Nautilus, Inc. Reports Results for the Third Quarter 2018
Third Quarter Total Revenues Increased 3% Fueled by 15% Growth in Retail Segment
Company Set to Unveil Major Digital Platform with New Max Trainer Line in Q4
Net sales for the third quarter of 2018 totaled
Operating income for the third quarter of 2018 was
Income from continuing operations for the third quarter of 2018 was
At
Mr. Cazenave continued, “We are pleased with progress on our strategic investment initiatives and are excited about our growth opportunities in 2019. Specifically, we have ramped up investments in the international channel and key logistics and systems integration initiatives have been completed. The new products we have introduced over the last 18 months give us a good base for growth by themselves, but the new digital platform coming this quarter provides an even broader foundation for near-term and long-term growth. This upgraded platform will change the way we engage with consumers, including new methods like offering value added content rich subscriptions. We remain grounded as a company focused on designing and marketing a broad range of high-quality innovative products but will be layering on a new level of enhanced customer experience with AI-driven technology that uniquely adapts to individual user desires and needs as they progress through their fitness journey. Although the initial launch leads within the Direct segment with our most popular product line, ultimately, we expect to offer it across many of our brands, product lines, and channels of distribution.”
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 third 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 and nine 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 expectations for full year
2018 net revenue and operating income; future plans for introduction of
new products, anticipated demand for the Company's new and existing
products, and projected impact of the new product launches on the
Company’s operating results for the fourth quarter of 2018 and future
periods; statements regarding the Company's prospects, resources or
capabilities; current or future financial and economic trends; planned
investments 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 and nine months
ended
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Net sales | $ | 91,057 | $ | 88,132 | $ | 281,368 | $ | 278,413 | ||||||||||||
Cost of sales | 52,551 | 46,817 | 150,343 | 136,975 | ||||||||||||||||
Gross profit | 38,506 | 41,315 | 131,025 | 141,438 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling and marketing | 20,635 | 18,028 | 79,482 | 79,321 | ||||||||||||||||
General and administrative | 7,503 | 6,305 | 20,740 | 21,106 | ||||||||||||||||
Research and development | 4,208 | 3,617 | 12,744 | 11,114 | ||||||||||||||||
Total operating expenses | 32,346 | 27,950 | 112,966 | 111,541 | ||||||||||||||||
Operating income | 6,160 | 13,365 | 18,059 | 29,897 | ||||||||||||||||
Other income (expense), net | 213 | (161 | ) | 236 | (648 | ) | ||||||||||||||
Income from continuing operations before income taxes | 6,373 | 13,204 | 18,295 | 29,249 | ||||||||||||||||
Income tax expense | 1,870 | 4,862 | 4,645 | 10,156 | ||||||||||||||||
Income from continuing operations | 4,503 | 8,342 | 13,650 | 19,093 | ||||||||||||||||
Loss from discontinued operations(1) | (194 | ) | (101 | ) | (354 | ) | (1,270 | ) | ||||||||||||
Net income | $ | 4,309 | $ | 8,241 | $ | 13,296 | $ | 17,823 | ||||||||||||
Basic income per share from continuing operations | $ | 0.15 | $ | 0.27 | $ | 0.45 | $ | 0.62 | ||||||||||||
Basic loss per share from discontinued operations | (0.01 | ) | — | (0.01 | ) | (0.04 | ) | |||||||||||||
Basic net income per share | $ | 0.14 | $ | 0.27 | $ | 0.44 | $ | 0.58 | ||||||||||||
Diluted income per share from continuing operations | $ | 0.15 | $ | 0.27 | $ | 0.45 | $ | 0.61 | ||||||||||||
Diluted loss per share from discontinued operations | (0.01 | ) | — | (0.01 | ) | (0.04 | ) | |||||||||||||
Diluted net income per share | $ | 0.14 | $ | 0.27 | $ | 0.44 | $ | 0.57 | ||||||||||||
Shares used in per share calculations: | ||||||||||||||||||||
Basic | 30,185 | 30,749 | 30,230 | 30,739 | ||||||||||||||||
Diluted | 30,433 | 31,075 | 30,500 | 31,098 | ||||||||||||||||
Select Metrics: | ||||||||||||||||||||
Gross margin | 42.3 | % | 46.9 | % | 46.6 | % | 50.8 | % | ||||||||||||
Selling and marketing % of net sales | 22.7 | % | 20.5 | % | 28.2 | % | 28.5 | % | ||||||||||||
General and administrative % of net sales | 8.2 | % | 7.2 | % | 7.4 | % | 7.6 | % | ||||||||||||
Research and development % of net sales | 4.6 | % | 4.1 | % | 4.5 | % | 4.0 | % | ||||||||||||
Operating income % of net sales | 6.8 | % | 15.2 | % | 6.4 | % | 10.7 | % | ||||||||||||
(1) The nine months ended
SEGMENT INFORMATION
The following table presents certain comparative information by segment
for the three and nine months ended
Three Months Ended |
Change | ||||||||||||||||||
2018 | 2017 | $ | % | ||||||||||||||||
Net sales: | |||||||||||||||||||
Direct | $ | 28,955 | $ | 33,986 | $ | (5,031 | ) | (14.8 | )% | ||||||||||
Retail | 61,490 | 53,505 | 7,985 | 14.9 | % | ||||||||||||||
Royalty | 612 | 641 | (29 | ) | (4.5 | )% | |||||||||||||
$ | 91,057 | $ | 88,132 | $ | 2,925 | 3.3 | % | ||||||||||||
Operating income (loss): | |||||||||||||||||||
Direct | $ | (1,363 | ) | $ | 5,289 | $ | (6,652 | ) | (125.8 | )% | |||||||||
Retail | 12,707 | 12,118 | 589 | 4.9 | % | ||||||||||||||
Unallocated corporate | (5,184 | ) | (4,042 | ) | (1,142 | ) | (28.3 | )% | |||||||||||
$ | 6,160 | $ | 13,365 | $ | (7,205 | ) | (53.9 | )% | |||||||||||
Nine Months Ended |
Change | ||||||||||||||||||
2018 | 2017 | $ | % | ||||||||||||||||
Net sales: | |||||||||||||||||||
Direct | $ | 134,980 | $ | 147,800 | $ | (12,820 | ) | (8.7 | )% | ||||||||||
Retail | 143,668 | 128,393 | 15,275 | 11.9 | % | ||||||||||||||
Royalty | 2,720 | 2,220 | 500 | 22.5 | % | ||||||||||||||
$ | 281,368 | $ | 278,413 | $ | 2,955 | 1.1 | % | ||||||||||||
Operating income (loss): | |||||||||||||||||||
Direct | $ | 10,667 | $ | 23,141 | $ | (12,474 | ) | (53.9 | )% | ||||||||||
Retail | 20,196 | 20,427 | (231 | ) | (1.1 | )% | |||||||||||||
Unallocated corporate | (12,804 | ) | (13,671 | ) | 867 | 6.3 | % | ||||||||||||
$ | 18,059 | $ | 29,897 | $ | (11,838 | ) | (39.6 | )% | |||||||||||
BALANCE SHEET INFORMATION
The following summary contains information from our condensed
consolidated balance sheets as of
As of | |||||||||
September 30, 2018 | December 31, 2017 | ||||||||
Assets |
|||||||||
Cash and cash equivalents | $ | 30,753 | $ | 27,893 | |||||
Available-for-sale securities | 40,352 | 57,303 | |||||||
Trade receivables, net of allowances of $45 and $119 | 46,130 | 42,685 | |||||||
Inventories | 55,549 | 53,354 | |||||||
Prepaids and other current assets | 11,174 | 7,257 | |||||||
Total current assets | 183,958 | 188,492 | |||||||
Property, plant and equipment, net | 19,580 | 15,827 | |||||||
Goodwill | 61,969 | 62,030 | |||||||
Other intangible assets, net | 55,364 | 57,743 | |||||||
Other assets | 631 | 684 | |||||||
Total assets | $ | 321,502 | $ | 324,776 | |||||
Liabilities and Shareholders' Equity | |||||||||
Trade payables | $ | 67,675 | $ | 66,899 | |||||
Accrued liabilities | 7,846 | 10,764 | |||||||
Warranty obligations, current portion | 3,904 | 3,718 | |||||||
Note payable, current portion | 15,993 | 15,993 | |||||||
Total current liabilities | 95,418 | 97,374 | |||||||
Warranty obligations, non-current | 1,802 | 2,399 | |||||||
Income taxes payable, non-current | 3,317 | 2,955 | |||||||
Deferred income tax liabilities, non-current | 10,141 | 8,558 | |||||||
Other non-current liabilities | 1,967 | 2,315 | |||||||
Note payable, non-current | 19,991 | 31,986 | |||||||
Shareholders' equity | 188,866 | 179,189 | |||||||
Total liabilities and shareholders' equity | $ | 321,502 | $ | 324,776 | |||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The following table presents a reconciliation of EBITDA from continuing
operations for the three and nine months ended
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Income from continuing operations | $ | 4,503 | $ | 8,342 | $ | 13,650 | $ | 19,093 | |||||||||||
Interest (income) expense, net | (25 | ) | 207 | (30 | ) | 757 | |||||||||||||
Income tax expense from continuing operations | 1,870 | 4,862 | 4,645 | 10,156 | |||||||||||||||
Depreciation and amortization | 2,178 | 1,868 | 6,646 | 6,386 | |||||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations | $ | 8,526 | $ | 15,279 | $ | 24,911 | $ | 36,392 | |||||||||||
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Source:
Investor Relations Contact:
ICR, LLC
John Mills, 646-277-1254