Gaiam: Q2Fiscal 2009 Results
Gaiam, Inc., a lifestyle media company announced results for its second quarter ended June 30, 2009. Revenue for the second quarter ended June 30, 2009 increased 5.7% to $60.5 million from $57.2 million recorded in the same period last year. The increase in sales was primarily due to the solar business, coupled with a solid improvement in the Company's trade domestic business, partially offset by a planned reduction in catalog circulation.
Gross profit decreased to $31.4 million or 52.0% of revenue for the second quarter of 2009, from $36.2 million, or 63.2% of revenue, in the comparable quarter last year. The change in gross margin reflects the Company's investment in the lower margin solar business and the implementation of media category management at retail.
Selling and operating expenses decreased $3.0 million, or 9.0%, to $30.7 million during the second quarter of 2009, from $33.7 million during the same quarter last year, reflecting cost saving measures, including reducing payroll costs, optimizing the direct business through reduced catalog prospecting and closing non-profitable businesses.
Net loss for the quarter was $1.0 million, or $0.04 per share, compared to net income of $2.6 million in the same period last year. Gaiam's prior year results included a gain on the initial public offering of its solar subsidiary Real Goods Solar, partially offset by impairments of some of its media library and related assets. Excluding these items, second quarter 2008 results would have been a loss of $0.1 million.
In the second quarter of 2009, Gaiam generated free cash flow of $8.2 million, a $13.8 million improvement from cash use of $5.6 million during the same quarter of the prior year. For the first six months of the year, Gaiam's free cash flow increased to $15.3 million, a $24.2 million improvement from cash use of $8.9 million during the same period last year.
During the quarter the Company repurchased 932,000 shares of its common stock for $2.8 million. This brings the total number of shares repurchased by the Company since beginning its share repurchase initiative, to 4.8 million shares. These purchases represent over 20% of the approximately 23 million shares currently outstanding. The Company still has 2.7 million shares remaining in its authorized share repurchase program.
For the first half of 2009, the Company generated $17.1 million in cash from operations and ended the quarter with $42.8 million in cash, up $10.8 million for the six months and $4.6 million for the quarter. The Company's current ratio during the last six months improved to 4.2.
During the quarter the Company signed an exclusive home video license agreement with Discovery Communications. Under the three-year license, Gaiam will release programming from Discovery Communications networks, including Discovery Channel, TLC, Animal Planet, ID: Investigation Discovery, Science Channel, HD Theater, and The Military Channel.
"We achieved top line growth in a difficult retail environment and increased our shelf space in both branded store within a store presence, which increased to 11,000 stores, and category management. The strategic licensing partnership with Discovery Communications leverages our strong retail breadth and merchandise expertise to distribute educational content and increase our non-theatrical market share," said Lynn Powers, President and CEO. "Additionally, the cost cutting measures we implemented continue to improve our results this quarter."
"We are pleased with the $15.3 million of free cash flow and the increase of our top line, after three quarters of sluggish economy driven declines. We believe the recent revenue increase, combined with our new strategic relationships and our strong financial position, constitute a good base for solid growth," said Jirka Rysavy, Chairman.
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," "intend," "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.
VP Corporate Finance and Investor Relations