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Wall Street dings Nautilus after Q3 report

Vancouver-based fitness brand expects Q4 boost from seasonal purchases of exercise equipment

By , Columbian Business Editor
Published:
3 Photos
Employees use the company workout room during a tour of the Nautilus headquarters in Vancouver in May 2013.
Employees use the company workout room during a tour of the Nautilus headquarters in Vancouver in May 2013. (The Columbian files) Photo Gallery

Nautilus stock lost 11 percent of its value Tuesday, a day after the Vancouver fitness brand reported disappointing third-quarter results.

But there’s always tomorrow or, better yet, the fourth quarter, which is typically a time for people to open their wallets for exercise equipment.

The share price closed at $11.85. The day before, it closed at $13.04.

The Vancouver-based fitness products company announced its third-quarter results after the market’s close, reporting earnings of $4.3 million and a profit of 14 cents per share. Earnings, adjusted to account for discontinued operations, were 15 cents per share. The results missed Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 17 cents per share. The fitness products company posted revenue of $91.1 million in the period, also falling short of Street forecasts. Four analysts surveyed by Zacks expected $93.5 million.

Nautilus chief executive Bruce Cazenave acknowledge in an interview Tuesday that the stock likely dipped because the company did not meet analysts’ expectations. But the combination of new products and what has traditionally been one of the most productive sales seasons for the company prompted Cazenave to add, “Our biggest quarter is coming.”

“Starting Black Friday and going all through mid-February — the peak period is right in that time frame,” Cazenave said. “People are doing those resolutions” to exercise.

Cazenave pointed to two products that could account for a sales bump.

The company, known best for its Nautilus and Bowflex brand exercise machines, has been delving into digital products over nearly a decade. Along those lines, in November it is expected to introduce the “Max Intelligence Platform,” a cloud-based adaptive coaching technology that customizes workouts to its user.

“Through an initial fitness assessment and ongoing predictive analytics, Max Intelligence tracks and collects data from the user’s history of workouts, learns their capabilities and customizes new workouts every day,” says company promotional material. The platform will be offered at $149 annually or $14.95 per month.

A Bowflex treadmill will be offered soon at $999 retail, which is lower than most treadmill pricing, Cazenave said.

“They’re pretty excited about their new direct launches, especially the new digital” products, such as Max Intelligence, said Michael Kawamoto, an analyst with D.A. Davidson & Co. in Portland.

Kawamoto said he is “in a wait-and-see mode” on consumer reception for the product launches.

But he thought the market “overreacted” Tuesday to Nautilus missing projections. Kawamoto recommends the stock as a buy with an $18 target. Nautilus’ share price has a 52-week range of $10.82 to $17.20.

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