Accessibility StatementSkip Navigation MORTON GROVE, Ill., Sept. 8, 2025 /PRNewswire/ --Â Lifeway Foods, Inc. (Nasdaq: LWAY) ("Lifeway" or "the Company"), a leading U.S. supplier of kefir and fermented probiotic products that support the microbiome, is proud to announce Muscle Matesâ"¢, an innovative, ready-to-drink functional beverage that pairs 20 grams of protein with 5 grams of creatine and Lifeway's 12 live and active probiotic cultures. Set to hit shelves in grocery stores, fitness centers and select ...

Core Insights - Lifeway Foods, Inc. is reintroducing its Basics Plus™ line of kefir and colostrum supplement shots, a product that originally launched nearly three decades ago [1][3] - The Basics Plus™ product combines probiotic kefir with colostrum, targeting digestive and immune health, and is positioned as a higher-quality alternative to current market offerings [2][3] Company Overview - Lifeway Foods is recognized as a leading supplier of kefir and has been acknowledged as one of Forbes' Best Small Companies [7] - The company produces a variety of products including drinkable kefir, cheeses, and a ProBugs line for children, with distribution across multiple countries [7] Industry Context - Probiotics and kefir are among the fastest-growing categories in health and wellness, with global probiotic sales projected to exceed $200 billion by 2030 [5] - Colostrum has gained popularity for its benefits related to immunity, gut health, and recovery, complementing the benefits of kefir [5]

New kefir products will soon be available nationwide, making gut health for kids more accessible and affordable while still delivering high-quality, bioavailable proteinMORTON GROVE, Ill., Aug. 21, 2025 /PRNewswire/ -- Lifeway Foods, Inc. (NASDAQ: LWAY)(Lifeway, or The Company), a leading supplier of kefir and fermented probiotic products to support the microbiome, today announced the expansion of its popular ProBugs® line with the launch of ProBugs Kefir made with conventional whole milk in three new kid-a ...

Lifeway Foods (LWAY) Q2 2025 Earnings Call August 12, 2025 09:00 AM ET Speaker0Good morning. Welcome to LifeWay Foods' Second Quarter twenty twenty five Conference Call. On the call with me today is Julie Smolensky, President and Chief Executive Officer. By now, everyone should have access to the press release that went out this morning. If you have not received the release, it is available on the Investor Relations portion of LifeWay's website at www.lifewayfoods.com.A recording of this call will be availa ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents Lifeway Foods, Inc.'s unaudited consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------------------ | :------------------ | | **Assets** | | | | Total current assets | $49,331 | $43,605 | | Property, plant and equipment, net | $30,731 | $26,862 | | Total assets | $98,267 | $90,547 | | **Liabilities** | | | | Total current liabilities | $16,289 | $15,504 | | Total liabilities | $19,571 | $18,636 | | **Stockholders' Equity** | | | | Total stockholders' equity | $78,696 | $71,911 | - Total assets increased by **$7,720 thousand (8.5%)** from December 31, 2024, to June 30, 2025, primarily driven by increases in cash and cash equivalents, inventories, and property, plant, and equipment[10](index=10&type=chunk) - Total stockholders' equity increased by **$6,785 thousand (9.4%)** from December 31, 2024, to June 30, 2025[10](index=10&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $53,901 | $49,157 | $99,992 | $93,791 | | Gross profit | $15,400 | $13,275 | $26,435 | $24,810 | | Income from operations | $5,795 | $5,386 | $7,369 | $8,950 | | Net income | $4,249 | $3,783 | $7,789 | $6,209 | | Basic EPS | $0.28 | $0.26 | $0.51 | $0.42 | | Diluted EPS | $0.28 | $0.25 | $0.51 | $0.41 | - Net sales increased by **9.7%** for the three months ended June 30, 2025, and by **6.6%** for the six months ended June 30, 2025, compared to the respective prior-year periods[12](index=12&type=chunk) - Net income increased by **12.3%** for the three months ended June 30, 2025, and by **25.4%** for the six months ended June 30, 2025, compared to the respective prior-year periods[12](index=12&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity increased from **$71,911 thousand** at January 1, 2025, to **$78,696 thousand** at June 30, 2025, primarily due to net income of **$7,789 thousand** and stock-based compensation[16](index=16&type=chunk) - Net income contributed **$3,540 thousand** in Q1 2025 and **$4,249 thousand** in Q2 2025 to retained earnings[16](index=16&type=chunk) - Stock-based compensation expense recognized was **$326 thousand** in Q1 2025 and **$601 thousand** in Q2 2025[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $3,762 | $8,090 | | Net cash provided by (used in) investing activities | $795 | $(3,905) | | Net cash used in financing activities | $(65) | $(2,750) | | Net increase in cash and cash equivalents | $4,492 | $1,435 | | Cash and cash equivalents at end of period | $21,220 | $14,633 | - Net cash provided by operating activities decreased to **$3,762 thousand** in the first six months of 2025 from **$8,090 thousand** in the same period of 2024, primarily due to lower cash earnings and changes in working capital[18](index=18&type=chunk)[107](index=107&type=chunk) - Net cash provided by investing activities significantly improved to **$795 thousand** in the first six months of 2025, compared to net cash used of **$3,905 thousand** in 2024, driven by **$5,206 thousand** in proceeds from the sale of investments[18](index=18&type=chunk)[108](index=108&type=chunk) [Note 1 – Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include all adjustments necessary for fair presentation[20](index=20&type=chunk) - The consolidated financial statements include Lifeway Foods, Inc. and all its wholly-owned subsidiaries, with all significant intercompany accounts and transactions eliminated[21](index=21&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) - Significant accounting policies have not materially changed from the Annual Report on Form 10-K for fiscal year ended December 31, 2024[22](index=22&type=chunk) - Key estimates include promotional allowances, goodwill and intangible asset valuation, stock-based compensation, and deferred income taxes[23](index=23&type=chunk) - Advertising costs are expensed as incurred and reported in Selling expense, with total advertising expense at **$4,418 thousand** for the six months ended June 30, 2025, up from **$2,531 thousand** in 2024[26](index=26&type=chunk) - The Company operates as a single reportable segment, focusing on cultured dairy products sold in the United States[28](index=28&type=chunk) - New accounting standards ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Income Tax Disclosures) are effective for future periods and will primarily impact financial statement notes, not recognition or measurement[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 3 – Inventories, net](index=10&type=section&id=Note%203%20%E2%80%93%20Inventories%2C%20net) | Inventory Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Ingredients | $3,053 | $2,519 | | Packaging | $2,872 | $2,855 | | Finished goods | $4,299 | $3,304 | | Total inventories, net | $10,224 | $8,678 | - Total inventories, net, increased by **$1,546 thousand (17.8%)** from December 31, 2024, to June 30, 2025, primarily due to increases in ingredients and finished goods[31](index=31&type=chunk) [Note 4 – Property, Plant and Equipment, net](index=11&type=section&id=Note%204%20%E2%80%93%20Property%2C%20Plant%20and%20Equipment%2C%20net) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :------------ | :---------------- | | Buildings and improvements | $24,141 | $23,520 | | Machinery and equipment | $38,997 | $38,181 | | Construction in process | $5,459 | $2,163 | | Total property, plant and equipment, net | $30,731 | $26,862 | - Net property, plant and equipment increased by **$3,869 thousand (14.4%)** from December 31, 2024, to June 30, 2025, largely due to an increase in construction in process[32](index=32&type=chunk) [Note 5 – Goodwill and Intangible Assets](index=11&type=section&id=Note%205%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) - Goodwill remained constant at **$11,704 thousand** as of June 30, 2025, with no changes from December 31, 2024[32](index=32&type=chunk) Intangible Assets, Net | Intangible Asset | Net Carrying Amount (June 30, 2025) (in thousands) | Net Carrying Amount (December 31, 2024) (in thousands) | | :------------------------------ | :---------------------------------- | :------------------------------------ | | Customer relationships | $1,773 | $1,853 | | Brand names | $4,315 | $4,505 | | Total intangible assets, net | $6,088 | $6,358 | - Total intangible assets, net, decreased by **$270 thousand** from December 31, 2024, to June 30, 2025, primarily due to amortization[33](index=33&type=chunk) - Estimated amortization expense for intangible assets is **$270 thousand** for the six months ended December 31, 2025, and **$540 thousand** annually from 2026 to 2029[33](index=33&type=chunk) [Note 6 – Accrued Expenses](index=12&type=section&id=Note%206%20%E2%80%93%20Accrued%20Expenses) | Accrued Expense Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------------- | :------------ | :---------------- | | Payroll and incentive compensation | $3,364 | $4,188 | | Real estate taxes | $507 | $468 | | Utilities | $189 | $193 | | Current portion of operating lease liabilities | $58 | $47 | | Other | $291 | $207 | | Total accrued expenses | $4,409 | $5,103 | - Total accrued expenses decreased by **$694 thousand (13.6%)** from December 31, 2024, to June 30, 2025, mainly due to a decrease in payroll and incentive compensation[34](index=34&type=chunk) [Note 7 – Debt](index=13&type=section&id=Note%207%20%E2%80%93%20Debt) - On February 5, 2025, the Company entered into the Fifth Modification to its Revolving Credit Facility, increasing the commitment from **$5,000 thousand** to **$25,000 thousand** and extending the termination date to February 5, 2028[35](index=35&type=chunk) - The Fifth Modification replaced the quarterly minimum working capital covenant with a maximum cash flow leverage ratio of no greater than **2.00 to 1.00**[35](index=35&type=chunk) - As of June 30, 2025, the Company had no outstanding borrowings and **$25,000 thousand** available under the Revolving Credit Facility, and was in compliance with all covenants[36](index=36&type=chunk)[37](index=37&type=chunk) [Note 8 – Leases](index=13&type=section&id=Note%208%20%E2%80%93%20Leases) - The Company leases machinery and equipment with remaining lease terms ranging from less than one year to six years[38](index=38&type=chunk) - Total lease expense (including short-term leases) was **$95 thousand** for the six months ended June 30, 2025, compared to **$77 thousand** for the same period in 2024[41](index=41&type=chunk) Operating Leases | Year | Operating Leases (in thousands) | | :--- | :------------------------------ | | Six months ended December 31, 2025 | $45 | | 2026 | $82 | | 2027 | $74 | | 2028 | $67 | | 2029 | $60 | | Thereafter | $41 | | Total lease payments | $369 | | Less: Interest | $(91) | | Present value of lease liabilities | $278 | - The weighted-average remaining lease term for operating leases was **4.8 years**, and the weighted average discount rate was **12.27%** as of June 30, 2025[42](index=42&type=chunk) [Note 9 – Commitments and contingencies](index=14&type=section&id=Note%209%20%E2%80%93%20Commitments%20and%20contingencies) - Lifeway is involved in various legal proceedings, claims, and disputes in the ordinary course of business[43](index=43&type=chunk) - Provisions for legal matters are recorded when a loss is probable and reasonably estimable; currently, no accruals are material individually or in aggregate[44](index=44&type=chunk) [Note 10 – Income taxes](index=14&type=section&id=Note%2010%20%E2%80%93%20Income%20taxes) | Period | Effective Tax Rate | | :----- | :----------------- | | Six months ended June 30, 2025 | 28.4% | | Six months ended June 30, 2024 | 30.0% | | Three months ended June 30, 2025 | 28.1% | | Three months ended June 30, 2024 | 29.4% | - The change in the effective tax rate is primarily due to changes in non-deductible officer compensation and stock-based compensation expense[45](index=45&type=chunk) - The provision for income taxes during interim periods is calculated by applying an estimate of the annual effective tax rate to income before taxes, excluding discrete items[46](index=46&type=chunk) [Note 11 – Stock-based and Other Compensation](index=15&type=section&id=Note%2011%20%E2%80%93%20Stock-based%20and%20Other%20Compensation) - The Lifeway Foods, Inc. 2022 Omnibus Incentive Plan has **2.57 million shares** remaining available for awards as of June 30, 2025[48](index=48&type=chunk) - The 2022 Non-Employee Director Equity and Deferred Compensation Plan has **390 thousand shares** remaining available for awards as of June 30, 2025[49](index=49&type=chunk) Compensation Expense and Tax Benefit | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Compensation expense related to stock-based payments | $601 | $623 | $927 | $1,296 | | Related income tax benefit | $168 | $66 | $259 | $131 | - Unrecognized compensation expense for nonvested restricted stock units was **$687 thousand** as of June 30, 2025, to be recognized over a weighted average period of **1.2 years**[53](index=53&type=chunk) - Unrecognized compensation expense for nonvested performance units is estimated at **$1,775 thousand** as of June 30, 2025, to be recognized over a weighted average period of **1.16 years**[58](index=58&type=chunk) - Total contribution expense for the defined contribution plan was **$413 thousand** for the six months ended June 30, 2025, compared to **$362 thousand** for the same period in 2024[59](index=59&type=chunk) [Note 12 - Earnings Per Share](index=17&type=section&id=Note%2012%20-%20Earnings%20Per%20Share) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Weighted average common shares outstanding | 15,206 | 14,727 | 15,170 | 14,709 | | Assumed exercise/vesting of equity awards | 184 | 470 | 189 | 467 | | Weighted average diluted common shares outstanding | 15,390 | 15,197 | 15,359 | 15,176 | [Note 13 – Disaggregation of Revenue and Significant Customers](index=17&type=section&id=Note%2013%20%E2%80%93%20Disaggregation%20of%20Revenue%20and%20Significant%20Customers) - Lifeway operates as one reportable segment, manufacturing and distributing cultured dairy products primarily in North America[61](index=61&type=chunk)[62](index=62&type=chunk) - The primary product is drinkable kefir, sold under Lifeway, Fresh Made, GlenOaks Farms, and private labels[63](index=63&type=chunk) Net Sales by Product Category | Product Category | Six Months Ended June 30, 2025 (in thousands) | % of Total (2025) | Six Months Ended June 30, 2024 (in thousands) | % of Total (2024) | | :--------------- | :----------------------------- | :---------------- | :----------------------------- | :---------------- | | Drinkable Kefir other than ProBugs | $84,039 | 84% | $77,543 | 83% | | Cheese | $7,811 | 8% | $6,892 | 7% | | Cream and other | $4,825 | 5% | $3,987 | 4% | | ProBugs Kefir | $1,515 | 1% | $1,750 | 2% | | Drinkable Yogurt | $1,083 | 1% | $2,918 | 3% | | Other dairy | $719 | 1% | $701 | 1% | | **Net Sales** | **$99,992** | **100%** | **$93,791** | **100%** | | Product Category | Three Months Ended June 30, 2025 (in thousands) | % of Total (2025) | Three Months Ended June 30, 2024 (in thousands) | % of Total (2024) | | :--------------- | :------------------------------- | :---------------- | :------------------------------- | :---------------- | | Drinkable Kefir other than ProBugs | $45,989 | 85% | $41,010 | 83% | | Cheese | $3,999 | 8% | $3,377 | 7% | | Cream and other | $2,366 | 4% | $2,171 | 4% | | ProBugs Kefir | $769 | 1% | $884 | 2% | | Drinkable Yogurt | $449 | 1% | $1,382 | 3% | | Other dairy | $329 | 1% | $333 | 1% | | **Net Sales** | **$53,901** | **100%** | **$49,157** | **100%** | - Drinkable Kefir (excluding ProBugs) remains the largest product category, accounting for **84%** of net sales for the six months ended June 30, 2025[64](index=64&type=chunk) - Two significant customers accounted for approximately **25%** of net sales for the six months ended June 30, 2025, and **26%** for the same period in 2024[65](index=65&type=chunk) [Note 14 – Shareholder Rights Plan](index=19&type=section&id=Note%2014%20%E2%80%93%20Shareholder%20Rights%20Plan) - The Company adopted a Shareholder Rights Agreement on November 4, 2024, issuing one preferred share purchase right for each outstanding common stock share[68](index=68&type=chunk) - Each Right entitles its holder to purchase one one-thousandth of one share of Series A Junior Participating Preferred Stock at an exercise price of **$130.00**[68](index=68&type=chunk) - The Right expires at the end of November 4, 2025, or earlier if exercised[68](index=68&type=chunk) [Note 15 – Subsequent Events](index=19&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, but is not expected to have a material impact on the Company's estimated annual effective tax rate or cash flows in the current fiscal year[69](index=69&type=chunk) - To increase organic milk supply, Lifeway purchased **224 mature dairy cows** for **$694 thousand** in July 2025 and entered into a 39-month agreement with a third-party dairy facility to manage the herd and sell milk to a COOP[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The Company is currently assessing the appropriate accounting treatment for the herd purchase and related agreement[73](index=73&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's financial condition, operational results, liquidity, and capital resources for the reported periods [Business Overview](index=21&type=section&id=Business%20Overview) - Lifeway Foods, Inc. was founded in 1986 and is the largest producer and marketer of kefir in the U.S., focusing on probiotic-based and 'better for you' foods[78](index=78&type=chunk) - The primary product is drinkable kefir, a cultured dairy product, marketed under Lifeway, Fresh Made, GlenOaks Farms, and private labels[79](index=79&type=chunk) - Product categories include: Drinkable Kefir, European-style soft cheeses, Cream and other, Drinkable Yogurt, ProBugs (kefir for children), and Other Dairy (butter and sour cream)[84](index=84&type=chunk) - The Company is primarily a United States-based manufacturer, sourcing most inputs domestically and selling all domestically produced products to U.S. customers[83](index=83&type=chunk) [Recent Developments and Trends](index=21&type=section&id=Recent%20Developments%20and%20Trends) - Lifeway is increasing its organic milk supply by purchasing mature dairy cows and entering into agreements with a third-party dairy facility and a COOP[79](index=79&type=chunk)[81](index=81&type=chunk) - The Company purchased **224 mature dairy cows** in July 2025 for **$694 thousand** and is evaluating further purchases[80](index=80&type=chunk) - The Company is assessing the accounting treatment for the herd purchase and the 39-month Herd Agreement[82](index=82&type=chunk) [Current Macroeconomic Environment](index=21&type=section&id=Current%20Macroeconomic%20Environment) - The Company monitors macroeconomic conditions, including inflation, tariffs, and trade policies, but does not currently expect a material adverse impact on operations or financial results[83](index=83&type=chunk) - An accelerating consumer focus on health and wellness is expected to drive increased demand for Lifeway's products[83](index=83&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 ($ in thousands) | 2025 (%) | 2024 ($ in thousands) | 2024 (%) | Change ($ in thousands) | Change (%) | | :-------------------------------- | :------- | :------- | :------- | :------- | :--------- | :--------- | | Net sales | 53,901 | 100.0% | 49,157 | 100.0% | 4,744 | 9.7% | | Gross profit | 15,400 | 28.6% | 13,275 | 27.0% | 2,125 | 16.0% | | Selling expenses | 4,718 | 8.8% | 3,577 | 7.3% | 1,141 | 31.9% | | General & administrative expense | 4,752 | 8.8% | 4,177 | 8.5% | 575 | 13.8% | | Income from operations | 5,795 | 10.7% | 5,386 | 10.9% | 409 | 7.6% | | Net income | 4,249 | 7.9% | 3,783 | 7.6% | 466 | 12.3% | Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 ($ in thousands) | 2025 (%) | 2024 ($ in thousands) | 2024 (%) | Change ($ in thousands) | Change (%) | | :-------------------------------- | :------- | :------- | :------- | :------- | :--------- | :--------- | | Net sales | 99,992 | 100.0% | 93,791 | 100.0% | 6,201 | 6.6% | | Gross profit | 26,435 | 26.5% | 24,810 | 26.4% | 1,625 | 6.5% | | Selling expense | 9,416 | 9.4% | 7,277 | 7.8% | 2,139 | 29.4% | | General & administrative expense | 9,380 | 9.4% | 8,313 | 8.9% | 1,067 | 12.8% | | Income from operations | 7,369 | 7.4% | 8,950 | 9.4% | (1,581) | (17.7%) | | Net income | 7,789 | 7.9% | 6,209 | 6.5% | 1,580 | 25.4% | - Net sales for Q2 2025 increased by **9.7%** to **$53,901 thousand**, primarily due to higher volumes of branded drinkable kefir, with a comparable increase of approximately **18%** when adjusting for exited customer relationships and distributor shifts[86](index=86&type=chunk) - Gross profit margin for Q2 2025 increased to **28.6%** from **27.0%** in Q2 2024, driven by higher branded product volumes and favorable conventional milk pricing, partially offset by unfavorable organic milk pricing and trade promotion investments[87](index=87&type=chunk) - Selling expenses for Q2 2025 increased by **$1,141 thousand (31.9%)** to **$4,718 thousand**, mainly due to increased marketing activities to boost brand awareness and sales volumes[88](index=88&type=chunk) - General and administrative expenses for Q2 2025 rose by **$575 thousand (13.8%)** to **$4,752 thousand**, primarily due to professional fees related to non-routine stockholder action and the Danone unsolicited purchase proposal[89](index=89&type=chunk) - The effective income tax rate for the six months ended June 30, 2025, was **28.4%**, down from **30.0%** in the prior year, mainly due to changes in non-deductible officer compensation and stock-based compensation[99](index=99&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - Lifeway maintains a strong financial position, expecting sufficient liquidity from operations, its revolving credit facility, and cash equivalents to fund working capital, capital requirements, and growth initiatives[102](index=102&type=chunk) - As of June 30, 2025, **$25,000 thousand** was available under the Revolving Credit Facility, with no outstanding borrowings[103](index=103&type=chunk)[110](index=110&type=chunk) - The Company is in compliance with all financial covenants of its Credit Agreement, including a fixed charge coverage ratio of no less than **1.25 to 1.00** and a maximum cash flow leverage ratio of no greater than **2.00 to 1.00**[111](index=111&type=chunk)[112](index=112&type=chunk) - Short-term cash requirements include funding operations (raw materials, labor, marketing, taxes) and capital expenditures; long-term needs relate to debt repayments and deferred income taxes[104](index=104&type=chunk) [Cash Flow](index=26&type=section&id=Cash%20Flow) | Cash Flow Activity | Six months Ended June 30, 2025 (in thousands) | Six months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $3,762 | $8,090 | | Investing activities | $795 | $(3,905) | | Financing activities | $(65) | $(2,750) | - Net cash from operating activities decreased to **$3,762 thousand** in H1 2025 from **$8,090 thousand** in H1 2024, primarily due to lower cash earnings and changes in working capital[107](index=107&type=chunk) - Net cash from investing activities turned positive at **$795 thousand** in H1 2025, compared to a net use of **$3,905 thousand** in H1 2024, mainly due to **$5,206 thousand** in proceeds from the sale of the Simple Mills investment[108](index=108&type=chunk)[27](index=27&type=chunk) - Net cash used in financing activities decreased significantly to **$65 thousand** in H1 2025 from **$2,750 thousand** in H1 2024, as the 2024 figure included principal payments on a term loan that was fully repaid[109](index=109&type=chunk) [Recent Accounting Pronouncements](index=27&type=section&id=Recent%20Accounting%20Pronouncements) - Information on recent accounting pronouncements is detailed in Note 2 – Summary of Significant Accounting Policies[113](index=113&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There were no material changes to the Company's critical accounting policies and estimates during the six months ended June 30, 2025, as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The Company has no applicable quantitative and qualitative disclosures about market risk - The Company has no applicable quantitative and qualitative disclosures about market risk[115](index=115&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[116](index=116&type=chunk) [Changes in Internal Control over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect, its internal control over financial reporting[117](index=117&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings.) This section refers to Note 9 for information regarding legal proceedings, indicating no new material information beyond what is already disclosed in the financial notes - Information regarding legal proceedings is available in Note 9, Commitment and Contingencies[119](index=119&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.Risk%20Factors.) This section states that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024[120](index=120&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities and use of proceeds to report[121](index=121&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This section reports that there were no defaults upon senior securities - There were no defaults upon senior securities[122](index=122&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information.) This section confirms that no director or officer adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025[123](index=123&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed or furnished with the Form 10-Q, including certifications, press releases, and XBRL documents - Certifications (Rule 13a-14(a)/15d-14(a) and Section 1350) from Julie Smolyansky (CEO) and Eric Hanson (CFO) are included[125](index=125&type=chunk) - A press release dated August 12, 2025, reporting financial results for the three months ended June 30, 2025, is furnished[125](index=125&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and Cover Page Interactive Data File are included[125](index=125&type=chunk) [Signatures](index=30&type=section&id=Signatures.) This section contains the required signatures from the Company's Chief Executive Officer, President, and Director, Julie Smolyansky, and Chief Financial & Accounting Officer, Eric Hanson, certifying the filing of the report - The report is signed by Julie Smolyansky, Chief Executive Officer, President, and Director (Principal Executive Officer), and Eric Hanson, Chief Financial & Accounting Officer (Principal Financial and Accounting Officer), both dated August 12, 2025[129](index=129&type=chunk)

[Business and Operational Highlights](index=1&type=section&id=Business%20and%20Operational%20Highlights) The company achieved record Q2 2025 performance, capitalizing on consumer wellness trends and reinforcing its kefir market leadership - Lifeway was named **Processor of the Year** by Dairy Foods magazine, the publication's highest annual honor, recognizing the Company's innovation and leadership[3](index=3&type=chunk) - The company is capitalizing on powerful consumer tailwinds, including the wellness boom and the surge in **GLP-1 medication use**, by offering nutrient-dense, protein-rich, probiotic foods[2](index=2&type=chunk) [Q3 2025 Momentum and Outlook](index=1&type=section&id=Q3%202025%20Momentum%20and%20Outlook) The company reports strong sales momentum entering Q3 and reiterates its long-term financial targets for 2027 - Unaudited net sales for Q3 to date reached **$26.4 million**, an increase of more than **20%** year-over-year[1](index=1&type=chunk)[5](index=5&type=chunk) - In July, Lifeway recorded the **highest single week of gross sales** in Company history, surpassing **$5.5 million**[5](index=5&type=chunk) - The Company reiterated its long-term target of **$45–$50 million in Adjusted EBITDA for FY 2027** and expects record annual sales in 2025[7](index=7&type=chunk) [Growth Trends and Innovation](index=1&type=section&id=Growth%20Trends%20and%20Innovation) The company's innovative collagen-infused smoothies are capitalizing on the growing 'beauty from within' trend - Lifeway's Probiotic Smoothies with Collagen are resonating with consumers, tapping into the rapidly growing **$8 billion global market for collagen**[4](index=4&type=chunk) - The Berry Blast flavor of the collagen smoothie won a **2025 Good Housekeeping Snack Award**, highlighting the product's success and consumer appeal[4](index=4&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) The company delivered record Q2 2025 net sales with expanded gross profit margin and net income growth Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $53.9M | $49.2M | +9.7% | | Gross Profit Margin | 28.6% | 27.0% | +160 bps | | Net Income | $4.2M | $3.8M | +10.5% | | Diluted EPS | $0.28 | $0.25 | +12.0% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales grew 9.7% in Q2 2025, driving higher gross profit and net income despite increased operating expenses Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $53,901 | $49,157 | | Gross profit | $15,400 | $13,275 | | Income from operations | $5,795 | $5,386 | | Net income | $4,249 | $3,783 | | Diluted EPS | $0.28 | $0.25 | Six Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $99,992 | $93,791 | | Gross profit | $26,435 | $24,810 | | Income from operations | $7,369 | $8,950 | | Net income | $7,789 | $6,209 | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity increased, driven by a significant rise in cash and cash equivalents Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,220 | $16,728 | | Total current assets | $49,331 | $43,605 | | Total assets | $98,267 | $90,547 | | Total current liabilities | $16,289 | $15,504 | | Total liabilities | $19,571 | $18,636 | | Total stockholders' equity | $78,696 | $71,911 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by $4.5 million, supported by strong proceeds from investing activities despite lower operating cash flow Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,762 | $8,090 | | Net cash provided by (used in) investing activities | $795 | $(3,905) | | Net cash used in financing activities | $(65) | $(2,750) | | **Net increase in cash** | **$4,492** | **$1,435** | [Other Information](index=2&type=section&id=Other%20Information) This section details the non-GAAP financial measure Adjusted EBITDA and outlines forward-looking statement risks [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes the non-GAAP measure Adjusted EBITDA for its outlook and cannot reconcile it to GAAP net income - **Adjusted EBITDA** is a non-GAAP measure defined as Operating Income, as reported, plus Depreciation and Amortization, plus Stock-Based Compensation[7](index=7&type=chunk)[11](index=11&type=chunk) - The Company cannot reconcile its target fiscal year **2027 Adjusted EBITDA** to projected net income without unreasonable effort due to uncertainty[12](index=12&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to risks including competition, pricing, and an unsolicited acquisition proposal - The press release contains **forward-looking statements** that are subject to risks and uncertainties beyond the company's control[10](index=10&type=chunk) - Identified risks include price competition, commodity pricing, and uncertainty related to an **unsolicited acquisition proposal from Danone**[10](index=10&type=chunk)

Lifeway Kefir Peach and Strawberry Multipack Lifeway Kefir Peach and Strawberry Multipack Costco Members Can Now Enjoy Lifeway's Probiotic, Protein-Packed Kefir in Convenient 8oz Multi- Pack Boxes MORTON GROVE, Ill., Aug. 11, 2025 /PRNewswire/ -- Lifeway Foods, Inc. (NASDAQ: LWAY) ("Lifeway" or "the Company"), a leading U.S. supplier of kefir and fermented probiotic products, is proud to announce the launch of its signature Lifeway Kefir in the San Diego Costco region, which includes parts of California, Ar ...

Core Insights - Lifeway Foods, Inc. has been nominated for the 2025 Dairy Product of the Year for its new 8oz Organic Flavor Fusions line of kefir, showcasing the company's innovation in the dairy industry [1][2] - The Organic Flavor Fusions collection features ten unique flavor combinations designed to enhance gut health and provide a convenient on-the-go option for consumers [2][3] - Lifeway Foods has been recognized as Processor of the Year by Dairy Foods, highlighting its leadership and commitment to quality in the probiotic beverage market [1][3] Product Details - The Organic Flavor Fusions line includes flavors such as Matcha Latte, Pistachio Rose Vanilla, and Passionfruit Lychee, inspired by global trends and designed to appeal to modern consumers [2][5] - Each nominee for the Dairy Product of the Year was selected based on quality, innovation, and contribution to the industry, emphasizing Lifeway's commitment to excellence [2][3] Voting and Recognition - Public voting for the Dairy Product of the Year is open until August 31, 2025, with the winner to be announced in the October 2025 issue of Dairy Foods magazine [4] - The recognition from Dairy Foods serves as a testament to Lifeway's innovation and dedication to wellness in the dairy sector [3]

Core Insights - Lifeway Foods, Inc. has been awarded Processor of the Year by Dairy Foods Magazine, recognizing its innovation, leadership, growth, and impact in the dairy industry [1][2][3] - The award reflects Lifeway's strong revenue growth, expanded distribution, and commitment to wellness and sustainability in 2025 [1][2] Company Performance - Lifeway Foods experienced record-breaking retail growth driven by increased consumer demand for functional and probiotic-rich foods [6] - The company launched innovative products such as Lifeway Probiotic Smoothie + Collagen and Flavor Fusions [6] - Engaging marketing initiatives have attracted new consumers to the kefir category [6] Leadership and Vision - Julie Smolyansky, President and CEO, emphasized the company's mission to promote the health benefits of probiotics and fermented foods [2] - Smolyansky has led Lifeway for 23 years, contributing to its growth from a small startup to a global category leader [2] Industry Recognition - Lifeway Foods will be featured in the December 2025 issue of Dairy Foods Magazine and will receive a physical award at the IDFA Dairy Forum in January 2026 [3] - The company is recognized as a pioneer in the kefir category, balancing tradition with innovation [3] Future Outlook - As Lifeway approaches its 40th anniversary in 2026, it remains focused on its mission of nourishing the body and mind through probiotics and fermented foods [4]

Core Viewpoint - Lifeway Foods, Inc. has received a recommendation from Institutional Shareholder Services Inc. (ISS) advising shareholders to "DO NOT VOTE" in the ongoing dissident-led consent solicitation, indicating that the dissident group has not made a compelling case for change [1][2]. Company Overview - Lifeway Foods, Inc. is recognized as a leading supplier of kefir and fermented probiotic products in the U.S. and has been listed among Forbes' Best Small Companies [3]. - The company offers a variety of products including drinkable kefir, cheeses, and a ProBugs line for children, with distribution across the U.S., Mexico, Ireland, South Africa, the UAE, and France [3]. Financial Performance - Lifeway's financial performance has been directionally positive, with its share price rallying over the past year due to multiple positive earnings announcements [5]. - The total shareholder return has significantly outperformed peers in the Russell 3000 Food Producers Index [5]. Dissident Group Analysis - The critiques from the dissident group are viewed as lacking adequate context and do not clearly establish how their proposed changes would impact shareholder returns [5]. - The dissident nominees have a history of governance concerns during their previous tenures at the company [5]. Management's Position - The management team, led by CEO Julie Smolyansky, remains focused on maximizing shareholder value and encourages shareholders to follow ISS's guidance by taking no action on the consent solicitation [5].