Nautilus (NLS) Misses Q3 EPS by 32c, Revenues Miss

Nautilus (NYSE: NLS) reported Q3 EPS of ($0.36), $0.32 worse than the analyst estimate of ($0.04). Revenue for the quarter came in at $61.71 million versus the consensus estimate of $81.17 million.

Jim Barr, Chief Executive Officer, stated, “Third quarter results were impacted by declines in both of our segments. The Direct segment results were related to a significant reduction in advertising spend while we continued to fine-tune our refreshed brand and advertising messaging and finalize our fourth quarter advertising plan. The Retail segment experienced a partial shipping delay to October 2019 related to recently imposed tariffs implemented with a shortened notice period, as well as lower sales of our existing Max Trainer products. In late August, we began the Direct segment rollout of the new Max TotalTM product. This trainer features our first integrated digital screen that directly connects the user to the features of our upgraded AI-powered digital platform. Our new advertising and brand campaign launched with limited media weight to test messaging effectiveness and efficiency across television, social media, PR, and other digital platforms. The marketing spend during the third quarter included content development costs that we do not expect to incur on a similar scale in the fourth quarter. We anticipate ramping up a more robust marketing campaign during the fourth quarter of 2019 and the first quarter of 2020, incorporating learnings from the initial campaign test launch.”

Mr. Barr continued, “Now that I've been at Nautilus for 90 days, I am even more excited about the overall strength and potential of our brands. We believe that the digital platform, combined with a growing number of connected fitness offerings, is setting the stage for future performance and positions Nautilus as a global technology-driven fitness company. On October 30th, we relaunched our digital platform under the new JRNYTM name, reflecting our belief that fitness is a life-long pursuit and we continue to make that pursuit more attainable for everyone through our products and experiences. At its core, JRNYTM features an AI-driven true personalization engine that suggests customized workouts and adjusts to individual fitness levels, along with friendly coaching that customers tell us feels like having an on-demand one-on-one personal trainer. Accompanying these digital launches are our multichannel introductions of the connected fitness experience with the Bowflex 216 and 116 treadmills, the Schwinn IC4 bike, and the Bowflex C6 bike. Our efforts to right-size the business that we announced in July 2019 are progressing and we expect to save approximately $6 million in workforce and shared support cost reductions in 2020. In addition, we expect to have positive EBITDA from continuing operations in the fourth quarter and generate positive cash flow from operations in the fourth quarter.”

For earnings history and earnings-related data on Nautilus (NLS) click here.

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