Fiscal Year 2022 Net Sales were $590M up 85%
versus Fiscal Year 2020
Net Sales of $120M for Q4 Fiscal 2022 up 28%
vs Q4 Fiscal 2020 or 41% Excluding Octane
JRNY® Total Members Now Over 325k,
more than 7x versus Fiscal Year 2020
Company Expects to exceed 500k JRNY®
Total Members at Fiscal Year End 2023 and Achieve Positive
Adjusted EBITDA for Second Half Fiscal Year 2023
Nautilus, Inc. (NYSE: NLS) today reported its unaudited
operating results for the fiscal 2022 fourth quarter and for the
twelve-months ended March 31, 2022.
Management Comments
“We continue to successfully execute on our multi-year plan of
transforming Nautilus into a leading digitally enabled at-home
fitness company. Fiscal year and fourth quarter performance was
strong. Our strategic decision to pull forward key technology and
marketing investments is paying off, as we have increased JRNY®
members to over 325,000 at year-end, exceeding our initial
expectations by 30%. Our diversified omnichannel strength and
cardio offerings enabled us to meet fourth quarter demand, with
revenue up 41% compared to the same period in 2020,” said Jim Barr,
Nautilus, Inc. Chief Executive Officer.
“Year one of our North Star strategy is complete and our
transformation is well on track. The foundation has been set,
including harnessing a culture of innovation, establishing key
third-party partnerships, and evolving our manufacturing and
distribution capabilities to meet consumer demand. These
advancements will allow us to successfully navigate the current
operating environment. We are committed to balancing continued
growth investments with an efficient cost structure to drive both
our transformation and put us on a path to deliver positive
adjusted EBITDA1 during the second-half of fiscal 2023.”
Company Results
Fiscal 2022 Fourth Quarter Ended March 31, 2022 Compared to
Three-Months Ended March 31, 2021
- Net sales were $119.7 million, compared to $206.1 million, a
decline of 41.9% versus last year. As a reminder, the comparable
quarter last year was the highest quarterly sales in the company’s
history. Net sales are up 41%, or a 19% CAGR, when compared to the
same period ended in 2020, excluding Octane. Lower demand of our
cardio products was partially offset by strong sales of SelectTech®
weights and benches compared to the same period in 2021.
- Gross profit was $21.0 million, compared to $79.1 million last
year. Gross profit margins were 17.5% compared to 38.4% last year.
The 20.9 ppt decrease in gross margins was primarily due to:
increased product costs, logistics and discounting (-16 ppts) and
increased investments in JRNY® (-5 ppts).
- Operating expenses were $42.9 million, an increase of $3.5
million, or 8.9%, compared to last year, primarily due to a $5.1
million increase in JRNY® investments and $2.5 million more in
advertising. Total advertising expenses were $14.0 million versus
$11.5 million last year.
- Operating loss was $21.9 million or a negative 18.3% operating
margin, compared to operating income of $39.7 million last year,
primarily due to lower gross profit and higher operating
expenses.
- Loss from continuing operations was $18.2 million, or $(0.58)
per diluted share, compared to income from continuing operations of
$30.6 million, or $0.94 per diluted share, last year.
- Net loss was $18.2 million, or $(0.58) per diluted share,
compared to net income of $30.4 million, or $0.93 per diluted
share, last year.
- The effective tax rate was 20.5% this year compared to 19.9%
last year, primarily due to the impact of the higher non-deductible
GAAP book expenses related to the VAY AG acquisition.
- The following statements exclude the impact of VAY AG
acquisition and other related costs1 for the three-months ended
March 31, 2022.
- Adjusted operating expenses were $42.1 million, or 35.2% of
sales, compared to $39.4 million, or 19.1% of sales, last year. The
increase was driven by JRNY® investments and advertising.
- Adjusted operating loss was $21.1 million compared to last
year’s income of $39.7 million, driven by lower gross profit and
higher adjusted operating expenses.
- Adjusted EBITDA loss from continuing operations was $16.9
million compared to earnings of $42.9 million last year.
1 See “Reconciliation of Non-GAAP
Financial Measures” for more information
Twelve-Months Ended March 31, 2022 Compared to Twelve-Months
Ended March 31, 2021
- Net sales were $589.5 million, down 11.3% compared to $664.9
million last year. Excluding sales related to the Octane brand, net
sales were down 9% compared to last year and up 112%, or a 46%
CAGR, when compared to twelve-months ended March 31, 2020. The
sales decrease compared to the same period in 2021 was driven
primarily by lower cardio sales offset by robust sales of our
popular SelectTech® weights and benches.
- Gross profit was $148.5 million compared to $272.3 million last
year. Gross profit margins were 25.2% compared to 41.0% last year.
The 15.8 ppts decrease in gross margins was primarily due to:
increased product costs, logistics and discounting (-14 ppts) and
increased investments in JRNY® (-2 ppts).
- Operating expenses were $173.8 million, an increase of $19.6
million, or 12.7%, compared to $154.2 million last year, primarily
due to $25.9 million more in advertising, increased JRNY®
investments of $14.6 million, a legal settlement of $4.7 million
and acquisition expenses of $2.4 million, partially offset by last
year’s $20.7 million Octane loss on disposal group2. Total
advertising expenses were $58.3 million compared to $32.4 million
last year.
- Operating loss was $25.3 million compared to income of $118.1
million last year. The decrease was primarily due to lower gross
profit and higher operating expenses, partially offset by the
Octane loss on disposal group2.
- Net loss was $22.4 million compared to income of $88.1 million
last year.
- The following statements exclude the impact of the legal
settlement, acquisition and other related costs for the
twelve-months ended March 31, 2022 and loss on disposal group2 for
the same period in 2021.
- Adjusted operating expenses were $166.7 million, or 28.3% of
sales, compared to $133.6 million, or 20.1% of sales, last year.
The increase was driven by $25.9 million more of advertising and
JRNY® investments.
- Adjusted operating loss was $18.2 million compared to last
year’s operating income of $138.7 million, driven by lower gross
margins and higher operating expenses.
- Adjusted EBITDA loss from continuing operations was $3.3
million compared to earnings of $151.7 million last year.
2 See “Reconciliation of Non-GAAP
Financial Measures” and “Loss on Disposal Group” for more
information
JRNY® Update
- Nautilus, Inc. continues to enhance the JRNY® platform,
creating differentiated connected-fitness experiences for its
Members3, which numbered 325k at March 31, 2022. Of these members,
111k were Subscribers4.
- JRNY® Members now have access to over 1,400 on-demand
instructor led videos as well as being able to enjoy over 220
locations with the immersive Explore the World feature.
- The benefits of the JRNY® platform are now even more
prominently featured on the Bowflex.com and Schwinnfitness.com
websites to help customers understand the full value of purchasing
the company’s connected-fitness cardio and strength products.
- The Company has made great strides over the last two years to
expand the installed base of “connectable to JRNY®” products. In
FY2020, the Company sold only one connectable to JRNY® product, the
Max Total. Since then, the Company has launched new bikes,
treadmills, and Max Trainers that are connectable to JRNY® via an
embedded screen or via the user’s own device. With the launch of
the Bowflex® SelectTech® Workouts on the JRNY® Platform in November
2021, the Company can now include the best-selling SelectTech® 552
and 1090 dumbbells to the connectable to JRNY® installed base,
which has grown to over 2.7 million units at the end FY2022 from
about 0.1 million units at the end of FY2020.
- In FY 2022, approximately 80% of total units sold were
connectable to JRNY®, compared to only 22% in FY 2020.
3 The Company defines JRNY® Members as all
individuals who have a JRNY® account and/or subscription, which
includes Subscribers, their respective associated users and users
who consume free content.
4 The Company defines JRNY® Subscriptions
as a person or household, who paid for a Subscription (via a
successful credit card billing or with prepaid subscription credits
or waivers), or are in a trial, or has requested a "pause" to their
subscription for up to 3 months.
Segment Results
Fiscal 2022 Fourth Quarter Ended March 31, 2022 Compared to
March 31, 2021
Direct Segment
- Direct segment sales were $59.8 million, compared to $101.5
million, a decline of 41.1% versus last year, and up 27%, or a 13%
CAGR, compared to the same period in 2020. The net sales
year-over-year decrease was primarily driven by lower cardio
sales.
- Cardio sales declined 44.2% versus last year and were up 9%, or
a 4% CAGR, compared to the same period in 2020. Lower sales were
primarily driven by lower bike demand. Strength product sales
declined 34.3% versus last year and increased 83%, or a 35% CAGR,
compared to the same period in 2020. Lower sales this quarter were
primarily driven by lower sales of Bowflex® Home Gyms partially
offset by increased sales of SelectTech® weights and benches.
- The Direct segment ended the quarter with $0.8 million of
backlog as of March 31, 2022, as product demand declined. These
amounts represent unfulfilled consumer orders net of current
promotional programs and sales discounts.
- Gross profit margin was 19.3% versus 50.3% last year. The 31.0
ppt decrease in gross margin was primarily driven by increased
product costs, logistics and discounting (-24 ppts) and increased
investments in JRNY® (-7 ppts). Gross profit was $11.5 million,
down 77.4% versus last year.
- Segment contribution loss was $11.7 million, or (19.5)% of
sales, compared to segment contribution income of $27.8 million, or
27.4% of sales last year. The decline was primarily driven by lower
gross profit and increased investments in media and JRNY®.
Advertising expenses were $11.3 million compared to $10.1 million
last year.
Retail Segment
- Retail segment sales were $58.7 million, down by 43.2% versus
last year. Excluding sales related to Octane, net sales were up
60%, or a 27% CAGR, compared to the same period in 2020. Retail
segment sales outside the United States and Canada were down 76%
versus last year. Excluding sales related to Octane, net sales
outside the United States and Canada were up 4%, or a 2% CAGR,
compared to the same period in 2020. The year-over-year decrease in
net sales is primarily driven by lower cardio sales partially
offset by strong sales of SelectTech® weights and benches.
- Cardio sales declined by 67.5% versus last year. Excluding
sales of the Octane brand, cardio sales were down 15%, or a
negative 8% CAGR, compared to the same period in 2020. Lower sales
this quarter were primarily driven by lower bike sales. Strength
product sales grew by 9.8% versus last year, and were up 277%, or a
94% CAGR, compared to the same period in 2020, led by the popular
SelectTech® weights and benches.
- As of March 31, 2022, the Retail segment's backlog totaled
$32.1 million compared to $178.6 million as of March 31, 2021, as
retailers are now ordering closer to need compared to last year.
These amounts represent customer orders for future shipments and
are net of contractual rebates and consideration payable to
applicable Retail customers.
- Gross profit margins were 14.0% compared to 26.0% last year.
The 12.0 ppt decrease in gross margin was primarily driven by
increased product costs, logistics and discounting. Gross profit
was $8.2 million, a decrease of 69.4% versus last year.
- Segment contribution income was $0.7 million, or 1.2% of sales,
compared to $20.3 million, or 19.7% of sales, last year. The
decline was primarily driven by lower gross profit.
Comparison of Segment Results for the Twelve-Month Period
Ended March 31, 2022 to the Twelve-Month Period Ended March 31,
2021
Direct Segment
- Net sales, for the twelve-month period ended March 31, 2022,
were $221.7 million, down 24.9% versus last year and up 85%, or a
36% CAGR, compared to the same period in 2020. Year-over-year
decrease in net sales were driven primarily by cardio products,
which declined by 39.6% versus last year due to lower sales of
bikes. Strength product sales grew 13.0% versus last year, driven
by SelectTech® weights and benches.
- Gross profit margin, for the twelve-month period ended March
31, 2022, was 30.7%, down from 53.4% last year. The 22.7 ppt
decrease in gross profit margin was primarily driven by: increased
product costs, logistics and discounting (-19 ppts) and increased
investments in JRNY® (-4 ppts). Gross profit was $68.1 million, a
decrease of 56.8% versus last year.
Retail
Segment
- Net sales, for the twelve-month period ended March 31, 2022,
were $364.1 million, down 0.5% versus last year. Excluding sales
related to Octane, net sales were up 5.0% versus last year, and up
136%, or a 54% CAGR compared to the same period in 2020. Retail
segment sales outside the United States and Canada were down 13%
versus last year. Excluding sales related to Octane, net sales
outside the United States and Canada were down 9% versus last year
and up 179%, or an 67% CAGR, compared to the same period in
2020.
- Cardio sales were down 22.6% versus last year, driven primarily
by lower bike sales. Strength sales were up 61.9% versus last year,
driven primarily by SelectTech® weights, and up 219%, or a 79%
CAGR, compared to the same period in 2020.
- Gross profit margin, for the twelve-month period ended March
31, 2022, was 21.0%, down from 30.3% last year. The 9.3 ppt
decrease in gross profit margin was primarily driven by increased
product costs, logistics and discounting. Gross profit was $76.6
million, a decrease of 31.0% versus last year.
Balance Sheet and Other Key Highlights as of March 31,
2022:
- Cash and Liquidity:
- Total liquidity, defined as cash, investments, and available
borrowing under the Company’s line of credit, was $80.0 million,
compared to $167.6 million as of March 31, 2021.
- Cash, cash equivalents, and restricted cash were $14.2 million,
compared to cash, cash equivalents, restricted cash and
available-for-sale securities of $113.2 million as of March 31,
2021. The decrease was primarily due to the strategic decision to
increase on-hand inventory for the fitness season and the
acquisition of VAY AG.
- Debt and other borrowings were $29.4 million compared to $13.3
million as of March 31, 2021.
- $65.8 million was available for borrowing under the Wells Fargo
Asset Based Lending Revolving Facility (“Facility”) compared to
$54.4 million as of March 31, 2021.
- Inventory was $111.2 million, down from $128.1 million as of
December 31, 2021, but up compared to $68.1 million as of March 31,
2021. The increase in inventory versus March 31, 2021, is driven by
the strategic decision to increase on-hand inventory levels given
disruption in global logistics. About 14% of inventory as of March
31, 2022, was in-transit.
- Trade receivables were $61.5 million, compared to $88.7 million
as of March 31, 2021. The decrease in trade receivables was due to
the timing of customer payments.
- Trade payables were $53.2 million, compared to $98.9 million as
of March 31, 2021. The decrease in trade payables was primarily due
to the timing of payments for inventory.
- Capital expenditures totaled $12.5 million for the twelve-month
period ended March 31, 2022.
Forward Looking Guidance
- For Fiscal 2023, Nautilus expects to return to a more typical
pre-pandemic seasonality with the 2nd half of the year contributing
more of the full year’s revenue. As a result, the Company expects
the first fiscal quarter ending in June to represent the low point
for the year, followed by the second fiscal quarter ending in
September being the second lowest. The third quarter ending in
December is expected to be the strongest with the fourth quarter
expected to be slightly lower than the third quarter.
- Additionally, to gauge growth and progress against more
“normalized” results, the Company will be measuring Fiscal Year
2023 sales growth versus the same pre-pandemic period in Fiscal
Year 2020.
Fiscal Q1 2023
- The Company expects Q1 FY2023 sales to be between $45 million
and $55 million. At the mid-point, compared to the same period in
Fiscal Year 2020, this guidance represents a decline of 13% or 4%
growth excluding Octane. Q1 revenue guidance reflects weaker retail
demand as our partners work through their elevated inventory
levels.
- The Company expects Q1 FY2023 Adjusted EBITDA loss of between
$(22) million and $(27) million.
Second Half and Full Year 2023
- The Company expects Full Year Revenue of between $380 million
and $460 million. At the mid-point, compared to the same period in
Fiscal Year 2020, this guidance represents 32% growth or 10% CAGR
or 52% growth or 16% CAGR excluding Octane.
- Given the impact of elevated inventory levels at the Company’s
retail partners, the Company expects the 2nd half of the year to
represent between 65% and 70% of full year sales, slightly higher
than pre-pandemic 2nd half seasonality of approximately 60%.
- Gross margins for the second half of the year are expected to
be in the range of 27% to 30%. Improvements versus last year are
driven by lower in-bound freight and demurrage fees, and the
reduction in logistics facilities footprint. The Company is closing
one of its distribution centers when the lease expires in the fall
of 2022 and will not be renewing the leases of some storage
locations.
- Given higher anticipated sales levels in the 2nd half of the
year, improved gross margins, and plans to flex sales and marketing
expenses in-line with sales, the Company expects to deliver
positive adjusted EBITDA for the 2nd half of Fiscal 2023.
- As a result, the Company expects Full Year Adjusted EBITDA loss
of between $(25) million and $(35) million.
- The Company expects JRNY® members to exceed 500,000 at March
31, 2022.
Conference Call
Nautilus will discuss our fiscal 2022 fourth quarter ended March
31, 2022 operating results during a live conference call and
webcast on Monday, May 23, 2022 at 1:30 p.m. Pacific Time. The
conference call can be accessed by calling (877) 425-9470 in North
America. International callers may dial (201) 389-0878. Please note
that there will be presentation slides accompanying the earnings
call. The slides will be displayed live on the webcast and will be
available to download via the webcast player or at
http://www.nautilusinc.com/events. The webcast will be archived
online within two hours after completion of the call and will be
available for six months. Participants from the Company will
include Jim Barr, Chief Executive Officer, and Aina Konold, Chief
Financial Officer.
A telephonic playback will be available from 4:30 p.m. PT, May
23, 2022 through 8:59 p.m. PT, June 6, 2022. Participants can dial
(844) 512-2921 in North America and international participants can
dial (412) 317-6671 to hear the playback. The passcode for the
playback is 13728250.
About Nautilus, Inc.
Nautilus, Inc. (NYSE:NLS) is a global leader in digitally
connected home fitness solutions. The Company’s brand family
includes Bowflex®, Nautilus®, Schwinn®, and JRNY®, its digital
fitness platform. With a broad selection of exercise bikes, cardio
equipment, and strength training products, Nautilus, Inc. empowers
healthier living through individualized connected fitness
experiences and in doing so, envisions building a healthier world,
one person at a time.
Headquartered in Vancouver, Washington, the company’s products
are sold direct to consumer on brand websites and through retail
partners and are available throughout the U.S. and internationally.
Nautilus, Inc. uses the investor relations page of its website
(www.nautilusinc.com/investors) to make information available to
its investors and the market.
Forward-Looking Statements
This press release includes forward-looking statements
(statements which are not historical facts) within the meaning of
the Private Securities Litigation Reform Act of 1995, including:
projected, targeted or forecasted financial, operating results and
capital expenditures, including but not limited to net sales growth
rates, gross margins, operating expenses, operating margins,
anticipated demand for the Company's new and existing products,
statements regarding the Company's prospects, resources or
capabilities; planned investments, strategic initiatives and the
anticipated or targeted results of such initiatives; the effects of
the COVID-19 pandemic on the Company’s business; and planned
operational initiatives and the anticipated cost-saving results of
such initiatives. All of these forward-looking statements are
subject to risks and uncertainties that may change at any time.
Factors that could cause Nautilus, Inc.’s actual expectations to
differ materially from these forward-looking statements also
include: weaker than expected demand for new or existing products;
our ability to timely acquire inventory that meets our quality
control standards from sole source foreign manufacturers at
acceptable costs; risks associated with current and potential
delays, work stoppages, or supply chain disruptions, including
shipping delays due to the severe shortage of shipping containers;
an inability to pass along or otherwise mitigate the impact of raw
material price increases and other cost pressures, including
unfavorable currency exchange rates and increased shipping costs;
experiencing delays and/or greater than anticipated costs in
connection with launch of new products, entry into new markets, or
strategic initiatives; our ability to hire and retain key
management personnel; changes in consumer fitness trends; changes
in the media consumption habits of our target consumers or the
effectiveness of our media advertising; a decline in consumer
spending due to unfavorable economic conditions; risks related to
the impact on our business of the COVID-19 pandemic or similar
public health crises; softness in the retail marketplace;
availability and timing of capital for financing our strategic
initiatives, including being able to raise capital on favorable
terms or at all; changes in the financial markets, including
changes in credit markets and interest rates that affect our
ability to access those markets on favorable terms and the impact
of any future impairment. Additional assumptions, risks and
uncertainties are described in detail in our registration
statements, reports and other filings with the Securities and
Exchange Commission, including the “Risk Factors” set forth in our
Annual Report on Form 10-K, as supplemented by our quarterly
reports on Form 10-Q. Such filings are available on our website or
at www.sec.gov. You are cautioned that such statements are not
guarantees of future performance and that our actual results may
differ materially from those set forth in the forward-looking
statements. We undertake no obligation to publicly update or revise
forward-looking statements to reflect subsequent developments,
events, or circumstances.
RESULTS OF OPERATIONS INFORMATION
The following summary contains information from our consolidated
statements of operations for the three and twelve-month periods
ended March 31, 2022 and 2021 (unaudited and in thousands, except
per share amounts):
Three-Months Ended March
31,
Twelve-Months Ended March
31,
2022
2021
2022
2021
Net sales
$
119,724
$
206,075
$
589,534
$
664,913
Cost of sales
98,741
126,984
441,077
392,617
Gross profit
20,983
79,091
148,457
272,296
Operating expenses:
Selling and marketing
23,570
23,480
99,204
77,131
General and administrative
12,428
12,060
51,783
40,580
Research and development
6,904
3,843
22,786
15,840
Loss on disposal group
—
—
—
20,668
Total operating expenses
42,902
39,383
173,773
154,219
Operating (loss) income
(21,919
)
39,708
(25,316
)
118,077
Other expense, net
(984
)
(1,532
)
(2,914
)
(6,022
)
(Loss) income from continuing operations
before income taxes
(22,903
)
38,176
(28,230
)
112,055
Income tax (benefit) expense
(4,705
)
7,595
(6,026
)
23,239
(Loss) income from continuing
operations
(18,198
)
30,581
(22,204
)
88,816
Loss from discontinued operations, net of
income taxes
(16
)
(177
)
(227
)
(748
)
Net (loss) income
$
(18,214
)
$
30,404
$
(22,431
)
$
88,068
Basic (loss) income per share from
continuing operations
$
(0.58
)
$
1.01
$
(0.72
)
$
2.94
Basic loss per share from discontinued
operations
—
(0.01
)
—
(0.02
)
Basic net (loss) income per share
$
(0.58
)
$
1.00
$
(0.72
)
$
2.92
Diluted (loss) income per share from
continuing operations
$
(0.58
)
$
0.94
$
(0.72
)
$
2.81
Diluted loss per share from discontinued
operations
—
(0.01
)
—
(0.03
)
Diluted net (loss) income per share
$
(0.58
)
$
0.93
$
(0.72
)
$
2.78
Shares used in per share calculations:
Basic
31,256
30,416
31,029
30,161
Diluted
31,256
32,642
31,029
31,660
Select Metrics:
Gross margin
17.5
%
38.4
%
25.2
%
41.0
%
Selling and marketing % of net sales
19.7
%
11.4
%
16.8
%
11.6
%
General and administrative % of net
sales
10.4
%
5.9
%
8.8
%
6.1
%
Research and development % of net
sales
5.8
%
1.9
%
3.9
%
2.4
%
Operating (loss) income % of net sales
(18.3
)%
19.3
%
(4.3
)%
17.8
%
SEGMENT INFORMATION
The following tables present certain comparative information by
segment and major product lines within each business segment for
the three and twelve-months ended March 31, 2022 and 2021
(unaudited and in thousands):
Three-Months Ended March
31,
Change
2022
2021
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
39,156
$
70,148
$
(30,992
)
(44.2
)%
Strength products(2)
20,616
31,389
(10,773
)
(34.3
)%
Direct
59,772
101,537
(41,765
)
(41.1
)%
Retail net sales:
Cardio products(1)
23,020
70,907
(47,887
)
(67.5
)%
Strength products(2)
35,711
32,528
3,183
9.8
%
Retail
58,731
103,435
(44,704
)
(43.2
)%
Royalty
1,221
1,103
118
10.7
%
Consolidated net sales
$
119,724
$
206,075
$
(86,351
)
(41.9
)%
Gross profit:
Direct
$
11,519
$
51,046
$
(39,527
)
(77.4
)%
Retail
8,243
26,942
(18,699
)
(69.4
)%
Royalty
1,221
1,103
118
10.7
%
Consolidated gross profit
$
20,983
$
79,091
$
(58,108
)
(73.5
)%
Gross margin:
Direct
19.3
%
50.3
%
(3,100
)
basis points
Retail
14.0
%
26.0
%
(1,200
)
basis points
Contribution:
Direct
$
(11,655
)
$
27,846
$
(39,501
)
(141.9
)%
Retail
730
20,348
(19,618
)
(96.4
)%
Royalty
1,221
1,103
118
10.7
%
Consolidated contribution
$
(9,704
)
$
49,297
$
(59,001
)
(119.7
)%
Reconciliation of consolidated
contribution to (loss) income from continuing operations:
Consolidated contribution
$
(9,704
)
$
49,297
$
(59,001
)
(119.7
)%
Amounts not directly related to
segments:
Operating expenses
(12,215
)
(9,589
)
(2,626
)
(27.4
)%
Other expense, net
(984
)
(1,532
)
548
35.8
%
Income tax benefit (expense)
4,705
(7,595
)
12,300
161.9
%
(Loss) income from continuing
operations
$
(18,198
)
$
30,581
$
(48,779
)
(159.5
)%
(1) Cardio products include:
connected-fitness bikes, the Bowflex® C6, Bowflex® VeloCore®,
Schwinn® IC4, Max Trainer®, connected-fitness treadmills, other
exercise bikes, ellipticals and subscription services.
(2) Strength products include: Bowflex®
Home Gyms, Bowflex® SelectTech® dumbbells, kettlebell and barbell
weights, and accessories.
Twelve-Months Ended
March 31,
Change
2022
2021
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
128,550
$
212,887
$
(84,337
)
(39.6
)%
Strength products(2)
93,176
82,435
10,741
13.0
%
Direct
221,726
295,322
(73,596
)
(24.9
)%
Retail net sales:
Cardio products(1)
208,991
270,097
(61,106
)
(22.6
)%
Strength products(2)
155,078
95,761
59,317
61.9
%
Retail
364,069
365,858
(1,789
)
(0.5
)%
Royalty
3,739
3,733
6
0.2
%
Consolidated net sales
$
589,534
$
664,913
$
(75,379
)
(11.3
)%
Gross profit:
Direct
$
68,117
$
157,562
$
(89,445
)
(56.8
)%
Retail
76,601
111,001
(34,400
)
(31.0
)%
Royalty
3,739
3,733
6
0.2
%
Consolidated gross profit
$
148,457
$
272,296
$
(123,839
)
(45.5
)%
Gross margin:
Direct
30.7
%
53.4
%
(2,270
)
basis points
Retail
21.0
%
30.3
%
(930
)
basis points
Contribution:
Direct
$
(15,711
)
$
86,013
$
(101,724
)
(118.3
)%
Retail
44,831
80,741
(35,910
)
(44.5
)%
Royalty
3,739
3,733
6
0.2
%
Consolidated contribution
$
32,859
$
170,487
$
(137,628
)
(80.7
)%
Reconciliation of consolidated
contribution to (loss) income from continuing operations:
Consolidated contribution
$
32,859
$
170,487
$
(137,628
)
(80.7
)%
Amounts not directly related to
segments:
Operating expenses
(58,175
)
(52,410
)
(5,765
)
(11.0
)%
Other expense, net
(2,914
)
(6,022
)
3,108
51.6
%
Income tax benefit (expense)
6,026
(23,239
)
29,265
125.9
%
(Loss) income from continuing
operations
$
(22,204
)
$
88,816
$
(111,020
)
(125.0
)%
(1) Cardio products include:
connected-fitness bikes, the Bowflex® C6, Bowflex® VeloCore®,
Schwinn® IC4, Max Trainer®, connected-fitness treadmills, other
exercise bikes, ellipticals and subscription services.
(2) Strength products include: Bowflex®
Home Gyms, Bowflex® SelectTech® dumbbells, kettlebell and barbell
weights, and accessories.
BALANCE SHEET INFORMATION
The following summary contains information from our consolidated
balance sheets as of March 31, 2022 and March 31, 2021 (unaudited
and in thousands):
As of
March 31, 2022
March 31, 2021
Assets
Cash and cash equivalents
$
12,872
$
38,441
Restricted cash
1,339
1,339
Available-for-sale securities
—
73,448
Trade receivables, net of allowances
61,454
88,657
Inventories
111,190
68,085
Prepaids and other current assets
14,546
25,840
Income taxes receivable
1,998
—
Other assets – restricted, non-current
3,887
—
Total current assets
207,286
295,810
Property, plant and equipment, net
32,129
24,496
Operating lease right-of-use assets
23,620
19,108
Goodwill
24,510
—
Other intangible assets, net
9,304
9,365
Deferred income tax assets,
non-current
8,760
2,144
Income taxes receivable, non-current
5,673
—
Other assets
2,763
3,307
Total assets
$
314,045
$
354,230
Liabilities and Shareholders'
Equity
Trade payables
$
53,165
$
98,878
Accrued liabilities
29,386
19,627
Operating lease liabilities, current
portion
4,494
3,384
Finance lease liabilities, current
portion
119
—
Warranty obligations, current portion
4,968
7,243
Income taxes payable, current portion
839
5,709
Debt payable, current portion, net of
unamortized debt issuance costs
2,243
3,000
Total current liabilities
95,214
137,841
Operating lease liabilities,
non-current
20,926
17,875
Finance lease liabilities, non-current
395
—
Warranty obligations, non-current
1,248
1,408
Income taxes payable, non-current
4,029
3,657
Other non-current liabilities
1,071
607
Debt payable, non-current, net of
unamortized debt issuance costs
27,113
10,297
Shareholders' equity
164,049
182,545
Total liabilities and shareholders'
equity
$
314,045
$
354,230
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Non-GAAP Presentation
In addition to disclosing its financial results determined in
accordance with GAAP, Nautilus has presented in this release
certain non-GAAP financial measures, which exclude the impact of
certain items (as further described below) and provide supplemental
information regarding operating performance. Nautilus presents
non-GAAP financial measures as a complement to results provided in
accordance with GAAP, and the non-GAAP financial measures should
not be regarded as a substitute for GAAP. By disclosing these
non-GAAP financial measures, management intends to provide
investors with a supplemental comparison of operating results and
trends for the periods presented. Management believes these
measures are also useful to investors as such measures allow
investors to evaluate performance using the same metrics that
management uses to evaluate past performance and prospects for
future performance. Nautilus strongly encourages you to review all
its financial statements and publicly filed reports in their
entirety and to not rely on any single financial measure.
Adjusted Results
In addition to disclosing the comparable GAAP results, Nautilus
has presented its operating expenses and operating (loss) income on
an adjusted basis. Adjusted operating expenses and Adjusted
operating (loss) income excludes the non-cash charges related to
the disposal group held-for-sale of Octane Fitness®, legal
settlements and acquisition and other related costs. We believe
that the adjustment of these charges and any associated tax
benefit, which are inconsistent in amount and frequency,
supplements the GAAP information with a measure that can be used to
assess the sustainability of our operating performance. We may
periodically incur charges or receive payments in connection with
litigation settlements. We exclude these charges and legal
settlements from non-GAAP when associated with a significant
settlement because we do not believe they are reflective of ongoing
business and operating results. We exclude certain expense items
resulting from acquisitions, such as legal, accounting and advisory
fees, deferred compensation and retention expense. Nautilus has
also presented EBITDA from continuing operations on an adjusted
basis, excluding the aforementioned items for similar reasons.
Adjusted EBITDA from Continuing Operations
Nautilus has also presented EBITDA from continuing operations on
an adjusted basis, to exclude the non-cash charge related to loss
on disposal group, stock-based compensation expense, legal
settlements, other expenses, net, and acquisition and other related
costs. We believe that the exclusion of stock-based compensation
expense provides for a better comparison of our operating results
to prior periods and to our peer companies as the calculations of
stock-based compensation vary from period to period and company to
company due to different valuation methodologies, subjective
assumptions, and the variety of award types. We exclude other
expenses, net that are the result of factors and can vary
significantly from one period to the next, we believe that
exclusion of such other expenses are useful to management and
investors in evaluating the performance of our ongoing operations
on a period-to-period basis. We believe that the adjustment of this
charge, which is inconsistent in amount and frequency, supplements
the EBITDA information with a measure that can be used to assess
the sustainability of our operating performance.
We do not reconcile non-GAAP financial measures on a
forward-looking basis as it is impractical to do so without
unreasonable effort.
The following table presents a reconciliation of operating
expenses, the most directly comparable GAAP measure, to Adjusted
operating expenses for the three and twelve-month periods ended
March 31, 2022 and 2021 (unaudited and in thousands):
Three-Months Ended March
31,
Twelve-Months Ended March
31,
2022
2021
2022
2021
Operating expenses
$
42,902
$
39,383
$
173,773
$
154,219
Loss on disposal group(1)
—
—
—
(20,668
)
Legal settlement
—
—
(4,665
)
—
Acquisition and other related costs
(770
)
—
(2,448
)
—
Adjusted operating expenses
$
42,132
$
39,383
$
166,660
$
133,551
The following table presents a reconciliation of operating
(loss) income, the most directly comparable GAAP measure, to
Adjusted operating (loss) income for the three and twelve-month
periods ended March 31, 2022 and 2021 (unaudited and in
thousands):
Three-Months Ended March
31,
Twelve-Months Ended March
31,
2022
2021
2022
2021
Operating (loss) income
$
(21,919
)
$
39,708
$
(25,316
)
$
118,077
Loss on disposal group(1)
—
—
—
20,668
Legal settlement
—
—
4,665
—
Acquisition and other related costs
770
—
2,448
—
Adjusted operating (loss) income
$
(21,149
)
$
39,708
$
(18,203
)
$
138,745
The following table presents a reconciliation of (loss) income
from continuing operations, the most directly comparable GAAP
measure, to Adjusted EBITDA from continuing operations for the
three and twelve-month periods ended March 31, 2022 and 2021
(unaudited and in thousands):
Three-Months Ended March
31,
Twelve-Months Ended March
31,
2022
2021
2022
2021
(Loss) income from continuing
operations
$
(18,198
)
$
30,581
$
(22,204
)
$
88,816
Other expense, net
984
1,532
2,914
6,022
Income tax (benefit) expense from
continuing operations
(4,705
)
7,595
(6,026
)
23,239
Depreciation and amortization
2,628
2,017
8,615
8,655
Loss on disposal group(1)
—
—
—
20,668
Stock-based compensation expense
1,651
1,172
6,262
4,342
Legal settlement
—
—
4,665
—
Acquisition and other related costs
770
—
2,448
—
Adjusted (loss) earnings before interest,
taxes, depreciation, and amortization (Adjusted EBITDA) from
continuing operations
$
(16,870
)
$
42,897
$
(3,326
)
$
151,742
(1) Loss on disposal group In accordance with Accounting
Standards Codification (“ASC”) 360, Property, Plant and Equipment,
for a long-lived assets or disposal group classified as
held-for-sale, a loss is recognized for the carrying amount that
exceeds the fair market value of the long-lived assets less the
cost to sell. The assets and liabilities of a disposal group
classified as held-for-sale should be presented separately in the
asset and liability sections, respectively, of the balance sheet.
The disposal group was structured as a sale of the subsidiary
shares and we elected to classify the deferred taxes associated
with the individual assets and liabilities as part of the disposal
group held-for-sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220523005920/en/
Investor Relations: John Mills ICR, LLC 646-277-1254
John.mills@icrinc.com Media: John Fread Nautilus, Inc
360-859-5815 jfread@nautilus.com Carey Kerns The Hoffman Agency
503-754-7975 ckerns@hoffman.com
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