Fiscal Third Quarter 2023 Highlights
- Total sales were
$49.2 million , compared to$38.0 million in the third quarter of 2022; - Comparable restaurant sales increased 10.3% for the third quarter of 2023 as compared to the third quarter of 2022;
- Operating income was
$1.3 million , compared to operating income of$0.5 million in the third quarter of 2022; - Net income was
$1.7 million , or$0.16 per diluted share, compared to net income of$0.5 million , or$0.05 per diluted share, in the third quarter of 2022; - Restaurant-level operating profit* was
$11.6 million , or 23.5% of sales; - Adjusted EBITDA* was
$5.1 million ; and - One new restaurant opened during the fiscal third 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.
Follow-on Offering of Common Stock
During the third quarter of 2023, the Company completed an underwritten public offering of 1,265,000 shares of its Class A common stock at a public offering price of
Review of Fiscal Third Quarter 2023 Financial Results
Total sales were
Food and beverage costs as a percentage of sales were 30.0% compared to 29.7% in the third 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 29.2% from 31.0% in the third 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 wage rates.
Occupancy and related expenses were
Other costs as a percentage of sales increased to 12.5% compared to 11.5% in the third quarter of 2022. The increase was primarily driven by advertising, repair and maintenance and travel costs.
General and administrative expenses were
Operating income was
Income tax expense was
Net income was
Restaurant-level operating profit* was
Adjusted EBITDA* was
During the fiscal third quarter of 2023, the Company opened one new restaurant in
Subsequent to
Fiscal Year 2023 Outlook
For the full fiscal year of 2023, the Company reiterates and updates the following annual guidance:
- Total sales between
$187 million and$189 million ; - General and administrative expenses as a percentage of sales to be between 15.0% and 15.5%; and
- 9 to 11 new restaurants, with average net capital expenditures per unit of approximately
$2.5 million .
The Company’s guidance assumes no material changes in consumer behavior or broader macroeconomic trends.
Conference Call
A conference call and webcast to discuss Kura Sushi’s financial results is scheduled for
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 13739075. 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
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
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, 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 stakeholder
Investor Relations Contact:
(657) 333-4010
investor@kurausa.com
Condensed Statements of Operations and Comprehensive Income (Loss) | ||||||||||||||||
(in thousands, except per share amounts; unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Sales | $ | 49,238 | $ | 37,969 | $ | 132,500 | $ | 99,091 | ||||||||
Restaurant operating costs: | ||||||||||||||||
Food and beverage costs | 14,770 | 11,282 | 40,440 | 29,615 | ||||||||||||
Labor and related costs | 14,362 | 11,788 | 40,751 | 31,840 | ||||||||||||
Occupancy and related expenses | 3,554 | 2,693 | 9,504 | 7,195 | ||||||||||||
Depreciation and amortization expenses | 1,975 | 1,376 | 5,309 | 3,814 | ||||||||||||
Other costs | 6,165 | 4,372 | 17,352 | 12,326 | ||||||||||||
Total restaurant operating costs | 40,826 | 31,511 | 113,356 | 84,790 | ||||||||||||
General and administrative expenses | 7,012 | 5,900 | 20,776 | 16,714 | ||||||||||||
Depreciation and amortization expenses | 92 | 85 | 265 | 256 | ||||||||||||
Total operating expenses | 47,930 | 37,496 | 134,397 | 101,760 | ||||||||||||
Operating income (loss) | 1,308 | 473 | (1,897 | ) | (2,669 | ) | ||||||||||
Other expense (income): | ||||||||||||||||
Interest expense | 23 | 23 | 53 | 70 | ||||||||||||
Interest income | (436 | ) | (25 | ) | (593 | ) | (75 | ) | ||||||||
Income (loss) before income taxes | 1,721 | 475 | (1,357 | ) | (2,664 | ) | ||||||||||
Income tax expense (benefit) | 41 | (2 | ) | 66 | 13 | |||||||||||
Net income (loss) | $ | 1,680 | $ | 477 | $ | (1,423 | ) | $ | (2,677 | ) | ||||||
Net income (loss) per Class A and Class B shares | ||||||||||||||||
Basic | $ | 0.16 | $ | 0.05 | $ | (0.14 | ) | $ | (0.28 | ) | ||||||
Diluted | $ | 0.16 | $ | 0.05 | $ | (0.14 | ) | $ | (0.28 | ) | ||||||
Weighted average Class A and Class B shares outstanding | ||||||||||||||||
Basic | 10,485 | 9,722 | 10,028 | 9,714 | ||||||||||||
Diluted | 10,807 | 10,069 | 10,028 | 9,714 | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized loss on short-term investments | $ | (7 | ) | — | $ | (7 | ) | — | ||||||||
Comprehensive income (loss) | $ | 1,673 | $ | 477 | $ | (1,430 | ) | $ | (2,677 | ) |
Selected Balance Sheet Data and Selected Operating Data | ||||||||
(in thousands, except restaurants and percentages; unaudited) | ||||||||
Selected Balance Sheet Data: | ||||||||
Cash and cash equivalents | $ | 70,474 | $ | 35,782 | ||||
Total assets | $ | 286,248 | $ | 201,356 | ||||
Total liabilities | $ | 126,508 | $ | 108,062 | ||||
Total stockholders’ equity | $ | 159,740 | $ | 93,294 |
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Selected Operating Data: | ||||||||||||||||
Restaurants at the end of period | 46 | 37 | 46 | 37 | ||||||||||||
Comparable restaurant sales performance | 10.3 | % | 65.3 | % | 11.0 | % | 118.7 | % | ||||||||
EBITDA | $ | 3,375 | $ | 1,934 | $ | 3,677 | $ | 1,401 | ||||||||
Adjusted EBITDA | $ | 5,118 | $ | 3,183 | $ | 8,065 | $ | 4,361 | ||||||||
Adjusted EBITDA margin | 10.4 | % | 8.4 | % | 6.1 | % | 4.4 | % | ||||||||
Operating income (loss) | $ | 1,308 | $ | 473 | $ | (1,897 | ) | $ | (2,669 | ) | ||||||
Operating income (loss) margin | 2.7 | % | 1.2 | % | (1.4 | )% | (2.7 | )% | ||||||||
Restaurant-level operating profit | $ | 11,576 | $ | 8,543 | $ | 27,664 | $ | 19,919 | ||||||||
Restaurant-level operating profit margin | 23.5 | % | 22.5 | % | 20.9 | % | 20.1 | % |
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | ||||||||||||||||
(in thousands; unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income (loss) | $ | 1,680 | $ | 477 | $ | (1,423 | ) | $ | (2,677 | ) | ||||||
Interest income, net | (413 | ) | (2 | ) | (540 | ) | (5 | ) | ||||||||
Income tax expense (benefit) | 41 | (2 | ) | 66 | 13 | |||||||||||
Depreciation and amortization expenses | 2,067 | 1,461 | 5,574 | 4,070 | ||||||||||||
EBITDA | 3,375 | 1,934 | 3,677 | 1,401 | ||||||||||||
Stock-based compensation expense(1) | 975 | 732 | 2,570 | 1,771 | ||||||||||||
Non-cash lease expense(2) | 768 | 517 | 1,818 | 1,189 | ||||||||||||
Adjusted EBITDA | $ | 5,118 | $ | 3,183 | $ | 8,065 | $ | 4,361 |
Reconciliation of Operating Income (Loss) to Restaurant-level Operating Profit | ||||||||||||||||
(in thousands; unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Operating income (loss) | $ | 1,308 | $ | 473 | $ | (1,897 | ) | $ | (2,669 | ) | ||||||
Depreciation and amortization expenses | 2,067 | 1,461 | 5,574 | 4,070 | ||||||||||||
Stock-based compensation expense(1) | 975 | 732 | 2,570 | 1,771 | ||||||||||||
Pre-opening costs(3) | 258 | 104 | 1,011 | 420 | ||||||||||||
Non-cash lease expense(2) | 768 | 517 | 1,818 | 1,189 | ||||||||||||
General and administrative expenses | 7,012 | 5,900 | 20,776 | 16,714 | ||||||||||||
Corporate-level stock-based compensation included in general and administrative expenses | (812 | ) | (644 | ) | (2,188 | ) | (1,576 | ) | ||||||||
Restaurant-level operating profit | $ | 11,576 | $ | 8,543 | $ | 27,664 | $ | 19,919 |
(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) 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.
Source:
2023 GlobeNewswire, Inc., source