BOULDER, Colo., Nov. 4 Gaiam, Inc. (Nasdaq: GAIA), a lifestyle media company, announced today results for its third quarter ended September 30, 2009. Gaiam will host a conference call today, November 4, 2009, at 2:30 p.m. MST (4:30 p.m. EST) to review the results.
Revenue for the third quarter ended September 30, 2009 increased 23.5% to $74.4 million from $60.3 million recorded in the same period last year. The increase in sales was primarily due to the solar division, and to our trade business which grew 24.2% in the quarter, partially offset by the planned reduction in catalog circulation.
Gross profit increased to $35.8 million, or 48.1% of revenue, for the third quarter of 2009, from $33.8 million, or 56.1% of revenue, in the comparable quarter last year. The change in gross margin as a percentage of revenue reflects the growth of the lower margin solar business and the implementation of media category management at retail.
Selling and operating expenses decreased to $31.6 million or 42.5% of revenue during the third quarter of 2009, from $34.0 million or 56.5% of revenue during the same quarter last year, reflecting the significant cost saving measures, including reducing payroll costs, optimizing the direct business through reduced catalog prospecting and closing non-profitable businesses.
Operating income for the quarter increased to $945,000 from a loss of $17.3 million during the same quarter of the last year. Gaiam's prior year results included a $13.9 million pre-tax impairment charge related to the Company's acquired media libraries, website development costs and related assets.
In the third quarter of 2009, Gaiam generated free cash flow of $1.8 million, an $11.3 million improvement from the free cash flow use of $9.5 million during the same quarter of the prior year. For the first nine months of the year, Gaiam's free cash flow increased to $17.2 million, a $35.6 million improvement from the use of $18.4 million in cash during the same period last year.
For the first nine months of 2009, the Company generated $20.9 million in cash from operations and ended the quarter with $44.4 million in cash, up $12.5 million from the end of 2008, and up $1.7 million for the quarter. The Company's current ratio remained strong at 3.4.
"We believe we have turned the corner with respect to our performance. By focusing on our core growth strategies and cost savings, our operating performance improved in each of our business segments and we returned to profitability. It was an especially strong quarter for our trade business, where we reported over 24% growth in sales to retailers compared to the same quarter last year. We also leveraged our partnerships, releasing the first of many-to-come Discovery titles in the non-theatrical segment, and expanded our media category management in the fitness segment," said Lynn Powers, CEO and President. "We are seeing fourth quarter retail orders continue to improve and believe that we are well positioned from a product and inventory standpoint as we move into the important holiday season."
"We are pleased with the return to profitability and $17.2 million of free cash flow year-to-date. The positive trends experienced in the third quarter have continued and we expect to return to double-digit internal revenue growth, in-line with our historical rates, in the fourth quarter. Looking to 2010, we believe that our revenue momentum, new media relationships and strong balance sheet position us well to drive top and bottom line growth as well as growth in our market share in non-theatrical media," said Jirka Rysavy, Chairman.
A replay of the call will begin approximately one hour after the end of the call and will continue until 11:00 p.m. CST on November 11, 2009.
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.
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SOURCE Gaiam, Inc.