Lifeway Foods® Announces Record-Breaking Fourth Quarter and Monumental Full Year 2023 Results
- Record annual net sales of $160.1 million, up 13.1% year-over-year
- 17th consecutive quarter of year-over-year growth
- 760 basis points of annual gross profit margin expansion
- Net income of $11.4 million, a significant increase from the previous year
- Strategic sales and marketing investments driving volume growth in core products
- Strong operational execution and favorable milk pricing contributing to profitability improvements
- None.
Insights
Observing the performance of Lifeway Foods, the reported year-over-year growth for the 17th consecutive quarter suggests a stable upward trend in the company's market position. The 13.1% increase in annual net sales is notable, particularly within the context of the competitive food and beverage industry. This growth trajectory, when coupled with the expansion of gross profit margin by 760 basis points, indicates effective cost management and potential operational efficiencies that may have been realized.
Furthermore, the increase in net income to $11.4 million, up from $0.9 million in the previous year, is a substantial improvement in profitability. This leap in net income could reflect well on investor confidence, potentially leading to a positive impact on the company's stock valuation. The improvement in gross profit margin, alongside reduced SG&A expenses as a percentage of net sales, suggests a leaner cost structure which is often rewarded by the market.
From a financial perspective, Lifeway Foods' significant margin expansion and profitability rise are key indicators of financial health. The gross profit margin increase from 18.9% to 26.5% signifies not only improved operational efficiency but also the company's ability to leverage favorable market conditions, such as beneficial milk pricing. The strategic price increases implemented in the fourth quarter of 2022 appear to have contributed positively to the margins without dampening volume growth, which can be a delicate balance to achieve.
Investors should note the earnings per share increase from $0.06 to between $0.75 and $0.77, as it reflects a substantial enhancement in shareholder value. This performance, if sustainable, might lead to an optimistic outlook on the stock's future performance. However, it would be prudent to monitor whether the company can maintain its growth without further price increases, which could potentially alienate price-sensitive consumers.
Within the context of the nutrition and wellness industry, Lifeway Foods' focus on kefir and fermented probiotic products aligns with increasing consumer trends towards health-conscious eating and gut health. The reported volume growth in their flagship kefir product suggests that Lifeway is successfully capitalizing on this trend. The company's strategic sales and marketing investments seem to be effectively positioning their products as premium, healthy offerings in a market that is becoming increasingly crowded with wellness-focused foods and beverages.
The long-term implications for stakeholders include potential sustained growth as consumers continue to prioritize health and wellness. Nevertheless, the company's ability to innovate and stay ahead of consumer preferences will be critical in maintaining this momentum amidst fierce competition.
Record annual net sales of
17th consecutive quarter of year-over-year growth
Delivers 760 basis points of annual gross profit margin expansion
"I am pleased to report another outstanding year for Lifeway Foods, highlighted by our record-breaking annual net sales, and driven by volume growth in our flagship Lifeway drinkable kefir," commented Julie Smolyansky, President and Chief Executive Officer of Lifeway Foods. "Our exceptional results in 2023 culminated with our highest ever quarterly net sales of
Full Year 2023 Results
Net sales were
Gross profit as a percentage of net sales increased to
Selling, general and administrative expenses as a percentage of net sales were
The Company reported net income of
Conference Call and Webcast
A pre-recorded conference call and webcast with Julie Smolyansky 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/ and will also be available for replay.
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
Forward-Looking Statements
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 "continue," "build," "future," "increase," "drive," "believe," "look," "ahead," "confident," "deliver," "outlook," "expect," and "predict." 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, 2023, 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.
Media:
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 | ||||||||
December 31, | ||||||||
2023 | 2022 | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 13,198 | $ | 4,444 | ||||
Accounts receivable, net of allowance for credit losses and discounts & allowances of | 13,875 | 11,414 | ||||||
Inventories, net | 9,104 | 9,631 | ||||||
Prepaid expenses and other current assets | 2,019 | 1,445 | ||||||
Refundable income taxes | – | 44 | ||||||
Total current assets | 38,196 | 26,978 | ||||||
Property, plant and equipment, net | 22,764 | 20,905 | ||||||
Operating lease right-of use asset | 192 | 174 | ||||||
Goodwill | 11,704 | 11,704 | ||||||
Intangible assets, net | 6,898 | 7,438 | ||||||
Other assets | 1,900 | 1,800 | ||||||
Total assets | $ | 81,654 | $ | 68,999 | ||||
Current liabilities | ||||||||
Current portion of note payable | $ | 1,250 | $ | 1,250 | ||||
Accounts payable | 9,976 | 7,979 | ||||||
Accrued expenses | 4,916 | 3,813 | ||||||
Accrued income taxes | 474 | – | ||||||
Total current liabilities | 16,616 | 13,042 | ||||||
Line of credit | – | 2,777 | ||||||
Note payable | 1,483 | 2,477 | ||||||
Operating lease liabilities | 118 | 104 | ||||||
Deferred income taxes, net | 3,001 | 3,029 | ||||||
Total liabilities | 21,218 | 21,429 | ||||||
Commitments and contingencies (Note 9) | ||||||||
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; 14,691 | 6,509 | 6,509 | ||||||
Paid-in capital | 4,825 | 3,624 | ||||||
Treasury stock, at cost | (16,695) | (16,993) | ||||||
Retained earnings | 65,797 | 54,430 | ||||||
Total stockholders' equity | 60,436 | 47,570 | ||||||
Total liabilities and stockholders' equity | $ | 81,654 | $ | 68,999 | ||||
LIFEWAY FOODS, INC. AND SUBSIDIARIES | ||||||||||||||||
Three Months Ended December 31, | Twelve months Ended December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 42,093 | $ | 35,838 | $ | 160,123 | $ | 141,568 | ||||||||
Cost of goods sold | 29,632 | 27,318 | 115,060 | 112,350 | ||||||||||||
Depreciation expense | 669 | 599 | 2,622 | 2,432 | ||||||||||||
Total cost of goods sold | 30,301 | 27,917 | 117,682 | 114,782 | ||||||||||||
Gross profit | 11,792 | 7,921 | 42,441 | 26,786 | ||||||||||||
Selling expenses | 2,802 | 2,777 | 11,776 | 11,304 | ||||||||||||
General and administrative | 3,102 | 3,047 | 13,130 | 12,593 | ||||||||||||
Amortization expense | 135 | 135 | 540 | 540 | ||||||||||||
Total operating expenses | 6,039 | 5,959 | 25,446 | 24,437 | ||||||||||||
Income from operations | 5,753 | 1,962 | 16,995 | 2,349 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (62) | (96) | (384) | (267) | ||||||||||||
Gain (loss) on sale of property and equipment | 1 | (241) | 34 | (241) | ||||||||||||
Other income (expense) | 5 | 10 | 4 | – | ||||||||||||
Total other income (expense) | (56) | (327) | (346) | (508) | ||||||||||||
Income before provision for income taxes | 5,697 | 1,635 | 16,649 | 1,841 | ||||||||||||
Provision for income taxes | 1,728 | 919 | 5,282 | 917 | ||||||||||||
Net income | $ | 3,969 | $ | 716 | $ | 11,367 | $ | 924 | ||||||||
Net earnings per common share: | ||||||||||||||||
Basic | $ | 0.27 | $ | 0.05 | $ | 0.77 | $ | 0.06 | ||||||||
Diluted | $ | 0.26 | $ | 0.05 | $ | 0.75 | $ | 0.06 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 14,691 | 15,199 | 14,667 | 15,396 | ||||||||||||
Diluted | 15,174 | 15,557 | 15,103 | 15,718 | ||||||||||||
LIFEWAY FOODS, INC. AND SUBSIDIARIES | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 11,367 | $ | 924 | ||||
Adjustments to reconcile net income to operating cash flow: | ||||||||
Depreciation and amortization | 3,162 | 2,972 | ||||||
Non-cash interest expense | 6 | 6 | ||||||
Bad debt expense | 2 | – | ||||||
Deferred revenue | – | (28) | ||||||
Stock-based compensation | 1,497 | 1,109 | ||||||
Deferred income taxes | (28) | (172) | ||||||
(Gain) loss on sale of property and equipment | (34) | 241 | ||||||
(Increase) decrease in operating assets: | ||||||||
Accounts receivable | (2,463) | (1,483) | ||||||
Inventories | 527 | (1,345) | ||||||
Prepaid expenses and other current assets | (574) | (191) | ||||||
Refundable income taxes | 44 | 300 | ||||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable | 1,859 | 1,945 | ||||||
Accrued expenses | 1,102 | 434 | ||||||
Accrued income taxes | 474 | (725) | ||||||
Net cash provided by operating activities | 16,941 | 3,987 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (4,351) | (3,449) | ||||||
Proceeds from sale of equipment | 41 | – | ||||||
Acquisition, net of cash acquired | – | (580) | ||||||
Purchase of investments | (100) | – | ||||||
Net cash used in investing activities | (4,410) | (4,029) | ||||||
Cash flows from financing activities: | ||||||||
Repayment of line of credit | (2,777) | – | ||||||
Repayment of note payable | (1,000) | (750) | ||||||
Purchase of treasury stock | – | (3,997) | ||||||
Net cash used in financing activities | (3,777) | (4,747) | ||||||
Net increase (decrease) in cash and cash equivalents | 8,754 | (4,789) | ||||||
Cash and cash equivalents at the beginning of the period | 4,444 | 9,233 | ||||||
Cash and cash equivalents at the end of the period | $ | 13,198 | $ | 4,444 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for income taxes, net of (refunds) | $ | 4,792 | $ | 1,121 | ||||
Cash paid for interest | $ | 415 | $ | 247 | ||||
Non-cash investing activities | ||||||||
Accrued purchase of property and equipment | $ | 137 | $ | 424 | ||||
Right-of-use assets obtained in exchange for lease obligations | $ | 94 | $ | 83 | ||||
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SOURCE Lifeway Foods, Inc.
FAQ
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