Nautilus Stock Falls After Q1 Results, Faces Margin Pressure

Nautilus Inc NLS reported first-quarter FY22 sales growth of 61.7% year-on-year, to $184.6 million, beating the analyst consensus of $169.05 million.
The revenue increase was driven primarily by continued demand for connected fitness bikes and treadmills, like the Bowflex VeloCore bike and Bowflex T22 Treadmill, and solid sales of SelectTech weights.
Direct segment sales grew 25.7% Y/Y, and retail segment sales increased 91.4%.
Adjusted EPS of $0.43 beat the analyst consensus of $0.30.
Gross profit increased 17.1% Y/Y to $55.5 million, with gross margin contracting 1140 basis points to 30.1%.
Operating expenses expense declined 30.9% Y/Y to $37.6 million.
The operating margin was 9.7%, and operating income for the quarter was $17.9 million. EBITDA was $19.8 million.
The company held $82.8 million in cash and equivalents as of June 30, 2021.
Inventory as of June-end rose 63% to $111.1 million from $68.09 million as of March-end.
Outlook: Nautilus sees Q2 FY22 sales of $145 million - $155 million versus the consensus of $153.05 million.
It expects external gross margin challenges to continue in Q2 and anticipates increased price pressure due to the ongoing chip shortage.
Price action: NLS shares traded lower by 10.68% at $12.80 in premarket on the last check Tuesday.