SOURCE: AeroGrow International, Inc.

August 07, 2008 09:08 ET

AeroGrow Reports First Quarter Financial Results

Quarterly Revenues Increase 7% Over Prior Year to $6.7 Million

BOULDER, CO--(Marketwire - August 7, 2008) - AeroGrow International, Inc. (NASDAQ: AERO) ("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) 220-1753
       Conference ID:    58135575

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 kits and accessories                       1,736,665        634,800
                                              -------------  -------------
    Total sales                                   6,720,081      6,278,685

Product Revenues
  AeroGardens                                          74.2%          89.9%
  Seed kits and accessories                            25.8%          10.1%
                                              -------------  -------------
    Total sales                                       100.0%         100.0%
                                              -------------  -------------

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.

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.

Contact Information

  • CONTACTS:

    Corporate
    John Thompson
    AeroGrow International, Inc.
    (303) 444-7755
    Email Contact

    Investor
    Budd Zuckerman
    Genesis Select Corporation
    (303) 415-0200
    Email Contact