Q3 2021 Build-A-Bear Workshop Inc Earnings Call

December 1, 2021

Greetings and welcome to the build a bear third quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host MS. Allison Malkin of ICR. Please go ahead.

Good morning, Thank you for joining US with me today are Sharon price, John CEO and CFO.

CFO for today's call Sharon will begin with a discussion of our strategy and third quarter fiscal 2021 performance and discuss our outlook for the year.

They're waiting will review the financials and guidance in more detail. We will then open the call to take your questions. We ask that you limit your questions to one question and one follow up this way we can get to everyone's questions. During this one hour call feel free to re queue. If you have further questions.

Members of the media, who maybe on our call today should contact US. After this conference call with your question. Please note the call is being recorded and broadcast live via the Internet.

And he is available on the Investor relations portion of our corporate website, a replay of both our call and webcast will be available later today on the IR site I will remind everyone that forward looking statements are inherently subject to risks and uncertainties actual results could differ materially from those.

Currently anticipated due to a number of factors, including those set forth in the risk factors section in the company's annual report on Form 10-K, we undertake no obligation to revise any forward looking statements and now I would like to turn the call over to Sharon.

Good morning, and thank you for joining us today.

Late in the third quarter, we acknowledged our 24th anniversary, which marks the beginning of build a bear's milestone quarter century here of adding a little more heart to lung.

In preparation for a year long celebration of our 25th anniversary.

Want to thank our founder Maxine Clark and everyone that has been a part of this organization through the decades and around the world for their dedication and hard work that has resulted in an iconic brand and beloved company, enabling them to hold special memory and the creation of over $200 million furry friends for our guests.

Since 1997 build a bear has grown from a single retail location in the St. Louis Galleria Mall too.

<unk> and evolved and diversified Global corporation, reflecting many market in consumer changes.

Most of the business model evolution has taken place in the past eight years since I took the helm in 2013 with this passionate team staying focused on successfully turning around the company that didn't endorse eight consecutive years of comparable store sales declined by 2012 and to todays thriving entity that is now Paul.

For a compelling future.

With that backdrop, it seems relevant to highlight some of the remarkable progress that has been made since 2012, including <unk>.

One a comprehensive digital transformation, resulting in significantly more efficient operation and impactful e-commerce growth.

In fiscal 2012 web demand was 4% of total revenues or $14 million.

In fiscal 2021, we expect digital penetration of nearly 20% of total revenues on a higher top line, reflecting a more than five times increase in annual web demand, which would surpass the $70 million Mark the best E Commerce results in our history for both revenue and <unk>.

Profitability.

Two a meaningful expansion in merchandise margin and.

In fiscal 2020, we have steadily expanded merchandise margin by nearly 900 basis points compared to 2012, even with some of the current supply chain pressures, we expect to end fiscal 2021 near those record 2020 level.

<unk> more than doubled the average store contribution rate.

At the end of fiscal 2012 more than 20% of North American locations were unprofitable with an average contribution margin under 10%.

In fiscal 2021, 98% of North American stores are expected to be profitable with an average contribution margin of over 25%.

For improvements across operational metrics, such as dollars per transaction, which for example were $35 56 in fiscal 2012 and have now through a combination of strategic initiatives risen slightly above $54 year to date for fiscal 2021.

<unk> fiscal 2021 revenue is expected to be at its highest level since 2012 in fact, the midpoint of the revised guidance from this morning's press release would translate to the highest total revenue and over a decade.

And sixth we have created value for our shareholders with record breaking profit as well as stock price depreciation on my first day at build a bear in 2012, the stock closed at $6 56.

Although it has fluctuated over the years like many especially during the Covid yesterday's closing price was $17 six <unk> with the U S News recently ranking BBW as the top 25 best performing stocks in 2021.

Upon further reflection of this financial progress since 2012, it is important to understand that the team needed to do more than just returned to profitability after eight years of contraction.

We had also inherited a suboptimal supply chain and outdated technological infrastructure and a company that had not yet pivoted its retail strategy to reflect the changing environment, nor envision meaningfully leveraging the power of the brand to diversify revenue stream.

Therefore, the goal was to comp quickly returned to profitability, while simultaneously evolving the fundamentals of the company to compete in a very different world than the past.

And 18 months the company return to sustained profitability for four of the next five years, while self funding a new it infrastructure rebuilding a website to compete in the growing digital economy and reorganizing in assembling a leadership team to execute the diversification strategy.

However, this necessary and multi dimensional multiyear planned evolution unfolded during a period of rapid consumer shopping shifts in economic turmoil coined as the retail Apocalypse and Brexit, which continue.

Contributed to scores of retailers across the U S and U K filing for bankruptcy and thousands of store closures.

While traditional mall traffic reportedly dropped by more than half each.

Even with these headwinds build a bear persevered developing a variety of innovative new retail business models and format, while focusing beyond traditional malls to more tourist locations, where consumers were going for fun and entertainment and where our business tended to over index on key metrics.

We also leveraged the strength of our brand to expand into new non flash product category and add non traditional retail locations.

Separately because of the accelerating shift away from traditional advertising and media and marketing. We also developed new intellectual property, specifically designed to translate into owned value enhancing brand building content to directly connect and engage with children in new ways and do new.

Venues.

And we simultaneously leverage the recently achieved multi generational aspect of the brand to expand our consumer base beyond children.

Some of these evolutionary efforts include bill.

Build a bear is much less reliant on traditional mall.

The build a bear workshop North American retail locations have evolved from having 85% in traditional mall in 2012 to fewer than 65% in 2021.

We also recently successfully renegotiated favorable term for 99% of our leases, while maintaining high levels of lease optionality.

Build a bear is now more than plush and more than workshop.

Not only have we built on the power of the Master brand via outbound licensing deals in multiple categories beyond plush to expand the build a bear brand reach and deliver margin accretive revenue. We have also created a content pipeline using internally developed proprietary IP that we prove out and our.

Our stores and then partner with best in Class Entertainment company to drive awareness.

<unk> engagement and revenue through content creation and marketing such as we have done with the newly launched Honey Girls live action movie in conjunction with Sony Pictures.

And build a bear has a much broader consumer base.

In 2012, the vast majority of our Salesforce for kids under 10 years old.

Although children remain a core audience, we are purposefully and successfully expanded our consumer base to include more tweens teen and adult attracting a broader demographic and a larger addressable market, which means greater potential.

This expanded older demo, which leverages the multigenerational aspect of the brand now represents more than 40% of our total sales.

I share this with you because the execution of these and other transformational strategy combined with keen financial oversight have not only once again led to successful re emergence of the company even as we manage through the ongoing impact of a global pandemic that led to the unprecedented temporary.

<unk> of 100% of our locations in 2020, we believe they have set us up for future opportunities as well.

And these important building blocks in place.

Since that time the team has been able to deliver the most profitable first three quarters in our history.

Specific highlights from our record breaking third quarter 2021 results include.

$95 million in total revenues the highest level in more than 10 years for third quarter, representing growth of over 27% compared to fiscal 2023rd quarter and 35% versus 2019.

In fact on a year to date basis through the third quarter total revenues of $282 million.

It's also the highest level in over a decade and.

Pre tax income of nearly $8 million.

Representing the highest for a third quarter in our history.

And the third quarter third period in a row that we have set records for our most profitable quarters.

Accordingly year to date pre tax income of $2 $23 million is also a record breaking performance.

While we acknowledge the impact of Covid related factors, such as pent up demand and government stimulus. We also firmly believe that this year's momentum is reflective of the ongoing successful execution of our strategy combined with our ability to continually adapt in a volatile environment.

These multi year infrastructure operational and organizational shifts were designed to create a more diversified corporation poised for long term success.

Now I'd like to update you on our progress on three of these key priorities.

Our first strategic priority is the further acceleration of the digital transformation of the company.

When our stores were closed due to COVID-19 in 2020, we quickly pivoted to generate new levels of e-commerce demand.

In 2021, not only have we successfully sustained that elevated digital sales level. We've also been working to drive continued incremental E comm growth with innovative new products and experiences for a variety of consumer segment.

Some examples include.

First the large and expanding gifting category has emerged as an important component of our digital demand growth strategy further leveraging our efforts to broaden our consumer base we.

We intend to continue to fuel this initiative by building out our gifting selection and occasions online as many of these consumers prefer the convenience of digital shopping and directory stepping in delivery and we look forward to sharing some innovative new concepts as they launch.

Second our adult fan based affinity product continued to be online growth driver.

Now further enabled by our new dedicated space on our website called the bear case, offering some surprising collectibles and licensing.

In the bare case these highly valuable predominantly adult yet can find products that like in a cave or just a little bit cooler or maybe even a little bit darker while still being on brand.

Our offering feature popular entertainment properties, including our late third quarter collaboration with the friends television show. The recent introduction of Marvel's One division and update of our popular Deadpool, there and the anticipated launch of many other fan favorites.

Third we are rolling out our consumer facing marketing launch of a new interactive e-commerce experience call their builder three D or BV three D where guests can complete an online transactions via a re imagined animated build a bear workshop, where their furry friends of choice come to life.

And a video game like World.

Recently, given credit and a popular business podcast, a pioneer in ecommerce to point out with the process being done at the experiential E Commerce or E. Commerce. This exciting innovation opens up a new way for guests to engage and shop with us.

Fourth given the increasing desire for more internet consumer payment option. We have recently added the coroner extended payment plan to our web site.

Florida transactions have a 30% higher average order value versus non corn kernel orders and the relationship also provides the build a bear marketing exposure to millions of client a shocker.

Fifth since the relaunch of our bonus club loyalty membership and email access has continued to expand.

To leverage it late in the quarter, we launched the next module of Salesforce known as service cloud. This effort is reflective of our continued integration and elevation of digital capabilities via the multiple platforms, we are using to create value.

Through the more effective use of our first party data.

In the case of service cloud our goal is to improve our ability to identify collate and impossibly market to consumers through the creation of personal preference profile, which can lead to better buyer journey and more accurate look alike shopper data, which can improve our ability to drive incremental sales.

These initiatives have contributed to significantly higher site traffic compared to prior year record setting digital demand at all time E Commerce profitability.

I would like to congratulate the ecommerce team for these results as well as the build a bear for build a bear dot com being recognized by Newsweek as one of the best online shop for their recently published 2022 consumer guide.

Our second strategic priority relates to the continued evolution and leverage of our store footprint, including new format business and usage models and locations to assure consumer access to the important one on one retail payment experience that helps build our brand affinity.

As such we are using our stores and e-commerce fulfillment centers.

With our recently expanded inventory management capabilities, we are leveraging our geographically dispersed door footprint to expand our omnichannel consumer delivery options via buy online ship from store buy online pickup in store and same day delivery with our shift relationship.

This strategic use of hundreds of store location as many pool points significantly improved e-commerce fulfillment efficiency decreases ship time, which is especially critical to minimize holiday cutoff date and significantly expand our overall e-commerce throughput capacity versus using the.

A warehouse alone.

We are adding new tourist location to our fleet.

Given our overall improve store profitability strong store metrics associated with tourist location and the current favorable rent environment as well as the fact that we believe build a bear is not over stored we have recently started to strategically expand into a number of key tourist environment through a combination of Corporately managed and <unk>.

Third party model, thus far we have added new tourist locations that Pier Park in Panama City, the hub at water Sand Beach near Sea, South, Florida Icon Park, and Seaworld in Orlando Busch Gardens, Tampa River City, and San Antonio J W. Marriott Hill County in Austin.

And Kings Dominion amusement park in Richmond, Virginia.

We have recently reopened five historically successful temporary seasonal holiday shop at Gaylord Hotel.

Finally, we are dedicated to continued retail innovation.

And through our new relationship with the Hudson Group, who recently announced build a bear workshop first interactive Teddy bear they'd be machine located at JFK Airport.

We now have automatic petty machine or ATM.

Would provide an opportunity for us to expand with Hudson and two other airports across the country for last minute gift and traveling family.

As we look into additional sites for this brand extending low labor retail concepts.

It is important to note that many of these initiatives have been in the works for quite some time, but were delayed due to the COVID-19 business disruption.

However, we are now well be pleased to start rolling out a variety of these transformational and innovative concepts as we look forward to sharing additional strategic opportunities already planned for next year and beyond in upcoming discussion.

Our third strategic priority is to maintain and leverage our strong financial position.

Thus far in 2021 and for the third quarter build a bear has delivered record results, while maintaining a solid balance sheet and strong cash position with no borrowings on our credit facility.

We continue to support our business with strategic investments as we also recognize the opportunity to more directly returned value to our shareholders, especially given the results and the ongoing strong fourth quarter to date trends.

With that as noted in yesterday's press release on the precipice of our 20 <unk> anniversary celebration year I'm pleased to reiterate that the board of directors has authorized a.

The share repurchase program of up to $25 million in effect through November 32023, and a special cash dividend of $1 25 per share to be paid on December 27, 2021 to all shareholders of record as of December 10th.

We believe that the multiyear multimillion dollar buyback program is reflective of the board's confidence in this company and again given this record breaking year. The special dividend is intended to immediately return value to our shareholders.

We look to the upcoming peak selling as we look to the upcoming peak selling season like many companies, we too are monitoring the potential impact of the newly identified Covid there.

Are you at.

And.

Also juggling logistics and inventory challenges.

However, because of the team's long range planning and focused efforts on our supply chain. We remain confident that we will be in an inventory position to support our expected holiday demand.

We also believe that we are appropriately staffed and trained with bear builder associates ready to assure that there are plenty of Teddy bears do the tree. This Christmas.

With that in mind as noted in the earnings release from this morning, we have once again increased our annual guidance for total revenues and EBITDA for the fiscal year, which <unk> will expand on in his comments.

In closing I am proud of our team of talented committed and passionate associates for delivering another record breaking quarter and what has so far been a record breaking year.

I would also like to acknowledge our board of directors and welcome our recently announced New Board members and Orion.

And Dara.

And Leslie Rotenberg.

Two the build a bear family, we look forward to working with you.

Now I would like to turn the call over to Hawaii.

Thanks, Sharon and good morning to everyone.

Very pleased to continue our positive momentum from the first half of the year.

As John noted, we delivered third quarter and year to date profit.

Modest level in our history.

This performance reflects the success.

Our strategies Richard provocative.

<unk> platform for which to deliver consistent growth.

We expect the strength of our Omnichannel business model, which includes a very profitable E. Commerce is experiential retail store base.

Complemented by higher margin revenue stream.

Quarters.

<unk> supply chain as well as disciplined balance sheet management.

Put us in a solid position for continued future success.

Third quarter significantly exceeded our expectations as the month progressively group head of already regardless.

As a result.

Typically the smallest revenue quarter of the year turns out to be the biggest score card this year.

We are pleased to achieve these brokerage rolls in an operating environment that remains dynamic with ongoing macro challenges.

Our year to date performance and continued cost discipline.

Confidence to further increase our guidance for total revenue and EBIT in our quarter 2021 fiscal year return I will discuss in more detail in just a minute.

First.

Let me give more information for our third quarter results, which include comparisons to both the 2028 and 2019 first quarters due to the temporary COVID-19 related store closures last year.

Total revenues were $95 $1 billion is 27% increase compared to the third quarter of fiscal 2020.

35% decrease.

When you're not.

Our sales improved across geographies driven by both higher profit levels as well as an increase in the average transaction value compared to the 2020 per quarter.

Gross profit margin was 52, 4% was significantly higher than the prior year as a result of 44, 6% and 79, 4% in the third quarter of fiscal 2020 in fiscal 2019, respectively.

The growth in core revenues drove leverage fixed occupancy expenses.

Also benefited from the renegotiated lease terms, which started to take effect in 2020.

Our merchandise margin expanded as we reduce promotional activity leading to lower discovery.

We also strategically increased prices on highly sought after product in an effort to mitigate supply chain and inflationary pressures.

To assist the FASB February for the foreseeable future.

SG&A dollars decreased compared to both the 2020 as in 2019 first quarters.

However, SG&A as a percent of total revenues improve.

243, 8% versus 44, 3% last year and 54, 3% in 2019.

The increase in SG&A dollars compared to the prior years was driven by higher totally were expenses given the reopening of the location.

We ended operating hours.

We also recorded full corporate salaries this year.

Thoughts for fiscal 2020, this pandemic related costs compared with initiatives included a great introduction.

In addition, the change in SG&A reflects an increase in variable costs driven by sales growth initiatives inclusive of higher marketing expense and funding a performance based incentive programs.

Notably we delivered.

Third quarter pre tax profit in our company nearly 25 year history of $749 million.

This represents an improvement of $6 $2 billion compared to the prior year's quarter, and a decrease of $56 million versus the third quarter of fiscal 2019.

For the first nine months of fiscal 2021.

Total revenues were $281 6 million, an increase of 74% compared to the first nine months of fiscal 2020.

And then one 8% increase versus the first nine months of 2019.

Pretax income was $34 $6 million.

Goldman 61 $5 million from the pretax loss recorded in the first nine months of fiscal 2020.

And the $36 $6 million improvement compared with the first nine months of fiscal 2019.

Adjusted EBIT was $39 $1 million, an increase of $52 $2 million compared to the first nine months of fiscal 2020.

An increase of $34 8 million compared to the first nine months of fiscal 2019.

Turning to the balance sheet.

We ended the third quarter with cash and cash equivalents of $45 million with no borrowings on our credit facility compared to 25.

Julien.

Yes.

23rd quarter.

Decrease in cash reported improvement in profitability for the quarter, partially offset by increased inventory levels and cash tax payments.

<unk> capital expenditures.

And as we have previously shared.

Proactively accelerated the timing maybe about order placements and.

Increased quantities for core products and evergreen work for those collection to support our business momentum and as part of our efforts to mitigate ongoing supply chain disruption.

At quarter end inventory was up.

$4 million, an increase of 44% from last year's third quarter.

Assuming no additional material COVID-19 impact either.

Logistics consumer sentiment or store operations, we are still targeting to have increased inventory levels compared to the fiscal year end.

1002 thousand 19 to meet our anticipated business.

As noted yesterday, we announce specific capital allocation plans to return value to our shareholders.

In addition, our use of capital will continue to focus on investments supporting initiatives that are expected to generate positive returns.

For the first nine months of the year our capital expenditures.

$6 million.

And on a full year basis, we expect capex to be in the range of $8 million to $10 million again, assuming there are no additional significant COVID-19 related disruptions or delays in availability of goods and services.

Also as our performance expectations in Peru, we made about $9 million in cash tax payments this year.

Based on our strong third quarter performance and positive growth.

Again, raising our guidance for fiscal 2021, total revenue and EBITDA as compared to the guidance, we shared in conjunction with our second quarter earnings release.

Specifically.

Currently expect total revenues to be in the range of $390 million to $400 million versus our previous guidance of $375 million to $385 million in total revenues.

And EBITDA to be in the range of $55 million to $60 million, an increase from our previous expectations for EBITDA in the range of $45 million to $50 million.

In addition, we expect depreciation and amortization in the range of 12 to protein yogurt.

Our full year guidance assume no additional physics.

The negative impact from the pandemic, such as polo store closures due to government mandate.

The.

We reported fundamental performance based incentive program as well.

Current expectations for inflationary pressures from product rates.

And minimum wage increases.

In closing we are.

We're pleased with our record setting first nine months and our momentum so far in the fourth quarter.

And then I want to.

And congratulate teams across the globe.

Driven these results.

<unk> continues to be neutral make a difference every day in our stores and warehouses.

Offices, along with support from our vendors.

Logistics support and other partners in order to drive our growth.

We remain focused on accelerating the execution of key strategic initiatives.

We are confident.

We are in a position to achieve our goal of long.

For sustained profitable growth.

This concludes our prepared remarks, and we will now turn the call back over to the operator for questions operator.

Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.

You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

As a reminder, we ask that you each keep to one question and one follow up thank you.

Our first question comes from the line of Eric better with S. G. Research. Please proceed with your question.

Yes.

Good morning, congratulations on a really great quarter.

Sure.

When you work with.

Commercial revenue and international revenue.

They've been coming back.

Actually the commercial.

How do you feel about those areas in terms of.

Potential growth prospects going forward.

Yeah. Thanks, Eric.

The commercial revenue side again, that's part of what's diversifying our business.

But a big portion of that is something we call third party retail.

And those manifest as retail stores just operated by our partners such as Great Wolf Lodge, our Carnival cruise line. Some of those as we noted in the remarks are very strategically chosen at tourist locations and that sort of why we saw the law during 2020 and now we're seeing some strong come back.

As the market stabilize the growth in those opportunities is really dependent on finding those partners as we move forward and there are additional partners that we have targeted and known and identified as potential growth opportunities for us for the <unk>.

<unk> operated operated location.

Where the partner buys the fixtures manage the inventory and maintain the labor cost so.

We're looking forward to continued tourist location expansion, but not just in third party I also noted in the call. We still see some opportunistic store expansion on the R&R owned and operated side as well and lifted out a few locations, where we feel like we have opportunity.

<unk> because.

But I think the specific comment was we don't believe build a bear's oversold.

So thank you for the question, but yes, there should be some opportunity pointed to something else.

Q I spoke about international definitely considering the pandemic around the world you know the situation is different in every country. As you know are different on international franchise partners in different locations are dealing with some of the challenges in their respective countries.

So.

A little bit outside of our control.

Definitely we believe you know in our international business in the future and we would love to find additional partners, who can work, but at the same time doing this.

Challenging time, especially the global pandemic.

<unk> business is a little bit.

A favorable guest recall, though that most of those partners and whether it's India, Australia and China. Those are franchise partners that franchise revenues for us So it's a comparatively less negative impact.

Okay and so in Q3, you had I believe that what was it.

Paul Patrol movie movies, you become are slowly evolving how are you going to evolve.

In terms of are you handle movies going forward.

Are you referring to the licensed products, Eric our content creation.

You can do both if you had the honey girls also.

Okay.

On the license product we have.

We really enjoyed some best in class relationships and.

And work with those intellectual property owners to optimize not only movie properties that often have like a spike kind of.

The impact on sales such as Paw patrol, but we create these long term relationships with evergreen type properties.

With Harry Potter being one of our more successful.

Collections from this year, our other intellectual properties that are from their source for movies like Star Wars with <unk> continued to be very successful for us. So our pokemon from a gaming environment. So we think of entertainment is not just.

The old model, if you will from the ninth 19, 92000, 2010, we really think about how do we optimize.

Sort of a macro entertainment in terms of what what's in the common sort of popular vernacular and that not only down not for children. As we mentioned, we're expanding our consumer base and so we're also working with entertainment properties like trends are like one division or Deadpool.

So that mashup of build a bear with something else that has an emotional connection with a wide variety of our expanded consumer base creates the opportunity for us to not only drive sales, but it drives additional affinity and gives US a reason to communicate and speak with these guests on a more regular basis.

On our own content front.

We had been as you know developing this intellectual property for quite some time to have more balance in the way we present ourselves to the broad consumer base.

We don't want to just be a store of licenses, although we absolutely value. Those license relationship. We also want to have that control. If you will over when and how we launch our own intellectual property or drive our own content and that's reflective of Honey girls. So we launched honey girls back in 2015 I wanted to say.

It's been one of our most successful lines and re envisioned it as a live action film starring Shawn <unk> launched at the start.

The very end of the third quarter, our sales rose, 20% in the midst of that and our DPT on the Honey Girls line is at $90. Then you might recall I mentioned that we were around $56 on an average DPT, which have risen from 35.

In 2012, so you can kind of see that engagement that happens.

When you get you have.

That kind of high emotive intellectual ingate intellectual property engagement with your gas. So we have a lot in the pipeline on our own content side and one of the other reasons that so critical is because of the changes in the marketing environment, particularly the kit.

That model is creating commercial and putting it on.

TV and expecting to be able to drive sales just is it as robust as it used to be you have to be a lot more diversified than you have to have ways and means.

To communicate directly with children, particularly through content.

Okay, great and congrats and good luck for the holiday periods.

Great. Thank you.

Thank you. Our next question comes from the line of Williams to Lindsay wants to visit Dara Street Capital. Please proceed with your question.

Hi, congratulations on the great results I guess just to start housekeeping question, what is the EBITDA guidance translate into as far as non-GAAP non-GAAP earnings per share for the year.

Good morning, William Thank you. Thanks for the question so.

Our EBITDA guidance of $55 million to $60 million on a full year basis is going to be also guided our appreciation to be about $12 million to $13 million.

One number if you are assuming the statutory tax rate of about 25% for the calculation that.

Salt in EPS in the range of.

<unk> to <unk> <unk> per share.

Okay. That's great. So I can only I guess are you guys going ICR.

We are currently expecting to go to ICR yet.

Okay great.

Great and I guess, just lastly would just be a comment as opposed to a question I mean stop obviously straining.

Less than 10 times earnings and you guys are history, beating and raising so I know you guys Im very happy to see you guys put that buyback in place I would love to see you guys execute on it.

To the extent you guys go to ICR and keep executing we're not going to get a chance to buy the stock at less than 10 times earnings for long. So I would go ahead and execute on that.

Love the dividend. So thank you guys for the great execution.

You'll see that we're going to start returning capital to shareholders.

Okay.

Thank you.

Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Our next question comes from the line of David Cannon with Cannon wealth management. Please proceed with your question.

Good morning congratulations.

Two questions first one is expanding your total addressable market.

The two teams between adults.

Is there anything that you could share with us in terms of the pipeline of products and collaborations.

Yeah.

Further drives.

Sales.

It's about increasing Tam opportunity. So that's kind of that's number one number two if you could comment a little bit.

The ATM machines.

Tom.

Airports kind of what's the average unit volume as well.

The opportunity over the next couple of years.

Yeah. Thank you David so on the sanction of the addressable market as I mentioned in the comments. The two key ways that we're doing that is wanted to gifting and we are providing lots of different gifting opportunity new concepts, new ideas and new occasions.

We've tested into Valentine's for example, adult to adult gifting and recognize it that our product and our brand.

Resonate in that area and are continuing to evolve with direct marketing efforts against that adult to adult consumer base.

That there are other opportunities and have been building.

Creating building blocks against whether its graduations mother's day father's day.

A number of different any occasion that you might see it.

And to celebrate our makeup memory, we believe that build a bear can be there and we certainly expect to be able to share even more specific information as we go to ICR or closing call for a year and and look forward to that I mean, obviously, you understand that that broader market.

I can create a lot of opportunity for us to build the business beyond just kids get out of the churn of that age the age gating that happened or the age grading that happens for us when you have a data build a bear now that were multi generational you really don't have to age out of build a bear.

The second question about Atms, we've just passed the one.

ATM and JFK right now we haven't shared the specifics of that I can say that thus far Hudson's is pleased with our results.

I actually mentioned it in their own earnings call.

They were pleased with the build a bear vending machine results and we look forward to being able to replicate those positive results in partnership with them.

We also believe there are opportunities for other types of location, whether that children's hospital, where you have.

Need for a low labor model, but also a desire for.

It's an immediate gift giving need.

And it's just another way another innovative way for us to be in front of our and when in front of the consumers at the right time and the right place.

And we're always looking for those types of opportunities.

Okay, I should've been more clear.

Questions.

I understand the target audience.

What I meant.

To support the content. If you will in terms of collaborations like you mentioned doing something with friends is there are there other specific product opportunities for collaborations that would be more appealing to an adult or teenage or 'twenty nature so to speak.

We have a pipeline as I mentioned on the call of licensed properties that we expect to rollout some of which I mentioned would be one division, which just launched quite successful.

As well as we're re launching our Deadpool product, which has also been very popular in the past and as.

As I'm sure you realized David a lot of these are licenses so that requires us to have.

Approval to mentioned that was in a public forum, but we do have a pipeline of products that are coming out that are.

Our design to an expected to appeal to that target audience.

Okay.

Okay. Thanks.

Have a good holiday season, I'll see you at ICR.

Great.

Thank you.

Thank you, ladies and gentlemen, once again it is star one to ask a question, we'll pause a moment to allow for any other questions.

Okay.

Ladies and gentlemen, thank you. This does conclude our question and answer session I'll turn the floor back to Mr. <unk> for any final comments.

Let's just thanks for everyone joining us today, and we do look forward to sharing our year end results and providing additional updates on our strategic plan.

Kelly as we are starting to the beginning of celebrating our milestone 25th anniversary year as mentioned on the call. We currently are planning to attend the ICR conference in January and look forward to seeing any or all of you there.

And have a happy holiday.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

[music].

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host MS. Allison Malkin of ICR. Please go ahead.

Good morning, Thank you for joining US with me today are Sharon price, John CEO I'm going to go at it CFO for today's call Sharon will begin with a discussion of our strategy and third quarter fiscal 2021 performance and discuss our outlook for the year. After we will review the financials and Guy.

Items in more detail, we will then open the call to take your questions.

I ask that you limit your questions to one question and one follow up this way we can get to everyone's questions. During this one hour call feel free to requeue. If you have further questions.

Members of the media, who maybe on our call today should contact US. After this conference call with your question. Please note the call is being recorded and broadcast live via the Internet.

The earnings release is available on the Investor Relations portion of our corporate website, a replay of both our call and webcast will be available later today on the IR site.

I will remind everyone that forward looking statements are inherently subject to risks and uncertainties actual results could differ materially from those currently anticipated due to a number of factors, including those set forth in the risk factors section in the company's annual report on Form 10-K, we undertake no obligation to.

Revise any forward looking statements and now I would like to turn the call over to Sharon.

Good morning, and thank you for joining us today.

Late in the third quarter, we acknowledged our 24th anniversary, which marks the beginning of build a bear's milestone quarter century here.

Adding a little more part to lock.

In preparation for a year long celebration of our 25th anniversary I want to thank our founder Maxine Clark and everyone that has been a part of this organization through the decades and around the world for their dedication and hard work that has resulted in an iconic brand and beloved company, enabling them to hold special.

Murray and the creation of over 200 million furry friends for our guests.

Since 1997 build a bear has grown from a single retail location in the St. Louis Galleria Mall.

And evolved and diversified Global corporation, reflecting many market in consumer changes.

Most of the business model evolution has taken place in the past eight years since I took the helm in 2013 with this passionate team staying focused on successfully turning around the company that endured eight consecutive years of comparable store sales declined by 2012 and to todays thriving entity that is now Paul.

For a compelling future.

With that backdrop, it seems relevant to highlight some of the remarkable progress that has been made since 2012, including.

One a comprehensive digital transformation, resulting in significantly more efficient operation and impactful e-commerce growth.

In fiscal 2012 web demand was 4% of total revenues or $14 million in fiscal 2021, we expect digital penetration of nearly 20% of total revenues on a higher top line.

Reflecting a more than five times increase in annual web demand, which would surpass the $70 million Mark the best E Commerce results in our history for both revenue and profitability.

Two a meaningful expansion in merchandise margin and.

In fiscal 2020, we had steadily expanded merchandise margin by nearly 900 basis points compared to 2012.

Even with some of the current supply chain pressures, we expect to end fiscal 2021 near those record 2020 level.

Three more than doubled the average store contribution rate.

And our fiscal 2012 more than 20% of North American locations were unprofitable with an average contribution margin under 10%.

In fiscal 2021, 98% of North American stores are expected to be profitable with an average contribution margin of over 25%.

For improvement across operational metrics, such as dollars per transaction, which for example were $35 56 in fiscal 2012 and have now through a combination of strategic initiatives risen slightly above $54 year to date for fiscal 2021.

And sixth we have created value for our shareholders with record breaking profit as well as stock price depreciation.

On my first day at build a bear in 2012, the stock closed at $6.56. Although it has fluctuated over the years like many especially during the Covid yesterday's closing price was $17 six is when the U S. News recently ranking BBW as the top 25 best performing stocks in 2021.

Upon further reflection of this financial progress since 2012, it's important to understand that the team needed to do more than just returned to profitability after eight years of contraction.

Therefore, the goal with two comp quickly returned to profitability, while simultaneously evolving the fundamentals of the company to compete in a very different world than the past.

However, this necessary and multi dimensional multiyear planned evolution unfolded during a period of rapid consumer shopping shifts and economic turmoil coined as the retail Apocalypse and Brexit which continues.

Contributed to scores of retailers across the U S and U K filing for bankruptcy and thousands of store closures.

While traditional mall traffic reportedly dropped by more than half each.

We also leveraged the strength of our brand to expand into new non flash product categories and add non traditional retail locations.

Separately the cause of the accelerating shift away from traditional advertising and media and marketing. We also developed new intellectual property, specifically designed to translate into owned value enhancing brand building content to directly connect and engage with children, a new way and new.

Venue.

And we simultaneously leverage the recently achieved multi generational aspect of the brand to expand our consumer base beyond children.

Some of these evolutionary efforts include <unk>.

Build a bear is much less reliant on traditional mall.

The build a bear workshop, North American retail locations have evolved from having 85% and traditional mall in 2012 to fewer than 65% in 2021.

We also recently successfully renegotiated favorable term for 99% of our leases, while maintaining high levels of lease optionality.

Build a bear is now more than flush and more than workshop not.

In our stores and then partner with best in Class Entertainment company to drive awareness affinity engagement and revenue through content creation and marketing such as we have done with the newly launched Honey Girls live action movie in conjunction with Sony Pictures.

And build a bear has a much broader consumer base.

In 2012, the vast majority of our Salesforce for kids under 10 years old.

So children remain a core audience, we have purposefully and successfully expanded our consumer base to include more tweens teen and adult attracting a broader demographic and a larger addressable market, which means greater potential.

This expanded older demo, which leverages the multi generational aspect of the brand now represents more than 40% of our total sales.

I share this with you because of the execution of these and other transformational strategy combined with keen financial oversight.

Not only once again led to successful re emergence of the company even as we manage through the ongoing impact of a global pandemic that led to the unprecedented temporary closure of 100% of our locations. In 2020, we believe they have set us up for the future opportunities as well.

Well.

And these important building blocks in place.

Since that time the team has been able to deliver the most profitable first three quarters in our history.

Specific highlights from our record breaking third quarter 2021 results include.

$95 million in total revenue the highest level in more than 10 years for third quarter, representing growth of over 27% compared to fiscal 2023rd quarter and 35% versus 2019.

In fact on a year to date basis through the third quarter total revenues of $282 million.

Which is also the highest level in over a decade and.

Pre tax income of nearly $8 million.

Representing the highest for a third quarter in our history and in the third quarter third period in a row that we have set record for our most profitable quarters.

Accordingly year to date pre tax income of $2 $23 million is also a record breaking performance.

These multi year infrastructure operational and organizational shifts were designed to create a more diversified corporation poised for long term success.

Now I'd like to update you on our progress on three of these key priorities.

Our first strategic priority is the further acceleration of the digital transformation of the company.

When our stores were closed due to Covid and 2020, we quickly pivoted to generate new levels of e-commerce demand.

Some examples include.

First the large and expanding gifting category has emerged as an important component of our digital demand growth strategy further leveraging our efforts to broaden our consumer base we.

We intend to continue to fuel this initiative by building out our gifting selection and occasions online as many of these consumers prefer the convenience of digital shopping and directories that delivery and we look forward to sharing some innovative new concepts as they launch.

Second our adult fan base affinity product continued to be online growth driver.

Now further enabled by our new dedicated space on our website called the bear case, offering some surprising collectibles and licensing.

In the bare case these highly valuable predominantly adult yet can find products that like in a cave or just a little bit cooler or maybe even a little bit darker while still being on brand.

Third we are rolling out our consumer facing marketing launch of a new interactive e-commerce experience call their builder three D. R. <unk> D where guests can complete an online transactions via a re imagined animated build a bear workshop, where their furry friends of choice come to life.

In a video game like World.

Fourth given the increasing desire for more internet consumer payment option. We have recently added the coroner extended payment plan to our web site.

Florida transactions have a 30% higher average order value versus non corn kernel orders and the relationship also provides build a bear marketing exposure to millions of Klein of shoppers.

And fifth since the relaunch of our bonus club loyalty membership and email access has continued to expand.

In the case of service cloud our goal is to improve our ability to identify collate and in passenger market.

Get to consumers through the creation of personal preference profile, which can lead to better buyer journey and more accurate look alike shopper data, which can improve our ability to drive incremental sales.

These initiatives have contributed to significantly higher site traffic compared to prior year record setting digital.

And at all times E Commerce profitability.

I would like to congratulate the ecommerce team for these results as well as the build a bear for build a bear dot com being recognized by Newsweek is one of the best online shop for their recently published 2022 consumer guide.

Our second strategic priority relate.

Will demand a continued evolution and leverage of our store footprint, including new format business and usage model and locations to assure consumer access to the important one on one retail payment experience that helps build our brand affinity.

As such we are using our stores and e-commerce fulfillment centers.

Centers with our recently expanded inventory management capabilities, we are leveraging our geographically dispersed door footprint to expand our omnichannel consumer delivery options via buy online ship from store buy online pickup in store and same day delivery with our shift relationship.

This strategic.

<unk> use of hundreds of store location as many pool points significantly improved e-commerce fulfillment efficiency decreases ship time, which is especially critical to minimize holiday cut update and significantly expand our overall e-commerce throughput capacity versus using the warehouses.

Wow.

We are adding new tourist location to our fleet.

We have recently started to strategically expand into a number of key tourist environment through a combination of Corporately managed and third party model.

Thus far we have added new tourist locations at Pier Park in Panama City, the hub at water Sand Beach near Seaside, Florida Icon Park, and Seaworld in Orlando Busch Gardens, Tampa River City, and San Antonio J W. A Marriott Hill County in Austin and Kings Dominion.

<unk> Park in Richmond, Virginia, plus we have recently reopened five historically successful temporary seasonal holiday shop at Gaylord Hotel.

Finally, we are dedicated to continued retail innovation and through our new relationship with the Hudson Group.

Who recently announced build a bear workshop first interacted Teddy bear they think machine located at JFK Airport.

We now have automatic petty machine or ATM.

Would provide an opportunity for us to expand with Hudson into other airports across the country for last minute gift and traveling family.

As we look into additional sites for this brand extending low labor retail concepts.

It is important to note that many of these initiatives have been in the works for quite some time, but were delayed due to the COVID-19 business disruption.

However, we are now I'm really pleased to start rolling out a variety of these transformational and innovative concepts.

Look forward to sharing additional strategic opportunities already planned for next year and beyond in upcoming discussion.

Our third strategic priority is to maintain and leverage our strong financial position.

Thus far in 2021 and for the third quarter build a bear has delivered record results, while maintaining a solid balance sheet and strong cash position with no borrowings on our credit facility.

We continue to support our business with strategic investments as we also recognize the opportunity to more directly return value to our shareholders, especially given the results and the ongoing strong fourth quarter to date trends.

With that as noted in yesterday's press release on the precipice of our 20 <unk> anniversary celebration year I'm pleased to reiterate that the board of directors has authorized a.

We look to the upcoming peak selling as we look to the upcoming peak selling season like many companies, we too are monitoring the potential impact of the newly identified Covid there.

Yes.

And.

Also juggling logistics and inventory challenges.

However, because of the team's long range planning and focused efforts on our supply chain. We remain confident that we will be in an inventory position to support our expected holiday demand.

We also believe that we are appropriately staffed and trained with bear builder associates ready to assure that there are plenty of Teddy bears do the tree. This Christmas.

In closing I am proud of our team of talented committed and passionate associates for delivering another record breaking quarter and what has so far been a record breaking year.

I would also like to acknowledge our board of directors and welcome our recently announced New Board members and Orion.

And Dara.

And Leslie Rotenberg.

Two the build a bear family, we look forward to working with you.

Now I would like to turn the call over to Boeing.

Thanks, Sharon and good morning to everyone.

Very pleased to continue our positive momentum from the first half of the year.

What sort of notice.

Third quarter and year to date profit at the highest level in our history.

This performance reflects the success of our strategies Richard prerogative.

<unk> platform for which to build.

Liver system growth.

We expect the strength of our Omnichannel business model, which includes a very profitable with ecommerce is experiential rebuilt for food.

Complemented by higher margin revenue stream.

Quarters.

What was the question.

<unk> expense as balance sheet management.

Put us in a solid position for continued future success.

Third quarter significantly exceeded our expectations.

The month progressively improved our head of R&D, who got it.

As a result.

The smallest revenue quarter of the year turns out to be the biggest so far this year.

We are pleased to achieve these results.

An operating environment that remains dynamic with ongoing macro challenges.

Our year to date performance and continued cost discipline gives us confidence to further increase our guidance for total revenue and EBIT in our quarter 2021 fiscal year, which I'll discuss in more detail in just a minute.

First.

Let me give more information for our third quarter results, which include comparisons to both the 2020 and 2019 first quarters due to the temporary COVID-19 related store closures last year.

Total revenues were $95 $1 billion is 27% increase compared to the third quarter of fiscal 2020.

35% increase.

When you're not.

Our sales improved across geographies driven by both higher traffic levels as well as an increase in average transaction value compared to the 2021st quarter.

Yeah.

Gross profit margin was 54, 1% was significantly higher than the prior year's result of 44, 6% and 79, 4% in the third quarter of fiscal 2020 in fiscal 2019, respectively.

The growth in total revenues drove leverage fixed occupancy expenses. It would be also benefited from the renegotiated lease terms, which started to take effect in 2020.

Our merchandise margin expanded as we reduce promotional activity leading to lower discounting.

We also strategically increased prices on highly sought after product in an effort to mitigate supply chain and inflationary pressures.

To anticipate the headwinds for the foreseeable future.

SG&A dollars increased compared to both the 2020 in 2019 first quarters.

However, SG&A as a percent of total revenues improved to 43, 8% versus 44, 3% last year and 53% in 2019.

The increase in SG&A dollars compared to the prior years was driven by higher store labor expenses, given the reopening that location is.

And as operating dollars.

We also reported full corporate salaries this year.

For fiscal 2020, this pandemic related cost containment initiatives, including great introductions.

In addition, the change in SG&A reflects an increase in variable costs driven by sales growth initiatives inclusive of higher marketing expense and funding performance base incentive program.

Notably we delivered.

Third quarter pre tax profits in our company.

Five year history of $749 million.

This represents an improvement of $6 $2 million compared to the prior year's quarter, and an increase of $15 $6 million versus the third quarter of fiscal 2019.

For the first nine months of fiscal 2021.

Total revenues were $281 6 million, an increase of 74% compared to the first nine months of fiscal 2020.

And then one 8% increase versus the first nine months of 2019.

Pretax income was $36 million in it.

Coolman booked 61 $5 million from the pre tax loss recorded in the first nine months of fiscal 2020.

And the $36 $6 million improvement compared to the first nine months of fiscal 2019.

And adjusted EBIT was $79 $1 million, an increase of $52 $2 million compared to the first nine months of fiscal 2020, and an increase of $34 8 million compared to the first nine months of fiscal 2019.

Turning to the balance sheet.

We ended the third quarter with cash and cash equivalents of $45 million with no borrowings on our credit facility compared to 25 $8 million at the end.

The 2023rd quarter.

Decrease in cash reflects the improvement in profitability for the quarter, partially offset by increased inventory levels and cash tax payments as well as capital expenditures.

As we have previously shared.

Proactively accelerated the timing of maybe about order placements and increased quantities for core products and evergreen merchandise collection to support our business momentum and it's part of our efforts to mitigate ongoing supply chain disruption.

At quarter end inventory was up $4 million, an increase of 22% from last year's third quarter.

Assuming no additional material COVID-19 impact either factories logistics.

Tumor specimen or store operations, we are.

We're still targeting to have increased inventory levels compared to the fiscal year end of both 2020 and 2019 to meet our anticipated business.

As noted yesterday the amount.

<unk> capital allocation plans to return value to our shareholders.

In addition, our use of capital will continue to focus on the investments.

Funding initiatives that are expected to generate positive returns.

For the first nine months of the year, our capital expenditures were $4 $6 million and on a full year basis, we expect capex to be in the range of $8 million to $10 million.

Assuming there are no additional significant COVID-19 related disruptions or delays in availability of goods and services.

Also as our performance expectations in Peru.

<unk> about $9 million in cash tax payments this year.

Based on our strong third quarter performance and positive trends.

Again.

Our guidance for fiscal 2021, total revenues and EBITDA as compared to some guidance. These shares in conjunction with our second quarter earnings release.

Specifically.

Currently expect total revenues to be in the range of $390 million to $400 million versus our previous guidance of $375 million to $385 million in total revenues.

EBITA to be in the range of $55 million to $60 million, an increase from our previous expectations for EBITDA in the range of $45 million to $50 million.

In addition, we expect depreciation and amortization in the range of $12 million to $13 million.

Our full year guidance assume no additional physics.

The negative impact from the pandemic, such as prolonged store closures due to government mandate.

That would reflect the fundings are performance based incentive program as Phil its current expectation for inflationary pressures from product rates.

And minimum wage increases.

In closing we are pleased with our record setting first nine months and our momentum so far in the fourth quarter.

And then I want to thank and congratulate teams across the globe.

Hit driven these results.

Associates continue we continue to make a difference every day in our stores.

Houses and corporate offices, along with support from our vendors will just logistics supply and other partners in order to drive our growth.

We remain focused on accelerating the execution of key strategic initiatives and we are confident.

We're positioned to achieve our goal of long term sustained profitable growth.

This concludes our prepared remarks, and we will now turn the call back over to the operator for questions operator.

You May press star two if you'd like to remove your question from the queue.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

As a reminder, we ask that you each keep to one question and one follow up thank you.

Our first question comes from the line of Eric better with FCC Research. Please proceed with your question.

Good morning, congratulations on a really great quarter.

Sure.

When you look at.

The commercial revenue and the international revenue.

<unk> been coming back.

Especially the commercial.

How do you feel about those areas in terms of.

Potential growth prospects going forward.

Yes, Thanks, Eric.

The commercial revenue side again.

That's a part of whats diversifying our business.

But a big portion of that is something we call third party retail.

And those manifest as retail stores just operated by our partners such as Great Wolf Lodge, our Carnival cruise line. Some of those as we've noted in the remarks are very strategically chosen at tourist locations and that's sort of why we saw the law during 2020 and now we're seeing some strong come back.

As the market stabilize the growth in those opportunities.

Really dependent on finding those partners as we move forward and there are additional partners that we have targeted and note and identified as potential growth opportunities for us for the <unk>.

<unk> operated operated location.

Where the partner buys the fixtures manage the inventory and maintain the labor cost so.

Yes, we're looking forward to continued tourist location expansion, but not just in third party I also noted in the call. We still see some opportunistic store expansion on the R&R owned and operated side as well and lifted out a few locations, where we felt likely have opportunity.

<unk> because.

But I think the specific comment was we don't believe build a bear's over stored.

So thank you for the question, but yes, there should be some opportunity for something else.

Eric You asked also about international definitely considering the pandemic around the world you know the situation is different in every country are different international franchise partners in different locations are dealing with some of the challenges in their respective countries.

So that's a little bit outside of our control and like we definitely believe you know in our international business in the future and we would love to find additional partners who can work.

At the same time doing this.

Challenging times, especially with the global pandemic.

Business is a little bit.

I'd say the whole guests recall, though that most of those partners and whether it's India, Australia and China. Those are franchise partners that that franchise revenues for us. So it's a comparatively less negative impact.

Okay and so in Q3, you had I believe that what was it Paul.

Paul Patrol movie movies have become are slowly evolving how are you going to evolve.

In terms of how you handle movies going forward.

Are you referring to the licensed products area our content creation.

You can do both you had the honey girls also come out that's okay. Yeah.

On the license product we have.

We really enjoy some best in class relationships and and work with those.

Actual property owners to optimize not only moving properties that often have like a spike kind of.

The impact on sales such as Paw patrol, but we create these long term relationships with evergreen type properties.

Harry Potter being one of our more successful AR collections from this year are you know other intellectual properties that are from their source for movies like Star Wars with <unk> continued to be very successful for us. So our pokemon from a gaming environment. So we think of entertainment is not.

Jeff.

The old model, if you will from the ninth 19, 92000, 2010, we really think about how do we optimize.

Sort of a macro entertainment in terms of what what's in the Commons.

Sort of popular vernacular and that was only down not for children. As we mentioned, we're expanding our consumer base and so we're also working with entertainment properties like friends are like monetization or Deadpool.

So that mashup of build a bear with something else that has an emotional connection with a wide variety of any of our expanded consumer base creates the opportunity for us to not only drive sales, but it drives additional affinity and gives US a reason to communicate and speak with these guests on a more regular basis.

On our own content front.

We had been as you know developing this intellectual property for quite some time to have.

More balance in the way, we present ourselves to the broad consumer base.

We don't want to just be historic licenses, although we absolutely value those license relationship. We also want to have that control. If you will over when and how we launch our own intellectual properties are drive our own content and that's reflective of Honey girls. So we launched honey girls back in 2015, I want to say.

And one of our most successful lines and we envisioned it as a live action film starring Sean and launched at the start of a.

Very end of the third quarter, our sales rose, 20% in the midst of that and our DPT on the Honey Girls line is at $90. Then you might recall I mentioned that we were around $56.

On an average DPT, which have risen from $35. In 2012. So you can kind of see that engagement that happens.

And you get you have that kind of high emotive intellectual engage intellectual property engagement with your gas. So we have a lot in the pipeline on our own content side and one of the other reasons that so critical it's because of the changes in the marketing environment, particularly the kit.

That model is creating commercial and putting it on TV.

TV and expecting to be able to drive sales just is it as robust as it used to be you have to be a lot more diversified than you have to have ways and means to.

To communicate directly with children, particularly through content.

Okay, great and congrats and good luck for the holiday period.

Thanks, Thank you.

Thank you. Our next question comes from the line of Williams, Dylan Haze with da Vinci Dara Street capital. Please proceed with your question.

Hi, congratulations on the great results I guess just to start housekeeping question, what is the EBITDA guidance translate into as far as non-GAAP non-GAAP earnings per share for the year.

Good morning. Thank you. Thanks for the question so.

Our EBITDA guidance of $55 million to $60 million on a full year basis. We also guided agra appreciation to be about $12 million to $13 million.

One number if you are assuming the statutory tax rate of about one 5% for the calculation that would.

Golf and EPS in a range of.

<unk> to <unk> 30 per share.

Okay. That's great Secondly, I guess you guys don't ICR.

We are currently expecting to go to ICR yet.

Okay great.

Great and I guess, just lastly would just be a comment as opposed to a question I mean stock obviously is trading at.

Less than 10 times earnings and you guys are history, beating and raising so I know you guys Im very happy to see you guys put that buyback in place I would love to see you guys execute on it.

To the extent you guys go to ICR and keep executing we're not going to get a chance to buy the stock at less than 10 times earnings for long. So I would go ahead and execute on that.

Love the dividend. So thank you guys for the great execution and thank you.

To see that we're going to start returning capital to shareholders.

Okay.

Thank you.

Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Our next question comes from the line of David Cannon with Cannon wealth management. Please proceed with your question.

Good morning congratulations.

Two questions first one is expanding your total addressable market.

Teens tweens adults.

Is there anything that you could share with us in terms of the pipeline of products and collaborations.

Further drives.

<unk>.

It's about increasing Tam opportunity. So that's kind of that's number one number two if you could comment a little bit odd.

<unk> M machines I should call them.

Airports kind of what's the average unit volume if you will.

The opportunity over the next couple of years.

Yes. Thank you David so on that thanks.

Sanction of the addressable market as I mentioned in the comments the two key ways that we're doing that is one of the gifting and we are providing lots of different gifting opportunities new concepts, new ideas and new occasions.

We've tested into Valentine's for example, our adult to adult gifting and recognize it that our product and our brand.

Resonate in that area and are continuing to evolve with direct marketing efforts against that adult to adult consumer base.

And see that there are other opportunities and have been building, creating building blocks against whether its graduations mother's day father's day.

A number of different any occasion that you might see it.

The reason to celebrate our makeup memory, we believe that build a bear can be there and we certainly expect to be able to share even more specific information as we go to ICR closing call for year end.

And look forward to that I mean, obviously, you understand that that broader market.

Can create a lot of opportunity for us to build the business beyond just kids get out of the churn of that age the age gating that are the <unk>.

Integrating that happens for us when you have a data to build a bear now that were multi generational you really don't have to age out of build a bear.

The second question about Atms, we've just passed the one ATM and JFK right now we haven't shared the specifics of that I can say that thus far Hudson's is pleased with our results. They actually mentioned it in their own earnings call them because they were pleased with the build a bear vending machine results then.

We look forward to being able to replicate those positive results in partnership with them.

We also believe there are opportunities for other types of location, whether that's children's hospital.

Where you have.

The need for a low labor model, but also a desire for.

It's an immediate gift giving need.

And it's just another way another innovative way for us to be in.

In front of our and when in front of consumers at the right time and the right place.

And we're always looking for those types of opportunities.

Okay, I should've been more clear.

Questions.

I understand the target audience.

What I meant.

Sport content. If you will in terms of collaborations like you mentioned doing something with friends is there are there other specific product opportunities for collaborations that would be more appealing to an adult or teenage or 20 days or so to speak.

We have a pipeline as I mentioned on the call of licensed properties that we expect to rollout some of which I mentioned would be one division, which just launched quite successful.

As well as we're re launching our Deadpool product, which has also been very popular in the past and as.

As I'm sure you realized David a lot of these are licenses so that requires us to have.

Approval to mention those in a public forum, but we do have a pipeline of products that are coming out that are.

Our design to an expected to appeal to that target audience.

Okay.

Okay. Thanks.

Have a good holiday season, I'll see you at ICR.

Great.

Thank you.

Thank you, ladies and gentlemen, once again it is star one to ask a question, we'll pause a moment to allow for any other questions.

Okay.

Ladies and gentlemen, thank you. This does conclude our question and answer session I will turn the floor back to Ms. Zhang for any final comments.

Let's just thanks for everyone joining us today, and we do look forward to sharing our year end results and providing additional updates on our strategic plan.

Clearly as we are starting to the beginning of celebrating our milestone 25th anniversary year as mentioned on the call. We currently are planning to attend the ICR conference in January and look forward to seeing any or all of you there.

And have a happy holiday.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Q3 2021 Build-A-Bear Workshop Inc Earnings Call

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