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KRUS Kura Sushi USA Inc

93.62
-0.10 (-0.11%)
21 Dec 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Kura Sushi USA Inc NASDAQ:KRUS NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.10 -0.11% 93.62 55.00 101.00 96.7913 92.37 92.40 135,919 05:00:14

Kura Sushi USA Announces Fiscal Fourth Quarter and Fiscal Year 2024 Financial Results

06/11/2024 9:05pm

GlobeNewswire Inc.


Kura Sushi USA (NASDAQ:KRUS)
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Kura Sushi USA, Inc. (“Kura Sushi” or the “Company”) (NASDAQ: KRUS), a technology-enabled Japanese restaurant concept, today announced financial results for the fiscal fourth quarter and fiscal year ended August 31, 2024.

Fiscal Fourth Quarter 2024 Highlights

  • Total sales were $66.0 million, compared to $54.9 million in the fourth quarter of 2023;
  • Comparable restaurant sales decreased 3.1% for the fourth quarter of 2024 as compared to the fourth quarter of 2023;
  • Operating loss was $5.8 million, compared to operating income of $2.2 million in the fourth quarter of 2023;
  • Net loss was $5.2 million, or $(0.46) per diluted share, compared to net income of $2.9 million, or $0.25 per diluted share, in the fourth quarter of 2023;
  • Adjusted net income* was $1.0 million, or $0.09 per diluted share, compared to an adjusted net income of $2.9 million or $0.25 per diluted share, in the fourth quarter of 2023;
  • Restaurant-level operating profit* was $13.8 million, or 20.9% of sales;
  • Adjusted EBITDA* was $5.5 million; and
  • One new restaurant opened during the fiscal fourth quarter of 2024.

* Adjusted net income, 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, “In fiscal 2024, we succeeded on our key goals of achieving over 20%-unit growth and maintaining best-in-class restaurant-level operating profit margins. I am tremendously excited for this fiscal year 2025 and what we can achieve in respect to these goals. Fiscal year 2025 is an opportunity to demonstrate the next level of Kura Sushi’s potential, and I am incredibly grateful for the excellent work by our team members who have positioned us so well for the new year.”

Review of Fiscal Fourth Quarter 2024 Financial Results

Total sales were $66.0 million compared to $54.9 million in the fourth quarter of 2023. Comparable restaurant sales decreased 3.1% for the fourth quarter of 2024 as compared to the fourth quarter of 2023.

Food and beverage costs as a percentage of sales were 28.5% compared to 29.5% in the fourth quarter of 2023. The decrease is primarily due to increase in menu prices and supply chain initiatives.

Labor and related costs as a percentage of sales were 31.1% compared to 28.8% in the fourth quarter of 2023. The increase is primarily due to sales deleverage and increases in wage rates.

Occupancy and related expenses were $4.6 million compared to $3.6 million in the fourth quarter of 2023. The increase is primarily due to fourteen new restaurants opening since the fourth quarter of 2023.

Other costs as a percentage of sales increased to 14.7% compared to 13.8% in the fourth quarter of 2023. The increase was primarily driven by utilities, delivery fees, software licenses and operating supplies.

General and administrative expenses were $13.4 million compared to $7.3 million in the fourth quarter of 2023. This increase was primarily due to litigation costs, compensation-related costs and professional fees. As a percentage of sales, general and administrative expenses increased to 20.3%, which includes $4.7 million in litigation costs, as compared to 13.2% in the fourth quarter of 2023.

Impairment of long-lived assets were $1.6 million in the fourth quarter of 2024 due to impairment charges related to the property and equipment on one underperforming restaurant location.

Operating loss was $5.8 million compared to operating income of $2.2 million in the fourth quarter of 2023.

Income tax expense was $19 thousand compared to $167 thousand in the fourth quarter of 2023.

Net loss was $5.2 million, or $(0.46) per diluted share, compared to net income of $2.9 million, or $0.25 per diluted share, in the fourth quarter of 2023.

Adjusted net income* was $1.0 million, or $0.09 per diluted share, compared to adjusted net income* of $2.9 million or $0.25 per diluted share, in the fourth quarter of 2023.

Restaurant-level operating profit* was $13.8 million, or 20.9% of sales, compared to $13.4 million, or 24.4% of sales, in the fourth quarter of 2023.

Adjusted EBITDA* was $5.5 million compared to $6.3 million in the fourth quarter of 2023.

Review of Fiscal Year 2024 Financial Results

Total sales were $237.9 million compared to $187.4 million in fiscal year 2023. Comparable restaurant sales increased 0.7% as compared to fiscal year 2023. Average unit volumes were $4.2 million and $4.3 million in fiscal year 2024 and 2023, respectively.

Operating loss was $11.5 million compared to operating income of $0.3 million in fiscal year 2023.

Income tax expense was $0.2 million for both fiscal years 2024 and 2023.

Net loss was $8.8 million, or $(0.79) per diluted share, compared to net income of $1.5 million, or $0.14 per diluted share, in fiscal year 2023.

Adjusted net loss* was $1.8 million, or $(0.16) per diluted share, compared to adjusted net income* of $1.5 million, or $0.14 per diluted share, in fiscal year 2023.

Restaurant-level operating profit* was $47.7 million, or 20.1% of sales, compared to $41.1 million or 21.9% of sales, in fiscal year 2023.

Adjusted EBITDA* was $14.6 million compared to $14.3 million in fiscal year 2023.

Restaurant Development

During the fiscal fourth quarter of 2024, the Company opened one new restaurant in Lake Grove, New York.

Subsequent to August 31, 2024, the Company opened five new restaurants in Beaverton, Oregon; Tacoma, Washington; Rockville, Maryland; Cherry Hill, New Jersey; and Bakersfield, California.

Fiscal Year 2025 Outlook

  • Total sales between $275 million and $279 million;
  • 14 new restaurants, maintaining an annual unit growth rate above 20%, with average net capital expenditures per unit of approximately $2.5 million;
  • General and administrative expenses as a percentage of sales to be approximately 13.5%

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 & System 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 13748567. 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 69 locations across 19 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 550 restaurants and 40 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 litigation costs and restaurant impairments, 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 litigation 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; 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 full calendar 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.

Average Unit Volumes (“AUVs”) consist of the average annual sales of all restaurants that have been open for 18 full calendar 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 associated period.

Non-GAAP Financial Measures

To supplement the 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 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, including rising interest rates, the possibility of a recession and instability in financial markets; the Company’s ability to compete with many other restaurants; the Company’s reliance on vendors, suppliers and distributors, including its majority stockholder 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) 333-4010investor@kurausa.com

Kura Sushi USA, Inc.Statements of Operations and Comprehensive Income (Loss)(in thousands, except per share amounts; unaudited)
 
  Three months ended August 31,  Twelve months ended August 31, 
  2024  2023  2024  2023 
Sales $66,012  $54,929  $237,860  $187,429 
Restaurant operating costs:            
Food and beverage costs  18,818   16,191   69,509   56,631 
Labor and related costs  20,517   15,796   75,926   56,547 
Occupancy and related expenses  4,613   3,637   16,792   13,141 
Depreciation and amortization expenses  3,068   2,113   11,362   7,422 
Other costs  9,725   7,559   34,748   24,911 
Total restaurant operating costs  56,741   45,296   208,337   158,652 
General and administrative expenses  13,416   7,259   39,050   28,035 
Depreciation and amortization expenses  107   145   425   410 
Impairment of long-lived assets  1,553      1,553    
Total operating expenses  71,817   52,700   249,365   187,097 
Operating income (loss)  (5,805)  2,229   (11,505)  332 
Other expense (income):            
Interest expense  12   16   47   69 
Interest income  (635)  (879)  (2,915)  (1,472)
Income (loss) before income taxes  (5,182)  3,092   (8,637)  1,735 
Income tax expense  19   167   167   233 
Net income (loss) $(5,201) $2,925  $(8,804) $1,502 
Net income (loss) per Class A and Class B shares            
Basic $(0.46) $0.26  $(0.79) $0.15 
Diluted $(0.46) $0.25  $(0.79) $0.14 
Weighted average Class A and Class B shares outstanding            
Basic  11,247   11,126   11,204   10,305 
Diluted  11,247   11,500   11,204   10,640 
             
Other comprehensive income (loss):            
Unrealized gain (loss) on short-term investments $  $50  $(43) $43 
Comprehensive income (loss) $(5,201) $2,975  $(8,847) $1,545 

Kura Sushi USA, Inc.Selected Balance Sheet Data and Selected Operating Data(in thousands, except restaurants and percentages; unaudited)
 
  August 31, 2024  August 31, 2023 
Selected Balance Sheet Data:      
Cash and cash equivalents $50,986  $69,697 
Total assets $328,522  $304,659 
Total liabilities $165,984  $140,018 
Total stockholders’ equity $162,538  $164,641 

  Three months ended August 31,  Twelve months ended August 31, 
  2024  2023  2024  2023 
Selected Operating Data:            
Restaurants at the end of period  64   50   64   50 
Average unit volumes N/A  N/A  $4,228  $4,281 
Comparable restaurant sales performance  (3.1)%  6.5%  0.7%  9.5%
EBITDA $(2,630) $4,487  $282  $8,164 
Adjusted EBITDA $5,496  $6,277  $14,564  $14,342 
Adjusted EBITDA margin  8.3%  11.4%  6.1%  7.7%
Operating income (loss) $(5,805) $2,229  $(11,505) $332 
Operating income (loss) margin  (8.8)%  4.1%  (4.8)%  0.2%
Restaurant-level operating profit $13,829  $13,399  $47,703  $41,063 
Restaurant-level operating profit margin  20.9%  24.4%  20.1%  21.9%

Kura Sushi USA, Inc.Reconciliation of Net Income (Loss) and Net Income (Loss) Per Diluted Share toAdjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Diluted Share(in thousands, except income (loss) per share amounts; unaudited)
 
  Three months ended August 31,  Twelve months ended August 31, 
  2024  2023  2024  2023 
Net income (loss) $(5,201) $2,925  $(8,804) $1,502 
Litigation(3)  4,683      5,450    
Impairment of long-lived assets(5)  1,553      1,553    
Adjusted net income (loss) $1,035  $2,925  $(1,801) $1,502 
Net income (loss) per Class A and Class B diluted shares $(0.46) $0.25  $(0.79) $0.14 
Litigation(3)  0.41      0.49    
Impairment of long-lived assets(5)  0.14      0.14    
Adjusted net income (loss) per Class A and Class B diluted shares $0.09  $0.25  $(0.16) $0.14 
Weighted average Class A and Class B shares outstanding            
Diluted shares  11,247   11,500   11,204   10,640 
Adjusted diluted shares  11,501   11,500   11,204   10,640 

Kura Sushi USA, Inc.Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA(in thousands; unaudited)
 
  Three months ended August 31,  Twelve months ended August 31, 
  2024  2023  2024  2023 
Net income (loss) $(5,201) $2,925  $(8,804) $1,502 
Interest income, net  (623)  (863)  (2,868)  (1,403)
Income tax expense  19   167   167   233 
Depreciation and amortization expenses  3,175   2,258   11,787   7,832 
EBITDA  (2,630)  4,487   282   8,164 
Stock-based compensation expense(1)  1,145   980   4,314   3,550 
Non-cash lease expense(2)  745   810   2,965   2,628 
Litigation(3)  4,683      5,450    
Impairment of long-lived assets(5)  1,553      1,553    
Adjusted EBITDA $5,496  $6,277  $14,564  $14,342 

Kura Sushi USA, Inc.Reconciliation of Operating Income (Loss) to Restaurant-level Operating Profit(in thousands; unaudited)
 
  Three months ended August 31,  Twelve months ended August 31, 
  2024  2023  2024  2023 
Operating income (loss) $(5,805) $2,229  $(11,505) $332 
Depreciation and amortization expenses  3,175   2,258   11,787   7,832 
Stock-based compensation expense(1)  1,145   980   4,314   3,550 
Pre-opening costs(4)  554   719   3,165   1,730 
Non-cash lease expense(2)  745   810   2,965   2,628 
Impairment of long-lived assets(5)  1,553      1,553    
General and administrative expenses  13,416   7,259   39,050   28,035 
Corporate-level stock-based compensation included in general and administrative expenses  (954)  (856)  (3,626)  (3,044)
Restaurant-level operating profit $13,829  $13,399  $47,703  $41,063 

(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 and comprehensive income (loss).
(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)Litigation includes expenses related to legal claims or settlements.
(4)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.
(5)Impairment of long-lived assets includes losses incurred due to the impairment of property and equipment on one underperforming restaurant location.

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