8-K
BUILD-A-BEAR WORKSHOP INC (BBW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 2023
Build-A-Bear Workshop, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 001-32320 | 43-1883836 |
|---|---|---|
| (State or Other Jurisdiction | (Commission | (IRS Employer |
| of Incorporation) | File Number) | Identification No.) |
| 415 South 18th St., St. Louis, Missouri | 63103 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
(314) 423-8000
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions \(see General Instruction A.2. below\):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | BBW | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On January 9, 2023, Build-A-Bear Workshop, Inc. (the “Company”) issued a press release setting forth certain expectations for the Company’s 2022 fiscal year (52 weeks ending January 28, 2023), including total revenue; pre-tax income; earnings before interest, taxes, depreciation and amortization (EBITDA); and capital expenditures. A copy of the Company’s press release is being furnished as Exhibit 99.1 and hereby incorporated by reference.
| Item 7.01. | Regulation FD Disclosure. |
|---|
On January 9, 2023, Build-A-Bear Workshop, Inc. (the “Company”) will participate in a fireside chat at the ICR Conference 2023 held at the Grande Lakes Orlando Resort in Orlando, Florida. Sharon Price John, President and Chief Executive Officer, and Voin Todorovic, Chief Financial Officer, will host the presentation at 1:30 p.m. Eastern Standard Time. The audio portion of the fireside chat will be available on the Company’s Investor Relations website, http://IR.buildabear.com and will remain available for 90 days following the event. The investor presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference. A copy of the investor presentation is also available on the Investor Relations section of the Company’s web site at http://IR.buildabear.com.
To supplement its financial statements presented in accordance with GAAP, the Company used, in its investor presentation, certain non-GAAP measures of financial performance. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior periods and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s financial performance.
* * * * *
The information furnished in, contained, or incorporated by reference into Item 2.02 and Item 7.01 above, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”), as amended, or the Exchange Act, regardless of any general incorporation language in such filing. In addition, this report (including Exhibits 99.1 and 99.2) shall not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely as a requirement of Items 2.02 and 7.01.
This Current Report on Form 8-K and the press release and investor presentation attached hereto as Exhibits 99.1 and 99.2, respectively, contain certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements in this report and in such exhibits not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this report and in such exhibits are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things: statements regarding the Company’s goals, intentions, and expectations; business plans and growth strategies; estimates of the Company’s risks and future costs and benefits; forecasted demographic and economic trends relating to the Company’s industry; and other risk factors referred to from time to time in filings made by the Company with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. The Company disclaims any intent or obligation to update these forward-looking statements.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| Exhibit Number | Description of Exhibit |
| --- | --- |
| 99.1 | Press Release dated January 9, 2023 |
| 99.2 | Investor Presentation— January 9, 2023 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BUILD-A-BEAR WORKSHOP, INC. | |||
|---|---|---|---|
| Date: January 9, 2023 | By: | /s/ Voin Todorovic | |
| Name: | Voin Todorovic | ||
| Title: | Chief Financial Officer | ||
| Exhibit 99.1 | |||
| --- |
Build-A-Bear Workshop, Inc. Again Raises Midpoint of Its Guidance for Fiscal 2022 Total Revenues and Pre-Tax Income
Company to present at ICR Conference 2023 Tuesday, January 10th at 1:30 p.m. EST
ST. LOUIS--(BUSINESS WIRE)--January 9, 2023--Build-A-Bear Workshop, Inc. (NYSE: BBW) updated its financial guidance for the 2022 fiscal year in advance of its participation at the ICR Conference 2023. The Company expects its fiscal 2022 results to deliver the highest profitability in its 25-year history.
On a preliminary basis for the 2022 fiscal year (52 weeks ending January 28, 2023 compared to the 52 weeks ended January 29, 2022), the Company currently expects:
- Total revenues to be in the range of $460.0 million to $465.0 million, an increase from its previous expectation for total revenues in the range of $455.0 million to $465.0 million. The Company reported total revenues of $411.5 million in fiscal 2021;
- Pre-tax income to be in the range of $57.0 million to $63.0 million, an increase from its previous expectation for pre-tax income in the range of $56.0 million to $63.0 million. The company reported pre-tax income of $50.7 million in fiscal 2021;
- Earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the range of $69.5 million to $75.5 million, an increase from its previous expectation for EBITDA in the range of $69.0 million to $76.0 million. The Company reported EBITDA of $63.0 million in fiscal 2021; and
- Capital expenditures to be in the range of $12.0 million to $14.0 million and depreciation and amortization to be approximately $12.5 million in fiscal 2022.
The Company’s guidance 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.
Sharon Price John, Build-A-Bear Workshop President and Chief Executive Officer commented, “We have continued to see positive momentum in our business throughout the current fourth quarter and combined with our record-breaking profit in the first nine-month period, we expect fiscal 2022 to deliver a double-digit increase in profitability compared to the prior year which would be the most profitable in our 25 years of operations, which comes on top of the previous record set in fiscal 2021. Our company has evolved to become a multi-channel, site-based experience and entertainment entity with diverse categories that appeal to a broad addressable demographic and market. Our disciplined execution of our strategic model and key initiatives has allowed us to build a foundation that we believe can be leveraged for further profitable growth in 2023 and beyond.”
The Company is scheduled to participate at the ICR Conference 2023 being held at the Grande Lakes Orlando on January 9, 2023 through January 11, 2023. The Company expects to conduct a fireside chat presentation on Tuesday, January 10, 2023, at 1:30 p.m. EST. The audio portion of the presentation will be broadcast over the internet and can be accessed at the Company’s investor relations website, http://IR.buildabear.com. A replay of the broadcast will remain on the Company’s investor relations website for one year.
The Company noted that it expects to report full results for the fourth quarter and fiscal 2022 year in March 2023.
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 projected and historic EBITDA, which is a non-GAAP financial measure. These projections and 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.
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.
| * Non-GAAP Financial Measures | |||
|---|---|---|---|
| BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES | |||
| Reconciliation of GAAP to Non-GAAP Results | |||
| (dollars in millions) | |||
| New | Previous | ||
| Projected | Projected | Actual | |
| 2022 | 2022 | 2021 | |
| Income (loss) before income taxes (pre-tax) | $57.0 - $63.0 | $56.0 - $63.0 | $50.7 |
| Interest expense (income), net | - | - | - |
| Depreciation & Amortization | 12.5 | 13 | 12.3 |
| Earnings before interest, taxes, depreciation and amortization (EBITDA) | $69.5 - $75.5 | $69.0 - $76.0 | $63.0 |
Contacts
Investors:
Voin Todorovic
Build-A-Bear Workshop
314.423.8000 x5221
Media:
Public Relations
PR@buildabear.com
| Exhibit 99.2 |
|---|
ICR CONFERENCE 2023
FORWARD LOOKING AND CAUTIONARY STATEMENTS 2 This presentation 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. Forward-looking statements are based on current expectation and assumptions that are subject to risks and uncertainties which may cause results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise. Risks and uncertainties to which our forward-looking statements are subject include: (1) macroeconomic and industry risks such as (a) the COVID-19 pandemic has had and is expected to continue to have an adverse effect on our business and results of operations; (b) continued or further declines in retail consumer traffic could adversely affect our financial performance and profitability; (c) declines in general global economic conditions could lead to disproportionately reduced discretionary consumer spending and demand for our products; (d) consumer interests change rapidly and our success depends on the ongoing effectiveness of our marketing and online initiatives to build consumer affinity for our brand and drive consumer demand for our products and services; (e) our profitability could be adversely impacted by fluctuations in petroleum products prices; and (f) our business may be adversely impacted by a variety of significant competitive threats; (2) operational risks such as: (a) we may be unable to generate demand for our interactive retail experience and products, including timely responses to consumer preferences; (b) failure to execute our omnichannel strategy and the costs of investments in e-commerce and digital technology could adversely affect our profitability; (c) we are subject to risks associated with technology and digital operations; (d) we may be unable to renew, renegotiate our store leases or enter into new store leases on favorable terms; (e) our company-owned distribution center and our third-party distribution center providers may experience disruptions or operate inefficiently; and (f) we may not be able to evolve our store locations to align with market trends, successfully diversify our store models and formats, or otherwise effectively manage our overall portfolio of stores; (3) international risks such as: (a) we may not be able to operate our international corporately-managed locations profitably; (b) we rely on a few global supply chain vendors to supply substantially all of our merchandise, and significant price increases or disruption in their ability to deliver merchandise could harm our ability to source products and supply inventory to our stores; (c) our merchandise is manufactured by foreign manufacturers and the availability and costs of our products, as well as our product pricing, may be negatively affected by risks associated with international manufacturing and trade and foreign currency fluctuations; and (d) we may be unable to effectively manage our international franchises, attract new franchisees or the laws relating to our international franchises change; (4) Legal, technology and intellectual property risks such as: (a) we are subject to a number of risks related to disruptions, failures or security breaches of our information technology infrastructure; (b) we may fail to renew, register or otherwise protect our trademarks or other intellectual property and may be sued by third parties for infringement or misappropriation of their proprietary rights; (c) we may suffer negative publicity or be sued if the manufacturers of our merchandise or Build-A-Bear branded merchandise sold by our licensees ship products that do not meet current safety standards or production requirements or if such products are recalled or cause injuries; (d) we may suffer negative publicity or be sued if the manufacturers of our merchandise violate labor laws or engage in practices that consumers believe are unethical; and (e) we may suffer negative publicity or a decrease in sales or profitability if the products from other companies that we sell in our stores do not meet our quality standards or fail to achieve our sales expectations; (5) Risks related to owning our common stock such as: (a) fluctuations in our operating results could reduce cash flow or result in restrictions under our credit agreement and we may be unable to repurchase shares; (b) fluctuations in our quarterly results of operations could cause the price of our common stock to substantially decline; (c) the market price of our common stock is subject to volatility, which could in turn attract the interest of activist shareholders; and (d) provisions of our corporate governing documents and Delaware law may prevent or frustrate attempts to replace or remove our management by our stockholders, even if such replacement or removal may be in our stockholders’ best interests; and (6) general risks such as: (a) we may not be able to operate successfully if we lose key personnel; and (b) we may be unsuccessful in acquiring businesses or engaging in other strategic transactions, which may negatively affect our financial condition and profitability. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our most recent reports on Form 10-K, Form 10-Q and Form 8-K. © 2023 Build-A-Bear Workshop, Inc.
EXECUTIVE SUMMARY
In 1997, we pioneered experiential retail for kids 4 © 2023 Build-A-Bear Workshop, Inc. BUILD-A-BEAR WORKSHOP, INC. (NYSE: BBW) Today, we are a MULTI-CHANNEL, SITE-BASED EXPERIENCE and ENTERTAINMENT COMPANY with DIVERSIFIED CATEGORIES and CONSUMER SEGMENTS Started as a mall-based vertical kid’s retailer…Pivoted to become a brand that monetizes equity via multiple channels, categories, consumers and content
MOST PROFITABLE YEAR in COMPANY HISTORY 2ND CONSECUTIVE YEAR of RECORD-BREAKING PROFITABILITY 8 CONSECUTIVE QUARTERS of YEAR-OVER-YEAR REVENUE GROWTH 5 *Based on Company’s current projections for fiscal 2022 © 2023 Build-A-Bear Workshop, Inc. BBW FY2022 EXPECTATIONS* FY2022 expected to deliver record-breaking performance… On top of record-breaking performance in FY2021
25 YEARS OF EMOTIONAL CONNECTIONS 6 93% Brand Awareness* 20MM+ First Party Data Contacts, Social Media Followers & Loyalty Members ~225MM Furry Friends Sold Since Inception ~500 Experience Locations Worldwide with Multiple Business Models >160% Digital Demand Growth (since 2019)*** Skilled Associates and Seasoned Management 3,500+ ~40% of Sales to TEENS AND ADULTS ~100% Of Locations are Profitable** 50MM+ Visitors Per Year to Experience Locations * Source: Proprietary research, LEK Consulting, 2022 survey with consumers ** North America experience location portfolio *** Based on Company’s current projections for FY2022 © 2023 Build-A-Bear Workshop, Inc. BBW SNAPSHOT: BY THE NUMBERS >60% Visits are DESTINATION DRIVEN (Planned in Advance) ~35% of Experience Locations Outside Traditional Malls**
BBW KEY INVESTOR CONSIDERATIONS BUSINESS STRENGTH AND MOMENTUM SUPPORTS PROVEN STRATEGIC INITIATIVES: Strong financial results with profitable, growing revenue, high margins, good free cash flow, clean debt-free balance sheet and seasoned executive team BRAND POWER PRESENTS MONETIZABLE OPPORTUNITIES: Trusted and iconic brand appeals to today’s desire for personalized, shared & share-able experiences, unique gifting, enthusiast/collectibles & nostalgia fueled by 25-years of one:one experiences with multi-generational demographics spanning ages, genders and socio-economic strata, who desire loyal brand relationships providing relevant engagements that can drive lifetime value 7 © 2023 Build-A-Bear Workshop, Inc. PROVEN STRATEGY AND DYNAMIC BUSINESS MODEL DIVERSIFIES REVENUE: Multi-channel, vertical “experience locations” in a variety of viable formats, settings and geographies combined with integrated robust e-commerce business and extensive digital capabilities as well as content and key category expansions BBW’S UNIQUE COMPETITIVE POSITION, GROWTH OPPORTUNITIES AND SIGNIFICANT CONTROL OVER ITS FUTURE HAS BEEN COMPARATIVELY UNRECOGNIZED BY THE MARKET
BRAND POWER
BBW ENGAGES AT LIFE MOMENTS TO CREATE RELATIONSHIPS 9 © 2023 Build-A-Bear Workshop, Inc. EXPERIENCE + EMOTION = BRAND POWER Empowerment Personalization Emotional Bonding Self Expression Engagement Story Telling Diverse reasons to visit create destination-driven traffic (planned in advance)
BBW IS BELOVED MULTIPLE OCCASIONS BALANCE BUSINESS SEASONALITY** Jan-Mar Jul-Sep Apr-Jun Oct-Dec First party data email contacts, social followers and loyalty members 20MM+ >60% of visits to experience locations are planned and the top occasion is a birthday Well-Known Multi-Generational Emotional Trusted Extendable 10 © 2023 Build-A-Bear Workshop, Inc. * Source: Proprietary research, LEK Consulting, 2022 survey with consumers ** Reflects average results of multiple years DESTINATION-DRIVEN 93% Aided Brand Awareness* 76% Purchase consideration* of those aware
BBW HAS DIVERSE AND HIGHLY COVETED CONSUMERS Build-A-Bear appeals to a broad demographic market with strong purchasing power and brand loyalty Wide interest across ages Educated with spending power: Professional careers, Appx 70% attended college Over 80% are homeowners Approximately 70% are married <$50K H o u s e h o l d i n c o m e $50K-$100K $100-$150K >$150K ~40% ~40% ~20% Build-A-Bear’s ~10 million active Bonus Club membership profile: Interests include: Eating out, books/reading, visiting amusement parks ~70% have children giving us reach within households to approximately 20 million people Household Profile Infant/Toddler Kids Teens, Adults Diverse Demographics Over 40% of furry friends are for teens and adults Source: BBW proprietary loyalty program database 11 © 2023 Build-A-Bear Workshop, Inc. Female Male
12 12 Annual media and PR impressions 2020, 2021, 2022 © 2023 Build-A-Bear Workshop, Inc. OVER 10 BILLION ANNUAL MEDIA AND PR IMPRESSIONS Build-A-Bear IS pop culture; iconic status drives media exposure. Our brand is regularly mentioned on popular TV shows, movies and in celebrity news
BBW CO-BRANDS WITH LEADING LICENSES License relationships with over 75 world-class collaborators from film, TV, art, games, sports and more support enthusiast, collectible, affinity and gifting businesses with appeal to expanded consumer demographics…yet BBW is a brand unto itself providing balanced sales 13 © 2023 Build-A-Bear Workshop, Inc.
PROVEN STRATEGY & DYNAMIC MULTI-CHANNEL BUSINESS MODEL
BBW HARNESSES BRAND EQUITY and TECHNOLOGY TO DRIVE GROWTH BBW operates a dynamic “circle of engagement” model designed to efficiently create multiple consumer touchpoints using our one-to-one experience locations, data capture and advanced digital analytics & communications capabilities to increase lifetime value across a variety of brand interfaces 15 © 2023 Build-A-Bear Workshop, Inc. DIVERISFIED EXPERIENCES & BUSINESS MODELS FOUNDATION FOR GROWTH EXPERIENCES Locations & E-commerce ENGAGEMENT Content/Communications/Category Expansion MULTIPLE CONSUMER SEGMENTS CREATES CONNECTION PLACES BRAND TOP OF MIND EXPANDED CATEGORIES & CONSUMERS TRANSFORMED DIGITAL CAPABILITIES
EXPERIENCE LOCATIONS PRODUCT DEVELOPMENT SOURCING PRODUCTION LOGISTICS CONSUMERS STRATEGIC BRAND INSIGHTS 16 MORE BUSINESS CONTROL: BBW uses proprietary data to design/develop concepts that are directly sourced, distributed, marketed, priced, and sold providing business flexibility. Stores also serve as efficient fulfillment for buildabear.com CONSUMER ACCESS: BBW is known for its one:one personalized experiences. BBW locations have ~80% first-party data/loyalty program capture rate providing tremendous access to re-engage directly with guests © 2023 Build-A-Bear Workshop, Inc. Vertical experience locations give direct consumer access and more business control BBW HAS COMPETITIVE DYNAMIC BUSINESS MODEL
EXECUTION OF 2022 STRATEGY DELIVERING ANOTHER RECORD YEAR © Build-A-Bear Workshop, Inc. 17 © 2023 Build-A-Bear Workshop, Inc. DIGITAL CAPABILITIES TRANSFORMED CATEGORIES & CONSUMERS EXPANDED EXPERIENCE & BUSINESS MODELS DIVERSIFIED Disciplined and agile execution of strategic pillars which provide a foundation, delivering record-setting results in FY2022 and a platform to leverage for further growth
EXPERIENCE LOCATIONS BUILD BRAND and SUPPORT E-COMMERCE Award winning concept enjoys >25% average contribution margin and ~100% of our “experience locations” were EBITDA positive and generate meaningful cash flow for the company Over 50 million guests enter a Workshop per year. The iconic hands-on experience builds emotional connections and captures significant consumer data and loyalty club sign-up A broad range of formats, sizes, designs and business models allows experience locations to operate with less total square footage and higher productivity per square foot than in the past Build-A-Bear locations act as efficient “mini distribution centers” for increased digital demand fulfillment leveraging fixed costs like labor and overhead, while reducing last mile time and expense 18 © 2023 Build-A-Bear Workshop, Inc. Contribution margin for trailing twelve months through end of Q3 2022
EXPERIENCE LOCATIONS HAVE DIVERSE FORMATS AND MODELS OPPORTUNITY FOR ADDITIONAL LOCATIONS - BBW is NOT overstored Opened over 20 new locations in 2022 including sites such as Six Flags Magic Mountain and the Pro Football Hall of Fame; additional expansion planned in 2023 and beyond Recently added format called Build-A-Bear Adventure includes arcade and party rooms Can successfully operate for days (events such as the NFL Experience), weeks (Gaylord seasonal shops) to months and years Third-party retail model 65 locations with a variety of operators primarily in the US Corporately-managed store model Long-term and seasonal locations in the US, Canada, the UK and Ireland Most common business model options: International franchise model Currently 66 locations in 8 countries 19 © 2023 Build-A-Bear Workshop, Inc. Walmart Model Traditional Model Tourist Locations Concourse Model Seasonal Locations Vending Machines Event/Temp Locations BAB Adventure Cruise Ships Location counts as of end of Q3 2022
Rather than “digitizing” the BBW “physical” experience, BBW extended the reach and size of our market with diverse consumer segments including teens, adults, gift-givers, brand enthusiasts and collectors with new licensed relationships, experiences, and advanced digital marketing activities E-COMMERCE GROWTH INCLUDES EXPANSION OF CONSUMER BASE Buildabear.com PRIMARY TARGET SECONDARY TARGET FAMILIES WITH CHILDREN COLLECTOR & GIFT GIVERS (TWEENS/TEENS/ADULTS) FAMILIES WITH CHILDREN COLLECTOR AND GIFT GIVERS (TWEENS/TEENS/ADULTS) In late 2022, a new mobile first e-commerce site was launched featuring multiple “shop-in-shop” landing pages to appeal to specific consumer segments and purchase occasions 20 © 2023 Build-A-Bear Workshop, Inc. ~67% Kids ~33% Teen/Adult ~70% Teen/Adult ~30% Kids Age of bear “owner” registered in “Name Me” database Age of bear “owner” per post-purchase consumer survey Experience Locations
DIVERSE DIGITAL EXPERIENCES APPEAL TO VARIETY OF GUESTS Buildabear.com offers various online shopping experiences and product options to meet the preferences of diverse consumer segments for multiple occasions and products Third-party marketplaces allow consumers to shop online at their preferred site Age-gated shop-in-shop focused on edgier products and licensing including the “After Dark” line Makes gift shopping easy options sorted by season, occasion, recipient, price and category 21 Top landing page for ecommerce site also supports guests who want to “Plan a Visit” and “Plan a Party” Guided process reflecting familiar Build-A-Bear shopping stations providing a highly step-by-step customized on-line experience. Interactive animated digital experience designed to appeal to a younger consumer. Gifting solution offering for a convenient, stylish online option for a wide range of adult-to-adult gifting occasions © 2023 Build-A-Bear Workshop, Inc. Family pajama offering with matching options focused on seasonal occasions featuring easy shopping/sizing configurator.
BBW BUSINESS IS ENHANCED BY PROFITABLE E-COMMERCE PLATFORM Expanded digital marketing technology enables efficient targeting of broadened consumer segments to drive e-commerce demand E-commerce strong in both US and UK om Salesforce technology expanding loyalty and digital capabilities and efficiencies in marketing and analytics across platform Comprehensive e-commerce site update including expanded mobile-first capabilities in Q3 2022 22 Over 160% growth expected in digital demand for FY 2022 vs. FY2019 © 2023 Build-A-Bear Workshop, Inc.
BUSINESS STRENGTH AND MOMENTUM
2021 FINANCIAL SNAPSHOT TOTAL REVENUES $411.5MM +61.2% OVER 2020 +21.6% OVER 2019 PRE-TAX INCOME +$70.9MM OVER 2020 +$49.1MM OVER 2019 HIGHEST IN COMPANY’S HISTORY CASH AND EQUIVALENTS $32.8MM* +$34.8MM 2020 +$26.7MM 2019 GROSS PROFIT MARGIN 53.0% +1,480 BPS VS 2020 +760 BPS VS 2019 THE MOST PROFITABLE YEAR IN BBW HISTORY Delivered the highest revenue in over a decade and highest profit in company’s history even with ongoing impact of global pandemic Positive momentum has continued throughout 2022 and while we are navigating an environment with higher costs and a tight supply chain as well as monitoring the evolving external environment, we have again raised our guidance reflecting further growth for fiscal 2022 compared to fiscal 2021 $50.7MM 24 © 2023 Build-A-Bear Workshop, Inc. * After ~$20MM special dividend paid in Dec ‘21
CONTINUED MOMENTUM IN FISCAL 2022 TOTAL REVENUES $322.8MM VS $281.6MM IN 2021* VS $161.7MM IN 2020** PRE-TAX INCOME VS $30.6MM IN 2021* VS ($31.0MM) IN 2020** EBITDA $45.0MM $35.7MM 25 © 2023 Build-A-Bear Workshop, Inc. FIRST NINE MONTHS 2022 DELIVERED RECORD-SETTING TOTAL REVENUES AND PROFITABILITY FISCAL 2022 PROJECTED RESULTS TOTAL REVENUES RANGE $460MM- $465MM VS $411.5MM IN FY2021 VS $255.3MM IN FY2020 PRE-TAX INCOME RANGE $57MM-$63MM VS $39.7MM IN 2021* VS ($21.1MM) IN 2020** VS $50.7MM IN FY2021 VS ($20.2MM) IN FY2020 VS $63.0MM IN FY2021 VS ($6.9MM) IN FY2020 EBITDA RANGE $69.5MM- $75.5MM HIGHEST IN BBW’S 25-YEAR HISTORY The annual guidance takes into account anticipated ongoing inflationary pressures as well as plans to mitigate the impact on margin and assumes no additional material changes in either our supply chain, the macro environment or relevant foreign currency exchange rates HIGHEST IN BBW’S 25-YEAR HISTORY * In fiscal 2021, the Company’s European stores were temporarily closed for the majority of first quarter ** In fiscal 2020, the Company’s North American and European stores were temporarily closed as of March 18, 2020; By the end of H1 2020, 90% of stores had reopened Highest in company history Highest in company history Highest in company history
CURRENT MANAGEMENT LED SUCCESSFUL BUSINESS TURNAROUND $384 $411.5 2012 2021 In millions TOTAL REVENUES 2021 highest level in over a decade EBITDA Over $85MM swing in profitability PROFITABLE STORES In North America LOCATION DIVERSIFICATION More than doubled non-traditional locations AVERAGE DOLLARS PER TRANSACTION Over 50% appreciation in Avg DPT Contribution margin <10% Contribution margin >25% 2012 2021 $35.50 $53.33 12% 35% 2012 2021 % of locations in non-traditional malls 80% 97% 2012 2021 % of NA stores that are profitable DIGITAL DEMAND Digital revenue has grown to $73MM 2012 2021 % of Net Retail Sales 4% 18.3% In millions 26 © 2023 Build-A-Bear Workshop, Inc. $63.0 EOY fiscal 2021 vs EOY fiscal 2012
SUSTAINED GROWTH (Excluding 2020 due to negative COVID impact) TOTAL REVENUES >12% growth, following best year in a decade PRETAX INCOME Double-digit profit margin 27 © 2023 Build-A-Bear Workshop, Inc. +12.4% In millions In millions +18.3% 12.3% of Ttl Rev 13.0% of Ttl Rev * * * 2022 annual and Q4 numbers reflect mid-point of the guidance range In millions` QUARTERLY REVENUES Q4 2022* expected to be 8th consecutive quarter of revenue growth $462.5 $60.0
EXPERIENCED MANAGEMENT DRIVES RESULTS WITH FOCUS ON FUTURE Sharon Price John President and Chief Executive Officer Former President of Stride Rite Children’s Group LLC, a division of Wolverine World Wide, Inc. Also: Hasbro, Inc., VTech Industries, Inc. and Mattel, Inc. Eric Fencl Chief Administrative Officer, General Counsel and Secretary Former Executive Vice President, General Counsel and Secretary: Outsourcing Solutions Inc.; Legal positions at Monsanto Company, McDonnell Douglas Corporation and Bryan Cave LLP. Also: Arthur Young & Company Jennifer Kretchmar Chief Digital & Merchandising Officer Former Senior Vice President of Product and Brand Management of Stride Rite Children’s Group LLC, a division of Wolverine World Wide, Inc. Also: The Timberland Company, Goldbug, and the United States Department of Agriculture Foreign Service Chief Operations Officer J. Christopher Hurt Former Senior Vice President, North America and Vice President/ General Manager - Factory, Canada, Mexico Retail American Eagle Outfitters, Inc.; Also: Polo Ralph Lauren and The Procter & Gamble Company Voin Todorovic Chief Financial Officer Former Head of Finance and Operations Lifestyle Group Wolverine World Wide, Inc.; Vice President - Finance and Administration of the Stride Rite Children’s Group. Also: Collective Brands, Inc. and Payless ShoeSource 28 © 2023 Build-A-Bear Workshop, Inc. Proven, resilient and results-driven team successfully led company through a financial turnaround and economic uncertainties including COVID with decades of brand, marketing, toy, sourcing and retail experience Over seven years as a team at BBW; CEO, CFO, CDMO previously worked together
CONTINUED FOCUS ON SHAREHOLDER RETURN 29 © 2023 Build-A-Bear Workshop, Inc. * Share repurchase program in effect through August 31, 2025 Repurchased ~10% of our outstanding shares since Q3 2019 Declared $1.25 special dividend in Q4 2021 The Board authorized a new $50.0MM buyback program on August 31, 2022* and the company has $46.5MM remaining as of 10/29/22 Multi-year high stock price of $26.47 reached on 12/14/2022 Stock price closed at $25.00 on 1/6/2023 As of 1/6/2023, market capitalization of less than $370MM, which is a multiple of 5.1 based on mid-point of guidance of $72.5MM EBITDA for FY2022
BBW IN REVIEW BUSINESS STRENGTH AND MOMENTUM SUPPORTS PROVEN STRATEGIC INITIATIVES BRAND POWER PRESENTS MONETIZABLE OPPORTUNITIES 30 © 2023 Build-A-Bear Workshop, Inc. PROVEN STRATEGY AND DYNAMIC BUSINESS MODEL DIVERSIFIES REVENUE BBW’S UNIQUE COMPETITIVE POSITION, GROWTH OPPORTUNITIES AND SIGNIFICANT CONTROL OVER ITS FUTURE HAS BEEN COMPARATIVELY UNRECOGNIZED BY THE MARKET
Explanatory Note on Non-GAAP Financial Measures 31 © 2023 Build-A-Bear Workshop, Inc. Build-A-Bear Workshop (NYSE: BBW) reports its financial results in accordance with generally accepted accounting principles (GAAP). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain 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 within this appendix.
Reconciliation of Non-GAAP Measures: 32 © 2023 Build-A-Bear Workshop, Inc. $ in millions 1st NINE MONTHS FY22 FY22* Income before income taxes (pre-tax) $35.7 $60.0 Interest $0 $0 Depreciation & Amortization $9.3 $12.5 Earnings before interest, taxes, depreciation and amortization (EBITDA) $45.0 $72.5 *FY2022 at mid-year of current annual guidance
Reconciliation of Non-GAAP Measures: First nine months and Fiscal 2021; First nine months and Fiscal 2020 33 © 2023 Build-A-Bear Workshop, Inc. $ in millions 1st NINE MONTHS FY21 FY21 Income before income taxes (pre-tax) $30.6 $50.7 Interest $0 $0 Depreciation & Amortization $9.1 $12.3 Earnings before interest, taxes, depreciation and amortization (EBITDA) $39.7 $63.0 $ in millions 1ST NINE MONTHS FY20 FY20 Income before income taxes (pre-tax) ($31.0) ($20.2) Interest $0 $0 Depreciation & Amortization $9.9 $13.3 Earnings before interest, taxes, depreciation and amortization (EBITDA) ($21.1) ($6.9)
