Revealing Arc Trainer salesÂ up nearly 70 percent in the quarter, Cybex (AMEX: CYB), nevertheless had a huge drop in net income -- $119,000 compared to $375,000 a year ago -- although still showedÂ a small increase in net sales of 1 percent.
"Keep in mind, we're no longer overwhelmed," CEO John Aglialoro told analysts in a quarterly earnings call, referring to the past couple of years of bank business, financing, refinancing, debt and legal issues.
"We're going to win a lot of the categories we're competing in," he added.
The company announced for the quarter ended March 26, 2005, net sales of $24,759,000, for a 1 percent increase compared to net sales for the first quarter of 2004 of $24,421,000. Net income for the quarter ended March 26, 2005 was $119,000, or $0.01 per diluted share, compared to net income for the first quarter of 2004 of $375,000 of which $253,000, or $0.03 per diluted share, was attributable to common stockholders. Gross profit margin dropped from 37.9 a year ago to 35.8 in the quarter.
â€œAlthough immediate results are comparatively modest, Cybex is in its best position to grow in many years," Aglialoro said in an official statement. "The second half of 2005 will represent an exciting period of new product introductions including the movement and reaction-based Trazer â€“ a breakthrough new product category for Cybex."
Of net sales, the new upper-body Arc Trainer held on to about 50 percent of all Arc sales. Bikes, although new last year, were also up 20 percent, while other categories were down. Operating income was down, too, and the Trazer product was taking longer to get to market than hoped or expected, Aglialoro said.
"The good news is, our goal of double-digit profit targets remain intact," he said in the call. "The bad news is, getting product to market is taking longer than anticipated."
Also coming are new treadmills for the vertical market and the VR3 line of strength equipment. Strength sales were down and Aglialoro speculated that some customers may be simply waiting for the newer line. A retail line is also coming -- that was a category Cybex had to exit when it began to reorganize -- and will begin to roll out in late 2005 as the company begins to re-establish its dealer network. And a cordless Arc Trainer is also expected to debut at the Club Industry 2005 fall show.
Aglialoro called the company "a distance fourth" (behind Life Fitness, Precor and Nautilus) domestically, but said "every day we are working for long-term success."
"Everybody is just more comfortable with the company," Aglialoro said.
One analyst told SNEWSÂ® the turnaround seemed to be "on track," partly due to rampant success by the Arc Trainer, which helped to put the company back into play.
Still, Wall Street must not have been overly impressed. Cybex stock closed the day of the release at 3.84, down from the previous day's 4.12.
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