Krispy Kreme, Inc.

Net revenue in the second quarter was $331 million, down 13% year over year, reflecting planned re-franchising of the Western U.S. and Japan; excluding re-franchising, revenue was essentially flat organically. System-wide sales were $497 million, up 2.6% in constant currency excluding the impact of the ended McDonald’s USA partnership. Adjusted EBITDA was $28.8 million, up 43%, and adjusted EBITDA margin improved 340 basis points to 8.7%. Adjusted EPS improved by $0.12 year over year, with about $0.02 of that benefit tied to re-franchising deals. In the U.S., organic revenue rose 0.1% and 4.4% excluding McDonald’s; U.S. adjusted EBITDA was $13.8 million, up 38%, and margin expanded about 370 basis points to 8%. International organic revenue fell 5.1%, and international adjusted EBITDA declined 22% to $14.2 million; Market Development organic revenue grew 14.4% and adjusted EBITDA rose 117% to $19.4 million. Net leverage ended the quarter at 5.4x trailing four-quarter adjusted EBITDA. Year to date, CapEx was $16.1 million, down 70%, and free cash flow improved by more than $100 million versus the first half of last year. Full-year guidance was maintained: net revenue of $1.25 billion to $1.35 billion, system-wide sales growth of 2% to 4% in constant currency, adjusted EBITDA of $140 million to $150 million, and CapEx of $50 million to $60 million. Management also said Q4 is typically stronger seasonally than Q3.

Josh Charlesworth framed the quarter as further evidence that the turnaround is working, emphasizing balance-sheet repair, lower leverage, and a more profitable growth model. He said the company is focused on two main growth engines: profitable U.S. expansion and capital-light international franchise growth. He also highlighted stronger digital sales, expanded retail partnerships like Target, and the view that the brand remains underpenetrated in key channels and markets.

Raphael Duvivier highlighted that the quarter’s improvement came from productivity initiatives, cost controls, and re-franchising, which reduced reported revenue but improved profitability and cash generation. He cited adjusted EBITDA of $28.8 million, margin of 8.7%, net leverage of 5.4x, and CapEx of $16.1 million year to date, down 70% year over year; he also said free cash flow improved by more than $100 million in the first half. He reiterated the full-year targets and said the company expects higher growth and margins in Q4 than Q3, with low-single-digit commodity inflation and logistics savings expected to offset fuel pressure.

Analysts focused on where margin expansion can go next, what is driving U.S. delivery performance, and why EBITDA margins were not even stronger given the underlying sales improvement. Management said the largest margin benefits from logistics outsourcing are still coming through, and that future margin gains should come from more re-franchising, lower capital intensity, and continued operational efficiency. Questions on weak international performance centered on the U.K. and Australia; management pointed to door rationalization and extreme hot weather in the U.K., while saying they still see opportunity in those markets and want the right local partners. On retail partner penetration, management said Krispy Kreme is still only present in about 30% of partner networks and sees room to expand through better merchandising and online availability at Walmart, Kroger, and soon Target.com.