Lifeway Foods, Inc. Q1 FY2025 earnings call

• Net sales were $46.1 million, up 3.3% YoY. Growth driven by higher volumes of Lifeway branded drinkable Kefir and Farmer's Cheese. - Strategically eliminated a retail relationship in H2 2024 to prioritize Lifeway branded offerings and enhance margins. - Adjusted distributor agreement: now bill less but have less freight costs, accretive to profits and margins. - Gross profit margin was 24%, impacted by inflationary milk costs and promotions/slotting fees. - Selling, general, and administrative expenses were $9.3 million. - Net income increased to $3.5 million vs $2.4 million in Q1 2024, driven in part by net gain from Simple Mills acquisition. - Capital funding decreased to $2.2 million. - Innovations include lactose-free organic whole milk Kefir flavor fusions, Probiotic Smoothies with Collagen, and new conventional whole milk Kefir flavors. Farmer's Cheese saw significant growth with expansion into 1,400 Albertsons stores and new store commitments. - Marketing activities: Julie to speak at Wall Street Journal Global Food Forum, Mother's Day Pancake and Kefir celebration with influencers, collaboration with Katie Couric. Digital marketing efforts include targeted advertising on retail partner sites. - Distribution updates: New commitments for expanded distribution through key channels like CVS, Target, Publix, etc. Farmer's Cheese expanded into 1,400 Albertsons stores and nearly 1,000 new stores.

Net sales for the first quarter of 2025 were $46.1 million, an increase of $1.5 million or 3.3% compared to Q1 2024. The growth was primarily driven by higher volumes of Lifeway branded drinkable Kefir and Farmer's Cheese. Lifeway branded drinkable Kefir and Farmer's Cheese are key product segments. In absolute terms, net sales increased by $1.5 million. In terms of revenue contribution, the growth was led by these two branded products which saw volume growth, though specific percentage contributions aren't explicitly broken down beyond the overall net sales figure.

• Reiterated expectation to achieve between $45 million to $50 million in adjusted EBITDA in fiscal year 2027. - In late April, achieved a Lifeway record high week of sales, surpassing $5 million in gross sales, a 35% increase YoY, driven by Lifeway Kefir and Farmer's Cheese.