hi everyone...
another disapointing stock performance following another
stellar quarter. After listening to the conference call,
I believe the reason we didn't get a boost is because of
extremely poor eps guidance provided by management. The
concern here is that this is the seasonally week quarter.
But to the defense of management, their direct sales model
provides little visibility... so I have no idea where the
estimates will be but it seems that as long as management
doesn't provide any better guidance, the scary cats will
avoid DFXI stock. quite unfortunate... At least, management
should PRE-ANNOUNCE AS SOON AS they realize they are going
to trounce the estimate... their attitude is exceedingly
defensive... recap of conference call highlights provided
below.
highlights and notes from the conference call:
1) revenues up 64% over previous year due to increase
sales across all product lines, including stronger than
anticipated growth for bowflex line.
2) ecommerce sales =5mil up 28% over previous quarter.
recently introduced online financing. expect to see number
of finance purchases grow.
3) nautilus represent 11% of total sales at 4.4 million,
up 10% from last year for seasonally low quarter.
4) cash up about 11 million in 1 quarter.
5) DSO remain constant at around 2 days for direct division
and 77 for Nautilus.
6) past december, roll out of sleep system. Initial consumer
response was very positive. Sleep system is on track to
represent about 5% of sales by the end of the year.
7) shipment of bowflex growing beyond expectation.
8) over 238000 customers.
9) expand by feeding new fithness nautilus branded products
through direct sales system.
10) Q1 congrads! Rev going forward? historically, 2nd
quarter most challenging (what a pathethic answer!!!!!!
can't the management turn things positive?). G&A going
forward? in the 4.5% and then level out... building infra-
structure on ecommerce side. TV is driving people to web-
site.
11)Q2 congrads! Gross margin line 74-75%; anything
unusual in cost of goods line? two things: exceptional
quarter for direct sales side. Nothing unusual...
distribution center in Nevada fulling functioning and
consumers buying higher priced products when using the
web... Nautilius lost money? yes, around 170000$.
Major shows lead to extra costs. Expect to be profitable
in 2nd half. Bookings related to new line of Nautilus
product? will start shipping in late June. On commercial
side (new Nitro line): positive reception from industry.
12) Q3: Great quarter but how the hell will be able to
better forecast you guys? After 2nd Q, will be able
to give better quarter, but can't say whether only a
a spike in consumer demand... THIS ANALYST IS PISSED BY
GUIDANCE OF COMPANY. Company just doesn't want to forecast
anything... Leaving analysts IN THE DARK. POOR MANAGEMENT
RESPONSE TO BASIC QUESTIONS.
13) Q4: Are bed sales doing better than expected? In line
with where the company would like to see them... on target.
Absolute level of sales is better than expected.
Acquisitions? (nothing close at hand)
14) Q5: Nautilus sleep are 4% this Q? don't say but
internally satisfied. 25 million sales for Nautilus sales
this year? this isn't too aggressive...
15) Q6: convesion rates higher than expected last Q,
did they decline this Q? converting quicker due to
e-commerce. WHat can you say about the first 2 weeks of
Q2? any changes in product demand? need another month
into the Q to see where we will be... Building quite a
cash position? war chest? keep our eyes open for
acquisitions... nothing specific. Great Q. |
