Lifeway Foods’ Q2 Earnings Exceeded Expectations and Increased Yoy

Lifeway Foods

Lifeway Foods, Inc. (NASDAQ:LWAY) posted second-quarter 2023 results that exceeded the Consensus Estimate and improved year over year. This was the company’s 15th consecutive quarter of year-on-year net sales growth.

A proactive approach to operations management, combined with the reduction of inflationary pressures, has allowed the company to capitalize on sustained revenue growth. This expansion indicates not only increased product volumes, but also general acceptance of price increases justified by inflation.

Strategic retail and branding initiatives that capitalize on consumer loyalty attract new, quality-conscious buyers. Marketing, distribution, and bright prospects in key goods like kefir and Farmer Cheese, which benefit from popular social media recipes, are all part of the company’s dedication to growth.

Detail on Q2 Performance

Lifeway reported profits per share of 21 cents in the second quarter, exceeding the Consensus Estimate of 6 cents. This compared to a year ago’s earnings of one cent per share.

Net revenues were $39.2 million, a 17.1% increase year on year. The revenue surpassed the Consensus Estimate of $38 million. Higher volumes of its branded drinkable kefir and, to a lesser extent, the effects of price hikes enacted in the fourth quarter of 2022 drove the increase.

The gross profit increased to $11.3 million from $5.7 million in the previous quarter. Higher revenues can be attributable to the upward trend. Gross margin increased by 1,170 basis points (bps) to 28.7%. Higher quantities of its branded products and the favorable effects of milk pricing, as well as, to a lesser extent, price hikes introduced in the fourth quarter of 2022 and lower transportation costs, aided the metric.

Selling, general, and administrative costs increased by 19.9% to $6.4 million. Selling, general, and administrative expenses climbed 40 basis points to 16.3% of net revenues.

The company recorded $3.2 million in net income for the second quarter ended June 30, 2023, up from $0.1 million in the same time in 2022.  

Other Financial Information

Lifeway concluded the quarter with $7.4 million in cash and cash equivalents as of June 30, 2023, compared to $6.5 million for the six months ended June 30, 2022. The firm has no long-term debt. For the six months ended June 30, 2023, net cash provided by operating operations was $5.5 million.

This company’s shares have risen 44.5% in the last six months, outperforming the industry’s decrease of 33.2%.

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About the author: Stephanie Bédard-Châteauneuf has over seven years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, market news, and personal finance. She has an MBA in finance.