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Share Name | Share Symbol | Market | Type |
---|---|---|---|
BowFlex Inc | NYSE:BFX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.195 | 0 | 01:00:00 |
Direct Segment Net Sales of $21 Million Down 15% versus Q2 Fiscal 2023
Direct Strength Product Sales Up 15% versus Q2 Fiscal 2023
Reaches 596K JRNY® Members During Q2 Fiscal 2024, Up 51% versus Q2 Fiscal 2023
Adjusted EBITDA Loss Reduced by 41% versus Q2 Fiscal 2023
Updates Fiscal Year 2024 Guidance
BowFlex Inc. (NYSE: BFX) today reported its unaudited operating results for the fiscal 2024 second quarter ended September 30, 2023.
Management Comments
“The retail environment has remained challenging throughout our fiscal year second quarter. We continued to offset the topline softness with diligent cost management and operational excellence efforts, resulting in another quarter of year-over-year improvement in gross margin and adjusted EBITDA loss during Q2,” said Jim Barr, BowFlex Inc. Chief Executive Officer. “While both our Retail and Direct segment net sales declined year-over-year, we were encouraged by the growth of our international Retail business and the positive comp we delivered in our Direct Strength equipment, a testament to the deliberate product enhancements we’ve made in this area. Additionally, we recently marked a major milestone for our business with our rebranding to BowFlex Inc., reflecting our reinforced focus on our strongest brand and providing our consumers with the products and experiences that support their lifelong fitness journey.”
Mr. Barr concluded, “Coming into our fiscal third quarter, we see the difficult macroeconomic landscape persisting, with retailers maintaining a highly conservative approach to inventory reorders. In this environment, we are delivering on our operational excellence initiatives, successfully controlling our costs and optimizing our inventory position. These initiatives resulted in improvements to adjusted EBITDA loss in the first half of the year and we believe will drive continued adjusted EBITDA loss improvement in the second half of the year. Looking further ahead, we are strategically positioned to capitalize on the long-term shift to connected at-home fitness with a strong pipeline of new strength and cardio products and continued momentum on scaling JRNY®.”
Total Company Results
Fiscal 2024 Second Quarter Ended September 30, 2023 Compared to September 30, 2022
1 See “Reconciliation of Non-GAAP Financial Measures” for more information
Six-Months Ended September 30, 2023 Compared to Six-Months Ended September 30, 2022
1 See “Reconciliation of Non-GAAP Financial Measures” for more information
JRNY® Update
Segment Results
Fiscal 2024 Second Quarter Ended September 30, 2023 Compared to September 30, 2022
Direct Segment
Retail Segment
Comparison of Segment Results for the Six-Months Ended September 30, 2023 to the Six-Months Ended September 30, 2022
Direct Segment
Retail Segment
Balance Sheet and Other Key Highlights as of September 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 November 14, 2023 and are subject to risks and uncertainties.
Full Year Fiscal 2024
BowFlex is adjusting full year fiscal 2024 guidance.
1 The 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
BowFlex Inc. will discuss fiscal 2024 second quarter ended September 30, 2023 operating results during a live conference call and webcast on Tuesday, November 14, 2023 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 https://corporate.bowflex.com/investors/events-webcasts/. 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, November 14, 2023 through 8:59 p.m. PT, November 28, 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 13741508.
About BowFlex Inc.
BowFlex Inc. (NYSE:BFX) is a global leader in digitally connected home fitness solutions. The Company’s brand family includes BowFlex®, Schwinn®, and JRNY®, its digital fitness platform. With a broad selection of exercise bikes, cardio equipment, and strength training products, BowFlex 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. Bowflex Inc. uses the investor relations page of its website (www.bowflex.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; 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 BowFlex 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 six-month periods ended September 30, 2023 and 2022 (unaudited and in thousands, except per share amounts):
Three-Months Ended September 30,
Six-Months Ended September 30,
2023
2022
2023
2022
Net sales
$
48,659
$
65,458
$
90,409
$
120,275
Cost of sales
38,705
54,000
71,805
101,859
Gross profit
9,954
11,458
18,604
18,416
Operating expenses:
Selling and marketing
7,023
9,400
13,024
22,290
General and administrative
8,980
10,995
17,874
23,458
Research and development
3,836
5,405
7,684
11,229
Restructuring and exit charges
1,323
—
1,763
—
Goodwill and intangible impairment charge
—
—
—
26,965
Total operating expenses
21,162
25,800
40,345
83,942
Operating loss
(11,208
)
(14,342
)
(21,741
)
(65,526
)
Total other (expense) income, net
(883
)
(815
)
5,231
(1,705
)
Loss from continuing operations before income taxes
(12,091
)
(15,157
)
(16,510
)
(67,231
)
Income tax expense
452
156
957
8,251
Loss from continuing operations
(12,543
)
(15,313
)
(17,467
)
(75,482
)
Income from discontinued operations, net of income taxes
—
2,110
—
2,102
Net loss
$
(12,543
)
$
(13,203
)
$
(17,467
)
$
(73,380
)
Basic loss per share from continuing operations
$
(0.35
)
$
(0.48
)
$
(0.51
)
$
(2.40
)
Basic income per share from discontinued operations
—
0.07
—
0.07
Basic net loss per share
$
(0.35
)
$
(0.41
)
$
(0.51
)
$
(2.33
)
Diluted loss per share from continuing operations
$
(0.35
)
$
(0.48
)
$
(0.51
)
$
(2.40
)
Diluted income per share from discontinued operations
—
0.07
—
0.07
Diluted net loss per share
$
(0.35
)
$
(0.41
)
$
(0.51
)
$
(2.33
)
Shares used in per share calculations:
Basic
36,008
31,585
34,192
31,496
Diluted
36,008
31,585
34,192
31,496
Select Metrics:
Gross margin
20.5
%
17.5
%
20.6
%
15.3
%
Selling and marketing % of net sales
14.4
%
14.4
%
14.4
%
18.5
%
General and administrative % of net sales
18.5
%
16.8
%
19.8
%
19.5
%
Research and development % of net sales
7.9
%
8.3
%
8.5
%
9.3
%
Operating loss % of net sales
(23.0
)%
(21.9
)%
(24.0
)%
(54.5
)%
SEGMENT INFORMATION
The following table presents certain comparative information by segment and major product lines within each business segment for the three and six-months ended September 30, 2023 and 2022 (unaudited and in thousands):
Three-Months Ended September 30,
Change
2023
2022
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
11,561
$
16,493
$
(4,932
)
(29.9
)%
Strength products(2)
9,176
7,987
1,189
14.9
%
Direct
20,737
24,480
(3,743
)
(15.3
)%
Retail net sales:
Cardio products(1)
11,002
14,554
(3,552
)
(24.4
)%
Strength products(2)
16,778
25,351
(8,573
)
(33.8
)%
Retail
27,780
39,905
(12,125
)
(30.4
)%
Royalty
142
1,073
(931
)
(86.8
)%
Consolidated net sales
$
48,659
$
65,458
$
(16,799
)
(25.7
)%
Gross profit:
Direct
$
2,786
$
3,101
$
(315
)
(10.2
)%
Retail
7,026
7,284
(258
)
(3.5
)%
Royalty
142
1,073
(931
)
(86.8
)%
Consolidated gross profit
$
9,954
$
11,458
$
(1,504
)
(13.1
)%
Gross margin:
Direct
13.4
%
12.7
%
70
basis points
Retail
25.3
%
18.3
%
700
basis points
Contribution:
Direct
$
(7,668
)
$
(7,887
)
$
219
2.8
%
Retail
3,663
966
2,697
279.1
%
Royalty
142
1,073
(931
)
(86.8
)%
Consolidated contribution
$
(3,863
)
$
(5,848
)
$
1,985
33.9
%
Reconciliation of consolidated contribution to loss from continuing operations:
Consolidated contribution
$
(3,863
)
$
(5,848
)
$
1,985
33.9
%
Amounts not directly related to segments:
Operating expenses
(7,345
)
(8,493
)
1,148
13.5
%
Other expense, net
(883
)
(816
)
(67
)
(8.2
)%
Income tax expense
(452
)
(156
)
(296
)
(189.7
)%
Loss from continuing operations
$
(12,543
)
$
(15,313
)
$
2,770
18.1
%
(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.
Six-Months Ended September 30,
Change
2023
2022
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
24,079
$
33,626
$
(9,547
)
(28.4
)%
Strength products(2)
18,503
17,331
1,172
6.8
%
Direct
42,582
50,957
(8,375
)
(16.4
)%
Retail net sales:
Cardio products(1)
20,323
26,397
(6,074
)
(23.0
)%
Strength products(2)
26,934
40,951
(14,017
)
(34.2
)%
Retail
47,257
67,348
(20,091
)
(29.8
)%
Royalty
570
1,970
(1,400
)
(71.1
)%
Consolidated net sales
$
90,409
$
120,275
$
(29,866
)
(24.8
)%
Gross profit:
Direct
$
6,315
$
7,665
$
(1,350
)
(17.6
)%
Retail
11,719
8,781
2,938
33.5
%
Royalty
570
1,970
(1,400
)
(71.1
)%
Consolidated gross profit
$
18,604
$
18,416
$
188
1.0
%
Gross margin:
Direct
14.8
%
15.0
%
(20
)
basis points
Retail
24.8
%
13.0
%
1,180
basis points
Contribution:
Direct
$
(12,376
)
$
(17,780
)
$
5,404
30.4
%
Retail
4,045
(4,442
)
8,487
191.1
%
Royalty
570
1,970
(1,400
)
(71.1
)%
Consolidated contribution
$
(7,761
)
$
(20,252
)
$
12,491
61.7
%
Reconciliation of consolidated contribution to (loss) income from continuing operations:
Consolidated contribution
$
(7,761
)
$
(20,252
)
$
12,491
61.7
%
Amounts not directly related to segments:
Operating expenses
(13,980
)
(45,274
)
31,294
69.1
%
Other expense, net
5,231
(1,704
)
6,935
407.0
%
Income tax expense
(957
)
(8,252
)
7,295
88.4
%
Loss from continuing operations
$
(17,467
)
$
(75,482
)
$
58,015
76.9
%
(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 September 30, 2023 and March 31, 2023 (unaudited and in thousands):
As of
September 30, 2023
March 31, 2023
Assets
Cash and cash equivalents
$
8,134
$
17,362
Restricted cash
2,158
950
Trade receivables, net of allowances
24,187
21,489
Inventories
66,077
46,599
Prepaids and other current assets
9,779
8,033
Income taxes receivable
7,215
1,789
Total current assets
117,550
96,222
Property, plant and equipment, net
28,352
32,789
Operating lease right-of-use assets
16,906
19,078
Other intangible assets, net
3,059
6,787
Deferred income tax assets, non-current
540
554
Income taxes receivable, non-current
—
5,673
Other assets
1,271
2,429
Total assets
$
167,678
$
163,532
Liabilities and Shareholders' Equity
Trade payables
$
63,235
$
29,378
Accrued liabilities
11,858
15,575
Operating lease liabilities, current portion
4,575
4,427
Finance lease liabilities, current portion
123
122
Warranty obligations, current portion
2,560
2,564
Income taxes payable, current portion
1,089
328
Debt payable, current portion, net of unamortized debt issuance costs
1,803
1,642
Total current liabilities
85,243
54,036
Operating lease liabilities, non-current
13,950
16,380
Finance lease liabilities, non-current
225
282
Warranty obligations, non-current
859
703
Income taxes payable, non-current
2,055
2,316
Deferred income tax liabilities, non-current
128
253
Other non-current liabilities
4,108
1,978
Debt payable, non-current, net of unamortized debt issuance costs
13,987
26,284
Shareholders' equity
47,123
61,300
Total liabilities and shareholders' equity
$
167,678
$
163,532
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Non-GAAP Presentation
BowFlex 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.
In addition to disclosing its financial results determined in accordance with GAAP, BowFlex has presented in this release certain non-GAAP financial measures, which exclude the impact of certain items (as further described below). Management believes these measures are also useful to investors as these are the same metrics that management uses to evaluate past performance and prospects for future performance. BowFlex strongly encourages investors to review all its financial statements and publicly filed reports in their entirety and to not rely on any single financial measure to evaluate the Company’s performance.
Free Cash Flow
Free cash flow is a non-GAAP financial measure. BowFlex defines free cash flow as net cash provided by (used in) operating activities minus capital expenditures. The Company believes that, when viewed with its GAAP results, free cash flow provides management, investors and other users of the Company's financial information with a more complete understanding of factors and trends affecting its cash flows. BowFlex believe free cash flow provides useful additional information to users of the Company's financial information and is an important metric because it represents a measure of how much cash is available for discretionary and non-discretionary items after the deduction of capital expenditures. The Company uses this metric internally, as we believe a sustained ability to generate free cash flow is an important driver of value creation. However, this non-GAAP financial measure is not intended to supersede or replace GAAP results.
Adjusted Results
In addition to disclosing the comparable GAAP results, BowFlex has presented its operating expenses and operating (loss) income on an adjusted basis to exclude certain non-recurring items, including the non-cash charge related to goodwill and intangible asset impairment(1)and exit charges(2). The Company believes that excluding these items, which are inconsistent in amount and frequency, supplements the GAAP information with a measure that can be used to assess the sustainability of the Company’s operating performance. BowFlex has also presented EBITDA from continuing operations on an adjusted basis, excluding the aforementioned items for similar reasons.
Adjusted EBITDA from Continuing Operations
BowFlex has also presented EBITDA from continuing operations on an adjusted basis, to exclude the non-cash charge related to goodwill and intangible asset impairment(1) and restructuring and exit charges(2), depreciation and amortization, stock-based compensation and certain other net expenses. The Company believes that EBITDA is an important measure as it allows the company to evaluate past performance and prospects for future performance. The Company believes the exclusion of stock-based compensation expense provides for a better comparison of operating results to prior periods and to 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. The Company excludes other expenses, net that are the result of factors and can vary significantly from one period to the next. BowFlex believes that exclusion of such other expenses are useful to management and investors in evaluating the performance of ongoing operations on a period-to-period basis.
BowFlex does not reconcile non-GAAP financial measures on a forward-looking basis as it is impractical to do so without unreasonable effort.
The following table reconciles free cash flow, a non-GAAP financial measure, from a GAAP financial measure for the three and six-month periods ended September 30, 2023 and 2022 (unaudited and in thousands):
Three-Months Ended September 30,
Six-Months Ended September 30,
2023
2022
2023
2022
Net cash used in operating activities
$
(5,566
)
$
(3,616
)
$
(7,931
)
$
(9,596
)
Purchase of property, plant and equipment
(724
)
(4,130
)
(1,902
)
(7,511
)
Free cash flow
$
(6,290
)
$
(7,746
)
$
(9,833
)
$
(17,107
)
Net loss
$
(12,543
)
$
(13,203
)
$
(17,467
)
$
(73,380
)
Free cash flow as percentage of net loss
50.1
%
58.7
%
56.3
%
23.3
%
The following table presents a reconciliation of operating expenses, the most directly comparable GAAP measure, to Adjusted operating expenses for the three and six-month periods ended September 30, 2023 and 2022 (unaudited and in thousands):
Three-Months Ended September 30,
Six-Months Ended September 30,
2023
2022
2023
2022
Operating expenses
$
21,162
$
25,800
$
40,345
$
83,942
Goodwill and intangible impairment charge(1)
—
—
—
(26,965
)
Acquisition and other related costs(3)
—
(648
)
—
(1,296
)
Restructuring and exit charges(2)
(1,323
)
—
(1,763
)
—
Adjusted operating expenses
$
19,839
$
25,152
$
38,582
$
55,681
The following table presents a reconciliation of operating loss, the most directly comparable GAAP measure, to Adjusted operating loss for the three and six-month periods ended September 30, 2023 and 2022 (unaudited and in thousands):
Three-Months Ended September 30,
Six-Months Ended September 30,
2023
2022
2023
2022
Operating loss
$
(11,208
)
$
(14,342
)
$
(21,741
)
$
(65,526
)
Goodwill and intangible impairment charge(1)
—
—
—
26,965
Acquisition and other related costs(3)
—
648
—
1,296
Restructuring and exit charges(2)
1,323
—
1,763
—
Adjusted operating loss
$
(9,885
)
$
(13,694
)
$
(19,978
)
$
(37,265
)
The following table presents a reconciliation of loss from continuing operations, the most directly comparable GAAP measure, to Adjusted EBITDA from continuing operations for the three and six-month periods ended September 30, 2023 and 2022 (unaudited and in thousands):
Three-Months Ended September 30,
Six-Months Ended September 30,
2023
2022
2023
2022
Loss from continuing operations
$
(12,543
)
$
(15,313
)
$
(17,467
)
$
(75,482
)
Total other (income) expense, net
883
815
(5,231
)
1,705
Income tax expense from continuing operations
452
156
957
8,251
Depreciation and amortization
3,106
2,480
6,256
4,786
Stock-based compensation expense
923
1,367
1,945
3,346
Goodwill and intangible impairment charge(1)
—
—
—
26,965
Acquisition and other related costs(3)
—
648
—
1,296
Restructuring and exit charges(2)
1,323
—
1,763
—
Adjusted loss before interest, taxes, depreciation, and amortization (Adjusted EBITDA) from continuing operations
$
(5,856
)
$
(9,847
)
$
(11,777
)
$
(29,133
)
(1) Goodwill and intangible impairment charge In accordance with ASC 350 — Intangibles — Goodwill and Other, an entity is required to perform goodwill and indefinite-lived trade names impairment valuations annually, or sooner if triggering events are identified. We observed continued market volatility including significant declines in our market capitalization during the three-month period ended June 30, 2022, which we identified as a triggering event. In response to the triggering event, we performed an interim evaluation and a market capitalization reconciliation during the first quarter of fiscal 2023, which resulted in non-cash goodwill and indefinite-lived intangible assets impairment charges.
(2) Restructuring and exit charges In February 2023, we restructured our cost structure to align with lower revenue. In addition to ending relationships with outsourced contractors, we executed a reduction in our workforce of approximately 15%. Restructuring and exit charges include involuntary employee termination benefits and other exit costs.
(3) Acquisition and other related costs On September 17, 2021, we acquired VAY AG ("VAY") for aggregate purchase consideration of approximately $27.0 million. We accounted for the transaction as a business combination. Acquisition and other costs are reflected in general and administrative costs and consist of acquisition related closing costs and a contingent consideration arrangement. The contingent consideration arrangement required the Company to recognize $3.9 million compensatory expense over an 18 month service period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231114298650/en/
Investor Relations: John Mills ICR, LLC 646-277-1254 John.mills@icrinc.com Media: Hanna Herrin BowFlex Inc 360-859-2570 hherrin@bowflex.com Robin Rootenberg Action Mary 925-464-8030 robin.rootenberg@actionmary.com
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