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
third quarter ended September 30, 2021.
“I am thrilled to report yet another consecutive quarter of
year-over-year growth for Lifeway Foods, as the third quarter was
highlighted by a strong 13.5% increase in net sales when compared
to the same period in 2020, and a 15.2% increase for the first nine
months of 2021,” commented Julie Smolyansky, Lifeway’s President
and Chief Executive Officer. “This quarter we furthered our
dedicated customer acquisition strategies with increased
investments in our marketing and advertising programs, which
continue to contribute to increased customer engagement and
enhanced brand performance. Our elevated marketing alongside our
improving execution of the Lifeway 2.0 strategy and the growing
consumer trend towards gut health should help sustain Lifeway’s
growth as we move forward. We continue to feel excited and
validated by the ongoing research around probiotics and their
influence on gut health, mental health and immunity, all of which
are especially important with the impact of Covid-19. We are
looking forward to finishing off strong in 2021, and entering 2022
with momentum through the continued efficient execution of our
growth strategies.”
Smolyansky added, “Separate from our current brand performance,
I would also like to highlight some recent business events that we
are very excited about. On August 18, we completed the acquisition
of certain assets of GlenOaks Farms, our first expansion outside of
kefir and into drinkable yogurt. GlenOaks has strong distribution
in Western U.S. retailers, which is strategically significant as we
are looking to further our presence in the region, and also a great
complement to our portfolio as Freshmade has a strong eastern
presence, alongside the national presence of Lifeway. Initial
results have been encouraging, and we are looking forward to
further integrating GlenOaks into our strategy and expanding its
reach. Lastly, we announced the introduction of Lifeway Oat, our
probiotic cultured oat drinkables, a great-tasting dairy-free,
plant-based beverage in a variety of flavors which connects several
of the fastest growing industry trends today. We are bullish on the
potential of this product and have already secured national
distribution at four major retail partners with shipments beginning
to our first customer in the fourth quarter of 2021.”
Smolyansky continued, “We also have strong distribution trends
for our core kefir line, which is seeing new distribution on
multiple SKUs at top retailers in the coming months and into 2022.
A major strength for Lifeway right now is our supply chain control.
We do not foresee any shortages, and we have already prepared extra
inventory for the anticipated holiday surge. We are issuing three
times the lead time when ordering raw materials and have taken the
necessary steps to meet demand, similar to our advanced action plan
protocols that helped us successfully navigate the Covid-19
pandemic health regulations and product stockpiles.”
Third Quarter 2021 Results
Net sales were $29.6 million for the third quarter, an increase
of $3.5 million or 13.5% from the same period in 2020. The net
sales increase was primarily driven by higher volumes of our
branded drinkable kefir, and to a lesser extent the favorable
impacts from the completed acquisition of GlenOaks Farms in the
third quarter.
Gross profit as a percentage of net sales was 23.7% for the
third quarter ended September 30, 2021.
Selling expenses increased $0.6 million to $2.7 million for the
third quarter from $2.1 million in the third quarter of 2020. The
increase was due to increased investment in advertising and
marketing programs.
General and administrative expenses increased
$0.4 million to $3.2 million for the third quarter of 2021 from
$2.8 million during the same period in 2020. The increase is
primarily a result of incentive compensation expense.
Income tax expense was $0.5 million for the
third quarter of 2021, compared to $0.8 million during the same
period in 2020.
The Company reported net income of $0.5 million
or $0.03 per basic and diluted common share for the third quarter
ended September 30, 2021.
Conference Call and WebcastA
pre-recorded conference call and webcast with Julie Smolyansky
discussing these results with additional comments and details will
be available today at approximately 9:00 a.m. ET. The webcast will
be available over the Internet through the “Investor Relations”
section of the Company’s website at
https://lifewaykefir.com/webinars-reports/. An audio replay will be
available through November 29, 2021. North American listeners may
dial 844-512-2921 and international listeners may dial
412-317-6671. The passcode is 11147523.
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 and a
ProBugs line for kids. Lifeway's tart and tangy fermented dairy
products are now sold across the United States, Mexico, Ireland,
France and the United Kingdom. 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,
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
SheetsSeptember 30, 2021 and December 31,
2020(In thousands)
|
|
September 30, |
|
|
|
|
|
|
2021 |
|
|
December 31, |
|
|
|
Unaudited |
|
|
2020 |
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,018 |
|
|
$ |
7,926 |
|
Accounts receivable, net of allowance for doubtful accounts and
discounts & allowances of $1,290 and $1,350 at September 30,
2021 and December 31, 2020 respectively |
|
|
9,828 |
|
|
|
8,002 |
|
Inventories, net |
|
|
7,572 |
|
|
|
6,930 |
|
Prepaid expenses and other current assets |
|
|
1,315 |
|
|
|
1,163 |
|
Refundable income taxes |
|
|
415 |
|
|
|
31 |
|
Total current
assets |
|
|
29,148 |
|
|
|
24,052 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
20,546 |
|
|
|
21,048 |
|
Operating lease
right-of-use asset |
|
|
255 |
|
|
|
345 |
|
|
|
|
|
|
|
|
|
|
Intangible
assets |
|
|
|
|
|
|
|
|
Goodwill and indefinite-lived intangibles |
|
|
14,224 |
|
|
|
12,824 |
|
Other intangible assets, net |
|
|
4,367 |
|
|
|
– |
|
Total intangible
assets |
|
|
18,591 |
|
|
|
12,824 |
|
|
|
|
|
|
|
|
|
|
Other
assets |
|
|
1,800 |
|
|
|
1,800 |
|
Total
assets |
|
$ |
70,340 |
|
|
$ |
60,069 |
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Current portion of note payable |
|
$ |
1,000 |
|
|
$ |
– |
|
Accounts payable |
|
|
7,867 |
|
|
|
5,592 |
|
Accrued expenses |
|
|
3,872 |
|
|
|
2,196 |
|
Accrued income taxes |
|
|
100 |
|
|
|
653 |
|
Total current
liabilities |
|
|
12,839 |
|
|
|
8,441 |
|
Line of
credit |
|
|
2,777 |
|
|
|
2,768 |
|
Note
payable |
|
|
3,726 |
|
|
|
– |
|
Operating lease
liabilities |
|
|
113 |
|
|
|
165 |
|
Deferred income taxes,
net |
|
|
1,764 |
|
|
|
1,764 |
|
Other long-term
liabilities |
|
|
62 |
|
|
|
77 |
|
Total
liabilities |
|
|
21,281 |
|
|
|
13,215 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
|
|
|
|
|
|
Preferred stock, no par value; 2,500 shares authorized; no shares
issued or outstanding at September 30, 2021 and December 31,
2020 |
|
|
– |
|
|
|
– |
|
Common stock, no par value; 40,000 shares authorized; 17,274 shares
issued; 15,435 and 15,604 outstanding at September 30, 2021 and
December 31, 2020, respectively |
|
|
6,509 |
|
|
|
6,509 |
|
Paid-in capital |
|
|
2,387 |
|
|
|
2,600 |
|
Treasury stock, at cost |
|
|
(13,436 |
) |
|
|
(12,450 |
) |
Retained earnings |
|
|
53,599 |
|
|
|
50,195 |
|
Total stockholders'
equity |
|
|
49,059 |
|
|
|
46,854 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity |
|
$ |
70,340 |
|
|
$ |
60,069 |
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Statements of
OperationsFor the three and nine months ended
September 30, 2021 and
2020(Unaudited)(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, |
|
|
Nine Months Ended September
30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
29,553 |
|
|
$ |
26,039 |
|
|
$ |
88,091 |
|
|
$ |
76,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
21,915 |
|
|
|
17,710 |
|
|
|
63,273 |
|
|
|
53,613 |
|
Depreciation expense |
|
|
645 |
|
|
|
752 |
|
|
|
2,099 |
|
|
|
2,326 |
|
Total cost of goods sold |
|
|
22,560 |
|
|
|
18,462 |
|
|
|
65,372 |
|
|
|
55,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
6,993 |
|
|
|
7,577 |
|
|
|
22,719 |
|
|
|
20,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
|
2,722 |
|
|
|
2,116 |
|
|
|
8,510 |
|
|
|
7,411 |
|
General and administrative |
|
|
3,194 |
|
|
|
2,805 |
|
|
|
8,702 |
|
|
|
8,681 |
|
Amortization expense |
|
|
33 |
|
|
|
39 |
|
|
|
33 |
|
|
|
117 |
|
Total operating
expenses |
|
|
5,949 |
|
|
|
4,960 |
|
|
|
17,245 |
|
|
|
16,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
1,044 |
|
|
|
2,617 |
|
|
|
5,474 |
|
|
|
4,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(30 |
) |
|
|
(27 |
) |
|
|
(72 |
) |
|
|
(96 |
) |
Gain on investments |
|
|
– |
|
|
|
– |
|
|
|
2 |
|
|
|
4 |
|
Loss on sale of property and equipment |
|
|
(5 |
) |
|
|
– |
|
|
|
(88 |
) |
|
|
(28 |
) |
Other (expense) income, net |
|
|
(2 |
) |
|
|
– |
|
|
|
(61 |
) |
|
|
2 |
|
Total other income
(expense) |
|
|
(37 |
) |
|
|
(27 |
) |
|
|
(219 |
) |
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes |
|
|
1,007 |
|
|
|
2,590 |
|
|
|
5,255 |
|
|
|
4,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
527 |
|
|
|
764 |
|
|
|
1,851 |
|
|
|
1,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
480 |
|
|
$ |
1,826 |
|
|
$ |
3,404 |
|
|
$ |
2,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
$ |
0.22 |
|
|
$ |
0.19 |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
0.12 |
|
|
$ |
0.22 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
15,473 |
|
|
|
15,602 |
|
|
|
15,572 |
|
|
|
15,595 |
|
Diluted |
|
|
15,651 |
|
|
|
15,642 |
|
|
|
15,712 |
|
|
|
15,621 |
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Statements of Cash
Flows(Unaudited)(In
thousands)
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
3,404 |
|
|
$ |
2,952 |
|
Adjustments to reconcile net income to operating cash
flow: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,132 |
|
|
|
2,443 |
|
Non-cash interest expense |
|
|
9 |
|
|
|
17 |
|
Non-cash rent expense |
|
|
1 |
|
|
|
(38 |
) |
Bad debt expense |
|
|
6 |
|
|
|
(3 |
) |
Deferred revenue |
|
|
(23 |
) |
|
|
(73 |
) |
Stock-based compensation |
|
|
608 |
|
|
|
274 |
|
Deferred income taxes |
|
|
– |
|
|
|
369 |
|
Loss (gain) on sale of property and equipment |
|
|
88 |
|
|
|
28 |
|
(Increase) decrease in operating assets: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,832 |
) |
|
|
(1,464 |
) |
Inventories |
|
|
(642 |
) |
|
|
(80 |
) |
Refundable income taxes |
|
|
(384 |
) |
|
|
492 |
|
Prepaid expenses and other current assets |
|
|
(152 |
) |
|
|
248 |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
2,275 |
|
|
|
756 |
|
Accrued expenses |
|
|
1,498 |
|
|
|
(595 |
) |
Accrued income taxes |
|
|
(553 |
) |
|
|
22 |
|
Net cash provided by operating activities |
|
|
6,435 |
|
|
|
5,348 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(1,685 |
) |
|
|
(1,168 |
) |
Proceeds from sale of property and equipment |
|
|
– |
|
|
|
5 |
|
Acquisition, net of cash acquired |
|
|
(5,800 |
) |
|
|
– |
|
Net cash used in investing activities |
|
|
(7,485 |
) |
|
|
(1,163 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Purchase of treasury stock |
|
|
(1,583 |
) |
|
|
(405 |
) |
Payment of deferred financing cost |
|
|
(25 |
) |
|
|
– |
|
Proceeds from note payable |
|
|
5,000 |
|
|
|
– |
|
Repayment of note payable |
|
|
(250 |
) |
|
|
– |
|
Net cash provided by (used in) financing
activities |
|
|
3,142 |
|
|
|
(405 |
) |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
2,092 |
|
|
|
3,780 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
|
7,926 |
|
|
|
3,836 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
period |
|
$ |
10,018 |
|
|
$ |
7,616 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for income taxes, net of (refunds) |
|
$ |
2,788 |
|
|
$ |
335 |
|
Cash paid for interest |
|
$ |
60 |
|
|
$ |
82 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities |
|
|
|
|
|
|
|
|
Increase (decrease) in right-of-use assets and operating lease
obligations |
|
$ |
45 |
|
|
$ |
(58 |
) |
|
|
|
|
|
|
|
|
|
Non-cash financing
activities |
|
|
|
|
|
|
|
|
Issuance of common stock under equity incentive plans |
|
$ |
– |
|
|
$ |
522 |
|
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