MORTON GROVE, Ill, May 15, 2012 /PRNewswire/ -- Lifeway Foods, Inc.,
(Nasdaq: LWAY), a leading supplier of cultured dairy products
known as kefir and organic kefir, today announced results for the
first quarter ended March 31,
2012.
(Logo:
http://photos.prnewswire.com/prnh/20120119/AQ36947LOGO-b )
First Quarter Results
First quarter of 2012 gross sales increased 13% to $21.6 million compared to $19.0 million for the first quarter of
2011. This increase is primarily attributable to increased
sales and awareness of the Company's flagship line, Kefir, as well
as ProBugs® Organic Kefir for kids and BioKefir™. In
addition, Lifeway's Frozen Kefir line, which was launched in
April 2011, contributed approximately
$0.7 million to sales during the
first quarter of 2012.
Total consolidated net sales increased 12% or $2.1 million to $19.4
million during the three-month period ended March 31, 2012 from $17.3
million during the same three-month period in 2011.
Net sales are recorded as gross sales less promotional activities
such as slotting fees paid, couponing, spoilage and promotional
allowances as well as early payment terms given to customers.
Gross profit for the first quarter of 2012 decreased 11% to
$6.8 million, compared to
$9.7 million in the first quarter of
the prior year. The Company's gross profit margin decreased to 35%
in the first quarter versus 43% in the first quarter of 2011. The
decrease was primarily attributable to a 30% increase in freight
expense and higher fuel costs during the first quarter of 2012 when
compared to the same period in 2011 and the increased cost of
conventional and organic milk, the Company's largest raw material.
The total cost of milk was approximately 20% higher during the
first quarter 2012 when compared to the same period in
2011.
Total operating expenses increased 13% or $0.6 million to $4.9
million during the first quarter of 2012, from $4.3 million during the same period in 2011. This
increase was primarily attributable to increased selling expenses
of $0.4 million and partially offset
by a decrease in amortization expense. This increase is directly
attributable to increases in marketing and advertising of the
Company's flagship line, Kefir, as well as ProBugs Organic Kefir
for kids, BioKefir and Lifeway's Frozen Kefir.
Total operating income decreased 43% or $1.4 million to $1.9
million during the first quarter of 2012, from $3.3 million during the same period in
2011. The decrease in operating income is related to the
decrease in gross profit and the increased operating expenses
previously outlined.
Income tax benefit was $0.8
million for the first quarter of 2012 compared to
$1.3 million during the same period
in 2011.
Total net income was $1.1 million
or $0.07 per diluted share for the
three-month period ended March 31,
2012 compared to $1.9 million
or $0.12 per diluted share in the
same period in 2011.
"We are pleased with our first quarter financial performance,
despite the cost headwinds we experienced in the quarter, and
believe our sales strong sales momentum will continue in 2012,"
said Julie Smolyansky, CEO of
Lifeway Foods, Inc. "This year, we expect increased
distribution of our kefir products with our retail
partners. Our recent expansion with Target exhibits the
growing healthy living trend, consumers' demand for nutritious
products, and retailers increasingly expanding their product
offerings to support consumer demand."
Mrs. Smolyansky continued, "Going forward, we are very confident
in our business and believe we should begin to realize lower milk
prices in the second quarter of 2012. These results, combined
with our consistently strong sales increases, should lead to record
profitability for the year. Our executive team remains
committed to increasing shareholder value through our first annual
dividend and share repurchase program."
Balance Sheet/Cash Flow Highlights
The Company had $0.8 million in
cash and cash equivalents as of March 31,
2012 compared to a $1.1
million at December 31,
2011. Total stockholder's equity was $36.3 million as of March
31, 2012, which is an increase of $1.6 million when compared to March 31, 2011. This is primarily due to an
increase in retained earnings of $2.0
million when compared to March 31,
2012.
Despite the lower net income for the three months ended
March 31, 2012 as compared to the
same period last year, net cash provided by operating activities
increased $0.4 million to
$1.5 million for the first quarter of
2012. This increase reflects the Company's improvement in operating
efficiencies.
2012 Dividend
The Company announced on May 3,
2012 that its Board of Directors declared an annual cash
dividend of $0.07 per common share.
The dividend is payable on June 29,
2012 to shareholders of record as of the close of business
on May 30, 2012. As of March 31, 2012, there were 16.4 million common
shares outstanding.
Retail Expansion
Today, the Company also announced an agreement nearly tripling
distribution of its kefir line in Target stores as well as adding
new Lifeway products to Target's dairy cases. Availability in
Target will increase from 170 to 453 locations, with the addition
of three flavors of 8-oz. Lifeway Kefir four-packs to Target's
offerings. This is the first major expansion with Target in eight
years.
The agreement covers multiple flavors and sizes of Lifeway
Kefir, a probiotic drink similar to drinkable yogurt that is high
in calcium and protein and low in fat in calories, as well as
Lifeway ProBugs, children's line of Organic Kefir with a no-spill
pouch and kid-friendly flavors like Goo Berry Pie. The company
plans increased marketing and advertising support to raise
awareness with Target customers and promote sales at the retail
chain.
Conference Call
The Company will host a conference call to discuss these results
with additional comments and details. The conference call is
scheduled to begin at 4:30 p.m. ET on
Tuesday, May 15, 2012. The call will
be broadcast live over the Internet hosted at the Investor
Relations section of Lifeway Foods' website at www.lifeway.net, and
will be archived online through May
29, 2012. In addition, listeners may dial 877-407-3982
in North America, and
international listeners may dial 201-493-6780. Participants from
the Company will be Julie
Smolyansky, President and Chief Executive Officer, and
Edward Smolyansky, Chief Financial
Officer.
About Lifeway Foods
Lifeway Foods, Inc. (LWAY), recently named one of Fortune Small
Business' Fastest Growing Companies for the fifth consecutive year,
is America's leading supplier of the cultured dairy products known
as kefir and organic kefir. Lifeway Kefir is a dairy beverage that
contains 10 exclusive live and active probiotic cultures plus
ProBoost™. In addition to its line of Kefir products, the company
produces a variety of Frozen Kefir and probiotic cheese products.
Lifeway also sells frozen kefir, kefir smoothies and kefir parfaits
through its Starfruit™ retail stores. For more information,
visit http://www.lifewaykefir.com or follow Lifeway Foods on
Facebook (www.facebook.com/lifewaykefir); Twitter
(http://twitter.com/lifewaykefir); Pinterest
(http://pinterest.com/lifewaykefir); Flickr
(http://www.flickr.com/photos/Lifeway_Kefir) or YouTube
(http://www.youtube.com/user/lifewaykefir).
Forward Looking Statements
This news release contains forward-looking statements.
Investors are cautioned that actual results may differ materially
from such forward-looking statements. Forward-looking statements
involve risks and uncertainties including, but not limited to,
competitive pressures and other important factors detailed in the
Company's reports filed with the Securities and Exchange
Commission.
Contact:
|
Lifeway
Foods, Inc.
|
Phone:
877.281.3874
|
Email:
info@Lifeway.net
|
|
Investor Relations:
|
ICR
|
Katie
Turner
|
John
Mills
646.277.1228
|
LIFEWAY
FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
March 31, 2012 and 2011 (Unaudited) and December 31,
2011
|
|
|
(Unaudited)
|
|
|
|
|
March
31,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
2011
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
1,156,539
|
|
$
2,075,791
|
|
$
1,115,150
|
Investments
|
|
1,723,836
|
|
1,314,382
|
|
1,695,044
|
Certificates of deposits in financial
institutions
|
|
300,000
|
|
250,000
|
|
300,000
|
Inventories
|
|
5,205,457
|
|
4,752,054
|
|
4,954,475
|
Accounts
receivable, net of allowance for doubtful
accounts
and discounts
|
|
8,484,371
|
|
8,346,560
|
|
7,950,276
|
Prepaid
expenses and other current assets
|
|
39,880
|
|
126,919
|
|
79,630
|
Other
receivables
|
|
155,937
|
|
74,879
|
|
224,204
|
Deferred
income taxes
|
|
357,963
|
|
368,176
|
|
338,690
|
Refundable
income taxes
|
|
|
|
---
|
|
41,316
|
Total
current assets
|
|
17,423,983
|
|
17,308,761
|
|
16,698,785
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
15,031,364
|
|
15,129,655
|
|
15,198,822
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
|
|
|
|
Goodwill
and other non amortizable brand assets
|
|
14,068,091
|
|
14,068,091
|
|
14,068,091
|
Other
intangible assets, net of accumulated amortization
of
$3,276,645 and $2,500,066 at March 31, 2012 and 2011
and
3,087,940 at December 31, 2011, respectively
|
|
5,029,355
|
|
5,805,934
|
|
5,218,060
|
Total
intangible assets
|
|
19,097,446
|
|
19,874,025
|
|
19,286,151
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
Long-term
accounts receivable net of current portion
|
|
276,050
|
|
---
|
|
289,550
|
|
|
$
51,828,844
|
|
$
52,312,441
|
|
$
51,473,308
|
Total
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Checks
written in excess of bank balances
|
|
$
333,446
|
|
$
1,067,073
|
|
$
592,040
|
Current
maturities of notes payable
|
|
789,933
|
|
2,364,774
|
|
1,540,716
|
Accounts
payable
|
|
4,597,466
|
|
3,781,059
|
|
4,386,239
|
Accrued
expenses
|
|
755,187
|
|
595,841
|
|
553,725
|
Accrued
income taxes
|
|
279,402
|
|
430,246
|
|
---
|
Total
current liabilities
|
|
6,755,434
|
|
8,238,993
|
|
7,072,720
|
|
|
|
|
|
|
|
Notes
payable
|
|
5,363,750
|
|
5,995,558
|
|
5,539,836
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
3,394,957
|
|
3,332,473
|
|
3,503,595
|
Total
liabilities
|
|
15,514,141
|
|
17,567,024
|
|
16,116,151
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
Common
stock, no par value; 20,000,000 shares authorized;
17,273,776
shares issued; 16,390,417 shares outstanding
at March
31, 2012; 17,273,776 shares issued; 16,443,809
shares
outstanding at March 31, 2011; 17,273,776 shares
issued;
16,409,317 shares outstanding at December 31, 2011
|
|
6,509,267
|
|
6,509,267
|
|
6,509,267
|
Paid-in-capital
|
|
2,032,516
|
|
2,032,516
|
|
2,032,516
|
Treasury
stock, at cost
|
|
(7,783,580)
|
|
(7,271,836)
|
|
(7,606,974)
|
Retained
earnings
|
|
35,526,285
|
|
33,501,646
|
|
34,431,296
|
Accumulated other comprehensive loss, net of
taxes
|
|
30,214
|
|
(26,176)
|
|
(8,948)
|
Total
stockholders' equity
|
|
36,314,702
|
|
34,745,417
|
|
35,357,157
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
51,828,843
|
|
$
52,312,441
|
|
$
51,473,308
|
|
|
|
|
|
|
|
LIFEWAY
FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income
For the Years Three Months Ended March 31, 2012 and 2011
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
March
31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
21,545,896
|
|
|
|
$
19,047,266
|
|
|
|
Less:
discounts and allowances
|
|
(2,148,699)
|
|
|
|
(1,743,363)
|
|
|
|
Net
sales
|
|
19,397,197
|
|
19,397,197
|
|
17,303,903
|
|
17,303,903
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold
|
|
|
|
12,238,341
|
|
|
|
9,345,717
|
|
Depreciation expense
|
|
|
|
399,045
|
|
|
|
376,513
|
|
|
|
|
|
|
|
|
|
|
|
Total cost
of goods sold
|
|
|
|
12,637,386
|
|
|
|
9,722,230
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
6,759,811
|
|
|
|
7,581,673
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
|
2,721,973
|
|
|
|
2,282,470
|
|
General
and administrative
|
|
|
|
1,976,603
|
|
|
|
1,837,622
|
|
Amortization expense
|
|
|
|
188,705
|
|
|
|
195,959
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
|
4,887,281
|
|
|
|
4,316,051
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
|
|
|
1,872,530
|
|
|
|
3,265,622
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income
|
|
|
|
11,573
|
|
|
|
17,593
|
|
Rental
income
|
|
|
|
3,000
|
|
|
|
---
|
|
Interest
expense
|
|
|
|
(50,186)
|
|
|
|
(62,130)
|
|
Gain
(loss) on sale of investments, net
|
|
|
|
17,985
|
|
|
|
(2,597)
|
|
Loss on
disposition of equipment
|
|
|
|
|
|
|
|
---
|
|
Other
expense
|
|
|
|
|
|
|
|
---
|
|
Total
other income (expense)
|
|
|
|
(17,628)
|
|
|
|
(47,134)
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for
|
|
|
|
|
|
|
|
|
|
income taxes
|
|
|
|
1,854,902
|
|
|
|
3,218,488
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
|
759,913
|
|
|
|
1,292,717
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
$
1,094,989
|
|
|
|
$
1,925,771
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted earnings
|
|
|
|
|
|
|
|
|
|
per
common share
|
|
|
|
0.07
|
|
|
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
|
|
|
|
|
|
|
|
|
|
shares
outstanding
|
|
|
|
16,397,998
|
|
|
|
16,489,954
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
$
1,094,989
|
|
|
|
$
1,925,771
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
(loss), net of tax:
|
|
|
|
|
|
|
|
|
|
Unrealized gains on
|
|
|
|
|
|
|
|
|
|
investments
(net of tax)
|
|
|
|
29,000
|
|
|
|
15,451
|
|
Less reclassification adjustment
|
|
|
|
|
|
|
|
|
|
for (gains)
losses included in
|
|
|
|
|
|
|
|
|
|
net income (net
of taxes)
|
|
|
|
10,162
|
|
|
|
1,467
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
$
1,134,151
|
|
|
|
$
1,942,689
|
|
|
|
|
|
|
|
|
|
|
|
LIFEWAY
FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2012 and 2011 (Unaudited)
and for the Year Ended December 31, 2011
|
|
|
March
31
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
2011
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income
|
|
$
1,094,989
|
|
$
1,925,771
|
|
$
2,855,421
|
Adjustments to reconcile net income to net
|
|
|
|
|
|
|
cash flows
from operating activities, net of acquisition:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
587,750
|
|
572,472
|
|
2,336,794
|
Loss
(gain) on sale of investments, net
|
|
(17,985)
|
|
2,597
|
|
29,256
|
Loss on
disposition of equipment
|
|
|
|
---
|
|
20,135
|
Impairment
of investments
|
|
|
|
---
|
|
36,032
|
Deferred
income taxes
|
|
(185,805)
|
|
(119,129)
|
|
68,217
|
Treasury
stock issued for compensation
|
|
|
|
---
|
|
---
|
Bad Debt
Expense
|
|
6,384
|
|
20,000
|
|
48,240
|
(Increase)
decrease in operating assets:
|
|
|
|
|
|
|
Accounts
receivable
|
|
(526,979)
|
|
(1,573,284)
|
|
(1,494,790)
|
Other
receivables
|
|
68,267
|
|
29,801
|
|
(119,524)
|
Inventories
|
|
(250,982)
|
|
(766,680)
|
|
(969,101)
|
Refundable
income taxes
|
|
41,316
|
|
906,748
|
|
865,432
|
Prepaid
expenses and other current assets
|
|
39,750
|
|
31,396
|
|
78,685
|
Increase
(decrease) in operating liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
211,227
|
|
(402,422)
|
|
202,758
|
Accrued
expenses
|
|
201,462
|
|
86,382
|
|
84,466
|
Income
taxes payable
|
|
279,402
|
|
430,246
|
|
---
|
Net
cash provided by operating activities
|
|
1,548,796
|
|
1,143,898
|
|
4,042,021
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
Purchases
of investments
|
|
(318,123)
|
|
(445,049)
|
|
(2,434,340)
|
Proceeds
from sale of investments
|
|
404,028
|
|
234,388
|
|
1,810,816
|
Investments in certificates of deposits
|
|
|
|
---
|
|
(50,000)
|
Proceeds
from redemption of certificates of deposit
|
|
|
|
---
|
|
---
|
Purchases
of property and equipment
|
|
(231,243)
|
|
(353,455)
|
|
(1,439,133)
|
Net
cash (used in) provided by investing activities
|
|
(145,338)
|
|
(564,116)
|
|
(2,112,657)
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
Proceeds
of note payable
|
|
|
|
---
|
|
2,000,000
|
Checks
written in excess of bank balances
|
|
(258,594)
|
|
(274,137)
|
|
(749,170)
|
Purchases
of treasury stock
|
|
(176,606)
|
|
(846,290)
|
|
(1,181,428)
|
Repayment
of notes payable
|
|
(926,869)
|
|
(613,503)
|
|
(4,113,555)
|
Net
cash used in financing activities
|
|
(1,362,069)
|
|
(1,733,930)
|
|
(4,044,153)
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
41,389
|
|
(1,154,148)
|
|
(2,114,789)
|
|
|
|
|
|
|
|
Cash and
cash equivalents at the beginning of the period
|
|
1,115,150
|
|
3,229,939
|
|
3,229,939
|
|
|
|
|
|
|
|
Cash
and cash equivalents at the end of the period
|
|
$
1,156,539
|
|
$
2,075,791
|
|
$
1,115,150
|
|
|
|
|
|
|
|
SOURCE Lifeway Foods, Inc.