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Friday
Aug302013

Man With a Mission

If one were to attempt to sum up the company Cybex International, Inc., in a single word, that word would have to be: results.

Visit its headquarters in Medway, Massachusetts. Speak with its execu- tives, its engineers, its researchers, and its workers. Talk to its advisors, its clients, and industry observers. And that’s the word you’ll hear over and over again.

It pops up in conversation so frequently you begin to think it’s a new form of punctuation.

For Cybex, “results” is a simple goal with a complex and sophisticated pedigree. The short-form definition is: commercial fitness equipment that’s solidly built, as scientifically sound as possible, efficient, durable, and offering a safe and effective workout in a reasonable amount of time to produce (here’s that word again) results for the user.

And if one were to attempt to identify a metaphor for that philosophy, one would undoubtedly settle on the Cybex Research Institute.

Situated adjacent to the corporate gym at Cybex’s headquarters, the Institute has been described, by some, as the firm’s “beating heart.” This is where Cybex conducts the research and sorts out the science that informs the equipment it manufactures and ships to more than 80 countries worldwide.

The Institute makes use of force plates, metabolic systems, a kinetics lab, motion-capture systems, and other resources, plus a core group of 20 staff and associates, to formulate studies that test everything the industry thinks it knows about exercise and fitness. The group is headed by Executive Director Paul Juris, who holds a doctorate in motor learning from Columbia University, and has held a wide variety of positions with club, sports, educational, and medical organizations.

“We want the truth about performance, physical activity, and human health,” Juris explains. “We examine the trends, themes, and perceived wisdom. If everyone else is looking to the left, we tend to look to the right. We like to question dogma.”

The scientific method defines not only Cybex’s approach to manufacturing, but also its approach to business in general.

The process even drove its transition, effective February 9, 2013, from a public into a private company.  

Public to private

In 2012, the public assessment of Cybex might have sounded something like this: Its machines are biomechanically advanced, but its fixation on research and testing sometimes means that new products are slow to reach market. Its equipment is safe and durable, but it’s hardly sexy. The company builds its products in the U.S., which gives it manufacturing flexibility and a marketing edge, but imposes a pricing penalty. As a public company (NASDAQ: CYBI), it must answer to shareholders and bear the burden of regulatory compliance and reporting.

One year later, much of that has changed.

Since then, John Aglialoro and his wife, Joan Carter, who owned 49.5% of Cybex’s stock as principals in UM Holdings, Ltd., a privately held investment firm based in Haddonfield, New Jersey, have taken the company private. They purchased the outstanding shares at a cost estimated at $20–$22 million.

Aglialoro, who’s taken companies public several times, is now passionate about having taken Cybex private. “Since the Sarbanes-Oxley Act became law in 2002, it hasn’t been much fun to be a public company,” he suggests. “It’s all about governance and compliance. There’s no longer a constructive government/business relationship. Government, it seems, has become the adversary.”

Rick Caro, the president of Management Vision, Inc., a leading industry consultancy based in Manhattan, and recipient of IHRSA’s 2013 Lifetime Achievement Award, concurs. “As a private company, Cybex will save money, spend less time talking to analysts, and be able to redeploy resources more effectively. I see only upside benefits.” 

Another change is that, in March, Aglialoro, while remaining chairman of the company’s board of directors, stepped down as CEO, handing the reins to Art Hicks, who’s worked with Aglialoro for 30 years. Initially, Hicks served as the controller for UM Holdings, and then as its treasurer and CFO. Eventually, he moved to Cybex, becoming its CFO and interacting with every department in the company.

The common, one-word perception of Aglialoro, who holds an economics degree from Temple University, in Philadelphia, is that he’s a visionary; while the word that’s frequently attached to Hicks, a graduate of La Salle University, in Philadelphia, and Rutgers Business School, in New Jersey, is pragmatic.

“John is an entrepreneur, a big-idea man,” observes Hicks. “I’m an analytical guy, someone who likes hard facts and is hardwired by numbers. I don’t need all of the facts to proceed, but I do have to be convinced that something will spin, twist, or pump. I find the best ideas, and the best brains, and I see that it gets done—that we transform those ideas into products. What I bring to the table is discipline.”

His take on Cybex’s new private status: “We’re more nimble now,” he posits without clarification.

No changes. Really?

Ask Aglialoro and Hicks how the shift—in corporate status and executive staffing—is going to change things, and the impression they try to convey is that it won’t. “From a customer and employee perspective, there will be no change in long-term strategy or goals,” responds Hicks.

But Cybex’s signature modus operandi—research, innovation, results—is still at work. So what the two men really mean is that the company’s core values, the quality of its products, and the rewarding exercise experiences they provide—no, they’re not going to change. Nor is there any reason for them to do so. The company manufactures a comprehensive line of commercial—note, not consumer—equipment that’s solidly established in 85 countries.

Some of them, such as its Arc Trainer, a unique elliptical that Aglialoro refers to, fondly, as “the best cross-trainer in the industry,” have a singular appeal. And many of them are new. Among the most recent additions to its portfolio of products and services are its Eagle Strength Series of selectorized strength-training pieces; its Big Iron Performance Series of strength equipment; and its brand-new 525 Cardio Series (525AT Arc Trainer, 525 Treadmill, and 525C Upright and 525R Recumbent bikes) for the hospitality, corporate wellness, and residential fitness center markets. Also new is its Bravo Energy Burn Series of fitness programs. 

“Cybex is the Toyota of exercise equipment manufacturers,” observes Richard Miller, the owner and founder of Gym Source, the largest distributor of fitness equipment in the U.S. “It’s committed to understanding the intersection between the machine and the human body. Any machine can give you a workout, but the test is how that exercise will affect your shoulders, elbows, and knees. Cybex is constantly striving to provide the best, most efficient workout, without causing harm, so they test obsessively.”

Another industry observer prefers a different automotive analogy: “Cybex has concentrated on building machines that operate like BMWs,” he says.

Robert Linkul, the strength and fitness director at the Arden Hills Resort Club and Spa, a 60,000-square-foot facility in Sacramento, California, learned that last year when he re-equipped its 16,000-square-foot fitness center. “The Cybex rep didn’t try to sell me,” he recalls. “Instead, he talked about research, education, and proven results.” The outcome for Cybex: a $500,000 sale.

Lots of action. Actually!

In the same way that the Cybex Research Institute focuses on what’s wrong with contemporary exercise options and attempts to improve upon them, Cybex constantly scrutinizes its own business practices. Given the new freedom afforded by its private status, and the fresh air produced by the shift in management, it now seems determined to address the shortcomings it’s identified.

In the past, the word “sexy,” when it was heard at Medway, generally occurred within a negative context, e.g., “We don’t build sexy equipment.”

Today, it’s getting a positive spin.

“We weren’t interested in competing on style and color. We always said, ‘We might be ugly, but we cook good.’ We’d decided to compete on the basis of performance,” explains Aglialoro. “Bells and whistles—we may have missed that boat. Our thinking always was, you get on a bike for, what, 30–60 minutes. Shouldn’t you give yourself a little break from all the movies, television, social media, e-mail, and Twitter? Belatedly, we’re adding bells and whistles, consoles, connections, etc., because we’ve realized that people do want to be entertained, to stay in touch with one another.”

Which is not to suggest, however, that Cybex hasn’t had its share of sexy ideas: e.g., celebrity affiliations; a strong link with the golf market (Aglialoro is a player); pink treadmills to raise money for breast cancer research (more than $100,000, thus far); equipment customized to match college and university school colors (done by Cirrus Fitness, a Manhattan-based design firm). And have you seen the Arc Trainer?

“We need to improve the aesthetics of our equipment,” acknowledges Hicks. “We don’t need to be the fashion leader, but we do intend to improve the look and design of our equipment.”  

The company also plans to enhance the appeal and pizzazz of its equipment by leveraging its customization capabilities. “In the past, we took the Model T approach— ‘You get it in black’—emphasizing flexibility and speed,” says Hicks, “but we’re switching over to customization in terms of colors and line. Some club chains want a special line just for their members—maybe fewer weights, fewer adjustments, or a particular package of programs on their cardio equipment. If they want it, we can do it. We’ll make machines for them, customize to their specs, as long as the numbers work.

“We have to do a better job of communicating why our equipment is better, to distributors, club owners, and end users—the fact that we have the goods,” he continues. “We need to get the message out. We need to communicate our why honestly and effectively.”

...On a variety of fronts

Training, programming, and other service components also play a major role in Cybex’s future plans. “We offer two-to-three-day courses on a variety of topics,” points out Hicks, “because we believe an educated buyer is our best customer.” The company has nearly doubled the number of continuing education credits (CECs) it offers in the U.S. and Europe. It’s developing new programs in response to emerging market trends—witness its new Bravo Energy Burn Series, introduced at IHRSA 2013 in Las Vegas. 

The five programs in the series—Ignite, Blaze, Firestorm, Rock, and Varsity—combine functional elements with Cybex equipment in a circuit format to burn calories and increase strength. “Our Bravo functional training is leaning in the direction of CrossFit,” notes Hicks, “but, in our system, it’s done in a safer, self-directed way.”

Hicks’ thoughts on two other inescapable topics: “I’d be surprised if Cybex went on a major buying spree,” he says of possible acquisitions. “Instead, what I see are tuck-in acquisitions to fill gaps in a product line or to meet some distribution need.” And, of growth, he observes, “There’s a lot of pressure to grow, because growth is viewed as a yardstick of success, but growth for growth’s sake can be dangerous. You’ve got to grow the right way.” He recalls that Cybex passed on manufacturing consumer fitness equipment. “We’re focused on making the best equipment, and we realized that, given the price point in that sector, we wouldn’t be able to compete effectively.”

Growth, however, is clearly part of Cybex’s long-term calculus. 

“Precor, Inc., Life Fitness, Matrix Fitness, and Technogym all sell more equipment than Cybex, but, today, only about a third of Cybex’s sales are overseas,” assesses John McCarthy, IHRSA executive director emeritus and a Cybex advisor. “But if Cybex can do a better job of marketing, I think it can grow its foreign sales.” Hicks, for his part, expects the firm’s sales growth outside North America to outpace domestic sales within five years.

“Just look at this year,” says McCarthy. “In the first quarter, Cybex experienced 19% growth in the U.S. How’s that for results?”  

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