Cybex road show attracts probing, interested brokers

Nearing the end of its five-city road show — its first in at least four years — Cybex has found rooms full of investors and brokers all who seem to have done their homework and are asking savvy questions that go beyond the canned presentation.

“Investors appear more confident about Cybex,” one attendee at the New York City event June 3 told SNEWS®. He cited reasons for the success are the company’s newer products and the positive direction that Cybex and its earnings are taking.

Sponsored by the National Association of Stockbrokers and the Philadelphia Securities Association, the road show aimed at boosting investments and interest by investors has produced a full house in all locations, with 60 attendees in Philadelphia, 30 in Boston, and a jammed room of 35 in New York. An event was held in Palm Springs, Calif., June 4, where the 111-degree temperatures didn’t deter attendees. The last event is June 10 in Washington, D.C.

“Momentum is good — we’re on a road show,” CEO John Aglialoro told SNEWS® after the talk in New York. “They’ve all been very well received.”

During a Q&A period following a nearly 45-minute lunch presentation about the company’s history and earnings, analysts and investors in the New York audience asked about industry trends, products and financial status for 20 minutes.

When CFO Arthur Hicks told the audience sales were up 18 percent for the first quarter, one analyst wanted to know for perspective what the industry trend was in sales and if overall sales are going up. Hicks told the group that industry-wide sales are up about 5 percent to 6 percent.

Another wanted to know what the company’s average sale was — which he was told is $60,000 — and if it were increasing in the coming year. Although not specifically answering the second part of the question, Cybex executives told the group of its future plans to increase revenue. For instance, in an effort to improve the company’s cash flow and profitability, Cybex plans to refinance the $11 million bridge financing it currently holds to achieve a lower interest rate and better terms.

“We are heavily engaged in trying to cut that,” said Hicks.

Aglialoro also emphasized the quality of its sales. In spite of industry-wide discounting, Cybex products have maintained high list prices and margins have also stayed on the high side, he said, making the brand even more attractive to buyers.

In the future, Cybex has plans to increase revenue by going after the service end of the business. It already has a strong sales business in parts. “Our part sales alone are $6.5 million representing a nice return revenue stream,” said Hicks.

Aglialoro said, “Now we want the labor,” and added that the company has increased the number of Cybex-trained technicians. “We see an opportunity to go after the tons of equipment sold over the last 20 years and offer factory authorized service.”
 
Customization was another big topic of interest to investors attending the New York meeting. How fast could the factory turn around customized products, asked one show-goer: “We are able to do turnaround faster,” because of a flexible manufacturing schedule at the U.S. factories, said Aglialoro. “We’re hiring again which we haven’t done in a long time,” and the company is beefing up capacity with a third shift.

When it came to questions about product shipping, Aglialoro said there had been no major problems, although he conceded some bike shipments were delayed six weeks. He said the company already started shipping the Total Body Arc Trainer — just introduced formally at the IHRSA show in March. Said Aglialoro, “We’re backordered.”

The company also reported recent success with its sales efforts in the corporate health market as well as to smaller clubs, like those in colleges, senior centers, physical therapy offices, the hospital market and apartment complexes. Calling strength training an “emerging industry for stock analysts,” Aglialoro said because of the increased attention on health and fitness by insurance companies and the government, corporations can sometimes get better rates on insurance claims by adding health clubs into their infrastructure.

“I was pretty pleased with the questions and the level of preparedness,” CFO Hicks later told SNEWS®. “They came informed and ready to ask questions. They had done their homework and asked questions about things other than what they got from our presentation.”