Lifeway Foods Inc (LWAY) 2022 Q3 法說會逐字稿

Good afternoon. Welcome to Lifeway Foods Third Quarter 2022 Earnings Conference Call. On the call with me today is Julie Smolyansky, Chief Executive Officer. By now, everyone should have access to the press release that went out this morning. If you have not received the release, it is available on the Investor Relations portion of Lifeway's website at www.lifewayfoods.com. A recording of this call will be available on the company's website.

下午好。歡迎來到 Lifeway Foods 2022 年第三季度收益電話會議。今天與我通話的是首席執行官 Julie Smolyansky。到現在為止，每個人都應該可以看到今天早上發布的新聞稿。如果您還沒有收到新聞稿，可以在 Lifeway 網站 www.lifewayfoods.com 的投資者關係部分找到。該公司網站上將提供此次通話的錄音。

Before we begin, we would like to remind everyone that the prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. The words believe, expect, anticipate and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance and therefore, undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements. Lifeway assumes no obligation to update any forward-looking projections that may be made in today's release or call. All of the forward-looking statements contained herein speak only as of the date of this call.

在我們開始之前，我們想提醒大家，準備好的評論包含前瞻性陳述，管理層可能會針對您的問題作出額外的前瞻性陳述。相信、期望、預期和其他類似的表達方式通常可以識別前瞻性陳述。這些陳述不保證未來的表現，因此，不應過分依賴它們。實際結果可能與任何前瞻性陳述中預測的結果存在重大差異。 Lifeway 不承擔更新今天發布或電話會議中可能做出的任何前瞻性預測的義務。此處包含的所有前瞻性陳述僅在本次電話會議之日有效。

And with that, I would like to turn the call over to Lifeway's Chief Executive Officer, Julie Smolyansky.

因此，我想將電話轉給 Lifeway 的首席執行官 Julie Smolyansky。

Thank you, John, and good morning to everyone joining us today. First, as always, thank you for your interest in Lifeway Foods. I am very pleased to be speaking with you today about our third quarter, another strong period of growth for our business.

謝謝你，約翰，早上好，今天加入我們的每個人。首先，一如既往地感謝您對 Lifeway Foods 的關注。我很高興今天能與您談論我們的第三季度，這是我們業務的又一個強勁增長時期。

Before discussing the results, I'd like to thank the whole Lifeway team for their impressive efforts and commitment, which have enabled us to seamlessly navigate the challenging operating environment our industry has faced this year and deliver for our valued partners and customers.

在討論結果之前，我要感謝整個 Lifeway 團隊所做的令人印象深刻的努力和承諾，這使我們能夠無縫應對我們行業今年面臨的充滿挑戰的運營環境，並為我們重要的合作夥伴和客戶提供服務。

Now I will review our third quarter 2022 results. This quarter's record-breaking top line numbers are a result of our focus on the core Lifeway Kefir business. The strategy we have put in place to build awareness for our flagship product has yielded our 12th consecutive quarter of year-over-year growth at Lifeway, and we're grateful to our customers who have made this milestone possible.

現在我將回顧我們 2022 年第三季度的業績。本季度創紀錄的收入數字是我們專注於 Lifeway Kefir 核心業務的結果。我們為提高旗艦產品知名度而實施的戰略使 Lifeway 連續第 12 個季度實現同比增長，我們感謝讓這一里程碑成為可能的客戶。

Net sales were $38.1 million for the period ended September 30, 2022, an increase of $8.6 million or 29.1% compared to the third quarter in 2021. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir; and the impact of our price increases implemented during the first quarter of 2022; and, to a lesser extent, the favorable impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

截至 2022 年 9 月 30 日止期間的淨銷售額為 3810 萬美元，比 2021 年第三季度增加 860 萬美元或 29.1%。淨銷售額的增長主要是由於我們品牌的可飲用開菲爾的銷量增加；以及我們在 2022 年第一季度實施的價格上漲的影響；在較小程度上，我們在 2021 年第三季度收購 GlenOaks Farms 的有利影響。

It's important to note that even though we implemented price increases this year, branded Lifeway unit sales also increased by double digits during the third quarter. Our branded drinkable kefir is the core driver of our business, and the consistent growth of Lifeway Kefir illustrates both the stickiness of our active customers and the success of our customer acquisition effort.

值得注意的是，儘管我們今年實施了提價，Lifeway 品牌的銷量在第三季度也實現了兩位數的增長。我們的品牌飲用開菲爾是我們業務的核心驅動力，Lifeway Kefir 的持續增長說明了我們活躍客戶的粘性和我們客戶獲取工作的成功。

In addition, we reported a gross profit margin of 19.9% for the period ended September 30, 2022. Like others in the industry, we are not immune to the inflationary pressures of the current economic market. We continue to incur incremental costs from our price increases on raw materials, including milk, our core commodity, packaging and freight. That said, as we have disclosed previously, we have taken a price increase throughout this year to offset certain costs and maintain our growth without bottom line erosion.

此外，我們報告截至 2022 年 9 月 30 日止期間的毛利率為 19.9%。與業內其他公司一樣，我們也不能倖免於當前經濟市場的通脹壓力。我們繼續因原材料價格上漲而產生增量成本，包括牛奶、我們的核心商品、包裝和運費。也就是說，正如我們之前披露的那樣，我們今年全年都在提價，以抵消某些成本並保持我們的增長而不會侵蝕底線。

Our operations team has also consistently delivered in monitoring industry trends and ensuring that we have been positioned comfortably against any potential shortages as well. We intend to continue to prioritize margins moving forward and searching for efficiencies to keep them as stable as possible.

我們的運營團隊還始終如一地監測行業趨勢，並確保我們能夠輕鬆應對任何潛在的短缺。我們打算繼續優先考慮利潤率向前發展並尋求效率以盡可能保持穩定。

Moving on to expenses. Selling, general and administrative expenses increased $0.4 million to $6.3 million for the period ended September 30, 2022, from $5.9 million during the same period in 2021. Our net income during the period ended September 30, 2022, was $1 million, reflecting EPS of $0.06 per basic and diluted share, compared to a net income of $5 million or $0.03 per diluted common share during the prior year period. As we work to stabilize our margins and continue to execute on our outlined Lifeway 2.0 strategy, we expect to see progress on our profitability metrics.

繼續討論費用。截至 2022 年 9 月 30 日止期間，銷售、一般和行政費用從 2021 年同期的 590 萬美元增加 40 萬美元至 630 萬美元。我們截至 2022 年 9 月 30 日止期間的淨收入為 100 萬美元，反映每股收益為每股基本和稀釋股 0.06 美元，而去年同期的淨收入為 500 萬美元或每股稀釋普通股 0.03 美元。在我們努力穩定我們的利潤率並繼續執行我們概述的 Lifeway 2.0 戰略時，我們希望看到我們的盈利指標取得進展。

Capital spending increased approximately $0.9 million to $2.6 million during the same 9-month period ended September 30, 2022. We focus our capital spend on 3 core areas: growth capital, cost reduction and facility improvements. The growth capital supports new product innovation and enhancement. [Spend] on cost reduction and facility improvements support manufacturing efficiencies, safety and productivity. Our continued capital commitment reflects our goals as a business to continue growing and improving our internal efficiencies.

在截至 2022 年 9 月 30 日的同一 9 個月期間，資本支出增加了約 90 萬美元至 260 萬美元。我們將資本支出集中在 3 個核心領域：增長資本、降低成本和改善設施。成長資本支持新產品的創新和改進。 [支出] 用於降低成本和改進設施支持製造效率、安全性和生產力。我們持續的資本承諾反映了我們作為一家企業的目標，即繼續發展和提高我們的內部效率。

In summary, the third quarter was a record-breaking quarter for Lifeway. Our net sales of $38.1 million were the highest for any quarter in the company's history. This also marked our 12th straight quarter of year-over-year net sales growth and furthered the exceptional performance of our brand year-to-date.

總之，第三季度是 Lifeway 創紀錄的季度。我們 3810 萬美元的淨銷售額是公司歷史上任何一個季度的最高值。這也標誌著我們連續第 12 個季度實現淨銷售額同比增長，進一步鞏固了我們品牌今年迄今的卓越表現。

In addition to the results, we continue to enhance our relationship with our retail partners and customers, increase our investment in sales and marketing to promote retention and attract new eyes to the brand and have put pen to paper on multiple new distribution deals, which I'll discuss shortly, and I'm quite excited about.

除了業績，我們還繼續加強與零售合作夥伴和客戶的關係，增加對銷售和營銷的投資，以促進品牌保留並吸引新眼光，並簽署了多項新的分銷協議，我很快就會討論，我很興奮。

We're particularly encouraged by our third quarter performance as consumer trends, affected by inflation and recessionary expectations, have indicated a trade down to value items and overall decreased willingness to spend. Despite that, demand for Lifeway products has increased meaningfully, and we have expanded distribution and seen accelerating velocities with certain key retail partners.

我們對第三季度的業績感到特別鼓舞，因為受通貨膨脹和衰退預期影響的消費者趨勢表明，人們傾向於低估商品的價值，並且整體消費意願下降。儘管如此，對 Lifeway 產品的需求顯著增加，我們已經擴大了分銷範圍，並看到與某些主要零售合作夥伴的合作速度加快。

Our strong results throughout this quarter and this year to date illustrate that our target consumers remain very focused on gut health and nutrition, which is a strong tailwind to Lifeway's addressable market. Based on multiple market research reports, we believe this tailwind will continue to accelerate us for years to come.

我們在本季度和今年迄今為止的強勁業績表明，我們的目標消費者仍然非常關注腸道健康和營養，這對 Lifeway 的目標市場來說是一個強大的推動力。根據多項市場研究報告，我們相信這種順風將在未來幾年繼續加速我們的發展。

Per September report from Brainy Insights, the global kefir market is expected to grow from $1.46 billion in 2021 to $2.45 billion by 2030 at a CAGR of 5.9% during the forecast period 2022 to 2030. Cited drivers include the increased preference for healthy drinks and snacks during the forecast period expanding demand.

根據 Brainy Insights 9 月份的報告，全球開菲爾市場預計將從 2021 年的 14.6 億美元增長到 2030 年的 24.5 億美元，在 2022 年至 2030 年的預測期內，複合年增長率為 5.9%。提到的驅動因素包括對健康飲料和零食的偏好增加在預測期內擴大需求。

Per an August report from Mordor Intelligence, the global kefir market is expected to grow at a CAGR of 6.4% during the forecast period of 2022 to 2027, up from their previous report this year, which cited a 5.6% CAGR. They cite the increasing demand for probiotic drinks as one of the key drivers, noting the efficacy of probiotics in treating certain health concerns such as lactose intolerance.

根據 Mordor Intelligence 8 月份的一份報告，全球開菲爾市場預計在 2022 年至 2027 年的預測期內以 6.4% 的複合年增長率增長，高於他們今年上一份報告的複合年增長率 5.6%。他們將對益生菌飲料的需求不斷增長列為主要驅動因素之一，並指出益生菌在治療某些健康問題（如乳糖不耐症）方面的功效。

As the dominant market leaders in the U.S. kefir industry, Lifeway is extremely well positioned to capitalize on this growing market and consumer interest. Our drinkable kefir is the backbone of our business and accounts for the vast majority of our sales. In the 36 years since Lifeway was founded, we have established ourselves as the leading brand in kefir and dominate the category.

作為美國開菲爾行業的主導市場領導者，Lifeway 處於非常有利的地位，可以利用這個不斷增長的市場和消費者的興趣。我們的可飲用開菲爾是我們業務的支柱，占我們銷售額的絕大部分。自 Lifeway 成立以來的 36 年裡，我們已經確立了自己在開菲爾領域的領導品牌地位，並在該品類中佔據主導地位。

While innovation and the ability to adapt to consumer trends and behaviors is crucial for success in this industry, it's important to also recognize that consumer fabs come and go. We have seen money shifts in dynamics in the dairy and dairy alternative space over the past years in particular, and our core Lifeway Kefir business has remained steady and consistent in comparison. After very strong years in both 2020 and 2021, our drinkable kefir net sales were up 27.1% and 14.6% for the third quarter and 9 months ended September 30, 2022, respectively, when compared to the same period in 2021.

雖然創新和適應消費者趨勢和行為的能力對於這個行業的成功至關重要，但同樣重要的是要認識到消費者工廠的來來去去。特別是在過去幾年中，我們看到了乳製品和乳製品替代空間動態的資金轉移，相比之下，我們的核心 Lifeway Kefir 業務保持穩定和一致。在經歷了 2020 年和 2021 年的強勁表現之後，與 2021 年同期相比，截至 2022 年 9 月 30 日的第三季度和 9 個月，我們的可飲用開菲爾淨銷售額分別增長了 27.1% 和 14.6%。

As we aim ahead to Lifeway's continued expansion within the growing market, we are focused on doing what we do well over and over again, and that is selling our kefir. Our products are healthy, delicious and can be incorporated very dynamically amongst a variety of recipes, which have consistently received positive attention from customers and in the press.

由於我們的目標是 Lifeway 在不斷增長的市場中繼續擴張，我們專注於一次又一次地做我們擅長的事情，那就是銷售我們的開菲爾。我們的產品健康、美味，可以靈活地融入各種食譜中，一直受到客戶和媒體的積極關注。

To continue delivering Lifeway to more and more consumers, we plan to consistently deliver on our customer acquisition strategy through advertising and marketing program and to focus on our distribution network to increase access. I'll now touch on some of our marketing and advertising strategies.

為了繼續向越來越多的消費者提供 Lifeway，我們計劃通過廣告和營銷計劃始終如一地實施我們的客戶獲取戰略，並專注於我們的分銷網絡以增加訪問量。我現在將談談我們的一些營銷和廣告策略。

In the middle of 2021, we initiated a large marketing program with the Immersive Van Gogh experience, a national exhibition that showcases Van Gogh's artwork through light, music and movement and imagination in 22 major U.S. cities. This in-person marketing opportunity emphasizes wellness and allows us to connect with our consumers on a deep level. To date, Van Gogh experience has netted over 275 million impressions, and we've distributed over 250,000 Lifeway Kefir samples to attendees.

2021 年年中，我們啟動了一項大型營銷計劃，其中包括沉浸式梵高體驗，這是一個在美國 22 個主要城市通過燈光、音樂、運動和想像力展示梵高藝術作品的全國性展覽。這種面對面的營銷機會強調健康，使我們能夠與消費者建立更深層次的聯繫。迄今為止，梵高體驗已獲得超過 2.75 億次展示，我們已向與會者分發了超過 250,000 個 Lifeway Kefir 樣品。

In Q3 of 2022, Lifeway received 60 media placements and target outlets, resulting in a potential reach of more than 875 million impressions, including prominent features with Fox Business, Forbes, Good Housekeeping, mindbodygreen, Women's Health and much more.

2022 年第三季度，Lifeway 獲得了 60 個媒體投放和目標渠道，潛在影響超過 8.75 億次，包括 Fox Business、Forbes、Good Housekeeping、mindbodygreen、Women's Health 等的突出報導。

To demonstrate the versatility of Lifeway Kefir and expand reach, we've continued our work with notable influencers, chefs and nutrition experts to suggest healthy ingredient swaps, recipes and snack ideas incorporating our products. We distribute these across Lifeway social media platforms and website, which have both seen large increases this year.

為了展示 Lifeway Kefir 的多功能性並擴大影響範圍，我們繼續與著名的影響者、廚師和營養專家合作，建議將我們的產品融入健康的成分交換、食譜和零食創意。我們在 Lifeway 社交媒體平台和網站上分發這些內容，這些平台和網站今年都出現了大幅增長。

Lifeway social channels have now amassed over 1 million followers, and brand website sessions were up 26.5% year-over-year for Q3 of 2022. Moving forward, we'll continue to evaluate all potential marketing and promotional opportunities to onboard new customers and increase the velocities of our brand.

Lifeway 社交渠道現已積累了超過 100 萬粉絲，2022 年第三季度品牌網站訪問量同比增長 26.5%。展望未來，我們將繼續評估所有潛在的營銷和促銷機會，以吸引新客戶並增加我們品牌的速度。

Now I'll touch on some operational highlights. As we mentioned previously, in the first half of this year, we had 2 big wins: Lifeway regained distribution at the fresh market after a 3-year absence and was awarded a rotation at Costco Midwest stores. Lifeway also converted Food Lion from a private label to branded product, increasing our brand recognition and building consumer awareness for our leadership position in the category.

現在我將介紹一些操作要點。正如我們之前提到的，在今年上半年，我們取得了 2 項重大勝利：Lifeway 在缺席 3 年後重新獲得生鮮市場的分銷權，並在 Costco Midwest 門店獲得輪換。 Lifeway 還將 Food Lion 從自有品牌轉變為品牌產品，提高了我們的品牌知名度並建立了消費者對我們在該類別中的領導地位的認識。

The grocery channel has long been our traditional approach. Our first large customer was Whole Foods who we grew with during the '90s. And along the way, we have picked up distribution through multiple other large grocery chains. Yet, as we alluded to previously, we have been evaluating options to increase our presence in high visibility away-from-home locations, such as small-format convenience stores, universities and health care settings.

長期以來，雜貨渠道一直是我們的傳統方法。我們的第一個大客戶是 Whole Foods，我們在 90 年代與它一起成長。一路走來，我們已經通過其他多家大型雜貨連鎖店獲得了分銷。然而，正如我們之前提到的，我們一直在評估各種選擇，以增加我們在知名度較高的離家地點的影響力，例如小型便利店、大學和醫療機構。

With that said, I'm pleased to announce 2 new distribution deals that we have recently secured. First, we received authorization with Pratt Pantry, an Oregon-based chain, which represents Lifeway's expansion into the Pacific Northwest, a region we see as a potential growth area. Second, we plan to begin shipping to Wawa in late Q4. Wawa is the dominant convenience chain in the Northeast with over 900 stores, and we are energized and optimistic about our opportunities with such an amazing partner.

話雖如此，我很高興地宣布我們最近獲得的 2 項新的分銷協議。首先，我們獲得了總部位於俄勒岡州的連鎖店 Pratt Pantry 的授權，這代表了 Lifeway 向太平洋西北地區的擴張，我們認為該地區是一個潛在的增長區域。其次，我們計劃在第四季度末開始向 Wawa 發貨。 Wawa 是東北地區占主導地位的便利連鎖店，擁有 900 多家門店，我們對與這樣一個了不起的合作夥伴的機會充滿活力和樂觀。

These new placements represent a strong gain in the convenience segment. We're very excited about the prospects of both new opportunities as they serve both sales and marketing functions for the brand because of their high visibility. I believe both of these deals and our activity throughout 2022 illustrate Lifeway's clear commitment to growth, and we'll continue to search for and evaluate expansion opportunities across all of our distribution channels.

這些新的佈局代表了便利領域的強勁增長。我們對這兩個新機會的前景感到非常興奮，因為它們具有很高的知名度，可以為品牌提供銷售和營銷功能。我相信這些交易和我們在整個 2022 年的活動都表明了 Lifeway 對增長的明確承諾，我們將繼續在我們所有的分銷渠道中尋找和評估擴張機會。

Lifeway Kefir products provide customers with probiotics, vitamin D and protein that help to support their gut health, immunity and mental well-being. The probiotics in kefir support a healthy microbiome, and approximately 80% of immune defense comes from the gut. Probiotic products such as kefir are the focus of intense research related to the microbiomes' role in stress, depression and anxiety. We now know that up to 90% of the body serotonin comes from gut cells. And the gut brain axis, which links the emotional and cognitive centers of the brain with our intestinal function, plays a major role in happiness and well-being.

Lifeway Kefir 產品為客戶提供益生菌、維生素 D 和蛋白質，有助於支持他們的腸道健康、免疫力和心理健康。開菲爾中的益生菌支持健康的微生物組，大約 80% 的免疫防禦來自腸道。開菲爾等益生菌產品是與微生物組在壓力、抑鬱和焦慮中的作用相關的深入研究的焦點。我們現在知道，體內高達 90% 的血清素來自腸道細胞。腸腦軸將大腦的情緒和認知中心與我們的腸道功能聯繫起來，在幸福和幸福中起著重要作用。

As today's consumer learns and focuses on their health, they will care even more about those facts and the probiotic culture in their gut, which should be of great benefit to Lifeway's product portfolio. In addition to our best-selling kefir and Farmers Cheese, our new GlenOaks drinkable yogurt, we are evaluating innovation opportunities, and I look forward to more exciting announcements in the coming months.

隨著今天的消費者了解並關注他們的健康，他們將更加關心這些事實和腸道中的益生菌培養物，這對 Lifeway 的產品組合應該大有裨益。除了我們最暢銷的 kefir 和 Farmers Cheese，我們的新 GlenOaks 飲用酸奶，我們正在評估創新機會，我期待在未來幾個月內發布更多令人興奮的消息。

Lifeway's performance in 2022, so far, highlighted by this record-breaking third quarter, has our team very encouraged, and we believe we're currently on the right path achieving our primary target: delivering profitable and strategic growth to our investors while furthering our mission to provide best-in-class probiotic and nutritious food to improving the health and well-being of our customers.

迄今為止，Lifeway 在 2022 年的表現，以這個破紀錄的第三季度為亮點，讓我們的團隊倍受鼓舞，我們相信我們目前正走在實現我們主要目標的正確道路上：為我們的投資者提供盈利和戰略增長，同時進一步推動我們的發展。使命是提供一流的益生菌和營養食品，以改善我們客戶的健康和福祉。

To close, thank you all very much for listening to the call today and, of course, for your interest in Lifeway Foods. We look forward to updating you on our progress and our business momentum on our next earnings call. And finally, I want to wish you and your families a happy and healthy holiday season. Thank you.

最後，非常感謝大家今天收聽電話會議，當然也感謝大家對 Lifeway Foods 的關注。我們期待在下次財報電話會議上向您通報我們的進展和業務勢頭。最後，我希望您和您的家人度過一個快樂健康的假期。謝謝你。