Q3 2025 Lifeway Foods Inc Earnings Call - Pre-Recorded

Speaker #1: A 25 conference call on the call with me today is Julie Smolyansky President and Chief Executive officer . By now , everyone should have access to the press release that went out this morning .

Speaker #1: If you have not received the release , it is available on the Investor Relations portion of Lifeway's website at Lifeway Foods, Inc. . A recording of this call will be available on the company's website .

Speaker #1: Before we begin , we would like to remind everyone that the prepared remarks contain forward looking statements . The words believe , expect , anticipate , plan , will , other similar expressions .

Speaker #1: Generally identify forward looking statements statements . These guarantee performance and therefore future undue reliance should not be placed on them . Actual results could differ materially from those any forward looking projected in .

Speaker #1: statements assumes no LifeWay forward looking projections that may obligation to made during today's call , except as by law required . All the forward looking statements contained herein update any of the speak this call .

Speaker #1: And date of that , I would like to turn the over to call Lifeway's President and Chief Officer , Julie Smolyansky .

Speaker #1: And date of that , I would like to turn the over to call Lifeway's President and Chief Officer , Julie Smolyansky . Executive Thank you ,

Speaker #2: John , and good morning to everyone joining us . As always , we greatly appreciate your interest in Lifeway Foods, Inc. . I'm thrilled to announce yet another record breaking quarter for LifeWay food this quarter significantly our surpassed previous high set in Q2 and further showcases our unique and powerful growth as we continue to define our industry and deliver outstanding results across the board .

Speaker #2: Before diving into details , I want to the applaud our incredible LifeWay team . Your relentless execution , innovation and commitment to excellence are the driving force behind our consistently extraordinary results .

Speaker #2: And you continue to raise the bar every . In the third quarter delivered quarter , record net we sales of a 24% increase year over $57.1 million , year .

Speaker #2: And an approximate 29% increase on a comparable basis . When adjusted for two strategic modifications to customer relationships that we initiated in late 2020 .

Speaker #2: Four to prioritize high value brand strengthening opportunities . This growth was entirely volume led and driven by the explosive demand for our flagship kicker LifeWay and high protein low farmer cheese .

Speaker #2: growth is even more impressive when considering we delivered it on top of a strong 13% increase in This Q3 of 2024 . This marks our 24th consecutive quarter of year year over net sales growth .

Speaker #2: In other words , six full years of uninterrupted growth . To put that in perspective date , we achieved net sales of , year to $157.1 million , which is an incredible 123% when increase same to the nine month period six years compared In 2019 .

Speaker #2: In other words , six full years of uninterrupted growth . To put that in perspective date , we achieved net sales of , year to $157.1 million , which is an incredible 123% when increase same to the nine month period six years ago .

Speaker #2: We're consistently records at have LifeWay and been doing so for setting years . Our growth trajectory is consistent and sustainable , and it's strongly accelerating as we cement our continue to position as the undisputed leader kefir and help drive growth in the dairy functional space .

Net income with 3.5 million or 23 cents per basic and diluted share compared to 3 million dollars or 20 cents per basic and 19 cents per diluted. Share last year, the strong double digit growth, on the bottom line further shines a light on our operational excellence and our ability to seamlessly convert Topline strength into profitable results. I'll now touch on ongoing matter organization of our state of the art walk and shop facility this strategic expansion continues to progress as planned and we are on track to double manufacturing capacity and enhance our operational efficiencies by the end of 2026 in September. We completed the first step of our facility optimization with the successful installation of additional fermentation tanks which are used to combine raw milk and the live keeper culture during the fermentation process to make our kafir

As for next steps, we have recently initiated critical infrastructure enhancements to our Refrigeration capabilities and meal processing systems with plans to break ground on the facility expansion. In early 2026. We will realize the bulk production capacity benefits and efficiencies including more than tripling. Our bottling speeds upon completion of the project in Q4 of 2026. Enabling us to meet the accelerating demand for our products, while maintaining our exceptional product quality standards.

To date in 2025, we have invested over $9 million in this project and upon completion. We estimate the total invent Investments of approximately 45 million dollars in capital expenditures. This expansion is a pivotal investment in LifeWay future. As we position ourselves to further capitalize on the rapid growth and functional Dairy consumer appetite for protein and Associated glp1 trends.

Beyond our operational Investments. We're simultaneously keeping a pulse on the consumer and they're evolving case to stay ahead of the curve on emerging Trends. We recently announced muscle mates our revolutionary ready to drink functional beverage. That delivers a powerful Trifecta of 20 grams of protein, 5 grams of creatine and our 12 live and active probiotic. Cultures this product happens to be the exploding creatin Market, which has seen significant triple digits growth at certain retailers in recent years and is notably serving a growing percentage of women. With this product. We are advancing functional Nutrition By delivering performance.

And wellness in 1 convenience and delicious bottle. And we are extremely excited for it to begin shipping to retailers.

Our first of its kind probiotic smoothies with collagens, continue to perform very well and are resonating comfortably with the global growing Global Market for collagen which is projected to exceed 8 billion dollars by 2030.

We are also expanding our brand reach through strategic partnerships that introduced Lifeway to new consumers through innovative product launches and experiential settings. Our "Trust Your Gut" smoothie is an exciting collaboration with Joe & The Juice, bringing Lifeway "Wake Up Here" to a wide audience of Gen Z and Millennial consumers in cafes across the United States. Our second partnership with Air1 delivered the delicious "Love Your Gut" pumpkin spice smoothie exclusively for the month of October, perfectly timed for seasonal wellness trends at LA's iconic wellness destination.

I'm also excited to highlight lightweight Nationwide sorority tour. We are currently connecting with young, women across the country, to introduce them, to the brand. And the benefits of gut health. The gut health blow up tour is yet another opportunity to build community and Sample, our core products and Innovative keeper flavor, fusion, with the next generation of LifeWay. Keeper consumers.

Our digital marketing strategy continues to launch lightweight into the center of viral moments across Tic-Tac and Instagram. Millions of users are engaging with, authentic customer stories about the daily Wellness benefits of their experiencing from Life, way to care. And we continue to expand our influence of Partnerships to drive awareness of our product offerings, educate on their benefits and showcase the recipes with lifelike care and farmers cheese.

Additionally in Q4 we have visibility into a significant Nationwide, distribution expansion for our lightweight Farmers Chief as it continues to capture the attention of consumers Nationwide.

What we have accomplished is extraordinary but our momentum is only in intensifying we're well on Pace to deliver our strongest, annual sales in the company history in 2025. And we're reiterating our Target to achieve between 45 and 50 million in adjusted by fiscal year 2027.

We are operating from a position of strength dominating to keep your category heavily investing behind our key products and expanding into high growth adjacent. All while scaling profitability, with our improving production capabilities and our accelerating Tailwind behind consumer, health and wellness. We are perfectly situated to sustain this remarkable momentum, the results speak for themselves, and we're on an incredible growth trajectory as we finish off, 2025, and head into the new year, we remain committed to our mission of bringing best and class, bioavailable probiotic and nutritious foods to our loyal and growing customer base. Thank you for your continued support. And we look forward to updating you on our continued progress. When we report our fourth quarter and full year results in March 2026, I hope you all have a wonderful holiday season.

Thank you.