Krispy Kreme to Buy Back $50 Million Worth of Stock

Hot glazed doughnut maker Krispy Kreme Doughnuts (NYSE: KKD  ) said today it will buy back up to $50 million worth of its stock. At Friday's closing price of $20.10, that would be equivalent to almost 2.5 million shares. The company had approximately 66 million shares outstanding as of July 12, so the repurchase plan equates to just under 4% of its stock.

Noting that the company had made substantial improvements to its balance sheet and had recently completed a $20 million share repurchase authorization, Krispy Kreme Chairman, President, and CEO James H. Morgan said the doughnut maker had the financial wherewithal to complete this newest buyback plan.

"While we will always seek to first deploy cash to grow the business," Morgan said, "we will complement that usage, as appropriate, with other means of increasing shareholder value. The repurchase authorization announced today reflects our desire to further enhance shareholder returns when our cash flow generation is excess to our current needs and when doing so is in the best interests of our shareholders."

As of last Friday, Krispy Kreme had $55 million in cash available plus $31 million in unused borrowing capacity on its revolving credit facility, reflecting the retirement of the $22 million remaining balance of its term loan and the refinancing of its secured credit facilities that it just completed. 

The doughnut maker anticipates generating net income of between $42 million and $45 million in fiscal 2014, an increase of 28% to 31% over the profits generated in 2013. Operating cash flows are expected to be in a range of $63 million to $66 million, and after deducting capital expenditures of $23 million to $35 million, Krispy Kreme will generate free cash flow of around $5 million to $20 million.

Included in these figures is the refinancing of its secured credit facilities. It paid in full the $22 million balance of its term loan and increased the size of its revolving credit commitments from $25 million to $40 million, which is expected to lower Krispy Kreme's interest expense by approximately $1 million in the first 12 months. It also expects to record a non-cash charge of approximately $1 million in the second quarter related to the transaction. It has no borrowings outstanding under the term loan at this time.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2013, at 9:35 PM, devoish wrote:

    The 4300, full and part time employees mentioned on the balance sheet probably do not care that they could have been rewarded with $11,000 each for their work.

    Fortunately that probably does not make sense to investors.

    Best wishes,


Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2538846, ~/Articles/ArticleHandler.aspx, 9/25/2016 3:29:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
KKD $0.00 Down +0.00 +0.00%
Krispy Kreme Dough… CAPS Rating: **