Lifeway Foods, Inc.
For the period ended Jun 30, 2025. Filed Aug 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 12, 2025
LWAY$21.65-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001683168-25-003458
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-12.
0001683168-25-005922
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 68 current paragraphs.
38 unchanged; 10 reworded; 14 added; 2 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Organic Milk Supply
Current report
To increase the supply of organic milk available to the Company for the manufacture of finished goods, the Company is purchasing mature dairy cows (or the “herd”) which will be managed by a third-party dairy facility (the “Dairy”), and expects to enter into a supply and purchase agreement (“SPA”) with a COOP (the “COOP”) to purchase the milk produced by the herd.
Current report
The Company purchased 224 mature dairy cows during July 2025 for $694 and will consider further mature dairy cow purchases in the future.
Current report
On July 1, 2025, the Company entered into a thirty-nine month agreement (the “Herd Agreement”) with a third-party Dairy who will manage care of the herd, milk the herd, and sell the milk to a COOP, with which Lifeway will have a separate supply and purchase agreement. The Dairy will make monthly payments to Lifeway over the agreement period in exchange for its right to sell milk produced by the herd to the COOP and has a right to purchase the herd at the end of the agreement period for a nominal amount.
Current report
The Company is currently assessing the appropriate accounting treatment for the purchase of the herd and agreement with the Dairy.
Current report
Net Sales
Current report
Gross Profit
Current report
Gross profit as a percentage of net sales was 26.5% and 26.4% during the six-month period ended June 30, 2025 and 2024, respectively. The increase versus the prior year was driven by higher volumes of our branded products, which provided manufacturing efficiencies, partially offset by organic milk pricing and planned trade promotion investment.
Current report
Selling Expense
Current report
General and Administrative Expense
Current report
Provision for Income Taxes
Current report
The provision for income taxes was $3,088 and $2,658 during the six months ended June 30, 2025 and 2024, respectively.
Current report
The effective income tax rate for the six months ended June 30, 2025 was 28.4% compared to 30.0% in the same period last year.
Current report
Income taxes are discussed in Note 10 in the Notes to the Consolidated Financial Statements.
Removed paragraphs (2)
Previous report
Debt Refinancing
Previous report
On February 5, 2025, the Company entered into the Fifth Modification to the Amended and Restated Loan and Security Agreement (the “Fifth Modification”) with its current lender. The Fifth Modification, among other things, (i) increased the commitment for revolving loans under the Credit Agreement from $5,000 to $25,000, with interest payable at either the lender Base Rate (the Prime Rate minus 1.00%) or the SOFR plus 1.75%, (ii) extended the termination date of the Credit Agreement to February 5, 2028 and (iii) replaced the quarterly minimum working capital financial covenant with a financial covenant to maintain a maximum cash flow leverage ratio of no greater than 2.00 to 1.00 for each fiscal quarter commencing with the fiscal quarter ending March 31, 2025. The remaining material terms and conditions of the Credit Agreement remain substantially unchanged. The Company had no outstanding borrowings at the time of entry into the Fifth Modification.
Reworded paragraphs (10)
Previous wording
Net sales were at $46,091 for the three-month period ended March 31, 2025, an increase of $1,457 or 3.3% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir, partially offset by the planned trade promotion investment to support incremental distribution of farmers cheese and kefir. The first quarter 2024 benefited from a customer relationship we strategically exited in the third quarter of 2024, and a significant distributor shifting from Lifeway delivered to customer pick-up in late 2024, which results in lower net sales and lower freight out expense. On a comparable basis adjusting for these two factors, the Company’s net sales increased approximately 11% in the first quarter of 2025 compared to the same period in 2024.
Current wording
Net sales were at $53,901 for the three-month period ended June 30, 2025, an increase of $4,744 or 9.7% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir, partially offset by the planned trade promotion investment to support incremental distribution of farmers cheese and kefir. The second quarter 2024 benefited from a customer relationship we strategically exited in the third quarter of 2024, and a significant distributor shifting from Lifeway delivered to customer pick-up in late 2024, which results in lower net sales and lower freight out expense. On a comparable basis adjusting for these two factors, the Company’s net sales increased approximately 18% in the second quarter of 2025 compared to the same period in 2024.
Previous wording
Gross profit as a percentage of net sales was 24.0% and 25.8% in the three-month period ended March 31, 2025 and 2024, respectively. The decrease versus the prior year was driven by the unfavorable impact of milk pricing and increased trade promotions.
Current wording
Gross profit as a percentage of net sales was 28.6% and 27.0% in the three-month period ended June 30, 2025 and 2024, respectively. The increase versus the prior year was driven by higher volumes of our branded products, which provided manufacturing efficiencies and the favorable impact of conventional milk pricing, partially offset by unfavorable organic milk pricing and planned trade promotion investment.
Previous wording
Selling expenses increased by $998 to $4,698 during the three-month period ended March 31, 2025 from $3,700 during the same period in 2024. Selling expenses as a percentage of net sales increased to 10.2% in the three-month period ended March 31, 2025 from 8.3% during the same period in 2024. The increase is primarily a result of our continued investments in marketing activities to drive brand awareness and sales volumes.
Current wording
Selling expenses increased by $1,141 to $4,718 during the three-month period ended June 30, 2025 from $3,577 during the same period in 2024. Selling expenses as a percentage of net sales increased to 8.7% in the three-month period ended June 30, 2025 from 7.3% during the same period in 2024. The increase is primarily a result of our continued investments in marketing activities to drive brand awareness and sales volumes.
Previous wording
General and administrative expenses increased $492 to $4,628 during the three-month period ended March 31, 2025 from $4,136 during the same period in 2024. The increase is primarily driven by professional fees associated with non-routine stockholder action and the Danone unsolicited purchase proposal.
Current wording
General and administrative expenses increased $575 to $4,752 during the three-month period ended June 30, 2025 from $4,177 during the same period in 2024. The increase is primarily driven by professional fees associated with non-routine stockholder action and the Danone unsolicited purchase proposal.
Previous wording
Income taxes were recognized at effective rates of 28.7% and 30.8% for the three months ended March 31, 2025 and 2024, respectively. The change in the Company’s effective tax rate is primarily driven by changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.
Current wording
Income taxes were recognized at effective rates of 28.1% and 29.4% for the three months ended June 30, 2025 and 2024, respectively. The change in the Company’s effective tax rate is primarily driven by changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.
Previous wording
The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the relative mix of pre-tax earnings (or losses), the jurisdictional mix of earnings, enacted tax legislation, state income taxes, the impact of non-deductible items, changes in valuation allowances, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits.
Current wording
The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the relative mix of pre-tax earnings (or losses), the jurisdictional mix of earnings, enacted tax legislation, state income taxes, the impact of non-deductible items, changes in valuation allowances, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits. The Company records discrete income tax items such as enacted tax rate changes and completed tax audits in the period in which they occur.
Previous wording
Net cash used in operating activities was $150 during the three-month period ended March 31, 2025 compared to net cash provided by operating activities of $1,546 in the same period in 2024. The decrease was primarily due lower cash earnings and the change in working capital.
Current wording
Net cash provided in operating activities was $3,762 and $8,090 during the six-month period ended June 30, 2025 and 2024, respectively. The decrease was primarily due lower cash earnings and the change in working capital.
Previous wording
Net cash provided by investing activities was $2,933 during the three-month period ended March 31, 2025 compared to net cash used in investing activities of $2,469 in the same period in 2024. The decrease in cash used reflects cash proceeds of $5,152 received in the first quarter of 2025 from the sale of our Simple Mills investment. Our capital spending is focused in three core areas: growth, cost reduction, and facility improvements. Growth capital spending supports capacity expansion and new product innovation and enhancements. Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity.
Current wording
Net cash provided by investing activities was $795 during the six-month period ended June 30, 2025 compared to net cash used in investing activities of $3,905 in the same period in 2024. The decrease in cash used reflects cash proceeds of $5,152 received in the first quarter and $54 in the second quarter of 2025 from the sale of our Simple Mills investment. Our capital spending is focused in three core areas: growth, cost reduction, and facility improvements. Growth capital spending supports capacity expansion and new product innovation and enhancements. Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity.
Previous wording
Net cash used in financing activities was $65 and $250 during the three-month period ended March 31, 2025 and 2024, respectively. The cash used in 2025 represents credit agreement amendment expenses incurred during the first quarter. The cash used in 2024 represented the quarterly principal payments under the term loan, which was paid in full during the second quarter of 2024.
Current wording
Net cash used in financing activities was $65 and $2,750 during the six-month period ended June 30, 2025 and 2024, respectively. The cash used in 2025 represents credit agreement amendment expenses incurred during the first quarter. The cash used in 2024 represented the quarterly principal payments under the term loan, which was paid in full during the second quarter of 2024.
Previous wording
A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the year ended December 31, 2024. There were no material changes to the Company’s critical accounting policies and estimates in the three months ended March 31, 2025.
Current wording
A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the year ended December 31, 2024. There were no material changes to the Company’s critical accounting policies and estimates in the six months ended June 30, 2025.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Six Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2025
Current report — wording carried from elsewhere
The following table presents certain information concerning our financial results, including information presented as a percentage of consolidated net sales:
Current report — wording carried from elsewhere
Net sales were at $99,992 for the six-month period ended June 30, 2025, an increase of $6,201 or 6.6% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir, partially offset by the planned trade promotion investment to support incremental distribution of farmers cheese and kefir. The first six months of 2024 benefited from a customer relationship we strategically exited in the third quarter of 2024, and a significant distributor shifting from Lifeway delivered to customer pick-up in late 2024, which results in lower net sales and lower freight out expense. On a comparable basis adjusting for these two factors, the Company’s net sales increased approximately 14% in the first six months of 2025 compared to the same period in 2024.
Current report — wording carried from elsewhere
Selling expense increased by $2,139 to $9,416 during the six-month period ended June 30, 2025 from $7,277 during the same period in 2024. Selling expenses as a percentage of net sales increased to 9.4% in the six-month period ended June 30, 2025 from 7.8% during the same period in 2024. The increase is primarily a result of our continued investments in marketing activities to drive brand awareness and sales volumes.
Current report — wording carried from elsewhere
General and administrative expense increased $1,067 to $9,380 during the six-month period ended June 30, 2025 from $8,313 during the same period in 2024. The increase is primarily driven by professional fees associated with non-routine stockholder action and the Danone unsolicited purchase proposal.
Current report — wording carried from elsewhere
The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the relative mix of pre-tax earnings (or losses), the jurisdictional mix of earnings, enacted tax legislation, state income taxes, the impact of non-deductible items, changes in valuation allowances, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits. The Company records discrete income tax items such as enacted tax rate changes and completed tax audits in the period in which they occur.