Nautilus said it is transitioning out of its nutrition business to focus on opportunities presented by the Octane Fitness acquisition Photo by Thinkstock

Nautilus said it is transitioning out of its nutrition business to focus on opportunities presented by the Octane Fitness acquisition. (Photo by Thinkstock.)

Octane Fitness Acquisition Marked 'Significant Milestone' for Nautilus

Octane Fitness is expected to report sales of approximately $65 million for 2015, according to financials released on Monday by parent company Nautilus.

Nautilus, Vancouver, Washington, reported net sales of $335.8 million in 2015 and net sales of $109.1 million in the fourth quarter of 2015, according to financial earnings released Monday.

Manufacturer Octane Fitness, which was acquired by Nautilus on Dec. 31, 2015, for $115 million, is expected to report sales of approximately $65 million for 2015. Nautilus evaluated many acquisition candidates in 2015 before picking Octane Fitness, Nautilus CEO Bruce Cazenave told analysts in Monday's conference call.

"This acquisition is a significant milestone for Nautilus," Cazenave said before calling Octane Fitness a "synergistic and cultural" fit for Nautilus.

Nautilus Chief Operating Officer William McMahon elaborated on that fit in the call, noting there was little to no overlap in Nautilus' and Octane Fitness' selling channels. Nautilus' brands include Bowflex, Schwinn and Universal.

"This acquisition gives us access to higher price products, new modalities and new distribution channels," McMahon said.  "Our focus will remain the same. We will apply our combined product development capabilities toward the most promising projects, and now with five of the best brands in fitness, there is little doubt we will have a brand and a market for any fitness innovation we can develop."

Nautilus can accelerate its sales of the Schwinn Airdyne bike in specialty retail with the help of Octane Fitness' experience in that market, McMahon said.

"Octane is probably one of the top brands in all of specialty and an emerging brand in commercial," McMahon added. "We feel confident we have the right brands to compete in that [specialty retail] space going forward."

In its media release, Nautilus said it is transitioning out of its nutrition business to focus on opportunities presented by the Octane Fitness acquisition.

"As we begin 2016, we are excited about the positive momentum in the business and feel we are well positioned for another year of revenue and earnings growth," Cazenave said in a statement. "We expect to benefit from our recently announced acquisition of Octane Fitness, which further diversifies our product portfolio, expands our channels of distribution and increases our access to international markets."

Nautilus noted its 2015 fourth quarter net sales increased 15 percent over the same quarter in 2014, and its 2015 full-year net sales increased 22.3 percent over 2014. The growth was driven by higher sales in direct and retail segments, according to the release.

Nautilus' net sales in the fourth quarter was $67 million in the direct segment and $41.8 in the retail segment. Net sales for 2015 was $225.6 million in the direct segment and $106.1 million in the retail segment.

Nautilus (NYSE:NLS) closed Monday at $21.03 per share and traded up over a percent in after-hours trading. Nautilus' price-per-share has increased 27 percent since the company announced the acquisition of Octane Fitness on Jan. 4.

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