Nautilus' static direct segment performance was attributed to a drop in direct sales for the TreadClimber product line Photo courtesy Nautilus.
Despite its retail segment successes, Nautilus' static direct segment performance was attributed to a drop in direct sales for the TreadClimber product line, as well as reduced media spending in the third and fourth quarters.

Octane Boosts Nautilus Retail Sales by 67 Percent in 2016

Although Nautilus' direct segment sales remained static, the company reported $60 million in fourth quarter retail sales and $177.9 million in year-end retail sales. CEO Bruce Cazenave attributed to the growth to the company's inclusion of Octane Fitness.

Nautilus, Inc., Vancouver, Washington, reported $406 million in 2016 net sales, supported by $125.8 million in fourth quarter net sales, according to financials released Tuesday. Year-over-year, these figures represent increases of 20.9 percent and 15.2 percent, respectively.

Nautilus’ retail segment sales grew 43.6 percent in fourth quarter to $60 million, which CEO Bruce Cazenave attributed to the inclusion of Octane Fitness, which the company purchased in January 2016. This growth offset a 6.6 percent drop in fourth quarter organic growth, as well as a 2.7 percent decrease in direct segment sales for the quarter. In the third quarter of 2016, Nautilus reported a 21.4 percent drop in direct segment sales.

Octane helped improve the company’s year-end retail segment sales by 67.5 percent—a total sum of $177.9 million. Nautilus’ 2016 direct segment sales remained static at $225 million due to a drop in sales for the TreadClimber product line, as well as reduced media spending in the third and fourth quarters due to “sub-optimal media response metrics,” Cazenave said.

“Our fourth quarter was strong, rounding out another year of solid revenue growth, increased profitability, and achieving greater operating leverage,” Cazenave said. “Our direct segment response rates improved on a sequential basis, but we continued to face challenging consumer response conditions and a soft consumer retail environment.

“Most importantly, in 2016, we advanced our primary strategic objectives of continuing to build our innovation pipeline and capabilities, diversifying product lines and channels of distribution, and expanding access points in international markets,” he said. “The successful integration of Octane was an important contributor to advancing on all these strategic fronts, helping lay the groundwork for another year of positive growth in 2017 and beyond.”

In the fourth quarter, EBITDA from continuing operations increased 61.7 percent to $21.4 million, and operating income jumped 56 percent to $19.3 million. For 2016, EBITDA improved 41.4 percent to $61.1 million, and operating income grew 32.6 percent to $53.4 million.

Nautilus’ inventory was valued at $47 million at the end of 2016, compared to $42.7 million in 2015. This is a result of the increased stocking of specific product lines coupled with lower-than-expected sales in the fourth quarter, Cazenave said.

As of December 31, Nautilus reported $64 million in debt and $79.6 million in cash and marketable securities, versus $80 million and $64 million at the end of 2015.

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