SFIA

Promoting Sports & Fitness
Participation and Industry Vitality

SFIA Products and Services

Nautilus, Inc. Reports Results for the Second Quarter 2018

Date: 7/30/18

Nautilus, Inc. Reports Results for the Second Quarter 2018

July 30, 2018
 
Second Quarter Retail Revenue Increased 5.7% to $39.2 Million

Company Raises Full Year 2018 Revenue Guidance Range and Reiterates Operating Income Guidance
 
VANCOUVER, Wash.--(BUSINESS WIRE)--Jul. 30, 2018-- Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the second quarter and six months ended June 30, 2018. The Company raised its full year 2018 revenue guidance range and reiterated full year operating income guidance.
 
Net sales for the second quarter of 2018 totaled $75.5 million, down 2.0% compared to $77.0 million in the same quarter of 2017. The decrease in net
sales was driven by lower Direct segment sales, down 11.0%, reflecting expected declines in Bowflex TreadClimber® sales, and weaker than projected Bowflex Max Trainer® sales. Strong performance in the Retail segment, up 5.7% from the prior year quarter, was driven by double-digit growth in the mass retail channel, partially offset by lower sales in the specialty commercial channel. Royalty revenue in the second quarter of 2018 was $1.5 million, compared to $0.8 million for the same quarter of last year, reflecting payments related to a new royalty agreement, with future sales-based royalties that are not expected to be material. For the first six months of 2018, net sales were $190.3 million, flat to prior year. Gross margins for the second quarter of 2018 totaled 44.6% versus 49.8% for the same period last year, reflecting higher product costs across all channels, coupled with a shift in segment revenue mix from Direct to Retail.
 
Operating income for the second quarter of 2018 was $1.2 million, compared to $3.8 million in the same period last year, as lower net sales and gross margins resulted in a decline in gross profit dollars, partially offset by improved management of operating expenses. Operating expenses for the second quarter were 43.0% of revenue versus 44.8% in the same period last year. For the first six months of 2018, operating income was $11.9 million, compared to $16.5 million in the same period last year.
 
Income from continuing operations for the second quarter of 2018 was $1.0 million, or $0.03 per diluted share, compared to $2.6 million, or $0.08 per diluted share, for the same period last year. Income from continuing operations for the first six months of 2018 was $9.1 million, or $0.30 per diluted share, compared to income from continuing operations of $10.8 million, or $0.35 per diluted share for the same period last year. EBITDA from continuing operations for the second quarter of 2018 totaled $3.3 million compared to $6.2 million in the prior year period.
 
At June 30, 2018, cash and marketable securities increased to $85.9 million and debt decreased to $40.0 million, compared to $85.2 million and $48.0 million, respectively, at December 31, 2017.
 
Bruce M. Cazenave, Chief Executive Officer, stated, “Our overall performance was in-line with our expectations for the second quarter, historically the seasonally slowest quarter of the year. We continued to see solid momentum in our Retail segment during the second quarter, which achieved 5.7%year-over-year growth, driven by double-digit expansion in our mass retail channel. Our Direct segment remained challenged in the second quarter by the continued phase-down of the mature TreadClimber® and softer than expected results from Max Trainer®. We expect strong growth in the Direct segment in the back-half of 2018 based on new product launches and the introduction of our new digital platform, which will be incorporated onto an upgraded and refreshed Max Trainer product line."
 
Mr. Cazenave continued, “Our year is unfolding as expected and key initiatives such as new product launches and fall season order plans for retail customers are tracking well. These positive factors give us the confidence to increase our full year revenue guidance range by $3 million. We are now expecting full year revenues in 2018 to be in the range of $431 million to $440 million and are reiterating operating income to be in the range of $42 million to $45 million. The Company has also taken pricing actions and cost improvement measures to help mitigate the impact of inflationary product cost pressures and unfavorable foreign exchange trends that negatively impacted gross margins in the first half of 2018. New product introductionsslated for the third quarter include two models of the Bowflex LateralX® trainer in the Direct segment and the Octane MTX Max Trainer®, the commercial version of our popular Max Trainer line designed for the specialty and commercial channels of distribution. In addition, we plan to launch upgraded versions of the Max Trainer that will support our exciting new digital subscription platform in our Direct segment during the fourth quarter. Our Retail segment is expected to continue to perform well in the back-half of this year and achieve growth in each quarter of 2018 versus the comparable quarters in 2017. Retail growth in the back-half of this year is anticipated to come from expanded product offerings across our Octane, Nautilus, and Bowflex brands, which will be sold in commercial, traditional retail, and e-commerce channels this fall. We are also pleased with the progress to date on several of the key strategic initiatives we outlined earlier in the year. Specifically, we have ramped up investments in the international channel, and key logistics and systems integration initiatives have been completed. While there is much we still need to do to accomplish the acceleration in future top line and bottom line growth, we believe we are on track to deliver on our stated objectives for 2018.”
 
For the full release, please click here.

Copyright © 2020 SFIA • All Rights Reserved

Subscribe to Our SFIA Weekly E-Mail List

Enter Your E-Mail Address:

No, thanks