Build-A-Bear Workshop, Inc. (BBW) on Q3 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Build-A-Bear Third Quarter 2021 Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Allison Malkin of ICR. Please go ahead.
Allison Malkin: Good morning. Thank you for joining us. With me today are Sharon Price John, CEO; and Voin Todorovic, 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, Voin 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 question during this one-hour call. Feel free to requeue, if you have further questions. Members of the media who may be on our call today should contact us after this conference call with your questions. 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.
Sharon Price John: 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 year of adding a little more heart to life. 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 the dedication and hard work that has resulted in an iconic brand and beloved company, enabling untold 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 to an evolved and diversified global corporation, reflecting many market and 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 declines by 2012 and to today's thriving entity that is now poised for a compelling future. With that backdrop, it seemed 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 operations 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 5x 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. 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 levels. Three, 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%. Fourth, improvements across operational metrics such as dollars per transaction, which, for example, were $35.50 in fiscal 2012 and have now, through a combination of strategic initiatives, risen slightly above $54 year-to-date for fiscal 2021. Five, 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 in over a decade. And six, we have created value for our shareholders with record-breaking profit as well as stock price appreciation. 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 COVID, yesterday's closing price was $17.06 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's important to understand that the team needed to do more than just return to profitability after eight years of contraction. We had also inherited a suboptimal supply chain, an 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 streams. Therefore, the goal is two-pronged, quickly return to profitability while simultaneously evolving the fundamentals of the Company to compete in a very different world than the past. In 18 months, the Company returned to and 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 and assembling a leadership team to execute the diversification strategy. However, this necessary multidimensional, multiyear planned evolution unfolded during a period of rapid consumer shopping shift and economic turmoil coined as the retail apocalypse and Brexit, which 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. Even with these headwinds, Build-A-Bear persevered, developing a variety of innovative new retail business models and formats 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-plush product categories and add nontraditional retail locations. Separately, because of the accelerating shift away from traditional advertising and kids media and marketing, we also developed new intellectual properties specifically designed to translate into owned value-enhancing, brand-building content to directly connect and engage with children in new ways and through new venues. And we simultaneously leveraged the recently achieved multigenerational aspect of the brand to expand our consumer base beyond children. Some of these evolutionary efforts include: Build-A-Bear is much less reliant on traditional malls. 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 terms 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 in our stores and then partner with best-in-class entertainment companies 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 sales were for kids under 10 years old. Although children remain a core audience, we have purposely and successfully expanded our consumer base to include more tweens, teens and adults, 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 strategies, combined with keen financial oversight, had not only once again led to successful reemergence 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 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% and compared to fiscal 2020 third 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 pretax 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 most profitable quarters. Accordingly, year-to-date pretax income of $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 multiyear 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 the 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 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-com growth, with innovative new products and experiences for a variety of consumer segments. 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 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 of delivery, and we look forward to sharing some innovative new concepts as they launch. Second, our adult fan-based affinity products continue to be an online growth driver, now further enabled by a new dedicated space on our website called The Bear Cave offering some surprising collectibles and licenses. In The Bear Cave, these highly valuable predominantly adult guests can find products that like in a cave are just a little bit cooler or maybe even a little bit darker while still being on brand. Our offerings feature popular entertainment properties, including our late third quarter collaboration with the FRIENDS television show, the recent introduction of Marvel's Wanda Vision, an update of our popular Deadpool bear and the anticipated launch of many other fan favorite. Third, we are rolling out our consumer-facing marketing launch of a new interactive e-commerce experience called Bear Builder 3D or BB 3D, where guests can complete an online transaction via a reimagined animated Build-A-Bear Workshop, where their furry friends of choice come to life in a video game-like world, recently given credit in a popular business podcast as pioneering e-commerce 2.0, with the process being dubbed as experiential e-commerce or e-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 options, we have recently added the Klarna extended payment plan to our website. Klarna transactions have a 30% higher average order value versus non-Klarna orders. And the relationship also provides Build-A-Bear marketing exposure to millions of Klarna shoppers. And fifth, since the relaunch of our Bonus Club loyalty membership and e-mail access has continued to expand. To leverage this, 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 impactfully 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 and all-time e-commerce profitability. I would like to congratulate the e-commerce team for these results as well as the Build-A-Bear -- for buildabear.com being recognized by Newsweek as one of the best online shops for their recently published 2022 consumer guide. Our second strategic priority relates to the continued evolution and leverage of our store footprint, including new formats, 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 as e-commerce fulfillment centers. With our recently expanded inventory management capabilities, we are leveraging our geographically dispersed door footprint to expand our omni-channel consumer delivery options via buy online, ship from store, buy online, pick up in store and same-day delivery with our ship relationship. This strategic use of hundreds of store locations as many pool points significantly improved e-commerce fulfillment efficiency, decreases ship time, which is especially critical to minimize holiday cutoff days and significantly expands our overall e-commerce throughput capacity versus using the warehouse alone. We are adding new tourist locations to our fleet. Given our overall improved 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 overstored, we have recently started to strategically expand into a number of key tourist environments through a combination of corporately managed and third-party models. Thus far, we have added new tourist locations at Pure Park in Panama Beach City, The Hub at Watertown Beach near Seaside Florida, Icon Park and SeaWorld in Orlando, Lush Gardens in Tampa, River City in San Antonio; JW Marriott, Hill County in Austin and Kings Dominion Amusement Park in Richmond, Virginia. Plus, we have recently reopened five historically successful temporary seasonal holiday shops 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's first interactive teddy bear linking machine located at JFK Airport, we now have automatic teddy machine or ATM, which provide an opportunity for us to expand with Hudson's into other airports across the country for last-minute gifts and traveling family as we look into additional sites for this brand extending low labor retail concept. 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 business disruption. However, we are now early 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 discussions. 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 25th anniversary celebration year, I'm pleased to reiterate that the Board of Directors has authorized a share repurchase program of up to $25 million in effect through November 30, 2023, 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 10. We believe that the multiyear, multimillion dollar buyback program is reflective of the Board's confidence in this company. And again, given the 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 variant 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 under 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 fourth of fiscal year, which Voin 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, Narayan Iyengar and Lesli Rotenberg to the Build-A-Bear family. We look forward to working with you. Now, I would like to turn the call over to Voin.
Voin Todorovic: Thanks, Sharon, and good morning, everyone. We are very pleased to continue our positive momentum from the first half of the year. And as Sharon noted, we delivered third quarter and year-to-date profit at the highest level in our history. This performance reflects the success of our strategy, which has provided us with a powerful platform for which to deliver consistent growth. We expect the strength of our omni-channel business model, which includes a very profitable e-commerce and experiential retail store base, complemented by high-margin revenue streams and supported by the improved supply chain as well as disciplined expense and balance sheet management to put us in a solid position for continued future success. Third quarter significantly exceeded our expectations as the month progressively improved ahead of our revenue guidance. As a result, what is typically the smallest revenue quarter of the year turned out to be the biggest so far this year. We are pleased to achieve these strong results in an operating environment that remains dynamic with ongoing macro challenges. Our year-to-date performance and continuing cost discipline give us the confidence to further increase our guidance for total revenues and EBITDA for the 2021 fiscal year, which 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 2020 and 2019 third quarters due to the temporary COVID-related store closures last year. Total revenues were $95.1 million, a 27% increase compared to the third quarter of fiscal 2020 and a 75% increase compared to 2019. Our sales improved across geographies, driven by both higher traffic levels as well as an increase in average transaction value compared to the 2020 third quarter. Gross profit margin of 52.1% was significantly higher than prior year's results of 44.6% and 39.4% in the third quarter of fiscal 2020 and fiscal 2019, respectively. The growth in total revenues drove leverage in fixed occupancy expenses, and we also benefited from the renegotiated lease starting to take effect in 2020. Our merchandise margin expanded as we reduced promotional activity, leading to lower discounting. We also strategically increased prices on highly sought after products in an effort to mitigate supply chain and inflationary pressures that we continue to anticipate being headwinds for the foreseeable future. SG&A dollars increased compared to both the 2020 and 2019 third quarters. However, SG&A as a percent of total revenues improved to 43.8% versus 44.3% last year and 50.3% in 2019. The increase in SG&A dollars compared to the prior years was driven by higher store labor expenses given the reopening of location and extended operating hours. We also recorded full corporate salaries this year as opposed to fiscal 2020 that pandemic-related cost containment initiatives included temporary wage reduction. 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 of performance-based incentive programs. Notably, we delivered the highest third quarter pretax profit in our company's nearly 25-year history of $7.9 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 a 20% increase versus the first nine months of 2019. Pretax income was $30.6 million, an improvement of $61.5 million from the pretax loss recorded in the first nine months of fiscal 2020 and a $36.6 million improvement compared to the first nine months of fiscal 2019. And adjusted EBITDA was $39.1 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 $48.5 million with no borrowings on our credit facility compared to $25.8 million at the end of the 2020 third quarter. The increase 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, we proactively accelerated the timing of many of our order placements and increased quantities for core products and merchandise collection to support our business momentum and is part of our efforts to mitigate ongoing supply chain disruption. At quarter end, inventory was up $10.4 million, an increase of 20.2% from last year's third quarter. Assuming no additional material COVID impact either in factories, logistics, consumer sentiment or store operation, we are still targeting to have increased inventory levels compared to the fiscal year-end of both 2020 and 2019 to meet our anticipated business needs. As noted, yesterday, we announced 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 of $4.6 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-related disruptions or delays in availability of goods and services. Also, as our performance expectations improve, we made about $9 million in cash tax payments this year. Based on our strong third quarter performance and positive trends, we are 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, we 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 million to $13 million. Our full year guidance assumes no additional significant negative impact from the pandemic such as prolonged store closures due to the government mandate. Our guidance does reflect the funding of performance based incentive programs as well as current expectations for inflationary pressures from product, freight 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 I want to thank and congratulate teams across the globe that has driven these results. Our associates continue to make a difference every day in our stores, warehouses and corporate offices, along with support from our vendors logistics supply and other partners in order to drive high growth. We remain focused on accelerating the execution of key strategic initiatives, and we are confident that we are in a position 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 your questions. Operator?
Operator: Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question.
Eric Beder: Congratulations on a really great quarter. When you look at the commercial revenue and the international revenue, they've been coming back, especially the commercial. How do you feel about those areas in terms of potential growth prospects going forward?
Sharon Price John: Yes. Thanks, Eric. On the commercial revenue side, that's a 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 Live or Carnival Cruise Line. Some of those, as we noted in the remarks, are very strategically chosen at tourist locations. And that's sort of why we saw the lull during 2020 and now why we're seeing some strong comeback as those markets 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 identified as potential growth opportunities for us for the operated locations 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 our owned and operating side as well and listed out a few locations, where we feel like we have opportunities because I think the specific comment was we don't believe Build-A-Bear is overstored. So thank you for the question. But yes, there should be some opportunity. Voin, is there something else you want to add?
Voin Todorovic: Well, I just -- and Eric, you asked us about international. Definitely, considering the pandemic around the world, the situation is different in every country as our 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 the -- we definitely believe in our international business in the future, and we would love to find additional partners in work. But at the same time, during this challenging time, especially with the global pandemic, this business is a little bit, I'd say, lull.
Sharon Price John: Just recall, though, that most of those partners in whether it's India, Australia and China, those are franchise partners. That's franchise revenue for us. So it's comparatively less negative impact.
Eric Beder: Okay. And so in Q3, you had -- I believe that it was PAW Patrol movie. Movies have become -- are slowly evolving. How are you going to evolve in terms of how you handle movies going forward?
Sharon Price John: Are you referring to the licensed products, Eric, or our content creation?
Eric Beder: You can do both. You had the Honey Girls also come out at that time.
Sharon Price John: Yes. So on the license product, we have -- we really enjoy some best-in-class relationships and work with those intellectual property owners to optimize not only movie properties that often have like a spike kind of 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 or other intellectual properties that are from -- that are sourced for movies like Star Wars with Rogue continue to be very successful for us. So -- or Pokemon from a gaming environment. So we think of entertainment as not just the old model, if you will, from the 1990s, 2000, 2010. We really think about how do we optimize sort of macro entertainment in terms of what's in the common sort of popular vernacular, and that not only now not for children, as we mentioned, we're expanding our consumer base. And so, we're also working with entertainment properties like FRIENDS or like Wanda Vision or Deadpool. So that mash-up 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 have 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 relationships. 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 want to say it's been one of our most successful lines. And we envisioned it as a live action film starring Ashanti and launched this 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. And you might recall, I mentioned that we were around $56 on an average DPT, which has risen from $35 in 2012. So you can kind of see that engagement that happens when you get -- you have that kind of high -- intellectual property engagement with your guests. So we have a lot in the pipeline on our own content side. And one of the other reasons that's so critical is because of the changes in the marketing environment, particularly to kids, that model of creating commercial and putting it on television and expecting to be able to drive sales just as robust as it used to be. You have to be a lot more diversified and you have to have ways and means to communicate directly with children, particularly through content.
Eric Beder: Okay. Great. And congrats and good luck for the holiday period.
Sharon Price John: Thank you.
Voin Todorovic: Thank you.
Operator: Our next question comes from the line of William Zolezzi with Divisadero Street Capital. Please proceed with your question.
William Zolezzi: Congratulations on the great results. I guess just to start housekeeping question, what does the EBITDA guidance translate into as far as non-GAAP earnings per share for the year?
Voin Todorovic: William, thanks for the question. So our EBITDA guidance of $55 million to $60 million on a full year basis, and we also guided our depreciation to be about $12 million to $13 million. One number, if you are assuming the tax rate of about 25% for the calculation that would result in EPS in the range of $2.10 to $2.30 per share.
William Zolezzi: Okay. That's great. Secondly, I guess are you guys going to ICR?
Sharon Price John: We are currently expecting to go to ICR, yes.
William Zolezzi: Okay. Great. And I guess just lastly, it would just be a comment as opposed to a question. I mean stock obviously is trading at less than 10x earnings, and you guys have history beating and raising. So, I know you guys are -- 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 10x earnings for long, so I would go ahead and execute on that and love the dividend. So, thank you guys for the great execution and nice to see that we're going to start returning capital to shareholders.
Sharon Price John: Thank you.
Voin Todorovic: Thank you.
Operator: Our next question comes from the line of David Kenen with Kenen Wealth Management. Please proceed with your question.
David Kenen: Congratulations. Two questions. First one is expanding your total addressable market, as you said, to teens, tweens, adults. Is there anything that you could share with us in terms of the pipeline of products and collaborations that would further drive sales into that increased TAM opportunity? So that's number one. Number two, if you could comment a little bit on these ATM machines as you call them, in airports kind of what's the average unit volume, if you will, and the opportunity over the next couple of years?
Sharon Price John: Yes. Thank you, David. So on the expansion of the addressable market, as I mentioned in the comments, the two key ways that we're doing that is one is gifting. And we are providing lots of different gifting opportunities, new concepts, new ideas, a new occasion. We've tested into Valentine's, for example, adult-to-adult gifting and recognize that our product and our brand resonates in that area and are continuing to evolve with direct marketing and efforts against that adult-to-adult consumer base and see that there are other opportunities and have been building -- creating building blocks against whether it's graduation, Mother's Day, Father's Day, a number of different -- any occasion that you might see as a reason to celebrate or make a 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 our 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 and get out of the churn of the age gating that -- or the age grading that happens for us when you age out of Build-A-Bear, now that we're multigenerational, you really don't have to age out of Build-A-Bear. The second question about ATMs, we just have the one ATM in 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 that 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 opportunity for other types of locations, whether that's children's hospitals, where you have a need for a low labor model but also a desire for an immediate gift-giving need. And it's just another way, another innovative way for us to being front of -- or in front of consumers at the right time and the right place. And we're always looking for those types of opportunities.
David Kenen: Okay. I should have been more clear on my first question. I understand the target audience and the TAM. What I meant is the products for 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 teenager or tweenager, so to speak?
Sharon Price John: We have a pipeline, as I mentioned on the call, of licensed properties that we expect to roll out, some of which I mentioned would be Wanda Vision, 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 I'm sure you realize, 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 designed to and expected to appeal to that target audience.
Operator: Ladies and gentlemen, this does conclude our question-and-answer session. I'll turn the floor back to Ms. John for any final comments.
A - Sharon Price John: 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 particularly 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.
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
