Krispy Kreme, Inc.

Company Overview

Business Model: Krispy Kreme, Inc. operates an omni-channel business model focused on producing and delivering fresh, high-quality doughnuts. As of the end of fiscal 2025, the Company had 15,194 points of access globally, serving consumers through Hot Light Theater Shops, Fresh Shops, fresh delivery, and digital channels. This model is supported by a capital-efficient Hub and Spoke distribution network, where Doughnut Factories and Hot Light Theater Shops serve as production Hubs for Fresh Shops, Carts, Food Trucks, and fresh delivery Spokes. While U.S. sales are primarily from Company-operated locations, international sales are derived from both Company and franchise partners. Digital is the fastest-growing channel in the U.S. The Company is expanding its global franchising model and plans to refranchise certain international Company-owned markets and its western U.S. joint venture, aiming for nearly 50% of systemwide sales to be generated by franchisees starting fiscal 2027, up from approximately 25% in fiscal 2025. Revenue is generated from product sales (doughnuts, complementary products, mix, ingredients, equipment to franchisees) and various franchise fees (development, initial, ongoing royalties, and advertising).

Market Position: Krispy Kreme is positioned as one of the most beloved and well-known sweet treat brands globally, operating in 42 countries. Its iconic Original Glazed doughnut, made from proprietary formulations and using proprietary doughnut-making equipment, is a key differentiator. The Company leverages its strong brand love and emotionally connected consumer base. The omni-channel model, enabled by the Hub and Spoke approach, is designed to maximize market opportunity and ensure consistent product quality worldwide. Krispy Kreme competes in the fragmented indulgence industry against a wide range of retailers, coffee shops, bakeries, and snack providers, differentiating itself through brand engagement, consumer experience, and product uniqueness.

Recent Strategic Developments: In fiscal 2025, Krispy Kreme implemented a comprehensive turnaround plan focused on de-leveraging the balance sheet and achieving sustainable, profitable growth. Key components include:

• Refranchising: Pursuing opportunities to refranchise certain international equity markets and restructure its W.K.S. Krispy Kreme, LLC joint venture in the western U.S. The Company completed the sale of its Japan operations in the first quarter of fiscal 2026 and has initiated steps towards refranchising its Canada business.
• Driving Return on Invested Capital: Reducing capital intensity by improving asset utilization and prioritizing franchise development. Capital expenditures decreased by 18.9% to $97.9 million in fiscal 2025 from $120.8 million in fiscal 2024, with further reductions expected to $50.0 million to $60.0 million in fiscal 2026. New international franchise markets, such as Uzbekistan, were opened in the fourth quarter of fiscal 2025.
• Expanding Margins: Simplifying operations and strengthening the U.S. business to reduce costs while maintaining product freshness and quality. Initiatives include optimizing production, streamlining Hub activities, improving labor productivity, and enhancing demand planning. The Company continued outsourcing U.S. fresh deliveries to third-party logistics (3PL) carriers in fiscal 2025, with the transition expected to complete in fiscal 2026.
• Driving Sustainable, Profitable Growth: Focusing on profitable U.S. expansion by growing the fresh delivery business with strategic partners and accelerating digital channel growth. The Company added over 1,100 profitable fresh delivery doors and strategically closed approximately 1,400 underperforming fresh delivery doors in the U.S. (excluding McDonald’s USA doors) in fiscal 2025.
• Digital and Innovation: Digital channel sales grew in fiscal 2025, driven by improvements to branded digital platforms and increased product availability through third-party digital channels. The Company relaunched its core doughnut menu in 2025 and continues to introduce rotating seasonal menus and limited-time offerings.
• Termination of McDonald’s USA Agreement: On July 2, 2025, Krispy Kreme and McDonald’s USA, LLC jointly terminated their Business Relationship Agreement, resulting in the reduction of approximately 2,400 fresh delivery doors in the third quarter of fiscal 2025. This is expected to positively impact U.S. segment profitability in the first half of fiscal 2026.
• 2024 Cybersecurity Incident: The Company experienced operational disruptions in the fourth quarter of fiscal 2024 and early first quarter of fiscal 2025 due to unauthorized activity on its IT systems, with an estimated $15 million aggregate impact on Adjusted EBITDA. Krispy Kreme accrued $14.1 million in business interruption insurance proceeds and incurred $12.9 million in remediation costs, offset by $2.4 million in insurance proceeds. The investigation was substantially completed in the second quarter of fiscal 2025.

Geographic Footprint: Krispy Kreme operates in 42 countries. As of December 28, 2025, the Company had 15,194 Global Points of Access. The U.S. segment accounted for 7,463 Points of Access, primarily Company-operated. The International segment had 4,822 Points of Access, including Company-owned operations in the U.K., Ireland, Australia, New Zealand, Mexico, Canada, and Japan (Japan operations sold in Q1 2026). The Market Development segment, comprising franchise operations globally, had 2,909 Points of Access. International shipments of doughnut mixes and concentrates primarily originate from a single port in Florida.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 75.5%
• Operating Margin: -30.8%
• Net Margin: -34.4%

Investment in Growth:

• Capital Expenditures: $97.9 million
• Strategic Investments:
  • $2.1 million cash investment for a 45.0% noncontrolling interest in Krispy Kreme Doughnuts Brasil S.A. in Q2 2025.
  • $0.9 million cash investment for a 25.0% noncontrolling interest in Glaseadas Originales S.L. (KK Spain) in Q3 2025.

Business Segment Analysis

U.S.

Financial Performance:

• Revenue: $913.1 million (-13.8% YoY)
• Organic Revenue Decline: -3.5% YoY
• Adjusted EBIT: $16.1 million (-69.2% YoY)
• Operating Margin (Adjusted EBITDA margin): 8.7% (down 200 basis points YoY)
• Key Growth Drivers: The revenue decline was primarily due to a $138.5 million reduction from the divestiture of a controlling interest in Insomnia Cookies in fiscal 2024. Organic revenue declined due to lower Doughnut Shop transaction volume, impacted by consumer softness in a challenging macroeconomic environment, and a 25.0% decline in Points of Access (2,488 fewer), largely from the strategic closure of underperforming fresh delivery doors, including those associated with the McDonald’s USA agreement termination. This was partially offset by a 2% increase in pricing, primarily driven by reduced discounting.
• Sales per Hub: $4.7 million (down from $4.9 million in fiscal 2024)

Product Portfolio:

• The segment's product portfolio includes doughnuts and complementary products, supported by a refreshed core menu, rotating seasonal offerings, and limited-time innovations.

Market Dynamics:

• The U.S. segment is primarily Company-operated and focuses on growing its fresh delivery business with strategic partners. The segment strategically exited underperforming fresh delivery doors, including approximately 2,400 related to the McDonald’s USA partnership.

Sub-segment Breakdown:

• W.K.S. Krispy Kreme, LLC, a consolidated subsidiary in the western U.S., accounted for approximately 15% of the U.S. segment's revenues as of the fourth quarter of fiscal 2025.

International

Financial Performance:

• Revenue: $535.1 million (+3.1% YoY)
• Organic Revenue Growth: +3.3% YoY
• Adjusted EBIT: $50.1 million (-15.6% YoY)
• Operating Margin (Adjusted EBITDA margin): 15.5% (down 200 basis points YoY)
• Key Growth Drivers: Revenue growth was driven primarily by strong performance in Canada, Japan, and Mexico, despite a $4.0 million negative impact from foreign currency translation. Organic growth was partially offset by lower transaction volume in the U.K.
• Sales per Hub: $9.7 million (down from $9.9 million in fiscal 2024)

Product Portfolio:

• The International segment offers Krispy Kreme doughnuts and complementary products, with a focus on leveraging the Hub and Spoke model for efficient distribution.

Market Dynamics:

• This segment includes Company-owned operations in the U.K., Ireland, Australia, New Zealand, Mexico, Canada, and Japan (Japan operations sold in Q1 2026). The Hub and Spoke model is most developed in these markets, providing a blueprint for global expansion.

Market Development

Financial Performance:

• Revenue: $74.5 million (-14.9% YoY)
• Organic Revenue Decline: -5.7% YoY
• Adjusted EBIT: $43.9 million (-8.0% YoY)
• Operating Margin (Adjusted EBITDA margin): 59.2% (up 450 basis points YoY)
• Key Growth Drivers: The revenue decline was primarily due to the impact of franchise acquisitions in fiscal 2024, where acquired businesses are reclassified to the U.S. or International segments post-acquisition. Organic revenue declined due to the timing of equipment shipments to franchisees, partially offset by expansion into new international franchise markets such as Brazil and Spain. Margin expansion was driven by changes in revenue mix, including fewer shipments of lower-margin equipment and growth in royalties.

Product Portfolio:

• This segment generates revenue from the sale of doughnut mix, other ingredients and supplies, and doughnut-making equipment to franchisees, in addition to franchise fees and royalties.

Market Dynamics:

• The Market Development segment encompasses Krispy Kreme's global franchise operations. The Company is actively expanding its franchised business model to drive brand presence and leverage franchisee capital and local market knowledge.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $1.4 million (representing 1.5 million shares)
• Dividend Payments: $11.9 million
• Future Capital Return Commitments: The Company halted its quarterly cash dividend to common stockholders subsequent to the first quarter of fiscal 2025 to align capital allocation priorities with its growth strategy.

Balance Sheet Position:

• Cash and Equivalents: $42.4 million
• Total Debt: $977.8 million
• Net Cash Position: $(935.4) million
• Debt Maturity Profile: The 2023 Facility, comprising a term loan and revolving credit facility, matures in March 2028. Short-term lines of credit mature within three months. Aggregate maturities for the 2023 Facility are $41.8 million in fiscal 2026 and $806.2 million in fiscal 2028.
• Leverage Ratio: The Company's leverage ratio under the 2023 Facility was 4.4 to 1.00 as of December 28, 2025, compared to a maximum covenant of 5.00 to 1.00.

Cash Flow Generation:

• Operating Cash Flow: $33.9 million
• Free Cash Flow: $(64.0) million (calculated as Operating Cash Flow less Capital Expenditures)

Operational Excellence

Production & Service Model: Krispy Kreme operates an omni-channel business model supported by a capital-efficient Hub and Spoke distribution network. Hubs, which include Doughnut Factories and Hot Light Theater Shops, produce fresh doughnuts daily. These are then delivered to Spokes, such as Fresh Shops, Carts, Food Trucks, and fresh delivery doors. The Company utilizes proprietary doughnut formulations and doughnut-making equipment, maintaining strict quality standards and uniform production systems globally. In the U.S., the Company is increasingly outsourcing fresh deliveries to 3PL carriers, with the transition expected to be completed in fiscal 2026.

Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials: The Company procures principal ingredients (flour, shortening, sugar) from approximately 20 main vendors, with most raw materials available from multiple sources.
• Glaze Flavoring: Krispy Kreme relies on a single vendor for the essential ingredients required to produce its proprietary glaze flavoring.
• Doughnut Mix & Concentrate: Doughnut mix is manufactured at the Company's Winston-Salem, North Carolina facility and a third-party facility in Pico Rivera, California for domestic markets. A concentrate for international markets is exclusively produced at the Winston-Salem facility.
• Doughnut-making Equipment: All custom doughnut-making equipment is exclusively manufactured at a single facility in Winston-Salem.
• Distribution (U.S. & Canada): BakeMark USA LLC holds an exclusive distribution partnership for ingredients, packaging, and supplies to Company-owned and franchise shops in the U.S. (excluding New York City) and Canada. A regional distribution partner serves the New York City market. International distribution of mixes and concentrates is handled by a limited number of independent contract distributors.

Facility Network:

• Manufacturing: The Company operates a 107,000 sq ft Mix Production Plant and Distribution facility and a 101,710 sq ft Equipment Manufacturing Facility, both leased in Winston-Salem, NC. Domestically, there are six Company-operated Doughnut Factories and one operated by a franchisee. Internationally, the Company operates 14 Doughnut Factories, with an additional 25 operated by franchisees.
• Research & Development: R&D facilities, including test kitchens and doughnut producing equipment, are located in Winston-Salem.
• Distribution: Delivery routes operate out of each Doughnut Factory and certain Hot Light Theater Shops.
• Corporate Administrative: The corporate administrative office is a 31,776 sq ft leased facility in Charlotte, NC.
• Shops: The Company operates 882 Company-owned shops globally, with the majority being leased.

Operational Metrics:

• Global Points of Access: 15,194 (down 13.5% from fiscal 2024)
• Total Hubs: 423 (down from 425 in fiscal 2024)
• U.S. Sales per Hub: $4.7 million
• International Sales per Hub: $9.7 million

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Through Hot Light Theater Shops and Fresh Shops.
• Channel Partners: Fresh delivery to a network of grocery stores, club wholesalers, convenience stores, quick service restaurants (QSR), and drug stores.
• Digital Platforms: Sales via branded digital platforms and integrations with third-party digital channels, including delivery apps and customer digital platforms.
• Franchise Development: Strategic expansion of the global franchising model.

Customer Portfolio: Enterprise Customers:

• No single customer accounted for more than 10% of total revenue in fiscal 2025, 2024, or 2023.
• Strategic Partnerships: Key relationships with various retail customers for fresh delivery.
• Customer Concentration: The Company's fresh delivery business depends on these key customers, but no single customer represents a material concentration risk based on revenue contribution. The Business Relationship Agreement with McDonald’s USA, LLC was terminated in July 2025.

Geographic Revenue Distribution:

• U.S.: 61.6% of total revenue
• U.K.: 10.5% of total revenue
• Mexico: 8.2% of total revenue
• Australia / New Zealand: 7.7% of total revenue
• All other: 12.0% of total revenue
• Growth Markets: The Company is actively pursuing expansion in new international franchise markets, including Brazil and Spain.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Krispy Kreme operates within the highly fragmented indulgence industry, characterized by relatively low start-up costs and few barriers to entry. The industry is highly susceptible to shifts in consumer preferences, including dietary choices, health concerns, economic conditions, discretionary spending patterns, and the increasing use of weight loss medications. There is also an increasing legal, legislative, and regulatory focus on the food service industry concerning issues such as menu labeling, food additives, and health risks.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The Company faces competition from a diverse array of food service businesses, including independent local operators, well-capitalized regional, national, and international players, and franchises. These competitors span various categories such as doughnut and sweet treat retailers, coffee shops, cafes, bakeries, bagel stores, quick service restaurants, delicatessens, take-out services, convenience stores, and supermarkets. Competition is based on factors including food quality, freshness, convenience, accessibility, customer service, price, and value.

Emerging Competitive Threats: New market entrants, disruptive technologies, and alternative solutions pose ongoing competitive threats. The Company also competes with online platforms and aggregators that can direct potential customers to other options based on paid placements or reviews.

Competitive Response Strategy: Krispy Kreme's strategy involves effectively responding to evolving consumer preferences, continuously improving existing products, and developing and launching new offerings. The Company aims to strengthen its digital consumer experience through mobile ordering, delivery, kiosks, loyalty programs, and social interaction. It emphasizes leveraging its unique brand engagement and product distinctiveness to maintain its competitive advantage.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company's business is highly susceptible to changes in consumer preferences, including dietary trends, health concerns, and economic conditions that impact discretionary spending. The increasing use of weight loss medications could also negatively affect demand for indulgence products. Technology Disruption: Failure to adequately invest in or implement new technologies, such as artificial intelligence, machine learning, and automation, at a sufficient speed or scale could impair the Company's ability to compete effectively. Customer Concentration: The fresh delivery business relies on key retail customers. While no single customer accounts for more than 10% of total revenue, a significant reduction in purchases or termination of relationships by these customers could adversely affect the business. Competitive Landscape: The fragmented indulgence industry, with low barriers to entry, means Krispy Kreme faces intense competition from various operators, some with greater financial resources or broader product ranges, which could impact market share and profitability.

Operational & Execution Risks

Supply Chain Vulnerabilities: Krispy Kreme is the exclusive or primary supplier of doughnut mixes and key ingredients to its global network. A single vendor supplies the essential ingredients for glaze flavoring. Any disruption at the Winston-Salem manufacturing facilities (for mix concentrate and doughnut-making equipment) or delays at the single Florida port for international shipments could severely impact production and distribution. Distribution Dependency: The Company relies on an exclusive distribution partnership with BakeMark USA LLC for most materials and supplies in the U.S. and Canada. Any failure by this vendor could lead to significant supply chain disruptions. Commodity Price Fluctuations: Profitability is sensitive to volatile costs of raw materials (flour, shortening, sugar), energy, fuel, and transportation. The Company may not be able to fully offset inflationary pressures through price increases, potentially affecting financial performance. Capacity Constraints: Aging facilities and equipment may require substantial capital investment for remodeling, repair, or replacement, potentially leading to higher costs, extended downtimes, or insufficient maintenance capital.

Financial & Regulatory Risks

Market & Financial Risks: Sales exhibit seasonality, peaking during promotional events and holidays, and are sensitive to economic cycles. Quarterly results can be volatile due to the timing of shop openings, closings, or refranchising transactions. The Company is exposed to foreign currency exchange rate risk from its international operations, which accounted for approximately 35% of total net revenues in fiscal 2025. Indebtedness: Significant indebtedness ($977.8 million total debt as of December 28, 2025) increases vulnerability to adverse economic conditions, requires a substantial portion of cash flow for debt service, and imposes restrictive covenants (e.g., leverage ratio of less than 5.00 to 1.00). Failure to comply could lead to acceleration of debt maturity. Goodwill Impairment: A significant portion of long-term assets consists of goodwill and other intangible assets. The Company recorded a $356.0 million partial goodwill impairment charge in the second quarter of fiscal 2025. Future impairment charges could occur if actual performance deviates from current expectations. Regulatory & Compliance Risks: The Company is subject to extensive U.S. and international laws and regulations concerning food safety, occupational safety, food quality, health, menu labeling, and data privacy (e.g., GDPR). Non-compliance or changes in these regulations could result in significant costs, fines, or reputational damage. Franchise laws and employment legislation also impose compliance burdens and can affect operational costs. Legal Proceedings: Krispy Kreme is currently involved in material legal proceedings, including federal securities class actions, data breach class actions (with a preliminary settlement of approximately $1.6 million approved), and shareholder derivative actions. These litigations can be costly, divert management attention, and potentially result in significant monetary damages.

Geopolitical & External Risks

Geopolitical Exposure: International operations are exposed to political, economic, and currency risks inherent in foreign markets, including trade disputes, tariffs, and regional instability. Public Health & Catastrophic Events: Public health outbreaks, epidemics, pandemics, adverse weather conditions, natural disasters, war, or terrorist attacks could disrupt business operations, reduce guest traffic, or necessitate the closure of shops and manufacturing facilities.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Krispy Kreme's R&D efforts are centered on new product innovation, including doughnuts, beverages, and other complementary products, aimed at attracting new consumers and increasing shop sales. The Company maintains research and development facilities in Winston-Salem, NC, equipped with test kitchens and doughnut-producing equipment for developing new products and processes. Innovation Pipeline: The Company relaunched its core doughnut menu in 2025 to feature trending flavors and fan favorites. It also maintains a rotating seasonal menu, limited-time offerings (LTOs), and smaller portion options like "doughnut dots" and "minis," which are designed to create buzz, increase purchase frequencies, and encourage gifting. Digital Capabilities: The Company is focused on expanding its digital capabilities through new third-party platform integrations, increased third-party advertising, and strategic partnerships to streamline the ordering journey and enhance the overall guest experience.

Intellectual Property Portfolio:

• Patent Strategy: Krispy Kreme protects its proprietary doughnut formulations and unique doughnut-making equipment.
• Trademarks: The Company holds numerous federally and internationally registered trademarks and service marks, including Krispy Kreme®, Original Glazed®, and Hot Krispy Kreme Original Glazed Now®, registered in over 65 countries. These trademarks are licensed to franchisees.
• Trade Secrets: Proprietary formulas are maintained as trade secrets.
• IP Litigation: The Company faces risks of infringement claims, challenges to the validity of its IP, or difficulties in enforcing its rights, which could entail substantial resource allocation.

Technology Partnerships: Krispy Kreme engages in strategic alliances and collaborations with third-party digital platforms for online sales and delivery services.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors includes Patricia Capel (Chair), Marissa Andrada, David Deno, Patrick Grismer, Bernardo Hees, Gerhard Pleuhs, and Easwaran Sundaram. The Audit and Finance Committee of the Board oversees the Company's annual enterprise risk assessment, including security and technology risks and cybersecurity threats.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 17,000 Krispy Kremers globally as of December 28, 2025.
• Skill Mix: The Company relies on its Krispy Kremers for customer service, adherence to high-quality production standards, and operational consistency.

Talent Management: Acquisition & Retention: The Company's Total Rewards platform offers competitive pay, health, and wellness programs, including medical, dental, vision, employee assistance, life insurance, and retirement benefits. Select benefits are extended to part-time Krispy Kremers. Employee equity ownership plans are in place for shop general managers to align incentives with long-term strategic goals. Diversity & Development: Krispy Kreme aims to attract a diverse team from a wide range of backgrounds. Its "Leadership Mix" (Be Real, Be Joyful, Be Generous, Be Courageous, Be All In) guides employee behaviors and culture. The Company is committed to employee health, safety, and wellness, and supports development programs.

Environmental & Social Impact

Environmental Commitments: The Company's "Be Sweet in All That We Do" platform represents its Responsibility platform, focusing on positive social and environmental impact with its people, communities, and planet. The Company periodically issues "Be Sweet" Responsibility reports or fact sheet updates outlining its journey, progress, and future ambitions.

Social Impact Initiatives: Krispy Kreme's Responsibility platform includes commitments to community investment and broader social impact.

Business Cyclicality & Seasonality

Demand Patterns: Krispy Kreme's sales exhibit seasonality, with peaks occurring during various promotional events and holiday celebrations such as Valentine’s Day, St. Patrick’s Day, Easter, the Fourth of July, Halloween, and Christmas. Hot beverage sales typically increase during fall and winter, while iced beverage sales rise in spring and summer. The Company's products, categorized as indulgences, are sensitive to shifts in consumer discretionary spending and dietary trends. Planning & Forecasting: The Company employs a demand planning system designed to enhance service and improve waste and labor efficiencies across all channels. It manages inventory with a focus on rapid turnover and waste reduction, and optimizes production and Hub activities to leverage capacity.

Regulatory Environment & Compliance

Regulatory Framework: Krispy Kreme operates under a complex regulatory framework, subject to U.S. and foreign laws and regulations governing food safety, occupational safety, food quality, health, menu labeling, packaging, food additives, and environmental standards. Compliance with these diverse and evolving requirements, including international compliance for import and business licensing, can incur significant costs. Trade & Export Controls: The Company's international operations, which rely on exporting doughnut mixes and concentrates, are subject to U.S. and international regulations concerning food products. Tariffs and retaliatory trade measures can increase commodity costs. Legal Proceedings: The Company is currently involved in several material legal proceedings. These include two putative federal securities class actions alleging false/misleading statements related to the McDonald’s USA agreement, several putative class action lawsuits concerning a 2024 cybersecurity incident (for which a preliminary settlement of approximately $1.6 million has been approved), and shareholder derivative actions alleging breaches of fiduciary duties and inadequate internal controls.

Tax Strategy & Considerations

Tax Profile: Krispy Kreme is subject to federal, state, and local income taxes in the U.S. and various foreign jurisdictions. The Company's effective tax rate was -3.8% in fiscal 2025, 80.7% in fiscal 2024, and 10.6% in fiscal 2023, influenced by the geographic mix of earnings and other factors. Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, is expected to change the timing of U.S. cash taxes in current and future periods, though it did not have a material impact on the Company's income tax expense in fiscal 2025. Deferred Tax Assets: The realization of deferred tax assets, including federal and state net operating loss carryforwards and tax credits, is dependent on the generation of future taxable income. The Company established a full valuation allowance against U.S. net definite-lived deferred tax assets as of December 28, 2025.

Insurance & Risk Transfer

Risk Management Framework: Krispy Kreme manages its exposure to market-based risks through various strategies.

• Insurance Coverage: The Company maintains insurance policies for workers’ compensation and personal injury claims, subject to deductibles. Cybersecurity insurance provided partial offsets for losses and remediation costs incurred from the 2024 Cybersecurity Incident.
• Risk Transfer Mechanisms: To mitigate commodity price fluctuations, the Company uses forward purchase contracts, futures contracts, and options. Interest rate swaps with an aggregate notional amount of $550.0 million are used to manage exposure to interest rate volatility on variable rate debt, maturing in March 2028. Foreign exchange forward contracts are employed to mitigate foreign currency exchange rate risk.