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    DNUT
    Earnings call· Jun 2026(Q2 FY26)

    Krispy Kreme Q2 FY26 earnings call DNUT

    Aug 6, 2026 Source

    Executive summary

    Krispy Kreme Q2 FY26 — Turnaround Progress Drives Margin Expansion and Deleveraging

    Krispy Kreme delivered another quarter of significant progress on its turnaround plan, marked by strong adjusted EBITDA growth and margin expansion, particularly in the US segment. The company continued to deleverage its balance sheet and improve free cash flow, driven by reduced capital intensity and strategic re-franchising efforts. While international organic revenue saw declines in some markets, the company remains focused on capital-light franchise growth and leveraging existing US production capacity to drive sustainable, profitable expansion.

    Highlights

    5

    • Adjusted EBITDA increased 43% year-over-year to $28.8 million, marking the fourth consecutive quarter of growth.

    • Consolidated adjusted EBITDA margin improved 340 basis points to 8.7%.

    • Net leverage ratio improved by 1.3 turns to 5.4x, and by over 2 turns since Q2 FY25.

    • Free cash flow improved by over $100 million in H1 FY26 compared to H1 FY25.

    • US organic revenue, excluding the McDonald's impact, grew 4.4%.

    Concerns

    3

    • Net revenue decreased 13% to $331 million due to planned re-franchising of Western US and Japan.

    • International organic revenue decreased 5.1%, primarily due to declines in the UK and Australia.

    • International adjusted EBITDA declined 22% year-over-year to $14.2 million due to Japan re-franchising and mix changes.

    Guidance & targets

    10
    CategoryTargetConfidence
    System-wide sales
    more than $2 billion
    high materiality
    High
    System-wide sales generated by franchisees
    approximately 50%
    medium materiality
    High
    Free cash flow
    positive
    high materiality
    High
    New international franchise markets
    3-4 new markets
    medium materiality
    High
    New shop openings
    at least 100 shops
    medium materiality
    High
    Net Revenue
    $1.25B-$1.35B
    high materiality
    High
    System-wide sales growth (constant currency)
    2%-4%
    high materiality
    High
    Adjusted EBITDA
    $140M-$150M
    high materiality
    High
    Capital Expenditures
    $50M-$60M
    high materiality
    High
    Growth and margins
    higher in Q4 than Q3
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    US
    Organic revenue increased 0.1% (reported), but 4.4% excluding the McDonald's impact, driven by digital and retail shops. Adjusted EBITDA increased due to cost control initiatives and efficiencies from outsourcing logistics.
    Organic revenue growth (reported): 0.1%Organic revenue growth (ex-McDonald's impact): 4.4%Adjusted EBITDA growth: 38%Adjusted EBITDA margin: 8%
    		———$13.8M
    International
    Organic revenue decreased due to declines in UK and Australia, partially offset by Canada growth. Adjusted EBITDA declined due to Japan re-franchising and a change in mix.
    Organic revenue decrease: 5.1%Adjusted EBITDA decline: 22%Adjusted EBITDA margin: 12.1%
    		———$14.2M
    Market Development
    Organic revenue increased due to growth in royalty revenues from Middle East, Japan, and Brazil. Adjusted EBITDA increased due to re-franchising of Western US and Japan and increased royalty revenue. Margin decreased due to higher domestic vs. international revenue mix from re-franchising.
    Organic revenue growth: 14.4%Adjusted EBITDA increase: 117%Adjusted EBITDA margin: 47.3%
    		———$19.4M

    Operational metrics

    19
    Net Revenue
    $331Mdown 13%
    Q2 FY26

    Reflecting planned re-franchising of Western US and Japan.

    Organic Revenue Growth
    flatessentially flat
    Q2 FY26

    Excluding re-franchising, revenue was essentially flat on an organic basis.

    System-wide Sales
    $497Mup 2.6% in constant currency
    Q2 FY26

    Reflects the strength of the Krispy Kreme brand globally.

    Adjusted EBITDA
    $28.8Mincreased 43%
    Q2 FY26

    Driven by productivity initiatives and cost controls. Fourth consecutive quarter of growth, accelerating from Q1's 38%.

    Adjusted EBITDA Margin
    8.7%improved 340 basis points
    Q2 FY26

    Through intense focus on driving sustainable, profitable growth.

    US Organic Revenue Growth
    4.4%up 4.4%
    Q2 FY26

    Driven mostly by growth in digital and retail shops.

    Average Weekly Sales per Door
    $697increase of 33% year-over-year
    Q2 FY26

    Inclusive of both company and franchise-operated doors. Reflects disciplined actions to improve productivity.

    Adjusted EPS
    increased 12 centsyear over year
    Q2 FY26

    About 2 cents of the increase was due to re-franchising deals.

    Net Leverage Ratio
    5.4ximproved by 1.3 turns vs. FY25 end; improved by >2 turns vs. Q2 FY25
    Q2 FY26 end

    Continued deleveraging through increased adjusted EBITDA and net debt reduction.

    Capital Expenditures
    $16.1Mdecreased 70% versus H1 FY25
    YTD H1 FY26

    Focus on repairs and maintenance of existing infrastructure, in line with asset-light model.

    System-wide Sales from Franchisees
    42%up from 25% in prior year
    Q2 FY26

    Reflects re-franchising efforts to drive more profitable system-wide sales growth.

    New Shops Opened
    59
    YTD H1 FY26

    Driven by growth in Japan, Brazil, South Korea, and the Middle East.

    US Network Utilization
    25%
    Q2 FY26

    Demonstrates opportunity to expand to more locations without incremental capacity investment.

    Digital Channel Sales Growth
    8%year over year
    Q2 FY26

    Driven by improvements in proprietary digital platforms and loyalty program growth.

    Digital Channel Sales as % of US Retail Sales
    22%
    Q2 FY26

    Reflects growing digital penetration.

    Loyalty Program Members
    nearly 18M
    Q2 FY26

    Members visit typically 30% more frequently than non-loyalty members.

    New Fresh Delivery Doors Added
    450
    YTD FY26

    Added with strategic partners such as Walmart, Target, Kroger, and Sam's Club.

    Commodity Inflation
    low single-digit
    FY26

    Expected for the full year, with logistics outsourcing benefits offsetting fuel price increases.

    Adjusted EBITDA (ex-cyber related insurance gain)
    $31.3M
    Q3 FY25

    Provided as a reminder for comparison, as Q3 FY25 included a $9.3M cyber-related insurance gain.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps2.6%%
    Global system wide sales$497MUSD
    Net unit growth development pipeline59shops

    Deals & partnerships

    6
    UnisonRe-franchising of company-owned operations in Japan

    One of two transactions completed this year to advance the re-franchising strategy.

    unnamed partnerRe-franchising of company-owned operations in the Western US

    One of two transactions completed this year to advance the re-franchising strategy.

    unnamed partnerAgreement for a new international franchise market in the Netherlands

    One of three new international markets added this year, achieving the FY26 goal.

    unnamed partnerAgreement for a new international franchise market in Estonia

    One of three new international markets added this year, achieving the FY26 goal.

    unnamed partnerAgreement for a new international franchise market in Mauritius

    One of three new international markets added this year, achieving the FY26 goal.

    TargetExpanded relationship to include Krispy Kreme products available for purchase on target.com

    Reflects confidence of leading retailers in the brand and enhances merchandising and checkout placement. Availability beginning in September.

    Risks & headwinds

    5
    Dynamic macro environmentongoing

    unquantified

    Mitigation: Focus on increasing consumer demand for fresh donuts, offering value (e.g., discounted second dozen).

    Evolving consumer trends including GLP-1 and other weight loss medicationsongoing

    unquantified

    Mitigation: Research indicates consumers still purchase for holidays/special occasions; Krispy Kreme's infrequent, sharing-occasion purchase pattern positions it well; focus on minis category for value/variety.

    Declines in UK and Australia organic revenue and EBITDAQ2 FY26

    International organic revenue decreased 5.1%; International adjusted EBITDA declined 22%

    Mitigation: Door rationalization and extreme hot weather cited for UK; commitment to finding right re-franchising partners for these markets to bring capital for growth.

    Planned re-franchising of Western US and Japan impacting net revenueQ2 FY26

    Net revenue down 13% ($331M)

    Mitigation: Strategic move to drive more profitable system-wide sales growth and reduce capital intensity, with long-term accretion to free cash flow.

    Seasonality leading to lower growth and margins in Q3 compared to Q4Q3 FY26

    Q4 typically stronger than Q3

    Mitigation: Management expects higher growth and margins in Q4.

    What to watch in Q3 FY26

    5

    Logistics optimization benefits

    next year and beyond
    CurrentGreater cost certainty, improved service levels, efficiencies
    TargetBenefits to margin flowing through to P&L

    Why it matters

    The full financial impact of logistics outsourcing is expected to drive future margin expansion and offset inflation.

    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.

    Q&A highlights

    6

    Analyst asked about the long-term target for EBITDA margins and key drivers for upside beyond the current year, given completed cost-side actions like logistics outsourcing.

    Management stated that margins will continue to increase as more re-franchising deals are completed, driving a capital-light model and higher free cash flow. They also noted that most benefits from logistics optimization, such as improved cost certainty and service levels, are yet to fully flow through to the P&L, offsetting inflation and promising future margin benefits.

    “As we complete more deals, and we continue to move our agenda to become capitalized, we believe margins will continue to increase and as well drive more free cash flow by 20%.”

    asked by Brian Harbor · answered by Unknown Speaker

    2 min read5 chapters

    Detailed Narrative

    01

    Turnaround Plan Progress

    Krispy Kreme highlighted significant progress across its four-pillar turnaround plan, focusing on re-franchising, improving returns on capital, expanding margins, and driving sustainable US growth. These initiatives have led to a stronger balance sheet, reduced leverage, and improved profitability, positioning the company for long-term growth. The company's strategy emphasizes a capital-light model, leveraging franchisees for expansion and optimizing existing infrastructure.

    02

    US Growth and Fresh Delivery Expansion

    The US segment demonstrated strong underlying organic growth, up 4.4% excluding the McDonald's impact, driven by digital channels and retail shops. The company is strategically expanding its fresh delivery network with partners like Walmart and Target, adding over 450 doors this year. This expansion is supported by a low current network utilization of approximately 25%, allowing for growth without significant new capital investment.

    03

    Margin Expansion and Operational Efficiency

    Significant margin improvement was driven by the US segment through enhanced production planning, labor optimization, and streamlined hub operations. The outsourcing of US logistics has provided greater cost predictability and reduced operational risk. Furthermore, the rollout of an AI-enabled platform for fresh delivery demand planning is expected to reduce out-of-stocks and minimize returns, contributing to continued margin expansion.

    04

    International Franchise Growth

    Krispy Kreme continues to pursue capital-light international expansion, having already secured agreements for three new franchise markets (Netherlands, Estonia, Mauritius) in FY26, meeting its annual goal. Franchisees opened 59 new shops year-to-date, primarily in Japan, Brazil, South Korea, and the Middle East, with the company on track to open at least 100 new shops globally in FY26. This strategy aims to increase high-margin royalty streams and reduce company capex.

    05

    GLP-1 and Consumer Trends

    The company is actively monitoring evolving consumer trends, including the impact of GLP-1 and other weight loss medications. Research indicates that Krispy Kreme consumers using these medications are equally likely to purchase sweet treats for holidays and special occasions. Given that Krispy Kreme donuts are typically purchased infrequently for sharing, the company believes it is well-positioned to navigate these trends, also leveraging its high-performing minis category for variety and value.

    AI-generated summary of the company’s earnings call. Not investment advice.