Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Build-A-Bear Workshop’s First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Investor your Relations my Vice Gary now of President and is to host, introduce Schnierow, It Corporate Finance. you sir, you may Thank begin.

Gary Schnierow

to With Vice Voin President thank us. Investor CEO Relations my Good and for Finance of are earnings speak for Sharon Corporate excited John, Build-A-Bear. first the and on today to Todorovic, as morning call CFO. and you me you I'm joining Price

progress more quarter we will Sharon with discussion and begin key update first After the the provide made For will today's call guidance. priorities. have of a our detail on review our our Voin financials and in

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by obligation uncertainties. any and factors number We materially statements company's and differ replay risk available to call no will could to Report both the from note anticipated IR remind of broadcast Internet. results in looking subject the required our including factors forward-looking via forward relations is statements Form of a recorded Annual website. I the earnings being Actual those due and later release revise corporate today A Please XX-K. on live unless The available call currently inherently to portion risks be and our on set is undertake webcast site. the will law. investor are section of the everyone that on the those forth

financial of financial If GAAP. company's items reconciliation in measures the adjusts not of measures The non-GAAP will Also presentation these be over I can considered measures, financial call, information GAAP management to or eliminate non-GAAP for earnings impact in a find results and non-GAAP which performance. useful the evaluating a discuss during our the turn certain non-GAAP the isolation results regarding which to believes we to presented, may like Sharon. in you this would non-GAAP be should And now, are to of release. with call in prepared these GAAP measures company's accordance measures substitute

Sharon Price John

Thank Good for pleased joining you, off I'm and Build-A-Bear's thank start. you First the has morning, to that XXXX Earnings share Gary. for good us year gotten Call. Quarter to a

and results full guidance. we quarter for have XXXX record-setting reiterating are record for results again fiscal and both XXXX, year of annual posted our our first Following XXXX, we the

resonate more details quarter some financial on than greater guests to ages, provide child. Workshop experience I agree as Before has a the Build-A-Bear with our and reflect I'd XX% continues why all brand like of reasons is fun of XX% a for than of more aided first and that results, Build-A-Bear regarding to awareness moms

our bond with lifetime This brands certificate. membership posts, stage giving ceremony. heart birth relationship loyalty during our it and with and mission little for the mission by friend tailor And heart past sounds new name These importantly, in store century, social furry experience a friends well often our delivered toes a well-known enable Most a their heart they quarter outfits, have receive life. Build-A-Bear's includes their add friends new additional visits, our that and during that with a accessories, the of to over furry sets to media their stuffing memory-making guests through we as a and on engagements program. process, is First, in our especially variety the ways, memorable more interactive to experience. as

she such was This with our and from a indicative to of being fun just our celebrate we from twin is loved like time them is Facebook to The staff. heart I'd I of how stuff awesome.” to to couple life with post first treat.” relay It gifts weeks at today create for this so example, of their own “We to our furry valued it. the with As a watch, caring much birthdays. Lidia to an sweet her was experience store and [indiscernible] an the bears share Build-A-Bear to ceremony just like they every and ago. friend took the was had, feedback relationships that creating nieces “Kudos quickly a recent the patient such e-mail. a minute their staff Millie. bring Watching Build-A-Bear help wanted wonderful and thanks and to some

with guests Each day, memorable Build-A-Bear the and furry years, and is through powerful brand that and XXX the our managed, magic nearly enabled work experience to business we of often make at in have our experience have children made self-expression their now XX XXX guests' core one-to-one of own friends past grown the for we creativity to franchise international With these pride they guests too. the ensure our fact and locations up our moments. over our than to million more of corporately their many Build-A-Bear hard wish our model unique that partner-managed, take

multiple memories and brand ages With creating guests generations our are adults website, our all create our to representing and to Build-A-Bear. consumers or our Between at go Additionally, Build-A-Bear not site are also teens others. our for in and experiences gifts moments wonderful our now stores create come trust. only and a older of and joyful back for themselves, Workshop love additional growing numbers, we XX% e-commerce to but of that sales,

which growth model, the segment. franchising revenues posted last across record. our we We Now year's topped quarter backdrop, segment, all our with our commercial growth includes stores previous asset-light that past delivered eight segment. in year, We first in partner-operated geographies adding direct-to-consumer our over in total growth international and posted

$X.XX the of in history. represented share highest for per quarter first earnings quarter first a Our Build-A-Bear's

experienced demand stores in partially up continued web double-digit our site. is managed generally and than of at DTC product with greater in XX% and corporately demand. made calendar and Digital expected, shifts. We revenues demand driven increased e-commerce are rebounded rates second than by films. decline feature Hello a planned. due Overall, demand has product launches thus stores for timing product tied products direct-to-consumer our web launches, by be our website in launches with which testing of more and new the by increase our the affected key associated will where quarter, recent segment increasing for an by at driven more Kitty, revenue our followed estimated launch quarter, to by including nearly offset Recall our sales the optimization Web an to store of workshop, trips largely volatility far is

year. expect growth of while our this Also, return across our demand special also segments to to positive drive to we through to our confident continued repurchases. would continue ebb flow, and stock shareholders dividends like expectation we web capital I shareholder to ongoing sales are commitment growth, and e-commerce In highlight in value and

to shares. initiatives and repurchased prospects. return our future per we've along Over capital share, believe demonstrates paid the million strategic We past two two special with effort $X.XX this X.X we in have dividends confidence years, our totaling

of growth the for our three growth quarter in quarter-to-date positive segments XX% both XXXX in reflect guidance XXrd of fiscal first all total to the compared we to of range and with benefit of operating to of to the income XX%, pretax which added week. annual performance reiterating X% increase are second this trends, revenues provided the and X% record year With earlier

and to continue the that the Kalahari accelerating announced product includes in launches expect press We as this XX by sales year the This tourist progresses was a trends growth Resorts release in new to inclusive XX other driven initiatives. of openings stores morning. new phasing locations of

new year. Merry movies media Build-A-Bear marketing introductions, including as well documentary the As this and later Mission and

releases into creation, Roblox includes X our We as these more announced which represent game through relationship which includes Publishing million excited initiatives, Macmillan has they users. are about launch and continued Build-A-Bear's particularly digital than Tycoon recently the expansion content of film that our books, with two

about our Merry Mission first introduction, Glisten the other Build-A-Bear to question people. a further culture weeks top year, by expected each Morton, this story XXXX. generated has second available revenue often iconic a our the is the and brand's And our the everyone the over million in are item is Deer the spirit Mission Taylor Build-A-Bear's slated our in the season for Merry set Specifically, to few worked season. on Magical sure resonates Glisten our what the only years. film on for to Director, highlighting entitled, that exploring is reindeers which This Glisten the of holiday Build-A-Bear its holiday there make Santa Snow on release XX seasonal Since enhance out [ph]. many line, Christmas and documentary centers status it originally feature belief based with collection launched $XXX so product journey and our is who was answer for has toys successful heartfelt Unstuffed, with at heroine first the being with pop animated story that in of and Award-winning elves night enough

and focusing both opportunity our Gary two for would return to portfolio for year little announce an to analyzing the a be thank to and companies associates achieving this President would also Corporate research and while to add work and as value Vice valuable on continue I decades to as Build-A-Bear yet I together to their our Gary experience analyst joined brings has Investor that and of closing, partners company of investors. heart continuing welcomes over Schnierow another as like Finance. to-life a recently efforts record-setting Relations potential the existing manager shareholders. more and In we like resource public to the all quarter equity

since very also thank zero Axiom launch turn the to GiGi, our a its Voin. Voin over crew I over compressions With to for adding indicator to space small kind. the SpaceX giant this million in to their for it's review gravity I as one Mission for XXX step would financial PR Bear like Space Before Falcon week, more leap Bear call GiGi one our past detail, results rocket for the the but Rocket.

Voin Todorovic

Thanks, Sharon and good morning to everyone.

revenue, XX% that ongoing business dynamic delivers first strategy We This to to in which income margin, achieved results report combined increased execution strong and a quarter best-ever financial with led strength across our and share diluted our the increasing in attribute share We resonance profit expansion quarter. of and was our brand gross ability today the rise our the a activity EPS. model of flow. highlighted first start pleased to positive in with solid to with results to growth key year. a for metrics are by cash pretax in repurchase We the speak you performance successful and environment

in which investment cash planned growth, capital our through capital-light we million shareholders. model, partner-operated dividends including our expansion, to retail benefited After retail returned shareholders our Year-to-date, share and store we continue in from return repurchases. has to to $XX.X

past the we returned to million quarters, six Over of $XX shareholders. have our capital

million more of $X.X Turning million, million review Total Adjusted fiscal to detailed revenues were quarter. million a first the first to negative as of were quarter. $XXX.X store the XXXX including impact exchange, to in compared first $XXX.X in $XXX.X Net negative $XXX.X compared XXXX exchange of the retail million demand the quarter. period. currency increased declined currency for while sales in e-commerce the sales the fiscal

geographies. quarter, traffic plus were mix. all driven across increased offset by product sales increase by in for the pricing, an sales Store Overall,

XXXX, March comparisons became are look Because and years in much at past shifts, when year-over-year we For challenging noise over more calendar and stores, late in the April, the but results monthly the our monthly rebounded May. from have of in couple COVID managed of comparisons versus since consistent. more cadence corporately

of launches was product e-commerce, strength year. For down results demand as to expected by noise also web quarter, a impacted for timing XX.X% the last compared the the as there and bit was in of

basis. year’s, first on In launch in XXXX, demand QX, new with against web launched positive on to note this would fact, product quarter-to-date I double-digit schedule nearly e-commerce last continued quarter growth we on when viewed as year have product to full that also compared year's returned expect grew a a we demand basis. XXX%. Based web

million basis rose which compared Gross by a represents total revenues revenues costs freight of revenues, or $XX.X expansion XXXX $XX.X distribution million total leverage expected, million by of in driven gross support versus pretax the offset and revenues The labor franchise XXX sales in costs. costs. XX to million future SG&A XX% than and to lower a with last income in dollars XX.X% to expenses margin million in in first the year. of first profit increase were investment Commercial XX.X% SG&A growth compared wholesale to our revenues of $X.X planned year. extent, to revenues store to was SG&A the expanding quarter. XX% of pretax total increase inflation growth $XX.X million XX.X%, driven talent quarter more Higher the prior an or basis operators year, of primarily partner margin of and combined of was profit points pretax to points and international lesser as $XX.X to marketing XX% reflects total income led to plus in last compared $X or

effective was fiscal with of with million of $X first rate to tax XX.X%, XX% expense million, the XXXX rate income effective in Income tax an $X.X tax an quarter. compared expense tax of

XXXX. $X.XX diluted share fiscal net or per share a net was of result, million $XX.X As diluted per or $X.XX the $XX.X income in versus income million

First $XX.X quarter. which is level for increase And record quarter, XX% in a increased million, is first the EPS year-over-year. which a to EBITDA

Turning and the had to the quarter million the quarter balance end, end the equivalents $XX.X first cash compared last sheet. year. to of at million we of At cash $XX.X

to Our reflects generation, dividend our to impact continue cash cash performance and share repurchases payments and capital end strong the shareholders. position record over of months drove as last our XX business the quarter we return

end begin avoid comfortable million, from last elevated end Inventory We level year Keep first remain chain of our quarter with inventory at disruptions. of $XX.X line supply was or quarter the the and $XX.X declining XX.X% last we our the and was mind, inventory year's with in quarter end as to composition million intentionally potential expectations. second quarter. in the

outlook, XXXX. relates guidance it to for our our As we reaffirming are fiscal

exclusive XX-week to fiscal expect fiscal XXXX, While in week. our XXrd year, profit deliver growth of pretax in compares a and prior benefit projected revenues we XX-week XXXX the is the versus and a year total year of the to

with reflected additional to million in flow-through $X will the EBITDA. which total fourth approximately is quarter, week, reference, For our revenues be be to in estimated XX%

X% fiscal XXXX, continue to the increase in three range expect to XXXX, operating we in fiscal compared to segments. X% For revenues total to including expansion all of

and to combination surpassing compared XX% business growth open majority with and Pretax XX% the planned income fiscal to high, XX XX year's to $XX to discrete to million the depreciation for range the and of items. second half corporately a of of tax partner locations model last expenditures Capital $XX rate of approximate excluding record million to to amortization of the in operated experienced year. $XX XXXX, million, XX% $XX through million,

uncertain. second in remain the remains recognize macro said, we begin XXXX we ahead we record quarter, to As our that income set the guidance. year and line the pretax positioned of believe environment fiscal last and revenue well we That achieve with

the variety of of a ongoing considers guidance expected freight costs. benefit reduced pressures factors from to ranging Our anticipated inflationary

basis, and including changes Additionally, relevant a currency supply our products the receive exchange that chain, material rates. our we ability environment macroeconomic note geopolitical no operations on assumes outlook timely ship and to foreign further in or of the the

executed will have warehouse our proven the has the see we to the We corporate record, store long-term ahead well would over to operator call which performance. questions. forced In our year upcoming investor the thank to associates Operator? of has our believe solid long of deliver all with I many near move us team We turn as and opportunities and who back to to discipline year are and members as This seeing the and like of objectives. and efforts, and our their through concludes positioned XXXX. prepared remarks, as on progress you conferences. are record-breaking sharing our growth with agility look results we we significant you the the we in continued track closing, record contributing to pleased business, quarter we another forward and which the for begin for now year at

Operator

Thank you. [Operator Instructions].

first question Steve with of the comes your proceed from Please line question. with Our Research. Silver Argus

Steven Silver

And position congratulations remarks, in for the first inventory comfortable thanks for your taking the entering being operator results QX. with you Voin, mentioned record and quarter. you questions. Thank the on the

terms we could investments hoping over making product the of progress all year? the expect terms the color how more over is of expected given a inventories provide the that should the in in Just course the just of and launches content year of little you new to rest company

Voin Todorovic

and for to Sure, and nice second definitely are thanks Steve. of inventory are in inventories about answer words Thanks the now the question, your quarter. we feeling the good composition we starting

as that supply to and some last early in and by our forward in relates inventory potential avoid challenges was XXXX XXXX. in mentioned chain disruptions I year to As facing flow there inventory we noise late COVID buys caused prepared as remarks, are really we it were pulling

inventory So this to want high and thing our fall our inventory I line different. more a probably basis One expect relationships, support partners point out, need those flow them with to wholesale replenishment. continue do may for we a on support to in we as on be bit inventory some as And grow year, hand them in their that have COVID. sell we like business to we little of be before to normalized foot flow to wholesale our

by expect a we year on I below before would level. So -- still to as at finish the last think year's basis probably level inventory full year year-end,

Steven Silver

and helpful again. That's congratulations Great.

Voin Todorovic

Thank you Steve.

Operator

this over to comments. It time. [Operator floor have management I appears Instructions]. the we further to closing no for turn would at questions like back

Sharon Price John

on Thank second next us on our forward and year for for call progress today, with joining look our we updating you you to the results. quarter

Operator

this today's gentlemen, and teleconference. conclude Ladies does

Thank your for this participation, wonderful a have time. disconnect at day. may your lines and You you

Build-A-Bear Workshop (BBW) 25 May 232023 Q1 Earnings call transcript