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Cybex Sales Fell in Fourth Quarter

MEDWAY, MA -- Last week, Cybex reported lower net sales for the fourth quarter of 2008, but increased net sales for the year.

In the fourth quarter of 2008, Cybex had net sales of $39.3 million compared to $44.5 million for the corresponding 2007 period. The company reported a net loss for the fourth quarter of $10.9 million, including an $11.3 million goodwill impairment charge, compared to net income of $3 million for the corresponding 2007 period.

For 2008, the company’s net sales were $147.9 million compared to $146.5 million for 2007. The net loss for 2008 was $9.1 million compared to net income of $9.8 million.

Fourth quarter sales were down 12 percent compared to fourth quarter 2007, according to John Aglialoro, chairman and CEO of Cybex. He says that he expects first quarter 2009 sales to be below first quarter 2008 sales.

“Fitness clubs appear to be cautious in making expansion investments and have reduced their capital expenditures,” Aglialoro said in a release announcing the financials. “This is reflective, of course, of general economic conditions. Looking forward, while the company is not certain how long these conditions will persist, we expect sales to rebound as the economy recovers. In the meantime, expenses are being closely monitored as they were throughout 2008, and some initiatives are being delayed until we are more confident of the sales horizon. Gross margin in the quarter continued to be negatively impacted by higher material costs compared to fourth quarter 2007, although we have seen some decreases in commodity prices in first quarter 2009.”

In a call with analysts, Aglialoro noted that the company has a “pristine” balance sheet and has made major investments in its plants and equipment.

He also noted that research and development have been a strength for the company. Cybex recently released a home version of its Arc trainer and will introduce the commercial Arc 2 trainer at the International Health, Racquet and Sportsclub Association show in March.

“Our culture is a strong one,” Aglialoro said in the call. “I like the industry. People want to live longer and have a better quality of life. Exercise coupled with good nutrition—people are going toward that. One study showed that people will think hard about cutting back on their fitness club dues. There’s a hesitancy at health clubs with memberships tapering off…but people will want to have exercise be a part of their lives.”

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