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Nautilus’ earnings out of shape in 2017

Rising costs, slim profits cause 32% income drop for Vancouver company

By Troy Brynelson, Columbian staff writer
Published: March 7, 2018, 5:05pm

Nautilus Inc. finished 2017 a little out of shape, according to the latest filings with the U.S. Securities and Exchange Commission.

The Vancouver-based maker of home fitness equipment saw operating income decrease from $53.4 million to $36.3 million, a 32 percent drop, from 2016 to 2017.

After taxes, which treated Nautilus and many corporations favorably after a recent overhaul from the federal government, the Bowflex maker’s net income dropped from $34.1 million to $27.6 million.

In a conference call with investors this week, Nautilus CEO Bruce Cazenave said the year-end balance sheet looked “significantly below what we expected to achieve when we entered the year.”

By the Numbers

Operating income

2013: $15.7 million

2014: $30.1 million

2015: $40.2 million

2016: $53.4 million

2017: $36.3 million

Net income

2013: $48 million

2014: $18.8 million

2015: $26.6 million

2016: $34.1 million

2017: $27.6 million

Source: Nautilus Inc., U.S. Securities and Exchange Commission

From a revenue standpoint, the company seemed to stand pat. Sales via retailers and direct-to-consumer sales were level with the year before. Products in its Bowflex line — the Max Trainer and the High Velocity Trainer — showed strong, while the TreadClimber series struggled.

The company doesn’t expect the TreadClimber, a series of treadmills it has sold for 12 years, to be much of a factor for much longer, said Chief Financial Officer Sid Nayer.

But the bottom line was ultimately hurt, Nayer said, by rising expenses and decreasing profit margins. Raw materials costs have risen, and currency exchange rates have been “unfavorable.” The products that are selling also have slimmer profit margins, he said.

Nautilus also added an $8.8 million expense tied to its 2015 acquisition of Octane Fitness. The brand has struggled and the company said its “branded sales and projected growth trends” are hurt, according to the SEC filings.

Company executives remained optimistic for some innovations in 2018. New products to be revealed this year could help sales, they said. They are also seeing promise from subscription-based digital services that they can pair with their equipment.

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Columbian staff writer