Lifeway Foods Announces Record First Quarter 2013 Financial Results

 

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. 

(Logo: http://photos.prnewswire.com/prnh/20120119/AQ36947LOGO-b) 

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 

quarter 

? 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. 

Conference Call 

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 

YouTube: http://www.youtube.com/user/lifewaykefir 

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. 

Contact: 

Lifeway Foods, Inc. 

Phone: 877.281.3874 

Email: [email protected] 

Investor Relations: 

ICR 

Katie Turner 

John Mills 

646.277.1228