Lifeway Foods EPS Increases 44% Year-Over-Year as Kefir Company Announces Results for the First Quarter Ended March 31, 2025

Rhea-AI Summary

Lifeway Foods (NASDAQ: LWAY), a leading kefir and fermented probiotic products supplier, reported strong Q1 2025 financial results. The company achieved net sales of $46.1 million, marking a 3.3% year-over-year increase and its 22nd consecutive quarter of year-over-year sales growth. Notable highlights include a 44% increase in EPS with net income reaching $3.5 million ($0.23 per share). The company's core metrics showed solid performance with a gross profit margin of 24.0% and SG&A expenses at 20.2% of net sales. Excluding strategic adjustments, Lifeway delivered nearly 11% volume-led growth. The company secured commitments for over 2,000 new distribution points and expanded presence to 40 airports. Management remains confident in achieving their FY2027 Adjusted EBITDA target of $45-50 million.

Positive

• Net sales increased 3.3% year-over-year to $46.1 million
• 22nd consecutive quarter of year-over-year sales growth
• 44% increase in EPS with net income of $3.5 million
• 11% volume-led growth excluding strategic adjustments
• Secured over 2,000 new distribution points
• Expanded presence to 40 airports nationwide
• Record weekly gross sales surpassing $5 million in late April

Negative

• Strategic elimination of retail relationship affecting sales growth
• Changes in distributor ordering patterns impacting billed sales

Insights

Financial Analyst

Lifeway Foods delivers solid Q1 with 3.3% revenue growth and 44% EPS increase despite strategic customer adjustments that masked stronger 11% organic growth.

Lifeway Foods has posted its 22nd consecutive quarter of year-over-year growth with $46.1 million in revenue, representing a 3.3% increase compared to Q1 2024. The headline 3.3% growth rate actually understates the company's performance, as management revealed they strategically eliminated a private label relationship and had a distribution model change that affected revenue recognition. Adjusting for these factors, the true organic growth was nearly 11% - a significant achievement following an already strong 18% growth in Q1 2024.

The 44% year-over-year EPS increase signals substantial bottom-line improvement, with net income reaching $3.5 million or $0.23 per share. This profitability growth outpaced revenue growth by a considerable margin, suggesting effective cost management and operating leverage. Gross margin came in at 24.0%, while SG&A expenses were kept at 20.2% of sales.

The company appears to be executing well on its distribution expansion strategy, securing commitments for over 2,000 additional points of distribution across key product lines. The momentum continued beyond Q1, with management highlighting a record $5 million in gross sales in a single week in late April.

From a broader market perspective, Lifeway is capitalizing on several consumer trends: increased focus on protein-rich and probiotic foods, growing interest in gut health, and a shift toward nutritionally-dense options particularly among GLP-1 medication users. Their strategic decision to focus on branded offerings over private label appears to be paying off in margin enhancement.

Management reaffirmed their confidence in achieving $45-50 million in Adjusted EBITDA by FY2027, signaling their long-term growth trajectory remains on track despite evolving market conditions. The absence of tariff impacts on their business provides additional stability to their outlook.

Net sales of $46.1 million; up 3.3% year-over-year

Consumer demand for probiotic Lifeway products drives 22^nd consecutive quarter of year-over-year sales growth

MORTON GROVE, Ill., May 13, 2025 /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, reported financial results for the first quarter ended March 31, 2025.

"We're thrilled to begin 2025 with continued topline momentum, delivering our 22^nd consecutive quarter of year-over-year net sales growth," commented Julie Smolyansky, President and Chief Executive Officer of Lifeway Foods. "Our Q1 performance builds on the foundation of our record-breaking 2024, as we continued to see consistent volume growth in our flagship drinkable Lifeway Kefir. Our topline growth follows a very strong first quarter in 2024 in which we delivered 18% growth.  There are several important factors that highlight the underlying strength of the business that led to year-over-year growth.  First, in the second half of last year we strategically eliminated a retail relationship to prioritize our branded offerings over private label and enhance our margins.  Additionally, a sizeable distributor adjusted orders from delivery to direct pick-ups in late 2024, this leads to lower billed sales and correspondingly lower freight costs. Excluding the impact from both of these strategic adjustments, on a like-for-like basis, we delivered nearly 11% volume-led growth in the quarter, underscoring the power of our Lifeway branded products and the loyalty of our growing customer base." added Ms. Smolyansky.

Ms. Smolyansky continued, "The accelerating consumer focus on health and wellness continues to be a tailwind for our business, with demand rising for protein-rich, probiotic and bioavailable foods, including our Lifeway Kefir and Farmer Cheese. Our strategic sales and marketing investments are clearly paying dividends, driving increased brand recognition, strong product velocities, and introducing the Lifeway brand to more and more customers who value premium, nutritious offerings. We see no impact of tariffs on our business at this time or in the foreseeable future. We expect consumer visits to grocery and club stores to increase amid tightening consumer spending, as shoppers seek better-for-you and nutritionally valuable foods and beverages, such as the highly bioavailable protein options and gut-healthy products that Lifeway offers. This focus on protein, gut health and select nutrients is especially true for consumers currently using GLP-1 medications and those who are looking for foods that naturally stimulate GLP-1 hormone production. As a result, our target addressable market has rapidly grown, and we are successfully capitalizing on that trend alongside our retailer partners through expanded distribution of our key products. This year we have received commitments at key retailers for more than 2,000 total incremental points of distribution across our product lines, including Lifeway Farmer Cheese, our new Flavor Fusions and our Probiotic Smoothies with Collagen. Lifeway products can also now be found in 40 airports across the country. Notably, in the last full week of April, we surpassed $5 million in gross sales, a record week for our business, propelled by demand for Lifeway Kefir and Farmer Cheese. The second quarter is off to a good start, and we plan to continue our investments behind our core branded products in 2025 to further capitalize on the tremendous market opportunity in front of us and extend upon the vast momentum we have achieved."

First Quarter 2025 Results

Net sales were $46.1 million for the first quarter ended March 31, 2025, an increase of $1.5 million or 3.3% from the same period in 2024. The net sales increase was primarily driven by higher volumes of Lifeway's branded drinkable kefir.

Gross profit as a percentage of net sales was 24.0% for the first quarter ended March 31, 2025.

Selling, general and administrative expenses as a percentage of net sales was 20.2% for the first quarter ended March 31, 2025.

The Company reported net income of $3.5 million or $0.23 per basic and diluted common share for the first quarter ended March 31, 2025.

We remain confident that the Company is on track to deliver Adjusted EBITDA¹ of $45 - $50mm in FY2027. 

1.	Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as Operating Income, as reported, plus Depreciation and Amortization, plus Stock-Based Compensation.

The Company does not provide guidance for GAAP Operating Income, nor a reconciliation of any forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis, because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These forward-looking non-GAAP financial measures do not include certain items, which may be significant, including, without limitation, non-recurring or non-operational expenses such as stock-based compensation, gain/loss on sale of equipment, deferred revenue and gain/loss on investments prior to payment of bonuses to employees.

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, the drivers of demand for Lifeway's products, consumer trends, the anticipated effects of scheduled upgrades at the Waukesha plant, expected operating efficiencies and expectations regarding future operating and financial performance. These statements use words, and variations of words, such as "will," "continue," "future," "increase," "believe,"  "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; customer acceptance of products and services; and uncertainty regarding proposals or other actions taken by shareholders related to the unsolicited proposal made by Danone North America PBC ("Danone") to acquire all of the shares of Lifeway stock that Danone does not already own. 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, 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.

Non-GAAP Financial Measures

This press release refers to Adjusted EBITDA, which is a financial measure that has not been prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), and may exclude items that are significant to understanding and assessing financial results. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's financial performance. Non-GAAP financial measures should be considered as supplements to GAAP measures reported, should not be considered replacements for, or superior to, GAAP measures reported and may not be comparable to similarly named measures used by other companies. The Company's calculation of non-GAAP financial measures may differ from methods used by other companies.

Perceptual Advisors
Dan Tarman
Email: dtarman@perceptualadvisors.com

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
March 31, 2025 and December 31, 2024
(In thousands)
		March 31, 2025				December 31,
		(Unaudited)				2024
Current assets
Cash and cash equivalents		$	19,446			$	16,728
Accounts receivable, net of allowance for credit losses and discounts & allowances of $2,030 and $1,590 at March 31, 2025 and December 31, 2024, respectively			16,684				15,424
Inventories, net			9,241				8,678
Prepaid expenses and other current assets			2,007				2,144
Refundable income taxes			–				631
Total current assets			47,378				43,605
Property, plant and equipment, net			28,112				26,862
Operating lease right-of-use asset			109				118
Goodwill			11,704				11,704
Intangible assets, net			6,223				6,358
Other assets			141				1,900
Total assets		$	93,667			$	90,547
Current liabilities
Accounts payable		$	11,635			$	10,401
Accrued expenses			3,939				5,103
Accrued income taxes			795				–
Total current liabilities			16,369				15,504
Operating lease liabilities			68				70
Deferred income taxes, net			3,062				3,062
Total liabilities			19,499				18,636
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; 15,203 and 15,100 outstanding at March 31, 2025 and December 31, 2024, respectively			6,509				6,509
Treasury stock, at cost			(13,383)				(14,052)
Paid-in capital			2,680				4,632
Retained earnings			78,362				74,822
Total stockholders' equity			74,168				71,911
Total liabilities and stockholders' equity		$	93,667			$	90,547

 

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the three months ended March 31, 2025 and 2024
(Unaudited)
(In thousands, except per share data)
		2025				2024
Net Sales		$	46,091			$	44,634
Cost of goods sold			34,254				32,438
Depreciation expense			802				661
Total cost of goods sold			35,056				33,099
Gross profit			11,035				11,535
Selling expense			4,698				3,700
General and administrative expense			4,628				4,136
Amortization expense			135				135
Total operating expenses			9,461				7,971
Income from operations			1,574				3,564
Other income (expense):
Interest expense			(14)				(51)
Gain on sales of investments			3,352				–
Other income (expense), net			54				(5)
Total other income (expense)			3,392				(56)
Income before provision for income taxes			4,966				3,508
Provision for income taxes			1,426				1,082
Net income		$	3,540			$	2,426
Net earnings per common share:
Basic		$	0.23			$	0.17
Diluted		$	0.23			$	0.16
Weighted average common shares outstanding:
Basic			15,134				14,691
Diluted			15,333				15,222

 

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
		Three months ended March 31,
		2025				2024
Cash flows from operating activities:
Net income		$	3,540			$	2,426
Adjustments to reconcile net income to operating cash flow:
Depreciation and amortization			937				796
Stock-based compensation			326				673
Non-cash interest expense			3				2
Gain on sale of investments			(3,352)				–
Fair value loss on investment			20				–
(Increase) decrease in operating assets:
Accounts receivable			(1,259)				(1,189)
Inventories			(563)				974
Prepaid expenses and other current assets			136				31
Refundable income taxes			631				(378)
Increase (decrease) in operating liabilities:
Accounts payable			1,401				(6)
Accrued expenses			(2,765)				(1,309)
Accrued income taxes			795				(474)
Net cash (used in) provided by operating activities			(150)				1,546
Cash flows from investing activities:
Purchases of property and equipment			(2,219)				(2,469)
Proceeds from sale of investments			5,152				–
Net cash provided by (used in) investing activities			2,933				(2,469)
Cash flows from financing activities:
Repayment of note payable			–				(250)
Payment of deferred financing costs			(65)				–
Net cash used in financing activities			(65)				(250)
Net increase (decrease) in cash and cash equivalents			2,718				(1,173)
Cash and cash equivalents at the beginning of the period			16,728				13,198
Cash and cash equivalents at the end of the period		$	19,446			$	12,025
Supplemental cash flow information:
Cash paid for income taxes, net of (refunds)		$	–			$	1,934
Cash paid for interest		$	11			$	50
Non-cash investing activities
Accrued purchase of property and equipment		$	239			$	192
Right-of-use assets obtained in exchange for lease obligations		$	8			$	–

 

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SOURCE Lifeway Foods, Inc.

FAQ

What were Lifeway Foods (LWAY) Q1 2025 earnings results?

Lifeway Foods reported Q1 2025 net sales of $46.1 million (+3.3% YoY), with net income of $3.5 million or $0.23 per share, representing a 44% EPS increase year-over-year.

How many consecutive quarters of growth has LWAY achieved?

Lifeway Foods has achieved 22 consecutive quarters of year-over-year sales growth as of Q1 2025.

What is Lifeway Foods' (LWAY) expansion strategy for 2025?

Lifeway secured commitments for over 2,000 new distribution points across product lines and expanded to 40 airports nationwide, focusing on core branded products and capitalizing on growing health-conscious consumer demand.

What is LWAY's projected Adjusted EBITDA target for FY2027?

Lifeway Foods maintains its confidence in achieving an Adjusted EBITDA target of $45-50 million for FY2027.

How did Lifeway Foods perform in terms of profitability in Q1 2025?

Lifeway Foods achieved a gross profit margin of 24.0% and maintained SG&A expenses at 20.2% of net sales in Q1 2025.