Nautilus, Inc. Reports Strong Results for the Fourth Quarter and Full Year 2015
Fourth Quarter Revenue Increased 15.0% Over Prior Year and Full Year Revenue Grew 22.3%
Fourth Quarter Adjusted EPS from Continuing Operations was
Full Year Adjusted EPS from Continuing Operations up 45.3% to
Net sales for the fourth quarter of 2015 totaled
Income from continuing operations for the fourth quarter of 2015 was
Adjusted earnings per diluted share for the fourth quarter and full year
2015 excludes transaction costs expensed to general and administrative
expense that were related to the acquisition of
The effective income tax rate for continuing operations in the fourth quarter of 2015 was 20.3% and 33.0% for the full year, reflecting the release of a valuation allowance mentioned above.
For the fourth quarter of 2015, the Company reported net income
(including discontinued operations) of
As previously disclosed, on
For further information, see "Results of Operations Information" attached hereto.
Segment Results
Net sales for the Direct segment were
Operating income for the Direct segment was
Net sales for the Retail segment were
Operating income for the Retail segment was
Royalty revenue in the fourth quarter 2015 was
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 fourth quarter and full year ended
A telephonic playback will be available from
Non-GAAP Presentation
In addition to disclosing results determined in accordance with GAAP, Nautilus has presented certain Non-GAAP financial results for the fourth quarter and full year 2015 excluding certain unusual items.
When presenting non-GAAP information, the Company includes a reconciliation of the non-GAAP results to the most directly comparable financial measure calculated and presented in accordance with GAAP. We present adjusted results because management believes that due to the unusual nature of the excluded items, the non-GAAP results assists investors in assessing the Company's operational performance relative to its competitors and its historical financial performance. The Company presents these non-GAAP results 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 statements concerning: the
Company's prospects, resources or capabilities; current or future
financial and economic trends; future operating results; future plans
for introduction of new products; anticipated channel diversification,
anticipated demand for the Company's new and existing products; growth
in revenues and profits; anticipated benefits of the acquisition of
Octane; and anticipated pursuit of available remedies for non-payment
under a license agreement. Factors that could cause Nautilus, Inc.'s
actual results to differ materially from these forward-looking
statements include costs associated with the acquisition, failure to
successfully integrate the Octane business, achieve expected synergies
or realize other anticipated benefits of the transaction, our ability to
timely acquire inventory that meets our quality control standards from
sole source foreign manufacturers at acceptable costs, greater than
anticipated costs associated with launch of new products, incurrence of
unanticipated obligations under licensing agreements and the impact of
disputes regarding royalty obligations owed or owing to us, 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 consolidated
statements of operations for the three and twelve months ended
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net sales | $ | 109,140 | $ | 94,930 | $ | 335,764 | $ | 274,447 | ||||||||
Cost of sales | 56,660 | 46,411 | 162,530 | 133,872 | ||||||||||||
Gross profit | 52,480 | 48,519 | 173,234 | 140,575 | ||||||||||||
Gross profit % | 48.1 |
% |
51.1 | % | 51.6 |
% |
51.2 | % | ||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 31,425 | 26,510 | 101,618 | 81,059 | ||||||||||||
General and administrative | 6,065 | 5,624 | 21,441 | 22,131 | ||||||||||||
Research and development | 2,645 | 1,893 | 9,904 | 7,231 | ||||||||||||
Total operating expenses | 40,135 | 34,027 | 132,963 | 110,421 | ||||||||||||
Operating income | 12,345 | 14,492 | 40,271 | 30,154 | ||||||||||||
Other income (expense), net | 16 |
|
123 | (249 | ) | 70 | ||||||||||
Income from continuing operations before income taxes | 12,361 | 14,615 | 40,022 | 30,224 | ||||||||||||
Income tax expense | 2,509 | 4,142 | 13,219 | 9,841 | ||||||||||||
Income from continuing operations | 9,852 | 10,473 | 26,803 | 20,383 | ||||||||||||
Loss from discontinued operations, net of income taxes | (134 | ) | (96 | ) | (201 | ) | (1,588 | ) | ||||||||
Net income | $ | 9,718 | $ | 10,377 | $ | 26,602 | $ | 18,795 | ||||||||
Basic income per share from continuing operations | $ | 0.32 | $ | 0.33 | $ | 0.86 | $ | 0.65 | ||||||||
Basic loss per share from discontinued operations | — | — | (0.01 | ) | (0.05 | ) | ||||||||||
Basic net income per share(1) | $ | 0.31 | $ | 0.33 | $ | 0.85 | $ | 0.60 | ||||||||
Diluted income per share from continuing operations | $ | 0.32 | $ | 0.33 | $ | 0.85 | $ | 0.64 | ||||||||
Diluted loss per share from discontinued operations | — | — | (0.01 | ) | (0.05 | ) | ||||||||||
Diluted net income per share(1) | $ | 0.31 | $ | 0.33 | $ | 0.84 | $ | 0.59 | ||||||||
Shares used in per share calculations: | ||||||||||||||||
Basic | 30,992 | 31,319 | 31,288 | 31,253 | ||||||||||||
Diluted | 31,249 | 31,760 | 31,589 | 31,688 | ||||||||||||
(1) May not add due to rounding. | ||||||||||||||||
SEGMENT INFORMATION
The following tables present certain comparative information by segment
for the three and twelve months ended
Three Months Ended |
Change | ||||||||||||||
2015 | 2014 | $ | % | ||||||||||||
Net sales: | |||||||||||||||
Direct | $ | 67,000 | $ | 58,004 | $ | 8,996 | 15.5 | % | |||||||
Retail | 41,771 | 34,614 | 7,157 | 20.7 | % | ||||||||||
Royalty income | 369 | 2,312 | (1,943 | ) | (84.0 | )% | |||||||||
$ | 109,140 | $ | 94,930 | $ | 14,210 | 15.0 | % | ||||||||
Operating income (loss): | |||||||||||||||
Direct | $ | 9,869 | $ | 10,970 | $ | (1,101 | ) | (10.0 | )% | ||||||
Retail | 6,950 | 5,742 | 1,208 | 21.0 | % | ||||||||||
Unallocated corporate | (4,474 | ) | (2,220 | ) | (2,254 | ) | (101.5 | )% | |||||||
$ | 12,345 | $ | 14,492 | $ |
(2,147 |
) | (14.8 | )% | |||||||
Twelve Months Ended |
Change |
||||||||||||||
2015 | 2014 | $ | % | ||||||||||||
Net sales: | |||||||||||||||
Direct | $ | 225,595 | $ | 175,593 | $ | 50,002 | 28.5 | % | |||||||
Retail | 106,195 | 93,223 | 12,972 | 13.9 | % | ||||||||||
Royalty income | 3,974 | 5,631 | (1,657 | ) | (29.4 | )% | |||||||||
$ | 335,764 | $ | 274,447 | $ | 61,317 | 22.3 | % | ||||||||
Operating income (loss): | |||||||||||||||
Direct | $ | 39,940 | $ | 29,345 | $ | 10,595 | 36.1 | % | |||||||
Retail | 12,850 | 13,279 | (429 | ) | (3.2 | )% | |||||||||
Unallocated corporate | (12,519 | ) | (12,470 | ) | (49 | ) | (0.4 | )% | |||||||
$ | 40,271 | $ | 30,154 | $ | 10,117 | 33.6 | % | ||||||||
|
BALANCE SHEET INFORMATION
The following summary contains information from our consolidated balance
sheets as of
|
|
||||||
2015 | 2014 | ||||||
Assets |
|||||||
Cash and cash equivalents | $ | 30,778 | $ | 45,206 | |||
Available-for-sale securities | 29,998 | 26,984 | |||||
Trade receivables, net of allowances of |
45,155 | 26,260 | |||||
Inventories | 42,729 | 24,896 | |||||
Prepaids and other current assets | 6,888 | 6,987 | |||||
Income taxes receivable | 439 | 50 | |||||
Deferred income tax assets |
8,904 | 12,368 | |||||
Total current assets | 164,891 | 142,751 | |||||
Property, plant and equipment, net |
16,764 |
9,634 | |||||
|
60,470 |
2,520 | |||||
Other intangible assets, net |
73,354 |
10,575 | |||||
Long-term deferred income tax assets | — | 9,546 | |||||
Other assets | 433 | 628 | |||||
Total assets | $ |
315,912 |
$ | 175,654 | |||
Liabilities and Shareholders' Equity |
|||||||
Trade payables | $ | 61,745 | $ | 47,574 | |||
Accrued liabilities | 13,027 | 9,851 | |||||
Warranty obligations, current portion | 4,753 | 2,246 | |||||
Note payable, current portion | 15,993 | — | |||||
Total current liabilities | 95,518 | 59,671 | |||||
Warranty obligations, non-current | 3,792 | — | |||||
Income taxes payable, non-current | 4,116 | 3,725 | |||||
Deferred income tax liabilities, non-current |
18,380 |
— | |||||
Other long-term liabilities | 3,144 | 1,186 | |||||
Note payable, non-current | 63,971 | — | |||||
Shareholders' equity | 126,991 | 111,072 | |||||
Total liabilities and shareholders' equity | $ |
315,912 |
$ | 175,654 | |||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
||||||||
|
||||||||
Three Months Ended | Twelve Months Ended | |||||||
Adjusted earnings per diluted share from continuing operations | $ | 0.39 | $ | 0.93 | ||||
Transaction expenses related to Octane acquisition | (0.02 | ) | (0.02 | ) | ||||
Arbitration settlement expense | (0.05 | ) | (0.05 | ) | ||||
Nutrition inventory write-off | (0.03 | ) | (0.03 | ) | ||||
Disputed royalties | (0.03 | ) | (0.03 | ) | ||||
Reserve for bad debt | (0.02 | ) | (0.02 | ) | ||||
Release of valuation allowance | 0.06 | 0.06 | ||||||
Earnings per diluted share from continuing operations(1) | $ | 0.32 | $ | 0.85 | ||||
(1) May not add due to rounding. | ||||||||
|
||||||||
Three Months Ended | Twelve Months Ended | |||||||
Adjusted operating income | $ | 19,165 | $ | 47,091 | ||||
Transaction expenses related to Octane acquisition | (610 | ) | (610 | ) | ||||
Arbitration settlement expense | (2,478 | ) | (2,478 | ) | ||||
Nutrition inventory write-off | (1,410 | ) | (1,410 | ) | ||||
Disputed royalties | (1,421 | ) | (1,421 | ) | ||||
Reserve for bad debt | (901 | ) | (901 | ) | ||||
Operating income | $ | 12,345 | $ | 40,271 | ||||
|
||||||||
Three Months Ended | Twelve Months Ended | |||||||
Adjusted gross profit | $ | 57,789 | $ | 178,543 | ||||
Arbitration settlement expense | (2,478 | ) | (2,478 | ) | ||||
Nutrition inventory write-off | (1,410 | ) | (1,410 | ) | ||||
Disputed royalties | (1,421 | ) | (1,421 | ) | ||||
Gross profit | $ | 52,480 | $ | 173,234 | ||||
|
||||||||
Three Months Ended | Twelve Months Ended | |||||||
Direct adjusted operating income | $ | 13,757 | $ | 43,828 | ||||
Arbitration settlement expense | (2,478 | ) | (2,478 | ) | ||||
Nutrition inventory write-off | (1,410 | ) | (1,410 | ) | ||||
Direct operating income | $ | 9,869 | $ | 39,940 | ||||
|
||||||||
Three Months Ended | Twelve Months Ended | |||||||
Direct adjusted gross margin | $ | 44,453 | $ | 146,245 | ||||
Arbitration settlement expense | (2,478 | ) | (2,478 | ) | ||||
Nutrition inventory write-off | (1,410 | ) | (1,410 | ) | ||||
Direct gross margin | $ | 40,565 | $ | 142,357 | ||||
|
||||||||
Three Months Ended | Twelve Months Ended | |||||||
Retail adjusted operating income | $ | 7,851 | $ | 13,751 | ||||
Reserve for bad debt | (901 | ) | (901 | ) | ||||
Retail operating income | $ | 6,950 | $ | 12,850 | ||||
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