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.
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