discounted cash flow perspective. Our refranchising deals intend to be accredited to free cash flow over time, by increasing high-margin royalty stream and reducing capex, which we believe will increase long-term shareholder value.

Capex year to date of 16.1 million decreased 70% versus the first half of 2025. We continue to focus our invested capital on repairs and maintenance of existing infrastructure which is in line with our asset light business model and we believe we contribute meaningfully to free cash flow generation during the year.

Philosophy. We believe our attractive branch margins advance our capital-light growth strategy.

Speaker #1: Moving to our financial targets, I'm pleased to say we're maintaining our previously stated full-year guidance metrics as laid out in our earnings release. Some key metrics include: net revenue of $1.25 to $1.35 billion, system-wide sales growth of 2 to 4% in constant currency, adjusted EBITDA of $140 to $150 million, capital expenditures of $50 to $60 million, given the dynamic changes over the last four quarters, I want to provide some additional color on the rest of the year.

As Josh mentioned, we added 3 International franchise markets this year and we are working to add more. We also continued discussions to franchise additional markets to trusted Partners to grow our brand, around the world.

We believe this will lead to higher margins, reduce capex, and generate more free cash flow than only the markets ourselves.

While some different Chinese deals can be diluted to the income statement. We believe in important to view them from a discounted cash flow perspective.

Our ref franchising deals intend to be accredited to free cash flow over time by increasing high margin royalty stream and reducing capex, which we believe will increase long-term shareholder value.

Speaker #1: The fourth quarter is typically stronger due to seasonality and thus we expect to see higher growth and margins in the fourth quarter than in the third quarter.

Speaker #1: Additionally, as a reminder, in the third quarter of 2025, we reported a 9.3 million dollar cyber-related insurance gain. Adjusted EBITDA in the third quarter of 2025 would have been 31.3 million dollars excluding this gain.

Moving to our financial targets and please to save your maintaining our previously stated full year guidance metrics at laid out in our earnings release.

Some key metrics include net revenue of $1.25 to $1.35 billion.

Systemwide sales growth of 2% to 4% in constant currency.

Speaker #1: With that, I will now turn it over to Josh for his closing remarks.

Adjusted debt of 140 to 150 million dollars.

Speaker #2: We are pleased to have delivered another consecutive quarter of significant progress on sheet, reduce leverage, and drive sustainable, profitable growth. We are confident in the foundation we are building for Krispy Kreme's next era of growth, and believe our results continue to demonstrate that we are well on our way.

Capital expenditures of 50 to 60 million dollars.

Speaker #2: Operator, you may now open the lineup for Q&A.

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 star 1 to raise your hand.

Given the dynamic changes over the last 4 quarters, I want to provide some additional color on the rest of the year. The fourth quarter is typically stronger due to seasonality. And thus we expect to see higher growth and margins in the fourth quarter than in the third quarter. Additionally, as a reminder in the third quarter of 2025, we reported a 9.3 million cyber related Insurance, gain adjusted beyond the third quarter of 2025 would have been 31.3 million dollars, excluding this game.

With that, I will now turn it over to Josh for his closing remarks.

Speaker #3: To withdraw your question, press star 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 Brian Harber with Morgan Stanley.

We are pleased to have delivered another consecutive quarter of significant progress on our turnaround to strengthen the balance sheet, reduce leverage and drive sustainable profitable growth.

We're confident in the foundation we are building for Krispy Kreme's next era of growth and believe our results continue to demonstrate that we are well on our way.

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

Operator, you may now open the line up for Q&A.

Speaker #4: Yeah, thanks. Good morning, guys. Just, you know, when I think about sort of EBITDA margins, I mean, you don't have a longer-term target out there right now, but, like, you've obviously completed quite a bit here.

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 1 to raise your hand. To withdraw your question, press star 1 again.

Speaker #4: On the cost side, you've sort of completed the outsourcing of delivery. I mean, where do you see this going over time, or, you know, as we think about kind of upside into next year and beyond, what will be the key margin drivers, and where do you see that going?

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.

Speaker #1: Hey, Brian. How are you? This is Raphael. Look, we're happy with the turnaround plan. I think, as you said, look, this is the fourth quarter.

Your first question comes from the line of Brian Harbor with Morgan Stanley, your line is open, please go ahead.

Speaker #1: We've seen the results is more important than the first quarter, where we've seen the two deals that we already did, Japan and the Western US, fall to the P&L, right?

Yeah, thanks. Good morning, guys. Um, just, you know, when I think about sort of EBIT margins, I, you know, I mean, you don't have a longer-term target out there right now, but like, you've obviously completed,

Speaker #1: So you're seeing that impact, and you see the margin coming up, right? So as we complete more deals, and we continue to move our agenda to become capital-light, we believe margins will continue to increase.

Speaker #1: And as well, to. Have more free cash flow by doing so.

You know, quite a bit here. Um, on the cost side, you've sort of completed the the Outsourcing of of delivery. I mean where do you where do you see this going over time or you know, as we think about kind of upside um into next year and Beyond what what will be the key margin drivers? And where do you see that going?

Speaker #2: And I'll just add, as you mentioned the outsourcing of logistics, in the US, yes, we've completed that transition, but most of the benefits of our logistics optimization have not really yet come through to the P&L, we're seeing greater cost certainty, improved service levels, and efficiencies.

Speaker #2: These are, at the moment, more than offsetting any inflation on gas prices, for example. So we'd expect to see over time the benefits to margin of that logistics outsourcing as well.

Hey, Brian. How are you? Um, this is Raphael. Um, look, um, we we we're happy with the turnaround plan. I think, uh, as you said, look, this is a fourth quarter. We've seen the results is more important than the first quarter, where we seen the 2 deals that we already did, uh, Japan and the west and us both the pnl, right? So, you seen that, in fact, and you see the margin coming up, right? So as we as, we complete more dose, uh, um, and we want you to move our agenda to become kept alive, We Believe margin will continue to increase and, and

Speaker #4: Okay. Which of the DFD, you know, I guess, like, which of the retailers are performing best for you right now? And do you continue to still have some net closures?

And as well uh Drive uh more free cash flow uh by doing so.

I'll just add, as you mentioned, the outsourcing of logistics.

Speaker #4: Or are there things, you know, places that you're still rationalizing? It seems like Walmart and Target are more of the focus for growth, but could you talk more about what's working best there, and should that continue to drive kind of that increase in average weekly sales?

Speaker #2: Yeah, we're working closely with our strategic partners. You mentioned Walmart, Target, there are others, Kroger, Publix, just to mention a couple more: Costco, Sam's Club, as well in the club channel, very promising.

In the US. Yes, we've completed that transition. But most of the benefits of our Logistics, optimization of, not really yet come through to the p&l. We're seeing greater cost certainty improved service levels and efficiencies um, these are at the moment more than offsetting uh any inflation on gas prices for example. Uh, so we'd expect to see over time the benefits to margin of that Logistics Outsourcing as well.

Speaker #2: You know, we work closely with those, both to expand distribution, where the conditions are right, where we can make sure we have sustainable, profitable sales.

Speaker #2: That's why we made the interventions that we made last year, but also where we already are that we're improving in-store merchandising, placement of the product, and that's why we've not only increased the number of doors where we distribute so far this year in the US by about 450 doors, but we've also increased the average weekly sales in our whole network by over 30% compared to a year ago.

Still rationalizing. It seems like Walmart and Target are more of the focus for growth, but could you, you know, talk more about, um, what's working best there? And, you know, should that continue to drive? Kind of that increase in average weekly sales.

Speaker #2: So if your overall question, yes, we're very pleased with the fresh delivery channel. It was important to make interventions on it last year, and we continue to work with those partners to improve the whole network.

Speaker #2: Most recently, even adding dot-com availability with the likes of Kroger.com, Walmart.com, and soon Target.com.

Speaker #3: Your next question comes from the line of David Palmer with Evercore ISI. Your line is open. Please go ahead.

Speaker #5: Great. Thank you. I'm looking at your margin stuff for the quarter, and actually your US organic sales. I could have it looked like the US organic sales were better than we would have thought, and EBITDA margins, we could have envisioned stronger than what they were.

Yeah, we're, uh, working closely with our strategic partners—you mentioned Walmart, Target, there are others: Kroger, Publix. And just to mention a couple more: Costco, Sam's Club, uh, as well, in the club channel, uh, very promising. You know, we work closely with those both to expand distribution where the conditions are right, where we can make sure we have sustainable, profitable sales. That's why we made the interventions that we made last year, but also, where we already are, that we're improving in-store merchandising, placement of the product. And that's why we've not only increased the number of doors where we've distributed so far this year in the U.S. by about 450 doors, but we've also increased the average weekly sales in our whole network by over 30% compared to a year ago. So to your overall question—yes, we're very pleased with the fresh delivery, uh, channel. It was important.

Speaker #5: So I'm just wondering, is are there any ramp costs or any callouts this quarter that you would point out? You talked about some of the expansion you're doing with certain retailers, so maybe there's something there that we should be thinking about and modeling into the second half.

Important to make interventions on it last year, and we continue to work with those Partners to to uh, improve uh, the whole, uh, Network most recently even adding.com, availability with the likes of kroger.com walmart.com and soon target.com.

Your next question comes from.

The line of David Palmer with evercore isi. Your line is open. Please go ahead.

Speaker #5: And you have a quick follow-up.

Speaker #2: Sure. I'll start with the growth, and I'll hand over to Raphael to talk about the margins. Two, both important. They go hand in hand.

Great. Thank you. Um, I'm looking at your margins stuff for the quarter and actually your us organic sales, I could have

Speaker #2: You know, we actually, you're right, we saw strong underlying growth in the second quarter in the US. If you exclude the McDonald's business that we exited from last year, the organic growth was up 4.4% in the second quarter.

It looked like the US organic sales were better than I—or we—would have thought, and

Speaker #2: You know, we're seeing popularity both with our popular and affordable original Glazed Donuts, especially these second dozen promotions that are driving additional volume and tickets.

Even down margins, we could have envisioned stronger, uh, than what they were. So I'm just wondering, are there any ramp costs or any callouts this quarter that you would point out? You talked about some of the expansion you're doing with certain retailers, so maybe there's something there that we should be thinking about and modeling into the second half.

And you have a, I have a quick follow-up.

Speaker #2: But also, our donut innovations, as I described earlier, these cadence of limited-time offerings, backed up by seasonal program, is generating a lot of engagement with the brand.

Sure, I'll start with the the growth and I'll hand over to Rafael to talk about uh the margins uh to uh both important. They go hand in hand.

Speaker #2: So yeah, it's good to see the underlying growth coming through, but also the profit, Raphael.

Speaker #1: Yeah. Hey, David. Look, on the US margin, we are pleased with the results in the quarter, right? If I look at the margin, we almost double the US margin compared to last quarter.

Speaker #1: You have to remember Q4, the second half, is stronger for us. So you should see higher margins, as we get to the balance of the year.

Speaker #5: That's great. And, you know, I guess international sales, anything to point out, you know, looked like organic sales were maybe a little lighter? Any trends you want to call out there or actions that you're taking in your key international markets?

Speaker #5: And I'll pass it on.

Speaker #1: Yeah. So look, with international, we continue to see strong growth in Canada. Even in places, look, the Japan deal also just going back, because we recently refranchised, but they are growing, right?

You know, we actually you're right we saw strong underlying growth uh in the second quarter in the US if you exclude the McDonald's business that we exited from last year. Uh the organic growth uh was up 4.4% in the second quarter. You know, we're seeing popularity both of our popular and affordable. Original guys Donuts, especially these second dozen promotions that are driving additional volume, and and ticket. But also, I don't know, Innovation as I described earlier these, this Cadence of limited time offerings backed up by a seasonal program, uh, is is generating a lot of Engagement with the brand, so yeah. Uh, it's good to see the underlying growth coming through but also the prophet Rafael. Yeah. Hey, David. Um, look on the you at margin. Um, we we are pleased with, uh, the results in the quadrant, right? If I look at the margin, we almost double uh, the US and margin compared to less quarter. Um, you have to remember as well.

Speaker #1: So it's not hitting that segment anymore, but they opened five shops, already this quarter. We did see some decline in our company-owned UK market, just mostly from door versus restaurantization that we did last year, plus the extreme hot weather, which backed up both sales and profits.

The second half, Q3 and Q4, is typically stronger for us, so you should see higher margins as we get to the balance of the year.

That's great. And, you know, I guess international sales—anything to point out? You know, it looked like...

Speaker #1: But look, we feel confident on the themes turnaround plan, as we head to the second half of the year.

Organic sales were maybe a little lighter. Um, any Trends, you want to call out there or actions that you're taking and your key International markets and I'll pass it on.

Speaker #5: Thanks, guys.

Speaker #1: Thanks, David.

Speaker #3: Your next question comes from the line of Sarah Senator with Bank of America. Your line is open. Please go ahead.

Speaker #6: Hi, this is Ashling on for Sarah. Good morning, guys. I was just wondering if you could give a little more color on what is happening in the UK and Australia.

Speaker #6: It sounds like those markets are still kind of weighing on international, so I'm curious whether the pressure is mostly demand or brand relevance. And when you have markets that are underperforming, does that make refranchising more attractive?

Speaker #6: Because a local partner may be kind of better positioned to fix them, or more challenging because it weighs on valuation?

Yeah, so local International. We continue to see strong growth uh, in Canada. Even in places like the Japan. You also just going back because we recently moved franchise but, uh, they are growing right. So it's not hitting that segment, uh, uh, anymore. But they open 5 shops, uh, uh, already this quarter. Um, we did see some decline in our company owned, uh, UK Market is mostly from door versus restaurant that we did last year plus the extreme hot weather. Um, which back the most sales and profits. But look, we feel confident on the, on the, on the teams around plan, uh, as we had the second half of the year,

Thanks guys.

Speaker #1: Hey, Ashling. This is Raphael. Thanks for the question. Look, I actually was just saying, we did see some decline in the UK, on the revenue side.

Head.

Speaker #1: There's also portfolio mix, just as you look at the margin. That you have to think about it. But yeah, in the UK, we had doors personalization plus extreme hot weather.

Speaker #1: I feel confident about the second half. I think your question on the deals is a good one. And look, we are committed to finding the right partners, right?

Speaker #1: We believe there's a lot of opportunity for us in both Australia and UK. We also said we want to refranchise all the markets outside of the US.

Hi. This is Ashley on for Sarah uh good morning guys. I was just wondering if you could give a little more color on what is happening in the UK and Australia. It sounds like those markets are still kind of Weighing on International. So I'm I'm curious whether the pressure is mostly you know, demand or brand relevance and when you have markets that are underperforming does that make reranch, you know, more attractive? Because a local partner may be kind of better positioned to fix them or more challenging because it weighs on valuation.

Speaker #1: We are also working as we said last quarter on Canada. And make sure that we're finding the right partners that can bring cash flow for us to grow and continue to develop all the markets.

Speaker #6: Great. Thank you for the color. I'll pass it back.

Speaker #3: Your next question comes from the line of Rahul Krathapalli with JPMorgan. Your line is open. Please go ahead.

Speaker #7: Hi, good morning. This is Crystal on for Rahul. I just wanted to ask, on the retail partners, after the 450, you've added this year, kind of where do you see current EFT penetration across the retailers today versus where you wanted to land?

Speaker #7: Over the long term, and if you could share the current churn indoors and how this will change going forward as you focus on improving profitability.

Hey Aslin. Uh, this is Raphael. Thanks for the question. Uh, look as it was just saying. Um, we did see some decline in the UK, um, on the brand new side, uh, there's also a portfolio mix. Just what you look at the margin, uh, that you have to think about it. Um, but yeah, in the UK we we have more personalizations plus uh, extreme hot weather content about the second half. I think your question on the zoos is a good 1 and look, we've committed to finding the right Partners, right? We believe there's a lot of opportunity for us in both Australia and UK. We also said, we want to differentiate all the markets outside of the us. We also working, as we said less quarter on Canada and make sure that we are finding the right partners that can bring that go for us to grow and continue to develop all the markets.

Great, thank you for the color. I'll pass it back.

Speaker #2: Yeah, one of the great things about the strategic partners that we are growing with is that we are you're right, relatively under-penetrated typically around about 30% of their network is where we're currently present.

Your next question comes from the line of Rahul. Kapali with JP Morgan, your line is open. Please go ahead.

Speaker #2: And because we're working so closely with them, and people are looking for our donuts, in places that make where they want them, more conveniently, our customers want us to expand more.

Speaker #2: What we've learned is growth is great, but it needs to be sustainable, profitable growth as well. And so we've been very focused on making sure that the deliveries are locally made, that way we ensure great quality, but we also make sure that the delivery routes are efficient and profitable.

Hi, good morning. This is Crystal on for, um, for a whole. I'm sorry to ask on the Retail Partners. After the 450 is added this year. For the, where do you see current DFD penetration across the retailers today versus where you wanted to land over the long term? And if you could share like the current current indoors and how this will change going forward as you focus on improving profitability,

Speaker #2: So we're growing thoughtfully with those customers, where those conditions are right, where the traffic is high in the store, where we can get we can secure really good indoors in-store displays.

Speaker #2: Or indeed beyond their online platforms. And that's an ongoing journey. We added 450 already this year, on top of about 7 and 1/2 thousand that we had at the beginning of the year.

Speaker #2: So we're pleased with the momentum that we're seeing with that expansion. And momentum. Which always also ensures profitable growth is key. And that's how we see it going forward.

Yeah, 1 of the great things about the Strategic partners that we are growing with is that we are, you're right relatively under penetrated. Um, typically around about 30% of their network is where we're currently present, and because we're working so closely with them. And, um, people are looking for our Donuts, um, in places that make and where they want them more conveniently, um, our customers want us to to expand more. Um, what we've learned is growth is great, but it needs to be sustainable profitable growth as well. And so, we've been very focused on making sure that the deliveries are, are locally made that way, we ensure great quality. We also make sure that the delivery

Speaker #7: And then to follow up on competition, where do you see Krispy Kreme positioning themselves amongst the broader space of desserts and sweets, and how has competition kind of changed?

Speaker #2: Yeah, that's a great question. You know, we make high-quality fresh donuts made from scratch, with our Krispy Kremers preparing the dough, making and decorating the donuts, in front of the eyes of the customer.

Speaker #2: And those same donuts we sell in our donut shops, we sell online, and we sell through the fresh delivery channel. So I'd say that we're pretty unique in the competitive set.

Routes are efficient, um, and profitable. Um, so we're growing thoughtfully with those customers, where those conditions are right, where the traffic, um, is high in the store where we can get, we can secure really good indoors, um, in store displays, um, or indeed be on their online platforms. And that's an ongoing Journey, we added 450 already this year, uh, on top of about 7 and a half thousand that we had at the beginning of the year. So um, you know, we're pleased with the momentum that we're seeing with that expansion and momentum, which always also ensures profitable growth. Um is is key and that's how we see it going forward.

Speaker #2: The other thing to remember is it's a relatively infrequent purchase for people. Most people are buying our donuts just two to three times a year, for special occasions, and sharing.

And then swap on competition. Like where do you see Krispy Kreme Precision themselves amongst the the broader space of, you know, desserts and sweets and how has competition can be changed?

Speaker #2: So we think about all the ways we can bring those donuts to people in ways that are a lot more convenient for them, like the fresh delivery expansion we just discussed, or indeed digital, where we see us growing 8% right now, with our loyalty membership already having reached 18 million for a 400-donut shop chain.

Speaker #2: It's a pretty unique player in the industry. So we worry mostly about making sure our great donuts are high-quality and available and convenient to people, rather than the competition.

Yeah, that's a great question. You know, we make high quality fresh donuts, um, made from scratch, um, with, uh, our crispy creamers preparing the dough making and decorating the donuts in front of the eyes of the customer. And those same Donuts, we sell and our donut shops, we sell online, and we sell through the fresh delivery channels. So I I'd say that we're pretty unique in the competitive set. The other thing to remember is it's a relatively infrequent purchase for people.

Speaker #3: Your next question comes from the line of John Tower with Citibank. Your line is open. Please go ahead.

Speaker #5: Hi, this is Gautam Nanda on for John Tower. Thanks for the question. Can you provide some insight into commodity inflation during the quarter, and have you begun contracting with suppliers for 2027?

Speaker #1: Hey, how are you? This is Raphael again. Look, we said before, and we haven't changed, that we expect low single-digit commodity Josh also mentioned that we are outsourcing we outsource fully logistics.

To people rather than the competition.

Speaker #1: I'm sorry. And we expect the benefit of it more than offset any potential fuel prices increase over the year. So we feel good about where we are from a commodity point of view.

Your next question comes from the line of John Tower with Citi Bank. Your line is open; please go ahead.

Speaker #5: Great, thank you. And just for a follow-up, could you provide any color on maybe how your retail doors are performing across maybe higher versus lower income zip codes?

Hi. This is, uh, galto on for John Tower. Thanks for the question. Uh, can you provide some insight into commodity inflation during the quarter and have you begun Contracting with suppliers for 2027?

Speaker #1: Yeah, sure. You know, our overall focus

Speaker #2: here at Krispy Kreme is making sure we offer great value to our customers. And we're really fortunate with the popular original glaze donuts, they are also our most affordable donuts, whether bought in singles, but actually usually bought in dozens and increasingly in double dozens, where we've been providing additional discounts, almost every day, to our customers to enable them to buy those at an even better value.

Hey, how are you? Uh, this is rafo again. Uh, look, we we said before and we haven't changed and we we expect low single digits. Uh, commodity, um, Josh also mentioned that we, we Outsourcing. Um, we Outsource fully logistic. I'm sorry. And we expect the benefits of it more than offset. Any potential? Few prices increase over the year. Uh, so we feel good about where we are from a commodity point of view.

Speaker #2: And we're seeing that drive volumes, drive ticket, and drive results. And so that's our main focus, is making sure that our donuts are available to as many people as possible.

Okay, thank you. And just as a follow-up, could you provide any color on how your retail stores are performing across higher versus lower income zip codes?

Speaker #3: Your next question comes from the line of Daniel Guglielmo, with Capital One Securities. Your line is open. Please go ahead.

Speaker #6: Hi, everyone. Thank you for taking my questions. Guidance stayed the same this quarter, but the midpoint of adjusted EBITDA represents 3% growth this year on a much stronger capital structure.

Yes, sure. Um, you know, our overall Focus here at Krispy Kreme is making sure we offer Great Value to our customers. And we're really fortunate with the popular original glazed, doughnuts. Uh, they are also almost affordable Donuts, whether bought in singles but actually usually bought in dozens and increasingly in double dozens, where we've been providing

Speaker #6: Can you just highlight why it was so important to bring leverage down before moving on to this next phase of growth for Krispy Kreme?

Speaker #1: Hey, Dan. Hi, this is Raphael. Look, good question. You I mean, you remember as well that we quoted the impact that Japan WKS on a four-year basis.

Finding additional discounts almost every day, so our customers to enable them to, to, um, uh, um, buy those as a even better value. And we're seeing that drive volumes Drive ticket and drive drive results. And so, that's our main. Main focus is making sure that our doughnuts are available to as many people as possible.

Speaker #1: So when you look at when you adjust for that, you're going to end up with a lower base last year. So I think that's already one point.

Your next question comes from the line of Daniel ghoul with capital 1 security. Your line is open, please go ahead.

Speaker #1: On the question of the leverage, look, we knew the leverage that we had at 7 and 1/2 times I call it a year ago, was something we had to work.

Speaker #1: And we've been working on that, because the objective is to continue to do the right deals. That not only will help us with leverage, but we feel our capitalite growth going forward, right?

Hi everyone. Um thank you for taking my questions. Uh, guidance stayed the same this quarter, but the midpoint of adjusted uh, represents 3% growth this year on a much stronger capital structure. Can you just highlight why it was so important to bring leverage down before moving on to this next phase of growth for Krispy Kreme?

Speaker #1: As we move to a lower capex, higher EBITDA margin, and leverage global partners across the globe to grow the brand. And that's what we're already doing, by the way, in a lot of places, like we mentioned last quarter and to the same this one, we've already seen growth in Brazil, in Spain, Middle East, and as I was saying before as well, on Japan, where we just refranchising with our new partner Unison.

Speaker #1: And then they're fully in the business with growth.

Hey Dan. Hi this is Raphael um look good question. Um um you I mean you remember as well that we we we coded the impact that Japan that we K as on a 4 year basis. So when you look at when you adjust for that you're going to you're going to end up with a lower base last year. So um, I think that's already 1 point on on on on the question that the average but we knew the leverage that we had at 7 and a half times. I call it a year ago. Uh was something we had to work and we've been working on that because the objective is to continue to do the right deals.

Speaker #6: Great, then longer term, with the focus on system-wide sales in the US and internationally, does the existing factory and production footprint across the world support significant growth there over the next few years, will there be any need for additional capital from franchisees or you all at some point to build that out?

Speaker #2: In the US, we currently operate at around about 25% production utilization. So there's plenty of room for growth in and that's why we have focused on partnering with those fresh delivery partners.

Uh that not only will help us with leverage but we feel our Capital It Grow going forward, right? As we move to a lower capex uh higher, a margin and leverage Global Partners across the globe to grow the brand. And that's what we we already doing. By the way, in a lot of places like we mentioned last quarter, and to the same, this 1 we've already seen growth in Brazil and Spain, Middle East. Uh, and as was saying before, as well on on Japan, where we just referencing with our new partner Unison and then the food in the business will grow

Speaker #2: We've already discussed today or indeed why we're able to capture the digital e-commerce opportunity. Internationally, the utilization isn't as low, but there's also a lot of opportunity for our franchisees to expand.

Great, great. I appreciate um, that color and then longer term with with the focus, on systemwide sales in the US and internationally does the existing Factory and production footprint across the world support significant growth there. Over the next few years, will there be any need for additional capital from franchisees or you all at some point to build that out?

Speaker #2: And we've seen already this year in India, Brazil, Middle East, Japan, our franchisees supporting expansion of new shops, 59 already this year. We're on track to get over 100 for the full year.

Speaker #2: And we also have already announced three new international markets on top of the 42 we already operate in. And we are when we're bringing those partners on, we're sitting down with them and talking about how we're going to build the brand, support them, to build the brand in their markets with development, and so they're pretty excited about the capital returns that they can see themselves from bringing the brand or expanding the brand around the world.

In the US, we currently operate at around about 25% production utilization. So there's there's plenty of room for growth in. Uh, and that's why we have a focused on partnering with those fresh delivery Partners we've already discussed today or indeed uh why we're able to capture the digital e-commerce opportunity um internationally um utilize

Speaker #2: So it's definitely a lot of opportunity. When you remember that the number one reason why people say they may not yet purchase Krispy Kreme, they just don't have as easy access to it.

Speaker #2: And that applies to the US and around the world.

Speaker #3: There are no further questions at this time. I will now turn the call back to Josh for any closing remarks.

Speaker #2: Well, thank you, everyone. For joining the call. It's important to understand that we're making significant progress on our turnaround. You can hear that as we strengthen the balance sheet and position ourselves for sustainable, profitable growth.

Speaker #2: I want to thank all our Krispy Kremers around the world for your passion, dedication, and commitment. And we look forward to continuing the momentum throughout 2026 and beyond.

International markets. On top of the 42, we already operate in and we are when we're bringing those Partners on, we're sitting down with them and talking about how we're going to build the brand, support them, uh, to build the brand and their markets, uh, with development. Um, and so they're pretty excited about the capital returns that they can see themselves from bringing the brand or expanding the brand, uh, around the world. So, uh, it's definitely, uh, a lot of opportunity. Uh, when you can remember that the number 1 reason, why people say they may not yet purchase Krispy Kreme, they just don't have as easy access to it and that applies to the US and around the world.

Speaker #2: Thank you.

There are no further questions at this time. I will now turn the call back to Josh for any closing remarks.

Thank you everyone, for joining the call. Um, it's important to understand that we're making significant progress on our turnaround. You can hear that as we strengthen the balance sheet, um, and position ourselves for sustainable profitable growth, I want to thank all our crispy creamers around the world, for your passion, dedication, and commitment. And we look forward to continuing the momentum throughout 2026 and Beyond. Thank you.

This concludes today's call, thank you for attending. You may now disconnect