ImmuCell - Earnings Call - Q1 2025

Executive Summary

• Record quarter: revenue $8.07M (+11% y/y, +4% q/q), gross margin 42% (vs 37% in Q4), net income $1.45M ($0.16 diluted EPS) and Adjusted EBITDA $2.31M; cash rose to $4.60M, aided by a $0.43M insurance recovery.
• Operational recovery continues: no new contamination events since Apr-2024; elevated output helped reduce backlog to $4.0M at 3/31 and further to $3.4M by 5/6, supporting near‑term sales visibility.
• Mix and pricing tailwinds: Tri‑Shield share reached ~70% of Q1 sales; price increase (~6%) effective 1/1/25; management targets gross margin ≥45% as yields improve.
• Re‑Tain: Investigational Product use to gather field feedback in 2H25; NADA review is pending resolution of the contract manufacturer’s FDA inspection observations—no near‑term revenue expected from this activity.
• Key stock catalysts: pace of backlog conversion and margin expansion, FDA/CMO resolution for Re‑Tain, sustained contamination‑free production and evidence of normalized seasonality (Q1 is the seasonal high).

What Went Well and What Went Wrong

• What Went Well

  • Record sales and profitability: “Product sales… of $8.1 million set a record high… We also set a quarterly record for net income… approximately $1.4 million”.
  • Margin expansion: gross margin improved to 42% (vs 37% in Q4) as higher volumes leveraged fixed costs and yields improved.
  • Backlog reduction and cash build: backlog fell to $4.0M (3/31) and $3.4M (5/6); cash grew to $4.60M with no LOC draw.

• What Went Wrong

  • Gross margin still below 45% target; management acknowledges “more work to do” to reach ≥45% as yields continue to normalize.
  • Re‑Tain timing remains constrained by CMO inspection issues; Investigational use won’t drive revenue and a supply pause is likely after initial lots.
  • Concentrated distribution and ongoing cost pressures: top two customers were 71% of receivables at Q1 end; inflation and supply costs continue to impact COGS.

Transcript

Operator (participant)

Good morning and welcome to the ImmuCell Corporation Reports First quarter ended March 31, 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.

Joe Diaz (Managing Partner)

Thank you, Vicky. 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 1st 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 10Q 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 15, 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 1st quarter financial highlights, after which we will open the call for your questions. Michael.

Michael F. Brigham (President and CEO)

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 1st quarter financial highlights?

Timothy Fiori (CFO)

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 financials for IDEX 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 IDEX's OPSI medical human health line of business. Let's talk about the 1st quarter financial results for ImmuCell. Product sales during the 1st quarter of 2025 increased 11%, or $810,000, over thest quarter of 2024 to a record $8.1 million. Those record quarterly sales eclipsed the previous record set in the 4th 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 1st quarter of 2025 is an improvement over the 37% during the 4th 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, Startech. 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 the investors section of our 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 line.

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using speakerphone, please pick up your handsets before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Anyone who has a question may press star and one at this time. Once again, for your questions, please press star and one. We have a question from George Melas, MKH Management. Please go ahead.

George Melas-Kyriazi (President)

Good morning, Michael and Tim.

Michael F. Brigham (President and CEO)

Hey there, George. Good morning. How are you?

George Melas-Kyriazi (President)

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. It helps us sort of get ready for understanding the call. On the product mix, this quarter was quite strong on TriShield, which I think was 71% of sales compared to 55% in the previous quarter. 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 2025 and maybe in 2026? It seems that the mix of TriShield and Byvale has relatively little impact on the gross margin. Maybe could you comment on that?

Michael F. Brigham (President and CEO)

Yeah. Thanks, George. Looking at the queue, you pointed out the 1st quarter at 70% TriShield and 30% other. That's three months. With 12 months, it's 64% TriShield, 36% other. TriShield has been a big seller since we launched just a few years ago. The broader claim set really makes that product excel in the market based on efficacy, based on being similar to a vaccine in the coverage of the pathogens that it works on. That is the exciting driver of our growth. We are always looking at what else can we do and how can we expand the product line and how can we grow sales. When you mentioned your question on the bulk powder, that is still in development. We are on track to get that product out into the market over the second, third, and fourth quarter, but we have no sales yet.

It's a different format in that it's, again, bulk, as you mentioned, George, as opposed to in a capsule or a tube. It's going to be used as a seed additive, and it's going to go to big cap ranches where they're not accustomed to dosing individual calves with a capsule or with a tube. More to come on that. I like the development progress. It's being led by our VP of Sales and Marketing, Bobbi Jo Brockmann, but no sales report yet. That's a new event, a new upside for the last nine months of the year. Did that answer you, George?

George Melas-Kyriazi (President)

That totally does. Maybe the correlation of gross margin to the product mix right now, it seems like regardless, it seems like you achieve really strong gross margin regardless of whether TriShield is 70% or 55%. We're just trying to see if there is a bit of an impact, the mix on the gross margin.

Michael F. Brigham (President and CEO)

Yeah. We do price according to our estimated costing by format. TriShield is quite a bit more expensive than the Bolus, or the Bolus is quite a bit more cost-effective than the TriShield. I would argue you get what you pay for, and people are willing to pay for that TriShield and get that broader coverage. We do have quite a large amount of fixed costs, so we do benefit, and we did see that benefit both in the fourth quarter at 37% and more so in the first quarter here at 42%. Just moving our labor is largely fixed. All our equipment and facility costs fixed is moving over higher volumes. All product formats benefit with that volume growth, and that got us to the 42%. As Tim said, we're still a work in progress. We've still got room for improvement.

George Melas-Kyriazi (President)

Great. Congratulations. It's fantastic results. Tim, welcome to the team, and wonderful to have you on board.

Timothy Fiori (CFO)

Thank you, George.

Operator (participant)

For any further questions, please press star and one on your telephone. We have a question from Russ Tolander, Capital Alliance. Please go ahead.

Russell Tolander (Managing Director)

Yeah. Greetings, Michael and Tim.

Michael F. Brigham (President and CEO)

Thank you, Russell. Hey, good morning.

Russell Tolander (Managing Director)

Appreciate a little more detail in breakouts of expense categories under the new CFO here. That's appreciated already. The focus, I think, just in the presentation on the adjusted EBITDA and the trailing 12 months. I guess looking at the business, there was one last contamination event a year ago, April timeframe. I'm curious, in Q2 of last year, how much EBITDA erosion was there from that event? I guess what I'm driving at is Q2 and Q3 of last year might have been lower EBITDA than we would expect from the core business in Q2 and Q3 of this year. Can you help us kind of create expectations for Q2 and Q3 this year for EBITDA?

Michael F. Brigham (President and CEO)

Right. Yeah. It's a great question, but we did answer that on an annual basis. I don't have that broken out on a quarterly basis. I'm referring to about page 26 in the queue where we talk about the scrap per year. Part of my answer would be '22, that total scrap cost was $589,000. Year-ended '23 was $527,000. Then '24 was $407,000. So around $500,000 per year during that expansion phase where we're incurring those contaminations. As far as Q2, yeah, there's going to be that contamination. You're remembering it right. April '24 was the last one. That affected that full year of just $407,000. Most of that would have been in the first quarter because that was just one contamination in April and then none for the rest of the year.

I'm not answering with a specific number, but a direction.

Russell Tolander (Managing Director)

I got it. Maybe a better way of asking is, were there revenue implications still in Q2 and Q3 of last year? Or how do we look?

Michael F. Brigham (President and CEO)

Right. Right. No, the revenue rebound began in the fourth quarter of 2024. So we were down. We set those consecutive records 4th quarter of '24 and then beat that record first quarter of '25. So that is comparing to those reduced periods. But nonetheless, those are our best two quarters in our history.

Russell Tolander (Managing Director)

Oh, yeah. Absolutely. Congratulations. I'm driving at kind of what could be expectations for revenues for the next couple of quarters. I guess the reality is we should expect greater EBITDA from the enterprise after the next couple of quarters because the comps from a year ago were maybe lower than the level of the business you're able to conduct currently.

Michael F. Brigham (President and CEO)

Yeah. I think that's fair. I mean, we definitely want to be real clear on that. The 4th quarter and the 1st quarter are strong. They look strong relative to the reduced quarters, to the reduced first nine months of 2024. I think the other thing, and Tim and I were just looking at our notes here, is also factor in the backlog. That second quarter is going to benefit. Tim mentioned that we—what did you say, Tim?

Timothy Fiori (CFO)

3.4, I believe.

Michael F. Brigham (President and CEO)

We got so it's.

Timothy Fiori (CFO)

$3.4 million at May 6th.

Michael F. Brigham (President and CEO)

At May 6th. We have two things going on: increased capacity and then clearing out that accumulated backlog, making progress on that through the 2nd quarter. Yeah. I do not have a—we do not do the public projections of the revenue, but I guess I am trying to—we think we are trying to make it clear what is comparing the good period to the bad period. Let us see what the sales team can do because they are now allowed, able to go out and actually bring in new business, where over the period there of 2024, they were really stuck. They were dealing with irritated customers and allocating scarce products. Bringing in new customers really did not help us. Now that transition will be able to—that means the sales team has just made a great pivot from that scarce product allocation period to the business growth period going forward.

Not a numerical answer to your question, but directionally, I think that that's where we're going: clear the backlog and bring back customers we lost and find new business both with the existing product line and the expansion of the product lines that we talked about with George to the bulk powder.

Russell Tolander (Managing Director)

Literally what you're saying, I guess what I'm driving at is the core business EBITDA kind of run rate is much greater than $3.3 million for 12 months.

Michael F. Brigham (President and CEO)

That's exactly it. Yeah. Yeah. Yep. I guess, no, I think maybe that's a slew to follow the question there. Yeah. Definitely look at the three—that's why we did those three periods. And the three is more indicative, and the six more indicative of the recovered company. And the 12 has a six-month lag in it. Yeah.

Russell Tolander (Managing Director)

I think that's the next part of my question is maybe a statement. That's the core business, but you're spending $800,000 a quarter roughly on product development for most of it going to the new product approval. And so if you wouldn't have been doing additional product development, your core business for First Defense is worth a lot more than the EBITDA of the enterprise.

Michael F. Brigham (President and CEO)

Yeah. I think there's a lot of variability in the sales and in the gross margin is what we need to track. I think what we can count on is that admin expense noting the modest increase we've agreed to fund. The other expenses are more straight line. I think what was important to answer your question there is that's one of the reasons we put together that segment footnote. I would really—yeah, I think that's what you're doing, Russ. If you're not, I would encourage you to just look at that note. I was just trying to get the number in front of me towards the end of the footnote from number 16. I think that really is my best answer to your question is when we break the business down to the scours, to the mastitis, and to the other.

The other is very small. The mastitis is the Re-Tain, and that's the one that we are actively seeking strategic options to cover that big expense. Then the scour standalone is just what the business would be without the other two categories, just purely the scour business.

Russell Tolander (Managing Director)

I think there's a lot of value here is what I'm driving at, and that you've been investing quite a bit of product development capital here, which detracts from the EBITDA of the kind of existing core business, all of which shareholders approve. I think we're all excited to see the new product come to fruition for mastitis. Any update on that? I guess you got it in the press.

Michael F. Brigham (President and CEO)

Yeah. I'm glad you touched on that because, yeah, I pointed to that segment footnote. That's fair. 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. We touched on it more in the press release than in our script. The investigational product use is really a new development, a really important development. We're all frustrated by not being able to achieve that FDA license yet. There are things that we can control and things that we can't. We're frustrated but can't control. It really is hung up right now based on the need for our contract manufacturer to clear inspection. It would be horrible if that was the end of the story. 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. 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. That's a big step. I wish we had the bigger step, which is just full commercial sales and FDA approval. We simply don't. This allows us to move forward to test this product that hasn't been tested in cows since efficacy trials years ago. We'll be looking forward to reporting on those results.

It'll start late 2nd quarter into 3rd quarter and have some results around year-end as far as outside of the lab and on a commercial dairy. How did the product perform?

Russell Tolander (Managing Director)

Congrats on the six months of performance, the opportunities ahead, and the first advance over many years. Good luck going forward.

Michael F. Brigham (President and CEO)

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

Timothy Fiori (CFO)

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

Michael F. Brigham (President and CEO)

We do have to watch that. I would add to Tim's right, but also that backlog.

Timothy Fiori (CFO)

Mitigates the price.

Michael F. Brigham (President and CEO)

Mitigates a little bit of that seasonal bump because right now we're just selling almost everything that we make. Yeah, going forward, that Q1 is always going to be the high season. Going forward, we're not going to have a backlog.

Russell Tolander (Managing Director)

Okay. Thank you.

Michael F. Brigham (President and CEO)

Awesome.

Operator (participant)

The next question from Jane Lindemann, Private Investor. Please go ahead.

Bruce Ruehl (Private Investor)

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

Michael F. Brigham (President and CEO)

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

Bruce Ruehl (Private Investor)

You're welcome. Also, exactly what's a few questions. What's the difference that you could investigate this and the product and approval? How come we can investigate it, but it's not approved?

Michael F. Brigham (President and CEO)

The biggest difference is it's not commercial sales. It's not a revenue initiative. It doesn't generate revenue. It's very similar in that we're going to dose, we're going to deliver product to cows, whether under the investigational status without license or under commercial approval with a license. We're going to put Re-Tain into cows and track data. 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. We're going to handhold.

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.

Bruce Ruehl (Private Investor)

Thank you. 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?

Michael F. Brigham (President and CEO)

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. 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. Yeah, 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. More recently, we've been less active. We just have a lot; it's a great tool to be because of its flexibility. I think we just continue to watch that going forward and consider all those capital needs beyond just operating expenses. Yeah, because, as you said, debt and CapEx and growth.

Yeah, less recently and more back in 2024 when we were in the deep of the contamination and it really was very, very essential and productive for us.

Bruce Ruehl (Private Investor)

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

Michael F. Brigham (President and CEO)

Right. A lot of that '24 money went out in the $350-$370 range, which was needed cash, but the trade-off was unwanted dilution. Yeah, look at that subsequent event note. You can see the activity is much, much, much smaller, as I think appropriate to where we stand today.

Bruce Ruehl (Private Investor)

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

Michael F. Brigham (President and CEO)

I definitely agree.

Bruce Ruehl (Private Investor)

Would you, again, as Re-Tain gets approval and you're no more contamination, 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?

Michael F. Brigham (President and CEO)

Yeah. Extremely difficult to do with Re-Tain. It's a practice-changing. It moves the mastitis paradigm. It's a whole new thing. Very hard to do with Re-Tain. I think the track record on First Defense is the better indicator. I mean, 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. Some of those projections come from just we have a hope and we have a projection. We build capacity to meet that. At the same time, we do not 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.

This small company has stepped without an analyst, stepped too timely, as one of the questioners said. Was that George? Yeah. Anyway, I think we will stick with that early announcement on the top line because we know that quick after the end of the quarter. That's a little hesitant to get more deeper into projections because it's just subject to change. We know one thing about projections is they're always wrong, and they're just either high or low.

Bruce Ruehl (Private Investor)

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

Michael F. Brigham (President and CEO)

Yeah. I think it's something that has certainly been our objective for years. We haven't succeeded. We'd love to have that interactive collaboration. That's missing for ImmuCell right now, that third-party financial analyst.

Bruce Ruehl (Private Investor)

It would.

Michael F. Brigham (President and CEO)

Work collaboratively, as you said. Yeah.

Bruce Ruehl (Private Investor)

Right. As the company grows and 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. I do not know. Motley Fool or something. Maybe they would, maybe you, maybe somebody like that would start with you guys. All right. Listen, thank you very much. Congratulations to you.

Michael F. Brigham (President and CEO)

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

Bruce Ruehl (Private Investor)

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

Michael F. Brigham (President and CEO)

All right. Thank you so much.

Bruce Ruehl (Private Investor)

See you.

Michael F. Brigham (President and CEO)

Bye.

Bruce Ruehl (Private Investor)

Have a great day.

Michael F. Brigham (President and CEO)

Thanks.

Operator (participant)

Again, if you have a question, please press star and one. This concludes the Q&A session. I would like to turn the conference back over to Mr. Diaz for any closing remarks. Thank you.

Joe Diaz (Managing Partner)

Thank you, Vicky. 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.