First Quarter 2020 Sales Increase by
Approximately 11%, Driven by Strength of Bowflex and Schwinn
Brands
Retail Segment Delivers Strong Sales Growth
and Direct Segment Breaks Negative Streak
Company Raises First Quarter 2020
Guidance
Nautilus, Inc. (NYSE: NLS) today reported preliminary first
quarter 2020 sales results and offered a brief business update
given the unprecedented environment related to the coronavirus
disease 2019 (“COVID-19”).
First Quarter 2020 Preliminary Net Sales Results
Preliminary net sales for the first quarter of 2020 were
approximately $94 million, up 11% versus the same quarter in 2019,
the first time quarterly sales have grown year-over-year since Q3,
2018. This increase was driven by the power of the Bowflex and
Schwinn brands, recent strategic and operational changes,
disciplined execution, and a near-term trend toward home
fitness.
Segment Sales
Direct Segment
- Preliminary Q1, 2020 net sales were approximately $47 million,
up 1% compared to Q1 2019. This is the first quarter of
year-over-year sales growth for the Direct segment since Q4, 2017.
Top-selling direct-to-consumer items like the Bowflex® SelectTech®
dumbbells and kettlebells and the Bowflex® C6 and Schwinn® IC4
bikes more than offset lower Max Trainer® sales. Both the Bowflex
C6 and Schwinn IC4 connected-fitness bikes have been popular with
consumers since they were first introduced in October 2019.
Retail Segment
- Preliminary Q1, 2020 net sales were approximately $46 million,
up 24% compared to Q1 2019. Strong sales of Bowflex and Schwinn
home fitness products more than offset weaker performance in the
Octane Fitness commercial line. Like the Direct segment, the Retail
segment was boosted by strong demand for Bowflex SelectTech 552
adjustable weights and Schwinn IC4 connected-fitness bikes.
Although numerous retailers have temporarily closed store locations
due to COVID-19, Bowflex and Schwinn experienced strong
year-over-year sales increases through retail partners’ ecommerce
and curbside pick-up platforms.
In addition to meeting strong customer demand, Nautilus is
focused on the health and welfare of its employees. Before
government orders were in place in the jurisdictions where Nautilus
conducts business, the Company implemented its work from home
policies for most employees world-wide, while continuing to provide
leading customer care for Direct and Retail customers. The
Company’s distribution centers remain open for both receiving and
shipping with strict guidelines on social distancing and worker
health and safety protocols.
Manufacturing and Supply Chain
A significant volume of Nautilus products is manufactured in
China and most workers in the factories the Company utilizes have
returned to work. Further, ground transportation to the ports, and
shipping capabilities from China are improving daily. Management is
working closely with partners across its entire supply chain to
improve production and delivery timelines and has expedited
deliveries to the U.S. and Europe to meet increased customer
demand.
Management Comments
Jim Barr, Chief Executive Officer of Nautilus Inc., noted, “The
power of our trusted brands, quality products, and strong execution
in sales, marketing, and supply chain fueled significant growth and
strong results in Q1. COVID-19 has created a heightened need for
home-fitness products and our company was able to meet customer
demand well, through both the Direct and Retail segments. We
reversed five quarters of year-over-year sales declines and
delivered sales growth of 11% in Q1, 2020 as customers gravitated
to key products like the Bowflex SelectTech dumbbells, Bowflex C6
bike, and the Schwinn IC4 bike. Demand for many of our home-fitness
products continues to outpace supply and we are pulling all levers
to accelerate the manufacturing and delivery of key products. Our
better than expected EBITDA is the result, in part, of the
strategic and operational improvements we’ve made recently,
combined with a dedicated and engaged employee base focused on
consistent execution.
While these short-term results have exceeded expectations, it is
prudent to realize the coming quarters may present added challenges
for all businesses as we better understand the longer-term impacts
of COVID-19. Short-term, it may remain a significant challenge to
fully match the unplanned surge in demand with supply. Looking to
the long term, like many companies, we will be evaluating the
potential impact and duration of the pandemic on the overall
macro-economic environment.”
Mr. Barr continued, “Our management team is very proud of our
employees and how they faced this current adversity. We rapidly and
profoundly changed our historical working model, well ahead of
government mandates, and have created new solutions to ensure we
are meeting our customers’ enhanced needs. Our supply chain and
front-line customer care teams have been handling holiday-level
volumes with very little time to prepare. I want to thank our
employees and partners for their amazing efforts and for coming
together as a team for our customers. We believe this challenge has
brought out the best in our company, further demonstrating our
resolve, resilience, and agility, qualities that make us stronger,
and will serve us well in our efforts to return to long-term
profitable growth.”
Raising First Quarter 2020 Guidance
The Company now expects EBITDA from continuing operations to be
in the range of $0.0 million to positive $1.5 million. This
information is preliminary and based upon information available as
of the date of this release. While preliminary Q1 results have
exceeded expectations, it is prudent to realize the coming quarters
may present added challenges for Nautilus and other businesses as
the longer-term impacts of COVID-19 are highly uncertain and cannot
be predicted with confidence.
The Company does not plan to release preliminary financial
information on an ongoing basis.
Liquidity
As of March 31, 2020, the Company had cash and cash equivalents
of $26.5 million and debt of $28.0 million, compared to cash and
cash equivalents of $11.1 million and debt of $14.1 million as of
December 31, 2019. The Company had $19.3 million available for
borrowing on its line of credit as of March 31, 2020.
The amounts and financial results described in this press
release reflect the Company’s estimates based solely upon
information available to it as of the date of this press release,
which are not a comprehensive statement of its financial results or
position as of March 31, 2020, and have not been reviewed or
compiled by the Company’s independent registered public accounting
firm. The actual amounts that the Company reports will be subject
to its financial closing procedures and any final adjustments that
may be made prior to the time its financial results for the period
ended March 31, 2020 are finalized.
First Quarter Earnings Results Conference Call
Nautilus will host a conference call at 4:30 p.m. ET (1:30 p.m.
PT) on Tuesday, May 5, 2020 to discuss the Company’s operating
results for the first quarter ended March 31, 2020. The call will
be broadcast live via the Internet hosted at
http://www.nautilusinc.com/events and will be archived online
within one hour after completion of the call. In addition,
listeners may call (877) 425-9470 in North America and
international listeners may call (201) 389-0878. Participants from
the Company will include Jim Barr, Chief Executive Officer, Aina
Konold, Chief Financial Officer, and Bill McMahon, Special
Assistant to the CEO.
A telephonic playback will be available from 7:30 p.m. ET, May
5, 2020 through 11:59 p.m. ET, May 19, 2020. 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 13701186.
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.
We have not reconciled guidance for non-GAAP financial measures
to our most directly comparable GAAP measures because certain items
that impact these measures are uncertain, out of our control and/or
cannot be reasonably predicted or estimated at this time, such as
net/income tax or benefit from continuing operations. Accordingly,
a reconciliation of the non-GAAP financial measure guidance to the
corresponding GAAP measures is not available without unreasonable
effort.
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.
About Nautilus, Inc.
Headquartered in Vancouver, Washington, Nautilus, Inc. (NYSE:
NLS) is a global technology driven fitness solutions company that
believes everyone deserves a fit and healthy life. With a brand
portfolio including Bowflex®, Nautilus®, Octane Fitness® and
Schwinn®, Nautilus, Inc. develops innovative products to support
healthy living through direct and retail channels as well as in
commercial channels. 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:
estimated, projected or forecasted financial and operating results
for the first quarter of 2020, the expected impact of the COVID-19
pandemic on our operations and results; anticipated demand for the
Company's new and existing products; and statements regarding the
Company's prospects, resources or capabilities; planned
investments, strategic initiatives and the anticipated or targeted
results of such initiatives. Factors that could cause Nautilus,
Inc.’s actual results to differ materially from these
forward-looking statements 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; an inability to pass along or
otherwise mitigate the impact of raw material price increases and
other cost pressures, including unfavorable currency exchange
rates; 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; and softness in
the retail marketplace. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200408005709/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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