CHARLOTTE, N.C. - Krispy Kreme, Inc. (NASDAQ: DNUT) reported its fourth-quarter earnings, missing analyst estimates for adjusted earnings per share (EPS) but surpassing revenue expectations.
The company posted an EPS of $0.09, which fell short of the consensus estimate of $0.13. However, revenue for the quarter was $450.9 million, exceeding the analyst forecast of $438.74 million.
Despite the revenue beat, the stock fell 3.7% as investors reacted to the earnings miss.
The fourth quarter saw a robust 11.4% increase in net revenue compared to the same period last year, with organic revenue climbing 13.2%. GAAP net income stood at $1.9 million, marking an improvement from a loss of $1.0 million in the prior year's quarter. Adjusted EBITDA also grew by 14.7% to $64.1 million, with margins expanding by 40 basis points to 14.2%.
CEO Josh Charlesworth attributed the quarter's strong performance to high consumer demand across all sales channels and improved profitability through the company's Hub and Spoke operating model.
"Our growth was driven by strong consumer demand in all sales channels and increased access to our fresh doughnuts around the world," Charlesworth said.
He also highlighted the company's strategy to modernize doughnut production and distribution to ensure quality growth.
For the full year 2024, Krispy Kreme has issued guidance projecting net revenue growth of 5% to 7% and organic revenue growth of 6% to 8%. Adjusted EBITDA is expected to increase by 8% to 11%, with adjusted diluted EPS forecasted to be between $0.27 and $0.31. The guidance suggests a midpoint for adjusted diluted EPS at $0.29, in line with the full-year 2023 results.
The company's fourth-quarter performance in the U.S. was particularly notable, with organic revenue growth of 13.7% driven by marketing initiatives, an expansion of the Delivered Fresh Daily (DFD) strategy, and growth at Insomnia Cookies. Internationally, net revenue grew by 15.2%, with organic revenue up by 9.0%, despite challenges in the U.K. market.
Looking ahead, Krispy Kreme's focus remains on expanding its Delivered Fresh Daily network and making selective investments in markets with limited access to its products. The company's confidence in its growth strategy is reflected in its 2024 guidance, which anticipates continued revenue and profitability increases.
InvestingPro Insights
Krispy Kreme's latest earnings report revealed a mixed bag of outcomes, with the company surpassing revenue expectations but falling short on adjusted earnings per share. A deeper dive into the financials through InvestingPro data and tips provides a nuanced view of the company's performance and future prospects.
InvestingPro data indicates a market capitalization of $2.33 billion, suggesting a substantial presence in the market. Despite a negative P/E ratio of -52.63, reflecting challenges in profitability, the company's revenue growth remains positive with a 9.62% increase over the last twelve months as of Q3 2023. This growth is consistent with the reported revenue beat in the most recent quarter.
InvestingPro Tips highlight that analysts are optimistic about Krispy Kreme's future profitability, with predictions of net income growth this year and five analysts revising their earnings upwards for the upcoming period. This optimism is tempered by the fact that the company was not profitable over the last twelve months and that it is currently trading at high EBIT and EBITDA valuation multiples. Additionally, a point of concern is the company's liquidity, as short-term obligations exceed liquid assets.
For readers seeking a more comprehensive analysis, InvestingPro offers additional insights into Krispy Kreme's financial health and prospects. With a total of 7 InvestingPro Tips available, users can gain a more detailed understanding of the company's position. Moreover, by using the coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to valuable investment tools and data.
The company's focus on growth and profitability, as noted in the CEO's remarks, aligns with the positive revenue trends and analyst expectations for profitability. However, the liquidity concerns and high valuation multiples suggest that investors should keep a close eye on the company's financial strategies moving forward.
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