Medway, MA — Cybex International Inc.'s second quarter net sales and net income were down in the second quarter compared to the same period last year, mostly due to a sudden drop in sales at the end of March, Cybex Chairman and CEO John Aglialoro said in a conference call with analysts last month.
Net sales were $33.1 million, 4.6 percent lower than the $34.7 million for the corresponding 2007 period. Net income was $128,000 compared to $1.1 million for the corresponding 2007 period.
“At this moment, serious issues of credit, debt levels, consumer spending attitudes, and commodity prices are affecting the global economy, the U.S. economy, our fitness industry and, certainly, Cybex,” Aglialoro said in the call. “For now, I'll restate what was reported at this meeting at the last quarter in April, and that is that the orders dropped suddenly at the end of March, affecting second quarter results.”
In the second quarter, cardiovascular equipment sales were down about 8 percent to $17.3 million, Art Hicks, president and COO of Cybex, said in the call. The decrease in cardio equipment was mostly due to the sale of Arc Trainers plummeting almost 17 percent in the quarter. The company will introduce the Arc 2 later this year, which Hicks said should reinvigorate that line.
“Treadmills were up a little bit in the quarter, mostly the effect of the new 750T, which seems to be well received in the marketplace,” Hicks said.
Strength equipment sales were down 4 percent to $12.8 million. The company's new VR1 line of selectorized equipment was up in the quarter, but most other strength lines were down, Hicks said.
The other sales categories were up 16 percent at $3.3 million, he added. North American sales were down just under 5 percent, and international sales were down 4 percent. Selling, general and administrative costs were down 3 percent at $265,000 in the quarter, Hicks added.
Despite the sales downturn in the second quarter, net sales increased to $72.9 million for the six months ended June 28, 2008, compared to $69.4 million for the first six months of 2007. Net income, however, was still down for the six months, coming in at $1.4 million compared to net income of $2.2 million for the corresponding period in 2007.
Aglialoro noted that the company's first quarter had double-digit revenue gains and solid earnings. So far in the third quarter, the company has had an increase in orders.
“Although I can't predict the third quarter at this point yet, we have an excellent product map, a good balance sheet, and favorable indication for the industry — and Cybex at large — into the future,” Aglialoro said. “The culture change, I believe, is authentic. People are exercising more. Health clubs are opening more and more because of the benefits of exercise.”
The company began preparing for the possible downturn last fall.
“We upped prices pretty well at the end of 2007 with the idea that we might need to really start doing some price promotions or be prepared to take less margins,” Aglialoro said, adding that he doesn't foresee price increases now. “I think we're priced attractively, and if this upturn in orders continues throughout the industry, I hope — because what affects the industry affects Cybex — I think we'll be in pretty good shape.”