EX-99.1 2 a07-28631_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

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, CO, November 7, 2007 – 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 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.