Kura Sushi,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥245.11B
• Operating Income: ¥5.46B
• Net Income: ¥3.48B
• EPS: ¥90.74

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Kura Sushi Co., Ltd. (2695) reported FY2025 Q4 consolidated results under JGAAP with steady top-line growth but soft operating profitability and negative free cash flow. Revenue rose 4.3% YoY to 2,451.09 (100M JPY), indicating resilient demand and continued store network contribution. Operating income declined 4.2% YoY to 54.60, reflecting cost pressures and limited operating leverage despite growth in sales. Ordinary income was 61.79 (-0.7% YoY), supported by a positive non-operating balance (non-operating income 9.31 vs expenses 4.06), including 5.66 of interest income. Net income increased 11.8% YoY to 36.06, benefitting from non-operating items and despite a relatively high effective tax rate of 38.6%. DuPont analysis shows a modest ROE of 4.2%, built from a slim net margin (1.5%), solid asset turnover (1.571x), and moderate financial leverage (1.81x). Gross profit margin was reported at 56.8% and EBITDA was 159.92 (margin 6.5%), yet SG&A of 1,335.31 nearly consumed gross profit, keeping operating margin thin at about 2.2%. Liquidity is adequate with a current ratio of 110.7% and cash and deposits of 230.43, versus current liabilities of 309.78. The capital structure is moderate with a reported debt-to-equity of 0.77x and interest coverage a comfortable 14.88x, indicating manageable financial risk. Operating cash flow was strong at 148.69 (4.12x net income), supported by depreciation and likely working capital effects, but investing cash outflows of -185.50 drove free cash flow to -36.81, consistent with ongoing store investments and asset expansion. Capex was -102.86, implying additional investing outlays (e.g., deposits, construction-in-progress, or overseas investments) beyond maintenance capex. Dividend data are largely unreported; the calculated payout ratio of 45.9% suggests a moderate policy but FCF coverage was negative (-2.22x) this term due to investment-heavy cash flows. Balance sheet quality is underpinned by 862.58 of total equity and owners’ equity of 623.38, with assets of 1,560.15, supporting the 1.81x equity multiplier. Reported ratios such as ROA (ordinary) and operating margin show as 0.0% in XBRL due to disclosure gaps, not actual zeros. Overall, Kura Sushi delivers stable sales growth but faces margin compression from labor, ingredient, and utility costs, with capex intensity weighing on FCF. The outlook hinges on cost discipline, price/mix management, and the payback of new stores to convert revenue growth into margin and cash flow improvement. Data limitations (notably SG&A breakdown, inventory, long-term debt, and dividends) constrain the depth of some conclusions, but the available metrics frame a picture of cautious profitability with adequate liquidity and moderate leverage.

Profitability Analysis

ROE_decomposition: - Net profit margin: 1.5% (Net income 36.06 / Revenue 2,451.09). Asset turnover: 1.571x (Revenue 2,451.09 / Total assets 1,560.15). Financial leverage: 1.81x (Assets 1,560.15 / Equity 862.58). Implied ROE ~4.2%, in line with reported 4.2%. margin_quality: - Gross margin reported at 56.8%. EBITDA 159.92 implies a 6.5% EBITDA margin; operating income 54.60 implies an operating margin of ~2.2%. Net margin at 1.5% reflects thin restaurant economics under cost pressure and a high effective tax rate (38.6%). Non-operating balance contributes modestly (+5.25), aided by interest income (5.66). operating_leverage: - Despite 4.3% YoY revenue growth, operating income declined 4.2% YoY, indicating negative operating leverage this period, likely from higher SG&A (labor, utilities, marketing) and possibly food cost creep. D&A of 105.32 supports EBITDA, but SG&A of 1,335.31 nearly offset gross profit, limiting flow-through from sales.

Growth Assessment

revenue_sustainability: - Revenue grew to 2,451.09 (+4.3% YoY), consistent with steady store expansion and traffic resilience. Asset turnover of 1.571x suggests active asset utilization; sustaining this depends on same-store sales and utilization of new capacity. profit_quality: - Operating profit softness versus sales indicates cost headwinds. Ordinary income stability (down only 0.7% YoY) reflects non-operating support. Net income growth (+11.8% YoY) is encouraging but partially driven by non-operating items and despite a high tax rate, pointing to mixed quality. outlook: - Near-term earnings trajectory depends on cost normalization (ingredients, wage, utilities) and pricing/mix actions. Improved store maturity and efficiency can restore positive operating leverage. Continued investment implies growth capacity, but conversion to FCF will be key to sustain expansion without elevating leverage.

Financial Health

liquidity: - Current assets 343.07 vs current liabilities 309.78 yield a current ratio of 110.7% and quick ratio of 110.7% (inventory unreported). Cash and deposits of 230.43 provide a meaningful liquidity buffer. Working capital stands at 33.29. solvency: - Total liabilities 664.99 vs equity 862.58 indicate a conservative balance sheet. Debt-to-equity reported at 0.77x (likely total liabilities/equity). Interest expense is 3.67 with EBIT 54.60, giving interest coverage ~14.9x, implying low near-term default risk. capital_structure: - Short-term loans are 11.30; long-term loans and total interest-bearing debt are unreported. Equity multiplier is 1.81x. Investment securities of 43.40 add financial flexibility. Lack of lease disclosure under JGAAP and unreported long-term debt limit full leverage assessment.

Cash Flow Quality

earnings_quality: - OCF 148.69 is 4.12x net income (36.06), supported by non-cash D&A of 105.32 and likely working capital tailwinds. This points to solid accrual quality for the period. FCF_analysis: - Free cash flow is -36.81 (OCF 148.69 + Investing CF -185.50). Capex was -102.86, so additional investing outflows beyond capex (e.g., new store deposits, intangible investments) weighed on FCF. Financing inflow of 49.46 helped fund the investment gap. working_capital: - Accounts receivable are modest at 56.72 in relation to sales, consistent with a cash-heavy business model; inventory data are unreported. The OCF strength suggests either stable or improving working capital turns this period.

Dividend Sustainability

payout_ratio_assessment: - Annual DPS is unreported. The calculated payout ratio is 45.9%, while the XBRL-reported DOE and payout ratios are 0.0%/0.5%, which likely reflect disclosure gaps rather than policy. On earnings, a ~46% payout would be moderate. FCF_coverage: - With FCF at -36.81, any dividend would not be covered by free cash flow this period (FCF coverage -2.22x). Coverage should improve if investment intensity normalizes or if OCF grows with margin recovery. policy_outlook: - Given data limitations, dividend policy signals are unclear. Balance sheet capacity is adequate, but near-term dividends would compete with growth capex; prioritization will depend on store roll-out returns and cash generation.

Risk Assessment

Business Risks:

• Food cost inflation (seafood, rice) and FX-linked import costs compressing gross margins
• Labor cost and staffing constraints driving elevated SG&A
• Utility and energy price volatility impacting store-level profitability
• Execution risk on new store openings and maturation curves affecting operating leverage
• Competitive intensity in conveyor-belt sushi and broader casual dining
• Health, safety, and supply chain disruptions affecting operations and brand

Financial Risks:

• Negative free cash flow due to high investment outlays
• Potential increase in borrowing needs if capex remains elevated and OCF moderates
• Interest rate and credit market conditions affecting financing costs
• Limited visibility on lease and long-term debt obligations under JGAAP disclosures

Key Concerns:

• Thin operating margin (~2.2%) leaves little buffer against cost shocks
• Operating deleverage despite revenue growth
• High effective tax rate (38.6%) dampening net profitability
• Unreported details on SG&A composition, inventory, and long-term debt constrain analysis

Investment Implications

Key Takeaways:

• Top-line growth (+4.3% YoY) but operating income declined (-4.2% YoY), indicating cost pressures
• ROE at 4.2% driven by slim margins but solid asset turnover and moderate leverage
• Adequate liquidity (current ratio 110.7%) and strong interest coverage (~14.9x)
• OCF strong (148.69), but FCF negative (-36.81) due to sizable investing outflows
• Margin recovery and capex discipline are central to improving cash returns

Metrics to Watch:

• Same-store sales growth and average ticket
• Food cost ratio and labor cost ratio within SG&A
• Operating margin and EBITDA margin trajectory
• OCF/Net income ratio and free cash flow
• Capex per new store and payback periods
• Leverage metrics (interest-bearing debt once disclosed) and interest coverage

Relative Positioning: Within Japanese casual dining and conveyor-belt sushi peers, Kura Sushi exhibits solid asset turnover and moderate leverage but operates with thinner operating margins and negative near-term FCF due to continued investment; sustained margin improvement and normalization of investment outflows would be needed to close the profitability gap with stronger-margin competitors.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
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