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Nautilus' (NLS) Q3 Earnings Beat Estimates, Revenues Up Y/Y

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Nautilus (NLS - Free Report) reported third-quarter 2020 adjusted earnings of 87 cents per share that beat the Zacks Consensus Estimate by 135.1%. The company had reported a loss of 29 cents per share in the year-ago quarter.

Revenues of $155.4 million beat the consensus mark by 30.3%. Moreover, the figure grew 151.8% year over year. Accelerated demand for the company’s home fitness products like Schwinn IC4 and Bowflex C6 connected-fitness bikes, Bowflex Home Gyms, and SelectTech weights despite the reopening of gyms has contributed to the top-line growth.

Segment Details

Direct Segment revenues (39.4% of the total revenues) surged 278.8% year over year to $61.2 million. Revenues from Cardio Products and Strength Products jumped 256.2% and 349.2% year over year to $44.3 million and $16.9 million, respectively.

Retail Segment revenues (60% of the total revenues) surged 107.8% year over year to $93.2 million. Revenues from Cardio Products and Strength Products soared 102.6% and 128% year over year to $71.9 million and $21.2 million, respectively.
 

Nautilus Group, Inc. The Price, Consensus and EPS Surprise

Nautilus Group, Inc. The Price, Consensus and EPS Surprise

Nautilus Group, Inc. The price-consensus-eps-surprise-chart | Nautilus Group, Inc. The Quote

 

Strong adoption of online shopping and increased use of curbside pickup services induced by the coronavirus outbreak, have driven revenues in the Retail segment.

As of Sep 30, 2020, the direct backlog was $23 million compared to $20.6 million as of Jun 30, 2020. Retail backlog was $44.6 million compared to $13.6 million in the year-ago quarter. Retail backlog in the third quarter was mainly driven by the lack of outgoing shipping containers from China.

Operating Details

Gross Profit on a GAAP basis surged 256.3% year over year to $67.9 million from $19.1 million in the year-ago quarter. Moreover, the gross margin expanded 12.8% year over year to 44%.

The growth was driven by improved margins in both direct and retail segments, partially offset by higher transportation costs due to the global logistics disruptions caused by the pandemic.

Selling and Marketing expenses grew 8.26% year over year to $19.2 million. General and Administrative expenses jumped 31.5% year over year to $8.8 million. Research and Development expenses rose 35.8% year over year to $4.2 million.

Nautilus reported adjusted operating income of $35.7 million, up 532% year over year. Adjusted operating margin expanded 36.3% year over year to 22.9%.

Adjusted EBITDA was $37.1 million, up 771.4% year over year.

Balance Sheet    

As of Sep 30, 2020, Nautilus had cash & cash equivalents worth $70.1 million compared with $45.7 million as of Jun 30, 2020.

Guidance

Nautilus expects 2020 revenues between $540 million and $565 million. Adjusted EBITDA for the year is expected between $90 million and $100 million.

The company expects gross margin for fourth-quarter 2020 to be lower than the third quarter due to increased transportation costs as well as additional resources disbursed to support increased volumes.

Operating expenses are expected to increase primarily due to higher marketing expenses incurred on the launch of new connected fitness products.

Zacks Rank & Stocks to Consider

Currently, Nautilus carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Retail-Wholesale sector are Beacon Roofing Supply (BECN - Free Report) , Shoe Carnival (SCVL - Free Report) and Signet Jewelers Limited (SIG - Free Report) . Signet Jewelers sports a Zacks Rank #1 (Strong Buy), while Beacon Roofing and Shoe Carnival carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shoe Carnival, Beacon Roofing and Signet Jewelers are set to release their quarterly earnings on Nov 18, Nov 19 and Dec 3, respectively.

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