Net sales increase 7.2% year-over-year to
$40.9 million; 16th
consecutive quarter of year-over-year net sales growth
730 basis points of year-over-year gross profit
margin expansion
MORTON
GROVE, Ill., Nov. 13,
2023 /PRNewswire/ -- Lifeway Foods, Inc. (Nasdaq:
LWAY) ("Lifeway" or "the Company"), a leading U.S. supplier of
kefir and fermented probiotic products to support the microbiome,
today reported financial results for the third quarter ended
September 30, 2023.
"I am excited to announce that our strong momentum continued in
the third quarter as we once again set a Company record on the
topline, and delivered robust, year-over-year gross profit margin
expansion of 730 basis points," commented Julie Smolyansky, President and Chief Executive
Officer of Lifeway Foods. "Net sales were up 7.2%, marking our
16th consecutive quarter of year-over-year growth, and
continued to be driven by volume growth in our flagship Lifeway
drinkable kefir. This growth is particularly impressive as we
lapped an exceptional third quarter of 2022, illustrating both the
loyalty of our customers, who have maintained their dedication to
our premium, healthy offerings in light of inflation-justified
price increases last year, as well as the success of our strategic
investments in capturing incremental consumers seeking
better-for-you offerings at a great value. Additionally, our
proactive operating discipline and favorable milk pricing helped
achieve vastly improved year-over-year profitability alongside the
heightened sales, a testament to the execution by the whole Lifeway
team. Looking ahead, we will continue to assess further
distribution opportunities and pursue additional brand exposure for
our core Lifeway kefir products and farmer cheese. This was an
amazing start to the second half of 2023, and I want to thank the
Lifeway team, our customers and retail partners for helping us
deliver yet another quarter of record revenue."
Third Quarter 2023 Results
Net sales were $40.9 million for
the third quarter ended September 30,
2023, an increase of $2.8
million or 7.2% from the same period of 2022. The net sales
increase was primarily driven by higher volumes of Lifeway branded
drinkable kefir, and to a lesser extent the impact of price
increases implemented during the fourth quarter of 2022.
Gross profit as a percentage of net sales was 27.2% for the
third quarter ended September 30,
2023, compared to 19.9% in the same period of 2022. The 730
basis point increase versus the prior year was primarily due to the
higher volumes of Lifeway branded products and the favorable impact
of milk pricing, and to a lesser extent the price increases
implemented during the fourth quarter of 2022 and decreased
transportation costs.
Selling, general and administrative expenses as a percentage of
net sales were 14.6% for the third quarter ended September 30, 2023, compared to 16.4% in the same
period of 2022.
The Company reported net income of $3.4
million or $0.23 per basic and
diluted common share for the third quarter ended September 30, 2023 compared to net income of
$1.0 million or $0.06 per basic and diluted common share during
the same period in 2022.
Conference Call and Webcast
A pre-recorded conference
call and webcast with Julie
Smolyansky discussing these results with additional comments
and details is available through the "Investor Relations" section
of the Company's website at
https://lifewaykefir.com/webinars-reports/ and will also be
available for replay.
About Lifeway Foods, Inc.
Lifeway Foods, Inc., which has been recognized as one of Forbes'
Best Small Companies, is America's leading supplier of the
probiotic, fermented beverage known as kefir. In addition to its
line of drinkable kefir, the company also produces cheese,
probiotic oat milk, and a ProBugs line for kids. Lifeway's tart and
tangy fermented dairy products are now sold across the United
States, Mexico, Ireland and France. Learn how
Lifeway is good for more than just you at lifewayfoods.com.
Forward-Looking Statements
This release (and oral statements made regarding the subjects of
this release) contains "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995 regarding,
among other things, future operating and financial performance,
product development, market position, business strategy and
objectives. These statements use words, and variations of words,
such as "continue," "build," "future," "increase," "drive,"
"believe," "look," "ahead," "confident," "deliver," "outlook,"
"expect," and "predict." Other examples of forward-looking
statements may include, but are not limited to, (i) statements of
Company plans and objectives, including the introduction of new
products, or estimates or predictions of actions by customers or
suppliers, (ii) statements of future economic performance, and
(III) statements of assumptions underlying other statements and
statements about Lifeway or its business. You are cautioned not to
rely on these forward-looking statements. These statements are
based on current expectations of future events and thus are
inherently subject to uncertainty. If underlying assumptions prove
inaccurate or known or unknown risks or uncertainties materialize,
actual results could vary materially from Lifeway's expectations
and projections. These risks, uncertainties, and other factors
include: price competition; the decisions of customers or
consumers; the actions of competitors; changes in the pricing of
commodities; the effects of government regulation; possible delays
in the introduction of new products; and customer acceptance of
products and services. A further list and description of these
risks, uncertainties, and other factors can be found in Lifeway's
Annual Report on Form 10-K for the fiscal year ended December
31, 2022, and the Company's subsequent filings with the SEC. Copies
of these filings are available online
at https://www.sec.gov, http://lifewaykefir.com/investor-relations/,
or on request from Lifeway. Information in this release is as of
the dates and time periods indicated herein, and Lifeway does not
undertake to update any of the information contained in these
materials, except as required by law. Accordingly, YOU SHOULD NOT
RELY ON THE ACCURACY OF ANY OF THE STATEMENTS OR OTHER INFORMATION
CONTAINED IN ANY ARCHIVED PRESS RELEASE.
Media:
Derek Miller
Vice President of Communications, Lifeway Foods
Email: derekm@lifeway.net
General inquiries:
Lifeway Foods, Inc.
Phone: 847-967-1010
Email: info@lifeway.net
LIFEWAY FOODS, INC.
AND SUBSIDIARIES
Consolidated Balance
Sheets
September 30, 2023
and December 31, 2022
(In
thousands)
|
|
|
|
|
|
|
|
|
|
September
30,
2023
|
|
|
December
31,
|
|
|
|
(Unaudited)
|
|
|
2022
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
12,632
|
|
|
$
|
4,444
|
|
Accounts receivable,
net of allowance for doubtful accounts and discounts &
allowances of $1,430 and $1,820 at September 30, 2023 and December
31, 2022
respectively
|
|
|
13,095
|
|
|
|
11,414
|
|
Inventories,
net
|
|
|
9,321
|
|
|
|
9,631
|
|
Prepaid expenses and
other current assets
|
|
|
1,621
|
|
|
|
1,445
|
|
Refundable income
taxes
|
|
|
260
|
|
|
|
44
|
|
Total current
assets
|
|
|
36,929
|
|
|
|
26,978
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
22,285
|
|
|
|
20,905
|
|
Operating lease
right-of-use asset
|
|
|
203
|
|
|
|
174
|
|
Goodwill
|
|
|
11,704
|
|
|
|
11,704
|
|
Intangible assets,
net
|
|
|
7,033
|
|
|
|
7,438
|
|
Other
assets
|
|
|
1,900
|
|
|
|
1,800
|
|
Total
assets
|
|
$
|
80,054
|
|
|
$
|
68,999
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Current portion of note
payable
|
|
$
|
1,250
|
|
|
$
|
1,250
|
|
Accounts
payable
|
|
|
9,102
|
|
|
|
7,979
|
|
Accrued
expenses
|
|
|
5,555
|
|
|
|
3,813
|
|
Accrued income
taxes
|
|
|
500
|
|
|
|
–
|
|
Total current
liabilities
|
|
|
16,407
|
|
|
|
13,042
|
|
Line of
credit
|
|
|
2,777
|
|
|
|
2,777
|
|
Note
payable
|
|
|
1,731
|
|
|
|
2,477
|
|
Operating lease
liabilities
|
|
|
130
|
|
|
|
104
|
|
Deferred income
taxes, net
|
|
|
3,029
|
|
|
|
3,029
|
|
Total
liabilities
|
|
|
24,074
|
|
|
|
21,429
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 9)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Preferred stock, no par
value; 2,500 shares authorized; no shares issued or outstanding
at September 30, 2023 and December 31, 2022
|
|
|
–
|
|
|
|
–
|
|
Common stock, no par
value; 40,000 shares authorized; 17,274 shares issued; 14,691
and 14,645 outstanding at September 30, 2023 and December 31,
2022,
respectively
|
|
|
6,509
|
|
|
|
6,509
|
|
Paid-in
capital
|
|
|
4,338
|
|
|
|
3,624
|
|
Treasury stock, at
cost
|
|
|
(16,695)
|
|
|
|
(16,993)
|
|
Retained
earnings
|
|
|
61,828
|
|
|
|
54,430
|
|
Total stockholders'
equity
|
|
|
55,980
|
|
|
|
47,570
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and stockholders' equity
|
|
$
|
80,054
|
|
|
$
|
68,999
|
|
LIFEWAY FOODS, INC.
AND SUBSIDIARIES
Consolidated
Statements of Operations
For the three and
nine months ended September 30, 2023 and 2022
(Unaudited)
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
|
Nine months
Ended
September
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
40,896
|
|
|
$
|
38,140
|
|
|
$
|
118,030
|
|
|
$
|
105,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
|
29,099
|
|
|
|
29,962
|
|
|
|
85,428
|
|
|
|
85,032
|
|
Depreciation
expense
|
|
|
654
|
|
|
|
590
|
|
|
|
1,953
|
|
|
|
1,833
|
|
Total cost of goods
sold
|
|
|
29,753
|
|
|
|
30,552
|
|
|
|
87,381
|
|
|
|
86,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
11,143
|
|
|
|
7,588
|
|
|
|
30,649
|
|
|
|
18,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
2,884
|
|
|
|
2,843
|
|
|
|
8,974
|
|
|
|
8,527
|
|
General and
administrative
|
|
|
3,085
|
|
|
|
3,415
|
|
|
|
10,028
|
|
|
|
9,546
|
|
Amortization
expense
|
|
|
135
|
|
|
|
135
|
|
|
|
405
|
|
|
|
405
|
|
Total operating
expenses
|
|
|
6,104
|
|
|
|
6,393
|
|
|
|
19,407
|
|
|
|
18,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
5,039
|
|
|
|
1,195
|
|
|
|
11,242
|
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(109)
|
|
|
|
(77)
|
|
|
|
(322)
|
|
|
|
(171)
|
|
Gain on sale of
property and equipment
|
|
|
–
|
|
|
|
–
|
|
|
|
33
|
|
|
|
–
|
|
Other (expense) income,
net
|
|
|
(1)
|
|
|
|
(5)
|
|
|
|
(1)
|
|
|
|
(10)
|
|
Total other income
(expense)
|
|
|
(110)
|
|
|
|
(82)
|
|
|
|
(290)
|
|
|
|
(181)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
|
|
4,929
|
|
|
|
1,113
|
|
|
|
10,952
|
|
|
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for
income taxes
|
|
|
1,517
|
|
|
|
130
|
|
|
|
3,554
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
3,412
|
|
|
$
|
983
|
|
|
$
|
7,398
|
|
|
$
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.23
|
|
|
$
|
0.06
|
|
|
$
|
0.50
|
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
0.23
|
|
|
$
|
0.06
|
|
|
$
|
0.49
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,677
|
|
|
|
15,490
|
|
|
|
14,659
|
|
|
|
15,462
|
|
Diluted
|
|
|
15,101
|
|
|
|
15,848
|
|
|
|
15,063
|
|
|
|
15,759
|
|
LIFEWAY FOODS, INC.
AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Unaudited)
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
2023
|
|
|
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
7,398
|
|
|
$
|
208
|
|
Adjustments to
reconcile net income to operating cash flow:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
2,358
|
|
|
|
2,238
|
|
Stock-based
compensation
|
|
|
1,078
|
|
|
|
755
|
|
Non-cash interest
expense
|
|
|
5
|
|
|
|
5
|
|
Bad debt
expense
|
|
|
2
|
|
|
|
–
|
|
Deferred
revenue
|
|
|
–
|
|
|
|
(23)
|
|
Gain on sale of
equipment
|
|
|
(33)
|
|
|
|
–
|
|
(Increase)
decrease in operating assets:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(1,683)
|
|
|
|
(1,576)
|
|
Inventories
|
|
|
310
|
|
|
|
(907)
|
|
Refundable income
taxes
|
|
|
(216)
|
|
|
|
(309)
|
|
Prepaid expenses and
other current assets
|
|
|
(176)
|
|
|
|
(115)
|
|
Increase
(decrease) in operating liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
928
|
|
|
|
3,085
|
|
Accrued
expenses
|
|
|
1,673
|
|
|
|
1,003
|
|
Accrued income
taxes
|
|
|
500
|
|
|
|
(725)
|
|
Net cash provided by
operating activities
|
|
|
12,144
|
|
|
|
3,639
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(3,146)
|
|
|
|
(2,609)
|
|
Proceeds from sales of
equipment
|
|
|
40
|
|
|
|
–
|
|
Acquisition, net of
cash acquired
|
|
|
–
|
|
|
|
(580)
|
|
Purchase of
investments
|
|
|
(100)
|
|
|
|
–
|
|
Net cash used in
investing activities
|
|
|
(3,206)
|
|
|
|
(3,189)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Repayment of note
payable
|
|
|
(750)
|
|
|
|
(750)
|
|
Net cash used in
financing activities
|
|
|
(750)
|
|
|
|
(750)
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
8,188
|
|
|
|
(300)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at the beginning of the period
|
|
|
4,444
|
|
|
|
9,233
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at the end of the period
|
|
$
|
12,632
|
|
|
$
|
8,933
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for income
taxes, net
|
|
$
|
3,270
|
|
|
$
|
640
|
|
Cash paid for
interest
|
|
$
|
343
|
|
|
$
|
158
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing
activities
|
|
|
|
|
|
|
|
|
Accrued purchase of
property and equipment
|
|
$
|
194
|
|
|
$
|
250
|
|
Increase in
right-of-use assets and operating lease obligations
|
|
$
|
86
|
|
|
$
|
19
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/lifeway-foods-announces-record-results-for-the-third-quarter-ended-september-30-2023-301985230.html
SOURCE Lifeway Foods, Inc.