Fitness financials: Brunswick's Q1 profit drops 71 percent, Life Time Fitness, Nautilus, The Sports Club, Accell Group, GSI Commerce

Brunswick’s Q1 profit drops 71 percent

Despite a 3-percent rise in sales for its Life Fitness division, Brunswick Corp.’s (NYSE: BC) first-quarter profit plunged 71 percent, weighed down by weaker demand for its core boat products, as well as restructuring and other charges.

For the period ended March 29, net income dropped to $13.3 million, or $0.15 per share, compared with $45.6 million, or $0.50 per share, in the corresponding period a year ago.

Quarterly results were hurt by a loss of $0.07 per share on the planned sale of Baja boats and $0.09 per share in restructuring and other impairment charges. These were partially offset by a $0.10 per share investment sale gain. Year-ago results included restructuring charges of $0.06 per share and tax-related benefits of $0.03 per share.

Revenue dropped 3 percent to $1.35 billion, from $1.39 billion in the previous year.

The company’s fitness segment, comprised of Life Fitness, Hammer Strength and ParaBody, reported first-quarter sales of $149.2 million, up 3 percent from $145.0 million in the year-ago quarter. Segment operating earnings were $8.1 million for the first quarter of 2008, flat from the first quarter a year ago. Operating margins were 5.4 percent versus 5.6 percent in the year-earlier quarter.

“Sales growth was driven by a significant increase in commercial equipment sales, which were up nearly double digits. This was offset by a steep decline in the consumer segment, as individuals continue to defer purchasing discretionary items,” Brunswick Chairman and CEO Dustan McCoy said in a statement.

“Operating earnings and margins were affected by a shift in commercial product mix as the growth in strength equipment sales, which carry lower margins relative to cardiovascular equipment, was disproportionately higher than the growth in cardio sales,” he added.

Brunswick’s boat segment sales dropped 9 percent to $637.8 million, marine engine revenue slipped 1 percent to $566 million, and bowling and billiards revenue climbed 7 percent to $113.6 million.

Life Time Fitness’ Q1 profit up 23 percent

Life Time Fitness (NYSE: LTM) said its first-quarter profit rose 23 percent, aided by membership dues growth and higher in-center revenue.

Quarterly profit rose 23 percent to $17.4 million, or $0.44 per share, from $14.1 million, or $0.38 per share last year. Revenue rose 21 percent to $184.5 million from $153.1 million last year.

EBITDA for the first quarter grew 23.8 percent to $52.9 million from $42.7 million in 2007. As a percentage of total revenue, EBITDA was 28.7 percent in the first quarter, compared to 27.9 percent last year.

Membership rose 10 percent to 421,177, while dues rose 19 percent and enrollment feels rose 15 percent. In-center revenue rose 25.9 percent.

Cash flows from operations for the first quarter grew 26.4 percent to $49.3 million from $39.0 million in the prior-year period.

The company also raised 2008 earnings guidance, saying revenue growth will be driven by new center growth, higher membership and in-center revenue growth. It now expects earnings of $2.06 to $2.09 per share, from previous guidance of $2.05 to $2.08 per share.

Nautilus reorganizes business units

Nautilus (NYSE: NLS) said it has reorganized its business into three stand-alone units: direct, commercial and retail.

The three business units and Nautilus International will now report to Tim Joyce, senior vice president and general manager of Nautilus, who will oversee daily operations of these groups.

The direct business unit will be led by Vice President and General Manager Bill McMahon. The retail business unit will be led by Vice President and General Manager Jon Levin. The commercial business unit will be led by Vice President and General Manager Ken Fish.

Nautilus also announced that Doug Strom has been promoted to vice president and general manager of EMEA and Tracy Maloney to vice president and general manager of Asia Pacific/ Latin America.



The Sports Club narrows Q1 net loss

The Sports Club Company (Pink Sheets: SCYL.PK) reported a 6.5-percent increase in first-quarter revenue and narrowed its net loss.

Revenue for the quarter was $15.9 million compared to $15.0 million for the first quarter in 2007. Net loss for the quarter was $1.3 million, or $0.06 per basic and diluted share, compared to a net loss of $1.9 million, or $0.10 per basic and diluted share, last year.

The weighted average number of basic and diluted shares outstanding for the 2008 first quarter was 21.1 million shares compared to 19.9 million shares for the 2007 first quarter.

The Sports Club Company operates and owns sports and fitness complexes nationwide under the brand name The Sports Club/LA.



Accell Group reports higher 2008 sales and profit

Accell Group N.V. said in its general meeting of shareholders that its sales and profit in the first months of 2008 are higher than in 2007. The company is the parent of the Accell Fitness Division, Bremshey, Tunturi and BS&T.



The company said both sales and profit increased again due to higher sales of bicycles, bicycle parts and accessories in the first quarter. Fitness equipment sales, though, lagged in terms of expectations in the first quarter. This impact is relatively minor, it noted, as the fitness activities represent less than 10 percent of Accell Group’s total sales.



Accell will report quarterly earnings results on July 23.

Also, Accell declared a dividend of EUR 1.25 (USD $1.95) per outstanding ordinary share in either cash or shares. The payout ratio comes to 48.1 profit and the dividend yield to 5.0 profit, based on the year-end 2007 closing share price. The dividend will be payable on May 16 to shareholders of record on April 28.

GSI Commerce boasts 34-percent jump in Q1 revenue

GSI Commerce (Nasdaq: GSIC) said its revenue increased 34 percent to $195.5 million for the quarter ended March 29. Adjusted income from operations was $700,000, better than the company had expected.

Net loss for the quarter was $9.6 million, or $0.20 per share, compared to $2.3 million, or $0.05 per share, last year’s first quarter.

Loss from operations was $17.8 million this year compared to a loss of $4.8 million last year.

GSI expects 2008 sales of about $1 billion. Income from operations is expected to be in a range of a loss of $1.5 million to income of $1.5 million.

Stifel Nicolaus analyst Scott Devitt, who has a “Hold” rating on the stock, wrote in a client note that its business is holding up despite the economic slowdown.

The better-than-expected first-quarter results boosted GSI’s shares up $2.69, or 23.6 percent, to close at $14.07 on April 23.



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