Hello, everyone, and thank you for standing by. My name is Ellie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Christine McDevitt, Krispy Kreme Associate General Counsel. Please go ahead.

Hello, everyone, and welcome to Krispy Kreme's Fourth Quarter and Full Year 2025 Earnings Call. Thank you for joining us today. This morning, Krispy Kreme issued its earnings press release. The press release and an accompanying presentation are available on our Investor Relations website at investors.krispykreme.com. Joining me on the call are President and Chief Executive Officer, Josh Charlesworth; and Chief Financial Officer, Raphael Duvivier. After their prepared remarks, we will host a question-and-answer session. But before we begin, please note that during this call, we will be making forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations, future events or future financial performance. Forward-looking statements involve a number of risks, assumptions and uncertainties, and we caution investors that many factors 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 cautionary statements in our earnings press release, our annual report on Form 10-K filed with the SEC and in other SEC filings we make from time to time. Forward-looking statements represent our expectations only as of today, and we assume no obligation to publicly update or revise any forward-looking statements, except as may be required by law. Additionally, during this call, we will reference certain non-GAAP financial measures. Please refer to our earnings press release on our website for additional information regarding these non-GAAP measures, including a reconciliation to the closest comparable GAAP measures. Raphael will take us through our financial performance in a moment. But first, here's Josh.

Thank you, Christine, and good morning, everyone. Our fourth quarter results show that we are making meaningful progress on our turnaround plan to deleverage the balance sheet and deliver sustainable, profitable growth. Krispy Kreme continues to be a compelling growth story, anchored by our globally recognized brand and strong consumer demand for our iconic fresh doughnuts. Our turnaround plan is centered on unlocking that demand through our 2 biggest opportunities, profitable U.S. expansion and capital-light international franchise growth. In 2025, we generated $2 billion in system-wide sales, and we expect to grow this by 2% to 4% in 2026 through higher sales volumes, points of access expansion and franchise development. Last year, approximately 75% of our system-wide sales came from company-operated locations. As a result of our refranchising efforts, we expect nearly 50% of system-wide sales to come from franchisees as we begin 2027. We believe this shift will improve capital efficiency while supporting sustainable long-term growth. Although our decision to exit underperforming U.S. stores earlier in 2025 resulted in a modest decline in net revenue in the fourth quarter, we significantly increased adjusted EBITDA, expanded adjusted EBITDA margin, reduced our financial leverage and delivered positive free cash flow. These results demonstrate the meaningful progress we are making on our turnaround plan focused on: one, refranchising; two, improving returns on capital; three, expanding margins; and four, driving sustainable, profitable U.S. growth. Our first pillar, refranchising, enables us to more profitably drive system-wide sales growth and accelerate unit development through our capital-light franchise model. In December, we announced a strategic refranchising agreement with Unison Capital for our operations in Japan, which we expect to close in March. Unison is a proven operator with extensive expertise in the retail restaurant sector, and we believe they are an ideal partner to continue to…

Thank you, Josh. Our financial results reflect meaningful progress on our turnaround, positioning us to deliver sustainable, profitable growth while continuing to deleverage the balance sheet. In the second half of 2025, adjusted EBITDA reached $96.2 million, more than double the $44.1 million generated in the first half, even as net revenue grew less than 2%. Moving to our fourth quarter results. Adjusted EBITDA of $55.6 million rose 21% year-over-year and 37% quarter-over-quarter. Profitability was positively impacted by productivity initiatives across our network and at the corporate level. Net revenue of $392.4 million represented a decrease of 2.9%, while organic revenue decreased 3.9%. These declines were driven by the strategic closure of underperforming fresh delivery doors, primarily in the U.S. as we focus on quality growth. Excluding these closures, we benefit from growth with strategic partners, higher digital sales and international expansion. As of the end of the fourth quarter, our net leverage ratio, which reflects our net debt divided by trailing 4 quarters adjusted EBITDA improved 0.6x quarter-over-quarter to 6.7x, falling below 7x is an encouraging milestone, driven by strong adjusted EBITDA and lower debt, and we expect to be at or below 6x by the end of the first quarter. Our cash flow was strengthened by higher adjusted EBITDA, significantly reduced CapEx and working capital management that include better handling of receivables and lower inventories. For the fourth quarter, we generated $45 million in operating cash flow and $27.9 million in free cash flow. Free cash flow improved substantially compared to the third quarter and rose $34.8 million from the same quarter a year ago. At year-end, we had excess liquidity of $207 million, which we believe enable us to meet our short-term obligations and fund long-term investments while continuing to advance our turnaround. We are also in…

Thank you, Raphael. We are pleased with the meaningful progress achieved during the fourth quarter. We look forward to building on this momentum and growing our brand around the world in 2026. As we continue to expand, deleveraging the balance sheet and delivering sustainable profitable growth remain our 2 primary objectives. We plan to accomplish both through refranchising, improving returns on capital, expanding margins and continuing to drive sustainable, profitable U.S. growth. I am grateful to work alongside a highly capable team that shares my passion and belief in our opportunity as we continue to spread the joy that is Krispy Kreme to more people in more places around the world. Operator, let's now open it up for Q&A, please.

[Operator Instructions] Your first question comes from the line of Daniel Guglielmo of Capital One Securities.

[indiscernible] are making great progress on the turnaround [indiscernible] drive the best bottom line. You mentioned the moderated growth [indiscernible] are you starting to think about potential U.S. hub growth that you know can provide a good return? Or is it still too early?

Yes. I think that the line was a bit interrupted there, but I think you were asking around the potential expansion and supporting it with whether or not we need new hub growth. What's great about our opportunity in the U.S. is we have plenty of underpenetrated customers, places like Walmart and Target, where we're only about 30% of those. Costco, Sam's only about 20%. And so we have plenty of opportunity to grow. As we saw in the fourth quarter, we expanded access with new distribution by more than 200 doors in the U.S. So we intend to continue to drive that expansion opportunity as we grow the brand in the U.S. in 2026. We also have a great opportunity in our capacity utilization is only around about 25%. So we're able to manufacture the doughnuts without significant investment in new production. And that is why our CapEx in the fourth quarter is actually nearly half what it had been year-over-year, and we expect CapEx overall to be about half the level in 2026 as it was in 2025 as we're able to pursue that growth opportunity, which is very compelling. We know our consumer continues to look for convenient access for our doughnuts, but without significant investment in infrastructure, enabling us to drive not just profitable growth but to strengthen the balance sheet as we go.

Great. I appreciate that color and hope the line is clear now. As a follow-up [indiscernible] this quarter [indiscernible] on those closures? Is it going to be a significant [indiscernible] or will it come down from here?

Yes. I'm sorry, the line broke up a little too much. You were asking around perhaps the door closures that we completed in the third quarter last year, a program that is over. We're now focused on expanding access to the brand and distribution. Was that what you were asking about?

Sorry about that. I took my head set off, and hopefully, is it clear now?

Yes, that's much better. If you could repeat that, that would be great.

Okay. Perfect. Yes. So there was a pretty significant shop closure expense for this quarter. For 2026, how much more do you guys have left to go on those closures? Is it going to be significant in the first half of 2026? Or will it come down from here?

Yes. What we saw regarding shops is that what we've been doing is with our production hubs and our retail shops, we've been really optimizing where we produce, how we then deliver the doughnuts, how many locations individual sites are supporting. And that has enabled us to improve productivity, drive efficiency throughout the system, both from a production and delivery point of view. So -- so we're not making closures right now. Instead, what we're doing is focusing production to be as efficient as possible. This is all in support, of course, of the journey that we saw in the fourth quarter, where we saw meaningful EBITDA growth. And then we expect that to translate into 2026. We expect, for example, in the first quarter, EBITDA to be growing again versus the same quarter a year ago. So this is all part of our efforts around the turnaround to drive margins in the U.S. and become more profitable.

There are no further questions. I'd now like to hand the call back to Josh for final remarks.

Okay. Thank you very much. Appreciate everybody's interest in Krispy Kreme. We're making very good progress, as you heard, on our turnaround, strengthening the balance sheet and positioning Krispy Kreme for sustainable long-term growth. And we look forward to continuing this momentum into 2026. Thank you, everybody.

Thank you for attending today's call. You may now disconnect. Goodbye.