Annual net sales increase 16.7% year-over-year to $119.1 million; up 27.1% compared to 2019

Delivers 9th straight quarter of year-over-year net sales growth

MORTON GROVE, Ill., July 21, 2022 /PRNewswire/ -- 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 fourth quarter and full year ended December 31, 2021.

(PRNewsfoto/Lifeway Foods, Inc.)

"I am excited to report yet another consecutive quarter of year-over-year growth for Lifeway and a very strong year for the brand as a whole, illustrated by our 16.7% net sales growth when compared to full year 2020," commented Julie Smolyansky, Lifeway's President and Chief Executive Officer. "Our customer acquisition strategy paid dividends in 2021. Throughout the year, we increased investments in our marketing and advertising programs, focusing both on new customers as well as our existing base, which has contributed to elevated brand engagement and improved brand performance. We are also encouraged by the growing consumer focus on gut-health and protein, which continues to expand our addressable market and should provide us continued positive momentum. We plan to further execute on our customer acquisition strategy and capitalize on the heightened interest in our better-for-you sector."

Smolyansky added, "I would also like to highlight a few other wins for Lifeway in 2021. First, the acquisition of GlenOaks Farms. The integration of this great drinkable yogurt brand into our portfolio has been seamless so far, and we are very happy with its performance amongst its base of Western U.S. retailers, strategically complementing our eastern focused Fresh Made brand. Moving forward, we plan to expand upon the GlenOaks distribution.  Our Lifeway Kefir product remains the true core of our business, and we are seeing a growth in velocity at some of our top retailers, which should drive continued growth of the product throughout the current year and beyond."

Full Year 2021 Results

Net sales were $119.1 million for the year ended December 31, 2021, an increase of $17.0 million or 16.7% from the prior year. 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 24.1% for the year ended December 31, 2021.

Selling expenses increased $0.9 million to $11.1 million for the year ended December 31, 2021 from $10.2 million in the prior year. The increase was primarily due to increased investment in advertising and marketing programs. 

General and administrative expenses decreased to $11.6 million for the year ended December 31, 2021 from $11.7 million during the same period in 2020.

The Company reported net income of $3.3 million or $0.21 per basic and diluted common share for the year ended December 31, 2021 compared to net income of $3.2 million or $0.21 per basic and diluted common share during the same period in 2020.

Delayed Reporting of Financial Results and Filing of 10-K

As previously announced, the Company experienced delays in reporting its financial results and filing its 10-K for the year ended December 31, 2021. The delay is due to the identification of an error in accounting for income taxes of a prior year acquisition, resulting in a $1.18 million increase in goodwill and deferred income tax liability. The Company has evaluated the effect of this error on its current and prior period filings. As a result, the Company has restated its financial statement for the year ended December 31, 2020, and each of the quarters of fiscal years 2020 and 2021 in its Form 10K filed this morning.

Conference Call and Webcast

A pre-recorded conference call and webcast with Julie Smolyansky discussing these results with additional comments and details is available through the "Investor Relations" section of the Company's website at https://lifewaykefir.com/webinars-reports/  and will also be available for replay.

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, 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: 847-967-1010
Email: info@lifeway.net

 


LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(In thousands)










December 31,




2021



2020

(As Restated)


Current assets









Cash and cash equivalents


$

9,233



$

7,926


Accounts receivable, net of allowance for doubtful accounts and discounts & allowances of $1,170 and $1,350 at December 31, 2021 and 2020, respectively



9,930




8,002


Inventories, net



8,285




6,930


Prepaid expenses and other current assets



1,254




1,163


Refundable income taxes



344




31


Total current assets



29,046




24,052











Property, plant and equipment, net



20,130




21,048


Operating lease right-of use asset



216




345











Intangible assets









Goodwill and indefinite-lived intangibles



15,404




14,004


Other intangible assets, net



4,278





Total intangible assets



19,682




14,004











Other Assets



1,800




1,800


Total assets


$

70,874



$

61,249











Current liabilities









Current portion of note payable


$

1,000



$


Accounts payable



6,614




5,592


Accrued expenses



3,724




2,196


Accrued income taxes



725




653


Total current liabilities



12,063




8,441


Line of credit



2,777




2,768


Note Payable



3,470





Operating lease liabilities



85




165


Deferred income taxes, net



3,201




2,944


Other long-term liabilities



147




77


Total liabilities



21,743




14,395











Commitments and contingencies


















Stockholders' equity









Preferred stock, no par value; 2,500 shares authorized; none issued







Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 15,435 and 15,604 shares outstanding at 2021 and 2020



6,509




6,509


Paid-in capital



2,552




2,600


Treasury stock, at cost



(13,436)




(12,450)


Retained earnings



53,506




50,195


Total stockholders' equity



49,131




46,854











Total liabilities and stockholders' equity


$

70,874



$

61,249


 

LIFEWAY FOODS, INC. AND SUBSIDIARIES


Consolidated Statements of Operations


For the three months and twelve months ended December 31, 2021 and 2020


 (In thousands, except per share data)






Three Months Ended

December 31,



Twelve months Ended

December 31,




2021



2020



2021



2020

(As Restated)















Net sales


$

30,974



$

25,585



$

119,065



$

102,026



















Cost of goods sold



24,331




18,393




87,604




72,006


Depreciation expense



652




761




2,751




3,087


Total cost of goods sold



24,983




19,154




90,355




75,093



















Gross profit



5,991




6,431




28,710




26,933



















Selling expenses



2,587




2,786




11,097




10,197


General and administrative



2,909




2,980




11,611




11,661


Amortization expense



89




35




122




152


Total operating expenses



5,585




5,801




22,830




22,010



















Income from operations



406




630




5,880




4,923



















Other income (expense):

















Interest expense



(44)




(27)




(116)




(118)


Realized gain on investments, net









2




4


Loss on sale of property and equipment









(88)




(28)


Other (expense) income



(1)







(62)




47


Total other (expense) income



(45)




(27)




(264)




(95)



















Income before provision for income taxes



361




603




5,616




4,828



















Provision for income taxes



454




764




2,305




1,596



















Net income (loss)


$

(93)



$

(161)



$

3,311



$

3,232



















Earnings (loss) per common share:

















Basic


$

(0.01)



$

0.02



$

0.21



$

0.21


Diluted


$

(0.01)



$

0.02



$

0.21



$

0.21



















Weighted average common shares:

















Basic



15,435




15,604




15,537




15,597


Diluted



15,686




15,797




15,773




15,766


 

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2021 and 2020

(In thousands)










2021



2020

(As Restated)









Cash flows from operating activities:









Net income


$

3,311



$

3,232


Adjustments to reconcile net income to operating cash flow:









Depreciation and amortization



2,873




3,239


Non-cash interest expense



11




23


Non-cash rent expense



1




(37)


Bad debt expense



2




(6)


Deferred Revenue



(30)




(91)


Stock-based compensation



1,144




393


Deferred income taxes



257




841


Loss on sale of property and equipment



88




28


(Increase) decrease in operating assets:









Accounts receivable



(1,931)




(1,304)


Inventories



(1,356)




(538)


Refundable income taxes



(313)




649


Prepaid expenses and other current assets



(91)




423


Increase (decrease) in operating liabilities:









Accounts payable



1,022




311


Accrued expenses



504




(1,278)


Operating lease asset amortization/liability







Accrued income taxes



72




500


Net cash provided by operating activities



5,564




6,385











Cash flows from investing activities:









Purchases of property and equipment



(1,922)




(1,895)


Proceeds from sale of property and equipment






5


Acquisition, net of cash acquired



(5,220)





Net cash used in investing activities



(7,142)




(1,890)











Cash flows from financing activities:









Purchase of treasury stock



(1,583)




(405)


Payment of deferred financing cost



(32)





Proceeds from note payable



5,000





Repayment of note payable



(500)





Net cash provided by (used in) financing activities



2,885




(405)











Net increase in cash and cash equivalents



1,307




4,090


Cash and cash equivalents at the beginning of the period



7,926




3,836


Cash and cash equivalents at the end of the period


$

9,233



$

7,926











Supplemental cash flow information:









Cash paid for income taxes, net of (refunds)


$

2,288



$

(426)


Cash paid for interest


$

102



$

99


Non-cash investing activities









Increase (decrease) in right-of-use assets and operating lease obligations


$

45



$

(44)


Business acquisition escrow payable


$

580



$


Non-cash financing activities









Issuance of common stock under equity incentive plans


$



$

522


 

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SOURCE Lifeway Foods, Inc.

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