Nautilus (NLS) Tops Q1 EPS by 16c

Nautilus (NYSE: NLS) reported Q1 EPS of $0.08, $0.16 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $93.7 million versus the consensus estimate of $93.82 million.

First Quarter 2020 Highlights Compared to First Quarter 2019

• Net sales were $93.7 million, up 11.0% compared to $84.4 million, driven primarily by strong demand for strength and cardio products, particularly the Bowflex® SelectTech® weights and the new connected-fitness bikes. Additionally, the Company was able to capture the accelerated demand for home fitness resulting from COVID-19 stay-at-home orders in the last few weeks of March through strong omni-channel execution.
• Operating expenses decreased by 21.4% to $36.2 million compared to $46.0 million, primarily due to increased expense discipline, particularly in advertising expenses which delivered strong ROI in Q1.
• Operating loss decreased by 94.5% to $0.6 million compared to loss of $10.2 million.
• Income from continuing operations increased to $2.3 million, or $0.08 per diluted share, compared to loss from continuing operations of $8.5 million, or $0.29 per diluted share, driven by higher revenue, expense discipline, and aided by the tax benefit related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
• EBITDA from continuing operations increased to $2.3 million compared to an EBITDA loss of $8.1 million.

Management Comments

“In the first quarter of 2020, we achieved stronger than expected financial results, including revenue growth of 11%, our first positive sales comp since third quarter of 2018, and significantly exceeded our EBITDA estimates,” said Jim Barr, Nautilus Inc. Chief Executive Officer. “The continued momentum of our new connected fitness products and technology, as well as the strategic and operational changes instituted in the latter half of 2019 put us on track to deliver year-over-year improvement. However, when COVID-19 pandemic stay-at-home orders hit the last few weeks of the quarter, it was the agility and strong execution of the team that allowed us to maximize the opportunity provided by the surge in demand for at-home fitness products. It was rewarding to see the power of our brands, strength of our product portfolio, and reach of our omnichannel model in action when our customers needed us most. We delivered strong results across many of our brands including our Bowflex® and Schwinn® lines, in both strength and cardio products.”

“As we enter the second quarter and prepare for the remainder of 2020, we know we will be navigating a rapidly changing environment. We experienced the ripple effects of the supply chain disruption caused by COVID-19 early in the first quarter and then experienced a strong spike in demand across the product portfolio as the virus hit world-wide. Although we’ve expanded production in response to continued strong demand, we carry over a significant level of back-orders into the second quarter and believe we may not be fully caught up until the beginning of the third quarter. Additionally, while the consumer side of our business is surging, the commercial side, represented by our Octane Fitness brand, is experiencing softness, as gym closures have resulted in sales declines. Lastly, like many companies, we are closely monitoring the longer-term impact the shelter-in-place orders are having on consumer sentiment and demand.”

Mr. Barr continued, “I want to thank our dedicated employees and partners for how they’ve responded to the demands of the COVID-19 pandemic, rapidly changing our work model to remote work, dealing with disruptions in their lives, but still remaining focused on solutions to meet our customers’ needs. While delivering for customers in the short-term, our team is also balancing focus on longer-term challenges. It is important to remember that we are early in the long-term transformation of our company. We are actively gaining insights and continue to address the underlying issues that caused our multi-year revenue decline. While we believe we are making strong quarter-to-quarter progress, it is possible we will not yet produce consistent linear quarterly improvements, especially considering the array of uncertain outcomes from the longer-term impact of COVID-19. However, we believe that the company’s resolve, resilience, and agility are qualities that, when coupled with well-known brands and a strong product portfolio, will allow us to successfully implement the strategies that will return Nautilus to long-term profitable growth.”

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

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