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

LWAY

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, Ill., Sept. 26, 2022 /PRNewswire/ -- 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.

(PRNewsfoto/Lifeway Foods, Inc.)

"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.

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.

For media inquiries:
Derek Miller
Vice President of Communications, Lifeway Foods
Email: derekm@lifeway.net

For general Lifeway Foods inquiries:
info@lifeway.net
Phone: 847-967-1010

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

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


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


Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/lifeway-foods-inc-announces-results-for-the-second-quarter-ended-june-30-2022-301632554.html

SOURCE Lifeway Foods, Inc.