Lifeway Foods, Inc. Announces Second Quarter 2019 Results

Reports Sequential Quarterly Profit Improvement

Morton Grove, Illinois, UNITED STATES


MORTON GROVE, Ill., Aug. 19, 2019 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2019.

“The improvement in sequential quarterly profit highlights the significant progress we’ve made to position Lifeway for long-term, sustainable growth,” said Julie Smolyansky, CEO of Lifeway Foods, Inc. “The items debuted this year at trade shows are now hitting shelves, and we’re encouraged by the exciting distribution growth of our newest offering, Plantiful, a line of vegan, plant-based probiotic beverages. Based on retailer shelf reset schedules for items already accepted, we are planning for marketing and advertising initiatives that align with the expanded distribution of our innovation portfolio. Our team is focused on long-term success by building increased brand awareness and consumer loyalty on our strong core product line, as well as the burgeoning prospects of our recent offerings.”

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 non-dairy Plantiful, cupped kefir and cheese, frozen kefir, specialty cheeses, probiotic supplements and a ProBugs line for kids. Lifeway's tart and tangy fermented dairy and non-dairy products are now sold across the United States, Mexico, Ireland and the United Kingdom. Learn how Lifeway is good for more than just you at www.lifewaykefir.com.

Forward-Looking Statements

All statements in 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 “believe,” “ahead,” “remain,” “build,” “generate,” “progress,” “innovate,” “continue.” 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, 2018, 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.

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

 
LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2019 and December 31, 2018
(In thousands)
 
 June 30,    
 2019  December 31, 
 (Unaudited)  2018 
Current assets       
Cash and cash equivalents$3,022  $2,998 
Accounts receivable, net of allowance for doubtful accounts and discounts & allowances of $1,220 at June 30, 2019 and December 31, 2018 respectively 7,570   6,276 
Inventories, net 6,843   5,817 
Prepaid expenses and other current assets 1,393   1,077 
Refundable income taxes 1,278   2,748 
Total current assets 20,106   18,916 
        
Property, plant and equipment, net 23,365   24,573 
Operating lease right-of-use asset 966    
        
Intangible assets       
Goodwill & indefinite-lived intangibles 12,824   12,824 
Other intangible assets, net 231   344 
Total intangible assets 13,055   13,168 
        
Other assets 165   150 
Total assets$57,657  $56,807 
        
Current liabilities       
Accounts payable$5,459  $4,570 
Accrued expenses 4,141   2,777 
Accrued income taxes 63   106 
Total current liabilities 9,663   7,453 
Line of credit 4,677   5,995 
Operating lease liabilities 584    
Deferred income taxes, net 390   390 
Other long-term liabilities 100   564 
Total liabilities 15,414   14,402 
        
Stockholders' equity       
Preferred stock, no par value; 2,500 shares authorized; no shares issued or outstanding at June 30, 2019 and December 31, 2018, respectively     
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 15,761 and 15,814 outstanding at June 30, 2019 and December 31, 2018, respectively 6,509   6,509 
Paid-in capital 2,230   2,303 
Treasury stock, at cost (12,477)  (12,970)
Retained earnings 45,981   46,563 
Total stockholders' equity 42,243   42,405 
        
Total liabilities and stockholders' equity$57,657  $56,807 
 


LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the six months ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except per share data)
 
 Three Months Ended  Six Months Ended 
 June 30,  June 30, 
 2019  2018  2019  2018 
            
Net sales$23,153  $27,096  $47,768  $55,838 
                
Cost of goods sold 16,843   19,495   34,410   39,520 
Depreciation expense 747   725   1,492   1,405 
Total cost of goods sold 17,590   20,220   35,902   40,925 
                
Gross profit 5,563   6,876   11,866   14,913 
                
Selling expenses 2,691   3,383   5,830   7,401 
General and administrative 2,898   2,996   6,390   6,701 
Amortization expense 40   164   113   327 
Total operating expenses 5,629   6,543   12,333   14,429 
                
(Loss) income from operations (66)  333   (467)  484 
                
Other income (expense):               
Interest expense (68)  (75)  (137)  (138)
Gain (loss) on sale of property and equipment 4   (1)  29   14 
Other income, net 2   3   5   8 
Total other income (expense) (62)  (73)  (103)  (116)
                
(Loss) income before provision for income taxes (128)  260   (570)  368 
                
Provision for income taxes 13   90   (41)  128 
                
Net (loss) income$(141) $170  $(529) $240 
                
Earnings (loss) per common share:               
Basic$(0.01) $0.01  $(0.03) $0.02 
Diluted$(0.01) $0.01  $(0.03) $0.02 
                
Weighted average common shares:               
Basic 15,775   15,879   15,771   15,893 
Diluted 15,775   15,992   15,771   16,026 
                


LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands)
 
 2019  2018 
Cash flows from operating activities:       
Net (loss) income$(529) $240 
Adjustments to reconcile net (loss) income to operating cash flow:       
Depreciation and amortization 1,605   1,732 
Bad debt expense 3   20 
Reserve for inventory obsolescence 210   271 
Stock-based compensation 535   495 
Non-cash interest expense 12   3 
Deferred revenue (48)  (48)
(Gain) on sale of property and equipment (29)  (14)
(Increase) decrease in operating assets:       
Accounts receivable (1,297)  66 
Inventories (1,235)  243 
Refundable income taxes 1,470   (463)
Prepaid expenses and other current assets (308)  (584)
Increase (decrease) in operating liabilities:       
Accounts payable 888   423 
Accrued expenses 774   (153)
Accrued income taxes (43)  (121)
Net cash provided by operating activities 2,008   2,109 
        
Cash flows from investing activities:       
Purchases of property and equipment (290)  (2,024)
Proceeds from sale of property and equipment 36   35 
Purchase of investments (15)   
Net cash used in investing activities (269)  (1,989)
        
Cash flows from financing activities:       
Purchase of treasury stock (385)  (1,168)
Borrowings under revolving credit facility    6,050 
Repayment of line of credit (1,330)   
Payment of deferred financing costs    (69)
Repayment of notes payable    (6,279)
Net cash used in financing activities (1,715)  (1,466)
        
Net decrease in cash and cash equivalents 24   (1,346)
        
Cash and cash equivalents at the beginning of the period 2,998   4,978 
        
Cash and cash equivalents at the end of the period$3,022  $3,632 
        
Supplemental cash flow information:       
Cash paid for income taxes, net of (refunds)$(1,469) $712 
Cash paid for interest$149  $108 
        
Non-cash investing activities       
Right-of-use assets recognized at ASU 2016-02 transition$944  $ 
Operating lease liability recognized at ASU 2016-02 transition$997  $ 
Right-of-use assets and operating lease liabilities recognized after ASU 2016-02 transition$280  $