-- Record sales across all channels of distribution.
-- Successful chain-wide launches at Sears, Linens 'n Things, Bed Bath
and Beyond, JCPenney and Macy's.
-- Significant holiday media exposure, including features on the Tyra
Banks Show and two appearances on the Today Show.
-- Multiple top listings in Amazon.com's "Best Seller's," "Most Gifted,"
and "Most Wished For," top twenty lists in the Home and Garden Category.
-- An international product launch into the U.K., Germany, and others,
including high visibility UK retail placements.
-- The significant expansion of our in-house catalog distribution with
the mailing of more than 1,000,000 catalogs during the quarter.
-- Development of multiple new products including the $99 AeroGarden3
series, the $149 Space Saver6, the $199 Pro 200 and the $229 AeroGarden
Deluxe.
-- Expansion of our television advertising and support, with more than
$2.5 million in television media during the quarter.
For the quarter ended December 31, 2007, AeroGrow reported a net loss of
$1.65 million, or $0.13 per share, as compared to a net loss of $2.9
million for the quarter ended December 31, 2006. For the nine months ended
December 31, 2007, AeroGrow reported a net loss of $6.0 million, or $0.52
per share, as compared to a net loss of $8.4 million, or $0.90 per share,
for the nine months ended December 31, 2006.
"While our revenues were exceptional, we fell short of our profit
expectations for the quarter in three main areas," continued Mr.
Bissonnette. "First, to ensure our momentum during what was forecasted to
be a sluggish retail holiday season, we significantly increased our
advertising and promotion expenditures. Second, to support our increased
revenues, we allowed fixed costs and overhead to rise too rapidly.
Finally, we did have a significant amount of top and bottom line revenue
that was deferred to the March quarter related to our 36 Day Free Trial
Offer promotion for our direct TV and web channels. Combined, these
factors had a significant impact on our earnings for the quarter despite
our record sales increases."
"Moving forward, we've implemented five critical areas for improvement in
our gross margins and operating profit," said Jerry Perkins, President and
COO of AeroGrow. "First, and most significant, we've driven accountability
into the system by dividing the company into four business units, each a
profit center led by a GM with P&L responsibility and accountability for
performance. Goals and budgets have been established and everyone will be
measured against these on a monthly and quarterly basis. The other
initiatives, ranging from cost reductions in products, distribution,
logistics and fixed and overhead expenses, should contribute a 3 to 4 point
improvement in gross margin and overhead costs on an annualized basis.
With these initiatives in place, I'm confident in our ability to put some
solid numbers up, both revenues and profits, in the coming year."
The following table sets forth, as a percentage of sales, our quarterly
financial results for the three months ended December 31, 2007 and the
three months ended December 31, 2006:
Three months ended Nine months ended
------------------ ------------------
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue
Product sales- retail, net 65.1% 67.2% 68.0% 70.9%
Product sales- direct to consumer,
net 34.9% 32.8% 32.0% 29.1%
-------- -------- -------- --------
Total sales 100.0% 100.0% 100.0% 100.0%
Operating expenses
Cost of revenue 61.1% 67.6% 59.9% 71.3%
Research and development 4.7% 14.4% 6.8% 23.0%
Sales and marketing 34.1% 40.5% 40.8% 63.9%
General and administrative 10.1% 21.5% 13.5% 39.8%
-------- -------- -------- --------
Total operating expenses 110.0% 144.0% 121.0% 198.0%
-------- -------- -------- --------
Loss from operations -10.0% -44.0% -21.0% -98.0%
======== ======== ======== ========
Earnings Conference Call
AeroGrow will host a conference call today, Wednesday, February 13, 2008,
to review operational results for the quarter ended December 31, 2007.
The conference call is scheduled for 4:30 PM ET. To participate in the
call, please dial:
U.S. and Canada: 1 (888) 241-0558
International: 1 (647) 427-3417
A replay of the call will be available within 12 hours of completion. You
will be able to access it for the following 30 days through the AeroGrow
website at www.aerogrow.com/investors or by phone until March 13, 2008. To
access the replay by phone, please dial:
U.S. and Canada: 1 (888) 562-2818
International: 1 (402) 220-7736
Conference ID: 33910024
AEROGROW INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
-------------------------- --------------------------
December 31, December 31,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenue
Product sales,
net $ 14,637,742 $ 4,857,604 $ 27,199,821 $ 6,709,858
Operating expenses
Cost of revenue 8,938,857 3,282,291 16,286,651 4,785,151
Research and
development 682,453 700,111 1,840,441 1,544,495
Sales and
marketing 4,997,801 1,965,578 11,089,338 4,285,849
General and
administrative 1,471,364 1,042,537 3,679,397 2,671,939
------------ ------------ ------------ ------------
Total operating
expenses 16,090,475 6,990,517 32,895,827 13,287,434
------------ ------------ ------------ ------------
Loss from
operations (1,452,733) (2,132,913) (5,696,006) (6,577,576)
Other (income)
expense, net
Interest (income) (31,679) (12,646) (101,879) (157,508)
Interest expense 234,833 101,841 426,681 305,445
Other income - - (2,929) -
Registration
rights penalty - 636,130 - 1,664,380
------------ ------------ ------------ ------------
Total other
(income) expense,
net 203,154 725,325 321,873 1,812,317
------------ ------------ ------------ ------------
Net loss $ (1,655,887) $ (2,858,238) $ (6,017,879) $ (8,389,893)
============ ============ ============ ============
Net loss per share,
basic and diluted $ (0.13) $ (0.30) $ (0.52) $ (0.90)
============ ============ ============ ============
Weighted average
number of common
shares outstanding,
basic and diluted 12,371,517 9,501,095 11,529,472 9,304,380
============ ============ ============ ============
BALANCE SHEET DATA December 31, March 31,
2007 2007
------------ ------------
ASSETS (Unaudited)
------------
Current assets
Cash and cash equivalents $ 3,729,822 $ 5,495,501
Restricted cash 86,256 84,363
Accounts receivable 6,705,924 1,884,743
Other receivable 286,342 182,221
Inventory 5,791,752 3,940,614
Prepaid expenses and other 947,135 480,990
------------ ------------
Total current assets 17,547,231 12,068,432
Property and equipment 1,367,314 909,496
Other assets 157,607 63,878
------------ ------------
Total Assets $ 19,072,152 $ 13,041,806
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion - capital lease obligation $ 124,331 $ -
Due to factor 4,450,538 645,151
Accounts payable 3,656,668 3,192,734
Accrued expenses 2,336,154 1,166,485
Customer deposits 490,397 -
Deferred rent 64,787 53,531
------------ ------------
Total current liabilities 11,122,875 5,057,901
------------ ------------
Capital lease obligation - long term portion 163,489 -
Stockholders' equity
Common stock 12,032 11,065
Additional paid-in capital 43,583,798 37,765,003
Accumulated (deficit) (35,810,042) (29,792,163)
------------ ------------
Total Stockholders' Equity 7,785,788 7,983,905
------------ ------------
Total Liabilities and Stockholders' Equity $ 19,072,152 $ 13,041,806
============ ============
Sales by Channel
(Unaudited) Three months ended Nine months ended
December 31, December 31,
-------------------------- --------------------------
Product Revenues 2007 2006 2007 2006
------------ ------------ ------------ ------------
Product sales-
retail, net $ 9,528,337 $ 3,266,226 $ 18,508,237 $ 4,759,171
Product sales-
direct to
consumer, net 5,109,405 1,591,378 8,691,584 1,950,687
------------ ------------ ------------ ------------
Total $ 14,637,742 $ 4,857,604 $ 27,199,821 $ 6,709,858
============ ============ ============ ============
% of Revenues
Product sales-
retail, net 65.1% 67.2% 68.0% 70.9%
Product sales-
direct to
consumer, net 34.9% 32.8% 32.0% 29.1%
------------ ------------ ------------ ------------
Total 100.0% 100.0% 100.0% 100.0%
============ ============ ============ ============
Sales by product
category
(Unaudited) Three months ended Six months ended
December 31, December 31,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Product Revenues
AeroGardens $ 12,145,733 $ 4,438,916 $ 22,605,871 $ 5,931,861
Seed kits and
accessories 2,492,009 418,688 4,593,950 777,997
------------ ------------ ------------ ------------
Total $ 14,637,742 $ 4,857,604 $ 27,199,821 $ 6,709,858
============ ============ ============ ============
% of Revenues
AeroGardens 82.98% 91.38% 83.11% 88.41%
Seed kits and
accessories 17.02% 8.62% 16.89% 11.59%
------------ ------------ ------------ ------------
Total 100.00% 100.00% 100.00% 100.00%
============ ============ ============ ============
About AeroGrow International, Inc.
Founded in 2002 in Boulder, Colorado, AeroGrow International, Inc. is
dedicated to the research, development and marketing of the
AeroGarden® line of indoor gardening products. AeroGardens feature
NASA-proven, dirt-free aeroponic technology, allowing anyone to grow
farmer's market fresh herbs, salad greens, tomatoes, chili peppers, flowers
and more, indoors,
year-round, so simply and easily that no green thumb is required. See
www.aerogrow.com.
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements by Michael Bissonnette, Jerry Perkins, and/or the
Company, statements regarding growth of the AeroGarden product line,
optimism related to the business, expanding sales and other statements in
this press release are forward-looking statements within the meaning of the
Securities Litigation Reform Act of 1995. Such statements are based on
current expectations, estimates and projections about the Company's
business. Words such as expects, anticipates, intends, plans, believes,
sees, estimates and variations of such words and similar expressions are
intended to identify such forward-looking statements.
These statements are not guarantees of future performance and involve
certain risks and uncertainties that are difficult to predict. Actual
results could vary materially from the description contained herein due to
many factors including continued market acceptance of the Company's
products or the need to raise additional capital. In addition, actual
results could vary materially based on changes or slower growth in the
kitchen garden appliance market; the potential inability to realize
expected benefits and synergies; domestic and international business and
economic conditions; changes in customer demand or ordering patterns;
changes in the competitive environment including pricing pressures or
technological changes; technological advances; shortages of manufacturing
capacity; future production variables impacting excess inventory and other
risk factors listed from time to time in the Company's Securities and
Exchange Commission (SEC) filings under "risk factors" and elsewhere. The
forward-looking statements contained in this press release speak only as of
the date on which they are made, and the Company does not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this press release.
Contact Information: CONTACTS: Corporate John Thompson AeroGrow International, Inc. (303) 444-7755 Investor Budd Zuckerman Genesis Select Corporation (303) 415-0200