Company Achieves Full Year Revenue Guidance
by Growing Revenue 79% to $553 million
Full Year Operating Income was $78 million
and Full Year EBITDA was $84 million
Full Year Adjusted EBITDA of $107 million
exceeds company EBITDA guidance
Fourth Quarter Operating Income of $41
million is the second highest since our founding in 1986
Fourth Quarter EBITDA improved by 578% to
$40 million compared to same period last year
Company Expects Revenue to Increase 55% to
75% for the period ending March 31, 2021 compared to the same
period last year
Nautilus, Inc. (NYSE: NLS) today reported its unaudited
operating results for the fourth quarter and full year ended
December 31, 2020.
Fourth Quarter 2020 Highlights Compared to Fourth Quarter
2019
- Net sales were $189.3 million, up 81.7% compared to $104.2
million last year and up 108.3%, excluding sales related to the
Octane brand, which was sold in October 2020. Sales growth was
driven primarily by continued demand for connected-fitness bikes,
like the Schwinn® IC4, Bowflex® C6 and VeloCore®, as well as robust
sales of SelectTech® weights and Bowflex® Home Gyms. Strong
execution across the organization coupled with supply chain
improvements that began earlier in the year drove these record
results. Importantly, due to the severe shortage of shipping
containers, some factory fulfilled orders, representing over $16
million in revenue, did not ship in late December. Container
shortages, worsening global logistics disruptions, and continued
factory capacity constraints resulted in $91.5 million of
backlog.
- Gross profit was $77.9 million, up 104.1% compared to $38.2
million last year. Gross margin rate expanded by 450 basis points
to 41.1% driven by increased full-priced selling in Direct,
improved wholesale margins in Retail, and fixed costs leverage,
partially offset by increased transportation costs driven by global
logistics disruptions.
- Operating expenses increased by $1.5 million or 4.4% to $36.4
million primarily due to increased general and administrative costs
and research and development costs offset by a reduction in sales
and marketing expenses.
- Operating income was $41.5 million, a $38.2 million or 1,160.8%
improvement compared to $3.3 million last year. This quarter’s
operating income is second only to the $44.0 million of operating
income in Q3 2020, which included a gain of $8.3 million related to
the Octane transaction. If we exclude that gain, Q4 2020 represents
the highest quarterly operating income in the company’s
history.
- Income from continuing operations increased by 698.6% to $29.3
million, or $0.90 per diluted share, compared to $3.7 million, or
$0.12 per diluted share last year.
- Net income increased by 729.8% to $28.9 million, or $0.89 per
diluted share, compared to $3.5 million, or $0.12 per diluted share
last year.
- The tax rate for the fourth quarter was 22.7%.
- EBITDA from continuing operations1 was $40.3 million, a $34.3
million or 578.1% improvement compared to $5.9 million last
year.
1 See "Reconciliation of Non-GAAP Financial Measures" for more
information
Management Comments
“Our team’s passion to deliver a best-in-class consumer
experience resulted in our strongest quarterly performance of all
time. We delivered robust growth across our brands, channels, and
products. Net sales grew 82% or 108% excluding the impact of the
Octane brand, which we sold in October 2020. We expanded gross
margins by 450 basis points, delivered operating income of $41
million, and generated $40 million of EBITDA,” said Jim Barr,
Nautilus Inc. Chief Executive Officer. “The demand for in-home
fitness has not abated in early 2021, even in the face of a vaccine
roll-out. We ended the year with $91 million in backlog as, similar
to many industries, we continue to face disruptions in global
logistics. We are managing through these temporary constraints
which we expect will remain through the first half of calendar
2021. Strong consumer response to our expanding cardio and strength
offerings, particularly our IC bikes, SelectTech® weights, and Home
Gyms drove our performance in the quarter.”
Mr. Barr continued, “During the holiday fitness season, we added
to our product portfolio by launching the new Bowflex® C7 bike, two
Bowflex® Treadmills, and an updated Max Trainer® all integrated
with the JRNY® digital fitness platform through HD touchscreens.
Additionally, our new VeloCore® bike, the industry’s first
(un)stationary, dual-mode bike that combines leaning technology
with digital connectivity, won a prestigious Consumer Electronics
Show 2021 Innovation Award. These new products and JRNY 2.0 have
received incredible coverage and glowing customer reviews,
positioning us well for 2021. Lastly, we completed North Star, our
long-term strategy that builds on the company's well-known brands,
reputation for quality and innovation, broad product portfolio, and
consumer-focused company culture. We ended the year with over $90
million of cash and short-term investments, providing additional
resources needed to accelerate our North Star strategy and
ultimately deliver sustainable long-term growth.”
Fourth Quarter 2020 Segment Results Compared to Fourth
Quarter 2019
Direct Segment
- Direct delivered their best quarterly sales in segment history.
Net sales were $82.2 million, up 128.8% from last year. Cardio
sales increased by 78.0%, driven by the Schwinn® IC4, Bowflex® C6
and VeloCore® connected-fitness bikes. In the fourth quarter, the
company launched a new generation of Bowflex® connected treadmills
integrated with the JRNY® digital fitness platform through an HD
touch screen console. Strength products grew 372.1% led by the
popular SelectTech® weights and Bowflex® Home Gyms.
- As of December 31, 2020, Direct's backlog totaled $46.5 million
compared to $3.5 million as of December 31, 2019. These amounts
represent unfulfilled consumer orders net of current promotional
programs and sales discounts.
- Gross margin rate expanded by 370 basis points to 53.6%
primarily driven by increased full-priced sales and favorable fixed
costs leverage, partially offset by higher transportation
costs.
- Segment contribution income was $23.6 million, compared to a
loss of $5.0 million last year. The $28.6 million improvement was
primarily driven by higher gross profit and decreased media spend.
Advertising expenses were $10.5 million compared to $12.9 million
last year.
Retail Segment
- Retail delivered their best quarterly sales in segment history.
Net sales were $106.3 million up 57.5% from last year and by 96.2%
over last year excluding sales related to the Octane brand. Cardio
sales increased by 59.4%, driven by bikes, particularly the
Schwinn® IC4 connected-fitness bikes, Max Trainer®, treadmills and
ellipticals. Strength products sales grew by 52.5%, led by Bowflex®
Home Gyms and the popular SelectTech® weights and benches.
- As of December 31, 2020, Retail's backlog totaled $45.0 million
compared to $2.3 million as of December 31, 2019. These amounts
represent customer orders for future shipments and are net of
contractual rebates and consideration payable to applicable Retail
customers.
- Gross margin rate expanded by 230 basis points to 31.1%
primarily driven by favorable customer mix and fixed costs
leverage, partially offset by higher transportation costs.
- Segment contribution income was $25.3 million, 107.0% or $13.1
million higher than last year primarily driven by higher gross
profit and leveraging of fixed costs.
Full Year 2020 Highlights Compared to Full Year 2019
- Net sales for 2020 were $552.6 million, up 78.7% compared to
$309.3 million in 2019 and up 97.2% excluding sales related to the
Octane brand. Sales growth was driven primarily by strong demand
for the Schwinn® IC4 and Bowflex® C6 connected-fitness bikes,
Bowflex® Home Gyms, and SelectTech® weights. Positive customer
response to the new JRNY® powered connected fitness products
launched in 2020, like the VeloCore® bikes, new treadmills, and new
Max Trainer®, also contributed to sales growth. Full year sales
results were in the mid-point of company’s guidance of $540 million
to $565 million. Importantly, due to the severe shortage of
shipping containers, some factory fulfilled orders, representing
over $16 million in revenue, did not ship in late December. If
these products had shipped as planned, net sales for 2020 would
have been approximately $569 million.
- Gross profit for the year was $228.8 million, up 106.9%
compared to $110.6 million in 2019. Gross margin rate expanded by
560 basis points to 41.4%, driven by increased full-priced selling
in Direct, improved wholesale margins in Retail, and fixed costs
leverage, partially offset by increased transportation costs driven
by global logistics disruptions.
- Operating expenses were $151.0 million, down 28.5% compared to
$211.1 million last year, primarily because of lower one-time
costs. This year, the company recorded a loss on disposal group of
$20.7 million and last year, the company recorded a goodwill and
other intangible impairment charge of $72.0 million. Additionally,
the company pulled back on paid advertising, given strong organic
demand and inventory scarcity. These expense reductions were
partially offset by increases in general and administrative and
research and development costs.
- Full year operating income hit an 18-year high at $77.8
million, an improvement of $178.4 million compared to the $100.5
million loss last year.
- Income from continuing operations increased to $60.5 million,
or $1.88 per diluted share, compared to loss from continuing
operations of $92.3 million, or -$3.11 per diluted share.
- Net income was $59.8 million, or $1.86 per diluted share, an
improvement of $152.6 million compared to last year’s loss of $92.8
million, or -$3.13 per diluted share last year.
- The effective tax rate from continuing operations for the year
was 16.8% versus last year’s 9.4%. The higher rate this year was
primarily due to profit generated in the U.S. partially offset by
the 14% rate benefit of net operating loss carry-backs as a result
of the enactment of the CARES Act.
- EBITDA from continuing operations was $83.7 million compared to
a loss of $90.2 million, an improvement of $173.9 million.
- The following statements exclude the impact of this year’s loss
on disposal group and last year’s goodwill and other intangible
impairment charge1
- Adjusted operating expenses decreased by 6.3% to $130.3 million
compared to $139.1 million last year, primarily due to reduced
advertising partially offset by increases in general and
administrative and research and development costs.
- Adjusted operating income was $98.5 million, an improvement of
$127.0 million compared to the operating loss of $28.5 million last
year, driven by sales growth and expanded gross margin rates.
- Adjusted income from continuing operations improved to $78.9
million, or $2.46 per diluted share, compared to a loss from
continuing operations of $23.4 million, or -$0.79 per diluted
share.
- Adjusted EBITDA from continuing operations was $106.8 million,
an improvement of $125.0 million compared to last year’s adjusted
EBITDA loss of $18.2 million. This result is 7% higher than the top
end of company’s guidance of $90 million to $100 million.
1 See "Reconciliation of Non-GAAP Financial Measures" for more
information
Full Year 2020 Segment Results Compared to Full Year
2019
Direct Segment
- Net sales for 2020 were $240.9 million, up 101.4% from last
year. Cardio sales grew by 82.6% and were led by strong demand for
our connected-fitness bikes, the Bowflex® C6 and Schwinn® IC4,
offset by lower Max Trainer® sales. Strength product sales grew
185.5% versus the same period in 2019 driven by SelectTech® weights
and Bowflex® Home Gyms. Positive customer response to the new JRNY®
powered connected fitness products launched in 2020 also
contributed to sales growth.
- Gross margin rates for 2020 expanded by 450 basis points to
54.3% primarily driven by increased full-priced sales and favorable
fixed cost leverage, partially offset by higher transportation
costs.
- Segment contribution income for 2020 was $60.0 million,
compared to loss of $24.6 million for 2019. The $84.6 million
improvement was primarily driven by higher gross profit.
Retail Segment
- Net sales for 2020 were $308.0 million, up 65.1% from last year
and up 95.4% excluding sales related to the Octane brand. Cardio
sales were up 66.5%, driven by the Schwinn® IC4 connected-fitness
bikes and Max Trainer®. Strength sales were up 60.7% led by the
popular Bowflex® Home Gyms and SelectTech® weights.
- Gross margin rates for 2020 expanded by 490 basis points to
30.6% primarily driven by favorable customer mix and fixed cost
leverage, partially offset by higher transportation costs.
- Segment contribution income for 2020 was $62.8 million, 291.3%
or $46.8 million higher than last year primarily driven by higher
gross profit.
Balance Sheet and Other Key Highlights as of December 31,
2020:
- The company’s liquidity position continues to improve
- Cash, cash equivalents, restricted cash and available-for-sales
securities were $94.1 million, an increase of $83.0 million,
compared to $11.1 million as of December 31, 2019.
- Debt was $13.5 million compared to $14.1 million as of December
31, 2019.
- $54.8 million was available for borrowing under the Wells Fargo
Asset Based Lending Revolving Facility.
- Account receivables were $91.2 million, compared to $54.6
million as of December 31, 2019. The increase in accounts
receivable was primarily due to the timing of Retail customer
payments on increased sales.
- Inventory was $51.1 million, compared to $54.8 million as of
December 31, 2019. The decrease in inventory was primarily due to
the surge in demand for home-fitness products.
- To secure factory capacity, the company routinely issues
non-cancelable purchase obligations for expected product deliveries
in the next twelve months. As of December 31, 2020, there were
approximately $165.7 million of non-cancelable purchase
obligations, compared to $28.4 million as of December 31,
2019.
- Trade payables were $96.4 million, compared to $74.3 million as
of December 31, 2019. The increase in trade payables was primarily
due to timing of payments for inventory in-transit.
Change in Year-End
- On December 30, 2020, the Board of Directors approved a change
in the company's fiscal year from the twelve months beginning
January 1 and ending December 31 to the twelve months beginning
April 1 and ending March 31.
- The company plans to file a transition report on Form 10-QT for
the transition period from January 1, 2021 to March 31, 2021. The
Company’s fiscal year 2022 will begin April 1, 2021 and end March
31, 2022.
- The company changed its fiscal year-end to include the primary
fitness season for exercise equipment, October to March, in the
same fiscal year. In addition, the new fiscal year-end is better
aligned with the fiscal year-end of its retail partners.
Investor Day Announcement
- The company plans to host an Investor Day on Thursday, March
18th beginning at 9am PST.
- The company will present its long-range strategic plan, titled
North Star, to investors and will host a live question and answer
session, which can be accessed on the Investor Relations section of
Nautilus’ website at http://www.nautilusinc.com.
Forward Looking Guidance
- Turning now to our forward-looking guidance for the transition
period from January 1, 2021 to March 31, 2021.
- We expect net sales growth of 55% to 75% versus the same period
last year.
- Due to pressure from increased logistics costs, higher
commodity prices, and continued foreign exchange headwinds, we
expect gross margins to be relatively flat to the same period last
year.
- We expect operating expenses to be higher in dollars but
achieve leverage as these expenses are expected to be lower as a
percent of sales than the same period last year, driven by
increased marketing and investments in JRNY® and North Star.
Conference Call
Nautilus will discuss fourth quarter 2020 operating results
during a live conference call and webcast on Monday, February 22,
2021 at 1:30 p.m. Pacific Time. the conference call can be accessed
by calling (877) 425-9470 in North America. International callers
may dial (201) 389-0878. Please note 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,
February 22, 2021 through 11:59 p.m. ET, March 8, 2021.
Participants can dial (844) 512-2921 in North America and
international participants can dial (412) 317-6671 to hear the
playback. The passcode for the playback is 13715623.
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®, Schwinn® and JRNY®.
Nautilus, Inc. develops innovative products to support healthy
living through direct and retail 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, operating results and capital
expenditures, 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; 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 twelve months ended
December 31, 2020 and 2019 (unaudited and in thousands, except per
share amounts):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Net sales
$
189,259
$
104,173
$
552,560
$
309,285
Cost of sales
111,388
66,016
323,758
198,702
Gross profit
77,871
38,157
228,802
110,583
Operating expenses:
Selling and marketing
21,998
25,449
78,337
94,595
General and administrative
10,364
6,418
36,176
30,242
Research and development
4,029
3,000
15,812
14,282
Loss on disposal group, goodwill and other
intangible impairment charge
—
—
20,668
72,008
Total operating expenses
36,391
34,867
150,993
211,127
Operating income (loss)
41,480
3,290
77,809
(100,544
)
Other expense, net
(3,640
)
(378
)
(5,074
)
(1,288
)
Income (loss) from continuing operations
before income taxes
37,840
2,912
72,735
(101,832
)
Income tax expense (benefit)
8,588
(751
)
12,198
(9,537
)
Income (loss) from continuing
operations
29,252
3,663
60,537
(92,295
)
Loss from discontinued operations, net of
income taxes
(316
)
(176
)
(689
)
(505
)
Net income (loss)
$
28,936
$
3,487
$
59,848
$
(92,800
)
Basic income (loss) per share from
continuing operations
$
0.97
$
0.12
$
2.02
$
(3.11
)
Basic loss per share from discontinued
operations
(0.01
)
(0.01
)
(0.03
)
(0.02
)
Basic net income (loss) per share(1)
$
0.96
$
0.12
$
1.99
$
(3.13
)
Diluted income (loss) per share from
continuing operations
$
0.90
$
0.12
$
1.88
$
(3.11
)
Diluted loss per share from discontinued
operations
(0.01
)
(0.01
)
(0.02
)
(0.02
)
Diluted net income (loss) per share(1)
$
0.89
$
0.12
$
1.86
$
(3.13
)
Shares used in per share calculations:
Basic
30,284
29,756
30,007
29,684
Diluted
32,633
29,756
32,123
29,684
(1) May not add due to rounding.
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 December 31, 2020 and 2019
(unaudited and in thousands):
Three Months Ended December
31,
Change
2020
2019
$
%
Net sales:
Direct:
Cardio products(1)
$
52,876
$
29,703
$
23,173
78.0
%
Strength products(2)
29,282
6,203
23,079
372.1
%
Direct sales
$
82,158
$
35,906
$
46,252
128.8
%
Retail:
Cardio products(1)
78,255
49,081
29,174
59.4
%
Strength products(2)
28,065
18,406
9,659
52.5
%
Retail sales
106,320
67,487
38,833
57.5
%
Royalty
781
780
1
0.1
%
Consolidated net sales
$
189,259
$
104,173
$
85,086
81.7
%
Gross profit:
Direct
$
44,003
$
17,917
$
26,086
145.6
%
Retail
33,087
19,460
13,627
70.0
%
Royalty
781
780
1
0.1
%
Consolidated gross profit
$
77,871
$
38,157
$
39,714
104.1
%
Contribution:
Direct
$
23,584
$
(5,000
)
$
28,584
571.7
%
Retail
25,338
12,240
13,098
107.0
%
Royalty
781
780
1
0.1
%
Consolidated contribution
$
49,703
$
8,020
$
41,683
519.7
%
Reconciliation of consolidated
contribution to income (loss) from continuing operations:
Consolidated contribution
$
49,703
$
8,020
$
41,683
519.7
%
Amounts not directly related to
segments:
Operating expenses
(8,223
)
(4,730
)
(3,493
)
(73.8
)%
Other expense, net
(3,640
)
(378
)
(3,262
)
(863.0
)%
Income tax (expense) benefit
(8,588
)
751
(9,339
)
(1,243.5
)%
Income from continuing operations
$
29,252
$
3,663
$
25,589
698.6
%
(1) Cardio products include:
connected-fitness bikes, the Bowflex® C6, Bowflex® VeloCore®,
Schwinn® IC4, Max Trainer®, 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 December
31,
Change
2020
2019
$
%
Net sales:
Direct:
Cardio products(1)
$
178,615
$
97,824
$
80,791
82.6
%
Strength products(2)
62,311
21,827
40,484
185.5
%
Direct sales
$
240,926
$
119,651
$
121,275
101.4
%
Retail:
Cardio products(1)
235,333
141,331
94,002
66.5
%
Strength products(2)
72,703
45,253
27,450
60.7
%
Retail sales
308,036
186,584
121,452
65.1
%
Royalty
3,598
3,050
548
18.0
%
Consolidated net sales
$
552,560
$
309,285
$
243,275
78.7
%
Gross profit:
Direct
$
130,815
$
59,550
$
71,265
119.7
%
Retail
94,389
47,983
46,406
96.7
%
Royalty
3,598
3,050
548
18.0
%
Consolidated gross profit
$
228,802
$
110,583
$
118,219
106.9
%
Contribution:
Direct
$
59,976
$
(24,569
)
$
84,545
344.1
%
Retail
62,782
16,043
46,739
291.3
%
Royalty
3,598
3,050
548
18.0
%
Consolidated contribution
$
126,356
$
(5,476
)
$
131,832
2,407.5
%
Reconciliation of consolidated
contribution to income (loss) from continuing operations:
Consolidated contribution
$
126,356
$
(5,476
)
$
131,832
2,407.5
%
Amounts not directly related to
segments:
Operating expenses
(48,547
)
(95,068
)
46,521
48.9
%
Other expense, net
(5,074
)
(1,288
)
(3,786
)
(293.9
)%
Income tax (expense) benefit
(12,198
)
9,537
(21,735
)
(227.9
)%
Income (loss) from continuing
operations
$
60,537
$
(92,295
)
$
152,832
165.6
%
(1) Cardio products include:
connected-fitness bikes, the Bowflex® C6, Bowflex® VeloCore®,
Schwinn® IC4, Max Trainer®, 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 December 31, 2020 and 2019 (unaudited and in
thousands):
As of December 31,
2020
2019
Assets
Cash and cash equivalents
$
56,581
$
11,070
Restricted cash
1,339
—
Available-for-sale securities
36,199
—
Trade receivables, net of allowances of
$337 and $45
91,224
54,600
Inventories
51,140
54,768
Prepaids and other current assets
19,188
8,283
Income taxes receivable
4,021
472
Total current assets
259,692
129,193
Property, plant and equipment, net
23,926
22,755
Operating lease right-of-use assets
19,876
20,778
Other intangible assets, net
9,380
43,243
Deferred income tax assets,
non-current
2,426
—
Other assets
2,817
4,510
Total assets
$
318,117
$
220,479
Liabilities and Shareholders'
Equity
Trade payables
$
96,399
$
74,255
Accrued liabilities
22,841
7,633
Operating lease liabilities, current
portion
3,331
3,720
Warranty obligations, current portion
4,198
3,100
Debt payable, current portion, net of
unamortized debt issuance costs of $83 and $0
2,792
—
Total current liabilities
129,561
88,708
Operating lease liabilities,
non-current
18,736
18,982
Warranty obligations, non-current
1,000
2,617
Income taxes payable, non-current
4,309
3,676
Deferred income tax liabilities,
non-current
—
1,783
Other long-term liabilities
606
46
Debt payable, non-current, net of
unamortized debt issuance costs of $256 and $230
10,710
14,071
Shareholders' equity
153,195
90,596
Total liabilities and shareholders'
equity
$
318,117
$
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 from continuing operations is frequently used by investors,
securities analysts and other interested parties in their
evaluation of companies, many of which present EBITDA when
reporting their results. Other companies may calculate EBITDA
differently, and it may not be comparable.
Adjusted Results
In addition to disclosing the comparable GAAP results, Nautilus
has presented its operating expenses, operating income and income
from continuing operations on an adjusted basis. Adjusted operating
expenses and income excludes non-cash charges related to the loss
on the disposal group held-for-sale, goodwill and the Octane
Fitness® trade name intangible asset impairment, and an equity
investment 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,
Nautilus has also presented EBITDA from continuing operations on an
adjusted basis, excluding the aforementioned impairment charge for
similar reasons.
Adjusted EBITDA from Continuing Operations
In addition to disclosing the comparable GAAP results, Nautilus
has presented its operating expenses, operating income and income
from continuing operations on an adjusted basis. Adjusted operating
income excludes non-cash charges related to the disposal group
held-for-sale and goodwill and the Octane Fitness® trade name
intangible asset impairment, and an equity investment 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 for the three and twelve months ended December
31, 2020 and 2019 (unaudited and in thousands):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Operating expenses
$
36,391
$
34,867
$
150,993
$
211,127
Loss on disposal group(1)
—
—
(20,668
)
—
Goodwill and other intangible
impairment
charge(2)
—
—
—
(72,008
)
Adjusted operating expenses
$
36,391
$
34,867
$
130,325
$
139,119
The following table presents a reconciliation of operating
income (loss), the most directly comparable GAAP measure, to
Adjusted operating income (loss) for the three and twelve months
ended December 31, 2020 and 2019 (unaudited and in thousands):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Operating income (loss)
$
41,480
$
3,290
$
77,809
$
(100,544
)
Loss on disposal group(1)
—
—
20,668
—
Goodwill and other intangible impairment
charge(2)
—
—
—
72,008
Adjusted operating income (loss)
$
41,480
$
3,290
$
98,477
$
(28,536
)
The following table presents a reconciliation of income (loss)
from continuing operations, the most directly comparable GAAP
measure, to Adjusted income (loss) from continuing operations or
the three and twelve months ended December 31, 2020 and 2019
(unaudited and in thousands):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Income (loss) from continuing
operations
$
29,252
$
3,663
$
60,537
$
(92,295
)
Loss on disposal group(1)
—
—
20,668
—
Goodwill and other intangible
impairment
charge(2)
—
—
—
72,008
Income tax benefit for loss on disposal
group and goodwill and other intangible impairment
—
—
(4,796
)
(3,095
)
Other expenses
2,500
—
2,500
—
Adjusted income (loss) from continuing
operations
$
31,752
$
3,663
$
78,909
$
(23,382
)
The following table presents a reconciliation of income (loss)
from continuing operations, the most directly comparable GAAP
measure, to EBITDA from Continuing Operations for the three and
twelve months ended December 31, 2020 and 2019 (unaudited and in
thousands):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Income (loss) from continuing
operations
$
29,252
$
3,663
$
60,537
$
(92,295
)
Interest expense, net
273
259
1,487
818
Income tax expense (benefit) of continuing
operations
8,588
(751
)
12,198
(9,537
)
Depreciation and amortization
2,145
2,766
9,448
10,811
Earnings (loss) before interest, taxes,
depreciation and amortization (EBITDA) from continuing
operations
$
40,258
$
5,937
$
83,670
$
(90,203
)
The following table presents a reconciliation of income (loss)
from continuing operations, the most directly comparable GAAP
measure, to Adjusted EBITDA from Continuing Operations for the
three and twelve months ended December 31, 2020 and 2019 (unaudited
and in thousands):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Income (loss) from continuing
operations
$
29,252
$
3,663
$
60,537
$
(92,295
)
Interest expense, net
273
259
1,487
818
Income tax expense (benefit) from
continuing operations
8,588
(751
)
12,198
(9,537
)
Depreciation and amortization
2,145
2,766
9,448
10,811
Loss on disposal group(1)
—
—
20,668
—
Other expenses
2,500
—
2,500
—
Goodwill and other intangible impairment
charge(2)
—
—
—
72,008
Adjusted earnings (loss) before interest,
taxes, depreciation and amortization (Adjusted EBITDA) from
continuing operations
$
42,758
$
5,937
$
106,838
$
(18,195
)
The following table presents a reconciliation of diluted income
(loss) per share from continuing operations, the most directly
comparable GAAP measure, to Adjusted diluted income (loss) per
share from continuing operations for the three and twelve months
ended December 31, 2020 and 2019 (unaudited and in thousands):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Diluted income (loss) per share from
continuing operations
$
0.90
$
0.12
$
1.88
$
(3.11
)
Loss on disposal group, net of tax (1)
—
—
0.49
—
Goodwill and other intangible impairment
charge, net of tax(2)
—
—
—
2.32
Other expense
0.07
—
0.09
—
Adjusted diluted income (loss) per share
from continuing operations
$
0.97
$
0.12
$
2.46
$
(0.79
)
(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 was recognized
for the carrying amount that exceeded the fair market value of the
long-lived assets less the cost to sell.
(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/20210222005823/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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