Lifeway Foods, Inc. Announces Third Quarter 2019 Results
MORTON GROVE, Ill., Nov. 14, 2019 (GLOBE NEWSWIRE) — Lifeway Foods, Inc. (Nasdaq: LWAY) (“Lifeway” or “the Company”), the leading U.S. supplier of kefir and fermented probiotic products to support the microbiome, today reported financial results for the third quarter ended September 30, 2019.
“Our third quarter results reflect our commitment to our strategic long-term plan to meaningfully reinvigorate growth,” said Julie Smolyansky, CEO of Lifeway Foods, Inc. “While we continue to implement changes in our organizational structure to build for the future and create efficiencies, we also remain focused on increasing brand awareness, driving new product innovation and strengthening consumer loyalty. We are thrilled major retailers nationwide have chosen Plantiful to enhance their healthy consumable product offerings. We believe this increased distribution will lead to long-term sales growth in demographics previously unserved by Lifeway, and we look forward to adding new distribution in the future. In addition to Plantiful, we also have Kefir Minis that we expect to begin shipping at the end of the fourth quarter. Looking ahead to 2020 and beyond, we are committed to our strategic plan and confident about delivering improved financial results.”Third Quarter ResultsNet sales were $22.7 million for the third quarter of 2019, a decrease of 2.2% from $23.2 million in the second quarter of 2019.Gross profit as a percentage of net sales was 22.8% for the third quarter of 2019, a decrease of 120 basis points from 24.0% for the second quarter of 2019. Gross profit percentage was 23.9% in prior year period. The decline versus the prior year was primarily due to the unfavorable impact of operating leverage that arises from lower net sales relative to fixed costs, partially offset by a reduction in variable costs. Additionally, depreciation expense increased reflecting the continued investment in manufacturing improvements.Selling expenses decreased $0.5 million or 14.6% to $2.7 million for the third quarter of 2019 from $3.1 million during the same period in 2018. The decrease versus prior year primarily reflects a reduction in advertising and marketing programs with lower efficiency, and compensation savings from organizational changes made in 2018. Selling expenses as a percentage of net sales were 11.8% for the third quarter of 2019 compared to 12.8% for the same period in 2018.General and administrative expenses decreased $0.4 million or 14% to $2.7 million for the third quarter of 2019 from $3.1 million during the same period in 2018. The decrease is primarily a result of lower compensation expenses due to organization changes made in 2018, lower incentive compensation, and lower professional fees, partially offset by increased legal expenses.The effective income tax rate for the third quarter of 2019 was 19.3% compared to 20.9% in the same period last year. The decrease in the effective tax rate was primarily due to the non-deductible expense amounts being a higher percentage of pre-tax income, non-deductible compensation expense related to equity incentive awards, and adjustments to state income tax receivable. The decrease in the effective tax rate was partially offset due to separate state tax rates and a change in valuation allowance.The Company reported a net loss of $(0.00) per diluted share for the third quarter of 2019, an increase from the net loss of $(0.01) per diluted share in the second quarter of 2019, and as compared to a net loss of $(0.5) million, or $(0.03) per diluted share, in the third quarter of 2018.Conference Call and WebcastA pre-recorded conference call and webcast with Julie Smolyansky discussing these results with additional comments and details will be available today at 5:00 p.m. ET. The webcast will be available over the Internet through the “Investor Relations” section of the Company’s website at https://lifewaykefir.com/webinars-reports/. An audio replay will be available through November 28, 2019. North American listeners may dial 844-512-2921 and international listeners may dial 412-317-6671. The passcode is 1137085.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 cupped kefir and cheese, frozen kefir, specialty cheeses, probiotic supplements and a ProBugs line for kids. Lifeway’s tart and tangy fermented dairy and non-dairy products are now sold across the United States, Mexico, Ireland and the United Kingdom. Learn how Lifeway is good for more than just you at www.lifewaykefir.com.Forward-Looking StatementsThis 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, 2018, 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.Contact:Lifeway Foods, Inc.
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