AeroGrow Achieves First Profitable Quarter

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AeroGrow Achieves First Profitable Quarter

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AeroGrow Achieves First Profitable Quarter


   * Strong retail sell-in, cost-control measures drive $418 thousand net income

   * Quarterly revenue more than doubles from prior year, to $13.9 million
Boulder, CO - November 6, 2008 -- AeroGrow International, Inc. (NASDAQ:AERO [links to finance.yahoo.com/q?s=aero] - News [links to finance.yahoo.com/q/h?s=aero]) ("AeroGrow" or the "Company"), makers of the AeroGarden? line of indoor gardening products, announced results for the quarter ended September 30, 2008.

AeroGrow reported quarterly revenue of approximately $13.9 million, an increase of 120% over the $6.3 million reported for the prior year's quarter ended September 30, 2007, and an increase of 106% over the $6.7 million in revenue reported for the quarter ended June 30, 2008.

For the quarter ended September 30, 2008, AeroGrow reported a net profit of $418 thousand, or $0.035 per share, as compared to a net loss of $2.3 million for the prior year's quarter, a $2.8 million turnaround. The current quarter's profit represents more than a $3 million improvement from the June 30, 2008 quarter as well, when the company reported a net loss of $2.8 million.

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Ginger
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Running 400W for 16-18 hours

Running 400W for 16-18 hours a day does give one pause, doesn't it? That's a lot of power... And the sodium definitely needs to be locked in a closet. That light is way too yellow for living space.

Maybe another idea for Aerogrow pricing would simply be a volume discount. They've offered deals on 3 classics + a wall rack for $450... Maybe they should just offer 10% off two, 15% off three, 20% off four... Though, I think $60 for one AG3 is a more reasonable price. I can get 10-20% off  by going to another retailer with a lower markup...

I think you're right, Bruce, "toy" and "hourly wage" are closely related.  Though people's interpretation of "toy" varies - or "toy" scales up to "luxury", like for high-end TV's. But in my family, gifts are expected to exchange at somewhere near parity in value, and those of us with children spend on them, so "hourly wage" is more of a lowest common denominator affair...

Moderator. Author of Indoor SaladEcigs 102, and the Calm Act climate apocalyptic series.

BB (not verified)
You're right on, Ginger.

You're right on, Ginger. They're not the cheapest or the best at growing plants but they're damn beautiful and practical for anybody, anywhere. Put them together in a few minutes, stick in the pods, add water and tabs and wait to be amazed. And you can be as active as you want, just grow the pods with tabs or experiment your heart out. That's hard to beat.

Maere and I are both getting a little reluctant to move the Deluxes to the grow tent now that the time is nigh, we're going to miss looking at all the new growth each morning with coffee and tea. Maere loves clipping fresh herbs and I enjoy futzing with them. I'm enjoying exploring the grow tent's potential but it's taking a lot of work and thought while the AGs just keep chugging away with little effort, especially with Peat's help. The vast majority would never get past the little work I've invested in the tent so far, not to mention the expense even though it will be cheaper in the long run. But then again, nowhere as cheap as we can buy whatever we want at the store/coop. I realize we're not doing this to save money but for pure enjoyment.

We would buy a 6 pack of the AG3s for $300 or so for gifts. I'd like to see $50 ea. but could live with $60. I've always had  a "Toy category" price. Once it was $10 then $25, $50 and so on. Just now thinking back, it was always an hour or two's salary that grew with inflation and profession. I think many people are like that but I've never been mainstream so what do I know? Still, at $49.95 I think they'd have a stampede, recession or not.

I think the classic, deluxe and pro series are doomed because of the water pump. The generic Chinese cardboard box my last pro came in just reinforced that thought. I hope they'll come out with a cheap retrofit but probably a new series based on the air pump.

Here's hoping they keep doing things right!

Ginger
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Actually, that's where I

Actually, that's where I started with the AG - saw it and decided it was a cool Christmas present for my mother, and got a sister to go halves with me. Then of course bought me one, too, and... Now I've bought three for me (four total), but I have four, because of one being defective...

Quality control matters bigtime. Replacing defective equipment is worse than a dead loss. And the thought of assembling and packaging those things in China... Most of it is simple molded plastic! Costs next to nothing to produce - US, China, or Swaziland. But instead it's all assembled in China, bashed around in its packaging, and we're paying vast carbon sums to shove the Pacific Ocean around.

Anyway, I bought the last AG - the Deluxe - despite having studied hydroponic light rigs and hummed and hawed over it for about a month. Even meditated on buying a grow closet like yours. But - all that costs a bit more. Takes a bit more power. And it's hell on the decor, both attractiveness & sheer light damage to carpets & furniture & art. I have no spare room. Only living space, cold-climate garage, and my office. And that which lives in my office, must be light-compatible with computer screen. 400W metal halide? Not! So despite the Deluxe not being quite as flexible as what I really wanted... it works in my space, and its price point was more reasonable for adding another unit of indoor garden. So another AG it was...

The AG3's are very cute. And I enjoyed having the dill and basil around last winter so much, I grew oodles of the stuff outside this year. Excess crop in baggies in the freezer now. I would give more AG's as gifts, but the pricepoint is too high for my family. Even gift-for-mother - the pinnacle of our family outlays, aside from gifts-for-children - was a stretch split two ways, by our standards.

What do you think the right price point is for these things? I'm thinking $60 for an AG3.

Moderator. Author of Indoor SaladEcigs 102, and the Calm Act climate apocalyptic series.

BB (not verified)
You are absolutely right, I

You are absolutely right, I tend to get negative lately. We would gift many of our friends with AGs if they were a bit cheaper, they should offer a 6 pack just for that reason. We still use some of their replaceable items but have about 4 years of supplies and a huge bag of tabs we'll never use. They've got to fix that and quick.

We went from one to three in a month. Would have been four if the Pro200 hadn't blown up and Maere wouldn't let me grow what I wanted. So we've spent almost $1K with AG in just a couple of months. I'd rather buy Maere a li'l 3 podder than a bouquet of flowers because it keeps on giving, not to mention all the fresh herbs we use almost every night. Here's wishing them all the best.

Ginger
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Thanks, much, Bruce, very

Thanks, much, Bruce, very interesting presentation.

One of the things that impresses me with the Aerogarden, among consumer appliances, is how people often end up buying more than one. They talked about repeat sales of lights and kits. But the much bigger repeat sales are those of us who want to grow tomatoes, lettuce, and herbs (or whatever - lettuce and flowers and not-tomato-fruiting-things in my case ) at the same time. If they brought their price point lower on the unit, I think they could get a whole lot more of those repeat sales, and gift sales from AG owners to new AG owners. In the long run that'll bring them more money than the kits. And most people probably don't replace the light bulbs on schedule. (Though I must say, I replaced my pro100 bulbs after about 8 months, and there was clearly more light. The minis as well, though I didn't notice the difference as much. Their bulbs weren't as old.)

Only 100 employees in the US. That's sad, that they can't do more manufacturing here... I hang out at Yale Entrepreneurial Society meetings sometimes (local), and they're all just like, Well, no one would even consider manufacturing in the US anymore! like I'm a fool for bringing it up. Chumps.

Moderator. Author of Indoor SaladEcigs 102, and the Calm Act climate apocalyptic series.

BB (not verified)
I missed the conference call

I missed the conference call but 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 December 6, 2008. To access the replay by phone, please dial:
U.S. and Canada: 1 (888) 567-0343
International: 1 (402) 220-4373
Conference ID: 70407588

I see AGs as strictly luxury items almost bought on a whim. I'm impressed with the job the new management is doing overall but haven't a clue what the Christmas season will bring, that could possibly make or break them. I see their stock is down 10.5% today, but everything is down today, what's new...

Ginger
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Good news! Hopefully, a lot

Good news! Hopefully, a lot of the cost-control involves needing to replace defective product less often. Though I imagine it has also to do with the current distribution headaches...

Moderator. Author of Indoor SaladEcigs 102, and the Calm Act climate apocalyptic series.