Aerogrow International, Inc. (AERO) SEC Filing 10-Q Quarterly report for the period ending Saturday, December 31, 2016

Exhibit 99.1

 

AeroGrow Reports Results for the Third quarter ended December 31, 2016

 

·	Third Quarter Sales up 11% to $13.2 million

·	Year to Date Sales up 21% to $17.6 million

·	Strong Sales in On-line and Retail Channels; High Levels of Sell-thru

·	Third Quarter Operating Income was $620K; Year to Date improvement + 42%

·	Third Quarter Adjusted EBITDA $1.5 million; Year to Date + 470%

Boulder, CO - (February 13, 2017) - AeroGrow International, Inc. (OTCQB: AERO) (“AeroGrow” or the “Company”), which

is the manufacturer and distributor of the world’s leading indoor gardening systems – the AeroGarden line of Smart Countertop Gardens™  – announced results for the third quarter ended December 31, 2016.

For the quarter the Company recorded total net revenue of $13.2 million, up from $11.9 million the prior year. Adjusted EBITDA was $1.48 million, down from $1.65 million, primarily due to increased advertising spending to further build the brand.  For the nine months ended December 31, sales rose + 21% to $17.6 million from $14.5 million in the previous year, and adjusted EBITDA stands at $697 thousand, + 470% vs. $122 thousand in the prior year.

“I’m very pleased to report on our 2016 holiday selling season – overall the best in our Company’s history,” said President and CEO J. Michael Wolfe.  “Our focus this year was to continue the growth in our highly successful on-line channels and to establish in-store success with prominent national retailers.  The results were exceptional as we experienced + 49% sell-thru growth at Amazon.com and + 101% at Amazon.ca.  We also had good results with our other on-line retailers, including a very successful launch at Target.com.  But I think the really big news for us was the success we had in-store as we experienced nearly 100% chain-wide sell-thru at Bed, Bath & Beyond and Sur La Table, with high-profile rollouts at both stores.

“We have worked hard to get our product line, our advertising, our point of purchase merchandising and our mix of stores optimized so that we could begin seeing good success in brick and mortar retail.  This resulted in our spending more on media than we have previously, but drove excellent sell-thru and I truly think we’ve now “cracked the code” on achieving in-store retail success.  We believe we are poised to grow this channel significantly.

“We also had good results in our Direct-to-Consumer business and on QVC.  In addition we had a very successful launch in our European business – with encouraging results on the Amazon platforms in the UK, France and Germany.

“While our sell-thru results were exceptional this past holiday season, I frankly would have liked our sales results (sell-in) to have been higher in the quarter.  Two factors contributed to our quarterly sales results not being quite as robust as our sell-thru results:  (1) we loaded more products in to retailers earlier than we have in the past (remember our second quarter sales were +106%); and (2) Amazon, our largest customer, recently began a new practice of carrying fewer days of inventory from key vendors.  This resulted in our making fewer shipments to them in the quarter relative to their extremely strong holiday season sell-thru for our products.  Early 2017 sell-thru at Amazon has been strong – and we anticipate that they will remain a significant growth engine for us – but short term sales may be impacted as they continue to adjust their inventory levels.

 “Our new products were extremely well received – particularly our launch of the world’s first Wi-Fi enabled indoor garden.  In addition, we introduced a series of gardens that feature colorful, high-end finishes, a major contributor to our success in the housewares channel.

“I’ve never been more excited about our future.  In Amazon and our Direct-to-Consumer business, we have two very well-established channels that continue to grow and generate significant profitability.  In addition, we’ve now proven that we can be successful in-store, a highly scalable channel that can grow significantly in the coming years.  And we also had a very promising start to our international distribution model.

“Finally, we are now very well-capitalized, with no debt and a strong cash position due to improved performance and the warrant exercised by The Scotts Miracle-Gro Company in November of last year.  When you combine the strong sales, expanding distribution, excellent capitalization, and the continued innovation of our product line, we believe we are in a very strong position to grow rapidly in fiscal 2018 and beyond.”