New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Business News and Headlines
SEC Filings, Earing Reports, Press Releases
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Lifeway Foods Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 14, 2012 09:05PM

Lifeway Foods Inc. (LWAY) filed Quarterly Report for the period ended 2012-09-30. Lifeway Foods Inc. has a market cap of $135.7 million; its shares were traded at around $8.5 with a P/E ratio of 34.5 and P/S ratio of 1.9. The dividend yield of Lifeway Foods Inc. stocks is 0.8%. Lifeway Foods Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Lifeway Foods Inc. the business predictability rank of 4.5-star.



Highlight of Business Operations:

The following analysis should be read in conjunction with the unaudited financial statements of the Company and related notes included elsewhere in this quarterly report and the audited financial statements and Management s Discussion and Analysis contained in our Form 10-K, for the fiscal year ended December 31, 2011. This report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “estimates,” and similar words. Forward-looking statements represent, as of the date of this report, our judgment relating to, among other things, future results of operations, growth plans, sales, capital requirements and general industry and business conditions applicable to us. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company s control that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Results of Operations Comparison of Quarter Ended September 30, 2012 to Quarter Ended September 30, 2011 Total consolidated gross sales increased by $3,193,599 (approximately 16%) to $22,617,132 during the three-month period ended September 30, 2012 from $19,423,533 during the same three-month period in 2011. 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™. In addition, Lifeway s Frozen Kefir line, which was launched in April 2011, contributed approximately $700,000 to sales during the third quarter of 2012. Total consolidated net sales increased by $2,918,129 (approximately 17%) to $20,619,733 during the three-month period ended September 30, 2012 from $17,701,604 during the same three-month period in 2011. 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. Gross profit for the third quarter of 2012 increased 18% to $7,473,856, compared to $6,346,757 million in the third quarter of the prior year. The Company s gross profit margin was 33% in the third quarter, which was approximately the same in the third quarter of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk. Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 62% during the third quarter of 2012, which was approximately the same during the same period in 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk as compared to the same period last year. Total operating expenses increased $617,595 (approximately 13%) to $5,396,647 during the third quarter of 2012, from $4,779,052 during the same period in 2011. This increase was primarily attributable to increased general and administrative expenses. Total operating income increased by $509,504 (approximately 33%) to $2,077,209 during the third quarter of 2012, from $1,567,705 during the same period in 2011. This increase in operating income is related to the increase in gross profits. Income tax expense was $657,697, or a 32% effective tax rate for the third quarter of 2012 compared to an income tax expense of $441,989, or a 30% effective tax rate during the same period in 2011. Total net income was $1,402,179 or $0.09 per diluted share for the three-month period ended September 30, 2012 compared to $1,030,041 or $0.06 per diluted share in the same period in 2011. - 20 - Comparison of Nine-Months Ended September 30, 2012 to Nine-Months Ended September 30, 2011 Total consolidated gross sales increased by $8,493,184 (approximately 15%) to $66,876,986 during the nine-month period ended September 30, 2012 from $58,383,802 during the same nine-month period in 2011. 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™. In addition, Lifeway s Frozen Kefir line, which was launched in April 2011, contributed approximately $1,900,000 to sales during the first nine months of 2012. Total consolidated net sales increased by $7,366,886 (approximately 13.8%) to $60,570,311 during the nine-month period ended September 30, 2012 from $53,203,425 during the same three-month period in 2011. 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. Gross profit for the nine-month period ended September 30, 2012 increased 16% to $22,271,099, compared to $19,155,726 million in the first nine months of the prior year. The Company s gross profit margin was approximately 36% in the nine-months ended September 30, 2012, which was approximately the same in the same period of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk. Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 62% during the first nine months of 2012, which was approximately 63% during the same period in 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk as compared to the same period last year. Total operating expenses increased $1,572,422 (approximately 12%) to $15,194,607 during the nine-months ended September 30, 2012, from $13,622,185 during the same period in 2011. This increase was primarily attributable to increased general and administrative expenses. Total operating income increased by $1,542,951 (approximately 28%) to $7,076,492 during the nine-months ended September 30, 2012, from $5,533,541 during the same period in 2011. This increase in operating income is related to the increase in gross profits. Income tax expense was $2,483,216, or a 35% effective tax rate for the nine-months ended September 30, 2012 compared to an income tax expense of $2,115,365, or a 40% effective tax rate during the same period in 2011. Total net income was $4,546,296 or $0.28 per diluted share for the nine-month period ended September 30, 2012 compared to $3,221,354 or $0.20 per diluted share in the same period in 2011. - 21 - Liquidity and Capital Resources Sources and Uses of Cash Net cash provided by operating activities was $6,092,293 during the nine-months ended September 30, 2012 compared to $2,592,504 during the same period in 2011. This increase is primarily attributable to the increase in net income of $1,324,942. The increase reflects the Company s improvement in operating efficiencies. Net cash used in investing activities was $1,216,160 during the nine-months ended September 30, 2012 compared to net cash used in operating activities of $2,107,555 during the same period in 2011. This decrease is primarily attributable to the decrease in purchases of investments of $713,588. The Company had a net increase in cash and cash equivalents of $1,518,882 during the nine month period ended September 30, 2012 compared to the same period in 2011. The Company had cash and cash equivalents of $2,379,565 as of September 30, 2012 compared to cash and cash equivalents of $860,683 as of September 30, 2011. Assets and Liabilities Total assets were $54,512,574 as of September 30, 2012, which is an increase of $972,886 when compared to September 30, 2011. This is primarily due to an increase in cash and cash equivalents of $1,518,882 as of September 30, 2012 when compared to September 30, 2011. Total current liabilities were $7,935,427 as of September 30, 2012, which is a decrease of $597,722 when compared to September 30, 2011. This is primarily due to a $1,342,655 decrease in current maturities of notes payable. Notes payable decreased by $786,016 as of September 30, 2012, when compared to September 30, 2011. The balance of the notes payable as of September 30, 2012 was $5,096,675. Total stockholder s equity was $38,367,943 as of September 30, 2012, which is an increase of $2,557,187 when compared to September 30, 2011. This is primarily due to an increase in retained earnings of $3,034,046 when compared to September 30, 2011. All of our marketable securities are classified as available-for-sale on our balance sheet. All of these securities are stated thereon at market value as of the end of the applicable period. Gains and losses on the portfolio are determined by the specific identification method. We anticipate being able to fund the Company s foreseeable liquidity requirements internally.

Gross profit for the third quarter of 2012 increased 18% to $7,473,856, compared to $6,346,757 million in the third quarter of the prior year. The Company s gross profit margin was 33% in the third quarter, which was approximately the same in the third quarter of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk. Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 62% during the third quarter of 2012, which was approximately the same during the same period in 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk as compared to the same period last year.

Gross profit for the third quarter of 2012 increased 18% to $7,473,856, compared to $6,346,757 million in the third quarter of the prior year. The Company s gross profit margin was 33% in the third quarter, which was approximately the same in the third quarter of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk.

Comparison of Nine-Months Ended September 30, 2012 to Nine-Months Ended September 30, 2011 Total consolidated gross sales increased by $8,493,184 (approximately 15%) to $66,876,986 during the nine-month period ended September 30, 2012 from $58,383,802 during the same nine-month period in 2011. 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™. In addition, Lifeway s Frozen Kefir line, which was launched in April 2011, contributed approximately $1,900,000 to sales during the first nine months of 2012. Total consolidated net sales increased by $7,366,886 (approximately 13.8%) to $60,570,311 during the nine-month period ended September 30, 2012 from $53,203,425 during the same three-month period in 2011. 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. Gross profit for the nine-month period ended September 30, 2012 increased 16% to $22,271,099, compared to $19,155,726 million in the first nine months of the prior year. The Company s gross profit margin was approximately 36% in the nine-months ended September 30, 2012, which was approximately the same in the same period of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk. Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 62% during the first nine months of 2012, which was approximately 63% during the same period in 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk as compared to the same period last year. Total operating expenses increased $1,572,422 (approximately 12%) to $15,194,607 during the nine-months ended September 30, 2012, from $13,622,185 during the same period in 2011. This increase was primarily attributable to increased general and administrative expenses. Total operating income increased by $1,542,951 (approximately 28%) to $7,076,492 during the nine-months ended September 30, 2012, from $5,533,541 during the same period in 2011. This increase in operating income is related to the increase in gross profits. Income tax expense was $2,483,216, or a 35% effective tax rate for the nine-months ended September 30, 2012 compared to an income tax expense of $2,115,365, or a 40% effective tax rate during the same period in 2011. Total net income was $4,546,296 or $0.28 per diluted share for the nine-month period ended September 30, 2012 compared to $3,221,354 or $0.20 per diluted share in the same period in 2011.

Gross profit for the nine-month period ended September 30, 2012 increased 16% to $22,271,099, compared to $19,155,726 million in the first nine months of the prior year. The Company s gross profit margin was approximately 36% in the nine-months ended September 30, 2012, which was approximately the same in the same period of 2011. This was primarily attributable to a 20% decrease in the cost of conventional milk, the Company s largest raw material, partially offset by a 10% increase in the cost of organic milk.

Read the The complete Report



Stocks Discussed: LWAY,
Rate this post:




Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't




Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial