Build-a-bear Workshop, Inc. · NYSE:BBW
Build-a-bear Workshop — Investor Presentation (September 2018)
26 slides from Build-a-bear Workshop's investor presentation, Sep 6, 2018
Slide 1: Investor Presentation September 2018
Investor Presentation September 2018
Slide 2: Forward Looking and Cautionary Statements
Forward Looking and Cautionary Statements 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 imited to, statements that reflect our current wlews with respect fo future events
Slide 3: BBW Overview
BBW Overview 20+ YEARS YOUNG: Established in 1997 as an experiential retailer offering make-your-owned stuffed animals; IPO in 2004 GLOBAL: Nearly 500 retail locations around the world through a combination of direct and franchise operations generating over $350MM in annual revenue STRONG BRAND: Pos
Slide 4: Why BBW
Why BBW * Transformation of business model is working and driving: > Sustained profitability; > Strong cash flow with no debt; and > Sales productivity and gross margin expansion * Powerful brand with broad appeal with untapped monetization opportunities © Growth opportunities to drive long-term sus
Slide 5: Business Now
‘@) Business Now *, x 4 CONSECUTIVE YEARS OF a PROFITABILITY 2014 - 2017 GAAP Pre-Tax after 8 consecutive years of Pre-Tax losses 4 oe Q 5% Profitable US Stores 0 compared to 78% at the start of the turnaround in 2013 Strong Cash Flow & No Debt
Slide 6: 2017 Highlights
2017 Highlights 2017 vs 2016 ¢ $358MM Total Revenues ° 46.9% Retail Gross Margin ."'. ¢ $13.8MM GAAP Pre-Tax Income BUILD-A-BEAR
Slide 7: Consistent Improvement in Underlying Metrics
Consistent Improvement in Underlying Metrics 45.6% 38.9% 2012 2013 2014 North America Dollars Per Transaction oe +31% ae 110 $45.61 $46.29 tl I I | | 2012-2013, 2014S 2015S 2016-2017 45.2% 46.9% eee +800 bps 47.1% 2015 2016 = 2017 North America Units Per Transaction ce +11% ae 3.99 4.06 I 1 | | 2014
Slide 8: Company Delivering Sustained Profitability
onger Company Delivering Sustained Profitability Pre-Turnaround: Post Turnaround: 4 consecutive years of Pre-Tax Losses 4 consecutive years of Pre-Tax Profits 2009-2012 2013 2014-2017 $1.6B Cumulative Revenue $1.5B Cumulative Revenue* Cumulative GAAP Pre- $52MM Cumulative GAAP Pre- Tax Loss Tax Prof
Slide 9: Build-A-Bear is a Powerful Brand
Build-A-Bear is a Powerful Brand A Distinctive Brand with Consumers % 100% oe 0% 88% 396 8240% eee 595% ot Aided Brand Awareness US Moms of Kids ages 2-12 x BBW Brand1 Brand2 Brand3 Brand 4 Other brands include American Gil, Disney Store, Justice, LEGO Store Source: C&R Research, 2017 Balanced Seaso
Slide 10: Over 20+ years of Furry Friends sold
Over 8 Furry Friends sold (and bed memories made) in first Sa 20+ years! BUILD-A-BEA|
Slide 11: Growth Opportunities
Growth Opportunities Powerful Brand + Evolving Business Model Continued focus on the evolution of our Strategic Plan to monetize the Build-A-Bear brand across channels, geographies, consumers and categories: 1. Retail Diversification 2. E-Commerce and Gifting Growth 3. International Franchising 4. R
Slide 12: Retail Diversification: Multiple Store Formats
Retail Diversification: Multiple Store Formats Our stores can be located wherever families are going for fun, entertainment and shopping ina variety of sizes, formats and capital structures. Flagship Tourist eg., 34° Street, NYC ‘Seasonal Shop-in-shops €9,, Gaylord Holiday Ice Event Shop-in-shops Bu
Slide 13: Retail Diversification: Tourist Locations
Retail Diversification: 8 Tourist Locations FAO Schwartz Shop-in-shop Rockefeller Center, NYC Fashion Outlets Niagara Falls,
Slide 14: Retail Diversification
Retail Diversification Beginning in mid-October, we expect to open a half dozen full-service Build-A-Bear Workshop stores which will be situated inside select Walmart locations. * We feel confident that the combination of our unique retail experience with Walmart at a time when billions of dollars o
Slide 15: There are Great Wolf Lodge locations
There are 18 Great Wolf Lodge locations in the US and CA; first 3 open Fall 2018
Slide 16: E-Commerce Growth
E-Commerce Growth Largest single “store” (while under- indexing industry as % of business) * New site launched 4Q 2017, +14.4% in Q2 2018, +DD FYTD 2018 * New “Bear-Builder” step-by-step experience mimics store while building sales metrics * Fully integrated with refreshed CRM program and consumer d
Slide 17: E-Commerce Growth: DRTV, BAB Giftshop
E-Commerce Growth: DRTV, BAB Giftshop Direct response television (DRTV) September 2018 test will feature Promise Pets product offering: Examples of plush successfully sold via DRTV Dedicated gifting section has been launched on existing web site, gifting 1.0, with future initiatives in development f
Slide 18: International Franchising
International Franchising rere tect CS After initial “Shrink to Grow” approach, now delivering significant growth: * Terminated marginal operators while restructuring internal organization and adding infrastructure Aad ; * China franchise signed in 2017, expect to have 8- Mexico UAE, Qatar, 10 store
Slide 19: Revenue Diversification: Outbound Licensing
Revenue Diversification: Outbound Licensing ‘@) Royalty based revenue model with higher than average flow-through to bottom line * Means to profitably extend the brand into key categories including Crafts, Footwear, Activewear, Apparel and Accessories, Electronics, Publishing, Graphic Novels, Collec
Slide 20: Revenue Diversification: Entertainment
Revenue Diversification: Entertainment ‘@) * Build-A-Bear Radio expected to (( )) launch in early October, powered by DASH, a multi-station streaming platform with over 5MM subscribers and agreement to be standard in BU | LD- A- B EA R variety of new GM vehicles in the US * Will be exclusive kids’ o
Slide 21: Retail Diversification
Retail Diversification 3-5 Years Expected Expected Relative Expected Re Potential Growth Contribution Contribution Relative Capital evenue Stream a Rates Margin Dollars Investment Percentage Brick & Mortar Retail Low to Mid Single 20-25% High Med - High Digits E-commerce High Single to Low 20-25% Me
Slide 22: Long-Term Profitability Improvement
Long-Term Profitability Improvement ‘@) Disciplined execution of growth strategies and expense management ETE While continuing to upgrade systems and processes BUILD-A-BEAI
Slide 23: Count Your Candles/Pay Your Age Day
Count Your Candles/Pay Your Age Day COUNT YOUR CANDLES The age they are turning is how much our special Birthday Treat ‘Bear costs during their birthday month BUILD-A-BEAR New ‘Count Your Candles’ Guest Acquisition and Activation Program launched in July that allows any child to cometoa Build-A-Bear
Slide 24: Impact of Count Your Candles
Impact of Count Your Candles + MOMENTUM SHIFT: Pay Your Age Day, subsequent vouchers and Count Your Candles program have shifted sales velocity from double-digit decline to triple then double-digit increase; QTD Q3 remains positive + BONUS CLUB GROWTH: Over 1MM new accounts created in lead-up to Pay
Slide 25: Reiterating 2018 Guidance
Reiterating 2018 Guidance x" * Total revenuesin the range $345-$355MM * Retail Gross Margin expansion in H2 (excl Revenue Recognition Impact) * GAAP Pre-tax income in the range of $8.0MM to $11.5MM and Diluted earnings per share to be in the range of $0.40 to $0.57; 2018 results are reflecting an es
Slide 26: www.buildabear.com
www.buildabear.com
Build A Bear Workshop — Investor Presentation (September 2018) on 6ix