Lifeway Foods(US:LWAY)2025-11-12 14:01Financial Performance - Net sales for the three-month period ended September 30, 2025, were $57,143, an increase of $11,048 or 24.0% compared to the same period in 2024[87] - Net income for the three months ended September 30, 2025, was $3,529, compared to $2,976 in 2024, reflecting a net income margin of 6.3%[86] - For the nine-month period ended September 30, 2025, net sales were $157,135, an increase of $17,249 or 12.3% compared to the prior year[94] Profitability Metrics - Gross profit as a percentage of net sales increased to 28.7% for the three months ended September 30, 2025, up from 25.7% in 2024, driven by higher volumes and manufacturing efficiencies[88] - Gross profit as a percentage of net sales increased to 27.3% for the nine-month period ended September 30, 2025, compared to 26.2% in 2024, driven by higher volumes of branded products and favorable conventional milk pricing[95] Expenses - Selling expenses rose by $1,068 to $5,047 during the three-month period ended September 30, 2025, representing 8.8% of net sales, up from 8.6% in 2024[89] - General and administrative expenses increased by $2,622 to $6,186 for the three-month period ended September 30, 2025, largely due to professional fees related to an unsolicited purchase proposal[90] - Selling expenses rose by $3,207 to $14,463, representing 9.2% of net sales in 2025, up from 8.0% in 2024, primarily due to increased marketing investments[96] - General and administrative expenses increased by $3,689 to $15,566, with approximately $4,300 incurred for professional fees related to an unsolicited purchase proposal[97] Taxation - The effective tax rate for the three months ended September 30, 2025, was 30.3%, down from 31.2% in 2024, influenced by non-deductible compensation changes[91] - The effective tax rate decreased to 29.1% in 2025 from 30.4% in 2024, influenced by changes in non-deductible compensation expenses[98] Cash Flow and Financing - Net cash provided by operating activities was $10,681 in 2025, down from $15,541 in 2024, attributed to lower cash earnings and changes in working capital[105] - Cash used in investing activities decreased to $4,354 in 2025 from $5,431 in 2024, reflecting cash proceeds from the sale of an investment[106] - Net cash used in financing activities was $65 in 2025, a significant decrease from $2,750 in 2024, primarily due to credit agreement amendment expenses[109] Investments and Future Plans - The company plans to invest approximately $45,000 to expand manufacturing capacity and modernize its facility, with an expected completion in Q4 2026[107] - As of September 30, 2025, the company had $0 outstanding under the Revolving Credit Facility, with $25,000 available for future borrowings[110] - The company is in compliance with all financial debt covenants, maintaining a fixed charge coverage ratio of no less than 1.25 to 1.00[111] Strategic Outlook - The company expects the accelerating consumer focus on health and wellness to drive increased demand for its products amid macroeconomic uncertainties[85] Livestock Acquisition - The company purchased 402 mature dairy cows for $1,335 during the third quarter of 2025 to increase the supply of organic milk[81] - The herd agreement with a third-party dairy facility is structured as a sale of non-financial assets, with $184 recorded in prepaid and other current assets as of September 30, 2025[83]