Kura Sushi USA, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA Incorporated Fiscal First Quarter 2026 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and lines will 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, Jeff Utes, Chief Financial Officer, and Benjamin Porton, Senior Vice President of Investor Relations and System Development. 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 first quarter 2026 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 the AK 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 under 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 in financial condition. Also during today's call, we will discuss certain non-GAAP financial 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 reconciliations to comparable GAAP measures are available in our orange release. With that out of the way, I'd like to turn the call over to Jimmy.

Thanks, Ben, and happy New Year to everyone for joining us on the call today. We are making great progress towards the goals we laid out in our annual guidance and towards achieving creative comparable sales on a full year basis. Regarding our goal of 16 new restaurant openings, we have 10 units under construction on top of the four restaurants opened to date. Our commitment to aggressive cost management has reduced G&A as a percentage of sales by 80 basis points on an adjusted basis. We are also able to deliver labor as a percentage of sales, renewing our confidence in our ability to improve labor costs by 100 basis points in fiscal 2026. The first quarter has created a strong foundation for us to build on as we enter the easier comparisons of Q2 and Q3. Total sales for the fiscal first quarter was $73.5 million, representing comparable sales growth of negative 2.5%, outperforming the complex expectations we had shared during our last earnings call. We were very pleased to see the sequential improvement at the end of the quarter and for this momentum to have continued past November. Most of this as a percentage of sales were 29.9% as compared to the prior year quarter's 29%. As a reminder, we took 3.5% price on November 1st, so Q1 did not see the true quarter benefit. Also, as we have previously discussed, we expect full-year costs to be around 30% after considering the impact of tariffs and achieving the full benefit of our menu price adjustment. Labor as a percentage of sales was 32.5% as compared to the prior year period of 32.9% due to a number of initiatives relating to operating costs. Shifting to real estate, we opened four restaurants in the first quarter, Arcadia and Modesto in California, and Freefold and Lawrenceville in New Jersey. We currently have 10 restaurants under construction, including one in Tulsa and one in Charlotte, both of which are new markets for us. As we have mentioned in the last Astonings call, Fiscal 25 was the strongest class in recent memory, and the restaurants we've opened to date are continuing this trend. We expect to open one more unit in the fiscal second quarter, and for the remainder to open in the back half of the year. Turning to marketing, we are currently engaged in our campaign with Kirby coinciding with the release of Kirby Air Riders for Switch 2. As part of our efforts to maximize the impact of each collaboration, we have introduced IP-themed Mr. Fresh Domes and touch panels, which have been well received by our guests. As we mentioned in our last running call, research is ongoing for the introduction of reverse program status tiers. We also began advertising our reservation system for the first time during the holidays. In preparation for the reservation system's marketing campaign, we have also decoupled the reservation system from our revert program with the hopes of encouraging adaption by removing the user friction created by a required map download and allowing guests to place reservations directly through the cooler website or our Google Maps pages. In other system development news, The manufacturing of our robotic resources is proceeding on schedule, and we continue to expect to begin installation in Q3 and to have the majority of the 50 eligible existing restaurants retrofitted by the end of the fiscal year. To conclude, we are pleased with the progress we've made towards the goals we shared with our annual guidance. We believe we are on the right path to achieving positive comp sales for the year. I would like to express my thanks to every one of our team members at our restaurants and support center for their partnership in achieving these goals. Jeff, now I'll hand it over to you to discuss our financial results on the liquidity.