Lifeway Foods, Inc.
For the period ended Jun 30, 2026. Filed Aug 13, 2026.
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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, 2026 · Filed Aug 13, 2026
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 2026-03-31; filed 2026-05-14.
0001683168-26-003839
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001683168-26-006302
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 53 previous paragraphs and 82 current paragraphs.
37 unchanged; 16 reworded; 25 added; 0 removed; 0 previous and 4 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 (25)
Current report
Recent Developments
Current report
Danone Offering
Current report
On May 14, 2026, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with BTIG, LLC (the “Underwriter”) and Danone USA Public Benefit Corporation (the “Selling Stockholder”) in connection with a public offering of an aggregate of 3,454,756 shares (the “Shares”) of the Company’s common stock, no par value, by the Selling Stockholder at a price to the public of $19.50 per share (the “Offering”).
Current report
The Offering was completed on May 19, 2026 and was made pursuant to a shelf registration statement on Form S-3 (No. 333-291148) that was previously filed with the Securities and Exchange Commission (“SEC”) and declared effective by the SEC on December 10, 2025 and a prospectus supplement. The Company did not receive any proceeds from the Offering.
Current report
Share Buyback
Current report
The Company repurchased 253,153 Shares in the Offering at the same per share price paid by investors in the Offering.
Current report
Rights Redemption
Current report
On June 5, 2026, the board of directors authorized and directed the Company to redeem rights of shareholders outstanding on June 5, 2026 to a dividend of Series A Junior Participating Preferred Stock (the “Rights”) declared pursuant to that certain Shareholder Rights Agreement with Computershare Trust Company, N.A., as rights agent dated November 4, 2024, as amended (as amended from time to time, the “Rights Agreement”). Upon such redemption, the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the redemption price of $0.001 for each Right so held and the Rights Agreement will terminate and be of no further force or effect.
Current report
Interim Funding Agreement
Current report
On June 30, 2026, the Company entered into a Master Security Agreement (the “MSA”) with its current lender. The MSA provides for loan advances under an Interim Funding Agreement (the “Interim Funding Agreement”) to finance or refinance the acquisition of equipment, subject to lender’s acceptance of collateral documentation, up to $22,000,000 in the aggregate, during an interim funding period which expires June 30, 2027. Interest on the loan advances is payable monthly in arrears at the 1-month Term SOFR plus 1.65%.
Current report
Upon the conclusion of loan advances under the Interim Funding Agreement, and the execution of a Collateral Schedule by lender and Lifeway, all loan advances outstanding on the date of such Collateral Schedule (the “Conversion Date”), shall be converted into the Equipment Guidance Line Note (the “Note”). The note is payable in monthly installments of principal and interest and matures five years after the Conversion Date. Interest is payable monthly in arrears at the 1-month Term SOFR plus 1.65%.
Current report
During the second quarter of 2026 we experienced significant increases in the price of conventional milk. We anticipate the elevated pricing to continue into the third quarter and then begin to decrease in the fourth quarter of 2026. Additionally, driven by the rising price of oil, the input cost of our resin-based packaging components such as bottles and caps increased during the second quarter of 2026. We continue to monitor macroeconomic conditions and global trade developments, including inflation in key input costs, implemented tariffs, and the potential for additional or modified tariffs or export controls. These evolving global trade policies may contribute to increased supply chain complexity, further commodity cost volatility, and broader economic uncertainty.
Current report
Income taxes were recognized at effective rates of 68.7% and 28.1% for the three months ended June 30, 2026 and 2025, respectively. Statutory Federal and state tax rates remained consistent from 2025 to 2026. The Company has items that are nondeductible or are discrete adjustments to tax expense. The Company consistently reflects non-deductible officer compensation expense, non-deductible stock-based compensation expense and separate state tax rates from period to period. Although similar items were reflected in 2026, the percentage effect is different due to the difference in pre-tax income in 2026 compared to 2025.
Current report
Income taxes are discussed in Note 10 in the Notes to the Consolidated Financial Statements.
Current report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current report
Net Sales
Current report
Gross Profit
Current report
Gross profit as a percentage of net sales was 23.4% and 26.5% during the six-month period ended June 30, 2026 and 2025, respectively. The decrease versus the prior year was driven by the unfavorable impact of milk pricing and to a lesser extent the unfavorable impact of resin-based packaging inputs and transportation costs, partially offset by higher volumes of our branded products, which provided manufacturing efficiencies.
Current report
Selling Expense
Current report
General and Administrative Expense
Current report
General and administrative expense decreased $20 to $9,360 during the six-month period ended June 30, 2026 from $9,380 during the same period in 2025. The Company incurred approximately $375 of legal and professional fees associated with the sale of Danone USA Public Benefit Corporation's holdings of common stock of Lifeway Foods, Inc. in an underwritten transaction during the six-month period ended June 30, 2026.
Current report
Provision for Income Taxes
Current report
Income taxes are discussed in Note 10 in the Notes to the Consolidated Financial Statements.
Current report
As of June 30, 2026, the Company had $0 outstanding under the Interim Funding Agreement. The Company had $22,000 available for future borrowings under the Interim Funding Agreement as of June 30, 2026, subject to lender’s acceptance of collateral documentation.
Current report
All outstanding amounts under the Interim Funding Agreement bear interest at the 1-month Term Secured Overnight Financing Rate (“SOFR”), plus 1.65%. Monthly Interest is payable monthly in arrears.
Reworded paragraphs (16)
Previous wording
We continue to monitor macroeconomic conditions and global trade developments, including inflation in key input costs, recently implemented tariffs, and the potential for additional or modified tariffs or export controls. These evolving global trade policies may contribute to increased supply chain complexity, commodity cost volatility, and broader economic uncertainty. We do not currently expect these conditions to have a material adverse impact on our operations or financial results. We are primarily a United States based manufacturer sourcing a vast majority of our inputs domestically. In addition, all our domestically produced products are sold to customers in the United States. We expect the accelerating consumer focus on health and wellness to drive increased demand for our products.
Current wording
We do not currently expect tariffs to have a material adverse impact on our operations or financial results. We are primarily a United States based manufacturer sourcing a vast majority of our inputs domestically. In addition, all our domestically produced products are sold to customers in the United States. We expect the accelerating consumer focus on health and wellness to drive increased demand for our products.
Previous wording
Net sales were at $63,012 for the three-month period ended March 31, 2026, an increase of $16,921 or 36.7% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir.
Current wording
Net sales were at $66,893 for the three-month period ended June 30, 2026, an increase of $12,992 or 24.1% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir.
Previous wording
Gross profit as a percentage of net sales was 27.5% and 24.0% in the three-month period ended March 31, 2026 and 2025, respectively. The increase versus the prior year was driven by the favorable impact of milk pricing and manufacturing efficiencies resulting from increased production volumes.
Current wording
Gross profit as a percentage of net sales was 19.5% and 28.6% in the three-month period ended June 30, 2026 and 2025, respectively. The decrease versus the prior year was driven by the unfavorable impact of milk pricing and to a lesser extent the unfavorable impact of resin-based packaging inputs and transportation costs.
Previous wording
Selling expenses increased by $1,490 to $6,188 during the three-month period ended March 31, 2026 from $4,698 during the same period in 2025. The increase is primarily a result of our continued investments in marketing activities to drive brand awareness and sales volumes. Selling expenses as a percentage of net sales decreased to 9.8% in the three-month period ended March 31, 2026 from 10.2% during the same period in 2025.
Current wording
Selling expenses increased by $2,916 to $7,634 during the three-month period ended June 30, 2026 from $4,718 during the same period in 2025. Selling expenses as a percentage of net sales increased to 11.4% in the three-month period ended June 30, 2026 from 8.8% during the same period in 2025. 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 $75 to $4,703 during the three-month period ended March 31, 2026 from $4,628 during the same period in 2025. General and administrative expenses as a percentage of net sales decreased to 7.5% in the three-month period ended March 31, 2026 from 10.0% during the same period in 2025. During the first quarter of 2025, the Company incurred approximately $985 of legal and professional fees associated with Danone’s unsolicited purchase proposal and non-routine stockholder action.
Current wording
General and administrative expenses increased $95 to $4,657 during the three-month period ended June 30, 2026 from $4,752 during the same period in 2025. General and administrative expenses as a percentage of net sales decreased to 7.0% in the three-month period ended June 30, 2026 from 8.8% during the same period in 2025. During the second quarter of 2026, the Company incurred approximately $375 of legal and professional fees associated with the sale of Danone USA Public Benefit Corporation's holdings of common stock of Lifeway Foods, Inc. in an underwritten transaction.
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
Income taxes were recognized at effective rates of 25.3% and 28.7% for the three months ended March 31, 2026 and 2025, respectively. The change in the Company’s effective tax rate is primarily driven by the increase in pre-tax book income and changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.
Current wording
The effective income tax rate for the six months ended June 30, 2026 was 28.0% compared to 28.4% in the same period last year. The change in the Company’s effective tax rate is primarily driven by the decrease in pre-tax book income and changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.
Previous wording
Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, and believes that its cash flow from operations, revolving credit facility, and cash and cash equivalents will continue to provide sufficient liquidity for its working capital needs, capital resource requirements, and growth initiatives and to ensure the continuation of the Company as a going concern.
Current wording
Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, and believes that its cash flow from operations, revolving credit facility, interim funding agreement, and cash and cash equivalents will continue to provide sufficient liquidity for its working capital needs, capital resource requirements, and growth initiatives and to ensure the continuation of the Company as a going concern.
Previous wording
If additional borrowings are needed, $18,000 was available under the Revolving Credit Facility as of March 31, 2026 (see Note 7, Debt).
Current wording
If additional borrowings are needed, $3,000 was available under the Revolving Credit Facility and $22,000 was available under the Interim Funding Agreement as of June 30, 2026 (see Note 7, Debt).
Previous wording
Net cash provided by operating activities was $4,378 during the three-month period ended March 31, 2026 compared to net cash used in operating activities of $150 in the same period in 2025. The increase was primarily due increased cash earnings, partially offset by the change in working capital.
Current wording
Net cash provided by operating activities was $4,039 and $3,762 during the six-month period ended June 30, 2026 and 2025, respectively. The increase was primarily due to the increase in cash earnings offset by the change in working capital.
Previous wording
Net cash used in investing activities was $11,041 during the three-month period ended March 31, 2026 compared to net cash provided by investing activities of $2,933 in the same period in 2025.
Current wording
Net cash used in investing activities was $19,282 during the six-month period ended June 30, 2026 compared to net cash provided by investing activities of $795 in the same period in 2025.
Previous wording
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 $48,500. As of March 31, 2026, $31,267 is included on the consolidated balance sheet in property, plant and equipment, with $3,691 in-service and recorded in machinery and equipment and $27,576 recorded in construction in process. The cumulative cash paid for this project is $31,267 as of March 31, 2026. 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.
Current wording
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 $50,500. As of June 30, 2026, $38,917 is included on the consolidated balance sheet in property, plant and equipment, with $3,691 in-service and recorded in machinery and equipment, $7,348 in-service and recorded in leasehold improvements, and $27,878 recorded in construction in process. The cumulative cash paid for this project is $38,917 as of June 30, 2026. 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 and interim funding agreement. The ability to manufacture and package at the increased scale is expected to begin in January 2027, and the total project expected to be completed during the first fiscal quarter of 2027.
Previous wording
Net cash provided by financing activities was $6,696 and net cash used in financing activities was $65 during the three-month period ended March 31, 2026 and 2025, respectively. The cash provided by during 2026 primarily represents the line of credit borrowing in connection with the Waukesha Wisconsin facility expansion and modernization project. During the first quarter of 2026, to comply with the Company’s contractual obligations prohibiting the Company from issuing equity to the Chief Executive Officer and certain of her affiliates, the Company settled previously vested restricted stock units held by the Chief Executive Officer in cash. The cash used in 2025 represented credit agreement amendment expenses incurred during the first quarter.
Current wording
Net cash provided by financing activities was $16,759 during the six-month period ended June 30, 2026 compared to net cash used in financing activities of $65 in the same period in 2025. The cash provided during 2026 primarily represents the line of credit borrowing in connection with the Waukesha Wisconsin facility expansion and modernization project. During the second quarter of 2026, the Company repurchased $4,937 of treasury stock in connection with the sale of Danone USA Public Benefit Corporation's holdings of common stock of Lifeway Foods, Inc. in an underwritten transaction. During the first quarter of 2026, to comply with the Company’s contractual obligations in place at the time prohibiting the Company from issuing equity to the Chief Executive Officer and certain of her affiliates, the Company settled previously vested restricted stock units held by the Chief Executive Officer in cash. The cash used in 2025 represented credit agreement amendment expenses incurred during the first quarter.
Previous wording
As of March 31, 2026, the Company had $7,000 outstanding under the Revolving Credit Facility. The Company had $18,000 available for future borrowings under the Revolving Credit Facility as of March 31, 2026.
Current wording
As of June 30, 2026, the Company had $22,000 outstanding under the Revolving Credit Facility. The Company had $3,000 available for future borrowings under the Revolving Credit Facility as of June 30, 2026.
Previous wording
All outstanding amounts under the revolving line of credit bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 1.75% (5.54% as of March 31, 2026). Interest is payable monthly in arrears. Lifeway is also required to pay a quarterly unused line fee of 0.25% on the Revolving Credit Facility, and in conjunction with the issuance of any letters of credit, a letter of credit fee of 1.00%.
Current wording
All outstanding amounts under the revolving line of credit bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 1.75% (5.48% as of June 30, 2026). Interest is payable monthly in arrears. Lifeway is also required to pay a quarterly unused line fee of 0.25% on the Revolving Credit Facility, and in conjunction with the issuance of any letters of credit, a letter of credit fee of 1.00%.
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, 2025. There were no material changes to the Company’s critical accounting policies and estimates in the three months ended March 31, 2026.
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, 2025. There were no material changes to the Company’s critical accounting policies and estimates in the six months ended June 30, 2026.
Rearranged current paragraphs (4)
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 $129,905 for the six-month period ended June 30, 2026, an increase of $29,913 or 29.9% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir.
Current report — wording carried from elsewhere
Selling expense increased by $4,406 to $13,822 during the six-month period ended June 30, 2026 from $9,416 during the same period in 2025. Selling expenses as a percentage of net sales increased to 10.6% in the six-month period ended June 30, 2026 from 9.4% during the same period in 2025. 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
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.