Lifeway Foods cited volume growth of its flagship drinkable kefir as the key driver of record sales in Q2 2024, according to the company’s latest quarterly earnings report released this morning.
The fermented beverage brand saw net sales climb 25.3% year-over-year to $49.2 million. Net income was $3.8 million or $0.26 per basic and $0.25 per diluted common share compared to net income of $3.2 million in the prior year period.
Gross profit margin was 27% on a sequential basis, an improvement of 120 basis points. Additionally, for the first six months of 2024, Lifeway’s gross profit margin improved 110 basis points compared to the first six months of 2023. During today’s prerecorded conference call, president and CEO Julie Smolyansky said the company is pleased with the progress and will continue to proactively manage the supplies and transportation of its products to meet demand.
This quarter – which marks the brand’s fifth straight quarter of record sales growth – seemingly prove that the “Lifeway 3.0” phase, focused on growth and scaling, is paying off for the decades-old brand.
“We continued to enhance our profitability profile with solid gross margins and strong net income growth, a testament to the seamless operational execution of our whole Lifeway team,” said Smolyansky in a prepared statement. “We are thrilled with our results in the first half of 2024 and will continue to strategically invest behind the Lifeway brand to drive velocities, win new customers and position ourselves to deliver more outstanding performances.”
Capital spending increased approximately $2 million to $3.9 million during the six-month period ended June 30, reflecting the brand’s planned increase to support business growth with cost reductions and facility improvements. According to Smolyansky, Lifeway’s spend is “very efficient,” and the company consistently generates returns when installing additional tanks as it leverages existing infrastructure.
Looking ahead, the brand is betting on updated formulas and packaging claims to appeal to a broader consumer base.
In March, the U.S. Food and Drug Administration (FDA) announced its first ever qualified health claim regarding the consumption of cultured dairy and the reduced risk of type 2 diabetes. Lifeway will begin incorporating the claim on its labels and within its marketing efforts in the coming weeks and months.
The company will also reduce the sugar and lactose content in nearly all of its Lifeway products in the near future, as market data shows a growing amount of consumers are seeking to lower sugar consumption.
“High-quality protein, low sugar and lactose-free are trends that are not going away any time soon, and Lifeway is at the forefront of bringing these attributes to the marketplace,” said Smolyansky during the prerecorded call, noting that Lifeway will continue to dedicate the bulk of its time and investments to its drinkable kefir.
The optimistic Q2 earnings report comes amidst the fermenting family feud between Julie Smolyanski and Pure Culture Organics’ founders, Ludmila and Edward Smolyansky, who are aiming to force Julie’s termination as Lifeway CEO.
Separate from the earnings report, Ludmila and Edward today announced the filing of a consent statement with the U.S. Securities and Exchange Commission (SEC) marking the launch of their “Life Back to Lifeway” campaign. The campaign seeks to replace Lifeway’s current board of directors.
“Under my sister Julie’s authority, Lifeway has been on autopilot for far too long, missing critical market opportunities due to a lack of strategic vision,” said Edward Smolyansky, former COO of Lifeway Foods, in the announcement. “It’s time for a fresh approach to leadership that prioritizes growth and innovation over personal agendas.”