Krispy Kreme, Inc.

Krispy Kreme Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Welcome to Krispy Kreme's first quarter 2024 earnings call. Thank you for joining us today. We will be referencing our earnings release and presentation during the call. These are available on our investor relations website at investors.krispykreme.com. Joining me on the call this morning are President and Chief Executive Officer Josh Charlesworth and Chief Financial Officer Jeremiah Shukian. After prepared remarks, there will be a question and answer session. Before we begin, I would like to remind you that this call contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities and Litigation Reform Act of 1995, including statements of expectations, future events, or future financial performance. Forward-looking statements involve a number of inherent risks and uncertainties, and we caution investors that these risks could cause actual results to differ materially from those contained in any forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's Form 10-K filed with the SEC for the year ended December 31, 2023, and in the other filings we make from time to time with the SEC. Forward-looking statements made today are only as of today, The company assumes no obligation to publicly update or revise any forward-looking statements, except as may be required by law. Additionally, today's call will include certain non-GAAP financial measures. A reconciliation between non-GAAP financial measures and our closest comparable GAAP measures can be found in our first quarter 2024 earnings press release and Form 8K, filed today with the SEC, and is also available at our investors.crispycream.com website. Jeremiah will take us through our financial performance in a moment, but first, here's Josh.

Thanks, Dre. Good morning, everyone. Thank you for joining us. We had a strong first quarter. Our strategy of making fresh Krispy Kreme donuts more available around the world is working. Excitement for our fresh Krispy Kreme donuts has never been higher. This photo is from our recently opened hot light theater in France, where Parisians lined up, some waiting overnight for their first ever hot original grazed donut, fresh off the line. I was able to join our team members in Paris, who are doing a great job spreading the joy that is Krispy Kreme, not just to eat, but to share and give to others. I wish to thank all our hardworking Krispy Kremers who get it done every day in now 39 countries around the world. Let me summarize today's key messages. First quarter, organic revenue growth exceeded expectations at 6.7% year-over-year with strong consumer demand and increased sales through digital channels fueling the results. We're increasing the pace of expansion as we make our fresh donuts more available around the world. In Q1, we grew our points of access for Krispy Kreme fresh donuts by 19.4% year-over-year. We recently launched in France and we've announced our expansion into Brazil and Germany. In the US, we expect to add 15,000 points of access by the end of 2026. We're accelerating into more grocers and convenience stores. We're excited about our national rollout with McDonald's, which is expected to add more than 12,000 new points of access alone. And we're reaffirming our guidance for the full year with 6% to 8% organic revenue growth expected to translate into adjusted EBITDA expansion of 8% to 11%. This reflects our intent to drive increasingly profitable growth from our hub and spoke operating model. Let's double click into each of these topics. In the first quarter, engagement with the brand hit all-time highs. We had a record 17.6 billion media impressions, nearly triple the same quarter last year. We launched planned initiatives, like our St. Patrick's Day specialty donut collection, and nimbly responded to spontaneous events, such as the AT&T cell phone outage, when we offered free donuts to those impacted. Krispy Kreme's fresh and innovative donuts continue to resonate with our customers, especially on celebratory occasions. For example, our Valentine's Day specialty donut collection, available in 33 countries, led to our biggest sales day ever. Sales through digital channels, including for delivery and pickup, increased by 26% in the quarter. And we're excited about our recently launched new and improved loyalty program in the U.S., which has been very well received. So much so, at one point, our app became the number one download on the App Store last week. Following our recent announcement to provide fresh donuts daily at McDonald's restaurants in the U.S., we have raised our long-term global points of access goal from 75,000 to 100,000 to include the quick service restaurant opportunity. Our pace of expansion is also accelerating. For the past three years, our global points of access grew by an average 19% per year to just over 14,000 by the end of 2023. Looking ahead, we expect fresh Krispy Kreme donuts to be available in 33,000 points of access already by the end of 2026. We expect this growth to be driven by a combination of both existing and new customers, as well as new market expansion. For example, our nationwide rollout to McDonald's in the US gives us the opportunity to add distribution at other major customers, such as Walmart, which still only lists us in about 25% of their stores, and Target, with whom we have already agreed to expand our presence. In new markets, our upcoming expansion into Germany, France, and Brazil provide opportunities for thousands more points of access. and we expect to continue opening three to five new markets per year. Still, we do expect that the U.S. will be the biggest driver of our profitable expansion. The recently announced agreement with McDonald's is expected to bring Krispy Kreme to more than 12,000 of their U.S. restaurants by the end of 2026. We'll provide three of our most popular donuts fresh every day, the iconic original glazed, chocolate ice with sprinkles, and chocolate ice cream filled. They will be available individually and in boxes of six. McDonald's is making them available in restaurant, via drive-thru, and on their mobile app. This follows a successful test of more than 160 McDonald's restaurants in the Lexington and Louisville, Kentucky areas, where consumer excitement and demand exceeded expectations. We are partnering with McDonald's on a phased rollout through to the end of 2026, which we expect to begin before the end of this year. We anticipate nearly tripling our U.S. points of access over the next three years, from 7,775 today to more than 22,000 by the end of 2026. Much of the national rollout can happen using existing capacity, but we will also invest in our business to increase production hubs with spokes. We expect to do this in a couple of ways. We'll add approximately 30 new hubs, which will be optimized for the needs of our deliver fresh daily network. We'll also convert about 20 existing hubs that do not currently have spokes to make them able to fully support our DFD expansion. In all, we expect to have just over 200 hubs with spokes by the end of 2026. This point of access expansion will allow increased utilization of our production hubs and increased distribution density on our delivery routes. This means that we expect to get more points of access from the same production hub. Currently, our 154 hubs with spokes each serve, on average, 47 points of access in the U.S., We expect this to increase to over 100 by 2026. The impact is best explained with a couple of examples. In Philadelphia, the productivity benefits of a more mature hub and spoke model are expected to bring margin accretive growth. And in Minneapolis, where we don't currently sell donuts, we have the chance to be fully optimized from the start. We have a tremendous opportunity ahead of us, and I'm excited to partner with our teams to capitalize on this growth potential. Now I will turn it over to Jeremiah to talk more about the US business expansion opportunity and our overall financial performance.