Build-A-Bear Workshop, Inc. (NYSE: BBW) today announced results
for the fourth quarter and fiscal year 2023 ended February 3, 2024,
both of which benefited from an additional week of sales as
compared to fiscal 2022.
- Fiscal year total revenues and pre-tax income increased 3.9%
and 7.1%, respectively
- Fiscal year diluted earnings per share (“EPS”) increased 15.9%,
and on an adjusted basis, EPS increased 8.6% (see reconciliation of
GAAP to non-GAAP results)
- The Company introduces fiscal 2024 guidance with expectations
for growth in total revenues and pre-tax income, as well as net new
unit growth of at least 50 experience locations globally
- For fiscal 2023, the Company returned $42.4 million to
shareholders through a special dividend and share repurchases; with
$91.4 million returned to shareholders over the past three
years
- The Company initiates a new quarterly dividend of $0.20 per
share
“Build-A-Bear achieved another milestone in 2023, as we reported
our third consecutive year of revenue and profit growth. We believe
our record results reflect our strategy to continue the evolution
of our business model, inclusive of our ongoing digital
transformation, the broadening appeal of the Build-A-Bear brand,
and last year’s net new unit growth of 37 experience locations
across our corporate, partner-operated, and franchise store
models,” commented Sharon Price John, President and Chief Executive
Officer of Build-A-Bear Workshop. “Looking ahead, we remain focused
on our strategic initiatives to leverage the power of the
Build-A-Bear brand, including a recent reorganization designed to
further elevate our digital and marketing efforts, plus the
expected acceleration of net new unit growth to at least 50
locations globally,” concluded Ms. John.
Voin Todorovic, Chief Financial Officer of Build-A-Bear Workshop
added, “In conjunction with Build-A-Bear’s third consecutive year
of sustained profitable growth and our 2024 outlook, we are pleased
to initiate a quarterly dividend, which reflects our confidence in
the company's continued financial performance and underscores our
commitment to return capital to shareholders."
Fourth Quarter Fiscal 2023 Results
(14 weeks ended February 3, 2024, compared to the 13 weeks ended
January 28, 2023)
The company notes that the additional week in fiscal fourth
quarter 2023 generated approximately $7 million in total revenues
with an estimated 35% flow-through to EBITDA.
- Total revenues were $149.3 million and
increased 2.9%
- Net retail sales were $140.2 million and increased 1.5%
- Consolidated e-commerce demand (online orders fulfilled from
either the Company’s warehouse or its stores) decreased 8.8%
- Commercial and international franchise revenues were a combined
$9.1 million and increased 31.1%
- Pre-tax income was $26.1 million, or 17.5% of
total revenues, a decrease of 60 basis points, driven by a
230-basis point increase in Selling, General and Administrative
(“SG&A”) expense from an increase in marketing expenses, higher
store-level wages due to inflation, and the addition of talent and
other investments to support future growth, partially offset by
gross margin, primarily due to improvement from lower freight
expense.
- Diluted EPS was $1.57, a 12.9% year-over-year
increase driven by a decrease in tax rate due to the release of a
valuation allowance and a reduction in share count. On an adjusted
basis, excluding the tax benefit from the reversal of the tax
valuation allowance and the tax impact of international
restructuring, EPS decreased 3.6%.
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) grew 1.6% to $29.9 million, or 20.0% of total
revenues.
Fiscal year 2023 Results
(53 weeks ended February 3, 2024, compared to the 52 weeks ended
January 28, 2023)
The company notes that the additional week in fiscal 2023
generated approximately $7 million in total revenues with an
estimated 35% flow-through to EBITDA.
- Total revenues were $486.1 million and increased 3.9%
- Net retail sales were $456.2 million and increased 2.2%
- Consolidated e-commerce demand decreased 4.9%
- Commercial and international franchise revenues were a combined
$30.0 million and increased 37.7%
- Pre-tax income grew 7.1% to $66.3 million, or 13.6% of total
revenues, an expansion of 40 basis points, driven by an increase in
gross margin, primarily due to lower freight expense and leverage
of warehouse costs. This was partially offset by a 160-basis point
increase in SG&A from an increase in marketing expenses, higher
store-level wages due to inflation, and the addition of talent and
other investments to support future growth.
- Diluted EPS was $3.65, a 15.9% year-over-year increase driven
by pre-tax margin expansion and a decrease in tax rate, plus a
reduction in share count. On an adjusted basis, excluding the tax
benefit from the reversal of the tax valuation allowance and the
tax impact of international restructuring, EPS increased 8.6%.
- EBITDA grew 6.2% to $79.1 million, or 16.3% of total
revenues.
Store Activity
The Company added three corporately-managed locations, seven
partner-operated locations, and four franchised locations in the
quarter. As of the fiscal year-end, Build-A-Bear had 525 global
locations through a combination of its corporately-managed,
partner-operated, and international-franchise models. This reflects
359 corporately-managed stores, 92 partner-operated stores, and 74
international franchise stores. For the fiscal year, the company
had net new unit growth of 37 experience locations, comprised of
nine corporately-managed locations, 22 partner-operated locations,
and six international franchise locations.
Balance Sheet
As of February 3, 2024, cash and cash equivalents totaled $44.3
million compared to $42.2 million as of January 28, 2023. The
Company finished the quarter with no borrowings under its revolving
credit facility.
For the fourth quarter and fiscal 2023, capital expenditures
totaled $7.2 million and $18.3 million, respectively.
Inventory at year end was $63.5 million, reflecting a decline of
$7.0 million, or 9.9% from January 28, 2023. The Company remains
comfortable with the level and composition of its inventory.
Return of Capital to Shareholders
For the fourth quarter, the Company utilized $5.2 million in
cash to repurchase 223,869 shares of its common stock. For fiscal
2023, the Company returned $42.4 million to shareholders in the
form of a $22.0 million special dividend and share repurchases of
$20.4 million.
Since fiscal year-end through March 11, the Company utilized
$2.6 million in cash to repurchase 111,135 shares of its common
stock. As of March 11, $23.5 million remained available under the
Board authorized $50.0 million stock repurchase program adopted on
August 31, 2022.
As announced on March 13, 2024, the Company’s Board of Directors
declared an initial quarterly cash dividend of $0.20 per share that
will be paid on April 11, 2024, to all stockholders of record as of
March 28, 2024. The Company intends to pay dividends quarterly in
the future, subject to market conditions and approval by the Board
of Directors.
2024 Outlook
The Company issues the following fiscal 2024 outlook with
expectations of delivering growth in total revenues and pre-tax
income compared to our 53-week fiscal 2023:
- Total revenue growth on a low-to-mid-single-digit percentage
basis
- Pre-tax income growth on a low-single-digit percentage
basis
For comparative purposes, the company notes that the additional
week in fiscal 2023 was approximately $7 million in total revenues
with an estimated 35% flow-through to EBITDA.
For fiscal 2024, as compared to the 2023 non-GAAP 52-week year,
the Company expects:
- Total revenue growth on a mid-single-digit percentage
basis
- Pre-tax income growth on a mid-single-digit percentage
basis
In addition, for fiscal 2024, the Company currently expects:
- Net new unit growth of at least 50 experience locations,
through a combination of corporately-managed, partner-operated, and
franchised business models
- Capital expenditures in the range of $18 million to $20
million
- Depreciation and amortization in the range of $15 million to
$16 million
- Tax rate to approximate 26%, excluding discrete items
The Company’s guidance considers a variety of factors including
anticipated ongoing inflationary pressures and increased freight
costs. Additionally, the Company’s outlook assumes no further
material changes in the macroeconomic or geopolitical 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.
Webcast and Conference Call Information
At 9:00 AM ET today, Build-A-Bear Workshop will host a
conference call with investors and financial analysts to discuss
its financial results. The conference call will be webcast on
Build-Bear’s Investor Relations website,
https://ir.buildabear.com.
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 call is expected to conclude by 10 AM
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 1:00 PM ET today until 11:59
PM ET on March 21, 2024. The telephone replay is available by
calling (412) 317-6671 (toll/international) or (844) 512-2921 (toll
free). The access code is 13743348.
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. More than 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
“HeartBox” and its age-gated adult-focused “Bear Cave.” 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 $486.1 million
for fiscal 2023. 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 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 13, 2023 and other periodic reports filed with the SEC
which are incorporated herein.
All 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)
14 Weeks
13 Weeks
Ended
Ended
February 3,
% of Total
January 28,
% of Total
2024
Revenues (1)
2023
Revenues (1)
Revenues:
Net retail sales $
140,191
93.9
$
138,180
95.2
Commercial revenue
7,729
5.2
6,059
4.2
International franchising
1,358
0.9
871
0.6
Total revenues
149,278
100.0
145,110
100.0
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
60,652
43.3
62,148
45.0
Cost of merchandise sold - commercial (1)
3,634
47.0
2,767
45.7
Cost of merchandise sold - international franchising (1)
775
57.1
393
45.1
Total cost of merchandise sold
65,061
43.6
65,308
45.0
Consolidated gross profit
84,217
56.4
79,802
55.0
Selling, general and administrative expense
58,473
39.2
53,608
36.9
Interest (income) expense, net
(405
)
(0.3)
(8
)
(0.0)
Income before income taxes
26,149
17.5
26,202
18.1
Income tax expense
3,876
2.6
5,692
3.9
Net income $
22,273
14.9
$
20,510
14.1
Income per common share:
Basic $
1.57
$
1.42
Diluted $
1.57
$
1.39
Shares used in computing common per share amounts:
Basic
14,146,883
14,469,633
Diluted
14,224,767
14,767,725
(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)
53 Weeks
52 Weeks
Ended
Ended
February 3,
% of Total
January 28,
% of Total
2024
Revenues (1)
2023
Revenues (1)
Revenues:
Net retail sales $
456,163
93.9
$
446,181
95.4
Commercial revenue
25,413
5.2
18,523
4.0
International franchising
4,538
0.9
3,233
0.7
Total revenues
486,114
100.0
467,937
100.1
Cost of merchandise sold:
Cost of merchandise sold - retail (1)
206,815
45.3
211,489
47.4
Cost of merchandise sold - commercial (1)
12,092
47.6
8,591
46.4
Cost of merchandise sold - international franchising (1)
2,816
62.0
1,985
61.4
Total cost of merchandise sold
221,723
45.6
222,065
47.5
Consolidated gross profit
264,391
54.4
245,872
52.5
Selling, general and administrative expense
198,991
40.9
183,929
39.3
Interest (income) expense, net
(929
)
(0.2)
19
0.0
Income before income taxes
66,329
13.6
61,924
13.2
Income tax expense
13,524
2.8
13,939
3.0
Net income $
52,805
10.9
$
47,985
10.3
Income per common share:
Basic $
3.68
$
3.21
Diluted $
3.65
$
3.15
Shares used in computing common per share amounts:
Basic
14,342,931
14,940,770
Diluted
14,471,875
15,249,819
(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)
February 3, January 28,
2024
2023
ASSETS Current assets: Cash, cash equivalents and restricted
cash
$
44,327
$
42,198
Inventories, net
63,499
70,485
Receivables, net
8,569
15,374
Prepaid expenses and other current assets
11,377
19,374
Total current assets
127,772
147,431
Operating lease right-of-use asset
73,443
71,791
Property and equipment, net
55,262
50,759
Deferred tax assets
8,682
6,592
Other assets, net
7,165
4,221
Total Assets
$
272,324
$
280,794
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
16,170
$
10,286
Accrued expenses
19,954
37,358
Operating lease liability short term
25,961
27,436
Gift cards and customer deposits
18,134
19,425
Deferred revenue and other
3,514
6,646
Total current liabilities
83,733
101,151
Operating lease liability long term
57,609
59,080
Other long-term liabilities
1,320
1,446
Stockholders' equity: Common stock, par value $0.01 per
share
143
148
Additional paid-in capital
66,329
69,868
Accumulated other comprehensive loss
(12,082
)
(12,274
)
Retained earnings
75,272
61,375
Total stockholders' equity
129,662
119,117
Total Liabilities and Stockholders' Equity
$
272,324
$
280,794
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES Unaudited
Selected Financial and Store Data (dollars in thousands)
14 Weeks 13 Weeks 53 Weeks 52 Weeks
Ended Ended Ended Ended February
3, January 28, February 3, January 28,
2024
2023
2024
2023
Other financial data: Retail gross margin ($)
(1) $
79,539
$
76,032
$
249,348
$
234,692
Retail gross margin (%) (1)
56.7
%
55.0
%
54.7
%
52.6
%
Capital expenditures (2) $
7,171
$
6,882
$
18,295
$
13,634
Depreciation and amortization $
4,117
$
3,187
$
13,657
$
12,480
Store data (3): Number of corporately-managed retail
locations at end of period North America
320
312
Europe
39
38
Total corporately-managed retail locations
359
350
Number of franchised stores at end of period
74
68
Number of third-party retail locations at end of period
92
70
Corporately-managed store square footage at end of period
(4) North America
732,966
726,209
Europe
54,787
54,725
Total square footage
787,753
780,934
(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 are 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) Adjusted net income and adjusted
income per diluted share
14 Weeks 13 Weeks 53
Weeks 52 Weeks Ended Ended Ended
Ended February 3, January 28, February
3, January 28,
2023
2022
2023
2022
Net income
$
22,273
$
20,510
$
52,805
$
47,985
Valuation allowance (1)
(4,361
)
-
(4,361
)
-
International restructuring (2)
1,102
-
1,102
-
Adjusted net income
$
19,014
$
20,510
$
49,546
$
47,985
Net income per diluted share (EPS)
1.57
1.39
3.65
3.15
Adjusted net income per diluted share (adjusted EPS)
1.34
1.39
3.42
3.15
(1)
Represents the valuation allowance
recorded on its net deferred tax assets in the United Kingdom in
prior periods.
(2)
Tax impact of restructuring in international jurisdictions.
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
14 Weeks 13 Weeks 53 Weeks 52
Weeks Ended Ended Ended Ended
February 3, January 28, February 3, January
28,
2023
2022
2023
2022
Income before income taxes (pre-tax)
$
26,149
$
26,202
$
66,329
$
61,924
Interest expense, net
(405
)
(8
)
(929
)
19
Depreciation and amortization expense
4,117
3,187
13,657
12,480
Earnings before interest, taxes, depreciation and amortization
(EBITDA)
$
29,861
$
29,381
$
79,057
$
74,423
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240314549003/en/
Investor Relations Contact Gary Schnierow, Vice
President, Investor Relations & Corporate Finance
garys@buildabear.com
Media Relations Contact pr@buildabear.com
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