ICCC - NASDAQ

Good morning and welcome to the ImmuCell Corporation Reports First Quarter Ended March 31st, 2025 Audited Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference call over to Joe Diaz of Lytham Partners. Please go ahead.

Thank you, Vicki. Good morning and welcome to all. As the operator indicated, my name is Joe Diaz with Lytham Partners. We are the Investor Relations consulting firm for ImmuCell. I thank all of you for joining us today to discuss the unaudited financial results for the first quarter ended March 31, 2025. Listeners are reminded and cautioned that statements made by management during the course of this call include forward-looking statements, which include any statement that refers to future events or expected future results or predictions about steps the company plans to take in the future. These statements are not guarantees of performance and are subject to risks and uncertainties that could cause actual results, outcomes, or events to differ materially from those discussed today. Additional information regarding forward-looking statements and the risks and uncertainties that could impact future results, outcomes or events is available under the cautionary note regarding forward-looking statements or the Safe Harbor statement provided with Form 10-Q and the press release the company filed last night, along with the company's other periodic filings with the SEC. Information discussed on today's call speaks only as of today, Thursday, May 15th, 2025. The company undertakes no obligation to update any information discussed on today's call. Please note that references to certain non-GAAP financial measures may be made during today's call. The company included definitions of these terms as well as reconciliations of these figures to the most comparable GAAP financial measures in last night's press release in order to better assist you in understanding its financial performance. With that said, let me turn the call over to Michael Brigham, President and CEO of ImmuCell Corporation for opening remarks. We will then hear from Tim Fiori, the company's newly appointed CFO, with a review of some first quarter financial highlights, after which we will open the call for your questions. Michael?

Thanks, Joe and good morning everyone. As Joe said in a moment, I'd like to introduce you all to our new CFO, Tim Fiori. First, I would like to offer a few comments from a high-level strategic perspective. Quite simply, our business is becoming larger, more diverse, and more complex, and that's a great thing. We are very focused on the commercial opportunity that we have with First Defense. The recent growth in First Defense sales is very positive for us. Our investments to increase production capacity above $30 million per year are now complete, expanding our production facilities and implementing the new equipment was a huge project. We implemented important process improvements and worked through certain contamination events. It is important to note that we have not incurred another contamination event for over a year now. During the just completed quarter, we achieved gross margin expansion along with the revenue growth and we increased our cash balance to about $4.6 million as of March 31, 2025. Moreover, we are pleased to see traction for the different product formats we introduced for First Defense to the point where these now should be seen as a suite of related products with expanded uses and appeal. At the same time, we are initiating investigational product use of Re-Tain to collect market feedback about product performance in the field while reducing product development expenses and exploring potential strategic options for our novel technology. Our financial recovery and improvement shows up in the favorable adjusted EBITDA results that Tim will touch on. But first, I want to underscore that expanding the size and breadth of our product sales and managing other corporate objectives has become an increasingly complex responsibility. Over the years, we have prided ourselves in keeping administrative expenses low by public company standards. Growing our senior management team brings added expense, but also offers new opportunities and benefits. I've already experienced some of those benefits working with Tim for just over a month now. We are optimistic as we work our way through the balance of 2025. With that said, let me introduce Tim Fiori. Tim, would you please tell us a bit about your background and talk about some of the first quarter financial highlights.

Thanks, Michael. As Michael mentioned, I've been here at ImmuCell for just over a month. Before coming to ImmuCell, I worked for 24 years in various finance roles for IDEXX Laboratories, a well-respected public company headquartered in nearby Westbrook, Maine. Most recently, I was Senior Director of Finance and Commercial Operations for their livestock, poultry and dairy known as LPD, water testing and IDEXX's OPTI Medical Human Health line of business. Let's talk about the first quarter financial results for ImmuCell. Product sales during the first quarter of 2025 increased 11% or $810,000 over the first quarter of 2024 to a record $8.1 million. Those record quarterly sales eclipsed the previous record set in the fourth quarter of 2024. These strong sales helped us reduce our order backlog from $4.4 million as of December 31, 2024, to $4 million as of March 31, 2025. I'm pleased to say that we've continued to eat away at that backlog, which was down to $3.4 million as of May 6, 2025. We previously had announced our goal of increasing annual production capacity to $30 million or more per year. Our achievement of $15.8 million in sales during the six-month period ended March 31, 2025, suggests that we are achieving that target. Product sales during the 12-month period ended March 31, 2025, increased by 28% or $6 million to $27.3 million compared to the 12-month period ended March 31, 2024. To remain successful, we must continue to avoid significant contamination events and equipment breakdowns and operate with strong production yields. We pay our bills and drive our cash flows with the gross margin dollars. We experienced some low gross margin percentages in prior periods as we dealt with low output and scrap costs related largely to the contamination events mentioned previously. The 42% gross margin during the first quarter of 2025 is an improvement over the 37% during the fourth quarter of 2024, but we still have more work to do to achieve our target of 45% or more. The increase in sales and the improvement in gross margin are important. I take nothing away from those accomplishments, but I would like to talk for a moment about adjusted EBITDA because the impact of non-cash depreciation expense on our bottom line is significant. As a reminder, adjusted EBITDA as opposed to just EBITDA includes an add-back of stock-based compensation expense, which is another non-cash expense that is included in net income as calculated in accordance with GAAP. We created adjusted EBITDA of $2.3 million, $3.7 million and $3.3 million during the three-month, six-month and 12-month periods ended March 31, 2025. These strong results compare very favorably to adjusted EBITDA of just $458,000, $247,000 and negative $280,000 during the three-month, six-month and 12-month periods ended March 31, 2024. With regards to the other financial results, the press release and the Form 10-Q that we filed last night provide the complete unaudited P&L and balance sheet results. Lastly, I encourage you to review our corporate presentation slide deck. I believe it provides a very good summary of our business strategy and objectives as well as our current financial results. A May update was just posted to our website last night, see it in the Investors section of website and click on corporate presentation or contact us for a copy. With that said, we would be happy to take your questions. Let's have the operator open up the lines.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have a question from George Melas, MKH Management. Please go ahead.

Good morning, Michael and Tim.

Hi, George, good morning. How are you?

Good, very well. Question on the product mix. First of all, I have to say I really like how you report the revenue ahead of time and then file your Q before the call. So it helps us sort of get ready for understanding the call. On product mix, this quarter was quite strong on Tri-Shield, which I think was 71% of sales compared to 55% in the previous quarter. So I have two questions. One of them is on the new sort of bulk powder product. How do you expect that to contribute towards the end of '25 and maybe in '26? And then it seems that the mix of Tri-Shield and bivalent has relatively little impact on the gross margin? And maybe could you comment on that?

Thank you, George.

Thank you. Good morning.

Yes, I think that's fair. I mean, we definitely want to be real clear on that. The fourth quarter and the first quarter are strong. They look strong relative to the reduced quarters, to the reduced first nine months of 2024. But I think the other thing, and Tim and I were just looking at our notes here is also a factor in the backlog. So that’s – the second quarter is going to benefit. Tim mentioned, what did you say, Tim, 3-point.

4, I believe. $3.4 million at May 6.

Yeah. Russ, I'm glad you touched on that because, yeah, I pointed to that segment footnote, that's fair. Also we always fully disclose depreciation because it's huge, and it won't affect that EBITDA, and it is a big piece of that product development spend. But then we touched on more in the press release than in our script, but the investigational product use is really a mentor of really important development. We're all frustrated by not being able to achieve that FDA license yet. And there are things that we can control and things that we can't. And we're frustrated but can't control. It really has hung up right now based on the need for our contract manufacturer to clear inspection. And it would be horrible, if that was the end of story. But what the new piece of the story is this investigational use, while it won't generate revenue getting the product out to market right now, right in the next few months through the balance of the year the sales team is going to do a really good job of getting product in and getting customer feedback. And that's what investigational product use is. It's a way that the FDA creates a little bit of flexibility. We are not granting you the license yet, but we're giving you the ability to get market feedback. So that's a big step, and I wish we had the bigger step, which is just full commercial sales and FDA approval. We simply don't and this allows us to move forward test this product that hasn't been tested since -- in cows since efficacy trials years ago. So we're looking forward to reporting on those results. It will start late second quarter into third quarter and have some results around the year-end as far as outside of the lab and on a commercial dairy, how did the product perform.

Well, congrats on the 6 months of performance, the opportunities ahead and perseverance over many years and good luck going forward.

Hey, Russ, Tim's got one point for you on -- this is a good one that I missed.

Yeah, just wanted to mention, when you were thinking about EBITDA and the full year estimate when you're in your thinking of that, I would consider that Q1 is a seasonal high, not going to quantify exactly relative to other quarters, but there is seasonality to it.

We do have to watch that. Yeah. And I would add to -- Tim's right, but also that backlog mix -- mitigates a little bit of that seasonal bump because right now, we're just selling almost everything that we make. So yeah, going forward, that Q1 is always going to be the high season, and going forward, we're not going to have a backlog.

Okay. Thank you.

Awesome.

The next question from Jane Lindenman, Private Investor.

Hey, Mike, it's Bruce with Jane. First, we want to congratulate you and the company on a really, really nice quarter.

Thank you. Yes, I appreciate that, both of you. Thanks.

You're welcome. And also exactly what's -- a few questions, what's the difference between that you could investigate this and the product, an approval, what -- how come we can investigate it, but it's not approved.

Well, the biggest difference is it's not commercial sales. So it's not a revenue initiative. It doesn't generate revenue, but it's very similar in that we're going to dose. We're going to deliver product to cows, whether on the investigational status without license or under commercial approval with a license, we're going to put Re-Tain into cows and track data. So the real difference is, because of the inspectional issues at our CMO, we don't have a license. We're not going through distribution, typical sales where you just move out a lot of product. We really wanted to do something like this anyway, even with license. We had previously referred to it as a controlled launch. We weren't going to just mass market, a novel practice-changing product like this through distribution. And we're going to handhold and this just gives us the approval to start those studies to deliver that product and gather that data while the final stages of that FDA license and approval are still in process.

At this point, with this quarter, the great results of this quarter. At this point, we would stop having to sell common shares, because the company is profitable?

It's certainly a factor. It's certainly a factor, Bruce. We monitor that closely. I'd like to refer to the ATM as we're opportunistic. So that means you sell certain shares at certain prices, and you consider your long-term capital needs even beyond just our profitability, our debt obligations, our CapEx, desires/almost obligations, obligations to grow. But you saw us very active. You can see this both in the MD&A discussion and in the subsequent event. You can see that during 2024 when we needed to be, we were very active and more recently, we've been less active. So we just have a lot -- it's a great tool to be, because of its flexibility. And I think we just continue to watch that going forward and consider all those capital needs beyond just operating expenses. But as I said, debt and CapEx and growth, And yes, less recently and more back in 2024 when we -- in the deep of the contamination and really was very, very essential and productive for us.

So at this point, you would look at numbers that were higher than $5 or whatever?

Right. A lot of that 2024 money went out in the $350 to $370 range, which was needed cash, but the trade-off was unwanted dilution. But yes, look at that subsequent event note, you can see the activity is much smaller, as I think appropriate to where we stand today.

Right. It seems as the company gets more and more profitable that the needs other than really far out unless the stock was a really skyrocket would be as necessary at this point.

I definitely agree.

And would you -- again, as Re-Tain gets approval and your no more contaminations at some point, would you look to maybe project into the future what the company expects to do so that people have an idea of what's going on -- what you anticipate to go on.

Yes. Extremely difficult to do with Re-Tain. It's a practice changing. It moves the mastitis paradigm. It's a whole new thing. It's very hard to do with Re-Tain. And I think the track record on First Defense is the better indicator. I mean we're going to just -- we talk a lot about our production capacity. We talked about doubling from $15 million or $16 million to $30 million or $30 million plus. We do talk a little bit about the desire to get capacity up to $40 million. So, some of those projections come from just -- we have a hope and we have a projection, so we build capacity to meet that. But at the same time, we don't have the benefit of one or two or any financial analysts that could kind of help us on those projections and make those projections with us. So, this small company has stuck -- without an analyst stuck to timely as one of the questioners that said, was that, George? Yes. Anyway, that early -- I think we will stick with that early announcement on the top line because we know that quick after the end of the quarter. And a little hesitant to get more deeper into projections because it's just subject to change. And we know one thing about projections is they're always wrong and they're just either high or low.

Right. No, no. Listen, you guys at this point, you're doing a wonderful job. Congratulations. I was just looking more into the future as opposed to not tomorrow, obviously. But as you get a handle on Re-Tain and look, the companies come out and they do conservative projections. And usually, it's what you said, working with the analysts usually from -- it appears that the analysts look to the companies more than the companies look to the analysts.

Yes, I think it's something -- it's certainly been our objective for years, gotten succeeded, but we'd love to have that interactive collaboration that's missing for ImmuCell right now, that third-party financial analyst. Flat as you said.

Right. And as you -- as the company grows, it becomes more profitable and more people follow you, hopefully, one of the institutions will either follow you because they own it or one of the other services, Motley Fool or something, maybe somebody like that would start with you guys. All right. Well, listen, thank you very much. Congratulations to you.

No, that makes sense, Bruce. Thanks for your thoughts. I'm with you.

All right. Be safe and healthy and good luck to everybody.

All right. Thanks.

[Operator Instructions] This concludes the Q&A session. I would like to turn the conference back over to Mr. Diaz for any closing remarks. Thank you.

Thank you, Vicki and thank all of you for participating on today's call. We look forward to talking with you again to review the results of the second quarter ending June 30, 2025, during the week of August 11, 2025. That concludes today’s call. Thank you and have a great day.