Good afternoon. Welcome to Lifeway Foods Second Quarter 2020 Earnings Conference Call. .
On the call with me today is Julie Smolyansky, Chief Executive Officer. .
By now, everyone should have access to the press release that went out this evening. If you have not received the release, it is available on the Investor Relations portion of Lifeway's website at www.lifeway foods.com. .
A recording of this call will be available on the company website. .
Before we begin, we would like to remind everyone that prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. 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. 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 of as the date of this call. .
And with that, I would like to turn the call over to Lifeway's Chief Executive Officer, Julie Smolyansky. .
Thank you, Madeline, and good afternoon to everyone joining us. .
Thank you, as always, for your interest in Lifeway Foods. In the time since our last earnings call, the entire world has continued to navigate the COVID-19 pandemic. This has created a very dynamic operating environment, but at Lifeway, we have faced challenges head-on to deliver healthy probiotic products to our customers when they need them most. .
While the health and safety of our entire team is our top priority, we have remained nimble and agile to best support our valued retail partners and customers as well as consistently execute on our long-term transformational plan to deliver long-term growth and value for our shareholders. .
On behalf of everyone at Lifeway, I'd like to continue to express our deepest sympathies to all those who are affected by COVID-19 and thank the health professionals working to keep people safe throughout this crisis. .
During this time of unprecedented uncertainty, we all have a role to play to support our local and national communities and each other. Lifeway's commitment to expanding access to healthy, nutritious food is a mission we take seriously, especially in light of current events. .
Today, I will review how we are responding to COVID-19, in addition to sharing our second quarter results. .
Consistent with the height of grocery sales in April and May, likely second quarter sales were up 8% from a year ago. To match this increased demand, we have been in constant communication with our retailers and have made the appropriate adjustments to our supply chain. .
With shelter-in-place orders still implemented throughout certain states in the country, we have shifted our in-store promotions to digital events with our retail partners in the second quarter. These include online promotions with delivery services such as Instacart, AmazonFresh and others.
These efforts have allowed us to reach current and new customers and ensure that everyone in the United States has access to our kefir products with probiotics and vitamin D, which consumers are seeking out to help them support their immune system. .
We are continuing to see high demand for products with ingredients that are associated with boosting health and wellness. Recent food intelligence data have shown a significant uptick in the consumer's desire for food and beverage products that strengthen the immune system and aid in stress relief.
57% of global consumers have said they are more conscious about the products they use for their immune system as a direct result of COVID-19. Lifeway's products are uniquely positioned in the marketplace, providing both physical and mental benefits to the consumer. .
As a natural probiotic, kefir supports healthy gut microbes, providing 70% of immune defense from the gut. Probiotic products such as kefir are the focus of intense research related to the microbiomes' role in stress, depression and anxiety.
We now know that up to 90% of serotonin comes from the gut cells and the gut brain access, which links emotional and cognitive centers to the brain with our intestinal function and plays a major role in happiness and well-being. .
Lifeway's products also meet consumer needs for post-workout protein. According to the global numbers from ADPI, dairy is the second most popular protein-fortification ingredient. As fitness routines have shifted from gym to home workout, consumers are looking for protein-packed foods to replace the smoothie they might otherwise buy at the gym.
Lifeway products fit that need in a convenient, ready-to-drink format. With our limited exposure to the heavily-hit food service vertical and strong presence in traditional grocery, Lifeway is in a perfect position to capitalize on consumer demand. .
We will continue our marketing efforts to educate consumers on these attributes as we provide in-depth nutritional information as well as recipe ideas and ingredient swaps. .
In May, our Frontline Heroes commercial spot debuted nationally on the TODAY Show. The 30-second spot highlights the faces of those making a difference behind the scenes and underpins the importance of brands giving back to support relief efforts. .
Additionally, the brand garnered morning shows, interviews, mentions in metro areas across the U.S., including New York, Los Angeles and Chicago. The awareness boost and marketing blitz led to articles in Thrive Global, mindbodygreen, Wall Street Journal and many others. .
In addition to traditional marketing efforts in the second quarter, we were excited to add virtual events to bring together the community, especially at a time when more people are in their home than ever before.
These include self-care sessions on Instagram Live, where experts in health and wellness space lead the Lifeway community through high-intensity workouts, gut-healthy cooking demonstrations and well-being chats. It's our goal to cultivate vibrant communities, both in-person and online to help people lead healthier, happier lives. .
Lifeway is supporting COVID-19 relief efforts through a donation of more than 125,000 single-serve and multi-serve bottles. To date, the company has provided meals and immune-boosting foods to more than 100,000-plus people across the country.
We've increased production to support increased demand; donations have mobilized refrigerated trucks to ensure these meals get to those in need, food banks, shelters and health professionals working on the front lines in New York City, Chicago and Los Angeles; and we've begun donating to a local organizations in early March and have since them ramped up our donation efforts significantly, looking to increase them even more in the coming months as we continue to grow.
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Before we review the financials, I'd like to take a moment to comment on the social justice movements that made significant impact around the world. Let me be clear, Lifeway's stance is that there is no place for racism or institutionalized inequality in the world.
We are taking an active approach and focusing our efforts on listening, leading, investing and advocating. .
I've mentioned this in the past that being socially conscious is part of our DNA. It's part of our community building, but it's not just because we want to do good things. Lifeway's mission extends to healing people's bodies, healing communities, healing our neighborhoods and healing families. .
As a financial update, net sales were $25 million for the second quarter of 2020, an increase of 8% from $23.2 million in the second quarter of 2019, another strong quarter of consecutive growth.
We reported earnings of $0.06 per diluted share for the second quarter of 2020, an increase of earnings of $0.01 per diluted share in the first quarter of 2020, and as compared to a net loss of $0.01 per diluted share in the second quarter of 2019. .
We are pleased with the strong first half of 2020 and believe Lifeway is well positioned for long-term growth and value creation as we serve consumers looking for increased self-care, immunity and gut health options during this time of global health crisis and uncertainty. .
I'd also like to take a moment to welcome Dorri McWhorter, our newest Board of Director. We are lucky to have such a dedicated, socially conscious leader on our team to help guide our business approach. Dorri brings with her invaluable perspective and business acumen from her years of experience as a pillar of the business community. .
In closing, thank you for listening to this call today and for your interest in Lifeway. We hope everyone will continue to remain safe and we look forward to updating you on our next ongoing progress and business momentum on our next call. .
Have a great day..