All Eight Company Director Nominees Elected to
Board
Company Announces Latest Step in Ongoing
Review of Strategic Alternatives with Hiring of Kroll Securities,
LLC as Financial Advisor
Responds to Letter from Kanen Wealth
Management and Highlights Positive Business Momentum
MORTON
GROVE, Ill., June 16,
2023 /PRNewswire/ -- The Board of Directors (the
"Board") of Lifeway Foods, Inc. (Nasdaq: LWAY) ("Lifeway" or the
"Company"), a leading U.S. supplier of kefir and fermented
probiotic products to support the microbiome, today announced the
results of its 2023 Annual Meeting of Shareholders (the "Annual
Meeting") and provided other updates to shareholders.
Annual Meeting Results
At the Annual Meeting held on June 15,
2023, shareholders supported Proposal 1, electing the
Company's eight nominees to the Board. Shareholders also supported
Proposal 2, ratifying Grant Thornton LLP as the Company's
independent financial auditor for fiscal year 2023 and Proposal 3,
approving, by a non-binding advisory vote, executive
compensation.
Notably, a leading independent shareholder advisory firm,
Institutional Shareholder Services Inc., recommended that
shareholders vote for the Company's eight director nominees.
Hiring of Financial Advisor
The Audit & Corporate Governance Committee of the Board has
retained Kroll Securities, LLC as its exclusive financial advisor
to support its ongoing evaluation of strategic alternatives. In
connection with this engagement, the independent members of the
Board stated:
"We are always open to considering all available
avenues to maximize shareholder value. While we are confident in
the Company's current strategy, we are also committed to exploring
strategic alternatives that might be in the best interests of all
shareholders. Over the course of the past several months we have
been considering potential options, and the hiring of Kroll
represents the next step in this process. We will provide further
updates as appropriate."
Response to Kanen Wealth Management
In response to the June
8th press release issued by David Kanen, President and CEO of Kanen Wealth
Management ("KWM"), the Board stated:
"Lifeway has a highly qualified Board and
management team that collectively possess the right skills and
experience to continue driving positive performance and creating
value for shareholders. Chief Executive Officer Julie Smolyansky and the entire leadership team
are successfully executing our Lifeway 2.0 strategy to optimize
growth, productivity and profitability.
The Board is committed to maintaining high
standards of corporate governance and has a strong, clearly defined
Lead Independent Director role. With respect to executive
compensation, the Board consistently engages with our shareholders
and has listened to their concerns – making changes to more
directly align pay with performance – including with the advice of
a leading independent compensation consultant.
We are disappointed that KWM – an activist
investor with a history of targeting companies and which in the
past has had to apologize for breaching settlement agreements – has
chosen to publicly attack Lifeway and our leadership. This is
especially unfortunate given that KWM did not raise its concerns
with us privately, despite our prior interactions with the firm's
principal. KWM's recent letter is riddled with inaccuracies,
mischaracterizations and blatantly false statements that
demonstrate its ignorance of our business.
As significant owners of the Company – with
combined ownership of 18% – the members of the Board are fully
aligned with shareholders and collectively have more skin in the
game than KWM. We will continue to represent the best interests of
all shareholders.
KWM's communication ignores the following evidence of strong
momentum in the business:
- Lifeway has delivered 14 consecutive quarters of strong
year-over-year net sales growth and has shown continued dominance
within the U.S. kefir industry as it has broadened access to its
best-in-class kefir products, introduced innovative offerings for
consumers focused on health and wellness, and enhanced brand
awareness.
- Total shareholder return over the past year was ~44% and over
the past three years was ~191%.1
- Lifeway is currently the 9th largest yogurt
manufacturer in the U.S. based on sales and is growing its customer
base with targeted marketing and branding strategies.
- In the first quarter of 2023, the Company saw continued
positive results and is poised to capitalize on macro trends as
customer demand for its products grows, with accelerating unit
velocities of the core kefir line.
- Gross profit as a percentage of net sales increased to 21.7% in
the first quarter of 2023 compared to 16.4% in the first quarter of
last year.
- Even as inflationary trends have put downward pressure on
consumer spending, Lifeway's premium products continue to see high
levels of demand, demonstrating the value of its premium products
and customer loyalty.
Litigation Update
As previously disclosed, there is no basis in law or fact for
the purported director nominations put forth by Edward and Ludmila Smolyansky and their attempt
to do so is in contravention of the 2022 settlement agreement with
the Company. The Company will continue to take steps to ensure that
the best interests of all shareholders are protected and vigorously
prosecute claims against Edward and Ludmila
Smolyansky in the Circuit Court of Cook County, Illinois.
About Lifeway Foods, Inc.
Lifeway Foods, Inc., which has been recognized as one of Forbes'
Best Small Companies, is America's leading supplier of the
probiotic, fermented beverage known as kefir. In addition to its
line of drinkable kefir, the company also produces cheese,
probiotic oat milk, and a ProBugs line for kids. Lifeway's tart and
tangy fermented dairy products are now sold across the United States, Mexico, Ireland and France. Learn how Lifeway is good for more
than just you at lifewayfoods.com.
Contacts
Derek Miller
Vice President of Communications, Lifeway Foods
Email: derekm@lifeway.net
OR
Joe Germani / Dan Zacchei
Longacre Square Partners
jgermani@longacresquare.com / dzacchei@longacresquare.com
1 As of market close on
June 13, 2023.
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SOURCE Lifeway Foods, Inc.