Lifeway (LWAY)

[zsvq1p]

More On milk price....

I think if ya can figure out COGS, as it relates to Milk price you'll be ahead of the game here....

So here goes...

COGS
2Q COGS = 5,886,186
3Q COGS = 7,096,819
7,096,819/5,886,186 = 21% increase

Milk Price
2Q avg = 16.67333333
3Q avg = 21.99
21.99/16.67 = 31% increase

Labor
the Q reports says labor increase 15%...This is about the as 10K05 report says labor increase 18% and they said then it had 2% effect on COGS... so....
21% - 2% = 19%

Packaging and freight!
freight using GXYF compares .05% increase and plastics are higher 1%....
19% - 1.5% = 17.5%

thus Giff concludes for every 1% move on Class II Price milk price has .564% effect COGS... For example...

If price of milk had 0% increase..
0% x .564% = $0
10% x .564% = 5.6% increase in COSG (1.56*5.8 mil = $6.2 mil vs 3Q)


So here we go.... Does this company hedge?? http://futures.tradingcharts.com/marketquotes/DA.html
Oct 2007 = 21.9
Nov 2007 = Futures...19.20
Dec 2007 = Futures...19.55
4Q avg maybe = 20.21
3Q avg = 21.99
20.21/21.99 = (8.1%)

Thus 8.1 x .564% = (4.56%) effect on COGS...
so assume same sales the COGS 7,096,819 - 4.56% = 6,772,494
meaning $6.8/$9,8 = 69% COGS.. and 100%-69% = 31% gross margins...

2Q to 3Q revs increase 1%... I think 4Q will be higher! What.. WAG??? Anybody want to take a guess?

and what about price increases? I say they do at least 5%....

Anybody want to make some assumption on Q on Q growth for 2008?