Lifeway Foods Delivers Record Q2 2025 Net Sales, Extends Kefir Category Leadership, and Estimates Over 20% Q3 Net Sales Growth to Date

Kefir market leader posts $53.9 million in net sales, an 18% volume-led net sales increase on acomparable basis, marking nearly six years of uninterrupted net sales growth

Company posts double-digit diluted EPS gains and strong gross margin expansion year-over-year

Momentum accelerates into Q3 with highest weekly sales ever recorded in July and unauditedestimate of $26.4 million in net sales for the third quarter-to-date through August 11, up over 20%year-over-year

Lifeway Foods, Inc. (Nasdaq: LWAY) (“Lifeway” or “the Company”), the leading U.S. supplier of kefir and fermented probiotic foods, today announced record financial results for the second quarter ended June 30, 2025 and reported that third quarter momentum is already outpacing last year's performance by more than 20%. Unaudited estimated net sales for Q3 to date through August 11, 2025, reached $26.4 million, powered by accelerating consumer demand for the Company's flagship Lifeway Kefir and high-protein Lifeway Farmer Cheese.

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“This was another quarter that reinforces Lifeway's position as the undisputed leader in the kefir category,” said Julie Smolyansky, President and Chief Executive Officer of Lifeway Foods. “We delivered $53.9 million in net sales, our highest quarter ever, with strong, volume-led growth across our core portfolio. The consistency of our performance, even as we cycle past previous record highs, speaks to the strength of our brand, the loyalty of our customers, and the expanding reach of our platform.”

Smolyansky continued, “Beyond topline growth, we expanded gross margin by 160 basis points year-over-year and more than 460 basis points sequentially, translating into double-digit net income and diluted EPS growth year-over-year. We are executing with discipline while capturing powerful consumer tailwinds – from the continued wellness boom to the surge in GLP-1 medication use – as more people seek nutrient-dense, protein-rich, probiotic foods that support digestion, satiety, and natural GLP-1 hormone production.”

Recognized Industry Leadership

In July, Lifeway was named Processor of the Year by Dairy Foods magazine, the publication's highest annual honor, recognizing the Company's innovation, leadership, growth, and impact on the dairy industry. “Earning this award is a testament to our team's dedication and to the role Lifeway has played in pioneering kefir in the U.S. for nearly 40 years,” Smolyansky said.

Capitalizing on Growth Trends

In addition to its flagship kefir and Farmer Cheese, Lifeway's Probiotic Smoothies with Collagen – the first in the category – are resonating strongly with consumers. Collagen, a rapidly growing $8 billion global market, is valued for its skin, joint, hair, and nail health benefits. Lifeway's innovative blend of probiotics and collagen supports both gut health and “beauty from within,” with the Berry Blast flavor recently winning a 2025 Good Housekeeping Snack Award.

Third Quarter Momentum

Momentum has carried into the second half of the year. In July, Lifeway recorded the highest single week of gross sales in Company history, surpassing $5.5 million, representing a 66% increase over the same week in 2024. For Q3 to date through August 11, unaudited net sales were $26.4 million, an increase of more than 20% compared to the same period last year.

Second Quarter 2025 Highlights

— Net Sales: $53.9 million, highest in Company history, up 9.7% year-over-year and approximately 18% on a comparable basis, adjusted for a customer relationship the Company strategically exited in the third quarter of 2024, and a distributor shifting fromLifeway delivered to customer pick-up in late 2024, resulting in lower net sales and lower freight expense.

— Gross Profit Margin: 28.6%, up from 27.0% last year

— SG&A: 17.6% of net sales, reflecting continued investment in marketing and distribution

— Net Income: $4.2 million, or $0.28 per basic and diluted common share, compared to $3.8 million, or $0.26 per basic and $0.25 per diluted share in the prior year

Outlook

The Company reiterated its long-term target of $45-$50 million in Adjusted EBITDA1 for FY 2027 and expressed confidence in delivering the strongest annual sales in Company history in 2025.

“We are just getting started,” Smolyansky concluded. “With record sales, expanding margins, category-leading innovation, and a production platform ready to scale, Lifeway is positioned for sustained, profitable growth. The best is yet to come.”

— Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as Operating Income, as reported, plus Depreciation and Amortization, plus Stock-Based Compensation.

Conference Call and Webcast A webcast with Lifeway's President and Chief Executive Officer discussing these results with additional comments and details is available through the “Investor Relations” section of the Company's website at https://lifewaykefir.com/webinars-reports/.

About Lifeway Foods, Inc. Lifeway Foods, Inc., which has been recognized as one of Forbes' Best Small Companies, is America's leading supplier of the probiotic, fermented beverage known as kefir. In addition to its line of drinkable kefir, the Company also produces a variety of cheeses and a ProBugs line for kids. Lifeway's tart and tangy fermented dairy products are now sold across the United States, Mexico, Ireland, South Africa, United Arab Emirates, and France. Learn how Lifeway is good for more than just you at lifewayfoods.com.

Forward-Looking Statements This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, the drivers of demand for Lifeway's products, consumer trends, the anticipated effects of scheduled upgrades at the Waukesha plant, expected operating efficiencies and expectations regarding future operating and financial performance. These statements use words, and variations of words, such as “will,” “continue,” “future,” “increase,” “believe,” “outlook,” “expect,” and “predict.” You are cautioned not to rely on these forward-looking statements. These forward-looking statements are made as of the date of this press release, are based on current expectations of future events and thus are inherently subject to a number of risks and uncertainties, many of which involve factors or circumstances beyondLifeway's control. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from Lifeway's expectations and projections. These risks, uncertainties, and other factors include: price competition; the decisions of customers or consumers; the actions of competitors; changes in the pricing of commodities; the effects of government regulation; possible delays in the introduction of new products; customer acceptance of products and services; and uncertainty regarding proposals or other actions taken by shareholders related to the unsolicited proposal made by Danone North America PBC (“Danone”) to acquire all of the shares of Lifeway stock that Danone does not already own. A further list and description of these risks, uncertainties, and other factors can be found in Lifeway's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2024. Copies of these filings are available online at https://www.sec.gov, http://lifewaykefir.com/investor-relations/, or on request from Lifeway. Lifeway expressly disclaims any obligation to update any forward-looking statements (including, without limitation, to reflect changed assumptions, the occurrence of anticipated or unanticipated events or new information), except as required by law.

Non-GAAP Financial Measures This press release refers to Adjusted EBITDA, which is a financial measure that has not been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), and may exclude items that are significant to understanding and assessing financial results. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's financial performance. Non-GAAP financial measures should be considered as supplements to GAAP measures reported, should not be considered replacements for, or superior to, GAAP measures reported and may not be comparable to similarly named measures used by other companies. The Company's calculation of non-GAAP financial measures may differ from methods used by other companies.

We are unable to reconcile our target fiscal year 2027 Adjusted EBITDA to projected net income, the most directly comparable projected GAAP financial measure, because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of our control. Due to this uncertainty, the Company cannot reconcile target fiscal year 2027 Adjusted EBITDA to the nearest GAAP financial measure without unreasonable effort.

Derek Miller Vice President of Communications, Lifeway Foods Email:derekm@lifeway.net

Perceptual Advisors Dan Tarman Email:dtarman@perceptualadvisors.com

General inquiries: Lifeway Foods, Inc. Phone: 847-967-1010 Email:info@lifeway.net

LIFEWAY FOODS, INC. AND SUBSIDIARIESConsolidated Balance SheetsJune 30, 2025 and December 31, 2024(In thousands) June 30, 2025 December 31, (Unaudited) 2024Current assetsCash and cash equivalents $ 21,220 $ 16,728Accounts receivable, net of allowance for credit losses and discounts & allowances of 16,065 15,424$1,760 and $1,590 at June 30, 2025 and December 31, 2024, respectivelyInventories, net 10,224 8,678Prepaid expenses and other current assets 1,822 2,144Refundable income taxes – 631Total current assets 49,331 43,605Property, plant and equipment, net 30,731 26,862Operating lease right-of-use asset 278 118Goodwill 11,704 11,704Intangible assets, net 6,088 6,358Other assets 135 1,900Total assets $ 98,267 $ 90,547Current liabilitiesAccounts payable $ 11,880 $ 10,401Accrued expenses 4,409 5,103Total current liabilities 16,289 15,504Operating lease liabilities 220 70Deferred income taxes, net 3,062 3,062Total liabilities 19,571 18,636Stockholders' equityPreferred stock, no par value; 2,500 shares authorized; none issued – -Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 15,221 6,509 6,509and 15,100 outstanding at June 30, 2025 and December 31, 2024, respectivelyTreasury stock, at cost (13,268) (14,052)Paid-in capital 2,844 4,632Retained earnings 82,611 74,822Total stockholders' equity 78,696 71,911Total liabilities and stockholders' equity $ 98,267 $ 90,547LIFEWAY FOODS, INC. AND SUBSIDIARIESConsolidated Statements of OperationsFor the three and six months ended June 30, 2025 and 2024(Unaudited)(In thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024Net sales $ 53,901 $ 49,157 $ 99,992 $ 93,791Cost of goods sold 37,669 35,181 71,923 67,619Depreciation expense 832 701 1,634 1,362Total cost of goods sold 38,501 35,882 73,557 68,981Gross profit 15,400 13,275 26,435 24,810Selling expense 4,718 3,577 9,416 7,277General and administrative expense 4,752 4,177 9,380 8,313Amortization expense 135 135 270 270Total operating expenses 9,605 7,889 19,066 15,860Income from operations 5,795 5,386 7,369 8,950Other income (expense):Interest expense (21) (47) (35) (98)Fair Value Loss on investments – – (20) -Gain on sale of investments 55 – 3,407 -Other income (expense), net 82 20 156 15Total other income (expense) 116 (27) 3,508 (83)Income before provision for income taxes 5,911 5,359 10,877 8,867Provision for income taxes 1,662 1,576 3,088 2,658Net income $ 4,249 $ 3,783 $ 7,789 $ 6,209Net earnings per common share:Basic $ 0.28 $ 0.26 $ 0.51 $ 0.42Diluted $ 0.28 $ 0.25 $ 0.51 $ 0.41Weighted average common shares outstanding:Basic 15,206 14,727 15,170 14,709Diluted 15,390 15,197 15,359 15,176LIFEWAY FOODS, INC. AND SUBSIDIARIESConsolidated Statements of Cash Flows(Unaudited)(In thousands) Six months ended June 30, 2025 2024Cash flows from operating activities:Net income $ 7,789 $ 6,209Adjustments to reconcile net income to operating cash flow:Depreciation and amortization 1,904 1,632Stock-based compensation 927 1,296Non-cash interest expense 9 17Gain on sale of equipment (115) -Gain on sale of investments (3,407) -Fair value loss on investment 20 -(Increase) decrease in operating assets:Accounts receivable (640) (651)Inventories (1,546) 650Prepaid expenses and other current assets 322 531Refundable income taxes 631 (180)Increase (decrease) in operating liabilities:Accounts payable 500 (574)Accrued expenses (2,632) (366)Accrued income taxes – (474)Net cash provided by operating activities 3,762 8,090Cash flows from investing activities:Purchases of property and equipment (4,526) (3,905)Proceeds from sale of equipment 115 -Proceeds from sale of investments 5,206 -Net cash provided by (used in) investing activities 795 (3,905)Cash flows from financing activities:Repayment of note payable – (2,750)Payment of deferred financing costs (65) -Net cash used in financing activities (65) (2,750)Net increase in cash and cash equivalents 4,492 1,435Cash and cash equivalents at the beginning of the period 16,728 13,198Cash and cash equivalents at the end of the period $ 21,220 $ 14,633Supplemental cash flow information:Cash paid for income taxes, net of (refunds) $ 2,457 $ 3,312Cash paid for interest $ 26 $ 89Non-cash investing activitiesAccrued purchase of property and equipment $ 1,083 $ 106Right-of-use assets obtained in exchange for lease obligations $ 196 $ –

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SOURCE Lifeway Foods, Inc.

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