EX-99.1 6 lifeway_ex9901.htm PRESS RELEASE

 

Lifeway Foods, Inc. Announces Results for the Second Quarter Ended June 30, 2022

 

Net sales increase 14.8% year-over-year to $33.5 million; up 33.9% compared to 2020

 

Delivers 11th straight quarter of year-over-year net sales growth

 

Morton Grove, IL — September 26, 2022— Lifeway Foods, Inc. (Nasdaq: LWAY) (“Lifeway” or “the Company”), a leading U.S. supplier of kefir and fermented probiotic products to support the microbiome, today reported financial results for the second quarter ended June 30, 2022.

 

“I am excited to report yet another consecutive quarter of growth at Lifeway, driven primarily by the continued strong performance of our core drinkable Kefir,” commented Julie Smolyansky, Lifeway’s President and Chief Executive Officer. “Throughout 2022 we have continued to execute on our strategic initiatives, elevating consumer awareness and brand engagement, which has led to ongoing improvement in brand performance. This is highlighted in the second quarter by our 14.8% year-over-year net sales increase. Despite the industry-wide inflationary pressures and cautious spending trends, our customers have proven they will remain focused on gut health and nutrition. The strong demand for Lifeway products is signaled by our expanded distribution and accelerating velocities with key retail partners. Additionally, we continue to evaluate options to increase our presence in high visibility away-from-home locations including universities, small format convenience stores and healthcare settings. I look forward to building upon this incredible momentum we have garnered in the last two years, and maximizing gains for our business and our shareholders in the back half of 2022 and into 2023.”

 

Second Quarter 2022 Results

 

Net sales were $33.5 million for the second quarter ended June 30, 2022, an increase of $4.3 million or 14.8% from the same period in 2021. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir and the impact of price increases implemented during the first quarter of 2022, and to a lesser extent the favorable impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

 

Gross profit as a percentage of net sales was 17.0% for the second quarter ended June 30, 2022.

 

Selling, general and administrative expenses increased $0.1 million to $5.3 million for the second quarter ended June 30, 2022, from $5.2 million during the same period in 2021.

 

The Company reported net income of $0.1 million or $0.01 per basic and diluted common share for the second quarter ended June 30, 2022.

 

Delayed Reporting of Financial Results

 

As previously announced, the Company experienced delays in reporting its financial results and filing its 10-K for the year ended December 31, 2021, which was subsequently filed on July 21, 2022. As a result, the reporting of financial results and filing of its 10-Q for the second quarter ended June 30, 2022 was also delayed.

 

 

 

 

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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, probiotic oat milk, and a ProBugs line for kids. Lifeway’s tart and tangy fermented dairy products are now sold across the United States, Mexico, Ireland and France. 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, 2021, 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: 847-967-1010

Email: info@lifeway.net

 

 

 

 

 

 

 

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2022 and December 31, 2021

(In thousands)

 

    June 30,
2022		     December 31,  
    Unaudited     2021  
Current assets                
Cash and cash equivalents   $ 6,494     $ 9,233  
Accounts receivable, net of allowance for doubtful accounts and discounts & allowances of $1,220 and $1,170 at June 30, 2022 and December 31, 2021 respectively     10,354       9,930  
Inventories, net     8,436       8,285  
Prepaid expenses and other current assets     1,100       1,254  
Refundable income taxes     784       344  
Total current assets     27,168       29,046  
                 
Property, plant and equipment, net     20,595       20,130  
Operating lease right-of-use asset     179       216  
Goodwill     11,704       11,704  
Intangible assets, net     7,708       7,978  
Other assets     1,800       1,800  
Total assets   $ 69,154     $ 70,874  
                 
Current liabilities                
Current portion of note payable   $ 1,000     $ 1,000  
Accounts payable     6,859       6,614  
Accrued expenses     3,166       3,724  
Accrued income taxes     –       725  
Total current liabilities     11,025       12,063  
Line of credit     2,777       2,777  
Note payable     2,973       3,470  
Operating lease liabilities     86       85  
Deferred income taxes, net     3,201       3,201  
Other long-term liabilities     –       147  
Total liabilities     20,062       21,743  
                 
Commitments and contingencies     –       –  
                 
Stockholders' equity                
Preferred stock, no par value; 2,500 shares authorized; no shares issued or outstanding at June 30, 2022 and December 31, 2021     –       –  
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 15,473 and 15,435 outstanding at June 30, 2022 and December 31, 2021, respectively     6,509       6,509  
Paid-in capital     3,008       2,552  
Treasury stock, at cost     (13,156 )     (13,436 )
Retained earnings     52,731       53,506  
Total stockholders' equity     49,092       49,131  
                 
Total liabilities and stockholders' equity   $ 69,154     $ 70,874  

 

See accompanying notes to consolidated financial statements

 

 

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

For the three and six months ended June 30, 2022 and 2021

(Unaudited)

(In thousands, except per share data)

 

   

Three Months Ended

June 30,

    

Six Months Ended

June 30,

  
    2022     2021     2022     2021  
                         
Net sales   $ 33,491     $ 29,162     $ 67,590     $ 58,538  
                                 
Cost of goods sold     27,207       20,846       55,070       41,358  
Depreciation expense     587       639       1,243       1,454  
Total cost of goods sold     27,794       21,485       56,313       42,812  
                                 
Gross profit     5,697       7,677       11,277       15,726  
                                 
Selling expenses     2,482       2,566       5,684       5,788  
General and administrative     2,839       2,617       6,131       5,508  
Amortization expense     135       –       270       –  
Total operating expenses     5,456       5,183       12,085       11,296  
                                 
Income from operations     241       2,494       (808 )     4,430  
                                 
Other income (expense):                                
Interest expense     (52 )     (20 )     (94 )     (42 )
Gain on investments     –       –       –       2  
Loss on sale of property and equipment     –       (76 )     –       (83 )
Other (expense) income, net     (4 )     (49 )     (5 )     (59 )
Total other income (expense)     (56 )     (145 )     (99 )     (182 )
                                 
Income before provision for income taxes     185       2,349       (907 )     4,248  
                                 
Provision for income taxes     65       731       (132 )     1,324  
                                 
Net income   $ 120     $ 1,618     $ (775 )   $ 2,924  
                                 
Earnings (loss) per common share:                                
Basic   $ 0.01     $ 0.10     $ (0.05 )   $ 0.19  
Diluted   $ 0.01     $ 0.10     $ (0.05 )   $ 0.19  
                                 
Weighted average common shares:                                
Basic     15,466       15,639       15,450       15,622  
Diluted     15,875       15,793       15,772       15,772  

 

 

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

    Six months ended June 30,  
    2022     2021  
Cash flows from operating activities:                
Net (loss) income   $ (775 )   $ 2,924  
Adjustments to reconcile net (loss) income to operating cash flow:                
Depreciation and amortization     1,513       1,454  
Non-cash interest expense     3       9  
Non-cash rent expense     –       51  
Bad debt expense     –       (1 )
Deferred revenue     (15 )     (15 )
Stock-based compensation     547       301  
Loss on sale of property and equipment     –       83  
(Increase) decrease in operating assets:                
Accounts receivable     (424 )     (1,154 )
Inventories     (151 )     (361 )
Refundable income taxes     (440 )     (323 )
Prepaid expenses and other current assets     154       255  
Increase (decrease) in operating liabilities:                
Accounts payable     246       (305 )
Accrued expenses     (462 )     1,276  
Accrued income taxes     (725 )     (547 )
Net cash (used in) provided by operating activities     (529 )     3,647  
                 
Cash flows from investing activities:                
Purchases of property and equipment     (1,710 )     (1,161 )
Net cash used in investing activities     (1,710 )     (1,161 )
                 
Cash flows from financing activities:                
Repayment of note payable     (500 )     –  
Net cash used in financing activities     (500 )     –  
                 
Net (decrease) increase in cash and cash equivalents     (2,739 )     2,486  
                 
Cash and cash equivalents at the beginning of the period     9,233       7,926  
                 
Cash and cash equivalents at the end of the period   $ 6,494     $ 10,412  
                 
Supplemental cash flow information:                
Cash paid for income taxes, net   $ 640     $ 2,194  
Cash paid for interest   $ 88     $ 33  
                 
Non-cash investing activities                
Increase (decrease) in right-of-use assets and operating lease obligations   $ 36     $ 27  

 

 

 

 

 

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