Kura Sushi USA(US:KRUS)2023-07-06 20:29Sales Performance - Sales for the three months ended May 31, 2023, were $49.2 million, an increase of $11.2 million or 29.7% compared to $38.0 million for the same period in 2022[69]. - For the nine months ended May 31, 2023, sales were $132.5 million, a 33.7% increase from $99.1 million in 2022[66]. - Sales for the nine months ended May 31, 2023, were $132.5 million, an increase of $33.4 million or 33.7% compared to $99.1 million for the same period in 2022[79]. - Comparable restaurant sales increased by 10.3% for the three months ended May 31, 2023, driven by the opening of nine new restaurants and menu price increases[69]. - Comparable restaurant sales increased by 11.0% for the nine months ended May 31, 2023, compared to the same period in 2022[79]. - Comparable restaurant sales performance increased by 10.3% for the three months ended May 31, 2023, and 11.0% for the nine months ended May 31, 2023, compared to 65.3% and 118.7% in 2022, respectively[102]. Cost and Expenses - Food and beverage costs rose to $14.8 million for the three months ended May 31, 2023, an increase of 30.9% from $11.3 million in the same period in 2022, with food costs as a percentage of sales increasing to 30.0%[70]. - Labor and related costs increased to $14.4 million for the three months ended May 31, 2023, up 21.8% from $11.8 million in 2022, while the percentage of sales decreased to 29.2%[71]. - Occupancy and related expenses were $3.6 million for the three months ended May 31, 2023, a 32.0% increase from $2.7 million in 2022, maintaining a consistent percentage of sales at 7.2%[73]. - Depreciation and amortization expenses for restaurant operations were $2.0 million for the three months ended May 31, 2023, an increase of 43.5% from $1.4 million in 2022, with the percentage of sales rising to 4.0%[74]. - Total restaurant operating costs for the three months ended May 31, 2023, were $40.8 million, representing a 29.6% increase from $31.5 million in 2022[66]. - Food and beverage costs rose to $40.4 million for the nine months ended May 31, 2023, an increase of $10.8 million or 36.6% from $29.6 million in 2022[80]. - Labor and related costs increased to $40.8 million for the nine months ended May 31, 2023, representing a rise of $9.0 million or 28.0% compared to $31.8 million in 2022[81]. - General and administrative expenses were $20.8 million for the nine months ended May 31, 2023, an increase of $4.1 million or 24.3% from $16.7 million in 2022[85]. - Other costs for the nine months ended May 31, 2023, were $17.4 million, an increase of $5.1 million or 40.8% from $12.3 million in 2022[84]. - Depreciation and amortization expenses increased to $5.3 million for the nine months ended May 31, 2023, up by $1.5 million or 39.2% from $3.8 million in 2022[83]. Profitability - Net income for the three months ended May 31, 2023, was $1.68 million, a 252.2% increase from $477,000 in the same period in 2022[66]. - Adjusted EBITDA for the nine months ended May 31, 2023, was $8.1 million, compared to $4.4 million for the same period in 2022, reflecting an increase of 84.0%[94]. - Adjusted EBITDA margin improved to 6.1% for the nine months ended May 31, 2023, compared to 4.4% in 2022[94]. - Operating income for the three months ended May 31, 2023, was $1.3 million, compared to a loss of $1.9 million for the nine months ended May 31, 2023[99]. - Restaurant-level operating profit for the three months ended May 31, 2023, was $11.6 million, with a margin of 23.5%, compared to $8.5 million and a margin of 22.5% in the same period of 2022[99]. Cash Flow and Financing - Net cash provided by operating activities was $7.1 million for the nine months ended May 31, 2023, down from $17.0 million in the same period of 2022[111]. - Net cash used in investing activities was $37.2 million for the nine months ended May 31, 2023, primarily due to $27.2 million in purchases of property and equipment[113]. - Net cash provided by financing activities was $64.9 million for the nine months ended May 31, 2023, mainly from net proceeds of $64.3 million from a public offering[115]. - As of May 31, 2023, the company had $11.4 million in contractual obligations related to the construction of new restaurants and purchase commitments[117]. - The company had $45.0 million of availability remaining under its Revolving Credit Agreement as of May 31, 2023[106]. Inflation and Cost Management - The company expects inflationary pressures to continue throughout the remainder of fiscal year 2023, impacting food, labor, and other operational costs[56]. - Inflationary factors impacting operations include food and beverage costs, labor costs, construction costs, and energy costs[126]. - Significant portions of restaurant personnel are paid at or near federal and state minimum wage, making labor costs sensitive to minimum wage increases[126]. - Menu price increases have been used to mitigate rising costs, but future pricing flexibility may be limited by competitive conditions and macroeconomic factors[127]. - Historical inflation has not materially affected operating results, but increased inflationary pressures are being observed across the business[126]. - Severe inflation could adversely impact the global and U.S. economies, affecting the company's financial condition and results[126]. - There is no assurance that future cost increases can be fully offset by menu price increases without affecting customer visit frequencies or purchasing patterns[127]. - The company has implemented more efficient purchasing practices and productivity improvements to help manage costs[127]. - Future sales growth may not be sufficient to offset inflationary or other cost pressures[127]. Restaurant Expansion - The number of restaurant openings was 1 for the three months ended May 31, 2023, and 6 for the nine months ended May 31, 2023, compared to 1 and 5 in the same periods of 2022[103]. - The restaurant base increased to 46 locations by the end of May 31, 2023, from 40 at the beginning of the period[103].