Key Highlights

  • Third-quarter 2026 net sales were a record USD 67.8 million.
  • Nine-month net sales were USD 197.7 million, up 25.8%.
  • Gross Margin was 18% in the third quarter.
  • Net income was USD 0.3 million, or USD 0.02 per share.

Lifeway Foods (NASDAQ:LWAY) reported third-quarter 2026 net sales of USD 67.80 million, against an estimate of USD 66.45 million. Earnings Per Share were USD 0.02, against an estimate of USD 0.06. The company makes kefir and other cultured dairy products.

Management described the quarter's net sales as the highest quarterly net sales in the company's history. It said nine-month net sales were USD 197.7 million, up 25.8% and equal to approximately 93% of full-year 2025 net sales of USD 212.5 million.

Results and Margins

Management said the company grew nearly 19% in the quarter and would have grown more with additional production space and equipment. Gross margin was 18%, which management attributed to an elevated input cost environment. It said milk prices rose approximately 26% in the second quarter compared with the first quarter and eased only minimally in the third, and that rising oil prices affected packaging and freight costs. The filing states that the decrease versus the prior year was driven by milk pricing and increases in input costs such as resin-based packaging, ingredients and transportation.

Selling expenses increased USD 1,387 thousand to USD 6,434 thousand for the quarter, or 9.5% of net sales, against 8.8%. For the nine months, selling expenses increased USD 5,793 thousand to USD 20,256 thousand, or 10.2% of net sales, against 9.2%. Management said SG&A was 16.2% of net sales, against 19.6% a year earlier, and 17.2% for the year to date, against 19.1%. General and administrative expenses were 6.7% of net sales for the quarter, against 10.8%.

Net income was USD 0.3 million, or USD 0.02 per basic and diluted share, against USD 3.5 million, or USD 0.23 per share, in the prior-year quarter.

Capacity and Waukesha Expansion

Management said Demand is bumping against the limit of what the company can produce in its own factories, and that a planned shutdown of the Waukesha Facility of approximately one week occurred during the quarter for facility improvements and the expansion project. It said it continues to add shifts and supplement production with co-manufacturing partners. It said the expanded Waukesha facility is scheduled to begin Manufacturing at increased scale in the first quarter of 2027, with packaging and automation processes to follow, and that the project more than doubles the facility's capacity at completion.

The filing states that cumulative cash paid for the project was USD 40,847 thousand at September 30, 2026, with USD 3,691 thousand in machinery and equipment, USD 7,348 thousand in leasehold improvements and USD 29,808 thousand in construction in process. USD 12,032 thousand was outstanding under the Interim Funding Agreement.

Pricing and Product Update

Management said it is working with retail partners on price increases that take effect on a rolling basis through the end of the year and into the first quarter of 2027. It said it projects higher average milk cost in the fourth quarter than in the third, and elevated packaging, ingredient and transportation costs. It said it views the margin pressure as temporary, with timing depending on factors outside its control, and projects gross margin expansion and improved profitability in 2027.

Management noted that Fortune named Lifeway to its 2026 list of 100 fastest-growing companies, ranking it number 45. It cited new product placements, including Farmer Cheese at select Target stores, organic Farmer Cheese at Erewhon and Sprouts, Muscle Mates at Kroger and Wegmans and Kefir Butter at Meijer.