EXCLUSIVE: Nautilus CEO Shares Why Investors Should Expect Continued Growth
Shares of Nautilus, Inc. (NYSE: NLS) sold off Tuesday following Monday's earnings report, but that didn't do much to dampen spirits at the Vancouver-based fitness company.
The manufacturer of the Bowflex and other fitness equipment reported Q4 earnings of $0.39 per share on revenue of $109 million, both inline with expectations.
Appearing on Benzinga's PreMarket Prep Tuesday morning, CEO Bruce Cazenave and CFO Sid Nayar discussed that report and how the company is positioning itself for the future.
Drivers Of Growth
Nautilus saw its Q4 sales increase 15 percent from the previous year, which it attributed to strong demand for two key products: the TreadClimber, of which new models were just released, and the Max Trainer, which is designed to provide a complete workout in 14 minutes.
"The key for us is a steady cadence of new products," said Cazenave. "In our direct-to-consumer business it's a little more paced and deliberate. We're continuing to develop new cardio and new strength products, typically at a pace of one-to-two a year. And those are normally pretty big items."
Growing At A High Octane
Nautilus made news in January after announcing the acquisition of Octane Fitness for $115 million. That acquisition, Cazenave said, was meant to increase Nautilus' presence new distribution channels, international markets -- specifically western Europe -- and give them higher price point products.
Nayar added, "We do believe that the acquisition will be accretive starting in 2016."
When asked if Nautilus would remain active in the M&A front, Cazenave said "it's possible," noting that the fitness industry has recently been in a state of consolidation.
Fitness In The Smartphone Era
With many fitness-related companies working to make fitness more interactive and data-driven via smartphone apps, such as Under Armour's purchase of MyFitnessPal and the growth of wearable fitness trackers, Nautilus has chosen to go the other way. Rather than build its own proprietary app, its made its equipment compatible with the apps already on the market.
"Our approach has been we believe people want to track and compare notes with their friends via the platform that they choose. And so if you buy a piece of Nautilus or Schwinn...with Bluetooth or whatever other technology we have through it you can download into any of those sites," said Cazenave. "We feel that's something that's actually very unique to us, and we're doing pretty well because I think we hit on something that's appealing to people."
What Can Investors Expect?
Nautilus stock has risen from under $3 to over $18 since Cazenave took the helm in 2011. Cazenave said investors can expect continued growth.
"We would like to continue what we're doing. Our objective is to continue to grow in the high single digit/low double digits in terms of revenue, and much faster than that on a bottom line operating income basis."
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