Lifeway Foods® Announces Strong Results for the Third Quarter and Nine Months Ended September 30, 2024

Rhea-AI Summary

Lifeway Foods (LWAY) reported strong Q3 2024 results with net sales of $46.1 million, up 12.7% year-over-year, marking their 20th consecutive quarter of growth. Year-to-date net sales reached $139.9 million, an 18.5% increase from 2023. The company achieved a net income of $3.0 million ($0.20 per basic share) for Q3 and $9.2 million ($0.62 per basic share) year-to-date. Growth was primarily driven by higher volumes of branded drinkable kefir and cheese products. The company secured new retail placements, including strawberry banana kefir in 1,000 stores and Farmer Cheese in 1,400 stores by Q1 2025. Gross profit margin improved to 26.2% year-to-date due to manufacturing efficiencies.

Positive

• Net sales increased 12.7% to $46.1 million in Q3 2024
• Year-to-date net sales up 18.5% to $139.9 million
• Net income grew to $9.2 million YTD from $7.4 million in 2023
• Gross profit margin improved to 26.2% year-to-date
• Secured new retail distribution agreements for multiple products
• 20 consecutive quarters of year-over-year growth

Negative

• None.

Insights

Financial Analyst

Lifeway Foods delivered exceptional Q3 2024 results with $46.1 million in net sales, marking a robust 12.7% year-over-year increase. The company's year-to-date performance is equally impressive, with net sales reaching $139.9 million, up 18.5% from 2023. The sustained growth trajectory is particularly noteworthy, achieving 20 consecutive quarters of year-over-year growth.

The company's focus on branded products over private label manufacturing has yielded stronger margins, with gross profit margin improving to 26.2% year-to-date. Net income for Q3 reached $3.0 million ($0.20 per basic share), while year-to-date net income grew to $9.2 million ($0.62 per basic share), showing substantial improvement from $7.4 million in the same period last year.

The expansion into new retail locations, including placement in 1,000 stores of their largest retail customer and upcoming distribution in 1,400 stores of a national retailer, positions the company for continued growth momentum into 2025.

Market Research Analyst

The strategic positioning in the growing probiotic and functional foods market demonstrates strong market awareness. The company's success in expanding its core kefir product line while growing the cheese category shows effective portfolio management and market adaptation. The focus on protein-rich, probiotic-containing products aligns perfectly with current consumer health trends.

The 98.4% growth in net sales and 115.3% increase in gross profit over the past five years validates the effectiveness of their Lifeway 2.0 Strategic Growth Plan. The decision to prioritize branded products over private label manufacturing indicates a strong brand-building strategy that should support long-term pricing power and market position.

Year-to-date net sales of $139.9 million; up 18.5% year-over-year

Heightened interest in probiotic foods with bioavailable nutrients drives volume growth of Lifeway Kefir and Farmer Cheese

20th consecutive quarter of year-over-year growth

Year-to-date gross profit margin increased to 26.2%

MORTON GROVE, Ill., Nov. 14, 2024 /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 third quarter ended September 30, 2024.

"I'm thrilled to announce our 20^th consecutive quarter of net sales growth, marking an impressive 5 consecutive years' worth of quarterly growth for Lifeway on the topline," commented Julie Smolyansky, President and Chief Executive Officer of Lifeway Foods. "We continued this record year by delivering our second largest quarter ever with $46.1 million in net sales, up double-digits year-over-year, driven by the continued volume growth of our flagship drinkable Lifeway Kefir. We also saw growth in our cheese category, as our strategic sales investments have capitalized on the increasing consumer interest in soft cheese products, such as our Lifeway Farmer Cheese. Our effective sales and marketing investments continue to create demand, drive trial and accelerate velocities in our core offerings, as evidenced by our remarkable, volume-led results. Recently, our strawberry banana flavor of Lifeway Kefir gained placement at select locations of our largest retail customer, with an estimated total of 1,000 stores once resets are complete in the fourth quarter. We also anticipate that our ProBugs will gain incremental distribution at around 260 stores with a regional retailer in December, and our Farmer Cheese will gain placement with a large national retailer in an estimated 1400 stores by the end of the first quarter of 2025. We will continue to strategically evaluate opportunities to elevate the exposure of our core Lifeway offerings. Interest in protein-rich foods with probiotics and bioavailable nutrients like Lifeway Kefir and Farmer Cheese is higher than ever, and we believe that, in our 38-year history, our trajectory has never been stronger."

Smolyansky continued, "The strong third quarter performance extends our track record of execution on our growth plan to consolidate our market leading position. Compared to the same period 5 years ago, the year we initiated our Lifeway 2.0 Strategic Growth Plan, our year-to-date net sales and gross profit have grown by 98.4% and 115.3%, respectively, which has led to substantial shareholder value creation. We continued to deprioritize private label manufacturing during the quarter, focusing on our branded products to protect Lifeway's category dominance and visibility, streamline operations and further improve margins. As we continue to ship higher volumes of our Lifeway branded products, we will continue to realize manufacturing efficiencies and favorable fixed cost absorption, driving operating leverage across the business. The whole Lifeway team has contributed to our strong operational execution. We are on pace for record-breaking net sales in 2024, and I believe we are poised to continue this excellent momentum into the fourth quarter and 2025."

Third Quarter 2024 Results

Net sales were $46.1 million for the third quarter ended September 30, 2024, an increase of $5.2 million or 12.7% from the same period in 2023. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir.

Gross profit as a percentage of net sales was 25.7% for the third quarter ended September 30, 2024.

Selling, general and administrative expenses as a percentage of net sales were 16.4% for the third quarter ended September 30, 2024.

The Company reported net income of $3.0 million or $0.20 per basic and $0.19 per diluted common share for the third quarter ended September 30, 2024.

Year-to-Date 2024 Results

Net sales were $139.9 million for the nine months ended September 30, 2024, an increase of $21.9 million or 18.5% from the same period in 2023. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir.

Gross profit as a percentage of net sales was 26.2% for the nine months ended September 30, 2024, an improvement when compared to the same period in 2023, due to the higher volumes of our branded products, which provided manufacturing efficiencies and favorable fixed cost absorption.

Selling, general and administrative expenses as a percentage of net sales were 16.5% for the nine months ended September 30, 2024.

The Company reported net income of $9.2 million or $0.62 per basic and $0.60 per diluted common share for the nine months ended September 30, 2024, compared to net income of $7.4 million or $0.50 per basic and $0.49 per diluted common share during the same period in 2023.

Conference Call and Webcast
A webcast with Lifeway's President and Chief Executive Officer 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/.

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 a variety of cheeses and a ProBugs line for kids. Lifeway's tart and tangy fermented dairy products are now sold across the United States, Mexico, Ireland, South Africa, United Arab Emirates and France. Learn how Lifeway is good for more than just you at lifewayfoods.com.

Forward-Looking Statements

This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, Lifeway's outlook, expected manufacturing efficiencies and fixed cost absorption, expectations regarding future operating and financial performance, future business strategy and objectives and expected shipping to Dubai and the United Arab Emirates. These statements use words, and variations of words, such as "will," "continue," "build," "future," "increase," "drive," "believe," "look," "ahead," "confident," "deliver," "outlook," "expect," and "predict." You are cautioned not to rely on these forward-looking statements. These forward-looking statements are made as of the date of this press release, are based on current expectations of future events and thus are inherently subject to a number of risks and uncertainties, many of which involve factors or circumstances beyond Lifeway's control. 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, 2023 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. Copies of these filings are available online at https://www.sec.gov, http://lifewaykefir.com/investor-relations/, or on request from Lifeway. Lifeway expressly disclaims any obligation to update any forward-looking statements (including, without limitation, to reflect changed assumptions, the occurrence of anticipated or unanticipated events or new information), except as required by law.

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

General inquiries:
Lifeway Foods, Inc.
Phone: 847-967-1010
Email: info@lifeway.net

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2024 and December 31, 2023
(In thousands)
		September 30, 2024				December 31,
		(Unaudited)				2023
Current assets
Cash and cash equivalents		$	20,558			$	13,198
Accounts receivable, net of allowance for credit losses and discounts & allowances of $1,320 and $1,270 at September 30, 2024 and December 31, 2023 respectively			13,495				13,875
Inventories, net			8,441				9,104
Prepaid expenses and other current assets			1,893				2,019
Refundable income taxes			379				–
Total current assets			44,766				38,196
Property, plant and equipment, net			26,310				22,764
Operating lease right-of-use asset			136				192
Goodwill			11,704				11,704
Intangible assets, net			6,493				6,898
Other assets			1,900				1,900
Total assets		$	91,309			$	81,654
Current liabilities
Current portion of note payable		$	–			$	1,250
Accounts payable			11,117				9,976
Accrued expenses			5,589				4,916
Accrued income taxes			–				474
Total current liabilities			16,706				16,616
Note payable			–				1,483
Operating lease liabilities			79				118
Deferred income taxes, net			3,001				3,001
Total liabilities			19,786				21,218
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, no par value; 2,500 shares authorized; no shares issued or outstanding at September 30, 2024 and December 31, 2023			–				–
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 14,816 and 14,691 outstanding at September 30, 2024 and December 31, 2023, respectively			6,509				6,509
Paid-in capital			5,915				4,825
Treasury stock, at cost			(15,883)				(16,695)
Retained earnings			74,982				65,797
Total stockholders' equity			71,523				60,436
Total liabilities and stockholders' equity		$	91,309			$	81,654

 

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the three and nine months ended September 30, 2024 and 2023
(Unaudited)
(In thousands, except per share data)
		Three Months Ended September 30,								Nine months Ended September 30,
		2024				2023				2024				2023
Net sales		$	46,095			$	40,896			$	139,886			$	118,030
Cost of goods sold			33,508				29,099				101,127				85,428
Depreciation expense			720				654				2,082				1,953
Total cost of goods sold			34,228				29,753				103,209				87,381
Gross profit			11,867				11,143				36,677				30,649
Selling expense			3,979				2,884				11,256				8,974
General and administrative expense			3,564				3,085				11,877				10,028
Amortization expense			135				135				405				405
Total operating expenses			7,678				6,104				23,538				19,407
Income from operations			4,189				5,039				13,139				11,242
Other income (expense):
Interest expense			(4)				(109)				(102)				(322)
Gain on sale of property and equipment			3				–				3				33
Other income (expense), net			138				(1)				153				(1)
Total other income (expense)			137				(110)				54				(290)
Income before provision for income taxes			4,326				4,929				13,193				10,952
Provision for income taxes			1,350				1,517				4,008				3,554
Net income		$	2,976			$	3,412			$	9,185			$	7,398
Net earnings per common share:
Basic		$	0.20			$	0.23			$	0.62			$	0.50
Diluted		$	0.19			$	0.23			$	0.60			$	0.49
Weighted average common shares outstanding:
Basic			14,801				14,677				14,740				14,659
Diluted			15,265				15,101				15,194				15,063

 

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
		Nine months ended September 30,
		2024				2023
Cash flows from operating activities:
Net income		$	9,185			$	7,398
Adjustments to reconcile net income to operating cash flow:
Depreciation and amortization			2,487				2,358
Stock-based compensation			1,898				1,078
Non-cash interest expense			17				5
Bad debt expense			–				2
Gain on sale of equipment			(3)				(33)
(Increase) decrease in operating assets:
Accounts receivable			379				(1,683)
Inventories			663				310
Refundable income taxes			(379)				(216)
Prepaid expenses and other current assets			125				(176)
Increase (decrease) in operating liabilities:
Accounts payable			949				928
Accrued expenses			694				1,673
Accrued income taxes			(474)				500
Net cash provided by operating activities			15,541				12,144
Cash flows from investing activities:
Purchases of property and equipment			(5,445)				(3,146)
Proceeds from sales or equipment			14				40
Purchase of investments			–				(100)
Net cash used in investing activities			(5,431)				(3,206)
Cash flows from financing activities:
Repayment of note payable			(2,750)				(750)
Net cash used in financing activities			(2,750)				(750)
Net increase in cash and cash equivalents			7,360				8,188
Cash and cash equivalents at the beginning of the period			13,198				4,444
Cash and cash equivalents at the end of the period		$	20,558			$	12,632
Supplemental cash flow information:
Cash paid for income taxes, net of (refunds)		$	4,861			$	3,270
Cash paid for interest		$	95			$	343
Non-cash investing activities
Accrued purchase of property and equipment		$	331			$	194
Increase in right-of-use assets and operating lease obligations		$	–			$	86

 

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SOURCE Lifeway Foods, Inc.

FAQ

What was Lifeway Foods (LWAY) Q3 2024 revenue?

Lifeway Foods reported Q3 2024 revenue of $46.1 million, representing a 12.7% increase year-over-year.

How much did Lifeway Foods (LWAY) earn per share in Q3 2024?

Lifeway Foods earned $0.20 per basic share and $0.19 per diluted share in Q3 2024.

What was Lifeway Foods (LWAY) gross profit margin in Q3 2024?

Lifeway Foods' gross profit margin was 25.7% in Q3 2024.

How many consecutive quarters of growth has Lifeway Foods (LWAY) achieved?

Lifeway Foods has achieved 20 consecutive quarters of year-over-year growth.