Lifeway sales up 15%

Lifeway Foods Inc. (Nasdaq: LWAY), a leading supplier of cultured dairy products known as kefir and organic kefir, announced results for the third quarter ended Sept. 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 percent 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 percent or $3.2 million to $23.8 million during the three-month period ended Sept. 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 percent in the third quarter of 2013 compared to 33 percent in the third quarter of 2012. This was primarily attributable to a 35 percent increase in the cost of milk, the Company's largest raw material.

Total operating expenses decreased 3 percent 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 three-month period ended Sept. 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 percent compared to 32 percent 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 Sept. 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 percent, to $80.0 million during the nine-month period ended Sept. 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 percent, to $71.3 million during the nine-month period ended Sept. 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 percent 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 percent in the first nine months versus 34 percent 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 percent higher compared to the first nine months of 2012.

Operating expenses as a percentage of net sales were approximately 20 percent during the nine-month period ended Sept. 30, 2013 compared to approximately 22 percent during the same period in 2012.  General and administrative expenses increased by $0.9 million (approximately 20 percent) to $5.6 million during the nine-month period ended Sept. 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 Sept. 30, 2013 compared to $4.6 million or $0.28 per share in the same period in 2012.