With strength in both its retail and direct channels, Nautilus Inc. reported net sales in the fourth quarter increased 23 percent to $95 million. The fitness equipment specialist also said it expects EPS to come in the range of 30 to 33 cents per share compared to 27 cents per share for the fourth quarter of 2013.

Pretax EPS from continuing operations are estimated to be in the range of 43 to 46 cents, up from 32 cents.

For the full year, EPS is expected to land in the range of 61 to 64 cents per share, down from $1.53 per share in 2013. Full year 2013 EPS included an income tax benefit of $1.05 per share as a result of the partial reversal of the valuation allowance recorded against the company’s deferred tax assets. On a full year basis for 2014, pretax EPS are expected to be in the range of 92 to 95 cents a share versus 51 cents per share for the full year 2013

Sales for the year are expected to reach $274 million, an increase of 25 percent compared to the full year 2013.

The company had cash, cash equivalents, and marketable securities of $72 million and no debt at Dec. 31, 2014 compared to $41 million and no debt at Dec. 31, 2013.

At the ICR XChange Conference last week, Bruce Cazenave, CEO, noted that “there has been a steady improvement in our business over the last 3 of 4 years and we feel we still have a long way to go.”

He added, “These results are further affirmation that the new product roadmap and operational initiatives we embarked on a few years ago are effective.”

Nautilus officials noted that the company has averaged 13 percent revenue growth form 2010 to 2014, led by new products and market share penetration. Gross margins have improved 600 basis points over that period due to its improved product mix, cost reductions, efficiencies in supply chain and other areas, and expense leverage. EBITDA has improved from $7 million in 2011 to over $33 million 2014.

Looking head, Bill McMahon, COO, said that on the retail side with major partners such as Dick’s SG, The Sports Authority and Amazon, the gains will have to continue to come from creating “compelling new product to take floor share.”

New product categories are also expected to support retail growth. Nautilus returned to the treadmill category under the Schwinn and Nautilus brands at retail with a comprehensive offering last fall. He said treadmills is the largest fitness category but also “high commoditized” and Nautilus made efforts to maintain worthwhile margins. He added, “The initial offering is performing well for us but it’s early so we need to see how it does going forward.”

McMahon said the retail side could also benefit from marketing to support sales in the same way as its direct side does. He said the company believes its brand lineup remains significantly underpenetrated at retail with only 3 percent share of the North American market at retail and even less overseas despite the strong consumer recognition of its brands.

On the direct side, its Bowflex line continues to be the core driver and the recently-launched Bowflex Max Trainer elliptical is “doing quite well for us.” It just entered the nutrition category with Bowflex and expects to benefit from that brand’s loyal fans as well as its customer database of over 12 million names it’s built up over the years. Its TV and digital efforts secured 6 million impressions last year.

Given its strength over the last year, Nautilus upwardly-revised its long-term growth targets. It now expects revenues over the next few years to rise in the 10- to 12 percent range, up from high-single to low-double digits. It lifted its goals on operating margins to 9 to 13 percent, up from 7 to 10 percent previously.

Regarding its use of cash and capital, Cazenave said the first priority would be investing in organic growth, including new products and infrastructure. The second is acquisitions. Cazenave said Nautilus has been engaged in discussions over the last six months exploring acquiring either intellectual property or a brand. For any acquisition, it doesn’t plan to take on any debt and Cazenave cautioned it could be a two-year process until something develops. The third alternative for cash is stock buybacks and dividends.