Gaiam acquires Spri Products - SNEWS

Gaiam acquires Spri Products

Gaiam Inc., a company that specializes in lifestyle, wellness and education, announced March 10 in a quarterly earnings call with investors that it had just completed an acquisition of Spri Products.
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Gaiam Inc., a company that specializes in lifestyle, wellness and education, announced March 10 in a quarterly earnings call with investors that it had just completed an acquisition of Spri Products.

Calls to Spri were not returned and Gaiam's President Lynn Powers was traveling and unable to comment about how this might change the company, its products or channels.

However, in the earnings call based on a transcript, Powers told analysts:

"To grow our distribution channels, we just recently acquired Spri products, the leading manufacturer and distributor of rubberized resistance exercise products for the professional health and fitness industry. SPRI is one of the original companies in the professional market with over 20 years of experience and is well established among health clubs and professional trainers," she said.

"This acquisition offers a variety of synergies, Spri's expertise and marketing in the professional fitness world, including personal trainers and health clubs is a strong compliment to Gaiam's consumer-oriented business and a tremendous cross-selling opportunity for both companies. We plan to leverage Gaiam's strong backend functions and sourcing ability to add bottom line profitability to the organization."

In financials also released for the year and the fourth quarter, Gaiam noted that it expects its revenues with the acquisition of Spri and other companies for 2008 to be approximately $300 million.

According to a filing with the SEC by Gaiam (Nasdaq: Gaia), the company will receive shares of Spri Products for the shares of its Class A common stock that Gaiam sells to its investors in the merger based on stock swaps. Gaiam's shares for the purpose of the offering were valued at $23.01 and the sales involves 202,562 shares of its Class A common stock. This kind of arrangement means shares of the stock of the acquiring company are exchanged for shares of the company being acquired.

Jirka Rysavy, CEO and founder of Gaiam, noted in the call that it has expanded the fitness offerings in a lot of stores, partly because of its presence.

"In a lot of the stores, we were only fitness there before," he said in answer to a question on the call according to a transcript. "We actually bring competitors in our space. That's why we think we'll cannibalize our market share, but increase our revenues overall.

"We keep growing this market share forever, and we kind of want to keep growing it further, but right now it's important really to expand our presence and increase profitability, so we have kind of taken this bold step to bring competitors to our space, because we have 70,000 doors and most of them have half of that," Rysavy added. "So we are really kind of holding some leverage here and which we intend to use."

Gaiam reported for the 2007 year that its earnings per share increased 48 percent to $0.34, and its operating income increased 85 percent to $10.5 million. Revenue for the year ended Dec. 31, 2007, increased 19.8 percent to $262.9 million from $219.5 million for 2006. The internal growth rate was 17.5 percent. Revenues for Gaiam's direct-to-consumer segment increased 20.5 percent to $151.4 million. Revenues for Gaiam's business segment increased 18.9 percent to $111.5 million. Additional financial information will be covered later this week in SNEWS® financial reports.

For more information about Gaiam, go to www.gaiam.com.

SNEWS® View: Gaiam has become a powerful, forward-thinking company that is involved in the wellness space including fitness, yoga, Pilates, green living, solar products and all the related products. This is the future and Gaiam, with its ties to larger retail, could actually help spread interest in fitness and its products as well as educate about the broader lifestyle. Although without discussions with executives, this seems to SNEWS® as a win-win for the larger industry.

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