Nautilus, Inc. (NLS) 10-Q Quarterly Report November 2020

•Net sales were $114.2 million, up 93.5% compared to $59.0 million, driven primarily by strong demand for cardio and strength products, particularly our connected-fitness bikes, Max Trainer^®and treadmills. Our ability to restart and then accelerate our supply chain allowed us to better respond to the heightened demand that began in March when COVID-19 shelter-in-place orders were first put in place. However, despite increased supply capacity, we entered Q3 with $34.2 million in backorders.

•Gross profit was $47.4 million, up 170.6% compared to $17.5 million last year. Gross margin rates expanded to 41.5% this year compared to 29.7% last year, driven by favorable product and customer mix and fixed costs leverage, partially offset by higher product landed costs. As a reminder, our products are now subject to 7.5% tariffs versus no tariff last year, and shipping costs from Asia are higher due to constrained supply in logistics.

•In second quarter 2020, the company recognized a non-cash loss on disposal group of $29.0 million related to the planned sale of Octane Fitness^®. In the second quarter of 2019, the company recognized an impairment of $72.0 million for goodwill and other intangible assets. As a result, operating expenses decreased by 47.0% to $54.5 million, compared to $102.9 million last year.

•Operating loss was $7.1 million, compared to a loss of $85.4 million last year. The $78 million improvement was driven by lower operating expenses, sales growth, and expanded gross margin rates. Net loss was $5.1 million, or -$0.17 cents per diluted share, compared to last year's loss of $78.9 million, or -$2.66 per diluted share.

•The following statements exclude the impact of the loss on disposal group this year and the impairment last year¹.

•Adjusted operating expenses decreased by 17.6% to $25.5 million compared to $30.9 million last year, primarily due to continued expense discipline and lower advertising expenses. Customer acquisition costs were meaningfully lower this year as the company pulled back on paid advertising, given strong organic demand and inventory scarcity.

•Adjusted operating income improved to a record $21.9 million compared to an operating loss of $13.4 million last year, driven by sales growth, expanded gross margin rates, and lower operating expenses.

The following information was filed by Nautilus, Inc. (NLS) on Monday, August 10, 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-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:

Financial - Earnings Highlight
Gross margin rates for the three and nine month periods ended September 30, 2020 and September 30, 2019 were 57.2% and 54.7%, up from 38.3% and 49.7%, respectively, primarily driven by increased full-priced sales and favorable fixed costs leverage, partially offset by higher transportation costs.

Financial - Expense Highlight
The decrease in operating expenses was primarily related to a loss on disposal group of $20.7 million compared to a goodwill and other intangible impairment charge of $72.0 million in 2019 and a reduction in media spending in 2020 of $23.6 million compared to $32.0 million in 2019.
Financial - Earnings Highlight
Gross margin rates for the three and nine month periods ended September 30, 2020 and September 30, 2019 were 34.3% and 30.4%, up from 27.1% and 23.9% respectively, primarily driven by favorable customer mix and fixed costs leverage, partially offset by higher transportation costs.
Revenue - Product Highlight
Sales and Gross Profit Direct Segment Net sales for the three month period ended September 30, 2020 were $61.2 million, up 277.8%, from $16.2 million for the three month period ended September 30, 2019, driven primarily by cardio products which grew 256.2%, led by Schwinn IC4 and Bowflex C6 connected-fitness bikes.
Revenue - Product Highlight
Trade receivables as of September 30, 2020 compared to September 30, 2019 increased by $37.8 million due to the higher net sales and the timing of receipts in the third quarter of 2020.
Revenue - Product
Strength sales were up 66.3%...Read more
Other - Other
The lower effective tax rate...Read more
Financial - Earnings
The $56.0 million improvement was...Read more
Financial - Earnings
The $33.6 million improvement was...Read more
Financial - Expense
Historically, our operating expenses have...Read more
Financial - Earnings
The $26.3 million improvement was...Read more
Financial - Earnings
In addition to meeting the...Read more
Financial - Income
Royalty income increased by $0.5...Read more
Revenue - Product
Trade receivables increased by $14.0...Read more
Financial - Expense
Selling and Marketing Selling and...Read more
Financial - Income
Royalty Royalty income increased by...Read more
Revenue - Product
Retail Segment Net sales for...Read more
Financial - Expense
32 Table of Contents General...Read more
Revenue - Product
Our future capital requirements may...Read more
Financial - Expense
The decrease in operating expenses...Read more
Financial - Income
Income Tax Expense (Benefit) Income...Read more
Revenue - Product
Strength product sales grew 349.2%...Read more
Revenue - Product
Strength product sales grew by...Read more
Financial - Expense
In addition, our operating expenses...Read more
Financial - Expense
31 Table of Contents Operating...Read more
Revenue - Product
Forward-looking statements include any statements...Read more
Financial - Earnings
We may not be able...Read more
Revenue - Product
The decrease in inventory was...Read more
Revenue - Product
Net sales for the three...Read more
Revenue - Product
Strength product sales grew 111.4%...Read more
Financial - Earnings
Profit margins may also be...Read more
Revenue - Product
Cardio sales increased by 102.6%...Read more
Financial - Earnings
Gross profit for the three...Read more
Revenue - Geography
33 Table of Contents Other,...Read more
Financial - Expense
Operating Expenses Operating expenses for...Read more
Revenue - Product
Net sales for the nine...Read more
Revenue - Product
Net sales for the nine...Read more
Revenue - Product
Net sales for the nine...Read more
Other - Other
As of September 30, 2020,...Read more
Other - Other
Our strong operating results were...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

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

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

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

Exhibit 32.2: Section 1350 Certification

Ticker: NLS
CIK: 1078207
Form Type: 10-Q Quarterly Report
Accession Number: 0001078207-20-000099
Submitted to the SEC: Mon Nov 09 2020 4:09:20 PM EST
Accepted by the SEC: Mon Nov 09 2020
Period: Wednesday, September 30, 2020
Industry: Sporting And Athletic Goods