Lifeway Foods, Inc. Segments Disclosure

Note 13 – Segment, Customer and Geographic Information

 

Segment Information

 

The Company has one reportable segment, which manufactures and distributes cultured dairy products. Our products are produced using the same processes and materials and are sold to consumers through a common network of distributors and retailers. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis. The business activities include selling cultured dairy products across various channels including retail-direct, distributor, and direct store delivery in a refrigerated format. We operate our business with a centralized financial systems infrastructure, and we share centralized resources for procurement and general and administrative activities. The accounting policies of the segment are the same as those described in the Summary of Significant Accounting Policies for the Company. Refer to Note 1 for additional information.

 

The Chief Executive Officer (“CEO”) has been identified as our Chief Operating Decision Maker (“CODM”). The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources as one segment. The CODM uses discrete financial information at the consolidated level to assess performance for the segment and decides how to allocate resources based on the Company's consolidated Net income (loss), which is reported on the Consolidated Statement of Operations. The measure of segment assets is reported on the Consolidated Balance Sheet as Total assets.

 

The following table summarizes the reported segment revenue, segment profit, and significant segment expenses for the years ended December 31, 2024 and 2023.

Schedule of segment revenue
		2024				2023
Net sales		$	186,820			$	160,123
Cost of goods sold			135,400				115,060
Depreciation expense			2,846				2,622
Total cost of goods sold			138,246				117,682
Gross profit			48,574				42,441
Selling expenses			14,743				11,776
General and administrative			19,439				13,130
Amortization expense			540				540
Total operating expenses			34,722				25,446
Income from operations			13,852				16,995
Other income (expense):
Interest expense			(105	)			(384	)
Gain (loss) on sale of property and equipment			(8	)			34
Other income			230				4
Total other income (expense)			117				(346	)
Income before provision for income taxes			13,969				16,649
Provision for income taxes			4,944				5,282
Net income		$	9,025			$	11,367

 

The following table summarizes the reported segment total assets as of December 31, 2024 and 2023. 

Schedule of segment total assets
		December 31,
		2024				2023
Total assets for reportable segment		$	90,547			$	81,654
Adjustments and reconciling items			–				–
Consolidated total assets		$	90,547			$	81,654

 

Products from which the reportable segment derives its revenue

 

Lifeway’s primary product is drinkable kefir. The Company manufactures (directly or through a co-manufacturer) and markets products under the Lifeway, Fresh Made, and GlenOaks Farms brand names, as well as under private labels on behalf of certain customers.

  

The Company’s product categories are:

 

	·	Drinkable kefir, a cultured dairy product sold in a variety of organic and non-organic sizes, flavors, and types.
	·	European-style soft cheeses, including farmer cheese, white cheese, and Sweet Kiss.
	·	Cream and other, which primarily consists of cream, a byproduct of raw milk processing.
	·	Drinkable yogurt, sold in a variety of sizes and flavors.
	·	ProBugs, a line of kefir products designed for children.
	·	Other dairy, which primarily consists of Fresh Made butter and sour cream.

 

Net sales of products by category were as follows for the years ended December 31:

Schedule of segment products by category
		2024								2023
In thousands		$				%				$				%
Drinkable Kefir other than ProBugs			153,493				82%				127,726				80%
Cheese			14,554				8%				13,781				9%
Cream and other			8,299				4%				7,382				4%
Drinkable Yogurt			5,619				3%				6,236				4%
ProBugs Kefir			3,421				2%				3,429				2%
Other dairy			1,434				1%				1,569				1%
Net Sales			186,820				100%				160,123				100%

  

Significant Customers

 

Sales are predominately to companies in the retail food industry located within the United States. Two major customers accounted for a total of 25% and 24% of net sales for the years ended December 31, 2024 and 2023, respectively. Two major customers accounted for a total of 26% and 25% of accounts receivable as of December 31, 2024 and 2023, respectively.

 

Geographic Information

 

Net sales outside the of the United States represented less than 1% of total consolidated net sales in 2024 and 2023, respectively. Net sales are determined based on the destination where the products are shipped by Lifeway.

 

All the Company’s long-lived assets are in the United States.