Fitness financials: Cybex jumps sales 17 percent, Icon posts profit, plus Brunswick/Life Fitness, Under Armour, Life Time Fitness, Everlast, Dick's, Puma, Wal-Mart

Cybex jumps sales 17 percent
Continuing its Phoenix-like rise, Cybex International (AMEX: CYB) reported that its net sales for the first quarter of 2006 ended April 1, 2006, jumped 17 percent, or $28,912,000 from $24,759,000 a year ago. Net income was $667,000, or $0.04 per diluted share, or more than five times what it was a year ago ($119,000, or $0.01 per diluted share).

More specifically, the company told analysts in its quarterly earnings call that its treadmill sales drove the 17 percent increase in the cardio area, comprising 31 percent of the sales there of $15.3 million. Strength jumped 24 percent over a year ago, reversing the downward trend, said CFO Art Hicks, hitting $10.6 million. It did not break out Arc Trainer sales.

The company’s gross profit margin was 36.5 percent, up from 35.8 percent, with CEO John Aglialoro saying he expected to reach 38 percent by later this year. Operating income was $1,289,000, up 67 percent over the same quarter a year ago.

“The pathway to accelerate our growth is continuing with our strength, which I mean as the Arc Trainer,” Aglialoro said.

He explained that not having a cordless unit has been a disadvantage, but it showed one to top clients in a private room at the IHRSA show. That should ship by the end of the second quarter, he said. In addition, he said the company expects to have an Arc Trainer for the light commercial markets, including higher-end retail, by the fourth quarter. To cut its cost, it will be shorter and squattier, Aglialoro explained, with the same motion but will use for example a lower steel gauge.

The company has also been working on its look since that has become more important in recent years and, Aglialoro said, a common comment is that the Cybex equipment “works great but it doesn’t look pretty.” Cybex is also working on entertainment areas since that is also more important.

Another path to higher sales will be its reentry to the consumer market later this year with equipment that is high-end consumer and light commercial. To that end, the company is re-engaging with dealers, as it said it intended to do at the Health & Fitness Business show in Denver in August.

In answer to an analyst who asked Aglialoro about the “wolves at the door” comment he always made in weaker financial times, Aglialoro said, “There are little puppy dogs at the door.”

Icon shows profit despite lower sales
Icon Health & Fitness again showed a decrease in net sales in both cardiovascular and strength categories, but pulled an increase in gross profit for its quarter ended March 4, 2006, hitting $86.1 million up from $80.3 million a year ago.

Net sales for the quarter were down $12.1 million, or 3.9 percent, to $299.4 million from $311.5 million in the corresponding three-month period ended Feb. 26, 2005. Sales of cardiovascular and other equipment dropped $3.5 million, or 1.4 percent, to $250.2 million. Sales of strength training equipment were down $8.6 million, or 14.9 percent, to $49.2 million.

Income before interest expense, income tax expense, depreciation and amortization and certain non-recurring items (EBITDA) for the quarter was $27.7 million, compared to $17.3 million in the year-ago quarter. Net income was $10.3 million, compared to a net loss of $800,000 a year ago.

Icon reported that its three largest customers together accounted for approximately 51.7 percent and 50.6 percent of revenues in fiscal year 2005 and the first nine months of fiscal 2006, respectively. The company’s largest customer, Sears, accounted for 40.4 percent and 37.8 percent of revenues in fiscal year 2005 and the first nine months of fiscal 2006, respectively.

The entire 10-Q can be seen by clicking here.

Life Fitness’ sales up despite Brunswick’s first-quarter profit slip
Brunswick Corp. (NYSE: BC) saw its first-quarter earnings fall 29 percent from the same period last year, and lowered its full-year earnings guidance. Sales for its Life Fitness division were up 5 percent.

Income for the quarter was $67.4 million, or $0.70 per share, down 29 percent from $94.6 million, or $0.96 per share, last year. The most recent earnings include a tax-related benefit of $0.13 per share, while last year’s results included a one-time gain of $0.32 per share. Revenue for the quarter was $1.46 billion, up 4 percent from $1.4 billion last year. Analysts, on average, had estimated $0.59 cents per share on $1.47 billion in revenue.

Brunswick’s fitness segment, made up of Life Fitness, Hammer Strength and ParaBody, had first-quarter sales on a pro forma basis of $134.5 million, up 5 percent from $128.1 million in the year-ago quarter. Segment operating earnings were up 39 percent, totaling $8.9 million compared with $6.4 million for the year-ago quarter, and operating margins were up 160 basis points to 6.6 percent as compared with 5.0 percent a year ago.

“Margin and earnings improvement remain the story at Life Fitness,” Dustan McCoy, Brunswick’s CEO and chairman, said in a statement. “Life Fitness has achieved this result through hard work, diligence and steadily improving productivity and operating results through manufacturing and supply chain efficiencies.”

Brunswick lowered its full-year earnings projection to $3 per share to $3.15 per share, down from a January forecast of $3.25 to $3.45 per share. For the second quarter, the company expects to earn $0.90 to $0.97 per share. Analysts expect the company to earn $3.38 per share for the year and $1.21 per share for the quarter.

Also, Brunswick’s board of directors has authorized the repurchase of up to $500 million of the company’s outstanding common stock.

In other company news, Brunswick said it plans to sell its Brunswick New Technologies business unit, which makes GPS technologies and other portable consumer navigation products. It has retained Merrill Lynch & Co. to act as its financial adviser in connection with the sale. The unit posted revenue of $356 million in 2005, a 76 percent improvement over the prior year.

“As we become increasingly focused on our core business segments — marine, fitness, bowling and billiards — we have determined that continuing to invest in this business unit to fuel growth is not consistent with our long-term strategic objectives,” McCoy said.

Brunswick ended April 27 up $0.49 on the New York Stock Exchange, closing at $40.50.

Under Armour’s income surges 51 percent
Shares of Under Armour (Nasdaq: UARM) jumped in morning trading on April 26 after the company said net income shot up on a 51 percent increase in revenue. Its stock climbed $7.79 to a day’s high of $40.50 in trading on the Nasdaq, but settled down to close at $37.

First-quarter net income more than tripled to $8.7 million, or $0.18 per share, from $2.5 million, or $0.05 per share, a year ago. The company’s quarterly income from operations grew to $14.2 million, from $4.9 million a year ago. Quarterly revenue increased to $87.7 million from $58.2 million a year ago. The results surpassed analyst expectations of $0.07 a share and $72 million in revenue.

For the second quarter, Under Armour expects to post revenue of $70 million to $75 million. Analysts had pegged the quarter at $72 million. For the full year, Under Armour sees revenue of $380 million to $390 million, well ahead of the $353.5 million analysts are predicting.

Under Armour’s stock has traded in a 52-week range as low as $21.08 to as high as $41.90. The stock, which doubled on its first day of trading in November and added another 55 percent through January, plunged on soft guidance issued Feb. 7 and has spent the interval since bouncing around $30 a share.

Life Time Fitness revenue up 29.2 percent
As it continues on a path of club expansion, Life Time Fitness (NYSE: LTM) reported double-digit percentage growth in first-quarter sales and profit, driven primarily by growth in membership dues and in-center revenue.

Revenue for the quarter grew 29.2 percent to $115.4 million from $89.3 million during the same period last year. For the quarter, its membership dues were up 25.3 percent, enrollment fees up 8.5 percent and in-center revenue up 42.6 percent.

Total operating expenses during the quarter totaled $94.3 million up from $72.0 million in 2005, driven primarily by increased expenses to support new centers, membership growth and presale activities, it said.

Net income during the quarter was up 28.5 percent to $10.4 million, or $0.28 per diluted share compared to $8.1 million, or $0.23 per diluted share, in 2005. Its first-quarter net income margin was 9.0 percent, down slightly from 9.1 percent in the prior-year period.

For the full year, Life Time Fitness expects revenue to be $480 million to $488 million, while net income is forecasted to be in the range of $51.2 million to $51.8 million.

During the quarter, Life Time Fitness said it continued its expansion efforts with openings in Columbia, Md., and Minnetonka, Minn. It closed the quarter with a total of 48 open centers in nine states and has commenced construction on the six additional new centers it plans to open this year.

In other company news, Life Time Fitness has entered into an amended revolving credit agreement that will increase the facility from $200 million to $300 million and extend it to April 28, 2011. The amended facility involves a syndicate of nine banks, including U.S. Bank N.A. as the lead arranger, J.P. Morgan Chase Securities, Inc. as syndication agent, and M&I Marshall & Ilsley Bank, National City Bank of the Midwest, and Royal Bank of Canada as co-documentation agents. Additional members of the facility include Harris Trust and Savings Bank, Associated Bank, N.A., Bank of the West, and MB Financial Bank, N.A.

Everlast sporting goods sales hit a record high
Everlast Worldwide (Nasdaq: EVST) reported 20 percent growth in first-quarter net revenue — $10 million in 2006 vs. $8.3 million in 2005 — as a result of a 33 percent boost in sporting goods sales to a record $7 million. The sporting goods sales increase marked the second consecutive quarter of more than 30 percent year-over-year sales growth, the company said.

Net licensing revenues for the first quarter of 2006 were $3 million, as compared to $3.1 million in the same period a year ago. In the first quarter of fiscal 2006, Everlast’s licensing revenues were impacted by its decision not to renew its previous footwear license, as well as an increase in licensing commissions resulting from the litigation settlement which requires the company to pay commissions to the former agent of Everlast during 2006.

For the quarter, Everlast’s gross margin was 44.5 percent, compared with 48.1 percent in the first quarter a year ago. The company said the lower gross profit margin was primarily due to a change in revenue mix. This was driven by higher sporting goods sales, which have a lower gross margin than its revenue stream of licensing. However, the company’s sporting goods gross margins did improve 330 basis points over the 2005 comparable period due to lower product costs, improved operational efficiencies and cost reductions in labor and overhead.

Net income $2.5 million, or $0.69 per basic share and $0.64 per diluted share, as compared to a net loss of $94,000, or $0.03 loss per basic and diluted share, in the 2005 comparable period.

Everlast also reported an 83 percent increase in operating income to $1.5 million, while earnings from continuing operations and before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for non-cash stock based compensation and warrant issuance costs, improved 27 percent to $1.7 million, as compared with $1.3 million reported in the same period a year ago.

Dick’s receives $18.5 million in financing to expand Indiana facility
W. P. Carey & Co. is giving Dick’s Sporting Goods (NYSE: DKS) $18.5 million in build-to-suit financing to expand its existing distribution facility in Plainfield, Ind. The investment firm will finance the construction of the facility and lease it back to Dick’s under a 15-year triple net lease.

This expansion financing took place subsequent to several transactions between W. P. Carey’s affiliates and Galyan’s Trading Company, which was acquired by Dick’s in 2004. Together with this recent deal, W. P. Carey and its affiliates now own nine Dick’s Sporting Goods retail and distribution facilities located in Kennesaw, Ga.; Lombard, Ill.; Greenwood (2) and Plainfield, Ind.; Leawood, Kan.; Freehold, N.J.; Buffalo, N.Y., and Fairfax, Va.

Puma revenue up 30 percent for quarter, raises 2006 outlook
Beating analyst expectations, Puma (PUM.DE) said first-quarter net profit rose 2.5 percent to Euro 93.1 million (USD $116.0 million), with revenue up 30 percent to Euro 643 million (USD $801.5 million).

During the quarter, footwear sales rose 18 percent, apparel sales grew 63 percent and accessories sales rose 22 percent. The profit rise didn’t match its sales rise due to the company’s “Phase IV” restructuring program.

Puma has been integrating units in Japan, China, Hong Kong, Taiwan, Canada and Argentina that it previously dealt with on a licensing basis only, and also has been starting units in Dubai and India.

The company has also been aggressively building its position in the United States, where it has 4 percent market share of branded athletic-footwear. U.S. sales on a comparable basis jumped 62 percent to $157 million, and orders were up 46 percent, Puma noted. But the expansion came at a price — selling, general and administrative expenses rocketed 45 percent during the quarter, mainly due to a 61 percent hike in marketing and retail expenses.

For the year, with orders up 35 percent, it now expects 2006 sales to rise up to 35 percent, and now sees only a high single-digit percentage decline in profit due to advertising for the World Cup campaign and a planned shift in the regional and product mix. Puma attributed improving orders from Europe, the Middle East and Africa for the better guidance.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of April 28.)

Wal-Mart says April sales rose 6.8 percent
Wal-Mart Stores (NYSE: WMT) reported April sales in the United States rose about 6.8 percent over the same period last year because of Easter falling later in the calendar. Last month, Wal-Mart reported that sales increased only 1.4 percent for March, but the company had predicted a 4 percent to 6 percent rise for April. The estimated figures cover same-store sales — sales at stores open for at least 12 months — from April 1 through Friday. Wal-Mart said its official sales release for the April four-week period will be on May 4.

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