Cybex International, Inc. recorded a 20% jump in net sales for the first quarter to $34.7 million from $28.9 million for the same quarter last year. Net income for the quarter was $1.1 million, or 6 cents per diluted share, growing 57.1% from $0.7 million or 4 cents per diluted share last year. The company noted that the year-over-year earnings per share growth was achieved despite three offsetting factors: an 8.6% tax rate in the year-ago first quarter compared to a 41.5% rate in 2007 that resulted from the realizability of a deferred tax asset; a 12.8% increase in shares outstanding; and a $509,000 pre-tax charge in 2007 related to the previously announced product development agreement with eNova.
First quarter operating income increased by 61% to $2.1 million versus $1.3 million in the prior year quarter. The company's first quarter gross margin increased to 37.2% versus the prior year 36.5%. The increase resulted primarily from greater overhead absorption. The company also saw a .90% improvement in its first quarter SG&A expenses as a percentage of net sales versus the year-ago quarter due to the leverage from the sales increase. This was achieved despite the additional $509,000 expense described above.
John Aglialoro, Cybex chairman and CEO stated, “The Company is pleased to have begun the year with a strong quarter. We executed well and saw success across the breadth of our product lines. CYBEX expects to see continued growth as the year progresses, both in our current equipment lines and through introductions of new products. CYBEX is excited by the recent introduction of our VR1 line of commercial strength training equipment, which has a space-efficient footprint, an elegant and inviting design and is exceptionally easy to use. We are also looking forward to the third quarter launch of our new high-performance 750T treadmill which we expect will be the reference standard for this category.”
Mr. Aglialoro continued, “It is our belief that we can continue to grow our revenues and drive further improvements in our profitability. CYBEX is taking a disciplined approach to growth, but at the same time, we are making prudent investments in personnel and systems to ensure that we retain our leadership position. I believe this balanced business plan, which focuses on both near-term performance as well as long-term opportunity, will create significant and sustainable value for our shareholders.”
The company noted that inventories at the close of the first quarter were up 29% to $12.2 million versus $9.6 million at this same time last year. This increase reflects the inclusion of $1.1 million of inventory for the new Home Arc line which utilizes outsourced manufacturing and, therefore, has a much slower turn rate than the balance of our business. Additionally, the company's inventory build included approximately $500,000 of audio-visual screens, which had not yet begun to ship until the end of the first quarter.
CYBEX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended
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March 31, April 1,
2007 2006
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Net sales $ 34,676 $ 28,912
Cost of sales 21,782 18,361
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Gross profit 12,894 10,551
As a percentage of sales 37.2% 36.5%
Selling, general and administrative expenses 10,796 9,262
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Operating income 2,098 1,289
Interest expense, net 210 559
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Income before income taxes 1,888 730
Income taxes 784 63
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Net income $ 1,104 $ 667
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Basic and diluted net income per share $ 0.06 $ 0.04
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Shares used in computing basic net income per
share 17,224 15,158
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Shares used in computing diluted net income
per share 17,838 15,819
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