2008-08-14 16:20:00
- Q2 Sales Up 19%
- Q2 2008 Gross Margin 34%; Operating Income Margin 13%
- Total Q2 Net Income $911,718; EPS $.05
MORTON GROVE, Ill., Aug. 14 /EMWNews/ -- Lifeway Foods,
Inc., (Nasdaq: LWAY), makers of a nutritious, probiotic dairy beverage
called kefir, announced today for the second quarter ended June 30, 2008,
sales increased 19% to approximately $11,523,500 from $9,715,000 during the
same period a year ago. This increase in sales was driven by another strong
sales increase of Lifeway's kefir and ProBugs(R).
Second quarter 2008 gross profit virtually unchanged to $3,872,569 from
$3,829,076 during the same period a year ago. Gross margins were 34% in the
second quarter 2008. Operating income was $1,546,161 for the second quarter
2008. Net Income was $911,718 for the second quarter 2008. Earnings per
share were $.05 per share for the second quarter 2008
Edward Smolyansky, CFO commented, "We are extremely proud of our second
quarter and first half 2008 results. Our margins continue to improve as the
cost of our largest raw material, milk, continues to decrease from its
record highs set in the fall of 2007. The price of milk in August was the
second lowest month in 2008, and we hope the downward trend will persist
throughout the remainder of 2008. Even though we have had some relief in
the cost of milk, the prices of most of our other production and packaging
supplies that are derived from oil continue to rise, as does the cost to
deliver our products."
Smolyansky added, "We intend on using the extra savings derived from
these lower raw material prices to increase our marketing and promotional
activities and to continue to educate the public as to the benefits of our
Kefir. Selling related expenses in the second quarter 2008 increased 26%
compared to the same period a year ago and we expect to continue to spend a
higher percentage of sales on marketing in the second half of 2008."
About Lifeway Foods
Lifeway, recently named Fortune Small Business' 49th Fastest Growing
Small Business, is America's leading supplier of the cultured dairy product
known as kefir. Lifeway Kefir is a dairy beverage that contains Lifeway's
exclusive 10 Live and Active probiotic cultures. While most regular yogurt
only contains two or three of these "friendly" cultures, Lifeway kefir
products offer more nutritional benefits. Lifeway offers 12 different
flavors of its Kefir beverage, Organic Kefir and SoyTreat (a soy based
kefir). Lifeway recently introduced a series of innovative new products
such as pomegranate kefir, Greek-style kefir, a children's line of organic
kefir products called ProBugs (TM) in a no-spill pouch in kid-friendly
flavors like Orange Creamy Crawler and Sublime Slime Lime, and a line of
organic whole milk kefir. Lifeway also produces a line of products marketed
in US Hispanic communities, called La Fruta, Drinkable Yogurt (yogurt
drinks distinct from kefir). In addition to its line of Kefir products, the
company produces a variety of cheese products and recently introduced a
line of organic pudding called It's Pudding!
Live conference calls will now be on an annual basis to discuss fiscal
full year results. For more information, contact Lifeway Foods, Inc. at
(847) 967-1010 or e-mail at [email protected] visit
http://www.lifeway.net .
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.
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Sales $11,523,393 $9,715,262 $22,645,631 $18,737,506
Cost of goods sold 7,455,696 5,699,883 14,897,79 10,984,414
Depreciation expense 195,128 186,303 384,552 351,597
Total cost of goods sold 7,650,824 5,886,186 15,282,311 11,336,011
Gross profit 3,872,569 3,829,076 7,363,300 7,401,495
Selling Expenses 1,154,126 912,262 2,213,292 1,682,343
General and Administrative 1,092,420 1,074,530 2,077,466 1,995,103
Amortization expense 79,862 80,997 159,723 161,272
Total Operating Expenses 2,326,408 2,067,789 4,450,481 3,838,718
Income from operations 1,546,161 1,761,287 2,912,819 3,562,777
Other income (expense):
Interest and dividend
income 62,862 98,365 165,995 164,164
Rental Income 11,647 9,581 23,294 18,181
Interest expense (68,969) (109,283) (154,924) (218,812)
Gain (loss) on sale of
marketable securities,
net (87,174) 439,586 (36,145) 454,331
Total other income
(Expense) (81,634) 438,249 (1,780) 417,864
Income before provision for
income taxes 1,464,527 2,199,536 2,911,039 3,980,641
Provision for income 552,809 803,510 1,110,715 1,449,284
Net income $911,718 $1,396,026 $1,800,324 $2,531,357
Basic and diluted
earnings per
common share 0.05 0.08 0.11 0.15
Weighted average
number of shares
outstanding 16,765,094 16,875,905 16,789,727 16,885,586
(Unaudited)
Six Months Ended
June 30, December 31,
2008 2007 2007
Cash flows from operating
activities:
Net income $1,800,324 $2,531,357 $3,152,660
Adjustments to reconcile net income
to net cash flows from operating
activities, net of acquisition:
Depreciation and amortization 544,275 512,869 1,049,913
(Gain)Loss on sale of marketable
securities, net 36,145 (454,331) (539,739)
Deferred income taxes (78,035) (5,303) (223,717)
Treasury stock issued for
compensation 34,650 6,930 48,509
Increase (decrease) in
allowance for doubtful accounts (4,449) (40,540) (40,540)
(Increase) decrease in
operating assets:
Accounts receivable (412,176) (619,056) (226,405)
Other receivables (6,460) 30,755 27,939
Inventories (345,171) (988,401) (984,358)
Refundable income taxes 240,880 267,771 26,891
Prepaid expenses and other
current assets 8,950 (1,224) (9,270)
Increase (decrease) in
operating liabilities:
Accounts payable 279,314 64,150 131,316
Accrued expenses 134,667 (93,352) (66,062)
Accrued income taxes 395,093 31,802
Net cash provided by operating
activities 2,628,007 1,243,427 2,347,137
Cash flows from investing activities:
Investment in cost method securities --- --- (500,000)
Purchases of marketable
securities (3,490,650) (3,274,563) (5,744,697)
Sale of marketable securities 3,299,791 3,750,770 7,168,246
Increase in margin 407,479
Purchases of property and
equipment (1,475,280) (590,096) (1,824,879)
Purchases of organizational costs --- (5,858)
Net cash used in investing activities (1,258,660) (119,747) (901,330)
Cash flows from financing activities:
Proceeds of note payable --- --- 300,000
Purchases of treasury stock, net (1,038,723) (752,603) (752,603)
Repayment of notes payable (584,470) (904,456) (1,945,131)
Net cash used in financing
activities (1,623,193) (1,657,059) (2,397,734)
Net decrease in cash and cash
equivalents (253,846) (533,379) (951,927)
Cash and cash equivalents at the
beginning of the period 595,885 1,547,812 1,547,812
Cash and cash equivalents at the
end of the period $342,039 $1,014,433 $595,885
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