Nautilus, Inc. Reports Strong Results for the First Quarter 2012
First Quarter Income from Continuing Operations Increased 136%
Operating Margin Improved 180 Basis Points
VANCOUVER, WASHINGTON--(BUSINESS WIRE)--
May 7, 2012 - Nautilus, Inc. (NYSE: NLS) reported today its unaudited
operating results for the first quarter ended March 31, 2012. Continuing
the momentum established in 2011, net sales for the first quarter ended
March 31, 2012 totaled $51.3 million, an increase of 6.1% compared to
net sales of $48.3 million for the same quarter in 2011. Gross margin
for the first quarter of 2012 improved 90 basis points to 46.6% compared
to 45.7% for the same quarter in 2011. The increase in gross margin was
primarily due to a greater proportion of sales being derived from the
higher margin Direct segment. Operating margin for the first quarter of
2012 improved 180 basis points to 5.5%, compared to 3.7% for the same
period last year.
Income from continuing operations for the first quarter ended March
31, 2012 was $2.6 million, compared to $1.1 million for the same period
last year. Diluted income per share from continuing operations for the
first quarter of 2012 was $0.09, compared to $0.04 for the same quarter
a year ago. The significant improvement in results from continuing
operations reflects stronger sales, improved gross margins, and lower
operating expenses as a percentage of sales, mainly due to lower general
and administrative expense.
Bruce M. Cazenave, Chief Executive Officer, stated, "We are pleased with
our start to fiscal 2012. The increased revenues and improved bottom
line profitability are consistent with our stated priority of delivering
sustainable and profitable growth. Our first quarter results benefited
from revenue growth in the Direct channel driven by the continued
success of a number of products, higher gross margins and diligent
management of operating expenses for all areas of our business.
Importantly, we also pre-paid all amounts outstanding under our senior
notes issued in 2010 and ended the quarter with a strong balance sheet,
including cash of over $20 million. This gives us the financial
flexibility to make strategic investments in our business as we see
appropriate."
Mr. Cazenave continued, "We are excited about our outlook for the
remainder of the year and remain confident that we are well positioned
to continue to deliver improved year-over-year financial results. As
part of our continuing initiative to introduce innovative new products
that satisfy changing customer needs and diversify our product
portfolio, we recently launched the Bowflex® BodyTower™,
which is a unique, strength training product that leverages our well
recognized Bowflex® brand. Initial consumer response to this
product has been encouraging and we look forward to continuing to
roll-out more new products in the coming quarters."
The Company reported net income (including discontinued operation) of
$2.5 million for the first quarter of 2012, compared to $1.6 million for
the first quarter of 2011. Diluted net income per share for the first
quarter of 2012 was $0.08, compared to $0.05 for the same quarter a year
ago. Net income for the 2012 first quarter included a loss from
discontinued operation of $0.1 million, or $(0.01) per diluted share,
compared to income from discontinued operation of $0.5 million, or $0.01
per diluted share for the 2011 first quarter.
For further information, see "Results of Operations Information"
attached hereto.
Segment Results
Net sales for the Direct segment were $33.7 million in the first quarter
of 2012, an increase of 11.5% over the comparable period last year
reflecting strong demand for the Company's cardio products. The higher
sales were also partly driven by increased advertising effectiveness and
higher consumer credit approval rates, which rose to 30% in the 2012
first quarter, from 21% for the same period last year.
First quarter 2012 operating income for the Direct segment improved to
$3.0 million, a 37.6% increase over the same quarter last year. This
improvement reflects stronger sales as well as a 90 basis point
reduction in Direct selling and marketing expense as a percentage of
sales. Gross margin for the Direct business was 56.5% for the first
quarter of 2012, an increase of 20 basis points compared to the first
quarter of last year.
Net sales in the Retail segment for the first quarter 2012 totaled $16.6
million, compared to $17.0 million in the same period last year. The
decrease in sales was primarily attributed to lower sales of certain
strength products to brick-and-mortar retailers, partially offset by
higher sales to online retailers. Operating income for the Retail
segment was $2.3 million, essentially flat compared to the same quarter
a year ago. Retail gross margin was 23.8% in the first quarter of 2012,
an increase of 40 basis points from the same quarter a year ago.
For further information, see "Segment Information" attached hereto.
Balance Sheet
As of March 31, 2012, cash and cash equivalents were $20.4 million,
compared to $17.4 million at year end 2011. On March 30, 2012 the
Company used $5.5 million of cash on hand to pre-pay all outstanding
obligations under its increasing rate senior discount notes issued in
2010. Working capital was $17.2 million, compared to $19.4 million at
year end 2011. Inventory as of March 31, 2012 was $13.5 million,
compared to $11.6 million as of December 31, 2011. The Company believes
it has adequate inventory to support current demand levels.
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 March 31, 2012 at 4:30 p.m. ET (1:30
p.m. PT) on Monday, May 7, 2012. The call will be broadcast live over
the Internet hosted at http://www.nautilusinc.com/events
and will be archived online within one hour after completion of the
call. In addition, listeners may call (888) 343-1302 in North America
and international listeners may call (303) 223-2680. Participants from
the Company will include Bruce M. Cazenave, Chief Executive Officer and
William B. McMahon, Chief Operating Officer.
A telephonic playback will be available from 6:30 p.m. ET, May 7, 2012,
through 6:30 p.m. ET, May 21, 2012. Participants can dial (800) 633-8284
in North America and international participants can dial (402) 977-9140
to hear the playback. The passcode for the playback is 21589099.
About Nautilus, Inc.
Headquartered in Vancouver, Washington, Nautilus, Inc. (NYSE: NLS) is a
global fitness products company providing innovative, quality solutions
to help people achieve a healthy lifestyle. With a brand portfolio
including Nautilus®, Bowflex®, TreadClimber® ,
Schwinn®, Schwinn FitnessTM, Universal® and
CoreBody Reformer™, Nautilus markets innovative fitness products through
Direct and Retail channels. Websites: www.nautilusinc.com,
www.bowflex.com,
www.treadclimber.com
and www.corebody.com.
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 trends; future operating results; anticipated demand for the
Company's products; the adequacy of inventory levels and future plans
for introduction of new products. Factors that could cause Nautilus,
Inc.'s actual results to differ materially from these forward-looking
statements include our ability to acquire inventory from sole source
foreign manufacturers at acceptable costs, within timely delivery
schedules and that meet our quality control standards, availability and
price of media time consistent with our cost and audience profile
parameters, a decline in consumer spending due to unfavorable economic
conditions, an adverse change in the availability of credit for our
customers who finance their purchases, our ability to pass along vendor
raw material price increases and increased shipping costs, our ability
to effectively develop, market and sell future products, our ability to
protect our intellectual property, the introduction of competing
products, and our ability to get foreign-sourced product through customs
in a timely manner. Additional assumptions, risks and uncertainties are
described in detail in our registration statements, reports and other
filings with the Securities and Exchange Commission, including the "Risk
Factors" set forth in our Annual Report on Form 10-K, as supplemented by
our quarterly reports on Form 10-Q. Such filings are available on our
website or at www.sec.gov.
You are cautioned that such statements are not guarantees of future
performance and that actual results or developments may differ
materially from those set forth in the forward-looking statements. We
undertake no obligation to publicly update or revise forward-looking
statements to reflect subsequent events or circumstances.
RESULTS OF OPERATIONS INFORMATION
The following summary contains information from our consolidated
statements of operations for the three months ended March 31, 2012 and
2011:
|
|
|
|
|
Results of Operations Information
|
|
Three months ended March 31,
|
|
(Unaudited and in thousands, except per share amounts)
|
|
2012
|
|
|
2011
|
|
Net sales
|
|
$
|
51,262
|
|
|
|
$
|
48,301
|
|
|
Cost of sales
|
|
27,357
|
|
|
|
26,214
|
|
|
Gross profit
|
|
23,905
|
|
|
|
22,087
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Selling and marketing
|
|
16,066
|
|
|
|
14,865
|
|
|
General and administrative
|
|
4,010
|
|
|
|
4,692
|
|
|
Research and development
|
|
1,000
|
|
|
|
753
|
|
|
Total operating expenses
|
|
21,076
|
|
|
|
20,310
|
|
|
Operating income
|
|
2,829
|
|
|
|
1,777
|
|
|
Other income (expense), net
|
|
82
|
|
|
|
(89
|
)
|
|
Income from continuing operations before taxes
|
|
2,911
|
|
|
|
1,688
|
|
|
Income tax expense
|
|
264
|
|
|
|
567
|
|
|
Income from continuing operations
|
|
2,647
|
|
|
|
1,121
|
|
|
(Loss) income from discontinued operation, net of tax
|
|
(125
|
)
|
|
|
485
|
|
|
Net income
|
|
$
|
2,522
|
|
|
|
$
|
1,606
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
|
|
|
$
|
0.04
|
|
|
Diluted
|
|
0.09
|
|
|
|
0.04
|
|
|
(Loss) income per share from discontinued operation:
|
|
|
|
|
|
|
Basic
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
Diluted
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
Net income per share:
|
|
|
|
|
|
|
Basic
|
|
0.08
|
|
|
|
0.05
|
|
|
Diluted
|
|
0.08
|
|
|
|
0.05
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
30,748
|
|
|
|
30,744
|
|
|
Diluted
|
|
30,839
|
|
|
|
30,760
|
|
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION
The following table presents comparative net sales by segment for the
three months ended March 31, 2012 and 2011:
|
|
|
|
|
|
|
Net Sales by Segment
|
|
Three months ended March 31,
|
|
Change
|
|
(Unaudited and in thousands)
|
|
2011
|
|
2010
|
|
$
|
|
%
|
|
Direct
|
|
$
|
33,734
|
|
|
$
|
30,254
|
|
|
$
|
3,480
|
|
|
11.5
|
%
|
|
Retail
|
|
16,639
|
|
|
16,963
|
|
|
(324
|
)
|
|
(1.9
|
)%
|
|
Royalty income
|
|
889
|
|
|
1,084
|
|
|
(195
|
)
|
|
(18.0
|
)%
|
|
Total net sales
|
|
$
|
51,262
|
|
|
$
|
48,301
|
|
|
$
|
2,961
|
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents comparative operating results by segment
for the three months ended March 31, 2012 and 2011:
|
|
|
|
|
|
|
Operating Income (Loss)
by Segment
|
|
Three months ended March 31,
|
|
|
|
(Unaudited and in thousands)
|
|
2011
|
|
2010
|
|
Change
|
|
Direct
|
|
$
|
3,028
|
|
|
$
|
2,200
|
|
|
$
|
828
|
|
Retail
|
|
2,267
|
|
|
2,229
|
|
|
38
|
|
Unallocated corporate
|
|
(2,466
|
)
|
|
(2,652
|
)
|
|
186
|
|
Total operating income
|
|
$
|
2,829
|
|
|
$
|
1,777
|
|
|
$
|
1,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET INFORMATION
The following summary contains information from our consolidated balance
sheets as of March 31, 2012 (unaudited) and December 31, 2011:
|
|
|
|
|
Balance Sheet Information
|
|
As of
|
|
|
|
|
|
(In thousands)
|
|
March 31, 2012
|
|
December 31, 2011
|
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,397
|
|
|
$
|
17,427
|
|
Trade receivables, net
|
|
11,901
|
|
|
23,780
|
|
Inventories
|
|
13,450
|
|
|
11,601
|
|
Prepaids and other current assets
|
|
4,537
|
|
|
5,279
|
|
Total current assets
|
|
50,285
|
|
|
58,087
|
|
Property, plant and equipment, net
|
|
4,724
|
|
|
4,405
|
|
Goodwill
|
|
2,939
|
|
|
2,873
|
|
Other intangible assets, net
|
|
16,204
|
|
|
16,716
|
|
Other assets
|
|
606
|
|
|
732
|
|
Total assets
|
|
$
|
74,758
|
|
|
$
|
82,813
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Trade payables
|
|
$
|
23,461
|
|
|
$
|
28,563
|
|
Accrued liabilities
|
|
6,744
|
|
|
7,218
|
|
Warranty obligations, current portion
|
|
1,658
|
|
|
1,803
|
|
Deferred income tax liabilities
|
|
1,191
|
|
|
1,064
|
|
Total current liabilities
|
|
33,054
|
|
|
38,648
|
|
Long-term notes payable
|
|
—
|
|
|
5,598
|
|
Warranty obligations, non-current
|
|
214
|
|
|
214
|
|
Income taxes payable, non-current
|
|
3,711
|
|
|
3,658
|
|
Deferred income tax liabilities, non-current
|
|
1,669
|
|
|
1,434
|
|
Other long-term liabilities
|
|
1,310
|
|
|
1,308
|
|
Stockholders' equity
|
|
34,800
|
|
|
31,953
|
|
Total liabilities and stockholders' equity
|
|
$
|
74,758
|
|
|
$
|
82,813
|
Investor Relations Contact:
John Mills, ICR, LLC
Telephone:
(310) 954-1105
Source: Nautilus, Inc.
News Provided by Acquire Media
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