Cybex International, Inc. reported a loss of $2.1 million in the second quarter of fiscal 2009 due to a weak sales environment and cautious spending by its customers, particularly fitness clubs and similar facilities. The maker of exercise equipment also said it is in violation of certain financial covenants in its loan agreements and is negotiating with its banks. The loss compared with a net income of $128,000, or one penny per share, in the year-ago period. Sales slid to $27.8 million from $33.1 million in Q2 2008.
John Aglialoro, chairman and CEO, stated, “We believe our customers, particularly fitness clubs and similar facilities, continue to be cautious, delaying purchases. Margins have been negatively affected by several factors, most particularly the lower sales levels. We expect fitness clubs to resume purchasing to previous levels in the future, and in the meantime we are focusing on other markets that will represent incremental sales to Cybex. We also continue to closely control costs, with Q2 2009 SG&A reduced by over $1 million, or 10%, compared to Q2 2008. While steel costs declined in the second quarter, we are anticipating a greater impact on margins in the next quarter due to the reduction in steel costs than we realized in Q2.”
Regarding its bank negotiations, the company said it believes it will receive waivers for these violations. However, no assurance of this is guaranteed at the present time.