Lifeway Foods Announces Record First Quarter 2013 Financial Results

May 15, 2013, 16:05 ET from Lifeway Foods, Inc.

MORTON GROVE, Ill., May 15, 2013 /PRNewswire/ -- Lifeway Foods, Inc., (Nasdaq: LWAY), a leading supplier of cultured dairy products known as kefir and organic kefir, today announced results for the first quarter ended March 31, 2013. 

(Logo: http://photos.prnewswire.com/prnh/20120119/AQ36947LOGO-b)

First Quarter 2013 Highlights

  • Net sales increased approximately 26% to $24.4 million for the quarter
  • Gross profit increased approximately 41% and gross profit margin increased to 35% for the quarter
  • Record earnings per diluted share of $0.14 for the quarter
  • Cash and cash equivalents increased $1.6 million to $2.7 million for the quarter

"We started the year off strong as our record sales increase, combined with a lower cost of milk and management of our expenses enabled us to see a 100% increase in earnings the first quarter of 2013," said Julie Smolyansky, CEO of Lifeway Foods, Inc. "We continue to add new distribution in the US and to expand Lifeway's kefir probiotic reach beyond dairy aisles into other areas of the store. We continue to focus on expanding our complementary product portfolio to appeal to the increasingly health conscious consumer. Looking ahead, we are prudently targeting new markets like the UK and remain optimistic about our future growth long-term both domestically and internationally."

First Quarter Results
First quarter of 2013 gross sales increased approximately 28% to $27.6 million compared to $21.6 million for the first quarter of 2012.  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™.

First quarter total consolidated net sales increased approximately 26% to $24.4 million from $19.4 million in the first quarter of 2012.  Net sales are recorded as gross sales less promotional activities such as slotting fees paid, couponing, spoilage and promotional allowances as well as early payment terms given to customers.  The total allowance for promotions and discounts in the first quarter of 2013 was approximately $3.2 million or 12% of gross sales, compared to $2.2 million or approximately 10% of gross sales in the same period last year. 

Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 63% during the first quarter of 2013, compared to approximately 67% during the same period in 2012. Gross profit for the first quarter of 2012 increased 41% to approximately $8.6 million, compared to approximately $6.1 million in the first quarter of the prior year. The gross profit margin increased to 35% in the first quarter 2013 versus 31% in the first quarter of 2012. The increase was primarily attributable to the decreased cost of conventional milk, the Company's largest raw material.  The total cost of milk was approximately 5% lower during the first quarter 2013 when compared to the same period in 2012. 

Operating expenses as a percentage of net sales were approximately 20% during the first quarter of 2013, compared to approximately 22% during the same period in 2012.  This was primarily attributable to an increase in selling related expenses, which increased approximately 3% to $2.8 million during the first quarter of 2013, from $2.7 million during the same period in 2012.

The Company reported income from operations of $3.7 million during the first quarter of 2013, an improvement of $1.9 million from $1.9 million during the same period in 2012.

Provision for income tax was $1.4 million or a 37% effective tax rate for the first quarter compared to a provision for income tax of $0.8 million or a 41% effective tax rate during the same period in 2012.

Total net income was $2.4 million, or $0.14 per diluted share, for the three-month period ended March 31, 2013 compared to $1.1 million, or $0.07 per diluted share, in the same period in 2012.

Balance Sheet/Cash Flow Highlights
The Company had a net increase of cash and cash equivalents of $1.6 million during the three-month period ended March 31, 2013 compared to the same period in 2012 and an increase of $0.5 million as compared to the December 31, 2012 cash and equivalent balance. The Company had cash and cash equivalents of $2.7 million as of March 31, 2013 compared to cash and cash equivalents of $1.2 million as of March 31, 2012.

Total stockholder's equity was $41.7 million as of March 31, 2013, which is an increase of $5.4 million when compared to March 31, 2012.  This is primarily due the increase in retained earnings of $5.7 million when compared to March 31, 2012.

Conference Call
The Company will host a conference call to discuss these results with additional comments and details today, Wednesday, May 15, 2013 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 May 29, 2013. 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 fifth 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

March 31, 2013 and 2012 (Unaudited) and December 31, 2012

(Unaudited)

March 31

December 31

2013

2012

2012

ASSETS

Current assets

Cash and cash equivalents

2,739,957

$      1,156,539

$      2,286,226

Investments

2,062,343

1,723,836

1,869,888

Certificates of deposits in financial institutions

250,000

300,000

450,000

Inventories

7,080,899

5,205,457

5,939,186

Accounts receivable, net of allowance for doubtful

accounts and discounts

11,915,981

8,484,371

8,723,737

Prepaid expenses and other current assets

92,827

39,880

97,138

Other receivables

5,165

155,937

8,825

Deferred income taxes

295,701

357,963

234,687

Refundable income taxes

84,828

---

84,828

Total current assets

24,527,701

17,423,983

19,694,515

Property and equipment, net

14,917,260

15,031,364

14,986,776

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 $4,020,598

 and $3,276,645 at March 31, 2013 and 2012 and $3,842,756 at

December 31, 2012, respectively

4,285,403

5,029,355

4,463,242

Total intangible assets

18,353,494

19,097,446

18,531,333

Other Assets

Long-term accounts receivable net of current portion

294,000

276,050

294,000

Total assets

$ 58,092,455

$ 51,828,843

$ 53,506,624

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Checks written in excess of bank balances 

$                  ---

$         333,446

$                  ---

Current maturities of notes payable

543,591

789,933

542,981

Accounts payable

6,465,801

4,597,466

4,256,725

Accrued expenses

1,197,883

755,187

1,155,677

Accrued income taxes

462,593

279,402

254,311

Total current liabilities

8,669,868

6,755,434

6,209,694

Notes payable

4,820,160

5,363,750

4,955,945

Deferred income taxes

2,909,134

3,394,957

3,028,518

Total liabilities

16,399,162

15,514,141

14,194,157

Stockholders' equity

Common stock, no par value; 20,000,000 shares authorized; 17,273,776 shares issued; 16,346,017 shares outstanding

at March 31, 2013; 17,273,776 shares issued; 16,390,417 shares outstanding
at March 31, 2012; 17,273,776 shares issued; 16,346,017 shares outstanding
at December 31, 2012

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)

(     7,783,580)

(     8,187,682)

Retained earnings

41,270,416

35,526,285

38,904,777

Accumulated other comprehensive income (loss), net of taxes

68,776

30,214

53,591

Total stockholders' equity

41,693,293

36,314,702

39,312,469

Total liabilities and stockholders' equity

$ 58,092,455

$ 51,828,843

$ 53,506,626

 

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

March 31, 2013 and 2012 (Unaudited)

(Unaudited)

Three Months Ended

March 31,

2013

2012

(as restated)

Sales

$ 27,590,621

$ 21,545,896

Less: discounts and allowances

(  3,203,591)

(  2,148,699)

Net sales

24,387,031

24,387,031

19,397,197

19,397,197

Cost of goods sold

15,402,875

12,906,722

Depreciation expense

394,125

399,045

Total cost of goods sold

15,797,000

13,305,767

Gross profit

8,590,030

6,091,430

Selling expenses

2,813,572

2,721,973

General and administrative

1,868,100

1,308,222

Amortization expense

177,842

188,705

Total operating expenses

4,859,514

4,218,900

Income from operations

3,730,516

1,872,530

Other income (expense):

Interest and dividend income

15,009

11,573

Rental income

3,269

3,000

Interest expense

(        36,299)

(        50,186)

Gain (loss) on sale of investments, net

64,335

17,985

Other Expense

---

---

Total other income (expense)

46,314

(        17,628)

Income before provision for income taxes

3,776,831

1,854,902

Provision for income taxes

1,411,192

759,913

Net income

$ 2,365,639

$ 1,094,989

Basic and diluted earnings

per common share

0.14

0.07

Weighted average number of shares outstanding

16,346,017

16,397,998

COMPREHENSIVE INCOME

Net income

$ 2,365,630

$ 1,094,989

Other comprehensive income (loss), net of tax:

     Unrealized gains (losses) on investments (net of tax)

51,535

29,000

     Less reclassification adjustment for (gains) losses included in net income (net of taxes)

(        36,349)

10,162

Comprehensive income

$ 2,380,824

$ 1,134,151

 

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2013 and 2012 (Unaudited)

(Unaudited)

March 31,

2013

2012

Cash flows from operating activities:

Net income

$ 2,365,639

$ 1,094,989

Adjustments to reconcile net income to net

cash flows from operating activities:

Depreciation and amortization

571,967

587,750

Loss (gain) on sale of investments, net

(        64,335)

(        17,985)

Deferred income taxes

(      192,090)

(      185,805)

Bad Debt Expense

51,819

6,384

(Increase) decrease in operating assets:

Accounts receivable

(   3,244,063)

(      526,979)

Other receivables

3,660

68,267

Inventories

(   1,141,713)

(      250,982)

Refundable income taxes

---

41,316

Prepaid expenses and other current assets

4,311

39,750

Increase (decrease) in operating liabilities:

Accounts payable

2,209,076

211,227

Accrued expenses

42,206

201,462

Income taxes payable

208,282

279,402

Net cash provided by operating activities

814,759

1,548,796

Cash flows from investing activities:

Purchases of investments

(   1,271,516)

(      318,123)

Proceeds from sale of investments

1,170,271

404,028

Redemption of certificates of deposits

200,000

---

Purchases of property and equipment

(      324,608)

(      231,243)

Net cash (used in) provided by investing activities

(    225,853)

(    145,338)

Cash flows from financing activities:

Checks written in excess of bank balances

---

(      258,594)

Purchases of treasury stock

---

(      176,606)

Repayment of notes payable

(      135,175)

(      926,869)

Net cash used in financing activities

(    135,175)

( 1,362,069)

Net (decrease) increase in cash and cash equivalents

453,731

41,389

Cash and cash equivalents at the beginning of the period

2,286,226

1,115,150

Cash and cash equivalents at the end of the period

$ 2,739,957

$ 1,156,539

 

SOURCE Lifeway Foods, Inc.



RELATED LINKS

http://www.lifeway.net