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Net Sales of $42M Down 24% Year-over-Year
Gross Profit Up 24%; Gross Margin Expanded 800 Basis Points vs. Q1 Fiscal 2023
Adjusted EBITDA Loss Reduced by 70% vs Q1 Fiscal 2023
Reaches Approximately 535K JRNY®Members, Up 48% vs Q1 Fiscal 2023
Reaffirms Fiscal Year 2024 Guidance, Expecting Significant Year-over-Year Improvement in Adjusted EBITDA Loss in Full Year Fiscal 2024
VANCOUVER, Wash.–(BUSINESS WIRE)–Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the fiscal 2024 first quarter ended June 30, 2023.
Management Comments
“Driven by our operational and supply chain efforts and cost reduction actions, we made progress on our path back to profitability in the first quarter with significant improvement in gross margin and adjusted EBITDA loss,” said Jim Barr, Nautilus, Inc. Chief Executive Officer. “We also delivered our seventh consecutive quarter of sequential improvements in our inventory levels, solidified our liquidity position, and strengthened our balance sheet, providing us with the necessary financial flexibility to navigate the volatile retail environment while continuing to execute on our North Star Strategy.”
Mr. Barr concluded, “We continue to scale our differentiated digital offering, JRNY®, reaching over 535,000 members at the end of the quarter. Continued momentum in our Direct business reflects enhancements we’ve made to our product portfolio in this category. We are excited to further build on our strong portfolio with an exciting new pipeline of products with our new BowFlex® visual branding this Fall. With improving profitability, ample liquidity, and traction on our North Star strategy, we feel well positioned to capitalize on the enduring shift to at home fitness over the long term.”
Total Company Results
Fiscal 2024 First Quarter Ended June 30, 2023 Compared to June 30, 2022
1 See “Reconciliation of Non-GAAP Financial Measures” for more information
JRNY® Update
Segment Results
Fiscal 2024 First Quarter Ended June 30, 2023 Compared to June 30, 2022
Direct Segment
Retail Segment
Balance Sheet and Other Key Highlights as of June 30, 2023:
1 See “Reconciliation of Non-GAAP Financial Measures” for more information
Forward Looking Guidance
The following forward-looking statements reflect the Company’s full fiscal year 2024 expectations as of August 9, 2023 and are subject to risks and uncertainties.
Full Year Fiscal 2024
Nautilus is reiterating full year fiscal 2024 guidance.
1The Company provides Adjusted EBITDA guidance, rather than net income guidance, due to the inherent unpredictability of forecasting certain types of expenses such as stock-based compensation and income tax expenses, which affect net income but not Adjusted EBITDA. The Company is unable to reasonably estimate the impact of such expenses, if any, on net income. The inability to project certain components of the calculation would significantly affect the accuracy of a reconciliation. Accordingly, the Company does not provide a reconciliation of projected net income to projected Adjusted EBITDA
Conference Call
Nautilus Inc. will discuss fiscal 2024 first quarter ended June 30, 2023 operating results during a live conference call and webcast on Wednesday, August 9, 2023 at 1:30 p.m. Pacific Time. The conference call can be accessed by calling (844) 825-9789 in North America. International callers may dial (412) 317-5180. 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, August 9, 2023 through 8:59 p.m. PT, August 23, 2023. 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 10180917.
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-month period ended June 30, 2023 and 2022 (unaudited and in thousands, except per share amounts):
|
Three-Months Ended June 30, |
||||||
|
2023 |
|
2022 |
||||
Net sales |
$ |
41,750 |
|
|
$ |
54,817 |
|
Cost of sales |
|
33,101 |
|
|
|
47,860 |
|
Gross profit |
|
8,649 |
|
|
|
6,957 |
|
Operating expenses: |
|
|
|
||||
Selling and marketing |
|
6,001 |
|
|
|
12,891 |
|
General and administrative |
|
8,894 |
|
|
|
12,463 |
|
Research and development |
|
3,847 |
|
|
|
5,823 |
|
Restructuring and exit charges |
|
440 |
|
|
|
— |
|
Goodwill and intangible impairment charge |
|
— |
|
|
|
26,965 |
|
Total operating expenses |
|
19,182 |
|
|
|
58,142 |
|
|
|
|
|
||||
Operating loss |
|
(10,533 |
) |
|
|
(51,185 |
) |
Other income (expense), net |
|
6,114 |
|
|
|
(889 |
) |
Loss from continuing operations before income taxes |
|
(4,419 |
) |
|
|
(52,074 |
) |
Income tax expense |
|
505 |
|
|
|
8,096 |
|
Loss from continuing operations |
|
(4,924 |
) |
|
|
(60,170 |
) |
Loss from discontinued operations, net of income taxes |
|
— |
|
|
|
(7 |
) |
Net loss |
$ |
(4,924 |
) |
|
$ |
(60,177 |
) |
|
|
|
|
||||
Basic loss per share from continuing operations |
$ |
(0.15 |
) |
|
$ |
(1.92 |
) |
Basic loss per share from discontinued operations |
|
— |
|
|
|
— |
|
Basic net loss per share |
$ |
(0.15 |
) |
|
$ |
(1.92 |
) |
|
|
|
|
||||
Diluted loss per share from continuing operations |
$ |
(0.15 |
) |
|
$ |
(1.92 |
) |
Diluted loss per share from discontinued operations |
|
— |
|
|
|
— |
|
Diluted net loss per share |
$ |
(0.15 |
) |
|
$ |
(1.92 |
) |
|
|
|
|
||||
Shares used in per share calculations: |
|
|
|
||||
Basic |
|
32,355 |
|
|
|
31,405 |
|
Diluted |
|
32,355 |
|
|
|
31,405 |
|
|
|
|
|
||||
Select Metrics: |
|
|
|
||||
Gross margin |
|
20.7 |
% |
|
|
12.7 |
% |
Selling and marketing % of net sales |
|
14.4 |
% |
|
|
23.5 |
% |
General and administrative % of net sales |
|
21.3 |
% |
|
|
22.7 |
% |
Research and development % of net sales |
|
9.2 |
% |
|
|
10.6 |
% |
Operating loss % of net sales |
|
(25.2 |
)% |
|
|
(93.4 |
)% |
SEGMENT INFORMATION
The following table presents certain comparative information by segment and major product lines within each business segment for the three-months ended June 30, 2023 and 2022 (unaudited and in thousands):
|
Three-Months Ended June 30, |
|
Change |
|||||||||||
|
2023 |
|
2022 |
|
$ |
|
% |
|||||||
Net sales: |
|
|
|
|
|
|
|
|||||||
Direct net sales: |
|
|
|
|
|
|
|
|||||||
Cardio products(1) |
$ |
12,518 |
|
|
$ |
17,133 |
|
|
$ |
(4,615 |
) |
|
(26.9 |
)% |
Strength products(2) |
|
9,328 |
|
|
|
9,343 |
|
|
|
(15 |
) |
|
(0.2 |
)% |
Direct |
|
21,846 |
|
|
|
26,476 |
|
|
|
(4,630 |
) |
|
(17.5 |
)% |
|
|
|
|
|
|
|
|
|||||||
Retail net sales: |
|
|
|
|
|
|
|
|||||||
Cardio products(1) |
|
9,321 |
|
|
|
11,843 |
|
|
|
(2,522 |
) |
|
(21.3 |
)% |
Strength products(2) |
|
10,156 |
|
|
|
15,601 |
|
|
|
(5,445 |
) |
|
(34.9 |
)% |
Retail |
|
19,477 |
|
|
|
27,444 |
|
|
|
(7,967 |
) |
|
(29.0 |
)% |
|
|
|
|
|
|
|
|
|||||||
Royalty |
|
427 |
|
|
|
897 |
|
|
|
(470 |
) |
|
(52.4 |
)% |
Consolidated net sales |
$ |
41,750 |
|
|
$ |
54,817 |
|
|
$ |
(13,067 |
) |
|
(23.8 |
)% |
|
|
|
|
|
|
|
|
|||||||
Gross profit: |
|
|
|
|
|
|
|
|||||||
Direct |
$ |
3,530 |
|
|
$ |
4,562 |
|
|
$ |
(1,032 |
) |
|
(22.6 |
)% |
Retail |
|
4,692 |
|
|
|
1,498 |
|
|
|
3,194 |
|
|
213.2 |
% |
Royalty |
|
427 |
|
|
|
897 |
|
|
|
(470 |
) |
|
(52.4 |
)% |
Consolidated gross profit |
$ |
8,649 |
|
|
$ |
6,957 |
|
|
$ |
1,692 |
|
|
24.3 |
% |
|
|
|
|
|
|
|
|
|||||||
Gross margin: |
|
|
|
|
|
|
|
|||||||
Direct |
|
16.2 |
% |
|
|
17.2 |
% |
|
|
(100 |
) |
basis points |
||
Retail |
|
24.1 |
% |
|
|
5.5 |
% |
|
|
1,860 |
|
basis points |
||
|
|
|
|
|
|
|
|
|||||||
Contribution: |
|
|
|
|
|
|
|
|||||||
Direct |
$ |
(4,708 |
) |
|
$ |
(9,893 |
) |
|
$ |
5,185 |
|
|
52.4 |
% |
Retail |
|
382 |
|
|
|
(5,408 |
) |
|
|
5,790 |
|
|
107.1 |
% |
Royalty |
|
427 |
|
|
|
897 |
|
|
|
(470 |
) |
|
(52.4 |
)% |
Consolidated contribution |
$ |
(3,899 |
) |
|
$ |
(14,404 |
) |
|
$ |
10,505 |
|
|
72.9 |
% |
|
|
|
|
|
|
|
|
|||||||
Reconciliation of consolidated contribution to loss from continuing operations: |
|
|
||||||||||||
Consolidated contribution |
$ |
(3,899 |
) |
|
$ |
(14,404 |
) |
|
$ |
10,505 |
|
|
72.9 |
% |
Amounts not directly related to segments: |
|
|
|
|
|
|
|
|||||||
Operating expenses |
|
(6,634 |
) |
|
|
(36,781 |
) |
|
|
30,147 |
|
|
82.0 |
% |
Other expense, net |
|
6,114 |
|
|
|
(889 |
) |
|
|
7,003 |
|
|
787.7 |
% |
Income tax expense |
|
(505 |
) |
|
|
(8,096 |
) |
|
|
7,591 |
|
|
93.8 |
% |
Loss from continuing operations |
$ |
(4,924 |
) |
|
$ |
(60,170 |
) |
|
$ |
55,246 |
|
|
91.8 |
% |
|
|
|
|
|
|
|
|
|||||||
(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 (applicable to Direct only). |
||||||||||||||
(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 June 30, 2023 and March 31, 2023 (unaudited and in thousands):
|
As of |
||||||
|
June 30, 2023 |
|
March 31, 2023 |
||||
Assets |
|
|
|
||||
|
|
|
|
||||
Cash and cash equivalents |
$ |
17,326 |
|
$ |
17,362 |
||
Restricted cash |
|
954 |
|
|
|
950 |
|
Trade receivables, net of allowances |
|
13,225 |
|
|
|
21,489 |
|
Inventories |
|
39,791 |
|
|
|
46,599 |
|
Prepaids and other current assets |
|
7,914 |
|
|
|
8,033 |
|
Income taxes receivable |
|
7,235 |
|
|
|
1,789 |
|
Total current assets |
|
86,445 |
|
|
|
96,222 |
|
Property, plant and equipment, net |
|
30,502 |
|
|
|
32,789 |
|
Operating lease right-of-use assets |
|
18,009 |
|
|
|
19,078 |
|
Other intangible assets, net |
|
3,075 |
|
|
|
6,787 |
|
Deferred income tax assets, non-current |
|
554 |
|
|
|
554 |
|
Income taxes receivable, non-current |
|
— |
|
|
|
5,673 |
|
Other assets |
|
1,596 |
|
|
|
2,429 |
|
Total assets |
$ |
140,181 |
|
|
$ |
163,532 |
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity |
|
|
|
||||
|
|
|
|
||||
Trade payables |
$ |
20,527 |
|
|
$ |
29,378 |
|
Accrued liabilities |
|
12,739 |
|
|
|
15,575 |
|
Operating lease liabilities, current portion |
|
4,505 |
|
|
|
4,427 |
|
Finance lease liabilities, current portion |
|
123 |
|
|
|
122 |
|
Warranty obligations, current portion |
|
2,568 |
|
|
|
2,564 |
|
Income taxes payable, current portion |
|
1,064 |
|
|
|
328 |
|
Debt payable, current portion, net of unamortized debt issuance costs |
|
1,807 |
|
|
|
1,642 |
|
Total current liabilities |
|
43,333 |
|
|
|
54,036 |
|
Operating lease liabilities, non-current |
|
15,182 |
|
|
|
16,380 |
|
Finance lease liabilities, non-current |
|
254 |
|
|
|
282 |
|
Warranty obligations, non-current |
|
731 |
|
|
|
703 |
|
Income taxes payable, non-current |
|
2,014 |
|
|
|
2,316 |
|
Deferred income tax liabilities, non-current |
|
42 |
|
|
|
253 |
|
Other non-current liabilities |
|
5,469 |
|
|
|
1,978 |
|
Debt payable, non-current, net of unamortized debt issuance costs |
|
14,085 |
|
|
|
26,284 |
|
Shareholders’ equity |
|
59,071 |
|
|
|
61,300 |
|
Total liabilities and shareholders’ equity |
$ |
140,181 |
|
|
$ |
163,532 |
|
Contacts
Investor Relations:
John Mills
ICR, LLC
646-277-1254
John.mills@icrinc.com
Media:
John Fread
Nautilus, Inc
360-859-5815
jfread@nautilus.com
Robin Rootenberg
Action Mary
925-464-8030
robin.rootenberg@actionmary.com
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