Lifeway Foods, Inc. reported significant financial performance improvements for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Net sales for the third quarter reached $46.1 million, marking a 12.7% increase from $40.9 million in the prior year. For the nine-month period, net sales totaled $139.9 million, an 18.5% increase from $118.0 million, driven primarily by higher volumes of branded drinkable kefir.

Gross profit for the third quarter was $11.9 million, representing 25.7% of net sales, slightly down from 27.2% in the previous year. For the nine months, gross profit increased to $36.7 million, or 26.2% of net sales, up from 25.9% in 2023, attributed to manufacturing efficiencies from increased branded product volumes.

Operating income for the third quarter decreased to $4.2 million (9.1% of net sales) from $5.0 million (12.3% of net sales) in 2023. However, for the nine-month period, operating income rose to $13.1 million (9.4%), compared to $11.2 million (9.5%) in the prior year. Net income for the third quarter was $3.0 million, down from $3.4 million, while for the nine months, net income increased to $9.2 million from $7.4 million, reflecting improved profitability despite rising expenses.

Selling expenses for the third quarter increased to $4.0 million, representing 8.6% of net sales, up from 7.1% in 2023. General and administrative expenses also rose to $3.6 million, accounting for 7.7% of net sales, compared to 7.5% in the previous year. The effective tax rate for the nine months decreased to 30.4% from 32.5%.

Lifeway's current assets increased to $44.8 million as of September 30, 2024, from $38.2 million at the end of 2023, with cash and cash equivalents rising to $20.6 million from $13.2 million. The company paid off its outstanding term loan balance of $2.3 million in Q2 2024 and has a $5 million revolving credit facility available for future borrowings.

Strategically, Lifeway introduced new lactose-free products in October 2024 and expanded its distribution into South Africa and Dubai. The company also rejected an unsolicited acquisition proposal from Danone North America, asserting it undervalued Lifeway. In response, Lifeway established a Shareholder Rights Agreement to protect stockholder interests and deter potential takeover attempts. The company remains focused on leveraging health and wellness trends to enhance its product portfolio and market presence.