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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nautilus Inc | NYSE:NLS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.8204 | 0 | 01:00:00 |
Total Net Sales increased 62% to $185 million, the highest fiscal first quarter sales result in company history
Record Breaking Retail Segment Quarterly Net Sales of $120 million
Operating Income of $18 million, Operating Margin of 10%, EBITDA of $20 million
Advances JRNY® platform, including FitOn partnership.
Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the fiscal 2022 first quarter ended June 30, 2021.
Fiscal 2022 First Quarter Ended June 30, 2021 Compared to June 30, 2020
1 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 their members. In the past quarter, the Company enhanced its content library, adding 200+ trainer-led videos and commissioning additional Explore the World content. They introduced the JRNY® app for use with its popular IC4 and C6 bikes further expanding its diverse lineup of connected products.
Today, Nautilus also announced a strategic partnership with digital fitness provider, FitOn. Under the agreement, JRNY® members will have access to hundreds of off-product workouts through the JRNY® digital fitness platform and app to keep members engaged and reaching their fitness goals.
Management Comments
“I’m really pleased by how our team delivered in comparison to last year, the first full quarter that benefitted from the COVID-related tailwinds. We delivered the highest fiscal Q1 net sales in company history, highlighting the continued demand for at-home fitness products. Retail grew sales by 91% or 107% excluding Octane, delivering record net sales of $120 million, while Direct grew by 26%. We generated $18 million in operating income and 10% operating margins even with the continued external pressure of elevated logistics costs and supply inflation. Importantly, we made great progress on our North Star strategy, with improved incremental brand advertising and further enhancements to our JRNY® digital fitness platform,” said Jim Barr, Nautilus Inc. Chief Executive Officer.
“We have generated record results for three sequential quarters, underscoring the momentum of our execution of North Star, our long-term transformation plan. We believe that our planned North Star investments, particularly in marketing and our JRNY® platform, will result in more predictable growth and consistent and expanding profitability. We will continue to enhance JRNY® to provide our members with a differentiated experience and our recently announced FitOn partnership is an example of that commitment. Our team’s focus on executing North Star has enabled us to reach more of our target customers, grow our member base, add new retailer partners, reduce backlog, and improve our inventory position. These areas of focus combined with our improving connected fitness experience have us very well positioned to deliver sustainable long-term growth and profitability,” continued Mr. Barr.
Fiscal 2022 First Quarter ended June 30, 2021 Segment Results Compared to June 30, 2020
Direct Segment
Retail Segment
Balance Sheet and Other Key Highlights as of June 30, 2021:
Forward Looking Guidance
Second Quarter Fiscal 2022
Back Half of Fiscal 2022
Longer term view, beyond Fiscal 2022
Conference Call
Nautilus will discuss our fiscal 2022 first quarter ended June 30, 2021 operating results during a live conference call and webcast on Monday, August 9, 2021 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, August 9, 2021 through 8:59 p.m. PT, August 30, 2021. 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 13721447.
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-months ended June 30, 2021 and 2020 (unaudited and in thousands, except per share amounts):
Three-Months Ended June 30,
2021
2020
Net sales
$
184,593
$
114,188
Cost of sales
129,088
66,792
Gross profit
55,505
47,396
Operating expenses:
Selling and marketing
21,300
12,446
General and administrative
11,523
9,315
Research and development
4,815
3,728
Loss on disposal group
—
29,013
Total operating expenses
37,638
54,502
Operating income (loss)
17,867
(7,106
)
Other expense, net
(413
)
(222
)
Income (loss) from continuing operations before income taxes
17,454
(7,328
)
Income tax expense (benefit)
3,438
(2,342
)
Income (loss) from continuing operations
14,016
(4,986
)
Loss from discontinued operations, net of income taxes
(132
)
(124
)
Net income (loss)
$
13,884
$
(5,110
)
Basic income (loss) per share from continuing operations
$
0.46
$
(0.17
)
Basic loss per share from discontinued operations
(0.01
)
—
Basic net income (loss) per share
$
0.45
$
(0.17
)
Diluted income (loss) per share from continuing operations
$
0.43
$
(0.17
)
Diluted loss per share from discontinued operations
—
—
Diluted net income (loss) per share
$
0.43
$
(0.17
)
Shares used in per share calculations:
Basic
30,697
29,909
Diluted
32,508
29,909
Select Metrics:
Gross margin
30.1
%
41.5
%
Selling and marketing % of net sales
11.5
%
10.9
%
General and administrative % of net sales
6.2
%
8.2
%
Research and development % of net sales
2.6
%
3.3
%
Operating income (loss) % of net sales
9.7
%
(6.2
)%
SEGMENT INFORMATION
The following tables present certain comparative information by segment and major product lines within each business segment for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
Change
2021
2020
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
31,430
$
45,585
$
(14,155
)
(31.1
)%
Strength products(2)
31,966
4,848
27,118
559.4
%
Direct
63,396
50,433
12,963
25.7
%
Retail net sales:
Cardio products(1)
89,924
49,011
40,913
83.5
%
Strength products(2)
30,560
13,937
16,623
119.3
%
Retail
120,484
62,948
57,536
91.4
%
Royalty
713
807
(94
)
(11.6
)%
Consolidated net sales
$
184,593
$
114,188
$
70,405
61.7
%
Gross profit:
Direct
$
24,514
$
27,523
$
(3,009
)
(10.9
)%
Retail
30,278
19,066
11,212
58.8
%
Royalty
713
807
(94
)
(11.6
)%
Consolidated gross profit
$
55,505
$
47,396
$
8,109
17.1
%
Gross margin:
Direct
38.7
%
54.6
%
(1,590
)
basis points
Retail
25.1
%
30.3
%
(520
)
basis points
Contribution:
Direct
$
6,759
$
16,995
$
(10,236
)
(60.2
)%
Retail
22,090
11,613
10,477
90.2
%
Royalty
713
807
(94
)
(11.6
)%
Consolidated contribution
$
29,562
$
29,415
$
147
0.5
%
Reconciliation of consolidated contribution to income (loss) from continuing operations:
Consolidated contribution
$
29,562
$
29,415
$
147
0.5
%
Amounts not directly related to segments:
Operating expenses
(11,695
)
(36,521
)
24,826
68.0
%
Other expense, net
(413
)
(222
)
(191
)
(86.0
)%
Income tax (expense) benefit
(3,438
)
2,342
(5,780
)
(246.8
)%
Income (loss) from continuing operations
$
14,016
$
(4,986
)
$
19,002
381.1
%
(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.
(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, 2021 and March 31, 2021 (unaudited and in thousands):
As of
June 30,
2021
March 31,
2021
Assets
Cash and cash equivalents
$
25,218
$
38,441
Restricted cash
1,339
1,339
Available-for-sale securities
56,264
73,448
Trade receivables, net of allowances
98,160
88,657
Inventories
111,132
68,085
Prepaids and other current assets
15,650
25,840
Income taxes receivable
9,500
—
Total current assets
317,263
295,810
Property, plant and equipment, net
24,718
24,496
Operating lease right-of-use assets
25,662
19,108
Other intangible assets, net
9,350
9,365
Deferred income tax assets, non-current
3,068
2,144
Other assets
2,325
3,307
Total assets
$
382,386
$
354,230
Liabilities and Shareholders' Equity
Trade payables
$
114,602
$
98,878
Accrued liabilities
14,515
19,627
Operating lease liabilities, current portion
4,706
3,384
Warranty obligations, current portion
8,191
7,243
Income taxes payable, current portion
845
5,709
Debt payable, current portion, net of unamortized debt issuance costs
3,125
3,000
Total current liabilities
145,984
137,841
Operating lease liabilities, non-current
23,221
17,875
Warranty obligations, non-current
1,593
1,408
Income taxes payable, non-current
3,805
3,657
Other non-current liabilities
606
607
Debt payable, non-current, net of unamortized debt issuance costs
10,296
10,297
Shareholders' equity
196,881
182,545
Total liabilities and shareholders' equity
$
382,386
$
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.
EBITDA from Continuing Operations
Nautilus defines EBITDA from continuing operations as its income from continuing operations, adjusted to exclude interest expense (income), income tax expense (benefit) of continuing operations, and depreciation and amortization expense. Nautilus uses EBITDA from continuing operations in evaluating its operating results and for financial and operational decision-making purposes such as budgeting and establishing operational goals. Nautilus believes that EBITDA from continuing operations helps identify underlying trends in its business that could otherwise be masked by the effect of the items that are excluded from EBITDA from continuing operations and enhances the overall understanding of the Company’s past performance and future prospects. Management believes that EBITDA is frequently used by investors, securities analysts, and other interested parties in their evaluation of companies, many of which present EBITDA when reporting their results. Other companies may calculate EBITDA differently, and it may not be comparable.
Adjusted Results
In addition to disclosing the comparable GAAP results, Nautilus has presented its operating expenses, operating income, and income from continuing operations on an adjusted basis. Adjusted operating expenses excludes the non-cash charges related to the disposal group held-for-sale of Octane Fitness®. Adjusted operating income excludes non-cash charges related to the disposal group held-for-sale of Octane Fitness®. Adjusted income from continuing operations excludes the loss as well as the associated tax benefit. We believe that the adjustment of this charge and 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. In addition to presenting its EBITDA from continuing operations as described above, Nautilus has also presented EBITDA from continuing operations on an adjusted basis, excluding the aforementioned loss for similar reasons.
Adjusted EBITDA from Continuing Operations
In addition to presenting its EBITDA from continuing operations as described above, Nautilus has also presented EBITDA from continuing operations on an adjusted basis, to exclude the non-cash charge related to stock-based compensation expense. 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.
The following table presents a reconciliation of operating expenses, the most directly comparable GAAP measure, to Adjusted operating expenses for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
2021
2020
Operating expenses
$
37,638
$
54,502
Loss on disposal group(1)
—
(29,013
)
Adjusted operating expenses
$
37,638
$
25,489
The following table presents a reconciliation of operating income (loss), the most directly comparable GAAP measure, to Adjusted operating income for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
2021
2020
Operating income (loss)
$
17,867
$
(7,106
)
Loss on disposal group(1)
—
29,013
Adjusted operating income
$
17,867
$
21,907
The following table presents a reconciliation of income (loss) from continuing operations, the most directly comparable GAAP measure, to Adjusted income from continuing operations for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
2021
2020
Income (loss) from continuing operations
$
14,016
$
(4,986
)
Loss on disposal group(1)
—
29,013
Income tax benefit for loss on disposal group
—
(7,216
)
Adjusted income from continuing operations
$
14,016
$
16,811
The following table presents a reconciliation of income (loss) from continuing operations, the most directly comparable GAAP measure, to EBITDA from continuing operations for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
2021
2020
Income (loss) from continuing operations
$
14,016
$
(4,986
)
Interest expense, net
293
337
Income tax expense (benefit) from continuing operations
3,438
(2,342
)
Depreciation and amortization
2,054
2,646
Earnings (loss) before interest, taxes, depreciation, and amortization (EBITDA) from continuing operations
$
19,801
$
(4,345
)
The following table presents a reconciliation of income (loss) from continuing operations, the most directly comparable GAAP measure, to Adjusted EBITDA from continuing operations for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
2021
2020
Income (loss) from continuing operations
$
14,016
$
(4,986
)
Interest expense, net
293
337
Income tax expense (benefit) from continuing operations
3,438
(2,342
)
Depreciation and amortization
2,054
2,646
Loss on disposal group(1)
—
29,013
Stock-based compensation expense
1,225
865
Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) from continuing operations
$
21,026
$
25,533
The following table presents a reconciliation of diluted income (loss) per share from continuing operations, the most directly comparable GAAP measure, to Adjusted diluted income per share from continuing operations for the three-months ended June 30, 2021 and 2020 (unaudited and in thousands):
Three-Months Ended June 30,
2021
2020
Diluted income (loss) per share from continuing operations
$
0.43
$
(0.17
)
Loss on disposal group, net of tax(1)
—
0.73
Adjusted diluted income per share from continuing operations
$
0.43
$
0.56
(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/20210809005703/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@hoffmn.com
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