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
second quarter ended June 30, 2021.
“I am proud to report that the second quarter of 2021 marked yet
another consecutive quarter of year-over-year growth, highlighted
by our strong 16.6% increase in net sales when compared to the
second quarter of 2020,” commented Julie Smolyansky, Lifeway’s
President and Chief Executive Officer. “Throughout the quarter, we
remained focused on advertising and customer acquisition strategies
with elevated digital engagement and marketing programs, including
our first Spanish-language campaign. This increased marketing,
combined with the improving execution of our previously outlined
Lifeway 2.0 strategy, have contributed to our accelerating growth.
I am excited for the remainder of 2021, as current consumer trends
towards healthy eating alongside the continued efficient execution
of our growth strategy should provide a strong platform for Lifeway
moving forwards.”
Smolyansky added, “I would also like to highlight two pivotal
events that indicate Lifeway’s commitment to growth. On July 1,
2021, we announced the brand’s first expansion of kefir
distribution into the French market with our first listing in
France. We are very excited to capitalize on this expansion, and
the French market is a perfect target, as fermented dairy foods
like kefir have been prevalent in the country’s diet for
generations. In addition, on August 3, 2021, we announced the
intended acquisition of the assets of GlenOaks Farms. GlenOaks’
product offering includes six different flavors of their popular,
probiotic drinkable yogurt, a tremendous strategic complement to
our kefir products. The acquisition further solidifies our position
in California and the West, and we look forward to integrating the
GlenOaks brand and expanding its reach.”
A pre-recorded conference call and webcast with Lifeway CEO
Julie Smolyansky discussing these results with additional comments
and details will be available on August 16, 2021 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/.
Second Quarter 2021 Results
Net sales were $29.2 million for the second quarter, an increase
of $4.1 million or 16.6% from the same period in 2020. The net
sales increase was primarily driven by higher volumes of our
branded drinkable kefir.
Gross profit as a percentage of net sales was 26.3% for the
second quarter, compared to 27.7% during the same period in 2020.
The decrease versus the prior year was primarily due to the
unfavorable impact of milk pricing, and to a lesser extent the
increased pricing of other inputs, partially offset by decreasing
in depreciation expense.
Selling expenses decreased $0.1 million, or 5.7%, to $2.6
million for the second quarter from $2.7 million in the second
quarter of 2020. The decrease was primarily due to favorable
compensation expense.
General and administrative expenses decreased
$0.1 million, or 4.2% to $2.6 million for the second quarter of
2021 from $2.7 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 $0.7 million for the
second quarter of 2021, compared to $0.4 million during the same
period in 2020.
The Company reported net income of $1.6 million
or $0.10 per basic and diluted common share for the second quarter
ended June 30, 2021 compared to a net income of $1.0 million or
$0.06 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 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
SheetsJune 30, 2021 and December 31,
2020(In thousands)
|
|
June 30,
2021(Unaudited) |
|
|
December 31, 2020 |
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,412 |
|
|
$ |
7,926 |
|
Accounts receivable, net of allowance for doubtful accounts and
discounts & allowances of $1,190 and $1,350 at June 30, 2021
and December 31, 2020 respectively |
|
|
9,157 |
|
|
|
8,002 |
|
Inventories, net |
|
|
7,291 |
|
|
|
6,930 |
|
Prepaid expenses and other current assets |
|
|
908 |
|
|
|
1,163 |
|
Refundable income taxes |
|
|
354 |
|
|
|
31 |
|
Total current
assets |
|
|
28,122 |
|
|
|
24,052 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
20,671 |
|
|
|
21,048 |
|
Operating lease
right-of-use asset |
|
|
226 |
|
|
|
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 |
|
$ |
63,643 |
|
|
$ |
60,069 |
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,285 |
|
|
$ |
5,592 |
|
Accrued expenses |
|
|
3,587 |
|
|
|
2,196 |
|
Accrued income taxes |
|
|
106 |
|
|
|
653 |
|
Total current
liabilities |
|
|
8,978 |
|
|
|
8,441 |
|
Line of
credit |
|
|
2,777 |
|
|
|
2,768 |
|
Operating lease
liabilities |
|
|
107 |
|
|
|
165 |
|
Deferred income taxes,
net |
|
|
1,764 |
|
|
|
1,764 |
|
Other long-term
liabilities |
|
|
12 |
|
|
|
77 |
|
Total
liabilities |
|
|
13,638 |
|
|
|
13,215 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
|
|
|
|
|
|
Preferred stock, no par value; 2,500 shares authorized; no shares
issued or outstanding at June 30, 2021 and December 31, 2020 |
|
|
– |
|
|
|
– |
|
Common stock, no par value; 40,000 shares authorized; 17,274 shares
issued; 15,650 and 15,604 outstanding at June 30, 2021 and December
31, 2020, respectively |
|
|
6,509 |
|
|
|
6,509 |
|
Paid-in capital |
|
|
2,488 |
|
|
|
2,600 |
|
Treasury stock, at cost |
|
|
(12,111 |
) |
|
|
(12,450 |
) |
Retained earnings |
|
|
53,119 |
|
|
|
50,195 |
|
Total stockholders'
equity |
|
|
50,005 |
|
|
|
46,854 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity |
|
$ |
63,643 |
|
|
$ |
60,069 |
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Statements of
OperationsFor the three months ended June 30, 2021
and 2020(Unaudited)(In thousands,
except per share data)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
29,162 |
|
|
$ |
25,014 |
|
|
$ |
58,538 |
|
|
$ |
50,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
20,846 |
|
|
|
17,279 |
|
|
|
41,358 |
|
|
|
35,903 |
|
Depreciation expense |
|
|
639 |
|
|
|
807 |
|
|
|
1,454 |
|
|
|
1,574 |
|
Total cost of goods sold |
|
|
21,485 |
|
|
|
18,086 |
|
|
|
42,812 |
|
|
|
37,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
7,677 |
|
|
|
6,928 |
|
|
|
15,726 |
|
|
|
12,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
|
2,566 |
|
|
|
2,720 |
|
|
|
5,788 |
|
|
|
5,295 |
|
General and administrative |
|
|
2,617 |
|
|
|
2,731 |
|
|
|
5,508 |
|
|
|
5,876 |
|
Amortization expense |
|
|
– |
|
|
|
39 |
|
|
|
– |
|
|
|
78 |
|
Total operating
expenses |
|
|
5,183 |
|
|
|
5,490 |
|
|
|
11,296 |
|
|
|
11,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
2,494 |
|
|
|
1,438 |
|
|
|
4,430 |
|
|
|
1,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(20 |
) |
|
|
(30 |
) |
|
|
(42 |
) |
|
|
(69 |
) |
Gain on investments |
|
|
– |
|
|
|
4 |
|
|
|
2 |
|
|
|
4 |
|
Loss on sale of property and equipment |
|
|
(76 |
) |
|
|
(33 |
) |
|
|
(83 |
) |
|
|
(28 |
) |
Other (expense) income, net |
|
|
(49 |
) |
|
|
5 |
|
|
|
(59 |
) |
|
|
2 |
|
Total other income
(expense) |
|
|
(145 |
) |
|
|
(54 |
) |
|
|
(182 |
) |
|
|
(91 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes |
|
|
2,349 |
|
|
|
1,384 |
|
|
|
4,248 |
|
|
|
1,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
731 |
|
|
|
404 |
|
|
|
1,324 |
|
|
|
459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
1,618 |
|
|
$ |
980 |
|
|
$ |
2,924 |
|
|
$ |
1,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
$ |
0.19 |
|
|
$ |
0.07 |
|
Diluted |
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
$ |
0.19 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
15, 639 |
|
|
|
15,560 |
|
|
|
15, 622 |
|
|
|
15,591 |
|
Diluted |
|
|
15, 793 |
|
|
|
15,586 |
|
|
|
15, 772 |
|
|
|
15,607 |
|
LIFEWAY FOODS, INC. AND
SUBSIDIARIESConsolidated Statements of Cash
Flows(Unaudited)(In
thousands)
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
2,924 |
|
|
$ |
1,126 |
|
Adjustments to reconcile net income to operating cash
flow: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,454 |
|
|
|
1,652 |
|
Non-cash interest expense |
|
|
9 |
|
|
|
12 |
|
Non-cash rent expense |
|
|
51 |
|
|
|
(38 |
) |
Bad debt expense |
|
|
(1 |
) |
|
|
(4 |
) |
Deferred revenue |
|
|
(15 |
) |
|
|
(48 |
) |
Stock-based compensation |
|
|
301 |
|
|
|
232 |
|
Deferred income taxes |
|
|
– |
|
|
|
369 |
|
Loss (gain) on sale of property and equipment |
|
|
83 |
|
|
|
28 |
|
(Increase) decrease in operating assets: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,154 |
) |
|
|
(1,041 |
) |
Inventories |
|
|
(361 |
) |
|
|
(262 |
) |
Refundable income taxes |
|
|
(323 |
) |
|
|
65 |
|
Prepaid expenses and other current assets |
|
|
255 |
|
|
|
502 |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
(305 |
) |
|
|
(172 |
) |
Accrued expenses |
|
|
1,276 |
|
|
|
(448 |
) |
Accrued income taxes |
|
|
(547 |
) |
|
|
(62 |
) |
Net cash provided by operating activities |
|
|
3,647 |
|
|
|
1,911 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(1,161 |
) |
|
|
(728 |
) |
Proceeds from sale of property and equipment |
|
|
– |
|
|
|
5 |
|
Net cash used in investing activities |
|
|
(1,161 |
) |
|
|
(723 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Purchase of treasury stock |
|
|
– |
|
|
|
(405 |
) |
Net cash used in financing activities |
|
|
– |
|
|
|
(405 |
) |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
2,486 |
|
|
|
783 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
|
7,926 |
|
|
|
3,836 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
period |
|
$ |
10,412 |
|
|
$ |
4,619 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for income taxes, net of (refunds) |
|
$ |
2,194 |
|
|
$ |
82 |
|
Cash paid for interest |
|
$ |
33 |
|
|
$ |
61 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities |
|
|
|
|
|
|
|
|
Increase (decrease) in right-of-use assets and operating lease
obligations |
|
$ |
27 |
|
|
$ |
(58 |
) |
|
|
|
|
|
|
|
|
|
Non-cash financing
activities |
|
|
|
|
|
|
|
|
Issuance of common stock under equity incentive plans |
|
$ |
– |
|
|
$ |
522 |
|
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