Nautilus, Inc. released unaudited results showing losses narrowed in the first quarter ended March 31, 2010 despite a big decline in sales.
The company’s loss from continuing operations was $2.4 million, or 8 cents per share, compared to $5.4 million, or 18 cents per share in the same quarter of 2009. Net sales for the period reached $45.6 million, down 18.6% from $54.1 million in the first quarter of 2009.
Operating loss was $1.9 million for the first quarter 2010, compared to a loss of $3.7 million for the first quarter 2009, an improvement of 47.8%. The company’s improved operating results were driven by an increase in operating income from the company’s retail segment, company-wide cost reduction initiatives, and the impact of restructuring expenses on the first quarter of 2009. The improvements mentioned were partially offset by operating income declining for the direct segment in the first quarter of 2010, when compared to the same period in 2009.
For the first quarter of 2010, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) was a negative $0.2 million compared to a negative $1.3 million in the same period of 2009. A reconciliation of EBITDA compared to its nearest comparable measure under generally accepted accounting principles is appended to this release.
Loss from discontinued operations in the first quarter of 2010 was $5.4 million, or $0.17 per share, compared to a loss of $8.4 million, or $0.27 per share, in the first quarter of 2009. During the first quarter of 2010 the company disposed of the Nautilus branded commercial product line and the factory in Virginia. A significant portion of the remaining commercial assets were sold effective April 30, 2010. A majority of the loss from discontinued operations in the first quarter of 2010 was attributable to operations which have now been sold.
Net loss in the first quarter 2010 was $7.8 million, or $0.25 per share, compared to net loss of $13.8 million, or $0.45 per share, in the first quarter 2009.
The company generated net cash from operating activities of $0.9 million for the first quarter 2010, compared to $12.8 million for the comparable period in 2009. The cash generated in 2009 was particularly high as a result of the company’s efforts to reduce working capital invested, primarily in our commercial business, in anticipation of discontinuing that segment.
As of March 31, 2010, the company had no borrowings on its $15 million line of credit and cash of $16.3 million of which $4.4 million was restricted cash to support outstanding letters of credit. As of the same date, the Company also had $4.2 million of assets held for sale associated with the discontinued commercial business.
At December 31, 2009, the company had no borrowings and cash of $12.2 million of which $4.9 million was restricted cash.
| NAUTILUS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Unaudited and in thousands, except per share amounts) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
| Net sales | $ | 45,644 | $ | 54,055 | ||||
| Cost of sales | 22,679 | 23,751 | ||||||
| Gross profit | 22,965 | 30,304 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 18,943 | 22,659 | ||||||
| General and administrative | 5,159 | 7,888 | ||||||
| Research and development | 803 | 1,423 | ||||||
| Restructuring | – | 2,049 | ||||||
| Total operating expenses | 24,905 | 34,019 | ||||||
| Operating loss | (1,940 | ) | (3,715 | ) | ||||
| Other income and expenses: | ||||||||
| Interest income | 11 | 9 | ||||||
| Interest expense | – | (147 | ) | |||||
| Other expense | (24 | ) | (292 | ) | ||||
| Total other expenses | (13 | ) | (430 | ) | ||||
| Loss from continuing operations before income taxes | (1,953 | ) | (4,145 | ) | ||||
| Income tax expense | 418 | 1,279 | ||||||
| Loss from continuing operations | (2,371 | ) | (5,424 | ) | ||||
| Discontinued operation: | ||||||||
| Loss from discontinued operation | (5,387 | ) | (7,929 | ) | ||||
| Income tax expense from discontinued operation | 33 | 466 | ||||||
| Loss from discontinued operation, net of tax | (5,420 | ) | (8,395 | ) | ||||
| Net loss | $ | (7,791 | ) | $ | (13,819 | ) | ||
| Loss per share from continuing operations: | ||||||||
| Basic and diluted | $ | (0.08 | ) | $ | (0.18 | ) | ||
| Loss per share from discontinued operation: | ||||||||
| Basic and diluted | $ | (0.17 | ) | $ | (0.27 | ) | ||
| Loss per share: | ||||||||
| Basic and diluted | $ | (0.25 | ) | $ | (0.45 | |||
