Lifeway Foods reported financial results for the first two quarters of its fiscal 2015 ended March 31, 2015 and June 30, 2015. Total consolidated net sales increased by $0.7 million, or approximately 1%, to $59.4 million during the six months from $58.7 million during the same six-month period in 2014.
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Cost of goods sold as a percentage of net sales, excluding depreciation expense, was approximately 72% during the first six months of fiscal 2015 compared to approximately 74% for the same period last year. This improvement was primarily driven by significantly lower milk prices, partially offset by costs associated with increased production at the Wisconsin facility as compared to the prior year period.
Selling expenses decreased approximately 5% to $6.8 million during the first six months of 2015 from $7.2 million in the first six months of 2014. Provision for income taxes was $0.8 million, or a 50.6% effective rate, for the first six months of 2015 compared to $1.1 million, or a 53.4% effective tax rate, during the same period in 2014.
Net income was $0.8 million or $0.05 per share for the six-month period ended June 30, 2015 compared to $1.0 million or $0.06 per share in the same period in 2014.
Second quarter results
Second quarter 2015 total consolidated net sales increased 1% to $29.8 million from $29.6 million in the second quarter of 2014.
The company’s second quarter net sales were impacted by significantly higher customer promotional allowances and kefir production capacity constraints. Cost of goods sold as a percentage of net sales, excluding depreciation expense, was approximately 74% during the second quarter compared to approximately 73% for the same period last year.
This increase was primarily driven by a significant increase in promotional allowances and discounts given to customers. Selling expenses decreased approximately 29% to $2.6 million during the second quarter of 2015 from $3.7 million in the second quarter of 2014.
Provision for income taxes was $0.1 million, or a 54.7% effective rate, for the second quarter of 2015 compared to $0.8 million, or a 54.7% effective tax rate, during the same period in 2014.
Net income was $0.1 million, or $0.01 per diluted share, in the three-month period ended June 30, 2015 compared to net income of $0.7 million, or $0.04 per diluted share, in the same period in 2014.
First quarter results
First quarter 2015 total consolidated net sales increased approximately 2% to $29.6 million from $29.1 million in the first quarter of 2014. Cost of goods sold as a percentage of net sales, excluding depreciation expense, was approximately 70% during the first quarter compared to approximately 74% for the same period last year.
This improvement was primarily driven by lower milk prices, partially offset by costs associated with increased production at the Wisconsin facility.
Selling expenses increased approximately 20% to $4.2 million during the first quarter of 2015 from $3.5 million in the first quarter of 2014. This increase was primarily attributable to increased advertising expenses of $1.1 million associated with launch of the company’s first national TV commercial.
Provision for income taxes was $0.7 million, or a 50% effective rate, for the first quarter of 2015 compared to $0.3 million, or a 50% effective tax rate, during the same period in 2014. Net income was $0.7 million, or $0.04 per diluted share, in the three-month period ended March 31, 2015 compared to $0.3 million, or $0.02 per diluted share, in the same period in 2014.
The company had record cash and cash equivalents of approximately $5.9 million as of June 30, 2015 compared to cash and cash equivalents of $3.3 million as of December 31, 2014. The company also generated a record $4.7 million in cash from operating activities in the first six-months of 2015.
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