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Non-Tech : LIFEWAY FOODS (LWAY) -- Ignore unavailable to you. Want to Upgrade?

To: Greger who wrote (318)	3/14/1999 10:32:00 PM
From: Steve Cox	Read Replies (1) \| Respond to of 352

I was browsing this weekend looking for another unknown microcap with a niche product and improving revs/earnings. Came across Galaxy Foods, maker of a substitute dairy beverage. It's very interesting to read. Very much like LWAY in some areas and just the opposite in others. I'll explain: SIMILARITIES: In 97 /98 GALX was gearing up for increased production in anticipation of initiating an advertising program come March 1998. Just as LWAY has been in expansion and our national marketing program kicks off tomorrow. Check out Galaxy's revs/earnings the last few Q's to see what this advertising program caused. The 10K98 attributes the ad program to the increases. yahoo.marketguide.com I was curious now if this product was a threat to kefir. This is the product, straight from their website: "Veggie Milk™, Nature's Alternative to Milk, is a creamy, delicious and highly nutritious milk made by blending some of nature's most wholesome foods – soy, rice and oats." Now I was really curious. Delicious? So I went to Winn Dixie's health food display and didn't find Galaxy's brand, but White Wave had a product named "Silk - dairyless soy beverage". I bought it for $1.99 qt. Ingredients: filtered water, soybeans, raw cane crystals, calcium carbonate, vanilla, vitamins and thickening agent xanthan gum. Yuck! It pours like milk but that's the last resemblance to milk. It has a browish tint like sewage water and tastes like I believe a sewer would taste. Can't believe it is on a supermarket shelf. Now this wasn't Galaxy's brand, so maybe adding their rice and oats makes it delicious, but I doubt it. DISSIMILARITIES: LWAY has been using mostly cash to fuel the expansion process over the last 2 years. Look at Galaxy's 10K98. $$Millions and $$millions through credit lines, conversion of preferred convertibles to common stock, private placement of common shares. Big loans and much dilution to get their expansion underway, a path Mr. Smolyansky has chosen NOT to take. Galaxy's earnings are great the last few Q's but look at the cash flow. To sum it up here is a quote from oxull's post# 677: "As I have said many times and again just a few days ago, LWAY's expansion has cost $2.9 million and of that they paid for $2.1 million of that with cash flows from operations. A company can have great looking EPS quarter after quarter but if their cash flows from operations are negative, then they are headed for trouble. LWAY consistantly generates positive cash flows from operations." Some posters on this board say Mike isn't doing a good job cause nothing is happening. Much has happened the last two years, he's prepared us for the future in the best way to reap the cash. The marketing plan which starts tomorrow, do you think that should have been pushed 6 months or a year ago? If the product was only in 100's of stores instead of 1000's of stores across the nation how could the potential customers purchase kefir after seeing the ads? That would be a waste of money. If the demand is great due to advertising, which he is counting on, how would he keep supplying without the new plant? Tomorrow the plan starts so he must be ready. Like I said we need to be in many supermarkets so these ads will be effective right?...well just 2 weeks ago 8 rows of kefir took up residence displayed in our Winn Dixie supermarket here on Amelia Is. FL. in my backyard. Yes! Some are worried about family hirings at Lway to head up the marketing. I think the banner ad on the healthfood site is awesome. I've also received a fax of the upcoming full page ad for magazines and it is very appealing. Neck labels (I'd imagine like the tags on Samuel /Adam's beer) are coming which I think is a very classy touch. AND NEW LABELS! Yes, you can read right. New labels. So if Julie had anything to do with these dealings for pushing the product nationwide, I'd say she's what LWAY needs. Steve