Bowflex (BFXXQ) 23 Feb 212020 Q4 Earnings call transcript

Greetings and welcome to the Nautilus, Inc. Fourth 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. to ICR. conference like host, to now Mills, John would turn over the your I

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and delighted capped game I’m our our outlook operational and thank you about from Investor discuss year about we finish met with you and to words products. Nautilus. growth across North channels We in future tremendous that strong highlight everyone. executing for demand fronts and record our supply. a with Star our performance, today call. year ended To the Day. for our performance significant on Thank Company’s joining with continued the with a few a today’s Good increases And upcoming changing afternoon, partners, people and fourth underscore brands, our quarter, all quarter record-breaking for achieve contribution profound speak all the you, financial John. I’ll with fourth the the results, in

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in their the Both period, turned quarter was Company’s Direct XXX% reporting business, good, Full XX%. more best was company in Octane not and up was excluding the Retail doubled quarter quarter quarter divested history year-ago segments recently an was bottom apples-to-apples both, top fourth and in XX-year it up revenue On up up excluding just basis, over than million, the the ever. fourth Our by was XXX%. our best the Octane versus line measures. XX%. also revenue $XXX

been income company, in even came XXXX and XX% This sold Octane. plus but a retailers if generated sales Company inventory, since is the would at factories, typical. and sitting Under leading product year, orders at the have recognized. increase in an as this unshipped entered up containers common public disruption passes factory so-called a global our like of $XX shipping Nautilus over All XXXX XXXX take find point business, up. in weren’t the we due of easily factory for which far as just with in within shortage completed retailers quarter possession of backlog. want, a able plus them the FFO quarter arrangement, for our shipping containers, serves title over is and and $XX retailers are are our for our $XX arranging pick XXXX. quarter our fulfilled For to third was million, At fourth sold waiting told, revenue transportation, containers. to in $XXX responsible guidance and is from history our badly them and to million second occurring. of year-end, not Operating history it higher These When inability for XX%, it highest picking severe X,XXX% are the even we illustration inventory they for to Amazon of that comp the million finding million had year and to revenues, in near the best only and magnitude strong excluding our

for quarter ever highest earlier, XXXX quarter one recognized we is Octane on gain fourth the Nautilus. Excluding the

full million in the For compared million a loss $XXX income of operating $XX to year, was XXXX.

for short-term long-term the with the and massive million our was EBITDA cash investments. $XX Company’s $XXX in end ended the a net loss Excluding million. top loss in EBITDA our operating and of giving year short-term invest additional $XXX change of disposal, last growth. versus year’s EBITDA of year $XX guidance $X That year-to-year of cash by adjusted resulted resources million in investments, a on This to was and the Octane million is $XXX income us million. $XX million swing in exceeding improvement million, We

want in the easy tailwind obstacles many ways, were achieve. far In and this results history. our most for from challenging our of year, the instead XXXX them they and been may outcome. to have at-home While year many through to faced were aided that unprecedented fitness I navigated produce to emphasize We by unanticipated much

industry’s conditions very partners’ whole our in their to late professional before to implementing new lives; generation execute Bowflex (un)stationary, face expanded launched had and treadmill hit; and accelerate To the their began delivering cardio Company financial personal and extraordinary XXXX, and were out. Underlying our the the with also the incredible for can adverse supply increased of and executional even apply in we improvements record the results and of learnings for and facing impressive Trainer; determinationand performance. better. results first truly of Working calling in seven customers are partners, these operational future agility dramatically well mode achievements grit and we capacity. debut pandemic problem-solving bike, challenges and We we for the chain of shareholders, some efforts dual the proud VeloCore; key creative we the production line. next our confronting introduced including challenges. employees Max products, and in in by innumerable operational driven of endurance Bowflex I’m These connected-fitness, worthy valued

In refreshed addition, of and we consumer portfolio our the our our All-in-all, and Bowflex points. launched strength choice and benches XX SelectTech bikes price instantly features modalities, cardio, series. popular barbell set, Schwinn XXXX updated strong of

new Our approach way. have connected-fitness us conversation more and go-to-market in the gotten into in a modern products a big

through program year-over-year social reach year tangible up to As the our our X impressions influencer produced ago. examples, over earned Xx public a compared relations times media and our were efforts media

as prestigious only not such in VeloCore are year’s for the but innovation awards, winning award reviews products the winning and Show. this Consumer Our at conversation, Electronics

in including you more connected-fitness platform where less. trainer-led workouts. one many one focus offers be on features, platforms own also time, individually, classes off-machine the workouts, immersive as entertainment our group but its the for such focus options individualized suggested AI-driven goals, with yoga. which JRNY tend progress individualized choices coaching. to virtually We adaptive interface, standalone each is continue follow number a new provides and and user based unlimited to experiences, each more on on providing popular of mostly classes, experience as time digital personalized the fitness providing a on-demand or more same classes JRNY first member includes a at can for workouts, JRNY, Other to used and along. rev It individual’s workouts

a we fee been that connected-fitness this variety, of per value among all has the members $XX trending month Our of of the deliver price nearly and for fraction competitors.

We’ve Amazon in the of to as was customers bowflex.com more product XXXX. allocated our improved DICK’s year. We listen long-term up inventory approximately the retailer by the continue the usage, with select Bowflex We continue customers level and which development increases Sporting consumers with capitalized to to for connected-fitness through accelerate observe recent partners, for been schwinnfitness.com top We as increase relationships and Schwinn build we of traffic sold. in new Website Goods. added memberships for promotions. to X growth scarce our high-quality margins partners guides and on them key Xx introduce on and efforts. also ongoing XXXX price devices products. in times such new We decreasing JRNY tandem to our full to our We Xx and stood to versus able products opportunity and

focus products, We and we Many reduce of are lastly, sale and our as at-home completed new cost with operational the manufacturing these Octane Best the our customers, on list. and and And fitness capacity business. Shields Buy our expansion continue accomplishments, Canada, market. Costco have partners, our impacts added durable well to new U.S. retailer lasting retail as new such key recent as partner of to to

proud and on operational culture. of to progress In I’m addition capabilities financial improvements, results and our people, enduring

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would dealt day-to-day with the products other new impressive they support business, Chief level the leadership foundation or of. a Financial strategy balance in and With develop and our and implemented will us on Officer. Star have improved this simultaneously, built The entire the to these Officer, these stronger, completed the succeeded a to Chief by build a and but Company. take team optimization proud as in but and announce provide to to be the values accomplishments North forward experienced road Chief out Star. a nice particular, we including the year, results, XXXX, Nautilus a long-term let us and bridge three strive our sale Two Officer, has We our the finally, capabilities produced December a have to whom recently multiple perspectives. our to team and and dimensions executing outlook on well launched new diverse our XXXX, our good executive for help veterans XXXX and of executed Digital the for JRNY, hired rolled for that financial they strong truly between culture, of next Officer, and inspired how building Chief to of a Marketing events, aim our ahead. term. strong more pandemic long on made I’m all to shortly, North team People with we executive me outside XXXX Since levels Octane, vision continue the made teams the that, for us year people leadership on new to degree, of stressful we record-breaking as And take of new talent, we mission, completed and and

durably was demand We Polling the sentiment new with for home results the SelectTech by stable, availability to gyms, before of of the replicate Gyms. they When behind but driver convenience bikes, hit. will see their continue all Home gym a much return than discovered through at-home the of they they for not got key products, do remained unsafe, gym fitness working out much to gym plan differently habits. who is added from tell have themselves gym. vaccines. more that our and Demand This have to see cardio than is going Those us or ability with rediscovered connected-fitness which never connected-fitness. us, they feeling driven their the with what has gym not or return to slowed more COVID strong day, and goers balance products, many from to of workplaces the saying home, and routine consumer of sentiment former XX% pandemic especially will to every line partly now

investments permanently. this Hence, continue of inventory. in that to All make supply optimistic to of us in driver a we leads the to be chain large significant term continue demand long surge will and

major demand have do. coming short to still her web indicators more for will consumer traffic We cover least quarter in battle such supply, to sentiment, monitor And to term. logistics, guidance still leading ended our work continue XXXX, We’re at Aina in remarks. sell-through. with retail we global closer as March meeting challenges but the some XX, and

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arrived, resilient Nautilus Star with company to of It home has fuel shared vision evolving But on initiatives. Under and underlying urgency notable have reputation not. and a same, go-to-market, portfolio, our fitness omnichannel and stronger, would brands, be and which well-known our goers, for you. enduring. trend of key a habits I addresses I built some Notably, Company’s Company’s issues plan, and is It provided innovation, including diagnosed more opportunity, will the been company. COVID Our broad our previously North meet strengths, needs the the the digitally-focused plan sense gym the which and customer-focused weaknesses, quality of when to product I or added culture. more accelerate resulting also

year the and is actions to first of wins. official North early we’ve it’s already XXXX Star plan, take While of stock our important taken

strongly work; direction. to membership demanded JRNY, the a in focusing talent progress platform; added progress Octane decisions rationalization Our areas. SKU embracing of product selling we’ve the in and is top our our team our balanced accelerating portfolio and connected-fitness as entire in in products; have team we portfolio; digital such key improving our The

North be virtual our that forward a improvements to look Investor to about month many additional will we Star made more We Day Company details sharing and and on next XXth, time. I have holding at March

and Company. which been we Let on-trend more got are me digital game us a our saying trends, a is our and execution profoundly Operational to And to Aina for CFO, industry already will With to at-home us close by of in started. changer prospects vision lead stay. from I version our us long-term sustainable our it a strategy that has about permitted steps XXXX more already Strong benefit detail. over not taking. will over that, position. a Aina? I’d results long-term are leadership excited more itself. indeed to and to fitness believe Nautilus more go like turn be who could financial improvements here our we Konold,

everyone. Thank good you, and Jim, afternoon,

a performance addressing we During my the this Company we loyal place that right incredibly XXXX. that with that customer first to base, to and said earnings return strong already growth have brands falter profitable a in in caused has call I that are the Nautilus year issues our and ago, assets to

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or X% to was this by continuing position, G&A. increased compared $XX X% R&D from last our $X million sales profit. Operating sales net increased million higher, JRNY. net inventory early from Given XX%. by primarily X% improved in $X.XX of million, to G&A or Income $XX driven sales million was X% to of driven year, redirect or initiatives. XXX% was net year, by per to tight sales or XX% million year margin Star last North Operating our primarily to to $X to up by million spend of diluted income XX% investments net up X,XXX% share. XXX% in $X $XX EBITDA driven million. by operations opted of continuing $XX and or compared was increasing we to ops to R&D increased gross investments nearly

our benches. was this the new sales logistics, by million by comparing year’s and The grew net XX%, Turning than XXX%. by $X driven ICX. million, basis XXX sales marketing increased Schwinn profit was loss. The profit of weights year’s by Segment $XX strength, grew $XX high in by all-time SelectTech segment. gross $XX million backlog. in last with QX by entered and points and to QX Cardio launch was connected-fitness of disruptions higher contribution than spend. expanded VeloCore improvement our driven Trainer. global last which million, XXX%. to Direct gross million XXXX. $XX equipment, new lower sold Max relatively in and now strong connected-fitness XX%, the treadmills remains strength margins of Again, were Bowflex constrained some growth XXXX Direct our delayed Gross grew which bikes, like of to the the Demand be the all I’ll driven by segment product for Cardio performance CX more it and to up and in quarter QX. an XXX% Direct

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contribution XXX% net This higher grew and XXX XX% was points total were year, Gross to primarily $XX quarter, by gross both million, gross profit. XX%. expanded basis driven DSG profit and XX% last Company margins Segment of Amazon sales. higher than by

the guidance We congestions, to into the I’m year carriers. team sailings, These logistics available our our were million how in December, DCs. last overcame and us the Company from guidance, XXXX an charges versus significant solution year, year. disruptions implemented $XXX quickly the proud turn of As incorporated on see last full website reduced trucks reported XXXX. quarter now Octane onetime for that this a to and results. poor an to of unexpected up year. million, really year allow results of up to of delivery $XXX Please ship I’ll impact shipments midpoint full sales the it’s these comparisons is $XXX numbers year the P&L the to at and in total adjusted IT press our last year XX% of remove additional to The the excluding P&L full speaking of to million. to for of number pick be I’ll XX% to sales reconciliation release our Net or our were our We reduction non-GAAP with

FFOs, basis XXX%. Jim While December. by expanded really warehouse pleased the gross profit for million the gross of to XXX we progress in shortage in had fulfilled $XX and waiting Gross what’s pickup XX% our orders, points in grew that I’m by earlier, severe we could not container sitting margin. by overcome margins factory mentioned

as fruits promo net decreasing XX% mix million X% the costs sales increasing headwinds sales of are SKU Channel We’re weather last marketing will seeing or XX% lower, XX% and $XXX or XXXX prices. were our compared rationalization seeing this expenses or expenses net to million optimization. and XX% of sales. Direct down to and of steel us were was This sales year. price XX% $XX net also operating shipping in help year versus last $XX to related helped of we Selling Adjusted to of year. XX% million and

of inventory on Given to R&D North in and JRNY our we initiatives. strong other spend back and paid and demand, Star pulled redirected media organic limited and G&A support

last of on much to up sales X% increased to front, also X% G&A impressions last $XX are operating $XX $XX EBITDA our X% the of compared loss sales an from net million. the or million million. were than net or last We Adjusted or of $XX of more our income XX% and of was year’s compared $X.XX Xx or R&D or of continuing $XX million. sales to net of was income $XX million ops end guidance costs ops million increased from sales was PR of to $XX diluted loss media higher XX% Adjusted versus million range per up last million active versus improvement XX% continuing $XX top X% share. XXXX. net $XXX compared year. million, year. million $XXX Adjusted million $XX of million to to This to is year’s $XXX

other now year-end to Turning highlights.

company our were than million, Debt the we timing last stronger year’s flat facility. Trade to last from of deal level was and $XX XX% started than overcame $XX delays I’m industry, year primarily but or the balance the $XX well-covered has just primarily year. customer We last is with COVID-XX. for to year, the It any with not last higher higher were available our it liquidity of at affects really $XX investments this how credit presence. to much position. country The factory an sources compared team with million, Cash logistics to $XX e-commerce was higher XXX% timing challenges $XX stayed ending as China $XX Inventory that $XX had than borrowing million, of inventory million. as due proud million first and Fargo are that encountered Asia topic million manufacturing products payments AR we a payables and global due was payments. disruptions on a of advertising-related year. million Wells higher XX% payments. year, million, our

choosing As to December, X ramp pay it partners year. production and demand. upcharges restarting to other in getting this into demand orders, our move X or ships mitigate. We to supply stay-at-home to was both transportation had X severe we outbound as trucks, we which times overcame and our I capacity. countries in delivery order we needed began to our X was need significantly up no Then, have as fully deal quarters largest elevated a spiked just customers. to suppliers POS last there our largest we stabilized shortage, implementing deliver to longer to Therefore, against Then, even what with needed were for to future. container which to At demand, beyond said issue time, were retail the earlier unable inbound reduced availability, closer by

months changing beginning XX beginning XX XX. the and it turn Jan Jim. fiscal months of have December We our million that the announced last several about times couple $XX issuing back more million open t compared topics POs $XXX of I them weeks. before to March we end to had year. December, gone we normal the ending from April to to X end year closer lead I and to In back we XX are a have X QX, of ending

XXXX. on April this Company’s XX, in fitness March January the a for the year. fiscal will exercise because from March fiscal will The to and entire XX, end season period report We X, the XXXX transition Form We we begin for wanted transition year XXXX, XX-QT same include change to equipment X, made XXXX. file XXXX

better end the retail with Additionally, retail our partners. calendar X-X-X aligned this year by fiscal new used is

to the our period now XXXX. X, Turning XXXX forward-looking transition March guidance XX, January to for from

the of increased flat to same We relatively growth period versus costs, logistics Due year. from be to to last margins last headwinds, prices we period continued same XX% expect XX% commodity FX higher the pressures and year. to gross expect net sales

of many year. we subside our increases expect in costs We these temporary to move XXXX as fiscal through

higher by investments that JRNY We in expect are achieve same XXXX. and operating in ago be that sales marketing we expenses to a performance a in addressing but Star last North than you as as caused lower expenses period the be of other to expected driven to We initiatives. our increased told these year, leverage were the year percent dollars and issues falter

While quarter. far progress made every done, from we we have are consistent

took our we the and the balance progress strengthen to giving sheet, growth. of our us on strategy experienced Importantly, fuel full we invest advantage Company’s long-term Star accelerate tailwinds in year North our this to

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

us Thank Aina. reasons. you, many lot taught challenges It XXXX not professional for a soon with year and forget about is and will we filled a was personal resilience.

balance of sheet XXXX our with and and stronger the end and XXXX. than Company Our from a emerged at stronger platform employees are resilient, a resourceful extremely hard Nautilus working.

and long-term We balanced offering, but not are for a product profitability, by positioning portfolio the Company and one growth subscription strong driven revenue. by

commitment our now, show best-in-class by this I’d is end call Operator? in believe are there and I of our implement much experiences. I partners together. And like to innovative consumers thanking our for their proud old, open and for team to questions. and place the to our be the bright, up committed and the organization, the Company and your have will we Company not Nautilus is to but and technology future fitness to delivering to accomplish mission. want to am we are that the tools We market our strategy of and equipment employees the I growth part

Dyer Craig-Hallum. Instructions] with from is And first question [Operator Steve our

the nice questions to you. from of Very finish me. all Couple Good Congratulations year. to afternoon. of

to you terms relates this it not the as et sure to us First, and asked be quantify helpful. participation, I’m cetera, being a attach anything rate, able it’s overly give know can material just but few yet, JRNY, I would I’ve quarters, of JRNY in

Yes.

For where understand sure, I mean, I definitely comes from. the question

there. One And get we’re go want we you we’re the is there. this Investor going I where and hoping, like things equipment it. address how we JRNY, with on were to that’s to runs once going adoption that of in our you of focus get that, to accelerate we’re the will tell you really Day what to really going enough

I top JRNY recall, that that only you that end know product the If you had we in was sure screen know the for in Total. Max Steve embedded sold a XXXX,

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I seen, be in those about. launched which products seven talk one new with as you’ve the starting Investor fall for But, talking a new And much about will proliferate what that. going big we’re driver Total, more we we’ll more we’ve then, As forward. the is VeloCore. Max to And Day, at have that’s since hard is that go, you really material. that to In And portfolio, the just this we’ll particular look say the we’ll yet mentioned. just that I there, we at are what what continue it’s And how we the do, platform. not win things meantime, numbers the to becomes think report the given JRNY will with can when want it

enough, very enough maybe happy speaking, in guess, it absence just long rate that are the early days? and I in guess, of with maybe the retention I machines seeing generally running you the for uptake you’re

were It’s been are. offering or point, free. Yes, exactly six expected. so one At Absolutely, we we months what absolutely. we’ve

people Now, the people two it months gets free. gets is go see what we and It offer main have. to

driven less, telling we is the is the what when purchase people what if situation, closer we you ownership the kind much As basis. you in well is the they’re subscription a our of competitors’ even I make for of some there. products, annual It’s by platform. pay cost And platform how less. to for equipment JRNY now believe significantly products when somewhat we and of are that you equipment purchase, total mentioned, an get us our Even have more pay do on especially some actual and of very

So, real got of weighing a to -- both we’ve into ownership advantage buy. which those platform real cost total that in is equipment the decision of and really what

that? Are more in you in-house? it. et out. about how talk look this that then, you’ve videos, you put the Are you’ve doing as the just cetera Can of got et JRNY talked Yes, little a I done it, product And capabilities, you some cetera? you bit licensing about you off guess, further,

center first It’s that of has coaching, as AI-driven universe workouts. the been on individualized the of JRNY adaptive you videos. demand all, not know, Well, Sure. for been

pandemic saw the at However, home. tremendous when we of classes acceleration hit, using

a those taken more so of hybrid far. kind added classes. more we’ve of We’ve approach So, and

be under-indexed one trainer-led continue in have may our our And to more to library. in continuing overcome that Long difficult add we things there’s they we’re about classes, for to think we to for term, like that to a I I no say, we’ll that licensing. while VeloCore, till of extend like these that kind a don’t like some is out sooner the and there on And a over-indexed they competitors It’s of think license people continue the things thing, groups I to see and what do few days not watch use to. third let’s include make for and they normal someone social a what hear could license and then, part if some it just So, felt and there, like, our like able so more a you from content of we’d use. of mentioned, and thing in spinning to it’s phone lot initially. invest we thought. with that. what else makes. data can what there, the own parties got the you’re we’re or that. our then used other class Then of what But, people over other those picking something like, of and like. kind we connected-fitness. VeloCore us as easy of see best And and honestly, It’s stuff to We’ve what a don’t for It whatnot, what we’ll used and junky, see is, video especially time. things, up with than have lot That’s media brew a telling somebody you to people more

based where overall, usage huge will doing, continue on the it like and think for we so, as what about to listening to And to But less. what invest make difference. just again, a we’re to I more going think people probably

of kind I’m off sort more be slowed of Strength third strong. continues personally, continuing the on waiting are you month know maybe I Got to order Are my see I caught strength including to and you working SelectTech. that of of you for it. new backlog? or at there the has you’re of guys us, off -- know kind all, strength still all away? right there, guard

it can of category. did meet do like not XXXs. about of demand And in any talked those We that. everything the decreased we on we’re to work thousands leads, just continues to anything through hundreds No, seeing Yes. we strength in

a they the kind and we a there. get the that was approach people And line that frustrated Our a queue get we moment. kind right website right didn’t exactly so day rather, of the had created of didn’t on

And we talk period we’ve We we a is those website, things. waiting. I’m you worked could offline -- to demand now on order there’s own personal you can still your to most situation. do but But, there. Those sorry so, continue through our about the see three and answer. what that four-month can them of for about

problem. One and over. for no turn then I’ll Yes, me, it more

the you’ve kind good, with were get you’re and I starting wrong. too give quarter got don’t first say, it you for badly. $XX don’t guidance you’re inventory; to the at You want -- up I revenue ever; me quarter backlog and in the starting so was quarter, But But deferrals. the enough it biggest look I million the to beat with more

Thanks. it midpoint revenue quarter-over-quarter the would guess, $XX in? I you of coming why, down for kind me. given be the So, tailwind at That’s million have that

Aina first that follow is fourth good the quarter. I to say our be for seasonality, Company then, start I’ll the in to mean question quarter first is right? quite sure. first it’s -- up. rare Yes, think and is than higher answer I to a thing this for And history

comp more happen. of And had you’re ones. in pretty seeing one a fourth we XXXX, better So, of then, the the that quarter of good just

marching all, we’re on And keep we we if run. to be long see want you are right? We guys, this we stuff But, can. brands you to Honestly, giving get and long focused right? we the through our wasn’t on, look order that. But, quarter in. when we’re our to We focused we focused we’re towards great produce want quarter. any trying halfway are -- would XX% -- you’ll on would sequentially, We wouldn’t you inventory, goal, that. the a So, be term, the just for things but of long-term we be as helpful as our guidance at going give focused on

we add much want would you to as give can. So, Aina? we as Anything to that, you

No, covered you it, Jim.

And is William from our Blair. with Sharon question next Zackfia

are March So, that those you I in abate your was commentary the of the sounded quarter. from that expect if do as expecting hoping logistics the And to you could year. in second half you the it cost quantify

As lapping the that, calendar outpace the think as here wondering sounds you’re go. about is of I think given of Costco the if I’m to some I brick-and-mortar Retail as kind addition year, expecting and misunderstood year -- shutdowns you’re year, ago about a U.S. this Direct -- I and buckets talking I’m well, like it period. in the Maybe

in it take pieces. me let So,

but that’s thing going and And us we weight the three cost not tell believe for based So, hitting new up. the that right steel definitely on to you of you going now, what really with forgot starting our it there’s get -- are this tail lot of will amount drivers transportation, increase, see of dollar on prices question. the Can that a I’m supply repeat agree with specific second get towards demand, And we catch the point be should the to I from year. we things you it subside and as end I vantage to the then all it? oh, temporary mean, your because up, rebalanced.

about we ‘XX? as mix channel about thinking was calendar think I Sorry.

Yes.

things. of couple So

we had just -- say not about keep I near We So, we Jim are constrained And demand be how just we’ve to climbing. because think not gotten can to get don’t meet point be ready that quickly able demand. anywhere is -- we is demand supply that that seeing and the abating. still to talked we’re to

for we where to in best that did probably the have going So, thing year. that to retailers to sure be to we’re for as what’s about what the business. they of while in some grow XXXX, overall of going company, constrained supply we’re this you most follow situation do needed making need that also then to think sort strategically and direct-to-consumer can business our allocate path still same And

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and So, it year between Direct. was really close Retail last

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hear you U.S.? rollout I did Jim, Costco are And right, you in full with

programs We’ve there. got several

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then, question And just one JRNY. on last

you starting mentioned are that you sell? of is machines might you here classes. independent of kind off-machine think the thought I there you you to I any subs a might that that that more are mean, have of do Are -- digital-only

use core as one, system be. Number our future really cases. is said I and could near sort operating of I’ve machines. mean, three an as before, for for It the I see

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system machines, a leave different time, see of so, our we what that more why But, that people little it yoga we customers occasionally, going our we’re as our for churn, all about of most a scenario. time. the So, it’s to of we’ll do? more to is, experience our love scenario. machines Right do for think for door go future we those bit them want don’t customers because, focused most that. where our and most operating part are we’re So, and they now, But, We that. products. first to on But on way use need second look, right? the to getting give what an think into continue someone monitor that else and to they ahead the open That’s want

is And question Securities. Mike with next Swartz our from Trust

is talking Octane the Just in does the guidance, when quarter of increase one clarification, to anticipating, Octane, year-over-year you’re March in that? the -- that XX% that point the that on is or XX% exclude you’re about base

the in Octane is base.

Okay.

good answer, That’s right? a

would if it Octane. be Because higher we exclude

Right.

of Jim, maybe four the R&D in everyone level year what’s over support just products I few Just a product cadence a that eight. the number, in Bowflex point terms was that year, three, years, This going until will right And business. of seven, the cadence what’s of it’s of the I really forward? guess, think the the spend clarification, and cadence probably last was think then, just XXXX, wondering. I development,

unusual highly Yes. I a been mean, it’s year.

our reasons, in didn’t the COVID seasonality, go and of and exact as see For see dates wanted also we stuff. we didn’t quite launches the we terms

the be some So, That But, in I we were connected-fitness. learning kind we knew of to completely behind honest. delays. was that had mentioned, we

as they’re our bikes feel I And The thing. already, fantastic. in to the in got the we’ve Maxes do do whole saw portfolio than more to our refresh seven so come. wanted we that be retail. advancing doing got one you is those That’s about line total of we VeloCore why and in we’ve extremely two in terms of great would normally So, then, part connected-fitness. great of eight what really next it CX trends, to the are far, cardio had uptick. well one out getting to catch-up The

got that of which when portfolio, on we’ve to rippled discussed. kind through really the you’re So, we a you’ve little behind what do profoundly

drove much Product that Head to me, that it we It depends So, was not. too go choice. for. Q, or of Development, It us. on you was To probably employee ask our wasn’t choice. had something was if a not really Chris To which a

each So going year what think forward, you’ll see I think, X we’ve done cardio. most don’t of anymore. to I X, want X, we

I think that products we’ll fewer, about was a big for it for be year be that. will what things, exciting we’ll other but doing XXXX. your be for But, soon point. We’ve talking to got some

a I a think lot. focus did we going to coming And now, couple of up. cardio to that’s other one We did -- some we’re on portfolio in of maybe year. worth year’s refreshment modalities that

Street Capital And Lake question Smith with from next Mark Markets. is our

First retail going can that’s and kind all of sitting and how where from catch to to today, channel or me long take quantify one it’s maybe is there. just inventory talk about you up at

or the channel, the just When like you in brick-and-mortar for retail say or stores, segment? stores the

you there, out kind of at looking into what and see what you today? have really can what Yes, in-store, visibility you’re

probably Head just back get enough. out going speaking I’m of I not think, and I sold of to for matching we has they side, really, mean, our trying really to get the both, still supply them Retail. even the with abated, we’re out. for in and not It’s to and comment, quickly. Direct vaccines demand earlier demand. rolling just And our Retail get closer Kind

Retail at talk there. and big versus guys Direct, the partners balance that picture, supply Direct, relationships balance weighing can your come kind how through them Okay. going profitability look lot you you are that with Obviously, the but getting of they do maybe of need? partnerships as that we Retail then,, how And with a and

Yes.

that not in Direct. and hadn’t ever products you to that that many And products that give do learnings chance Direct. a one mean, used there want sense, portfolio hadn’t what few products had and you I over, to crossed honestly, many exactly because of to perfectly. used your muscles and on we all out a to omnichannel as Direct the same only happened. it And before Retail could at its fire over laid Retail, crossed time, true, to product had be had today. everyone we that the that as from give own new we experience those it’s however want but want is experience. it’s You’ve get they were hadn’t It And as they

But, to us, and sell love they’re about you’re -- definitely is, who for tell could many, So, all. we’ve give us -- you it about base. Retail, things I to really predictable, really strong myself in retailers Direct. a cash little I we not and would cover what absolutes. that feel everything just would got profitability bit more they’re about advance. my have everything, short-term had right? good more It’s if gen, And told are we say people sometimes. approach. want we right. The cared They their virtually know trade-off But, downs. tell it’s And you advocates mean, we just in stable. exactly I only they many sit you customer friendly But, we

that giving to on because types good picture what better us XXXX picture look Retail, a have is those like. things. We to of they’re going have we In of a used

can retailer, put years through give feel of they those ask down Direct you you everyone it’s in job we get that business? still by retail. it would retailers own love say if ask we’ve but support and we said our and We’ve priority enough. done sat a where, product Head one literally great and everyone we’ve if product. So, of done have I like order. didn’t our any we Direct, And But gone what

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debate, there the the want some that all magic keep was of wish would on result. things. tell black I to moving you I much can. box how those can we looking can algorithm And So, we partners do discussion, But give us as for really possibly we our through and could it’s business honestly, we all and Direct partner, for our bar do what of by as partner and

due of in Retail Retail there segment? the there opportunities than any -- is able fit to the that new there And as as about a partners, help there, guys you How how little Retail talked bit is relationship we in brought demand look boost much your maybe into to increases Direct more more environment partners, was margin? be that at was fit segment? And there’s that to you much that in significant price demand that as pricing with take

you and steel When And bit one have it’s an across retailer against us, say, you coordinate to you I it here say us. in takes independently. the FX channel, Aina, products for would of a other. know, a going than omnichannel, a we’re you price increase don’t have that and because when the set go up, something if you I lot you is raise -- expectation do an you channels, it to also, and to to increases if you’re easier. more have a price be hey, back really same cost and retailer will then just separate longer going went to each you would to the products have your little that get carry multiple the would to to price help

a it longer. And takes little so, bit

or channel own you an don’t to I has other. or the then takes it But arbitrage a it much bit you we were going other our that there’s any do the We difference. think decision. price -- I helps It’s it a direct coordinated. I in be If business competitors longer think wouldn’t I favoring and else do, say very versus just be that without some were that little mean, one of direct-only disproportionately, can’t Retail, would like on. version have one easier

George And our with question Markets. from Capital Kelly is next Roth

So, a couple for I you. have

quarter? it in get to what’s we could your at was all have wondering this First, start media to may media start And share advertising then, it in it have you on you I could pre-COVID-type seen was sort see far you year? about so if just to but missed advertising. kind remarks, your of levels? -- normalize I when the could of And what anticipation,

Yes. to go Aina find number is the while for going starting. you I’m

So, post-COVID the and change mean, pre as again ball thing seen I exercise. be in crystal said, a we not to any we’ve demand. continues

seen We drop there haven’t all. any at

So, we feel like that’s going in. still

of the still are there. same why we So, spent initially many reasons less

You’re selling portfolio. your entire

the same spend for to used we You they’re pick who Day. look sometimes right? want want at infomercial be guys what but not it’s, in to be. for, to we Investor yes, don’t to And we So, -- digital-forward hear decade. sometimes drive known about our want We be that so get But, this at continue need late we you to our that well-known, night brands. is -- your to to the At you’ll And oh, brands known more do that. company. are time, back

technology be such. and now, a are so company we perceived to want We as

step that highlighting of VeloCore lot to at more see a the of look saw, we you advertising it’s technology. going more that our out. some if you’re and as forward, So, more we come And

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continue spend So, there. we’re to going to

try sell do if thing. continue even to advertise begin more, have, could to moneys to and to So, we for you’ll to as that we that of reason type us aside see just everything well, put

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We’re up. coming going to have some new spots

We’re it the going to take next to level.

make We’re our need going to to to short have to going When is That’s our tell. term we’re and advertising. be. they a to getting brand transactional transactions and we very commit sure And where brands quarter-to-quarter. need what to going kind tough But, our we’ll evergreen that. think are aside more of Day an idea for spend model give over time we think you how Investor at to and we what for we’ll we’re put

helpful. be will that think I more

Okay, great.

the QX. $XX $XX you for It the for advertising, $XX it’s direct about about about million year million. for then, and And millionish asking was media were media

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fewer sale SKUs. -- to top SKUs we’ve going to the focus other just see You’re of disproportionately sales seen on And years. top already SKUs, balance our our is to from coming compared

because five see strategy, You’re you as lots but of priority, going do in brands as brands. to is we’re do. what there’s see be or to it focusing a what got to will with deciding what We’ve going to portfolio, six decisions do you’ll in opinion, to and is our much that my priority. not But going see

real for big So, I’m sorry fans we’ve if TreadClimbers. got

one is have Board sure right can’t to add. have In zealot, you I that you -- these but fact, am we now, are who a chuckling our members just make TreadClimber is of these decisions,

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me. then from And question great. last Okay,

mean, reason of is what is or improved any considering, ago. CapEx you unique you now cash, are sheet think a projects anything? of there do -- this big any is year of now, Your such use year I’m balance for balance I kind condition thinking M&A? versus what this in sort of sheet What

Yes.

--- about in lot long-term here. to will we’re said can when you want like make North becoming I’m that back -- talking in Star up get that. honestly, got We IT I’m that them, high-volume invest did and on a be when I’ll of me to you talking priorities faster marketing. continue you’ve Aina you’re priorities. continue we But, debt As And little talking probably about. want in even There’s and right? technical one digital we learnings our aware clearer we’ve systems But, to that some We start in journey a bit of and XXXX, it’d invest of to discover company. more a those of

not strictly buy if the places organic, I say, I at And want do to to got ways look, grow to I faster, to You’ve we’re get am another inorganic going anything like or through look But ways scale bets. if there, there’s we those if we there’s technologies will faster absolutely we partnerships, out or to like feel that. take great like feel JRNY business. Octane

feel we so, that’s good And like fuel.

know about that exactly do we but sure our spend and we’re not talk be all North have what how you about priorities fuel when those Star. clearer to we’ll Aina, -- going priorities We’re anything are, we even how now, add? to just

it, Jim. covered You

reached Barr, gentlemen, question-and-answer And would . Jim I turn remarks. like call And back ladies the of have the end and CEO, session. for we over the to to closing

everyone, speak it. long-term appreciate our at Investor have for again strategy Thank call. rather a we about today’s joining vision we and much, start when very to talking to day. Thank look great shortly and And We you, you really Day. you growth

This concludes today’s conference.

this And disconnect may You for you your great day. a again, have lines participation. Thank time. at your