NLS - Earnings call transcript Q4 2017

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Operator

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

John Mills

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

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

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

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

Bruce Cazenave

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

for a increase questions. provide full guidance outlook then always the quarter of mass fourth shipped some was open that base results. seasonal orders partially of We timing our call Bowflex and segment some we due a Direct last pipeline for including achieved the is we Bowflex fourth an quarters same year closing late the as driven the fill we’ll XX% ship, Finally, to customer by our up quarter of mass basis, such measure in combined. I and XXXX, there Trainer. fourth the growth quarters Because our will remarks both at in revenue the the quarter which update on far combined and of over was performance the On line line This a sales XX% improvement customer these third year. decline versus segment growth the two fine expected revenue due to as and by in in when in quarters third of This the orders offset fourth retail Hybrid opposed steady experienced health strong Velocity MaxTrainer Retail as to the quarter. from early looking retail primarily between

our Retail commercial channels, weakness. and continued experienced within segment, distribution of mainly channels other The our specialty

operations will healthy key continue increase and charge strategic to we significantly momentum I be generate million to continuing With was impairment while already of EBITDA XXXX faced, our on in were we as to operating operating overall, market performance discuss that well line development XXXX, adjustment the a associated achieve end implementing guidance and year we expenses entered our the in as year Excluding of a in later in that non-cash improvements $XX to continued having was this the what performance Sid stock At a will also from few $XX cash we we is moments, with XXXX. full said, during and the of to and incremental in and the balance will certain year. is with as charge. incurring research Despite had even operational which we efficiencies below expected in million repurchased the stronger include net initiatives challenges year. million able speak XX with sheet impairment open position non-cash the after investments

We back during will full let of me our summary I’m share turn multifaceted on comments. XXXX my growth into to But designed call in Sid? the plan I to are now desired to company Sid. and address stride a this highlights get excited accelerated first, the over some trajectory.

Sidharth Nayar

fourth results provide basis like prior sales segment XX, where an Thank points to year’s carrying $XXX.X increase margin XXX to financial the the total gross an related quarter Good quarter Direct the Retail quarter lower fourth Retail to performance to XXXX $XXX.X a name $XXX strong performance. benefit reporting unadjusted period we’re when segment offset totaled segment. adjusted Net mix for sales everyone. of weaker tax to XXXX tax fourth impairment an to the higher as the as certain the trade Bruce. same prior and basis points Fitness segments, basis, points down compared intangible to last XXXX shift basis both year margins Fourth results to year States sales gross Direct quarter quarter In million, this margins million, On asset, an the adjusted recent sales a our the same reflecting channel XX.X% by update exclude as the related numbers XX.X% totaled of release the partially decreased XXX the compared as the the the of overall in for XXX charge on million. to afternoon, basis XX.X% decreased same were across period non-cash December year. in margins sales company to ended for versus and of flat Octane code. Net Direct a well offset in changes the value you, year United I'd for on X.X% prior XXXX. of in

year operating fourth the For gross net were the quarter compared prior as a of was margins XXXX XXX-basis of for XX.X% decline which point expenses XXXX, year. a percentage to the full Total sales trade an the increased year by $X.X same the to charge value impairment name of Fitness related XX.X% Octane in from intangible asset. carrying million non-cash period last to primarily XX.X% the driven

same this compared charge. as driven charge, in as the December marketing sales revenues. operating year of XXXX as million period quarter Excluding increased net XX.X%. $XX.X the and by compared XX.X% same reflecting last XXXX percentage for expenses operating for percentage of were to of the for fourth a net $XX.X XX% Operating primarily aforementioned of XX, of media to primarily revenues million adjusted On the expenses expense expenses year XX.X% ended totaled an basis, for ended the impairment prior XX, to XX.X% December higher a year, XX.X% period were of or XXXX spending. as the sales or Sales sales

the net a to main administrative The or for XXXX million For to in or the year supplement in period net in prior dollar the excluding last and fees. to $X.X of or margins and as in decreased with X.X% X.X% compared sales compared $X.X lower innovate to million fourth year. costs of prior Adjusted the driver the and spending non-cash for impairment income period General were fourth income savings for of portfolio. of compared driven XX.X million totaled or sales same to increase sales incentive million of of percentage of million quarter the $XX.X operating million XXXX were of dollar X.X% General million. expense was prior fourth quarter development of due XXXX, sales expenses which net of X.X% Research XXXX of to reduction X.X% sales December integration X.X X.X% XX, same operating sales to of charge same to gross as of our the X.X as fourth $XX.X required stock-comp XXXX $XXX.X million costs compares the million X.X offset Operating the totaled and last year. million financing X.X year or in to income year period development was year. the product expenses X.X% G&A sales last our capability the compared XXXX, was higher million totaled XX.X XXXX, for $X.X million net million, of The quarter sales of spend. same of resources for to was quarter compared by spending XX.X% quarter for year $X being in period. ended and or sales same the and net related lower of in of or for cost by for sales XX.X% product net period. the expenses the same increased marketing new net Octane or administrative reflecting $XXX.X the media Research media development and additional X.X% and the a as million the the

million diluted as compared million the an the of the million share share $XX quarter income XX.X million credit to sales sales continuing in net the a or of same XX.X in X.X% excluding law change of year. million operations effective Income impact the million period XXXX income of XX.X% media tax year higher of $X.XX the million fourth $X.XX XX.X% was to reflecting totaled $X.X compared recent impairment of period last The For full versus XX.X% X.X XXXX, sales for of reflecting an expense for was X.X or operating or the net Again, tax or year. XX.X the per tax prior diluted net year. or lower margins was related XX.X% income quarter XXXX spending. and operating last same for adjusted to the of of charge, fourth rate from gross per benefit

period XX or prior million For per per operations impairment $XX the $XX.X XX.X EBITDA compared for share continuing same income $XX.X million totaled the the million. from diluted EBITDA or operations in million full continuing share Adjusted year. to operations continuing million diluted was from from last XXXX, year. versus to was charge, the $X.XX year $X.XX exclude

while same business quarter fourth more offering, XXXX the Gross segment lower due segment exchange growth results. our fourth cost to was to were sales. the to Net than a sales line, increases product $XX.X XXXX in Direct Direct Bowflex shift than timing specialty XX.X% HVT the benefitted quarter Direct and of weakness selling in $XX into last treadmills in product coupled over now XX.X% video declines the in points In customers. compared for seasonal operating the XXXX Operating million foreign the product year. for to Net from declined to impact offset by the higher decrease the Retail in compared income of our reflected QX and to grew the Gross last of fourth and for of fourth which in X.X% quarter for production decline rates. continued XXXX, million, to the XXXX in by MaxTrainer sales for noted business totaled for margin related in due decrease sales basis the fourth decline the last the compared expense prior margin the $XX.X retail stronger in foreign specialty same TreadClimber with resulted mix The to compared seasonal QX Retail in quarter with to million margins unfavorable in quarter to last channel and items the exchange product previously the retail launches. related business like above to to Mass mass in the lower of totaled the $XX including was million as X.X% for the rates to operating in XXXX, that the period, commercial quarter the unfavorable same XX.X% gross the shift $X.X business of product cost the year. from income The coupled sales reported with that QX year. usual second for period. in driven with XXX commercial for year. across The quarter fourth a increase segment of unfavorable is HVT as Turning increases margins creative quarter business Direct prior sales Retail XX.X% new discounting. half million year. decrease XXXX same of Bowflex of product of in compared due $XX.X to currency increases a mix same million in coupled of the declined channel fourth period and saw the our in in coupled XX.X% million quarter $XX.X of quarter

totaled XXXX December December Now compares This as million $XX Cash of consolidated $XX $XX.X cash to in million XX, turning in the XX, debt. and with million of million XXXX. at to sheet. $XX.X debt balance

year end full XX, compared at the $X.X XX, the the December $XX new the of to with and hardware We addition full $X.X purchased December XXXX purchases. spending information were open and and reflects Working year million fourth like $XX totaled the its XXXX. will insights payables of million products McMahon, Chief stock the upgrades. $XX.X million in million system business Bill? versus December million $XX in capital repurchase time, provide CapEx primarily During stock company inventory our as Capital market products. of Trade for as to the XXXX end as over December $XX.X XXXX key in to our at be on implementation of XXXX million of The million of of were part for Inventories of timing XX, to million. and to of new quarter the of At to million additional Officer software XXXX Bill XXXX. increase totaled $X.X I’d ended year-end XXXX. XXXX, to who it of expenditures plan, $XX.X range compared in XXXX several Operating million $XX.X year into XXXX. XX, as turn of tooling this anticipate at $XX.X compared million of the year-end including

William McMahon

afternoon, Good in provide provide growth results sales opportunities segment. to with the Starting We we pleased and commentary see with our background like everyone. in Sid. further on I'd and as sales QX our growth by introduced you, The solid on quarter. well XXXX. in the our Bowflex were Thank prior our recently driven Bowflex contributions XX% some MaxTrainer versus year Results as Bowflex products, from fourth cardio Series the HVT increase a products. including of was of number Direct

As expected, by in this decline continued was sales. TreadClimber Bowflex partially our offset

what and we category contribute QX, advertising these network that approaches us product media for forward. customers our growth performance to measured and we’re During we sustainable going the in seasons want a Bowflex MaxTrainer to introduced We MaxTrainer. new changes more confidence delivering and remain Direct gives and To peak were Bowflex during should mix feel strategies are those with sales personalization. boost overall, contributing encouraged and to our further getting strong television see creative

during encouraged the launched reviews seek the we recognition recently the quality. were improving sporting fitness also to by example, Digital plan customers the MaxTrainer. satisfaction trained & in example, Consumer peak honors and joining addressing HVT a partnered personalized get this very such from measuring around from customers training captured with product the videos Bowflex remained we’ve customized and and prior In to design, with Bowflex an were quarter, season Health with product conversion performance provides most the their received we saw as for equipment. overall products focused performance, provide the innovation supplements Bowflex we Award opportunity strong we’re winners HVT the pleased For creative ISPO and very a The one benefit continued positive new them we improvement. maximum barriers Bowflex new and industry. free Fitness We Also goods HVT. for exceptional steady to of distinction Award from ISPO continued made world progress a After the believe we our with improvement. of LIFT professional help what on a the existing from with to sessions. This tutorial and the program advice Bowflex

further this better benefit wider from introduce would it unique to mass to feel order product in distribution the also market. We

direct will such, as opportune omni-channel As the peak year with use while media during continuing just we explore options strategically coming have MaxTrainer during during such as times we the season. to

continued anticipate QX direct treadmills meaningful our but a worst XXXX. growth As in XXXX. and headwind Bowflex have to than a midyear decline strength line continue be impact segment continued But our our category our in which generated QX of growth deliver exceeded expectations. during product Bowflex TreadClimber in rate will new expectations. the mentioned, Bowflex the sales majority that TreadClimber of our be we decline also level that will to will a we at in at longer material no to expect We sales by this MaxTrainer

is spent everyone a introduced of the time for we’ve even quality The We accessibility modern beginners it cyclists Schwinn Zwift evaluating like bike users hardcore Finally, brand. world. most recently CrossFit scenic the and the year over with the around through Social reality compatible with known nostalgia ease under participants. past other Retro-Inspired allows technology. virtual Ride to a locations Schwinn is to apps for it unique Cruiser pedal world from makes best Classic Bike offerings and that and from combines and experienced popular with Schwinn

Classic app, the be distance playing product monitor the product game With the This always, will as can direct to official our Direct launched be innovation. later of year. time, burned calories moving that channel it Future our in in driven matches growth also Paperboy nostalgia Schwinn while will, customers Retail a and by is bike itself. Cruiser this and

market. call. Our in our that involves it We’ll new more midyear the XXXX cardio-modality next on track provide launch and will on major information patented next to product this is for be the Direct earnings consumer product

Turning segment. our now Retail to

the of QX revenues results from were normal. than decrease Our approximately by into X.X% by sales orders were mentioned in those QX previously and year-over-year stronger shift reflecting fall being QX driven down the year-over-year timing

Bowflex are year continued with will single category mass and retail the in by growth of noted introduction fitness business previously weakness as been The driven the specialty call, with as commercial on halves underrepresented. compared was allow to channel evaluate that of category of performance cardio we which our the same make half of year, equipment, well performance traction sales. line in in second we as as sales the Bowflex in Bowflex do period continued XXXX especially earlier of Growth Retail largest the channel prior XX% Nautilus the this the here retail despite was encouraging treadmills we treadmills gains and basis over and in the of MaxTrainer pleased a over As strong of in ellipticals. our in to have

the the During the Octane Runner new Schwinn Retail introduced ADX lines Schwinn popular XX bike, products. ZRXXXX Bowflex these even These of the the our Crewmaster and are products several cycling beyond rowing XXXX, SKUs, to of performing the cardio machine, second as and Airdyne XX half new to the bikes, commercial channel XX line into we included ICX well. well Schwinn Schwinn products, Zero updates the more Series market Octane quality than as cardio new indoor

reviews excellent seeing products these indication sales are want the third results because down these and are fourth as quarter, products performing. We how on should the selling of quarter earlier products you view of not new I solid an well reiterate of and the that in

To consistently past fact initiatives two in XXXX point will are in we’ve this retail experiencing be we’re will to of driving sales innovation growth international and good our expect XXXX. We future Overall, at that year. our end, we product as commented be of in that compared expansion by sales. driven the sale that would strategic and sell-through retail up

to our team Octane market First, global we’re investments under a to product leader. the Further, infrastructure, to growth. operational capabilities new in with aligning focus have better team drive and the these combined we we’re for support one and proven readiness company’s and growth drive will leader into teams now distribution make sales international Nautilus we and believe right and and place efforts. team international the consolidating support the to the faster arm marketing needed from in our right international We

approach unique and space year, enable we of this trends the we’re we the iterations in and a to observed these of market identified growing approach space In have Secondly, and new very aware research and platform products digital related This group in will exercise time past remaining subscription compelling choice a Further, several coaching the our to we’ve the models to our involve have support. multiple based will this success. of our to products online market. fitness to a paid use new digital customers even achieve completed ecosystem content. of of and while use or be allowing our will over variety subscription of well in their across the product as customers be core exportable product as

to our will targeting We channel. introduce digital the Direct which in including are this launch platform, subscription new currently model QX

of is and mobile to positioned our deliver already Our uniquely traffic currently from over sales Web as a online Direct three is digital business our about quarters XX% are experience of devices.

comfortable in this information Completion compelling the are be when platform platform customers we’ll we our capability international with this profitability of launch We’ll along investment system new digital a in the on them year. more Our as date have launches. sales and on impact digital solutions near-term some providing later XXXX. approach with capabilities new will have with this

However, in is we a to to sustained that long-term this are foundation growth. Nautilus critical create confident for order path

supply our retail centers. inventory our feel inventory balance distribution partners Regarding is chain, our both that with own within appropriate our and we and

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

Bruce Cazenave

comments make open you, final like to we for Thank up I’d questions. call the before Bill. a few

are plans to from the level introducing a we new can healthy at growth. line return are XXXX expected and you both top of beginning to of the XXXX, products the As of towards end generate determine our

are of strategic needed gain introduced as below in retail in higher to With in well that added customers desired our retail order and help channels growth branded distribution drive specialty continue we increase revenue investments new We ecommerce provide that products with XXXX share levels will and our initiatives drive we key expecting the Octane commercial expectations, focus recently recognize market and well. our operating performance to of our traditional growth. and coming to financial in and

enables to As million will concentrated customer is well $X our sales first we will of entrée and to network have warehousing expenses with an third-party mostly provide able end give capital our and ability be Two, this brands. also By of Octane us in of services. four, to resonate be will will recently will integrated one a order have all under added supply and be to incremental more it subscription videos by are completing and give redeployment facilities and teams consolidated Nautilus involve And the drive XXXX is million our XXXX. realigning expense of additional XXXX, for as warehousing doubling by midyear. base. our This in for $X global in mentioned, the are ERP into schedule is our the to and bases, to to which million up of completed and we added Web areas. following evolving the out flexibility have responsive, as to the supply capitalizes half rapidly mentioned that the each pipeline consolidating chain sites. international will service capabilities activities resource will creating first things all related us incremental and and will support we revenue potential expected to spend suggested this locations building international well $XX other teams XXXX, ramped Not milestone finally, of our in fewer integration and such of us optimization as be plus research be Three, we mentioned million One, the of it of expenditures. innovation $X investments platform four at we give key our marketing will approximately the plan the targeted a restructured is and This to international Bill multifaceted In translations, new this technologies. leader. Fitness. cost. million support Bill facilities integration and focus on resources in training but platform $X These Octane lower the to and time only and worldwide development occur the

related quarters them. important fundamental cost opportunities, first high strategies brand additional market which plus on a changes of channel better innovation, realize XXXX during provide to a structure company and tactics growth will anticipated of to All occur efficient diversification the these position points three invest number continuing our of achieving mostly to and intact our more is investments necessary. return note that the are as course to on It we to stay centered product building, adapting remains while to intend and in access execute

expenses XXXX, as to related in did as we for the XXXX to year the well the outlook like quarter which As investments the prior year, estimated our I’d and share full first both of are of $XX inclusive mentioned. between million of full are for just million. $XXX in million to year basis to I income company a business million we $XX projecting model of the On $XXX operating range revenues changes with

in quarter $X.X and the revenues of to $XXX range million million. $X.X between income XXXX, first For are the $XXX operating million million and of we projecting

rate to to We of a and to and range XX% prepared the XX%. also every effective XXXX of in as our company tax initiatives. thank quarter anticipate closing, in efforts remarks. stronger concludes instrumental our the our in their I’d become help In who be dedicated all are That employees the like successes of result

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

Operator

from with take [Operator Frank question Camma first Instructions]. Sidoti. our We’ll

Frank Camma

guys. afternoon, Good Hi.

Bruce Cazenave

Frank. Hi,

Sidharth Nayar

Hi, Frank.

William McMahon

Hi, Frank.

Frank Camma

a here. noticed a DICK’S launch was the about talk there around things of I I I point everything. wondering notice at Movement little was did at if lower that One the and mention Modern you local it’s and least bit, it’s could the you now price given available

Bruce Cazenave

get available a Sporting so but need early I’d It awareness Movement. early give in certain Modern we Early deployed DICK’s up Goods. and to is partners we It available in it online say also by it’s say little time. we’re further anticipate still a it Yes, is pretty to It’s encouraged over on I’d chance it’s growth. now. on,

Frank Camma

awareness point, DICK’S, it. guess is Given obviously its – something but on to that? someone’s like for increase how It looking at price the shelf is be I that you do for got

in I kind but some behind known it’s campaigns know doing digital niche how of circles, increase that? it? So do Are you you

Bruce Cazenave

need social it people, digital, relations a fashioned We some media so of we is do way to efforts lot of awareness hey, and old we to telling get doing do in and to word you create some out. public media mouth influencers we – good try that get also this

it pretty if try know, a product people to always but it’s you compelling the it try it’s getting out; you As challenge. is

Frank Camma

other was just on And the general media. Okay. trend in my question

spending here would correlation more more all not direct was branding more. there’s I’ve and measure ads product the there you short ads its that – general it’s I you if talk specific since at versus returns about how wondering call could You’re in not term. that ads. noticed trend I a

Bruce Cazenave

Yes, great question.

during a And of is the more we pure would versus tried we pleased. One message. did a around branding definitely DR QX testing of we visibility, things ads pretty say some I network with higher are message

you attribute accurately. to on that your puts Now measure way lot success? is it it burden that you’re Web a you a Web your then and ability gives that A of traffic to use measure traffic in ecommerce that how capabilities do lot doing of confidence

So we the effort likely and future. repeat that effort in feel our there pretty good we’ll about

Frank Camma

guys. Thanks, Good.

Bruce Cazenave

Frank. you, Thank

Operator

with question Instructions]. take [Operator Capital. George from our next Imperial Kelly We’ll

George Kelly

taking for questions. Thanks my Hi, guys.

Just for a you. couple

margin other for start with segments faster if you First, commentary help Thanks. all XXXX I guidance. with Do in 'XX you one helpful directionally expect then than you each at around with of would any your too? grow be the expect business to what Can and expectations the same Retail margin, Direct? and with could

Sidharth Nayar

grow a expect the Yes, the in Direct, Direct channels, is just we right part Direct do year. second conservative in faster of the talking to Retail channel the the we new we’re now and launch more product launch the about obviously get after taking on of until channel some half outlook with well the the of as than the that to

well side XXX-basis the we for Direct probably gross on 'XX digits it and be cost introducing, revenue we’re as even the improvement. sense, low-single 'XX, falloff increases negative just to a to wanted you in if maybe XXX in on based 'XX product concerned, margins expect flat a versus it perspective. the the anticipate digits Retail from Direct these on again relatively of And point just side new mix products some continue probably on So slight to on do mid-to-high-single reported impact anticipated numbers to are we far as a actually side, the as some to then probably growth revenue margins so both margins was Retail And as shift on Direct.

George Kelly

That’s the margin? gross

Sidharth Nayar

margin. gross the That’s

George Kelly

year? are And for Direct Direct this far then you – of second in seen in prepared business. Okay. question you your growing? an quarter? grew the of What you the sounds so keep new seen but iterations like MaxTrainer growth the It’s to to you could such you piece fourth there are say How segment. didn’t in that remarks And How so it going important MaxTrainer? you What on have out are have it going you keep put that vehicle?

Bruce Cazenave

that would the what platforms see digital as with incremental conjunction the we we view going as line of George, original definitely do platform, Max products. would And and as in iterate certainly to we that think bring a could do table with forward. likely we both well refreshing with I our Yes, products on

George Kelly

I Okay. have more question do I side. on the digital guess one

that people initiative? it’s to There that aggressively Just that to as product I’m you is such the market How expect you digital guess XXXX, expect thinking importantly – out that market products. do offer behind competitive about that and is more a are already advertising there. I that a launch,

Bruce Cazenave

on to We yet. we all. away of a have think much first too we’ll unique offering want don’t it we think give Well,

Secondly, think maker. I do paired to compelling it product does a be need the difference would be platform with

that it would ecosystem advertising would just successful, think an to pair then its I as be and and that as be call if or our people to bring the – it people solution way. into you not own into a intention platform want on bring

George Kelly

Okay. Thanks.

Bruce Cazenave

George. Thanks,

Operator

Andrew Davidson. Burns question Instructions]. with [Operator next our take We’ll from D.A.

Andrew Burns

afternoon. couple Good for of questions A you. Thanks.

quarter, starts that faces, headwinds diminish. the once that to first pass the On outlined the you business the the TreadClimber you impact

to channel do in of on the the the specialty what minimize sort the magnitude and commercial Just you softness? 'XX of can weakness in and impacts curious that

Bruce Cazenave

specialty commercial, facing Yes, we’re dealers. within specialty the still particularly some channel, of – the the

dealers, the – off business around considerably sizably segment where up. it’s you In up, certain specialty a is country fact, if others there’s of Andrew, our digits and double like

if So say might was to probably or be headwinds and bit. flat you in some we ups other happy that areas commercial, But have still back with some particular in segment that that in marketplace kind we channel would some areas. expect certain of specialty I within downers peel little it and year-over-year a

year side. the – back are those these a do first expect affect something think that the I growth channels, channels well, commercial the could side introduction that track two specialty will within in it of and that would be have on and new we be probably us back we to the half coming of we and get a then eventually significant

Andrew Burns

And higher performance was noted. the activity gross seasonal Thanks. Great. release, then in promotional margin Retail the press there

to up curious, volume vastly Just new the peak expecting? or what different normal these than that seasons. is were that that did you seems keep that Is popping – during vastly

Bruce Cazenave

to it of a anticipated the originally be we think than was view our in certain. I more year little

we However, Retail. I going online in forward. that – of a now and we to advertising around most promotional would space for as expect normal the online And the need is that candidly solve new activity are

Andrew Burns

one then last And Great. one.

all In product and LIFT available of platform start. to digital potential that be terms model, going on from it the to was And sounded the just completely partnership? like one is subscription the of ecosystem that separate

quickly to be how additional you that products. validate able will extend into wondering Just new

Bruce Cazenave

partnership the and across we It multiple company preparation work quickly Direct several get Social it in separate our both it from our and but the run. extend things but the LIFT product launch to is anticipate make is to partnership we’d months do it like long afterwards able iteration to And and will It one throughout that Run pretty does each our it have. take that in and being incremental desire the to deployed live. products

So the and expect upgrade in well there. year an forth receive see and XXXX so could from initial major I’d this platform as launch another going you

Andrew Burns

luck. Okay. good Thanks and

Bruce Cazenave

Andrew. you, Thank

Operator

take Capital. up we’ll George from follow Kelly a Imperial Next, with

George Kelly

another for guys. taking Hi, Thanks question. quick

that the it first of about right Thanks. half, Just if operating bit year income operating profitability? looking looks back wondering second first XXXX reading is it a talk expect and and looks through like your heavier – you what is quarter guidance, can the or can for you half just the in the sort – products – is new of half that it you I’m the

Sidharth Nayar

Yes, specifically the hit as half revenue going significant both projecting to shortfall given it perspective growth a in year-over-year. from to product as going that particularly perspective. you to is to platform back an George, TreadClimber and the operating is going revenues operating But into heavily significant what introductions shift again, mentioned the year the well that Bill the see be which a decline to operating are quarter. is income in QX by income season income holiday is be of Direct channel some QX the there’s turn both new and introductions, the – of a revenue the skewed we’re from in that translates actually to

George Kelly

you. Thank you. Got

Operator

conference Bruce remarks. That to time, concludes back At question-and-answer this today’s for final I’ll Mr. the turn any session. Cazenave

Bruce Cazenave

another the call business you. in first our months. all on earnings our We for interest a today. you call look forward Hope in and Thank everyone has on your for Thank few joining Nautilus great a update to providing day. quarter

Operator

Thank This for conference. participation. you does your today’s conclude

disconnect. You may now

Bowflex (BFXXQ) 5 Mar 182017 Q4 Earnings call transcript