MORTON GROVE, Ill., Aug. 11, 2014 /PRNewswire/ -- Lifeway Foods, Inc., (Nasdaq: LWAY), a leading supplier of cultured dairy products known as kefir and organic kefir, today announced results for the second quarter ended June 30, 2014.
"We are pleased with our performance in the second quarter of fiscal 2014 driven by a strong net sales increase of 28% and growing trend of consumers looking for healthy food alternatives," said Julie Smolyansky, CEO of Lifeway Foods, Inc. "Our team has successfully executed on our ongoing initiative to expand our brand recognition which in turn allows us to increase distribution of our nutritious probiotic kefir products. We expect the momentum we have built in the first half of fiscal 2014 to continue for the remainder of the year and are optimistic about our long-term growth opportunities."
Second Quarter Results
Total consolidated net sales increased 28% or $6.5 million to $29.6 million during the three-month period ended June 30, 2014 from $23.1 million during the same three-month period in 2013. This increase is primarily attributable to increased sales and awareness of the Company's flagship line, Kefir, as well as ProBugs® Organic Kefir for kids and BioKefir™.
Gross profit for the second quarter of 2014 was $7.5 million compared to $7.6 million in the second quarter of the prior year. The Company's gross profit margin decreased to 25% in the second quarter of 2014 versus 33% in the second quarter of 2013. The decrease was primarily attributable to a 30% increase in the cost of milk, the Company's largest raw material, compared to the same period last year.
Total operating expenses increased 17% or $0.9 million to $6.0 million during the second quarter of 2014, from $5.1 million during the same period in 2013. This increase was primarily attributable to an increase in selling expenses.
Total operating income decreased $1.0 million to $1.5 million during the second quarter of 2014, from $2.5 million during the same period in 2013. The decrease in operating income is related to the decrease in gross profit and increased operating expenses.
The Company's second quarter 2014 effective tax rate was 26% compared to 45% in the same period last year.
Total net income was $1.1 million or $0.07 per diluted share for the three-month period ended June 30, 2014 compared to $1.4 million or $0.09 per diluted share in the same period in 2013.
Six Month Results
Total consolidated net sales increased by $11.2 million, or approximately 24%, to $58.7 million during the six-month period ended June 30, 2014 from $47.5 million during the same six-month period in 2013.
Gross profit for the first six-months of 2014 decreased 9% to $14.6 million, compared to $16.0 million in the same period in the prior year. The Company's gross profit margin was 25% in the first six-months of 2014 compared to 34% in the same period last year.
Total net income was $1.8 million or $0.11 per share for the six-month period ended June 30, 2014 compared to $3.8 million or $0.23 per share in the same period in 2013.
Balance Sheet/Cash Flow Highlights
The Company had $2.9 million in cash and cash equivalents as of June 30, 2014 compared to $4.9 million at June 30, 2013. This decrease is primarily due to the $7.4 million acquisition of the Golden Guernsey dairy plant in the second quarter of 2013. Total stockholder's equity was $44.7 million as of June 30, 2014, which is an increase of $3.0 million when compared to June 30, 2013.
Net cash provided by operating activities decreased $2.9 million to $2.1 million for the first six months of 2014. This decrease is primarily attributable to the decrease in accounts payable.
Net cash used in investing activities was $2.1 million during the six-months ended June 30, 2014 compared to net cash used in investing activities of $0.8 million during the same period in 2013.
Conference Call
The Company will host a conference call to discuss these results with additional comments and details on Monday, August 11, 2014 at 4:30 p.m. ET. The call will be broadcast live over the Internet hosted at the Investor Relations section of Lifeway Foods' website at www.lifeway.net, and will be archived online through August 25, 2014. In addition, listeners may dial 877-407-3982 in North America, and international listeners may dial 201-493-6780. Participants from the Company will be Julie Smolyansky, President and Chief Executive Officer, and Edward Smolyansky, Chief Financial Officer and Chief Operating Officer.
About Lifeway Foods
Lifeway Foods, Inc. (Nasdaq: LWAY), recently named one of Fortune Small Business' Fastest Growing Companies for the sixth consecutive year, is America's leading supplier of the cultured dairy products known as kefir and organic kefir. Lifeway Kefir is a dairy beverage that contains 10 exclusive live and active probiotic cultures plus ProBoost™. In addition to its line of Kefir products, the company produces a variety of Frozen Kefir and probiotic cheese products. Lifeway also sells frozen kefir, kefir smoothies and kefir parfaits through its Starfruit™ retail stores.
Find Lifeway Foods, Inc. on Facebook: www.facebook.com/lifewaykefir
Follow Lifeway Foods on Twitter: http://twitter.com/lifeway_kefir
YouTube: http://www.youtube.com/user/lifewaykefir
Forward Looking Statements
This news release contains forward-looking statements. Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, competitive pressures and other important factors detailed in the Company's reports filed with the Securities and Exchange Commission.
Contact:
Lifeway Foods, Inc.
Phone: 877.281.3874
Email: info@Lifeway.net
Investor Relations:
ICR
Katie Turner
John Mills
646.277.1228
|
LIFEWAY FOODS, INC. AND SUBSIDIARIES
|
|
Consolidated Statements of Financial Condition
|
|
June 30, 2014 and 2013 (Unaudited) and December 31, 2013
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2014
|
|
2013
|
|
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ 2,869,638
|
|
$ 4,939,948
|
|
$ 3,306,608
|
|
Investments
|
|
2,986,329
|
|
2,483,673
|
|
2,516,380
|
|
Certificates of deposits in financial institutions
|
|
---
|
|
115,373
|
|
15,373
|
|
Inventories
|
|
6,810,541
|
|
7,807,150
|
|
6,899,008
|
|
Accounts receivable, net of allowance for doubtful accounts and discounts ($1,300,000 and $1,350,000 and $1,050,000)
|
|
9,538,188
|
|
9,911,305
|
|
10,444,839
|
|
Prepaid expenses and other current assets
|
|
13,612
|
|
31,797
|
|
128,323
|
|
Other receivables
|
|
56,680
|
|
5,400
|
|
103,272
|
|
Deposits
|
|
142,836
|
|
580,974
|
|
-
|
|
Deferred income taxes
|
|
293,445
|
|
391,139
|
|
322,071
|
|
Refundable income taxes
|
|
1,965,933
|
|
28,123
|
|
1,014,947
|
|
Total current assets
|
|
24,677,202
|
|
26,294,882
|
|
24,750,821
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
21,494,127
|
|
14,718,760
|
|
20,824,448
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
|
|
|
|
|
Goodwill and other non amortizable brand assets
|
|
14,068,091
|
|
14,068,091
|
|
14,068,091
|
|
Other intangible assets, net of accumulated amortization of $4,913,397, $4,198,439 and $4,555,559 at June 30, 2014 and 2013 and at December 31, 2013, respectively
|
|
3,417,602
|
|
4,107,561
|
|
3,750,441
|
|
Total intangible assets
|
|
17,485,693
|
|
18,175,652
|
|
17,818,532
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
Long-term accounts receivable, net of current portion
|
|
279,921
|
|
280,000
|
|
280,000
|
|
Total assets
|
|
$63,936,943
|
|
$59,469,294
|
|
$63,673,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Current maturities of notes payable
|
|
$ 877,062
|
|
$ 545,494
|
|
$ 875,002
|
|
Accounts payable
|
|
6,471,442
|
|
7,166,377
|
|
6,723,179
|
|
Accrued expenses
|
|
899,803
|
|
1,094,820
|
|
1,284,060
|
|
Accrued income taxes
|
|
---
|
|
1,224,115
|
|
---
|
|
Total current liabilities
|
|
8,248,307
|
|
10,030,806
|
|
8,882,241
|
|
|
|
|
|
|
|
|
Notes payable
|
|
8,555,731
|
|
4,726,472
|
|
8,999,012
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
2,395,143
|
|
3,018,629
|
|
2,843,426
|
|
Total liabilities
|
|
19,199,181
|
|
17,775,907
|
|
20,724,679
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
Common stock, no par value; 40,000,000 shares authorized; 17,273,776 shares issued; 16,346,017 shares outstanding at June 30, 2014; 17,273,776 shares issued; 16,346,017 shares outstanding at June 30, 2013 and 16,346,017 shares outstanding at December 31, 2013
|
|
6,509,267
|
|
6,509,267
|
|
6,509,267
|
|
Paid-in-capital
|
|
2,032,516
|
|
2,032,516
|
|
2,032,516
|
|
Treasury stock, at cost
|
|
(8,187,682)
|
|
(8,187,682)
|
|
(8,187,682)
|
|
Retained earnings
|
|
44,341,809
|
|
41,366,495
|
|
42,587,214
|
|
Accumulated other comprehensive income (loss), net of taxes
|
|
41,852
|
|
(27,209)
|
|
7,807
|
|
Total stockholders' equity
|
|
44,737,762
|
|
41,693,387
|
|
42,949,122
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$63,936,943
|
|
$59,469,294
|
|
$63,673,801
|
|
LIFEWAY FOODS, INC. AND SUBSIDIARIES
|
|
Consolidated Statements of Income and Comprehensive Income
|
|
For the Three and Six Months Ended June 30, 2014 and 2013 (unaudited)
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Sales
|
|
$ 32,594,048
|
|
|
|
$ 25,838,058
|
|
|
|
$ 64,655,195
|
|
|
|
$ 53,428,680
|
|
|
|
Less: discounts and allowances
|
|
(3,028,637)
|
|
|
|
(2,760,174)
|
|
|
|
(5,958,073)
|
|
|
|
(5,963,765)
|
|
|
|
Net sales
|
|
29,565,411
|
|
29,565,411
|
|
23,077,884
|
|
23,077,884
|
|
58,697,122
|
|
58,697,122
|
|
47,464,915
|
|
47,464,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
21,432,624
|
|
|
|
15,058,461
|
|
|
|
43,114,535
|
|
|
|
30,607,446
|
|
Depreciation expense
|
|
|
|
627,878
|
|
|
|
421,707
|
|
|
|
1,011,238
|
|
|
|
815,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of goods sold
|
|
|
|
22,060,502
|
|
|
|
15,480,168
|
|
|
|
44,125,773
|
|
|
|
31,423,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
7,504,909
|
|
|
|
7,597,716
|
|
|
|
14,571,349
|
|
|
|
16,041,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
|
3,693,821
|
|
|
|
2,876,635
|
|
|
|
7,173,509
|
|
|
|
5,514,354
|
|
General and administrative
|
|
|
|
2,107,197
|
|
|
|
2,057,581
|
|
|
|
4,487,827
|
|
|
|
3,955,425
|
|
Amortization expense
|
|
|
|
178,919
|
|
|
|
177,842
|
|
|
|
357,839
|
|
|
|
355,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
5,979,937
|
|
|
|
5,112,058
|
|
|
|
12,019,175
|
|
|
|
9,825,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
1,524,972
|
|
|
|
2,485,658
|
|
|
|
2,552,174
|
|
|
|
6,216,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
|
|
35,227
|
|
|
|
30,622
|
|
|
|
63,925
|
|
|
|
45,631
|
|
Rental income
|
|
|
|
1,200
|
|
|
|
3,389
|
|
|
|
1,700
|
|
|
|
6,658
|
|
Interest expense
|
|
|
|
(66,724)
|
|
|
|
(37,424)
|
|
|
|
(132,293)
|
|
|
|
(73,723)
|
|
Gain on sale of investments, net
reclassified from OCI
|
|
|
|
57,321
|
|
|
|
56,944
|
|
|
|
62,130
|
|
|
|
121,280
|
|
Loss on sale of equipment
|
|
|
|
(76,484)
|
|
|
|
---
|
|
|
|
(76,484)
|
|
|
|
---
|
|
Other Income
|
|
|
|
1,672
|
|
|
|
10,229
|
|
|
|
1,672
|
|
|
|
10,229
|
|
Total other income (expense)
|
|
|
|
(47,788)
|
|
|
|
63,760
|
|
|
|
(79,350)
|
|
|
|
110,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes
|
|
|
|
1,477,184
|
|
|
|
2,549,418
|
|
|
|
2,472,824
|
|
|
|
6,326,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
382,768
|
|
|
|
1,145,478
|
|
|
|
718,229
|
|
|
|
2,556,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$ 1,094,416
|
|
|
|
$ 1,403,940
|
|
|
|
$ 1,754,595
|
|
|
|
$ 3,769,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share
|
|
|
|
0.07
|
|
|
|
0.09
|
|
|
|
0.11
|
|
|
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
16,346,017
|
|
|
|
16,346,017
|
|
|
|
16,346,017
|
|
|
|
16,346,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$ 1,094,416
|
|
|
|
$ 1,403,940
|
|
|
|
$ 1,754,595
|
|
|
|
$ 3,769,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on investments (net of tax)
|
|
|
|
63,111
|
|
|
|
(63,811)
|
|
|
|
71,155
|
|
|
|
(12,277)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less reclassification adjustment for (gains) losses included in net income (net of taxes)
|
|
|
|
(34,393)
|
|
|
|
(32,174)
|
|
|
|
(37,110)
|
|
|
|
(68,523)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
$ 1,123,134
|
|
|
|
$ 1,307,955
|
|
|
|
$ 1,788,640
|
|
|
|
$ 3,688,779
|
|
LIFEWAY FOODS, INC. AND SUBSIDIARIES
|
|
Consolidated Statements of Cash Flows
|
|
For the Six Months Ended June 30, 2014 and 2013 (Unaudited)
|
|
|
|
(Unaudited)
|
|
|
June 30,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$ 1,754,595
|
|
$ 3,769,579
|
|
Adjustments to reconcile net income to net cash flows from operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
1,369,077
|
|
1,171,515
|
|
Gain on sale of investments, net
|
|
(62,130)
|
|
(121,280)
|
|
Deferred income taxes
|
|
(440,285)
|
|
(104,133)
|
|
Bad Debt Expense
|
|
156,049
|
|
26,819
|
|
Loss on sale of equipment
|
|
76,484
|
|
---
|
|
(Increase) decrease in operating assets:
|
|
|
|
|
|
Accounts receivable
|
|
728,281
|
|
(1,211,015)
|
|
Other receivables
|
|
46,591
|
|
3,425
|
|
Inventories
|
|
88,467
|
|
(1,867,964)
|
|
Refundable income taxes
|
|
(950,986)
|
|
56,705
|
|
Prepaid expenses and other current assets
|
|
(28,125)
|
|
(515,633)
|
|
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
Accounts payable
|
|
(1,972,157)
|
|
2,909,652
|
|
Accrued expenses
|
|
1,336,163
|
|
(60,857)
|
|
Income taxes payable
|
|
---
|
|
969,804
|
|
Net cash provided by operating activities
|
|
2,102,024
|
|
5,026,617
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of investments
|
|
(1,774,734)
|
|
(2,573,721)
|
|
Proceeds from sale of investments
|
|
1,419,362
|
|
1,948,839
|
|
Redemption of certificates of deposits
|
|
15,000
|
|
334,627
|
|
Purchases of property and equipment
|
|
(1,761,401)
|
|
(547,819)
|
|
Proceeds from sale of equipment
|
|
4,000
|
|
---
|
|
Net cash used in investing activities
|
|
(2,097,773)
|
|
(838,074)
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Dividends paid
|
|
---
|
|
(1,307,861)
|
|
Repayment of notes payable
|
|
(441,221)
|
|
(226,960)
|
|
Net cash used in financing activities
|
|
(441,221)
|
|
( 1,534,821)
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(436,970)
|
|
2,653,722
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period
|
|
3,306,608
|
|
2,286,226
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$ 2,869,638
|
|
$ 4,939,948
|
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SOURCE Lifeway Foods, Inc.