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Nautilus Inc. Message Board

  • sblazo1 sblazo1 Feb 15, 2006 11:06 AM Flag


    Astral, since you are really focusing on the inventory issues do you have info on the Sept2005 to Dec2005 inventory? I see only Sept 2004 to Sept 2005 mentioned. Also finished goods inventory is somewhat flexible in that parts problems can cause finished goods to magically become wip when a problem is found. Not all companies are real careful about wip and finished goods distinctions (mine in particular). Also I don't see nls inventory even in Sept 2005 as being that large, what is it about 1.5 months or so? Also sold another 2000 shs at $17.15 this morning, still have too much, small profit.

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    • So anyhow the turnover time increased from a little more than 60 days in 2004 to almost 100 days in 2005. That is a very substantial increase in a short time. Are they making too much stuff, or selling too little? Management? Helloooooo?

      Another problem is the money tied up in the cost of that extra inventory. The increase over y/e 2005 inventory was nearly 50 million bucks. That's more than two years earnings (!) at the recent 70 cent per share figure.

      What's up? Why is so much shareholder money sitting in warehouses? Has management given an explanation for this?

    • There's no breakdown into finished goods vs wip vs parts for December, because the Q hasn't been filed yet. We have press-release numbers for total inventories.

      Based on the press-release numbers, the time to turn over inventory was drastically longer in 2005, compared to 2004:

      Dec 31, 2005 ... $96 million
      Dec 31, 2004 ... $49 million

      Cost of sales:
      2005 ... 351 million
      2004 ... 279 million

      So the inventory turnovers per year were ...
      2005 ... 351/96 = 3.7 times
      2004 ... 279/49 = 5.7 times

      That's a drastic slowdown in 2005.

      You really can't expect management to draw attention *toward* this sort of thing in a conference call that they control.

      • 2 Replies to astral_tsar
      • Theanks for the data Astral. However the lower turns are pretty much a forgone conclusion from the manufacturing problems, don't you think (bad parts higher COGS etc)? If they correct them and there is no smoke and mirrors then these things should improve, don't you think? I tend to think whether they have good products that sell well or not as more important in the long run, you seem to be an "operational excellance/balance sheet" fan, not that theres anything wrong with that to quote Seinfeld (and I admit you need both).

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