Kura Sushi USA, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kurosushi USA Inc. Fiscal First Quarter 2022 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 Hajime Jimmy-Uba, President and Chief Executive Officer, Steve Ben-Ruby, Chief Financial Officer, and Benjamin Porton, VP of Investor Relations and Business Development. And now I would 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 first quarter 2022 earnings release. It can be found at www.curricelist.com in the Investor Relations section. A copy of the earnings release has also been included in the 8K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussions 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 SEC filings for a more detailed discussion of the risks that could impact our future operating results, 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 should substitute for results prepared in accordance with GAAP. And the reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jamie.

Thank you, Ben, and thank you, everyone, for joining us today. I'm very pleased to announce a strong start we've had to fiscal 2022 and that we are on track to achieve the goals that we shared in our annual guidance. The sales momentum we discussed in the previous earnings call has continued into the new fiscal year, resulting in Q1 comparable sales growth of 19.9% as compared to the pre-pandemic fiscal first quarter 2020. As a reminder, our fiscal 2020 first quarter before September through November of calendar 2019. We believe these comps are a demonstration of the resilience of our business model in the face of renewed COVID concerns due to the Delta variant, and I couldn't be more proud of how far the company has come in adapting to the changes created by COVID. We continue to make excellent progress in returning to pre-pandemic unit performance with Q1 restaurant-level operating profit margin of 19.5% as compared to 17.3% in Q1 fiscal 2020. Q1 is typically our weakest quarter from a seasonality perspective, and to be so close to our historical peak annual restaurant-level operating profit margin of 20% is a great sign for our recovery. Regional sales tolerance observed in the previous quarter remained in play as Texas continued to be our strongest market with regional comps of 27.8% as compared to California's regional comps of 12.4%. Looking at the monthly cadence of sales, we benefited from an additional weak end in October as compared to the same period in fiscal 2020, which was offset by one less weak end in November. as compared to the same period in fiscal 2020. These differences in calendar timing resulted in a minor comp deceleration in November as compared to the preceding two months. After adjusting for this calendar shift, however, we demonstrated consistent comp strength versus fiscal 2020 throughout the quarter. Off-premises revenue was $1.3 million and sales mix of 4.5% against Q4 off-premises revenue of $1.4 million and mix of 5%. Now, I would like to provide one update on the pricing event we mentioned in our last earnings call. We increased pricing high single-digit at the beginning of September and saw minimal guest pushback, despite this being the largest single-pricing move we've ever taken. I'm pleased to report that this response continued to be just as favorable, and I would like to discuss effects this has had on our most recent quarter, as well as for our business going forward. Looking at our comps breakdown is particularly instructive in terms of understanding the impact of our pricing. Most of the growth seen in Q1's two-year stacked comps of 19.9% was driven by price taken over this two-year period. As guests are able to control their ticket size due to our small plate menu, we believe plate consumption rates serve as an effective measure of price elasticity. It is encouraging that over this same period, the average number of plates consumed per guest increased. The increase in per-guest consumption in spite of pricing, leads us to believe we have yet to approach the threshold of price sensitivity for our guests and that our guests understand and appreciate the premium value that Kura offers. The increased plate consumption was partially offset by a dining room traffic deceleration of approximately 11% versus two years ago, of which we believe a portion of our off-premises sales served to offset. We actually believe this is a positive signal. First, we think this traffic deceleration is being driven by longer table turn times due to more time-consuming but important COVID safety measures as opposed to any change in demand as demonstrated by how long our wait times remain. Secondly, the Q1 comps of 19.9% and restaurant-level operating profit margin of 19.5% were achieved in spite of a double-digit dining room traffic headwind, underscoring the potential for improvement on historical AUVs and unit profitability as we exit the pandemic and traffic normalizes. Turning to development, we opened our first new restaurant of the fiscal year in October at Stone Town Galleria in San Francisco. Subsequent to the quarter, we entered the new market of Arizona, with one unit in Phoenix and one unit in Chandler, both of which opened in late December. While it is still early days, we are encouraged by the performance of this year's class of restaurants. Our full-year development plans remain on track, with two more units under construction and fully executed leases for the remainder of the pipeline. Now I would like to touch on three topics that are the current focus of the restaurant industry, supply chain, staffing, and the impact of COVID variants. Due to the variety of our commodity basket, we continue to be relatively inflated from recent supply chain pressures. While we have seen the impact of pressures that apply across commodities, such as freight costs, Our lack of reliance on any single primary protein has protected us from the cost volatility that others are experiencing. This mini strategy, in conjunction with the pricing we have taken in September, has allowed us to maintain ongoing control over our COGS spend, as Steve will discuss later. Our investment in recruitment and retention continues to pay dividends resulting in fully staffed restaurant teams which enabled our strong Q1 sales. Looking to the current quarter, the Omicron variant has caused some operational complications for us due to occasional shift-wise quarantining out of an abundance of caution. In late December, we saw some of our restaurants reduce their seating capacities or operating hours due to reduced workforces which unfortunately coincided with a more lucrative holiday season, but we believe this is a temporary setback. These labor pressures are a result of the increased transmissibility of Omicron and our prioritization of the safety of our employees and guests, as opposed to difficulties with hiring and retention, and we expect normalization following this initial wave. During the month, We also wrapped our mid-December 2019 pricing event, representing several points of comp headwind for Q2. Consequently, we saw December comp growth of just over 14% when compared to December of calendar 2019. Now I would like to provide an update on our recent initiatives. Table-side payment is fully rolled out, with get reception exceeding initial expectations. The pilot for touch panel drink ordering continues to expand across our system, with full rollout expected in this or the next quarter. Lastly, I'm very excited to announce one more initiative, robot servers. As of today, five of our restaurants are testing robot servers, which assist our waiters' staff with drink deliveries. Even beyond these labor efficiencies, It's been a true pleasure to watch our guests delight in the future coming to life in our restaurant. Pending the result of the pilot, we expect full rollout by the end of the fiscal year. Our rewards program continued to grow with 73,000 new members joining in Q1, for a total of 313,000 members, representing a growth of over 30%. Reward program enrollment and engagement remains a top priority as our members have significantly higher ticket averages and dining frequency than non-members. While we all look forward to the end of the pandemic, I am extremely proud of our recent performance and the amazing work that our team has done to deliver these results. I would like to extend my thanks to everyone in our restaurant teams and corporate support center for making this possible. With that, let me turn the call over to Steve to briefly discuss our financial results and liquidity. Steve?