MORTON GROVE, Ill.,
May 12, 2014 /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, 2014.
"We are pleased to report our results for the first quarter in
which we achieved robust sales growth," said Julie Smolyansky, CEO of Lifeway Foods, Inc. "I
am impressed with our team's ability to closely manage expenses
despite increased margin pressure due to record high milk prices.
The progress we have made in product innovation and the positive
consumer response to our products has positioned us well to
capitalize on our growth opportunities. We continue to add new
distribution in the US and to expand Lifeway's kefir probiotic
reach. Looking ahead, our team remains committed to delivering
increased financial results and we expect fiscal 2014 to be another
record year."
First Quarter Results
First quarter of 2014 gross
sales increased approximately 16% to $32.1
million compared to $27.6
million for the first quarter of 2013. 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™.
First quarter total consolidated net sales increased
approximately 20% to $29.1 million
from $24.4 million in the first
quarter of 2013. 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. The total allowance for promotions and
discounts in the first quarter of 2014 was approximately
$2.9 million or 9% of gross sales,
compared to $3.2 million or
approximately 12% of gross sales in the same period last year.
Cost of goods sold as a percentage of net sales, excluding
depreciation expense, were approximately 74% during the first
quarter of 2014, compared to approximately 63% during the same
period in 2013. Gross profit for the first quarter of 2014
decreased 18% to approximately $7.1
million, compared to approximately $8.6 million in the first quarter of the prior
year. The gross profit margin decreased to 24% in the first quarter
2014 versus 35% in the first quarter of 2013. The decrease was
primarily attributable to the increased cost of conventional milk,
the Company's largest raw material. The total cost of milk
was approximately 35% higher during the first quarter 2014 when
compared to the same period in 2013.
Operating expenses as a percentage of net sales were
approximately 21% during the first quarter of 2014, compared to
approximately 20% during the same period in 2013. This was
primarily attributable to an increase in selling related expenses,
which increased approximately 24% to $3.5
million during the first quarter of 2014, from $2.8 million during the same period in 2013.
The Company reported income from operations of $1.0 million during the first quarter of 2014
compared to $3.7 million during the
same period in 2013.
Provision for income tax was $0.3
million or a 34% effective tax rate for the first quarter
compared to a provision for income tax of $1.4 million or a 37% effective tax rate during
the same period in 2013.
Total net income was $0.7 million,
or $0.04 per diluted share, for the
three-month period ended March 31,
2014 compared to $2.4 million,
or $0.14 per diluted share, in the
same period in 2013.
Balance Sheet/Cash Flow Highlights
The Company had
cash and cash equivalents of $2.5
million as of March 31, 2014
compared to cash and cash equivalents of $3.3 million as of December 31, 2013.
Total stockholder's equity was $43.6
million as of March 31, 2014,
which is an increase of $0.7 million
when compared to December 31,
2013. This is primarily due to the increase in retained
earnings of $0.7 million when
compared to December 31, 2013.
Conference Call
The Company will host a conference
call to discuss these results with additional comments and details
on Monday, May 12, 2014 at
4:30 p.m. ET. 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 26, 2014.
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 and Chief Operating
Officer.
About Lifeway Foods
Lifeway Foods, Inc. (Nasdaq:
LWAY), recently named one of Fortune Small Business' Fastest
Growing Companies for the sixth 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.
Find Lifeway Foods, Inc. on Facebook:
www.facebook.com/lifewaykefir
Follow Lifeway Foods on Twitter:
http://twitter.com/lifeway_kefir
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, 2014 and
2013 (Unaudited) and December 31, 2013
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
2,474,708
|
|
$
2,739,957
|
|
$
3,306,608
|
Investments
|
|
2,790,935
|
|
2,062,343
|
|
2,516,380
|
Certificates of
deposits in financial institutions
|
|
-
|
|
250,000
|
|
15,373
|
Inventories
|
|
7,355,884
|
|
7,080,899
|
|
6,899,008
|
Accounts receivable,
net of allowance for doubtful accounts and discounts ($1,300,000 and $1,350,000 and
$1,050,000)
|
|
|
|
|
|
|
|
10,794,866
|
|
11,915,981
|
|
10,444,839
|
Prepaid expenses and
other current assets
|
|
39,855
|
|
92,827
|
|
128,323
|
Other
receivables
|
|
91,628
|
|
5,165
|
|
103,272
|
Deferred income
taxes
|
|
360,110
|
|
295,701
|
|
322,071
|
Refundable income
taxes
|
|
2,580,323
|
|
84,828
|
|
1,014,947
|
Total current
assets
|
|
26,488,309
|
|
24,527,701
|
|
24,750,821
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
21,248,982
|
|
14,917,260
|
|
20,824,448
|
|
|
|
|
|
|
|
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 $4,734,478, $4,020,598 and $4,555,559 at March 31,
2014 and 2013 and at December 31,
2013, respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,571,522
|
|
4,285,403
|
|
3,750,441
|
Total intangible
assets
|
|
17,639,613
|
|
18,353,494
|
|
17,818,532
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
Long-term accounts
receivable net of current portion
|
|
273,000
|
|
294,000
|
|
280,000
|
Total
assets
|
|
$65,649,904
|
|
$58,092,455
|
|
$63,673,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Current maturities of
notes payable
|
|
$
879,354
|
|
$
543,591
|
|
$
875,002
|
Accounts
payable
|
|
6,958,999
|
|
6,465,801
|
|
6,723,179
|
Accrued
expenses
|
|
2,732,170
|
|
1,197,883
|
|
1,284,060
|
Accrued income
taxes
|
|
---
|
|
462,593
|
|
---
|
Total current
liabilities
|
|
10,570,523
|
|
8,669,868
|
|
8,882,241
|
|
|
|
|
|
|
|
Notes
payable
|
|
8,775,587
|
|
4,820,160
|
|
8,999,012
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
2,689,167
|
|
2,909,134
|
|
2,843,426
|
Total
liabilities
|
|
22,035,277
|
|
16,399,162
|
|
20,724,679
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Common stock, no par
value; 40,000,000 shares authorized; 17,273,776 shares issued; 16,346,017 shares
outstanding
at March 31, 2014;
17,273,776 shares issued; 16,346,017 shares outstanding at March
31, 2013 and 16,346,017 shares outstanding at December 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
(8,187,682)
|
|
(8,187,682)
|
|
(8,187,682)
|
Retained
earnings
|
|
43,247,392
|
|
41,270,416
|
|
42,587,214
|
Accumulated other
comprehensive income (loss), net of taxes
|
|
13,134
|
|
68,776
|
|
7,807
|
Total
stockholders' equity
|
|
43,614,627
|
|
41,693,293
|
|
42,949,122
|
|
|
|
|
|
|
|
Total liabilities
and stockholders' equity
|
|
$65,649,904
|
|
$58,092,455
|
|
$63,673,801
|
LIFEWAY FOODS,
INC. AND SUBSIDIARIES
Consolidated
Statements of Income and Comprehensive Income
For the Three
Months Ended March 31, 2014 and 2013 (Unaudited)
|
|
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2014
|
|
2013
|
Sales
|
|
$
32,061,147
|
|
|
|
$
27,590,622
|
|
|
Less: discounts and
allowances
|
|
(2,929,436)
|
|
|
|
(3,203,591)
|
|
|
Net
sales
|
|
29,131,711
|
|
29,131,711
|
|
24,387,031
|
|
24,387,031
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
|
|
21,681,910
|
|
|
|
15,402,875
|
Depreciation
expense
|
|
|
|
383,361
|
|
|
|
394,125
|
|
|
|
|
|
|
|
|
|
Total cost of goods
sold
|
|
|
|
22,065,271
|
|
|
|
15,797,000
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
7,066,440
|
|
|
|
8,590,031
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
|
3,479,688
|
|
|
|
2,813,572
|
General and
administrative
|
|
|
|
2,380,631
|
|
|
|
1,868,100
|
Amortization
expense
|
|
|
|
178,919
|
|
|
|
177,842
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
|
|
6,039,238
|
|
|
|
4,859,514
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
1,027,202
|
|
|
|
3,730,517
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest and dividend
income
|
|
|
|
28,698
|
|
|
|
15,009
|
Rental
income
|
|
|
|
500
|
|
|
|
3,269
|
Interest
expense
|
|
|
|
(65,569)
|
|
|
|
(36,299)
|
Gain (loss) on sale
of investments, net reclassified
from OCI
|
|
|
|
|
|
|
|
|
|
|
|
4,808
|
|
|
|
64,335
|
Total other income
(expense)
|
|
|
|
(31,563)
|
|
|
|
46,314
|
|
|
|
|
|
|
|
|
|
Income before
provision for income
taxes
|
|
|
|
|
|
|
|
|
|
|
|
995,639
|
|
|
|
3,776,831
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
335,461
|
|
|
|
1,411,192
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
$
660,178
|
|
|
|
$
2,365,639
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings
|
|
|
|
|
|
|
|
|
per common
share
|
|
|
|
0.04
|
|
|
|
0.14
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
outstanding
|
|
|
|
|
|
|
|
|
|
|
|
16,346,017
|
|
|
|
16,346,017
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
$
660,178
|
|
|
|
$
2,365,639
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of
tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on investments (net of tax)
|
|
|
|
|
|
|
|
|
|
|
|
8,044
|
|
|
|
51,535
|
Less reclassification adjustment for (gains) losses included in net income (net of taxes)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,717)
|
|
|
|
(36,349)
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
$
665,505
|
|
|
|
$
2,380,825
|
LIFEWAY FOODS,
INC. AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
For the Three
Months Ended March 31, 2014 and 2013 (Unaudited)
|
|
|
|
March
31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net
income
|
|
$
660,178
|
|
$
2,365,639
|
Adjustments to
reconcile net income to net
|
|
|
|
|
cash flows from
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
562,280
|
|
571,967
|
Loss (gain) on sale
of investments, net
|
|
(4,808)
|
|
(64,335)
|
Deferred income
taxes
|
|
(196,401)
|
|
(192,090)
|
Bad Debt
Expense
|
|
126,049
|
|
51,819
|
Loss (Gain) on sale
of equipment
|
|
---
|
|
---
|
(Increase) decrease
in operating assets:
|
|
|
|
|
Accounts
receivable
|
|
(468,826)
|
|
(3,244,063)
|
Other
receivables
|
|
11,644
|
|
3,660
|
Inventories
|
|
(456,876)
|
|
(1,141,713)
|
Refundable income
taxes
|
|
(1,565,376)
|
|
---
|
Prepaid expenses and
other current assets
|
|
88,468
|
|
4,311
|
Increase (decrease)
in operating liabilities:
|
|
|
|
|
Accounts
payable
|
|
235,820
|
|
2,209,076
|
Accrued
expenses
|
|
1,448,110
|
|
42,206
|
Income taxes
payable
|
|
---
|
|
208,282
|
Net cash provided
by operating activities
|
|
440,262
|
|
814,759
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of
investments
|
|
(814,804)
|
|
(1,271,516)
|
Proceeds from sale of
investments
|
|
554,609
|
|
1,170,271
|
Investments in
certificates of deposits
|
|
---
|
|
---
|
Redemption of
certificates of deposits
|
|
15,000
|
|
200,000
|
Purchases of property
and equipment
|
|
(807,894)
|
|
(324,608)
|
Proceeds from sale of
equipment
|
|
---
|
|
---
|
Net cash (used in)
provided by investing activities
|
|
(1,053,089)
|
|
(225,853)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayment of notes
payable
|
|
(219,073)
|
|
(135,175)
|
Net cash provided
(used in) financing activities
|
|
(219,073)
|
|
(135,175)
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(831,900)
|
|
453,731
|
|
|
|
|
|
Cash and cash
equivalents at the beginning of the period
|
|
3,306,608
|
|
2,286,226
|
|
|
|
|
|
Cash and cash
equivalents at the end of the period
|
|
$
2,474,708
|
|
$
2,739,957
|
Logo -
http://photos.prnewswire.com/prnh/20131010/AQ95965LOGO
SOURCE Lifeway Foods, Inc.