Lifeway Foods, Inc. Announces Results for First Quarter Ended March 31, 2021
May 17 2021 - 9:00AM
Lifeway Foods, Inc. (Nasdaq: LWAY) (“Lifeway” or “the Company”),
the leading U.S. supplier of kefir and fermented probiotic products
to support the microbiome, today reported financial results for the
first quarter ended March 31, 2021.
“I am pleased to report that our strong business momentum
continued in the first quarter of 2021 with our sixth consecutive
year-over-year quarterly net sales increase, and a tremendous 15.7%
increase in net sales compared to the first quarter of 2020,”
commented Julie Smolyansky, Lifeway’s President and Chief Executive
Officer. “Of note, our net income increased nearly 800% from
approximately $150,000 in the first quarter of 2020 to $1.3 million
in the first quarter of 2021. Our decision to increase advertising
and drive new customer acquisition through television campaigns and
digital engagement has invigorated and accelerated our growth. We
continue to make progress in profitability as a result of our
previously outlined Lifeway 2.0 strategy. Current consumer trends
around gut health, self-care and wellness bode well for mental
health and immune supporting probiotic products, which reflects our
strong performance year-to-date, and provides the foundation for a
strong 2021.”
First Quarter 2021 Results
Net sales were $29.4 million for the first quarter, an increase
of $4.0 million or 15.7% from the same period in 2020. The net
sales increase was primarily driven by higher volumes of our
branded drinkable kefir. Approximately 30% of the increase results
from the Farmers to Families Food Box program with the United
States Department of Agriculture (“USDA”) which began during the
middle of the first quarter of 2021.
Gross profit as a percentage of net sales increased to 27.4% for
the first quarter from 23.6% during the same period in 2020. The
increase versus the prior year was primarily due to the favorable
impact of operating leverage that arises from higher net sales
relative to fixed costs, and to a lesser extent favorable milk
pricing. Additionally, depreciation expense increased reflecting
our continued investment in manufacturing improvements.
Selling expenses increased $0.6 million, or 25.1%, to $3.2
million for the first quarter from $2.6 million in the first
quarter of 2020. The increase versus prior year primarily reflects
an increase in advertising expense related to a television and
digital advertising campaigns in the first quarter of 2021,
partially offset by lower compensation expense. Selling expenses as
a percentage of net sales were 11.0% in the first quarter of 2021
compared to 10.1% in the prior year period.
General and administrative expenses decreased
$0.2 million, or 8.1% to $2.9 million for the first quarter of 2021
from $3.1 million during the same period in 2020. The decrease is
primarily a result of lower compensation expense due to
organizational changes made in 2020 and lower professional
fees.
Income tax expense was $0.6 million for the
first quarter of 2021, compared to $0.1 million during the same
period in 2020.
The Company reported net income of $1.3 million
or $0.08 per basic and diluted common share for the quarter ended
March 31, 2021 compared to a net income of $0.1 million or $0.01
per basic and diluted common share in the prior year period.
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 cupped kefir and
cheese, frozen kefir, specialty cheeses, probiotic supplements and
a ProBugs line for kids. Lifeway’s tart and tangy fermented dairy
and non-dairy products are now sold across the United States,
Mexico, Ireland and the United Kingdom. Learn how Lifeway is good
for more than just you at www.lifewaykefir.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,
2020, 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.
Contact:
Lifeway Foods, Inc.Phone: 847-967-1010Email:
info@lifeway.net
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Balance
SheetsMarch 31, 2021 and December 31,
2020(In thousands)
|
|
March
31,2021(Unaudited) |
|
|
December 31,2020 |
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,618 |
|
|
$ |
7,926 |
|
Accounts receivable, net of allowance for doubtful accounts and
discounts & allowances of $1,100 and $1,350 at
March 31, 2021 and December 31, 2020 respectively |
|
|
9,961 |
|
|
|
8,002 |
|
Inventories, net |
|
|
6,736 |
|
|
|
6,930 |
|
Prepaid expenses and other current assets |
|
|
1,110 |
|
|
|
1,163 |
|
Refundable income taxes |
|
|
46 |
|
|
|
31 |
|
Total current
assets |
|
|
26,471 |
|
|
|
24,052 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
20,744 |
|
|
|
21,048 |
|
Operating lease
right-of-use asset |
|
|
317 |
|
|
|
345 |
|
|
|
|
|
|
|
|
|
|
Intangible
assets |
|
|
|
|
|
|
|
|
Goodwill and indefinite-lived intangibles |
|
|
12,824 |
|
|
|
12,824 |
|
Other intangible assets, net |
|
|
– |
|
|
|
– |
|
Total intangible
assets |
|
|
12,824 |
|
|
|
12,824 |
|
|
|
|
|
|
|
|
|
|
Other
assets |
|
|
1,800 |
|
|
|
1,800 |
|
Total
assets |
|
$ |
62,156 |
|
|
$ |
60,069 |
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,289 |
|
|
$ |
5,592 |
|
Accrued expenses |
|
|
2,587 |
|
|
|
2,196 |
|
Accrued income taxes |
|
|
1,215 |
|
|
|
653 |
|
Total current
liabilities |
|
|
9,091 |
|
|
|
8,441 |
|
Line of
credit |
|
|
2,774 |
|
|
|
2,768 |
|
Operating lease
liabilities |
|
|
143 |
|
|
|
165 |
|
Deferred income taxes,
net |
|
|
1,764 |
|
|
|
1,764 |
|
Other long-term
liabilities |
|
|
160 |
|
|
|
77 |
|
Total
liabilities |
|
|
13,932 |
|
|
|
13,215 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
|
|
|
|
|
|
Preferred stock, no par value; 2,500 shares authorized; no shares
issued or outstanding at March 31, 2021 and December
31, 2020 |
|
|
– |
|
|
|
– |
|
Common stock, no par value; 40,000 shares authorized; 17,274 shares
issued; 15,604 outstanding at March 31, 2021 and
December 31, 2020 |
|
|
6,509 |
|
|
|
6,509 |
|
Paid-in capital |
|
|
2,664 |
|
|
|
2,600 |
|
Treasury stock, at cost |
|
|
(12,450 |
) |
|
|
(12,450 |
) |
Retained earnings |
|
|
51,501 |
|
|
|
50,195 |
|
Total stockholders'
equity |
|
|
48,224 |
|
|
|
46,854 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity |
|
$ |
62,156 |
|
|
$ |
60,069 |
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Statements of
OperationsFor the three months ended March 31,
2021 and 2020(Unaudited)(In
thousands, except per share data)
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
Net
Sales |
|
$ |
29,376 |
|
|
$ |
25,388 |
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
20,512 |
|
|
|
18,624 |
|
Depreciation expense |
|
|
815 |
|
|
|
767 |
|
Total cost of goods sold |
|
|
21,327 |
|
|
|
19,391 |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
8,049 |
|
|
|
5,997 |
|
|
|
|
|
|
|
|
|
|
Selling expense |
|
|
3,222 |
|
|
|
2,575 |
|
General and administrative expense |
|
|
2,891 |
|
|
|
3,145 |
|
Amortization expense |
|
|
– |
|
|
|
39 |
|
Total operating
expenses |
|
|
6,113 |
|
|
|
5,759 |
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
1,936 |
|
|
|
238 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(22 |
) |
|
|
(39 |
) |
(Loss) gain on sale of property and equipment |
|
|
(7 |
) |
|
|
5 |
|
Other income, net |
|
|
(8 |
) |
|
|
(3 |
) |
Total other income
(expense) |
|
|
(37 |
) |
|
|
(37 |
) |
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes |
|
|
1,899 |
|
|
|
201 |
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
593 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
1,306 |
|
|
$ |
146 |
|
|
|
|
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
0.01 |
|
Diluted |
|
$ |
0.08 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares: |
|
|
|
|
|
|
|
|
Basic |
|
|
15,604 |
|
|
|
15,623 |
|
Diluted |
|
|
15,814 |
|
|
|
15,737 |
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Statements of Cash
Flows(Unaudited)(In
thousands)
|
|
Three Months Ended March 31, |
|
|
|
2021 |
|
|
2020 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,306 |
|
|
$ |
146 |
|
Adjustments to reconcile net income (loss) to operating
cash flow: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
815 |
|
|
|
806 |
|
Non-cash interest expense |
|
|
6 |
|
|
|
6 |
|
Non-cash rent expense |
|
|
– |
|
|
|
(11 |
) |
Bad debt expense |
|
|
– |
|
|
|
1 |
|
Deferred revenue |
|
|
(8 |
) |
|
|
(24 |
) |
Stock-based compensation |
|
|
153 |
|
|
|
117 |
|
Deferred income taxes |
|
|
– |
|
|
|
370 |
|
Loss (gain) on sale of property and equipment |
|
|
7 |
|
|
|
(5 |
) |
(Increase) decrease in operating assets: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,959 |
) |
|
|
(1,739 |
) |
Inventories |
|
|
193 |
|
|
|
(491 |
) |
Refundable income taxes |
|
|
(15 |
) |
|
|
(346 |
) |
Prepaid expenses and other current assets |
|
|
54 |
|
|
|
312 |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
(301 |
) |
|
|
833 |
|
Accrued expenses |
|
|
398 |
|
|
|
(981 |
) |
Operating lease asset amortization/liability |
|
|
– |
|
|
|
(11 |
) |
Accrued income taxes |
|
|
561 |
|
|
|
(38 |
) |
Net cash provided by (used in) operating
activities |
|
|
1,210 |
|
|
|
(1,055 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(518 |
) |
|
|
(403 |
) |
Proceeds from sale of property and equipment |
|
|
– |
|
|
|
5 |
|
Net cash used in investing activities |
|
|
(518 |
) |
|
|
(398 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Purchase of treasury stock |
|
|
– |
|
|
|
(405 |
) |
Net cash used in financing activities |
|
|
– |
|
|
|
(405 |
) |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents |
|
|
692 |
|
|
|
(1,858 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
|
7,926 |
|
|
|
3,836 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
period |
|
$ |
8,618 |
|
|
$ |
1,978 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for income taxes, net of (refunds) |
|
$ |
47 |
|
|
$ |
65 |
|
Cash paid for interest |
|
$ |
16 |
|
|
$ |
35 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities |
|
|
|
|
|
|
|
|
Increase (decrease) in right-of-use assets and operating lease
obligations |
|
$ |
21 |
|
|
$ |
113 |
|
|
|
|
|
|
|
|
|
|
Non-cash financing
activities |
|
|
|
|
|
|
|
|
Issuance of common stock under equity incentive plans |
|
$ |
– |
|
|
$ |
516 |
|
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