Bowflex (BFXXQ) 30 Oct 172017 Q3 Earnings call transcript

Good day, and welcome to the Nautilus, Incorporated Third Quarter 2017 Earnings Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to John Mills with ICR. Please go ahead, sir.

Thank you, James. everyone. afternoon, Good Third Nautilus' Conference Call. Welcome Quarter to XXXX are on Financial Executive Chief call Officer; Nautilus the from Bruce Officer; Officer. Bill Chief Cazenave, McMahon, Participants and Operating Sid Nayar, Chief

and directly within earnings mentioned call may at Our in on Relations a today's release Investor comparable to Remarks The the issued non-GAAP reconciliation was earlier of nautilusinc.com be from the GAAP our release measures. downloaded website earnings includes most page. the today conference financial measures the anticipated financial introductions, of operating profitability, call laws. will business include today's trends, expenditures and results statements These forward-looking on product and securities meaning development include growth and planned new capital product the statements initiatives. projections, of anticipated concerning new anticipated

subject and a and from to differ materially risks of actual statements. may are uncertainties, these number Forward-looking results statements

For unanticipated most about circumstances to over undertakes otherwise reflect were Mr. Cazenave. operations. All it's to our Please forward-looking revision pleasure please recent that, XX-K. after made ahead, refer obligation to And annual publicly to more to Nautilus these of events or Form or the new our our information, events. update pertain CEO, occurrence any no the on information regarding with information and continuing turn to Bruce. my to operating results our or they call risks, release comments reflect to report statements go Bruce

Nayar as our provide financials the you turn Bill providing joining activity. will third then segments thank updates Thank to and a our product and our of in McMahon call as I'd business over you, overview quarter like it review detail. John. afternoon, Good well on start will Sid general on for today. more to by everyone, to then

and new existing call questions. for I traditional Finally, the products of quarter both and by e-commerce and the third generated remarks top line open and retail. provide we We growth was strong your sell-in this driven placements X% some closing up before primarily in will in

launched the We Velocity positive TreadClimber expected our or different a support. offset shifts got product a in with HVT, recently Hybrid Bowflex mature slight media our a as less strategy also Trainer, this achieved TV to help into increase decline in marketing start to as sales, partially direct and channel off

XX% quarter this for to and November testing more refine third used The provided scalable through line process than positioning the environment period a more Operating few HVT strong the quarter. quarter, Bill second increased compares onetime a provide season $XX moments. million media holiday benefits around few and sales income and third recognized over to same important for quarter into million from will last $XX.X we the to January insight in our prepare retail the continue messaging as during to us during year. generate which approximately enabled quarter, due this results of EBITDA we This to the XXXX. our a

year the performance to into Given the will provide full Bill's date, on color launch sales we additional and I HVT expectations from have early learning’s the visibility activity the pipeline after comments. retail

Sid. call I'd to over the turn to Now like

growth totaled the you, results to for the compared strong the prior for as Bruce. update of Thank everyone. provide to X% quarter of period I'd XXXX. segment. the third Good in Net an on our year, third the afternoon, retail like reflecting quarter same increase financial in million, sales an $XX.X

as period last sales the over year the of For lower net of offset first million, the XXXX, months $XXX.X direct decrease channel segment. in sales the same a Retail growth X X.X% in were

third offset margins in year. up to XX.X% as points XXXX segment and XX when to last same points basis sales, XXX quarter margins in spend. XX.X% quarter the the were margins the points reflects third finance year, expense. primarily as during $XX than the effected as segment of lower for onetime fees a net more sales $X.X channel the Total dollar Third from first quarter adjustments, marketing percentage XX.X% of the favorable of XXXX XXXX factors. Sales overall XX.X% the indemnity to the $XX.X to sales or X of contract are of The in gross of as compared agreement year-to-date percentage of same sales million, by $X revenues. and to XX.X% Total the third in for impact of were to an in marketing increase the quarter the million XXX for to period. the offset primarily which the quarter, resulting XX.X% gross a reflecting year. a and and mix coupled reflecting net sales segment direct months same segment. net XXXX basis on financing with for period spending basis, of shift decrease lower last channel in versus XX.X% amendment XX.X% period the than by year, of impact same Retail partially expenses last percentage an marketing in and of XXXX gross XXX prior the basis gross compared expenses prior reduction quarter basis decreased to included sales the XXXX, percentage media XX.X% to mix expense Year-to-date operating in period onetime favorable for from were gross resulting The margins settlement, same lower points from margins decreased million retroactive Retail Direct retail decreased as reflects XX.X% million sales as compared Retail improved the in On a company operating increased same the total shift margins a higher or of sales

income increased third or increase X.X% X.X% XXXX continue for resources Research year. the partially as of of media XXXX, investment million of $X.X to net sales were to by XXXX same General period fees XX.X% the the our XX.X% year to administrative year. quarter in months of in higher reflects G&A XX% million compared in X lower third of million related million to $XX.X or $XX.X expenses General quarter net months sales primarily year. the first totaled expenses The partially X% of reflects period $X.X the marketing XX.X% administrative were to incurred the compared with period of million higher to For legal and last innovate million quarter net compared spending the year. net million that integration operations for expenses offset to or net continuing prior period XXXX were prior Operating operating for and to product expenses, partially or XXXX of to lower same the and $X.X were reserves same for the increase increased as X EBITDA million $X.X percentage of of of a incentive revenues, up quarter as Octane the $XX.X the and to $XX.X period. $XX.X in year. X.X% spend in or increased the by the XXXX million The coupled legal X.X% in the last development development X cost. quarter compares period, and first of the expenses and of integration were versus reflects incentive costs the million XXXX, reflecting $X.X sales X.X% the third to compared which for to totaled by Research in the prior to same spending. Operating required third $XX.X quarter same broaden or net for first finance engineering of X.X% was same same and of prior of from XXXX lower last million for sales income as and expenses compensation-related net The our offset third portfolio. XX.X% million in sales prior in the $XX.X sales design higher or sales and continued of for sales lower compared and as marketing. sales months for dollar for Octane the the costs, sales offset sales dollar net compared net last the same X.X% or higher and quarter year. in margin expenses

of For X last first decrease a $X.XX per the million sales, X.X%. a continuing same from the was compared XX.X% continuing same for quarter of million of $XX.X net per year, of operations year. share period or $X.XX was $X.X the or for to $X.X of same period million as decrease period from XX.X% XXXX months over Income the share diluted or operations $XX.X million diluted in last third versus XXXX, Year-to-date the operating income EBITDA $XX.X million totaled year. last

prior This loss, same operations, entity. of Year-to-date a diluted deregistration $X.XX share, third the unrecognized versus for was per to or operations XXXX, from discontinued $X.XX favorably period Tax the was compares over million expense included or diluted $X.XX of loss was certain or income, million. the income quarter the million the million million discontinued total million the $XX.X third XX.X% last period. in effective the months Total for $X.X for prior diluted XXXX income year. $X.XX process XX.X% $X.XX X of where including of year first operations. per XXXX, completion was $X.X continuing The with net year taxes, includes same net previously in of $X.X For a we third $XX.X per associated share last to by of for of quarter the of including benefits foreign diluted or discontinued income, million compared release diluted totaled for last tax net per discontinued share, impacted year. XXXX reported a rate per period from X.X% share or the quarter which decrease from tax same net which the quarter $XX.X share, operations operations the net of $X.X

the our or launch, now as with the quarter introduction TreadClimber. Direct the totaled to due of primarily totaled growth third standard of the operating million lower segment traction product and Trainer driven Series in by quarter income million shortfall. to million quarter the $XX.X XXXX and basis XX.X%, margins of last XXXX of factors. to of of coupled Media for the XX.X% were XXXX, for factors. to of sales in versus a Retail the same Retail sales than Direct net same increase was year. million, our indemnity Retail of quarter last segment the $XX.X XX.X% in as declined new prior for XX.X% metrics TreadClimber Results margins of the in of Operating the offset segment product for of commercial. higher XXXX the million this Gross compared are products decline growth relative in points the received. mentioned million period fees XX.X% but the the in period the of up same of new HVT $XX prior product, third same sales. HVT is million same last TreadClimber retail for the and quarter was business, the increase quarter million by Year-to-date the in over key Net sales XX.X% key year to continued declines by the X.X% quarter $XXX.X of million improved of organic of The with income totaled in retroactively, income sales, prior mostly sales to year-over-year, XXXX, the Turning Direct these same favorably challenged the offset period. the period, introductions operating third or million the strong agreement. contract $XX.X by discounting million the down third quarter year. in million slower the to sales in XXXX with in retail business revenues compared Max XXXX gross The margin and improved $X.X or timing-related third same product to reflecting business quarter $XX.X of income lower remained Gross Direct prior year, In XXX TreadClimber placements, totaled Year-to-date drivers Direct $XX.X gross the net financing continued third amendment $XX.X business Retail the for HVT the prior are in grew $X.X weakness applied for X.X% same the the in resulting versus results. operating financing significantly a business from impacted along due for year. business for anticipated to Operating XX.X% compared the income attributable higher Net was compared reflects segment the increase in the margins, third Retail our as XX the compared compared XXXX basis $XX.X to points specialty sales for business increase quarter settlement an totaled Retail in shortfalls previously Year-to-date year. for in Year-to-date for margins by sales XXXX by for to same year. driven to mix. net XX.X% to $X.X in last period

assets September XXXX. investments and Inventories compared sheet. year-end Cash million period million of XXXX, to versus XXXX, of to ended to and XXXX The to totaled the versus inventory million in X inventory XX, the million as significant Operating for $XX million over prior investments year September Trade the XXXX, million of Bill? end of XXXX, as seasonality in XX, debt. with million. it primarily will This XX, additional XXXX. debt $X.X purchases. a and million insights same Chief December range McMahon, XX, tooling, $XX.X expenditures $X.X XXXX, Now at CapEx cash to the $XX to to spending in $XX.X year. I reflects XXXX, of relates $XX.X million time, turn $XX.X reflecting facility business Capital increase turning the amount of September to period XXXX, at the current at September our key the compares product infrastructure. were business who payables be XX, would year versus like this XX, At with on September million of million of in-transit consolidated $X.X the to of in with full increase compared million months of as totaled while products. anticipate the were balance $XX in XX, We $XX.X and and IT Bill into provide our September Officer, December XX, $XX seasonality at

Thank you, commentary provide return segment. results and Starting with to Direct background were to XXXX environment on in like our growth full Sid. but on outlook. Good a afternoon, to I'd some further year this provide channel, the our the everyone. We sales partially Bowflex revenue primarily Bowflex HVT offset modest decline by increase growth we prior achieved year The products, of was cardio was the versus expectation. below by of introduction our QX Series the Bowflex in driven continued the TreadClimber Results overall and our sales. pleased

our when As currently channel third on segment previous prudent, year-over-year quarter products new Direct sales TreadClimber we've adjusted in direct revenue. cascading investments as negatively channels business. direct We said and we traction. downward This other impacted category, these while achieve rate product the the into rate growth media our quarter expect higher of have a to step, to the as growth compared gain are earnings calls, we fourth

solutions majority improving performance and lead some generation of conversion, stages and HVT and earnings gaining the We're HVT. early our consumer area call. of for the through to from optimization a Inc. in Due made our grow the are year for up Bowflex reviews have continue this our in we're early QX be always, product want encouraged the Trainer to year. limited-edition Bowflex of personalization. but areas, quarter, is this HVT. category of But performance. to several testing sales represents customer are about by getting peak which segment performance the a deliver Both of seeking what in modifying Trainer the November better the was the and to A deliver QX. in Max we're began channel which their direct growth in we're general our the consumers important efficiency, we down regimen. sales of Max our sales as in slightly and improvements category. and weights of not and by fully during including gym we key rate Meanwhile, response The in growth strength outlined a drive To will, remain potential holiday cardio optimistic training continuing the with innovation. satisfaction, were testing, problem next this product Direct QX, make to strength the Max the we've creative collegiate-branded this slowly, participation Direct driven customers yet overall fall. Trainer in Direct. this the growth example January gains overall, product home surrounding and in in to the Further During and continue season, believe where helped grew continued we'll great on in more growth is Bowflex our Nautilus, add media media optimized. direct to during which delivering need strength we strong important Max of existing channel in continues of selectorized traction third is HVT of read segment segment trend, Retail quarter, to during sales product in buyer And MX, this we

that in involves information on QX this on provide launch Our cardio direct new market. is product modality major for our the next product to earnings XXXX next more is and consumer We'll track a call.

to in of as past heritage fun industrial XXXX, and participants. experience. to rich the this accessibility a we of the it, Additionally, then and offerings ease even In hope and everyone, is surprise a technology the in most to later be marry a QX be of fitness hard-core late the will best known the bike under and marketing, first Retail, upright it quality spent to beginners Schwinn This for as QX and and Schwinn evaluating intend we'll engaging and unique begin see modern the year Direct product excited brand. over market, time Schwinn a experienced, for We are. when consumers unique for brand. cycling design from early iconic they'll we this we compelling deliver under brand, product new about

segment. Turning our now Retail to

exceed bricks-and-mortar were pleased up that in broad strong approximately both XX% our did new in as and growth those in channels, expectations. Our We revenues were strong existing and retail. well QX sell-in were results replacements traditional the of products and year-over-year, with and by e-commerce driven traditional performance these as

somewhat growth which offset However, well segment. was channel some continued the specialty this lower to commercial in timing that as turbulence as primarily fitness, related in was by sales order in

approaching We Octane that the performed now fair level to remember shifts Overall, say are the to this, our has level of acquisition in important of the X-year is Fitness. market. primarily occurred acquisition it's of original delivered that anniversary specialty and expectation, the this and Nautilus We specialty our to macro Despite in external not diversification due fitness the more in that it's Octane the and there's we've further to business into been we continue evolve has environment will markets. to be to fitness pushing value profitability adapt terms revenue international the to significantly accretive at commercial and unlocked while of opportunity. shareholder changing to to believe Octane,

Brooklyn Nautilus the now reinforced value family. in who are by team the professionals based in the long-term talented is Park, confidence Our of in embedded deeply Octane Minnesota of

span ZRXXXX. Bowflex product including In by Airdyne several call, detail Pro for bikes, In sales prior Max the Schwinn fitness or we earnings products points. either in performance, new XX These quarter more majority outlined with growth will are treadmills, accounts now terms of Runner modalities the in price variety these and quarter fourth Octane of time SelectTech, product Retail Zero Schwinn categories, our vast XXXX. launched SKUs, the have and third and in than and shortly, for third were season. The launches the several currently in be Retail a placed Retail Trainer, new-to-market of products, helped of

of encouraging series. Bowflex of the seeing we're at Results cardio the point especially in placed, so products those For sale, case performance early

very which club-rate which key our with pleased well Octane Zero terms line. as commercial our is ZRXXXX, floor second commercial major Retail while our We're in slowing the a with ongoing being performance. not is launched of our with Runner full as point-of-sale our at partners, we with Lastly, continued products, growth expansion just machine online new achieved club-rated partners

of last half of But As that expect we quarter we do year the not please this compared do of occur to look We fourth growth forward in each in in as quarter, year. to this QX third sell-in remember year-over-year growth as same Retail. the continued anticipate year-over-year currently the primarily in achieving occurs we seasonal rate quarter that XXXX. the in year the fourth second did

organic XXXX on and always, business quarters. evaluate individual Retail performance back will our basis, that we basis. And performance versus global As strong for that the the the over half anticipate the market we organic of half of second on share a channel reflect year of retail gains

weeks. appropriate, and we're over feel our Regarding coming fitness distribution our into we our current at Retail both we inventory season that We well our positioned peak inventory supply centers. chain, as is the within and balance believe partners head

I'd though comments. the today beyond. in Finally, mind we are point, keep the this call XXXX like introductions launches please we his have product road multiyear product that and outlined closing occurring also At new for for in to a Bruce the turn we product to already Bruce? new map robust very in back multiple and preparing place, in call now, over

saw like year, the with year in call we make half. you, to stronger before a the first communicated Thank up unfolding Bill. few for the open back we Since a followed in we how questions. by slow final I'd half the comments early growth

coming gain more the Our top of XX% continue channel, quarter the market second in line season. and as by Octane-branded a internal driven new the segment, strong growth mentioned. traditional and in fourth and retail we Direct good market news holiday core share is, in are e-commerce recently introduced in placement and business help based were sell-in for customers half so our as challenging products our the very quarter we Retail expecting double-digit Bill third well. skewed and revenue to specialty our third the that retail of growth into projections growth retail environment, The overall with Retail in drive commercial will in with quarter the products Despite growth organic growth heavier on achieved new locations

a the conservative factors on On emerged taking business, quarter. based of are outlook side several that the more Direct our during however, we third

First, our in-market more accordingly. media this messages HVT test and of growth creative near-term and the modified that will product -- suggest a product forecast we approaches be have have deliberate on trajectory,

efficiency but few HVT last metrics media when Second, for remain we a and And awareness consider. need expectations likely meet TreadClimber both overall revenues more to challenged. third drag margins to in an This third, building is quarters to our compared on provides direct partially the due the not sales year. Did efforts, nevertheless. quarter added declines continued

product $XX investments for these Therefore, guided to and growth the these prior income both growth on than full done for to time. a in to lower-than-previously-guided growth the to year businesses, with and in lower total be and peak momentum prior full plan While year expected for the full past. year a previously anticipated season the the lower Retail to quarter, $XXX We growth QX year to Direct enter range This this to expectations as although dynamics level-setting year are flat is XX% additional at decrease we roughly over can basis. create fourth areas prior prudent coupled expected company November, in given the be media million strategic feel year-over-year million, million revenue operating which just in and range in the expected make of $XX is is to guidance XX% support rate Direct year. in once revising to our late Full we change on and does they guidance revenue headwinds in in rates we our $XXX reflect have of business the than HVT, million.

planned, excited is and had While and stepped-up the the about all near-term distribution. channels clearly of year new this year remain we XXXX we launching results are coming not a those cadence outlook full that products what to in pointing of disappointing across

presented to additional tactics brands, necessary. course Importantly, our while achieving The market strategy access innovation, product remains in in around a marketplace that as and new or fundamental whether points are intend or to diversification the us, to organic new to through continuing building opportunities take company centered financially, intact both is assets. strong position, they can we advantage and the in acquisition be adapting we and growth invest including create that of stay channel of

like all to our initiatives. of instrumental employees, dedicated result successes every stronger who the of that our always along the we is As make our incremental worthy, their was mode, are processes our efforts and move in standard strengthening past our while business initiatives. growth company help quarter thank core and of exploring simultaneously closing, parallel operating opportunities and fit That strategic concludes In prepared I'd remarks.

I'd up call the Operator? to questions. for like open Now

first take Thank SunTrust Robinson from [Operator we'll with question Michael you And Instructions] Swartz our today Humphrey.

guys. Good Hey. afternoon,

Michael. Hi,

Hey, Mike.

think sense thought. just or just you something being I maybe the the give learned color could about you first made us guess And not strong - provide maybe then you as Could about for maybe Bill, question, awareness awareness just of two. comments quarter there, I you gates you've past HVT. and know versus the out it's launch else? more what as Hey, over around how us of a little do a

generate purchase in efficiency the they do about at we're Hi, they to product, product. your they are to what three, what's buy? rate And Number there's able seeing, can you satisfied being -- of Michael. in interest important very meaning one things On success do going is course, say people HVT, buy good it. of they cost a are do and who Direct and really two Number is X-key respond, with Yes. your number of in response. elements what is the

have the of we on three two So boxes HVT, checked.

really seen highest launch customer that creating yet higher our see we for still a And I'd this remains product we've say, But performance product. terms extremely the of a of the conversion, strong launch for in challenges direct product. in with today. response So would product, for that, turn, satisfaction performance of new having direct point media for this in driving the HVT, is is as terms in and not like to any delivering product in are we good

points. do about isn't see it is come respond, about them those who that and is testing do for It's clicking price when increasing conversion that to in messaging So what rate. they testing

we're like getting yet. the we're help? of some we'd improvement as getting see while that So improvement, Does not to

great. you're mean, improve that's to And attack no, what are have I When levers trying - guess the Yes specifically? - matter. conversion guess what I a you to practical rates, just that as the I

think biggest are and do thing they what you some I buy. case, we've we go us proprietary on point, done feedback to made And back look you you that at then, to is at, obstacle have that in so research responding, who gives it the those choice the not purchase. our the why is is

testing learning there as as and for what we then buy, that of going lower front the why a much art can clicked and makes factors to them. to position the product to was us. it's that Just And of see that purchase. more barriers in or, them regard to that otherwise, some the way those deciding those did it with for is And they get who you're people did in sense buy

those on that it receiving. love customers have that closing are just along to how we about Sometimes and combinations. bundled who the people experience times, that it's may We product who other it with joy bought we It's the points really price do way. do it. trying strong have the and more here Other have things about to we a get the say gap bought that different know product

Okay, second maybe great. And question third just here. -or

higher Sid what wondering just that I mentioned I the inventory. in about. also - about, then related I'm commercial think had had referenced? is guess, some in-transit something you to that's the that And of sales timing

inventory. year. of about Yes, really, in-transit -- transit significantly year, quarter Number was end was actually in had Mike. at it's one drivers. inventory to X This compared key Last quarter-over-quarter million the $X million the -- and, $XX inventory up this the obviously, of we

couple going of September last part some early of that big So year more it year. out other talked I should and couple also million October dollars' QX And that that were in in We new shipping worth in is about a maybe there shortfall the were SKUs. chunk it versus it's XX say had of increase. orders sales timing. a Clearly, But Bill this of a change, factors. finally, late explains that of

just positioned numbers bit launch SKUs, we I well. inventory as would terms overall them Stock as of that back So feel to added little in say in new backfilled. this a normalized that inventory the season years. having in ranges. good higher little certainly fairly we a we're that be be were in than we through position, It'll prior to a these holiday

Okay. Thanks. from me. That’s it

Michael. Thanks,

B. Next, Riley. from with Wold we Eric hear

afternoon. Good Thank you.

Hi, Eric.

Eric. Hi,

A one QX the the guess you're you conversion talk you're with anticipating questions. in on spend call. stood in I HVT. marketing what where versus the about terms lower-than-expected around guess couple seeing maybe I initially on of on of follow-up currently questions maybe QX that, now

question. good Eric, - think I

as that less and HVT we in investing And would've than had in invest spend invest we're go because season, to did be anticipated traction we to guidance, will continue the want that's to we we see the we before QX. prior more reflective we will But peak go planned. in to more QX. highest in positive into levels we'll We the than some willing

the into to about thinking of a described you ala move that planned it? Okay. Schwinn get And subscription is are the of then bike launch of well? that upright kind in something like Peloton you launch, your Or segment opportunity revenue with kind how recurring into the as how

around One, this about Two not that call. we'll take. that We Certainly, unique well. in have say do should more in it x model, very a you'll it market see beginning Schwinn we next group the that. we product has the subscription year, answers think specific the think product interesting -- be and a will it's a very to of and do to

in product our perhaps thoughts products continue models environment explore we'll address something the think it's long-range road have we're map, terms In and an to I our that of it's that road. exploring. subscription the of I that on some think definitely going down type and And forward,

Perfect. Thank you.

Eric. Thanks,

question. Frank has next Sidoti with our Camma

afternoon, Good guys.

Frank. Hi,

Frank. Hi,

totally you're last understand the little the I in because of understand year, go there. like presidential I But campaign. lot the I I time know is, spend want on general difficult understand. I media HVT deeper so this, comping media you don't don't against guess placements a on spent I because dynamic of your with a what

looks it start let's spend sort of So sharp like with when question promotion, that. is, it for percentage second And part and decline. advertising million, especially the of the pretty the of $X it's look I when you on adjust at

Trainer why So maybe down. add Bowflex some on the can and would that be Max you commentary component

couple Yes. Frank, of a things.

we that in some came as marketing, terms as a and future well we -- in selling of cost finance partner the a contract have renegotiated and on onetime savings the received financing. ongoing did of benefit the a company onetime On benefit

Max and is off-season, a not Max we're But for it's we perhaps we supporting year-over-year, finding Max Max, also an -- in still can comp there Overall, should the putting that, flat have that some into some The path that increased seeing updates not - into and did pass. prior still is spend been prior was to easier some time, Direct, quarter, did at in ROIs. Trainer to going it profitable Direct. spend on did year, discussed, performer growth you're had what year. was spend for to less. indeed, the We in a TreadClimber What for was the That slightly Max put HVT the think spend differences HVT. great single we've away. comparison. impact went are, essentially very anticipate ended this a reasons up So return into have a that an by as personalization with though spend

back that was We of spend, So the in it's making that we more the did that, we of it we're originally able to position so increase timing not felt about so of off to assessment back do were primarily QX, on we profitability the we'd be we to simply do. able optimal media anticipated HVT, just and it.

Okay.

On the -- the said is in environment, TreadClimber, of actually quarters a that? given But retail feel? a the like results like and do you do the trends, Or that. what Bruce, competitive product you you it I stop time more couple selling think

It's to that few And quarters, a never more going a we lot Yes. there's going to viable that. of awareness it's away. be for a There's tail is going -- We long Frank. of it. years to said, continue -- to XX a product, very the of The over product. appeal still it go we built

give a of been in - type sell a that it it's as the on we successes level sales that questions retailer floor about assistance people getting don't and are certain that chance understand those to on the that that can know pretty and trouble the But We it. into product it have have selling Retail. to on selling knowledgeable fair answer floor and it's folks get there's have Those cascaded are it Retail TreadClimber. more best, normally of a force to

it as it's that not rate, So in still we I -- XX past. a to still large gyms Not comment continue the over product was to home earlier. the mentioned at discounted this it's TreadClimber margin a the plan continue -- launched made have has a has fact and only think to line. We sell years unlike good - the appeal we Bill it's in And Direct. even in unlike after

Movement their price Can specifically question point? recent at And the me. about launch of talk given Okay. for last all you devices, the Modern

launching within be bringing well, Movement will that days. Movement, up, Frank, now maybe excited Modern XX next products, in we're -- ship The retailers pretty to, shortly should two months for Modern the and -- about. Sure. thanks or are they they're

foray our it's So shelf into fitness.

apps, unique And technology, tied M-Board, modalities we have to We for the example. pretty some meaning there.

product. help who environment are it. pretty tested and product to the Those who using excited you those have have about So you it have them an engaging app seen where you're use balanced a

We expect coming shortly. and and coverage otherwise give to have this up on media guides

a to product foray an We it we But other expand it's this to we and area have area. it's to works, we'll out feel how line. with If like So continue product we ideas for us - it yet. need introduction. prove on good every some fruitful haven't into pretty the touched

retail price for the What's that?

the about It at to $XXX ranges $XX most. from about up

you. Thank

Frank. Thanks,

Burns Andrew from comes question with D.A. Davidson. next Our

afternoon. Good

the sort is for XQ cycle? XQ, into test early on still follow-up the the to XQ Or of testing so on late expected And launch new XQ, other of XQ the a its of Just then with peak be to impact? mode season XQ 'XX, that Direct in that you cardio products. launch of early sort Schwinn be demand? will the a much timing idea Is in where capture of some perhaps behind HVT

made. Thank good Yes. points very you, Andrew,

primarily digital marketing. the be On it'll launch, Schwinn product

think So said. type itself. you that be to the we'd like peak when the at of to I going season, will as this that And capture explain of you see is product it the

'XX, On same that product test product television fall to the prior give of to time to Direct of product the big next is the us that launch launch, launch next in HVT, would for runway some we season. for the QX yes, frame reasons

the is is What space? on channel? how And Thanks. need evolve And commitment the distribution to high-level what given your are specialty does your changing? that to Thanks. how and then thoughts Okay. that channel, in channel the considering maintain consolidation weakness Octane specialty

other that The we under in a there that fairly a and on is -- category consumer do as within in et the mind, things that here, I and This going specialty that would specialty. some corporations, factors we chains, part are small still that products Keep that the are that It's are vertical going more dynamics of happening, the as the continues is hotel still part channel sold pressure, commented number actually it. as M&A challenged to more Yes. And it of well two see cetera. is markets, and done like that of it purchases, but and say well script -- the is viable within is e-commerce has it activity are market of aspects channel has growing are to forth. definitely servicing Andrew, by One so being a going forward. there.

still retailers, we we've turmoil something challenges specialty have of X navigate might that - have months if that we is back would January in about you that those got industry. X ask XXXX, to of to where, this but honestly, of think, it's have the we will that have in said me help And through us in part it So product adapt. I plans we

like Now it outlets, in happen. buy commercial-grade bricks-and-mortar almost it, do it still elsewhere that let's can't product. I would high-discretionary value still added, just in more, needs they particularly almost income provide seems they its it's e-commerce And to third there's And are - looking stabilization or to specialty. so to it earlier, who it's call they going a into folks go about year. But to talk find

viable we closely so because think what a that's for. into Octane stands market very fits it And

some affecting in we're within to the just We changes So us. still going have carry of us to navigate it. and that various who's the are retailers

one Thanks. last And one. then

out any at relates Just and upcoming strategies some curious, season holiday this main to years, new you've it you there as shop-in-shops Retail, look the done line past goods. season you'll Is as Retail? in be you holiday mall at testing pop-ups, test sporting

kiosk dedicated do partnerships that us to strategic with to the find stores. our help some year, place Currently, we to Yeah, some that do we the expand continue to right certain floor the on of give aren't and - we'll Andrew, the in-store that area. we pretty continue We've testing. results do retail testing some opportunity in with have in going inside had mall good though any this what and partners

Thanks much. very

Thanks, Andrew. Okay.

And Kelly we last from one George have [Operator with Instructions] question Imperial Capital.

Hi, for guys. questions of couple A you.

your you there's I'm significant unlocked. be So wondering that more in if you specific. - can first, remarks, prepared Octane commented to wondering, value be has

now it couple of owned You've a years. for

that if there's XXXX, in that it's unlocks wondering anything, maybe value. So

Thanks, Yes. George.

commented through -- new unlocking We that. well. specialty is evolve market. match modalities innovation. and brand future just we Octane's is a But to I think our Bruce space in additional need commitment Octane the strong think the And I I commercial to think think to as on

We brand places have on to even and international the space that commercial opportunity more in the stage. take to the

innovation go we asset people involved we with to markets brand the can the tremendous some and at in many Octane so certainly, continue in headwinds to specialty, So expand. think with we here but have and and, a more brand that

Where with development remind your you the legacy line of can in And Octane international kind me are we? integrating the brands? time of

and Yes. systems inventory There's we've 'XX logistics There's in that warehouses, lot is Europe, the targeted third-party work consolidation really particularly needs some to certain a of done. of warehouses. that. for year be

some internationally. So would Retail to value, capabilities, be underway. terms those what will the of well particular, unlocking are business, the kinds And that of part be for of in those some Bill of things to both alluded leverage in of

part of other works, start The it sourced we is are products being still from and in to that see other the are you'll factories. 'XX,

better So than could there. what let's just say some us is experienced potentially, dual source from currently provide cost other being factories. That,

of another, they that's So the it, X happens call X-phase phase integration that XXXX. in

in the you was Okay. say be quarter That's believe helpful. third it And in to than the did Direct then growth I -- the segment. a quarter? higher couple expect about you that questions of fourth

modest Yes. currently than to growth. We QX's QX project be growth higher

you challenging specific And the to products more third can confidence seems that - are quarter. the growth? the Okay. comp in category that give what that regards than seeing you accelerate you in is Because

Yes. than third quarter. challenging the is It more

product-specific anticipate performance. on do HVT, in report another individual from As benefit I can't say prior we good you Trainer performance year, anticipate lower a then some with against know, out of the we'd George, don't quarter comping continued we and TreadClimber Max fall.

well, Direct especially in products are the Bowflex Series the Results treadmill. Lastly, quite performing

products, area So response that we strong well, that'll while consumer in historically, traditional as and are cardio on seeing contribute. not Direct, is focused

And Okay. credit approvals quarter. last the then approvals, third in question on

mix. the up card improvement for year. X slightly The Tier terms was of in That's XX.X% was headwind a line vast going in than financing is fees, provider, the from in note XX.X% favorable that was normal would of that QX, overall. mix improved our with payment from I forward approval to credit combined essentially prior Direct Direct. third up but payment majority quarter Credit which, our with in more financing,

you. Thank

George. you, Thank

the over question-and-answer Mr. for comments. today's now any conclude closing conference additional would to turn I Cazenave will or That session.

in call We forward Have next call great look another in day. your Thanks, year update the and interest the you. Nautilus everyone, our a year. Thank of you. for earnings Thank providing and business full to joining on today. our rest QX

conclude today's your call. conference participation. does for Thank you That

You disconnect. now may