Cybex eyes future in brighter, post-refi world

With a much-awaited refinancing of its bank facility signed, sealed and delivered, Cybex International is ready to charge ahead as it lays out its long- and short-term planning that will take the company into more markets and more equipment segments.

The refi — announced June 12 and finalized a month later — ended not only months of nail-biting on the company’s part — and some wheel-spinning on product development and strategic planning — but also some speculation in the fitness industry about Cybex’s future.

On the heels of the refinance settlement, in which CIT Business Credit and Hilco Capital LP committed to providing a $30 million, three-year senior financing facility, came Cybex’s (AMEX: CYB) second-quarter results on July 24 that made analysts sit up just a bit. They showed net sales up (17 percent over the first six months of 2002), net income up ($183,000 compared to a net loss a year ago of more than $22 million), and expenses heading downward, including interest expense. Stocks prices have climbed slowly and steadily since then, closing at 1.5 on July 25.

“This tells us that the product rollouts and the last 13 months of everything we’ve done is coming together,” Roland Murray, vice president of sales and marketing, told SNEWS. “This also really puts the pressure on us.”

In the last few weeks, company executives have been immersed in planning meetings. Although they will take another month or so to hammer out the goals, both long-term and short-term, they have told SNEWS that new markets and new product are on the horizon. But that doesn’t mean Cybex will become a different company, just a more extended one in the next two to three years.

“We’re going to keep doing what we’ve been doing,” Murray said. “We have a good formula right now and we’re going to just build on it.”

The apple of the company’s eye will be the vertical market.

“Going after the vertical market segments is branching out and building on today,” Murray said. But the company might not stop there.

“If we are very successful marketing and selling our products in the vertical market,” he added, “we believe that will assist us significantly in the consumer market.”

Product will be a driving theme. Although details are yet to be finalized, SNEWS has learned the plans include:

Strength — Cybex will continue its three strength lines — the premium Eagle line’s now-complete 21 pieces, the secondary VR2 line, and the value-based VR line — with more of an emphasis on bringing some parts to the vertical market and working on positioning them all. Next emphasis to come? Plate-loaded equipment and free weights.

Treadmills — Always a standard for Cybex, more treadmill models are slated for its future as soon as next year, again looking to the light commercial market as an untapped one.

Stationary Bikes — Certainly a missing piece in the Cybex line, that will end next year with the introduction of two to four stationary bikes, with an eye on the vertical market, Murray said. He promises “new and innovative” features, which their engineers are hard at work on in the back rooms.

ArcTrainer — The company’s swinging new cardiovascular piece now only with one piece that targets the commercial market, the company is looking to extend the ArcTrainer concept up and down in 2004 to make it more available to other segments at their prices.

Of course, any moves the company makes will be careful: “You can’t make mistakes in this economy of ours.”

SNEWS View: Certainly SNEWS has been as — how do we say it? — skeptical about Cybex’s future as others were when sales, profits and income were in the basement. But the company kept its nose down and ignored all the naysayers. Said one SNEWS insider analyst about the current position: “This is very positive. It seems as if they are getting their act together.” We agree. Expansions in markets and product are only logical, and it’s also a no-brainer that the company begin more heartily to truly milk the power of its Cybex name and legacy. What markets could that include? In high-end home equipment segments, of course. In the next 18 months, we fully expect to see quality treadmills and bikes that a discerning home user would buy. And, in comparison to most of the other companies out there fighting for consumer brand awareness, Cybex will already mean something to many – something only a couple of companies can claim. And if that’s not a step-up in this ever-competitive market, nothing is.