Cybex 3Q sales up, but slight losses continue on litigation appeal
Cybex reported its third quarter 2011 revenue up 15 percent, but its quarterly loss widened as the fitness equipment company continues to incur costs while appealing an unfavorable lawsuit ruling.
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Cybex International, Inc. (NASDAQ: CYBI) continued its 2011 upward earnings trend by reporting another quarter of higher revenue, but it faced a second-straight quarter of slightly wider losses as it continues to incur costs while appealing an unfavorable lawsuit ruling.
The Medway, Mass.-based manufacturer of fitness equipment reported third-quarter 2011 revenue of $33.5 million – up nearly 15 percent from $29.2 million during the same period a year ago.
The rise was Cybex’s fourth consecutive quarter of double-digit percentage revenue growth, highlighted by 11-percent quarterly growth in its cardio category to $17.7 million, and 20-percent growth in its strength category to $12.3 million, said President and COO Art Hicks during the company’s conference call Oct. 18.
Cybex Chairman and CEO John Aglialoro noted the company’s continued rise in international sales, which were up 18 percent, compared to 13-percent growth in North America, and now account for about 30 percent of the business, he said during the call.
Despite the gains, Cybex reported a third-quarter 2011 net loss of $300,000, or a loss of $0.02 per diluted share, compared to a net loss of $15,000, or no change per diluted share, during the same period a year ago.
Company officials said the quarterly loss was due to an additional $1.4 million in litigation interest charges it incurred on a pending $66 million lawsuit won by Natalie Barnhard in December 2010. So far in 2011, Cybex has spent $3 million on interest charges, and in late 2010, the company set aside $58.7 million for the lawsuit. Cybex is appealing ruling, and has been granted a stay in full payment – although it must pay 9-percent interest along the way – until further rulings.
Oral arguments before the Appellate Division of the New York Supreme Court are scheduled for late October 2011, and company officials said they expected a decision on the appeal within several months.
In the meantime, Cybex continues to face pressure from Nasdaq for not meeting the market’s listing standards. Company officials have scheduled a Nov. 10, 2011, meeting with Nasdaq officials to try and gain an extension for the requirements, until it can resolve the pending litigation.
— Compiled by David Clucas
