![]() JANUARY 14, 2014 Orlando, Florida ICR Xchange Conference Exhibit 99.1 |
![]() Safe Harbor Statement This presentation includes forward-looking statements (statements which are not historical facts) within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning the Company's prospects, resources, capabilities, current or future financial trends or operating results, demand for the Company‘s products, future plans for introduction of new products and the anticipated outcome of new business initiatives, estimates of market size and growth, planned capital expenditures and statements concerning our ability to finance growth plans with cash generated from our operations. Factors that could cause Nautilus, Inc.'s actual results to differ materially from these forward-looking statements include our ability to acquire inventory from sole source foreign manufacturers at acceptable costs, within timely delivery schedules and that meet our quality control standards, availability and price of media time consistent with our cost and audience profile parameters, a decline in consumer spending due to unfavorable economic conditions in one or more of our current or target markets, an adverse change in the availability of credit for our customers who finance their purchases, our ability to pass along vendor raw material price increases and increased shipping costs, our ability to effectively develop, market and sell future products, our ability to protect our intellectual property, and the introduction of competing products. Additional assumptions, risks and uncertainties are described in detail in our registration statements, reports and other filings with the Securities and Exchange Commission, including the "Risk Factors" set forth in our Annual Report on Form 10-K, as supplemented by our quarterly reports on Form 10-Q. Such filings are available on our website or at www.sec.gov. You are cautioned that such statements are not guarantees of future performance and that actual results or developments may differ materially from those set forth in the forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances. Unless otherwise indicated, all information regarding our operating results pertain to continuing operations. © Nautilus, Inc. 2014 2 |
![]() Presentation Overview • Who We Are: A team focused on providing innovative fitness solutions and superior results • Business Strategies: Strategic Innovation, Operational Excellence, Footprint Expansion • Financial Overview: Robust top and bottom line growth; Strong Balance Sheet 3 |
![]() Who We Are 4 |
![]() A Team That Delivers Superior Results PRELIMINARY* UNAUDITED Q4 AND FULL YEAR 2013 RESULTS (CONTINUING OPERATIONS) • Q4 Revenues grew 18.5% over Q4 last year Direct business - 3.7% growth Retail business - 47.0% growth • Full Year 2013 Revenues grew 12.8% over 2012 Direct business - 9.3% growth Retail business - 20.2% growth • Non-GAAP Q4 EPS is expected to be between $0.29 and $0.31 per share** Versus $0.23 last year • Non-GAAP full year EPS is expected to be between $0.46 and $0.48 per share† Versus $0.34 last year 5 * All Q4 2013 and full year 2013 financial information is preliminary and unaudited; see preliminary earnings release dated January 13, 2014. ** Excludes income tax expense resulting from partial reestablishment of a valuation allowance against the Company’s deferred tax assets. † Excludes partial reversal of a valuation allowance recorded against the Company’s deferred tax assets. Non-GAAP Information, see Nautilus’ website under “Investor Relations” for a reconciliation to GAAP. |
![]() Who We Are Today A leading provider of fitness equipment and related products for use in, and around, the home Industry leading capabilities in product innovation and quality Growing company which has dramatically improved profitability Strong portfolio of brands, including #1 in the fitness industry (Bowflex)* Unique three-pronged business model An organization focused on increasing shareholder value 6 Our goal is to provide products which allow consumers to achieve their health and fitness goals * Based on 2012 National Consumer Research Study |
![]() Strongest Brands in Fitness Equipment 7 * Based on 2012 National Consumer Research Study |
![]() Winning Product Portfolio of Existing Heritage Products Cardio Unique technologies and modalities have driven growth Strength TreadClimber® SelectTech® Home Gym 8 AD6 |
![]() Recent Innovations Bowflex MAX Trainer™ Schwinn® Cardio MY13 Bowflex Boost ™ UpperCut® Schwinn® Elliptical MY13 9 |
![]() Growing in all Our Channels % of 2013 Revenue* 2013 Full Year Gross Margin* Op-ex Profile* 2013 Full Year Cont. Margin** Revenue Growth in 2013* Direct to Consumer 63% 59-61% Higher (due to advertising) 10-11% 9% Retail 35% 24-26% Very Low 14-16% 20% Licensing Royalties 2% ~100% Minimal 100% 6% Plus… Complementary business drivers across channels * All Q4 2013 and full year 2013 financial information is preliminary and unaudited; see preliminary earnings release dated January 13, 2014. ** Excluding unallocated corporate expense. 10 |
![]() Our Six Philosophies 1. Focus on profitable growth while leveraging and tightly controlling expenses 2. Deliver a steady flow of consumer driven innovations 3. Continue investing in our brands and new product launches • Longer term view 4. Emphasis on high opportunity initiatives for maximum success • Carefully scrutinize deployment of resources 5. Apply sense of urgency and intense focus on strategy and execution • Achieve what we say we’re going to do 6. Support and nurture our vibrant culture of organizational excellence Continue to drive positive shareholder return! 11 |
![]() Business Strategies 12 |
![]() Key Drivers • Emphasis on new product development for both the Direct and Retail channels; guided by a focus on consumer needs/wants • Utilize our unique multi-channel business model to gain share and secure traction on new products • Diversify our product offering and geographic footprint • Utilize new marketing approaches to energize our brands and build deeper customer relationships Utilize combination of “core growth” and “plus growth” initiatives to strengthen core and extend our reach 13 |
![]() Growth Opportunities • Launch New Direct to Consumer Products: Lead with new MAX Trainer, leverage our unique market’s capabilities • Large Domestic Retail Market: We are under-represented but well poised to take share • International Market Opportunity: Where we are almost non- existent today, but our brands are already well-known • Expand Licensing Royalty Base: Utilize both IP and Brands • Tap Into Adjacent Product Categories: That are growing and compliment our core competencies 14 |
![]() Global Market Opportunity *Compilation of Industry and Internal Data 15 Estimated Wholesale Retail Market Size by Region* |
![]() “The Road Map” 16 •New Price Points •New Core Categories •Plus Growth Opportunities •Access to Broader Audience •Licensing •Process Rigor •IP Portfolio •Brand Engagement •Margin Discipline •Leverage Infrastructure •Continuous Cost Improvements •Supply Chain Efficiency •Media Planning Our approach to profitable growth focuses on three major areas: |
![]() Financial Overview 17 |
![]() Revenue growing at 9.1% CAGR* *All Q4 2013 and full year 2013 financial information is preliminary and unaudited; see preliminary earnings release dated January 13, 2014. Note: Net Revenue and Operating Income are for Continuing Operations. Consistent Revenue and Profitability Growth 18 |
![]() Note: All Q4 and full year financial information is preliminary and unaudited; see preliminary earnings release January 13, 2014. * Non-GAAP Information, see Nautilus’ website under “Investor Relations” for a reconciliation to GAAP * Net Revenue and EBITDA are rolling four quarter totals, Continuing Operations EBITDA Outpacing Revenue Growth 19 |
![]() Strong Balance Sheet • Approximately $41M* of cash and no debt as of December 31, 2013 • $31.6M of deferred net tax assets as of September 30, 2013 • Working capital utilization metrics are best in the industry • Internal cash generation expected to finance growth plans • Modest capital expenditures of approximately $2 - $3M per year range expected *All Q4 2013 and full year 2013 financial information is preliminary and unaudited; see preliminary earnings release dated January 13, 2014. 20 |
![]() Longer Term Expectations Stated Strategic Goal Run Rate 2013 Preliminary Results vs. 2012* Revenue Growth 9-10% year 12.8% vs. 7.5% (L.Y.) Gross Margin Sustain gains in each channel 2-4 point improvement in both channels Operating Expense Leverage 1-3 points better Expenses flat to up slightly Operating Income 7-10% of revenue Absolute dollars increasing at double digit pace 7.0-7.2% vs. 5.5% (L.Y.) 45-49% growth EBITDA Growth Strong (outpacing revenue) 39-42% growth vs. 84% (L.Y.) 21 *All Q4 2013 and full year 2013 financial information is preliminary and unaudited; see preliminary earnings release dated January 13, 2014. |
![]() Key Take Aways Our company is achieving growth and significantly improved profitability Capabilities have been built to deliver long-term profitability Strategic growth drivers and opportunities have been identified and are being pursued Strong asset position is unique and leverage-able • Brands, IP, balance sheet, business model, human capital Our plan is solid and it is working 22 |
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Nautilus, Inc.
Reconciliation of Non-GAAP Financial Measure
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
Management considers EBITDA, a non-GAAP financial measure, to be useful for investors in evaluating our operating performance. We calculate EBITDA by adding income from continuing operations, plus (i) interest expense net of interest income, (ii) income tax expense and (iii) depreciation and amortization. A reconciliation of EBITDA to income from continuing operations is as follows (in millions).
2010 | 2011 | 2012 | 2013(2) | |||||||||||||
Income (loss) from continuing operations(1) | $ | (9.8 | ) | $ | 2.5 | $ | 10.6 | $ | 47.7-48.3 | |||||||
Interest expense (income), net | 0.1 | 0.4 | (0.1 | ) | 0.0 | |||||||||||
Income tax expense (benefit) of continuing operations | 0.6 | 0.7 | (0.2 | ) | (32.0)-(32.3 | ) | ||||||||||
Depreciation and amortization | 6.6 | 3.8 | 3.3 | 3.3 | ||||||||||||
EBITDA from continuing operations | $ | (2.5 | ) | $ | 7.4 | $ | 13.7 | (3) | $ | 19.0-19.4 | (3) |
(1) | Management does not include the results of discontinued operation in its calculation of EBITDA and, therefore, EBITDA was not reconciled to net income including discontinued operation. |
(2) | Full year 2013 financial information is preliminary and unaudited. |
(3) | May not add due to rounding. |
Nautilus, Inc.
Reconciliation of Non-GAAP Financial Measure
Net Income and Earnings Per Diluted Share Excluding a Partial Reversal of a
Valuation Allowance
Nautilus presents adjusted net income and earnings per diluted share results because management believes that due to the non-recurring nature of the partial reversal of a valuation allowance recorded against the Company’s deferred tax assets resulting in an income tax benefit, including the non-GAAP results assists investors in assessing the Company’s operational performance relative to its competitors and its historical financial performance.
Continuing Operations Income and Diluted EPS (as reported and excluding non-recurring items) (unaudited and in millions, except per share amounts):
Three Months Ended December 31, 2013 | ||||||||||||
Prelim Results (est range) (1) | Less non- recurring items(2) | Excluding non- (est range) | ||||||||||
Income from continuing operations | $ | 8.0-8.6 | $ | (1.1 | ) | $ | 9.1-9.7 | |||||
Diluted net income per share | $ | 0.25-0.27 | $ | (0.04 | ) | $ | 0.29-0.31 | |||||
Twelve Months Ended December 31, 2013 | ||||||||||||
Prelim Results (est range) (1) | Less non- recurring items(2) | Excluding non- (est range)(3) | ||||||||||
Income from continuing operations | $ | 47.7-48.3 | $ | 33.0 | $ | 14.6-15.2 | ||||||
Diluted net income per share | $ | 1.52-1.54 | $ | 1.05 | $ | 0.46-0.48 |
(1) | Full year and fourth quarter 2013 financial information is preliminary and unaudited. |
(2) | Such items were offset by the after-tax impact of an income tax benefit (expense) related to a partial reversal of a valuation allowance recorded against the Company’s deferred tax assets. |
(3) | May not add due to rounding. |