2014

Lifeway Foods Announces Results for the First Quarter of 2012 First Quarter 2012 Net Sales Increase 12% to $19.4 Million

Company Increases Retail Distribution

MORTON GROVE, Ill, May 15, 2012 /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, 2012. 

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

First Quarter Results

First quarter of 2012 gross sales increased 13% to $21.6 million compared to $19.0 million for the first quarter of 2011.  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™.  In addition, Lifeway's Frozen Kefir line, which was launched in April 2011, contributed approximately $0.7 million to sales during the first quarter of 2012.

Total consolidated net sales increased 12% or $2.1 million to $19.4 million during the three-month period ended March 31, 2012 from $17.3 million during the same three-month period in 2011.  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.

Gross profit for the first quarter of 2012 decreased 11% to $6.8 million, compared to $9.7 million in the first quarter of the prior year. The Company's gross profit margin decreased to 35% in the first quarter versus 43% in the first quarter of 2011. The decrease was primarily attributable to a 30% increase in freight expense and higher fuel costs during the first quarter of 2012 when compared to the same period in 2011 and the increased cost of conventional and organic milk, the Company's largest raw material. The total cost of milk was approximately 20% higher during the first quarter 2012 when compared to the same period in 2011. 

Total operating expenses increased 13% or $0.6 million to $4.9 million during the first quarter of 2012, from $4.3 million during the same period in 2011. This increase was primarily attributable to increased selling expenses of $0.4 million and partially offset by a decrease in amortization expense. This increase is directly attributable to increases in marketing and advertising of the Company's flagship line, Kefir, as well as ProBugs Organic Kefir for kids, BioKefir and Lifeway's Frozen Kefir.

Total operating income decreased 43% or $1.4 million to $1.9 million during the first quarter of 2012, from $3.3 million during the same period in 2011.  The decrease in operating income is related to the decrease in gross profit and the increased operating expenses previously outlined.

Income tax benefit was $0.8 million for the first quarter of 2012 compared to $1.3 million during the same period in 2011.

Total net income was $1.1 million or $0.07 per diluted share for the three-month period ended March 31, 2012 compared to $1.9 million or $0.12 per diluted share in the same period in 2011.

"We are pleased with our first quarter financial performance, despite the cost headwinds we experienced in the quarter, and believe our sales strong sales momentum will continue in 2012," said Julie Smolyansky, CEO of Lifeway Foods, Inc.  "This year, we expect increased distribution of our kefir products with our retail partners.   Our recent expansion with Target exhibits the growing healthy living trend, consumers' demand for nutritious products, and retailers increasingly expanding their product offerings to support consumer demand."

Mrs. Smolyansky continued, "Going forward, we are very confident in our business and believe we should begin to realize lower milk prices in the second quarter of 2012.  These results, combined with our consistently strong sales increases, should lead to record profitability for the year.  Our executive team remains committed to increasing shareholder value through our first annual dividend and share repurchase program."

Balance Sheet/Cash Flow Highlights

The Company had $0.8 million in cash and cash equivalents as of March 31, 2012 compared to a $1.1 million at December 31, 2011.   Total stockholder's equity was $36.3 million as of March 31, 2012, which is an increase of $1.6 million when compared to March 31, 2011.  This is primarily due to an increase in retained earnings of $2.0 million when compared to March 31, 2012.

Despite the lower net income for the three months ended March 31, 2012 as compared to the same period last year, net cash provided by operating activities increased $0.4 million to $1.5 million for the first quarter of 2012. This increase reflects the Company's improvement in operating efficiencies. 

2012 Dividend

The Company announced on May 3, 2012 that its Board of Directors declared an annual cash dividend of $0.07 per common share. The dividend is payable on June 29, 2012 to shareholders of record as of the close of business on May 30, 2012. As of March 31, 2012, there were 16.4 million common shares outstanding.

Retail Expansion

Today, the Company also announced an agreement nearly tripling distribution of its kefir line in Target stores as well as adding new Lifeway products to Target's dairy cases. Availability in Target will increase from 170 to 453 locations, with the addition of three flavors of 8-oz. Lifeway Kefir four-packs to Target's offerings. This is the first major expansion with Target in eight years.

The agreement covers multiple flavors and sizes of Lifeway Kefir, a probiotic drink similar to drinkable yogurt that is high in calcium and protein and low in fat in calories, as well as Lifeway ProBugs, children's line of Organic Kefir with a no-spill pouch and kid-friendly flavors like Goo Berry Pie. The company plans increased marketing and advertising support to raise awareness with Target customers and promote sales at the retail chain.

Conference Call

The Company will host a conference call to discuss these results with additional comments and details. The conference call is scheduled to begin at 4:30 p.m. ET on Tuesday, May 15, 2012. 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, 2012.  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.

About Lifeway Foods

Lifeway Foods, Inc. (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. For more information, visit http://www.lifewaykefir.com or follow Lifeway Foods on Facebook (www.facebook.com/lifewaykefir); Twitter (http://twitter.com/lifewaykefir); Pinterest (http://pinterest.com/lifewaykefir); Flickr (http://www.flickr.com/photos/Lifeway_Kefir) or 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, 2012 and 2011 (Unaudited) and December 31, 2011

 



(Unaudited)





 March 31,


December 31,



2012


2011


2011

ASSETS














Current assets







Cash and cash equivalents


$      1,156,539


$      2,075,791


$      1,115,150

Investments


1,723,836


1,314,382


1,695,044

Certificates of deposits in financial institutions


300,000


250,000


300,000

Inventories


5,205,457


4,752,054


4,954,475

Accounts receivable, net of allowance for doubtful

accounts and discounts


8,484,371


8,346,560


7,950,276

Prepaid expenses and other current assets


39,880


126,919


79,630

Other receivables


155,937


74,879


224,204

Deferred income taxes


357,963


368,176


338,690

Refundable income taxes




---


41,316

Total current assets


17,423,983


17,308,761


16,698,785








Property and equipment, net


15,031,364


15,129,655


15,198,822








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 $3,276,645 and $2,500,066 at March 31, 2012 and 2011

and 3,087,940 at December 31, 2011, respectively


5,029,355


5,805,934


5,218,060

Total intangible assets


19,097,446


19,874,025


19,286,151








Other Assets







Long-term accounts receivable net of current portion


276,050


---


289,550



$ 51,828,844


$ 52,312,441


$ 51,473,308

Total assets














LIABILITIES AND STOCKHOLDERS' EQUITY














Current liabilities







Checks written in excess of bank balances 


$         333,446


$      1,067,073


$         592,040

Current maturities of notes payable


789,933


2,364,774


1,540,716

Accounts payable


4,597,466


3,781,059


4,386,239

Accrued expenses


755,187


595,841


553,725

Accrued income taxes


279,402


430,246


---

Total current liabilities


6,755,434


8,238,993


7,072,720








Notes payable


5,363,750


5,995,558


5,539,836








Deferred income taxes


3,394,957


3,332,473


3,503,595

Total liabilities


15,514,141


17,567,024


16,116,151








Stockholders' equity







Common stock, no par value; 20,000,000 shares authorized;

17,273,776 shares issued; 16,390,417 shares outstanding

at March 31, 2012; 17,273,776 shares issued; 16,443,809

shares outstanding at March 31, 2011; 17,273,776 shares

issued; 16,409,317 shares outstanding at December 31, 2011


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


(7,783,580)


(7,271,836)


(7,606,974)

Retained earnings


35,526,285


33,501,646


34,431,296

Accumulated other comprehensive loss, net of taxes


30,214


(26,176)


(8,948)

Total stockholders' equity


36,314,702


34,745,417


35,357,157








Total liabilities and stockholders' equity


$ 51,828,843


$ 52,312,441


$ 51,473,308








  

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income
For the Years Three Months Ended March 31, 2012 and 2011 (Unaudited)

 




(Unaudited)




March 31,




2012


2011












Sales


$ 21,545,896




$ 19,047,266




Less: discounts and allowances


(2,148,699)




(1,743,363)




Net sales


19,397,197


19,397,197


17,303,903


17,303,903












Cost of goods sold




12,238,341




9,345,717


Depreciation expense




399,045




376,513












Total cost of goods sold




12,637,386




9,722,230












Gross profit




6,759,811




7,581,673












Selling expenses




2,721,973




2,282,470


General and administrative




1,976,603




1,837,622


Amortization expense




188,705




195,959












Total operating expenses




4,887,281




4,316,051












Income from operations




1,872,530




3,265,622












Other income (expense):










Interest and dividend income




11,573




17,593


Rental income




3,000




---


Interest expense




(50,186)




(62,130)


Gain (loss) on sale of investments, net




17,985




(2,597)


Loss on disposition of equipment








---


Other expense








---


Total other income (expense)




(17,628)




(47,134)












Income before provision for










   income taxes




1,854,902




3,218,488












Provision for income taxes




759,913




1,292,717












Net income




$  1,094,989




$ 1,925,771












Basic and diluted earnings










per common share




0.07




0.12












Weighted average number of 










  shares outstanding




16,397,998




16,489,954












COMPREHENSIVE INCOME




















Net income




$  1,094,989




$ 1,925,771












Other comprehensive income










    (loss), net of tax:










    Unrealized gains on 










      investments (net of tax)




29,000




15,451


    Less reclassification adjustment 










      for (gains) losses included in










      net income (net of taxes)




10,162




1,467












Comprehensive income




$  1,134,151




$ 1,942,689












 

LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2012 and 2011 (Unaudited)
and for the Year Ended December 31, 2011

 



March 31


December 31,



2012


2011


2011








Cash flows from operating activities:







Net income


$ 1,094,989


$ 1,925,771


$   2,855,421

Adjustments to reconcile net income to net







cash flows from operating activities, net of acquisition:







Depreciation and amortization


587,750


572,472


2,336,794

Loss (gain) on sale of investments, net


(17,985)


2,597


29,256

Loss on disposition of equipment




---


20,135

Impairment of investments




---


36,032

Deferred income taxes


(185,805)


(119,129)


68,217

Treasury stock issued for compensation




---


---

Bad Debt Expense


6,384


20,000


48,240

(Increase) decrease in operating assets:







Accounts receivable


(526,979)


(1,573,284)


(1,494,790)

Other receivables


68,267


29,801


(119,524)

Inventories


(250,982)


(766,680)


(969,101)

Refundable income taxes


41,316


906,748


865,432

Prepaid expenses and other current assets


39,750


31,396


78,685

Increase (decrease) in operating liabilities:







Accounts payable


211,227


(402,422)


202,758

Accrued expenses


201,462


86,382


84,466

Income taxes payable


279,402


430,246


---

Net cash provided by operating activities


1,548,796


1,143,898


4,042,021








Cash flows from investing activities:







Purchases of investments


(318,123)


(445,049)


(2,434,340)

Proceeds from sale of investments


404,028


234,388


1,810,816

Investments in certificates of deposits




---


(50,000)

Proceeds from redemption of certificates of deposit




---


---

Purchases of property and equipment


(231,243)


(353,455)


(1,439,133)

Net cash (used in) provided by investing activities


(145,338)


(564,116)


(2,112,657)








Cash flows from financing activities:







Proceeds of note payable




---


2,000,000

Checks written in excess of bank balances


(258,594)


(274,137)


(749,170)

Purchases of treasury stock


(176,606)


(846,290)


(1,181,428)

Repayment of notes payable


(926,869)


(613,503)


(4,113,555)

Net cash used in financing activities


(1,362,069)


(1,733,930)


(4,044,153)








Net (decrease) increase in cash and cash equivalents


41,389


(1,154,148)


(2,114,789)








Cash and cash equivalents at the beginning of the period


1,115,150


3,229,939


3,229,939








Cash and cash equivalents at the end of the period


$ 1,156,539


$ 2,075,791


$   1,115,150








 

 

 

SOURCE Lifeway Foods, Inc.



RELATED LINKS
http://www.lifeway.net

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.