- Total revenues increase 9.9% to $104.5 million compared to
the fiscal 2021 third quarter
- Pre-tax income increases 25.3% to $9.9 million compared to
the fiscal 2021 third quarter
- Diluted earnings per share increase 41.7% to $0.51 compared
to the fiscal 2021 third quarter
- Raises fiscal 2022 guidance for both total revenues and
profitability
Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results
for the third quarter and nine months ended October 29, 2022.
Sharon Price John, Build-A-Bear Workshop President and Chief
Executive Officer, commented, “We are pleased with our third
quarter and first nine months results as we continued to see
momentum and consistency in our business with strong brand interest
from consumers. Our retail store traffic continues to show
double-digit increases leading to year-over-year growth in
transactions across geographies. With our fiscal 2022 third
quarter, we have now delivered seven consecutive quarters of
increased total revenues compared to the prior year’s period, with
sustained profitability. With the strong positive trends continuing
in our fourth quarter, we are raising our guidance and believe we
are on track to deliver the most profitable year in our 25-year
history, building on the 2021 results which set our previous record
high.
“The tremendous progress that has been made since we instituted
our brand-leveraging diversification strategy has been instrumental
in fueling our current success and is designed to provide a
foundation from which we can scale while driving further
transformation and increasing profitable growth,” concluded Ms.
John.
Third Quarter Fiscal 2022 Results (13 weeks ended
October 29, 2022, compared to the 13 weeks ended October 30,
2021):
- Total revenues were $104.5 million, an increase of 9.9%
including the negative impact of $2.5 million due to unfavorable
currency exchange compared to $95.1 million in the fiscal 2021
third quarter;
- Net retail sales were $99.2 million, an 8.3% increase compared
to $91.6 million in the fiscal 2021 third quarter with growth in
sales from corporately-managed retail stores more than offsetting a
decline in consolidated e-commerce demand (orders generated online
to be fulfilled from either the Company’s warehouse or its stores).
The Company noted that consolidated e-commerce demand decreased
29.4% compared to the fiscal 2021 third quarter, as consumers
continue to embrace a return to in-person shopping, while its third
quarter e-commerce demand showed an increase of 104.7% from the
2019 period; and
- Commercial and international franchise revenues were $5.3
million compared to $3.6 million in the fiscal 2021 third
quarter;
- Gross profit margin was 52.0%, compared to 52.1% in the fiscal
2021 third quarter. The Company mitigated the negative impact of
approximately 200 basis points from higher freight costs by
leveraging occupancy and distribution costs;
- Selling, general and administrative (“SG&A”) expenses were
$44.4 million, or 42.5% of total revenues, compared to $41.7
million, or 43.8% of total revenues in the fiscal 2021 third
quarter. The 130 basis-point improvement in SG&A as a
percentage of total revenues was driven by favorable leverage on
fixed expenses due to the increase in total revenues offset by
unfavorable currency exchange rate fluctuations;
- Pre-tax income increased 25.3% to $9.9 million from pre-tax
income of $7.9 million in the fiscal 2021 third quarter;
- Income tax expense was $2.4 million compared to income tax
expense of $2.0 million in the fiscal 2021 third quarter;
- Net income increased 27.1% to $7.5 million from net income of
$5.9 million in the fiscal 2021 third quarter;
- Diluted net income per share rose 41.7% to $0.51, as compared
to $0.36 in the fiscal 2021 third quarter. This increase was a
result of the combination of a profitability improvement and a 9.1%
reduction in the quarter-end diluted share count compared to the
fiscal 2021 third quarter; and
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) rose 18.3% to $12.9 million from $10.9 million in the
fiscal 2021 third quarter.
Nine-Month Highlights (39 weeks ended October 29, 2022,
compared to the 39 weeks ended October 30, 2021):
- Total revenues were $322.8 million, an increase of 14.6%,
including the negative impact of $4.3 million due to unfavorable
currency exchange compared to $281.6 million in the first nine
months of fiscal 2021;
- Consolidated net retail sales were $308.0 million, an increase
of 13.2% compared to $272.1 million in the first nine months of
fiscal 2021 with growth in sales from corporately-managed retail
stores more than offsetting a decline in consolidated e-commerce
demand (orders generated online to be fulfilled from either the
Company’s warehouse or its stores). The Company noted that
consolidated e-commerce demand decreased 12.5% compared to the
first nine months of fiscal 2021, as consumers continue to embrace
a return to in-person shopping, while its first nine-months
e-commerce demand showed an increase of 152.0% from the 2019
period;
- Pre-tax income increased 16.7% to $35.7 million compared to
pre-tax income of $30.6 million in the first nine months of fiscal
2021;
- Income tax expense was $8.3 million compared to income tax
expense of $7.4 million in the first nine months of fiscal
2021;
- Net income rose 19.0% to $27.5 million from $23.1 million in
the first nine months of fiscal 2021;
- Diluted net income per share increased 23.6% to $1.78, as
compared to $1.44 in the first nine months of fiscal 2021. This
increase was the result of the combination of a profitability
improvement and a 3.9% reduction in the period-end diluted share
count compared to the end of the first nine months of fiscal 2021;
and
- EBITDA rose 13.4% to $45.0 million from $39.7 million in the
first nine months of fiscal 2021.
Store Activity:
The Company expects to end fiscal 2022 with an increase in total
stores in North America inclusive of third-party locations, as it
continues to execute its previously announced plans to open 20
Workshops within the fiscal year. Separately, the Company continues
to expect to end the year with a reduction in locations within
Europe. Combined across geographies, the Company plans to have more
total locations at the end of the 2022 fiscal year compared to the
end of fiscal 2021 inclusive of third-party locations.
As of October 29, 2022, the Company had 347 corporately-managed
stores which reflects two net closures as compared to the end of
the fiscal 2021 third quarter with seven net store openings in
North America and nine net store closures in Europe.
Through the Company’s third-party retail business model, there
were 65 locations as of October 29, 2022 with relationships that
include Carnival Cruise Lines, Great Wolf Lodge Resorts, Landry’s
and Beaches Family Resorts, reflecting four net openings in the
first nine months of fiscal 2022. The Company’s international
franchisees operated 66 locations at the end of the fiscal 2022
third quarter reflecting seven net closures compared to the end of
the 2021 third quarter.
Balance Sheet:
At the end of the fiscal 2022 third quarter, the Company had
cash, cash equivalents, and restricted cash totaling $12.0 million
compared to $48.5 million at the end of the fiscal 2021 third
quarter. The Company noted that the 2022 third quarter-end cash
position as compared to the prior year period reflected the use of
cash to repurchase shares of its common stock, pay a special
dividend, and increase investment in working capital to support
strategic initiatives intended to drive further growth. The Company
finished the quarter with no borrowings under its revolving credit
facility.
Total inventory at quarter end was $88.3 million, an increase of
$26.4 million from the end of the fiscal 2021 third quarter. The
increase in inventory as compared to the end of the fiscal 2021
third quarter reflects higher on-hand units compared to last year’s
unusually low level driven by supply chain disruptions and
increased freight and other inflationary costs. The Company noted
that it is comfortable with the composition and level of its
inventory which supports increased consumer demand and critical
seasonal products. The Company continues to expect to end the year
with total inventory below the 2021 fiscal year-end level.
As of the end of the fiscal 2022 third quarter, the Company had
utilized a total of $4.8 million to repurchase approximately
337,000 shares of its common stock. During fiscal 2022, the Company
utilized a total of $24.1 million to repurchase approximately
1,540,000 shares of its common stock. The Company currently has
authorization to repurchase an additional $46.5 million of its
stock under the new $50.0 million stock repurchase program adopted
on August 31, 2022.
In the fiscal 2022 third quarter, capital expenditures totaled
$2.7 million compared to $3.1 million in the fiscal 2021 third
quarter.
2022 Outlook:
Reflecting its positive business performance through the first
nine months of the year, continued positive fourth quarter trends
and its expectation of continued strength during the period, the
Company is raising its annual guidance, which includes the impact
of unfavorable currency exchange rate fluctuations primarily given
the current strength of the U.S. Dollar compared to the British
Pound.
For fiscal 2022, the Company currently expects:
- Total revenues in the range of $455 million to $465 million, as
compared to $411.5 million in fiscal 2021;
- Pre-tax income in the range of $56 million to $63 million, as
compared to $50.7 million in fiscal 2021;
- EBITDA in the range of $69 million to $76 million, as compared
to $63.0 million in fiscal 2021;
- Income tax rate in the range of 24% to 25%, excluding the
impact of discrete items;
- Capital expenditures in the range of $12 million to $14
million;
- Depreciation and amortization of approximately $13 million;
and
- Finish the year with inventory levels below the end of fiscal
2021.
The Company’s guidance for profit growth considers anticipated
ongoing inflationary pressures as well as its plans to mitigate the
impact on its margins. The Company noted that its outlook assumes
no further material changes in the operations of its supply chain
including the ability to receive and ship product on a timely
basis, the macro-economic environment or relevant foreign currency
exchange rates.
Note Regarding Non-GAAP Financial Measures:
In this press release, the Company’s financial results are
provided both in accordance with generally accepted accounting
principles (GAAP) and using certain non-GAAP financial measures. In
particular, the Company provides historic and projected EBITDA,
which is a non-GAAP financial measure. These results are included
as a complement to results provided in accordance with GAAP because
management believes these non-GAAP financial measures help identify
underlying trends in the Company’s business and provide useful
information to both management and investors by excluding certain
items that may not be indicative of the Company’s core operating
results. These measures should not be considered a substitute for
or superior to GAAP results. These non-GAAP financial measures are
defined and reconciled to the most comparable GAAP measure later in
this document.
Today’s Conference Call and Webcast:
Build-A-Bear will host a conference call and audio webcast to
discuss its results today, November 30, 2022 at 9:00 a.m. Eastern
Time. The conference call may be accessed by dialing (201) 493-6780
with access code Build-A-Bear. Additionally, a live webcast of the
call can be accessed at http://IR.buildabear.com. The call is
expected to conclude by 10 a.m. ET. The webcast will be archived on
the Company’s website for one year and will be available for replay
approximately one hour after the conclusion of the call.
Additionally, a telephonic re-play of the call will be available at
12:00 p.m. ET on November 30, 2022 until 11:59 p.m. ET on December
7, 2022 and can be accessed by dialing (844) 512-2921 and entering
replay pin number 13733904.
About Build-A-Bear
Build-A-Bear is a multi-generational global brand focused on its
mission to “add a little more heart to life” appealing to a wide
array of consumer groups who enjoy the personal expression in
making their own “furry friends” to celebrate and commemorate life
moments. Nearly 500 interactive brick-and-mortar retail locations
operated through a variety of formats provide guests of all ages a
hands-on entertaining experience, which often fosters a lasting and
emotional brand connection. The company also offers engaging
e-commerce/digital purchasing experiences on www.buildabear.com
including its online “Bear-Builder” as well as the new “Bear
Builder 3D Workshop”. In addition, extending its brand power beyond
retail, Build-A-Bear Entertainment, a subsidiary of Build-A-Bear
Workshop, Inc., is dedicated to creating engaging content for kids
and adults that fulfills the company’s mission, while the company
also offers products at wholesale and in non-plush consumer
categories via licensing agreements with leading manufacturers.
Build-A-Bear Workshop, Inc. (NYSE: BBW) posted total revenue of
$411.5 million in fiscal 2021. For more information, visit the
Investor Relations section of buildabear.com.
Forward-Looking Statements:
This press release contains certain statements that are, or may
be considered to be, “forward-looking statements” for the purpose
of federal securities laws, including, but not limited to,
statements that reflect our current views with respect to future
events and financial performance. We generally identify these
statements by words or phrases such as “may,” “might,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,”
“predict,” “future,” “potential” or “continue,” the negative or any
derivative of these terms and other comparable terminology. All of
the information concerning our future liquidity, future revenues,
margins and other future financial performance and results,
achievement of operating of financial plans or forecasts for future
periods, sources and availability of credit and liquidity, future
cash flows and cash needs, success and results of strategic
initiatives and other future financial performance or financial
position, as well as our assumptions underlying such information,
constitute forward-looking information.
These statements are based only on our current expectations and
projections about future events. Because these forward-looking
statements involve risks and uncertainties, there are important
factors that could cause our actual results, level of activity,
performance or achievements to differ materially from the results,
level of activity, performance or achievements expressed or implied
by these forward-looking statements, including those factors
discussed under the caption entitled “Risks Related to Our
Business” and “Forward-Looking Statements” in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission (“SEC”)
on April 15, 2021 and other periodic reports filed with the SEC
which are incorporated herein.
All of our forward-looking statements are as of the date of this
Press Release only. In each case, actual results may differ
materially from such forward-looking information. We can give no
assurance that such expectations or forward-looking statements will
prove to be correct. An occurrence of or any material adverse
change in one or more of the risk factors or other risks and
uncertainties referred to in this Press Release or included in our
other public disclosures or our other periodic reports or other
documents or filings filed with or furnished to the SEC could
materially and adversely affect our continuing operations and our
future financial results, cash flows, available credit, prospects
and liquidity. Except as required by law, the Company does not
undertake to publicly update or revise its forward-looking
statements, whether as a result of new information, future events
or otherwise.
All other brand names, product names, or trademarks belong to
their respective holders.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
13 Weeks
13 Weeks
Ended
Ended
October 29,
% of Total
October 30,
% of Total
2022
Revenues (1)
2021
Revenues (1)
Revenues: Net retail sales $
99,229
95.0
$
91,551
96.2
Commercial revenue
4,125
3.9
2,749
2.9
International franchising
1,126
1.1
839
0.9
Total revenues
104,480
100.0
95,139
100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
47,354
47.7
43,918
48.0
Cost of merchandise sold - commercial (1)
1,929
46.8
1,060
38.6
Cost of merchandise sold - international franchising (1)
867
77.0
547
65.2
Total cost of merchandise sold
50,150
48.0
45,525
47.9
Consolidated gross profit
54,330
52.0
49,614
52.1
Selling, general and administrative expense
44,436
42.5
41,709
43.8
Interest expense (income), net
6
0.0
(2
)
(0.0)
Income (loss) before income taxes
9,888
9.5
7,907
8.3
Income tax expense (benefit)
2,433
2.3
1,984
2.1
Net income (loss) $
7,455
7.1
$
5,923
6.2
Income (loss) per common share:
Basic $
0.51
$
0.38
Diluted $
0.51
$
0.36
Shares used in computing common per share amounts: Basic
14,542,947
15,578,389
Diluted
14,760,586
16,236,901
(1)
Selected statement of operations data expressed as a percentage of
total revenues, except cost of merchandise sold - retail, cost of
merchandise sold - commercial and cost of merchandise sold -
international franchising that are expressed as a percentage of net
retail sales, commercial revenue and international franchising,
respectively. Percentages will not total due to cost of merchandise
sold being expressed as a percentage of net retail sales,
commercial revenue or international franchising and immaterial
rounding.
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Statements of
Operations (dollars in thousands, except share and per share
data)
39 Weeks
39 Weeks
Ended
Ended
October 29,
% of Total
October 30,
% of Total
2022
Revenues (1)
2021
Revenues (1)
Revenues: Net retail sales
$
308,001
95.4
$
272,052
96.6
Commercial revenue
12,464
3.9
7,804
2.8
International franchising
2,362
0.7
1,704
0.6
Total revenues
322,827
100.0
281,560
100.0
Costs and expenses:
Cost of merchandise sold - retail (1)
149,341
48.5
128,688
47.3
Cost of merchandise sold - commercial (1)
5,824
46.7
3,250
41.6
Cost of merchandise sold - international franchising (1)
1,593
67.4
1,180
69.2
Total cost of merchandise sold
156,758
48.6
133,118
47.3
Consolidated gross profit
166,069
51.4
148,442
52.7
Selling, general and administrative expense
130,320
40.4
117,870
41.9
Interest expense, net
27
0.0
11
0.0
Income (loss) before income taxes
35,722
11.1
30,561
10.9
Income tax expense
8,247
2.6
7,423
2.6
Net income (loss)
$
27,475
8.5
$
23,138
8.2
Income (loss) per common share:
Basic
$
1.82
$
1.51
Diluted
$
1.78
$
1.44
Shares used in computing common per share amounts: Basic
15,097,816
15,345,420
Diluted
15,412,130
16,042,947
(1) Selected statement of operations data expressed as a
percentage of total revenues, except cost of merchandise sold -
retail, cost of merchandise sold - commercial and cost of
merchandise sold - international franchising that are expressed as
a percentage of net retail sales, commercial revenue and
international franchising, respectively. Percentages will not total
due to cost of merchandise sold being expressed as a percentage of
net retail sales, commercial revenue or international franchising
and immaterial rounding.
BUILD-A-BEAR WORKSHOP, INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Balance
Sheets (dollars in thousands, except per share data)
October 29,
January 29,
October 30,
2022
2022
2021
ASSETS Current assets: Cash, cash equivalents and restricted
cash
$
12,023
$
32,845
$
48,501
Inventories, net
88,339
71,809
61,912
Receivables, net
15,894
11,701
12,788
Prepaid expenses and other current assets
10,379
13,643
11,186
Total current assets
126,635
129,998
134,387
Operating lease right-of-use asset
76,236
77,671
86,888
Property and equipment, net
46,264
48,966
48,221
Deferred tax assets
7,561
7,613
-
Other assets, net
3,105
2,076
2,502
Total Assets
$
259,801
$
266,324
$
271,998
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable
$
19,514
$
21,849
$
25,830
Accrued expenses
25,764
25,543
20,378
Operating lease liability short term
27,644
25,245
26,815
Gift cards and customer deposits
18,287
20,937
18,197
Deferred revenue and other
5,713
3,808
2,690
Total current liabilities
96,922
97,382
93,910
Operating lease liability long term
64,212
73,307
82,700
Deferred franchise revenue
529
734
791
Other liabilities
1,040
1,218
1,533
Stockholders' equity: Common stock, par value $0.01 per share
147
162
163
Additional paid-in capital
68,422
75,490
75,316
Accumulated other comprehensive loss
(12,336
)
(12,470
)
(12,495
)
Retained earnings/(deficit)
40,865
30,501
30,080
Total stockholders' equity
97,098
93,683
93,064
Total Liabilities and Stockholders' Equity
$
259,801
$
266,324
$
271,998
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data (dollars in
thousands)
13 Weeks
13 Weeks
39 Weeks
39 Weeks
Ended
Ended
Ended
Ended
October 29,
October 30,
October 29,
October 30,
2022
2021
2022
2021
Other financial data: Retail gross margin ($)
(1) $
51,875
$
47,633
$
158,660
$
143,364
Retail gross margin (%) (1)
52.3
%
52.0
%
51.5
%
52.7
%
Capital expenditures (2) $
2,685
$
3,091
$
6,752
$
4,644
Depreciation and amortization $
3,017
$
3,033
$
9,293
$
9,152
Store data (3): Number of corporately-managed retail
locations at end of period North America
312
305
Europe
35
44
Asia
—
—
Total corporately-managed retail locations
347
349
Number of franchised stores at end of period
66
73
Number of third-party retail locations at end of period
65
60
Corporately-managed store square footage at end of period
(4) North America
727,006
713,959
Europe
53,146
65,387
Total square footage
780,152
779,346
(1)
Retail gross margin represents net retail sales less cost of
merchandise sold - retail. Retail gross margin percentage
represents retail gross margin divided by net retail sales. Store
impairment is excluded from retail gross margin.
(2)
Capital expenditures represents cash paid for property, equipment,
and other assets.
(3)
Excludes e-commerce. North American stores are located in the
United States and Canada. In Europe, stores are located in the
United Kingdom and Ireland. Seasonal locations not included in
store count.
(4)
Square footage for stores located in North America is leased square
footage. Square footage for stores located in Europe is estimated
selling square footage. Seasonal locations not included in the
store count.
* Non-GAAP Financial Measures
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP figures (dollars in
thousands)
13 Weeks 13 Weeks 39 Weeks
39 Weeks
Ended
Ended
Ended
Ended
October 29,
October 30,
October 29,
October 30,
2022
2021
2022
2021
Income before income taxes (pre-tax)
$
9,888
$
7,907
$
35,722
$
30,561
Interest (income) expense, net
6
(2
)
27
11
Depreciation and amortization expense
3,017
3,033
9,293
9,152
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$
12,911
$
10,938
$
45,042
$
39,724
Fiscal 2022 Guidance (in millions)
Income before before income taxes (pre-tax)
$56 - $63
Interest expense, net
-
Depreciation and amortization expense
13
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$69 - $76
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221130005387/en/
Investors: Voin Todorovic Build-A-Bear Workshop 314.423.8000
x5221 Media: Public Relations PR@buildabear.com
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