Lifeway Foods, Inc. Q3 FY2024 earnings call

• Strong momentum continued with double-digit top-line growth, including the second largest ever quarterly net sales result driven by volume growth of Lifeway drinkable kefir.
• 20th consecutive quarter of quarterly net sales growth, marking five consecutive years of quarterly growth.
• Gross profit margin improved, with manufacturing efficiencies and fixed cost absorption driving operating leverage.
• Capital spending increased to $5.4 million over nine months to increase manufacturing capacity.
• Launched first ever 100% lactose-free labeled product, with new Organic Whole Milk Flavor Fusion items and new on-trend flavors like Hot Honey, Matcha Latte, and Passionfruit Lychee.
• Expanded distribution in South Africa and began shipping to Dubai and the UAE.
• Sponsored Charity Miles app for mental health initiatives, implemented in-store programs, and continued e-commerce and influencer partnerships.
• Farmer Cheese to gain mass market placement in 1,400 stores in Q1 2025.

For the third quarter ended September 30, 2024, Lifeway Foods had net sales of $46.1 million, an increase of $5.2 million or 12.7% compared to the third quarter of 2023. The double-digit growth was primarily volume driven from branded drinkable kefir. For the nine months ended September 30, 2024, net sales were $139.9 million, an 18.5% increase compared to the first nine months of 2023. Gross profit margin was 25.7% for the quarter ended September 30, 2024 and 26.2% for the nine months ended September 30, 2024, up 30 basis points compared to the same period in 2023. Year-to-date, drinkable kefir sales have increased more than 22%.

• On pace for a new annual sales record in 2024.
• Plan to continue investing behind key products to capture more of the growing market.
• Look forward to updating on continued momentum in the year-end call in March.

• Macro headwinds including higher prices, high interest rates, and uncertain geopolitical landscape.
• Consumers budgeting carefully but prioritizing health and wellness.