Lifeway Foods Inc (LWAY) 2023 Q2 法說會逐字稿

Good morning. Welcome to Lifeway Foods Second Quarter 2023 Earnings Conference Call. On the call with me today is Julie Smolyansky, President and Chief Executive Officer.

早安.歡迎參加 Lifeway Foods 2023 年第二季度收益電話會議。今天與我通話的是總裁兼首席執行官 Julie Smolyansky。

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.

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。如果您尚未收到該新聞稿，可以在 Lifeway 網站 www.lifewayfoods.com 的投資者關係部分獲取。此次通話的錄音將在公司網站上發布。

Before we begin, we would like to remind everyone that the prepared remarks contain forward-looking statements. The words believes, 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.

在開始之前，我們想提醒大家，準備好的言論包含前瞻性陳述。 “相信”、“期望”、“預期”和其他類似表達方式通常可識別前瞻性陳述。這些陳述並不保證未來的表現，因此，不應過度依賴它們。

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.

實際結果可能與任何前瞻性陳述中的預測存在重大差異。 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。本文中包含的所有前瞻性陳述僅代表本次電話會議之日的情況。

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

說到這裡，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. As always, we greatly appreciate your interest in Lifeway Foods. I am thrilled to report yet another brilliant quarter for our business today. Yet before I detail the great results, I'd like to give thanks to the entire Lifeway team whose devotion and seamless execution have allowed us to perform for our customers and partners so remarkably so far in 2023.

謝謝約翰，今天加入我們的大家早上好。一如既往，我們非常感謝您對 Lifeway Foods 的興趣。我很高興今天向大家報告我們業務又一個輝煌的季度。然而，在詳細介紹這些出色成果之前，我要感謝整個 Lifeway 團隊，他們的奉獻精神和無縫執行使我們能夠在 2023 年迄今為止為客戶和合作夥伴提供出色的服務。

With that, I will now review our second quarter 2023 results, highlighted by our largest ever recorded net sales and very positive gross margin expansion. Net sales were $39.2 million for the period ended June 30, 2023, an increase of $5.7 million or 17.1% compared to the second quarter in 2022. The net sales increased, our 15th consecutive quarter of strong year-over-year growth was primarily driven by higher volumes of our branded drinkable kefir and to a lesser extent, the impact of price increases implemented during the fourth quarter of 2022.

接下來，我將回顧我們 2023 年第二季度的業績，其中突出的是我們有史以來最大的淨銷售額和非常積極的毛利率擴張。截至2023 年6 月30 日的期間淨銷售額為3,920 萬美元，與2022 年第二季度相比增加了570 萬美元，即17.1%。淨銷售額的增長，主要是由於我們連續第15 個季度實現強勁的同比增長我們的品牌飲用開菲爾銷量增加，以及 2022 年第四季度實施的價格上漲的影響（較小程度上）。

This net sales growth is particularly impressive as we continue to lap some strong quarters of our record-setting 2022. And when we compare to the second quarter of 2021, our net sales were up 34.5%. This value-driven growth accompanied by continued accelerating unit velocities in our core kefir line is encouraging as it once again illustrates the wide acceptance of our inflation justified price increases by our loyal and new consumers focused on high-quality, better-for-you offering.

隨著我們在 2022 年創紀錄的季度中繼續取得強勁表現，這種淨銷售額增長尤其令人印象深刻。與 2021 年第二季度相比，我們的淨銷售額增長了 34.5%。這種價值驅動的增長伴隨著我們核心開菲爾系列的單位速度的持續加速令人鼓舞，因為它再次表明我們的忠實新消費者廣泛接受我們的通貨膨脹合理的價格上漲，這些消費者專注於高質量，更適合您的產品。

It's worth noting that our next quarter, we will be lapping a very difficult comparison in the third quarter of 2022, our second largest quarter in history.

值得注意的是，我們的下一個季度將與 2022 年第三季度（我們歷史上第二大季度）進行非常困難的比較。

In addition, we reported a gross profit margin of 28.7% for the period ended June 30, 2023, increasing 1,170 basis points, compared to 17% in the second quarter of 2022. Compared to the first quarter of this year, when we reported another very strong year-over-year expansion, this quarter represents an expansion of 710 basis points. This remarkable gross margin expansion was primarily due to higher volumes of our branded products and to the favorable impact of milk pricing and to a lesser extent, the aforementioned price increases in the fourth quarter. We have consistently stated gross margin recovery was a priority of ours, and we are thrilled that the combination of our operational efficiency and subsiding inflationary impacts are now delivering us enhanced profitability.

此外，我們報告截至 2023 年 6 月 30 日的期間毛利率為 28.7%，增加了 1,170 個基點，而 2022 年第二季度為 17%。與今年第一季度相比，當時我們報告了另一同比擴張非常強勁，本季度擴張了710 個基點。毛利率的顯著增長主要是由於我們品牌產品的銷量增加以及牛奶定價的有利影響，以及較小程度上上述第四季度的價格上漲。我們一直表示毛利率恢復是我們的首要任務，我們很高興我們的運營效率和通脹影響的減弱現在正在為我們帶來更高的盈利能力。

Milk is our largest raw material and was largely impacted by inflationary price increases. As the price has normalized, we have certainly benefited. We couldn't be more pleased with this result and are looking forward to consistently maintaining better levels of margins like these moving forward. We will continue to prioritize our gross margin moving forward, and we are constantly in search of incremental productivity and profitability measures.

牛奶是我們最大的原材料，很大程度上受到通貨膨脹價格上漲的影響。隨著價格正常化，我們當然受益。我們對這一結果感到非常滿意，並期待著繼續保持更好的利潤水平。我們將繼續優先考慮未來的毛利率，並不斷尋求提高生產力和盈利能力的措施。

Underscoring these exceptional results is the environment we are delivering them in. Similar to last quarter, consumers across the United States are becoming more elastic in light of recessionary trends. With that has come price sensitivity and some trade down from more premium offerings to value alternatives. That said, our results have continued to prove that Lifeway premium offerings come with plenty of value. Even with price increase implemented in quarter 4 of 2022, our consumers remain steadfast in their commitment to improved health, immunity and gut health, demonstrated by our consumption trends and velocities within our key retailers, which remain strongly positive.

強調這些卓越成果的是我們實現這些成果的環境。與上季度類似，鑑於經濟衰退趨勢，美國各地的消費者變得更具彈性。隨之而來的是價格敏感性，一些人從更優質的產品轉向有價值的替代品。也就是說，我們的結果繼續證明 Lifeway 優質產品具有巨大的價值。即使 2022 年第四季度實施提價，我們的消費者仍然堅定地致力於改善健康、免疫力和腸道健康，我們的主要零售商的消費趨勢和速度仍然非常積極，這證明了這一點。

Today, on a sales basis, Lifeway Foods is the ninth largest yogurt manufacturer in the United States and a portion of our growth efforts surround attracting new customers and increasing retention rates through effective advertising and marketing. Recent data shows that customers new to Lifeway are delivering greater velocities and proving to be more valuable than lapse buyers.

如今，從銷售額來看，Lifeway Foods 已成為美國第九大酸奶製造商，我們的增長努力的一部分是通過有效的廣告和營銷吸引新客戶並提高保留率。最近的數據顯示，Lifeway 的新客戶提供了更高的速度，並且比舊客戶更有價值。

Now moving on to expenses. Selling, general and administrative expenses increased $1.1 million to $6.4 million for the period ended June 30, 2023 compared to $5.3 million in the second quarter of 2022. We continue to strategically invest in our core products through targeted advertising and marketing programs to increase awareness and capture incremental customers.

現在轉向開支。截至2023 年6 月30 日的期間，銷售、一般和管理費用增加了110 萬美元，達到640 萬美元，而2022 年第二季度為530 萬美元。我們繼續通過有針對性的廣告和營銷計劃對我們的核心產品進行戰略投資，以提高知名度和捕獲增量客戶。

Our net income during the period ended June 30, 2023 was $3.2 million, reflecting EPS of $0.22 per basic and $0.21 per diluted common share compared to net income of $0.1 million or $0.01 per basic and diluted share during the second quarter in 2022.

截至2023 年6 月30 日的期間，我們的淨利潤為320 萬美元，反映出每股基本每股收益0.22 美元，每股稀釋普通股每股收益0.21 美元，而2022 年第二季度淨利潤為10 萬美元，每股基本和稀釋普通股淨利潤為0.01 美元。

We are very pleased to see our continued top line and margin expansion now flowing down to the bottom line, a testament to the execution of our Lifeway 2.0 strategy and recovery from the high inflationary impacts we saw in the past couple of years.

我們很高興看到我們持續的營收和利潤擴張現在已滲透到利潤，這證明了我們 Lifeway 2.0 戰略的執行以及我們從過去幾年看到的高通脹影響中的複蘇。

Capital spending increased by approximately $0.2 million from $1.7 million to $2 million during the 6 months ended June 30, 2023 compared to the same period in 2022, aligned with our plan. Our capital spending is focused on 3 core areas: growth capital, cost reduction and facility improvements. Growth capital spending supports new product innovation and enhancement, cost reduction and facility improvements support manufacturing efficiency, safety and productivity. Our continued capital commitment reflects our goals as a business to continue growing and improving our internal efficiencies.

截至 2023 年 6 月 30 日的 6 個月內，資本支出比 2022 年同期增加約 20 萬美元，從 170 萬美元增加到 200 萬美元，這與我們的計劃一致。我們的資本支出主要集中在三個核心領域：增長資本、降低成本和設施改進。資本支出的增長支持新產品創新和改進、成本降低和設施改進，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不斷發展和提高內部效率的目標。

Overall, the second quarter was exceptional. Our net sales of $39.2 million is outstanding and a Lifeway record performance, and we are equally pleased that it was accompanied by a very strong 1,170 basis points gross margin expansion. Our business continues to grow in spite of the macro pressures that have challenged some of the broader industry, and we're yet to see our consumers act with restraint or trade down from our premium healthy offering.

總體而言，第二季度表現出色。我們 3920 萬美元的淨銷售額非常出色，創下了 Lifeway 的業績記錄，我們同樣感到高興的是，它伴隨著非常強勁的 1,170 個基點的毛利率擴張。儘管宏觀壓力給一些更廣泛的行業帶來了挑戰，但我們的業務仍在繼續增長，而且我們還沒有看到我們的消費者採取克制行動或放棄我們的優質健康產品。

An outstanding quarter like this would not be possible without the industry-leading and core driver of our business, drinkable Lifeway kefir. Net sales of our drinkable kefir increased 20% for the period ended June 30, 2023, when compared to the second quarter in 2022.

如果沒有我們業務的行業領先和核心驅動力——可飲用的 Lifeway 開菲爾，就不可能有如此出色的季度。截至 2023 年 6 月 30 日的期間，我們的飲用開菲爾的淨銷售額與 2022 年第二季度相比增長了 20%。

With the dominant market share in the United States kefir industry, we remain well positioned to capitalize on continued expansion of the global kefir market and the tailwinds behind health and wellness amongst consumers.

憑藉在美國開菲爾行業的主導市場份額，我們仍然處於有利地位，可以利用全球開菲爾市場的持續擴張以及消費者健康和保健背後的推動力。

Lifeway's kefir products are tart and tangy and provide customers with probiotics, vitamin D and protein to help support their gut health, immunity and mental wellbeing. 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.

Lifeway 的開菲爾產品酸味濃郁，為顧客提供益生菌、維生素 D 和蛋白質，幫助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群，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。

We now know that up to 90% of the body's serotonin comes from the gut cells and the gut-brain axis, which links emotional and cognitive centers of the brain with our intestinal function plays a major role in happiness and well-being.

我們現在知道，人體高達 90% 的血清素來自腸道細胞和腸腦軸，它將大腦的情感和認知中心與我們的腸道功能聯繫起來，在幸福感和幸福感方面發揮著重要作用。

Health and wellness remain a powerful tailwind to customer preferences in today's environment. And as the modern consumer learns and focuses more on their health, they will care even more about their microbiome. It is no secret that our recent strong results are driven by the fact that our customers love our healthy, delicious drinkable kefir and they keep coming back for it. Selling that kefir is both our primary focus and exactly what we do best. To sustain our growth, we'll continue to dedicate the majority of our time and investments behind our core products, both through targeted marketing investments and additional distribution opportunities in an effort to strategically affect as much exposure and customer awareness as we can.

在當今環境下，健康和保健仍然是客戶偏好的強大推動力。隨著現代消費者越來越了解並更加關注自己的健康，他們將更加關心自己的微生物群。眾所周知，我們最近取得的強勁業績是由於我們的客戶喜歡我們健康、美味的可飲用開菲爾，並且他們不斷回頭購買。銷售開菲爾既是我們的首要任務，也是我們最擅長的事情。為了維持我們的增長，我們將繼續將大部分時間和投資投入到我們的核心產品上，通過有針對性的營銷投資和額外的分銷機會，努力從戰略上影響盡可能多的曝光度和客戶認知度。

I'll now touch on another one of the great offerings within our portfolio of products, Lifeway Farmer Cheese. Lifeway Farmer Cheese is a premium cultured, soft cheese and a highly sought-after favorite in many specialty stores. While not as widely distributed as our drinkable kefir, our Farmer Cheese has been a staple since introduction 37 years ago.

現在我將介紹我們產品組合中的另一款優質產品：Lifeway Farmer 奶酪。 Lifeway Farmer 奶酪是一種優質的發酵軟奶酪，在許多專賣店中廣受歡迎。雖然我們的農夫奶酪不像我們的飲用開菲爾那樣廣泛分佈，但自 37 年前推出以來一直是人們的主食。

For those listeners who are active on social media, you may have seen the recent emergence of cottage cheese recipes with the term blended cottage cheese, now having over 320 million views on TikTok while also trending on Instagram.

對於那些活躍在社交媒體上的聽眾來說，您可能已經看到最近出現的帶有“混合乾酪”一詞的干酪食譜，目前在 TikTok 上的觀看次數超過 3.2 億，同時也在 Instagram 上流行。

Lifeway Farmer Cheese has that smooth, blended texture consumers are looking for. So our Farmer Cheese, saves a step when substituted in all of these popular recipes. With its creamy, spreadable texture and versatile flavor that works well for both sweet and savory dishes, we believe that Lifeway Farmer Cheese would be a logical fit for many of these blended cottage-cheese recipes as well as an alternative addition to new retail shelf.

Lifeway Farmer 奶酪具有消費者所尋求的光滑、混合的質地。因此，我們的農夫奶酪在所有這些流行食譜中替代時可以節省一個步驟。憑藉其奶油狀、可塗抹的質地和適合甜味和鹹味菜餚的多功能風味，我們相信 Lifeway Farmer 奶酪將非常適合許多這些混合乾酪食譜，也是新零售貨架上的替代品。

Our Farmer Cheese available nationwide has seen an increase in interest from consumers and retailers in recent years, and we are acting now to meet the growing demand. We will be increasing cheese production and investing in technology to cut production times by more than half, accompanied by new automation and efficiency plans to ensure the brand is equipped for future demand and distribution opportunities. We are excited about this product and plan to put calculated marketing efforts behind to support its growth and introduce it to new customers.

近年來，消費者和零售商對我們在全國范圍內銷售的農夫奶酪的興趣不斷增加，我們現在正在採取行動，以滿足不斷增長的需求。我們將增加奶酪產量並投資技術，將生產時間縮短一半以上，同時實施新的自動化和效率計劃，以確保該品牌能夠滿足未來的需求和分銷機會。我們對這款產品感到非常興奮，併計劃投入精心策劃的營銷工作來支持其發展並將其介紹給新客戶。

Additionally, we are seeing continued progress with our guava low-fat kefir and our new organic whole milk products. We will continue to test and develop new flavors and offerings in an effort to consistently satisfy our consumers with differentiated assortments.

此外，我們看到番石榴低脂開菲爾和新的有機全脂奶產品不斷取得進展。我們將繼續測試和開發新的口味和產品，努力以差異化的品種不斷滿足消費者的需求。

I'll now touch on some of our marketing and advertising, where we have been working to create opportunities directly focused on incentivized consumer trial. As we announced on our last call, following our successful pop-up experience in Miami Beach during its busy season, we shifted our focus to places like New York City, where we have embarked upon a yoga and kefir sampling program at Bryant Park, a pop-up with SHOWFIELDS sampling drinkable kefir in Williamsburg and various other activations such as movies in the park. We also just completed another successful year as the Kidzapalooza sponsored at Lalapalooza in Chicago. Attendees were welcomed by the Lifeway team and treated to kefir and ProBugs throughout the festival.

現在我將談談我們的一些營銷和廣告，我們一直在努力創造直接關注激勵消費者試用的機會。正如我們在上次電話會議中宣布的那樣，繼邁阿密海灘繁忙季節的快閃店成功體驗之後，我們將重點轉移到紐約市等地，在布萊恩特公園(Bryant Park) 開展了瑜伽和開菲爾採樣項目。在威廉斯堡舉辦的 SHOWFIELDS 快閃店品嚐可飲用開菲爾，以及公園裡的電影等各種其他活動。我們還剛剛完成了又一個成功的一年，因為 Kidzapalooza 贊助了芝加哥的 Lalapalooza。整個節日期間，與會者受到了 Lifeway 團隊的歡迎，並享用了開菲爾和 ProBugs。

Additionally, we continue to partner with influencers, chefs and nutrition experts with notable social media presence to suggest healthy ingredient swaps, recipes and snack ideas that incorporate Lifeway products. These partnerships are distributed across likely social media platforms, and we continue to realize positive impact through increased web traffic and steadily increasing followers to our Lifeway social accounts. We also partner these digital campaigns with in-store campaigns to incentivize retention rates and attract new eyes to the product.

此外，我們繼續與社交媒體上頗有影響力的人士、廚師和營養專家合作，提出包含 Lifeway 產品的健康成分交換、食譜和零食創意。這些合作夥伴關係分佈在可能的社交媒體平台上，我們繼續通過增加網絡流量和穩步增加 Lifeway 社交帳戶的關注者來實現積極影響。我們還將這些數字營銷活動與店內營銷活動結合起來，以提高保留率並吸引新的目光關注產品。

Lastly, I would like to note a positive development for Lifeway that's come out of the recent Barbie craze. I was pleased to see the news that in an effort to give the actors and actresses, Barbie like skin, the skin health specialist onset was recommending the consumption of kefir. The Daily Mail, among others, reported that she gave the main star, Margot Robbie kefir to improve her gut help. Many of the articles on the topic highlighted the skin health and beauty benefits that come from supporting gut-skin axis.

最後，我想指出 Lifeway 因最近的芭比娃娃熱潮而取得的積極發展。我很高興地看到這樣的消息：為了給演員們帶來芭比娃娃般的皮膚，皮膚健康專家開始建議食用開菲爾。據《每日郵報》等報導，她給女主角瑪格特·羅比喝開菲爾來改善腸道健康。許多有關該主題的文章都強調了支持腸道皮膚軸對皮膚健康和美容的好處。

Now I will touch on some distribution updates. We've recently gained distribution at roughly 140 CVS stores, a new retail partner for us. We have been placed in the premium set in their West Coast stores. While we don't anticipate this to be a large volume driver initially. We plan on keeping an eye on the performance and are very excited to gain incremental brand exposure to the vast amount of CVS shoppers. We also continued to perform solidly at Wawa. We are maintaining consistent unit movement slightly above the initial velocities upon our introduction in late 2022. Last quarter, we announced placements of our new Lifeway Organic Whole Milk at Sprouts and Fresh Thyme. Wegmans, Fresh Thyme in Meijers have also recently authorized our new guava flavor.

現在我將介紹一些發行版更新。最近，我們在大約 140 家 CVS 商店獲得了分銷權，CVS 商店是我們的新零售合作夥伴。我們已被放置在他們的西海岸商店的高級套裝中。雖然我們最初預計這不會是一個大容量的驅動程序。我們計劃密切關注其表現，並且非常高興能夠在大量 CVS 購物者中增加品牌曝光度。我們在 Wawa 也繼續表現出色。我們在 2022 年底推出後，保持了略高於初始速度的一致單位運動。上季度，我們宣佈在 Sprouts 和 Fresh Thyme 投放新的 Lifeway 有機全脂牛奶。 Wegmans、Meijers 的新鮮百里香最近也授權了我們的新番石榴口味。

Finally, we continue to maintain our strong relationships and active dialogues with our key retail partners in traditional grocery and are actively pursuing additional distribution opportunities across a variety of channels to increase the visibility and performance of the great products we have to offer. We believe there is still opportunity for our top-performing kefir flavors and Farmer Cheese to secure additional distribution.

最後，我們繼續與傳統雜貨領域的主要零售合作夥伴保持牢固的關係和積極的對話，並積極尋求跨各種渠道的額外分銷機會，以提高我們提供的優質產品的知名度和性能。我們相信，我們的頂級開菲爾風味和農夫奶酪仍有機會獲得更多分銷。

To wrap it up, the second quarter was a phenomenal record-breaking quarter for Lifeway Foods. Our core business continues to rapidly grow, and we have improved our profitability substantially. Today, we are in a great position with an incredible team in place to continue delivering on this growth. I am very excited for the second half of this year, where I expect to further our mission to provide best-in-class probiotic and nutritious foods to improve the health and well-being of our customers.

總而言之，第二季度對 Lifeway Foods 來說是一個驚人的破紀錄季度。我們的核心業務持續快速增長，盈利能力大幅提升。今天，我們處於有利地位，擁有一支令人難以置信的團隊，可以繼續實現這一增長。我對今年下半年感到非常興奮，我希望進一步履行我們的使命，提供一流的益生菌和營養食品，以改善客戶的健康和福祉。

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 business momentum on our third quarter earnings call. I hope you all enjoy your day.

非常感謝大家今天收聽電話會議，當然也感謝大家對 Lifeway Foods 的興趣。我們期待在第三季度財報電話會議上向您通報我們的進展和業務勢頭。我希望你們都過得愉快。