Gaiam Reports Third Quarter Fiscal 2007 Results
- Third quarter revenues increased 36% to $70.3 million
- Operating income increased 315% to $4.2 million
- Earnings per share doubled to $0.12
BROOMFIELD, Colo., Nov. 7 /PRNewswire-FirstCall/ -- Gaiam, Inc. (Nasdaq: GAIA), a lifestyle media company providing a broad selection of information, media, products and services to customers who value personal development, wellness, ecological lifestyles, responsible media and conscious community, announced today results for its third quarter ended September 30, 2007.
Gaiam also announced that it will host a conference call today, November 7, 2007, at 2:30 p.m. MST (4:30 p.m. EST) to review the third quarter 2007 results.
Dial-in No.: 888-396-9923
Passcode: GAIAM
For the third quarter, Gaiam generated revenue of $70.3 million, an increase of 36% over the $51.8 million recorded in the same period last year. The internal growth rate was 34%.
Gross margin expanded 260 basis points to 65.6% of revenue in the third quarter of 2007, from 63.0% in the same period last year, which in turn represented a 750 basis point increase from 55.5% in the third quarter of 2005. The increase over 2006 was primarily due to higher margin international sales and subscriptions.
Operating expenses as a percentage of revenue decreased to 59.7% in the third quarter of 2007, from 61.0% in the comparable period last year even after increased expenses related to Gaiam's expanding community business.
Operating income for the third quarter of 2007 increased 315% to $4.2 million, or 6% of revenue, compared to operating income of $1.0 million, or 2% of revenue, a year ago.
Gaiam reported a net income for the third quarter of $2.9 million, or $0.12 per share, as compared to net income of $1.7 million, or $0.06 per share, for the third quarter of 2006. Gaiam repurchased 2.5 million shares of its stock in February 2007. Depreciation and amortization for the third quarter of 2007 was $3.3 million.
For the nine months ended September 30, 2007, Gaiam recorded net revenues of $181.1 million, a 24% increase from $146.7 million in the comparable period a year ago. Net income tripled to $4.3 million, or $0.17 per share, compared to net income of $1.4 million, or $0.06 per share, for the nine months ended September 30, 2006.
According to Nielsen's VideoScan, Gaiam's market share in the fitness/wellness DVD category increased to 49% for the nine months ended September 2007, up from 45% in the same nine months last year, and for the quarter ended September 2007, increased to 53% compared to 46% for the third quarter of 2006.
Lynn Powers, Gaiam's President, commented, "We are extremely pleased with our third quarter results as we achieved a 34% internal growth in sales and improved gross and operating margins. During the quarter we continued to successfully leverage our leading media content growing our DVD market share in fitness / wellness to 53%."
Although Gaiam's third quarter is typically a very demanding cash flow period, Gaiam generated $4.1 million in cash from its operations, bringing year to date cash generated from operations to $20.6 million compared to cash provided by operations of $0.6 million in the same nine months of last year.
During the third quarter, Gaiam strengthened its community by acquiring Zaadz, a leading social networking site, LIME Media, a multimedia lifestyle company, and a majority ownership of Conscious Enlightenment, an online and offline community.
Gaiam is entering into a strategic relationship with Care2, a social networking site with 7.5 million members that circulates 40 million newsletters per month. Among other things, Gaiam will become an exclusive provider of paid subscription services and e-commerce for Care2.
"We are very pleased with our results, which allowed us to accelerate development of our community and subscription programs. The recent acquisitions strengthen our leading position in the field, creating a unified online solution for LOHAS," said Jirka Rysavy, Chairman and Chief Executive Officer.
Gaiam's board of directors also authorized a share repurchase program of up to 5 million shares of Gaiam's Class A common stock as well as the filing of a shelf registration statement for the same amount of shares. In some instances shareholders of potential acquisition targets request Gaiam shares as consideration, although Gaiam generally expects to use its growing cash on hand.
A replay of the call will begin approximately one hour after the end of the call and will continue until 11:59 p.m. EST on November 14, 2007.
Replay number: 866-347-5809
For more information about Gaiam, please visit http://www.gaiam.com, or call 1-800-869-3603
This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as "expect," "believe," "will," "should" or comparable terminology or by discussions of strategy. While Gaiam believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, introduction of new products and services, completion and integration of acquisitions, the possibility of negative economic conditions, and other risks and uncertainties included in Gaiam's filings with the Securities and Exchange Commission. Gaiam assumes no duty to update any forward-looking statements.
Contact: John Mills
Integrated Corporate Relations, Inc.
310-954-1105
jmills@icrinc.com
GAIAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three months ended Three months ended
September 30, 2007 September 30, 2006
Net revenue $70,318 100.0% $51,786 100.0%
Cost of goods sold 24,174 34.4% 19,157 37.0%
Gross profit 46,144 65.6% 32,629 63.0%
Operating expenses 41,948 59.7% 31,619 61.0%
Earnings from operations 4,196 5.9% 1,010 2.0%
Other income 1,028 1.5% 1,512 2.9%
Earnings before
income taxes 5,224 7.4% 2,522 4.9%
Income tax expense 2,060 2.9% 977 1.9%
Minority interest in
net (income) loss
of consolidated
subsidiaries (246) -0.4% 108 0.2%
Net income $2,918 4.1% $1,653 3.2%
Shares outstanding:
Basic 24,705 26,705
Diluted 24,970 26,864
Income per share:
Basic $0.12 $0.06
Diluted $0.12 $0.06
GAIAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Nine months ended Nine months ended
September 30, 2007 September 30, 2006
Net revenue $181,137 100.0% $146,699 100.0%
Cost of goods sold 63,886 35.3% 54,017 36.8%
Gross profit 117,251 64.7% 92,682 63.2%
Operating expenses 113,357 62.6% 93,337 63.6%
Earnings (loss)
from operations 3,894 2.1% (655) -0.4%
Other income 3,375 1.9% 2,639 1.7%
Earnings before
income taxes 7,269 4.0% 1,984 1.3%
Income tax expense 2,868 1.6% 784 0.5%
Minority interest in
net (income) loss
of consolidated
subsidiaries (77) -0.0% 178 0.1%
Net income $4,324 2.4% $1,378 0.9%
Shares outstanding:
Basic 25,000 23,450
Diluted 25,222 23,697
Income per share:
Basic $0.17 $0.06
Diluted $0.17 $0.06
GAIAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
September 30, December 31,
2007 2006
(Unaudited)
Assets
Current assets:
Cash and cash equivalents (1) $81,565 $104,876
Accounts receivable, net 12,879 25,324
Inventory, net 27,421 24,313
Deferred advertising costs 4,789 3,965
Deferred tax assets 4,700 3,404
Other current assets 6,449 4,965
Total current assets 137,803 166,847
Property and equipment, net 8,673 7,784
Media library, net 35,673 37,201
Goodwill and other intangibles, net 39,862 28,879
Deferred tax assets, net 4,111 5,958
Notes receivable and other assets 987 4,299
Total assets $227,109 $250,968
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $17,060 $18,848
Accrued liabilities 10,531 7,437
Income taxes payable 888 415
Total current liabilities 28,479 26,700
Minority interest 5,961 5,662
Commitments and contingencies
Stockholders' equity:
Class A common stock, $.0001 par
value, 150,000,000 shares
authorized, 19,361,373 and
21,749,936 shares issued and
outstanding at September 30, 2007
and December 31, 2006, respectively
(1) 2 2
Class B common stock, $.0001 par
value, 50,000,000 shares authorized,
5,400,000 issued and outstanding at
September 30, 2007 and December 31,
2006 1 1
Additional paid-in capital (1) 170,387 200,906
Accumulated other comprehensive income 1,131 873
Retained earnings 21,148 16,824
Total stockholders' equity 192,669 218,606
Total liabilities and stockholders' equity $227,109 $250,968
(1) On February 6, 2007, Gaiam repurchased 2.5 million shares of its
Class A common stock for $32.9 million in cash including acquisition
costs. The repurchased stock resulted in a $32.9 million reduction to
Additional paid-in capital.
SOURCE Gaiam, Inc.
Released November 7, 2007