Lifeway Foods 2025 Q1 Earnings Record High Net Income Growth

Lifeway Foods (LWAY) reported its fiscal 2025 Q1 earnings on May 13th, 2025. Lifeway Foods exceeded expectations with a 45.9% increase in net income for Q1 2025, reaching a record high of $3.54 million. The earnings report also saw a strong EPS growth of 35.3%, rising from $0.17 to $0.23 year-over-year. The company maintains its guidance, expecting to achieve $45-50 million in Adjusted EBITDA by FY2027, with investments focusing on marketing and distribution to support sustained revenue growth.

Revenue

The total revenue of Lifeway Foods grew by 3.3% to $46.09 million in Q1 2025, compared to $44.63 million in Q1 2024. The drinkable kefir segment, excluding ProBugs, generated $38.05 million, while cheese contributed $3.81 million. Revenue from cream and other products amounted to $2.46 million, drinkable yogurt brought in $634,000, ProBugs kefir added $746,000, and other dairy products accounted for $390,000.

Earnings/Net Income

Lifeway Foods' EPS increased by 35.3% to $0.23 in Q1 2025 from $0.17 in Q1 2024, reflecting ongoing earnings growth. The company's net income strengthened significantly, reaching $3.54 million in Q1 2025—a 45.9% increase from $2.43 million in Q1 2024—setting a record high for fiscal Q1 net income, the highest in 14 years. The EPS performance indicates robust financial health.

Price Action

The stock price of Lifeway Foods decreased by 4.56% during the latest trading day, fell by 3.65% over the most recent full trading week, and declined 4.15% month-to-date.

Post-Earnings Price Action Review

A strategy of buying LWAY when revenue misses and holding for 30 days has shown a 20% win ratio, with an average loss of 5% and a maximum loss of 15%. Though the strategy presents variability, it consistently underperforms the market, indicated by a Sharpe ratio of -1.2. Such a strategy is considered unprofitable and not recommended for investors seeking reliable returns. The historical underperformance suggests that the company's stock price struggles following revenue misses, emphasizing caution for potential investors considering this approach.

CEO Commentary

Julie Smolyansky, CEO, highlighted Lifeway Foods' 3.3% increase in net sales driven by over 10% volume growth in branded products, notably Lifeway drinkable kefir and Farmer's Cheese. She acknowledged inflationary pressures on milk prices and the strategic elimination of a retail relationship to enhance margins. Smolyansky emphasized expanding distribution, securing retailer commitments, and focusing on branded offerings to drive profitability. Her optimistic tone reflected confidence in the company's growth potential amidst market challenges.

Guidance

Lifeway Foods expects $45-50 million in Adjusted EBITDA by FY2027, with management committed to investing in marketing and distribution for sustained revenue growth while addressing cost pressures. The company anticipates further organic growth, supported by expanded distribution channels and rising consumer demand for probiotic products.

Additional News

In recent developments, Lifeway Foods faces significant governance challenges, as former officer Edward Smolyansky seeks to replace the company's entire Board of Directors at the 2025 annual meeting. This move comes amid Lifeway's record 2024 earnings and 22 consecutive quarters of growth. The company's Audit and Corporate Governance Committee will review the nominees, with the Board making recommendations accordingly. Additionally, Lifeway noted an unsolicited proposal from Danone North America to acquire shares it doesn't already own, adding complexity to the governance dynamics and potential acquisition landscape. Investors should closely monitor these developments, as they could impact Lifeway's strategic direction and operational momentum.