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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 |
Company Achieves Upper End Q1 Fiscal 2023 Revenue Guidance and Beats Adjusted EBITDA Guidance
Direct Net Sales of $26.5M up 27% vs pre-pandemic Q1 Fiscal 2020
JRNY® Total Members Reaches 360k with 133% Growth vs Q1 Fiscal 2022
Company Reiterates Full Year Guidance
Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the fiscal 2023 first quarter ended June 30, 2022.
Management Comments
“We are pleased to deliver solid first quarter results that reflect the execution of our multi-year transformation plan. Our omnichannel approach was critical to our success in the quarter, with Direct channel sales up 27% compared to the same pre-pandemic period in fiscal 2020. Further, we continue to expand our digital fitness platform, JRNY®, which exceeded 360,000 members at June 30, 2022, representing approximately 133% growth versus the same quarter last year,” said Jim Barr, Nautilus, Inc. Chief Executive Officer.
Mr. Barr continued, “As we look ahead, we believe we are well-positioned to navigate the current macroeconomic environment. Our ability to offer customers a diversified product assortment of strength and cardio offerings that includes our JRNY® platform at a compelling total cost of ownership enables us to drive demand and expand our market position. Based on our performance to-date and visibility into the remainder of our fiscal year, I am pleased to reiterate our full year financial and JRNY® member growth guidance. We have made tremendous progress on our North Star strategy, including becoming a nimbler organization that is equipped to adapt to market conditions and continue to deliver against expectations, including our guidance of positive Adjusted EBITDA for the second-half of fiscal 2023.”
Total Company Results
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. Additionally, to gauge sales growth and progress against more "normalized" or pre-pandemic results, the Company will rely more heavily on measuring performance of fiscal 2023 sales growth versus the pre-pandemic twelve-month period that ended March 31, 2020 ("fiscal 2020") to guide business strategy, rather than measuring performance against the atypical, outsized results that occurred during the pandemic.
Fiscal 2023 First Quarter Ended June 30, 2022 Compared to June 30, 2021
1 See “Reconciliation of Non-GAAP Financial Measures” for more information
JRNY® Update
Segment Results
Fiscal 2023 First Quarter Ended June 30, 2022 Compared to June 30, 2021
Direct Segment
Retail Segment
Balance Sheet and Other Key Highlights as of June 30, 2022:
Forward Looking Guidance
The following forward-looking statements reflect the Company's full fiscal year 2023 expectations as of August 9, 2022 and are subject to risks and uncertainties.
Second Half and Full Year 2023
(1) We provide 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. We are 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, we do not provide a reconciliation of projected net income to projected Adjusted EBITDA.
Conference Call
Nautilus will discuss our fiscal 2023 first quarter ended June 30, 2022 operating results during a live conference call and webcast on Tuesday, August 9, 2022 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, 2022 through 8:59 p.m. PT, August 23, 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 10169445.
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, 2022 and 2021 (unaudited and in thousands, except per share amounts):
Three-Months Ended June 30,
2022
2021
Net sales
$
54,817
$
184,593
Cost of sales
47,860
129,088
Gross profit
6,957
55,505
Operating expenses:
Selling and marketing
12,891
21,300
General and administrative
12,463
11,523
Research and development
5,823
4,815
Goodwill and intangible impairment charge
26,965
—
Total operating expenses
58,142
37,638
Operating (loss) income
(51,185
)
17,867
Other expense, net
(889
)
(413
)
(Loss) income from continuing operations before income taxes
(52,074
)
17,454
Income tax expense
8,096
3,438
(Loss) income from continuing operations
(60,170
)
14,016
Loss from discontinued operations, net of income taxes
(7
)
(132
)
Net (loss) income
$
(60,177
)
$
13,884
Basic (loss) income per share from continuing operations
$
(1.92
)
$
0.46
Basic loss per share from discontinued operations
—
(0.01
)
Basic net (loss) income per share
$
(1.92
)
$
0.45
Diluted (loss) income per share from continuing operations
$
(1.92
)
$
0.43
Diluted loss per share from discontinued operations
—
—
Diluted net (loss) income per share
$
(1.92
)
$
0.43
Shares used in per share calculations:
Basic
31,405
30,697
Diluted
31,405
32,508
Select Metrics:
Gross margin
12.7
%
30.1
%
Selling and marketing % of net sales
23.5
%
11.5
%
General and administrative % of net sales
22.7
%
6.2
%
Research and development % of net sales
10.6
%
2.6
%
Operating (loss) income % of net sales
(93.4
) %
9.7
%
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, 2022 and 2021 (unaudited and in thousands):
Three-Months Ended June 30,
Change
2022
2021
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
17,133
$
31,430
$
(14,297
)
(45.5
) %
Strength products(2)
9,343
31,966
(22,623
)
(70.8
) %
Direct
26,476
63,396
(36,920
)
(58.2
) %
Retail net sales:
Cardio products(1)
11,843
89,924
(78,081
)
(86.8
) %
Strength products(2)
15,601
30,560
(14,959
)
(48.9
) %
Retail
27,444
120,484
(93,040
)
(77.2
) %
Royalty
897
713
184
25.8
%
Consolidated net sales
$
54,817
$
184,593
$
(129,776
)
(70.3
) %
Gross profit:
Direct
$
4,562
$
24,514
$
(19,952
)
(81.4
) %
Retail
1,498
30,278
(28,780
)
(95.1
) %
Royalty
897
713
184
25.8
%
Consolidated gross profit
$
6,957
$
55,505
$
(48,548
)
(87.5
) %
Gross margin:
Direct
17.2
%
38.7
%
(2,150
)
basis points
Retail
5.5
%
25.1
%
(1,960
)
basis points
Contribution:
Direct
$
(9,893
)
$
6,759
$
(16,652
)
(246.4
) %
Retail
(5,408
)
22,090
(27,498
)
(124.5
) %
Royalty
897
713
184
25.8
%
Consolidated contribution
$
(14,404
)
$
29,562
$
(43,966
)
(148.7
) %
Reconciliation of consolidated contribution to (loss) income from continuing operations:
Consolidated contribution
$
(14,404
)
$
29,562
$
(43,966
)
(148.7
) %
Amounts not directly related to segments:
Operating expenses
(36,781
)
(11,695
)
(25,086
)
(214.5
) %
Other expense, net
(889
)
(413
)
(476
)
(115.3
) %
Income tax benefit (expense)
(8,096
)
(3,438
)
(4,658
)
(135.5
) %
(Loss) income from continuing operations
$
(60,170
)
$
14,016
$
(74,186
)
(529.3
) %
(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, 2022 and March 31, 2022 (unaudited and in thousands):
As of
June 30, 2022
March 31, 2022
Assets
Cash and cash equivalents
$
7,311
$
12,872
Restricted cash
1,339
1,339
Available-for-sale securities
—
—
Trade receivables, net of allowances
27,450
61,454
Inventories
103,932
111,190
Prepaids and other current assets
11,979
14,546
Other current assets - restricted, current
3,887
3,887
Income taxes receivable
1,721
1,998
Total current assets
157,619
207,286
Property, plant and equipment, net
33,185
32,129
Operating lease right-of-use assets
22,353
23,620
Goodwill
—
24,510
Other intangible assets, net
6,833
9,304
Deferred income tax assets, non-current
809
8,760
Income taxes receivable, non-current
5,673
5,673
Other assets
2,666
2,763
Total assets
$
229,138
$
314,045
Liabilities and Shareholders' Equity
Trade payables
$
26,764
$
53,165
Accrued liabilities
24,420
29,386
Operating lease liabilities, current portion
4,316
4,494
Finance lease liabilities, current portion
120
119
Warranty obligations, current portion
3,955
4,968
Income taxes payable, current portion
720
839
Debt payable, current portion, net of unamortized debt issuance costs
2,243
2,243
Total current liabilities
62,538
95,214
Operating lease liabilities, non-current
19,778
20,926
Finance lease liabilities, non-current
367
395
Warranty obligations, non-current
1,041
1,248
Income taxes payable, non-current
4,054
4,029
Deferred income tax liabilities, non-current
500
—
Other non-current liabilities
1,270
1,071
Debt payable, non-current, net of unamortized debt issuance costs
34,743
27,113
Shareholders' equity
104,847
164,049
Total liabilities and shareholders' equity
$
229,138
$
314,045
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 non-cash charge related to goodwill and intangible asset impairment. 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. 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 goodwill and intangible asset impairment, stock-based compensation expense, and other expenses, net. 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.
The following table presents a reconciliation of operating expenses, the most directly comparable GAAP measure, to Adjusted operating expenses for the three-month period ended June 30, 2022 and 2021 (unaudited and in thousands):
Three-Months Ended June 30,
2022
2021
Operating expenses
$
58,142
$
37,638
Goodwill and intangible impairment charge(1)
(26,965
)
—
Adjusted operating expenses
$
31,177
$
37,638
The following table presents a reconciliation of operating (loss) income, the most directly comparable GAAP measure, to Adjusted operating (loss) income for the three-month period ended June 30, 2022 and 2021 (unaudited and in thousands):
Three-Months Ended June 30,
2022
2021
Operating (loss) income
$
(51,185
)
$
17,867
Goodwill and intangible impairment charge(1)
26,965
—
Adjusted operating (loss) income
$
(24,220
)
$
17,867
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-month period ended June 30, 2022 and 2021 (unaudited and in thousands):
Three-Months Ended June 30,
2022
2021
(Loss) income from continuing operations
$
(60,170
)
$
14,016
Other expense, net
889
413
Income tax expense from continuing operations
8,096
3,438
Depreciation and amortization
2,306
2,054
Stock-based compensation expense
1,979
1,225
Goodwill and intangible impairment charge(1)
26,965
—
Adjusted (loss) earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) from continuing operations
$
(19,935
)
$
21,146
(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. While our stock price and related market capitalization remained above our reporting unit carrying values as of March 31, 2022, we observed continued market volatility including significant declines in our market capitalization during the three-month period ended June 30, 2022, identified as a 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220809005969/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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