On Tuesday, doughnut maker Krispy Kreme Inc. (NASDAQ:DNUT) stock traded lower after it reported worse-than-expected fourth-quarter earnings.
The company reported a fourth-quarter FY24 sales decline of 10.4% year-on-year to $404 million, missing the analyst consensus estimate of $415.450 million.
Organic revenue grew 1.8% to $400.6 million and was adversely impacted by an estimated 280 basis points of lost revenue linked to the 2024 Cybersecurity Incident.
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In the fourth quarter of 2024, the company incurred approximately $3 million of remediation expenses related to the 2024 Cybersecurity Incident.
Global Points of Access increased by 3,410, or 24.1%, to 17,557 in FY24. Revenue in the U.S. segment declined 17.2% Y/Y, the International segment grew 5.7%, and Market Development decreased 14.2%.
The drop in U.S. sales is due to the sale of Insomnia Cookies ($57.4 million impact), a decline in retail sales, and the 2024 Cybersecurity Incident.
The operating loss widened to $11.5 million from $5.3 million last year. Operating cash flow was $27 million in the fourth quarter.
Adjusted EBITDA plunged 28.4% Y/Y to $45.9 million, and the EBITDA margin contracted 280 basis points to 11.4%. Adjusted EPS of $0.01 missed the consensus estimate of $0.10.
The company held $28.9 million in cash and equivalents as of December end.
“Last quarter, we announced we were aligning our talent and capital to our business priorities, and we have taken significant action. We have restructured our management teams to maximize profitable U.S. expansion and capital-light international growth,” said CEO Josh Charlesworth.
“We expect to soon award contracts to outsource U.S. logistics. Finally, we have begun a process to evaluate refranchising certain international markets. I believe these changes will drive capital efficient growth, as we continue our transformation into a bigger and better Krispy Kreme.”
Outlook: Krispy Kreme expects FY25 revenue of $1.55 billion—$1.65 billion, versus an estimate of $1.764 billion.
The company sees FY25 adjusted EPS of $0.04 – $0.08, with an estimate of $0.30. Krispy Kreme anticipates FY25 adjusted EBITDA of $180 million—$200 million.
Price Action: At the last check on Tuesday, DNUT shares were trading lower by 23.40% at $6.98.
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