Lifeway Foods, Inc. Announces Results for the First Quarter Ended March 31, 2017
May 18 2017 - 5:59PM
Lifeway Foods, Inc., (Nasdaq:LWAY), the leading U.S. supplier of
kefir cultured dairy products, today reported financial results for
the first quarter ended March 31, 2017.
“Coming into 2017, we were prepared to overlap our first quarter
of 2016, which was the single biggest sales and growth quarter last
year,” said CEO Julie Smolyanksy. “We maintained our focus on
driving consumption and making investments in innovation, marketing
and the restructuring of our sales organization. Despite
headwinds in the edibles category during the first quarter 2017,
driven by lower foot traffic at retail, the impact of e-commerce
and the resulting pricing pressures, Lifeway posted consumption
growth in total US multi-outlet in the first quarter, reflecting
the strength of the Lifeway brand and consumer loyalty. We
are confident in our ability to execute against our strategic
initiatives throughout the balance of 2017 and beyond.”
First Quarter Results
First quarter of 2017 net sales decreased by $453 or 1.4% to
$32,117. Higher trade promotion and lower volumes of our branded
drinkable kefir was only partially offset by higher sales of
private label product and the impact of new items. The increased
trade promotion was driven by increased coupon redemption and trade
spending related to new product introductions.
Gross profit as a percent of net sales decreased to 26.3% during
the three-month period ended March 31, 2017 from 26.7% during the
same three-month period in 2016. The slightly lower gross profit
percent reflects higher milk costs and increased trade promotion
partially offset by lower manufacturing overhead costs.
Selling Expenses
Selling expenses increased by $1,274 or 43.0% to $4,238 during
the three-month period ended March 31, 2017 from $2,964 during the
same period in 2016. The increased selling expenses reflects
certain advertising and marketing related costs including an
advertising campaign that aired in the first quarter of 2017 to
coincide with an annual natural products conference, the production
costs associated with a national coupon campaign launched in the
first quarter of 2017 and increased costs related to trade shows.
Higher salaries, driven by a headcount increase in our salesforce,
also contributed to the increased selling expenses. Selling
expenses as a percentage of net sales were 13.2% for the
three-month period ended March 31, 2017 compared to 9.1% for the
same period in 2016.
General and Administrative Expenses
General and administrative expenses decreased $161 or 4.1% to
$3,785 during the three-month period ended March 31, 2017 from
$3,946 during the same period in 2016. The decrease is primarily a
result of lower professional fees partially offset by higher
compensation.
Our effective tax rate for the three months ended March 31, 2017
was 39.2% compared to an effective tax rate of 38.8% in the same
period last year. We reported net income of $124 or $0.01 per
basic and diluted common share for the three-month period ended
March 31, 2017 compared to net income of $955 or $0.06 per basic
and diluted common share in the same period in 2016.
Balance Sheet
Cash and cash equivalents increased $1.0 million to $9.8 million
as of March 31, 2017 as compared to the prior year. As of March 31,
2017, the Company had outstanding borrowings of approximately $7
million, substantially all of which consists of term loan
borrowings. The Company had additional borrowing capacity of
approximately $5 million under its line of credit, none of which
was outstanding as of March 31, 2017.
About Lifeway Foods, Inc.
Lifeway Foods, Inc. (LWAY), recently named 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 frozen kefir, specialty
cheeses and a ProBugs line for kids. Lifeway’s tart and tangy
cultured dairy products are available throughout the United States
and on a small, but growing basis in Canada, Latin America,
Ireland, and the United Kingdom. Learn how Lifeway is good for more
than just you at www.lifewaykefir.com.
Forward-Looking Statements
All statements in 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 “will,” “expect,” “next,” “project,”
“potential,” “continue,” “expand,” and “grow.” 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, 2016, 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.
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIES |
Consolidated Balance Sheets |
March 31, 2017 and December 31,
2016 |
(In thousands) |
|
|
|
March 31,
2017(Unaudited) |
|
December 31,2016 |
Current
assets |
|
|
|
Cash and cash
equivalents |
9,808 |
|
|
8,812 |
|
Accounts receivable,
net of allowance for doubtful accounts and |
|
|
|
discounts and allowances of $1,700 and $1,600 at March 31,
2017 and |
|
|
December
31, 2016 respectively |
12,170 |
|
|
9,594 |
|
Inventories, net |
7,630 |
|
|
8,042 |
|
Prepaid expenses and
other current assets |
698 |
|
|
785 |
|
Refundable income
taxes |
309 |
|
|
309 |
|
Total current
assets |
30,615 |
|
|
27,542 |
|
|
|
|
|
Property, plant
and equipment, net |
22,285 |
|
|
21,832 |
|
|
|
|
|
Intangible
assets |
|
|
|
Goodwill and other
indefinite-lived intangibles |
14,068 |
|
|
14,068 |
|
Other intangible
assets, net |
1,479 |
|
|
1,647 |
|
Total
intangible assets |
15,547 |
|
|
15,715 |
|
|
|
|
|
Other
Assets |
125 |
|
|
125 |
|
Total
assets |
68,572 |
|
|
65,214 |
|
|
|
|
|
Current
liabilities |
|
|
|
Current maturities of
notes payable |
840 |
|
|
840 |
|
Accounts payable |
8,273 |
|
|
5,718 |
|
Accrued expenses |
2,754 |
|
|
2,169 |
|
Accrued income
taxes |
734 |
|
|
654 |
|
Total current
liabilities |
12,601 |
|
|
9,381 |
|
|
|
|
|
Notes
payable |
6,069 |
|
|
6,279 |
|
Deferred income
taxes, net |
1,192 |
|
|
1,192 |
|
Other long-term
liabilities |
204 |
|
|
- |
|
Total
liabilities |
20,066 |
|
|
16,852 |
|
|
|
|
|
Stockholders'
equity |
|
|
|
Common
stock, no par value; 40,000,000 shares authorized; 17,274
shares |
|
|
issued; 16,154
outstanding |
6,509 |
|
|
6,509 |
|
Paid-in-capital |
2,218 |
|
|
2,198 |
|
Treasury stock, at
cost |
(10,340 |
) |
|
(10,340 |
) |
Retained earnings |
50,119 |
|
|
49,995 |
|
Total
stockholders' equity |
48,506 |
|
|
48,362 |
|
|
|
|
|
Total
liabilities and stockholders' equity |
68,572 |
|
|
65,214 |
|
|
|
|
|
|
|
|
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIES |
|
Consolidated Statements of Income and
Comprehensive Income |
|
For the three months ended March 31, 2017 and
2016 |
|
(Unaudited) |
|
(In thousands, except per share
data) |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
Net
sales |
$ |
32,117 |
|
|
$ |
32,570 |
|
|
|
|
|
|
|
Cost of
goods sold |
|
23,074 |
|
|
|
23,239 |
|
|
Depreciation expense |
|
586 |
|
|
|
631 |
|
|
Total cost
of goods sold |
|
23,660 |
|
|
|
23,870 |
|
|
|
|
|
|
|
Gross profit |
|
8,457 |
|
|
|
8,700 |
|
|
|
|
|
|
|
Selling
expense |
|
4,238 |
|
|
|
2,964 |
|
|
General and
administrative expense |
|
3,785 |
|
|
|
3,946 |
|
|
Amortization expense |
|
168 |
|
|
|
176 |
|
|
Total operating expenses |
|
8,191 |
|
|
|
7,086 |
|
|
|
|
|
|
|
Income from operations |
|
266 |
|
|
|
1,614 |
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
Interest
expense |
|
(57 |
) |
|
|
(58 |
) |
|
Loss on
sale of investments, net reclassified from OCI |
|
- |
|
|
|
(12 |
) |
|
Loss on
sale of equipment |
|
(5 |
) |
|
|
- |
|
|
Other
income, net |
|
- |
|
|
|
17 |
|
|
Total other
income (expense) |
|
(62 |
) |
|
|
(53 |
) |
|
|
|
|
|
|
Income before provision for income taxes |
|
204 |
|
|
|
1,561 |
|
|
|
|
|
|
|
Provision
for income taxes |
|
80 |
|
|
|
606 |
|
|
|
|
|
|
|
Net
income |
$ |
124 |
|
|
$ |
955 |
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.06 |
|
|
Diluted |
$ |
0.01 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
Basic |
|
16,154 |
|
|
|
16,189 |
|
|
Diluted |
|
16,156 |
|
|
|
16,189 |
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
|
|
|
Net
income |
$ |
124 |
|
|
$ |
955 |
|
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
Unrealized gains on investments, net of taxes |
|
- |
|
|
|
43 |
|
|
Reclassifications to earnings: |
|
|
|
|
Realized (losses) on investments, net of taxes |
|
- |
|
|
|
(7 |
) |
|
Comprehensive income |
$ |
124 |
|
|
$ |
991 |
|
|
|
|
|
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIES |
|
Consolidated Statements of Cash
Flows |
|
For the three months ended March 31, 2017 and
2016 |
|
(Unaudited) |
|
(In thousands) |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
Cash flows from operating activities: |
|
|
|
|
Net
Income |
|
124 |
|
|
|
955 |
|
|
Adjustments to reconcile net income to operating cash
flow: |
|
|
|
|
Depreciation and amortization |
|
754 |
|
|
|
807 |
|
|
Loss on sale of investments, net |
|
- |
|
|
|
12 |
|
|
Reserve for inventory obsolescence |
|
50 |
|
|
|
- |
|
|
Stock-based compensation |
|
449 |
|
|
|
21 |
|
|
Loss on sale of property and equipment |
|
5 |
|
|
|
- |
|
|
(Increase) decrease in operating assets: |
|
|
|
|
Accounts receivable |
|
(2,576 |
) |
|
|
(572 |
) |
|
Inventories |
|
363 |
|
|
|
(1,337 |
) |
|
Refundable income taxes |
|
- |
|
|
|
(232 |
) |
|
Prepaid expenses and other current assets |
|
87 |
|
|
|
(83 |
) |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
Accounts payable |
|
2,553 |
|
|
|
(946 |
) |
|
Accrued expenses |
|
361 |
|
|
|
411 |
|
|
Accrued income taxes |
|
80 |
|
|
|
(52 |
) |
|
Net
cash provided by (used in) operating activities |
|
2,250 |
|
|
|
(1,016 |
) |
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Purchases
of investments |
|
- |
|
|
|
(373 |
) |
|
Proceeds
from sale of investments |
|
- |
|
|
|
152 |
|
|
Redemption
of certificates of deposits |
|
- |
|
|
|
363 |
|
|
Purchases
of property and equipment |
|
(1,078 |
) |
|
|
(336 |
) |
|
Proceeds
from sale of property and equipment |
|
34 |
|
|
|
- |
|
|
Net
cash used in investing activities |
|
(1,044 |
) |
|
|
(194 |
) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Purchase of
treasury stock |
|
- |
|
|
|
(440 |
) |
|
Repayment
of notes payable |
|
(210 |
) |
|
|
(210 |
) |
|
Net
cash used in financing activities |
|
(210 |
) |
|
|
(650 |
) |
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents |
|
996 |
|
|
|
(1,860 |
) |
|
|
|
|
|
|
Cash and
cash equivalents at the beginning of the period |
|
8,812 |
|
|
|
5,646 |
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
period |
$ |
9,808 |
|
|
$ |
3,786 |
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
Cash paid for income taxes, net of refunds |
$ |
- |
|
|
$ |
886 |
|
|
Cash paid for interest |
$ |
57 |
|
|
$ |
48 |
|
|
Contact:
Lifeway Foods, Inc.
Phone: 877.281.3874
Email: info@Lifeway.net
Lifeway Foods (NASDAQ:LWAY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Lifeway Foods (NASDAQ:LWAY)
Historical Stock Chart
From Jul 2023 to Jul 2024