Direct Segment Net Sales of $21 Million Down
15% versus Q2 Fiscal 2023
Direct Strength Product Sales Up 15% versus
Q2 Fiscal 2023
Reaches 596K JRNY® Members During Q2 Fiscal
2024, Up 51% versus Q2 Fiscal 2023
Adjusted EBITDA Loss Reduced by 41% versus
Q2 Fiscal 2023
Updates Fiscal Year 2024 Guidance
BowFlex Inc. (NYSE: BFX) today reported its unaudited operating
results for the fiscal 2024 second quarter ended September 30,
2023.
Management Comments
“The retail environment has remained challenging throughout our
fiscal year second quarter. We continued to offset the topline
softness with diligent cost management and operational excellence
efforts, resulting in another quarter of year-over-year improvement
in gross margin and adjusted EBITDA loss during Q2,” said Jim Barr,
BowFlex Inc. Chief Executive Officer. “While both our Retail and
Direct segment net sales declined year-over-year, we were
encouraged by the growth of our international Retail business and
the positive comp we delivered in our Direct Strength equipment, a
testament to the deliberate product enhancements we’ve made in this
area. Additionally, we recently marked a major milestone for our
business with our rebranding to BowFlex Inc., reflecting our
reinforced focus on our strongest brand and providing our consumers
with the products and experiences that support their lifelong
fitness journey.”
Mr. Barr concluded, “Coming into our fiscal third quarter, we
see the difficult macroeconomic landscape persisting, with
retailers maintaining a highly conservative approach to inventory
reorders. In this environment, we are delivering on our operational
excellence initiatives, successfully controlling our costs and
optimizing our inventory position. These initiatives resulted in
improvements to adjusted EBITDA loss in the first half of the year
and we believe will drive continued adjusted EBITDA loss
improvement in the second half of the year. Looking further ahead,
we are strategically positioned to capitalize on the long-term
shift to connected at-home fitness with a strong pipeline of new
strength and cardio products and continued momentum on scaling
JRNY®.”
Total Company Results
Fiscal 2024 Second Quarter Ended September 30, 2023 Compared
to September 30, 2022
- Net sales were $48.7 million, compared to $65.5 million, a
decline of 25.7% versus last year. The sales decline versus last
year was driven primarily by lower customer demand.
- Gross profit was $10.0 million, compared to $11.5 million last
year, a decrease of 13.1%. Gross profit margin was 20.5% compared
to 17.5% last year. The 3 ppt increase in gross profit margin was
primarily due to lower landed product costs (+9 ppts) and a
decrease in inventory adjustments (+2 ppts), partially offset by
unfavorable absorption of JRNY COGs (-4 ppts), increased
discounting (-3 ppts), and higher other costs (-1 ppt).
- Operating expenses were $21.2 million compared to $25.8 million
last year. The decrease of $4.6 million, or 18.0%, was primarily
due to a $3.0 million decrease in personnel expenses, a $0.8
million decrease in media spending, and a $0.3 million decrease in
other variable selling and marketing expenses due to decreased
sales. Total advertising expenses were $2.3 million this year
versus $3.1 million last year.
- Operating loss was $11.2 million compared to an operating loss
of $14.3 million last year, primarily driven by lower operating
expenses and higher gross profit.
- Income tax expense was $0.5 million this year compared to $0.2
million last year. The increase in income tax expense compared to
last year was primarily driven by higher foreign related
taxes.
- Loss from continuing operations was $12.5 million, or $0.35 per
diluted share, compared to a loss of $15.3 million, or $0.48 per
diluted share, last year.
- Net loss was $12.5 million, or $0.35 per diluted share,
compared to a net loss of $13.2 million, or $0.41 per diluted
share, last year.
- The following non-GAAP measures exclude the impact of
restructuring and exit charges1 for the three-months ended
September 30, 2023.
- Adjusted operating expenses were $19.8 million compared to
$25.2 million last year. The $5.3 million, or 21.1%, decrease was
primarily due to a $3.0 million decrease in personnel expenses, a
$0.8 million decrease in media spending, and a $0.3 million
decrease in other variable selling and marketing expenses due to
decreased sales.
- Adjusted operating loss was $9.9 million compared to $13.7
million last year, primarily driven by lower operating expenses and
higher gross profit.
- Adjusted EBITDA loss from continuing operations was $5.9
million compared to $9.8 million last year.
1 See “Reconciliation of Non-GAAP
Financial Measures” for more information
Six-Months Ended September 30, 2023 Compared to Six-Months
Ended September 30, 2022
- Net sales were $90.4 million, compared to $120.3 million, a
decline of 24.8% versus last year. The net sales decline versus
last year was driven primarily by lower customer demand.
- Gross profit was $18.6 million, compared to $18.4 million last
year. Gross profit margin was 20.6% compared to 15.3% last year.
The 5 ppt increase in gross profit margin was primarily due to
lower landed product costs (+10 ppts), a decrease in inventory
adjustments (+2 ppts), and favorable logistics overhead absorption
(+1 ppt), partially offset by unfavorable absorption of JRNY COGS
(-5 ppts), increased discounting (-1 ppt), increased outbound
freight (-1 ppt), and higher other costs (-1 ppt).
- Operating expenses were $40.3 million compared to $83.9 million
last year. The decrease of $43.6 million, or 51.9%, was primarily
due to a prior year goodwill and intangible impairment charge of
$27.0 million, an $8.4 million decrease in personnel expenses, a
$5.4 million decrease in media spending, a $1.1 million decrease in
other variable selling and marketing expenses due to decreased
sales, and a $0.4 million decrease in legal expenses. Total
advertising expenses were $3.4 million versus $8.8 million last
year.
- Operating loss was $21.7 million or a negative 24.0% operating
margin, compared to an operating loss of $65.5 million last year,
primarily driven by lower operating expenses during the period as
well as a prior year goodwill and intangible impairment charge of
$27.0 million.
- Income tax expense was $1.0 million this year compared to $8.3
million last year. Tax expense in the current period was primarily
driven by foreign related taxes and reserves related to an income
tax audit. The decrease in income tax expense compared to last year
was primarily as a result of the U.S. deferred tax asset valuation
allowance recognized in fiscal 2023.
- Loss from continuing operations was $17.5 million, or $0.51 per
diluted share, compared to a loss of $75.5 million, or $2.40 per
diluted share, last year.
- Net loss was $17.5 million, or $0.51 per diluted share,
compared to a net loss of $73.4 million or $2.33 per diluted share,
last year.
- The following statements exclude the impact of restructuring
and exit charges1 for the six-months ended September 30, 2023 and
the impact of non-cash impairment charges1 related to the carrying
value of our goodwill and intangible assets and acquisition and
other related costs1 for the six-months ended September 30, 2022.
- Adjusted operating expenses were $38.6 million compared to
$55.7 million last year. The $17.1 million or 30.7% decrease was
driven by an $8.4 million decrease in personnel expenses, a $5.4
million decrease in media spending, a $1.1 million decrease in
other variable selling and marketing expenses due to decreased
sales, and a $0.4 million decrease in legal expenses.
- Adjusted operating loss was $20.0 million compared to a loss of
$37.3 million last year, driven by lower operating expenses.
- Adjusted EBITDA loss from continuing operations was $11.8
million compared to income of $29.1 million last year.
1 See “Reconciliation of Non-GAAP
Financial Measures” for more information
JRNY® Update
- BowFlex continues to enhance and refine existing JRNY® features
that are popular with customers, including its personalized
recommendations and differentiated, adaptive workouts.
- As of September 30, 2023, Members of JRNY® reached 596,000,
representing approximately 51% growth versus the same quarter last
year. Of these Members, 143,000 were Subscribers, representing
approximately 1% increase over the same period last year. BowFlex
defines JRNY® Members as all individuals who have a JRNY® account
and/or subscription, which includes Subscribers, their respective
associated users, and users who consume free content. A Subscriber
is a person or household who paid for a subscription, is in a trial
subscription period, or has requested a "pause"' to their
subscription for up to three months.
- Earlier this year, BowFlex introduced the JRNY® app with Motion
Tracking offering personalized coaching and feedback, automatic rep
tracking, form guidance, and adaptive weight targets to all JRNY®
memberships. Accessible via iOS or Android tablets and mobile
devices, these embedded features are available to all JRNY® members
with their existing membership and without the need for additional
equipment. Leveraging proprietary technology and machine learning
expertise from the Company's acquisition of VAY, these new features
bring enhanced value within the JRNY® platform, which BowFlex
expects to drive JRNY® membership growth. We have seen early
success, as workouts with motion tracking are chosen by consumers
70% more frequently than other workouts in the JRNY® platform.
- A JRNY® Mobile subscription, priced at $11.99 per month or $99
per year, is designed for Members who like using a mobile device
with a compatible BowFlex® or Schwinn® connectable product. Such
Members also benefit from a wide range of whole body workouts that
are versatile and can be used both at home and on the go.
- A JRNY® All-Access subscription, priced at $19.99 per month or
$149 per year, expands a Member's usage to any of our BowFlex®
built-in touchscreen cardio products.
Segment Results
Fiscal 2024 Second Quarter Ended September 30, 2023 Compared
to September 30, 2022
Direct Segment
- Direct segment sales were $20.7 million, compared to $24.5
million, a decline of 15.3% versus the same period in 2022. The net
sales decrease was primarily driven by lower customer demand.
- Cardio sales declined 29.9% versus the same period in 2022.
Lower Cardio sales this quarter versus last year were primarily
driven by lower demand for Max Trainer® and elliptical equipment.
Strength product sales increased 14.9% versus the same period last
year. Higher Strength sales this quarter were primarily driven by
sales of home gyms.
- Gross profit margin was 13.4% versus 12.7% for the same period
in 2022. Gross profit margin improved by 1 ppt because of gains
from lower landed product costs (+7 ppts), favorable logistics
overhead absorption (+3 ppts), decrease in inventory adjustments
(+2 ppts), lower outbound freight (+1 ppt), and lower other
expenses (+1 ppt) and were almost entirely offset by unfavorable
absorption of JRNY COGs (-9 ppts), and increased discounting (-4
ppts). Gross profit was $2.8 million, a decrease of 10.2% versus
the same period in 2022.
- Segment contribution loss was $7.7 million, or 37.0% of sales,
compared to segment contribution loss of $7.9 million, or 32.2% of
sales, for the same period in 2022. The improvement in segment
contribution loss was primarily driven by decreased media spend and
lower operating expenses, partially offset by lower gross profit.
Advertising expenses were $2.0 million compared to $2.6 million for
the same period in 2022.
Retail Segment
- Retail net segment sales were $27.8 million, compared to $39.9
million, a decline of 30.4% for the same period in 2022. Retail
segment sales outside the United States and Canada were up 41.0%
versus the same period in 2022. The overall net sales decrease
compared to last year was primarily driven by lower demand from
retailers.
- Cardio sales declined 24.4% versus last year. Lower Cardio
sales this quarter were primarily driven by lower demand for bikes.
Strength product sales declined by 33.8% versus last year. Lower
Strength sales this quarter versus last year were primarily driven
by lower demand for SelectTech® weights.
- Gross profit margin was 25.3% versus 18.3% for the same period
in 2022. The 7 ppt increase in gross profit margin was primarily
due to lower landed product costs (+10 ppts) and a decrease in
inventory adjustments (+2 ppts), partially offset by increased
discounting (-2 ppts), unfavorable logistics overhead absorption
(-1 ppt), and increases in outbound freight and other costs (-2
ppts). Gross profit was $7.0 million, a decrease of 3.5% versus the
same period in 2022.
- Segment contribution income was $3.7 million, or 13.2% of
sales, compared to segment contribution of $1.0 million, or 2.4% of
sales, last year. The improvement was primarily driven by lower
operating expenses, partially offset by lower gross profit.
Comparison of Segment Results for the Six-Months Ended
September 30, 2023 to the Six-Months Ended September 30,
2022
Direct Segment
- Direct segment sales were $42.6 million, compared to $51.0
million, a decline of 16.4% versus the same period in 2022. The net
sales decrease compared to last year was primarily driven by lower
customer demand.
- Cardio sales declined 28.4% versus the same period in 2022.
Lower Cardio sales were primarily driven by lower bike demand.
Strength product sales grew 6.8% versus the same period in 2022.
Higher Strength sales this year were primarily driven by sales of
home gyms.
- Gross profit margin was 14.8% versus 15.0% for the same period
in 2022. Gross profit margin was relatively flat as gains from
lower landed product costs (+7 ppts), favorable logistics overhead
absorption (+3 ppts), and a decrease in inventory adjustments (+2
ppts) were offset by unfavorable absorption of JRNY COGS (-8 ppts),
increased discounting (-3 ppts), and higher outbound freight (-1
ppt). Gross profit was $6.3 million, down 17.6% versus the same
period in 2022.
- Segment contribution loss was $12.4 million, or 29.1% of sales,
compared to segment contribution loss of $17.8 million, or 34.9% of
sales last year. The improvement was primarily driven by decreased
media spend and lower operating expenses, partially offset by lower
gross profit. Advertising expenses were $2.9 million compared to
$7.8 million for the same period last year.
Retail Segment
- Retail segment sales were $47.3 million, compared to $67.3
million, a decline of 29.8% versus the same period in 2022. Retail
segment sales outside the United States and Canada were up 53.9%
versus last year. The overall net sales decrease compared to last
year is primarily driven by lower demand from retailers.
- Cardio sales declined 23.0% versus the same period in 2022.
Lower Cardio sales this year were primarily driven by lower bike
demand. Strength product sales declined by 34.2% versus the same
period in 2022. Lower Strength sales this year were primarily
driven by lower demand for SelectTech® weights.
- Gross profit margin was 24.8% versus 13.0% for the same period
in 2022. The 12 ppt increase in gross profit margin was primarily
due to lower landed product costs (+11 ppts) and a decrease in
inventory adjustments (+2 ppts), partially offset by unfavorable
logistics overhead absorption (-1 ppt). Gross profit was $11.7
million, an increase of 33.5% versus last year.
- Segment contribution income was $4.0 million, or 8.6% of sales,
compared to segment contribution loss of $4.4 million, or 6.6% of
sales, last year, primarily driven by higher gross profit in the
current period.
Balance Sheet and Other Key Highlights as of September
30, 2023:
- Cash and Liquidity:
- Cash, cash equivalents, and restricted cash were $10.3 million,
compared to cash, cash equivalents, and restricted cash of $18.3
million as of March 31, 2023. The decrease was primarily due to
lower sales in slow season combined with inventory purchases in
anticipation of our busy season, which occurs in the third and
fourth quarters of our fiscal year.
- Debt and other borrowings were $15.8 million, a reduction of
$12.1 million, compared to $27.9 million as of March 31, 2023.
- $29.0 million was available for borrowing under the Wells Fargo
Asset Based Lending Revolving Credit Facility compared to $14.9
million as of March 31, 2023.
- Free Cash Flow1, defined as net cash used in operating
activities minus capital expenditures, was an outflow of $6.3
million for the three-months ended September 30, 2023 compared to
an outflow of $7.7 million for the same period last year.
1 See “Reconciliation of Non-GAAP
Financial Measures” for more information
- Inventory was $66.1 million, up 42% compared to $46.6 million
as of March 31, 2023 and down 33% versus the same quarter last
year. The increase in inventory in the second quarter of fiscal
2024 versus the fiscal year ended March 31, 2023 was driven by
inventory purchases in anticipation of our busy season, which
occurs in the third and fourth quarters of our fiscal year. About
40% of inventory as of September 30, 2023 was in-transit.
- Trade receivables were $24.2 million, compared to $21.5 million
as of March 31, 2023. The increase in trade receivables was due to
increased Retail sales offset by cash collection efforts in the
second quarter of fiscal 2024.
- Trade payables were $63.2 million, compared to $29.4 million as
of March 31, 2023. The increase in trade payables was primarily due
to inventory purchases in advance of our busy season, which occurs
in the third and fourth quarters of our fiscal year.
- Capital expenditures totaled $1.9 million for the six-months
ended September 30, 2023, compared to $7.5 million for the
six-months ended September 30, 2022. The decline is primarily
related to lower investments in JRNY® as the Company completed the
integration of Vay.
Forward Looking Guidance
The following forward-looking statements reflect the Company's
full fiscal year 2024 expectations as of November 14, 2023 and are
subject to risks and uncertainties.
Full Year Fiscal 2024
BowFlex is adjusting full year fiscal 2024 guidance.
- The Company now expects full year net revenue to be in the
range of $215 million to $240 million, compared to previous
guidance of a range of $270 million to $300 million.
- The Company now expects full year royalty revenue to be $1.1
million, compared to previous guidance of $1.8 million.
- The Company now expects full year Adjusted EBITDA1 loss of
between $15 million to $25 million, compared to previous guidance
of $15 million loss to break-even.
- The Company now expects to cross 650,000 JRNY® Members by March
31, 2024, compared to previous guidance of targeting 625,000 JRNY®
Members by March 31, 2024.
1 The Company provides Adjusted EBITDA
guidance, rather than net income guidance, due to the inherent
unpredictability of forecasting certain types of expenses such as
stock-based compensation and income tax expenses, which affect net
income but not Adjusted EBITDA. The Company is unable to reasonably
estimate the impact of such expenses, if any, on net income. The
inability to project certain components of the calculation would
significantly affect the accuracy of a reconciliation. Accordingly,
the Company does not provide a reconciliation of projected net
income to projected Adjusted EBITDA
Conference Call
BowFlex Inc. will discuss fiscal 2024 second quarter ended
September 30, 2023 operating results during a live conference call
and webcast on Tuesday, November 14, 2023 at 1:30 p.m. Pacific
Time. The conference call can be accessed by calling (877) 425-9470
in North America. International callers may dial (201) 389-0878.
Please note that there will be presentation slides accompanying the
earnings call. The slides will be displayed live on the webcast and
will be available to download via the webcast player or at
https://corporate.bowflex.com/investors/events-webcasts/. The
webcast will be archived online within two hours after completion
of the call and will be available for six months. Participants from
the Company will include Jim Barr, Chief Executive Officer and Aina
Konold, Chief Financial Officer.
A telephonic playback will be available from 4:30 p.m. PT,
November 14, 2023 through 8:59 p.m. PT, November 28, 2023.
Participants can dial (844) 512-2921 in North America and
international participants can dial (412) 317-6671 to hear the
playback. The passcode for the playback is 13741508.
About BowFlex Inc.
BowFlex Inc. (NYSE:BFX) is a global leader in digitally
connected home fitness solutions. The Company’s brand family
includes BowFlex®, Schwinn®, and JRNY®, its digital fitness
platform. With a broad selection of exercise bikes, cardio
equipment, and strength training products, BowFlex Inc. empowers
healthier living through individualized connected fitness
experiences and in doing so, envisions building a healthier world,
one person at a time.
Headquartered in Vancouver, Washington, the Company’s products
are sold direct to consumer on brand websites and through retail
partners and are available throughout the U.S. and internationally.
Bowflex Inc. uses the investor relations page of its website
(www.bowflex.com/investors) to make information available to its
investors and the market.
Forward-Looking Statements
This press release includes forward-looking statements
(statements which are not historical facts) within the meaning of
the Private Securities Litigation Reform Act of 1995, including:
projected, targeted or forecasted financial, operating results and
capital expenditures, including but not limited to net sales growth
rates, gross margins, operating expenses, operating margins,
anticipated demand for the Company's new and existing products,
statements regarding the Company's prospects, resources or
capabilities; planned investments, strategic initiatives and the
anticipated or targeted results of such initiatives; and planned
operational initiatives and the anticipated cost-saving results of
such initiatives. All of these forward-looking statements are
subject to risks and uncertainties that may change at any time.
Factors that could cause BowFlex Inc.’s actual expectations to
differ materially from these forward-looking statements also
include: weaker than expected demand for new or existing products;
our ability to timely acquire inventory that meets our quality
control standards from sole source foreign manufacturers at
acceptable costs; risks associated with current and potential
delays, work stoppages, or supply chain disruptions, including
shipping delays due to the severe shortage of shipping containers;
an inability to pass along or otherwise mitigate the impact of raw
material price increases and other cost pressures, including
unfavorable currency exchange rates and increased shipping costs;
experiencing delays and/or greater than anticipated costs in
connection with launch of new products, entry into new markets, or
strategic initiatives; our ability to hire and retain key
management personnel; changes in consumer fitness trends; changes
in the media consumption habits of our target consumers or the
effectiveness of our media advertising; a decline in consumer
spending due to unfavorable economic conditions; risks related to
the impact on our business of the COVID-19 pandemic or similar
public health crises; softness in the retail marketplace;
availability and timing of capital for financing our strategic
initiatives, including being able to raise capital on favorable
terms or at all; changes in the financial markets, including
changes in credit markets and interest rates that affect our
ability to access those markets on favorable terms and the impact
of any future impairment. Additional assumptions, risks and
uncertainties are described in detail in our registration
statements, reports and other filings with the Securities and
Exchange Commission, including the “Risk Factors” set forth in our
Annual Report on Form 10-K, as supplemented by our quarterly
reports on Form 10-Q. Such filings are available on our website or
at www.sec.gov. You are cautioned that such statements are not
guarantees of future performance and that our actual results may
differ materially from those set forth in the forward-looking
statements. We undertake no obligation to publicly update or revise
forward-looking statements to reflect subsequent developments,
events, or circumstances.
RESULTS OF OPERATIONS INFORMATION
The following summary contains information from our consolidated
statements of operations for the three and six-month periods ended
September 30, 2023 and 2022 (unaudited and in thousands, except per
share amounts):
Three-Months Ended
September 30,
Six-Months Ended September
30,
2023
2022
2023
2022
Net sales
$
48,659
$
65,458
$
90,409
$
120,275
Cost of sales
38,705
54,000
71,805
101,859
Gross profit
9,954
11,458
18,604
18,416
Operating expenses:
Selling and marketing
7,023
9,400
13,024
22,290
General and administrative
8,980
10,995
17,874
23,458
Research and development
3,836
5,405
7,684
11,229
Restructuring and exit charges
1,323
—
1,763
—
Goodwill and intangible impairment
charge
—
—
—
26,965
Total operating expenses
21,162
25,800
40,345
83,942
Operating loss
(11,208
)
(14,342
)
(21,741
)
(65,526
)
Total other (expense) income, net
(883
)
(815
)
5,231
(1,705
)
Loss from continuing operations before
income taxes
(12,091
)
(15,157
)
(16,510
)
(67,231
)
Income tax expense
452
156
957
8,251
Loss from continuing operations
(12,543
)
(15,313
)
(17,467
)
(75,482
)
Income from discontinued operations, net
of income taxes
—
2,110
—
2,102
Net loss
$
(12,543
)
$
(13,203
)
$
(17,467
)
$
(73,380
)
Basic loss per share from continuing
operations
$
(0.35
)
$
(0.48
)
$
(0.51
)
$
(2.40
)
Basic income per share from discontinued
operations
—
0.07
—
0.07
Basic net loss per share
$
(0.35
)
$
(0.41
)
$
(0.51
)
$
(2.33
)
Diluted loss per share from continuing
operations
$
(0.35
)
$
(0.48
)
$
(0.51
)
$
(2.40
)
Diluted income per share from discontinued
operations
—
0.07
—
0.07
Diluted net loss per share
$
(0.35
)
$
(0.41
)
$
(0.51
)
$
(2.33
)
Shares used in per share calculations:
Basic
36,008
31,585
34,192
31,496
Diluted
36,008
31,585
34,192
31,496
Select Metrics:
Gross margin
20.5
%
17.5
%
20.6
%
15.3
%
Selling and marketing % of net sales
14.4
%
14.4
%
14.4
%
18.5
%
General and administrative % of net
sales
18.5
%
16.8
%
19.8
%
19.5
%
Research and development % of net
sales
7.9
%
8.3
%
8.5
%
9.3
%
Operating loss % of net sales
(23.0
)%
(21.9
)%
(24.0
)%
(54.5
)%
SEGMENT INFORMATION
The following table presents certain comparative information by
segment and major product lines within each business segment for
the three and six-months ended September 30, 2023 and 2022
(unaudited and in thousands):
Three-Months Ended
September 30,
Change
2023
2022
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
11,561
$
16,493
$
(4,932
)
(29.9
)%
Strength products(2)
9,176
7,987
1,189
14.9
%
Direct
20,737
24,480
(3,743
)
(15.3
)%
Retail net sales:
Cardio products(1)
11,002
14,554
(3,552
)
(24.4
)%
Strength products(2)
16,778
25,351
(8,573
)
(33.8
)%
Retail
27,780
39,905
(12,125
)
(30.4
)%
Royalty
142
1,073
(931
)
(86.8
)%
Consolidated net sales
$
48,659
$
65,458
$
(16,799
)
(25.7
)%
Gross profit:
Direct
$
2,786
$
3,101
$
(315
)
(10.2
)%
Retail
7,026
7,284
(258
)
(3.5
)%
Royalty
142
1,073
(931
)
(86.8
)%
Consolidated gross profit
$
9,954
$
11,458
$
(1,504
)
(13.1
)%
Gross margin:
Direct
13.4
%
12.7
%
70
basis points
Retail
25.3
%
18.3
%
700
basis points
Contribution:
Direct
$
(7,668
)
$
(7,887
)
$
219
2.8
%
Retail
3,663
966
2,697
279.1
%
Royalty
142
1,073
(931
)
(86.8
)%
Consolidated contribution
$
(3,863
)
$
(5,848
)
$
1,985
33.9
%
Reconciliation of consolidated
contribution to loss from continuing operations:
Consolidated contribution
$
(3,863
)
$
(5,848
)
$
1,985
33.9
%
Amounts not directly related to
segments:
Operating expenses
(7,345
)
(8,493
)
1,148
13.5
%
Other expense, net
(883
)
(816
)
(67
)
(8.2
)%
Income tax expense
(452
)
(156
)
(296
)
(189.7
)%
Loss from continuing operations
$
(12,543
)
$
(15,313
)
$
2,770
18.1
%
(1) Cardio products include:
connected-fitness bikes, the BowFlex® C6, Bowflex® VeloCore®,
Schwinn® IC4, Max Trainer®, connected-fitness treadmills, other
exercise bikes, ellipticals and subscription services (applicable
to Direct only).
(2) Strength products include: Bowflex®
Home Gyms, BowFlex® SelectTech® dumbbells, kettlebell and barbell
weights, and accessories.
Six-Months Ended September
30,
Change
2023
2022
$
%
Net sales:
Direct net sales:
Cardio products(1)
$
24,079
$
33,626
$
(9,547
)
(28.4
)%
Strength products(2)
18,503
17,331
1,172
6.8
%
Direct
42,582
50,957
(8,375
)
(16.4
)%
Retail net sales:
Cardio products(1)
20,323
26,397
(6,074
)
(23.0
)%
Strength products(2)
26,934
40,951
(14,017
)
(34.2
)%
Retail
47,257
67,348
(20,091
)
(29.8
)%
Royalty
570
1,970
(1,400
)
(71.1
)%
Consolidated net sales
$
90,409
$
120,275
$
(29,866
)
(24.8
)%
Gross profit:
Direct
$
6,315
$
7,665
$
(1,350
)
(17.6
)%
Retail
11,719
8,781
2,938
33.5
%
Royalty
570
1,970
(1,400
)
(71.1
)%
Consolidated gross profit
$
18,604
$
18,416
$
188
1.0
%
Gross margin:
Direct
14.8
%
15.0
%
(20
)
basis points
Retail
24.8
%
13.0
%
1,180
basis points
Contribution:
Direct
$
(12,376
)
$
(17,780
)
$
5,404
30.4
%
Retail
4,045
(4,442
)
8,487
191.1
%
Royalty
570
1,970
(1,400
)
(71.1
)%
Consolidated contribution
$
(7,761
)
$
(20,252
)
$
12,491
61.7
%
Reconciliation of consolidated
contribution to (loss) income from continuing operations:
Consolidated contribution
$
(7,761
)
$
(20,252
)
$
12,491
61.7
%
Amounts not directly related to
segments:
Operating expenses
(13,980
)
(45,274
)
31,294
69.1
%
Other expense, net
5,231
(1,704
)
6,935
407.0
%
Income tax expense
(957
)
(8,252
)
7,295
88.4
%
Loss from continuing operations
$
(17,467
)
$
(75,482
)
$
58,015
76.9
%
(1) Cardio products include:
connected-fitness bikes, the Bowflex® C6, Bowflex® VeloCore®,
Schwinn® IC4, Max Trainer®, connected-fitness treadmills, other
exercise bikes, ellipticals and subscription services (applicable
to Direct only).
(2) Strength products include: Bowflex®
Home Gyms, Bowflex® SelectTech® dumbbells, kettlebell and barbell
weights, and accessories.
BALANCE SHEET INFORMATION
The following summary contains information from our consolidated
balance sheets as of September 30, 2023 and March 31, 2023
(unaudited and in thousands):
As of
September 30, 2023
March 31, 2023
Assets
Cash and cash equivalents
$
8,134
$
17,362
Restricted cash
2,158
950
Trade receivables, net of allowances
24,187
21,489
Inventories
66,077
46,599
Prepaids and other current assets
9,779
8,033
Income taxes receivable
7,215
1,789
Total current assets
117,550
96,222
Property, plant and equipment, net
28,352
32,789
Operating lease right-of-use assets
16,906
19,078
Other intangible assets, net
3,059
6,787
Deferred income tax assets,
non-current
540
554
Income taxes receivable, non-current
—
5,673
Other assets
1,271
2,429
Total assets
$
167,678
$
163,532
Liabilities and Shareholders'
Equity
Trade payables
$
63,235
$
29,378
Accrued liabilities
11,858
15,575
Operating lease liabilities, current
portion
4,575
4,427
Finance lease liabilities, current
portion
123
122
Warranty obligations, current portion
2,560
2,564
Income taxes payable, current portion
1,089
328
Debt payable, current portion, net of
unamortized debt issuance costs
1,803
1,642
Total current liabilities
85,243
54,036
Operating lease liabilities,
non-current
13,950
16,380
Finance lease liabilities, non-current
225
282
Warranty obligations, non-current
859
703
Income taxes payable, non-current
2,055
2,316
Deferred income tax liabilities,
non-current
128
253
Other non-current liabilities
4,108
1,978
Debt payable, non-current, net of
unamortized debt issuance costs
13,987
26,284
Shareholders' equity
47,123
61,300
Total liabilities and shareholders'
equity
$
167,678
$
163,532
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Non-GAAP Presentation
BowFlex presents non-GAAP financial measures as a complement to
results provided in accordance with GAAP, and the non-GAAP
financial measures should not be regarded as a substitute for
GAAP.
In addition to disclosing its financial results determined in
accordance with GAAP, BowFlex has presented in this release certain
non-GAAP financial measures, which exclude the impact of certain
items (as further described below). Management believes these
measures are also useful to investors as these are the same metrics
that management uses to evaluate past performance and prospects for
future performance. BowFlex strongly encourages investors to review
all its financial statements and publicly filed reports in their
entirety and to not rely on any single financial measure to
evaluate the Company’s performance.
Free Cash Flow
Free cash flow is a non-GAAP financial measure. BowFlex defines
free cash flow as net cash provided by (used in) operating
activities minus capital expenditures. The Company believes that,
when viewed with its GAAP results, free cash flow provides
management, investors and other users of the Company's financial
information with a more complete understanding of factors and
trends affecting its cash flows. BowFlex believe free cash flow
provides useful additional information to users of the Company's
financial information and is an important metric because it
represents a measure of how much cash is available for
discretionary and non-discretionary items after the deduction of
capital expenditures. The Company uses this metric internally, as
we believe a sustained ability to generate free cash flow is an
important driver of value creation. However, this non-GAAP
financial measure is not intended to supersede or replace GAAP
results.
Adjusted Results
In addition to disclosing the comparable GAAP results, BowFlex
has presented its operating expenses and operating (loss) income on
an adjusted basis to exclude certain non-recurring items, including
the non-cash charge related to goodwill and intangible asset
impairment(1)and exit charges(2). The Company believes that
excluding these items, which are inconsistent in amount and
frequency, supplements the GAAP information with a measure that can
be used to assess the sustainability of the Company’s operating
performance. BowFlex has also presented EBITDA from continuing
operations on an adjusted basis, excluding the aforementioned items
for similar reasons.
Adjusted EBITDA from Continuing Operations
BowFlex has also presented EBITDA from continuing operations on
an adjusted basis, to exclude the non-cash charge related to
goodwill and intangible asset impairment(1) and restructuring and
exit charges(2), depreciation and amortization, stock-based
compensation and certain other net expenses. The Company believes
that EBITDA is an important measure as it allows the company to
evaluate past performance and prospects for future performance. The
Company believes the exclusion of stock-based compensation expense
provides for a better comparison of operating results to prior
periods and to peer companies as the calculations of stock-based
compensation vary from period to period and company to company due
to different valuation methodologies, subjective assumptions, and
the variety of award types. The Company excludes other expenses,
net that are the result of factors and can vary significantly from
one period to the next. BowFlex believes that exclusion of such
other expenses are useful to management and investors in evaluating
the performance of ongoing operations on a period-to-period
basis.
BowFlex does not reconcile non-GAAP financial measures on a
forward-looking basis as it is impractical to do so without
unreasonable effort.
The following table reconciles free cash flow, a non-GAAP
financial measure, from a GAAP financial measure for the three and
six-month periods ended September 30, 2023 and 2022 (unaudited and
in thousands):
Three-Months Ended
September 30,
Six-Months Ended September
30,
2023
2022
2023
2022
Net cash used in operating activities
$
(5,566
)
$
(3,616
)
$
(7,931
)
$
(9,596
)
Purchase of property, plant and
equipment
(724
)
(4,130
)
(1,902
)
(7,511
)
Free cash flow
$
(6,290
)
$
(7,746
)
$
(9,833
)
$
(17,107
)
Net loss
$
(12,543
)
$
(13,203
)
$
(17,467
)
$
(73,380
)
Free cash flow as percentage of net
loss
50.1
%
58.7
%
56.3
%
23.3
%
The following table presents a reconciliation of operating
expenses, the most directly comparable GAAP measure, to Adjusted
operating expenses for the three and six-month periods ended
September 30, 2023 and 2022 (unaudited and in thousands):
Three-Months Ended
September 30,
Six-Months Ended September
30,
2023
2022
2023
2022
Operating expenses
$
21,162
$
25,800
$
40,345
$
83,942
Goodwill and intangible impairment
charge(1)
—
—
—
(26,965
)
Acquisition and other related costs(3)
—
(648
)
—
(1,296
)
Restructuring and exit charges(2)
(1,323
)
—
(1,763
)
—
Adjusted operating expenses
$
19,839
$
25,152
$
38,582
$
55,681
The following table presents a reconciliation of operating loss,
the most directly comparable GAAP measure, to Adjusted operating
loss for the three and six-month periods ended September 30, 2023
and 2022 (unaudited and in thousands):
Three-Months Ended
September 30,
Six-Months Ended September
30,
2023
2022
2023
2022
Operating loss
$
(11,208
)
$
(14,342
)
$
(21,741
)
$
(65,526
)
Goodwill and intangible impairment
charge(1)
—
—
—
26,965
Acquisition and other related costs(3)
—
648
—
1,296
Restructuring and exit charges(2)
1,323
—
1,763
—
Adjusted operating loss
$
(9,885
)
$
(13,694
)
$
(19,978
)
$
(37,265
)
The following table presents a reconciliation of loss from
continuing operations, the most directly comparable GAAP measure,
to Adjusted EBITDA from continuing operations for the three and
six-month periods ended September 30, 2023 and 2022 (unaudited and
in thousands):
Three-Months Ended
September 30,
Six-Months Ended September
30,
2023
2022
2023
2022
Loss from continuing operations
$
(12,543
)
$
(15,313
)
$
(17,467
)
$
(75,482
)
Total other (income) expense, net
883
815
(5,231
)
1,705
Income tax expense from continuing
operations
452
156
957
8,251
Depreciation and amortization
3,106
2,480
6,256
4,786
Stock-based compensation expense
923
1,367
1,945
3,346
Goodwill and intangible impairment
charge(1)
—
—
—
26,965
Acquisition and other related costs(3)
—
648
—
1,296
Restructuring and exit charges(2)
1,323
—
1,763
—
Adjusted loss before interest, taxes,
depreciation, and amortization (Adjusted EBITDA) from continuing
operations
$
(5,856
)
$
(9,847
)
$
(11,777
)
$
(29,133
)
(1) Goodwill and intangible impairment charge In
accordance with ASC 350 — Intangibles — Goodwill and Other, an
entity is required to perform goodwill and indefinite-lived trade
names impairment valuations annually, or sooner if triggering
events are identified. We observed continued market volatility
including significant declines in our market capitalization during
the three-month period ended June 30, 2022, which we identified as
a triggering event. In response to the triggering event, we
performed an interim evaluation and a market capitalization
reconciliation during the first quarter of fiscal 2023, which
resulted in non-cash goodwill and indefinite-lived intangible
assets impairment charges.
(2) Restructuring and exit charges In February 2023, we
restructured our cost structure to align with lower revenue. In
addition to ending relationships with outsourced contractors, we
executed a reduction in our workforce of approximately 15%.
Restructuring and exit charges include involuntary employee
termination benefits and other exit costs.
(3) Acquisition and other related costs On
September 17, 2021, we acquired VAY AG ("VAY") for aggregate
purchase consideration of approximately $27.0 million. We accounted
for the transaction as a business combination. Acquisition and
other costs are reflected in general and administrative costs and
consist of acquisition related closing costs and a contingent
consideration arrangement. The contingent consideration arrangement
required the Company to recognize $3.9 million compensatory expense
over an 18 month service period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114298650/en/
Investor Relations: John Mills ICR, LLC 646-277-1254
John.mills@icrinc.com Media: Hanna Herrin BowFlex Inc
360-859-2570 hherrin@bowflex.com Robin Rootenberg Action Mary
925-464-8030 robin.rootenberg@actionmary.com
BowFlex (NYSE:BFX)
過去 株価チャート
から 11 2024 まで 12 2024
BowFlex (NYSE:BFX)
過去 株価チャート
から 12 2023 まで 12 2024
