Lifeway Foods' Q3 Earnings Lag Estimates, Sales Rise 13% Y/Y

Core Insights - Lifeway Foods, Inc. (LWAY) reported third-quarter 2024 results with net sales increasing year over year but falling short of the Zacks Consensus Estimate, while the bottom line declined year over year and also missed the consensus mark [1][3] Financial Performance - Lifeway Foods achieved earnings of 19 cents per share, missing the Zacks Consensus Estimate of 27 cents, and decreased from 23 cents reported in the same quarter last year [3] - The company reported consolidated net sales of $46.1 million, missing the Zacks Consensus Estimate of$52 million, but representing a 12.7% increase from $40.9 million in the year-ago period, driven by increased volumes of branded drinkable kefir [4] - Gross profit increased 6.5$11.9 million, although gross margin contracted by 150 basis points to 25.7% compared to 27.2% in the third quarter of fiscal 2023, primarily due to unfavorable milk pricing [5] Expense Analysis - Selling expenses rose 38% year over year to $4 million, with selling expenses as a percentage of net sales increasing by 150 basis points to 8.6$3.6 million, with these expenses as a percentage of net sales rising by 20 basis points to 7.7% [6] Financial Health - Lifeway Foods ended the quarter with cash and cash equivalents of $20.6 million and total shareholders' equity of$71.5 million, with net cash provided by operating activities amounting to $15.5 million for the nine months ended September 30, 2024 [7] Future Outlook - Lifeway Foods plans to expand its ProBugs product distribution to approximately 260 stores with a regional retailer by December 2024 and anticipates placing its Farmer Cheese in about 1,400 stores with a major national retailer by the end of the first quarter of 2025 [8] Market Performance - The stock has gained 19% in the past three months, outperforming the industry, which saw a decline of 17.1% [9]