Hi, I just read a good post on the Yahoo thread that has some good information in it. I will copy it here:
****************************
Mark and Others,
Thought I would take a moment to reply to your analysis of LWAYs 1997 and 4Q results released yesterday. Although I was also slightly disappointed in the EPS for the fourth quarter, I am encouraged by the growth and recent developments in the company.
By way of introduction, although this is my first post to this forum, I have followed it for some time and have followed LWAY for a year or so and have enjoyed the 100% growth on a portion of my investment but also continue to accumulate shares as opportunity and funds permit.
That said, I wanted to provide some additional thoughts on Mark's analysis. Lifeway breaks its segment earnings down into
three categories; Dairy Products (it's core business), Resturant (a business that appears to be suffering) and Corporate.
Impacting 1997's earnings was the fact that the Resturant business lost 1.0 cents per share in 1997 versus making 1.7 cents per share
in 1996. If you look at just the Dairy Products business EPS grew from 14.8 cents in 1996 to 19.9 cents in 1997 or a 34.5%
growth. If you dilute this with the Corporate costs ESP grew from 14.6 to 19.6, still a 34% growth year over year.
I too would like to see the resturant business evaluated and maybe sold. It would eliminate what appears to be a potential burden to the earnings and would likely provide considerable cash and probably and nice one-time gain.
The point #5 made by Mark regarding net profit margin, I have to assume is correct as I have not looked specifically at
quarter to quarter. However the 1997 net profit margin of 11.75% is slightly better than the 1996 margin of 11.67% even given to low
4Q97 net profit margin of 4.6%. Again, if you look at just the Dariy Products business you see that net profit margin on the core
business rose from 11.5% in 1996 to 13.4% in 1997. This increase includes the adverse cost of bringing online the new facility in
1997.
The last point I'll make is about sales. While sales increased 12.6% year over year, this includes the Resturant business. If you look at just the Dairy Products business you see that revenues grew at 15.4%. Resturant sales were down around 20% during the year pulling down the overall sales growth figure.
So, overall, dispite somewhat disappointing earnings for the quarter and year, it appears to me that things are on track for Lifeway. The core business had EPS growth of 34+%, sales grew over 15% dispite capacity constraints (and grew at a considerably higher rate in the last quarter), net profit margins are rising even with the cost of starting up a new facility and there are some new, very good products that are just being introduced with plenty of capacity to meet demand.
I look forward to seeing the next couple of quarters and hope that Lifeway considers selling its resturant business as its Dairy Products business starts to really take off.
*********************************
Mark |
