Second Quarter 2020 Net Sales Increased94% to $114 million Compared to Same Period Last Year
Second Quarter 2020 Direct Segment Sales Increased142% and Retail Segment Sales Increased 68% Compared to Same Period Last Year
Operating Loss Was $7 million, driven by the $29 million loss on disposal group, a non-cash charge
Adjusted EBITDA Was $25 million, representing an Adjusted EBITDA improvement of $35 million
VANCOUVER, Wash.--(BUSINESS WIRE)-- Nautilus, Inc. (NYSE:NLS) today reported its unaudited operating results for the second quarter of 2020.
Second Quarter 2020 Highlights Compared to Second Quarter 2019
1 See "Reconciliation of Non-GAAP Financial Measures" and "Loss on Disposal Group" for more information
Management Comments
“The second quarter of 2020 was one of the strongest quarters ever for our Company; highlighted by record sales, almost 1,200 basis point increase in gross margins, and a $78 million improvement in operating loss, resulting in adjusted EBITDA of $25 million," said Jim Barr, Nautilus Inc. Chief Executive Officer. “While we benefitted from the COVID-19 at-home fitness trend, our team’s agility and strong execution were essential to our outstanding results. The operational improvements we implemented in the back half of 2019 changed our trajectory in the first quarter of 2020 and were instrumental in record results in Q2. We dramatically improved the flow of inventory in our supply chain by increasing factory capacity for our leading products by as much as 500%. Our team worked quickly to find solutions to move product from our manufacturers to the ports and then secured the quickest vessels to get the product to our distribution centers. Even with our expanded production and improved supply chain, demand still outpaced supply and we are entering the third quarter with a $34 million backlog."
Mr. Barr continued, “Our strong second quarter performance was driven by sales growth across both segments for all consumer modalities and brands, slightly offset by declines in our commercial business due to gym closures related to COVID-19. To continue providing new and existing customers with products that lead to a healthier lifestyle, we will be introducing several new strength and cardio product offerings in the fall, including an expansion of our JRNY® personalized connected fitness digital platform with the rollout of next generation JRNY® that will include an updated user interface, new content, integration of Explore The World™ and Apple Health.”
Mr. Barr, concluded, “We are still in the early stages of our long-term transformation, but we have made good progress in the past 6 months in enhancing our digital capabilities, in our products, our marketing, and our business operations. We remain confident that the company’s resolve, resilience, and agility are qualities that, when coupled with well-known brands, a strong product portfolio, and a strengthening digital strategy should allow us to successfully return Nautilus Inc. to long-term profitable growth.”
Second Quarter 2020 Segment Results Compared to Second Quarter 2019
Direct Segment
Retail Segment
Balance Sheet and Other Key Highlights
As of June 30, 2020:
Forward Looking Guidance
Conference Call
Nautilus will discuss second quarter 2020 operating results during a live conference call and webcast on Monday, August 10, 2020 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; Aina Konold, Chief Financial Officer; Chris Quatrochi, SVP of Product Development; and Bill McMahon, Special Assistant to the CEO.
A telephonic playback will be available from 4:30 p.m. PT, August 10, 2020 through 8:59 p.m. PT, August 24, 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 13707084.
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: projected or forecasted financial and operating results, 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, including with respect to our exploration of the sale of Octane Fitness and the risks and uncertainties as to the terms, timing, structure, benefits and costs of any divestiture or separation transaction and whether one will be consummated at all, and the impact of any divestiture or separation transaction on our remaining business. 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 caused by the COVID-19 pandemic; 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; risks related to the impact on our business of the COVID-19 pandemic or similar public health crises; softness in the retail marketplace; risks related to not completing, or not completely realizing the anticipated benefits from a sale of Octane Fitness; changes in the financial markets, including changes in credit markets and interest rates 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 months ended June 30, 2020 and 2019 (unaudited and in thousands, except per share amounts):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net sales | $ | 114,188 |
|
| $ | 59,004 |
|
| $ | 207,910 |
|
| $ | 143,404 |
| |
Cost of sales | 66,792 |
|
| 41,487 |
|
| 124,917 |
|
| 90,045 |
| |||||
Gross profit | 47,396 |
|
| 17,517 |
|
| 82,993 |
|
| 53,359 |
| |||||
|
|
|
|
|
|
|
| |||||||||
Operating expenses: |
|
|
|
|
|
|
| |||||||||
Selling and marketing | 12,446 |
|
| 17,631 |
|
| 37,132 |
|
| 51,674 |
| |||||
General and administrative | 9,315 |
|
| 9,443 |
|
| 16,971 |
|
| 17,098 |
| |||||
Research and development | 3,728 |
|
| 3,849 |
|
| 7,543 |
|
| 8,160 |
| |||||
Loss on disposal group and goodwill and other intangible impairment charge | 29,013 |
|
| 72,008 |
|
| 29,013 |
|
| 72,008 |
| |||||
Total operating expenses | 54,502 |
|
| 102,931 |
|
| 90,659 |
|
| 148,940 |
| |||||
|
|
|
|
|
|
|
| |||||||||
Operating loss | (7,106 | ) |
| (85,414 | ) |
| (7,666 | ) |
| (95,581 | ) | |||||
Other expense, net | (222 | ) |
| (55 | ) |
| (806 | ) |
| (488 | ) | |||||
Loss from continuing operations before income taxes | (7,328 | ) |
| (85,469 | ) |
| (8,472 | ) |
| (96,069 | ) | |||||
Income tax benefit | (2,342 | ) |
| (6,725 | ) |
| (5,788 | ) |
| (8,841 | ) | |||||
Loss from continuing operations | (4,986 | ) |
| (78,744 | ) |
| (2,684 | ) |
| (87,228 | ) | |||||
Loss from discontinued operations, net of income taxes | (124 | ) |
| (124 | ) |
| (242 | ) |
| (215 | ) | |||||
Net loss | $ | (5,110 | ) |
| $ | (78,868 | ) |
| $ | (2,926 | ) |
| $ | (87,443 | ) | |
|
|
|
|
|
|
|
| |||||||||
Basic loss per share from continuing operations | $ | (0.17 | ) |
| $ | (2.65 | ) |
| $ | (0.09 | ) |
| $ | (2.94 | ) | |
Basic loss per share from discontinued operations | — |
|
| — |
|
| (0.01 | ) |
| (0.01 | ) | |||||
Basic net loss per share(1) | $ | (0.17 | ) |
| $ | (2.66 | ) |
| $ | (0.10 | ) |
| $ | (2.95 | ) | |
|
|
|
|
|
|
|
| |||||||||
Diluted loss per share from continuing operations | $ | (0.17 | ) |
| $ | (2.65 | ) |
| $ | (0.09 | ) |
| $ | (2.94 | ) | |
Diluted loss per share from discontinued operations | — |
|
| — |
|
| (0.01 | ) |
| (0.01 | ) | |||||
Diluted net loss per share(1) | $ | (0.17 | ) |
| $ | (2.66 | ) |
| $ | (0.10 | ) |
| $ | (2.95 | ) | |
|
|
|
|
|
|
|
| |||||||||
Shares used in per share calculations: |
|
|
|
|
|
|
| |||||||||
Basic | 29,909 |
|
| 29,678 |
|
| 29,852 |
|
| 29,626 |
| |||||
Diluted | 29,909 |
|
| 29,678 |
|
| 29,852 |
|
| 29,626 |
| |||||
|
|
|
|
|
|
|
| |||||||||
(1) May not add due to rounding. |
|
|
|
|
|
|
|
SEGMENT INFORMATION
The following tables present certain comparative information by segment for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Change | ||||||||||||
| 2020 |
| 2019 |
| $ |
| % | ||||||||
Net sales: |
|
|
|
|
|
|
| ||||||||
Direct | $ | 50,433 |
|
| $ | 20,834 |
|
| $ | 29,599 |
|
| 142.1 | % | |
Retail | 62,948 |
|
| 37,453 |
|
| 25,495 |
|
| 68.1 | % | ||||
Royalty | 807 |
|
| 717 |
|
| 90 |
|
| 12.6 | % | ||||
Consolidated net sales | $ | 114,188 |
|
| $ | 59,004 |
|
| $ | 55,184 |
|
| 93.5 | % | |
|
|
|
|
|
|
|
| ||||||||
Gross profit: |
|
|
|
|
|
|
| ||||||||
Direct | $ | 27,523 |
|
| $ | 9,027 |
|
| $ | 18,496 |
|
| 204.9 | % | |
Retail | 19,066 |
|
| 7,773 |
|
| 11,293 |
|
| 145.3 | % | ||||
Royalty | 807 |
|
| 717 |
|
| 90 |
|
| 12.6 | % | ||||
Consolidated gross profit | $ | 47,396 |
|
| $ | 17,517 |
|
| $ | 29,879 |
|
| 170.6 | % | |
|
|
|
|
|
|
|
| ||||||||
Contribution: |
|
|
|
|
|
|
| ||||||||
Direct | $ | 16,995 |
|
| $ | (6,334 | ) |
| $ | 23,329 |
|
| * | ||
Retail | 11,613 |
|
| (247 | ) |
| 11,860 |
|
| * | |||||
Royalty | 807 |
|
| 717 |
|
| 90 |
|
| 12.6 | % | ||||
Consolidated contribution | $ | 29,415 |
|
| $ | (5,864 | ) |
| $ | 35,279 |
|
| * | ||
|
|
|
|
|
|
|
| ||||||||
Reconciliation of consolidated contribution to loss from continuing operations: | |||||||||||||||
Consolidated contribution | $ | 29,415 |
|
| $ | (5,864 | ) |
| $ | 35,279 |
|
| * | ||
Amounts not directly related to segments: |
|
|
|
|
|
|
| ||||||||
Operating expenses | (36,521 | ) |
| (79,550 | ) |
| 43,029 |
|
| 54.1 | % | ||||
Other expense, net | (222 | ) |
| (55 | ) |
| (167 | ) |
| (303.6 | )% | ||||
Income tax benefit | 2,342 |
|
| 6,725 |
|
| (4,383 | ) |
| (65.2 | )% | ||||
Loss from continuing operations | $ | (4,986 | ) |
| $ | (78,744 | ) |
| $ | 73,758 |
|
| 93.7 | % | |
*Not meaningful |
The following table compares the net sales of our major product lines within each business segment (dollars in thousands):
| Three Months Ended June 30, |
| Change | ||||||||||||
| 2020 |
| 2019 |
| $ |
| % | ||||||||
Direct net sales: |
|
|
|
|
|
|
| ||||||||
Cardio products(1) | $ | 45,585 |
|
| $ | 16,083 |
|
| $ | 29,502 |
|
| 183.4 | % | |
Strength products(2) | 4,848 |
|
| 4,751 |
|
| 97 |
|
| 2.0 | % | ||||
| 50,433 |
|
| 20,834 |
|
| 29,599 |
|
| 142.1 | % | ||||
Retail net sales: |
|
|
|
|
|
|
| ||||||||
Cardio products(1) | 49,011 |
|
| 26,045 |
|
| 22,966 |
|
| 88.2 | % | ||||
Strength products(2) | 13,937 |
|
| 11,408 |
|
| 2,529 |
|
| 22.2 | % | ||||
| 62,948 |
|
| 37,453 |
|
| 25,495 |
|
| 68.1 | % | ||||
|
|
|
|
|
|
|
| ||||||||
Royalty | 807 |
|
| 717 |
|
| 90 |
|
| 12.6 | % | ||||
| $ | 114,188 |
|
| $ | 59,004 |
|
| $ | 55,184 |
|
| 93.5 | % |
(1) | Cardio products include: connected-fitness bikes like the Bowflex® C6 and Schwinn® IC4, Max Trainer®, TreadClimber®, Zero Runner®, LateralX®, treadmills, other exercise bikes, ellipticals and subscription services. | |
(2) | Strength products include: home gyms and Bowflex® SelectTech® dumbbells, kettlebell weights, and accessories. |
| Six Months Ended June 30, |
| Change | ||||||||||||
| 2020 |
| 2019 |
| $ |
| % | ||||||||
Net sales: |
|
|
|
|
|
|
| ||||||||
Direct | $ | 97,574 |
|
| $ | 67,548 |
|
| $ | 30,026 |
|
| 44.5 | % | |
Retail | 108,561 |
|
| 74,274 |
|
| 34,287 |
|
| 46.2 | % | ||||
Royalty | 1,775 |
|
| 1,582 |
|
| 193 |
|
| 12.2 | % | ||||
Consolidated net sales | $ | 207,910 |
|
| $ | 143,404 |
|
| $ | 64,506 |
|
| 45.0 | % | |
|
|
|
|
|
|
|
| ||||||||
Gross profit: |
|
|
|
|
|
|
| ||||||||
Direct | $ | 51,822 |
|
| $ | 35,423 |
|
| $ | 16,399 |
|
| 46.3 | % | |
Retail | 29,396 |
|
| 16,354 |
|
| 13,042 |
|
| 79.7 | % | ||||
Royalty | 1,775 |
|
| 1,582 |
|
| 193 |
|
| 12.2 | % | ||||
Consolidated gross profit | $ | 82,993 |
|
| $ | 53,359 |
|
| $ | 29,634 |
|
| 55.5 | % | |
|
|
|
|
|
|
|
| ||||||||
Contribution: |
|
|
|
|
|
|
| ||||||||
Direct | $ | 18,804 |
|
| $ | (10,876 | ) |
| $ | 29,680 |
|
| * | ||
Retail | 14,002 |
|
| (969 | ) |
| 14,971 |
|
| * | |||||
Royalty | 1,775 |
|
| 1,582 |
|
| 193 |
|
| 12.2 | % | ||||
Consolidated contribution | $ | 34,581 |
|
| $ | (10,263 | ) |
| $ | 44,844 |
|
| 436.9 | % | |
|
|
|
|
|
|
|
| ||||||||
Reconciliation of consolidated contribution to loss from continuing operations: | |||||||||||||||
Consolidated contribution | $ | 34,581 |
|
| $ | (10,263 | ) |
| $ | 44,844 |
|
| * | ||
Amounts not directly related to segments: |
|
|
|
|
|
|
| ||||||||
Operating expenses | $ | (42,247 | ) |
| $ | (85,318 | ) |
| 43,071 |
|
| 50.5 | % | ||
Other expense, net | (806 | ) |
| (488 | ) |
| (318 | ) |
| (65.2 | )% | ||||
Income tax benefit | 5,788 |
|
| 8,841 |
|
| (3,053 | ) |
| (34.5 | )% | ||||
Loss from continuing operations | $ | (2,684 | ) |
| $ | (87,228 | ) |
| $ | 84,544 |
|
| 96.9 | % | |
*Not meaningful |
The following table compares the net sales of our major product lines within each business segment (dollars in thousands):
| Six Months Ended June 30, |
| Change | |||||||||
| 2020 |
| 2019 |
| $ |
| % | |||||
Direct net sales: |
|
|
|
|
|
|
| |||||
Cardio products(1) | $ | 81,461 |
| $ | 55,690 |
| $ | 25,771 |
| 46.3 | % | |
Strength products(2) | 16,113 |
| 11,858 |
| 4,255 |
| 35.9 | % | ||||
| 97,574 |
| 67,548 |
| 30,026 |
| 44.5 | % | ||||
Retail net sales: |
|
|
|
|
|
|
| |||||
Cardio products(1) | 85,154 |
| 56,741 |
| 28,413 |
| 50.1 | % | ||||
Strength products(2) | 23,407 |
| 17,533 |
| 5,874 |
| 33.5 | % | ||||
| 108,561 |
| 74,274 |
| 34,287 |
| 46.2 | % | ||||
|
|
|
|
|
|
|
| |||||
Royalty | 1,775 |
| 1,582 |
| 193 |
| 12.2 | % | ||||
| $ | 207,910 |
| $ | 143,404 |
| $ | 64,506 |
| 45.0 | % |
(1) | Cardio products include: connected-fitness bikes like the Bowflex® C6 and Schwinn® IC4, Max Trainer®, TreadClimber®, Zero Runner®, LateralX®, treadmills, other exercise bikes, ellipticals and subscription services. | |
(2) | Strength products include: home gyms and Bowflex® SelectTech® dumbbells, kettlebell weights, and accessories. |
HELD-FOR-SALE DISPOSAL GROUP
The assets and liabilities of Octane Fitness® disposal group were recorded on the condensed consolidated balance sheets as current assets held-for-sale of $29.1 million and current liabilities held-for-sale of $14.2 million as follows (in thousands):
| As of | |||
| June 30, 2020 | |||
Assets: |
| |||
Cash and cash equivalents | $ | 3,986 |
| |
Trade receivables | 7,765 |
| ||
Inventories | 11,538 |
| ||
Prepaids and other current assets | 1,054 |
| ||
Property, plant and equipment, net | 1,655 |
| ||
Other intangible assets | 32,045 |
| ||
Loss on disposal group | (29,013 | ) | ||
Other assets | 24 |
| ||
Total current assets held-for-sale | $ | 29,054 |
| |
Liabilities: |
| |||
Trade payables | $ | 8,997 |
| |
Accrued liabilities | 2,121 |
| ||
Warranty obligations | 3,097 |
| ||
Income taxes payable | 99 |
| ||
Other | (100 | ) | ||
Total current liabilities held-for-sale | $ | 14,214 |
|
BALANCE SHEET INFORMATION
The following summary contains information from our consolidated balance sheets as of June 30, 2020 and December 31, 2019 (unaudited and in thousands):
| As of | |||||
| June 30, 2020 |
| December 31, 2019 | |||
Assets |
|
|
| |||
|
|
|
| |||
Cash and cash equivalents | $ | 45,656 |
| $ | 11,070 | |
Restricted cash | 2,196 |
| — | |||
Trade receivables, net of allowances of $62 and $45 | 33,741 |
| 54,600 | |||
Inventories | 21,310 |
| 54,768 | |||
Prepaids and other current assets | 8,304 |
| 8,283 | |||
Income taxes receivable | 5,326 |
| 472 | |||
Current assets held-for-sale | 29,054 |
| — | |||
Total current assets | 145,587 |
| 129,193 | |||
Property, plant and equipment, net | 22,246 |
| 22,755 | |||
Operating lease right-of-use assets | 21,513 |
| 20,778 | |||
Other intangible assets, net | 9,601 |
| 43,243 | |||
Other assets | 6,024 |
| 4,510 | |||
Total assets | $ | 204,971 |
| $ | 220,479 | |
|
|
|
| |||
Liabilities and Shareholders' Equity |
|
|
| |||
|
|
|
| |||
Trade payables | $ | 45,207 |
| $ | 74,255 | |
Accrued liabilities | 11,632 |
| 7,633 | |||
Operating lease liabilities, current portion | 3,216 |
| 3,720 | |||
Warranty obligations, current portion | 1,966 |
| 3,100 | |||
Debt payable, current portion, net of unamortized debt issuance costs of $83 and $0 | 1,917 |
| — | |||
Current liabilities held-for-sale | 14,214 |
| — | |||
Total current liabilities | 78,152 |
| 88,708 | |||
Operating lease liabilities, non-current | 20,429 |
| 18,982 | |||
Warranty obligations, non-current | 585 |
| 2,617 | |||
Income taxes payable, non-current | 3,949 |
| 3,676 | |||
Deferred income tax liabilities, non-current | 222 |
| 1,783 | |||
Other non-current liabilities | — |
| 46 | |||
Debt payable, non-current, net of unamortized debt issuance costs of $298 and $230 | 12,518 |
| 14,071 | |||
Shareholders' equity | 89,116 |
| 90,596 | |||
Total liabilities and shareholders' equity | $ | 204,971 |
| $ | 220,479 |
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 income and income from continuing operations on an adjusted basis. Adjusted operating income excludes non-cash charges related to the disposal group held-for-sale and goodwill and the Octane Fitness® trade name intangible asset impairment. Adjusted income from continuing operations excludes the loss and impairment charges 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 impairment charge for similar reasons.
The following table presents a reconciliation of operating expenses, the most directly comparable GAAP measure, to Adjusted operating expenses is set forth below for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
Operating expenses | $ | 54,502 |
|
| $ | 102,931 |
|
| $ | 90,659 |
|
| $ | 148,940 |
| |
Loss on disposal group(1) | (29,013 | ) |
| — |
|
| (29,013 | ) |
| — |
| |||||
Goodwill and other intangible impairment charge(2) | — |
|
| (72,008 | ) |
| — |
|
| (72,008 | ) | |||||
Adjusted operating expenses | $ | 25,489 |
|
| $ | 30,923 |
|
| $ | 61,646 |
|
| $ | 76,932 |
|
The following table presents a reconciliation of operating loss, the most directly comparable GAAP measure, to Adjusted operating income (loss)is set forth below for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
Operating loss | $ | (7,106 | ) |
| $ | (85,414 | ) |
| $ | (7,666 | ) |
| $ | (95,581 | ) | |
Loss on disposal group(1) | 29,013 |
|
| — |
|
| 29,013 |
|
| — |
| |||||
Goodwill and other intangible impairment charge(2) | — |
|
| 72,008 |
|
| — |
|
| 72,008 |
| |||||
Adjusted operating income (loss) | $ | 21,907 |
|
| $ | (13,406 | ) |
| $ | 21,347 |
|
| $ | (23,573 | ) |
The following table presents a reconciliation of loss from continuing operations, the most directly comparable GAAP measure, to Adjusted income (loss) from continuing operations is set forth below for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from continuing operations | $ | (4,986 | ) |
| $ | (78,744 | ) |
| $ | (2,684 | ) |
| $ | (87,228 | ) | |
Loss on disposal group(1) | 29,013 |
|
| — |
|
| 29,013 |
|
| — |
| |||||
Goodwill and other intangible impairment charge(2) | — |
|
| 72,008 |
|
| — |
|
| 72,008 |
| |||||
Income tax benefit for loss on disposal group and goodwill and intangible impairment | (7,216 | ) |
| (3,095 | ) |
| (7,216 | ) |
| (3,095 | ) | |||||
Adjusted income (loss) from continuing operations | $ | 16,811 |
|
| $ | (9,831 | ) |
| $ | 19,113 |
|
| $ | (18,315 | ) |
The following table presents a reconciliation of loss from continuing operations, the most directly comparable GAAP measure, to EBITDA loss is set forth below for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from continuing operations | $ | (4,986 | ) |
| $ | (78,744 | ) |
| $ | (2,684 | ) |
| $ | (87,228 | ) | |
Interest expense, net | 337 |
|
| 226 |
|
| 962 |
|
| 266 |
| |||||
Income tax benefit from continuing operations | (2,342 | ) |
| (6,725 | ) |
| (5,788 | ) |
| (8,841 | ) | |||||
Depreciation and amortization | 2,644 |
|
| 2,706 |
|
| 5,454 |
|
| 5,192 |
| |||||
Loss before interest, taxes, depreciation and amortization (EBITDA) from continuing operations | $ | (4,347 | ) |
| $ | (82,537 | ) |
| $ | (2,056 | ) |
| $ | (90,611 | ) |
The following table presents a reconciliation of loss from continuing operations, the most directly comparable GAAP measure, to Adjusted EBITDA is set forth below for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from continuing operations | $ | (4,986 | ) |
| $ | (78,744 | ) |
| $ | (2,684 | ) |
| $ | (87,228 | ) | |
Interest expense, net | 337 |
|
| 226 |
|
| 962 |
|
| 266 |
| |||||
Income tax benefit from continuing operations | (2,342 | ) |
| (6,725 | ) |
| (5,788 | ) |
| (8,841 | ) | |||||
Depreciation and amortization | 2,644 |
|
| 2,706 |
|
| 5,454 |
|
| 5,192 |
| |||||
Loss on disposal group(1) | 29,013 |
|
| — |
|
| 29,013 |
|
| — |
| |||||
Goodwill and other intangible impairment charge(2) | — |
|
| 72,008 |
|
| — |
|
| 72,008 |
| |||||
Adjusted earnings (loss) before interest, taxes, depreciation and amortization (Adjusted EBITDA) from continuing operations | $ | 24,666 |
|
| $ | (10,529 | ) |
| $ | 26,957 |
|
| $ | (18,603 | ) |
The following table presents a reconciliation of diluted loss per share from continuing operations, the most directly comparable GAAP measure, to Adjusted diluted income (loss) per share from continuing operations is set forth below for the three and six months ended June 30, 2020 and 2019 (unaudited and in thousands):
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted loss per share from continuing operations | $ | (0.17 | ) |
| $ | (2.65 | ) |
| $ | (0.09 | ) |
| $ | (2.94 | ) | |
Loss on disposal group, net of tax(1) | 0.73 |
|
| — |
|
| 0.73 |
|
| — |
| |||||
Goodwill and other intangible impairment charge, net of tax(2) | — |
|
| 2.32 |
|
| — |
|
| 2.32 |
| |||||
Adjusted diluted income (loss) per share from continuing operations | $ | 0.56 |
|
| $ | (0.33 | ) |
| $ | 0.64 |
|
| $ | (0.62 | ) |
(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 loss on disposal group was determined to be $29.0 million and recorded in the second quarter of 2020. 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 is expected to be structured as a sale of the subsidiary shares and we elected to not classify the deferred taxes associated with the individual assets and liabilities as part of the disposal group held-for-sale.
(2) Goodwill and Other Intangible Impairment In accordance with ASC 350, Intangibles - Goodwill and Other, Nautilus is required to test its goodwill and other indefinite-lived intangible assets for impairment annually or when a triggering event has occurred that would indicate that it is more likely than not that the fair value of the reporting units are less than the book value, including goodwill and intangibles. In our assessment, a triggering event occurred during the second quarter of 2019 as a result of the decline in our stock price and overall market capitalization. Based on the assessment conducted, we estimated a $72.0 million impairment.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200810005680/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.