Nautilus Inc (NLS) 2019 Q3 法說會逐字稿

Good day, and welcome to the Nautilus, Inc. Third Quarter 2019 Earnings Results Conference Call. Today's conference is being recorded.

美好的一天，歡迎來到 Nautilus, Inc.2019 年第三季度收益結果電話會議。今天的會議正在錄製中。

At this time, I would like to turn the conference over to Mr. John Mills of ICR. Please go ahead, sir.

此時，我想把會議轉交給ICR的John Mills先生。請繼續，先生。

Thank you. Good afternoon, everyone. Welcome to Nautilus' Third Quarter 2019 Conference Call. Participants on the call from Nautilus are Jim Barr, Chief Executive Officer; Bill McMahon, Special Assistant to the CEO; Chris Quatrochi, Senior Vice President, Innovation and Engineering; and Dave Wachsmuth, Senior Director of Finance.

謝謝。大家下午好。歡迎來到 Nautilus 2019 年第三季度電話會議。參加 Nautilus 電話會議的有首席執行官 Jim Barr；首席執行官特別助理 Bill McMahon； Chris Quatrochi，創新與工程高級副總裁；和財務高級總監 Dave Wachsmuth。

Our earnings release was issued earlier today and may be downloaded from our website at nautilusinc.com on the Investor Relations page. The earnings release includes a reconciliation of the non-GAAP financial measures mentioned in today's call to the most directly comparable GAAP measures. Also on today's call, we're going to be referring to a slide presentation deck that Jim will discuss. To access this presentation, if you would, please now go to our website at nautilusinc.com and the investor presentation will be under the Events and Webcasts section.

我們的收益發佈於今天早些時候發布，可從我們網站 nautilusinc.com 的投資者關係頁面下載。收益發布包括對今天呼籲中提到的非 GAAP 財務指標與最直接可比的 GAAP 指標的對賬。同樣在今天的電話會議上，我們將提到 Jim 將討論的幻燈片演示文稿。要訪問此演示文稿，如果您願意，請現在訪問我們的網站 nautilusinc.com，投資者演示文稿將在“活動和網絡廣播”部分下。

Remarks on today's conference call will include forward-looking statements within the meaning of the securities laws. These include statements concerning financial projections; operating trends; anticipated growth and profitability; anticipated timing and market acceptance of new product introductions; planned investments in strategic and operational initiatives and the anticipated or targeted results of such initiatives; expected growth of our user base; consumer and retail demand for our products and the impact of new product introductions and marketing campaigns on our future financial results; planned capital expenditures and anticipated results of new product, business development initiatives and strategic partnerships.

今天電話會議的評論將包括證券法含義內的前瞻性陳述。其中包括有關財務預測的報表；經營趨勢；預期的增長和盈利能力；新產品推出的預期時間和市場接受度；對戰略和運營舉措的計劃投資以及此類舉措的預期或目標結果；我們用戶群的預期增長；消費者和零售對我們產品的需求以及新產品推出和營銷活動對我們未來財務業績的影響；新產品、業務發展計劃和戰略夥伴關係的計劃資本支出和預期結果。

Forward-looking statements are subject to a number of risks and uncertainties, and actual results may differ materially from these statements. Additional factors that could cause Nautilus' actual results to differ materially from these forward-looking statements include weaker-than-anticipated demand for new and existing products; our ability to timely acquire inventory that meets our quality control standards from sole-sourced foreign manufacturers at acceptable costs; experiencing delays and/or greater-than-anticipated costs in connection with launches of new products; entry into new markets or strategic initiatives, including recurring revenue offerings; our ability to hire and retain key management personnel; changes in consumer fitness trends and our ability to anticipate and satisfy consumer preference in a timely manner; changes in the media consumption habits of our target consumers or the effectiveness of our media advertising; a decline in consumer spending due to unfavorable economic conditions and softness in the retail marketplace.

前瞻性陳述受許多風險和不確定因素的影響，實際結果可能與這些陳述存在重大差異。可能導致 Nautilus 的實際結果與這些前瞻性陳述存在重大差異的其他因素包括對新產品和現有產品的需求弱於預期；我們能夠以可接受的成本及時從單一來源的外國製造商處獲得符合我們質量控制標準的庫存；與新產品的發布有關的延遲和/或高於預期的成本；進入新市場或戰略計劃，包括經常性收入產品；我們僱用和留住關鍵管理人員的能力；消費者健身趨勢的變化以及我們及時預測和滿足消費者偏好的能力；我們目標消費者的媒體消費習慣或我們媒體廣告的有效性發生變化；由於不利的經濟條件和零售市場的疲軟，消費者支出下降。

For more information about these risks and uncertainties, please refer to today's earnings announcement and our most recent annual report on Form 10-K as supplemented by our quarterly report on Form 10-Q.

有關這些風險和不確定性的更多信息，請參閱今天的收益公告和我們最近的 10-K 表格年度報告，以及我們的 10-Q 表格季度報告。

Nautilus undertakes no obligation to update or publicly release any revision to forward-looking statements to reflect new information, events or circumstances after they were made or to reflect the occurrence of unanticipated events. All information and comments regarding our operating results pertain to our continuing operations unless otherwise noted.

Nautilus 沒有義務更新或公開發布前瞻性陳述的任何修訂，以反映新的信息、事件或情況，或反映意外事件的發生。除非另有說明，否則有關我們經營業績的所有信息和評論都與我們的持續經營有關。

And with that, it is my pleasure to turn the call over to Nautilus' CEO, Jim Barr.

因此，我很高興將電話轉給 Nautilus 的首席執行官吉姆巴爾。

Thank you, John. Good afternoon, everyone, and thank you for joining our call today. I have now been CEO of Nautilus for 90 days. My welcome to Nautilus has been energizing, my onboarding going well, and I am spending time systematically learning our businesses. While continuing my education, I am also balancing near-term decisive actions and holiday season execution while diving into a longer-term strategic review. So far, I'm very encouraged about the opportunities ahead for our company, and I'm convinced that we have the right raw materials for a good comeback story.

謝謝你，約翰。大家下午好，感謝您今天加入我們的電話會議。我現在擔任 Nautilus 的 CEO 已經 90 天了。我對 Nautilus 的歡迎一直充滿活力，入職過程順利，我正在花時間系統地學習我們的業務。在繼續接受教育的同時，我也在平衡近期的果斷行動和假期執行，同時深入進行長期戰略審查。到目前為止，我對我們公司未來的機遇感到非常鼓舞，而且我相信我們擁有合適的原材料來實現一個好的複出故事。

We have earned top-of-industry brand reputation over decades of innovative design, sourcing great products and standing behind them. As a result, these brands remain very strong in the market. In addition, we provide customers with great choice. They can choose from multiple modalities of equipment, they can choose their price points and features, from budget conscious to top-of-the-line, technology-laden models.

經過數十年的創新設計、採購優質產品並為其提供支持，我們贏得了行業頂級品牌聲譽。因此，這些品牌在市場上仍然非常強大。此外，我們為客戶提供了很好的選擇。他們可以從多種形式的設備中進行選擇，他們可以選擇自己的價位和功能，從精打細算的設備到頂級的、技術含量高的型號。

As an omnichannel company, choice even extends to multiple ways to buy: direct, at leading retailers and through commercial channels. The team has some of the best talent in the industry, and the culture is strong with little resistance to change, in contrast to many other growth transformations, even some I've witnessed firsthand. A positive development has been our differentiated digital platform, which is now manifesting itself in exciting product offerings entering the market.

作為一家全渠道公司，選擇甚至擴展到多種購買方式：直接購買、在領先零售商處購買以及通過商業渠道購買。該團隊擁有業內一些最優秀的人才，而且文化強大，幾乎沒有改變的阻力，這與許多其他增長轉型形成鮮明對比，甚至是我親眼目睹的一些。一個積極的發展是我們差異化的數字平台，它現在正在進入市場的令人興奮的產品中表現出來。

When I decided to take the position of CEO, I knew we would face significant challenges. I've confirmed the belief that my background in digital products and marketing, and my experience driving growth transformations at legacy brands in several industries in the face of technological disruption and changes in value proposition, is a strong fit for the areas that need improvement at Nautilus.

當我決定擔任首席執行官時，我知道我們將面臨重大挑戰。我已經確信，我在數字產品和營銷方面的背景，以及我在面對技術顛覆和價值主張變化時推動多個行業傳統品牌增長轉型的經驗，非常適合需要改進的領域鸚鵡螺。

Our recent results are indicative of there being a lot of work to do, but I'm convinced we can reclaim our leadership position in the fitness industry. Even though being CEO for a few months is not enough time to make a full and proper assessment of our overall business, especially in our busiest season, I thought it might be helpful to share a few initial high-level observations. First, our Direct business has been declining for several years, and thus, I do not expect it to recover in just a few quarters. There are multiple causes, including adjusting to evolving shopping habits and media consumption, which are changing at an accelerating pace.

我們最近的結果表明還有很多工作要做，但我相信我們可以重新奪回我們在健身行業的領導地位。儘管擔任 CEO 幾個月不足以對我們的整體業務進行全面和適當的評估，尤其是在我們最繁忙的季節，但我認為分享一些初步的高層觀察可能會有所幫助。首先，我們的直接業務多年來一直在下滑，因此，我預計它不會在短短幾個季度內恢復。原因有多種，包括適應不斷變化的購物習慣和媒體消費，這些都在加速變化。

We are actively mining insights from consumers and are making adjustments to better deliver the right marketing message to the right audience at the right time. Recently, based on extensive consumer insight work, we launched a brand positioning for Bowflex as well as a new advertising campaign, Stronger Every Day. The campaign better positions us for where the market is today. We have provided links to these TV spots in our materials to give you a sense of this positioning. We are just beginning to enter our heavier spending period and believe the campaign will resonate and be one important step to meeting this challenge. We have work to do to return this channel to profitable growth.

我們正在積極挖掘消費者的洞察力，並進行調整以更好地在正確的時間向正確的受眾傳遞正確的營銷信息。最近，基於廣泛的消費者洞察工作，我們推出了 Bowflex 的品牌定位以及新的廣告活動，Stronger Every Day。該活動使我們更好地定位了當今的市場。我們在材料中提供了這些電視廣告的鏈接，讓您了解這種定位。我們才剛剛開始進入支出增加的時期，相信該活動將引起共鳴，並成為迎接這一挑戰的重要一步。我們需要努力使該渠道恢復盈利增長。

Second, technology is driving our industry in a great direction for both customers and fitness companies. Through connected fitness, we know more about where they are in their fitness journeys. We can engage frequently with them to assist them in meeting their goals. We can help motivate users so they stick with it for longer. In short, we now have more ways to deliver on our long-standing mission to make fitness more attainable and motivate people to live healthier lives.

其次，技術正在推動我們的行業朝著對客戶和健身公司都有利的方向發展。通過互聯健身，我們可以更多地了解他們在健身之旅中所處的階段。我們可以經常與他們接觸，幫助他們實現目標。我們可以幫助激勵用戶，讓他們堅持更長時間。簡而言之，我們現在有更多方法來實現我們的長期使命，讓健身更容易實現，並激勵人們過上更健康的生活。

One current challenge is that this has attracted competition, at times making it more difficult for our messages to be heard when these entrants strongly outspend us to build their brands. We need to strive for strong and sustained innovation in overall fitness while making sure our brands get credit -- the credit they deserve for our connected fitness experience, which now spans software, content and machines. Ultimately, that experience still centers around a wide choice of reliable and attainable equipment across multiple modalities and price points, which we intend to continue to deliver.

當前的一個挑戰是，這引起了競爭，有時當這些進入者在建立他們的品牌上花費遠遠超過我們時，我們的信息更難被聽到。我們需要在整體健身方面努力實現強大而持續的創新，同時確保我們的品牌獲得榮譽——他們因我們的互聯健身體驗而應得的榮譽，這些體驗現在涵蓋軟件、內容和機器。最終，這種體驗仍然圍繞著多種方式和價位的可靠且可獲得的設備的廣泛選擇，我們打算繼續提供這些設備。

Third, one size does not fit all, which is why our product portfolio is so comprehensive, spanning several brands, exercise modalities and price points, providing many choices in home fitness versus 1 brand or 1 or 2 types of equipment. This also helps protect us against the inevitable up-and-down popularity of any particular type of equipment. Today, our digital product offerings are strong and differentiated. We are squarely and digitally connected to the space. However, I wish we were further along in getting the platform on more products in our broad portfolio. We're making progress, including several recent connected fitness launches I'll discuss on this call. But I will be looking to accelerate connected fitness through the portfolio, giving customers even better choices sooner.

第三，一種尺寸並不適合所有人，這就是為什麼我們的產品組合如此全面，涵蓋多個品牌、鍛煉方式和價位，提供家庭健身的多種選擇，而不是一個品牌或一兩種類型的設備。這也有助於保護我們免受任何特定類型設備不可避免的上下流行。今天，我們的數字產品產品強大且與眾不同。我們直接和數字化地連接到空間。但是，我希望我們能夠在我們廣泛的產品組合中為更多產品提供平台。我們正在取得進展，包括我將在本次電話會議上討論的最近幾項互聯健身發布。但我將尋求通過產品組合加速互聯健身，更快地為客戶提供更好的選擇。

Finally, as someone who has spent a lot of my career driving omnichannel growth, I am pleased we also give consumers great choices to buy. Our retail channel, in particular, has good growth potential, has been profitable and should provide a meaningful economic base while we correct and improve our direct channel.

最後，作為一個在我的職業生涯中花了很多時間推動全渠道增長的人，我很高興我們也為消費者提供了很好的購買選擇。特別是我們的零售渠道具有良好的增長潛力，已經盈利，並且在我們糾正和改善我們的直接渠道的同時應該提供有意義的經濟基礎。

These are some initial observations, but as mentioned, we have initiated a full assessment of our overall business. From this, we plan to create a new insights-driven, long-term, true north vision and multi-year strategic plan, which we will unveil and transition to during 2020. A durable vision and plan takes time to get right. However, I assure you, we won't wait for the plan to begin to move in the right direction.

這些是一些初步觀察，但如前所述，我們已經開始對我們的整體業務進行全面評估。據此，我們計劃制定一個新的洞察力驅動的、長期的、真正的北方願景和多年戰略計劃，我們將在 2020 年公佈並過渡到該計劃。持久的願景和計劃需要時間才能正確。但是，我向您保證，我們不會等待計劃開始朝著正確的方向發展。

I would now like to provide a quick overview of our third quarter 2019 results, discuss our business segments as well as our new product offerings and then turn the call over to Dave to review our financials in more detail. I will close with a few final remarks before opening up the call to your questions.

我現在想快速概述一下我們 2019 年第三季度的業績，討論我們的業務部門以及我們的新產品，然後將電話轉給 Dave 以更詳細地審查我們的財務狀況。在開始回答您的問題之前，我將以最後幾句話結束。

We experienced declines in both of our segments in the third quarter. The decline of our Direct segment is primarily related to our 37% reduction in advertising expense compared to the prior year. As discussed in prior calls, we intend to increase this ad spend in the fourth quarter to support new offerings and improved advertising and messaging.

我們在第三季度的兩個部門都經歷了下滑。我們直銷業務的下降主要是因為我們的廣告費用比上一年減少了 37%。正如之前的電話會議所討論的那樣，我們打算在第四季度增加廣告支出，以支持新產品和改進的廣告和消息傳遞。

Retail sales were down 27.1% from the same quarter in the prior year, primarily reflecting partial shipment delays until the beginning of the fourth quarter due to recently imposed tariffs and some weaknesses from Max Trainer sales in the segment. While our overall results in Direct segment have been disappointing, we have been pleased with the recent rollout of our new Max Total product. It has done well, and we are looking forward to its performance in the fourth quarter holiday season and the first quarter 2020 fitness season.

零售額較上年同期下降 27.1%，主要反映了由於最近徵收的關稅導致部分發貨延遲至第四季度初，以及 Max Trainer 在該領域的銷售疲軟。雖然我們在直接細分市場的整體業績令人失望，但我們對最近推出的新 Max Total 產品感到滿意。它做得很好，我們期待它在第四季度假期季和2020年第一季度健身季的表現。

This new trainer features the company's first integrated digital touch screen that directly connects the user to the features of our upgraded AI-powered JRNY digital platform. The Max Total also delivers a connected fitness experience, incorporating both a cardio and upper body workout in as few as 14 minutes, with customized, personalized coaching, driven by built-in machine learning capabilities.

這款新教練配備了公司首款集成數字觸摸屏，可將用戶直接連接到我們升級後的 AI 驅動的 JRNY 數字平台的功能。Max Total 還提供互聯健身體驗，在短短 14 分鐘內結合有氧運動和上半身鍛煉，並在內置機器學習功能的驅動下提供定制的個性化指導。

Last week, we relaunched our digital platform under the new JRNY brand. The name reflects our belief that fitness is a lifelong pursuit. It is our role to accompany users on this journey and help them stay with fitness for the long run. The new brand also makes it easier to enable a connected fitness experience across our portfolio of brands and modalities, converging into one digital platform that we expect to be leveraged throughout our product portfolio.

上週，我們以新的 JRNY 品牌重新啟動了我們的數字平台。這個名字反映了我們相信健身是終生的追求。在這段旅程中陪伴用戶並幫助他們長期保持健康是我們的職責。新品牌還可以更輕鬆地在我們的品牌和模式組合中實現互聯的健身體驗，融合到一個我們希望在我們的產品組合中得到利用的數字平台。

At its core, JRNY features an AI-driven true personalization engine that suggests customized workouts and adjusts to individual fitness levels, along with a friendly coaching vet, customers tell us feels a lot like having an on demand, one-on-one personal trainer. JRNY's adaptive coaching technology uses algorithms, data from an initial assessment and tracking from previous workouts to create personalized daily workouts based on the user's fitness goals. Each custom workout is adjusted automatically based on input about how the user is feeling, how much they improve and their past performance.

JRNY 的核心是一個由 AI 驅動的真正個性化引擎，可以建議定制鍛煉並根據個人健康水平進行調整，還有一位友好的教練獸醫，客戶告訴我們感覺就像有一個按需一對一的私人教練.JRNY 的自適應教練技術使用算法、初始評估數據和之前鍛煉的跟踪，根據用戶的健身目標創建個性化的日常鍛煉。每項自定義鍛煉都會根據用戶的感受、改進程度以及過去的表現等輸入進行自動調整。

In addition to the true personalization engine, JRNY features an array of choices to motivate and entertain during workouts. This starts with our proprietary Explore the World experience, which allows users to virtually train in locations across the globe, from the Irish countryside to the beaches of Australia, via high-definition video. This will launch featuring numerous locations, and we expect it to be available later this year.

除了真正的個性化引擎外，JRNY 還提供一系列選擇，以在鍛煉期間激勵和娛樂。這始於我們專有的 Explore the World 體驗，它允許用戶通過高清視頻在全球各地進行虛擬訓練，從愛爾蘭鄉村到澳大利亞海灘。這將在多個地點推出，我們預計將在今年晚些時候推出。

JRNY features an expanded library of trainer-led workouts based on a user's fitness level, personalized running and walking coaching for treadmill users and additional rewards to celebrate achievements and motivate users to complete their workouts. JRNY also gives users a curated matching music to matching the -- music matching their workout and access their streaming entertainment subscriptions, including Netflix, Amazon Prime Video and Hulu. JRNY is integrated onto the new Bowflex Max Total and is available via an app for selected Bowflex Results Series treadmills. It will be made available on more Bowflex, Nautilus and Schwinn equipment over time.

JRNY 擁有一個擴展的訓練庫，其中包含基於用戶健身水平的教練指導訓練、針對跑步機用戶的個性化跑步和步行指導以及用於慶祝成就和激勵用戶完成訓練的額外獎勵。JRNY 還為用戶提供精選的匹配音樂，以匹配他們的鍛煉和訪問他們的流媒體娛樂訂閱，包括 Netflix、Amazon Prime Video 和 Hulu。JRNY 集成到新的 Bowflex Max Total 中，可通過適用於選定 Bowflex Results 系列跑步機的應用程序使用。隨著時間的推移，它將在更多 Bowflex、Nautilus 和 Schwinn 設備上提供。

Before I leave the discussion of our digital platform, I'm excited to report that subscribers to JRNY are working out 70% more than non-subscribers, which is a great early indicator of the exciting ways we can achieve our noble mission through technology.

在我結束對我們數字平台的討論之前，我很高興地報告 JRNY 的訂閱者比非訂閱者多鍛煉 70%，這是一個很好的早期指標，表明我們可以通過技術實現我們崇高使命的令人興奮的方式。

Moving to the cycling category. I'm proud to say that in late October, we debuted the first-ever Bowflex indoor bike for the direct channel that delivers an excellent connected fitness experience. The Bowflex C6 bike features an open platform, so users can connect with our Explore the World app as well as third-party cycling apps, including Peloton and Zwift.

轉到自行車類別。我可以很自豪地說，在 10 月下旬，我們推出了有史以來第一款用於直接渠道的 Bowflex 室內自行車，可提供出色的互聯健身體驗。Bowflex C6 自行車採用開放式平台，因此用戶可以連接我們的 Explore the World 應用程序以及第三方自行車應用程序，包括 Peloton 和 Zwift。

We are very excited to now offer bike users a more attainable and affordable option under the Bowflex brand. In fact, the Bowflex C6 delivers a great connected fitness experience at less than half the price of some of our competitors.

我們很高興現在可以在 Bowflex 品牌下為自行車用戶提供更容易獲得和負擔得起的選擇。事實上，Bowflex C6 以不到我們一些競爭對手一半的價格提供了出色的互聯健身體驗。

We are also continuing to expand our digital platform across our portfolio with a new Schwinn IC4 bike and the 810 treadmill, both of which we also launched in October.

我們還繼續通過新的 Schwinn IC4 自行車和 810 跑步機在我們的產品組合中擴展我們的數字平台，這兩款產品我們也在 10 月推出。

While we are very excited about these new offerings, we still have a lot of work to do to improve the business. We are developing actionable insights, meaningful innovation and increasing our digital focus in marketing and in our products. I look forward to speaking more about this transformation in the coming months. In the meantime, we will do all we can to shore up our short-term financial performance to give us the runway to execute our transformative strategy.

雖然我們對這些新產品感到非常興奮，但要改善業務，我們還有很多工作要做。我們正在開發可操作的見解、有意義的創新，並增加我們在營銷和產品中的數字重點。我期待在接下來的幾個月裡更多地談論這種轉變。與此同時，我們將盡我們所能來支撐我們的短期財務業績，為我們提供執行轉型戰略的跑道。

And now, Dave will provide an overview of the financials for the quarter. Dave?

現在，Dave 將概述本季度的財務狀況。戴夫？

Thank you, Jim. I would like to review the details of our financial results for the third quarter of 2019. Net sales for the third quarter totaled $61.7 million, a decrease of 32.2% as compared to the same period in the prior year, reflecting a 44.1% decline in Direct segment sales and a 27.1% decrease in the Retail segment.

謝謝你，吉姆。我想回顧一下我們 2019 年第三季度財務業績的細節。第三季度淨銷售額總計 6170 萬美元，與去年同期相比下降 32.2%，反映了直接部門銷售額下降 44.1% 和零售部門下降 27.1%。

For the first 9 months of 2019, net sales were $205.1 million, down 27.1% compared to the same period last year. Third quarter gross margins in the Direct segment decreased to 38.3% compared to 57.3% in the same quarter of last year, and Retail segment margins declined to 27.1% compared to 34.7% in the same quarter of last year.

2019 年前 9 個月，淨銷售額為 2.051 億美元，同比下降 27.1%。第三季度直營業務的毛利率從去年同期的 57.3% 下降至 38.3%，零售業務的利潤率從去年同期的 34.7% 下降至 27.1%。

Margins in both segments were negatively impacted by unfavorable product mix, coupled with unfavorable overhead absorption related to the decline in sales. On an overall basis, total company gross margins for the third quarter of 2019 were 30.9% versus 42.3% in the same period of the prior year, reflecting the lower rate in both segments.

這兩個部門的利潤率都受到不利的產品組合以及與銷售額下降相關的不利管理費用吸收的負面影響。總體而言，2019 年第三季度公司總毛利率為 30.9%，而去年同期為 42.3%，反映出這兩個領域的毛利率均有所下降。

For the first 9 months of 2019, gross margins were 35.3%, a decline of 11.3% from 46.6% in the first 9 months of the same period last year. Total operating expenses for the third quarter of 2019 as a percentage of net sales increased to 44.3% from 35.5% in the same period last year, primarily reflecting the decrease in sales.

2019年前9個月，毛利率為35.3%，較去年同期的46.6%下降11.3個百分點。2019 年第三季度總運營費用占淨銷售額的百分比從去年同期的 35.5% 上升至 44.3%，主要反映銷售額下降。

Total operating expenses for the first 9 months of 2019 as a percentage of sales were 85.9% as compared to 40.1% in the same prior period. Operating expenses for the first 9 months of 2019 included $72 million of goodwill and intangible impairments. Sales and marketing expense for the third quarter of 2019 was $17.5 million or 28.3% of net sales as compared to $20.6 million or 22.7% of net sales in the same period last year. The decreased dollar spending reflected a reduction in media spend, partially offset by increased advertising production costs. The increase in sales and marketing as a percentage of sales reflects the decrease in sales.

2019 年前 9 個月的總運營費用佔銷售額的百分比為 85.9%，而去年同期為 40.1%。2019 年前 9 個月的運營費用包括 7200 萬美元的商譽和無形資產減值。2019 年第三季度的銷售和營銷費用為 1750 萬美元，占淨銷售額的 28.3%，而去年同期為 2060 萬美元，占淨銷售額的 22.7%。美元支出的減少反映了媒體支出的減少，部分被廣告製作成本的增加所抵消。銷售和營銷佔銷售額百分比的增加反映了銷售額的下降。

For the first 9 months of 2019, sales and marketing expenses totaled $69.1 million or 33% of net sales compared to $79.5 million or 28.2% of net sales for the same period in the prior year, with lower media spend and financing fees being partially offset by increased advertising production costs.

2019 年前 9 個月，銷售和營銷費用總計 6910 萬美元，占淨銷售額的 33%，上年同期為 7950 萬美元，占淨銷售額的 28.2%，媒體支出和融資費用的減少被部分抵消通過增加廣告製作成本。

General and administrative expenses were $6.7 million or 10.9% of net sales for the third quarter of 2019, which compares to $7.5 million or 8.2% of net sales in the same period last year. The decreased dollar spending in G&A primarily reflects lower litigation expense.

2019 年第三季度的一般和行政費用為 670 萬美元，占淨銷售額的 10.9%，而去年同期為 750 萬美元，占淨銷售額的 8.2%。G&A 美元支出的減少主要反映了較低的訴訟費用。

General and administrative expenses for the first 9 months of 2019 as a percentage of net sales totaled 11.6% as compared to 7.4% for the same prior period. The increase in G&A as a percentage of sales reflects the decrease in sales as well as higher litigation expense and a legal settlement completed in the second quarter of the current year.

2019 年前 9 個月的一般和管理費用占淨銷售額的百分比為 11.6%，而上年同期為 7.4%。G&A 佔銷售額百分比的增加反映了銷售額的減少以及訴訟費用的增加以及本年度第二季度完成的法律和解。

Research and development costs in the third quarter of 2019 were $3.1 million or 5.1% of net sales compared to $4.2 million or 4.6% of net sales in the same period last year. The dollar decrease primarily reflects an increase in internal capitalized labor and a reduction in third-party app development spending.

2019 年第三季度的研發成本為 310 萬美元，占淨銷售額的 5.1%，而去年同期為 420 萬美元，占淨銷售額的 4.6%。美元下降主要反映了內部資本化勞動力的增加和第三方應用程序開發支出的減少。

Research and development expenses for the first 9 months of 2019 as a percentage of net sales totaled 5.5% as compared to 4.5% for the same prior period.

2019 年前 9 個月的研發費用占淨銷售額的百分比為 5.5%，而上年同期為 4.5%。

Operating loss for the third quarter of 2019 was $8.3 million as compared to operating income of $6.2 million in the same quarter of last year. The decrease reflects the decline in sales and gross margin rates along with increases in advertising production costs, partially offset by lower advertising expense.

2019 年第三季度的營業虧損為 830 萬美元，而去年同期的營業收入為 620 萬美元。這一下降反映了銷售額和毛利率的下降以及廣告製作成本的增加，部分被較低的廣告費用所抵消。

EBITDA loss from continuing operations in the third quarter of 2019 was $5.5 million versus income of $8.5 million for the same quarter of the prior year. For the first 9 months of 2019, operating loss was $103.8 million as compared to operating income of $18.1 million in the same prior period.

2019 年第三季度持續經營業務的 EBITDA 虧損為 550 萬美元，而去年同期的收入為 850 萬美元。2019 年前 9 個月，營業虧損為 1.038 億美元，而上年同期營業收入為 1810 萬美元。

Year-to-date operating loss includes goodwill and intangible impairments of $72 million in the second quarter. Loss from continuing operations for the third quarter of 2019 was $10.6 million or minus $0.36 per diluted share as compared to income of $4.5 million or $0.15 per diluted share for the same period last year.

年初至今的經營虧損包括第二季度 7200 萬美元的商譽和無形資產減值。2019 年第三季度持續經營虧損為 1060 萬美元或稀釋後每股收益減去 0.36 美元，而去年同期的收入為 450 萬美元或稀釋後每股收益為 0.15 美元。

For the first 9 months of 2019, loss from continuing operations was $97.8 million or $3.30 per diluted share as compared to income of $13.7 million or $0.45 per diluted share in the same period last year. The effective tax rate for the third quarter of 2019 was minus 21.9% compared to 29.3% in the same period last year.

2019 年前 9 個月，持續經營虧損為 9780 萬美元或攤薄後每股收益 3.30 美元，而去年同期的收入為 1370 萬美元或攤薄後每股收益 0.45 美元。2019 年第三季度的有效稅率為負 21.9%，而去年同期為 29.3%。

Tax expense in the current year quarter included a $3.9 million valuation allowance against the company's deferred tax assets to reduce the assets to anticipated realizable value based on our recent financial performance.

本年度季度的稅收費用包括對公司遞延稅資產的 390 萬美元估值備抵，以根據我們最近的財務業績將資產減少到預期的可變現價值。

Total net loss including discontinued operations for the third quarter of 2019 was $10.7 million or minus $0.36 per diluted share, which includes a $0.1 million loss net of taxes from discontinued operations. This compares to the third quarter last year when we reported total net income including discontinued operations of $4.3 million or $0.14 per diluted share, which included a net loss from discontinued operations of $0.2 million.

2019 年第三季度，包括終止經營在內的總淨虧損為 1070 萬美元，或減去每股攤薄收益 0.36 美元，其中包括來自終止經營的 10 萬美元稅後淨虧損。相比之下，去年第三季度我們報告的淨收入總額為 430 萬美元，包括終止經營業務或每股攤薄收益 0.14 美元，其中包括來自終止經營業務的淨虧損 20 萬美元。

Year-to-date net loss for 2019 totaled $98.1 million or $3.31 per share versus income of $13.3 million or $0.44 per diluted share for the first 9 months of 2018.

2019 年年初至今的淨虧損總計 9810 萬美元或每股 3.31 美元，而 2018 年前 9 個月的收入為 1330 萬美元或每股攤薄收益 0.44 美元。

Turning now to our segment results. Net sales for the Direct business totaled $16.2 million for the third quarter of 2019, a 44.1% decrease over the same quarter last year. The decline was primarily from lower sales of Max Trainer products and was related to a 37% reduction in advertising expense compared to the prior year quarter as the company prepared to increase spend on a new advertising campaign in the fourth quarter of 2019. 2019 year-to-date sales of $83.7 million in the segment were down 38% year-over-year.

現在轉向我們的細分結果。2019 年第三季度直接業務的淨銷售額總計 1620 萬美元，比去年同期下降 44.1%。下降的主要原因是 Max Trainer 產品的銷售額下降，並且與廣告費用相比去年同期減少 37% 有關，因為公司準備在 2019 年第四季度增加新廣告活動的支出。2019 年初至今該部門的銷售額為 8370 萬美元，同比下降 38%。

Gross margin for the Direct business declined to 38.3% for the third quarter of 2019 compared to 57.3% in the same quarter of last year due to unfavorable overhead absorption related to lower sales, coupled with unfavorable product mix due to lower Max Trainer sales.

直接業務的毛利率從去年同期的 57.3% 下降至 2019 年第三季度的 38.3%，原因是與銷售額下降相關的不利管理費用吸收，以及 Max Trainer 銷售額下降導致的不利產品組合。

Operating loss for the third quarter of 2019 in our Direct business was $8.7 million compared to a loss of $1.4 million in the same quarter of the prior year. The operating loss was negatively impacted by the lower net sales and gross margins in the third quarter of 2019, partially offset by reduced advertising expenses.

2019 年第三季度，我們直接業務的營業虧損為 870 萬美元，而去年同期為虧損 140 萬美元。營業虧損受到 2019 年第三季度較低的淨銷售額和毛利率的負面影響，部分被廣告費用的減少所抵消。

Year-to-date 2019 operating loss for the Direct segment totaled $19.6 million compared to income of $10.7 million in the same prior year period.

2019 年年初至今，直接部門的經營虧損總計 1,960 萬美元，而去年同期的收入為 1,070 萬美元。

Net sales in our Retail segment for the third quarter of 2019 were $44.8 million, a decrease of 27.1% compared to $61.5 million in the third quarter of last year. The decrease primarily reflected the delays in product placements until the beginning of the fourth quarter of 2019 resulting from recently imposed tariffs as well as a decline in Max Trainer product sales.

我們零售部門 2019 年第三季度的淨銷售額為 4480 萬美元，與去年第三季度的 6150 萬美元相比下降了 27.1%。這一下降主要反映了由於最近徵收的關稅以及 Max Trainer 產品銷量下降導致產品植入延遲到 2019 年第四季度初。

Gross margins for the Retail business decreased by 760 basis points to 27.1% in the third quarter of 2019 as compared to 34.7% for the prior period, mostly from unfavorable product mix and unfavorable overhead absorption related to lower sales.

零售業務的毛利率在 2019 年第三季度下降 760 個基點至 27.1%，而上一季度為 34.7%，這主要是由於不利的產品組合和與銷售額下降相關的不利間接費用吸收。

Year-to-date 2019 gross margins for Retail were 23.9%, down 820 basis points versus the same period in the prior year, primarily driven by similar factors.

2019 年初至今的零售毛利率為 23.9%，與上年同期相比下降 820 個基點，主要受類似因素的推動。

In the third quarter of 2019, operating income for the Retail business totaled $4.8 million as compared to income of $12.7 million in the same period of last year. The decrease is primarily attributable to the lower sales and gross margin rates. Year-to-date 2019 operating income for the Retail business totaled $3.8 million versus $20.2 million for the same period in the prior year.

2019 年第三季度，零售業務營業收入總計 480 萬美元，而去年同期為 1270 萬美元。下降的主要原因是較低的銷售額和毛利率。2019 年年初至今零售業務的營業收入總計 380 萬美元，而去年同期為 2020 萬美元。

Now turning to the consolidated balance sheet. Cash totaled $5.8 million as of September 30, 2019, with $20.3 million of debt. This compares to $63.5 million in cash and marketable securities and debt of $32 million at December 31, 2018. The company had $12.7 million available for borrowing on its line of credit as of September 30, 2019.

現在轉向合併資產負債表。截至 2019 年 9 月 30 日，現金總額為 580 萬美元，債務為 2030 萬美元。相比之下，截至 2018 年 12 月 31 日，現金和有價證券為 6350 萬美元，債務為 3200 萬美元。截至 2019 年 9 月 30 日，該公司有 1270 萬美元可用於信用額度借款。

Inventories were $50.1 million as of September 30, 2019, compared to $68.5 million at December 31, 2018, and $55.5 million at September 30, 2018. The decreases primarily reflect our efforts to reduce inventories from the higher-than-desired levels we ended at in December of 2018. Trade payables were $38.5 million as of September 30, 2019, compared to $87.3 million at the end of 2018, primarily reflecting seasonality of purchases.

截至 2019 年 9 月 30 日，庫存為 5010 萬美元，而 2018 年 12 月 31 日為 6850 萬美元，2018 年 9 月 30 日為 5550 萬美元。減少主要反映了我們努力從 2018 年 12 月結束時高於預期的水平減少庫存。截至 2019 年 9 月 30 日，貿易應付賬款為 3850 萬美元，而 2018 年底為 8730 萬美元，主要反映了採購的季節性。

Capital expenditures totaled $6.6 million for the 9 months ended September 30, 2019, with spending primarily on new software systems and production tooling and equipment. We anticipate full year CapEx to be in the range of $8 million to $10 million.

截至 2019 年 9 月 30 日的 9 個月，資本支出總計 660 萬美元，主要用於新軟件系統以及生產工具和設備。我們預計全年資本支出將在 800 萬至 1000 萬美元之間。

At this time, I'd like to turn the call back over to Jim for his final comments. Jim?

此時，我想將電話轉回給吉姆，徵求他的最終意見。吉姆？

Thank you, Dave. Nautilus is a company with multiple strong brands, including Bowflex, Nautilus, Octane Fitness and Schwinn, which are among the most recognized fitness brands in the world, and our equipment is known for its tremendous results. We now need to combine our improving product offerings with advertising and messaging that delivers the right message to our customers at the right point of contact. We also need to continue launching innovative products, drive connected fitness across our portfolio and keep improving our digital platform.

謝謝你，戴夫。Nautilus 是一家擁有多個強大品牌的公司，包括 Bowflex、Nautilus、Octane Fitness 和 Schwinn，這些都是世界上最知名的健身品牌，我們的設備以其巨大的效果而聞名。我們現在需要將我們改進的產品供應與廣告和信息相結合，以便在正確的聯繫點向我們的客戶傳遞正確的信息。我們還需要繼續推出創新產品，在我們的產品組合中推動互聯健身，並不斷改進我們的數字平台。

Our efforts to rightsize the business announced in July are progressing, and we expect to save approximately $6 million in workforce and shared support cost reductions in 2020.

我們在 7 月宣布的調整業務規模的努力正在取得進展，我們預計到 2020 年將節省約 600 萬美元的勞動力和共享支持成本。

During the fourth quarter, we expect to achieve positive cash flow from operations and positive EBITDA from continuing operations. There's a lot of work to do. This turnaround is not going to occur overnight. However, I expect we will make good progress each quarter, and I look forward to telling you about it as we do.

在第四季度，我們預計將實現正的運營現金流和正的持續運營 EBITDA。有很多工作要做。這種轉變不會在一夜之間發生。然而，我希望我們每個季度都能取得良好進展，我期待著像我們一樣告訴你。

Our entire company is aligned in our goals and the belief that we will restore Nautilus to its leadership position in the fitness industry.

我們整個公司都與我們的目標和信念保持一致，即我們將使 Nautilus 恢復其在健身行業的領導地位。

And now I'd like to open up the call to your questions. Operator?

現在我想打開你的問題的電話。操作員？

(Operator Instructions) The first question is from Michael Swartz of SunTrust. Please go ahead.

（操作員說明）第一個問題來自 SunTrust 的 Michael Swartz。請繼續。

Just wanted to start off with the Retail side of the business. Just trying to understand what exactly occurred in the quarter with regard to the tariffs. Was this something related to cancellation of direct import orders and you were forced to import them yourself? Or maybe just help us understand that, I guess. And maybe also how much in revenue that shifted between the quarters?

只是想從業務的零售方面開始。只是想了解本季度在關稅方面究竟發生了什麼。是不是和直接進口訂單取消，被迫自己進口有關？或者也許只是幫助我們理解這一點，我想。也許還有多少收入在兩個季度之間轉移了？

Yes, this is Bill. So the impact was not really cancellation of orders so much as renegotiating in light of the new cost structure related to the tariff imposition. And the biggest challenge was there was really no runway imposed to allow us time to do this. In fact, we had product on the water that was already subject to the increased tariff at the time it was announced. So it was a bit of scrambling.

是的，這是比爾。因此，影響並不是真正取消訂單，而是根據與關稅徵收相關的新成本結構重新談判。最大的挑戰是真的沒有跑道讓我們有時間去做這件事。事實上，我們的水上產品在宣佈時已經受到增加關稅的影響。所以有點手忙腳亂。

I can tell you that those shipments, which I believe, Dave, was $6 million -- roughly $6 million impacted, have already shipped in Q4. So it really was literally down to the hours of trying to hit the deadline to make Q3 still with all the renegotiation that had to happen.

我可以告訴你，戴夫，我相信這些出貨量為 600 萬美元——大約 600 萬美元受到影響，已經在第四季度出貨了。所以這真的是為了在最後期限前完成所有必鬚髮生的重新談判而使第三季度仍然存在的時間。

Okay, that's great. And then I know we're in early days here as part of this turnaround in new product and connected fitness platform. But have you given any thought to what the margin structure of this business should look like longer term? I know there's some targets that were put out years ago, but just trying to see if you have any general thoughts on that.

好的，那太好了。然後我知道我們處於早期階段，作為新產品和互聯健身平台轉變的一部分。但是您是否考慮過該業務的長期利潤結構應該是什麼樣子？我知道有一些目標是幾年前提出的，但只是想看看您是否對此有任何一般性想法。

No, I don't think we have anything really to share at this point. I mean, it would be part of our true north strategic planning to take a look at the trade-offs we have. Obviously, there are impacts, positive and negative, to connected fitness. You've got large screens that constitute a larger part of the cost of goods sold, but then you also have revenue streams that weren't in the original model. We have our own internal view of that, but we've not gotten to the point where we would share any of that.

不，我認為我們目前沒有什麼真正可以分享的。我的意思是，看看我們的權衡取捨將是我們真正的北方戰略規劃的一部分。顯然，互聯健身會產生積極和消極的影響。你有大屏幕，佔銷售成本的很大一部分，但你也有原始模型中沒有的收入流。我們對此有自己的內部觀點，但我們還沒有達到可以分享任何觀點的地步。

The next question is from George Kelly of Imperial Capital.

下一個問題來自帝國資本的喬治凱利。

So more questions on the Retail side. It's -- that segment has been a bit weak now for a few quarters. So just wondering if there's anything else you can talk to. I don't know if it's the category has seen more pressure or there's too much retail inventory or a loss of share. Or just wondering if you could go into more sort of depth about what else has -- now that you've been here for several months, if there's any other observations about the Retail business?

所以更多關於零售方面的問題。它是 - 這個部分現在已經有幾個季度有點疲軟了。所以只是想知道是否還有什麼可以聊的。我不知道是該類別承受了更多壓力，還是零售庫存過多或份額流失。或者只是想知道您是否可以更深入地了解其他情況 - 既然您已經在這裡待了幾個月，是否還有關於零售業務的其他觀察結果？

Yes, sure. This is Dave. So I think aside from the -- I mean, I think in the first half of the year, there was the high level of channel inventory, which we have talked about in previous calls. And that has fixed itself. And aside from the tariff issue, the one other dynamic going on is just -- is Max Trainer within the channel. And I think just some of our -- since it's been selling through a little slower in the first half of the year and a little bit end of last year, I think the customers have just been more conservative about how much inventory they want to take on.

是的，當然。這是戴夫。所以我認為除了 - 我的意思是，我認為在今年上半年，渠道庫存水平很高，我們在之前的電話會議中已經談到了這一點。這已經解決了。除了關稅問題之外，另一個正在發生的動態就是 - 渠道內的 Max Trainer。而且我認為只是我們的一些 - 因為它在今年上半年和去年年底的銷售速度有點慢，我認為客戶對他們想要多少庫存更加保守在。

And does Max Trainer still represent a pretty material portion of your Retail business?

Max Trainer 是否仍然代表您零售業務的重要部分？

I mean it's material.

我的意思是它是物質的。

Yes. Okay. Okay. And then -- so I guess, just as you look forward in Retail then, I mean, should the fourth quarter -- is it too soon to expect kind of a return to more flattish or positive revenue growth? Or what's your forward outlook in the Retail business?

是的。好的。好的。然後——所以我想，就像你對零售業的展望一樣，我的意思是，第四季度——現在預計收入會恢復到更平穩或正的增長還為時過早嗎？或者您對零售業務有何展望？

Yes, we're not providing guidance actually on the top line in the segment at this point. But I think -- I mean, in general, I think the normal seasonality would apply, as well as those shipments that didn't happen in Q3 are definitely rolled into Q4.

是的，目前我們實際上並未在該細分市場的頂線提供指導。但我認為——我的意思是，總的來說，我認為正常的季節性會適用，而那些在第三季度沒有發生的出貨量肯定會進入第四季度。

Okay, okay. And then next question for me, just on the balance sheet. Can you -- that was helpful. I think I heard you say positive cash flow from operations in the fourth quarter. Anything else you can share just about your expected inventory at year-end or availability on your facility? Anything else just would be helpful.

好吧好吧。然後是我的下一個問題，就在資產負債表上。你能-- 這很有幫助。我想我聽到你說第四季度的運營現金流為正。關於年底的預期庫存或設施的可用性，您還有什麼可以分享的嗎？其他任何事情都會有所幫助。

Sure. With regards to the facility, the availability is based on the amount of working capital, primarily accounts receivable and inventory we have. And generally, seasonality-wise, we end up with a higher amount of accounts receivable at the end of the year. So that should be positive in that regard.

當然。關於設施，可用性取決於營運資金的數量，主要是我們擁有的應收賬款和存貨。一般來說，就季節性而言，我們最終會在年底收到更多的應收賬款。所以在這方面應該是積極的。

On the inventory side, we know we -- as we said, we've finished high last year. And our goal -- internal goal is to drop that by around $10 million at the end of this year.

在庫存方面，我們知道我們——正如我們所說，我們去年的收盤價很高。我們的目標 - 內部目標是在今年年底將其減少約 1000 萬美元。

Okay, okay. Drop that $10 million versus the close to 7 -- so inventory could come back up in the third quarter?

好吧好吧。將 1000 萬美元降到接近 7 美元——這樣存貨會在第三季度回升嗎？

Correct. Yes, because you got to remember that we're still -- we still have -- the fitness season continues on into Q1. So we still have enough inventory position at the end of December to support that.

正確的。是的，因為你必須記住，我們仍然 - 我們仍然 - 健身季一直持續到第一季度。因此，我們在 12 月底仍有足夠的庫存頭寸來支持這一點。

There are no further questions at this time. I would like to turn the floor back over to Jim Barr, CEO, for closing comments.

目前沒有其他問題。我想將發言權轉回給首席執行官 Jim Barr，以徵求結束意見。

Thank you for joining our call today and your continued interest in Nautilus. We look forward to providing you with another update on the business in a few months on our fourth quarter earnings call. Have a great rest of the day, onwards and upwards.

感謝您今天加入我們的電話會議以及您對 Nautilus 的持續關注。我們期待在幾個月後的第四季度財報電話會議上為您提供另一項業務更新。好好休息一天，向前和向上。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有美好的一天。