Kura Sushi USA, Inc, a fast-growing technology-enabled Japanese restaurant concept, today reported fiscal first-quarter financial results for the period ended November 30, 2019.
Fiscal First Quarter 2020 Highlights
- Total sales increased 30% to $17.4 million, compared to the first quarter of 2019;
- Comparable restaurant sales growth increased 7.9%;
- Operating loss was $1.4 million, compared to a loss of $0.4 million in the first quarter of 2019;
- Net loss was $1.2 million, or ($0.15) per diluted share, compared to net loss of $0.4 million, or ($0.08) per diluted share in the first quarter of 2019;
- Restaurant-level contribution* was $3.0 million, compared to $2.5 million in the first quarter of 2019; and
- Adjusted EBITDA* was ($0.1) million, compared to $0.5 million in the first quarter of 2019.
* Restaurant-level contribution and Adjusted EBITDA are non-GAAP measures and 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, “Our first quarter loss was generally in line with our expectations, and we continue to expect our profits to be generated during the second half of the fiscal year, in line with historical cadence. Results in the first quarter included strong comparable restaurant sales growth, as guests continue to respond positively to our premium ingredients, affordable price points, and most importantly, the distinctive ‘Kura Experience’. We remain excited about the balance of fiscal 2020 and have a number of drivers in place that we believe can sustain our momentum. Furthermore, we have a strong development pipeline that will enable us to bring our unique brand to a growing number of guests throughout the country.”
Review of First Quarter 2020 Financial Results
Total sales increased 30% to $17.4 million compared to $13.4 million in the first quarter of 2019. Comparable restaurant sales increased 7.9% for first quarter of 2020, resulting in a 12.3% increase on a two-year basis. This increase was driven by increases in both average check and traffic.
Operating loss was $1.4 million compared to an operating loss of $0.4 million in the first quarter of 2019.
Net loss was $1.2 million, or ($0.15) per diluted share, compared to net loss of $0.4 million in the first quarter of 2019, or ($0.08) per diluted share.
Restaurant-level contribution* was $3.0 million compared to $2.5 million in the first quarter of 2019. As a percentage of restaurant sales, restaurant-level contribution margin decreased 120 basis points year-over-year to 17.5%. The decrease was primarily due to increases in occupancy and related expenses, and labor and related costs.
Adjusted EBITDA* decreased to ($0.1) million compared to $0.5 million in the first quarter of 2019.
Restaurant Development
During the first quarter of 2020, no new restaurants were opened. Subsequent to the end of the quarter, the Company opened one restaurant in Katy, TX. The Company continues to expect to open six new restaurants in fiscal 2020.
Fiscal Year 2020 Outlook
For the full fiscal year of 2020, the Company reiterates the following annual assumptions:
- Total sales between $84 million and $87 million;
- Comparable restaurant sales growth between 2% and 4%;
- Restaurant-level contribution* margin between 20.5% and 21.5%;
- Adjusted EBITDA* margin between 9% and 10%; and
- 6 new restaurants.
* Restaurant-level contribution and adjusted EBITDA are non-GAAP measures and defined below under “Key Financial Definitions”. See also “non-GAAP Financial Measures” below.
The Company has not reconciled guidance for restaurant-level contribution and adjusted EBITDA to the corresponding GAAP financial measure because the Company does not provide guidance for the various reconciling items. The Company is unable to provide guidance for these reconciling items because it cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, a reconciliation to the corresponding GAAP financial measure is not available without unreasonable effort.
About Kura Sushi USA, Inc.
Kura Sushi USA, Inc. is a technology-enabled Japanese restaurant concept with 24 locations in five states. 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 400 restaurants and 35 years of brand history. For more information, please visit www.kurasushi.com.
