EXHIBIT 99.1
FOR IMMEDIATE RELEASE
AeroGrow Reports Second Quarter Financial Results
- | Quarterly revenues increase 510% over prior year quarter to $6.3 million |
- | Retail storefronts expand to over 3,900 for 2007 holiday season |
Boulder, CO – November 14, 2007 -- AeroGrow International, Inc. (NASDAQ: AERO- News ) ("AeroGrow" or the "Company"), makers of the AeroGarden® kitchen garden appliance, today announced results for the quarter and six months ended September 30, 2007.
For the quarter ended September 30, 2007, AeroGrow reported revenues of approximately $6.3 million, an increase of 510% over the $1.03 million reported for the prior year’s quarter ended September 30, 2006. For the quarter ended September 30, 2007, AeroGrow reported a net loss of $2.3 million or $0.20 per share as compared to a net loss of $3.4 million, or $0.37 per share, for the quarter ended September 30, 2006.
For the six months ended September 30, 2007, AeroGrow reported revenues of approximately $12.6 million, an increase of 578% over the $1.9 million, in revenues, reported for the six months ended September 30, 2006. For the six months ended September 30, 2007, AeroGrow reported a net loss of $4.4 million or $0.39 per share as compared to a net loss of $5.5 million, or $0.60 per share, for the six months ended September 30, 2006.
“The past quarter ushered in the next phase of AeroGrow’s growth,” stated AeroGrow Founder and CEO, Michael Bissonnette. “Key accomplishments achieved during the quarter to date include:
| · | Significantly expanding our domestic retail distribution, from 750 storefronts last holiday season to 3,900 storefronts this holiday season. |
| · | Completing development of multiple new products, including our new lower cost, smaller footprint six pod AeroGardens and our new three pod AeroGarden systems including Chef in a Box™ , Florist in a Box™ and Garden in a Box™ products. We believe these products will greatly expand both our domestic and international markets with new compact designs tailored for smaller homes, condos and apartments with smaller kitchens as well as better price points for greater mass distribution. We are encouraged by the response these new products have received from major catalog and home shopping channels interested in participating as launch partners in 2008 for these new offerings. |
| · | Substantially completing two new infomercials for Florist in a Box and Chef in a Box. |
| · | Strengthening our management team with the addition of a new President and COO, a 30 year veteran in consumer products with a history of achieving significant top line and bottom line results in large successful public companies. |
We have also begun our international launch, to date accomplishing:
| · | Infomercial testing in Japan through our Japanese distributor, with additional testing, including incorporation of Japanese video footage and testimonials, to be completed by December 31, 2008. |
| · | Launching in the UK with successful airings of our infomercial and a successful debut of the AeroGarden in Selfridges, a premiere London high end department store. We have also obtained multiple catalog placements including Scotts of Stow and additional retailers including Fenwicks and Bentals who will begin selling the AeroGarden by December 31, 2008. |
| · | Obtaining commitments for airings by major home shopping networks in the UK and Germany to feature the AeroGarden in February 2008. |
| · | Finalizing agreements with distributors to air the AeroGarden infomercial before December 31, 2007 in Germany, Spain, Ireland and Belgium. |
As a result of these actions, we stand ready to maximize our opportunities for the upcoming holiday season and beyond.”
The following table sets forth, as a percentage of sales, our quarterly financial results for the three and six months ended September 30, 2007 and the three and six months ended September 30, 2006:
Three months ended September 30, | Six Months ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
| Revenue | ||||||||||||||||
| Product sales- retail | 77.2 | % | 77.6 | % | 71.5 | % | 80.6 | % | ||||||||
| Product sales- direct to consumer | 22.8 | % | 22.4 | % | 28.5 | % | 19.4 | % | ||||||||
| Total sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenue | 60.0 | % | 80.3 | % | 58.5 | % | 81.1 | % | ||||||||
| Research and development | 10.0 | % | 39.7 | % | 9.2 | % | 45.6 | % | ||||||||
| Sales and marketing | 50.2 | % | 132.0 | % | 48.5 | % | 125.3 | % | ||||||||
| General and administrative | 15.6 | % | 75.1 | % | 17.6 | % | 88.0 | % | ||||||||
| Total operating expenses | 135.8 | % | 327.1 | % | 133.8 | % | 340.0 | % | ||||||||
| Loss from operations | -35.8 | % | -227.1 | % | -33.8 | % | -240.0 | % | ||||||||
Retail revenues for the quarter ended September 30, 2007, representing sales to retailers, increased to $4.9 million, 77% of total sales, reflecting an expansion in retail storefronts carrying the AeroGarden products for the quarter of approximately 2,800 storefronts as compared to the prior quarter, bringing the total to approximately 3,900 storefronts. Initial inventory load in of these new retailers occurred primarily during September 2007 and store merchandising has been substantially completed during October and November. Direct to consumer sales derived through AeroGrow’s infomercials, websites and AeroGrow’s newly launched catalog mailings totaled $1.4 million for the quarter, 23% of total sales, representing a decline from previous three quarters due to the seasonality associated with television sales due to reduced viewership during the summer months which resulted in a decrease of television media spending of 50% from the previous quarter, as well as seasonality related to the sale of indoor gardening products during the summer outdoor gardening season. Seed Kit and accessory sales increased to $1.5 million for the quarter to 23% of total sales, as a result both retail stocking of seed kits for the holiday season as well as increases in sales to existing customers through our websites and catalogs. A table reflecting our sales for the three and six months ended September 30, 2007 and 2006 by both channel of distribution (retail/direct) and product category (AeroGardens/Seed Kits and accessories) is attached.
Net loss for the quarter was impacted by $730,000 in costs associated with production of two new infomercials for the Chef in a Box and Florist in a Box products to be launched in calendar year 2008 as well as $113,000 in initial display and merchandising costs related to the expanded retail distribution realized during the quarter.
Earnings Conference Call
AeroGrow will host a conference call today, Wednesday, November 14, 2007, to review operational results for the six months ended September 30, 2007. In addition, AeroGrow will discuss additional developments including major new retailers that will be launching the AeroGarden within the next six months.
The conference call is scheduled for 4:30 PM ET. To participate in the call, please dial:
| U.S. and Canada: | 1 (800) 374-0113 |
| International: | 1 (706) 758-9607 |
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 September 14, 2007. To access the replay by phone, please dial:
| U.S. and Canada: | 1 (800) 642-1687 |
| International: | 1 (706) 645-9291 |
| Conference ID: | 23976558 |
About AeroGrow International, Inc.
Founded in 2002 in Boulder, Colorado, AeroGrow International, Inc. is dedicated to the research, development and marketing of the AeroGarden®, the world's first kitchen garden appliance. The AeroGarden features NASA-proven, dirt-free aeroponic technology, allowing anyone to grow farmer's market fresh herbs, salad greens, tomatoes, chili peppers, strawberries and more, indoors, year-round, so simply and easily that no green thumb is required. See www.aerogrow.com.
CONTACTS:
Corporate Investor
John Thompson Budd Zuckerman
AeroGrow International, Inc Genesis Select Corporation
(303) 444-7755 (303) 415-0200
john@aerogrow.com bzuckerman@genesisselect.com
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements by Michael Bissonnette 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.
AEROGROW INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) | Three Months ended September 30, | Six Months ended September 30, | ||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
| Revenue | ||||||||||||||||
| Product sales | $ | 6,283,645 | $ | 1,030,316 | $ | 12,562,079 | $ | 1,852,254 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenue | 3,765,376 | 827,165 | 7,347,794 | 1,502,860 | ||||||||||||
| Research and development | 628,542 | 409,453 | 1,157,987 | 844,384 | ||||||||||||
| Sales and marketing | 3,156,414 | 1,359,797 | 6,091,537 | 2,320,271 | ||||||||||||
| General and administrative | 982,181 | 773,362 | 2,208,033 | 1,629,402 | ||||||||||||
| Total operating expenses | 8,532,513 | 3,369,777 | 16,805,351 | 6,296,917 | ||||||||||||
| Loss from operations | (2,248,868 | ) | (2,339,461 | ) | (4,243,272 | ) | (4,444,663 | ) | ||||||||
| Other (income) expense, net | ||||||||||||||||
| Interest (income) | (32,341 | ) | (60,749 | ) | (70,200 | ) | (144,862 | ) | ||||||||
| Interest expense | 125,664 | 101,804 | 191,849 | 203,604 | ||||||||||||
| Other income | (2,929 | ) | - | (2,929 | ) | - | ||||||||||
| Registration rights penalty | - | 1,028,250 | - | 1,028,250 | ||||||||||||
| Total other (income) expense, net | 90,394 | 1,069,305 | 118,7120 | 1,086,992 | ||||||||||||
| Net loss | $ | (2,339,262 | ) | $ | (3,408,766 | ) | $ | (4,361,992 | ) | $ | (5,531,655 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.20 | ) | $ | (0.37 | ) | $ | (0.39 | ) | $ | (0.60 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 11,469,707 | 9,286,678 | 11,278,598 | 9,202,219 | ||||||||||||
BALANCE SHEET DATA | September 30, | March 31, | ||||||
2007 | 2007 | |||||||
ASSETS | (Unaudited) | |||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 6,193,987 | $ | 5,495,501 | ||||
| Restricted cash | 85,712 | 84,363 | ||||||
| Accounts receivable, | 4,873,177 | 1,884,743 | ||||||
| Other receivable | 180,449 | 182,221 | ||||||
| Inventory | 6,480,391 | 3,940,614 | ||||||
| Prepaid expenses and other | 415,629 | 480,990 | ||||||
| Total current assets | 18,229,345 | 12,068,432 | ||||||
| Property and equipment | 1,138,965 | 909,496 | ||||||
| Other assets | 108,128 | 63,878 | ||||||
| Total Assets | $ | 19,476,438 | $ | 13,041,806 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Current portion - capital lease obligation | $ | 52,913 | $ | - | ||||
| Due to factor | 3,577,447 | 645,151 | ||||||
| Accounts payable | 4,036,087 | 3,192,734 | ||||||
| Accrued expenses | 1,544,109 | 1,166,485 | ||||||
| Customer deposits | 900,568 | - | ||||||
| Deferred rent | 61,035 | 53,531 | ||||||
| Total current liabilities | 10,172,159 | 5,057,901 | ||||||
| Capital lease obligation – long term portion | 79,137 | - | ||||||
| Stockholders' equity | ||||||||
| Common stock | 12,018 | 11,065 | ||||||
| Additional paid-in capital | 43,367,278 | 37,765,003 | ||||||
| Accumulated (deficit) | (34,154,154 | ) | (29,792,163 | ) | ||||
| Total Stockholders' Equity | 9,225,142 | 7,983,905 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 19,476,438 | $ | 13,041,806 | ||||
Sales by Channel (Unaudited) | Three Months ended September 30, | Six Months ended September 30, | ||||||||||||||
| Product Revenues | 2007 | 2006 | 2007 | 2006 | ||||||||||||
| Product sales- retail | $ | 4,850,298 | $ | 799,335 | $ | 8,979,900 | $ | 1,492,945 | ||||||||
| Product sales- direct to consumer | 1,433,347 | 230,981 | 3,582,179 | 359,309 | ||||||||||||
| Total | $ | 6,283,645 | $ | 1,030,316 | $ | 12,562,079 | $ | 1,852,254 | ||||||||
| % of Revenues | ||||||||||||||||
| Product sales- retail | 77.19 | % | 77.58 | % | 71.48 | % | 80.60 | % | ||||||||
| Product sales- direct to consumer | 22.81 | % | 22.42 | % | 28.52 | % | 19.40 | % | ||||||||
| Total sales | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Sales by product category (Unaudited) | Three Months ended September 30, | Six Months ended September 30, | ||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
| Product Revenues | ||||||||||||||||
| AeroGardens | $ | 4,816,504 | $ | 889,979 | $ | 10,460,138 | $ | 1,616,870 | ||||||||
| Seed kits and accessories | 1,467,141 | 140,337 | 2,101,941 | 235,384 | ||||||||||||
| Total | $ | 6,283,645 | $ | 1,030,316 | $ | 12,562,079 | $ | 1,852,254 | ||||||||
| % of Revenues | ||||||||||||||||
| AeroGardens | 76.65 | % | 86.38 | % | 83.27 | % | 87.29 | % | ||||||||
| Seed kits and accessories | 23.35 | % | 13.62 | % | 16.73 | % | 12.71 | % | ||||||||
| Total | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||