Krispy Kreme: net income down 34 percent in Q1/2013

Winston-Salem / NC. (kkd) Krispy Kreme Doughnuts Inc., member of the South Korean Lotte Group, reported financial results for the first quarter of fiscal 2013, ended April 29, 2012. Q1/2013 highlights compared to the year-ago period:

  • Revenues increased 3,7 percent to 108,5 million USD from 104,6 million USD
  • Company same store sales rose 2,1 percent, the 14th consecutive quarterly increase
  • Operating income increased to 10,8 million USD from 9,8 million USD
  • Adjusted net income, which reflects income tax expense only to the extent payable in cash, was 10,3 million USD (0,14 USD per share) compared to adjusted net income of 9,2 million USD (0,13 USD per share) in the first quarter last year; adjusted net income and diluted earnings per share (EPS) are non-GAAP measures
  • Net income was 6,0 million USD (0,08 USD per share) compared to 9,2 million USD (0,13 USD per share); net income and EPS for the first quarter of fiscal 2013 reflect a book tax rate of 43 percent compared to a rate of three percent in the first quarter last year due to the required reversal of valuation allowances on deferred tax assets in the fourth quarter of fiscal 2012; accordingly, net income and EPS for the first quarter of fiscal 2013 are not comparable to those for the first quarter of fiscal 2012
  • Cash provided by operating activities increased to 10,4 million USD from 5,1 million USD
  • The Company repurchased 255’000 of its common shares at an average price of 7,27 USD per share

Chief Executive Officer James H. Morgan commented: «We got off to a good start in fiscal 2013 as operating income rose eleven percent on a four percent increase in revenues. All four of our business segments reported improved operating results compared to last year. Based on these results and other factors, we expect our business model to generate healthy cash flows and financial returns for investors and we remain confident in our previous outlook for the full year».

Fiscal 2013 Full Year Outlook

Management expects fiscal 2013 operating income of between 29 and 33 million USD, compared to 25,6 million USD in fiscal 2012 and fiscal 2013 EPS of between 0,21 USD and 0,24 USD, reflecting an estimated tax rate of 45 percent. The higher tax rate compared to fiscal 2012 is a result of the required reversal of valuation allowances on deferred tax assets in the fourth quarter of fiscal 2012, as described in the Company´s March earnings release and in the Company´s annual report on Form 10-K filed in the end of March 30. Because the Company has substantial net operating loss carry-overs, the amount of taxes payable in cash is expected to remain insignificant for the foreseeable future.

Management estimates fiscal 2013 adjusted EPS of between 0,35 USD and 0,41 USD, which includes income tax expense only to the extent expected to be currently payable, compared to 0,31 USD in fiscal 2012. Fiscal 2012 adjusted EPS also excludes a gain of 0,06 USD per share from the sale of the Company´s interest in KK Mexico. Adjusted EPS is a non-GAAP measure.