Nautilus, Inc. announced results for the three months ended June 30, 2005, with net sales of $129.6 million compared to $100.2 million for the corresponding period last year, up 29.3%. Net income for the quarter was $3.3 million, or 10 cents per diluted share, up from $1.9 million, or 6 cents per share. The results exclude the acquisition of PEARL iZUMi USA which was completed after the second quarter.
“The quarter was on plan for both sales and earnings as we gear up for the primary fitness equipment season which begins in late September,” said Gregg Hammann, chairman and chief executive officer. “As part of our commitment to a fast pace of innovation, we are taking advantage of the seasonally slowest part of the year to move a number of important innovations through the development and introduction process. This gives us time to optimize manufacturing and shipping in advance of the high-volume season.
“We are approaching this fitness season in an excellent position to serve our consumers and customers with high-quality branded fitness products wherever they shop and exercise. We are better positioned due to our continued investments in infrastructure, such as making necessary improvements to our supply chain and information systems. Through these investments, we are able to support greater business volume now, and this will position us to achieve operating efficiencies later this year and beyond, while we maintain a fast pace of product innovation.”
For the third quarter of 2005, the company estimates that net sales will grow about 30 percent in its existing business compared to the same period last year. The company also expects to achieve an additional $15 million in net sales from its recently-completed acquisition of PEARL iZUMi USA, for a total net sales estimate of $175 to $180 million. Meanwhile, earnings are expected to grow about 25 percent to 23 cents to 24 cents per diluted share. The company reaffirmed its full year 2005 earnings estimate of $1.17 to $1.19, on annual sales of $690 to $700 million.
In addition, the company announced that its Board of Directors declared a regular quarterly dividend of $0.10 per common share, payable September 9, 2005, to stockholders of record as of August 19, 2005.
NAUTILUS, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
(Unaudited)
Three months ended June 30,
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2005 2004
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NET SALES $129,581 $100,179
COST OF SALES 71,527 55.5% 50,858 50.8%
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Gross profit 58,054 44.8% 49,321 49.2%
OPERATING EXPENSES:
Selling and marketing 39,977 30.9% 36,611 36.5%
General and administrative 9,985 7.7% 7,340 7.3%
Research and development 3,109 2.4% 1,276 1.3%
Royalties 1,181 0.9% 1,373 1.4%
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Total operating expenses 54,252 41.9% 46,600 46.5%
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OPERATING INCOME 3,802 2.9% 2,721 2.7%
OTHER INCOME:
Interest income 798 0.6% 296 0.3%
Other - net 460 0.4% 6 0.0%
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Total other income, net 1,258 1.0% 302 0.3%
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INCOME BEFORE INCOME TAXES 5,060 3.9% 3,023 3.0%
INCOME TAX EXPENSE 1,730 1.3% 1,088 1.1%
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NET INCOME $3,330 2.6% $1,935 1.9%
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BASIC EARNINGS PER SHARE $0.10 $0.06
DILUTED EARNINGS PER SHARE $0.10 $0.06
