SOURCE: AeroGrow International, Inc.

June 26, 2008 10:30 ET

AeroGrow Reports Results for Fourth Quarter and Year Ending March 31, 2008

Revenues of $11.2 Million for the Quarter; Revenues of $38.4 Million for the Full Year

BOULDER, CO--(Marketwire - June 26, 2008) - AeroGrow International, Inc. (NASDAQ: AERO) ("AeroGrow" or the "Company"), makers of the AeroGarden® line of indoor gardening products, announced results for the quarter and year ended March 31, 2008.

For the fiscal year ended March 31, 2008, AeroGrow reported revenues of $38.4 million, up from $13.1 million for the year ended March 31, 2007, an almost three times increase in revenue. This was AeroGrow's second full year of operations since the introduction of the first AeroGardens in March 2006. AeroGrow reported a net loss for the year of $9.8 million, or ($0.84) per share, down from a loss of $10.4 million for the year ended March 31, 2007.

For the quarter ended March 31, 2008, AeroGrow reported revenues of approximately $11.2 million, an increase of 73% over the $6.4 million reported for the quarter ended March 31, 2007. For the quarter ended March 31, 2008, AeroGrow reported a net loss of $3.8 million or ($0.32) per share.

Significant events for the year include:

--  Growth from less than 1,000 storefronts in March 2007 to more than
    5,100 storefronts as of March 31, 2008, a more than five times increase.
    
--  Expansion into seven countries internationally.
    
--  Initiation of trading on the NASDAQ Capital Markets, ticker symbol
    AERO, on June 13, 2007.
    
--  The launch of a successful direct mail catalog channel that now mails
    approximately 750,000 catalogs every 45 to 60 days to customers and modeled
    prospects.
    
--  Seed kit, grow bulb and accessory sales increased from 13% of revenues
    in Fiscal 2007 to 18% for the year ended March 31, 2008, a 40% increase and
    evidence of strong customer acceptance and continued use. Nearly 25% of
    consumers in AeroGrow's database own more than one AeroGarden.
    
--  Successful chain-wide launches at Sears, Linens 'n Things, Bed Bath &
    Beyond, JCPenney and Macy's, and successful tests at Target and leading
    warehouse clubs.
    
--  Expansion of the product line to include differentiated gardens with
    price points from $99 to $229 and the introduction and acceptance of these
    new products by retailers.
    
    

"Our second full year of operations was marked by continued, substantial growth across all channels, successful penetration into new channels, dramatic expansion of our product line, and investment in improving our systems, processes and management team to capitalize on the opportunity and continue our growth," said Jerry Perkins, CEO of AeroGrow. "In the coming year we expect storefronts to increase to more than 8,600, featuring our full line of products priced from $99 to $229, with continued and new expansion into lawn and garden, mass retail and clubs, and tests in the planning stage for grocery, drug and office supply chains."

"While our growth was exceptional," continued Mr. Perkins, "we did experience internal stresses as a result of that growth. We did not effectively manage to the bottom line and experienced losses higher than we expected. We have implemented significant changes across the organization to address this, including new management of our Finance Department, new financial systems and procedures, and significant logistical and product cost reductions that we believe will have a strong, bottom line impact in the coming year. Our goals for the coming year include the continued rapid growth of our business, expansion of the category, and the profitable operations of our business to ensure continued growth and success."

The year ended March 31, 2008 represented AeroGrow's second full year of revenues from operations. The following table sets forth, as a percentage of sales, our quarterly financial results for the last 12 months of operations:

Unaudited Quarterly Condensed Financial Information

                                            Three months ended
                                ------------------------------------------
                                March 31,   Dec 31,   Sept 30,   June 30,
                                ---------  ---------  ---------  ---------
                                  2008       2007       2007       2007
                                ---------  ---------  ---------  ---------

Revenue ($000)                  $  11,157  $  14,638  $   6,283  $   6,279

Revenue
  Product sales - retail             51.9%      62.5%      77.2%      65.8%
  Product sales - direct to
   consumer                          44.9%      34.9%      22.8%      34.2%
  Product sales - international       3.2%       2.6%       0.0%       0.0%
                                ---------  ---------  ---------  ---------
     Total sales                    100.0%     100.0%     100.0%     100.0%

Operating expenses
  Cost of revenue                    60.0%      61.1%      60.0%      56.9%
  Research and development            6.9%       4.7%      10.0%       8.3%
  Sales and marketing                44.9%      34.1%      50.2%      46.5%
  General and administrative         21.3%      10.1%      15.6%      20.0%
                                ---------  ---------  ---------  ---------
      Total operating expenses      133.1%     110.0%     135.8%     131.7%
                                ---------  ---------  ---------  ---------

Other (income) expense, net           1.1%       1.4%       1.4%       0.5%

Loss from operations                -34.2%     -11.4%     -37.2%     -32.2%
                                =========  =========  =========  =========

Earnings Conference Call

AeroGrow will host a conference call today, Thursday, June 26, 2008, to review operational results for the three months and fiscal full year ended March 31, 2008.

The conference call is scheduled for 12:00 PM (noon) 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 July 26, 2008. To access the replay by phone, please dial:

U.S. and Canada:  1 (888) 562-2824
International:    1 (402) 220-7739
Conference ID:    48675793

AEROGROW INTERNATIONAL, INC.
CONDENSED STATEMENT OF
OPERATIONS

                Three months ended March 31,      Years ended March 31,
                ----------------------------  ----------------------------
                    2008           2007           2008           2007
                -------------  -------------  -------------  -------------
Revenue
  Product
   sales        $  11,156,605  $   6,434,179  $  38,356,677  $  13,144,037

Operating
 expenses
  Cost of
   revenue      $   6,695,876      3,619,356     22,975,385      8,404,507
  Research and
   development        772,298        568,760      2,605,112      2,113,255
  Sales and
   marketing        5,009,151      2,831,764     16,084,353      7,117,613
  General and
   administrative   2,376,175      1,378,373      6,084,728      4,050,312
                -------------  -------------  -------------  -------------
  Total
   operating
   expenses        14,853,500      8,398,253     47,749,578     21,685,687
                -------------  -------------  -------------  -------------

Loss from
 operations        (3,696,895)    (1,964,074)    (9,392,901)    (8,541,650)

Other (income)
 expense, net
  Interest
   (income)           (13,191)       (18,665)      (115,070)      (176,173)
  Interest
   expense            134,337         51,149        558,089        356,594
  Loss on
   modification
   of debt                  -              -              -              -
  Registration
   rights
   penalty                  -              -              -      1,664,380
                -------------  -------------  -------------  -------------
  Total other
   (income)
   expense, net       121,146         32,484        443,019      1,844,801
                -------------  -------------  -------------  -------------

Net loss        $  (3,818,041) $  (1,996,558) $  (9,835,920) $ (10,386,451)
                =============  =============  =============  =============

Net loss per
 share, basic
 and diluted    $       (0.32) $       (0.19) $       (0.84) $       (1.09)
                =============  =============  =============  =============

Weighted
 average number
 of common
 shares
 outstanding,
 basic and
 diluted           12,066,080     10,121,762     11,662,891      9,505,926
                =============  =============  =============  =============


CONDENSED BALANCE SHEETS

                                 March 31,      March 31,
                                   2008           2007
                               -------------  -------------
ASSETS
Current assets
  Cash                         $   1,559,792  $   5,495,501
  Restricted cash                     86,676         84,363
  Accounts receivable, net         2,412,101      1,884,743
  Other receivable                   422,530        182,221
  Inventory                        4,688,444      3,940,614
  Prepaid expenses and other         762,013        480,990
                               -------------  -------------
Total current assets               9,931,556     12,068,432
Property and equipment, net        1,830,646        909,496
Other assets
  Intangible assets, net              56,263         28,723
  Deposits                           101,164         35,155
                               -------------  -------------
                                     157,427         63,878
                               -------------  -------------
Total Assets                   $  11,919,629  $  13,041,806
                               =============  =============

LIABILITIES AND STOCKHOLDERS'
 EQUITY
Current liabilities
  Current portion - long term
   debt                        $     128,927  $           -
  Due to factor                    1,480,150        645,151
  Accounts payable                 3,023,366      3,192,734
  Accrued expenses                 2,452,025      1,166,485
  Customer deposits                  232,200              -
  Deferred rent                       65,037         53,531
                               -------------  -------------
Total current liabilities          7,381,705      5,057,901
Long term debt                       129,373              -
Stockholders' equity
  Preferred stock                          -              -
  Common stock                        12,076         11,065
  Additional paid-in capital      44,024,559     37,765,003
  Accumulated (deficit)          (39,628,084)   (29,792,163)
                               -------------  -------------
Total Stockholders' Equity         4,408,552      7,983,905
                               -------------  -------------

Total Liabilities and
 Stockholders' Equity          $  11,919,629  $  13,041,806
                               =============  =============


SALES BY CHANNEL (Unaudited)

                Three months ended March 31,      Years ended March 31,
                ----------------------------  ----------------------------
                    2008           2007           2008           2007
                -------------  -------------  -------------  -------------
Product
 Revenues
  Product
   sales-retail $   5,785,315  $   4,189,871  $  23,910,782  $   8,949,042
  Product
   sales-direct
   to consumer      5,013,133      2,244,308     13,704,717      4,194,995
  Product
   sales-
   international      358,157              -        741,177              -
                -------------  -------------  -------------  -------------
     Total
      sales        11,156,605      6,434,179     38,356,676     13,144,037

Product
 Revenues
  Product
   sales-retail          51.9%          65.1%          62.4%          68.1%
  Product
   sales-direct
   to consumer           44.9%          34.9%          35.7%          31.9%
  Product
   sales-
   international          3.2%           0.0%           1.9%           0.0%
                -------------  -------------  -------------  -------------
     Total
      sales             100.0%         100.0%         100.0%         100.0%



SALES BY PRODUCT CATEGORY
(Unaudited)

                Three months ended March 31,      Years ended March 31,
                ----------------------------  ----------------------------
                    2008           2007           2008           2007
                -------------  -------------  -------------  -------------
Product
 Revenues
  AeroGardens   $   8,934,286  $   5,464,416  $  31,540,408  $  11,520,202
  Seed kits and
   accessories      2,222,319        969,763      6,816,269      1,623,835
                -------------  -------------  -------------  -------------
     Total
      sales        11,156,605      6,434,179     38,356,677     13,144,037

Product
 Revenues
  AeroGardens            80.1%          84.9%          82.2%          87.6%
  Seed kits and
   accessories           19.9%          15.1%          17.8%          12.4%
                -------------  -------------  -------------  -------------
     Total
      sales             100.0%         100.0%         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 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
    Email Contact

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