Nautilus just had one of the best years in its history, due to customers shifting to home equipment during the pandemic, as numerous gyms were temporarily closed.

The company posted net income of $28.9 million in the fourth quarter, up from $3.5 million in the year-ago period, as sales soared by 81.7 percent to $189.3 million. Excluding Octane Fitness, which was sold on Oct. 14, 2020 for $25 million, revenues were up by 108.3 percent.

The management highlighted continued demand for connected-fitness bikes, like the Schwinn IC4, Bowflex C6 and VeloCore, as well as robust sales of SelectTech weights and Bowflex home gyms. Supply chain improvements that began earlier in the year contributed to achieve the record quarterly results, but they were insufficient to fulfill all the orders.

Due to a severe shortage of shipping containers, the company was unable to deliver goods ordered and manufactured that would have generated over $16 million in revenues by the end of December. These shortages, along with worsening global logistics disruptions and continued capacity constraints at the factory level, resulted in a year-end backlog of $91.5 million.

Nautilus says that the sale of Octane Fitness allowed it to be laser-focused on growing and enhancing its at-home connected fitness experiences. It hired a chief digital officer who has implemented large-scale digital experiences at some of the world’s top technology companies to lead its e-commerce teams and accelerate the ongoing digital transformation.

During the holiday fitness season, the group expanded its product portfolio by launching the Bowflex C7 bike, two new Bowflex treadmills, and an updated Max Trainer, all integrated with its own JRNY digital fitness platform, launched in the course of last year, through their HD touchscreens.

In the Direct segment, Nautilus’ quarterly sales were the highest in the segment’s history. They climbed by 128.8 percent to $82.2 million, driven by 372 percent higher sales of strength training products. Sales of cardio products, including connected-fitness bikes, rose by 78 percent. The gross margin jumped by 3.7 percentage points to 53.6 percent, led by a higher proportion of full-priced sales and a favorable leverage on fixed costs, partially offset by higher transportation charges.

In the Retail segment, the company’s sales jumped by 57.5 percent to $106.3 million. Bikes, treadmills and ellipticals were particularly in demand. The gross margin in this segment expanded by 2.3 percentage points to 31.1 percent.

Overall, Nautilus’ gross margin surged by 4.5 percentage points to 41.1 percent. It also delivered an operating income of $41.5 million, up sharply from $3.3 million last year. Excluding Octane, it generated $40.3 million of Ebitda from continuing operations, versus $5.9 million in the fourth quarter of 2019.

For the full financial year, sales gained 78.7 percent to $552.6 million, which was at the mid-point of the company’s guidance of $540 million to $565 million, and they were up by 97 percent excluding Octane. They would have reached about $569 million if container shipments had been normal.

Cardio and strength training grew by 82.6 percent and 185.5 percent, respectively, in the Direct segment, and by 66.5 percent and 60.7 percent in the Retail segment.

The gross margin climbed by 5.6 percentage points to 41.4 percent for the year, and combined with an 8 percent drop in operating expenses, the final result for the year was a net profit of $59.8 million, a significant improvement compared with the previous year’s loss of $92.8 million, which included an impairment charge of $72 million on Octane’s acquisition.

The company said that the demand for in-home fitness has not abated recently, despite the vaccine roll-out. It entered the new year with $91 million in backlog as it continued to face disruptions in global logistics.

Nautilus expects sales for the first quarter ending March 31, 2021, to register growth of between 55 and 75 percent. Due to pressure from increased logistics costs, higher commodity prices and continued foreign exchange headwinds, it forecasts a flat gross margin as compared to the same period last year.

The company has decided to make its fiscal year end in March rather than December to reflect the seasonality of the fitness business and to better align with its retail partners. After a stub three-month fiscal year for the present quarter, Nautilus’ new financial year will start on April 1.