KRUS (2021 - Q3)

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA, Inc., Fiscal Third 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; Steven Benrubi, Chief Financial Officer, and Benjamin Porten, Investor Relations Director. And now I would like to turn the call over to Mr. Porten. Benjamin

Thank you, operator. Good afternoon, everyone, and thank you all for joining. By now everyone should have access to our fiscal third quarter 2021 earnings release. It can be found @www. kurasushi.com, in the investor relations section. A copy of the earnings release has also been included in an 8-K 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. 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 condition. Also, during today's call we will discuss certain non-GAAP measures which we believe to be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a 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'd like to turn the call over to Jimmy.

Thank you, Ben and thank you everyone for joining us today. Let me begin by saying how pleased I am with the rate of recovery in our restaurant following the COVID-related operational challenges we've experienced over the past 16 months. During our fiscal third quarter, we not only saw meaningful improvement in sales, but were also able to improve our operating efficiency and restaurant revenue profitability as we steadily increased our dining room capacity in accordance with state and local regulation. Let me briefly expand on this. As we mentioned on our last call March performance improvement was largely driven by the relaxation of dining room restrictions in mid to late March, including the resumption of our [indiscernible] base operation and limited indoor dining in our California stores, as well as increased indoor dining capacity in non-California restaurants. During the third quarter, our average available seating capacity was approximately 60% against the second quarter's available seating capacity of approximately 25%. Our sales momentum continued through April and May, culminating in third quarter revenue of $18.5 million, more than doubling the revenue we saw in our fiscal second quarter. Looking at the current quarter, our sales recovery has continued with the lifting of operating restrictions in California in mid-June, resulting in full month June revenue of $8 million. As of July 1, all of our restaurants system wide was back to operating at full capacity with no restrictions in place. Guest response to the return of the full Kura experience has been terrific, and with further restriction relaxation during the third quarter our stronger revenue led to a restaurant level operating profit for the first time since entering the pandemic. We believe we are on the path to return to pre-pandemic profitability instead of normalized. Texas which had full seating capacities for the majority of the quarter produced positive comps of 5% as compared to pre-pandemic fiscal '19 year revenue. Following the mid-June reopening of California, our system-wide comps began to exceed the goals of fiscal '19 and our California locations are making great strides towards returning to pre-pandemic productivity levels. July is off to an even stronger start propelled by the success of our Sanrio Bikkura Pon collaboration. Sanrio provided sushi-style redesigns of Hello Kitty and other iconic characters for our toys and interior decoration and the consumer reaction has been strong. I'm very excited for our promotional pipeline for the coming year, which includes collaboration with properties with cross generational appeal, such as ketorise [ph]. Now I would like to touch on our off-premises offerings. Third quarter results continue to support our belief that off-premises can be a long term and incremental part of our business. Instead of dining room reopenings and increases in our system wide seating capacity our third quarter off-premises mix is strong at 10%. As a reminder, pre-pandemic off-premises mix was minimal, of around 1%. And we are very pleased with this improvement. It's also worth noting that we were able to grow our off-premise sales with minimal paid advertising. Our primary communication channel was our rewards program, which now has over 160,000 members, representing 60% growth over the previous quarter's membership count of 100,000. Despite the tangible improvement in off-premises, as compared to before the pandemic, this part of our business is still nascent, and we remain very excited about its longer term potential. Adding to our development, I'm pleased to say that fiscal 2021 has been our busiest and possibly our most productive development year ever. During our fiscal third quarter, we opened one new restaurant in Sherman Oaks, California, and subsequent to the end of the quarter, we opened another new restaurant in Bellevue, Washington, bringing our total count to 32 restaurants. With these openings, we have completed our development plan for fiscal 2021 consisting of seven new restaurants and five new market, a truly impressive feat by our developmental team given the challenging macro environment. We continue to be pleased with the success of fiscal 2021 including our recent openings. We believe there are units from this year's vintage that have the potential to become some of the top performers in our system. For example, in June [indiscernible] were effectively our second and third strongest performers in our restaurant base. The success of our opening of new markets is a clear demonstration of the broader appeal of Kura Sushi in the U.S., and the confirmation of the enormous opportunity we have ahead of us as we continue to expand our footprint. As we look ahead, I'm excited about how our fiscal 2022 development plan is shaping up. We are benefiting from new real estate opportunities created by the pandemic as well as a more rigorous site selection process through our new data platform for model analytics resulting in the most exciting pipeline we've had since entering the space. To-date we've already executed eight new leases, including three new markets, Arizona, Massachusetts and Pennsylvania. And our Stonestown Galleria location in San Francisco is currently under construction. Fiscal '21 was a record development year for Kura, and we expect that we maintain this growth momentum by opening even more units in fiscal '22. On that note I'm so excited to announce the hiring of our new Chief Operating Officer, Sean Allameh. Sean has extensive experience in the restaurant industry, most recently as the CEO of Luna Grill, and with Umami Burger, Daphne’s Greek Café, Arby’s and Sbarro. We are tremendously excited to have Sean join our team and believe that he will be instrumental in Kura's growth. And finally we are thrilled with the success we've experienced so far and our team is ready to capitalize on our guests' pent-up demand for the full Kura experience. Of course none of these accomplishment would have been possible without the hard work and dedication of our team members. I would like to personally thank them for their resilience during these uncertain times. With that, let me turn the call over to Steve to briefly discuss our financial results and the liquidity. Steve?

Thank you, Jimmy. For the fiscal third quarter total sales were $18.5 million, as compared to $2.8 million in the past year period. We believe measurement of comparable sales growth is most relevant versus the pre-COVID period of 2019. On that basis, comparable sales declined 19% with California down 36% due to varying COVID operating restrictions continuing throughout the quarter, while our Texas market increased 5% as COVID restrictions were removed from that market in the third week of the quarter. Turning to cost, food and beverage costs as a percentage of sales were 31.7% compared to 38% in the prior year quarter, reflecting largely normalized performance as sales volume improved and lower inventory spoilage. Labor and related costs as a percentage of sales decreased to 8.9%, from 126.3% in the prior year quarter, primarily due to higher sales leverage and a $5.8 million employee retention credit recognized under The CARES Act extension. Excluding the credit and retention and hiring bonuses, labor and related costs would have been 36.6%, primarily due to the effect of lower sales and minimum staffing needed to operate our restaurants at reduced capacities. Occupancy and related expenses as a percentage of sales improved to 10.2% from 56.5% in the prior year quarter, primarily due to higher sales leverage. Other costs as a percentage of sales decreased to 14.7% compared to 34.3% in the prior year quarter, due to fixed cost leverage as a result of the increase in sales. General and administrative expenses were $4.3 million, compared to $2.9 million in the third quarter last year. Excluding the impact of the $500,000 employee retention credit recognized under The CARES Act extension and $1 million litigation accrual, general and administrative expenses would have been $3.7 million. This increase was primarily due to compensation-related expenses. As a percentage of sales, general and administrative expenses improved to 23.2% compared to 102.6% in the prior year quarter. Operating income was $900,000, compared to an operating loss of $8 million in the third quarter of 2020. Restaurant level operating profit was $1.1 million, compared to restaurant level operating loss of $5.3 million in the third quarter of 2020. Adjusted EBITDA was a negative $2.6 million, compared to a negative $8.2 million in the third quarter of 2020. Income tax expense was $30,000 compared to income tax expense of $1.2 million in the third quarter of 2020. The prior year included a valuation allowance on our deferred tax asset. Taking all these together net income was $800,000 or $0.09 per diluted share, compared to net loss of $9.2 million, or negative $1.10 per diluted share in the third quarter of 2020. Adjusted net loss was $4.5 million, or negative $0.54 per diluted share, compared to adjusted net loss of $10.7 million, or negative $1.29 per diluted share in the third quarter of 2020. Turning to our cash and liquidity, at the end of the fiscal third quarter, we had $4.7 million in cash and cash equivalent and $17 million in debt, as we borrowed an additional $5 million on our revolver to meet our planned capital expenditures for fiscal year 2021. In terms of capital expenditures, we continue to maintain the following expectations for the remainder of the fiscal year. Weekly CapEx spending for Q4 will be approximately $260,000. We continue to expect our weekly G&A spend to be approximately $320,000 as we scale our organization in preparation for our new units, and growing system size. I'd like to reiterate my comments from our last earnings call, where I had mentioned that we were moving from a relatively defensive strategy to a more aggressive one on the strength of our sales, recovery and new unit performance. Our performance in the third quarter has only made us more confident and the investments that we're currently making in preparation for the next fiscal year are a demonstration of this confidence. Lastly, as a reminder, due to the ongoing uncertainty driven by COVID-19, we will not issue additional financial guidance for fiscal year 2021 at this time. Now I'll turn the call back to Jimmy.

This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English. Please bear with us.

Thank you. At this time, we'll be conducting a question and answer session. [Operator Instructions] One moment please while we poll for questions. Our first question is from James Rutherford with Stephens, Inc. Please proceed.

Right. Thank you. Good afternoon, guys. I wanted to start off on the comments around unit development. I think you noted you expect continued momentum into fiscal 2022? Just to clarify, do you mean you aim to keep a similar growth rate of units in 2022? Or is it a number of units you intend to keep at a kind of consistent level next year.

Thank you, Jim for your first question. Please allow me to answer in Japanese. [Foreign Language].

Hi, James this is Ben. So our comments in the prepared remarks isn't a resetting of our guidance or us providing new guidance. It's simply a reference to us having opened seven units in fiscal '21 and our expectation to open more than 7 units in the coming fiscal year.

[Foreign Language].

In terms of our unit opening piece, there's always the considerations between the unit pipelines having the management pipeline in place, pandemic delays in our liquidity, and once we have greater clarity on all of those factors we hope to provide some more granular guidance.

Okay, that's helpful. I wanted to shift over to the comp side of the discussion. If I heard you correctly, you were exiting June with total company 2 year comps slightly positive. Correct me if I heard that wrong. But I wanted to ask for California specifically what you're seeing? I know the recovery there seems like it's pretty robust. Where do you think that shakes out here in the near term? I think Texas is kind of settled in that mid-single digit positive. Where do you think California will look like in the near term?

Hi, James, this is Steve. And I'll speak a little bit to the June comp performance. So as I think you know, June 15, the State of California lifted all of the remaining restrictions on indoor dining, and we were able to go to 100% capacity. And we did see a change in performance that came right along with that almost immediately. For the full month of June, the total company, we were down low-single digits on our comp. Texas was low double-digit positive. California was a mid-teens negative, as we were just starting to transition the restaurants to fuller capacity. And then for the second half of the month alone, if you just look at the period where everything in California and Texas was 100% we were actually up 4% in those last couple of weeks of the month, California down single-digit on comps. So well on our way to getting back to 2019 productivity levels and continued strength in Texas actually in the double digits, range. And that all came together to be a 4% positive for the back half of June.

That's super helpful. Thanks for all the detail, Steve. If I can squeeze one more in on labor costs and then I'll pass it on. It sounds like 36% of sales normalizing for few items. I know sales were still down in total for the full quarter. What do you think the post-pandemic normal sales level, what should we expect for labor in that environment, given sort of the wage dynamic today?

Yeah, we look at both, cost of goods and labor pre-pandemic, or historically in that low-30s range for the company and COGS came right in there for the quarter. Labor, we were pleased with the leverage pickup that we got from about mid-40% of sales in Q2 to the 36.6%, adjusted in Q3. And we hope to be working ourselves eventually toward the same kind of pre-pandemic labor rates, in that low-30s range. There are some factors, just the fact that we've got, with a lot of hiring to get the stores back to full capacity, there's a lot of green people in some of those locations. And it does take time in both new stores and newer employees to reach peak efficiencies. And so labor may run, a little bit more elevated for a period of time, but eventually getting back in that low-30s neighborhood is our target. There is some inflationary pressure in categories, like dish washer wages for instance. But we still believe that over time we can, work our way to a pretty similar kind of labor leveraging, both with the sales, recovery and continuing improvement on efficiencies in the restaurants.

All right, I really appreciate it. Congratulations.

Thanks, Jim.

Thank you, James.

Thank you. Our next question is from Peter Saleh, BTIG. Please proceed.

Great. Thanks. Jimmy, could you comment a little bit on the performance of the restaurants that are not in the comp base, especially those in some of the new markets and how they aligned or matched up with your expectations as you went into those markets?

Sure, I'm happy to answer this question. [Foreign Language].

In terms of sales recoveries, we're seeing similar results in Texas to the rest of the Texas comp base, it's been a very strong performer. California has been, just a little bit slower to recover. I think this is a function of us having smaller stores in California, and so they tend to fill up more quickly. But again, just as Steve mentioned, even the stores outside of our comp base are well within our expectations and are on track to hit pre-pandemic productivity levels.

[Foreign Language].

And as Jimmy mentioned in the prepared remarks we're extremely pleased with performance on these scores. Fort Lee and Bellevue, in particular, are neck and neck for the second and third top performing spots. That's continued through July. They're just -- they're great scores. The new units that we've opened in new markets have really been encouraging. And looking at these units, we're very confident that it's just a matter of time until we're able to return to the same unit level economics that we're delivering for COVID-19.

Excellent, that's great to hear. Could you just comment a little bit on the commodity environment and inflation that you guys are seeing and/or expecting over the next several quarters and what level of pricing do you anticipate you'll need to take to cover that inflation?

Sure, Peter, I'll speak a little bit to that. And just for starters, to kind of remind on our commodity basket, we are fortunate to have a very diverse mix of proteins and other commodities in our restaurants with over 130 items on the menu and our top five commodities are in the neighborhood of 25% to 26% only of our purchase mix. So it's not heavily concentrated in any particular area. But having said that, we have seen some inflationary pressure in spots across our commodity mix. And it's hard to know how much of that's transient versus more longer term. At this point, it's fortunately not a big factor, as you can see on our COGS performance for the quarter. But we're going to remain mindful of what we see develop in that arena. And if we see or feel like, things are a little more sticky that way, in long term, we do feel like, as we have in the past, there's opportunity to adjust pricing in an appropriate way to go along with what we're delivering in food product and not getting into any expectations or plans about the future on pricing. But suffice to say we'll, as we've done in the past, for instance, on minimum wage, increase dates, there could be further pricing move that goes along with what we see in food and labor.

All right. Thank you very much. I'll pass it along.

Thank you, Peter.

Thanks, Peter.

Our next question is from Andrew Strelzik with BMO Capital Markets. Please proceed.

Hey, good afternoon, everyone. My first question is on the whitespace opportunity. I know you've said that you thought it was greater than you thought in the past. And you were going to do some work to kind of explore what that might look like. I'm curious where you are in that process? And if you have any insights to share at this point.

So this is Jimmy. I'm happy to answer this question. [Foreign Language].

In terms of our thinking about the whitespace opportunity growing as a result of pandemic that remains unchanged. We're very optimistic. That being said, we're still very much in the early days of the pandemic winding down. And so we're waiting until things have stabilized further and things are -- we're clearly at the end to commission a whitespace study.

Okay, that makes sense. I think last quarter, you pointed to Texas, in particular, and the off-premise mix there and said, hadn't really dipped below 5% at any point. I'm just curious, for an update there, as you've seen Texas move to positive comps, and also in California as the gap is narrowing their relative to 2019. What does the off-premise mix look like as those key markets are more fully opening?

So the full June off-premises mix is 6%. So within that mid-single digit, the high single digit expectation that we have for post pandemic off-premises sales. We're seeing similar results across markets. And we're -- we think this is a great demonstration for the long term stickiness of off-premises, correct.

Okay, great. And then just my last one here. You mentioned, you still have a bunch of hiring to do. I'm just curious, how fully staffed are you now relative to before the pandemic and what is the -- what has the experience been hiring as these markets have opened? How are you finding the environment to be for the brand? Thanks.

[Foreign Language].

So obviously, we knew that California would be reopening on June 15. And so we made a very serious effort mid-May, at the end of May, to begin this hiring care. This is particularly focused on hiring and retention bonuses, the major change that we made in terms of the hiring end, referral bonuses would be that instead of having the bonuses dispersed after a month, or two months or three months of staying with the company, we made this an upfront bonus. And that was tremendously effective. And as a result, we were able to fill all the positions we needed in California to operate normally. It was a tremendously successful hiring campaign.

Great, thank you very much.

Thank you, Andrew.

Thank you. [Operator Instructions] Our next question is from Jeremy Hamblin with Craig Hallum Capital Group. Please proceed.

Thanks, and congratulations in managing through this really well. I wanted to come back to the commentary around Bellevue and Fort Lee locations. And in terms of that incredible performance you're seeing from those locations in the early days, is there something about the design of those restaurants, the size of those locations that maybe serves as a template, or perhaps even where they're located? What you might do going forward? Or I mean, because these are markets that you never been in before that probably don't have a lot of brand equity. But any color you can add in terms of how you know those restaurants are operating so strong right out of the gate?

Thank you Jeremy for your question. [Foreign Language].

In terms of -- you asked about the size of the template. Fort Lee's about 3,000 square feet, Bellevue's about 4,000 square feet. So the very strong sales we're seeing is not a function simply of larger sizes or greater occupancy limits. And so in terms of Bellevue or Fort Lee changing our thinking about sizing or templates prototypes, it's really -- it's not going to impact our thinking. It's more about having chosen very good -- the site selection within those markets was excellent.

[Foreign Language].

In terms of looking at Bellevue and Fort Lee specifically, I think we might have benefited a little bit from relatively higher demand for evolving sushi in those markets, as compared to the rest of the country. I think we're also benefiting from the fact that Fort Lee's our first store on the East Coast, Bellevue is our first on the West Coast. And so I think we're drawing from a larger radius than we would for a more infield market. Just to give you an idea, when we opened our first Texas store, people driving three hours down from Oklahoma. And so we do draw from a very wide area. In terms of the demographics, we're not seeing anything truly unique to Bellevue or Fort Lee that is correlated directly to its success. But we're excited to drill down further to see what we can glean from these openings to inform future openings. I just know, we do take an unusual approach in our unit growth and that we are not hub and spoke model where we take a non-continuous approach which is powered by our remote management system. And I say that this is a huge competitive advantage for us. If we were operating from a more traditional hub and spoke model it would have been much later in our corporate life, that we would have discovered just how lucrative and attractive the Pacific Northwest and East Coast are as markets for us.

Thanks for that color. You mentioned, I think that you have eight leases executed already. And I know you're not prepared yet to give specific unit growth guidance for fiscal '22. But typically, when you have those leases signed would development take more than a year or less than a year. What's kind of the average timeline from lease execution to having that store open?

[Foreign Language].

Historically, it was almost always the case that we would open a store within a year after executing the lease. That being said, as we've seen over the last year and a half of the pandemic, there are externalities, construction delays. And beyond just construction, permitting delays as well as municipal governments are spread thin. And so it's harder for us to predict the construction timeline right now. But typically yes, with an executed lease the stores open within a year.

Okay, great. And then just coming back to your labor model, the embedded technology that you have within your restaurants, if you think to the future of what the core sushi model is going to look like in the U.S., do you anticipate that that model drifts a little closer towards your core Japan locations where potentially there's even more functions that are performed, kind of technology or are more automated than you currently have in your restaurants or even what you had in your restaurants, kind of pre-pandemic?

I will answer this question. [Foreign Language].

In terms of comparisons to Japan, it's just the labor model is so fundamentally different, plate prices are different, commodities are different, the rent is different. And so we're very loath to draw direct comparison. But that being said, we do have a shared services agreement with the parent. And we have a quarterly exchange of technological developments from whether they're coming from the parent or our sister company in Taiwan, or ourselves, we regularly exchange developments. And we're also working on our own internal stuff that the parent doesn't have to introduce our own improvements. But just to add on to Jimmy's comment, you mentioned stuff that the parents, one major difference would be that Japan is a more self-service culture. And so they can deliver drinks by conveyor belts, where's that really is not part of what people expect for hospitality in the United States. And so our sort of analog for that would be the touch panel drink ordering that we're testing right now. This will allow -- servers won't be taking drinks. They'll be ordered through the touch panels. So the servers have -- their absolute labor responsibilities are reduced and they are able to focus more on hospitality. We're also working on tableside payment. And as I'm sure you know, our labor's really -- our labor's percentage of revenue is really a function of sales, leveraging, with tableside payment, we're hoping to reduce our table turn times and increase the number of parties that we can see per day. And that would be another way to improve our restaurant level economics.

Great, that's helpful. Last one from me, Steve, in terms of the May quarter, third party delivery charges off-premises, swipe charges, through Square, what was that as a percent of sales of your total sales?

Well, on the delivery charges, we actually don't subsidize that cost which runs right around $8 per transaction. So the customer picks that up themselves directly and to us there's no net cost related to that. And the Square charges are really baked into the credit card transaction fees that they charge us for processing the sales themselves. There's a few basis points -- just like any processor -- a few basis points premium that they charge to what their internal cost is. But it's a pretty -- for us it's a pretty transparent thing in terms of, not a significant incremental costs by anything going through Square and certainly the delivery is just a wash.

Great. Thanks for taking all of my questions and best wishes.

Thanks.

Thank you. Our next question is from George Kelly with ROTH Capital Partners. Please proceed.

Hi, everybody. Thanks for taking my questions. So maybe I'll start with pricing. You mentioned in response to one of the earlier questions just that you're considering, managing through this inflationary environment is by taking minus pricing at least that's what I heard. So question for you is I know you've taken some real modest nothing major in the past but is there much sensitivity and have you kind of tested the upper bounds of when that sensitivity really does start to show through?

Thank you. Steve.

Go ahead, Jimmy.

Okay. [Foreign Language].

In terms of testing what the potential upper limits of pricing would be we haven't done any tests specifically geared towards that. When we do take pricing the things that we're considering be -- we monitor, the plate price, not -- I'm sorry, not the plate price, the number of plates being eaten, the average tickets. Our goal is for our sushi to remain accessible. And so we try to keep our ticket in line with the ticket averages of our peers in casual dining industry. That being said, in terms of sensitivity, because we take such minor pricing because of our small plates menu, it's on the order of $0.05, $0.10, $0.25, there's been pretty minimal sensitivity or pushback from our guests in the past. In terms of margin management, that remains a very robust lever, whether we're talking about labor inflation or commodity inflation, there's still room to take price.

Okay, that's helpful. And then different topics, back to the trends that you've seen just in same store sales, so did I miss on that? Did you comment at all on July? What you've seen, I'm just curious if you've seen continued acceleration?

Yeah, we haven't commented on July same store. We really talked about through the end of June. Jimmy did allude to the Sanrio Hello Kitty promotion, which launched on July 1, and like many of our other brand partnerships, we're very excited and happy about how that customer reception has been to that since the beginning of July. But we'll share more of that next time we talk.

Okay, great. And then last question for me is when I look across your store base, I see wait times consistently at most of your restaurants. And I heard in response to a different question just that you don't think stores -- you're pretty comfortable with the size and everything. But why not open -- can you just, I don't know what the exact question is. But what is your largest restaurant? And why not in future units, why not tweak up the size a little bit just to boost your capacity? Thank you.

[Foreign Language].

So we're fully aware of that we have long wait times during weekends in particular. But as Jimmy mentioned earlier, actually, when we were talking about Bellevue and Fort Lee, larger sizes don't necessarily have a one to one correlation to stronger sales. Our largest store is 6,800 square feet. But Bellevue and Fort Lee are 4,000 and 3,000 square feet respectively, and are stronger performers. And so thinking about it, cash on cash, restaurant build out costs, it's not always a matter of simply just going bigger and expecting, comparable margins or comparable returns. And so this is going to be something that is part of an ongoing discussion between the executive management team at Kura Sushi to continue to figure out what the most appropriate sizes or whether they're different appropriate sizes for different markets.

Okay, thank you. And I guess I do have one more quick one. Texas, impressive statistics that you gave on same store sales. Within that, I'm sure you're not going to want to get too granular. But within that, what you reported, the positive comps and everything, is there a large range? And what I'm trying to understand is if there's a group of stores within the Texas market that still is being really, really negatively impacted by COVID? And that's my last question. Thank you.

[Multiple Speakers].

Go ahead Jimmy.

Yeah, just to reiterate, Texas as a whole has -- you know, we're very happy with the rebound in the performance there. You can look at maybe some markets and consumer psychology around COVID in general. It may be a little more cautious, for instance in the Houston market than it might be in the Dallas market. And you would see, to some degree, a little difference in numbers. But on the whole, you know, Texas is clearly doing very well as evidenced by the overall rebound that we saw very quickly, and sustained since then over the last few months.

Ladies and gentlemen, there are no more further questions, and this will conclude today's conference. You may disconnect your lines at this time. Thank you very much for your participation. Have a great day.