Lifeway Foods, Inc.
For the period ended Sep 30, 2025. Filed Nov 12, 2025.
View on SEC.govAbout this filing
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.
Sep 30, 2025 · Filed Nov 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 2025-06-30; filed 2025-08-12.
0001683168-25-005922
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0001683168-25-008212
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 68 previous paragraphs and 69 current paragraphs.
48 unchanged; 17 reworded; 2 added; 3 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 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 (2)
Current report
The herd agreement is treated as a sale of non-financial assets to a party that is not a customer. The Company will recognize a sale upon the delivery of each herd to the Dairy, with interest income recognized over the agreement period. The Company has recorded $184 in prepaid and other current assets and $1,151 in other assets as of September 30, 2025 related to the herd agreement with no recorded gain or loss on sale. The Company records the purchases of dairy cows as investing outflows, principal payments received as investing inflows and interest income as operating inflows on the statement of cash flows.
Current report
The increase in purchases of property and equipment is primarily driven by the expansion of manufacturing capacity and modernization of our Waukesha, Wisconsin facility. This project will enable Lifeway to meet increasing sales demand and will double the facility’s manufacturing capacity and improve packaging efficiency, as well as other operational improvements. The Company currently estimates investing approximately $45,000. As of September 30, 2025, approximately $9,200 is included on the consolidated balance sheet in property, plant and equipment, with cumulative cash paid of approximately $6,100. The project will be funded primarily through cash on-hand and cash flow from operations, with further requirements available under the Company’s revolving credit facility. The project is expected to be completed during the fourth fiscal quarter of 2026.
Removed paragraphs (3)
Previous report
The Company is currently assessing the appropriate accounting treatment for the purchase of the herd and agreement with the Dairy.
Previous report
The provision for income taxes was $3,088 and $2,658 during the six months ended June 30, 2025 and 2024, respectively.
Previous 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.
Reworded paragraphs (17)
Previous wording
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 wording
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 entered into a supply and purchase agreement (“SPA”) with a COOP (the “COOP”) to purchase the milk produced by the herd.
Previous wording
The Company purchased 224 mature dairy cows during July 2025 for $694 and will consider further mature dairy cow purchases in the future.
Current wording
The Company purchased 402 mature dairy cows during the third quarter of 2025 for $1,335 and plans further mature dairy cow purchases in the future.
Previous wording
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 wording
As amended in September 2025, the Company entered into a sixty 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 the COOP under the SPA, with a right to purchase the herd at the end of the agreement period for a nominal amount. Beginning December 1, 2025, the Dairy will make monthly payments to Lifeway over the five year agreement period in exchange for its right to possess and control the herd, including the right to sell milk produced by the herd to the COOP.
Previous 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.
Current wording
Net sales were at $57,143 for the three-month period ended September 30, 2025, an increase of $11,048 or 24.0% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir. The third 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 29% in the third quarter of 2025 compared to the same period in 2024.
Previous wording
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 wording
Gross profit as a percentage of net sales was 28.7% and 25.7% in the three-month period ended September 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.
Previous 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.
Current wording
Selling expenses increased by $1,068 to $5,047 during the three-month period ended September 30, 2025 from $3,979 during the same period in 2024. Selling expenses as a percentage of net sales increased to 8.8% in the three-month period ended September 30, 2025 from 8.6% 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 $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.
Current wording
General and administrative expenses increased $2,622 to $6,186 during the three-month period ended September 30, 2025 from $3,564 during the same period in 2024. The Company incurred approximately $2,400 of professional fees associated with the Danone unsolicited purchase proposal and non-routine stockholder action.
Previous 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.
Current wording
Income taxes were recognized at effective rates of 30.3% and 31.2% for the three months ended September 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
Six Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2025
Current wording
Nine Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2025
Previous wording
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 wording
Net sales were at $157,135 for the nine-month period ended September 30, 2025, an increase of $17,249 or 12.3% 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 nine 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 19% in the first nine months of 2025 compared to the same period in 2024.
Previous 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.
Current wording
Gross profit as a percentage of net sales was 27.3% and 26.2% during the nine-month period ended September 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 organic milk pricing and planned trade promotion investment.
Previous wording
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 wording
Selling expense increased by $3,207 to $14,463 during the nine-month period ended September 30, 2025 from $11,256 during the same period in 2024. Selling expenses as a percentage of net sales increased to 9.2% in the nine-month period ended September 30, 2025 from 8.0% 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 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 wording
General and administrative expense increased $3,689 to $15,566 during the nine-month period ended September 30, 2025 from $11,877 during the same period in 2024. The Company incurred approximately $4,300 of professional fees associated with the Danone unsolicited purchase proposal and non-routine stockholder action.
Previous 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.
Current wording
Net cash provided in operating activities was $10,681 and $15,541 during the nine-month period ended September 30, 2025 and 2024, respectively. The decrease was primarily due to lower cash earnings and the change in working capital.
Previous 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.
Current wording
Net cash used by investing activities was $4,354 and $5,431 during the nine-month period ended September 30, 2025 and 2024, respectively. 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.
Previous 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.
Current wording
Net cash used in financing activities was $65 and $2,750 during the nine-month period ended September 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 six months ended June 30, 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 nine months ended September 30, 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Income taxes were recognized at effective tax rates of 29.1% and 30.4% for the nine months ended September 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.
Current report — wording carried from elsewhere
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.