Nautilus, Inc.
Q1 2021 Earnings Call Transcript

Published: 10 May 2021

[Operator:]

Greetings and welcome to the Nautilus Inc. 2021 Transition Period Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. John Mills with ICR. Thank you. You may begin.

[John Mills:]

Thank you. Good afternoon everyone. Welcome to Nautilus' 2021 transition period conference call. As previously announced, Nautilus changed its fiscal year in the 12 months beginning January 1 and ending December 31 to the 12 months beginning April 1st and ending March 31st to include the primary fitness season for exercise equipment in the same fiscal year and to better align with the fiscal year-end of retail partners. As such, today, Nautilus is reporting financial results for the period January 1, 2021 to March 31, 2021 referred to as the Transition Period.

[Jim Barr:]

Thank you, John. I'll spend the first part of today reviewing the exceptional performance in our 2021 transition period and then move on to the progress we've made against our North Star strategy. In this transition period, we delivered record-breaking results for the second straight quarter and produced our highest revenue quarter in company history. Results were driven by leveraging the continued strong demand for at-home fitness, along with the team's impressive efforts to solve unprecedented challenges in global logistics, bringing supply much closer to matching demand. Our growth and profitability contributions were once again broad-based across brands, segments, products, and geographies.

[Aina Konold:]

Thank you, Jim, and good afternoon, everyone. I'm going to refer to the three month period ended March 31, 2021 as a transition period and we'll be comparing it to the same three month period last year. As Jim covered earlier, net sales were $206 million, up 120% versus last year, up 143% excluding Octane. Gross margin increased by 40 basis points to 38.4%. Gross profit was $79 million, up 122% versus last year. The deceleration in margin rate improvement is because of continued inflationary pressures on product landed costs and FX as the renminbi continues to strengthen. Operating expenses grew by 9% to $39 million, but leverage as the rate of sales to 19% versus 39% last year. Selling and marketing expenses were down 5% to $23 million or 11% of net sales, compared to $25 million or 26% of net sales last year, driven by a $3 million decrease in media spend. R&D costs were up 1% to $4 million or 2% of net sales, compared to $4 million or 4% of net sales last year, driven by increased investments in JRNY. G&A expenses were up 58% to $12 million or 6% of net sales this year compared to $8 million or 8% of net sales last year, primarily driven by bonus, stock comp and investments in JRNY and other North Star initiatives. Operating income increased to $40 million versus last year's loss of $600,000, driven by increased gross profit. Income from continuing ops increased to $31 million or $0.94 per diluted share compared to last year's income of $2 million or $0.08 per diluted share. EBITDA from continuing ops improved to $40 million compared to $2 million last year. Turning now to performance by segment. Direct segment net sales were up 115% to an all-time high of $102 million. Strength grew 179% driven by Bowflex SelectTech weights and Home Gyms. Cardio grew 96%, driven by connected fitness bikes the Bowflex VeloCore and C6 and Schwinn IC4 and our new Bowflex connected fitness treadmills. We're really pleased that Direct backlog at the end of the transition period was down to $27 million from $46 million last year as supply is coming closer to meeting demand and our consumers are getting their products faster. Gross margins declined by 120 basis points to 50% driven by higher land and product costs. Gross profit grew by 110% to $51 million. Segment contribution was $28 million versus last year's $2 million, driven by increased gross profit and lower media spend. Turning to Retail segment results. Net sales were $103 million, up 127% versus last year or 183% excluding Octane. Strength grew up 243%, driven by Bowflex Home Gyms and SelectTech weights and benches. Cardio was up 96%, driven by Schwinn and Bowflex connected fitness bikes and the new Bowflex connected fitness treadmills. Similar to Direct, we were able to reduce retail's backlog. A quick note on this. We further refined our Retail backlog to include all unfilled future Retail orders. We used to report only current orders that should have shipped that quarter but missed the cutoff. At the end of this transition period Retail's backlog was $179 million. The comparable number for last quarter was $209 million. Gross margins expanded 340 basis points to 26%, driven by favorable customer mix and fixed cost leverage, partially offset by higher landed product costs. Gross profit grew 161% to $27 million. Segment contribution was $20 million compared to $2 million last year. The improvement is primarily driven by higher gross profit. Turning now to other highlights. We ended this period with a much stronger liquidity position. Cash and short-term investments were $113 million compared to $26 million last year. Debt levels decreased to $14 million from $28 million last year and we had $54 million available for borrowing on our Wells Fargo credit facility. AR was $89 million, 159% higher than last year driven by the timing of customer payments on increased sales. Trade payables were $99 million, up 189% versus last year, primarily due to timing of inventory payments. Inventory was $68 million compared to $35 million last year. As a reminder our inventory levels at the end of March 2020 were unusually low, reflecting the initial surge in demand due to the first set of stay-at-home orders. We had about $216 million of non-cancelable POS at the end of the quarter, compared to $35 million for the same period last year. Turning now to our forward-looking guidance. When we unveiled our long-term strategy in March, I said that at this earnings call, I would give a perspective on FY 2022, year one of our North Star long-range plan. While many areas still struggle to battle COVID-19 and we keep them in our thoughts, we are thankful to see progress towards returning to normal. We're committed to communicating the progress of our transformation and expected impact of our North Star investments, while balancing the need to further learn how market conditions will evolve over the coming months. Perhaps, the most helpful approach we can take at this time is to communicate trends we are currently seeing. First, we remain bullish about the industry. We believe our SAM has increased and the strategy we unveiled several weeks ago is the right one to capitalize on this tremendous growth opportunity. Orders from our retail partners have not abated from previous quarters and this segment is driving the growth in our upcoming quarter. Further, we are highly encouraged by the strong reception to our new connected fitness cardio products. Sales of these products are growing at a much higher rate than non-connected products across both segments and represent a larger portion of our cardio equipment sales versus a year ago. Our research continues to show that about 25% of gym goers have no intention of returning to the gym and that those who want to return to the gym intend to have an option to work out at a home, coinciding with our hybrid return to work plans, some days at home and some days at the office. Our research also indicates that people intend to spend a greater share of their wallet on out-of-home activities during the holiday season. And at the same time, direct traffic while still much higher than calendar 2019 is suggesting a return to more typical late spring seasonality trends. Our guidance for the first quarter of fiscal year '22, which is the three months ending June 30, 2021, incorporates these trends that I've just mentioned. For the first quarter of fiscal year '22, we expect net sales to grow between 40% and 50% versus prior year or between 51% and 62% when excluding Octane. This assumes no new major challenges in global logistics or atypical end of quarter flow of goods. Compared to last year and consistent with prior year, we are experiencing gross margin pressures related to FX and pandemic-driven inflationary increases in steel and plastics and higher global logistics costs. Additionally in Q1 fiscal year '22, we expect incremental cost pressure due to the global microchip shortage. As these chips are a key component of our embedded screens we're investing in spot buys to protect supply and meet our customers' demand for embedded screen products. We are temporarily paying 40% plus more for SBCs much more elevated pricing than we experienced in the transition period. We have a slide in the presentation to help investors understand the impact of these factors on Q1 '22's operating margins. It's important to begin with a normalized operating margin of 14.2% for the quarter ending June -- for the quarter ending March -- June 2020 operating margins, which reflects the return to normalized media spend. We are expecting a five-point impact to gross margin related to commodities, FX, global logistics and spot buying of microchips. These external factors are temporary in nature, but are likely to continue for the next few quarters. Additionally, we expect our retail segment to be a larger percent of total sales versus last year, given this is the quarter when retailers begin their load-ins for holiday. This shift affects margins by about 1.5 points. The next set of impacts are related to strategic investments. We told you at Investor Day that we intend to reinvest a portion of our cash flow from operations in North Star with a particular focus on journey, marketing, supply chain and IT infrastructure. We call this pay-as-we-go because it means our objective is to balance both near-term and long-term obligations. Each will first seek to generate an appropriate amount of operating income, making sure that variable costs move with sales then we'll evaluate the next tranche of North Star investments moving forward on the ones that will get us closer to our two million members and deliver the requisite long-term ROI. In Q1 '22, we are making incremental investments in journey and supply chain. Some of these costs hit COGS and some hit SG&A. These investments have attractive ROIs and are critical to our digital transformation. The last point on the waterfall, which I've called operational improvements includes things like price increases that will go into effect on a rolling basis throughout the quarter and the benefits that we're starting to realize from the divestiture of Octane. As a result of the short-term gross margin pressures discussed and our intentional investments to build the new Nautilus, we are expecting operating margins for the quarter to be between 6.5% and 8%. Turning now to our expectations for the full fiscal year 2022. Like many other companies, we're still working to understand how our consumers will react once herd immunity is reached. We will continue to follow our pay-as-we-go philosophy in evaluating additional investments in North Star. We'll give you more color on our expectations for each upcoming quarter when we report earnings. At this time, we are providing full year capital expenditure guidance. We expect capital expenditures to be between $12 million and $14 million with the majority of the investment earmarked for journey. And we are reiterating that we expect to have 250,000 journey members at the end of FY 2022. Now, I'd like to turn it back over to Jim for his final comments. Jim?

[Jim Barr:]

Thank you, Aina. We are very well positioned to solidify and build our profound turnaround and for continued strong long-term growth and profitability as we transform into a digital leader in fitness. Our North Star is the absolute right direction for the company. It has traction and it is already generating early positive results. I want to end by thanking our employees and our partners for their commitment to our mission. You inspire me every day and over a year into the pandemic, I am blown away by what you have accomplished and proud to be your leader. And now, I'd like to open up the call to your questions. Operator?

[Operator:]

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. Our first question comes from the line of Mike Swartz with Truist. Please proceed with your question.

[Mike Swartz:]

Hi. Good evening, guys. I just wanted to touch on the 2026 long-range targets, and specifically on the margin outlook that you've now changed. I'm understanding, the 10% that you gave us a couple of months ago, was just kind of a baseline, and now going to the mid-teens range. Maybe give us a sense of just maybe what's changed in the past several months to give you more comfort that margins should be a couple of points higher than the low-end of your expectations back in March.

[Jim Barr:]

Sure. I'll start and I'll ask Aina the follow-on. So, first of all, I think the real answer to your question is there has been no change. There's no more information available. We just wanted to provide more clarity on what was going on. We provided -- we emphasized, as you know. that we wanted to get at least 10% operating income and then it would be sustainable. That is true, but it's more of a comment on the floor than it is the upside. So, in retrospect we said, look, we'd like to provide a little more clarity to add to what we said before not change it, just add to it that we've got upside in that range. So we've always had these numbers. They've always been in our model. It's what we've always believed, and we just wanted to make sure we provided more transparency, and a greater look at the upside of what this business is going to deliver, once it gets to 2026. Does that make sense? Aina, do you want to add that?

[Aina Konold:]

No. No. I think you covered it. Like the main clarification is instead of giving a range we only gave the floor. We now feel like it's appropriate to really talk about like where it's more likely to end up.

[Mike Swartz:]

Okay. That's extremely helpful. And then, if I just kind of parse through the targets and then again specifically on the margins given what the margin target is for the subscription business. It looks like you're kind of calling out the low-double-digits maybe even low-teens for the equipment business in terms of operating margin. You've done that in the past. But in the past when you achieve that you didn't have the benefit of a lot of the optimization initiatives that you've undertaken over the past year plus. So, maybe give us some more color or context around why that's the right number for equipment margins.

[Jim Barr:]

Sure. I'll start, and again, we'll ask Aina to add on. So, for the equipment business, as Aina pointed out, we've got kind of downward pressure on -- forget about the short-term stuff that short-term. But in the long run, you're still going to provide screens and put them on machines that didn't have them before. That is going to have some downward pressure. There maybe some things like last-mile distribution that will -- that consumers will begin to demand even more there. So, there's a lot of things that are changing in our business over time. Right now, you're not seeing the full impact of that, because there aren't screens on everything, but that's the way we're going. And so, there'll be those downward pressures. Aina, what else would you add to that?

[Aina Konold:]

I don't have anything to add. Just want to reiterate to screens and also that expanded increased customer touch points, like final mile and the orientation, before it was a little bit of – you bought something we dump it on your front step and we never hear from you again. This is a little bit more than that and we're just incorporating that into our product margins.

[Jim Barr:]

Yes. Last mile kind of becomes our first touch point or one of our early touch points, as we talked about at Investor Day. So we want to invest in that and we've got that in the projections.

[Mike Swartz:]

Okay. That's helpful. And then maybe just one final question for me if I may. It looks like you're turning back on marketing pretty heavily, particularly here in the first quarter. Is that – are we to read that that's a sign that you now have, the capacity you now have the bandwidth to meet demand within more normalized shipping windows?

[Jim Barr:]

Well, we're seeing, as Aina talked about, we're seeing kind of more seasonality in Direct and we're just assuming that hey there's going to be more like a normal season. So we're just going to return to the normal level of advertising looking at the ROI. It's very much – it works like a variable cost and we'll drive the revenue based on that. So yes, we're getting closer to supply meeting demand, especially in the direct segment that we're seeing first. Retail, very, very strong but we want to do advertising for all of that. And of course, we've got still pretty new products too that we want to talk about. And then increasingly we want to talk about journey. I mean, it's – you know about it but we need more consumers to know about it because the purchase path really is a total cost of ownership, where you look at the actual equipment, how it works, innovation, things like VeloCore and leaning and all that and you also think about hey, what's the membership experience, what content do I have, what keeps it interesting day-to-day. And so we're going to – you'll see a lot more a journey in our advertising as well. So that – and we want to spend some money on that. So hopefully, that answers your question. Aina, do you want to add anything?

[Aina Konold:]

No. No. You covered it Jim.

[Mike Swartz:]

Okay. Great. Thank you.

[Jim Barr:]

Thanks, Mike.

[Operator:]

Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

[Sharon Zackfia:]

Hi, good afternoon. A couple of questions. I just want to make sure, I've got the waterfall right. So are you kind of implying I guess mid-30% gross margins for the second quarter, just going through that kind of waterfall?

[Aina Konold:]

Similar, yes.

[Sharon Zackfia:]

Okay.

[Aina Konold:]

You have to – the five points for product cost increases is 100% in COGS and then journey is mostly in COGS as well.

[Sharon Zackfia:]

Okay. Perfect. And then on the gross margin and the kind of the chip shortage impact and the logistics and all of that, I mean is this a situation that based on what you know now gets worse before it gets better? I mean I know you mentioned that it might be a couple of quarter issue but I'm just trying to think about the impact to the business and as well as your back orders?

[Jim Barr:]

Yes. I mean, I'll start and Aina can jump on too. Yes. I mean, it's tough to tell. It's like we look at the steel prices similarly and say, look, that's got to be a COVID imbalance of supply and demand driving that and that should come back. And that's why we think these things are temporary. But what constitutes temporary, how the world – how quickly the world gets back to being balanced on these various commodities and inputs to what we all enjoy, that's not exactly clear. When we say short term, we don't know if it's going to be couple of quarters but we don't think it's going to be longer, longer than a year for example. But we're just guessing like everyone else. What we did make a decision to do though is to pay more for it to make sure we have the flow of connected fitness equipment that is the installed base for our JRNY membership. So we thought, it's worth paying a little bit more for that component and making sure that we don't have a more restricted supply of those and we can meet consumer demand for that. So I think the answer is we don't know. It certainly doesn't act like it's a long-term problem but I don't know when it exactly abates. So we baked it in at least through this quarter. Do you want to add anything Aina?

[Aina Konold:]

Yes. So Sharon the way I'd put it is similar to when we started recognizing that this was not a sprint for the pandemic, when we started ordering from our suppliers several quarters in advance. We're assuming that this is going to be -- it's a temporary situation, but not a sprint. So we want to make sure that we have enough, put aside in our supply chain that we can meet demand through holiday.

[Jim Barr:]

And we're not -- I think, we -- the one part of your question maybe, didn't get to is that, we're not anticipating it gets worse from where it is.

[Aina Konold:]

Yeah.

[Jim Barr:]

We think it's pretty bad right now, in terms of the spot prices. And we're not anticipating it gets worse. But again we -- it's a crystal ball exercise.

[Sharon Zackfia:]

I guess it's a good time to have a new Chief Supply Chain Officer...

[Jim Barr:]

It sure is. We sure need him.

[Sharon Zackfia:]

I think he's been on the job less than 45 days. But is there any kind of low-hanging fruit that, he's identified, or, like, what is his -- other than getting chips, what is his major thrust of what he's focused on for 2021?

[Jim Barr:]

Yeah. I mean, as we discussed at Investor Day and this is -- you walked in the door to these things. I think short-term, its meeting supply with demand. We still have elevated demand, especially in certain products, where we just can't even see a way to make enough of them still. So we've got that. So he's got to bring that closer. And he's working with our very valued suppliers, to see better transparency, and know what they can make, and how quickly they can make it. And so he's working on that short-term. And then, long-term we kind of referred to our China-plus strategy. We'll continue to make things in China, but we like to diversify a bit globally. And so that will be a bit of a longer-term thing. We are looking at a third DC, to handle all this volume this year that we're going to bring online. So he's going to help bring that online as well. So he's got a handful as you pointed out. And he's -- Bill McMahon, who's been doing this very well for us, has done a great job. But it's great to have somebody who's spent their career in supply chain, and global sourcing in particular, to go after these types of things. And so, we have high expectations. And John hasn't let us down so far. He's looking great. He's landed extremely well, just started April 1st and really already making a great impact.

[Sharon Zackfia:]

All right, great. Thank you.

[Jim Barr:]

Thanks, Sharon.

[Operator:]

Our next question comes from the line of Steve Dyer with Craig-Hallum. Please proceed with your question.

[Steve Dyer:]

Hi. Good afternoon Jim and Aina. Thank you for taking my question.

[Jim Barr:]

Hi Steve.

[Aina Konold:]

Hi.

[Steve Dyer:]

I don't want to overkill the commodity cost chip et cetera question. But are you far enough into it to where you feel like from an operating margin perspective given all the moving parts that the 6.5% to 8% could be sort of a baseline or a low watermark for the year, just assuming, that everything eases a bit from here?

[Jim Barr:]

I'll ask Aina to jump on that one.

[Aina Konold:]

I would -- I think, it's a good baseline. I wouldn't want to say, it's the low watermark, because we thought, transportation costs were really bad, like in Q3 last year. And then it got worse. So I'd like to say, like, as far as we can see, this is a good baseline. And every quarter we'll update, you if we see, something different.

[Steve Dyer:]

Got it. And you've talked a little bit about Retail versus Direct. Within the Direct segment, I guess you've alluded to it as being sort of more normal seasonality. Normal seasonality for the June quarter, historically, pre-gym Aina was fairly soft and I think would seem to indicate a pretty significant softening versus the last several quarters. Just any other color there that you could sort of help us, as maybe the last 45 days, what you're seeing there, relative to the previous call it year six months?

[Jim Barr:]

Yeah. I mean, I'll start on that one and two and I'll ask Aina to jump on after. So yeah, I think it's just normal seasonality, right? And people are going outside. You look at Google searches for all sorts of terms related to fitness and it's down significantly, probably started January -- late January, early February like the normal seasonality would do, still stayed pretty high though. And then, a little bit further down as the weather began to get better. So it looks exactly like, normal seasonality. Whereas you look at the retail business of course, they're thinking about the other side of that seasonality, when people are really back to looking at fitness equipment. And now with this elevated demand maybe doubling of the category, they're all trying to load up for the holidays. So we're very confident in the holidays, but the short-term is always seen. So I don't know if that's any additional color, but it's things that you can see in kind of non -- in public information as well, that the interest in the category is, sort of, what we'd call, a normal non-COVID year, which I guess maybe we, as a society, should feel pretty good about. Aina, anything you want to add?

[Aina Konold:]

The one thing I'd want to add, Steve, is don't forget we're still working through a bunch of backlog. So the underlying kind of traffic and demand currently is probably more like the normal seasonality, but because we still have that big backlog, it may not look like that from the shift revenue perspective.

[Jim Barr:]

That's a great point. That's a great point. So we're working all of that -- that backlog that we had coming into the quarter.

[Steve Dyer:]

Yes. Yes, that's what I was trying to get at a little bit. Last one for me, just as it relates to JRNY. You talked about 250,000 members by the end of the year. Are you able to sort of characterize, does that imply an acceleration? Is that sort of the rate that you've been kind of adding over the last, call it, year or so? And then, is the assumption that those would be mostly all paid subscribers? I know, at Investor Day you had talked about maybe doing some promotional stuff to sort of get people on and ingraining the user experience. Thanks.

[Jim Barr:]

Yes, sure. No problem. Yes, it's -- we're not providing any additional guidance on that. We just wanted everyone to know. Look, we said it once at Investor Day and we made it again. We are still on track to do that. It's what the organization is focused on. Getting early traction in membership is super important to our long run. And so, we're putting a lot of emphasis on that in terms of our goal setting and things like that. We're definitely seeing the increase in embedded products definitely helping, but that was the way it was before. We're continuing to see the mix of embedded products continue to accelerate. So that definitely helps us going forward. In terms of paid and regular, look, we're early in this business. So that's a level of detail that we're not providing at this point. But you can imagine that we're going to promote JRNY, we're going to make sure as many people get to experience it as possible. It's got a great price. It is very attainable, but we'll run promotions on that as well. So we'll definitely do that. We want people to try it already. We're doing two months free and we might try other types of marketing to get members even faster than that. So, hopefully, that gives you something, but really not a lot more than what we talked about before.

[Steve Dyer:]

Got it. All right. Thanks.

[Jim Barr:]

Thanks, Steve.

[Operator:]

Our next question comes from the line of George Kelly with ROTH Capital Partners. Please proceed with your question.

[George Kelly:]

Hey, everyone. Thanks for taking my questions. So just a few for you. The first, Jim, in your prepared remarks, you talked about a new Max Trainer product. Just curious if you can tell us any more, whether it's timing or anything about that product? And also, should we expect additional -- I would call that a big sort of one of your big SKUs. Should we expect additional product launches this year?

[Jim Barr:]

Yes. Sure. So first of all, we're not providing more information, as one of the few public companies in the space, on any more of our product launches. We've been so ambitious the last 12 months or so, getting all these things out there. But we do have a great innovation pipeline, but we're not going to talk any more about that going forward. Back to the Max total. Yes, we talked about it before. Essentially, it's the top of the line Max Trainer and we're excited as a bigger screen than the last Max Trainer and therefore, it really gets to benefit from JRNY. That was, as you would know, following it for a long time, the Max Total last time was the only embedded screen product we had until September when we went to VeloCore. So now that we're, kind of, refreshing everything across all those lines, including all the way to the top at the Max Total, which is going to be a great product. And as we've talked about before, that high-intensity interval workout that comes from the Max Trainer is enhanced with JRNY training and JRNY running it. So we're really excited that more and more people will have that great experience.

[George Kelly:]

Okay, okay. And then a couple of questions on the Retail business.

[Jim Barr:]

Sure.

[George Kelly:]

So, I guess, you answered, the retailers are just sort of loading up for the holiday season. But how is retail inventory? Do you feel like that's looking more healthy? And then second part of the question is, what is your -- so your JRNY embedded or compatible machines, do you feel like you have a good selection at retail of these machines that offer JRNY?

[Jim Barr:]

Yes. No, good question. So the journey embedded and the inventory. Yes I would -- maybe Aina you want to take the inventory one and then I'll come back on embedded.

[Aina Konold:]

I want to make sure, I understand your question, George. Are you asking, how I feel about the inventory at retailers or our inventory for our retailers?

[George Kelly:]

Inventory at retailers. I'm just trying to see if, your -- what we're seeing is retailers just finally sort of replenishing their inventory.

[Aina Konold:]

So, sell-through has been really good. So, we haven't seen any kind of deceleration in their sell-through. So -- but I think similar to what we want to do also for Direct for people, just want to not be in that, really deficit position we were in last holiday, where they want to build a little bit of safety stock that might be what's driving it. But their sell-through is fine. And we are accommodating their ordering for not just this quarter, but next quarter and the quarter after that order. So, we're meeting that demand.

[Jim Barr:]

Yes. And of course, yes, so what Aina said is exactly right. And so back on the connected products. Look, I mean, we went from one to nine of those in one year. We think, it's great selection across all modalities and price points. Some of our retailers also have begun to sell some of the higher priced items. For example, Best Buy so much of it were selling online that they've been going higher than the typical kind of retail price ceiling of $1,500. We still have several great products below $1,500 that you can buy at retail that are connected. But now, when you're selling even Dick's and Amazon, you're able to sell products more online and not worried about the floor space and the inventory per door and all that, that typically is a limiting factor for us. We're able to sell more and more of these products at retail.

[George Kelly:]

Okay. Great. Thank you.

[Jim Barr:]

Great question. Thanks.

[Operator:]

Our next question comes from the line of Mark Smith with Lake Street Capital Markets. Please proceed with your question.

[Mark Smith:]

Hi guys. First question for me is on the media spend. Can you just give us, where that was in Q4? Was that right at about 2% in the transition period?

[Jim Barr:]

Aina, can you answer that one?

[Aina Konold:]

Last -- you mean like last year?

[Mark Smith:]

No, this year just the reported transition period.

[Aina Konold:]

I'm going back from my notes. Ask your next question I might just grab it.

[Mark Smith:]

Yes. No problem. My next question is really on international growth and retail really look solid. Can you call out any specific geographies that are doing well? And then, maybe discuss opportunities to boost international sales and potential to really kind of hedge some FX in that manner?

[Jim Barr:]

Yes. So yes. So, we have long done business in many countries through distributorships. I think it's something like 30-some-odd countries that we do business in with value distributor partnerships. Recently, we've been making some traction going more direct-to-retail versus through distributorship and just a limited number of countries. And of course, there's better economics as you approach it that way. In terms of geographies, of course, Canada, we call North America. So that's international, but not really the way that we talk about it. So, outside of that and that's been great growth. Outside of that, it's been Europe that has led the way for us. We have very strong growth in Europe and some great distributors and retail partners in Europe and we continue to expand that particular business.

[Mark Smith:]

Perfect.

[Jim Barr:]

And then Aina, are you ready on the other one?

[Aina Konold:]

I'm going to -- I'm sorry, I can't find it easily. I'll call you back and give you that number.

[Mark Smith:]

No, we can follow up offline. Thank you, guys.

[Aina Konold:]

Here's an actual media number. It's $10 million in fiscal year -- this transition period. So $10 million versus last year's $13.2 million.

[Mark Smith:]

$13.2 million. Okay. That's great. Thank you.

[Aina Konold:]

Thank you.

[Mark Smith:]

Thank you, mark.

[Operator:]

There are no further questions in the queue. I'd like to hand the call back to CEO, Jim Barr for closing remarks.

[Jim Barr:]

Thank you to everyone on the call today, and for your continued support at Nautilus. We're looking forward to talking with you again on our first quarter fiscal year 2022 earnings call in August. Have a great rest of the day onwards and upwards. Thank you.

[Aina Konold:]

Thank you.

[Operator:]

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.