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, 2013.
"We are pleased to report another strong quarter, which demonstrates our steady progress in growing Lifeway into a leading health food brand," said Julie Smolyansky, CEO of Lifeway Foods. "Our team has remained focused on creating delicious and nutritious kefir products for our customers and the demand for Lifeway Foods continues to increase. The investments we have made in our business have created strong momentum and we are on track to report record results this year. Looking ahead, we believe that we will continue to deliver consistent returns to our shareholders as we grow the distribution of our products in the United States and abroad."
Third Quarter Results
Third quarter of 2013 gross sales increased 18% to $26.6 million compared to $22.6 million for the third quarter of 2012. 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
Total consolidated net sales increased 15% or $3.2 million to $23.8 million during the three-month period ended September 30, 2013 from $20.6 million during the same three-month period in 2012.
Gross profit for the third quarter of 2013 was $6.9 million, which was approximately the same in the third quarter of the prior year. The Company's gross profit margin was 29% in the third quarter of 2013 compared to 33% in the third quarter of 2012. This was primarily attributable to a 35% increase in the cost of milk, the Company's largest raw material.
Total operating expenses decreased 3% or $0.1 million to $4.7 million during the third quarter of 2013, from $4.8 million during the same period in 2012. This decrease was primarily attributable to a decrease selling related expenses.
Total operating income increased $0.1 million to $2.2 million during the third quarter of 2013, from $2.1 million during the same period in 2012.
During the 3 month period ended September 30, 2013, the company sold certain assets that were acquired in the Golden Guernsey Wisconsin production facility in July 2013 for net sale proceeds of $537,500. In connection with the sale of those assets, the company recognized a gain of approximately $209,000, which is included in other income.
The Company's third quarter 2013 effective tax rate was 29% compared to 32% in the same period last year.
Total net income was $1.7 million or $0.10 per diluted share for the three-month period ended September 30, 2013 compared to $1.4 million or $0.09 per diluted share in the same period in 2013.
Nine Month Results
Total consolidated gross sales increased by $13.2 million, or approximately 20%, to $80.0 million during the nine-month period ended September 30, 2013 from $66.9 million during the same nine-month period in 2012. 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.
Total consolidated net sales increased by $10.7 million, or approximately 18%, to $71.3 million during the nine-month period ended September 30, 2013 from $60.6 million during the same nine-month period in 2012.
Gross profit for the first nine months of 2013 increased 11% to $22.8 million, compared to $20.6 million in the third quarter of the prior year. The Company's gross profit margin decreased to 32% in the first nine months versus 34% in the same period last year. Gross profit was negatively impacted primarily by the increased price of milk, the Company's largest raw material. The cost of milk was approximately 25% higher compared to the first nine months of 2012.
Operating expenses as a percentage of net sales were approximately 20% during the nine-month period ended September 30, 2013 compared to approximately 22% during the same period in 2012. General and administrative expenses increased by $0.9 million (approximately 20%) to $5.6 million during the nine-month period ended September 30, 2013, from $4.6 during the same period in 2012.
Total net income was $5.5 million or $0.33 per share for the nine-month period ended September 30, 2013 compared to $4.6 million or $0.28 per share in the same period in 2012.
Balance Sheet/Cash Flow Highlights
The Company had $1.2 million in cash and cash equivalents as of September 30, 2013 compared to $2.4 million at September 30, 2012. Total stockholder's equity was $43.4 million as of September 30, 2013, which is an increase of $5.0 million when compared to September 30, 2012.
Net cash provided by operating activities decreased $2.5 million to $3.6 million for the first nine months of 2013.
Net cash used in investing activities was $7.9 million during the nine-months ended September 30, 2013 compared to net cash used in operating activities of $1.2 during the same period in 2012. This increase is primarily attributable to purchases of property and equipment of $7.4 million.
