Nautilus, Inc. completed the sale of non-core assets, including the Nautilus brand trademark assets and related licenses, for approximately $13 million in cash as part of an ongoing strategic review. The company, which makes Bowflex and Schwinn fitness equipment, also reported preliminary results for the fourth quarter that topped recent guidance.

Nautilus said selling these assets would streamline the brand’s focus and enhance its financial flexibility. The company used the net proceeds from the sale to pay down part of its term loan. The company’s cash, cash equivalents and restricted cash balance is about $19 million, and borrowings are about $18 million. This compares to cash, cash equivalents and restricted cash balance of about $16 million and borrowings of about $61 million as of December 31, 2022.

The company also improved the terms of its credit agreement for its existing revolving credit facility. Under the new agreement, Nautilus reduced its revolver commitment from $100 million to $60 million, to better align the company’s debt capacity with its working capital needs and reduce its annual interest expense and related fees. Nautilus also paid down the outstanding amounts on the revolver, and there are no outstanding borrowings.

“The sale of these valuable but non-core assets, including the Nautilus brand, which has been de-emphasized in our transformative North Star strategy, position us well to continue to capitalize on long-term growth in consumer demand for at-home fitness,” said Jim Barr, Nautilus, Inc. chief executive officer. “With the improved financial flexibility from the sale and enhancements to our balance sheet, we’re confident in our ability to manage through the current environment and continue our path to becoming a leader in connected fitness. At the same time, our strategic review is ongoing as we continue to assess any opportunities that may accelerate our transformation and enhance value for our shareholders while also benefitting our customers, employees, retail partners, and vendors.”

Preliminary Unaudited Fourth Quarter and Full Year Fiscal 2023 Results
For the fiscal 2023 fourth quarter ended March 31, 2023, the company expects to report:

  • Net sales of $68.4 million compared to $119.7 million last year, representing a decline of 42.9 percent. The sales decline versus last year is driven primarily by the return to pre-pandemic demand. The company focused on significantly reducing Nautilus branded inventory in the quarter. Excluding sales of Nautilus branded equipment, net sales for Q4-2023 are expected to be $62.0 million;
  • Loss from continuing operations of $20.9 million compared to an $18.2 million loss last year; and
  • Adjusted EBITDA loss from continuing operations of $12.6 million compared to $16.9 million last year.

For The Twelve Months Ended March 31, 2023, Nautilus Expects To Report:

  • Net sales of $286.8 million (versus guidance of about $270 million) compared to $589.5 million last year. The sales decline versus last year was driven primarily by the return to pre-pandemic demand. Excluding sales of Nautilus-branded equipment, net sales for FY2023 are expected to be $274.8 million;
  • Loss from continuing operations of $107.5 million compared to a $22.2 million loss last year;
  • Adjusted EBITDA loss from continuing operations of $46.6 million (versus guidance of Adjusted EBITDA loss of about $50.0 million) compared to Adjusted EBTIDA loss of $3.3 million last year; and
  • As of March 31, 2023, there were 500,000 member subscribers of its JRNY digital platform, in line with guidance.

“I am proud to announce results that exceeded our expectations,” said Barr. “Continued demand in our Direct business during the fourth quarter as well as continued outstanding inventory management and cost-control initiatives, enabled us to deliver solid results for Q4 and fiscal year 2023. We are also pleased by the strong momentum of our differentiated digital offering, having achieved our growth targets for JRNY Members by the end of the fiscal year. We operate a strong equipment portfolio, which has driven continued demand for our products, and we have made significant progress scaling JRNY.”

Photo courtesy Nautilus