Thank you for standing by. My name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Ms. Stephanie Daukus, Vice President of Investor Relations. Ms. Daukus, please go ahead.

Thank you. Good morning, everyone, and welcome to Krispy Kreme's third quarter 2023 earnings call. Thank you for joining us today. Our earnings release and associated earnings presentation are available on our Investor Relations website at investors.krispykreme.com. Joining me on the call this morning are Mike Tattersfield, President and Chief Executive Officer; Josh Charlesworth, Global President and Chief Operating Officer; and Jeremiah Ashukian, Chief Financial Officer. 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 and 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 than 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 January 1, 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 their closest comparable GAAP measures can be found in our third quarter 2023 earnings press release and Form 8-K filed today and is also available at investors.krispykreme.com. With that, I'll now turn the call over to Mike.

Thank you, Stephanie. Good morning, and thank you, everyone, for joining us today. We had quite a bit of news this quarter at Krispy Kreme with our upcoming CEO succession and our exploration of strategic alternatives for Insomnia Cookies. To frame the call, I want to talk about our history. Afterwards, I'll pass the mic to Josh to dive into our strategy and Jeremiah to cover our financial results and outlook for the remainder of the year. Krispy Kreme has been a beloved sweet treat brand since Vernel Rudolph first started making donuts in 1937. Since joining the company in 2016, we've taken Krispy Kreme on a transformation to focus as a donut company, always creating incredible donuts. Vernon's recipe and his hot-fresh donuts are how he built the brand. We further developed the brand unlocking the power of a truly omni-channel brand. Importantly, we now deliver 100% of our donuts fresh daily, up from 50% since 2016. Also since 2016, we've nearly tripled the number of access points where consumers can buy fresh donuts daily and increased the geographies where we operate by roughly 50%, as we are now in 37 countries. We learned that we need to be where consumers want us and develop our points of access beyond the fresh theater shops to include daily delivery to grocers, convenience stores, and we are also unlocking new channels, such as club stores and quick-service restaurants. We have profitably reshaped our global ownership network via our hub-and-spoke model and have also acquired Insomnia Cookies five years ago to help us strengthen our e-commerce and digital platform. Digital orders now represent approximately 20% of consolidated retail sales. Finally, we have continuously invested in innovation and focused the brand on gifting, sharing, and premiumization for our consumers worldwide. We know and believe there is nothing we can't do with donuts. At the core of our company is our purpose to touch and enhance lives through the joy that is Krispy Kreme, which guides our culture and sets our direction to become the most loved sweet treat brand in the world. Reflecting back, none of this would have been possible without our more than 23,000 global Krispy Kremers, our leaders and our culture to drive growth and results daily. This team has transformed our business from a legacy retail and wholesale operation to a fresh, nimble, unique omnichannel business that has more than proven itself. I'm truly grateful and thankful to every Krispy Kremer. Turning to Insomnia Cookies, I mentioned our announcement to explore strategic alternatives for the company to enhance the growth trajectories of both brands and enable Krispy Kreme to focus on our core strategy of producing, selling, and distributing fresh donuts daily. We thank Insomnia for their tremendous partnership in building upon our e-commerce and digital capabilities, all while helping to grow the Insomnia business in the US to roughly 250 cookie bakeries, as well as expanding globally into the UK and Canada. Regarding the CEO transition, I have been in conversations with the Board regarding my succession plan for some time now. Given the progress we've made on our strategy, the phenomenal team and culture we have in place, it was the right time to promote Josh as CEO effective January 1. I am also excited to transition to a senior adviser role and Krispy Kreme ambassador, where I'll support Josh and continue to spread the joy that is Krispy Kreme. Josh has played a critical role in Krispy Kreme's growth for the last six years, has been a tremendous partner to me, and I love his passion for the brand and our Krispy Kremers. All of this gives me confidence in our future success. Josh, I couldn't be happier to transition this role to you and look forward to watching you accomplish more as CEO. Now towards Q3, our results this quarter demonstrate the continued strength of our team, our business model, and the power of our brand. We delivered growth on both the top and bottom line, in line with our plans, while also delivering adjusted EBITDA margin expansion through our hub-and-spoke model. Our global expansion continued as we made our donuts available in two markets, Switzerland and Kazakhstan, and Insomnia Cookies expanded internationally into Canada and the United Kingdom. With that said, I will now turn it over to Josh for a review of our strategy and to discuss the momentum we've seen so far in the fourth quarter. Josh, congratulations once again.

Thanks, Mike. It's such a privilege and honor to be asked to lead this great team that you brought together to represent this incredible brand, which means so much to so many people and above all, to support all our Krispy Kremers around the world as we seek to firmly establish Krispy Kreme as the world's most loved sweet treat. On a more personal note, thank you, Mike, for the many years of support you've given me, including this period of CEO transition, and I'm very pleased that you'll be staying on as a member of the Krispy Kreme Board. I'm so excited for what is ahead of us at Krispy Kreme. Our strategy is clear: make our fresh donuts available in more places and keep reminding people of the joy that is Krispy Kreme, not just to eat, but to share and give to others. We have made so much progress in leveraging the power of the Krispy Kreme brand under Mike's leadership, now selling over 1.6 billion fresh donuts a year in over 13,000 points of access around the world. Yet, we have so much further to go. Our existing points of access represent less than 1% of the places a customer could theoretically buy Krispy Kreme donuts, and our purchase frequency is less than three times a year despite the many occasions and celebrations where our consumers can and do enjoy our donuts. We've laid out a great strategy, and we will remain focused on maximizing our global growth opportunity, leveraging our profitable omni-channel fresh donut business. The key elements are: one, expand availability of fresh donuts through more points of access in both new countries and new sales channels, such as quick-service restaurants; two, increase purchase frequency by continuing to strengthen our premium offerings for special occasions and improve e-commerce and loyalty programs; three, drive end-to-end productivity in our donut supply chain through operating excellence and automation; and four, improve capital efficiency by leveraging excess capacity in our fresh donut production hubs to supply more capital-light points of access. We are pleased with our progress so far. Our third quarter results were excellent with organic growth just under 10%, adjusted EBITDA margins up by 50 basis points, and points of access increasing 14% to 13,394. The 522 points of access that we added in the quarter were across multiple markets, including 453 new delivery fresh daily merchandising displays or DFD doors, 59 fresh shops, and four hot light theaters. The new DFD doors include OXXO convenience stores in Mexico, Woolworths grocery stores in Australia, and Costco wholesale stores in the UK, Australia, and Canada, reflecting the increasing diversity of our customer mix. This also demonstrates our ability to expand DFD across multiple channels in several markets around the world. The 186 DFD doors we added in the US, including two new Kroger divisions with Dillons in Kansas and Pick 'n Save in Wisconsin, and we also saw significant growth with Publix. We now have just over 6,500 DFD doors in the US with average weekly sales up 12% year-over-year in the third quarter. We're also confident that the quick-service restaurant channel is an exciting DSD opportunity for Krispy Kreme, not just in the US but around the world. We are making investments in the US that reflect our confidence in further scaling our delivery fresh daily network. While nothing has been finalized, we are excited about our continued partnership with McDonald's, and we are in advanced discussions about expanding the relationship. Looking at consumer engagement, we saw even during our seasonally low summer months, strong engagement with the Krispy Kreme brand driven by premium-priced specialty donuts and marketing activation. Our limited-time donut collections generated billions of media impressions, significantly increased average transaction values, and drove strong overall growth. For example, our partnership with M&Ms in the summer, which included a one-of-a-kind donut path with M&M'S Minis was a huge hit in 17 markets around the world. Our brand continues to grow and over-index with valuable younger consumers, with 18 to 34 year olds now representing 40% of our US consumer base, up from 33% a year ago. This is a big contributor to the success of our Strawberry Glazed Doughnut partnership with Hailey Bieber, which sold out quickly every day we ran it in early September. These partnerships demonstrate our ability to reach beyond seasonal occasions with creative and innovative marketing approaches, especially with our more social media and digital-savvy consumers. As we move into the peak holiday season, we have seen growth accelerate so far in the fourth quarter, thanks to a record overall performance in the buildup to Halloween, especially in the US where we brought mystery and monsters to life with a Scooby-Doo Dozen. Looking ahead, we expect to maintain this momentum driven by more premium, specialty donut collections inspired by the holidays and pop culture. Selling the same fresh donuts, both our beloved original glazed and our premium offerings that we make in our production hubs through more points of access is at the heart of our unique hub-and-spoke operating model, making Krispy Kreme more accessible and convenient to more consumers, and the hubs themselves more productive and profitable. This quarter, we increased the number of US hubs with spokes from 143 to 148 by adding delivery routes to existing locations. Our trailing twelve-month sales per hub KPI was up 9% year-over-year to $4.8 million, helping drive US fresh margins up over 100 basis points compared to the same quarter a year ago. We are seeing continued success in replicating the hub-and-spoke model and leveraging growth and delivered fresh daily doors across several cities, notably Charlotte, Dallas, Denver, Houston, and Miami, which have had some of the largest increases in DFD doors this year. As evidenced by our third-quarter results, our strategy continues to produce positive and tangible results, and I'm excited for the future as we continue to pursue establishing Krispy Kreme as the world's most loved sweet treat. I'll turn the call over now to Jeremiah.

Thanks, Josh, and good morning, everyone. The third quarter finished in line with our expectations as we delivered growth on both the top line and adjusted EBITDA with improved performance throughout the business. We delivered our strongest third quarter adjusted EBITDA growth since our return to the public markets. If trends maintain, we continue to track toward the mid to high end of our full year revenue and adjusted EBITDA guidance. Net revenue grew 7.9% to $407.4 million driven by successful execution of marketing activations, pricing actions, and further expansion of our omnichannel approach globally and across all segments. Organic revenue grew 9.6% to $400.3 million. As a reminder, organic revenue excludes impacts of acquisitions, foreign currency, and the branded sweet treats business. Growth, pricing, and the shift away from branded sweet treats resulted in product and distribution costs decreasing by 230 basis points year-over-year. GAAP net loss was $40.3 million in the quarter due to the forecasted effective tax rate and attributable noncash income tax expense. Importantly, we continue to expect an adjusted tax rate of between 24.5% and 26% for the full year 2023. Adjusted EBITDA grew 13.5% year-over-year to $43.7 million, exceeding the revenue growth rate. In turn, adjusted EBITDA margins expanded across all reportable segments, increasing 50 basis points year-over-year to 10.7%, demonstrating our ability to improve operating leverage through pricing and productivity initiatives. Diluted adjusted net income declined 3.6% year-over-year to $4.4 million. Adjusted EPS remained flat compared to last year at $0.03 despite net interest expense increasing 44% to $3.9 million. The increase was primarily driven by higher benchmark interest as well as reducing our reliance on vendor financing. Turning to the segment results. In the US segment, organic revenue grew 10.2% to $258.6 million, driven by effective premiumization opportunities and decreased discounting leading to an increased average transaction size. Adjusted EBITDA increased 8.8% year-over-year and margins expanded 30 basis points to 8.6%. Margin expansion was primarily driven by hub-and-spoke efficiencies and mitigating commodity inflation and labor pressures with the pricing taken from earlier in the year. We continue to focus on waste mitigation in both materials and labor efficiency and we're making improvements in both those areas. We expect that these structural improvements should set up for persistent margin expansion moving forward, combined with benefits from our hub-and-spoke system maturing. Finally, Insomnia margins improved sequentially due to pricing actions taken in the quarter to address input costs. In the International segment, organic revenue increased 8.2% year-over-year driven by increased pricing and points of access growth. Notably, Mexico continues to grow double digits and accelerated both sequentially and year-over-year driven by strong e-commerce and hub-and-spoke expansion. Adjusted EBITDA increased 17.3%, expanding 30 basis points year-over-year and has returned to over 20%, primarily driven by declines in product and distribution costs as a percent of revenue due to effective pricing increases. We saw strong operating leverage in the UK given actions taken to deploy cost control initiatives and introducing a nine-pack format in DFD. In the Market Development segment, organic growth increased 9.1%, which was partially offset by the timing of equipment sales to franchisees. Notably, Canada grew more than 30% as points of access growth accelerated. Adjusted EBITDA increased $1.6 million or 13.3% with margin expansion of 220 basis points to 32.6% driven mainly by strong margin improvement in our company-owned Canadian and Japanese businesses from hub-and-spoke efficiencies combined with fewer lower-margin equipment sales to franchisees. Moving to the balance sheet, we have a healthy balance sheet with ample liquidity and expect leverage to close the year below four times. We are focused on the long-term health of the business and setting up our capital structure to support growth through a strong balance sheet. As we explore strategic alternatives for Insomnia Cookies, we expect to use any proceeds to fund our growth agenda and strengthen our financial positioning, which includes paying down debt and a reduction in the usage of vendor financing. Over the longer term, we remain on track to be between two times and 2.5 times net leverage in 2026. Capital expenditures increased to 8.4% of revenues in the third quarter, driven by new store openings and foreign exchange rates as we continue to invest behind our growth and our omni-channel strategy. Looking forward, and as Josh mentioned, the fourth quarter is seasonally our strongest and we've observed strong October with low double-digit organic sales growth, proving that underlying demand remains robust. Today, we are reaffirming our full year guidance ranges for revenue and adjusted EBITDA and continue to trend towards the mid to high end of the range. Additionally, I want to specifically call out the changes to interest expense and capital expenditure assumptions. We are updating our outlook for interest expense to between $47 million and $51 million due to the prevailing interest rate environment as well as our strategic reduction of vendor financing. In addition, we're updating capital expenditures, which we now expect to land between 7% and 8% of full year revenues, largely due to strategic investments and growth of our US delivered fresh daily network and foreign currency rates. In summary, we had a strong third quarter and are seeing momentum in the fourth quarter. We're excited about the future growth opportunities in our business. With that, we will open up the call for questions.

Your first question is from the line of John Ivankoe with JPMorgan. Please go ahead.

Hi, thank you. The question is on US margins. I know in the past we've talked about DFD profitability really being considered at a market level. I'm wondering if there’s any more intelligence or thinking around doing it at a root level or count level or even day of the week level. Is there an opportunity for you to actually drive some margin beyond what we saw in the third quarter out of that business in general? And secondly, there's been some allusion that Krispy Kreme may potentially use third-party delivery in some DFD accounts instead of using your trucks and drivers. Is that an initiative that is currently being tested or explored, or can we talk about it on this call? Thank you.

Thanks, John. I appreciate the question around margins. I’ll open up by saying we were pleased with what we saw this quarter with respect to US margins. We were up 30 basis points, with the US fresh business up over 100 basis points for the quarter. This increase was driven by some of the hub-and-spoke efficiency that you referenced, but also despite needing to absorb performance-based accruals. We still have bonuses this year that we expect to pay where we're declining those bonuses or decreasing those accruals from last year. Regarding your question about looking at the business differently, we will consistently explore and tinker with different ways to investigate how to evaluate the business. I’ll pass to Josh to elaborate more.

The primary focus we consider for the health of the DFD business is the quality of the doors themselves. We ensure that the routes servicing them are as efficient as possible. The average sales per week of the door are over $600 a week, which grew 12% this quarter after multiple quarters of strong growth. This indicates that we're continuing to add productive doors while keeping an eye on the existing base. Scale and density in a city drive the profitability of the DFD routes. Routes that achieve 15-plus stops quickly lead to high-quality doors and short driving times, which is our main focus. In terms of different customers, we do see convenience stores producing a little higher margin than grocery stores, but that's more reflective of the product portfolio since we sell more loose donuts at C-stores. Currently, in grocery stores, we have an initiative to add more cabinets that better display those loose donuts. We've added over 120 this year, which we see as an opportunity to further improve the margin in grocery stores. So, we do a lot of analysis around it, but the quality of the doors and the routes is the key focus across different cities.

And in terms of considering a different route or style of distribution versus doing it in-house, could there be an opportunity to use existing distribution capabilities of a third party in various markets?

It could be. The routes that we have today are all run in-house. As we've built this model over the last couple of years, we've wanted to move quickly and protect quality. The most important aspect is that these donuts, which are always fresh daily, are displayed in the best way and that profitability is driven through high-quality doors and efficient routing. However, looking forward, third-party services could play a role as we look to scale DFD in the US. The quick-service restaurant opportunity is clearly significant, and we will need to be flexible in different models to scale at that magnitude. For now, we are focused on our in-house logistics model to ensure that those donuts are served at high service levels while keeping the system robust.

Sounds good.

Your next question is from the line of Sara Senatore with Bank of America. Please go ahead.

Great. Thank you. Hopefully, you can hear me. I have a question about the McDonald's announcement. It's twofold. One is the CapEx increase due to that, or are there other initiatives that you are also supporting? Additionally, are there findings that you can share about things like pack size or loose donuts, what you know about the customers regarding your earlier comments about the relative profitability of different DFD doors?

Yes, thanks, Sara. I’ll address the CapEx question, and then I’ll hand it off to Josh for the McDonald's question. We continue to focus our spending on the highest returns. CapEx did tick up this quarter to about 8.4% as we invest behind growth and expansion of our US DFD network. We also experienced the impact of foreign exchange rates on international investments, which contributed to the uptick this quarter. Josh, you can go ahead.

Sure thing, Jeremiah. Hi, Sara. Yes, regarding McDonald's, nothing has been finalized, but the opportunity to expand DFD through existing and new channels, including quick-service restaurants, is clear. We are discussing an expanded partnership with McDonald's in the US. The learnings from the pilot we've done have been interesting throughout the year in Kentucky. This is the nature of our ongoing discussions with McDonald's, covering operational execution, ensuring the donuts arrive at the right time and right quality, and understanding the requirements needed to scale beyond Kentucky. Our confidence in the US DFD opportunity, including now QSR, has grown. We've decided to thoughtfully start making additional investments to support that scale growth, as we've learned that these QSR outlets behave similarly to DFD doors. We're providing a fresh donut experience, and both loose and pre-packed donuts have been well received. From our perspective, this behavior is substantiating as we scale. We don't see cannibalization of our existing business in other DFD doors or retail locations, which excites us. Our confidence has grown enough to start thinking about where to invest to support this type of scale.

Thank you.

Your next question is from the line of Brian Mullan with Piper Sandler. Please go ahead.

Hey. Thank you. Just a question on Insomnia. I believe you're expecting about $230 million of revenue from that business this year. How should we think about the store-level margins associated with that revenue? And related, what's a good way to think about the G&A and D&A allocation to come up with a good sense of adjusted EBITDA? Any color would be great.

Yes, Brian, I can take that question. We’re super pleased with Insomnia’s performance as it continues to grow, and profitability is improving sequentially. We see a lot of opportunities for growth expansion both in the US and internationally, given great engagement in Canada and the UK in the early stages. I don’t want to speculate too much or share too much just yet since we're in the process right now, but I'll leave it at that.

Okay, understood. Thank you. Just to follow up, you mentioned expanding production capacity in the US. In the past, you said it's a 10% to 15% increase in hubs to serve an additional 8,000 to 10,000 DFD doors. How should we think about the cost to build each additional new hub? How long would it take to build? How many hubs can you target next year in your planning?

Okay. I'll take that. Hi, Brian. Yes, just stepping back a moment regarding support for the whole DFD opportunity in the US, including QSR, we can add about 6,000 points of access from the existing production hubs with minimal investment. That’s mainly about trucks and drivers. Clearly, we want to go beyond that, which you referenced. We aim to invest and increase capacity in underserved markets around the country, including new markets like New England, Upstate New York, and Minnesota, as well as high-demand markets like California and Florida. As we discussed, we would add about 10% to 15% more hubs on top of our existing network, serving around 8,000 additional points of access. This brings us to a total of about 20,000 points of access, which is an exciting opportunity. Interestingly, these future production hubs will be designed to support more off-premise DFD sales. They will include additional donut-making lines and larger load-out logistics areas. We plan to build 25 to 35 new hubs over the next few years at a cost of around $3 million to $6 million per hub. The timing will depend on several factors. We will keep you updated on our plans as more information becomes available.

Okay. Thank you very much.

Your next question is from the line of Andrew Wolf with C.L. King. Please go ahead.

Great. Thank you. I just wanted to ask about the restaurant industry at large. It generally had a weak summer, especially in August and September, and then it bounced back in October. Was the sales cadence within the shops and the hubs similar? Was there any correlation to the restaurant industry at large in your sales cadence?

Yes, thanks Andrew. Seasonally, Q3 is one of our softest periods traditionally, while Q4 is one of our strongest. We're seeing that cadence align with our expectations. Growth in the quarter was what we anticipated. We’re pleased with the growth in the US, demonstrating good underlying business stability despite recent price hikes. DFD all our channels grew, and DFD contributed over 20% growth in Q3. Half of that growth in DFD was driven by new access points and half by pricing and premiumization efforts with the addition of specialty donuts into the channel. We are maintaining productivity in existing doors, which signals good health for us.

Our seasonality is quite interesting compared to the industry you mentioned. We've been learning about QSR restaurants and their behavior this year. The summer, especially for us, tends to be a low point due to weather and fewer holidays. It’s exciting that we were able to generate significant brand excitement during this season with promotions like M&Ms and Pumpkin Spice. The opportunity to introduce premium specialty donuts during quieter months was beneficial. As we move ahead, we have the holiday season in sight, and we’ve already seen a solid start to Halloween.

Just one follow-up on the maintenance of sales productivity at DFD doors. Is that on dollar basis or unit basis? Specific question: does premiumization have any elasticity effects? Or is it more or less what you expected, which translates to less change in shrink? In terms of what didn’t get sold?

Yes, I can take that, Andrew. Half of the growth was driven by price, and the existing doors are maintaining productivity on a unit basis. We're not seeing significant elasticities; they’re in line with expectations.

The specialty donuts have high demand, meaning having them become a larger part of our portfolio is great for productivity since they sell out faster.

Yes.

Got it. Okay, terrific. Thank you.

Your next question is from the line of Bill Chappell with Truist. Please go ahead.

Thanks. Good morning. Just two questions on Insomnia and the announcement intra-quarter on there. I guess one, as you're considering potential strategic alternatives, can you quantify what that business did for organic sales in the US for the quarter and what that would mean for the year? Second, could you provide a little more context regarding the thought process behind this? From the IPO on, you had been firm about saying it was a key part of the business, something you could nurture and build. This seems like it might not be the ideal timing in terms of maximizing value, especially with a lot of news around GLPs. Just trying to understand what went behind it, as well as how it would impact overall organic growth.

Hey Bill, this is Mike. Five years ago we took on the Insomnia business. One key goal was to capitalize on the delivery and e-commerce capabilities of that brand, while helping it expand in the US and potentially abroad. As you've seen, 20% of our retail sales overall come from delivery. We've reached roughly 250 cookie shop bakeries in the US and unlocked international potential in Canada and the UK. They have a tremendous growth story, and Krispy Kreme also has one before us. Looking at strategic alternatives helps us explore and potentially enhance that growth opportunity. So the timing is right for this today.

We’re pleased with the top-line performance and profitability of the Insomnia business. We see a strong level of interest from high-quality parties and remain focused on this transaction, which we believe will generate strong ROI for the investment made while realizing value for our shareholders. Regarding the overall growth impact, we expect it to have a 100 to 200 basis point overall impact on the total business growth. However, we feel confident that Krispy Kreme's business can continue to accelerate and offset some loss. On the GLP question, I’ll turn it over to Josh to speak about that.

The Krispy Kreme consumer remains strong and trends are intact. We're not seeing an influence due to the use of these drugs. More than 70% of our donuts are typically sold in sharing sizes, often for special occasions. Infrequent purchase behavior remains as it’s typically bought less than three times a year, with most of our donuts under 200 calories each. We conduct regular brand research on purchase barriers, with the latest research showing accessibility remains the number one barrier for purchasing Krispy Kreme. Health considerations are a low priority and remain unchanged from prior surveys. Therefore, we believe this supports our growth ambition, driven by expanding access points and engagement surrounding our brand with specialty premium donuts.

Got it. And maybe I wasn’t clear. I was more concerned about the GLP risk concerning the valuation you might get for Insomnia. So be it. In terms of clarifying on Insomnia: If you take out Insomnia and it contributes 100 to 200 basis points to the total company, would that mean about a 300 basis point impact on the US business since it is US-based?

It would make sense to discuss this offline to debrief in a follow-up conversation. You might be close to estimating the impact on the US business.

Great. Thanks so much.

At this time, there appear to be no further questions in the queue. I will now turn the call back to Mike Tattersfield for any closing remarks.

Thank you, everyone, for your time. On a personal note, this marks my final earnings call as CEO of Krispy Kreme. I couldn't be happier to transition this role to Josh. I love his passion for the brand and our Krispy Kremers, and it gives me utmost confidence in our continued success. I look forward to watching how he and the team will accomplish this. Again, thank you to all the investors for your continued support of the company, and thank you to everyone at Krispy Kreme worldwide who inspired me throughout my time here. Lots of love. Ciao.

This concludes the Krispy Kreme third quarter 2023 earnings call. Thank you for your participation. You may now disconnect.