Nautilus, Inc. (NLS) 10-K Annual Report Wed Feb 26 2020

VANCOUVER, WASHINGTON, February 24, 2020 - Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Highlights Compared to Fourth Quarter 2018


•	Net Sales were $104.2 million, down 9.7% compared to $115.4 million. The 4.8% increase in the Retail Segment was offset by a 28.1% decline in the Direct Segment.


•	Operating Expenses decreased by 27.4% to $34.9 million compared to $48.0 million, primarily due to reductions in sales and marketing expenses, general and administrative costs, and research and development costs.


•	Operating Income increased by 21.4% to $3.3 million compared to $2.7 million.


•	Income from Continuing Operations increased to $3.7 million, or $0.12 per diluted share, compared to income from continuing operations of $1.5 million, or $0.05 per diluted share.


•	The tax rate for the fourth quarter was minus 25.8% primarily due to a true-up of an income tax benefit in the prior quarter.


•	EBITDA from continuing operations increased to $5.9 million compared to $5.0 million.

“We are seeing signs that the improvements made during the latter half of 2019 are beginning to benefit our business. New technology enhancements to our product offerings combined with more efficient advertising and reduced overall operating expenses resulted in overall improved results for the fourth quarter,” said Jim Barr, Chief Executive Officer. “We enter 2020 in a stronger financial position, having recently secured a new $70 million Senior Secured Credit Facility. We are very encouraged by customer reception of our new digital platform and new product offerings as well as the improvements in our cost structure, but we are very early in our transformation process. Throughout 2020, we will continue to focus on unlocking the potential of our brands and returning the company to sustainable profitable growth, but we do not expect the changes we are making to our company will result in immediate linear quarterly improvements.”

Fourth Quarter 2019 Segment Results Compared to Fourth Quarter 2018

Direct


•	Net Sales were $35.9 million, down 28.1% from $49.9 million. Increased sales of Bowflex bikes and Max Total^TM were more than offset by lower Max Trainer^®product sales.


•	Gross Margin was 49.9%, down from 58.7%, driven by unfavorable product mix and unfavorable overhead absorption related to the decrease in sales.

The following information was filed by Nautilus, Inc. (NLS) on Monday, February 24, 2020 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 - Earnings Highlight
The decrease in gross profit dollars was primarily due to lower sales coupled with lower gross margin percentages in both the Direct and Retail segments.

Revenue - Product Highlight
Although there was no revenue related to the Commercial business in 2019 and 2018, we continue to incur product liability expenses associated with product previously sold into the Commercial channel, and accrued interest associated with an uncertain tax position on discontinued international operations.
Other - Other Highlight
Improvements are being implemented that we believe should be effective in addressing this trend.
Revenue - Product Highlight
Trade receivables increased by $8.8 million to $54.6 million as of December 31, 2019, compared to $45.8 million as of December 31, 2018, due to the increase in Retail sales in the fourth quarter of 2019 compared to the same period of 2018.
Financial - Expense Highlight
Historically, our operating expenses have been influenced by media costs to produce and distribute advertisements of our products on television, the Internet and other media, facility costs, operating costs of our information and communications systems, product supply chain management, customer support and new product development activities.
Financial - Earnings
Gross margin decreased 10.0% points...Read more
Financial - Income
Accrued liabilities decreased by $0.7...Read more
Financial - Income
Net deferred income tax liabilities...Read more
Financial - Expense
Media advertising expense of our...Read more
Financial - Expense
The decrease in selling and...Read more
Financial - Debt
In addition, the 2019 Chase...Read more
Financial - Earnings
The decrease in Retail gross...Read more
Financial - Earnings
The 10.5% decrease in the...Read more
Legal - Other
The increase in general and...Read more
Financial - Expense
Inflation pressures do exist in...Read more
Financial - Income
The decrease in operating income...Read more
Revenue - Product
Our future capital requirements may...Read more
Financial - Expense
Prepaids and other current assets...Read more
Financial - Expense
In addition, our operating expenses...Read more
Financial - Earnings
We may not be able...Read more
Revenue - Product
Net sales of our Retail...Read more
Revenue - Product
Warranty obligations increased by $0.1...Read more
Financial - Earnings
Gross profit for 2019 was...Read more
Financial - Expense
Selling and marketing expenses include...Read more
Financial - Expense
Operating expenses for 2019 were...Read more
Legal - Other
Repurchases may be made in...Read more
Other - Other
A tax benefit from an...Read more
Revenue - Product
The slight increase in sales...Read more
Other - Other
The nature and terms of...Read more
Other - Other
An accounting estimate is considered...Read more
Financial - Earnings
The interest rate applicable to...Read more
Other - Other
The effective tax rates for...Read more
Other - Other
As of December 31, 2019,...Read more
Other - Other
The primary actions taken include...Read more
Other - Other
The primary actions taken include...Read more
Revenue - Geography
Our principal business activities include...Read more
Financial - Earnings
Profit margins may also be...Read more
Revenue - Product
In addition, our revenues are...Read more
Revenue - Product
Inventories decreased by $13.7 million...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Material Contracts, Statements, Certifications & more

Nautilus, Inc. provided additional information to their SEC Filing as exhibits

Exhibit 4.1: Instruments Defining The Rights Of Security Holders, Including Indentures

Exhibit 10.16: Material Contract

Exhibit 21.1: Subsidaries Of The Registrant

Exhibit 23.1: Consents Of Experts And Counsel

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Ticker: NLS
CIK: 1078207
Form Type: 10-K Annual Report
Accession Number: 0001078207-20-000015
Submitted to the SEC: Wed Feb 26 2020 4:33:40 PM EST
Accepted by the SEC: Wed Feb 26 2020
Period: Tuesday, December 31, 2019
Industry: Sporting And Athletic Goods