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Nautilus, Inc. (NLS) SEC Filing 10-K Annual report for the fiscal year ending Monday, December 31, 2018

Nautilus, Inc.

CIK: 1078207 Ticker: NLS
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Exhibit 99.1

NAUTILUS, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018
    


VANCOUVER, WASHINGTON, February 25, 2019 - Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the fourth quarter and full year ended December 31, 2018.

Net sales for the fourth quarter of 2018 totaled $115.4 million, a decrease of 9.7% compared to $127.8 million in the same quarter of 2017. The decrease in net sales was driven by a 30.3% decline in the Direct segment partially offset by 16.1% growth in the Retail segment, compared to the same quarter of the prior year, reflecting double-digit growth in the mass retail channel and modest gains in the international and specialty and commercial channels. Direct segment sales were primarily impacted by lower Bowflex Max Trainer® product sales, partially offset by increased sales of the recently introduced Bowflex® LateralX® trainer and strength products. Royalty revenue in the fourth quarter of 2018 increased to $1.0 million compared to $0.6 million in the same quarter of the prior year due to revenue collected in connection with a trademark infringement claim. For the full year 2018, net sales were $396.8 million, down 2.3% compared to 2017. Gross margins for the fourth quarter of 2018 were 44.0% versus 48.9% for the same period of 2017, reflecting a shift in segment revenue mix from Direct to Retail, coupled with a decline in Direct margins related to unfavorable product mix. Gross margins in the Retail segment increased by 220 basis points to 31.7%.

Operating income for the fourth quarter of 2018 was $2.7 million compared to $6.4 million in the same period of the prior year due to the decline in Direct segment net sales and the lower gross margin, partially offset by increases in net sales and gross margin in the Retail segment. Additionally, the fourth quarter of 2017 included an $8.8 million non-cash intangible impairment charge. Operating expenses for the fourth quarter of 2018 were 41.6% of revenue versus 43.9% in the same period of 2017. Operating expenses declined by $8.0 million due to the aforementioned intangible impairment in the same quarter of the prior year, partially offset by increased general and administrative costs. For the full year 2018, operating income was $20.8 million compared to $36.3 million in the prior year.

Income from continuing operations for the fourth quarter of 2018 was $1.5 million, or $0.05 per diluted share, compared to income from continuing operations of $8.5 million, or $0.28 per diluted share in the prior year quarter. The tax rate for the fourth quarter of 2018 increased from -32.2% in the fourth quarter of 2017 to 46% primarily due to $0.6 million of state-related adjustments and state valuation allowances. The tax rate of -32.2% for the fourth quarter of 2017 reflected a tax benefit related to a change in United States tax law at the end of 2017. Income from continuing operations for the full year 2018 totaled $15.1 million, or $0.50 per diluted share, compared to $27.6 million, or $0.89 per diluted share in the prior year. EBITDA from continuing operations for the fourth quarter of 2018 totaled $5.0 million versus $8.9 million in the same quarter of the prior year. For the full year of 2018, EBITDA from continuing operations totaled $30.0 million compared to $45.2 million for the prior year.

Bruce M. Cazenave, Chief Executive Officer, stated, “While there were pockets of growth and profit improvement, the overall results for the quarter were clearly below our expectations. Our Direct segment's disappointing results more than offset the strong Retail growth primarily due to much slower than expected sales of our refreshed Max Trainer product line launched in November which now incorporates an innovative digital personalized coaching platform called Max IntelligenceTM. We partially attribute the reduced sales of the Max Trainer product to low consumer awareness and understanding of this added digital capability which delivers a greatly enhanced consumer experience. The negative impact of slow initial traction of the Max Intelligence platform was magnified because the launch coincided with the critical holiday and fitness season, but there were many valuable lessons during these first two months of introduction. Importantly, given that the feedback from purchasers is generally very positive, we continue to believe that this platform and the unique personalization of the fitness experience it provides is unlike anything in the market today and will resonate with a broad base of consumers as awareness continues to build. The current obstacles we have can be overcome and our team is hard at work revamping the marketing message and media spending strategy with plans to relaunch in a significant way as soon as possible this year. Given what we now know and are able to do going forward, we


The following information was filed by Nautilus, Inc. (NLS) on Monday, February 25, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Nautilus, Inc.'s 10-K Annual Report:

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information Document
Consolidated Balance Sheets
Consolidated Balance Sheets (Parentheticals)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Comprehensive Income (Loss)
Consolidated Statements Of Comprehensive Income (Parenthetical)
Consolidated Statements Of Operations
Consolidated Statements Of Stockholders' Equity
Consolidated Statements Of Stockholders' Equity - Parenthetical
(Tables)
- Stock-Based Compensation (Details)
401(K) Savings Plan
401(K) Savings Plan (Details)
401(K) Savings Plan (Tables)
Accrued Liabilities
Accrued Liabilities (Details)
Accrued Liabilities (Tables)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) (Details)
Accumulated Other Comprehensive Income (Loss) (Tables)
Borrowings
Borrowings (Loan Agreement) (Details)
Borrowings (Tables)
Business Acquisition
Business Acquisition (Details)
Business Acquisition (Tables)
Business Acquisition - Assets Acquired And Liabilities Assumed (Details)
Commitments And Contingencies
Commitments And Contingencies (Details)
Commitments And Contingencies (Tables)
Commitments And Contingencies - Operating Lease (Details)
Derivatives
Derivatives (Details)
Derivatives (Tables)
Derivatives - Effect On Condensed Consolidated Statements Of Operations (Details)
Derivatives - Fair Value Of Derivative Instruments (Details)
Discontinued Operation
Discontinued Operation (Details)
Discontinued Operation (Tables)
Fair Value Measurements
Fair Value Measurements (Details)
Fair Value Measurements (Tables)
Goodwill
Goodwill (Details)
Goodwill (Tables)
Income Per Share
Income Per Share (Details)
Income Per Share (Tables)
Income Taxes
Income Taxes (Tables)
Income Taxes - Carryforwards (Details)
Income Taxes - Deferred Tax Assets And Liabilities (Details)
Income Taxes - Deferred Tax Liability (Details)
Income Taxes - Expense (Details)
Income Taxes - Income (Loss) Before Tax (Details)
Income Taxes - Reconciliation (Details)
Income Taxes - Unrecognized Tax Benefits (Details)
Inventories
Inventories (Details)
Inventories (Tables)
Other Intangible Assets
Other Intangible Assets (Details)
Other Intangible Assets (Tables)
Product Warranties
Product Warranties (Details)
Product Warranties (Tables)
Property, Plant And Equipment
Property, Plant And Equipment (Details)
Property, Plant, And Equipment (Tables)
Revenues
Revenues (Details)
Revenues (Tables)
Segment Information
Segment Information (Tables)
Segment Information - Concentration (Details)
Segment Information - Segments (Details)
Significant Accounting Policies
Significant Accounting Policies (Details)
Significant Accounting Policies (Policies)
Significant Accounting Policies (Tables)
Stock Repurchase Program
Stock Repurchase Program (Details)
Stock-Based Compensation
Stock-Based Compensation (Tables)
Stock-Based Compensation - 2015 Long-Term Incentive Plan (Detail)
Stock-Based Compensation - Employee Stock Purchase Plan (Details)
Stock-Based Compensation - Fair Value Assumptions (Details)
Stock-Based Compensation - Other (Details)
Stock-Based Compensation - Performance Stock Units (Details)
Stock-Based Compensation - Rsu And Rsa Activity (Details)
Stock-Based Compensation - Stock Options (Details)
Supplementary Information - Quarterly Results Of Operations (Details)
Supplementary Information - Quarterly Results Of Operations (Tables)
Supplementary Information - Quarterly Results Of Operations (Unaudited)
Trade Receivables
Trade Receivables (Details)
Trade Receivables (Tables)
Ticker: NLS
CIK: 1078207
Form Type: 10-K Annual Report
Accession Number: 0001078207-19-000011
Submitted to the SEC: Wed Feb 27 2019 11:31:33 AM EST
Accepted by the SEC: Wed Feb 27 2019
Period: Monday, December 31, 2018
Industry: Sporting And Athletic Goods

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