Kura Sushi USA, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kira Sushi USA Inc. Fiscal Second Quarter 2021 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this call is being recorded. On the call today, we have Jimmy Uba, President and Chief Executive Officer, Steve Benrubi, Chief Financial Officer, and Benjamin Porton, Investor Relations Director. And now, I'd like to turn the call over to Mr. Porton.

Thank you, operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal second quarter 2021 earnings release. It can be found at www.kurosushi.com in the investor relations section. A copy of the earnings release has also been included in an NK we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. Also during today's call, we will discuss certain non-GAAP measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation, nor as a substitute for results prepared in accordance with GAAP, and the reconciliation of the comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jim.

Thank you, Ben, and thank you, everyone, for joining us today. Let me start with a high-level review of our quarterly results and the business update before Steve goes through our financials. As I mentioned briefly on the previous call, our fiscal second quarter results ending in February were materially impacted by the increased severity of COVID restrictions. This was particularly the case in California, where 50% of our residents reside. If you recall, California imposed a total ban on both indoor and outdoor dining in early December. While the ban on outdoor dining was partially lifted at the end of January, the ban on indoor dining remained effective through our entire fiscal second quarter. While we are pleased with the strong performance of our off-premises sales, it was not enough to offset the loss of sales due to the inability to offer our guests the full-class experience created by our dining rooms. Health in California began to recover in February with the resumption of outdoor dining, although this was partially offset by severe winter weather in Texas, resulting in the temporary closure of all of our Texas restaurants, which lasted up to a week, depending on the location. While this was unfortunate, we are happy that our team members in Texas were all safe and are proud of the resilience they displayed throughout these overlapping difficulties. Thanks to their ongoing efforts, our Texas stores continued to perform well in spite of the winter storm and reduced seating capacities relative to the previous quarter. Our system-wide daily sales volumes in February, exclusive of the impact from weather, were among the best we've seen since entering the pandemic. Looking to the current quarter and beyond, we believe that we are poised for continued recovery as the pandemic winds down. Our March revenue exceeded $5 million, a material improvement over February's revenue of $3.1 million. This has largely been driven by the relaxation of certain dining restrictions in mid to late March, including the resumption of outdoor dining and restricted indoor dining in our California stores, the resumption of conveyor belt operations in California, increase of indoor dining capacity of our Texas restaurants to 100%, and the increase of indoor dining capacity in several other states. The month-over-month sales growth we've seen in March is very encouraging, especially considering that we only benefited from these regulatory relaxations for part of the month. Our Texas market, which now has no seating capacity restrictions, has already begun comping positively against pre-COVID-19 comps, and we think this is a great indication of the recovery we can expect once restrictions are lifted across our system. Again, I couldn't be more proud of our restaurant operations team's resilience despite the constant challenges they've faced during the last year and how nimble they have been at ramping up operations swiftly and efficiently as restrictions have allowed. Let me reiterate that while we are all eager to bring back the Fulcrum experience to our guests, our top priorities still includes the health and safety of our guests and team members. To that end, we are continuing to promote safe indoor and outdoor environments through the use of personal protective equipment for each of our team members, enhanced cleaning processes, social distancing, partitions between booths, and team member health checks prior to the start of each shift. As sales in our existing stores continue to show progress, we have also maintained our development momentum. During the fiscal second quarter, we opened two new restaurants with our Aventura, Florida location opening in early January and our Troy, Michigan location opening at the end of the quarter. We have been very pleased with the early performance of these new restaurants. Additionally, in early April, we opened a new restaurant in Sherman Oaks, California, and we expect our Bellevue, Washington restaurant to open later this quarter. With these latest openings, we will have completed our planned seven new restaurant openings for fiscal 2021. Looking ahead, we believe the units in our fiscal 2022 pipeline are among the best we've ever had. Our new data platform, Forum Analytics, has completed its correlation analysis of our unit system-wide and has been incorporated into our site selection process. We remain on track to achieve our 20% unit growth CAGR goal over the five-year period starting in fiscal 2019. Turning to other initiatives, we continue to strengthen our long-term business model by expanding the opportunities for our guests to enjoy the Cura experience. In January, we successfully launched our new CuraTouch app. With the goal of better integration, our new app combines our waitlist, online ordering, and rewards program all in one place. Today, we have over 100,000 combined rewards members and app users. We believe this app will further streamline our off-premises sales efforts, even as we continue to fill our restaurants with indoor dining. During the fiscal second quarter, our total off-premises revenue was $2.4 million, representing sustained and material growth over the previous quarter's off-premises revenue of approximately $1.3 million. While this period coincides with the restrictions on indoor and outdoor dining in California, we believe the biggest driver of this growth was our successful integration with Square, which was completed in December. By month, off-premises sales were $870,000 in December, $860,000 in January, and $650,000 in February. followed by $680,000 in March as we began our fiscal third quarter. Our fiscal second quarter off-premises mix was 26%, a far cry from the 1% or so sales mix that off-premises represented pre-pandemic. While we don't expect this mix to fold in full once we enter post-pandemic life and that the core of our business will always remain the correct experience. Our March off-premises revenue increased relative to February in spite of dining room reopenings in California. This is tremendously encouraging for long-term prospects for our off-premises sales. In closing, while we are still operating in uncertain environment, we believe we are starting to see the light at the end of the tunnel. With COVID cases continuing to decline and vaccines becoming more widely available, our team is ready for post-pandemic recovery and eager to capitalize on pent-up demand for a full-class experience. With that, let me turn the call over to Steve to briefly discuss our financial results and liquidity. Steve?