- Generates total revenues of $120.1 million representing a
record for this fiscal quarter
- Achieves pre-tax income of $19.4 million, a record level for
the third consecutive fiscal first quarter
- Delivers first quarter diluted earnings per share of $0.98,
the highest in its history for the period
- Fiscal year-to-date the Company returned $28.6 million to
shareholders through dividends and share repurchases
Build-A-Bear Workshop, Inc. (NYSE: BBW) today reported results
for its fiscal 2023 first quarter, the 13-week period ended April
29, 2023.
Sharon Price John, Build-A-Bear Workshop President and Chief
Executive Officer commented, “Following our record-breaking
performance in fiscal 2022, where we posted the highest annual
profit in our company’s 25-year history, we are pleased to be on
track for another record-breaking year, reporting our best-ever
first quarter EPS. We attribute our continuing record performance
to the on-going disciplined execution of our multi-year strategic
growth plan. Over the past quarter century, the Build-A-Bear brand
has created a deep emotional bond with our cherished guests,
transcending age barriers and extending our reach from children to
teenagers and adults alike. Our expansion efforts encompass growing
our retail footprint through stores and online platforms, enabling
us to broaden our consumer base and meet their needs, whether
through our hands-on, personalized in-store experience, through
unique and memorable gifts, or collecting limited edition and
exclusive furry friends. Additionally, we are investing in
captivating entertainment initiatives that enable us to foster even
deeper connections with our consumers.”
Ms. John concluded, “The positive momentum has continued into
the second quarter, and we are reiterating our annual guidance.
With the growth opportunities we see ahead, we look to a promising
future for our business and remain committed to continuing to
increase value for our shareholders.”
First Quarter 2023 Results (13 weeks ended April 29, 2023
compared to the 13 weeks ended April 30, 2022):
- Total revenues were $120.1 million, an increase of $2.4
million, including the negative impact of $1.3 million of currency
exchange, as compared to $117.7 million in the fiscal 2022 first
quarter;
- Net retail sales were $112.1 million compared to $112.9 million
in the fiscal 2022 first quarter. This decline reflects the $1.3
million negative impact from currency exchange and included growth
from sales in corporately-managed retail locations offset by a
decline in consolidated e-commerce demand (orders generated online
to be fulfilled from either the Company’s warehouse or its
stores);
- Commercial and international franchise revenues rose 66.7% to
$8.0 million compared to $4.8 million in the fiscal 2022 first
quarter;
- Gross profit margin was 54.1% compared to 52.5% in the fiscal
2022 first quarter. The 160-basis point expansion in gross profit
margin was driven by lower freight costs, as expected, and leverage
of distribution costs, as compared to the fiscal 2022 first
quarter;
- Selling, general and administrative (“SG&A”) expenses were
$45.6 million, or 38.0% of total revenues, compared to $43.6
million, or 37.0% of total revenues in the fiscal 2022 first
quarter. The $2.0 million increase in SG&A as compared to the
fiscal 2022 first quarter was driven by strategic investment in
talent and marketing to support future growth and to a lesser
extent, inflation in store labor costs;
- Pre-tax income was $19.4 million, or 16.2% of total revenues
compared to pre-tax income of $18.2 million, or 15.5% of total
revenues in the fiscal 2022 first quarter;
- Income tax expense was $4.7 million with an effective tax rate
of 24.5% compared to $4.0 million with an effective tax rate of
22.0% in the fiscal 2022 first quarter;
- Net income was $14.6 million, or $0.98 per diluted share,
compared to net income of $14.2 million, or $0.89 per diluted
share, in the fiscal 2022 first quarter; and
- Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) was $22.4 million, an increase $0.9 million compared to
$21.5 million in the fiscal 2022 first quarter.
Store Activity:
As of April 29, 2023, the Company had 482 global locations
through a combination of its corporately-managed, third-party
retail and international franchise models. This reflects 349
corporately-managed stores with one net closure in the fiscal 2023
first quarter compared to the beginning of the fiscal year.
Through the Company’s third-party retail business model there
were 70 locations at the end of the 2023 first quarter with
relationships that include Carnival Cruise Lines, Great Wolf Lodge
Resorts, Landry’s, and Beaches Family Resorts, unchanged from the
beginning of the fiscal year.
The Company’s international franchisees operated 63 locations at
the end of the fiscal 2023 first quarter reflecting four net
closures compared to the beginning of the fiscal year.
Balance Sheet:
As of April 29, 2023, cash and cash equivalents totaled $32.8
million compared to $26.1 million as of April 30, 2022. Inventory
at quarter end was $66.5 million reflecting a decline of $10.9
million, or 14.1%, from April 30, 2022. The Company remains
comfortable with the level and composition of its inventory. The
Company finished the quarter with no borrowings under its revolving
credit facility.
During the first quarter of fiscal 2023, the Company utilized
$3.1 million in cash to repurchase 132,385 shares of its common
stock. Subsequent to quarter end, the Company utilized an
additional $3.4 million in cash to repurchase 156,009 shares of its
common stock. As of May 24, 2023, the Company had $40.0 million
available under the current $50.0 million stock repurchase program
adopted on August 31, 2022.
Fiscal year-to-date, the Company returned $28.6 million to
shareholders, reflecting dividend payments of $22.1 million and
share repurchases of $6.5 million.
In the fiscal 2023 first quarter, capital expenditures totaled
$3.1 million compared to $1.1 million in the fiscal 2022 first
quarter. The increase in capital expenditures primarily reflected
investment in information technology and store expansion.
2023 Outlook:
The Company is reaffirming its fiscal 2023 outlook with
expectations of delivering growth in total revenues and pre-tax
income compared to fiscal 2022. While the Company notes that its
fiscal 2023 is a 53-week year compared to a 52-week year in fiscal
2022, it expects to deliver growth in total revenues and pre-tax
income versus the prior year exclusive of the projected benefit of
the 53rd week. For reference, the additional week in fiscal 2023,
which will be reflected in the Company’s fourth quarter, is
estimated to be $7 million in total revenues with approximately 35%
flow-through to EBITDA.
For fiscal 2023, the Company continues to expect:
- Total revenues to increase in the range of 5% to 7% compared to
fiscal 2022 with growth in its three operating segments;
- Pre-tax income growth of 10% to 15% compared to fiscal 2022,
surpassing the record high that the Company achieved in fiscal
2022;
- To open 20 to 30 experience locations, through a combination of
third-party retail and corporately-managed business models, with
the majority planned for the second half of the year;
- Capital expenditures in the range of $15 million to $20
million;
- Depreciation and amortization of approximately $13 million to
$14 million; and
- Tax rate to approximate 25% excluding discrete items.
The Company’s guidance considers a variety of factors ranging
from anticipated ongoing inflationary pressures to the expected
benefit of reduced freight costs. Additionally, 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 and
geo-political 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 income adjusted to
exclude certain costs, which are non-GAAP financial measures. 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 Webcast:
Build-A-Bear Workshop will host a live internet webcast of its
quarterly investor conference call at 9 a.m. ET today. The dial-in
number for the live conference call is (877) 407-3982 or (201)
493-6780 for international callers. The access code is
Build-A-Bear. The audio broadcast may be accessed at the Company’s
investor relations website, http://IR.buildabear.com. The call is
expected to conclude by 10 a.m. ET.
A replay of the conference call webcast will be available in the
investor relations website for one year. A telephone replay will be
available beginning at approximately noon ET today until midnight
ET on June 1, 2023. The telephone replay is available by calling
(844) 512-2921. The access code is: 13738110.
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 experience
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 “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
revenues of $467.9 million in fiscal 2022. 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 14, 2022 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
April 29,
% of Total
April 30,
% of Total
2023
Revenues (1)
2022
Revenues (1)
Revenues: Net retail sales $
112,096
93.4
$
112,890
96.0
Commercial revenue
6,688
5.6
4,286
3.6
International franchising
1,266
1.0
486
0.4
Total revenues
120,050
100.0
117,662
100.0
Cost of merchandise sold: Cost of merchandise sold - retail (1)
50,904
45.4
53,600
47.5
Cost of merchandise sold - commercial (1)
3,358
50.2
1,946
45.4
Cost of merchandise sold - international franchising (1)
885
69.9
288
59.3
Total cost of merchandise sold
55,147
45.9
55,834
47.5
Consolidated gross profit
64,903
54.1
61,828
52.5
Selling, general and administrative expense
45,626
38.0
43,620
37.1
Interest (income) expense, net
(76
)
(0.1
)
18
0.0
Income before income taxes
19,353
16.1
18,190
15.5
Income tax expense
4,745
4.0
3,999
3.4
Net income $
14,608
12.2
$
14,191
12.1
Income per common share: Basic $
1.01
$
0.92
Diluted $
0.98
$
0.89
Shares used in computing common per share amounts: Basic
14,457,858
15,475,731
Diluted
14,974,930
15,964,433
(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)
April 29,
January 28,
April 30,
2023
2023
2022
ASSETS
Current assets: Cash, cash equivalents and restricted cash
$
32,819
$
42,198
$
26,093
Inventories, net
66,489
70,485
77,366
Receivables, net
13,307
15,374
11,838
Prepaid expenses and other current assets
13,503
19,374
12,436
Total current assets
126,118
147,431
127,733
Operating lease right-of-use asset
73,780
71,791
72,126
Property and equipment, net
50,385
50,759
46,691
Deferred tax assets
6,642
6,592
7,609
Other assets, net
4,785
4,221
2,266
Total Assets
$
261,710
$
280,794
$
256,425
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities: Accounts payable
$
13,686
$
10,286
$
19,930
Accrued expenses
27,272
37,358
23,444
Operating lease liability short term
27,843
27,436
23,470
Gift cards and customer deposits
18,637
19,425
18,770
Deferred revenue and other
5,010
6,646
3,881
Total current liabilities
92,448
101,151
89,495
Operating lease liability long term
59,030
59,080
66,617
Other long-term liabilities
1,260
1,446
1,774
Stockholders' equity: Common stock, par value $0.01 per
share
149
148
157
Additional paid-in capital
70,324
69,868
71,962
Accumulated other comprehensive loss
(12,177
)
(12,274
)
(12,452
)
Retained earnings
50,676
61,375
38,872
Total stockholders' equity
108,972
119,117
98,539
Total Liabilities and Stockholders' Equity
$
261,710
$
280,794
$
256,425
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial
and Store Data
(dollars in thousands)
13 Weeks
13 Weeks
Ended
Ended
April 29,
April 30,
2023
2022
Other financial data: Retail gross margin ($)
(1) $
61,192
$
59,290
Retail gross margin (%) (1)
54.6
%
52.5
%
Capital expenditures (2) $
3,065
$
1,070
Depreciation and amortization $
3,080
$
3,250
Store data (3): Number of corporately-managed retail
locations at end of period North America
312
306
Europe
37
39
Total corporately-managed retail locations
349
345
Number of franchised stores at end of period
63
64
Number of third-party retail locations at end of period
70
62
Corporately-managed store square footage at end of period
(4) North America
726,209
721,966
Europe
52,763
58,216
Total square footage
778,972
780,182
(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
Ended
Ended
April 29,
April 30,
2023
2022
Income before income taxes (pre-tax)
$
19,353
$
18,190
Interest (income) expense, net
(76
)
18
Depreciation and amortization expense
3,080
3,250
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$
22,357
$
21,458
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230525005288/en/
Investors: Gary Schnierow VP Investor Relations & Corporate
Finance Build-A-Bear Workshop (314) 593-3233
Media: PR@buildabear.com
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