Bowflex (BFXXQ) 10 Aug 202020 Q2 Earnings call transcript

Greetings and welcome to the Nautilus Incorporated Second Quarter 2020 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. ICR. of Thomson Deirdre Ms. ahead, go Please Thomson.

Development; Chief Thank of you. call to quarter for this Bill McMahon, from the being second the for replay Aina Welcome are Quatrochi, afternoon, conference call. everyone. webcast Konold, Officer; and next Senior the XXXX Product Executive Special call Barr, to Officer; Participants Please days. Chris CEO. Vice and Jim President available Nautilus' XX Chief note is Assistant Good will Financial be on Nautilus the

happy will the We your conclusion of to be take questions our at prepared remarks.

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our and trends, and known to predict. by factors affected risks, be will ability results that beyond are and actual uncertainties control Our unknown

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you team XXXX from thank late we incredibly fruit. joining QX second on for Operational and efforts that them. everyone. XXXX of our achieve Deirdre. results you, And quarter beginning by our proud now I'm our two best quarter, nearly our to today's QX extremely over our built strong producing in are delivering We comp amazing entire results. sales since in change year-over-year. Thank becoming supply bear to the afternoon, it Good implemented first a positive improvements call. in truly our up years trajectory constrained public QX, doubled, growth This makes company. in in financial XX% Despite being and for net year-over-year the these

in to rate ago, period over year accelerating our the quarter million most importantly, long-term in best almost one from the of that short improving strongly Our our history. negative QX seasonal demand second quarter adjusted $XX liquidity our to not a experience opportunities. and growth expanded Gross long million our fuel we positive second margin markedly see to points XX%. quarters levels. quarter with basis typically We from decline did decade swung X,XXX and $XX And EBITDA in top

both demand of in a accelerated to proved what our growth to response excellent products of by driven at-home be was gym due sustained broad execution closures, demand. segments and performance Our across fitness full to brands quarter and COVID-XX consumer-focused in enhanced

ended in orders. in QX increase In manufacturing back and a with addition, our efforts dramatic in chain $XX despite supply million incredible our we capacity,

nice more we even QX. could have wish to a gives satisfied customers, we us While this start

COVID-XX navigate like the to priorities, company's pandemic. extended as I'd we remind our everyone Next, of

positive XXX of has safety Our our employees the health first priority remains tested to-date. to our and none our report partners. employees of I'm to that and happy approximately knowledge,

chain we massively throughput. culture especially their need. and supply in customers, to time In our production Second, of drives greatest us our for response, mission capacity and deliver expanded

and centers, operations of open throughout rest at distribution and our customer Our the the quarter. levels care, activity, remained elevated of

short-term. strength so, skills, these of specific confidence, our company have to customers assets, moment. this in we tailwind. I'll capabilities our some of while at-home our responded of new We make we serve I to and our capabilities, the brands, most the the and all quality maximize attracted And built the the are long-term. fitness a omnichannel doing well in examples cover opportunity products, have leveraging with will well that want believe Third, including new in of model and to our us

were we long-term company. transformation Finally, delivering remain the the of strong, short-term results, while we importance our of also focused on

fix to And previously. multi-year to progress decline, arrived since topics ago. and driven, continuing vision on strategic plan the long-term significant led that are mentioned I've issues the insights our call we've quarterly I made highlighted multi-year in that that year a underlying We we've our

of of of from We growth and long-term by events the have several already plan them delivered the opportunity the continuation and elements enhanced fitness trend. the quarter that some of anticipated the this and been has believe at-home our

throughput, While half is to step and closures, past and story and our XXXX retailer our own profitability, incredible this unexpected and like challenges our websites aided major our approach accelerating opportunities. tailwind to gym the of remarkable and transformation include track response first investing performance supply a actions keeping production despite product character QX They undeniably relationships, their in drive examples challenges. new and results agile on team, logistical by our decisive progress the of quarter. response share on launches main omnichannel some were in expansion I from agility, and our of would to chain our the resilience,

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we saw elevated production chain sustained increased As moved We and unfolded quarter and massively throughput. the to demand. supply capacity

can we do requires which then bike will, at For IC asset-light in To partnerships increase capacity. an leveraged long-term time and saw be XXX% having this. incredible our the manufacturing example, quarter, good a in production this in model built like

responded flow through partners agility of themselves profound purchasing, who production capacity, On unanticipated with inbound outstanding to the grateful increased top production and admirably planning, of enhanced suppliers logistics. inventory to levels through and of we and execution and and demand. We are our

reduce Our goods port find Once from though, team is secure the to orders. of the ports, QX, typically COVID-XX vessels get To same the our DCs. to at in the product volume port, quarter fast to then shifts despite QX our a the to product close quickest improved quarter to of half containers DCs. from the past team manufacturers worked this strategies help of the in to was and the to about overall QX XXXX. boated volume quickly used second and get lowest the over We throughput, shipped port restrictions, we the solutions our did back lead in We variety extra the to at including cross-docking quarter. time as customer, the illustrate our

made key decisions team profitability. also management Our agile drive to

example, leveraged reasonable spending. key to from proportion current cost For the high our on and suppliers of sharply media sales on anticipated took price we volume We back promotion, cut increases unit demand products. on decrease gain and improvements

of provide with when, they retail to our partners the intended to customers direct utilizing to where, and We framework allocation our long segments. inventory run and invest greater to approach, in with products, balance engage prefer. ability between health decision how our leverage and omnichannel continue We an retail buy

pickup experienced well also partners their that acceleration not changes I products space consumer retail. such did partners exist retail capabilities our digital before And constraints their Both transformations growth elevated the accelerated of and have curbside floor as behavior point believe retail We will categories of demand in the benefits Nautilus growth for trends have traditional own through quarter, for drove barriers, they reducing price on long-term by that ceilings us. will hit. as accelerated our from the This lasting pandemic in dotcoms. fitness their benefit pandemic as brick-and-mortar for believe of our

moment also top website. and offering the Buy gain greater quarter relationships in become volume partners. A sales our retailer a full to use products scale the new retail customer, Best of new with their first on rose to We retail in quickly build

in capture a content, demand, XXX% websites longer to with for lead in extended brands orders promote added by periods, ways products. XXX% to promise slower our and ability websites moving SEO, an in driven improvements Our own traffic, organic visits capture this sought saw out take notifications our and To increase products. as consumers out-of-stocks increase in-stock amazing our and

While television as we on such digital advertising, pulled back we investing channels, continued media. search social in and

saw new disproportionate also our and introduced in products. to We brands customers, growth

in restrictions more launch tell and to products I'm shortly. our product roadmap about overcame travel keep largely Finally, and overall associated advertising XXXX you new excited to production unscheduled. face-to-face builds working XXXX plans our we new

rapidly be? such an been significantly time No including can have how But over I to lives call year Before their seasonal typical the business in gyms is is that demand helpful this months, our of would impact I XX the predicting We on a and one the for for less answer products thought trends future. people's cover be assumptions changed far about seen other industries, In evolving relevant we've our likely proven component Aina, the XX to questions to altered thinking of business XXXX. of Given the certainty. Based thought I the I might to topic. capacity will profoundly. underlying over as COVID the so the been how have rest where decline point. believe and so it and such increases own so and any levels. next elevated turn will what one the What situation effect current degree with we're the undeniably have from the that temporary, our open on decisions our share and into unusual

COVID to never impact saying back will In They other there's to research, that fitness home our they focus on of is including another go portion own solutions, permanent. XX% term, will However, of we even believe gym. XX% the longer permanently. perhaps the gym-goers and that are

the new hedge outbreak a options it's availability will fitness control on that without eventually portion their when the the invest gym. also their felt pandemic. to home gym gym in Digital of of they by a vaccine say in that solutions at survive. return The help safer closure think they who will the than believe experience membership to they between at-home available the rely did home when will market rely because temporarily the differently their equipment workouts there's the the will of fitness of home. of be options aspect the is Due a a of membership will Further, were will likely bringing caught of In and aspects their either believe and we or roughly disrupted XX not because growth. as least of supply will They unfortunately normal, We times before loss began and these sometime, another they life. gym gyms balance against gym some important at-home – of will those will solutions gyms important the not think gym an we orders factors, size fitness market. experience XXX% market

our of a to from products, important and seen role. needs factors upstart in is the roadmap respective movement competition, should situation development go-to-market of two. product term, rapidly readiness brands opportunity. solutions Longer companies impacted supply has the evolving, strong our a demand, both physical are the of and boundary play defined well-known well-established We such evidence the supply have already the posture. inventory fierce but meet highly an brands Nautilus, former There between strong have an and strategy, and will are capturing our of and investment to go-forward and enhanced less reliable as important clearly latter who and The planning, already products, market to have including digital like leading short-term our gym-goers incremental envision such established as barriers portfolio the uncertain some solutions competitors. availability, and in at-home Thus,

will over reading the more who will the to and our to detail. With it develops. Konold, as CFO, financial go We Aina like in over situation market turn keep evolve results will I'd Aina? that,

good afternoon, and Jim, everyone. Thank you,

reflect saw high a consumer company significant of setting path continued the a on fitness home quality brands. As strong power in speaking quite to our our our from QX, we growth. I'll Jim gross expansion for surge orders Record and we on total QX our progress begin to mentioned our traffic P&L XXXX. margin as websites partners comparisons a with metric demand profitable for We're today on rate, QX key pleased the make retail we in also focus to results equipment. sustainable by to about XXXX

with us As our we've Blair to a help business. William sale the hired commercial-focused of reminder, Octane Fitness,

is on last quarter, this result, impairment disposal a included of of that in charges we I'll million As these loss are assets. goodwill In now impact almost press intangible last our adjusted for of speaking to a Both million see be Please to million $XXX of other group. sales compared $XX P&L non-GAAP our a the reported doubled both these year, of The million. expenses. website charges. and to booked GAAP reconciliation we of non-cash to remove to these QX year’s the Net $XX release significant one-time numbers recognize results. $XX on our operating

demand orders a began stay-at-home this went rapidly earlier, in trajectory sales in our and result decade. advantage Jim the first in team's March, is that the to pivot effect. of The As the ability sales meaningful into when QX best noted in is take past surge uptick of result our

supply once about COVID-XX on our bestselling our China eased of accelerated rebooted and it, quickly output restrictions products by team chain increasing they some Our then XXX%.

we significantly production was insufficient costs, capacity Although, to the in demand in we still supply increased shipping and expedited quarter. meet invested

sales compared EBITDA year, net X% XX% of down by expenses driven related Customer organic sales our back spent on R&D advertising, Our retail are We as partners. advertising, year-over-year acquisition tariff $XX million pulling most extended entered X% of year's minus-$X.XX demand of had we've $X to or versus Max Products on last or in our our per share. $X.XX loss million periods are to the to of last we all ocean to QX by improved million also margin versus ops was continued million. carriers as was expense XX% given costs. expenses pulled per year, XXXX, saw flat profit million across profit in million, million $XX our to EBITDA declining subject pressure the were tariff this G&A scarcity. fixed to driven driver leverage. a segments continued shipping increased from last primarily continuing year, Digital were X% seven and mix Gross in expenses been points delivered maintenance or million, offset China better $XX.X and reduced sales compared And strong as line. costs, a income of on last almost promise sales marketing or Strong last Direct to this basis or and XX% was products of the of million operating And gross In share, Adjusted from million were number or $XX or were versus COGS, sailings. no higher $X company increased shipments. growth costs margin of net XX% extra overall landed QX we down rate lastly, on a paid X,XXX half year. since quickly sales. on Adjusted diluted XX% XX% from of were was versus year. inventory year $XX We than $XX.X leverage XX%, million $X million sales backorders $XX product of year. million, continuing $XX Adjusted time by to to by import X% million basically by $XX compared this Platform. by we last over was sales. Trainer get Adjusted JRNY was net costs last in levers Selling this of diluted and websites of in $XX expenses popular increased XX% expedite as for sales year. supply last year lower, factor. million $XX to $X $XX to income year favorable And XX% loss meaningfully to net rising, we $XX operating to gross primarily driven out-of-stock key of ops adjusted fees year. decrease net $X million to as increase, a and and customers than million expense products our first lower with possible. have higher both execution costs million are compared net have incur lower lower year. the at a to last The

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of XX%. in XXXX. up Turning is historic history, now SelectTech up XXXX a and $XX segment’s limited Strength were only bike weights sales benches. sales were Retail sales only Trainer. Max scarcity highest QX by product Cardio second results. ICX this to to second were by and QX Schwinn the million segment driven Net up quarterly inventory sales XX% XX%

XXXX Retail's XX% QX retail backlog focus greater was to compared million our of of of end we $X sales sales. net sales QX are if the disposed segment customers exclude at to versus for related than Octane end XX% at XXXX. retail QX. commercial the the QX company net We sales million brand, Importantly, whose $XX total grew

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sale liabilities our current face Capital is to and inventory our being and the disposal $X on began into due regarding other inventory XX% at decrease the million now sheet. our highlights. end, Octane new current in included and and end, million XX% presentation. the to million, held customer to held compared in primarily earnings with resulted group Please the the payables expenditures demand of reclassified year related a year available $XX QX to year certain at to for million at million for end, decrease million, this million than held receivables of of due to liabilities and for $XX reduced lower press detailed Turning held advertising surge flow-through payments $XX debt had the $XX in at of $XX the $XX million sale more Fargo debt see part balance assets lower Cash million the end mid-March. was million grouped We've on group. sheet million, were was Trade was associated into balance Inventory year release at in borrowing growth sale our credit for quarter. was $XX to year-to-date. and sales of much assets $XX timing and in the Strong due of the website sale million $XX was of end. Wells in $XX $XX stronger than great AR that facility. compared payments were $XX and for million payments. We timing disposal for cash

in Our seasonally a been QX ending normal more inventory would have line with QX.

end extra IC what up to decreased lead in FASB the purchase in the bikes at in versus containers, allowed increased shifts These capacity, to $XX and about factory compared QX port obligations, next us cross-docking to for To meet XX to and POs At obligations adding million ability million our with secure $XXX XXXX. factory the our output million expected boarding demand at routinely last inventory QX. DC port we the the of chain and times non-cancelable process to the XXQs. are DC had supply team's is quarter. Our more accelerated of of We QX, in months. end $XX QX at disclosed from year volumes line ramp the we by purchases non-cancelable issue

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half. the seeing of Given year. the for affected this we're on want our back not for half uncertainty, color providing to we're the trends specific that back guidance we some and give how do But plans they've

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on in new with We plan more on to in our half operating launches. support regard Third, back spending expenses. of product the marketing

in not same that expense QX. the expecting saw leverage are So we level year-over-year of

Finally, reiterating responded are pleased to momentum in In surge full demand how with we $XX our to we million of and the year summary, business the guidance $X capital the range has sales our million. are at-home to fitness. and smooth. are We're with forward another mentioned, proud of transformation we Jim always way stages delivered in not but have for quarter as that be results, the anticipate the will early still has team our in

to with forward balance sharing short-term to delivering structural continue sustainable a changes I We improved growth. Nautilus results quarter. in return making our you required the with profitable to next look progress

Jim? Now, call back I'd Jim over to the his comments. for like to final turn

certainly our you, Thank making in business. the superior improvements Aina. are quarter and the in We're the results with we pleased

in remind of and some However, we operating must is underlying our business landscape the the that COVID-XX. challenges uncertain ourselves the due remain highly to

our dedicating significant on While was also historical team our financial and delivering long-term strategy time results, energy we management QX transformative were work.

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you. Thank

from [Operator Steve question Craig-Hallum. is conducting We session. The Dyer, go Instructions] be now sir. first will ahead, Please a question-and-answer

terrific congratulations afternoon, and results. on the Good –

Steve. Thanks,

ended reasonable mean, backlog, much with we going full didn't with right were there is mean, consider? to scenario are much or start inventory. out, should case revenue you Just of to is or didn't backlog, best I and I in the capacity case QX know with didn't kind of sort as give is end started now, but it you scenario. takes guidance, sort of think kind puts inventory, I a clearly of guess best look with you I that a I that's mean, a at you near-term, it think reasonable

then Yes. I'll jump I'll in. to ask and start Aina

out. a of we're Steve. And trying it's figure course, question, So to great this

we about response high, that in you extremely on continues be quarter, a things demand time, got going at have supply. same As to last got and two you've a then you've talked the

things. On demand I – types as match to do our a will anticipate Our in we of by our supply with just well it XXX% of we will a quarter. view supply was I supply – these side, is within how say would increase capability. that I we're well continue learning and comments. lot know my we didn't growing, and that We're bike thought it demand has I said demand, never capacity one on have could also how

capacity of QX we absolutely But We've and going. day, on the look existing to increase where Obviously, of some deliver our and might we'll one ability you and further, we'll supply $XXX have both looking definitely that this and to supplier your to you side add and we're augment things And particular made is of, suppliers bets as QX, and pretty already tricky every sheet to then first bring get And so that lines by in go to I'm that to with because those actually we're ability demand have the that's thing can kind our that. thing new you – to this it, if so pretty what forward. you second and that you at balance are get our capacity. suppliers, learning even end implement things what happen match what as quarter locked you of imagine and is have I in and to on one. and and things million, continue loaded the new think – that, right. that changes, they the to continue lines. it's do ability those will like to add we we're that you for our QX, second commitment get our tell terms still then at invest during with to is done we're But to even commitment moving that some capable not increasing we our and – view enough, gives to of you

pretty we're tell, it's to there's hard So – but many optimistic. so

those to The it, at only what continuing that's helpful. you I'd seem correctly, of that. up, and if have we lines then very capability doing on it to in add ramp low QX these you you're and focused existing that expand We're with it we the non-cancelable do can we them. Hopefully may expanding through that but to chain our thing first on inventory, showed deals, spots to supply looked POs is, in difficult said reserving coming when

around you is, the a really some and particularly the products table after do have raised crush difference couple you kind on as sort And the but much? or to rates that? as Thanks. just on kind mean, that. was any did that the sense you Where of see elasticity of Very just you're helpful. leaving cancellation bikes you're a did the overall, not I so your seeing quarter, demand And you what then you questions One Yes. of any of the around price of that during noticeable secondly, bikes, ramp?

that I'll that us platform we And It's pretty pre-pandemic. of no, CX fantastic We relative an demand. and to the increase otherwise And difference, would. really augment out value see proposition has seasonal didn't – we that quarter, tried think she first on we a even if that anything still that particular we it look going. such thing, competitors we idea any a a many cost in I'll any or that again was Sure. But open to price with well. you recall, start see noticeable Aina before more? drop, worked and raise we there. And little didn't ask didn’t might good had in the of COVID and if can the hit, a sort all this we and gave had a at, bit

the got and a felt SelectTech and gouging are in in So mean, things there. thing little paper were we've a we room We that, stock, in about those that would high the the bit, we we weren't kind XXXs, toilet also these way. couldn't just and that keep people, new demand thought, work raising I them little things of felt hey, so any we price same

we those decrease of demand. So we both saw in raised and no

of I a think long how kind you wait. function people In it's make cancellations, of terms of

they're market, the in wait while. alternatives other to given quite willing a think I

our XX, things that. of Some XX competitors out like are XX, weeks,

stock back from division from immediately all and be will that quite our list orders wait, committed gotten for and Amazon willing goes we those buy fulfilling ours. that happy sudden, and to to have ICXs and had they're cancel they're of So example, schwinnfitness.com, a if a they'll to we had Amazon People get a on cancellation, at you Occasionally some from you'll them actually spot direct then need. items.

of we So likely orders our you willing back the dollar But there of you'd are and people and our because won't products a see some to good, are $XX million them. dollar. Anything sticks fulfill cancellations brands wait for do like around for lot it to add. are

No.

covered I Jim. think it you

one me, last for And Great. I'll pass then along. it and

should about between then sort about QX? split products, QX, new ton think to all? marketing throwing you the a quantify there's at coming that dollars of great the And all how maybe which about talked some get. behind talked sort that, You willingness and of Any I we

I'll think about how far Aina then the as as and can numeric answer I question, feels comfortable just doing it she tell you it.

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to anything looking of were little answer really framework spend for we the do to you want a because we kind these in that's any on best which non-answer question you types Aina, dollar, but a I it's of So a the have, way too. probably bit can we have situations. know that money is just of add?

started add efficient spend I'd as everybody effective a really last I focus and our remind on year. The in being marketing happening more QX one in thing that

our efficiency of So to in put when behind. marketing think began XXXX, just to already something launches just in top on be product we're improvements going you're that that so the QX looking compares, the about mindful to plan at year-over-year

Well, you that's Thank helpful. both.

thanks. Okay,

Steve. Thanks,

next The from Mike sir. question go Securities. Swartz Please, ahead, of is Truist

Yes. Hey, guys. afternoon good

perspective. provide little Just maybe a first question, context or

call into last the to you’ve on backlog think I go your mid-third early to expected quarter. had

sight of in into, sales typically Aina And point satisfy to something you at what today. that backlog your can to the during on back step the at wanted line purchase – calendar where of take that percentage that, half do of maybe obligations, Is for just and is, I look the year? have in year? then is this related it just kind the back you So the a

and So have with then Aina I'll the start the question backlog we'll to purchase obligations. go

– to of we unwinding, spoke we for was look, like starting just the So were we time last backlog, develop. kind still COVID

months. thought, we I maybe world, a weeks I think, it'd we thought this thought be of thought couple collective then we couple And at and And of be would be month. a might the a it'd in first a hey, of we weeks. it of the mean, sense be then couple

So when see we third would that catch the just those demand. statements in elevation May didn't perhaps up we we made this quarter, early in continue of

chain levers you if kind demand haven't of and it's yet you to because weren't the hey, long it to supply of so, in was yet, you side, was going be the you your our and going output increase how away sure last. the longer pushed Then quite And suddenly from call. realize, to you the supply and that running all after have last supply

to longer-term making do be try calls give purchase how But we we up Aina, decisions a knew what a obligations? I'd to weeks the mode call, time. going catch on you few within that these is on best we're you want say then to inventory. we this have, is at cover of And So do the the information

not that but if want same you periods earlier we like something to and continues were the as to longer, it's the backlogs almost the are population want think that to just, out. are that about to certain the that there question. progresses, I although seeing demand the will to fulfilling make level add be in year, I it's them, along do, slides continue I just of of the to we're of are POs they're because promise high sure that how that as not continue, sure the think time I when you then second, high near-term. what demands going wanted call the issued because for to we've we long we make want backlog And

to we So we as can. want much reserve as capacity

just this QX. only you are for POs million of want plus don't that I necessarily of to So all think XXX

as reserving into far can So factories run make sure don't work that we we with see to in we’re the a we as just constraint.

hopefully that's, you're be to So you helpful about inventory will when thinking POs.

today a to No, Jim, know then and talk the maybe question you marketing. as spend in and a is in that's But you. on haven't to place then year I this an maybe typical as pack been extraordinary as putting purchase would as much any had of tools great. you're some we're of have you maybe you stimulate in and underlying the can kind far maybe attribution And about environment from learnings customer demand. early that? Thank

so It's some gravity Sure. so acquisition back, we're this persist cost because to years of question for years, dropped customer back. where a know and and has we've I a comes – years that's mean, – we not moment point it's right? precipitously, great our going at going

I we're that really So I say issues I about last of product working spot. main in when beginning your still the going ROI. have to right on. underlying the it money how the we was that, that questions hand the really, quarter about spend. are at smart these year, kind focused thing to that's out And point just we our we talk really know probably how And and great on fourth – we're and much we're we're we of look have, portfolio

the spend in doing we and vehicles I've were other, a for The doing than and of the two-thirds kept row. TV, you media every I We on? got what the think second one-third called year that worse digital do thing that money is buying five how years – that. And definition sanity, so

do you there. something Of say, course just different

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to the what's And we with own help that things, at so, as research. attribute And isn't. isn't. proprietary new digital this process, the what's new in tools, less with Then consumer moved various TV and planning marketing did of and us to great least working know working into more strategic we we – working we what agency tools their of do what where some

of have we’ll just behavioral strategy, We when we we demographic and market done talk you have segments, an industry. new share group the our kind a age that's about in segmentation, to now segmentation super with did important we’ve and we

So well. modality things we're our our done getting a we learning customers, a choose had people like we're you path types that better then they mentioned than purchase getting customers, this we're else. – know as anything of most much of to a And choose the we've before before. time And, different to lot

very to that's and products take to – and that definitely already, fitness We they spend the for exact complex do. have that from purchase we decision people learned it's on the website but a them. to knew and right for places them other this thing you our that, So right in money purchasing your equipment

normalized. in But learn can things solved and everything So efficiency, meantime, of more that's media that. for kinds and That's a making cost we're the we the all eventually on collectively of decision amazing acquisition. look, like getting a tip we moment. just I customer we've the now, the yet, we clearer right what them And right our have sure make decision the of comparisons that going that an that's little be making are to ROI, things low really we haven't have say, to easier, prepared better iceberg. at to really bit to And – doing we website the that

great a it's it. question, So appreciate I

color, Jim. lot a Thanks the for

Sure.

ahead, is Partners. from question George go sir. ROTH next Capital Our Kelly, Please

Hi, for everyone. my taking Thanks questions.

George. Hi,

of a couple just So you. questions for

like? progressed that I what about just, and momentum, if that measure kind trying slow the quarter-end? of maybe do does accelerated what down as you down of to demand looks it any seen to it I'm just saw what kind sort does of what really momentum, has how at it get summer of you look subsequent is the what sort break like? have First, And could you or or guess you what

want You to start?

as it a really some first March, sub for the We restrictions sort last was weeks drop-off see some not said, And expected slowdown see people early more most term began started I’ll But we start. did Jim the did we because two were drop-off few any normal QX. of we a any for were when of QX. didn't looking returning to April. eased see We see seasonal – of the we it of we thought gyms, of when drop-off. to I'll in not but looking be really drop-off in limit had already quarter. the in comments our in what We bit to little to had the – saw situation. happened maybe weeks shorter

tough ends demand and for apart. people them a an it's back out And on out if that. few of weeks, say, people take Because of to stop checking let's of you're I'll supply that completely pull item just that, happening, add stock, what kind up – and

And of so tired your website, you don't or that checking natural if just know there's means in that drop a got demand right. someone

course, that, that in see as we our as the timeframe you think as, QX way. QX September overall, of seen activity of And So in is short-term to significant but most drop-off we well periods about well. any haven't of have

originally fulfill as our of our many to back The and stock show when we the as out. him and want overall just a me in approach, Because taking a out possible didn't to conclusions lot on things button our just ran we you really best for grayed people when a on notify can't these we're things. XXXs, dying but doing So early were backlog. we get parts, started just and draw website

out, that so have work leads put we XXX,XXX to and we – So right now, in work off. there

thing. not those that kind of a we in we the sort of send to people. we of back why to And main as one feel get them of like somewhat we've that's and in because made on reasons commitment batch that So is we're stock notifications got each

much off still any supply. So, in And outstripping significant way. that, very we're drop demands a we haven't in seen

Okay.

And for it's one just call, Okay. the question about I Buy. the the me, prior two mentioned Best remember And retail then was for fall. next business. had on you I'm retailers new guessing big

Yes.

there guess, constraint What that look retailers I supply is of you are unexpected the you’re a but relationship? trying know lot question coming to to I does broader kind all that of just, a like? develop

The yes, short absolutely. is answer

selling are deciding, to so carry equipment fitness and category. need reading would Some our you whole important hey, have is customers' And saying, expected that behavior. retailers hey, wouldn't customers they're I this lives their start now they’re this look, in

And The years choices in In everything We two, not when in and years the buy Goods comments, this sell especially long-term view. we we've to number direct, number particular Buy to demand have So one, there for partners margin grown premier big should things. they're fantastic appropriate business, that's of you're We great to in media traction way. I known and paying They're a team – to have our and like run. some not enough but And had suggests them. time expected Best customers then the we we invested work carry with mouth with of for these made have course, fulfill. a well you partnership for we level. terrific mouth wouldn't And yes, our And in make keep last our some to first make mentioned network. – and together. are we've at we feed retailer we with. and names them grow to the and our we gotten they're sure a to together Sporting equipment. retailers one we even we fitness – retailers need equipment feed seen names sure We wants great to, this my grown that ones to well-known was you have and we've for as the surge intact long extent, when Dick's every said, necessarily have don't Amazon, of – everybody to the know, feed a commitments

of it Okay, prior from version. question me a is JRNY, a last and the kind lot features, up just real step And sounds great. then there's it's – of new for about new like the

curious do one just nails? excited version was that what most the this lacking prior you're So I you really What about? was think

Well, and right. of software, piece all a go our together. they it's software excited in with And I was before, of content part our a but it's experience equipment,

in wanted least only the And Max was, was it it total, the it, probably it that come I about so actually super alive. about was thing to excited I the we was way on excited

the So I am the I going top going portfolio. buying just it And would available excited the of the only that get be the is $X,XXX people option. being to to say most through without to chance line, are a as use model it's

one those I not said, to, had videos. one-to-one of people And bringing though that they're things where's I often, that. excited when those continue I customized – the So algorithmic. is about enough. that you would but we think things us, even still, pointed I'm we're when for us. especially And things. is be use more makes would I'm to know, a would hit excited the like love a we even the The I would've said, think that AI-driven differentiating our differentiator coaching weakness. say, equipment. differentiator have home. hey, it for experience, our And it's I that about maybe trainer-led have it's want COVID to excited super I one And not like that's the using feel workouts, And it's a we really some,

some the have. betting way not on others live, we're Now

and everything our like we at, experience. don't customized want interesting. use like looking are and And even keep have particular capabilities, They more a like really people have We workouts change in insight. to lot day that I on Hulu, that live adding And to we're our they a want saying, big is JRNY variety. something of our coaching They consumer Netflix this want based time some it every time.

coming, things. members world, because combination separate these will be So that's the excited I'm usable the JRNY it's quite that exciting too. also And be was now within of that just bunch about Explore of SKU. And a is too, that a platform. going to

on algorithmic And we're and would options that And our a over software on I say still like step, I keep leading then equipment, it's add taking perceived big you going more like feel we to Chris, is so that? with approach. and weakness said, a have, time backfilling. to bunch bunch we would anything So particular we're any more there JRNY.

covered you think No, Perfect, Jim. everything. I

enough. to… He's going long talks Jim

great. congrats quarter. great and Thank on you a that's again, Well,

Thank you.

Smith, Please Markets. Lake We have Mark Street question Capital from a ahead, go sir.

Hi guys.

one quantify the quarter where is increases guys at can you shipping for costs me, and the First today? maybe during that all

these to We're a the come suppliers, all year deals that analysts on the not the bottom that line different last publicly, on the going – things the down aware point year versus of of that sure and right. make we think, good you of from wanted have but new do and to costs that Because going can to concessions we to are it this do have of with. disclose pretty just flow I things we're related not lot because to logistics. some were But out our think We're we up we've pricing margin. some getting pressures promotional I

our if time. anything margins, you'd to obviously, is customers And just, and there's for match we them. builds what business expensive we wouldn't to that's they slight differences there demand. add to do if our go do and in because really costs, that? our too were would think deliver to and ahead we're going Bill, and trying But we're way And like over supply kill we that

I Aina I those No, inbound both on deals of negotiated agree outbound just cost I think we've elevated be rates. Jim. aware well, said through some and we agree. mean, it are that at even and challenges. that, I comparatively the But pressures navigate with as the side the favorable

keep that to like we'd under our So hat.

you. We're Yes. wink to just trying at

rate and QX apply the take to don't you infinity. So it margin

No, a maybe the that's along anything Is labor, else helpful there fair. as call headwind potential the raw a out. materials or of kind call we as that in in else to out out? look It's line anything chain there supply

costs really environment. a say getting movement commodities regarding challenges favorable It I'd is and things in control. we're of are product conditions and that pretty in labor under the COVID certainly

about we getting Can Okay, maybe perfect. you're where – delivery versus talk kind And during talk And you expected then into today quarter? as versus hands. then are customer's and where at just peers? shipping at about you it, look product your the were times you the versus of where also

check a it's competitors XXXs of backlog there, how know the think out the quickly, when, other not to XX put are who out our some to of on a products thing XX, time. indicator. you'll that a at grayed to don't we're one the only people button we do almost back like then and out thing even the that and public you do I seeing. experiencing mentioned our of for I eventually I major competitors, products period you as day I to have evolving eight, don't one every website see promise basket reports, and working days. that, that's let's helps good because a promise than quick, where whether are got Yes. report, is periods if XX, me approach a And customers the of and buy is I space. pretty many that know constantly what see other matter And what our I see long-term see to are you in we think you click, our with The me And stock can our same days out mean, basket. in a it's first products pretty that And what That a notify few things weeks XX actually relative are actually I companies them, taking product-by-product. read see management of I a but that few have

ones. the to to our ourselves on of secrets our lot not So the success we add we're think demand. a the well we push our we to only ability match and do will to with be know base continue how supply And that

post-quarter the in XX and behavior last, from maybe out this Okay. that – at if me one quarter, you've the consumer to at anything you in even look or they're call here any changes might we hard be looking but during points, And really look just seen last days? then price as consumer the at behavior in last over changing more quantify,

here, can't we've or jumps to that sell competitor, they been Meaning total. don't sort I tried some it's also that seen they'll for something of able see maybe products they And have It's while. products. been out than I our haven't I before. other we've at wouldn't a that, that people most we can't me find on always another – – few well Max anything to out. jumps That's try look think of our a for the great one think of that sold been at popular and the when products it

to company hey, quarter that. course, of much Max decline going to did we nice that when several actually up a And get Of super a positively our comp, total be quarter we then was quarters, said we while that that is margin the for wrapped as we in so one.

this. part sustainable Now, just I offerings or optimistic about our I mentioned. know that's I whether if Max as don't the am of new was line, or that not in

mind. So Is really I there, come are hope only anyone have… else the to hopefully it's things but that those that

No.

trend the I strength that we think closely. There's some closures strength significantly. impacts is with watching pretty people gym of something And strength have the products. the excellent we're obviously certainly

So trends those we're closely. really watching

as really had on. history, the last cardio, training an Yes. strength some ordered that the rewrite on that get especially mentioned we we have crystal people wish than strength, weather and the would terms could probably warn didn't possibly go coming, out one more was call, their have other in that as That's this alternative go lot probably to got that a that's could the go people have and back better. a one ball could they But we if out, gym of people we because we could

That's Okay. you, Thank great. guys.

you. Thank

floor this to like I'd There Jim go questions turn closing to Barr for comments. the over further are sir. at no time. ahead, Please

have and to Jerry. stay call. look like forward business with Thank few you. quarter you, everyone onwards support months our earnings Nautilus. providing day of your of third a on and in continued update for for and the to another I'd on good Thank today the safe a you We joining our call thank rest Please healthy, upwards.

This teleconference. concludes today's

You for may time. disconnect your your you Thank this lines participation. at