AeroGrow Reports First Quarter Financial Results
| · | Quarterly revenues increase 7% over prior year to $6.7 million |
Boulder, CO – August 07, 2008 -- AeroGrow International, Inc. (NASDAQ:AERO - News) ("AeroGrow" or the "Company"), makers of the AeroGarden® line of indoor gardening products, announced results for the quarter ended June 30, 2008.
For the quarter ended June 30, 2008, AeroGrow reported revenues of approximately $6.7 million, an increase of 7% over the $6.3 million reported for the prior year's quarter ended June 30, 2007. For the quarter ended June 30, 2008, AeroGrow reported a net loss of $2.8 million or $0.23 per share as compared to a net loss of $2.0 million for the quarter ended June 30, 2007.
“As expected, our revenue growth slowed due to summer seasonality and a reduction in wholesale orders as retailers sold through existing inventory in preparation for the fall rollout of our new and expanded product lines,” said Jerry Perkins, CEO of AeroGrow. “Our net loss was also in line with our expectations, and up from last year due to increased G&A supporting a far larger annual sales base. As we head into the fall quarter, we’re running all factories at full capacity to support our rollout into thousands of new retail storefronts in the next few months. Also noteworthy is the 174% increase in our revenues from seed kits and accessories year over year as we achieve increased levels of repeat sales from customers adopting the AeroGarden as an ongoing part of their lives.”
The following table sets forth, as a percentage of sales, our quarterly financial results for the three months ended June 30, 2008, and the three months ended June 30, 2007:
| | | Three months ended June 30, | |
| | | 2008 | | | 2007 | |
| Revenue | | | | | | |
| Product sales - retail | | | 39.3 | % | | | 65.8 | % |
| Product sales - direct to consumer | | | 49.7 | % | | | 34.2 | % |
| Product sales - international | | | 11.0 | % | | | 0.0 | % |
| Total sales | | | 100.0 | % | | | 100.0 | % |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| Cost of revenue | | | 54.9 | % | | | 56.9 | % |
| Research and development | | | 10.8 | % | | | 8.3 | % |
| Sales and marketing | | | 51.3 | % | | | 46.5 | % |
| General and administrative | | | 22.6 | % | | | 20.0 | % |
| Total operating expenses | | | 139.6 | % | | | 131.7 | % |
| | | | | | | | | |
| Other (income) expense, net | | | 2.3 | % | | | 0.5 | % |
| | | | | | | | | |
| Loss from operations | | | -41.9 | % | | | -32.2 | % |
Earnings Conference Call
AeroGrow will host a conference call today, Thursday, August 7, 2008, to review operational results for the quarter ended June 30, 2008.
The conference call is scheduled for 12:00 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 September 7, 2008. To access the replay by phone, please dial:
| U.S. and Canada: | 1 (800) 695-1018 |
| International: | 1 (402) 220-7753 |
| Conference ID: | 58135575 |
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 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.
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 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.
| CONDENSED STATEMENT OF OPERATIONS | | | | | | |
| | | Three months ended June 30, | |
| | | 2008 | | | 2007 | |
| Revenue | | | | | | |
| Product sales | | $ | 6,720,081 | | | $ | 6,278,685 | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| Cost of revenue | | $ | 3,686,823 | | | | 3,575,276 | |
| Research and development | | | 725,415 | | | | 521,819 | |
| Sales and marketing | | | 3,449,883 | | | | 2,920,987 | |
| General and administrative | | | 1,518,712 | | | | 1,255,008 | |
| Total operating expenses | | | 9,380,833 | | | | 8,273,090 | |
| | | | | | | | | |
| Loss from operations | | | (2,660,752 | ) | | | (1,994,405 | ) |
| | | | | | | | | |
| Other (income) expense, net | | | | | | | | |
| Interest (income) | | | (1,050 | ) | | | (37,859 | ) |
| Interest expense | | | 157,647 | | | | 66,184 | |
| Loss on modification of debt | | | - | | | | - | |
| Registration rights penalty | | | - | | | | - | |
| Total other (income) expense, net | | | 156,597 | | | | 28,325 | |
| | | | | | | | | |
| Net loss | | $ | (2,817,349 | ) | | $ | (2,022,730 | ) |
| | | | | | | | | |
| Net loss per share, basic and diluted | | $ | (0.23 | ) | | $ | (0.18 | ) |
| | | | | | | | | |
| Weighted average number of common | | | | | | | | |
| shares outstanding, basic and diluted | | | 12,100,387 | | | | 11,085,389 | |
| CONDENSED BALANCE SHEETS | | | | | | | | |
| | | | | | | June 30, | |
| | | | | | | 2008 | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| Cash | | | | | | $ | 344,981 | |
| Restricted cash | | | | | | | 473,275 | |
| Accounts receivable, net | | | | | | | 2,419,351 | |
| Other receivable | | | | | | | 323,451 | |
| Inventory | | | | | | | 4,951,647 | |
| Prepaid expenses and other | | | | | | | 730,137 | |
| Total current assets | | | | | | | 9,242,842 | |
| Property and equipment, net | | | | | | | 1,820,669 | |
| Other assets | | | | | | | | |
| Intangible assets, net | | | | | | | 132,910 | |
| Deposits | | | | | | | 101,164 | |
| | | | | | | | 234,074 | |
| Total Assets | | | | | | $ | 11,297,585 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Current portion - long term debt | | | | | | $ | 1,733,502 | |
| Due to factor | | | | | | | - | |
| Accounts payable | | | | | | | 4,275,844 | |
| Accrued expenses | | | | | | | 2,145,248 | |
| Customer deposits | | | | | | | 244,857 | |
| Deferred rent | | | | | | | 35,327 | |
| Total current liabilities | | | | | | | 8,434,778 | |
| Long term debt | | | | | | | 1,214,507 | |
| Stockholders' equity | | | | | | | | |
| Preferred stock | | | | | | | - | |
| Common stock | | | | | | | 12,100 | |
| Additional paid-in capital | | | | | | | 44,081,632 | |
| Accumulated (deficit) | | | | | | | (42,445,432 | ) |
| Total Stockholders' Equity | | | | | | | 1,648,300 | |
| | | | | | | | | |
| Total Liabilities and Stockholders' Equity | | | | | | $ | 11,297,585 | |
| SALES BY CHANNEL (Unaudited) | | | | | | | | |
| | | Three months ended June 30, | |
| | | 2008 | | | 2007 | |
| Product Revenues | | | | | | | | |
| Product sales- retail | | $ | 2,642,575 | | | $ | 4,129,853 | |
| Product sales- direct to consumer | | | 3,339,410 | | | | 2,148,832 | |
| Product sales- international | | | 738,096 | | | | - | |
| Total sales | | | 6,720,081 | | | | 6,278,685 | |
| | | | | | | | | |
| Product Revenues | | | | | | | | |
| Product sales- retail | | | 39.3 | % | | | 65.8 | % |
| Product sales- direct to consumer | | | 49.7 | % | | | 34.2 | % |
| Product sales- international | | | 11.0 | % | | | 0.0 | % |
| Total sales | | | 100.0 | % | | | 100.0 | % |
| SALES BY PRODUCT CATEGORY (Unaudited) | | | | | | | | |
| | | Three months ended June 30, | |
| | | 2008 | | | 2007 | |
| Product Revenues | | | | | | | | |
| AeroGardens | | $ | 4,983,416 | | | $ | 5,643,885 | |
| Seed kit and accessories | | | 1,736,665 | | | | 634,800 | |
| Total sales | | | 6,720,081 | | | | 6,278,685 | |
| | | | | | | | | |
| Product Revenues | | | | | | | | |
| AeroGardens | | | 74.2 | % | | | 89.9 | % |
| Seed kit and accessories | | | 25.8 | % | | | 10.1 | % |
| Total sales | | | 100.0 | % | | | 100.0 | % |
