Krispy Kreme, Inc.
For the period ended Jun 29, 2025. Filed Aug 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2025 · Filed Aug 8, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 2. Results of Operations
Results of Operations
The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented.
Quarter ended June 29, 2025 compared to the Quarter ended June 30, 2024
The following table presents our unaudited condensed consolidated results of operations for the quarter ended June 29, 2025 and the quarter ended June 30, 2024:
| Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| June 29, 2025 · June 30, 2024 · Change | ||||||
| (in thousands, except percentages) | Amount | % of Revenue | Amount | % of Revenue | $ | % |
| Net revenues | ||||||
| Product sales | $371,377 | 97.8% | $429,411 | 97.9% | $(58,034) | -13.5% |
| Royalties and other revenues | 8,390 | 2.2% | 9,398 | 2.1% | (1,008) | -10.7% |
| Total net revenues | 379,767 | 100.0% | 438,809 | 100.0% | (59,042) | -13.5% |
| Product and distribution costs | 92,627 | 24.4% | 107,846 | 24.6% | (15,219) | -14.1% |
| Operating expenses | 210,712 | 55.5% | 212,504 | 48.4% | (1,792) | -0.8% |
| Selling, general and administrative expense | 62,920 | 16.6% | 64,466 | 14.7% | (1,546) | -2.4% |
| Marketing expenses | 12,185 | 3.2% | 12,416 | 2.8% | (231) | -1.9% |
| Pre-opening costs | 1,471 | 0.4% | 967 | 0.2% | 504 | 52.1% |
| Goodwill and other asset impairments | 406,932 | 107.2% | 201 | —% | 406,731 | nm |
| Other income, net | (8,311) | -2.2% | (1,050) | -0.2% | (7,261) | -691.5% |
| Depreciation and amortization expense | 35,782 | 9.4% | 34,600 | 7.9% | 1,182 | 3.4% |
| Operating (loss)/income | (434,551) | -114.4% | 6,859 | 1.6% | (441,410) | nm |
| Interest expense, net | 16,696 | 4.4% | 14,452 | 3.3% | 2,244 | 15.5% |
| Loss on divestiture of Insomnia Cookies | 11,501 | 3.0% | — | —% | 11,501 | nm |
| Other non-operating (income)/expense, net | (1,177) | -0.3% | 949 | 0.2% | (2,126) | -224.0% |
| Loss before income taxes | (461,571) | -121.5% | (8,542) | -1.9% | (453,029) | nm |
| Income tax benefit | (20,453) | -5.4% | (3,611) | -0.8% | (16,842) | -466.4% |
| Net loss | (441,118) | -116.2% | (4,931) | -1.1% | (436,187) | nm |
| Net (loss)/income attributable to noncontrolling interest | (5,858) | -1.5% | 560 | 0.1% | (6,418) | nm |
| Net loss attributable to Krispy Kreme, Inc. | $(435,260) | -114.6% | $(5,491) | -1.3% | $(429,769) | nm |
The following table presents a further breakdown of total net revenue and organic revenue growth by segment for the quarter ended June 29, 2025 compared to the quarter ended June 30, 2024:
| (in thousands, except percentages) | U.S. | International | MarketDevelopment | TotalCompany |
|---|---|---|---|---|
| Total net revenues in second quarter of fiscal 2025 | $230,099 | $132,755 | $16,913 | $379,767 |
| Total net revenues in second quarter of fiscal 2024 | 289,304 | 125,269 | 24,236 | 438,809 |
| Total Net Revenues (Decline)/Growth | (59,205) | 7,486 | (7,323) | (59,042) |
| Total Net Revenues (Decline)/Growth % | -20.5% | 6.0% | -30.2% | -13.5% |
| Less: Impact of Insomnia Cookies divestiture | (64,166) | — | — | (64,166) |
| Adjusted net revenues in second quarter of fiscal 2024 | 225,138 | 125,269 | 24,236 | 374,643 |
| Adjusted net revenue growth/(decline) | 4,961 | 7,486 | (7,323) | 5,124 |
| Impact of acquisitions | (11,877) | (1,503) | 3,880 | (9,500) |
| Impact of foreign currency translation | — | 1,441 | — | 1,441 |
| Organic Revenue (Decline)/Growth | $(6,916) | $7,424 | $(3,443) | $(2,935) |
| Organic Revenue (Decline)/Growth % | -3.1% | 5.9% | -14.2% | -0.8% |
Total net revenue declined $59.0 million, or approximately 13.5%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, primarily due to the $64.2 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. Organic revenue declined $2.9 million, or approximately 0.8%, primarily driven by lower Doughnut Shop transaction volume driven by consumer softness in a challenging macroeconomic environment. The organic revenue decline was partially offset by Global Points of Access growth of 2,260, or 14.3%, and increased pricing of approximately 4% (primarily driven by our planned reduced discounting).
Our U.S. segment net revenue declined $59.2 million, or approximately 20.5%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, primarily due to the $64.2 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. U.S. organic revenue declined $6.9 million, or approximately 3.1%, primarily driven by lower Doughnut Shop transaction volume driven by consumer softness in a challenging macroeconomic environment and the strategic closure of underperforming DFD Doors. The organic revenue decline was partially offset by Points of Access growth of 2,094, or 25.9%, and increased pricing of approximately 6% (primarily driven by our planned reduced discounting).
Our International segment net revenue increased $7.5 million, or approximately 6.0%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. International organic revenue grew $7.4 million, or approximately 5.9%, driven primarily by growth in Canada, Japan, and Mexico. The organic revenue growth was partially offset by Points of Access decline of 177, or 3.3% due to strategic DFD Door closures in Japan and Mexico.
Our Market Development segment net revenue declined $7.3 million, or approximately 30.2%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, partially due to the $3.9 million impact of franchise acquisitions in fiscal 2024 (the results of acquired franchise businesses are reported within the Market Development segment prior to the respective dates of acquisition, and are reported within the U.S. or International segments, as applicable, following the respective dates of acquisition). Market Development organic revenue declined $3.4 million, or approximately 14.2%, as expansion of our international franchise business in new markets such as Brazil was more than offset by timing of shipments of mix and equipment to franchisees.
Operating expenses: Operating expenses decreased $1.8 million, or 0.8%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, driven mainly by a $31.8 million decrease resulting from the divestiture of a controlling interest in Insomnia Cookies that was partially offset by an increase of $30.0 million in operating expenses for the global Krispy Kreme brand primarily due to higher shop and delivery labor expenses, including logistics costs. Operating expenses as a percentage of revenue increased by approximately 710 basis points, from 48.4% in the second quarter of fiscal 2024 to 55.5% in the second quarter of fiscal 2025, primarily due to the impact of lower transaction volumes on operating leverage and operating costs associated with our now-ended McDonald’s USA partnership.
Selling, general and administrative expense: Selling, general and administrative (“SG&A”) expense decreased $1.5 million, or 2.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, driven mainly by a $11.1 million impact from the divestiture of a controlling interest in Insomnia Cookies. As a percentage of revenue, SG&A expense increased approximately 190 basis points, from 14.7% in the second quarter of fiscal 2024 to 16.6% in the second quarter of fiscal 2025, primarily driven by lower revenue and higher employee costs, including global support center restructuring charges in the second quarter of fiscal 2025.
Goodwill and other asset impairments: For discussion of the $406.9 million non-cash goodwill and other asset impairments in the second quarter of fiscal 2025, refer to Note 1, Description of Business and Summary of Significant Accounting Policies to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Other income, net: Other income, net of $8.3 million in the second quarter of fiscal 2025 was primarily related to gains on sale-leaseback transactions described in Note 5, Leases to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. Other income, net of $1.1 million in the second quarter of fiscal 2024 was primarily driven by business interruption insurance recoveries.
Depreciation and amortization expense: Depreciation and amortization expense increased $1.2 million, or 3.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. As a percentage of revenue, depreciation and amortization expense increased approximately 150 basis points, from 7.9% in the second quarter of fiscal 2024 to 9.4% in the second quarter of fiscal 2025, primarily driven by higher finance lease amortization expense and increased depreciation associated with capital assets placed into service to support our U.S. national expansion, including the McDonald’s USA rollout. We recorded long-lived asset and lease impairment charges during the second quarter of fiscal 2025, a portion of which related to assets supporting the U.S. national expansion, including the McDonald’s USA rollout, which we expect to impact the future rate of depreciation expense for these assets.
Interest expense, net: Interest expense, net increased $2.2 million, or 15.5%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, primarily driven by higher finance lease interest expense and a higher average debt balance.
Loss on divestiture of Insomnia Cookies: In the second quarter of fiscal 2025, we sold the remainder of our ownership interest in Insomnia Cookies for cash proceeds. Insomnia Cookies was previously accounted for using the equity method, and we recognized a loss on divestiture of $11.5 million (gross of income taxes). Refer to Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Income tax benefit: In the second quarter of fiscal 2025, we recorded an income tax benefit of$20.5 million compared to an income tax benefit of$3.6 million in the second quarter of fiscal 2024. The variancewas primarily driven by lower pre-tax results in the second quarter of fiscal 2025, offset by the tax effect of nondeductible goodwill impairment charges.
Results of Operations by Segment – Quarter ended June 29, 2025 compared to the Quarter ended June 30, 2024
The following table presents Adjusted EBITDA by segment for the periods indicated:
| Quarter Ended · Change | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | June 29, 2025 | June 30, 2024 | $ | % |
| Adjusted EBITDA | ||||
| U.S. | $9,930 | $32,668 | $(22,738) | -69.6% |
| International | 18,221 | 21,655 | (3,434) | -15.9% |
| Market Development | 8,948 | 12,875 | (3,927) | -30.5% |
| Corporate | (16,988) | (12,472) | (4,516) | -36.2% |
| Total Adjusted EBITDA (1) | $20,111 | $54,726 | $(34,615) | -63.3% |
(1) Refer to “Key Performance Indicators and Non-GAAP Measures” above for a reconciliation of Adjusted EBITDA to net loss.
U.S. segment Adjusted EBITDA decreased $22.7 million, or 69.6%, with $7.2 million of the reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. The margin decline of 700 basis points to 4.3% in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 was primarily driven by an estimated $7 million to $9 million adverse impact associated with our now-ended McDonald’s USA partnership and by lower transaction volumes impacting operating leverage.
International segment Adjusted EBITDA decreased $3.4 million, or 15.9%, with margin decline of 360 basis points to 13.7% in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024, as lower transaction volumes continued to impact operating leverage for the International equity markets, particularly the U.K.
Market Development segment Adjusted EBITDA decreased $3.9 million, or 30.5%, impacted by timing of shipments of mix and equipment to franchisees in certain markets. The margin of 52.9% in the second quarter of fiscal 2025 was relatively consistent with the second quarter of fiscal 2024.
Two Quarters ended June 29, 2025 compared to the Two Quarters ended June 30, 2024
The following table presents our unaudited condensed consolidated results of operations for the two quarters ended June 29, 2025 and the two quarters ended June 30, 2024:
| Two Quarters Ended | ||||||
|---|---|---|---|---|---|---|
| June 29, 2025 · June 30, 2024 · Change | ||||||
| (in thousands, except percentages) | Amount | % of Revenue | Amount | % of Revenue | $ | % |
| Net revenues | ||||||
| Product sales | $737,856 | 97.7% | $862,923 | 97.9% | $(125,067) | -14.5% |
| Royalties and other revenues | 17,095 | 2.3% | 18,584 | 2.1% | (1,489) | -8.0% |
| Total net revenues | 754,951 | 100.0% | 881,507 | 100.0% | (126,556) | -14.4% |
| Product and distribution costs | 183,363 | 24.3% | 214,861 | 24.4% | (31,498) | -14.7% |
| Operating expenses | 409,555 | 54.2% | 417,699 | 47.4% | (8,144) | -1.9% |
| Selling, general and administrative expense | 122,325 | 16.2% | 136,040 | 15.4% | (13,715) | -10.1% |
| Marketing expenses | 22,424 | 3.0% | 24,531 | 2.8% | (2,107) | -8.6% |
| Pre-opening costs | 2,400 | 0.3% | 2,072 | 0.2% | 328 | 15.8% |
| Goodwill and other asset impairments | 407,094 | 53.9% | 448 | 0.1% | 406,646 | nm |
| Other income, net | (7,073) | -0.9% | (1,097) | -0.1% | (5,976) | -544.8% |
| Depreciation and amortization expense | 69,683 | 9.2% | 68,186 | 7.7% | 1,497 | 2.2% |
| Operating (loss)/income | (454,820) | -60.2% | 18,767 | 2.1% | (473,587) | nm |
| Interest expense, net | 32,892 | 4.4% | 28,188 | 3.2% | 4,704 | 16.7% |
| Loss on divestiture of Insomnia Cookies | 11,501 | 1.5% | — | —% | 11,501 | nm |
| Other non-operating (income)/expense, net | (1,570) | -0.2% | 1,522 | 0.2% | (3,092) | -203.2% |
| Loss before income taxes | (497,643) | -65.9% | (10,943) | -1.2% | (486,700) | nm |
| Income tax (benefit)/expense | (23,120) | -3.1% | 651 | 0.1% | (23,771) | nm |
| Net loss | (474,523) | -62.9% | (11,594) | -1.3% | (462,929) | nm |
| Net (loss)/income attributable to noncontrolling interest | (5,979) | -0.8% | 2,431 | 0.3% | (8,410) | -345.9% |
| Net loss attributable to Krispy Kreme, Inc. | $(468,544) | -62.1% | $(14,025) | -1.6% | $(454,519) | nm |
The following table presents a further breakdown of total net revenue and organic revenue growth by segment for the two quarters ended June 29, 2025 compared to the two quarters ended June 30, 2024:
| (in thousands, except percentages) | U.S. | International | MarketDevelopment | TotalCompany |
|---|---|---|---|---|
| Total net revenues in first two quarters of fiscal 2025 | $466,643 | $252,390 | $35,918 | $754,951 |
| Total net revenues in first two quarters of fiscal 2024 | 585,239 | 250,019 | 46,249 | 881,507 |
| Total Net Revenues (Decline)/Growth | (118,596) | 2,371 | (10,331) | (126,556) |
| Total Net Revenues (Decline)/Growth % | -20.3% | 0.9% | -22.3% | -14.4% |
| Less: Impact of Insomnia Cookies divestiture | (128,485) | — | — | (128,485) |
| Adjusted net revenues in first two quarters of fiscal 2024 | 456,754 | 250,019 | 46,249 | 753,022 |
| Adjusted net revenue growth/(decline) | 9,889 | 2,371 | (10,331) | 1,929 |
| Impact of acquisitions | (22,920) | (2,868) | 7,478 | (18,310) |
| Impact of foreign currency translation | — | 9,800 | — | 9,800 |
| Organic Revenue (Decline)/Growth | $(13,031) | $9,303 | $(2,853) | $(6,581) |
| Organic Revenue (Decline)/Growth % | -2.9% | 3.7% | -6.2% | -0.9% |
Total net revenue declined $126.6 million, or approximately 14.4%, fromthe first two quarters of fiscal 2024 tothe first two quarters of fiscal 2025, primarily due to the $128.5 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. Organic revenue declined $6.6 million, or approximately 0.9%, primarily driven by lower Doughnut Shop transaction volume driven by consumer softness in a challenging macroeconomic environment. The organic revenue decline was partially offset by Global Points of Access growth of 2,260, or 14.3%, and increased pricing of approximately 2% (primarily driven by our planned reduced discounting).
Our U.S. segment net revenue declined $118.6 million, or approximately 20.3%, fromthe first two quarters of fiscal 2024 tothe first two quarters of fiscal 2025, primarily due to the $128.5 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. U.S. organic revenue declined $13.0 million, or approximately 2.9%, primarily driven by lower Doughnut Shop transaction volume driven by consumer softness in a challenging macroeconomic environment and the strategic closure of underperforming DFD Doors. The organic revenue decline was partially offset by Points of Access growth of 2,094, or 25.9%, and increased pricing of approximately 4% (primarily driven by our planned reduced discounting).
Our International segment net revenue grew $2.4 million, or approximately 0.9%, fromthe first two quarters of fiscal 2024 tothe first two quarters of fiscal 2025, in spite of adverse foreign currency translation impacts of $9.8 million. International organic revenue grew$9.3 million, or approximately 3.7%, driven primarily by growth in Canada, Japan, and Mexico. The organic revenue growth was partially offset by lower transaction volume in the U.K.
Our Market Development segment net revenue declined$10.3 million, or approximately 22.3%, fromthe first two quarters of fiscal 2024 tothe first two quarters of fiscal 2025, primarily due to the$7.5 million impact of franchise acquisitions in fiscal 2024. Market Development organic revenue declined$2.9 million, or approximately 6.2%, as expansion of our international franchise business in new markets such as Brazil was more than offset by timing of shipments of mix and equipment to franchisees.
Operating expenses: Operating expenses decreased $8.1 million, or 1.9%, from the first two quarters of fiscal 2024 to the first two quarters of fiscal 2025, driven mainly by a $61.3 million decrease resulting from the divestiture of a controlling interest in Insomnia Cookies that was partially offset by an increase of $53.1 million in operating expenses for the global Krispy Kreme brand primarily due to higher shop and delivery labor expenses, including logistics costs. Operating expenses as a percentage of revenue increased approximately 680 basis points, from 47.4% in the first two quarters of fiscal 2024 to 54.2% in the first two quarters of fiscal 2025, primarily due to the impact of lower transaction volumes on operating leverage, operating costs associated with our now-ended McDonald’s USA partnership, and an estimated $5 million related to the 2024 Cybersecurity Incident, primarily related to operational inefficiencies.
Selling, general and administrative expense: SG&A expense decreased $13.7 million, or 10.1%, from the first two quarters of fiscal 2024 to the first two quarters of fiscal 2025, driven mainly by a $21.3 million impact from the divestiture of a controlling interest in Insomnia Cookies. As a percentage of revenue, SG&A expense increased approximately 80 basis points, from 15.4% in the first two quarters of fiscal 2024 to 16.2% in the first two quarters of fiscal 2025, primarily driven by lower revenue and $5.3 million in costs related to remediation of the 2024 Cybersecurity Incident, including fees for cybersecurity experts and other advisors.
Goodwill and other asset impairments: For discussion of the $407.1 million non-cash goodwill and other asset impairments in the first two quarters of fiscal 2025, refer to Note 1, Description of Business and Summary of Significant Accounting Policies to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Other income, net: Other income, net of $7.1 million in the first two quarters of fiscal 2025 was primarily related to gains on sale-leaseback transactions described in Note 5, Leases to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. Other income, net of $1.1 million in the first two quarters of fiscal 2024 was primarily driven by business interruption insurance recoveries.
Depreciation and amortization expense: Depreciation and amortization expense increased $1.5 million, or 2.2%, from the first two quarters of fiscal 2024 to the first two quarters of fiscal 2025. As a percentage of revenue, depreciation and amortization expense increased approximately 150 basis points, from 7.7% in the first two quarters of fiscal 2024 to 9.2% in the first two quarters of fiscal 2025, primarily driven by higher finance lease amortization expense and increased depreciation associated with capital assets placed into service to support our U.S. national expansion, including the McDonald’s USA rollout. We recorded long-lived asset and lease impairment charges during the second quarter of fiscal 2025, a portion of which related to assets supporting the U.S. national expansion, including the McDonald’s USA rollout, which we expect to impact the future rate of depreciation expense for these assets.
Interest expense, net: Interest expense, net increased $4.7 million, or 16.7%, from the first two quarters of fiscal 2024 to the first two quarters of fiscal 2025 primarily driven by higher finance lease interest expense and a higher average debt balance.
Loss on divestiture of Insomnia Cookies: In the second quarter of fiscal 2025, we sold the remainder of our ownership interest in Insomnia Cookies for cash proceeds. Insomnia Cookies was previously accounted for using the equity method, and we recognized a loss on divestiture of $11.5 million (gross of income taxes). Refer to Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Income tax (benefit)/expense: Income tax benefit was $23.1 million in the first two quarters of fiscal 2025, while income tax expense was $0.7 million in the first two quarters of fiscal 2024. The variance was primarily driven by lower pre-tax results in the first two quarters of fiscal 2025, offset by the tax effect of nondeductible goodwill impairment charges.
Results of Operations by Segment – Two Quarters ended June 29, 2025 compared to the Two Quarters ended June 30, 2024
The following table presents Adjusted EBITDA by segment for the periods indicated:
| Two Quarters Ended · Change | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | June 29, 2025 | June 30, 2024 | $ | % |
| U.S. | $25,841 | $75,284 | $(49,443) | -65.7% |
| International | 33,118 | 42,191 | (9,073) | -21.5% |
| Market Development | 19,995 | 24,775 | (4,780) | -19.3% |
| Corporate | (34,863) | (29,336) | (5,527) | -18.8% |
| Total Adjusted EBITDA (1) | $44,091 | $112,914 | $(68,823) | -61.0% |
(1) Refer to “Key Performance Indicators and Non-GAAP Measures” above for a reconciliation of Adjusted EBITDA to net income.
U.S. segment Adjusted EBITDA decreased $49.4 million, or 65.7%, with $14.9 million of the reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. The margin decline of 740 basis points to 5.5% in the first two quarters of fiscal 2025 compared to the first two quarters of fiscal 2024 was primarily driven by an estimated $13 million to $15 million adverse impact associated with our now-ended McDonald’s USA partnership, lower transaction volumes impacting operating leverage, and an estimated $5 million related to the 2024 Cybersecurity Incident, primarily related to operational inefficiencies.
International segment Adjusted EBITDA decreased $9.1 million, or 21.5%, with margin decline of 380 basis points to 13.1% in the first two quarters of fiscal 2025 compared to the first two quarters of fiscal 2024, as lower transaction volume continued to impact operating leverage for the International equity markets, particularly the U.K.
Market Development segment Adjusted EBITDA decreased $4.8 million, or 19.3%, with margin expansion of 210 basis points to 55.7% in the first two quarters of fiscal 2025 compared to the first two quarters of fiscal 2024, driven mainly by changes in the revenue mix, including less shipments of lower-margin equipment to franchisees.
Capital Resources and Liquidity
Our principal sources of liquidity to date have included cash from operating activities, cash on hand, commercial trade financing including our structured payables programs, and proceeds from the divestiture of Insomnia Cookies. Our primary use of liquidity is to fund the cash requirements of our business operations, including working capital needs, capital expenditures, acquisitions, and other commitments.
Our future obligations primarily consist of our debt and lease obligations, as well as commitments under ingredient and other forward purchase contracts. As of December 29, 2024, we had the following future obligations:
An aggregate principal amount of $819.5 million outstanding under the 2023 Facility;
An aggregate principal amount of $5.0 million outstanding under short-term, uncommitted lines of credit;
Non-cancellable future minimum operating lease payments totaling $664.3 million;
Non-cancellable future minimum finance lease payments totaling $97.0 million; and
Purchase commitments under ingredient and other forward purchase contracts of $98.9 million.
As of June 29, 2025, the principal amount outstanding under our 2023 Facility was $861.3 million. The increase from the 2023 Facility balance as of December 29, 2024 was primarily driven by our need for cash to fund business operations, including impacts from the 2024 Cybersecurity Incident and our U.S. national expansion, as well as payments on structured payables associated with our acquisition of the noncontrolling interest in our consolidated subsidiary Awesome Doughnut, LLC (“Awesome Doughnut”). Refer to Note 9, Long-Term Debt to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
We had cash and cash equivalents of $21.3 million and $29.0 million as of June 29, 2025 and December 29, 2024, respectively. We believe that our existing cash and cash equivalents and available borrowing capacity under our credit facilities discussed above will be sufficient to fund our operating and capital needs for at least the next twelve months. Our assessment of the period of time through which our financial resources will be adequate to support our operations could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, the growth of our presence in new markets, and the expansion of our omni-channel model in existing markets. We may enter into arrangements in the future to acquire or invest in complementary businesses, services, and technologies. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.
Dividend Policy
In order to more closely align our capital allocation priorities with our growth strategy, we no longer expect to pay quarterly cash dividends to holders of our common stock. This represents a change to our dividend policy previously disclosed in Item 5 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 29, 2024.
Cash Flows
We have historically generated cash from operations and have credit availability and capacity to fund operating and discretionary spending such as capital expenditures and debt repayments. Our requirement for working capital is not significant because our consumers pay us in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the vendors for the various inputs to such items. The following table and discussion present, for the periods indicated, a summary of our key cash flows from operating, investing, and financing activities:
| Two Quarters Ended | ||
|---|---|---|
| (in thousands) | June 29, 2025 | June 30, 2024 |
| Net cash (used for)/provided by operating activities | $(53,377) | $15,525 |
| Net cash provided by/(used for) investing activities | 30,937 | (65,161) |
| Net cash provided by financing activities | 16,248 | 40,245 |
Operating Activities
Cash used for operations totaled $53.4 million for the first two quarters of fiscal 2025, a fluctuation of $68.9 million compared with the first two quarters of fiscal 2024, primarily due to less operating income generated in the first two quarters of fiscal 2025, partially offset by the intentional paydown of obligations due under our SCF programs (discussed in Note 8, Vendor Finance Programs to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q) in the first two quarters of fiscal 2024.
Investing Activities
Cash provided by investing activities totaled $30.9 million for the first two quarters of fiscal 2025, a fluctuation of $96.1 million compared with the first two quarters of fiscal 2024, primarily due to the divestiture of our remaining ownership interest in Insomnia Cookies for $75.0 million in aggregate cash proceeds (discussed in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q), proceeds from sale-leaseback transactions (discussed in Note 5, Leases to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q), and the use of less cash for capital expenditures in the first two quarters of fiscal 2025 compared to the first two quarters of fiscal 2024. As part of our turnaround plan, we expect to reduce capital investment by using existing assets and focusing on franchisee development.
Financing Activities
Cash provided by financing activities totaled $16.2 million for the first two quarters of fiscal 2025, a decrease of $24.0 million compared with the first two quarters of fiscal 2024, primarily due to draws on our 2023 Facility in the first two quarters of fiscal 2024 used in part to fund the intentional paydown of obligations due under our SCF programs. These draws on the 2023 Facility in the first two quarters of fiscal 2024 exceeded the draws on the 2023 Facility in the first two quarters of fiscal 2025 used to fund business operations, including impacts from the 2024 Cybersecurity Incident and our U.S. national expansion, as well as payments on structured payables associated with our acquisition of the noncontrolling interest in our consolidated subsidiary, Awesome Doughnut.
Debt
Our long-term debt obligations consist of the following:
| (in thousands) | June 29, 2025 | December 29, 2024 |
|---|---|---|
| 2023 Facility — term loan | $763,750 | $647,500 |
| 2023 Facility — revolving credit facility | 97,500 | 172,000 |
| Short-term lines of credit | 5,000 | 5,000 |
| Less: Debt issuance costs | (3,574) | (3,322) |
| Finance lease obligations | 94,369 | 79,725 |
| Total long-term debt | 957,045 | 900,903 |
| Less: Current portion of long-term debt | (67,603) | (56,356) |
| Long-term debt, less current portion | $889,442 | $844,547 |
2023 Secured Credit Facility
As of June 29, 2025, the 2023 Facility consisted of a $300.0 million senior secured revolving credit facility and a term loan with an original principal amount of $700.0 million. During the quarter ended June 29, 2025, the Company amended the 2023 Facility to, among other things, establish additional, incremental term loan commitments in an aggregate principal amount of $125.0 million. Refer to Note 9, Long-Term Debt to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Under the terms of the 2023 Facility, we are subject to a requirement to maintain a leverage ratio of less than 5.00 to 1.00 as of the end of each quarterly Test Period (as defined in the 2023 Facility) through maturity in March 2028. The leverage ratio under the 2023 Facility is defined as the ratio of (a) Total Indebtedness (as defined in the 2023 Facility, which includes all debt and finance lease obligations) minus unrestricted cash and cash equivalents to (b) a defined calculation of Adjusted EBITDA (2023 Facility Adjusted EBITDA) for the most recently ended Test Period. Our leverage ratio was 4.5 to 1.00 as of the end of the second quarter of fiscal 2025 compared to 3.9 to 1.00 as of the end of fiscal 2024.
We were in compliance with the financial covenants related to the 2023 Facility as of June 29, 2025. If we are unable to meet the 2023 Facility financial or other covenants in future periods, it could limit our ability to draw on the revolving credit facility, could result in the lenders accelerating the maturity of such indebtedness and foreclosing upon the collateral pledged thereunder, and could require the replacement of the 2023 Facility with new sources of financing, which we may be unable to secure on favorable terms or at all, any of which could negatively impact our liquidity.
Short-Term Lines of Credit
We are party to two agreements with existing lenders providing for short-term, uncommitted lines of credit up to an aggregate of $25.0 million. Borrowings under these short-term lines of credit are payable to the lenders on a revolving basis for tenors up to a maximum of three months and are subject to an interest rate of adjusted term SOFR plus a credit spread adjustment of 0.10% plus a margin of 1.75%.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.