Kura Sushi USA Announces Fiscal First Quarter 2023 Financial Results

IRVINE, Calif., Jan. 05, 2023 (GLOBE NEWSWIRE) -- 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.
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Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
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