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Lifeway Foods Announces Results for the Third Quarter of 2012

Date : 11/15/2012 @ 3:00AM
Source : PR Newswire (US)
Stock : Lifeway Foods, Inc. (MM) (LWAY)
Quote : 13.89  0.05 (0.36%) @ 5:40AM
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Lifeway Foods Announces Results for the Third Quarter of 2012

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Lifeway Foods Announces Results for the Third Quarter of 2012

MORTON GROVE, Ill., Nov. 14, 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 third quarter ended September 30, 2012. 

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

"We are excited to announce another quarter of record growth with our quarterly earnings increasing at more than double the corresponding increase in our rate of sales," said Julie Smolyansky, CEO of Lifeway Foods, Inc.  "In the third quarter, we were also able to strengthen our balance sheet and increase our cash flows, while returning value to our shareholders through a dividend.  Going forward, we believe that our growth strategies combined with improved operating efficiencies will enable us to report the strongest results in our Company's history."

Third Quarter Results

Third quarter of 2012 gross sales increased 16% to $22.5 million compared to $19.4 million for the third 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™.  Lifeway's Frozen Kefir line contributed approximately $0.7 million to sales during the third quarter of 2012.

Total consolidated net sales increased 16% or $2.9 million to $20.6 million during the three-month period ended September 30, 2012 from $17.7 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 third quarter of 2012 increased 18% to $7.5 million, compared to $6.3 million in the third quarter of the prior year. The Company's gross profit margin was 33% in the third quarter, which was approximately the same in the third quarter of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company's largest raw material, partially offset by a 10% increase in the cost of organic milk.

Total operating expenses increased 13% or $0.6 million to $5.4 million during the third quarter of 2012, from $4.8 million during the same period in 2011. This increase was primarily attributable to increased general and administrative expenses.

Total operating income increased $0.5 million to $2.1 million during the third quarter of 2012, from $1.6 million during the same period in 2011.  The increase in operating income is related to the increase in gross profit.

The Company's third quarter 2012 effective tax rate was 32% compared to 30% in the same period last year.

Total net income was $1.4 million or $0.09 per diluted share for the three-month period ended September 30, 2012 compared to $1.0 million or $0.06 per diluted share in the same period in 2011.

Balance Sheet/Cash Flow Highlights

The Company had $2.4 million in cash and cash equivalents as of September 30, 2012 compared to a $0.86 million at September 30, 2011.   Total stockholder's equity was $38.4 million as of September 30, 2012, which is an increase of $2.6 million when compared to September 30, 2011. 

Net cash provided by operating activities increased $3.5 million to $6.1 million for the first nine months of 2012. This increase reflects the Company's improvement in operating efficiencies. 

Net cash used in investing activities was $1.2 million during the nine-months ended September 30, 2012 compared to net cash used in operating activities of $2.1 during the same period in 2011.  This decrease is primarily attributable to the decrease in purchases of investments of $0.7 million.

Conference Call

The Company will host a conference call to discuss these results with additional comments and details on Thursday, November 15, 2012 at 9:00 a.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 November 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. 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

Investors and readers are cautioned that certain statements contained in this news release, as well as some statements in periodic press releases and some oral statements of Lifeway officials during presentations about Lifeway, along with Lifeway's filings with the Securities and Exchange Commission, including Lifeway's registration statements, quarterly reports on Form 10-Q and annual report on Form 10-K, are "forward-looking'' statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act''). Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "expects," "anticipates,'' "intends,'' "plans,'' "could," "might," "believes,'' "seeks," "estimates'' or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions, which may be provided by Lifeway's management, are also forward-looking statements within the meaning of the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to various risks, uncertainties and assumptions including, but not limited to, competitive pressures and other important factors detailed in the Company's reports filed with the Securities and Exchange Commission. Investors are cautioned that actual results may differ materially from such forward-looking statements. These statements are not guarantees of future performance and Lifeway undertakes no specific obligation or intention to update these statements after the date of this release.

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
September 30, 2012 and 2011 (Unaudited) and December 31, 2011

 



(Unaudited)





September 30,


December 31,



2012


2011


2011

ASSETS














Current assets







Cash and cash equivalents


$     2,379,565


$        860,683


$      1,115,150

Investments


2,032,598


1,814,344


1,695,044

Certificates of deposits in financial institutions


450,000


300,000


300,000

Inventories


5,569,887


5,779,926


4,954,475

Accounts receivable, net of allowance for doubtful







accounts and discounts


10,002,065


9,362,672


7,950,276

Prepaid expenses and other current assets


45,350


86,402


79,630

Other receivables


3,946


14,833


224,204

Deferred income taxes


315,887


458,001


338,690

Refundable income taxes


84,828


---


41,316

Total current assets


20,884,126


18,676,861


16,698,785








Property and equipment, net


14,754,312


15,380,717


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







$3,662,477 and $2,891,981 at September 30, 2012 and 2011







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


4,643,523


5,414,019


5,218,060

Total intangible assets


18,711,614


19,482,110


19,286,151








Other Assets







Long-term accounts receivable net of current portion


162,522


---


289,550

Total assets


$54,512,574


$53,539,688


$ 51,473,308















LIABILITIES AND STOCKHOLDERS' EQUITY














Current liabilities







Checks written in excess of bank balances 


$                 ---


$        870,987


$         592,040

Current maturities of notes payable


580,781


1,923,436


1,540,716

Accounts payable


5,118,902


4,529,757


4,386,239

Accrued expenses


894,092


857,862


553,725

Accrued income taxes


1,341,652


351,107


---

Total current liabilities


7,935,427


8,533,149


7,072,720








Notes payable


5,096,675


5,882,691


5,539,836








Deferred income taxes


3,112,529


3,313,092


3,503,595

Total liabilities


16,144,631


17,728,932


16,116,151








Stockholders' equity







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







17,273,776 shares issued; 16,359,017 shares







outstanding at September 30, 2012; 17,273,776 shares







issued; 16,425,809 shares outstanding at September 30,







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


(8,077,239)


(7,447,975)


(7,606,974)

Retained earnings


37,831,275


34,797,229


34,431,296

Accumulated other comprehensive income (loss), net of taxes

72,124


(80,281)


(8,948)

Total stockholders' equity


38,367,943


35,810,756


35,357,157








Total liabilities and stockholders' equity


$54,512,574


$53,539,688


$ 51,473,308








LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income
For the Three and Nine Months Ended September 30, 2012 and 2011 (Unaudited)

 



(Unaudited)


(Unaudited)



Three Months Ended


Nine Months Ended



September 30,


September 30,



2012


2011


2012


2011


















Sales


$ 22,617,132




$ 19,423,533




$ 66,876,986




$ 58,383,802



Less: discounts and allowances


(1,997,399)




(1,721,929)




(6,306,675)




(5,180,377)



Net sales


20,619,733


20,619,733


17,701,604


17,701,604


60,570,311


60,570,311


53,203,425


53,203,425


















Cost of goods sold




12,738,310




10,958,115




37,079,491




32,883,760

Depreciation expense




407,567




396,732




1,219,721




1,163,939


















Total cost of goods sold




13,145,877




11,354,847




38,299,212




34,047,699


















Gross profit




7,473,856




6,346,757




22,271,099




19,155,726


















Selling expenses




2,974,294




2,661,983




8,300,810




7,545,239

General and administrative




2,225,224




1,921,111




6,319,259




5,489,072

Amortization expense




197,129




195,958




574,538




587,874


















Total operating expenses




5,396,647




4,779,052




15,194,607




13,622,185


















Income from operations




2,077,209




1,567,705




7,076,492




5,533,541


















Other income (expense):

















Interest and dividend income




16,270




14,465




52,321




49,152

Rental income




4,270




4,546




10,284




5,196

Interest expense




(41,897)




(61,074)




(136,000)




(195,502)

Gain (loss) on sale of investments,




4,024




(33,477)




26,415




(35,533)

net

















Loss on disposition of assets




---




(20,135)




---




(20,135)

Total other income (expense)




(17,333)




(95,675)




(46,980)




(196,822)


















Income before provision for

















   income taxes




2,059,876




1,472,030




7,029,512




5,336,719


















Provision for income taxes




657,697




441,989




2,483,216




2,115,365


















Net income




$   1,402,179




$   1,030,041




$   4,546,296




$   3,221,354


















Basic and diluted earnings

















per common share




0.09




0.06




0.28




0.20


















Weighted average number of 

















  shares outstanding




16,366,974




16,428,005




16,380,793




16,450,973


















COMPREHENSIVE INCOME


































Net income




$   1,402,179




$   1,030,041




$   4,546,296




$   3,221,354


















Other comprehensive income

















    (loss), net of tax:

















    Unrealized gains (losses) on 

















      investments (net of tax)




62,266




(83,118)




95,996




(57,263)

    Less reclassification adjustment 

















      for (gains) losses included in

















      net income (net of taxes)




(2,274)




18,914




(14,924)




20,076


















Comprehensive income




$   1,462,171




$      965,837




$   4,627,368




$   3,184,167


















LIFEWAY FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2012 and 2011 (Unaudited)

 



(Unaudited)



September 30



2012


2011






Cash flows from operating activities:





Net income


$       4,546,296


$      3,221,354

Adjustments to reconcile net income to net





cash flows from operating activities, net of acquisition:





Depreciation and amortization


1,794,259


1,751,813

Loss (gain) on sale of investments, net


(26,415)


35,533

Loss on disposition of equipment


---


20,135

Deferred income taxes


(458,424)


(186,677)

Bad Debt Expense


332,301


80,000

(Increase) decrease in operating assets:





Accounts receivable


(2,106,020)


(2,649,396)

Other receivables


220,258


89,847

Inventories


(615,412)


(1,794,552)

Refundable income taxes


(43,512)


906,748

Prepaid expenses and other current assets


34,280


71,913

Increase (decrease) in operating liabilities:





Accounts payable


732,663


346,276

Accrued expenses


340,367


348,403

Income taxes payable


1,341,652


351,107

Net cash provided by operating activities


6,092,293


2,592,504






Cash flows from investing activities:





Purchases of investments


(1,092,976)


(1,806,564)

Proceeds from sale of investments


802,026


990,397

Investments in certificates of deposits


(150,000)


(50,000)

Purchases of property and equipment


(775,210)


(1,241,388)

Net cash (used in) provided by investing activities


(1,216,160)


(2,107,555)






Cash flows from financing activities:





Proceeds of note payable


---


1,000,000

Checks written in excess of bank balances


(592,040)


(470,223)

Purchases of treasury stock


(470,265)


(1,022,429)

Dividends paid


(1,146,317)


---

Repayment of notes payable


(1,403,096)


(2,361,553)

Net cash used in financing activities


(3,611,718)


(2,854,205)






Net (decrease) increase in cash and cash equivalents


1,264,415


(2,369,256)






Cash and cash equivalents at the beginning of the period


1,115,150


3,229,939






Cash and cash equivalents at the end of the period


$       2,379,565


$         860,683






 

SOURCE Lifeway Foods, Inc.

Copyright 2012 PR Newswire



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