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I have this chart I'll try and update this week end....
I think we are in or near a buy range...
http://investorshub.advfn.com/boards/read_msg.asp?message_id=20853311
Finding the one is my mission too Gfp.
I thought COR was it... it may still be, but the time horizon has lengthened quite a bit.
I know that you always do good DD and have a knack for asking good questions, so I'll be very interested in following LWAY more closely now and seeing if you jump in.
BTW, I've really appreciated following Oldpro's ongoing LWAY posts, as well as Giff and Billcoln.
Aiming, I can't help but think that Lifeway is going to be a much bigger company someday. They've hit a speed bump - the previous quarter was such a blowout that it set them up for a disappointment. But the market cap is now only around $200 mil, and one could see this as a multi billion dollar company some day.
The share price needs to establish some kind of bottom, but I'm thinking of taking a long term core position. As OldPro's motto says -- On a mission to find 'The One' -- and Lifeway looks like a promising candidate.
Or somebody writes a book with Lifeway as the backdrop and Oprah features it as one of her book selections.
Aiming, Maybe if Oprah becomes a regular :o)
I wonder how much public awareness one store can generate.
I'm undoubtedly missing some other reasons, but a single store would seem useful for either proof of concept (for more stores), or for market research.
OldPro, But how much sales can be generated by a single store in Chicago? For the retail outlet idea to provide a significant impact on company revenues, they're going to need to open many stores. Once you go down that route though, the company's business plan changes radically.
On the other hand, if they want to open just a couple stores in Chicago to generate public awareness for the brand, that's another thing. I still need to hear the CEO explain their long term strategy with the retail store idea.
milk prices dropped big...
in the 2nd quarter and then shot right back up - mostly due to speculators IMO - but I really thought they would continue lower due to corn yields being high. Milk prices seem to have stabilized (maybe) but LWAY should simply raise prices - that is the unfortunate answer IMO. The cost of doubling capacity is likely almost done and I'm uncertain on how much it costs to open a retail store (permits, rent, equipment, employees, etc.) but do know that they should have great margins on what they sell since they make it.
Growth should continue to be strong IMO and 30% is sustainable - but you are absolutely right - they need to bring the EPS growth up to the revenue growth. PE of 60 is defintely high given the EPS miss this quarter- and market is not be merciful right now to EPS misses.
OldPro, What do you think about the P/E still being at 60 though? Revenue growth around 30% will support a high valuation, but the growth in earnings has to come through too.
Several factors that could adversely affect earnings going forward - 1) milk prices continuing to rise, 2) the costs involved in doubling the company's production capacity, 3) the costs involved in opening retail stores.
agree with you assessment...
12 and then 10. Would think it would hold 12 and then make its way back up - but this market stinks and lots of stocks are taking big hits. They could mitigate the negative impact by releasing a PR in the AM on Starfruit shop opening and steps taken to improve earnings - but will they - doubt it.
Looks like $12.00 in after hours. The support levels look like $12, and then $10, though the P/E is still high. Any thoughts on where the price stabilizes? Thanks.
>>> Form 10QSB for LIFEWAY FOODS INC
14-Nov-2007
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Comparison of Quarter Ended September 30, 2007 to Quarter Ended September 30, 2006
The following analysis should be read in conjunction with the unaudited financial statements of the Company and related notes included elsewhere in this quarterly report and the audited financial statements and Management's Discussion and Analysis contained in our Form 10-KSB, for the fiscal year ended December 31, 2006, and in the Management's Discussion and Analysis contained in our Form 10-QSB, for the fiscal quarters ended March 31, 2007, and June 30, 2007.
Results of Operations
Total sales increased by $2,360,829, (approximately 32%) to $9,817,478 during the three-month period ended September 30, 2007 from $7,456,649 during the same three-month period in 2006. This increase is primarily attributable to increased sales and awareness of Lifeway's flagship line, Kefir, as well as the acquisition of the Helios Organic Kefir line and the Pride of Main Street milk line. Helios Nutrition and its subsidiary, Pride of Main Street Dairy, which were acquired August 3, 2006, accounted for a total of $1,434,517 in sales, with the Helios kefir brand accounting for $1,183,287 in sales, and the Pride of Main Street line accounting for $251,230 in sales.
Sales for the existing Lifeway Foods line increased by $1,823,927 (approximately 28%) to $8,382,961 during the three-month period ended September 30, 2007 from $6,559,034 during the same three-month period in 2006. This increase is primarily attributable to increased sales and awareness of Lifeway's existing drinkable dairy products including La Fruta, its flagship line, Kefir, as well as Lifeway's new kids kefir drink, Probugsä.
Total cost of goods sold as a percentage of sales for Lifeway Foods was approximately 72% during the third quarter 2007, compared to about 62% during the same period in 2006. The increase was primarily attributable to the cost of milk, Lifeway's largest cost of goods sold component, which was approximately 110% higher in the third quarter 2007 compared to the same period in 2006. The price of milk in the month of September was the highest ever recorded, and we have since seen the price slightly drop during the month of October, 2007, however, we can make no assurances that the price of milk will continue to decline from its September 2007 record highs. In addition, on July 1, 2007 the minimum wage in Illinois increased to $7.50 per hour from $6.50 per hour, which also had a negative impact our gross margins.
Total operating expenses as a percentage of sales for Lifeway Foods were approximately 22% during the third quarter 2007, compared to about 23% during the same period in 2006. This decrease is primarily attributable to operating synergies gained by the consolidation of the recently-acquired Helios Nutrition into our overall operations, as well as our continuing efforts to maximize efficiency through capital investments.
Total other income for the third quarter ended September 30, 2007 was $201,658, compared with $76,651 during the same period in 2006. This increase is primarily attributable to gains on the sale of marketable securities, which was $201,658 in the third quarter ended September 2007, compared with $89,260 in the same period in 2006. Marketable securities are discussed in Note 4 of the Notes to Consolidated Financial Statements.
Provision for income taxes was $314,508, or a 40% tax rate during the third quarter 2007 compared with $456,012 or a 38% tax rate during the same period in 2006. Income taxes are discussed in Note 9 of the Notes to Consolidated Financial Statements.
Total net income for the group was $468,194 or $.03 per split adjusted share for the third quarter ended September 30, 2007, compared with $739,959 or $.04 per split adjusted share in the same period in 2006.
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Total net income for the group was $468,194 or $.03 per split adjusted share for the third quarter ended September 30, 2007, compared with $739,959 or $.04 per split adjusted share in the same period in 2006. This decrease was primarily attributable to the reduced margins as a result of the increased cost of milk as discussed above.
Comparison of Nine-Month Period Ended September 30, 2007 to Nine Month Period Ended September 30, 2006
Results of Operations
Total sales increased by $8,727,915, (approximately 44%) to $28,554,984 during the nine-month period ended September 30, 2007 from $19,827,069 during the same nine-month period in 2006. This increase is primarily attributable to increased sales and awareness of Lifeway's flagship line, Kefir, as well as the acquisition of the Helios Organic Kefir line and the Pride of Main Street milk line. Helios Nutrition and its subsidiary, Pride of Main Street Dairy, which were acquired August 3, 2006, accounted for a total of $4,189,011 in sales, with the Helios kefir brand accounting for $3,519,872 in sales, and the Pride of Main Street line accounting for $669,139 in sales for the first nine-months of 2007
Sales for the existing Lifeway Foods line increased by $5,436,518 (approximately 29%) to $24,365,971 during the nine month period ended September 30, 2007 from $18,929,453 during the same nine-month period in 2006. This increase is primarily attributable to increased sales and awareness of Lifeway's existing drinkable dairy products including La Fruta, its flagship line, Kefir, as well as Lifeway's new kids kefir drink, Probugsä.
Cost of goods sold, as a percentage of sales for the Lifeway Foods line was approximately 65% during the nine-month period ended September 30, 2007, compared to about 59% during the same period in 2006. The increase was primarily attributable to the cost of milk, Lifeway's largest cost of goods sold component, which was approximately 80% higher in the first nine-months of 2007 compared to the same period in 2006. The price of milk in the month of September was the highest ever recorded, and we have since seen the price slightly drop during the month of October, 2007, however, we can make no assurances that the price of milk will continue to decline from its September 2007 record highs. In addition, on July 1, 2007 the minimum wage in Illinois increased to $7.50 per hour from $6.50 per hour, which also had a negative impact our gross margins.
Total operating expenses as a percentage of sales for Lifeway Foods were approximately 21% during the nine-month period ending September 30, 2007, compared to about 24% during the same period in 2006. This decrease is primarily attributable to operating synergies gained by the consolidation of the recently-acquired Helios Nutrition into our overall operations, as well as our continuing efforts to maximize efficiency through capital investments.
Total other income for the nine-months ended September 30, 2007 was $619,523, compared with $362,965 during the same period in 2006. This increase is primarily attributable to gains on the sale of marketable securities, which was $662,009 in the nine-month period ending September 30, 2007, compared with $277,674 in the same period in 2006. Marketable securities are discussed in Note 4 of the Notes to Consolidated Financial Statements.
Total net income for the group was $2,999,551, or $.18 per split adjusted share for the nine-months ended September 30, 2007, compared with $2,384,661 or $.14 per split adjusted share in the same period in 2006. This represents a 26% year over year increase.
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Sources and Uses of Cash
Net cash provided by operating activities increased $313,539 to $1,252,309 during the nine-month period ended September 30, 2007 from $938,770 during the same period in 2006. This increase is primarily attributable to the increase in net income during the first nine months of 2007.
Net cash used by financing activities was $1,771,488 during the nine months ended September 30, 2007, which is an increase of $800,712 compared to $970,776 of net cash used by financing activities during the same period in 2006. This increase is primarily attributable to the Company repaying $1,261,014 of the $4.2 million note issued in connection with the Helios acquisition in August 2006, which was absent in 2006. This note payable is discussed in Note 8 of the Notes to Consolidated Financial Statements
Net cash provided by investing activities was $595,933 during the nine months ended September 30, 2007, which is an increase of $3,675,702 compared to $3,079,769 net cash used in investing activities during the same period in 2006. This increase is primarily due to the Company's use of $2,514,679 net of cash acquired to purchase Helios Nutrition in August of 2006. The acquisition is discussed in Note 1 of the Notes to Consolidated Financial Statements.
Significant portions of our assets are held in marketable securities. The majority of our marketable securities are classified as available-for-sale on our balance sheet, while the mortgage-backed securities are classified as trading. All of these securities are stated thereon at market value as of the end of the applicable period. Gains and losses on the portfolio are determined by the specific identification method.
Other Developments
On May 18, 2007, Lifeway's Board of Directors approved awards of an aggregate amount of 8,400 shares to be awarded under its Employee and Consulting Services and Compensation Plan to certain key employees and consultants for services rendered to the Company. The stock awards were made on June 1, 2007 and have vesting periods of one year. The expense for the awards is measured as of June 1, 2007 at $9.90 per share for 8,400 shares, or a total stock award expense of $83,160. This expense will be recognized as the stock awards vest monthly in 12 equal portions of $6,930, based upon the vesting of 700 shares per month.
Critical Accounting Policies
Lifeway's analysis and discussion of its financial condition and results of operations are based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The preparation of financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. US GAAP provides the framework from which to make these estimates, assumptions and disclosures. Lifeway chooses accounting policies within US GAAP that management believes are appropriate to accurately and fairly report Lifeway's operating results and financial position in a consistent manner. Management regularly assesses these policies in light of current and forecasted economic conditions and has discussed the development and selection of critical accounting policies with its audit committee of the Board of Directors. For further information concerning accounting policies, refer to Note 2 -- Nature of Business and Significant Accounting Policies in the notes to the consolidated financial statements.
Forward Looking Statements
In this report, in reports subsequently filed by Lifeway with the SEC on Form 10-QSB and filed or furnished on Form 8-K, and in related comments by management, our use of the words "believe," "expect," "anticipate," "estimate," "forecast," "objective," "plan," "goal," "project," "explore," "priorities/targets," and similar expressions is intended to identify forward-looking statements. While these statements represent our
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current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described in this report and other factors that may be described in subsequent reports which Lifeway may file with the SEC on Form 10-QSB and filed or furnished on Form 8-K, including but not limited to:
· Changes in economic conditions, commodity prices;
· Shortages of and price increase for fuel, labor strikes or work stoppages, market acceptance of the Company's new products;
· Significant changes in the competitive environment;
· Changes in laws, regulations, and tax rates; and
· Management's ability to achieve reductions in cost and employment levels, to realize production efficiencies and to implement capital expenditures, all at of the levels and times planned by management. <<<
I am impressed with the way they released the 10Q with no press release. A press release hitting the news wires would just attract the quick hit and run short sellers and bring the price down even more.
Bill
All the dairy related business are taking a hit... raw prices have gone up way too fast for the food companies to react. I think they price retailers base on quarters.. A good thing to know would be how food companies price.
I am not sure why they did not pass increased costs along. This is still a great growth story with hopefully a one quarter misstep.
Bill
not good...
stock will take a hit and so will my account. lucky I sold some a while back near highs - but then bought some back lower. Will look to buy back in at lower amount since still believe future is bright - they were on the brink of a break through and this is a definite set back - temporary I hope.
10-Q: Earnings miss of .03 cents vs. .04 and estimates of .06 for the quarter on higher cost of milk and effects of minimum wage increase.
Bill
I got an e-mail from the cfo a few days ago and he said the 10Q would be released on Nov. 14 (today). I also asked if certain items would be mentioned in the 10Q and he was not sure. I'd hate to think I caused the delay if there is to be one. Isn't the 10Q due tomorrow?
Bill
Lifeway Foods Inc (LWAY) Corporate Event Announcement Notice
Tuesday , November 13, 2007 21:01ET
Nov 13, 2007 (Wall Street Horizon via COMTEX) --
Lifeway Foods Inc (LWAY)
Expected next earnings release:
Announcement date: 11/20/2007 - After Market
Earnings Quarter: Q3
Announcement Status: Unconfirmed
Now says not until next Tuesday - unconfirmed again - don't know when they're going to release.
Lifeway Foods Inc (LWAY) Corporate Event Announcement Notice
Monday , November 12, 2007 20:50ET
Nov 12, 2007 (Wall Street Horizon via COMTEX) --
Lifeway Foods Inc (LWAY)
Expected next earnings release:
Announcement date: 11/13/2007 - After Market
Earnings Quarter: Q3
Announcement Status: Unconfirmed
for the techies, LWAY now in...
bigtime oversold territory and due for a strong bounce. Good earnings and an announcement on the opening of the Starfruit shop should do it. Throw in other news on pick up in food distribution or deal with a nationally recognized franchise or similar - and you have powerful catalyst for investors to jump back in - it's all set up for big price jump IMO.
Aiming, Lifeway first needs to find a bottom. Looking at the chart, the $12 area looks like it should be strong support. OldPro said the earnings are due out probably next week. Revenues were up nice year over year but basically flat from the last quarter (last quarter was a blowout). We'll see how the earnings fared. One problem here is the company doesn't hold many conf calls, so it's hard to figure what their strategy is with the retail stores. Opening a bunch of stores could be an expensive proposition.
You might want to check out Wimm-Bill-Dann Foods also (WBD), a beautiful chart, PE in 40s, PEG ratio under 1. They sell dairy products in Russia. I've also been looking at two that operate in China - Synutra Intl (SYUT) and American Dairy (ADY).
A good core holding is Diageo (DEO), based in the UK, very nice long term chart, they own Guinness, Smirnoff, Bailey's, Johnny Walker, etc.
Lots of asses getting handed around the past week, so no shame there.
ha ha.. a hint...
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23392223
but don't follow me.. Just got my ass handed to me at VSF...
win a few.. lose a few...
Giff - did you post anywhere that you were shorting LWAY?
You certainly made a good trade - congrats.
It's a good company...
and got ahead of itself... IMO
I was able to short it in the 19's and covered around 17.. If I had any guts would have waited... LOL
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23051843
It's gonna come back.. people love the product!
After shedding 1/3 of its market cap and no company communications, smells more rotten than cultured, don't you think?
Billcoln, Did he indicate how many stores they have in mind? I assume they would limit it to the Chicago area first to see how it goes. Thanks.
I e-mailed the cfo as soon as I heard about the retail store and he gave me a fairly detailed explanation of why they are doing this Starfruit concept. I have e-mailed him a few times and he always responds right away.
Some people have questioned whether Trader Joes carries Lifeway kefir. I think the website link has been recently updated to show Trader Joes in the midwest and northeast as retailers that carry Kefir. http://www.lifeway.net/product/maps.php
Good luck to everyone.
Bill
The store is a concern to me too.
I think a proof of concept idea is ok, but retail is a whole new ball game if Lifeway is serious about it.
OldPro, To establish and run your own chain of stores is a whole other business plan with its own set of risks, and could prove to be an expensive distraction from the more important goal of expanding production capacity.
Lifeway is in the process of doubling production capacity already, but further expansion could allow US Foodservice to expand its distribution to restaurants/schools/hotels nationally. This would seem to be a safer approach than trying to start a chain of retail stores.
yes - I think that is their plan...
and you're right - communication is poor. They said they at their last conf. call they will do annual conf. calls - would be better IMO if they did them quarterly. I do believe the Starfruit shop will be a success and big revenue boost.
OldPro, Do you think the retail store idea is something Lifeway plans to expand upon, with the one in Chicago being a 'test run' for more stores? Having stores would change the business dynamics of the company significantly. They need to start communicating better with shareholders and the public, explaining how they see their business strategy evolving. An occasional conference call would be a good place to start.
price increase huh - guess bound to happen...
the local health food store doubled up on shelf space recently. Spoke with owner who said customers ask for Kefir by name now - something that is fairly recent.
Local Meijer store had some on shelves one week and then next week the spot was clear and hasn't been filled yet. Have to believe store managers are just being lame on noticing that it sold out and need to restock.
I get to Chicago several times a year and plan to visit the Starfruit shop either later this year or early next -will report back on. Believe this shop will result in noticeable jump in revenue and profit and several more stores will pop up in 2008 - we'll see.
This delay is of no concern to me. You would be surprised how difficult it can be to coordinate all the approvals, while dealing with the egos of all the departments needed to sign off before getting the occupancy permit.
The Whole Foods near me just increased the price of Lifeway Kefir 30 cents.
Bill
expecting News on the...
opening of Starfruit shop this month - obviously didn't get it open in October like they had originally planned.
she's got the right attitude...
hope for good report and to get some news on the starfruit shop.
yes, they have historically done it...
this way - first revenue and then earnings in the 10Q filing.
OldPro, A while ago they issued the revenue numbers for the last quarter, so I'm wondering what's holding up the earnings report? Have they done it this way in prior quarters (revs and earnings announced with a big time gap in between)? Thanks.
Fwiw, I unloaded a week or so ago, but am looking for a reentry point. Would like to see the earnings numbers first though. The PE was getting a little stratospheric (85), though even with the pullback its still way up there.
around Nov. 15th - should be an...
OK quarter, would be surprised if they beat estimates and hoping they hit. Really think the story will be going forward. Although they don't provide guidance, would be nice to get a forward looking statement of some kind. Really believe that sales on going to kick into high gear - several reasons for this including food distribution agreement gaining traction, opening of Starfruit shop, and growing awareness of kefir.
Tough last few trading days - may test 15 again but would be shocked if closed below for any length of time. Growth story and future is bright.
OldPro, Any idea when the rest of the earnings report will come out? Thanks.
oversold and Starfruit shop opens...
any day now in Chicago. Should get pop on that and hopefully when release earnings.
Store Manager, Full-time/ Part-time Staff
Reply to: job-424965231@craigslist.org
Date: 2007-09-17, 5:25PM CDT
Jobs at Starfruit
Do you want to join a fast-growing company with friendly people and a cool atmosphere that you will love working for? Join us and become an integral part of the Starfruit story! Starfruit, a new and healthy dessert alternative, serves delicious frozen Kefir. Please email your resume to marinan@lifeway.net
We are currently hiring for the following positions to start at the end of September and beginning of Oct 2007:
1 - Store Manager (full-time) 2 - Assistant Managers (part-time)
Cafe Associates - (Full Time and/or Part Time)
Starfruit is located at 1745 W. Division St., Chicago
Starfruit
Neighborhood: East Village / Ukranian Village
1745 W. Division St.
Chicago, IL 60622
773-328-2900
Fans of kefir, the yogurt-like dairy product that allegedly fights fatigue, enhances the immune system, promotes gastrointestinal health and might even cure a hangover, should be in heaven when this Wicker Park spot opens this fall. This is the first cafe from the folks behind Morton Grove-based Lifeway Foods; look for a lineup including kefir-based smoothies and frozen soft-serve kefir sundaes. Aiming to please both the snack and dessert crowd, there’ll be an array of toppings and mix-ins like cereal, crushed Oreo cookies, blueberries and strawberries. They’re not giving up details about the look of the space, but are promising a “homey coffeehouse-style hangout” and outdoor seating next summer. Target opening date: mid-October.
based on chart, may be able...
get some around 17.10 if it decides to pull back - should pull back to around the blue line if history repeats.
Yes it has... I thought those shorts would lay da wood to it... but since it's a strong growth stock maybe support will hold until next big product push.. gonna try a pick some up if falls back..
OldPro, Thanks. I'm long Lifeway, but am always looking for opportunities. Synutra has had a big run, but still looks interesting as a China play. Likewise WBD in Russia, unless of course Putin decides to nationalize the dairy industry or something :o)
know SYUT well - never...
pulled the trigger to buy shares long ago when found it - huge mistake - but so many like that.
Have DD'ed all of them before and picked LWAY in this sector - but the entire sector has been good. As I've said before and am sticking by - raw milk prices are declining and will continue to do so IMO. Any company that benefits from this is worth looking into.
Next quarter for LWAY shuld reflect the falling milk prices and this may have contributed to LWAY's ability to fight it's way back today.
OldPro, board, Any thoughts on the merits of these other dairy related companies - Synutra (SYUT), American Dairy (ADY), and Wimm-Bill-Dann Foods (WBD)? Thanks for any insights.
held up surprisingly well...
which I think spells something is in the works - we'll see. But I was a little disappointed on the revs - was hoping for around $10.5 mil.
Looked back at CROX and HANS and they both had a few flat quarters before the rocket ahead quarters - hoping that's where we are here.
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