Financial Performance - Net sales for the three months ended June 30, 2022, were $54.8 million, a decline of 70.3% compared to $184.6 million in the same period last year[92]. - Gross profit was $7.0 million with a gross profit margin of 12.7%, down from 30.1% last year, primarily due to increased discounting and unfavorable logistics overhead absorption[95]. - Operating loss was $51.2 million, resulting in a negative 93.4% operating margin, compared to operating income of $17.9 million last year[97]. - Loss from continuing operations was $60.2 million, or $(1.92) per diluted share, compared to income of $14.0 million, or $0.43 per diluted share, last year[98]. - The company reported a net loss of $60.2 million for the quarter, compared to a net income of $13.9 million in the same period last year[113]. Sales Breakdown - Direct segment net sales decreased by $36.9 million, or 58.2%, primarily due to higher sales discounting and a return to pre-pandemic seasonal demand[93]. - Retail segment net sales decreased by $93.0 million, or 77.2%, driven by lower cardio sales and higher sales discounting as retailers managed elevated inventory levels[94]. - Direct segment net sales were $26.5 million, down 58.2% from $63.4 million in the same period in 2021, primarily due to a return to pre-pandemic seasonal demand[116]. - Retail segment net sales were $27.4 million, down 77.2% from $120.5 million in the same period in 2021, with cardio sales decreasing by 86.8%[120]. Expenses - Selling and marketing expenses were $12.9 million, a decrease of 39.5% from $21.3 million in the same period last year, reflecting reduced media spend[126]. - Research and development expenses increased by 20.9% to $5.8 million compared to $4.8 million in the same period last year[113]. - General and administrative expenses increased to $12,463,000 for the three months ended June 30, 2022, up from $11,523,000 in the same period of 2021, representing an 8.2% increase[130]. - Research and development expenses rose to $5,823,000 for the three months ended June 30, 2022, compared to $4,815,000 in the same period of 2021, marking a 20.9% increase[132]. Cash Flow and Liquidity - Cash used in operating activities was $6.0 million for the three months ended June 30, 2022, a decrease from $28.2 million used in the same period of 2021[144]. - As of June 30, 2022, cash, cash equivalents, and restricted cash totaled $8.7 million, down from $14.2 million as of March 31, 2022[143]. - Cash used in investing activities was $3.4 million for the three months ended June 30, 2022, primarily for capital purchases related to the digital platform[148]. - As of June 30, 2022, outstanding borrowings totaled $37.2 million, with $9.8 million under the Term Loan Facility and $27.4 million under the Revolver[152]. Future Outlook - The company expects full-year revenue for fiscal 2023 to be between $380 million and $460 million, with the second half contributing 65% to 70% of total sales[103][104]. - Gross margins for the second half of the year are anticipated to be in the range of 27% to 30%, driven by lower inbound freight and logistics costs[105]. - The company aims to exceed 500,000 JRNY members by March 31, 2023[105]. - JRNY members exceeded 360,000, representing approximately 133% growth year-over-year, with 127,000 subscribers, a 290% increase[100]. Inventory and Backlog - The backlog for the retail segment totaled $48.0 million as of June 30, 2022, indicating a shift in ordering patterns by retailers[122]. - Trade receivables decreased to $27.5 million as of June 30, 2022, from $61.5 million as of March 31, 2022, primarily due to lower sales[145]. - Inventory was $103.9 million as of June 30, 2022, down from $111.2 million as of March 31, 2022, driven by sell-through and strategic demand planning[145]. Royalty Income - Royalty income increased by 25.8% to $0.9 million for the three-month period ended June 30, 2022, compared to the same period of 2021[125].
BowFlex (BFX) - 2023 Q1 - Quarterly Report