Kura Sushi USA, Inc. (“Kura Sushi” or the “Company”) (NASDAQ:
KRUS), a technology-enabled Japanese restaurant concept, today
reported fiscal first quarter 2022 financial results for the period
ended November 30, 2021.
Fiscal First Quarter 2022
Highlights
- Total sales were
$29.8 million compared to $9.4 million in the first quarter of
2021;
- Comparable restaurant sales
increased 154% for the first quarter of 2022 as compared to the
first quarter of 2021 and increased 19.9% as compared to the first
quarter of 2020;
- Operating loss was $1.3 million,
compared to an operating loss of $6.3 million in the first quarter
of 2021;
- Net loss was $1.3 million, or
($0.13) per diluted share, compared to net loss of $6.4 million, or
($0.76) per diluted share, in the first quarter of 2021;
- Adjusted net loss* was $1.3
million, or ($0.13) per diluted share, compared to an adjusted net
loss* of $6.0 million or ($0.71) per diluted share, in the first
quarter of 2021;
- Restaurant-level operating profit*
was $5.8 million;
- Adjusted EBITDA* was $0.8 million;
and
- One new restaurant opened during
the first quarter of 2022.
* Adjusted net loss, 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, “We are pleased with the solid start
to our fiscal 2022 as we posted a 19.9% increase in comparable
restaurant sales versus fiscal 2020 and generated a
restaurant-level operating profit margin of 19.5%, further
narrowing the profitability gap to our pre-pandemic performance. We
believe the actions we have taken to date have positioned our
company well to navigate the current operating environment as we
look forward to an even busier year with plans to open eight to ten
new restaurants to further capitalize on the pent-up demand for the
unique Kura experience in fiscal 2022 and beyond.”
Review of Fiscal First Quarter 2022
Financial Results
Total sales were $29.8 million compared to $9.4
million in the first quarter of 2021. Comparable restaurant sales
increased 154% for the first quarter of 2022 as compared to the
first quarter of 2021 and increased 19.9% as compared to the first
quarter of 2020.
Food and beverage costs as a percentage of sales
were 30.0% compared to 32.4% in the first quarter of 2021. The
decrease is primarily due to increased menu prices and lower
inventory spoilage.
Labor and related costs as a percentage of sales
decreased to 32.5% from 46.3% in the first quarter of 2021. The
decrease as a percentage of sales was primarily due to the effect
of lower sales and minimum staffing needed to operate our
restaurants at reduced capacities in the first quarter of 2021.
Occupancy and related expenses were $2.2 million
compared to $1.7 million in the first quarter of 2021. The increase
is primarily due to five new restaurants opened since the first
quarter of 2021.
Other costs as a percentage of sales decreased
to 12.1% compared to 22.1% in the first quarter of 2021. The
decrease was primarily due to higher sales leverage.
General and administrative expenses were $5.4
million compared to $3.5 million in the first quarter of 2021. This
increase was primarily due to compensation-related expenses as we
made investments in our team to support our accelerated growth. As
a percentage of sales, adjusted general and administrative expenses
decreased to 18.0% compared to 37.4% in the first quarter of
2021.
Operating loss was $1.3 million compared to an
operating loss of $6.3 million in the first quarter of 2021.
Income tax expense was $12 thousand compared to
$29 thousand in the first quarter of 2021.
Net loss was $1.3 million, or ($0.13) per
diluted share, compared to net loss of $6.4 million, or ($0.76) per
diluted share, in the first quarter of 2021.
Adjusted net loss* was $1.3 million, or ($0.13)
per diluted share, compared to adjusted net loss* of $6.0 million,
or ($0.71) per diluted share, in the first quarter of 2021.
Restaurant-level operating profit* was $5.8
million compared to restaurant-level operating loss* of $0.9
million in the first quarter of 2021.
Adjusted EBITDA* was $0.8 million compared to
($4.1) million in the first quarter of 2021.
Restaurant Development
During the fiscal first quarter of 2022, the
Company opened one new restaurant in San Francisco, CA. Subsequent
to November 30, 2021, the Company opened two new restaurants in
Phoenix, AZ and Chandler, AZ.
Fiscal Year 2022 Outlook
For the full fiscal year of 2022, the Company
reaffirms the following previously provided annual guidance:
- Total sales
between $130 million and $140 million;
- General and administrative expenses
as a percentage of sales of approximately 17%; and
- 8 to 10 new restaurants, with
average net capital expenditures per unit of approximately $2.1
million.
These expectations assume that the Company
experiences no further operating restrictions or material downturns
resulting from the ongoing COVID-19 pandemic. These expectations
are based on the Company’s recent results in the first quarter of
fiscal 2022, as well as performance to-date in the second quarter
of fiscal 2022. While the Company believes these expectations are
appropriate given the current operating environment, the Company
and the restaurant industry generally remain highly vulnerable to
COVID-related volatility.
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, and Steven Benrubi, Chief
Financial Officer.
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 13725811. The
replay will be available until January 13, 2022. 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 35 locations across ten 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 480 restaurants and more than 35
years of brand history. For more information, please visit
www.kurasushi.com.
Key Financial Definitions
Adjusted Net Income (Loss), a
non-GAAP measure, is defined as net income (loss) before certain
items, such as employee retention credits, litigation accrual and
certain executive transition costs, that the Company believes are
not indicative of its core operating results. Adjusted net income
(loss) per diluted share represents adjusted net income (loss)
divided by the number of diluted shares.
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, as well as certain items, such as
employee retention credits, litigation accrual and certain
executive transition costs, 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; employee retention credit; 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
and employee retention credits recognized within general and
administrative expenses. Restaurant-level operating profit (loss)
margin is defined as restaurant-level operating profit (loss)
divided by sales.
Average Unit Volumes (“AUVs”)
consist of the average annual sales of all restaurants that have
been open for 18 months or longer at the end of the fiscal year
presented. AUVs are calculated by dividing (x) annual sales for the
fiscal year presented for all such restaurants by (y) the total
number of restaurants in that base. The Company makes fractional
adjustments to sales for restaurants that were not open for the
entire fiscal year presented (e.g., a restaurant is closed for
renovation) to annualize sales for such period of time.
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 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 expenses excluded from such measures. In addition,
you should be aware when evaluating these non-GAAP 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 measures may not
be comparable to other similarly titled measures computed by other
companies, because all companies may not calculate these non-GAAP
measures in the same fashion. Because of these limitations, these
non-GAAP 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 measures on
a supplemental basis.
Forward-Looking Statements
Except for historical information contained
herein, the statements in this press release or otherwise made by
our 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: risks
related to the COVID-19 pandemic and its continued impact on the
Company’s ability to operate; our ability to successfully resume
and maintain increases in our comparable restaurant sales; our
ability to successfully execute our growth strategy and open new
restaurants that are profitable; our ability to expand in existing
and new markets; our projected growth in the number of our
restaurants; macroeconomic conditions and other economic factors;
our ability to compete with many other restaurants; our reliance on
vendors, suppliers and distributors, including our parent company
Kura Sushi, Inc.; concerns regarding food safety and foodborne
illness; changes in consumer preferences and the level of
acceptance of our restaurant concept in new markets; minimum wage
increases and mandated employee benefits that could cause a
significant increase in our labor costs; the failure of our
automated equipment or information technology systems or the breach
of our network security; the loss of key members of our management
team; the impact of governmental laws and regulations; volatility
in the price of our common stock; and other risks and uncertainties
as described in our 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:Fitzhugh Taylor or
Steven Boediarto(657) 333-4010investor@kurausa.com
Kura Sushi USA,
Inc.Condensed Statements of
Operations(in thousands, except per share amounts;
unaudited)
|
Three Months Ended November 30, |
|
|
2021 |
|
|
2020 |
|
Sales |
$ |
29,832 |
|
|
$ |
9,414 |
|
Restaurant operating
costs: |
|
|
|
|
|
|
|
Food and beverage costs |
|
8,957 |
|
|
|
3,053 |
|
Labor and related costs |
|
9,710 |
|
|
|
4,360 |
|
Occupancy and related expenses |
|
2,200 |
|
|
|
1,690 |
|
Depreciation and amortization expenses |
|
1,171 |
|
|
|
927 |
|
Other costs |
|
3,610 |
|
|
|
2,079 |
|
Total restaurant operating costs |
|
25,648 |
|
|
|
12,109 |
|
General and administrative
expenses |
|
5,360 |
|
|
|
3,521 |
|
Depreciation and amortization
expenses |
|
88 |
|
|
|
75 |
|
Total operating expenses |
|
31,096 |
|
|
|
15,705 |
|
Operating loss |
|
(1,264 |
) |
|
|
(6,291 |
) |
Other expense (income): |
|
|
|
|
|
|
|
Interest expense |
|
25 |
|
|
|
34 |
|
Interest income |
|
(26 |
) |
|
|
(4 |
) |
Loss before income taxes |
|
(1,263 |
) |
|
|
(6,321 |
) |
Income tax expense |
|
12 |
|
|
|
29 |
|
Net loss |
$ |
(1,275 |
) |
|
$ |
(6,350 |
) |
Net loss per Class A and Class
B shares |
|
|
|
|
|
|
|
Basic |
$ |
(0.13 |
) |
|
$ |
(0.76 |
) |
Diluted |
$ |
(0.13 |
) |
|
$ |
(0.76 |
) |
Weighted average Class A and
Class B shares outstanding |
|
|
|
|
|
|
|
Basic |
|
9,710 |
|
|
|
8,348 |
|
Diluted |
|
9,710 |
|
|
|
8,348 |
|
Kura Sushi USA,
Inc.Selected Balance Sheet Data and Selected
Operating Data(in thousands; except restaurants
and percentages; unaudited)
|
|
November 30,2021 |
|
|
August 31,2021 |
|
Selected Balance Sheet Data: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
44,421 |
|
|
$ |
40,430 |
|
Total assets |
|
$ |
178,819 |
|
|
$ |
177,669 |
|
Total liabilities |
|
$ |
88,788 |
|
|
$ |
86,825 |
|
Total stockholders’ equity |
|
$ |
90,031 |
|
|
$ |
90,844 |
|
|
Three Months Ended November 30, |
|
|
2021 |
|
|
2020 |
|
Selected Operating Data: |
|
|
|
|
|
|
|
Restaurants at the end of
period |
|
33 |
|
|
|
28 |
|
Comparable restaurant sales
performance |
|
154.3 |
% |
|
|
(50.8 |
)% |
EBITDA |
$ |
(5 |
) |
|
$ |
(5,289 |
) |
Adjusted EBITDA |
$ |
792 |
|
|
$ |
(4,057 |
) |
Adjusted EBITDA margin |
|
2.7 |
% |
|
|
(43.1 |
)% |
Operating loss |
$ |
(1,264 |
) |
|
$ |
(6,291 |
) |
Operating loss margin |
|
(4.2 |
)% |
|
|
(66.8 |
)% |
Restaurant-level operating
profit (loss) |
$ |
5,817 |
|
|
$ |
(934 |
) |
Restaurant-level operating profit (loss) margin |
|
19.5 |
% |
|
|
(9.9 |
)% |
Kura Sushi USA,
Inc.Reconciliation of Net Loss and Net Loss Per
Diluted Share toAdjusted Net Loss and Adjusted Net
Loss Per Diluted Share(in thousands, except loss
per share amounts; unaudited)
|
Three Months Ended November 30, |
|
|
2021 |
|
|
2020 |
|
Net loss |
$ |
(1,275 |
) |
|
$ |
(6,350 |
) |
Executive transition costs(4) |
|
— |
|
|
|
390 |
|
Adjusted net loss |
$ |
(1,275 |
) |
|
$ |
(5,960 |
) |
Net loss per Class A and Class
B diluted share |
$ |
(0.13 |
) |
|
$ |
(0.76 |
) |
Executive transition costs(4) |
|
— |
|
|
|
0.05 |
|
Adjusted net loss per Class A
and Class B diluted share |
$ |
(0.13 |
) |
|
$ |
(0.71 |
) |
Weighted average Class A and
Class B shares outstanding |
|
|
|
|
|
|
|
Diluted shares |
|
9,710 |
|
|
|
8,348 |
|
Adjusted diluted shares |
|
9,710 |
|
|
|
8,348 |
|
Kura Sushi USA,
Inc.Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA(in thousands;
unaudited)
|
Three Months Ended November 30, |
|
|
2021 |
|
|
2020 |
|
Net loss |
$ |
(1,275 |
) |
|
$ |
(6,350 |
) |
Interest (income) expense, net |
|
(1 |
) |
|
|
30 |
|
Income tax expense |
|
12 |
|
|
|
29 |
|
Depreciation and amortization expenses |
|
1,259 |
|
|
|
1,002 |
|
EBITDA |
|
(5 |
) |
|
|
(5,289 |
) |
Stock-based compensation expense(1) |
|
443 |
|
|
|
266 |
|
Non-cash lease expense(2) |
|
354 |
|
|
|
576 |
|
Executive transition costs(4) |
|
— |
|
|
|
390 |
|
Adjusted EBITDA |
$ |
792 |
|
|
$ |
(4,057 |
) |
Kura Sushi USA,
Inc.Reconciliation of Operating Loss to
Restaurant-level Operating Profit (Loss)(in
thousands; unaudited)
|
Three Months Ended November 30, |
|
|
2021 |
|
|
2020 |
|
Operating loss |
$ |
(1,264 |
) |
|
$ |
(6,291 |
) |
Depreciation and amortization expenses |
|
1,259 |
|
|
|
1,002 |
|
Stock-based compensation expense(1) |
|
443 |
|
|
|
266 |
|
Pre-opening costs(3) |
|
73 |
|
|
|
235 |
|
Non-cash lease expense(2) |
|
354 |
|
|
|
576 |
|
General and administrative expenses |
|
5,360 |
|
|
|
3,521 |
|
Corporate-level stock-based compensation included in general and
administrative expenses |
|
(408 |
) |
|
|
(243 |
) |
Restaurant-level operating
profit (loss) |
$ |
5,817 |
|
|
$ |
(934 |
) |
____________________ |
(1) |
Stock-based compensation expense includes non-cash stock-based
compensation, which is comprised of restaurant-level stock-based
compensation included in other costs in the statements of
operations 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 our 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 our restaurants, and other
related pre-opening costs. |
(4) |
Executive transition costs include severance and search fees
associated with the transition of our Chief Financial Officer. The
income tax impact of this adjustment was immaterial. |
|
|
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