Nautilus reports first-quarter profit

Maker of fitness equipment continues to gain strength

Published:

Updated: May 7, 2012, 6:05 PM

 

Nautilus Inc., the Vancouver-based maker of fitness equipment, flexed more financial muscle Monday, posting a profit of $2.5 million for the three-month period ended March 31, or 8 cents per share.

That compares to a profit of $1.6 million, or 5 cents per share, for the first quarter of 2011.

The positive results were driven by strong demand for the company’s cardio products, increased advertising effectiveness and higher consumer credit approval rates, company executives said.

During an earnings conference call Monday, Bruce Cazenave, CEO of Nautilus, said the company has launched a major research project to better understand the fitness market.

Cazenave said the research project cost “several hundred thousands of dollars,” most of which was spent in the first quarter of this year.

The company’s chief operating officer, Bill McMahon, said research results will probably become available in June and that those results will help drive the company’s future strategy and growth.

The company’s first-quarter financial results underscored the fresh bounce in Nautilus’ step. Last month, for example, the company launched its first strength machine in more than five years — the Bowflex BodyTower — in a continuing bid to offer lower-priced fitness products to consumers.

Nautilus had reported annual losses every year since 2006 until the first quarter of 2011, when it posted a profit of $1.6 million. But it has climbed back to profitability.

Challenges remain

The company’s overall first-quarter net sales were $51.3 million, up 6.1 percent year over year. Helping drive those sales was the company’s direct-to-consumer business, which reaches consumers through TV and online media advertising.

That segment saw net sales of $33.7 million in the January to March period, an increase of 11.5 percent year over year.

McMahon said the company’s direct-to-consumer channel is seeing growth largely driven by the company’s TreadClimber cardio machine.

Challenges to the company remain, though. For example, Nautilus’ retail business — which offers the company’s products through outlets such as Dick’s Sporting Goods — saw sales of $16.6 million in the first quarter of this year.

That’s down by roughly 2 percent from $17 million in retail sales during the same period a year ago.

Cazenave said an “uncertain retail environment,” the economy in general and supply-chain costs in Asia continue to pose challenges to the company.

Nevertheless, company officials said Nautilus has paid off all of the debt it incurred from 2010 and ended the first quarter with a strong balance sheet, including more than $20 million in cash.

“This gives us the financial flexibility to make strategic investments in our business as we see appropriate,” Cazenave said in a news release.

Nautilus stock, which trades as NLS, closed down 22 cents Monday, at $2.23 per share. The company’s shares have traded between $1.32 and $3.20 in the past 52 weeks.

Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com.