For the second quarter, revenues rose six per cent to just over $4 million compared to $3.78 million a year ago. A successful result, even if it was less impressive than the year-on-year first quarter increase of 18.9 per cent. However, the only real cloud in the sky was the decrease in net income to $432,109, or $0.05 per share, from $691,082, or $0.08 per share, in 2003.
Lifeway attributed this decrease primarily to a sharp, temporary increase in milk prices, though operating expenses were also up from $0.9 million a year ago, to slightly over $1 million.
"We continue to see a positive response in all our markets to our new packaging, as well as to the introduction last week of Slim 6, our no sugar added, low carb kefir," said Julie Smolyansky, president of Lifeway Foods. "We also look forward to further strengthening our presence on the East Coast with our recent acquisition of Ilya's Farms."
She blamed the reduction in net income on "an increase in milk prices of more than 100 per cent."
"However, we do not anticipate a similar impact to our margins in the third quarter due to a 50 per cent reduction in milk prices and to a price increase implemented by Lifeway in the beginning of June," added Smolyansky.
Lifeway bought Ilya Farms, a Philadelphia-based privately-held producer of gourmet cream cheeses at the end of last month, in the hope of boosting the distribution of its functional food brands on the East Coast and expanding its range of cheese products.
"This provides Lifeway with an important East Coast presence and distribution center, as well as an additional product line," said Smolyansky at the time.
In June, the company was ranked 38th in the FSB 100 list of the fastest-growing small public companies in the US, which is published by Fortune Small Business Magazine.
Lifeway's earnings have grown 53 per cent annually, revenues have risen 17 per cent per year, and the stock has returned 37 per cent annually since 2001. In May, the firm reported first-quarter revenue growth of 19 per cent and operating-income growth of 50 per cent over the same quarter in 2003.
Much of Lifeway's growth has been generated by new products, including a kefir beverage tailored to Hispanic tastes that is marketed under the brand name La Fruta, and the introduction latterly of the low-carbohydrate kefir beverage "Slim6".
Lifeway is a manufacturer of cultured, probiotic and functional food products and a leading supplier of kefirs. The company markets 12 flavors of kefir and exports to Canada.