Lifeway Foods has booked a surge in second-quarter net income, as earnings were boosted by improved margins and higher sales.
The company said today (14 August) that net income rose to US$2m in the three-months to 30 June, up from $0.3m in the comparable period of last year.
Total consolidated sales increased by 13% to $20.6m in the quarter, while gross profit jumped 46% to $8m. The company's gross profit margin increased to 39% in the quarter, up from 30% in the comparable period of the previous year.
The higher second-quarter sales and profits led to an increase in half-year revenue and earnings.
Lifeway Foods Announces Results for the Second Quarter of 2012
MORTON GROVE, Ill., Aug. 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 second quarter ended June 30, 2012.
"We are extremely pleased with our record second quarter financial performance," said Julie Smolyansky, CEO of Lifeway Foods, Inc. "Our higher net sales combined with the benefit from lower milk prices and tightly controlled expenses enabled us to report a quarterly earnings increase of 650%, the strongest in our Company's history."
Second Quarter Results
Second quarter of 2012 gross sales increased 14% to $22.7 million compared to $19.9 million for the second 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(TM). Lifeway's Frozen Kefir line contributed approximately $0.8 million to sales during the second quarter of 2012.
Total consolidated net sales increased 13% or $2.4 million to $20.6 million during the three-month period ended June 30, 2012 from $18.2 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 second quarter of 2012 increased 46% to $8.0 million, compared to $5.5 million in the second quarter of the prior year. The Company's gross profit margin increased to 39% in the second quarter versus 30% in the second quarter of 2011. The increase was primarily attributable to a 20% decrease in the cost of conventional, the Company's largest raw material, partially offset by a 5% increase in the cost of organic milk.
Total operating expenses increased 2% or $0.1 million to $4.9 million during the second quarter of 2012, from $4.8 million during the same period in 2011. This increase was primarily attributable to increased general and administrative expenses, partially offset by a decrease in selling and amortization expenses.
Total operating income increased $2.4 million to $3.1 million during the second quarter of 2012, from $0.7 million during the same period in 2011. The increase in operating income is related to the increase in gross profit.
The Company's second quarter 2012 effective tax rate was 34% compared to 59% in the same period last year.
Total net income was $2.0 million or $0.13 per diluted share for the three-month period ended June 30, 2012 compared to $0.3 million or $0.02 per diluted share in the same period in 2011.
Balance Sheet/Cash Flow Highlights
The Company had $2.0 million in cash and cash equivalents as of June 30, 2012 compared to a $1.4 million at June 30, 2011. Total stockholder's equity was $37.1 million as of June 30, 2012, which is an increase of $2.5 million when compared to June 30, 2011.
Net cash provided by operating activities increased $3.3 million to $4.1 million for the second quarter of 2012. This increase reflects the Company's improvement in operating efficiencies.
Net cash used in investing activities was $0.56 million during the six-months ended June 30, 2012 compared to net cash used in operating activities of $0.85 during the same period in 2011. This decrease is primarily attributable to the decrease in purchases of property and equipment of $268,822.
Six Month Results
Total consolidated gross sales increased by $5.3 million, or approximately 14%, to $44.3 million during the six-month period ended June 30, 2012 from $39.0 million during the same six-month period in 2011. This increase is primarily attributable to increased sales and awareness of Lifeway's flagship line, Kefir, as well as ProBugs® Organic Kefir for kids and BioKefir(TM). Lifeway Frozen Kefir line contributed approximately $1.5 million to net sales during the second quarter 2012.
Total consolidated net sales increased by $4.5 million, or approximately 13%, to $40.0 million during the six-month period ended June 30, 2012 from $35.5 million during the same six-month period in 2011.
Gross profit for the first six-months of 2012 increased 14% to $14.8 million, compared to $13.0 million in the same period in the prior year. The Company's gross profit margin increased to 37% in the first six-months of 2012 versus 36% in the same period last year.
Total net income was $3.3 million or $0.19 per share for the six-month period ended June 30, 2011 compared to $2.2 million or $0.13 per share in the same period in 2011.
