Nautilus, Inc. Reports Results For The Third Quarter 2013

November 4, 2013 - Nautilus, Inc. (NYSE: NLS) today reported its unaudited operating results for the third quarter and first nine-months ended September 30, 2013.

Net sales for the third quarter of 2013 totaled $46.3 million, a 22% increase compared to $38.1 million in the same quarter of 2012. Strong growth was primarily driven by the Company’s Retail segment combined with continued gains in the Direct segment. Year to date net sales through the third quarter were $141.7 million, an increase of 10% over the same period last year. Gross margins for the third quarter improved in both the Direct and Retail segments, by 310 and 400 basis points respectively, versus same period last year, however the consolidated gross margin declined 160 basis points to 47.1% due to a greater percentage of sales coming from the Company's lower gross margin Retail segment. Operating Income for the third quarter of 2013 was $1.3 million, a 91% increase over the $0.7 million reported in the same quarter of 2012. The increase in operating income reflects higher sales and gross margins in both the Direct and Retail Segments combined with improved operating leverage of sales and marketing and general and administrative expenses. Year to date operating income through nine months totals $5.6 million, an increase of 92% over the same period last year.

Net income from continuing operations for the third quarter of 2013 was $1.5 million, compared to $1.2 million for the same period last year. Net income for last year’s third quarter included a tax benefit of $0.6 million. Income per diluted share from continuing operations for the third quarter of 2013 was $0.05, compared to income per diluted share of $0.04 in the third quarter of 2012 which included approximately $0.02 per diluted share of tax benefit. On a year to date basis through the first nine-months of 2013, net income from continuing operations was $39.7 million or $1.26 per diluted share, which included a $34.2 million net income tax benefit due primarily to the partial reversal, in the second quarter of 2013, of a valuation allowance recorded against the Company's deferred tax assets. Excluding the net income tax benefit, the Company's income from continuing operations was $5.5 million, or $0.17 per diluted share, compared to $3.4 million, or $0.11 per diluted share, for the same period last year.

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