Nautilus, Inc. announced net sales for the three months ended September 30, 2005, were $163.3 million compared to $123.2 million for the corresponding period last year, up 33%. Net income for the quarter was $8.3 million, or 24 cents per diluted share, up from $7.5 million, or 22 cents per share, or 11% for the corresponding period last year. The year ago quarter included a pretax $1.8 million gain on sale of land, which contributed 3 cents per share.
“We are pleased with our revenue and earnings results for the third quarter and first nine months of 2005,” said Gregg Hammann, chairman and CEO. “Our campaign to bring complete assortments of high-quality branded fitness equipment into retail and specialty retail locations, where 80% of consumers shop for fitness products, continues to diversify our sales channels. Even with this positive performance, we need to improve our go-to-market effectiveness on new product innovations in order to capitalize on the opportunities we have ahead of us. This needed improvement, combined with some softness in the marketplace, has prompted us to take a more conservative view of the fourth quarter.”
“As we look forward, with five leading fitness brands, strong marketing and customer relationships, a wave of new product innovation, and the best position our company has ever had across diverse sales channels, we are very excited about our growth opportunities. Fitness is becoming a necessity around the world as our global society comes to grips with the health consequences of inactivity. We continue to believe our strategic business plan will deliver top line growth of 15% to 20%, and bottom line growth of 20% to 30%.”
For the fourth quarter of 2005, the company estimates that net sales will grow approximately 25% compared to the same period last year. Meanwhile, fourth quarter 2005 earnings are expected to grow to 44 cents to 48 cents per diluted share, up from 42 cents per share during the year ago quarter when the company achieved 50% earnings improvement. The company expects its full year 2005 earnings to be $1.06 to $1.10, on annual sales of around $660 million.
The company reported that it repurchased approximately 190,000 shares of stock during the third quarter at an average price of $23.75, as part of a $100 million buyback authorized by its Board earlier in the year.
In addition, the company announced that its Board of Directors declared a regular quarterly dividend of $0.10 per common share, payable December 9, 2005, to stockholders of record as of November 20, 2005.
NAUTILUS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
NET SALES $163,308 $123,182 $449,277 $354,257
COST OF SALES 91,022 64,577 242,164 189,475
----------- ----------- ----------- -----------
Gross profit 72,286 58,605 207,113 164,782
OPERATING EXPENSES:
Selling and marketing 44,526 38,039 129,425 110,392
General and
administrative 11,146 6,540 34,567 21,095
Research and
development 2,856 1,697 8,768 4,784
Royalties 1,297 1,051 3,952 4,693
----------- ----------- ----------- -----------
Total operating
expenses 59,825 47,327 176,712 140,964
----------- ----------- ----------- -----------
OPERATING INCOME 12,461 11,278 30,401 23,818
OTHER INCOME (EXPENSE):
Interest income 145 371 1,460 913
Other, net 31 (1) 542 (2)
----------- ----------- ----------- -----------
Total other
income, net 176 370 2,002 911
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 12,637 11,648 32,403 24,729
INCOME TAX EXPENSE 4,366 4,193 11,373 8,902
----------- ----------- ----------- -----------
NET INCOME $8,271 $7,455 $21,030 $15,827
=========== =========== =========== ===========
BASIC EARNINGS PER
SHARE $0.25 $0.23 $0.63 $0.48
DILUTED EARNINGS PER
SHARE $0.24 $0.22 $0.62 $0.47
