EX-99.1 6 lifeway_ex9901.htm PRESS RELEASE DATED NOVEMBER 13, 2023

EXHIBIT 99.1

 

 

Lifeway Foods® Announces Record Results for the Third Quarter Ended September 30, 2023

 

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, IL — November 13, 2023 — 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.

 

 

 

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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

 

 

 

 

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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 

 

 

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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 

 

 

 

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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 

 

 

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