NLS - Earnings call transcript Q4 2019

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Operator

Good day. Welcome to Nautilus, Inc.'s Fourth Quarter 2019 Earnings Results Conference Call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Instructions] [Operator

I Mills turn ahead, of time, to conference sir. like John Mr. ICR. would this the to over At Please go

John Mills

XXXX Wachsmuth, Barr, Assistant Chief Thank Nautilus' Officer; McMahon, Aina the everyone. Special afternoon Financial Executive of from conference Officer; Finance, Chief quarter Bill Dave call Jim you. CEO. on Director call. to are Welcome Nautilus the Konold, Participants Senior Good fourth to and

website may was includes release X:XX today nautilusinc.com be Relations downloaded Investor issued our the a non-GAAP release and earnings Our financial in P.M. page. from most the measures GAAP at to directly at of earnings measures. the on mentioned Eastern The call comparable today's reconciliation

initiatives; securities laws. include financial today's or anticipated and in marketing capital expected the operating targeted of results product financial on planned of new product future concerning conference and growth and anticipated These trends, will consumer operational projections, investments and planned anticipated on new anticipated strategic acceptance development statements of call and health marketing of impact the our initiatives base; introductions, demand timing within our introductions; and user for new partnerships. and and retail product, economic products; international results; crisis and profitability; conditions forward-looking statements such Remarks results of include the business initiatives, of expenditures meaning campaigns the our growth strategic

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

existing of delays recurring and consumer meets fitness to and at revenue sole-sourced, control including offerings; personnel; ability our changes timely effectiveness cost hire to manufacturers factors products; launches marketplace. in consumer from acceptable materially management new anticipate the include or conditions; of softness retail to connection with demand from and the greater-than-anticipated our spending differ in satisfy could new foreign or cost; in entering these to actual or statements advertising; the Nautilus' that weaker-than-anticipated media economic manner; standards our in experiencing target results a inventory markets new initiatives, our Additional to forward-looking and/or strategic our for unfavorable acquire quality due in that key timely consumer consumption cause in consumers; trends; changes to our habits ability and decline of a preferences ability retain media products;

information uncertainties, please on more refer today's risks For XX-K on recent most report XX-Q. supplemented reports our as these and and announcement earnings annual to quarterly by about our Form Form

update events operating to or release reflect occurrence forward-looking after new events. reflect revision the results comments our and noted. unanticipated operations made to they pertain regarding unless to our or Nautilus otherwise undertakes continuing publicly otherwise obligation to any of to information statements information, no or All circumstances were

over is it Nautilus' Jim my that, CEO, the turn with And Mr. Barr. call to to pleasure

James Barr

the second Thank Good In initial execution today's we joining you which quarter, we XXXX. areas, half are disciplined you, John. afternoon, began achieved strategic call. for to and implement improvements we the everyone, important sequential thank during of initiatives the believe in reflective and of fourth

Even though still realistic we short-term by considerable we face be results, are these must encouraged that challenges. we

in We line. decline losing Max of the reverse largely profitability with more fighting in and XXXX a decline than revenue culminated revenue the are that our to XX% by base multiyear driven

are continuing connected to early catch and up. despite fitness missed We trends acceleration, recent

turnaround expect that which of the profit is our exercise. strong competition, a some do in it seem transformation be is not at full have reasonable facing to going not short-term to least run. are and to Therefore, We short motive a

year. the actions, in delivered most season, issues, diagnosed the improvements the I on sequential and fitness root causes, months and In place short-term few my of in have first here, focused at key put team execution important the time identified

will plan have that to more selling we dive you discussed a strategic plan attention this share assessment, the with as a toward and on now that later which year. insights-driven multiyear we Now, into deep key turn strategic and season, previous planned we feed calls, as durable, exited vision

clear I For and investors, restore our will expect to customers, this long-term growth. and to employees, where be of articulation profitable a path our we focus

In we the transition decisions and continue meantime, beyond. important our year make to about XXXX,

prospects run. long in We are and the excited about our company's optimistic remain

Our brands strong. and are well-known

products with based on connected platform. our robust fortified technology increasingly Our are journey-personalized fitness

becoming our more go-to-market selves. version in digital both our our On methods, are former of a products and we

With more not talented a mission. and and have to team is have to connectedness, on evolving change. technology we and noble deliver a resistant ways and strong, resilient We culture that our

has helping notable leader a with and this in goals to their many for be we plan let reach come. over people fitness in me some accomplishments to With years context for you years Nautilus of an been industry call. mind, our more provide last overview our XX since

driven year. change of First, time restored growth, a resulting achieved weights at a well increase most in its during important partial quarter trajectory the year-over-year shipment delays as the The sales achieving nearly quarter, well best X% Schwinn sales IC the from important fourth as quarter. moderate its Retail fourth but was recognized comp we in primarily from quarter the bikes as by our history. in third strong in and being SelectTech

multiyear our the diagnosed Direct in are we continued and long-term just to underlying its address it issues have decline. We beginning business, that

a we launches quarterly levels, advertising advertising messaging, by in However, increases driver Direct fitness business. pleased were and changes media in buoyed connected change achieved and products in ROI of by strong mix, our spend on making successful that spend, the this major sequential achieving trajectory, in a

leadership. several our up fitness similar in XXXX of connected we evolving two, four, to multiple rapidly gaps begun customers' track consumption XXXX address: that techniques; repeating three, which diagnosed and accelerated technology years; marketing and journey and a five, for with media to of and decline, media enough; to one, number not unsuccessful in strategy failing losing multiyear Among and mix products have introduce purchase causes Direct's keeping habits; the modern

make on and to these channel. other the to fronts expect progress We revitalize

However, channel will return when it is unclear profitable growth. this to

offset and Total our on product to were due focusing was Bowflex sales Max more In this decision portion by increased Max direct decline of Bowflex A quarter, bikes, to the than investment. by sales. our on return the expense reduce XX%, sales lower treadmills Trainer advertising of

By reading of on a our results, return better competitors' behaviors our we and to able levels media spend, achieve results and adjusting creatives spend. better varying ad and were sequential quarterly mix

of generated we these same $X changes expenses continuing trajectory, and from XX% period quarter million in with compared to reduced by Overall, in operations the fourth EBITDA of XXXX XXXX. the in operational approximately

to strengthening future. our to more Xth, On our key secured senior capital to and that sheet a fund the we facility, provide flexibility refinance million we towards credit Second, giving we worked financial fuel us our secured growth February initiatives. our announced debt balance $XX

partners transformative additional We in this favorable liquidity give strong were a strong pleased and to this of banking the us to improved foundation. select our direction terms secure financial we much have leverage believe be consider community interest and to what the facility and from the We terms. stronger

individual's several our single the October, JRNY that on-demand JRNY with industry-leading personalization personal offerings. further of providing platform Third, true fitness the throughout At platform personalized providing features portfolio. our AI-driven that into we an workouts launched a feel digital engine customized we levels, accelerated connected our product will trainer. suggests us brand, new under we to and end fitness of portfolio connected an leverage the fitness with an adjust

well video users our with as the across JRNY -- Explore gives of to workouts. World high-definition globe users the access also train via allowing library trainer-led virtually as to proprietary experience, numerous locations a

to entertainment extensively workout, Additionally, we offer options. product throughout streaming be curated access JRNY matching music will portfolio. time, Over and their our available

We building achieved are members, numbers. strong discussing the paid growth I in our run and and for base, not membership say But the be we early can year. we members, in revenue specific quarter rate will so overall

we driven quarter marketed by competitor and bike than connected a less the in aggressively addition, indoor In offers Bowflex in half introduced of CX bikes, the the the fitness The popularity at high-quality popular indoor Bowflex category. bike, bike of first-ever cycling CX. price our a the fourth

instead, users platform programs. subscription avoid comes extremely resonated value well. CX has the can World a an a open and third-party Explore experience features $XX on The other choose our also embedded CX bike, proposition can or also that that popular competitor's where month between

have have been supply. very temporarily and outstripped encouraging, Sales

this are for working lead We our with shorten product. vendors to times the supply increase and

continue We through are breaking points, our such products to offer types our to our in by with in we the of compete customers be these value price giving pleased Along ways to so products. strong connected buy to have and launches, equipment, technology, and to fitness messages. highly key personalized choices marketing demanded

up-leveling across experience Direct. Avis and and and And Bros. Ritchie our brands department the to world-class partner customer multiple team driven strengthened we including VP recently, leaders. where an by categories, Becky, function. marketing as I needs of achieve marketer of and Becky more Most team at with and joins Budget, will Becky needs to she transformation believe and a with our leading Finally, Alseth this. led Marketing headed myself be company industries rest insights. Diageo, Clorox. at of the she a the digital marketing is outstanding

vital Aina including In knowledge Aina Aina's China served Gap, XX experience, background deep in initiatives Inc. as CFO, execute founding new of company. strategic with executive-level in and financial to which a December, CFO consumer Konold. XX we forward our of are and goods roles comes years welcomed as various us she of we at over our move financial

our importantly, mix strong than term leaders. of better years. being functional transformation with ahead, more Reflective team half are than now strong experience, passionate the executive of the fresh perspective Both less and thinkers company at and team is and the additions longer people a three expertise, Nautilus of bring strategic

with fitness pleased team. strengthened sheet, and improvements To our of further we and results, in our balance acceleration connected recap, change trajectory in are short-term the

to that but work am begun continue move I and pleased much have to do forward. we to We have excited

is want call, the everyone's evolving on as situation. the suspect, and over turn I an to coronavirus, is mind I address I Before

is our Let saying our the me and priority and of partners. that employees health welfare start by top

and to employees taken have virus. We are the diagnosed strong pleased been report we have precautions, no that with that

many our of some you products so factories our As there business. manufactured will the be China, are in in on side supply of know, impact

partners production ports. to and delays impacts our to with conditions working working are understand and We at

most producing important virus, our open are weeks factories post opening factories now to New and All delayed product. the Chinese two Year but due

the as capacity. to in rebounded However, not has quickly China our as and factories infrastructure has returned full not

Shipping issues some not yet. returned more in ground shipping experienced have transportation likely delays. slip may our has to with of expected is sales are There these products normal QX. of some QX It of to and products popular

over additional that we working event the plans hard supply past future has Our chain experience on in the contingency been month delays.

That being early understand the too fully to impacts to it's our ongoing said, business.

our on moment. assessment current based is best Our at guidance first quarter the

continuing are evolving this We to situation. monitor rapidly

like welcome now now new introduce Aina of And our Aina CFO, to the financials Konold. for quarter. I'd Nautilus. to will overview an provide Aina, the

Aina Konold

company having afternoon, this excited of my of key I've and company. time. of Good base, spent strong have career Jim. its which at to everyone. importance and you, Thank joined strengths I loyal customer retail majority a admired brands I'm the pivotal two Nautilus understand in for long the of a the portfolio the time. And industry, brands the are

believe in profitable investing return performance right that are the we our place and a I have we we trajectory, issues the are growth assets to have falter addressing future. in caused to the to

now fourth process time mentioned, results I'll company begin speaking more the like I'd this investments XXXX Jim detail. as transformation P&L completed pay take year to off, overnight. review to will results. and and by full total to XXXX in quarter not be However,

Deep Direct to the declines million the compared XX% were Net by sales sales QX million, gains $XXX segment retail. fourth year. in last $XXX were offset slightly in down for quarter in

sales For were $XXX year. the last down year, compared million, XX% full net million to $XXX

XX% seven to for margins for product XX% year. last QX the Unfavorable in versus decline. were were primary mix fourth and down the the Gross quarter tariffs percentage drivers higher points

points XX last For year. XX% versus the full percentage margins XX% down were company to year, gross total

of to to $XX XX% expenses Fourth compared or operating net XX% or decreased year. net by last million sales million of in QX XX% quarter $XX sales

operating year, or million year. For were last total expenses compared XX% the net to $XXX of million full XX% net $XXX or sales of sales

the for include expenses operating of million and reminder, a intangible impairments. XXXX $XX year goodwill full As

$XX expenses XX% million, million Excluding impairment, $XXX down operating total or the year. last $XX million below were

down net XX% operating detail of and million $XX or in I will Fourth expenses sales excluding to more were or sales of quarter QX on provide $XX impairment. compared the million of sales year. now net to expenses last $XX marketing XX% million XX%

for net of and down net area Expense in were in were reductions or For full expenses marketing the year or to XX% quarter the full $XX the of last million compared to spend. this and XX% primarily sales year, million XX% both sales sales media year. $XXX

to general Fourth expenses. X% million quarter administrative compared net QX lower legal $X or X% expenses year driven million sales down XX% $X or sales and were last of by of in to net

full $XX year, legal to sales net million the X% million general higher settlements. For were or of sales compared $XX net driven by of X% year or administrative XX% expenses up to last

quarter development net Fourth XX% to net X% to research or million sales X% down and were sales or $X last costs compared of year. million of $X

year. research to development or to $XX or million XX% down and X% sales XXXX, of were year sales full compared $XX expenses the net million net X% last For of

platforms the capitalized. that and For year, the due in the decrease higher to primarily digital were was quarter investments

versus in year. $X.X income Fourth quarter to million XX% million $X.X last improved operating QX by

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

Excluding loss million. year to goodwill impairments full XXXX $XX and assets, was related $XX intangible million of operating

Fourth continuing increased $X.XX to last for same diluted quarter $X.X share million income year. period the operations or per per share or to million from $X.X $X.XX compared diluted

per from loss share minus XXXX, operations $XX or $XX of million compared $X.XX to year or $X.XX income totaled share continuing diluted diluted full the per For year. last million

Fourth continuing last QX quarter million was compared for to operations $X EBITDA year. $X million from

year, year, XX% to in year. $XX QX EBITDA tax primarily XXXX. the rate effective was was full million true-up XX% the QX in quarter from fourth For $XX due income continuing million minus tax last income of of to loss XXXX an a operations for of compared benefit versus The last

Max were now like was segment. decrease $XX due XX% segment start million, Browflex Direct we'll fourth I'd offset in $XX with sales QX treadmills, The versus and and discuss Total. bikes, increased to partially sales, for year. direct down lower in product primarily XXXX million sales performance results our to quarter in Net Bowflex Max by Trainer last

to QX partially declined optimized by and XX% QX increased tariffs. marketing quarter. by our last driven year. higher versus Gross the to higher expense by compared spend We prior sales mix Direct Operating in loss $X $X unfavorable of reductions season sales lower margins, which compared and in a on in XX% XX% reduction a expenses. was fitness last year in returning to was and margins and loss year focused loss advertising resulted offset media, advertising million in for product The million driven

$XX were last now fourth were Retail quarter quarter to the well primarily in Retail versus XXXX delays as Turning XXXX. sales by XXXX that Schwinn QX the driven $XX Higher results. sales QX as Net recognized segment's in bikes our SelectTech of segment up and IC million year. X% million third shipment to weights in

margin $XX QX Gross were offset by by dollars product in last to compared million the higher reductions gross in for margins QX X% XX% $XX Operating expenses. XX% than Lower last unfavorable to in segment mix to declined year versus and driven operating year. grew tariffs. million income Retail more

balance to and million $XX at We debt to sheet XXXX. cash with million year cash of and the debt XXXX. and $XX of $XX as of December securities consolidated million Turning marketable ended in XX, $XX This million. now at XXXX end compares

closely Inventory million to XXXX. Working end million inventory more levels at worked compared versus them million as was trends. million million to to XX, XXXX. capital payables to our down We hard $XX $XX at were and year totaled $XX align XX% XXXX. year of $XX million to reduce sales $XX our Trade end compared December $XX

beginning $X mentioned, million recently million. liquidity sheet we stabilize and range credit XXXX, million of $X gives company's $XX balance secured new secured And to the growth and runway the increased to and greater long-term a financial as additional line flexibility. which facility, million senior us We're with our work in our invest Jim XX, for $XX year were expenditures as a in Capital XXXX guidance stronger strategies. December ended business we with

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

James Barr

assets Aina. for on our and brands transition leverage Thank be is forward Nautilus value our and these unlock you, strong as of primary right, company absolutely Aina's built to shareholders. will the one a brands, business we

year ongoing to an We plan do on fiscal basis. provide guidance not quarterly or

However, are the of the call to stages and we transformation, the due the QX providing business timing the this to our commentary. end early relative quarter, of of following

an expect We $X million range $X EBITDA loss of in the million. to

for we the of year. and are guidance $X million Additionally, $XX providing million capital expenditure between

and it's to to For our industry. understand and new nature our seasonal welcome, those company, investors of are business important our the that

strong more of seasonally of fourth quarter as is spending indoors. The people the the the quarter is exercising outside quarter the softest second year instead and quarter normally time are

as The will new next first fluctuate and product depending on the third introductions. quarters strongest quarter

exited XXXX flow, quarter strengthened a We a expenses. reduced solid operating continuing EBITDA balance operations, cash sheet and positive from with of

momentum improvements. But remind our that opportunities everyone XXXX. may every this is linear transformation our Thus, and optimized we incremental I sequential growth expect be We will over Long-term and undertaking. a to see recovery not is continue quarter. each company throughout want progression to

lot a work to have do. of We

a an confident direction we competitive a products, financial setting we and strategic team. have and ever position long-term in portfolio transition to return the a more it that industry. have strengthened as takes improving our strong of profile we to However, leading of what brands, more than I'm good leadership Nautilus very to fitness

like Operator? to I'd open to questions. now call up the your And

Operator

At [Operator Instructions] Thank be conducting we'll this session. question-and-answer you. time, a

Capital is Group. Please Our proceed. with first Craig-Hallum from question Steve Dyer

Steve Dyer

operational but sure just the Thank and correctly. to as around cetera, facilities of I there's your sounds make delays color are everything sort I chain, et of transportation afternoon. you. the other want sort such Appreciated supply that. heard It Good pieces virus, of and on that manufacturing the like

at quantify to possible, point secondly, then that fair? guess, First, And impact? I it this is is

William McMahon

Steve, Bill. Hi it's

You it progressive Think have a it set of down. as hurdles. of

to to themselves factory the So, little and some at place. to delayed fortunate takes partnerships, strong bit it time some back this also back XXX% labor the and internal a return, have ports transportation are the factories country get obviously, in get operational operation. time to take We're time, forces might but our of really

so make quarter what do hard numbers, at of we'll five call but to the able product. like the can us on the product looks away. We weeks a for for it that know produce firm our be that and to sure right the end time the makes that And make really to transportation right working still place the we what we're is get we want making on that

James Barr

now. And It's we've in guidance. that to the where guidance the range we best has why unclear that it's mentioned exactly effort weeks as it given remarks, one in reasons what happens of are couple last quantify little made right can, I bit the of because our of in my things quarter, our a of

Steve Dyer

Sure. say differentiation of just know sense. real CX of the you the its to as On price recently. lot I That CX and can received. a a Any what you IC, guess. new one your on makes talk both I of raised about wondering is sort heard the of those cousin, and about I how IC. But either being conversation bikes, the lot

James Barr

a bit. I'll in thought. The just comments, Well, more demand some of what than as has we we and way those been said bikes little upon on both expound our it

couple a think is it I very, part -- of of the of strong very part a products. that's

great. strong. our on our the bikes very market and is be a proved Then under has go-to-market very, Bowflex that the differentiation to bike other relative to Having in brand

demand. I exactly I hoped would. So, tremendous those how both And have tremendous believe we volume, marketed had we've bikes of

that. momentum So, we've good on got really

shipping as we making Of as we now across and as we're we're other quickly possible. course, as all to of side as the as them fulfill ocean them hope our quickly can, can, as of the that we fast demand we

Steve Dyer

do Just that IC time. know have has into is kind been Do -- a you sense sort of retailers. to both I in for my the of Yes, of there leads -- those or as you Or any hanging can I as some one of next to you have question, of quite tell? from there sense everybody is backlog in are you that cancellation? guess. any any is lot business stock out think? what of Do lost, any

James Barr

cancellations, period Well, of we have experienced extended like when you an that. course, some

our communicating being giving we're can customers However, we're trying our keep week we talking as specific things updates, the appreciate quickly to last the telling our and really them about the with back like them, customers directly about as just getting doing we to do everything We're we frequently, them can. for virus in employees impact do -- were had. and And that's are we're right things that fold.

how we be for And product find buyer a one hope there's much that. to inevitably cancellation. But hope strong as to given bit little to been sales we So, of of for probably going the mitigate that. a canceled, new have every

this see as significant a So, in in our fewer don't other. completely timing seeing minds, any the from one almost bikes But we we're maybe difference way. to ourselves quarter slipping and selling

Steve Dyer

and one the it. then Last in I'll queue. jump got back Okay,

going sales as kind You thinking primarily a we Is sales this of or think marketing should forward, of level a I basis evaluating -- normalized pretty of maybe more something. and significantly, ROI, of a about a that in it's on whether cut more sort guess, expenses percentage sort of of a things. about terms and

about sort in going we swing that spend the how Just factor forward. your It's do of model. big obviously think

James Barr

at forward-looking spend. I expect I But and Yes. what -- just would or I'll on saying will prior that, what doubling keep to think provide periods, in were spending I we you, meaningful we we down bad reiterate a really tell hand. is on guidance can't

we pulled -- the that we we results Now, back a have the real-time, team reads spend. have

it media. to different move We

moved are core high-vis watch. what TV this we we people digital more those channels TV, move what to to we year. that call more more call would We from example, some networks For would

And so we things. playing keep with those particular

We inherently time And proved do spend quarter, we how this decisions is that a what in an that that's know made. to took is in driver of we have really the economically good but that the But to we the at is, the that the on that outcome. business. -- such didn't we fourth ROI we'd get volume like really big trade-off

Steve Dyer

makes sense. Yes,

Thank you. Okay.

James Barr

Thanks Steve.

Operator

[Operator a Instructions] Steve. follow-up question have do And from we

Steve Dyer

you inventory sort you some legacy mix too Do versus quarter, or have sort hotter little feel categories? do the about of of stuff. any the How of your products maybe much exiting new too selling of

James Barr

about channel we feel good hurt in overall, sold No, mix inventory pretty our given Steve. in a a question, a way hasn't what through think XXXX in We quarter. retail reduced inventory year, situation, happened as us meaningful It's where with that. that exited only lot fourth of and especially the our well, we last that good and not actually a good of inventory we it's inventory

than of we wish retail those. the I looks more probably pretty had clear the we to stock-outs, would us. say And channel Other

So, this that year affecting be that us won't the it last way year. did

feeling comment? that. to anyone looking we're about at good else I'm So,

William McMahon

agree. I'd No,

Aina Konold

No. Agree.

Steve Dyer

for it is this time. really That guys. Thanks it. got me right, All

Operator

proceed. question Mike Please next from Swartz Our is Robinson SunTrust with Humphrey.

Mike Swartz

evening good Hey everyone.

James Barr

Mike. Hi

Mike Swartz

to on off the for that still on couple some years. in wanted just to sizable there. away side. process a maybe refresh, a your doing is product. pivoting the Or get process that product of portion things you something But more declined marketing you been side going Max well, optimal be a in from maybe like your kind with the of and of long-term product product of forward? to line? I sounds you're And reinvigorate you know start plans about to it's look I it sales of on Trainer. the Is are That going talk little as that

James Barr

of Well, product line. still we disclose say for rejuvenate viable that could cycles, the It will parts be going we that in to ways is would in become -- plan. And their probably to down. of hopefully, it life competitive have I it and this is the direction. year our that we Max very will as this more bikes And portfolio. see reasons, way But I probably of that we no once don't see up plans really matter was. Products a never what a year can refresh the own what the want

we're a to that that bit. we sales going But everything rejuvenate little fighting in do we're can So, particular to product.

don't you're call able apologize, our after, I asking probably I when what we portfolio one can't disclose that right at we'll now. just product to the next the talk know I about because in or tell And -- year -- And you be either the this way, I typically for exactly that we'll point.

Mike Swartz

And I your No, competitors motive. made both? profit the color you have no, side of on retail you're direct a Jim, the more that seem understood. the in little maybe on a comment, business? guess, side there. preamble, that the the I don't of impacting more then of slate real about to business think what seeing Is the Is or maybe

James Barr

we're a to before, we're probably kind that's and we I'd faced for like of planning that every strategic prepared that reality making say year, it's going there's there be business that more new talking when hadn't just about that of there's our reality a that. we're for long-term thing. think so sure When about a we competitors and

we we that a one our have. of those pretty strongly way each have occur, We are and they competitive, as want with compete and to products to feel make sure we

of We have a have -- there, winner-take-all large not market lot right? We situation. a it's opportunity. There's kind very a a

strong We've improved to our And on platform. know choice. company. brands. great compete transforming financial a we continue we always we got got as We're have, an have People We've position. already

price products each for and And a We the have range those. differentiator equipment of variety of of fitness a and that's of wide wide type known points versus a new competitor.

to we're adding and technology So, to compete, our old to then some new we of compete ways. continue formula use in

Mike Swartz

calling weren't clarify, is anything year worse? This you broader around out comment to the getting mean, this just specific of materially I competitor set. But anything a more to

James Barr

least of and go. they're mean, and just I'm growth, At I internal the I profitably, not it which public statements one them yes. doing that's no competitors. to Yes, driving admire. is off their so where of But public, going the comments we have they're view where lots

Mike Swartz

me. for And one Okay. more then just maybe

front. it line of on long-term ROIs them. need where mean, obviously, are on get marketing direct you business. the the I you spend; marketing optimizing you're the it or that. I is pulling of Because some like process guess, there that to versus the when back getting top on sounds in But But what's sounds Just cutting the balance back guys topline. Direct like impact in growth you're

about that talking the forward. going So, maybe balance of

James Barr

really only of, at I going We're not I looked we we're But to to five it's that focus we going Yes, to really And causes again shared diagnosed. at on bad enough. on I won't going but that in -- there's we've to eight the we're down really we're sort direct on going hands. as -- them of going them that. And we're described, ROI. especially them. because really to double those, of each address list was thought look,

We're going for to to are model we find drive need realities, -- model said, them. want we're find We is new but been a have There another don't talked the of hero when we but word. the realities. rely like balance direct the to hero about on the We'll products them that, trying our really is where right competition, been growth big as a you always works new get with one products. for time Whereas that. there most new to business we create have take business, we or that

never that. it's you market do just invented been invent wait sit and before, and you around hope But something and to I harder for that's exclusivity, it -- to think with if then

the to market of So, up just trying square today. model realities we're with this

Mike Swartz

Okay, That's me. great. it Thanks. for

James Barr

Thanks Steve.

Operator

like back the to closing comments. We floor of end Jim the CEO, to have for question-and-answer session. over would Barr, reached I the turn

James Barr

today's call. I call. joining us and on talking look upwards. everyone forward to you Thank for on the Onwards to next you,

Aina Konold

you. Thank

Operator

Thank conference. you. today's This concludes

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

Bowflex (BFXXQ) 24 Feb 202019 Q4 Earnings call transcript