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Nautilus, Inc. (NLS) SEC Filing 10-Q Quarterly report for the period ending Sunday, March 31, 2019

Nautilus, Inc.

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CIK: 1078207 Ticker: NLS


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EXHIBIT 99.1

NAUTILUS, INC. REPORTS RESULTS FOR THE FIRST QUARTER 2019


VANCOUVER, WASHINGTON, May 6, 2019 - Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the three months ended March 31, 2019.

Net sales for the first quarter of 2019 totaled $84.4 million, a decrease of 26.5% compared to $114.8 million in the same quarter of 2018. The decrease in net sales was driven by weakness in the Direct segment, down 34.4% from the prior year quarter, primarily reflecting a decline in sales of the Bowflex Max Trainer® product. Retail sales were down 14.4% from the prior year quarter, primarily due to lower order volume from certain customers reducing their inventory stocking levels. Royalty revenue in the first quarter of 2019 was $0.9 million, an increase of 39.7% compared to the same quarter of last year, due to payment of royalties related to a new agreement executed in late 2018. Gross margins for the first quarter of 2019 were 42.5% versus 51.3% for the same period of last year, reflecting unfavorable overhead absorption related to the decline in sales and unfavorable product mix.

Operating loss for the first quarter of 2019 was $10.2 million, compared to income of $10.7 million in the same period of last year, as lower sales and gross margins resulted in a decline in gross profit dollars, which was partially offset by a decrease in operating expenses. Operating expenses for the first quarter of 2019 decreased by $2.2 million to $46.0 million compared to $48.2 million in the same period of last year as a result of lower marketing costs. As a percentage of revenue, operating expenses were 54.5% of revenue versus 42.0% in the same period of last year due to the decrease in sales.

Loss from continuing operations for the first quarter of 2019 was $8.5 million, or $0.29 per diluted share, compared to income of $8.1 million, or $0.27 per diluted share, for the same period of last year. EBITDA loss from continuing operations for the first quarter of 2019 totaled $8.1 million compared to income of $13.1 million in the prior year period.

Carl Johnson, Chairman and Interim Chief Executive Officer, stated, “As anticipated, the primary factors impacting our first quarter results continued to be softness in the Direct segment as well as lower sales in our Retail segment due to certain strategic partners carrying higher than normal inventory levels. In the Direct segment, the refreshed Max Trainer product line with connected home digital capabilities continued to experience a slow ramp from its fourth quarter launch into the first quarter. Our analysis has confirmed the root cause as sub-optimal advertising creative resulting in low awareness and insufficient communication of the product's differentiated digital capabilities. We are in the midst of working to develop effective new positioning for Bowflex, the Max Trainer line, and our digital platform, using leading edge consumer insight techniques, in time for the important fourth quarter 2019 season. In the immediate term, we have initiated a broad range of tactical digital, social media and PR programs to support the Bowflex Max Trainer, the digital platform and other select Direct products. We remain confident that this new positioning and advertising will return the Direct business to profitability led by our digital platform and its personalized fitness and performance capabilities. Turning to Retail, while sales were soft in the first quarter due to the expected higher inventory levels of certain strategic partners, we continue to see solid sell-through and expect a healthy fall and holiday season for this segment.”

Mr. Johnson continued, “Additionally, to fuel sales for the balance of the year, we have a range of new product introductions planned across all of our sales channels. These introductions include, among others, the Max Trainer M10 with a built-in digital screen and capabilities, Octane Commercial Max Trainer, and the Octane XR6000S recumbent elliptical. Our focus remains on being a differentiated player in the industry by continuing to bring new innovations to market while also growing our top and bottom lines. Improved earnings and margins will come through the implementation of the initiatives discussed last quarter: broad cost containment, workforce reduction, value engineering initiatives and simplification of processes. Supporting all these measures is our solid balance sheet. We refinanced our debt and paid down $11.5 million to end the quarter with $20.5 million of debt and $23.6 million of cash. In summary, we have a robust plan in place to work through our temporary setbacks and to position Nautilus for growth and success in the coming


The following information was filed by Nautilus, Inc. (NLS) on Monday, May 6, 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-Q Quarterly 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-Q Quarterly Report:

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Inside this 10-Q Quarterly Report

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Condensed Consolidated Balance Sheets (Unaudited)
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Ticker: NLS
CIK: 1078207
Form Type: 10-Q Quarterly Report
Accession Number: 0001078207-19-000029
Submitted to the SEC: Wed May 08 2019 12:40:17 PM EST
Accepted by the SEC: Wed May 08 2019
Period: Sunday, March 31, 2019
Industry: Sporting And Athletic Goods

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