Business Wire | Nov 9, 2021 04:10PM EST

Krispy Kreme Reports Robust Third Quarter 2021 Results, with Strong Momentum into Q4

Nov. 09, 2021

CHARLOTTE, N.C.--(BUSINESS WIRE)--Nov. 09, 2021--Krispy Kreme, Inc. (NASDAQ: DNUT) ("Krispy Kreme" or the "Company") today reported strong financial results for the third quarter ended October 3, 2021 with net revenue growing 18% year-over-year. Organic growth, excluding the now fully exited legacy wholesale business, was 14% year-over-year and 22% on a two-year basis. Including the exited business, organic growth was 6% year-over-year, in line with company expectations after lapping a strong third quarter in 2020.

Growth was driven by the performance and expansion of Krispy Kreme's signature capital-efficient hub and spoke operating model. Global Points of Access, which reflect all locations where fresh doughnuts and cookies can be purchased, have grown 46% year-over-year, providing customers access to Krispy Kreme in more than 10,000 locations around the world. International Sales per Hub have grown 31% in the quarter year-over-year while U.S. and Canada Sales per Hub have grown 15%. In addition, ecommerce represented 17% of global retail sales in the third quarter.

Adjusted diluted Earnings Per Share was $0.06 in line with our expectations while GAAP diluted Loss Per Share which included IPO and acquisition related expenses was ($0.04). Adjusted EBITDA grew 10% in the quarter, driven by the strength and efficiency of the Company's fresh doughnut hub and spoke operating model. The economies of scale from adding over 3,000 Global Points of Access in the last 12 months, as well as a successful price increase in September, are already helping to offset wage and commodity inflation, with more of an impact of the price increase to come in the fourth quarter.

Net debt decreased 40% to $681 million from the end of the second quarter as a result of proceeds from the IPO and positive free cash flow generated during the third quarter. Current net leverage is now 3.7x. Including the impact of acquiring the Krispy Kreme Canada franchise operations in the fourth quarter, the company expects net leverage to be under 3.0x in the next 12 months.

Commenting on the performance, CEO Mike Tattersfield stated, "Our third quarter results demonstrate the benefits of our omni-channel and global expansion strategy, which allow us to meet consumer demand with premium, fresh doughnuts, in a capital-efficient manner. We are seeing positive momentum continue into the seasonally strong fourth quarter, as consumers sought out our sweet treats throughout October for Halloween and are expected to do so through the holidays. In addition, our pricing power means that we are able to quickly adapt to this inflationary environment with the full impact of the pricing action we have already taken still to come in the fourth quarter."

Third Quarter Consolidated Results

Krispy Kreme's third quarter results showcased strong growth compared to 2019 and 2020. Total company organic revenue grew 6.2% in the quarter, and 14.3% on a two-year stack basis against 2019. Organic revenue growth was driven by our International segment, which delivered results that were stronger than prior to the pandemic, as well as the expansion of our Delivered Fresh Daily ("DFD") network in the U.S. and Canada business, which is highlighted by weekly average sales per door growing more than 50% higher compared to the prior year. Total Company organic revenue growth, excluding the exit of our legacy wholesale business, grew 14.1% and was up 22.2% on a two-year stack basis with high growth from both the U.S. and Canada and International segments.

Adjusted EBITDA grew 9.6% to $41.4 million, with a 12.1% Adjusted EBITDA margin, as a result of strength in our International segment and economies of scale gained as we continue to grow our DFD doors globally. Adjusted Net Income grew 7.1% to $12.6 million in the quarter. We saw a GAAP net loss of $3.8 million, but net income would have been positive excluding IPO and acquisition related expenses in the quarter. GAAP diluted loss per share was ($0.04) for the third quarter of 2021, with Adjusted Diluted EPS decreasing to $0.06 from $0.08 in the third quarter of 2020 as a result of increased share count following the IPO. Weighted average shares outstanding for the third quarter of 2021 increased to 166 million, compared to 125 million in the third quarter of 2020 as a result of the IPO, with an additional 2 million of dilutive shares included when calculating Adjusted Diluted EPS, for a total of 168 million shares.

Net debt decreased from $1,133 million in the second quarter to $681 million in the third quarter due to IPO proceeds and $11 million of positive free cash flow generated in the quarter.

Third Quarter Market Segment Results

U.S. and Canada: In the U.S. and Canada segment, GAAP net revenue grew 11.5% to $225.8 million from $202.6 million the previous year, driven by the continued execution of our omni-channel strategy. Organic revenue declined 2.3% as we lapped the pipeline fill of the Branded Sweet Treat launch in the third quarter of 2020 and the now fully discontinued legacy wholesale business. Excluding the impact of exiting the legacy wholesale business, U.S. and Canada organic growth was 8.9%, with a two-year stack of 27.7% when compared to 2019. Growth was driven by the expansion of both DFD points of access and higher DFD sales per door as well as ecommerce sales which accounted for 16.8% of retail sales in the quarter. Over 150 DFD doors were added in the third quarter despite nationwide driver shortages with additional listings at leading national retailers in several key markets around the country including Chicago, Dallas and Los Angeles. A record 2,100 Krispy Kremers were hired in the quarter, despite the tight labor market. According to Nielsen, consumer demand for Krispy Kreme Branded Sweet Treats also remained very strong with a 33% increase in scan sales in the third quarter compared to the second quarter of 2021. However, production shortages resulted in fulfillment shortfalls in the quarter impacting net revenue. Branded Sweet Treats production capacity has now increased with the commission of three new production lines.

U.S. and Canada Adjusted EBITDA of $19.9 million remained relatively consistent with the prior year with the efficiency benefits of DFD to the hub and spoke model being offset by short term supply challenges on Branded Sweet Treats as well as commodity cost pressures following the expiration of some forward contracts. Price increases were implemented on fresh doughnuts during September to manage these cost pressures, as well as the growing impact of wage inflation in the marketplace.

International: In the International segment, GAAP net revenue grew 37.4% to $87.3 million from $63.5 million the previous year, with organic growth of 29.1%. Organic growth in the quarter was driven by successful limited time offerings, substantial expansion of DFD, and lapping a previous period which was negatively impacted by COVID-19. Our businesses in the United Kingdom, Ireland and Mexico in particular saw strong organic growth during the third quarter, with a greater number of points of access and higher ecommerce sales than prior to the pandemic. Our businesses in Australia and New Zealand also contributed to organic growth even with significantly heavier impacts from COVID-19 restrictions there, including temporary shop closures.

International Adjusted EBITDA grew 43.4% to $21.7 million from $15.1 million the previous year, driven primarily by revenue growth from expansion of points of access and some recovery from COVID-19 restrictions, which led to $8.6 million sales per hub over the trailing twelve months driving efficiencies from our hub and spoke model.

Market Development: In the Market Development segment, GAAP net revenue grew 23.1% to $29.7 million from $24.2 million the previous year, with organic growth of 18.1%. GAAP net revenue growth was driven mainly by the acquisition of Krispy Kreme Japan in the fourth quarter of 2020, while organic growth was primarily driven by continued improvement in market conditions for international franchise locations as COVID-19 restrictions in certain key markets continued to ease.

Market Development Adjusted EBITDA declined 3.6% to $9.0 million from $9.4 million the previous year, driven by the impact of U.S. and Canada franchise acquisitions over the last year, but partially offset by strengthening of the international franchise business as evidenced by the organic growth.

Balance Sheet

As of October 3, 2021, we had $44.9 million of cash and cash equivalents, $700.0 million of bank debt and $25.5 million of other debt-like items, for a total net debt of $680.6 million. This compared to $1,132.7 million at the end of the second quarter 2021. Using a trailing four quarters Adjusted EBITDA of $181.9 million, current net leverage is 3.7x, which is substantially below pre-IPO levels. Excluding IPO related expenses net leverage would have been 3.6x. Free cash flow in the third quarter was positive with the EBITDA generated from operating activities in excess of capital expenditures reflecting the capital efficient hub and spoke growth model. Operating cash flow was $41.9 million of which the Company invested $30.6 million primarily in growth-oriented capital, including in the U.S. to make the transition from our now exited legacy wholesale model to our Hub and Spoke strategy, which is now largely complete.

With the acquisition of the Krispy Kreme Canadian franchisee in the fourth quarter of 2021, we now expect total net leverage to be under 3.0x in the next 12 months. Our long-term net leverage policy is 2.0x.

Financial Highlights

Q3 vs 3Q vs 3Q 2021 2020 2019 2021 YTD vs 2020$ in millions, except per share data

Net Revenue $342.8 18.1% 46.2% $1,013.8 27.3%

Organic Revenue^(1) (2) (3) $308.4 6.2% 14.3% $891.4 11.9%

GAAP Net Loss $(3.8) 72.2% 11.6% $(19.1) 47.0%

Adjusted Net Income^(2) $12.6 7.1% 20.5% $50.7 76.9%

Adjusted EBITDA^(2) $41.4 9.6% 26.2% $140.2 35.2%

Adjusted EBITDA Margin^(2) 12.1% -90 bps -190 bps 13.8% +80 bps

GAAP Diluted Loss Per Share $(0.04) 70.0% - $(0.20) 35.5%

Adjusted Diluted EPS^(2) $0.06 -25.0% - $0.29 45.0%

Net Debt $680.6 -38.1% -27.8% - -

Notes:(1)Organic revenue growth negatively impacted by $22.8 million in Q3 2021 and $80.7 million in first three quarters of 2021 due to exit of the legacy wholesale business.

(2)Non-GAAP figures - please refer to Reconciliation of Non-GAAP Financial Measures.

(3)Organic Revenue Growth "% vs 2019" figures are calculated as a two-year stack.

Notes: Organic revenue growth negatively impacted by $22.8 million in Q3 2021(1) and $80.7 million in first three quarters of 2021 due to exit of the legacy wholesale business.

(2) Non-GAAP figures - please refer to Reconciliation of Non-GAAP Financial Measures.

(3) Organic Revenue Growth "% vs 2019" figures are calculated as a two-year stack.

Key Operating Metrics

$ in millions, except access points

Q3 2021

vs 3Q 2020

vs 3Q 2019

2021 YTD

Vs 2020

Global Points of Access

10,041

46.3%

67.4%

10,041

20.7%

Sales per Hub (U.S. and Canada) TTM

$3.8

14.5%

20.3%

$3.8

9.4%

Sales per Hub (International) TTM

$8.6

31.0%

9.0%

$8.6

35.2%

Ecommerce as a Percent of Retail Sales

17%

+10 bps

-

18%

+250 bps

Financial Outlook

Krispy Kreme reaffirmed the following guidance for the full year 2021:

* Net Revenue of $1.34 billion to $1.38 billion (growth of 19.4% to 23.0%) * Organic Revenue growth of 10% to 12% * Adjusted EBITDA of $178 million to $185 million (growth of 22.4% to 27.2%) * Adjusted Net Income of $62 million to $68 million (growth of 46.4% to 60.6%)

Krispy Kreme also reiterated the following long-term outlook:

* Organic Revenue growth of 9% to 11% * Adjusted EBITDA growth of 12% to 14% * Adjusted Net Income growth of 18% to 22%

We anticipate exceeding these long-term targets in the full year 2022 as we will no longer be lapping the exit of our legacy wholesale business in the U.S.

Definitions

The following definitions apply to terms used throughout this press release:

* Global Points of Access: Reflects all locations at which fresh doughnuts or cookies can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD doors and Cookie Shops, at both Company-owned and franchise locations as of the end of the respective reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments. * Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the respective reporting period. * Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of the five most recent quarters. * Fresh Revenues from Hubs with Spokes: Fresh Revenues include product sales generated from our Doughnut Shop business (including ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business. Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from those Hubs currently producing product for other shops, Carts and Food Trucks, and/or DFD doors, but excluding Fresh Revenues derived from those Hubs not currently producing product for other shops, Carts and Food Trucks, and/or DFD doors. * Total Net Leverage Ratio: Calculated using Net Debt (including both bank debt and financing leases as part of debt) divided by Adjusted EBITDA. * Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment.

Conference Call

Krispy Kreme will host a public conference call at 5:00 PM Eastern Time today to discuss its results for the third quarter of 2021. The conference call can be accessed by dialing (877) 312-1907, or (470) 495-9529 for international participants, and entering the conference ID 6086266. To listen to the live audio webcast and Q&A, visit the Krispy Kreme investor relations website at investors.krispykreme.com. A replay and transcript of the webcast will be available on the website within 24 hours after the call. Krispy Kreme's earnings press release and related materials will also be available on the investor relations section of the Company's website.

About Krispy Kreme

Headquartered in Charlotte, N.C., Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our iconic Original Glazed(r) doughnut is universally recognized for its hot-off-the-line, melt-in-your-mouth experience. Krispy Kreme operates in over 30 countries through its unique network of doughnut shops, partnerships with leading retailers, and a rapidly growing ecommerce and delivery business. Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day and is reflected in the love we have for our people, our communities and the planet. Connect with Krispy Kreme Doughnuts at www.KrispyKreme.com, or on one of its many social media channels, including www.Facebook.com/KrispyKreme, and www.Twitter.com/KrispyKreme.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. The words "believe," "may," "could," "will," "should," "would," "anticipate," "estimate," "expect," "intend," "objective," "seek," "strive" or similar words, or the negative of these words, identify forward-looking statements. Such forward-looking statements are based on certain assumptions and estimates that we consider reasonable but are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial conditions, business, prospects, growth strategy and liquidity. Accordingly, there are, or will be, important factors that could cause our actual results to differ materially from those indicated in these statements. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. Our actual results could differ materially from the forward-looking statements included herein. These forward-looking statements are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statement to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Non-GAAP Measures

This press release includes certain non-GAAP financial measures including organic revenue growth, Adjusted EBITDA, Adjusted Net Income, Fresh Revenue from Hubs with Spokes and Sales per Hub, which differ from results using U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are not universally consistent calculations, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC.

To the extent that the Company provides guidance, it does so only on a non-GAAP basis. The Company does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inability to predict the amount and timing of impacts outside of the Company's control on certain items, such as net income and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

Key Operating Metrics

$ in millions, except access points Q3 vs 3Q vs 3Q 2021 YTD Vs 2020 2021 2020 2019

Global Points of Access 10,041 46.3% 67.4% 10,041 20.7%

Sales per Hub (U.S. and Canada) TTM $3.8 14.5% 20.3% $3.8 9.4%

Sales per Hub (International) TTM $8.6 31.0% 9.0% $8.6 35.2%

Ecommerce as a Percent of Retail Sales 17% +10 bps - 18% +250 bps

Financial Outlook

Krispy Kreme reaffirmed the following guidance for the full year 2021:

* Net Revenue of $1.34 billion to $1.38 billion (growth of 19.4% to 23.0%) * Organic Revenue growth of 10% to 12% * Adjusted EBITDA of $178 million to $185 million (growth of 22.4% to 27.2%) * Adjusted Net Income of $62 million to $68 million (growth of 46.4% to 60.6%)

Krispy Kreme also reiterated the following long-term outlook:

* Organic Revenue growth of 9% to 11% * Adjusted EBITDA growth of 12% to 14% * Adjusted Net Income growth of 18% to 22%

We anticipate exceeding these long-term targets in the full year 2022 as we will no longer be lapping the exit of our legacy wholesale business in the U.S.

Definitions

The following definitions apply to terms used throughout this press release:

* Global Points of Access: Reflects all locations at which fresh doughnuts or cookies can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD doors and Cookie Shops, at both Company-owned and franchise locations as of the end of the respective reporting period. We monitor global points of access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments. * Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the respective reporting period. * Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of the five most recent quarters. * Fresh Revenues from Hubs with Spokes: Fresh Revenues include product sales generated from our Doughnut Shop business (including ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business. Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from those Hubs currently producing product for other shops, Carts and Food Trucks, and/or DFD doors, but excluding Fresh Revenues derived from those Hubs not currently producing product for other shops, Carts and Food Trucks, and/or DFD doors. * Total Net Leverage Ratio: Calculated using Net Debt (including both bank debt and financing leases as part of debt) divided by Adjusted EBITDA. * Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment.

Conference Call

Krispy Kreme will host a public conference call at 5:00 PM Eastern Time today to discuss its results for the third quarter of 2021. The conference call can be accessed by dialing (877) 312-1907, or (470) 495-9529 for international participants, and entering the conference ID 6086266. To listen to the live audio webcast and Q&A, visit the Krispy Kreme investor relations website at investors.krispykreme.com. A replay and transcript of the webcast will be available on the website within 24 hours after the call. Krispy Kreme's earnings press release and related materials will also be available on the investor relations section of the Company's website.

About Krispy Kreme

Headquartered in Charlotte, N.C., Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our iconic Original Glazed(r) doughnut is universally recognized for its hot-off-the-line, melt-in-your-mouth experience. Krispy Kreme operates in over 30 countries through its unique network of doughnut shops, partnerships with leading retailers, and a rapidly growing ecommerce and delivery business. Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day and is reflected in the love we have for our people, our communities and the planet. Connect with Krispy Kreme Doughnuts at www.KrispyKreme.com, or on one of its many social media channels, including www.Facebook.com/KrispyKreme, and www.Twitter.com/KrispyKreme.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. The words "believe," "may," "could," "will," "should," "would," "anticipate," "estimate," "expect," "intend," "objective," "seek," "strive" or similar words, or the negative of these words, identify forward-looking statements. Such forward-looking statements are based on certain assumptions and estimates that we consider reasonable but are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial conditions, business, prospects, growth strategy and liquidity. Accordingly, there are, or will be, important factors that could cause our actual results to differ materially from those indicated in these statements. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. Our actual results could differ materially from the forward-looking statements included herein. These forward-looking statements are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statement to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Non-GAAP Measures

This press release includes certain non-GAAP financial measures including organic revenue growth, Adjusted EBITDA, Adjusted Net Income, Fresh Revenue from Hubs with Spokes and Sales per Hub, which differ from results using U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are not universally consistent calculations, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC.

To the extent that the Company provides guidance, it does so only on a non-GAAP basis. The Company does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inability to predict the amount and timing of impacts outside of the Company's control on certain items, such as net income and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

Krispy Kreme, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts and number of shares)

Quarter Ended Three Quarters Ended

October 3, September 27, October 3, September 27, 2021 (13 weeks) 2020 (13 weeks) 2021 (39 weeks) 2020 (39 weeks)

Net revenues

Product sales $ 334,324 $ 281,317 $ 989,132 $ 769,461

Royalties and 8,475 8,916 24,662 26,960 other revenues

Total net 342,799 290,233 1,013,794 796,421 revenues

Product anddistribution 92,152 85,303 257,166 222,409 costs

Operating 157,315 121,792 462,733 341,792 expenses

Selling,general and 52,950 46,521 163,417 129,090 administrativeexpense

Marketing 12,062 8,015 31,621 24,704 expenses

Pre-opening 1,192 3,368 4,335 9,668 costs

Other (income) (359 ) 4,667 (4,365 ) 7,177 /expenses, net

Depreciationand 25,663 20,435 74,258 57,619 amortizationexpense

Operating 1,824 132 24,629 3,962 income

Interest 7,186 7,908 25,228 26,263 expense, net

Interestexpense - - 5,566 10,387 16,698 related party

Othernon-operating 732 (357 ) (126 ) (469 ) expense/(income), net

Loss before (6,094 ) (12,985 ) (10,860 ) (38,530 ) income taxes

Income tax(benefit)/ (2,342 ) 499 8,266 (2,413 ) expense

Net loss (3,752 ) (13,484 ) (19,126 ) (36,117 )

Net incomeattributableto 1,907 1,368 6,736 2,880 noncontrollinginterest

Net lossattributable $ (5,659 ) $ (14,852 ) $ (25,862 ) $ (38,997 ) to KrispyKreme, Inc.

Net loss per share:

Common stock - $ (0.04 ) $ (0.12 ) $ (0.20 ) $ (0.31 ) Basic

Common stock - $ (0.04 ) $ (0.12 ) $ (0.20 ) $ (0.31 ) Diluted

Weightedaverage shares outstanding:

Basic 166,033,539 124,987,370 141,123,999 124,987,370

Diluted 166,033,539 124,987,370 141,123,999 124,987,370

Krispy Kreme, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

Quarter Ended

Three Quarters Ended

(in thousands)

October 3,2021

September 27,2020

September 29,2019

October 3,2021

September 27,2020

Net loss

$

(3,752

)

$

(13,484

)

$

(4,286

)

$

(19,126

)

$

(36,117

)

Interest expense, net

7,186

7,908

8,426

25,228

26,263

Interest expense - related party(1)

-

5,566

5,630

10,387

16,698

Income tax (benefit)/expense

(2,342

)

499

(205

)

8,266

(2,413

)

Depreciation and amortization expense

25,663

20,435

14,860

74,258

57,619

Share-based compensation

6,315

3,095

2,556

16,973

9,236

Employer payroll taxes related to share-based compensation

1,171

-

-

2,012

-

Other non-operating expense/(income), net(2)

732

(357

)

(64

)

(126

)

(469

)

New York City flagship Hot Light Theater Shop opening(3)

-

2,190

1,576

-

6,429

Strategic initiatives(4)

-

4,649

-

-

13,923

Acquisition and integration expenses(5)

1,288

4,274

3,296

3,663

8,697

Shop closure expenses(6)

-

2,058

-

-

4,844

Restructuring and severance expenses(7)

57

-

-

1,393

-

IPO-related expenses(8)

4,018

206

-

14,221

206

Other(9)

1,081

746

1,018

3,064

(1,218

)

Adjusted EBITDA

$

41,417

$

37,785

$

32,807

$

140,213

$

103,698

Krispy Kreme, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

Quarter Ended Three Quarters Ended

(in October 3, September 27, September October 3, Septemberthousands) 2021 2020 29, 2021 27, 2019 2020

Net loss $ (3,752 ) $ (13,484 ) $ (4,286 ) $ (19,126 ) $ (36,117 )

Interest 7,186 7,908 8,426 25,228 26,263 expense, net

Interestexpense - - 5,566 5,630 10,387 16,698 related party^(1)

Income tax(benefit)/ (2,342 ) 499 (205 ) 8,266 (2,413 )expense

Depreciationand 25,663 20,435 14,860 74,258 57,619 amortizationexpense

Share-based 6,315 3,095 2,556 16,973 9,236 compensation

Employerpayroll taxesrelated to 1,171 - - 2,012 - share-basedcompensation

Othernon-operatingexpense/ 732 (357 ) (64 ) (126 ) (469 )(income), net^(2)

New York Cityflagship HotLight Theater - 2,190 1,576 - 6,429 Shop opening^(3)

Strategicinitiatives^ - 4,649 - - 13,923 (4)

Acquisitionand 1,288 4,274 3,296 3,663 8,697 integrationexpenses^(5)

Shop closure - 2,058 - - 4,844 expenses^(6)

Restructuringand severance 57 - - 1,393 - expenses^(7)

IPO-related 4,018 206 - 14,221 206 expenses^(8)

Other^(9) 1,081 746 1,018 3,064 (1,218 )

Adjusted $ 41,417 $ 37,785 $ 32,807 $ 140,213 $ 103,698 EBITDA

Quarter Ended

Three Quarters Ended

(in thousands)

October 3,2021

September 27,2020

September 29,2019

October 3,2021

September 27,2020

Net loss

$

(3,752

)

$

(13,484

)

$

(4,286

)

$

(19,126

)

$

(36,117

)

Interest expense - related party(1)

-

5,566

5,630

10,387

16,698

Share-based compensation

6,315

3,095

2,556

16,973

9,236

Employer payroll taxes related to share-based compensation

1,171

-

-

2,012

-

Other non-operating expense/(income), net(2)

732

(357

)

(64

)

(126

)

(469

)

New York City flagship Hot Light Theater Shop opening(3)

-

2,190

1,576

-

6,429

Strategic initiatives(4)

-

4,649

-

-

13,923

Acquisition and integration expenses(5)

1,288

4,274

3,296

3,663

8,697

Shop closure expenses(6)

-

2,058

-

-

4,844

Restructuring and severance expenses(7)

57

-

-

1,393

-

IPO-related expenses(8)

4,018

206

-

14,221

206

Other(9)

1,081

746

1,018

3,064

(1,218

)

Amortization of acquisition related intangibles(10)

7,497

6,566

5,129

22,573

19,138

KKI Term Loan Facility interest and debt issuance costs(11)

107

-

-

2,448

-

Tax impact of adjustments(12)

(5,784

)

(5,702

)

(4,388

)

(10,604

)

(14,669

)

Tax specific adjustments(13)

(114

)

1,975

-

3,833

1,975

Adjusted net income

$

12,616

$

11,782

$

10,467

$

50,711

$

28,673

Net income attributable to noncontrolling interest

(1,907

)

(1,368

)

N/A

(6,736

)

(2,880

)

Adjusted net income attributable to Krispy Kreme, Inc.

10,709

10,414

N/A

43,975

25,793

Adjustment to adjusted net income attributable to common shareholders

(522

)

34

N/A

(1,815

)

(121

)

Adjusted net income attributable to common shareholders - Basic

10,187

10,448

N/A

42,160

25,672

Additional income attributed to noncontrolling interest due to subsidiary potential common shares

(88

)

(22

)

N/A

(237

)

(48

)

Adjusted net income attributable to common shareholders - Diluted

10,099

10,426

N/A

41,923

25,624

Basic weighted average common shares outstanding

166,033,539

124,987,370

N/A

141,123,999

124,987,370

Dilutive effect of outstanding common stock options and RSUs

2,041,098

3,065,198

N/A

2,936,731

2,936,264

Diluted weighted average common shares outstanding

168,074,637

128,052,568

N/A

144,060,730

127,923,634

Adjusted net income per share attributable to common shareholders:

Basic

$

0.06

$

0.08

N/A

$

0.30

$

0.21

Diluted

$

0.06

$

0.08

N/A

$

0.29

$

0.20

* Consists of interest expense related to the Related Party Notes which were paid off in full during the quarter ended July 4, 2021. * Primarily foreign translation gains and losses in each period. * Consists of pre-opening costs related to our New York City flagship Hot Light Theater Shop opening, including shop design, rent, and additional consulting and training costs incurred and reflected in selling, general and administrative expenses. * The quarter and three quarters ended September 27, 2020 consists mainly of consulting and advisory fees, personnel transition costs, and network conversion and set-up costs related to the transformation of the Company's legacy wholesale business in the United States. * Consists of acquisition and integration-related costs in connection with the Company's business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition-related activities for the applicable period. * Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. * Consists of severance and related benefits costs associated with the Company's realignment of the Company Shop organizational structure to better support the DFD and Branded Sweet Treat Line businesses. * Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company's IPO. Due to the timing of the IPO, certain costs were incurred in the quarter ended October 3, 2021 that are not expected to recur in future quarters. * The quarter and three quarters ended October 3, 2021 consist primarily of legal expenses incurred. The quarter and three quarters ended September 27, 2020 consists primarily of fixed asset and impairment expenses, net of a gain on the sale of land. * Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations. * Includes interest expense and debt issuance costs incurred and recognized as expenses in connection with the extinguishment of the KKI Term Loan Facility within four business days of receipt of the net proceeds from the IPO. * Tax impact of adjustments calculated applying the applicable statutory rates. The three quarters ended October 3, 2021 also includes the impact of disallowed executive compensation expense incurred in connection with the IPO. * The three quarters ended October 3, 2021 consists primarily of the effect of the U.K. 2023 statutory tax rate change from 19.0% to 25.0% on existing temporary differences. Quarter Ended Three Quarters Ended

October 3, September 27, September October 3, September 27,(in thousands) 2021 2020 29, 2021 2020 2019

Net loss $ (3,752 ) $ (13,484 ) $ (4,286 ) $ (19,126 ) $ (36,117 )

Interestexpense - - 5,566 5,630 10,387 16,698 related party^(1)

Share-based 6,315 3,095 2,556 16,973 9,236 compensation

Employerpayroll taxesrelated to 1,171 - - 2,012 - share-basedcompensation

Othernon-operatingexpense/ 732 (357 ) (64 ) (126 ) (469 )(income), net^(2)

New York Cityflagship HotLight Theater - 2,190 1,576 - 6,429 Shop opening^(3)

Strategicinitiatives^ - 4,649 - - 13,923 (4)

Acquisitionand 1,288 4,274 3,296 3,663 8,697 integrationexpenses^(5)

Shop closure - 2,058 - - 4,844 expenses^(6)

Restructuringand severance 57 - - 1,393 - expenses^(7)

IPO-related 4,018 206 - 14,221 206 expenses^(8)

Other^(9) 1,081 746 1,018 3,064 (1,218 )

Amortizationof acquisitionrelated 7,497 6,566 5,129 22,573 19,138 intangibles^(10)

KKI Term LoanFacilityinterest and 107 - - 2,448 - debt issuancecosts^(11)

Tax impact ofadjustments^ (5,784 ) (5,702 ) (4,388 ) (10,604 ) (14,669 )(12)

Tax specificadjustments^ (114 ) 1,975 - 3,833 1,975 (13)

Adjusted net $ 12,616 $ 11,782 $ 10,467 $ 50,711 $ 28,673 income

Net incomeattributable ) )to (1,907 ) (1,368 ) N/A (6,736 (2,880 noncontrollinginterest

Adjusted netincomeattributable 10,709 10,414 N/A 43,975 25,793 to KrispyKreme, Inc.

Adjustment toadjusted netincome (522 ) 34 N/A (1,815 ) (121 )attributable to commonshareholders

Adjusted netincomeattributable 10,187 10,448 N/A 42,160 25,672 to common shareholders -Basic

Additionalincomeattributed tononcontrolling (88 ) (22 ) N/A (237 ) (48 )interest due to subsidiarypotentialcommon shares

Adjusted netincomeattributable 10,099 10,426 N/A 41,923 25,624 to common shareholders -Diluted

Basic weightedaverage common 166,033,539 124,987,370 N/A 141,123,999 124,987,370 shares outstanding

Dilutiveeffect ofoutstanding 2,041,098 3,065,198 N/A 2,936,731 2,936,264 common stock options andRSUs

Dilutedweightedaverage common 168,074,637 128,052,568 N/A 144,060,730 127,923,634 sharesoutstanding

Adjusted netincome pershare attributable to commonshareholders:

Basic $ 0.06 $ 0.08 N/A $ 0.30 $ 0.21

Diluted $ 0.06 $ 0.08 N/A $ 0.29 $ 0.20

* Consists of interest expense related to the Related Party Notes which were paid off in full during the quarter ended July 4, 2021. * Primarily foreign translation gains and losses in each period. * Consists of pre-opening costs related to our New York City flagship Hot Light Theater Shop opening, including shop design, rent, and additional consulting and training costs incurred and reflected in selling, general and administrative expenses. * The quarter and three quarters ended September 27, 2020 consists mainly of consulting and advisory fees, personnel transition costs, and network conversion and set-up costs related to the transformation of the Company's legacy wholesale business in the United States. * Consists of acquisition and integration-related costs in connection with the Company's business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition-related activities for the applicable period. * Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. * Consists of severance and related benefits costs associated with the Company's realignment of the Company Shop organizational structure to better support the DFD and Branded Sweet Treat Line businesses. * Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company's IPO. Due to the timing of the IPO, certain costs were incurred in the quarter ended October 3, 2021 that are not expected to recur in future quarters. * The quarter and three quarters ended October 3, 2021 consist primarily of legal expenses incurred. The quarter and three quarters ended September 27, 2020 consists primarily of fixed asset and impairment expenses, net of a gain on the sale of land. * Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations. * Includes interest expense and debt issuance costs incurred and recognized as expenses in connection with the extinguishment of the KKI Term Loan Facility within four business days of receipt of the net proceeds from the IPO. * Tax impact of adjustments calculated applying the applicable statutory rates. The three quarters ended October 3, 2021 also includes the impact of disallowed executive compensation expense incurred in connection with the IPO. * The three quarters ended October 3, 2021 consists primarily of the effect of the U.K. 2023 statutory tax rate change from 19.0% to 25.0% on existing temporary differences.Krispy Kreme, Inc.

Segment Reporting (Unaudited)

(in thousands)

Quarter Ended Three Quarters Ended

October 3, September 27, October 3, September 27, 2021 2020 2021 2020

Net revenues:

U.S. and Canada $ 225,807 $ 202,575 $ 679,195 $ 557,280

International 87,262 63,504 243,005 158,575

Market Development 29,730 24,154 91,594 80,566

Total net revenues $ 342,799 $ 290,233 $ 1,013,794 $ 796,421

(in thousands except percentages)

U.S. and Canada

International

Market Development

Total Company

Total net revenues in third quarter of fiscal 2021

$

225,807

$

87,262

$

29,730

$

342,799

Total net revenues in third quarter of fiscal 2020

202,575

63,504

24,154

290,233

Total Net Revenues Growth

23,232

23,758

5,576

52,566

Total Net Revenues Growth %

11.5

%

37.4

%

23.1

%

18.1

%

Impact of acquisitions

(27,928

)

-

(1,195

)

(29,123

)

Impact of foreign currency translation

-

(5,305

)

-

(5,305

)

Organic Revenue Growth

$

(4,696

)

$

18,453

$

4,381

$

18,138

Organic Revenue Growth %

-2.3

%

29.1

%

18.1

%

6.2

%

(in thousands U.S. and Marketexcept Canada International Development Total Companypercentages)

Total net revenuesin third quarter $ 225,807 $ 87,262 $ 29,730 $ 342,799 of fiscal 2021

Total net revenuesin third quarter 202,575 63,504 24,154 290,233 of fiscal 2020

Total Net Revenues 23,232 23,758 5,576 52,566 Growth

Total Net Revenues 11.5 % 37.4 % 23.1 % 18.1 %Growth %

Impact of (27,928 ) - (1,195 ) (29,123 ) acquisitions

Impact of foreigncurrency - (5,305 ) - (5,305 ) translation

Organic Revenue $ (4,696 ) $ 18,453 $ 4,381 $ 18,138 Growth

Organic Revenue -2.3 % 29.1 % 18.1 % 6.2 %Growth %

(in thousands except percentages)

U.S. and Canada

International

Market Development

Total Company

Total net revenues in first three quarters of fiscal 2021

$

679,195

$

243,005

$

91,594

$

1,013,794

Total net revenues in first three quarters of fiscal 2020

557,280

158,575

80,566

796,421

Total Net Revenues Growth

121,915

84,430

11,028

217,373

Total Net Revenues Growth %

21.9

%

53.2

%

13.7

%

27.3

%

Impact of acquisitions

(99,062

)

-

(1,584

)

(100,646

)

Impact of foreign currency translation

-

(21,767

)

-

(21,767

)

Organic Revenue Growth

$

22,853

$

62,663

$

9,444

$

94,960

Organic Revenue Growth %

4.1

%

39.5

%

11.7

%

11.9

%

(in thousands U.S. and Marketexcept Canada International Development Total Companypercentages)

Total netrevenues infirst three $ 679,195 $ 243,005 $ 91,594 $ 1,013,794 quarters offiscal 2021

Total netrevenues infirst three 557,280 158,575 80,566 796,421 quarters offiscal 2020

Total Net 121,915 84,430 11,028 217,373 Revenues Growth

Total NetRevenues Growth 21.9 % 53.2 % 13.7 % 27.3 %%

Impact of (99,062 ) - (1,584 ) (100,646 ) acquisitions

Impact offoreign currency - (21,767 ) - (21,767 ) translation

Organic Revenue $ 22,853 $ 62,663 $ 9,444 $ 94,960 Growth

Organic Revenue 4.1 % 39.5 % 11.7 % 11.9 %Growth %

(in thousands except percentages)

U.S. and Canada

International

Market Development

Total Company

Total net revenues in fiscal 2020

$

782,717

$

230,185

$

109,134

$

1,122,036

Total net revenues in fiscal 2019

587,522

223,115

148,771

959,408

Total Net Revenues Growth

195,195

7,070

(39,637

)

162,628

Total Net Revenues Growth %

33.2

%

3.2

%

-26.6

%

17.0

%

Impact of acquisitions

(121,671

)

(42,811

)

35,053

(129,429

)

Impact of foreign currency translation

-

(906

)

-

(906

)

Impact of 53rd week

(15,615

)

(3,287

)

(1,603

)

(20,505

)

Organic Revenue Growth

$

57,909

$

(39,934

)

$

(6,187

)

$

11,788

Organic Revenue Growth %

9.9

%

-17.9

%

-4.2

%

1.2

%

(in thousands U.S. and Marketexcept Canada International Development Total Companypercentages)

Total netrevenues in $ 782,717 $ 230,185 $ 109,134 $ 1,122,036 fiscal 2020

Total netrevenues in 587,522 223,115 148,771 959,408 fiscal 2019

Total Net 195,195 7,070 (39,637 ) 162,628 Revenues Growth

Total NetRevenues Growth 33.2 % 3.2 % -26.6 % 17.0 %%

Impact of (121,671 ) (42,811 ) 35,053 (129,429 ) acquisitions

Impact offoreign - (906 ) - (906 ) currencytranslation

Impact of 53rd (15,615 ) (3,287 ) (1,603 ) (20,505 ) week

Organic Revenue $ 57,909 $ (39,934 ) $ (6,187 ) $ 11,788 Growth

Organic Revenue 9.9 % -17.9 % -4.2 % 1.2 %Growth %

Quarter Ended

Three Quarters Ended

(in thousands except percentages)

October 3,2021

September 27,2020

September 29,2019

October 3,2021

September 27,2020

Total net revenues - current year

$

342,799

$

290,233

$

234,484

$

1,013,794

$

796,421

Total net revenues - prior year

290,233

234,484

197,115

796,421

694,136

Total Net Revenues Growth

52,566

55,749

37,369

217,373

102,285

Total Net Revenues Growth %

18.1

%

23.8

%

19.0

%

27.3

%

14.7

%

Impact of acquisitions

(29,123

)

(34,577

)

(29,087

)

(100,646

)

(96,714

)

Impact of foreign currency translation

(5,305

)

(2,117

)

3,371

(21,767

)

822

Organic Revenue Growth

$

18,138

$

19,055

$

11,653

$

94,960

$

6,393

Organic Revenue Growth %

6.2

%

8.1

%

5.9

%

11.9

%

0.9

%

Quarter Ended Three Quarters Ended

(inthousands October 3, September 27, September 29, October 3, September 27,except 2021 2020 2019 2021 2020percentages)

Total netrevenues - $ 342,799 $ 290,233 $ 234,484 $ 1,013,794 $ 796,421 current year

Total netrevenues - 290,233 234,484 197,115 796,421 694,136 prior year

Total NetRevenues 52,566 55,749 37,369 217,373 102,285 Growth

Total NetRevenues 18.1 % 23.8 % 19.0 % 27.3 % 14.7 %Growth %

Impact of (29,123 ) (34,577 ) (29,087 ) (100,646 ) (96,714 ) acquisitions

Impact offoreign (5,305 ) (2,117 ) 3,371 (21,767 ) 822 currencytranslation

OrganicRevenue $ 18,138 $ 19,055 $ 11,653 $ 94,960 $ 6,393 Growth

OrganicRevenue 6.2 % 8.1 % 5.9 % 11.9 % 0.9 %Growth %

Trailing Four Quarters Ended

Fiscal Year Ended

(in thousands, unless otherwise stated)

October 3,2021

January 3,2021

December 29,2019

U.S. and Canada:

Revenues

$

904,633

$

782,717

$

587,522

Non-Fresh Revenues (1)

(53,719)

(128,619)

(112,051)

Fresh Revenues from Insomnia Cookies and Hubs without Spokes (2)

(414,186)

(323,079)

(271,067)

Sales from Hubs with Spokes

436,728

331,019

204,404

Sales per Hub (millions)

3.8

3.5

3.2

International:

Sales from Hubs with Spokes (3)

$

314,615

$

230,185

$

223,115

Sales per Hub (millions)

8.6

6.4

8.3

* Includes legacy wholesale business revenues and Branded Sweet Treat Line revenues. * Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes. * Total International net revenues is equal to sales from Hubs with Spokes for that business segment. Trailing Four Fiscal Year Ended Quarters Ended

October 3, January 3, December(in thousands, unless otherwise stated) 2021 2021 29, 2019

U.S. and Canada:

Revenues $ 904,633 $ 782,717 $ 587,522

Non-Fresh Revenues ^(1) (53,719) (128,619) (112,051)

Fresh Revenues from Insomnia Cookies and (414,186) (323,079) (271,067) Hubs without Spokes ^(2)

Sales from Hubs with Spokes 436,728 331,019 204,404

Sales per Hub (millions) 3.8 3.5 3.2



International:

Sales from Hubs with Spokes ^(3) $ 314,615 $ 230,185 $ 223,115

Sales per Hub (millions) 8.6 6.4 8.3

* Includes legacy wholesale business revenues and Branded Sweet Treat Line revenues. * Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes. * Total International net revenues is equal to sales from Hubs with Spokes for that business segment. Quarter Ended Three Quarters Ended

October 3, September October 3, September 27, 2021 27, 2021 2020 2020

Segment Adjusted EBITDA:

U.S. and Canada $ 19,912 $ 20,028 $ 75,760 $ 69,216

International 21,655 15,098 60,676 27,909

Market Development 9,033 9,374 29,782 27,959

Corporate (9,183 ) (6,715 ) (26,005 ) (21,386 )

Total Adjusted EBITDA $ 41,417 $ 37,785 $ 140,213 $ 103,698

Krispy Kreme, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

As of

(Unaudited) October 3,2021

January 3,2021

ASSETS

Current assets:

Cash and cash equivalents

$

44,895

$

37,460

Marketable securities

614

1,048

Restricted cash

193

23

Accounts receivable, net

60,069

74,351

Inventories

36,141

38,519

Prepaid expense and other current assets

22,068

12,692

Total current assets

163,980

164,093

Property and equipment, net

423,547

395,255

Goodwill

1,089,914

1,086,546

Other intangible assets, net

993,440

998,014

Operating lease right of use asset, net

414,612

399,688

Other assets

17,165

17,399

Total assets

$

3,102,658

$

3,060,995

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

38,608

$

41,245

Current operating lease liabilities

42,637

45,675

Accounts payable

170,780

148,645

Accrued liabilities

132,638

124,951

Structured payables

108,969

137,319

Total current liabilities

493,632

497,835

Long-term debt, less current portion

682,676

785,810

Related party notes payable

-

344,581

Noncurrent operating lease liabilities

397,640

376,099

Deferred income taxes, net

155,982

144,866

Other long-term obligations and deferred credits

53,008

63,445

Total liabilities

1,782,938

2,212,636

Commitments and contingencies

Shareholders' equity:

Common stock, $0.01 par value; 300,000,000 and 174,500,000 shares authorized as of October 3, 2021 and January 3, 2021, respectively; 167,112,953 and 124,987,370 shares issued and outstanding as of October 3, 2021 and January 3, 2021, respectively

1,671

1,250

Additional paid-in capital

1,410,724

845,499

Shareholder note receivable

(4,216

)

(18,660

)

Accumulated other comprehensive loss, net of income tax

(6,707

)

(1,208

)

Retained deficit

(173,911

)

(142,197

)

Total shareholders' equity attributable to Krispy Kreme, Inc.

1,227,561

684,684

Noncontrolling interest

92,159

163,675

Total shareholders' equity

1,319,720

848,359

Total liabilities and shareholders' equity

$

3,102,658

$

3,060,995

Krispy Kreme, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

As of

(Unaudited) January 3, October 3, 2021 2021

ASSETS

Current assets:

Cash and cash equivalents $ 44,895 $ 37,460

Marketable securities 614 1,048

Restricted cash 193 23

Accounts receivable, net 60,069 74,351

Inventories 36,141 38,519

Prepaid expense and other current assets 22,068 12,692

Total current assets 163,980 164,093

Property and equipment, net 423,547 395,255

Goodwill 1,089,914 1,086,546

Other intangible assets, net 993,440 998,014

Operating lease right of use asset, net 414,612 399,688

Other assets 17,165 17,399

Total assets $ 3,102,658 $ 3,060,995

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt $ 38,608 $ 41,245

Current operating lease liabilities 42,637 45,675

Accounts payable 170,780 148,645

Accrued liabilities 132,638 124,951

Structured payables 108,969 137,319

Total current liabilities 493,632 497,835

Long-term debt, less current portion 682,676 785,810

Related party notes payable - 344,581

Noncurrent operating lease liabilities 397,640 376,099

Deferred income taxes, net 155,982 144,866

Other long-term obligations and deferred 53,008 63,445 credits

Total liabilities 1,782,938 2,212,636

Commitments and contingencies

Shareholders' equity:

Common stock, $0.01 par value; 300,000,000and 174,500,000 shares authorized as ofOctober 3, 2021 and January 3, 2021, 1,671 1,250 respectively; 167,112,953 and 124,987,370shares issued and outstanding as of October3, 2021 and January 3, 2021, respectively

Additional paid-in capital 1,410,724 845,499

Shareholder note receivable (4,216 ) (18,660 )

Accumulated other comprehensive loss, net of (6,707 ) (1,208 ) income tax

Retained deficit (173,911 ) (142,197 )

Total shareholders' equity attributable to 1,227,561 684,684 Krispy Kreme, Inc.

Noncontrolling interest 92,159 163,675

Total shareholders' equity 1,319,720 848,359

Total liabilities and shareholders' equity $ 3,102,658 $ 3,060,995

Krispy Kreme, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Three Quarters Ended

October 3, 2021 (39 weeks)

September 27, 2020 (39 weeks)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(19,126

)

$

(36,117

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization expense

74,258

57,619

Deferred income taxes

9,168

(4,623

)

Loss on extinguishment of debt

1,700

-

Impairment and lease termination charges

854

3,287

Loss on disposal of property and equipment

157

773

Share-based compensation

16,973

9,236

Change in accounts and notes receivable allowances

133

700

Inventory write-off

2,983

34

Other

(315

)

276

Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments

12,003

(433

)

Net cash provided by operating activities

98,788

30,752

CASH FLOWS USED FOR INVESTING ACTIVITIES:

Purchase of property and equipment

(83,485

)

(69,437

)

Proceeds from disposals of assets

202

2,793

Acquisition of shops and franchise rights from franchisees, net of cash acquired

(33,888

)

(59,658

)

Principal payments received from loans to franchisees

67

519

Purchases of held-to-maturity debt securities

-

(56

)

Maturities of held-to-maturity debt securities

388

517

Net cash used for investing activities

(116,716

)

(125,322

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the issuance of debt

670,000

263,097

Repayment of long-term debt and lease obligations

(1,115,910

)

(206,966

)

Payment of financing costs

(1,700

)

-

Proceeds from structured payables

194,927

211,892

Payments on structured payables

(223,063

)

(155,951

)

Payment of contingent consideration related to a business combination

-

(506

)

Capital contribution by shareholders

120,532

-

Proceeds from IPO, net of underwriting discounts (excluding unpaid issuance costs)

527,329

-

Proceeds from sale of noncontrolling interest in subsidiary

53,337

17,592

Distribution to shareholders

(42,334

)

(19

)

Payments for repurchase and retirement of common stock

(138,501

)

-

Distribution to noncontrolling interest

(17,257

)

(6,553

)

Net cash provided by financing activities

27,360

122,586

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(1,827

)

759

Net increase in cash, cash equivalents and restricted cash

7,605

28,775

Cash, cash equivalents and restricted cash at beginning of period

37,483

35,450

Cash, cash equivalents and restricted cash at end of period

$

45,088

$

64,225

Supplemental schedule of non-cash investing and financing activities:

Accrual for property and equipment

$

3,137

$

11,280

Stock issuance under shareholder notes

446

-

Accrual for distribution to noncontrolling interest

(5,056

)

-

Accrual for distribution to shareholders

(5,853

)

-

Accrual for repurchase and retirement of common stock

(188

)

-

Reconciliation of cash, cash equivalents and restricted cash at end of period:

Cash and cash equivalents

$

44,895

$

64,154

Restricted cash

193

71

Total cash, cash equivalents and restricted cash

$

45,088

$

64,225

Krispy Kreme, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Three Quarters Ended

October 3, September 27, 2021 2020 (39 (39 weeks) weeks)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (19,126 ) $ (36,117 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization expense 74,258 57,619

Deferred income taxes 9,168 (4,623 )

Loss on extinguishment of debt 1,700 -

Impairment and lease termination charges 854 3,287

Loss on disposal of property and equipment 157 773

Share-based compensation 16,973 9,236

Change in accounts and notes receivable 133 700 allowances

Inventory write-off 2,983 34

Other (315 ) 276

Change in operating assets and liabilities,excluding business acquisitions and foreign 12,003 (433 ) currency translation adjustments

Net cash provided by operating activities 98,788 30,752

CASH FLOWS USED FOR INVESTING ACTIVITIES:

Purchase of property and equipment (83,485 ) (69,437 )

Proceeds from disposals of assets 202 2,793

Acquisition of shops and franchise rights from (33,888 ) (59,658 ) franchisees, net of cash acquired

Principal payments received from loans to 67 519 franchisees

Purchases of held-to-maturity debt securities - (56 )

Maturities of held-to-maturity debt securities 388 517

Net cash used for investing activities (116,716 ) (125,322 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the issuance of debt 670,000 263,097

Repayment of long-term debt and lease (1,115,910 ) (206,966 ) obligations

Payment of financing costs (1,700 ) -

Proceeds from structured payables 194,927 211,892

Payments on structured payables (223,063 ) (155,951 )

Payment of contingent consideration related to a - (506 ) business combination

Capital contribution by shareholders 120,532 -

Proceeds from IPO, net of underwriting discounts 527,329 - (excluding unpaid issuance costs)

Proceeds from sale of noncontrolling interest in 53,337 17,592 subsidiary

Distribution to shareholders (42,334 ) (19 )

Payments for repurchase and retirement of common (138,501 ) - stock

Distribution to noncontrolling interest (17,257 ) (6,553 )

Net cash provided by financing activities 27,360 122,586

Effect of exchange rate changes on cash, cash (1,827 ) 759 equivalents and restricted cash

Net increase in cash, cash equivalents and 7,605 28,775 restricted cash

Cash, cash equivalents and restricted cash at 37,483 35,450 beginning of period

Cash, cash equivalents and restricted cash at $ 45,088 $ 64,225 end of period

Supplemental schedule of non-cash investing and financing activities:

Accrual for property and equipment $ 3,137 $ 11,280

Stock issuance under shareholder notes 446 -

Accrual for distribution to noncontrolling (5,056 ) - interest

Accrual for distribution to shareholders (5,853 ) -

Accrual for repurchase and retirement of common (188 ) - stock

Reconciliation of cash, cash equivalents and restricted cash at end of period:

Cash and cash equivalents $ 44,895 $ 64,154

Restricted cash 193 71

Total cash, cash equivalents and restricted cash $ 45,088 $ 64,225

Krispy Kreme, Inc.

Global Points of Access

Global Points of Access (1)

Quarter Ended

Fiscal Year Ended

October 3,2021

September 27,2020

January 3,2021

U.S. and Canada: (2)

Hot Light Theater Shops

238

206

229

Fresh Shops

57

48

47

Cookie Shops

206

178

184

DFD Doors (3)

5,220

2,846

4,137

Total

5,721

3,278

4,597

International:

Hot Light Theater Shops

30

28

28

Fresh Shops

352

353

348

Carts, Food Trucks, and Other (4)

12

10

11

DFD Doors (3)

2,415

1,833

1,986

Total

2,809

2,224

2,373

Market Development: (5)

Hot Light Theater Shops

113

144

119

Fresh Shops

761

716

732

Carts, Food Trucks, and Other (4)

30

30

30

DFD Doors (3)

607

470

465

Total

1,511

1,360

1,346

Total global points of access (as defined)

10,041

6,862

8,316

Total Hot Light Theater Shops

381

378

376

Total Fresh Shops

1,170

1,117

1,127

Total Cookie Shops

206

178

184

Total Shops

1,757

1,673

1,687

Total Carts, Food Trucks, and Other

42

40

41

Total DFD Doors

8,242

5,149

6,588

Total global points of access (as defined)

10,041

6,862

8,316

* Excludes Branded Sweet Treat Line distribution points and legacy wholesale business doors. * Includes points of access that were acquired from franchisees in the United States during the first quarter of fiscal 2021 and the second half of fiscal 2020. These points of access were previously included in the Market Development segment. * DFD Doors for both the U.S. and Canada and Market Development segments exclude legacy wholesale doors, which have been declining consistent with our strategy to evolve our legacy wholesale business to focus on the new DFD model and our new Branded Sweet Treat Line. As of July 4, 2021 legacy wholesale doors for the U.S. and Canada and the Market Development segments were substantially eliminated. * Beginning in the quarter ended October 3, 2021, the Company includes Carts and Food Trucks in its calculation of global points of access. Carts and Food Trucks are non-producing, mobile (typically on wheels) facilities without walls or a door where product is received from a Hot Light Theater Shop or Doughnut Factory. They are primarily found in international locations, in airports, train stations, etc. Comparative data has been included in all periods presented above. * Includes locations in Japan, which were acquired in December 2020 and are now Company-owned. All remaining points of access in the Market Development segment relate to our franchise business.Krispy Kreme, Inc.

Global Points of Access

Global Points of Access ^(1)

Quarter Ended Fiscal Year Ended

October September January 3, 3, 27, 2021 2021 2020

U.S. and Canada: ^(2)

Hot Light Theater Shops 238 206 229

Fresh Shops 57 48 47

Cookie Shops 206 178 184

DFD Doors ^(3) 5,220 2,846 4,137

Total 5,721 3,278 4,597

International:

Hot Light Theater Shops 30 28 28

Fresh Shops 352 353 348

Carts, Food Trucks, and Other ^(4) 12 10 11

DFD Doors ^(3) 2,415 1,833 1,986

Total 2,809 2,224 2,373

Market Development: ^(5)

Hot Light Theater Shops 113 144 119

Fresh Shops 761 716 732

Carts, Food Trucks, and Other ^(4) 30 30 30

DFD Doors ^(3) 607 470 465

Total 1,511 1,360 1,346

Total global points of access (as 10,041 6,862 8,316 defined)

Total Hot Light Theater Shops 381 378 376

Total Fresh Shops 1,170 1,117 1,127

Total Cookie Shops 206 178 184

Total Shops 1,757 1,673 1,687

Total Carts, Food Trucks, and Other 42 40 41

Total DFD Doors 8,242 5,149 6,588

Total global points of access (as 10,041 6,862 8,316 defined)

* Excludes Branded Sweet Treat Line distribution points and legacy wholesale business doors. * Includes points of access that were acquired from franchisees in the United States during the first quarter of fiscal 2021 and the second half of fiscal 2020. These points of access were previously included in the Market Development segment. * DFD Doors for both the U.S. and Canada and Market Development segments exclude legacy wholesale doors, which have been declining consistent with our strategy to evolve our legacy wholesale business to focus on the new DFD model and our new Branded Sweet Treat Line. As of July 4, 2021 legacy wholesale doors for the U.S. and Canada and the Market Development segments were substantially eliminated. * Beginning in the quarter ended October 3, 2021, the Company includes Carts and Food Trucks in its calculation of global points of access. Carts and Food Trucks are non-producing, mobile (typically on wheels) facilities without walls or a door where product is received from a Hot Light Theater Shop or Doughnut Factory. They are primarily found in international locations, in airports, train stations, etc. Comparative data has been included in all periods presented above. * Includes locations in Japan, which were acquired in December 2020 and are now Company-owned. All remaining points of access in the Market Development segment relate to our franchise business.Krispy Kreme, Inc.

Global Hubs

Hubs

Quarter Ended Fiscal Year Ended

October 3, September 27, January 3, 2021 2020 2021

U.S. and Canada:

Hot Light Theater Shops ^(1) 234 203 226

Doughnut Factories 4 7 5

Total 238 210 231

Hubs with Spokes 121 112 113

International:

Hot Light Theater Shops ^(1) 25 27 27

Doughnut Factories 10 9 9

Total 35 36 36

Hubs with Spokes 35 36 36

Market Development:

Hot Light Theater Shops ^(1) 111 141 116

Doughnut Factories 26 26 26

Total 137 167 142

Total Hubs 410 413 409

* Includes only Hot Light Theater Shops and excludes Mini Theaters. A Mini Theater is a spoke location that produces hot doughnuts. View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006498/en/

CONTACT: Investor Relations Rob Ballew, Head of Investor Relations rballew@krispykreme.com

CONTACT: Financial Media Edelman for Krispy Kreme, Inc. Allie McLarty & Ashley Firlan, KrispyKremeIR@edelman.com