Kura Sushi USA, Inc. (“Kura Sushi” or the “Company”) (NASDAQ:
KRUS), a technology-enabled Japanese restaurant concept, today
announced financial results for the fiscal first quarter ended
November 30, 2022.
Fiscal First Quarter 2023
Highlights
- Total sales were $39.3 million, compared to $29.8 million in
the first quarter of 2022;
- Comparable restaurant sales increased 6.9% for the first
quarter of 2023 as compared to the first quarter of 2022;
- Operating loss was $2.2 million, compared to operating loss of
$1.3 million in the first quarter of 2022;
- Net loss was $2.1 million, or $(0.21) per diluted share,
compared to net loss of $1.3 million, or $(0.13) per diluted share,
in the first quarter of 2022;
- Restaurant-level operating profit* was $7.2 million, or 18.2%
of sales;
- Adjusted EBITDA* was $0.6 million; and
- Two new restaurants opened during the fiscal first quarter of
2023.
* Restaurant-level operating profit and Adjusted
EBITDA are non-GAAP measures and are defined below under “Key
Financial Definitions.” Please see the reconciliation of non-GAAP
measures accompanying this release. See also “Non-GAAP Financial
Measures” below.
Hajime Uba, President and Chief Executive Officer
of Kura Sushi, stated, “I’m excited to report another strong
quarter where we outperformed industry averages with regards to
traffic growth, saw two strong restaurant openings, and delivered
restaurant-level operating profit margin that exceeded the same
period prior to the pandemic. Our performance has been driven by
the steadfast support from our loyal guests and warm receptions by
new fans alike. In an environment where consumers are forced to be
more careful with their discretionary spending, we’re delighted to
see that when our guests go out to eat, they choose to dine with
us.”
Uba added, "Our three goals for this year are to
continue our rapid unit expansion, grow into our G&A, and to
maintain the operational excellence and incredible values that have
made us our guest’s top choice for dining out.”
Review of Fiscal First Quarter 2023
Financial Results
Total sales were $39.3 million compared to $29.8
million in the first quarter of 2022. Comparable restaurant sales
increased 6.9% for the first quarter of 2023 as compared to the
first quarter of 2022.
Food and beverage costs as a percentage of sales
were 31.6% compared to 30.0% in the first quarter of 2022. The
increase is primarily due to food cost inflation, partially offset
by increases in menu prices.
Labor and related costs as a percentage of sales
decreased to 31.9% from 32.5% in the first quarter of 2022. The
decrease in cost as a percentage of sales was primarily due to
increases in menu prices and technological initiatives, partially
offset by increases in wages rates and incremental pre-opening
labor.
Occupancy and related expenses were $2.9 million
compared to $2.2 million in the first quarter of 2022. The increase
is primarily due to nine new restaurants opened since the first
quarter of 2022.
Other costs as a percentage of sales increased
to 13.5% compared to 12.1% in the first quarter of 2022. The
increase was primarily driven by increases in pre-opening costs,
advertising and promotional costs and repair and maintenance
costs.
General and administrative expenses were $6.6
million compared to $5.4 million in the first quarter of 2022. This
increase was primarily due to compensation-related costs, partially
offset by reductions in professional and insurance costs. As a
percentage of sales, general and administrative expenses decreased
to 16.9% from 18.0% in the first quarter of 2022, primarily due to
higher sales leverage.
Operating loss was $2.2 million compared to
operating loss of $1.3 million in the first quarter of 2022.
Income tax expense was $10 thousand compared to
$12 thousand in the first quarter of 2022.
Net loss was $2.1 million, or $(0.21) per
diluted share, compared to net loss of $1.3 million, or $(0.13) per
diluted share, in the first quarter of 2022.
Restaurant-level operating profit* was $7.2
million, or 18.2% of sales, compared to $5.8 million, or 19.5% of
sales, in the first quarter of 2022.
Adjusted EBITDA* was $0.6 million compared to
$0.8 million in the first quarter of 2022.
Restaurant Development
During the fiscal first quarter of 2023, the
Company opened two new restaurants in Bloomington, Minnesota; and
Jersey City, New Jersey.
Subsequent to November 30, 2022, the Company
opened one new restaurant in Philadelphia, Pennsylvania.
Fiscal Year 2023 Outlook
For the full fiscal year of 2023, the Company
reaffirms the following previously provided annual guidance:
- Total sales between $183 million and $188 million;
- General and administrative expenses as a percentage of sales of
approximately 16%; and
- 9 to 11 new restaurants, with average net capital expenditures
per unit of approximately $2.5 million.
Conference Call
A conference call and webcast to discuss Kura
Sushi’s financial results is scheduled for 5:00 p.m. ET today.
Hosting the conference call and webcast will be Hajime “Jimmy” Uba,
President and Chief Executive Officer, Jeff Uttz, Chief Financial
Officer, and Benjamin Porten, SVP Investor Relations & Business
Development.
Interested parties may listen to the conference
call via telephone by dialing 201-689-8471. A telephone replay will
be available shortly after the call has concluded and can be
accessed by dialing 412-317-6671; the passcode is 13734730. The
webcast will be available at www.kurasushi.com under the investor
relations section and will be archived on the site shortly after
the call has concluded.
About Kura Sushi USA, Inc.
Kura Sushi USA, Inc. is a technology-enabled
Japanese restaurant concept with 43 locations across 14 states and
Washington DC. The Company offers guests a distinctive dining
experience built on authentic Japanese cuisine and an engaging
revolving sushi service model. Kura Sushi USA, Inc. was established
in 2008 as a subsidiary of Kura Sushi, Inc., a Japan-based
revolving sushi chain with over 500 restaurants and more than 35
years of brand history. For more information, please visit
www.kurasushi.com.
Key Financial Definitions
EBITDA, a non-GAAP measure, is
defined as net income (loss) before interest, income taxes and
depreciation and amortization expenses.
Adjusted EBITDA, a non-GAAP
measure, is defined as EBITDA plus stock-based compensation
expense, non-cash lease expense and asset disposals, closure costs
and restaurant impairments, that the Company believes are not
indicative of its core operating results. Adjusted EBITDA margin is
defined as adjusted EBITDA divided by sales.
Restaurant-level Operating Profit
(Loss), a non-GAAP measure, is defined as operating income
(loss) plus depreciation and amortization expenses; stock-based
compensation expense; pre-opening costs and general and
administrative expenses which are considered normal, recurring,
cash operating expenses and are essential to supporting the
development and operations of restaurants; non-cash lease expense;
and asset disposals, closure costs and restaurant impairments; less
corporate-level stock-based compensation expense recognized within
general and administrative expenses. Restaurant-level operating
profit (loss) margin is defined as restaurant-level operating
profit (loss) divided by sales.
Comparable Restaurant Sales
Performance refers to the change in year-over-year sales
for the comparable restaurant base. The Company includes
restaurants in the comparable restaurant base that have been in
operation for at least 18 months prior to the start of the
accounting period presented due to new restaurants experiencing a
period of higher sales upon opening, including those temporarily
closed for renovations during the year. For restaurants that were
temporarily closed for renovations during the year, the Company
makes fractional adjustments to sales such that sales are
annualized in the associated period. Performance in comparable
restaurant sales represents the percent change in sales from the
same period in the prior year for the comparable restaurant
base.
Non-GAAP Financial Measures
To supplement the condensed financial statements
presented in accordance with U.S. generally accepted accounting
principles (“GAAP”), the Company presents certain financial
measures, such as adjusted net income (loss), EBITDA, adjusted
EBITDA, adjusted EBITDA margin, restaurant-level operating profit
(loss) and restaurant-level operating profit (loss) margin
(“non-GAAP measures”) that are not recognized under GAAP. These
non-GAAP measures are intended as supplemental measures of its
performance that are neither required by, nor presented in
accordance with, GAAP. The Company is presenting these non-GAAP
measures because the Company believes that they provide useful
information to management and investors regarding certain financial
and business trends relating to its financial condition and
operating results. These measures also may not provide a complete
understanding of the operating results of the Company as a whole
and such measures should be reviewed in conjunction with its GAAP
financial results. Additionally, the Company presents
restaurant-level operating profit (loss) because it excludes the
impact of general and administrative expenses which are not
incurred at the restaurant-level. The Company also uses
restaurant-level operating profit (loss) to measure operating
performance and returns from opening new restaurants.
The Company believes that the use of these
non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing the Company’s financial measures with those of
comparable companies, which may present similar non-GAAP financial
measures to investors. However, you should be aware that
restaurant-level operating profit (loss) and restaurant-level
operating profit (loss) margin are financial measures which are not
indicative of overall results for the Company, and restaurant-level
operating profit (loss) and restaurant-level operating profit
(loss) margin do not accrue directly to the benefit of stockholders
because of corporate-level and certain other expenses excluded from
such measures. In addition, you should be aware when evaluating
these non-GAAP financial measures that in the future the Company
may incur expenses similar to those excluded when calculating these
measures. The Company’s presentation of these measures should not
be construed as an inference that its future results will be
unaffected by unusual or non-recurring items. The Company’s
computation of these non-GAAP financial measures may not be
comparable to other similarly titled measures computed by other
companies, because all companies may not calculate these non-GAAP
financial measures in the same fashion. Because of these
limitations, these non-GAAP financial measures should not be
considered in isolation or as a substitute for performance measures
calculated in accordance with GAAP. The Company compensates for
these limitations by relying primarily on its GAAP results and
using these non-GAAP financial measures on a supplemental
basis.
Forward-Looking Statements
Except for historical information contained
herein, the statements in this press release or otherwise made by
the Company’s management in connection with the subject matter of
this press release are forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995)
and involve risks and uncertainties and are subject to change based
on various important factors. This press release includes
forward-looking statements that are based on management’s current
estimates or expectations of future events or future results. These
statements are not historical in nature and can generally be
identified by such words as “target,” “may,” “might,” “will,”
“objective,” “intend,” “should,” “could,” “can,” “would,” “expect,”
“believe,” “design,” “estimate,” “continue,” “predict,”
“potential,” “plan,” “anticipate” or the negative of these terms,
and similar expressions. Management’s expectations and assumptions
regarding future results are subject to risks, uncertainties and
other factors that could cause actual results to differ materially
from the anticipated results or other expectations expressed in the
forward-looking statements included in this press release. These
risks and uncertainties include but are not limited to: the impact
of a potential resurgence of the COVID-19 pandemic or an outbreak
of other highly contagious viruses; the Company’s ability to
successfully maintain increases in our comparable restaurant sales;
the Company’s ability to successfully execute our growth strategy
and open new restaurants that are profitable; the Company’s ability
to expand in existing and new markets; the Company’s projected
growth in the number of its restaurants; macroeconomic conditions
and other economic factors; the Company’s ability to compete with
many other restaurants; the Company’s reliance on vendors,
suppliers and distributors, including its parent company Kura
Sushi, Inc.; changes in food and supply costs, including the impact
of inflation and tariffs; concerns regarding food safety and
foodborne illness; changes in consumer preferences and the level of
acceptance of the Company’s restaurant concept in new markets;
minimum wage increases and mandated employee benefits that could
cause a significant increase in labor costs, as well as the impact
of labor availability; the failure of the Company’s automated
equipment or information technology systems or the breach of its
network security; the loss of key members of the Company’s
management team; the impact of governmental laws and regulations;
volatility in the price of the Company’s common stock; and other
risks and uncertainties as described in the Company’s filings with
the Securities and Exchange Commission (“SEC”). These and other
factors that could cause results to differ materially from those
described in the forward-looking statements contained in this press
release can be found in the Company’s other filings with the SEC.
Undue reliance should not be placed on forward-looking statements,
which are only current as of the date they are made. The Company
assumes no obligation to update or revise its forward-looking
statements, except as may be required by applicable law.
Investor Relations Contact: Jeff Priester or
Steven Boediarto (657) 333-4010 investor@kurausa.com
Kura Sushi USA, Inc.
Condensed Statements of Operations (in
thousands, except per share amounts; unaudited)
|
|
Three Months Ended November 30, |
|
|
|
2022 |
|
|
2021 |
|
Sales |
|
$ |
39,318 |
|
|
$ |
29,832 |
|
Restaurant operating costs: |
|
|
|
|
|
|
Food and beverage costs |
|
|
12,430 |
|
|
|
8,957 |
|
Labor and related costs |
|
|
12,535 |
|
|
|
9,710 |
|
Occupancy and related expenses |
|
|
2,885 |
|
|
|
2,200 |
|
Depreciation and amortization expenses |
|
|
1,576 |
|
|
|
1,171 |
|
Other costs |
|
|
5,321 |
|
|
|
3,610 |
|
Total restaurant operating costs |
|
|
34,747 |
|
|
|
25,648 |
|
General and administrative expenses |
|
|
6,642 |
|
|
|
5,360 |
|
Depreciation and amortization expenses |
|
|
85 |
|
|
|
88 |
|
Total operating expenses |
|
|
41,474 |
|
|
|
31,096 |
|
Operating loss |
|
|
(2,156 |
) |
|
|
(1,264 |
) |
Other expense (income): |
|
|
|
|
|
|
Interest expense |
|
|
16 |
|
|
|
25 |
|
Interest income |
|
|
(94 |
) |
|
|
(26 |
) |
Loss before income taxes |
|
|
(2,078 |
) |
|
|
(1,263 |
) |
Income tax expense |
|
|
10 |
|
|
|
12 |
|
Net loss |
|
$ |
(2,088 |
) |
|
$ |
(1,275 |
) |
Net loss per Class A and Class B shares |
|
|
|
|
|
|
Basic |
|
$ |
(0.21 |
) |
|
$ |
(0.13 |
) |
Diluted |
|
$ |
(0.21 |
) |
|
$ |
(0.13 |
) |
Weighted average Class A and Class B shares outstanding |
|
|
|
|
|
|
Basic |
|
|
9,789 |
|
|
|
9,710 |
|
Diluted |
|
|
9,789 |
|
|
|
9,710 |
|
Kura Sushi USA, Inc.
Selected Balance Sheet Data and Selected Operating
Data (in thousands, except restaurants and
percentages; unaudited)
|
|
November 30, 2022 |
|
|
August 31, 2022 |
|
Selected Balance Sheet Data: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,934 |
|
|
$ |
35,782 |
|
Total assets |
|
$ |
204,449 |
|
|
$ |
201,356 |
|
Total liabilities |
|
$ |
112,542 |
|
|
$ |
108,062 |
|
Total stockholders’ equity |
|
$ |
91,907 |
|
|
$ |
93,294 |
|
|
|
Three Months Ended November 30, |
|
|
|
2022 |
|
|
2021 |
|
Selected Operating Data: |
|
|
|
|
|
|
Restaurants at the end of period |
|
|
42 |
|
|
|
33 |
|
Comparable restaurant sales performance |
|
|
6.9 |
% |
|
|
154.3 |
% |
EBITDA |
|
$ |
(495 |
) |
|
$ |
(5 |
) |
Adjusted EBITDA |
|
$ |
637 |
|
|
$ |
792 |
|
Adjusted EBITDA margin |
|
|
1.6 |
% |
|
|
2.7 |
% |
Operating loss |
|
$ |
(2,156 |
) |
|
$ |
(1,264 |
) |
Operating loss margin |
|
|
(5.5 |
)% |
|
|
(4.2 |
)% |
Restaurant-level operating profit |
|
$ |
7,160 |
|
|
$ |
5,817 |
|
Restaurant-level operating profit margin |
|
|
18.2 |
% |
|
|
19.5 |
% |
Kura Sushi USA, Inc.
Reconciliation of Net Loss to EBITDA and Adjusted
EBITDA (in thousands; unaudited)
|
|
Three Months Ended November 30, |
|
|
|
2022 |
|
|
2021 |
|
Net loss |
|
$ |
(2,088 |
) |
|
$ |
(1,275 |
) |
Interest income, net |
|
|
(78 |
) |
|
|
(1 |
) |
Income tax expense |
|
|
10 |
|
|
|
12 |
|
Depreciation and amortization expenses |
|
|
1,661 |
|
|
|
1,259 |
|
EBITDA |
|
|
(495 |
) |
|
|
(5 |
) |
Stock-based compensation expense(1) |
|
|
650 |
|
|
|
443 |
|
Non-cash lease expense(2) |
|
|
482 |
|
|
|
354 |
|
Adjusted EBITDA |
|
$ |
637 |
|
|
$ |
792 |
|
Kura Sushi USA, Inc.
Reconciliation of Operating Loss to Restaurant-level
Operating Profit (in thousands;
unaudited)
|
|
Three Months Ended November 30, |
|
|
|
2022 |
|
|
2021 |
|
Operating loss |
|
$ |
(2,156 |
) |
|
$ |
(1,264 |
) |
Depreciation and amortization expenses |
|
|
1,661 |
|
|
|
1,259 |
|
Stock-based compensation expense(1) |
|
|
650 |
|
|
|
443 |
|
Pre-opening costs(3) |
|
|
437 |
|
|
|
73 |
|
Non-cash lease expense(2) |
|
|
482 |
|
|
|
354 |
|
General and administrative expenses |
|
|
6,642 |
|
|
|
5,360 |
|
Corporate-level stock-based compensation included in general and
administrative expenses |
|
|
(556 |
) |
|
|
(408 |
) |
Restaurant-level operating profit |
|
$ |
7,160 |
|
|
$ |
5,817 |
|
_______________ |
(1) |
Stock-based compensation expense includes non-cash stock-based
compensation, which is comprised of restaurant-level stock-based
compensation included in other costs and corporate-level
stock-based compensation included in general and administrative
expenses in the statements of operations. |
|
|
(2) |
Non-cash lease expense includes lease expense from the date of
possession of restaurants that did not require cash outlay in the
respective periods. |
|
|
(3) |
Pre-opening costs consist of labor costs and travel expenses for
new employees and trainers during the training period, recruitment
fees, legal fees, cash-based lease expenses incurred between the
date of possession and opening day of restaurants, and other
related pre-opening costs. |
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