Q1 2025 Lifeway Foods Inc Earnings Call

John Waldron: Is Julie Smolyansky, President and Chief Executive Officer. By now, everyone should have access to the press release that went out this morning. If you have not received the release, it is available on the investor relations portion of Lifeway's website at www.lifewayfoods.com. A recording of this call will be available on the company's website. Before we begin, we'd like to remind everyone that the prepared remarks contain forward-looking statements. The words "believe," "expect," "anticipate," "plan," "will," and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance, and therefore, undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements. Lifeway assumes no obligation to update any forward-looking projections that may be made during today's call, except as required by law.

Julie Smolyansky: Julie Smolyansky, President and Chief Executive Officer. By now, everyone should have access to the press release that went out this morning. If you have not received the release, it is available on the investor relations portion of Lifeway's website at www.lifewayfoods.com.

President and Chief Executive Officer.

By now everyone should have access to the press release that went out this morning.

You have not received the release it is available on the Investor Relations portion of Lifeway is website at Www Dot Lifeway foods Dot com.

Operator: A recording of this call will be available on the company's website. Before we begin, we'd like to remind everyone that the prepared remarks contain forward-looking statements. The words believe, expect, anticipate, plan, will, and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance and therefore undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statement. Lifeway assumes no obligation to update any forward-looking projections that may be made during today's call except as required by law. All of the forward-looking statements contained herein speak only as of the date of this call.

A recording of this call will be available on the company's website.

Before we begin we'd like to remind everyone that the prepared remarks contain forward looking statements.

Words believe expect anticipate.

Planned well and other similar expressions generally identify forward looking statements.

These statements do not guarantee future performance and therefore undue reliance should not be placed on them.

Actual results could differ materially from those projected in any forward looking statements.

Lifeway assumes no obligation to update any forward looking projections that may be made during today's call.

As required by law.

John Waldron: All of the forward-looking statements contained herein speak only as of the date of this call. With that, I would like to turn the call over to Lifeway's President and Chief Executive Officer, Julie Smolyansky.

All of the forward looking statements contained herein.

<unk> only as of the date of this call.

Julie Smolyansky: And with that, I would like to turn the call over to Lifeway's President and Chief Executive Officer, Julie Smolyansky. Thank you John and good morning to everyone joining us. As always, we greatly appreciate your interest in Lifeway Foods. After a monumental year in 2024, I am pleased to report that our strong business momentum has flowed into this year with yet another quarter of strong Smolyan-led growth to kick off 2025. In the first quarter, we continued to execute on our growth strategy, invested behind our key Lifeway brands, and furthered our position as the Kiefer Category Leader.

With that I would like to turn the call over to <unk>, President and Chief Executive Officer, Julie Smolinski.

Julie Smolyansky: Thank you, John, good morning to everyone joining us. As always, we greatly appreciate your interest in Lifeway Foods. After a monumental year in 2024, I am pleased to report that our strong business momentum has flowed into this year with yet another quarter of strong volume-led growth to kick off 2025. In Q1, we continued to execute on our growth strategy, invested behind our key Lifeway brands, and furthered our position as the kefir category leader. Before diving into the results, I want to applaud the efforts and execution of our entire Lifeway team. Our consistent growth and outstanding level of service that our customers and partners rely on would not be possible without you. With that, I will now review our results for Q1 2025.

Julie Smolinski: Thank you John and good morning to everyone joining us as always we greatly appreciate your interest in Lifeway foods.

Julie Smolinski: After a monumental year in 2024 I am pleased to report that our strong business momentum has flowed into this year with yet another quarter of strong volume led growth to kick off 2025 in the first quarter, we continued to execute on our growth strategy invested behind our key lifeway.

Julie Smolinski: <unk> and furthered our position as B, Keith or category leader.

Julie Smolyansky: Before diving into the results, I want to applaud the efforts and execution of our entire Lifeway team. Our consistent growth and outstanding level of service that our customers and partners rely on would not be possible without you.

Julie Smolinski: Before diving into the results I want to applaud the efforts and execution of our entire lifeway team.

Julie Smolinski: Our consistent growth an outstanding level of service that our customers and partners rely on would not be possible without you.

Julie Smolyansky: With that, I will now review our results for the first quarter of 2025. Net sales were $46.1 million for the period ended March 31, 2025, an increase of $1.5 million or 3.3% compared to the first quarter in 2024. The net sales growth was primarily driven by higher volumes of our Lifeway-branded drinkable kefir and farmer's cheese. After a year of significant volume growth in 2024, we were excited to sustain this trend in the first quarter, despite lapping an incredibly strong first quarter in 2024. a period where we achieved nearly 18% year-over-year growth. It is important to call out a few nuances on the top line that make this performance particularly impressive.

Julie Smolinski: With that I will now review our results for the first quarter of 2025.

Julie Smolyansky: Net sales were $46.1 million for the period ended 31 March 2025, an increase of $1.5 million, or 3.3%, compared to Q1 2024. The net sales growth was primarily driven by higher volumes of our Lifeway branded drinkable kefir and Farmer Cheese. After a year of significant volume growth in 2024, we were excited to sustain this trend in Q1, despite lapping an incredibly strong Q1 2024, a period where we achieved nearly 18% year-over-year growth. It is important to call out a few nuances on the top line that make this performance particularly impressive. First, in H2 of last year, we strategically eliminated a retail relationship that contributed meaningfully to net sales on a quarterly basis in a broader effort to prioritize our Lifeway branded offerings over private label, and to enhance our margins.

Julie Smolinski: Net sales were $46 $1 million for the period ended March 31, 2025, an increase of $1 5 million or three 3% compared to the first quarter in 2024.

Julie Smolinski: The net sales growth was primarily driven by higher volumes of our lifeway branded drinkable keefer and farmers cheese.

Julie Smolinski: After a year of significant volume growth in 2024, we were excited to sustain this trend in the first quarter. Despite lapping an incredibly strong first quarter in 2024.

Julie Smolinski: A period, where we achieved nearly 18% year over year growth.

Julie Smolinski: It is important to call out a few nuances on the topline that make this performance, particularly impressive.

Julie Smolyansky: First, in the second half of last year, we strategically eliminated a retail relationship that contributed meaningfully to net sales on a quarterly basis in a broader effort to prioritize our Lifeway-branded offerings over private label, and to enhance our margins. Second, in late 2024, we adjusted the relationship with one of our partner distributors. We previously delivered product directly to them, and they are now directly picking product up from our facilities. Under the new agreement, we now bill them less, but we have less freight costs. Overall, this is accretive to profits and margins. On a like-for-like basis, excluding those nuances, we achieved greater than 10% volume-like growth in the quarter, a testament to the strength of our Lifeway-branded products and the loyalty of our growing customer base.

Julie Smolinski: In the second half of last year, we strategically eliminated a retail relationship that can treat contributed meaningfully to net sales on a quarterly basis and a broader effort to prioritize our lifeway branded offerings over private label.

Julie Smolinski: And to enhance our margins.

Julie Smolyansky: Second, in late 2024, we adjusted the relationship with one of our partner distributors. We previously delivered product directly to them, and they are now directly picking products up from our facilities. Under the new agreement, we now bill them less, but we have less freight costs. Overall, this is accretive to profits and margins. On a like-for-like basis, excluding those nuances, we achieved greater than 10% volume-led growth in the quarter, a testament to the strength of our Lifeway branded products and the loyalty of our growing customer base. This also marked our 22nd consecutive quarter of net sales growth, an outstanding track record that dates back more than 5 years now. Over that time, consumers have collectively embraced a health and wellness-oriented movement that we expect will continue to grow.

Julie Smolinski: Second in late 2024, we adjusted the relationship with one of our partner distributors. We previously delivered product directly to them and they are now directly picking product up from our facilities under.

Julie Smolinski: Under the new agreement, we now build them less but we have less freight costs.

Julie Smolinski: Overall, this is accretive to profits and margins.

Julie Smolinski: On a like for like basis, excluding those nuances, we achieved greater than 10% volume led growth in the quarter, a testament to the strength of our lightweight branded products and the loyalty of our growing customer base.

Julie Smolyansky: This also marked our 22nd consecutive quarter of net sales growth, an outstanding track record that dates back more than five years now. Over that time, consumers have collectively embraced a health and wellness-oriented movement that we expect will continue to grow. Within that movement, consumer interest and demand for bioavailable protein-rich foods with probiotics, like our Lifeway Kefir and Lifeway Farmer's Cheese, has soared as well. The focus on protein, gut health, and select nutrients is especially true for consumers currently using GLP-1 medications and those who are looking for foods that naturally stimulate GLP-1 hormone production. As a result, our target addressable market has rapidly grown, and we continue to successfully capitalize on that trend.

Julie Smolinski: This also marked our 20 <unk> consecutive quarter of net sales growth and outstanding track record that dates back more than five years now over that time consumers have collectively embraced a health and wellness oriented movement that we expect will continue to grow.

Julie Smolyansky: Within that movement, consumer interest and demand for bioavailable protein-rich foods with probiotics, like our Lifeway Kefir and Lifeway Farmer Cheese, has soared as well. The focus on protein, gut health, and select nutrients is especially true for consumers currently using GLP-1 medications and those who are looking for foods that naturally stimulate GLP-1 hormone production. As a result, our target addressable market has rapidly grown, and we continue to successfully capitalize on that trend. Our consistent growth and the enduring strength of our brand speaks to the effectiveness of our strategic sales and marketing investments that resonate with consumers and driving exposure and demand for our core Lifeway products. Given our sustained high level of growth, we believe the factors I mentioned before will drive continued volume growth in our core Lifeway products.

Julie Smolinski: Within that movement consumer interest and demand for bio available protein rich foods with probiotics like our lightweight cheaper and lifeway farmer cheese has soared as well.

Julie Smolinski: The focus on protein gut health and select nutrients is especially true for consumers currently using G. L. P. One medications and those who are looking for foods that naturally stimulate G. L. P. One hormone production.

Julie Smolinski: As a result, our target addressable market has rapidly grown and we continue to successfully capitalize on that trend.

Julie Smolyansky: Our consistent growth and the enduring strength of our brand speaks to the effectiveness of our strategic sales and marketing investments that resonate with consumers and driving exposure and demand for our core Lifeway products. Given our sustained high level of growth, we believe the factors I mentioned before will drive continued volume growth in our core Lifeway products. Moving on, we reported a growth profit margin of 24% for the period ended March 31, 2025. Our margins continue to benefit from heightened volumes of our Lifeway-branded products while we incurred headwinds from continued inflationary pricing in milk, our largest raw material, as well as promotions and slotting fees related to distribution expansion and new placements for our Popular Farmer's Cheese and other branded Lifeway kefir offerings, including our new lactose-free kefir flavor fusions.

Julie Smolinski: Our consistent growth in the enduring strength of our brand speaks to the effectiveness of our strategic sales and marketing investments that resonate with consumers and driving exposure and demand for our core lifeway products.

Given our sustained high level of growth. We believe the factors I mentioned before we will drive continued volume growth in our core lifeway products.

Julie Smolyansky: Moving on, we reported a gross profit margin of 24% for the period ended 31 March 2025. Our margins continue to benefit from heightened volumes of our Lifeway branded products while we incurred headwinds from continued inflationary pricing in milk, our largest raw material, as well as promotions and slotting fees related to distribution expansion and new placements for our popular Farmer Cheese and other branded Lifeway Kefir offerings, including our new lactose-free kefir Flavor Fusions. We remain focused on margin expansion and as we continue to deliver increased shipment volumes of our Lifeway branded products, we should realize further operating efficiencies across the business. Now to our expenses. Selling and general administrative expenses were $9.3 million for the period ended 31 March 2025.

Julie Smolinski: Moving on we reported a gross profit margin of 24% for the period ended March 31 2025.

Julie Smolinski: Our margins continue to benefit from heightened volumes of our lifeway branded products, while we incurred headwinds from continued inflationary pricing and milk, our largest raw material as well as promotions and flatting fees related to distribution expansion and new placements or our popular farmers cheese and.

Julie Smolinski: Other branded lifeway keefer offerings, including our new lactose free Keefer flavor infusions.

Julie Smolyansky: We remain focused on margin expansion, and as we continue to deliver increased shipment volumes of our Lifeway-branded products, we should realize further operating efficiencies across the business.

Julie Smolinski: We remain focused on margin expansion and as we continue to deliver increased shipment volumes of our lifeway branded products, we should realize further operating efficiencies across the business.

Julie Smolyansky: Now to our expenses. Selling in general administrative expenses were $9.3 million for the period ended March 31, 2025. Our top-line performance is a reflection of our effective investments in sales and marketing initiatives, which continue to deliver exceptional returns and drive growth in our key Lifeway products. As we announced last quarter, we are investing in 2025 to further boost our growth and this includes accelerated investments behind our key product lines to grow our market leading position and enhance our brand awareness. Our marketing expenses in the quarter were in line with our plans for the year, and we will continue to invest behind our brand to match the rising consumer demand for healthy foods.

Julie Smolinski: Now to our expenses selling and general administrative expenses were $9 $3 million for the period ended March 31, 2025, our topline performance is a reflection of our effective investments in sales and marketing initiatives, which continue to deliver exceptional returns and drive growth in our key lifeway products.

Julie Smolyansky: Our top-line performance is a reflection of our effective investments in sales and marketing initiatives, which continue to deliver exceptional returns and drive growth in our key Lifeway products. As we announced last quarter, we are investing in 2025 to further boost our growth, and this includes accelerated investments behind our key product lines to grow our market-leading position and enhance our brand awareness. Our marketing expenses in the quarter were in line with our plans for the year. We will continue to invest behind our brand to match the rising consumer demand for healthy foods. Our net income during the period ended March 31 2025 was $3.5 million, reflecting EPS of $0.23 per basic and diluted common share, compared to net income of $2.4 million, or $0.17 per basic and $0.16 per diluted common share during Q1 2024.

Julie Smolinski: As we announced last quarter, we are investing in 2025 to further boost our growth and this includes accelerated investments behind our key product lines to grow our market, leading position and enhance our brand awareness.

Julie Smolinski: Our marketing expenses in the quarter were in line with our plan for the year and we will continue to invest behind our brand to match the rising consumer demand for healthy foods.

Julie Smolyansky: Our net income during the period ended March 31, 2025, with $3.5 million, reflecting EPS of $0.23 per basic and diluted common share compared to net income of $2.4 million, or $0.17 per basic and $0.16 per diluted common share during the first quarter of 2024. A driver of the growth here was the net gain resulting from Lifeway's early investment into Simple Mills, which was officially acquired by Flower Foods at the end of February. We were early believers in the Simple Mills growth story, and we were proven correct. I'm happy for their team, but even more so I'm thrilled for our shareholders who have benefited from our early investment into the brand.

Julie Smolinski: Net income during the period ended March 31, 2025, with $3 $5 million, reflecting EPS of <unk> 23 cents per <unk>.

Julie Smolinski: Basic and diluted common share compared to net income of $2.4 million or <unk> 17 per basic and <unk> 16 per diluted common share during the first quarter of 2024.

Julie Smolyansky: A driver of the growth here was the net gain resulting from Lifeway's early investment into Simple Mills, which was officially acquired by Flowers Foods at the end of February. We were early believers in the Simple Mills growth story, and we were proven correct. I'm happy for their team, but even more so, I'm thrilled for our shareholders who have benefited from our early investment into the brand. Capital spending decreased approximately $0.3 million to $2.2 million during the period ended 31 March 2025, compared to Q1 2024. Our capital spend is very efficient, and we generate a great return when installing additional tanks as we leverage existing infrastructure to scale the business. The decrease of spend compared to last year is in line with our expectations.

Speaker Change: Driver of the growth here was the net gain resulting from lightweight early investments into simple mills, which was officially acquired by flower foods at the end of February we were early believers in the simple meals growth story, and we were proven correct I'm happy for their team, but even more so I'm thrilled for our shareholders who have benefited from our.

Julie Smolinski: Early investments into the branch.

Julie Smolinski: Capital spending decreased approximately <unk> $3 million to $2.2 million. During the period ended March 31, 2025 compared to the first quarter of 2024.

Julie Smolyansky: Capital spending decreased approximately $0.3 million to $2.2 million during the period ended March 31, 2025, compared to the first quarter of 2024. Our capital spend is very efficient, and we generate a great return when installing additional tanks as we leverage existing infrastructure to scale the business. The decreases spend compared to last year is in line with our expectations. We have been investing for some time now in capacity to meet increasing demand and facilities upgrades to improve our efficiency and have now developed a state-of-the-art facility in Waukesha, Wisconsin. We are continuing to invest this year and expect that at completion, we will have almost doubled our production capacity and more than tripled our bottling speed.

Julie Smolinski: Our capital spend is very efficient and we generate a great return when installing additional tanks as we leverage existing infrastructure to scale the business the decreases spend compared to last year is in line with our expectations. We have been investing for some time now and capacity to meet increasing demand and.

Julie Smolyansky: We have been investing for some time now in capacity to meet increasing demand and facilities upgrades to improve our efficiency and have now developed a state-of-the-art facility in Waukesha, Wisconsin. We are continuing to invest this year and expect that at completion, we will have almost doubled our production capacity and more than tripled our bottling speed. As we stand today, we have the operations in place and abundant capacity to support further sales growth. This strong quarter reinforced our conviction in the strategy and path to continued profitable growth and shareholder value creation. With our business stronger than ever, I am pleased to reiterate our expectation to achieve between $45 to $50 million in adjusted EBITDA in fiscal year 2027. Our expanding target market and customer base continues to prove resilient, as evidenced by our growth so far this year.

Julie Smolinski: <unk> upgrades to improve our efficiency and have now developed a state of the art facility in Waukesha, Wisconsin, we are continuing to invest this year and expect.

Julie Smolinski: At completion, we will have almost doubled our production capacity and more than tripled our bottling speed.

Julie Smolyansky: As we stand today, we have the operations in place and abundant capacity to support further sales growth.

Julie Smolinski: As we stand today, we have the operations in place and abundant capacity to support further sales growth.

Julie Smolyansky: This strong quarter reinforced our conviction in the strategy and path to continued profitable growth and shareholder value creation. With our business stronger than ever, I am pleased to reiterate our expectation to achieve between $45 to $50 million in adjusted EBITDA in fiscal year 2027. Our expanding target market and customer base continues to prove resilient, as evidenced by our growth so far this year. Notably, at the end of April, we delivered a Lifeway record high week of sales, surpassing $5 million in growth sales for the first time ever, representing a 35% increase from the same week in the prior year, and propelled by demand for our Lifeway Keeper and Lifeway Farmer's Chief.

Julie Smolinski: This strong quarter reinforced our conviction in the strategy and path to continued profitable growth and shareholder value creation with our business stronger than ever I am pleased to reiterate our expectation to achieve between $45 million to $50 million and adjusted EBITDA in fiscal year 2027.

Julie Smolinski: Yeah.

Julie Smolinski: Our expanding target market and customer base continues to prove resilient as evidenced by our growth. So far this year, notably at the end of April we delivered a lightweight record high week of sales, surpassing $5 million in gross sales for the first time ever representing a 35% increase.

Julie Smolyansky: Notably, at the end of April, we delivered a Lifeway record high week of sales, surpassing $5 million in growth sales for the first time ever, representing a 35% increase from the same week in the prior year and propelled by demand for our Lifeway Kefir and Lifeway Farmer Cheese. This is a milestone we are immensely proud of, and it illustrates the continued consumer commitment to our branded products. That speaks to the staying power of the consumer health and wellness trends that I mentioned before. Despite being cost-conscious, the consumer is proving they will not sacrifice their well-being and are focused on nutritious, better-for-you foods that are affordable. Our premium branded Lifeway products are extremely healthy and come at excellent value, which is why our loyal customers keep coming back to the shelves.

Julie Smolinski: From the same week in the prior year and propelled by demand for our lightweight cheaper and lifeway farmers choose this.

Julie Smolyansky: This is a milestone we are immensely proud of, and it illustrates the continued consumer commitment to our branded products. Lifeway continues to perform strongly, and that speaks to the staying power of the consumer, health, and wellness trends that I mentioned before. Despite being cost-conscious, the consumer is proving they will not sacrifice their well-being and are focused on nutritious, better-for-you foods that are affordable. Our premium-branded Lifeway products are extremely healthy and come at excellent value, which is why our loyal customers keep coming back to the shelf. Our gut-healthy premium Lifeway products are delicious and are loaded with high-quality, bioavailable nutrients including protein, calcium, vitamin D, and live and active probiotic cultures.

Julie Smolinski: This is a milestone we are immensely proud of and it illustrates the continued consumer commitment to our branded products.

Julie Smolinski: Lifeway continues to perform strongly and that speaks to the staying power of the consumer health and wellness trends that I mentioned before despite being cost conscious consumers proving they will not sacrifice their wellbeing and are focused on nutritious better for you foods that are affordable or premium.

Julie Smolinski: Unbranded lifeway products are extremely healthy and come at excellent value, which is why our loyal customers keep coming back to the shelf.

Julie Smolyansky: Our gut-healthy premium Lifeway products are delicious and are loaded with high-quality, bioavailable nutrients, including protein, calcium, vitamin D, and live and active probiotic cultures. The probiotics in kefir help support a healthy microbiome. Between 70% and 80% of immune cells come from the gut. Probiotic products such as kefir are the focus of intense research related to the microbiome's role in stress, depression, and anxiety. We now know that almost 90% of the body's serotonin comes from gut cells and the gut-brain axis, which links the emotional and cognitive centers of the brain with our intestinal functions. In the past couple quarters, we have also called out numerous recent studies correlating potential long-term health benefits with the consumption of probiotic fermented dairy products like our own. We are always keeping an eye out for new research on the microbiome and its positive impact on human beings.

Julie Smolinski: Our God healthy premium lifeway products are delicious and our loaded with high quality bio available nutrients, including protein calcium and vitamin D and live inactive probiotic cultures probiotics.

Julie Smolyansky: The probiotics in kefir help support a healthy microbiome, and between 70 to 80 percent of immune cells come from the gut. Probiotic products such as kefir are the focus of intense research related to the microbiome's role in stress, depression, and anxiety. We now know that almost 90 percent of the body's serotonin comes from gut cells and the gut-brain access which links the emotional and cognitive centers of the brain with our intestinal functions. In the past couple quarters we have also called out numerous recent studies correlating potential long-term health benefits with the consumption of probiotic fermented dairy products like our own, and we are always keeping an eye out for new research on the microbiome and its positive impact on human beings.

Julie Smolinski: Probiotics and Keefer helps support a healthy microbiome and between 70 to 80 per cent of immune cells come from the gut.

Julie Smolinski: Probiotic products such as keep her are the focus of intense research related to the microbiome role and stress depression and anxiety, we now know that almost 90% of the body serotonin comes from got cells and the gut brain access, which links the emotional and cognitive centers of the brain with our intestinal function.

Julie Smolinski: In the past couple of quarters. We've also called out Numerate. Numerous recent studies correlating potential long term health benefits with the consumption of probiotic fermented dairy products like our own and we are always keeping an eye out for new research on the microbiome and its positive impact on human beings.

Julie Smolyansky: We are obsessed with supporting our customers' pursuit of healthy lives and our Lifeway offerings packed with probiotics and bioavailable nutrients that nourish the body and the mind. If you want to be healthy and happy, your gut should always be a top priority. We expect modern health and wellness trends to be a tailwind to our entire premium product portfolio for years to come. While health and wellness trends among consumers are a natural benefit to our industry, as the dominant leader in the kefir space, we are consistently evaluating consumer tastes and trends within our target market to stay ahead of the curve and diversify offerings for our growing consumer base. These insights have led to consistent innovations and new hit on-trend products within our portfolio that keep our customers excited and on their toes.

Julie Smolyansky: We are obsessed with supporting our customers' pursuits of healthy lives and our Lifeway offerings packed with probiotics and bioavailable nutrients that nourish the body and the mind. If you want to be healthy and happy, your gut should always be a top priority. We expect modern health and wellness trends to be a tailwind to our entire premium product portfolio for years to come. While health and wellness trends among consumers are a natural benefit to our industry as the dominant leader in the keeper space, we are consistently evaluating consumer tastes and trends within our target market to stay ahead of the curve and diversify offerings for our growing consumer base.

Julie Smolinski: We are obsessed with supporting our customers pursuit of healthy lives and our lightweight offerings packed with probiotics and bio available nutrients that nurse the body and the mind, if you want to be healthy and happy you're got should always be a top priority, we expect modern health and wellness trends to be a tailwind to our entire premium product portfolio.

So for years to come well health and wellness trends among consumers are natural benefit to our industry as the dominant leader in the keepers space, we are consistently evaluating consumer tastes and trends within our target market to stay ahead of the curve and diversified offerings of our growing consumer.

Julie Smolinski: For our growing consumer base.

These insights have led to consistent innovations and new hit on trend products within our portfolio to keep our customers excited and on their toes. We are a brand on the move and one that meets the moment and are always looking to extend the strength of our lifeway brand across the categories and channels.

Julie Smolyansky: These insights have led to consistent innovations and new, hit, on-trend products within our portfolio that keep our customers excited and on their toes. We are a brand on the move and one that meets the moment, and are always looking to extend the strength of our Lifeway brand across the categories and channels. Focusing specifically on the core driver of our business, our flagship Lifeway drinkable kefir. We built the U.S. kefir market on the back of this product and continue to anchor the market today by dedicating the majority of our time and investment behind our key products.

Julie Smolyansky: We are a brand on the move and one that meets the moment and are always looking to extend the strength of our Lifeway brand across the categories and channels. Focusing specifically on the core driver of our business, our flagship Lifeway Kefir, we built the US kefir market on the back of this product and continue to anchor the market today by dedicating the majority of our time and investment behind our key products. Lifeway Kefir has propelled the massive growth of our business in recent years, and our consumer insights and innovation have enabled us to keep this product fresh and new for our loyal customers as we maintain our dominant market position and impressive growth.

Julie Smolinski: And specifically on the core driver of our business our flagship Lifeway drinkable Keefer, we built the like the U S key for market on the back of this product and continue to anchor the market today by dedicating the majority of our time and investment behind our key products.

Julie Smolyansky: Lifeway Drinkable Keefer has propelled the massive growth of our business in recent years, and our consumer insights and innovation have enabled us to keep this product fresh and new for our loyal customers as we maintain our dominant market position and impressive growth. Some of the recent innovations within the category include our innovative, lactose-free, organic whole milk kefir flavor fusions, our probiotic smoothies with collagen made with kefir cultures and offered in four delicious flavors, and most recently, our new conventional whole milk kefir flavors. To date, we are encouraged by consumer acceptance of these new healthy offerings.

Julie Smolinski: We drinkable kieffer has propelled the massive growth of our business in recent years and our consumer insights and innovation have enabled us to keep this product fresh and new for our loyal customers as we maintain our dominant market position and impressive growth.

Julie Smolyansky: Some of the recent innovations within the category include our innovative lactose-free organic whole milk kefir Flavor Fusions, our Probiotic Smoothie + Collagen made with kefir cultures and offered in 4 delicious flavors, and most recently, our new conventional whole milk kefir flavors. To date, we are encouraged by consumer acceptance of these new healthy offerings. Each product and branded set of flavors were inspired by research and customer insights and are extremely healthy, packed with probiotics and bioavailable nutrients. We believe the kefir market will continue growing, and as the leader of the space, we will continue to invest behind and position our offerings in line with evolving consumer interest to further capitalize on the tremendous market opportunities in front of us. As we have touched on a number of times over the past year and a half, our secondary product focus has been on our Lifeway Farmer Cheese.

Julie Smolinski: Some of the reasons innovations within the category include our innovative lactose free organic whole milk keep her flavor fusions are probiotics movies with collagen made with Kiefer cultures and offered in four delicious flavors and most recently, our new conventional home they'll keep her flavors too.

Julie Smolinski: To date, we are encouraged by consumer acceptance of these new healthy offerings.

Julie Smolyansky: Each product and branded set of flavors were inspired by research and customer insights and are extremely healthy, packed with probiotics and bioavailable nutrients. We believe the kefir market will continue growing, and as the leader of the space, we will continue to invest behind and position our offerings in line with evolving consumer interests to further capitalize on the tremendous market opportunities in front of us. As we have touched on a number of times over the past year and a half, our secondary product focus has been on our Lifeway Farmer's Cheese. Our consumer insights allowed us to identify the growing customer demand for soft cheese products at the right time, and our strategic investments behind this category have started to pay off exceptionally.

Julie Smolinski: Each product and branded set of flavors were inspired by research and customer insights and are extremely healthy packed with probiotics and bio available nutrients.

Julie Smolinski: We believe the key for market will continue growing and as the leader of this space, we will continue to invest behind and position our offerings in line with evolving consumer interests to further capitalize on the tremendous market opportunities in front of us.

Julie Smolinski: As we have touched on a number of times over the past year and a half our secondary product focus has been on our lifeway farmers cheese.

Julie Smolyansky: Our consumer insights allowed us to identify the growing customer demand for soft cheese products at the right time, and our strategic investments behind this category have started to pay off exceptionally. In Q1, our cheese category, driven by Lifeway Farmer Cheese, was up significantly compared to Q1 2024. Our Farmer Cheese is protein-rich, packed full of probiotics and bioavailable nutrients, and it is a healthy, delicious alternative to popular blended cottage cheese recipes. Our recent expansion of Farmer Cheese into 1,400 Albertsons stores across the United States, plus an additional almost 1,000 new store commitments through spring, summer, and fall, demonstrate how excited we are about the product and will continue to appropriately invest behind it to ensure its success. I'll now touch on some marketing and advertising updates.

Julie Smolinski: Our consumer insights allowed us to identify the growing customer demand for soft cheese products at the right time and our strategic investments behind this category has started to pay off exceptionally.

Julie Smolyansky: In the first quarter, our cheese category driven by Lifeway Farmer's Cheese was up significantly compared to the first quarter of 2024. Our Farmer's Cheese is protein-rich, packed full of probiotics and bioavailable nutrients, and it is a healthy, delicious alternative to popular blended cottage cheese recipes.

Julie Smolinski: In the first quarter, our cheese category, driven by Lifeway farmer cheese was up significantly compared to the first quarter of 2024.

Julie Smolinski: Our farmers cheeses protein rich tactful of probiotics and bio available nutrients and it is a healthy delicious alternative to popular blended cottage cheese recipes.

Julie Smolyansky: Our recent expansion of Farmer's Cheese into 1,400 Albertson stores across the United States plus an additional almost 1,000 new store commitments through spring, summer, and fall demonstrate how excited we are about the product and will continue to appropriately invest behind it to ensure its success.

Julie Smolinski: Our recent expansion of farmers cheese into 1400 albertson stores across the United States.

Julie Smolinski: Plus an additional almost 1000, new store commitments through spring summer and fall demonstrate how excited we are about the product and we'll continue to appropriately invest behind it to ensure its success.

Julie Smolinski: I'll now touch on some marketing and advertising uptake.

Julie Smolyansky: I'll now touch on some marketing and advertising updates.

Julie Smolyansky: First, I'm excited to announce that I'll be attending The Wall Street Journal Global Food Forum on 16 and 17 June in Chicago. I'm honored to have been invited to speak at the forum in our home state alongside numerous influential business leaders in the food and agricultural space, and I look forward to telling the Lifeway story and discussing our great expectations for Lifeway's future at this esteemed and high-visibility event. Just this weekend, we held a high-profile Mother's Day pancake and kefir celebration with some of the top influencers in collaboration with artist, model, and entrepreneur Chrissy Teigen, and artist John Legend and their Cravings brand.

Julie Smolinski: First I'm excited to announce that I'll be attending the Wall Street Journal Global food forums.

Julie Smolyansky: First, I'm excited to announce that I'll be attending the Wall Street Journal Global Food Forum on June 16th and 17th in Chicago. I'm honored to have been invited to speak at the forum in our home state alongside numerous influential business leaders in the food and agricultural space, and I look forward to telling the Lifeway story and discussing our great expectations for Lifeway's future at this esteemed and high visibility event.

Julie Smolinski: On June 16th and 17th in Chicago I'm honored to have been invited to speak at the forum in our home state alongside numerous influential business leaders in the food and agricultural space and I look forward to telling the lifeway story and discussing our great expectations for lifeway future at this it seemed and high visibility events.

Julie Smolinski: Just this weekend, we held a high profile mother's day Pancaking Keefer celebration with some of the top influencers in collaboration with artist model, an entrepreneur Chrissy Teigen and artist John legend and their cravings brand.

Julie Smolyansky: Just this weekend, we held a high-profile Mother's Day Pancake and Kiefer celebration with some of the top influencers in collaboration with artist, model, and entrepreneur Chrissy Teigen and artist John Legend and their Cravings brand. I also recently joined iconic Katie Couric on stage at South by Southwest in Austin to discuss the newest groundwork for microbiome and colon cancer research out of Boston that followed 130,000 people over 30 years and found that those who regularly consumed fermented dairy foods, including products containing certain cultures, like those found in Lifeway Kiefer, had a 20 to 30 percent reduction in certain colon cancers, as well as the alarming trends around the increase in colon cancer among young adults.

Julie Smolyansky: I also recently joined iconic Katie Couric on stage at South by Southwest in Austin to discuss the newest groundbreaking microbiome and colon cancer research out of Boston that followed 130,000 people over 30 years and found that those who regularly consumed fermented dairy foods, including products containing certain cultures like those found in Lifeway Kefir, had a 20% to 30% reduction in certain colon cancers, as well as the alarming trends around the increase in colon cancer among young adults. As pioneers in the probiotic and beverage space, it is our duty to lead conversations that raise awareness around key issues related to digestive health. Lifeway will continue to communicate relevant research and data to the market and our customers. We have earned the trust of our customers over almost four decades and see it as a privilege and a responsibility to maintain this important dialogue.

Julie Smolinski: I also recently joined iconic Katy correct onstage at south by southwest in Austin to discuss the newest groundbreaker microbiome in colon cancer research out of Boston that followed 130000 people over 30 years and found that those who regularly consumed fermented dairy foods, including products.

Julie Smolinski: Painting certain cultures like those found in Lifeway Keefer had a 20% to 30% reduction in certain colon cancers as well as the alarming trends around the increase in colon cancer among young adults.

Julie Smolyansky: As pioneers in the probiotic and beverage space, it is our duty to lead conversations that raise awareness around key issues related to digestive health. Lifeway will continue to communicate relevant research and data to the market and our customers. We have earned the trust of our customers over almost four decades and see it as a privilege and a responsibility to maintain this important dialogue.

Julie Smolinski: As pioneers in the probiotic and beverage space. It is our duty to lead conversations that raise awareness around key issues related to digestive health livelihood.

Julie Smolinski: We will continue to communicate relevant research and data to the market and our customers. We have earned the trust of our customers over.

Julie Smolinski: Most for decades, and see it as a privilege and a responsibility to maintain this important dialogue.

Julie Smolyansky: Focusing on our overall marketing actions, our efforts have been laser-focused on moving units and building awareness of our core Lifeway-branded products. In Q1, we completed New Year, New Gut promotions across retailers to capture additional health-focused customers as they began their New Year's resolutions in January. Like last year, in Q1, we also relaunched a large in-store promotion across many retailers to create a temporary Lifeway-dedicated refrigerated spaces, showcasing our branded products at high-traffic end caps. By placing Lifeway's products at interruptive moments within the store, we have been effective at driving trial and increasing brand exposure to shoppers who don't typically browse our section. We've had success with this style of campaign. We will continue to focus our retail efforts on the greatest ROI opportunities for our marketing dollars.

Julie Smolyansky: Focusing on our overall marketing actions, our efforts have been laser-focused on moving units and building awareness of our core Lifeway-branded products. In the first quarter, we completed New Year New Gut promotions across retailers to capture additional health-focused customers as they began their New Year's resolutions in January. Like last year, in the first quarter, we also relaunched a large in-store promotion across many retailers to create a temporary Lifeway-dedicated refrigerated spaces, showcasing our branded products at high traffic end caps. By placing Lifeway's products at interruptive moments within the store, we have been effective at driving trial and increasing brand exposure to shoppers who don't typically browse our section.

Julie Smolinski: Focusing on our overall marketing actions our efforts have been laser focused on moving units and building awareness of our core lifeway branded products in the first quarter, we completed new year, new got promotions across retailers to capture additional health focused customers as they begin their new year's resolutions in January like last year.

Julie Smolinski: In the first quarter, we also relaunched a large in store promotion across many retailers to create a temporary lifeway dedicated refrigerated spaces showcasing our branded products at high traffic end caps.

Julie Smolinski: By placing lightwave products at interrupted moments within the store, we have been effective at driving trial and increasing brand exposure to shoppers, who don't typically browse. Our section. We've had success with this style of campaign and we will continue to focus our retail efforts on the greatest ROI up opportunities for our marketing dollars.

Julie Smolyansky: We have had success with this style of campaign, and we will continue to focus our retail efforts on the greatest ROI opportunities for our marketing dollars.

Julie Smolyansky: Outside of the store, we continue to invest behind our e-commerce as a cornerstone of our current sales strategy. We are investing more in targeted advertising on our retail partner sites and platforms such as Instacart to drive trial. Our comprehensive digital approach combines targeted search, display, and social advertising, supplemented by influencer campaigns that generate both brand and category awareness. We've allocated significant resources to those digital channels and continue to partner with celebrities, chefs, and nutrition experts with notable followings to advertise to a growing network of customers. These relationships educate potential customers on our better-for-you offerings and demonstrate the versatility of our products in various recipes. Our nimble e-com strategy has allowed us to guide customers through their purchasing journey while maintaining cost-effective advertising spend. Our continued top-line performance gives us conviction that our sales and marketing strategies have been effective.

Outside of the store, we continue to invest behind our e-commerce as a cornerstone of our current sales strategy.

Julie Smolyansky: Outside of the store, we continue to invest behind our e-commerce as a cornerstone of our current sales strategy. We are investing more in targeted advertising on our retail partner sites and platforms such as Instacart to Drive Trial. Our comprehensive digital approach combines targeted search, display, and social advertising supplemented by influencer campaigns that generate both brand and category awareness. We've allocated significant resources to those digital channels and continue to partner with celebrities, chefs, and nutrition experts with notable followings to advertise to a growing network of customers. These relationships educate potential customers on our Better For You offerings and demonstrate the versatility of our products in various recipes.

Julie Smolinski: We are investing more in targeted advertising on a retail partner sites and platforms, such as <unk> to drive trial.

Julie Smolinski: Our comprehensive digital approach combines targeted search display and social advertising supplemented by influencer campaigns to generate both brand and category awareness, we've allocated significant resources to those digital channels and continue to partner with celebrities chefs and nutrition experts with notable followings to advertise to.

Julie Smolinski: A growing network of customers these relationships educate potential customers on our better for you offerings and demonstrate the versatility of our products in various recipes are nimble E. Comm strategy has allowed us to guide customers through their purchasing journey, while maintaining cost effective advertising spend.

Julie Smolyansky: Our nimble e-com strategy has allowed us to guide customers through their purchasing journey while maintaining cost-effective advertising spend. Our continued top-line performance gives us conviction that our sales and marketing strategies have been effective.

Julie Smolinski: Our continued topline performance gives us conviction that our sales and marketing strategies have been effective.

Julie Smolyansky: I will now touch on some distribution updates. We have new commitments for expanded distribution through key channels, including new SKUs at CVS, Target, Publix, Amazon Fresh, and Walmart from now through fall. Lifeway products can now be found at 40 airports through distribution at WH Smith, including new vending machine distribution at O'Hare just last week. As we touched on before, our distribution expansion of Lifeway Farmer Cheese into 1,400 incremental Albertsons stores has greatly boosted visibility for this product line. Additionally, almost 1,000 new retail stores have committed to Farmer Cheese, including at King Soopers, Fred Meyer, Ralphs, QFC, Hannaford, and Lowes Foods. We've increased placements for our new Flavor Fusions at Amazon, and Probiotic Smoothie + Collagen during this quarter as well. Our new products are gaining customer followings, and we are pleased with the results so far.

Julie Smolyansky: I will now touch on some distribution updates. We have new commitments for expanded distribution through key channels, including new SKUs at CVS, Target, Publix, Amazon Fresh, and Walmart, from now through fall. And Lifeway products can now be found at 40 airports through distribution at WH Smith, including new vending machine distribution at O'Hare just last week. As we touched on before, our distribution expansion of Lifeway Farmer's Cheese into 1,400 incremental Albertson's stores has greatly boosted visibility for this product line. Additionally, almost 1,000 new retail stores have committed to Farmer's Cheese, including at King Soopers, Fred Meyers, Ralph's, QFC's, Hannaford, and Lowe's.

Julie Smolinski: I will now touch on some distribution updates.

Julie Smolinski: We have new commitments for expanded distribution through key channels, including new Skus at Cvs target Publix, Amazon fresh and Walmart from now through fall.

Julie Smolinski: And lifeway products can now be found at 40 airports through distribution at WH Smith, including new vending machine distribution at O'hare just last week.

Julie Smolinski: As we touched on before our distribution expansion of Lifeway farmers cheese into 1400 include incremental albertson stores.

Julie Smolinski: Has greatly boosted visibility for this product line.

Julie Smolinski: Additionally, almost 1000, new retail stores have committed to farmers cheese, including at King Soopers, Fred Meyers, Ralph's Qf's sees hannaford and Lowe's.

Julie Smolinski: We've increased placements for our new flavor fusions at Amazon and Probiotic Smoothies and college and during this quarter as well our new products are gaining customer following and we are pleased with the results so far.

Julie Smolyansky: We've increased placement for our new flavor fusions at Amazon and probiotic smoothies and collagen during this quarter as well. Our new products are gaining customer following and we are pleased with the results so far.

Julie Smolyansky: As an update to our smaller international business, we continue to see promising performance from our initial shipments in Dubai and the UAE. Our target consumer has a higher density in that region, and we will continue to monitor the performance and initial trends. I would remind you, this is a small percentage of our sales. Through both our marketing and distribution efforts, we are maintaining active dialogue and strong relationships with our key retail partners. Our strategy on both fronts is to elevate our brand exposure and drive trial and velocities of our core Lifeway products with a focus on our drinkable kefir and Farmer Cheese. To conclude, I'd like to express my gratitude to everyone joining us today. We had yet another incredible quarter here at Lifeway and are set up for another great year in 2025 as we kick off our 40th anniversary.

Julie Smolyansky: As an update to our smaller international business, we continue to see promising performance from our initial shipments in Dubai and the UAE. Our target consumer has a higher density in that region and we will continue to monitor the performance and initial trends, but I would remind you this is a small percentage of our sales. Through both our marketing and distribution efforts, we are maintaining active dialogue and strong relationships with our key retail partners. Our strategy on both fronts is to elevate our brand exposure and drive trial and velocities of our core Lifeway products with the focus on our drinkable kefir and farmer's cheese.

Julie Smolinski: As an update to our smaller international business, we continue to see promising performance from our initial shipments in Dubai in the UAE our target consumer has a higher density in that region and we will continue to monitor the performance and initial trends, but I would remind you. This is a small percentage of ourselves.

Julie Smolinski: Through both our marketing and distribution efforts, we are maintaining active dialogue and strong relationships with our key retail partners. Our strategy on both fronts is to elevate our brand exposure and drive trial and velocities of our core lifeway products with a focus on our drinkable keefer and farmers choose.

Julie Smolyansky: To conclude, I'd like to express my gratitude to everyone joining us today. We had yet another incredible quarter here at Lifeway and are set up for another great year in 2025 as we kick off our 40th anniversary. Lifeway is in a position of strength as consumer interest in healthy foods like our own continues to rise, and I'm confident that we have the best team assembled to maintain our positive trajectory. We are committed to investing behind our key products to continue growing and pursuing our mission to provide best-in-class, bioavailable, probiotic, and nutritious food to our growing base of health-conscious customers.

Julie Smolinski: To conclude I'd like to express my gratitude to everyone. Joining us today, we had yet another incredible quarter here at Lifeway and are set up for another great year in 2025, as we kick off our 40th anniversary.

Julie Smolyansky: Lifeway is in a position of strength as consumer interest in healthy foods like our own continues to rise, and I'm confident that we have the best team assembled to maintain our positive trajectory. We are committed to investing behind our key products to continue growing and pursuing our mission to provide best-in-class, bioavailable probiotic and nutritious food to our growing base of health-conscious customers. I'm truly excited about the opportunities that lie ahead as we continue this journey together. We look forward to providing another progress update on our Q2 call in August. Have an amazing day and a wonderful summer.

Julie Smolinski: Lifeway is in a position of strength as consumer interest in healthy foods like our own continues to rise and I'm confident that we have the best team assembled to maintaining our positive trajectory. We are committed to investing behind our key products to continue growing and pursuing our mission to provide best in class bio available probe.

Julie Smolinski: Biotic and nutritious food to our growing base of health conscious customers I'm truly excited about the opportunities that lie ahead as we continue this journey together, we look forward to providing another progress update on our second quarter call in August have an amazing day and a wonderful summer.

Julie Smolyansky: I'm truly excited about the opportunities that lie ahead as we continue this journey together.

Julie Smolyansky: We look forward to providing another progress update on our second quarter call in August.

Julie Smolyansky: Have an amazing day and a wonderful summer.