Nautilus, Inc. Reports Results for the First Quarter 2019
Net sales for the first quarter of 2019 totaled
Operating loss for the first quarter of 2019 was
Loss from continuing operations for the first quarter of 2019 was
Mr. Johnson continued, “Additionally, to fuel sales for the balance of
the year, we have a range of new product introductions planned across
all of our sales channels. These introductions include, among others,
the Max Trainer M10 with a built-in digital screen and capabilities,
Octane Commercial Max Trainer, and the Octane XR6000S recumbent
elliptical. Our focus remains on being a differentiated player in the
industry by continuing to bring new innovations to market while also
growing our top and bottom lines. Improved earnings and margins will
come through the implementation of the initiatives discussed last
quarter: broad cost containment, workforce reduction, value engineering
initiatives and simplification of processes. Supporting all these
measures is our solid balance sheet. We refinanced our debt and paid
down
For further information, see “Results of Operations Information” attached hereto.
Segment Results
Net sales for the Direct segment were
Net sales for the Retail segment were
For further information, see “Segment Information” attached hereto.
Balance Sheet
As of
For further information, see “Balance Sheet Information” attached hereto.
Conference Call
Nautilus will host a conference call to discuss the Company’s operating
results for the first quarter ended
A telephonic playback will be available from
Non-GAAP Presentation
In addition to disclosing results determined in accordance with GAAP,
Nautilus has presented EBITDA from continuing operations, a non-GAAP
financial measure, for the three months ended
The Company defines EBITDA from continuing operations as its income from continuing operations, adjusted to exclude interest expense (income), income tax expense of continuing operations, and depreciation and amortization expense. The Company uses EBITDA from continuing operations in evaluating its operating results and for financial and operational decision-making purposes such as budgeting and establishing operational goals. The Company believes that EBITDA from continuing operations helps identify underlying trends in its business that could otherwise be masked by the effect of the items that are excluded from EBITDA from continuing operations and enhances the overall understanding of the Company’s past performance and future prospects. The Company presents EBITDA from continuing operations as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. The Company strongly encourages you to review all of its financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.
For a quantitative reconciliation of our non-GAAP financial measures to the most comparable GAAP measures, see "Reconciliation of Non-GAAP Financial Measures" included with this release.
About
Headquartered in
This press release includes forward-looking statements (statements which
are not historical facts) within the meaning of the Private Securities
Litigation Reform Act of 1995, including: projected or forecasted
financial and operating results, including future plans for introduction
of new products, anticipated demand for the Company's new and existing
products, and projected impact of the new and continuing product
launches on the Company’s operating results for the first quarter of
2019 and future periods; statements regarding the Company's prospects,
resources or capabilities; current or future financial and economic
trends; planned investments, development partnerships and strategic
initiatives and the anticipated or targeted results of such initiatives.
Factors that could cause Nautilus, Inc.’s actual results to differ
materially from these forward-looking statements include: weaker than
expected demand for new or existing products; our ability to timely
acquire inventory that meets our quality control standards from sole
source foreign manufacturers at acceptable costs; an inability to pass
along or otherwise mitigate the impact of raw material price increases
and other cost pressures, including unfavorable currency exchange rates;
experiencing delays and/or greater than anticipated costs in connection
with launch of new products, entry into new markets, or strategic
initiatives; our ability to hire and retain key management personnel;
changes in consumer fitness trends; changes in the media consumption
habits of our target consumers or the effectiveness of our media
advertising; a decline in consumer spending due to unfavorable economic
conditions; and softness in the retail marketplace. Additional
assumptions, risks and uncertainties are described in detail in our
registration statements, reports and other filings with the
RESULTS OF OPERATIONS INFORMATION
The following summary contains information from our condensed
consolidated statements of operations for the three months ended
Three Months Ended |
||||||||||
2019 | 2018 | |||||||||
Net sales | $ | 84,400 | $ | 114,813 | ||||||
Cost of sales | 48,558 | 55,942 | ||||||||
Gross profit | 35,842 | 58,871 | ||||||||
Operating expenses: | ||||||||||
Selling and marketing | 34,043 | 36,763 | ||||||||
General and administrative | 7,655 | 6,910 | ||||||||
Research and development | 4,311 | 4,501 | ||||||||
Total operating expenses | 46,009 | 48,174 | ||||||||
Operating (loss) income | (10,167 | ) | 10,697 | |||||||
Other expense, net | (433 | ) | (34 | ) | ||||||
(Loss) income from continuing operations before income taxes | (10,600 | ) | 10,663 | |||||||
Income tax (benefit) expense | (2,116 | ) | 2,523 | |||||||
(Loss) income from continuing operations | (8,484 | ) | 8,140 | |||||||
Loss from discontinued operations | (91 | ) | (81 | ) | ||||||
Net (loss) income | $ | (8,575 | ) | $ | 8,059 | |||||
Basic (loss) income per share from continuing operations | $ | (0.29 | ) | $ | 0.27 | |||||
Basic loss per share from discontinued operations | — | — | ||||||||
Basic net (loss) income per share | $ | (0.29 | ) | $ | 0.27 | |||||
Diluted (loss) income per share from continuing operations | $ | (0.29 | ) | $ | 0.27 | |||||
Diluted loss per share from discontinued operations | — | — | ||||||||
Diluted net (loss) income per share(1) | $ | (0.29 | ) | $ | 0.26 | |||||
Shares used in per share calculations: | ||||||||||
Basic | 29,573 | 30,314 | ||||||||
Diluted | 29,573 | 30,591 | ||||||||
(1) May not add due to rounding. | ||||||||||
SEGMENT INFORMATION
The following table presents certain comparative information by segment
for the three months ended
Three Months Ended |
Change | ||||||||||||||||||
2019 | 2018 | $ | % | ||||||||||||||||
Net sales: | |||||||||||||||||||
Direct | $ | 46,714 | $ | 71,201 | $ | (24,487 | ) | (34.4 | )% | ||||||||||
Retail | 36,821 | 42,993 | (6,172 | ) | (14.4 | )% | |||||||||||||
Royalty | 865 | 619 | 246 | 39.7 | % | ||||||||||||||
$ | 84,400 | $ | 114,813 | $ | (30,413 | ) | (26.5 | )% | |||||||||||
Operating income (loss): | |||||||||||||||||||
Direct | $ | (4,542 | ) | $ | 11,291 | $ | (15,833 | ) | (140.2 | )% | |||||||||
Retail | (722 | ) | 3,921 | (4,643 | ) | (118.4 | )% | ||||||||||||
Unallocated corporate | (4,903 | ) | (4,515 | ) | (388 | ) | (8.6 | )% | |||||||||||
$ | (10,167 | ) | $ | 10,697 | $ | (20,864 | ) | (195.0 | )% | ||||||||||
BALANCE SHEET INFORMATION
The following summary contains information from our condensed
consolidated balance sheets as of
As of | |||||||||
March 31, 2019 | December 31, 2018 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 11,060 | $ | 38,125 | |||||
Available-for-sale securities | 12,583 | 25,392 | |||||||
Trade receivables, net of allowances of $28 and $99 | 21,940 | 45,847 | |||||||
Inventories | 60,892 | 68,465 | |||||||
Prepaids and other current assets | 6,888 | 7,980 | |||||||
Income taxes receivable | 5,761 | 5,653 | |||||||
Total current assets | 119,124 | 191,462 | |||||||
Property, plant and equipment, net | 21,823 | 22,216 | |||||||
Operating lease right of use assets | 23,401 | — | |||||||
Finance lease right of use assets | 209 | — | |||||||
Goodwill | 63,499 | 63,452 | |||||||
Other intangible assets, net | 54,430 | 55,240 | |||||||
Other assets | 2,784 | 574 | |||||||
Total assets | $ | 285,270 | $ | 332,944 | |||||
Liabilities and Shareholders' Equity | |||||||||
Trade payables | $ | 40,658 | $ | 87,265 | |||||
Accrued liabilities | 6,178 | 8,370 | |||||||
Operating lease liabilities, current portion | 3,561 | — | |||||||
Finance lease liabilities, current portion | 121 | — | |||||||
Warranty obligations, current portion | 3,048 | 3,213 | |||||||
Note payable, current portion | — | 15,993 | |||||||
Total current liabilities | 53,566 | 114,841 | |||||||
Warranty obligations, non-current | 2,375 | 2,362 | |||||||
Operating lease liabilities, non-current | 21,836 | — | |||||||
Finance lease liabilities, non-current | 135 | — | |||||||
Income taxes payable, non-current | 3,599 | 3,427 | |||||||
Deferred income tax liabilities, non-current | 9,638 | 11,888 | |||||||
Other non-current liabilities | — | 1,837 | |||||||
Debt payable, non-current | 20,490 | 15,993 | |||||||
Shareholders' equity | 173,631 | 182,596 | |||||||
Total liabilities and shareholders' equity | $ | 285,270 | $ | 332,944 | |||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The following table presents a reconciliation of EBITDA from continuing
operations for the three months ended
Three Months Ended |
||||||||||
2019 | 2018 | |||||||||
(Loss) income from continuing operations | $ | (8,484 | ) | $ | 8,140 | |||||
Interest expense, net | 40 | 21 | ||||||||
Income tax (benefit) expense from continuing operations | (2,116 | ) | 2,523 | |||||||
Depreciation and amortization | 2,485 | 2,439 | ||||||||
(Loss) earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations | $ | (8,075 | ) | $ | 13,123 | |||||
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Source:
Investor Relations Contact:
John Mills, ICR, LLC
Telephone:
(646) 277-1254