Nautilus, Inc. net sales for the first quarter ended March 31, 2007, fell 14% to $158.8 million, compared to $185.0 million for the corresponding period last year. Net income for the quarter was $2.5 million, or eight cents per share, compared to $5.2 million or 16 cents per share for the first quarter of 2006.
Gross margins reached 46.1%, the highest level in seven quarters.
“As we reported earlier, our international, apparel and commercial businesses performed well,” said Gregg Hammann, Chairman and CEO of Nautilus, Inc. “However, we experienced sluggish trends in the North American market for home fitness equipment in the first quarter, causing cancellation of expected retail replenishment orders and softness in direct.”
“We expect to achieve stronger net sales through new innovation and new promotions planned as the next fitness cycle begins the second half of the year. Meanwhile, our gross margin-improving activities that began in the back half of 2005 were evident again this quarter. Our efforts to bring efficiencies to manufacturing, distribution, packaging, shipping and transportation are putting us in an excellent position to improve bottom line results as sales pick up.”
For the second quarter of 2007, the company expects net sales of $135-140 million and expected earnings of $0.03-$0.06 per share. For the full year, the company expects net sales growth of 5-10 percent and earnings growth of 20-30 percent.
NAUTILUS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
Three Months
Ended March 31,
------------------------
2007 2006
------------ -----------
NET SALES $ 158,839 $ 184,990
COST OF SALES 85,571 105,678
------------ -----------
Gross profit 73,268 79,312
------------ -----------
OPERATING EXPENSES:
Selling and marketing 50,776 52,154
General and administrative 13,323 13,650
Research and development 3,215 3,268
Royalties 1,319 1,579
------------ -----------
Total operating expenses 68,633 70,651
------------ -----------
OPERATING INCOME 4,635 8,661
OTHER INCOME (EXPENSE):
Interest income 75 138
Interest expense (941) (589)
Other income, net 252 15
------------ -----------
Total other expense (614) (436)
------------ -----------
INCOME BEFORE INCOME TAXES 4,021 8,225
INCOME TAX EXPENSE 1,557 3,024
------------ -----------
NET INCOME $ 2,464 $ 5,201
============ ===========
EARNINGS PER SHARE:
BASIC $ 0.08 $ 0.16
DILUTED $ 0.08 $ 0.16
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 31,508 32,796
DILUTED 31,729 33,025
