November 5, 2012 - Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the third quarter ended September 30, 2012. Continuing the momentum established the first half of fiscal 2012, net sales for the third quarter 2012 totaled $38.1 million, an increase of 1.7% compared to net sales of $37.4 million for the same quarter in 2011.
Gross margin for the third quarter of 2012 improved 650 basis points to 48.7%, compared to 42.2% for the same quarter in 2011. The increase in gross margin was primarily due to sales of higher margin Direct products. Operating margin for the third quarter of 2012 improved 370 basis points to 1.8% versus a loss of 1.9% during the same period last year.
Income from continuing operations for the third quarter ended September 30, 2012 was $1.2 million, compared to $0.3 million for the same period last year. Income per diluted share from continuing operations for the third quarter of 2012 increased to $0.04, compared to $0.01 for the same quarter a year ago. The strong improvement in results from continuing operations primarily reflects improved gross margins and higher operating income from the Company’s Direct business.
For the nine months ended September 30, 2012, income from continuing operations was $3.4 million, compared to loss from continuing operations of $0.8 million for the same period last year. Income per diluted share from continuing operations for the first nine months of 2012 was $0.11, compared to loss per diluted share of $(0.03) for the same period a year ago.Bruce M. Cazenave, Chief Executive Officer, stated, “We are pleased with the performance of our business in the third quarter and first nine months of this year, as we generated sales growth and significant improvements in net income compared to the same periods last year . Our results reflect the continued strength of our Direct business, which highlights the successful execution of a number of our key initiatives, including generating strong top line growth while delivering higher gross margins. As we previously disclosed, our Retail business was impacted by a shift in some of our retail partners’ buying patterns, which accelerated revenue into the second quarter from the third quarter. Importantly, our Retail margins stabilized despite being adversely affected by the revenue shift and resulting lower volume absorption of fixed costs in the third quarter versus the same period last year. Our Retail segment continued to contribute positively to our overall profitability in the third quarter.”