Fiscal Year 2022 Net Sales were $590M up 85% versus Fiscal Year 2020
Net Sales of $120M for Q4 Fiscal 2022 up 28% vs Q4 Fiscal 2020 or 41% Excluding Octane
JRNY®Total Members Now Over 325k, more than 7x versus Fiscal Year 2020
Company Expects to exceed 500k JRNY® Total Members at Fiscal Year End 2023 and Achieve Positive Adjusted EBITDA for Second Half Fiscal Year 2023
VANCOUVER, Wash.--(BUSINESS WIRE)-- The last bullet under the section heading "Second Half and Full Year 2023" should read: ...at March 31, 2023 (instead of ...at March 31, 2022).
The updated release reads:
BOWFLEX MAKER NAUTILUS, INC. REPORTS FOURTH QUARTER AND FULL FISCAL YEAR 2022 RESULTS; PROVIDES FULL FISCAL YEAR 2023 GUIDANCE
Fiscal Year 2022 Net Sales were $590M up 85% versus Fiscal Year 2020
Net Sales of $120M for Q4 Fiscal 2022 up 28% vs Q4 Fiscal 2020 or 41% Excluding Octane
JRNY®Total Members Now Over 325k, more than 7x versus Fiscal Year 2020
Company Expects to exceed 500k JRNY® Total Members at Fiscal Year End 2023 and Achieve Positive Adjusted EBITDA for Second Half Fiscal Year 2023
Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the fiscal 2022 fourth quarter and for the twelve-months ended March 31, 2022.
Management Comments
“We continue to successfully execute on our multi-year plan of transforming Nautilus into a leading digitally enabled at-home fitness company. Fiscal year and fourth quarter performance was strong. Our strategic decision to pull forward key technology and marketing investments is paying off, as we have increased JRNY® members to over 325,000 at year-end, exceeding our initial expectations by 30%. Our diversified omnichannel strength and cardio offerings enabled us to meet fourth quarter demand, with revenue up 41% compared to the same period in 2020,” said Jim Barr, Nautilus, Inc. Chief Executive Officer.
“Year one of our North Star strategy is complete and our transformation is well on track. The foundation has been set, including harnessing a culture of innovation, establishing key third-party partnerships, and evolving our manufacturing and distribution capabilities to meet consumer demand. These advancements will allow us to successfully navigate the current operating environment. We are committed to balancing continued growth investments with an efficient cost structure to drive both our transformation and put us on a path to deliver positive adjusted EBITDA1 during the second-half of fiscal 2023.”
Company Results
Fiscal 2022 Fourth Quarter Ended March 31, 2022 Compared to Three-Months Ended March 31, 2021
1 See “Reconciliation of Non-GAAP Financial Measures” for more information |
Twelve-Months Ended March 31, 2022 Compared to Twelve-Months Ended March 31, 2021
2 See “Reconciliation of Non-GAAP Financial Measures” and “Loss on Disposal Group” for more information |
JRNY®Update
3 The Company defines JRNY® Members as all individuals who have a JRNY® account and/or subscription, which includes Subscribers, their respective associated users and users who consume free content. |
|
4 The Company defines JRNY® Subscriptions as a person or household, who paid for a Subscription (via a successful credit card billing or with prepaid subscription credits or waivers), or are in a trial, or has requested a "pause" to their subscription for up to 3 months. |
Segment Results
Fiscal 2022 Fourth Quarter Ended March 31, 2022 Compared to March 31, 2021
Direct Segment
Retail Segment
Comparison of Segment Results for the Twelve-Month Period Ended March 31, 2022 to the Twelve-Month Period Ended March 31, 2021
Direct Segment
Retail Segment
Balance Sheet and Other Key Highlights as ofMarch 31, 2022:
Forward Looking Guidance
Fiscal Q1 2023
Second Half and Full Year 2023
Conference Call
Nautilus will discuss our fiscal 2022 fourth quarter ended March 31, 2022 operating results during a live conference call and webcast on Monday, May 23, 2022 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, May 23, 2022 through 8:59 p.m. PT, June 6, 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 13728250.
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 and twelve-month periods ended March 31, 2022 and 2021 (unaudited and in thousands, except per share amounts):
| Three-Months Ended March 31, |
| Twelve-Months Ended March 31, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||||
Net sales | $ | 119,724 |
|
| $ | 206,075 |
|
| $ | 589,534 |
|
| $ | 664,913 |
|
Cost of sales |
| 98,741 |
|
|
| 126,984 |
|
|
| 441,077 |
|
|
| 392,617 |
|
Gross profit |
| 20,983 |
|
|
| 79,091 |
|
|
| 148,457 |
|
|
| 272,296 |
|
Operating expenses: |
|
|
|
|
|
|
| ||||||||
Selling and marketing |
| 23,570 |
|
|
| 23,480 |
|
|
| 99,204 |
|
|
| 77,131 |
|
General and administrative |
| 12,428 |
|
|
| 12,060 |
|
|
| 51,783 |
|
|
| 40,580 |
|
Research and development |
| 6,904 |
|
|
| 3,843 |
|
|
| 22,786 |
|
|
| 15,840 |
|
Loss on disposal group |
| — |
|
|
| — |
|
|
| — |
|
|
| 20,668 |
|
Total operating expenses |
| 42,902 |
|
|
| 39,383 |
|
|
| 173,773 |
|
|
| 154,219 |
|
|
|
|
|
|
|
|
| ||||||||
Operating (loss) income |
| (21,919 | ) |
|
| 39,708 |
|
|
| (25,316 | ) |
|
| 118,077 |
|
Other expense, net |
| (984 | ) |
|
| (1,532 | ) |
|
| (2,914 | ) |
|
| (6,022 | ) |
(Loss) income from continuing operations before income taxes |
| (22,903 | ) |
|
| 38,176 |
|
|
| (28,230 | ) |
|
| 112,055 |
|
Income tax (benefit) expense |
| (4,705 | ) |
|
| 7,595 |
|
|
| (6,026 | ) |
|
| 23,239 |
|
(Loss) income from continuing operations |
| (18,198 | ) |
|
| 30,581 |
|
|
| (22,204 | ) |
|
| 88,816 |
|
Loss from discontinued operations, net of income taxes |
| (16 | ) |
|
| (177 | ) |
|
| (227 | ) |
|
| (748 | ) |
Net (loss) income | $ | (18,214 | ) |
| $ | 30,404 |
|
| $ | (22,431 | ) |
| $ | 88,068 |
|
|
|
|
|
|
|
|
| ||||||||
Basic (loss) income per share from continuing operations | $ | (0.58 | ) |
| $ | 1.01 |
|
| $ | (0.72 | ) |
| $ | 2.94 |
|
Basic loss per share from discontinued operations |
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.02 | ) |
Basic net (loss) income per share | $ | (0.58 | ) |
| $ | 1.00 |
|
| $ | (0.72 | ) |
| $ | 2.92 |
|
|
|
|
|
|
|
|
| ||||||||
Diluted (loss) income per share from continuing operations | $ | (0.58 | ) |
| $ | 0.94 |
|
| $ | (0.72 | ) |
| $ | 2.81 |
|
Diluted loss per share from discontinued operations |
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.03 | ) |
Diluted net (loss) income per share | $ | (0.58 | ) |
| $ | 0.93 |
|
| $ | (0.72 | ) |
| $ | 2.78 |
|
|
|
|
|
|
|
|
| ||||||||
Shares used in per share calculations: |
|
|
|
|
|
|
| ||||||||
Basic |
| 31,256 |
|
|
| 30,416 |
|
|
| 31,029 |
|
|
| 30,161 |
|
Diluted |
| 31,256 |
|
|
| 32,642 |
|
|
| 31,029 |
|
|
| 31,660 |
|
|
|
|
|
|
|
|
| ||||||||
Select Metrics: |
|
|
|
|
|
|
| ||||||||
Gross margin |
| 17.5 | % |
|
| 38.4 | % |
|
| 25.2 | % |
|
| 41.0 | % |
Selling and marketing % of net sales |
| 19.7 | % |
|
| 11.4 | % |
|
| 16.8 | % |
|
| 11.6 | % |
General and administrative % of net sales |
| 10.4 | % |
|
| 5.9 | % |
|
| 8.8 | % |
|
| 6.1 | % |
Research and development % of net sales |
| 5.8 | % |
|
| 1.9 | % |
|
| 3.9 | % |
|
| 2.4 | % |
Operating (loss) income % of net sales |
| (18.3 | )% |
|
| 19.3 | % |
|
| (4.3 | )% |
|
| 17.8 | % |
SEGMENT INFORMATION
The following tables present certain comparative information by segment and major product lines within each business segment for the three and twelve-months ended March 31, 2022 and 2021 (unaudited and in thousands):
| Three-Months Ended March 31, |
| Change | |||||||||||
| 2022 |
| 2021 |
| $ |
| % | |||||||
Net sales: |
|
|
|
|
|
|
| |||||||
Direct net sales: |
|
|
|
|
|
|
| |||||||
Cardio products(1) | $ | 39,156 |
|
| $ | 70,148 |
|
| $ | (30,992 | ) |
| (44.2 | )% |
Strength products(2) |
| 20,616 |
|
|
| 31,389 |
|
|
| (10,773 | ) |
| (34.3 | )% |
Direct |
| 59,772 |
|
|
| 101,537 |
|
|
| (41,765 | ) |
| (41.1 | )% |
|
|
|
|
|
|
|
| |||||||
Retail net sales: |
|
|
|
|
|
|
| |||||||
Cardio products(1) |
| 23,020 |
|
|
| 70,907 |
|
|
| (47,887 | ) |
| (67.5 | )% |
Strength products(2) |
| 35,711 |
|
|
| 32,528 |
|
|
| 3,183 |
|
| 9.8 | % |
Retail |
| 58,731 |
|
|
| 103,435 |
|
|
| (44,704 | ) |
| (43.2 | )% |
|
|
|
|
|
|
|
| |||||||
Royalty |
| 1,221 |
|
|
| 1,103 |
|
|
| 118 |
|
| 10.7 | % |
Consolidated net sales | $ | 119,724 |
|
| $ | 206,075 |
|
| $ | (86,351 | ) |
| (41.9 | )% |
|
|
|
|
|
|
|
| |||||||
Gross profit: |
|
|
|
|
|
|
| |||||||
Direct | $ | 11,519 |
|
| $ | 51,046 |
|
| $ | (39,527 | ) |
| (77.4 | )% |
Retail |
| 8,243 |
|
|
| 26,942 |
|
|
| (18,699 | ) |
| (69.4 | )% |
Royalty |
| 1,221 |
|
|
| 1,103 |
|
|
| 118 |
|
| 10.7 | % |
Consolidated gross profit | $ | 20,983 |
|
| $ | 79,091 |
|
| $ | (58,108 | ) |
| (73.5 | )% |
|
|
|
|
|
|
|
| |||||||
Gross margin: |
|
|
|
|
|
|
| |||||||
Direct |
| 19.3 | % |
|
| 50.3 | % |
|
| (3,100 | ) | basis points | ||
Retail |
| 14.0 | % |
|
| 26.0 | % |
|
| (1,200 | ) | basis points | ||
|
|
|
|
|
|
|
| |||||||
Contribution: |
|
|
|
|
|
|
| |||||||
Direct | $ | (11,655 | ) |
| $ | 27,846 |
|
| $ | (39,501 | ) |
| (141.9 | )% |
Retail |
| 730 |
|
|
| 20,348 |
|
|
| (19,618 | ) |
| (96.4 | )% |
Royalty |
| 1,221 |
|
|
| 1,103 |
|
|
| 118 |
|
| 10.7 | % |
Consolidated contribution | $ | (9,704 | ) |
| $ | 49,297 |
|
| $ | (59,001 | ) |
| (119.7 | )% |
|
|
|
|
|
|
|
| |||||||
Reconciliation of consolidated contribution to (loss) income from continuing operations: |
|
| ||||||||||||
Consolidated contribution | $ | (9,704 | ) |
| $ | 49,297 |
|
| $ | (59,001 | ) |
| (119.7 | )% |
Amounts not directly related to segments: |
|
|
|
|
|
|
| |||||||
Operating expenses |
| (12,215 | ) |
|
| (9,589 | ) |
|
| (2,626 | ) |
| (27.4 | )% |
Other expense, net |
| (984 | ) |
|
| (1,532 | ) |
|
| 548 |
|
| 35.8 | % |
Income tax benefit (expense) |
| 4,705 |
|
|
| (7,595 | ) |
|
| 12,300 |
|
| 161.9 | % |
(Loss) income from continuing operations | $ | (18,198 | ) |
| $ | 30,581 |
|
| $ | (48,779 | ) |
| (159.5 | )% |
|
|
|
|
|
|
|
| |||||||
(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. |
|
|
|
|
|
|
|
| |||||||
| Twelve-Months Ended March 31, |
| Change | |||||||||||
| 2022 |
| 2021 |
| $ |
| % | |||||||
Net sales: |
|
|
|
|
|
|
| |||||||
Direct net sales: |
|
|
|
|
|
|
| |||||||
Cardio products(1) | $ | 128,550 |
|
| $ | 212,887 |
|
| $ | (84,337 | ) |
| (39.6 | )% |
Strength products(2) |
| 93,176 |
|
|
| 82,435 |
|
|
| 10,741 |
|
| 13.0 | % |
Direct |
| 221,726 |
|
|
| 295,322 |
|
|
| (73,596 | ) |
| (24.9 | )% |
|
|
|
|
|
|
|
| |||||||
Retail net sales: |
|
|
|
|
|
|
| |||||||
Cardio products(1) |
| 208,991 |
|
|
| 270,097 |
|
|
| (61,106 | ) |
| (22.6 | )% |
Strength products(2) |
| 155,078 |
|
|
| 95,761 |
|
|
| 59,317 |
|
| 61.9 | % |
Retail |
| 364,069 |
|
|
| 365,858 |
|
|
| (1,789 | ) |
| (0.5 | )% |
|
|
|
|
|
|
|
| |||||||
Royalty |
| 3,739 |
|
|
| 3,733 |
|
|
| 6 |
|
| 0.2 | % |
Consolidated net sales | $ | 589,534 |
|
| $ | 664,913 |
|
| $ | (75,379 | ) |
| (11.3 | )% |
|
|
|
|
|
|
|
| |||||||
Gross profit: |
|
|
|
|
|
|
| |||||||
Direct | $ | 68,117 |
|
| $ | 157,562 |
|
| $ | (89,445 | ) |
| (56.8 | )% |
Retail |
| 76,601 |
|
|
| 111,001 |
|
|
| (34,400 | ) |
| (31.0 | )% |
Royalty |
| 3,739 |
|
|
| 3,733 |
|
|
| 6 |
|
| 0.2 | % |
Consolidated gross profit | $ | 148,457 |
|
| $ | 272,296 |
|
| $ | (123,839 | ) |
| (45.5 | )% |
|
|
|
|
|
|
|
| |||||||
Gross margin: |
|
|
|
|
|
|
| |||||||
Direct |
| 30.7 | % |
|
| 53.4 | % |
|
| (2,270 | ) | basis points | ||
Retail |
| 21.0 | % |
|
| 30.3 | % |
|
| (930 | ) | basis points | ||
|
|
|
|
|
|
|
| |||||||
Contribution: |
|
|
|
|
|
|
| |||||||
Direct | $ | (15,711 | ) |
| $ | 86,013 |
|
| $ | (101,724 | ) |
| (118.3 | )% |
Retail |
| 44,831 |
|
|
| 80,741 |
|
|
| (35,910 | ) |
| (44.5 | )% |
Royalty |
| 3,739 |
|
|
| 3,733 |
|
|
| 6 |
|
| 0.2 | % |
Consolidated contribution | $ | 32,859 |
|
| $ | 170,487 |
|
| $ | (137,628 | ) |
| (80.7 | )% |
|
|
|
|
|
|
|
| |||||||
Reconciliation of consolidated contribution to (loss) income from continuing operations: |
|
| ||||||||||||
Consolidated contribution | $ | 32,859 |
|
| $ | 170,487 |
|
| $ | (137,628 | ) |
| (80.7 | )% |
Amounts not directly related to segments: |
|
|
|
|
|
|
| |||||||
Operating expenses |
| (58,175 | ) |
|
| (52,410 | ) |
|
| (5,765 | ) |
| (11.0 | )% |
Other expense, net |
| (2,914 | ) |
|
| (6,022 | ) |
|
| 3,108 |
|
| 51.6 | % |
Income tax benefit (expense) |
| 6,026 |
|
|
| (23,239 | ) |
|
| 29,265 |
|
| 125.9 | % |
(Loss) income from continuing operations | $ | (22,204 | ) |
| $ | 88,816 |
|
| $ | (111,020 | ) |
| (125.0 | )% |
|
|
|
|
|
|
|
| |||||||
(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 March 31, 2022 and March 31, 2021 (unaudited and in thousands):
| As of | ||||
| March 31, 2022 |
| March 31, 2021 | ||
Assets |
|
|
| ||
|
|
|
| ||
Cash and cash equivalents | $ | 12,872 |
| $ | 38,441 |
Restricted cash |
| 1,339 |
|
| 1,339 |
Available-for-sale securities |
| — |
|
| 73,448 |
Trade receivables, net of allowances |
| 61,454 |
|
| 88,657 |
Inventories |
| 111,190 |
|
| 68,085 |
Prepaids and other current assets |
| 14,546 |
|
| 25,840 |
Income taxes receivable |
| 1,998 |
|
| — |
Other assets – restricted, non-current |
| 3,887 |
|
| — |
Total current assets |
| 207,286 |
|
| 295,810 |
Property, plant and equipment, net |
| 32,129 |
|
| 24,496 |
Operating lease right-of-use assets |
| 23,620 |
|
| 19,108 |
Goodwill |
| 24,510 |
|
| — |
Other intangible assets, net |
| 9,304 |
|
| 9,365 |
Deferred income tax assets, non-current |
| 8,760 |
|
| 2,144 |
Income taxes receivable, non-current |
| 5,673 |
|
| — |
Other assets |
| 2,763 |
|
| 3,307 |
Total assets | $ | 314,045 |
| $ | 354,230 |
|
|
|
| ||
Liabilities and Shareholders' Equity |
|
|
| ||
|
|
|
| ||
Trade payables | $ | 53,165 |
| $ | 98,878 |
Accrued liabilities |
| 29,386 |
|
| 19,627 |
Operating lease liabilities, current portion |
| 4,494 |
|
| 3,384 |
Finance lease liabilities, current portion |
| 119 |
|
| — |
Warranty obligations, current portion |
| 4,968 |
|
| 7,243 |
Income taxes payable, current portion |
| 839 |
|
| 5,709 |
Debt payable, current portion, net of unamortized debt issuance costs |
| 2,243 |
|
| 3,000 |
Total current liabilities |
| 95,214 |
|
| 137,841 |
Operating lease liabilities, non-current |
| 20,926 |
|
| 17,875 |
Finance lease liabilities, non-current |
| 395 |
|
| — |
Warranty obligations, non-current |
| 1,248 |
|
| 1,408 |
Income taxes payable, non-current |
| 4,029 |
|
| 3,657 |
Other non-current liabilities |
| 1,071 |
|
| 607 |
Debt payable, non-current, net of unamortized debt issuance costs |
| 27,113 |
|
| 10,297 |
Shareholders' equity |
| 164,049 |
|
| 182,545 |
Total liabilities and shareholders' equity | $ | 314,045 |
| $ | 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.
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 disposal group held-for-sale of Octane Fitness®, legal settlements and acquisition and other related costs. 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. We may periodically incur charges or receive payments in connection with litigation settlements. We exclude these charges and legal settlements from non-GAAP when associated with a significant settlement because we do not believe they are reflective of ongoing business and operating results. We exclude certain expense items resulting from acquisitions, such as legal, accounting and advisory fees, deferred compensation and retention expense. 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 loss on disposal group, stock-based compensation expense, legal settlements, other expenses, net, and acquisition and other related costs. 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.
We do not reconcile non-GAAP financial measures on a forward-looking basis as it is impractical to do so without unreasonable effort.
The following table presents a reconciliation of operating expenses, the most directly comparable GAAP measure, to Adjusted operating expenses for the three and twelve-month periods ended March 31, 2022 and 2021 (unaudited and in thousands):
|
|
|
|
|
|
|
| |||||||
| Three-Months Ended March 31, |
| Twelve-Months Ended March 31, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||||
Operating expenses | $ | 42,902 |
|
| $ | 39,383 |
| $ | 173,773 |
|
| $ | 154,219 |
|
Loss on disposal group(1) |
| — |
|
|
| — |
|
| — |
|
|
| (20,668 | ) |
Legal settlement |
| — |
|
|
| — |
|
| (4,665 | ) |
|
| — |
|
Acquisition and other related costs |
| (770 | ) |
|
| — |
|
| (2,448 | ) |
|
| — |
|
Adjusted operating expenses | $ | 42,132 |
|
| $ | 39,383 |
| $ | 166,660 |
|
| $ | 133,551 |
|
The following table presents a reconciliation of operating (loss) income, the most directly comparable GAAP measure, to Adjusted operating (loss) income for the three and twelve-month periods ended March 31, 2022 and 2021 (unaudited and in thousands):
|
|
|
|
|
|
|
| ||||||
| Three-Months Ended March 31, |
| Twelve-Months Ended March 31, | ||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||
Operating (loss) income | $ | (21,919 | ) |
| $ | 39,708 |
| $ | (25,316 | ) |
| $ | 118,077 |
Loss on disposal group(1) |
| — |
|
|
| — |
|
| — |
|
|
| 20,668 |
Legal settlement |
| — |
|
|
| — |
|
| 4,665 |
|
|
| — |
Acquisition and other related costs |
| 770 |
|
|
| — |
|
| 2,448 |
|
|
| — |
Adjusted operating (loss) income | $ | (21,149 | ) |
| $ | 39,708 |
| $ | (18,203 | ) |
| $ | 138,745 |
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 and twelve-month periods ended March 31, 2022 and 2021 (unaudited and in thousands):
|
|
|
|
|
|
|
| ||||||
| Three-Months Ended March 31, |
| Twelve-Months Ended March 31, | ||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||
(Loss) income from continuing operations | $ | (18,198 | ) |
| $ | 30,581 |
| $ | (22,204 | ) |
| $ | 88,816 |
Other expense, net |
| 984 |
|
|
| 1,532 |
|
| 2,914 |
|
|
| 6,022 |
Income tax (benefit) expense from continuing operations |
| (4,705 | ) |
|
| 7,595 |
|
| (6,026 | ) |
|
| 23,239 |
Depreciation and amortization |
| 2,628 |
|
|
| 2,017 |
|
| 8,615 |
|
|
| 8,655 |
Loss on disposal group(1) |
| — |
|
|
| — |
|
| — |
|
|
| 20,668 |
Stock-based compensation expense |
| 1,651 |
|
|
| 1,172 |
|
| 6,262 |
|
|
| 4,342 |
Legal settlement |
| — |
|
|
| — |
|
| 4,665 |
|
|
| — |
Acquisition and other related costs |
| 770 |
|
|
| — |
|
| 2,448 |
|
|
| — |
Adjusted (loss) earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) from continuing operations | $ | (16,870 | ) |
| $ | 42,897 |
| $ | (3,326 | ) |
| $ | 151,742 |
(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/20220523005920/en/
Investor Relations: John MillsICR, LLC 646-277-1254 John.mills@icrinc.com Media: John FreadNautilus, Inc 360-859-5815 jfread@nautilus.com Carey Kerns The Hoffman Agency 503-754-7975 ckerns@hoffman.com
Source: Nautilus, Inc.