Lifeway Foods, Inc., (Nasdaq: LWAY), a leading
supplier of cultured dairy products known as kefir and organic kefir, today announced results for the first
quarter ended March 31, 2013.
First Quarter 2013 Highlights
Net sales increased approximately 26% to $24.4 million for the quarter
Gross profit increased approximately 41% and gross profit margin increased to 35% for the
Record earnings per diluted share of $0.14 for the quarter
Cash and cash equivalents increased $1.6 million to $2.7 million for the quarter
"We started the year off strong as our record sales increase, combined with a lower cost of milk and
management of our expenses enabled us to see a 100% increase in earnings the first quarter of 2013,"
said Julie Smolyansky, CEO of Lifeway Foods, Inc. "We continue to add new distribution in the US and to
expand Lifeway's kefir probiotic reach beyond dairy aisles into other areas of the store. We continue to
focus on expanding our complementary product portfolio to appeal to the increasingly health conscious
consumer. Looking ahead, we are prudently targeting new markets like the UK and remain optimistic
about our future growth long-term both domestically and internationally."
First Quarter Results
First quarter of 2013 gross sales increased approximately 28% to $27.6 million compared to $21.6 million
for the first 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™.
First quarter total consolidated net sales increased approximately 26% to $24.4 million from $19.4 million
in the first quarter of 2012. 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. The total allowance for promotions and discounts in the first quarter of 2013 was
approximately $3.2 million or 12% of gross sales, compared to $2.2 million or approximately 10% of gross
sales in the same period last year.
Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately
63% during the first quarter of 2013, compared to approximately 67% during the same period in 2012.
Gross profit for the first quarter of 2012 increased 41% to approximately $8.6 million, compared to
approximately $6.1 million in the first quarter of the prior year. The gross profit margin increased to 35% in
the first quarter 2013 versus 31% in the first quarter of 2012. The increase was primarily attributable to
the decreased cost of conventional milk, the Company's largest raw material. The total cost of milk was
approximately 5% lower during the first quarter 2013 when compared to the same period in 2012.
Operating expenses as a percentage of net sales were approximately 20% during the first quarter of
2013, compared to approximately 22% during the same period in 2012. This was primarily attributable to
an increase in selling related expenses, which increased approximately 3% to $2.8 million during the first
quarter of 2013, from $2.7 million during the same period in 2012.
The Company reported income from operations of $3.7 million during the first quarter of 2013, an
improvement of $1.9 million from $1.9 million during the same period in 2012. rovision for income tax was $1.4 million or a 37% effective tax rate for the first quarter compared to a
provision for income tax of $0.8 million or a 41% effective tax rate during the same period in 2012.
Total net income was $2.4 million, or $0.14 per diluted share, for the three-month period ended March 31,
2013 compared to $1.1 million, or $0.07 per diluted share, in the same period in 2012.
Balance Sheet/Cash Flow Highlights
The Company had a net increase of cash and cash equivalents of $1.6 million during the three-month
period ended March 31, 2013 compared to the same period in 2012 and an increase of $0.5 million as
compared to the December 31, 2012 cash and equivalent balance. The Company had cash and cash
equivalents of $2.7 million as of March 31, 2013 compared to cash and cash equivalents of $1.2 million
as of March 31, 2012.
Total stockholder's equity was $41.7 million as of March 31, 2013, which is an increase of $5.4 million
when compared to March 31, 2012. This is primarily due the increase in retained earnings of $5.7 million
when compared to March 31, 2012.
The Company will host a conference call to discuss these results with additional comments and details
today, Wednesday, May 15, 2013 at 4:30 p.m. ET. The call will be broadcast live over the Internet hosted
at the Investor Relations section of Lifeway Foods' website at www.lifeway.net, and will be archived online
through May 29, 2013. In addition, listeners may dial 877-407-3982 in North America, and international
listeners may dial 201-493-6780. Participants from the Company will be Julie Smolyansky, President and
Chief Executive Officer, and Edward Smolyansky, Chief Financial Officer and Chief Operating Officer.
About Lifeway Foods
Lifeway Foods, Inc. (Nasdaq: LWAY), recently named one of Fortune Small Business' Fastest Growing
Companies for the fifth consecutive year, is America's leading supplier of the cultured dairy products
known as kefir and organic kefir. Lifeway Kefir is a dairy beverage that contains 10 exclusive live and
active probiotic cultures plus ProBoost™. In addition to its line of Kefir products, the company produces a
variety of Frozen Kefir and probiotic cheese products. Lifeway also sells frozen kefir, kefir smoothies and
kefir parfaits through its Starfruit™ retail stores.
Find Lifeway Foods, Inc. on Facebook: www.facebook.com/lifewaykefir
Follow Lifeway Foods on Twitter: http://twitter.com/lifeway_kefir
Forward Looking Statements
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.
Lifeway Foods, Inc.
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