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Aerogrow International, Inc. (AERO) SEC Filing 10-K Annual report for the fiscal year ending Saturday, March 31, 2012

Aerogrow International, Inc.

CIK: 1316644 Ticker: AERO
Exhibit 99.1
AeroGrow Reports Results for the Fiscal Year Ended March 31, 2012
 
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$298,498 EBITDA profit for the fiscal year is $3.1 million better than the prior year and marks the first annual EBITDA profit in the Company’s history
 
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$1.6 million equity raise and restructured balance sheet improves liquidity and reduces long term debt
 
Boulder, COJune 26, 2012 - AeroGrow International, Inc. (OTCQB:AERO) ("AeroGrow" or the "Company"), makers of the AeroGarden® line of indoor gardening products, announced results for the fiscal year ended March 31, 2012.
 
AeroGrow reported an EBITDA profit of $298,498, representing the Company’s first-ever full year EBITDA profit, and a $3.1 million improvement over the EBITDA loss reported in the prior year.  The turnaround was driven by the Company’s success in improving marketing efficiency, increasing gross margins, exiting low margin sales channels, and reducing overhead costs.
 
“Delivering our first-ever full year EBITDA profit marks a proud day for AeroGrow,” said Mike Wolfe, AeroGrow’s President and Chief Executive Officer.  “We’ve worked hard to restructure our operations, shift our focus to the direct-to-consumer sales channels and dramatically reduce our breakeven revenue level.  Our results for the year show the benefits of those efforts.”
 
To achieve the EBITDA profit, the Company drove an increase in its gross margin to 49.4%, which was more than 19 percentage points higher than the prior year because of strategic price increases, greater promotional discipline, and reduced warehouse and fulfillment costs.  Also contributing to the EBITDA improvement was a $1.9 million, or 35%, reduction in overhead expense reflecting the Company’s continuing focus on cost controls.
 
During the year, the Company continued its strategic transition away from the low margin retail channel, resulting in a significant year-over-year decline in sales to retailers.  In addition, the Company’s direct-to-consumer revenue was adversely impacted by liquidity challenges the Company faced during the first half of the fiscal year.  These liquidity issues caused inventory shortages that impacted the Company’s ability to fully meet customer demand, and contributed to a 51% reduction in revenue-generating advertising.  Overall, these effects resulted in the Company’s total net revenue falling by 27.2% relative to the prior year.
 
On June 5, 2012, the Company announced that it raised $1.6 million in new equity capital, the final step in a broad restructuring of its balance sheet that converted more than $7.4 million in face value of debt and all of the Company’s preferred stock into common equity, simplifying the Company’s capital structure, strengthening the balance sheet, and dramatically reducing the impact of interest costs and principal repayments on the Company’s future cash flow.
 
“In the coming months we plan to leverage our improved operating performance and stronger balance sheet by launching a series of major growth initiatives that include expanding into new sales channels, introducing  a number of new products, our first concerted public relations program in years, and an increase in our direct-to-consumer marketing efforts,” continued Mr. Wolfe.  “We believe that the combination of continued passion on the part of consumers for the AeroGarden, our improved financial condition, and the launching of these growth initiatives should once again make AeroGrow an exciting story worth following.”
 
 
 

The following information was filed by Aerogrow International, Inc. (AERO) on Tuesday, June 26, 2012 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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