Nautilus, Inc. Reports Results for the Third Quarter 2019
Company Expects to Achieve Positive Cash Flow from Operations and EBITDA in Fourth Quarter 2019
Personalized Connected Fitness Offerings Enhanced with Additions to
Net sales for the third quarter of 2019 totaled
Total operating expenses for the third quarter of 2019 decreased by
Loss from continuing operations for the third quarter of 2019 was
EBITDA loss from continuing operations for the third quarter of 2019 totaled
Mr. Barr continued, “Now that I've been at Nautilus for 90 days, I am even more excited about the overall strength and potential of our brands. We believe that the digital platform, combined with a growing number of connected fitness offerings, is setting the stage for future performance and positions Nautilus as a global technology-driven fitness company. On
Segment Results
Net sales for the Direct segment were
Net sales for the Retail segment were
Balance Sheet
As of
Conference Call
Nautilus will host a conference call to discuss its operating results for the third quarter ended
A telephonic playback will be available from
Non-GAAP Presentation
In addition to disclosing its financial results determined in accordance with GAAP, Nautilus has presented in this release certain non-GAAP financial measures, which exclude the impact of certain items (as further described below) and provide supplemental information regarding operating performance. Nautilus presents non-GAAP financial measures as a complement to results provided in accordance with GAAP, and the non-GAAP financial measures should not be regarded as a substitute for GAAP. By disclosing these non-GAAP financial measures, management intends to provide investors with a supplemental comparison of operating results and trends for the periods presented. Management believes these measures are also useful to investors as such measures allow investors to evaluate performance using the same metrics that management uses to evaluate past performance and prospects for future performance. Nautilus 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.
EBITDA from Continuing Operations
Nautilus defines EBITDA from continuing operations as its income from continuing operations, adjusted to exclude interest expense (income), income tax expense (benefit) of continuing operations, and depreciation and amortization expense. Nautilus 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. Nautilus 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. Management believes that EBITDA is frequently used by investors, securities analysts and other interested parties in their evaluation of companies, many of which present EBITDA when reporting their results. Other companies may calculate EBITDA differently, and it may not be comparable.
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 and marketing campaigns, 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 fourth quarter of 2019 and future periods; statements regarding the Company's prospects, resources or capabilities; planned investments, strategic initiatives and the anticipated or targeted results of such initiatives; and planned operational initiatives and the anticipated cost-saving 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 September 30, 2019 and 2018 (unaudited and in thousands, except per share amounts): |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
61,708 |
|
|
$ |
91,057 |
|
|
$ |
205,112 |
|
|
$ |
281,368 |
|
Cost of sales |
42,641 |
|
|
52,551 |
|
|
132,686 |
|
|
150,343 |
|
||||
Gross profit |
19,067 |
|
|
38,506 |
|
|
72,426 |
|
|
131,025 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Selling and marketing |
17,472 |
|
|
20,635 |
|
|
69,146 |
|
|
79,482 |
|
||||
General and administrative |
6,726 |
|
|
7,503 |
|
|
23,824 |
|
|
20,740 |
|
||||
Research and development |
3,122 |
|
|
4,208 |
|
|
11,282 |
|
|
12,744 |
|
||||
Goodwill and intangible impairment charge |
— |
|
|
— |
|
|
72,008 |
|
|
— |
|
||||
Total operating expenses |
27,320 |
|
|
32,346 |
|
|
176,260 |
|
|
112,966 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating (loss) income |
(8,253 |
) |
|
6,160 |
|
|
(103,834 |
) |
|
18,059 |
|
||||
Other (expense) income, net |
(422 |
) |
|
213 |
|
|
(910 |
) |
|
236 |
|
||||
(Loss) income from continuing operations before income taxes |
(8,675 |
) |
|
6,373 |
|
|
(104,744 |
) |
|
18,295 |
|
||||
Income tax expense (benefit) |
1,900 |
|
|
1,870 |
|
|
(6,941 |
) |
|
4,645 |
|
||||
(Loss) income from continuing operations |
(10,575 |
) |
|
4,503 |
|
|
(97,803 |
) |
|
13,650 |
|
||||
Loss from discontinued operations |
(114 |
) |
|
(194 |
) |
|
(329 |
) |
|
(354 |
) |
||||
Net (loss) income |
$ |
(10,689 |
) |
|
$ |
4,309 |
|
|
$ |
(98,132 |
) |
|
$ |
13,296 |
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income per share from continuing operations |
$ |
(0.36 |
) |
|
$ |
0.15 |
|
|
$ |
(3.30 |
) |
|
$ |
0.45 |
|
Basic loss per share from discontinued operations |
— |
|
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
||||
Basic net (loss) income per share |
$ |
(0.36 |
) |
|
$ |
0.14 |
|
|
$ |
(3.31 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) income per share from continuing operations |
$ |
(0.36 |
) |
|
$ |
0.15 |
|
|
$ |
(3.30 |
) |
|
$ |
0.45 |
|
Diluted loss per share from discontinued operations |
— |
|
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
||||
Diluted net (loss) income per share |
$ |
(0.36 |
) |
|
$ |
0.14 |
|
|
$ |
(3.31 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
||||||||
Shares used in per share calculations: |
|
|
|
|
|
|
|
||||||||
Basic |
29,728 |
|
|
30,185 |
|
|
29,660 |
|
|
30,230 |
|
||||
Diluted |
29,728 |
|
|
30,433 |
|
|
29,660 |
|
|
30,500 |
|
SEGMENT INFORMATION |
||||||||||||||
The following table presents certain comparative information by segment for the three and nine months ended September 30, 2019 and 2018 (unaudited and in thousands): |
||||||||||||||
|
Three Months Ended
|
|
Change |
|||||||||||
|
2019 |
|
2018 |
|
$ |
|
% |
|||||||
Net sales: |
|
|
|
|
|
|
|
|||||||
Direct |
$ |
16,197 |
|
|
$ |
28,955 |
|
|
$ |
(12,758 |
) |
|
(44.1 |
)% |
Retail |
44,823 |
|
|
61,490 |
|
|
(16,667 |
) |
|
(27.1 |
)% |
|||
Royalty |
688 |
|
|
612 |
|
|
76 |
|
|
12.4 |
% |
|||
|
$ |
61,708 |
|
|
$ |
91,057 |
|
|
$ |
(29,349 |
) |
|
(32.2 |
)% |
|
|
|
|
|
|
|
|
|||||||
Operating (loss) income: |
|
|
|
|
|
|
|
|||||||
Direct |
$ |
(8,693 |
) |
|
$ |
(1,363 |
) |
|
$ |
(7,330 |
) |
|
(537.8 |
)% |
Retail |
4,772 |
|
|
12,707 |
|
|
(7,935 |
) |
|
(62.4 |
)% |
|||
Unallocated corporate |
(4,332 |
) |
|
(5,184 |
) |
|
852 |
|
|
16.4 |
% |
|||
|
$ |
(8,253 |
) |
|
$ |
6,160 |
|
|
$ |
(14,413 |
) |
|
(234.0 |
)% |
|
Nine Months Ended
|
|
Change |
|||||||||||
|
2019 |
|
2018 |
|
$ |
|
% |
|||||||
Net sales: |
|
|
|
|
|
|
|
|||||||
Direct |
$ |
83,745 |
|
|
$ |
134,980 |
|
|
$ |
(51,235 |
) |
|
(38.0 |
)% |
Retail |
119,097 |
|
|
143,668 |
|
|
(24,571 |
) |
|
(17.1 |
)% |
|||
Royalty |
2,270 |
|
|
2,720 |
|
|
(450 |
) |
|
(16.5 |
)% |
|||
|
$ |
205,112 |
|
|
$ |
281,368 |
|
|
$ |
(76,256 |
) |
|
(27.1 |
)% |
|
|
|
|
|
|
|
|
|||||||
Operating (loss) income: |
|
|
|
|
|
|
|
|||||||
Direct |
$ |
(19,569 |
) |
|
$ |
10,667 |
|
|
$ |
(30,236 |
) |
|
(283.5 |
)% |
Retail |
3,803 |
|
|
20,196 |
|
|
(16,393 |
) |
|
(81.2 |
)% |
|||
Unallocated corporate |
(88,068 |
) |
|
(12,804 |
) |
|
(75,264 |
) |
|
(587.8 |
)% |
|||
|
$ |
(103,834 |
) |
|
$ |
18,059 |
|
|
$ |
(121,893 |
) |
|
(675.0 |
)% |
BALANCE SHEET INFORMATION |
|||||||
The following summary contains information from our condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018 (unaudited and in thousands): |
|||||||
|
As of |
||||||
|
September 30, 2019 |
|
December 31, 2018 |
||||
Assets |
|
|
|
||||
|
|
|
|
||||
Cash and cash equivalents |
$ |
5,756 |
|
|
$ |
38,125 |
|
Available-for-sale securities |
— |
|
|
25,392 |
|
||
Trade receivables, net of allowances of $45 and $99 |
30,860 |
|
|
45,847 |
|
||
Inventories |
50,066 |
|
|
68,465 |
|
||
Prepaids and other current assets |
6,152 |
|
|
7,980 |
|
||
Income taxes receivable |
2,747 |
|
|
5,653 |
|
||
Total current assets |
95,581 |
|
|
191,462 |
|
||
|
|
|
|
||||
Property, plant and equipment, net |
22,366 |
|
|
22,216 |
|
||
Operating lease right-of-use assets |
21,640 |
|
|
— |
|
||
Goodwill |
— |
|
|
63,452 |
|
||
Other intangible assets, net |
44,054 |
|
|
55,240 |
|
||
Other assets |
4,498 |
|
|
574 |
|
||
Total assets |
$ |
188,139 |
|
|
$ |
332,944 |
|
|
|
|
|
||||
Liabilities and Shareholders' Equity |
|
|
|
||||
|
|
|
|
||||
Trade payables |
$ |
38,497 |
|
|
$ |
87,265 |
|
Accrued liabilities |
7,460 |
|
|
8,370 |
|
||
Operating lease liabilities, current portion |
3,695 |
|
|
— |
|
||
Warranty obligations, current portion |
2,982 |
|
|
3,213 |
|
||
Note payable, current portion |
— |
|
|
15,993 |
|
||
Total current liabilities |
52,634 |
|
|
114,841 |
|
||
|
|
|
|
||||
Operating lease liabilities, non-current |
19,926 |
|
|
— |
|
||
Warranty obligations, non-current |
2,391 |
|
|
2,362 |
|
||
Income taxes payable, non-current |
3,695 |
|
|
3,427 |
|
||
Deferred income tax liabilities, non-current |
4,661 |
|
|
11,888 |
|
||
Other non-current liabilities |
74 |
|
|
1,837 |
|
||
Debt payable, non-current |
20,296 |
|
|
15,993 |
|
||
Shareholders' equity |
84,462 |
|
|
182,596 |
|
||
Total liabilities and shareholders' equity |
$ |
188,139 |
|
|
$ |
332,944 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations |
$ |
(10,575 |
) |
|
$ |
4,503 |
|
|
$ |
(97,803 |
) |
|
$ |
13,650 |
|
Interest expense (income), net |
293 |
|
|
(25 |
) |
|
559 |
|
|
(30 |
) |
||||
Income tax expense (benefit) from continuing operations |
1,900 |
|
|
1,870 |
|
|
(6,941 |
) |
|
4,645 |
|
||||
Depreciation and amortization |
2,853 |
|
|
2,178 |
|
|
8,045 |
|
|
6,646 |
|
||||
(Loss) earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations |
$ |
(5,529 |
) |
|
$ |
8,526 |
|
|
$ |
(96,140 |
) |
|
$ |
24,911 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005857/en/
Source:
Investor Relations:
John Mills, ICR, LLC
Telephone: (646) 277-1254