IMMUCELL CORP /DE/ (ICCC)·Q1 2025 Earnings Summary

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 .

Financial Results

Segment breakdown (Q1 2025):

• Sales by segment and profitability

KPIs and operating drivers:

• Mix: Tri‑Shield First Defense $5.669M (70% of Q1 sales) vs $4.055M (56%) in Q1’24; trailing twelve months $17.377M (64%) .
• Backlog: $4.4M (12/31/24) → $4.0M (3/31/25) → $3.4M (5/6/25) .
• Cash and liquidity: Cash $3.758M (12/31/24) → $4.599M (3/31/25); no LOC draws .
• Other income: includes $426,587 insurance recovery in Q1 2025 .
• Seasonality: Q1 is typically the seasonal high .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Product sales during the first quarter of 2025 of $8.1 million set a record high… We also set a quarterly record for net income… approximately $1.4 million” — Michael F. Brigham, CEO .
• “The 42% gross margin… represented an improvement over… 37% recorded during fourth quarter of 2024” .
• “We have not incurred another contamination event for over a year now” .
• “We are moving ahead with Investigational Product use of Re‑Tain to collect market feedback… over the second half of 2025” .
• “Adjusted EBITDA of $2.3M… compares very favorably to… $458k… last year” — Tim Fiori, CFO .

Q&A Highlights

• Mix and margin: Management noted Tri‑Shield at ~70% of Q1 sales and explained margin gains mainly from higher volumes over largely fixed costs; they still price by format cost and see room to improve yields .
• Near‑term outlook: Backlog fell to $3.4M by 5/6; management refrained from numeric guidance but expects better y/y EBITDA as comps normalize and sales shift from allocation to growth mode .
• Re‑Tain path: Investigational use begins late Q2–Q3 to gather field data while CMO resolves FDA observations; this will not generate revenue but informs launch planning .
• Capital/dilution: ATM now used opportunistically after heavier 2024 issuance; profitability reduces urgency though broader capital needs (debt, capex) are considered .

Estimates Context

• No S&P Global Wall Street consensus EPS or revenue estimates were available for ICCC for Q1 2025 or forward quarters; consequently, no vs‑consensus comparisons are presented. Management also highlighted absence of third‑party analyst coverage at present .

Key Takeaways for Investors

• Execution inflecting: contamination‑free operations, record revenue, and 42% gross margin point to sustainable recovery; watch for progression toward the ~45% margin target via yields and throughput .
• Mix and pricing should support margins: Tri‑Shield penetration (~70%) and 2025 price increases are tailwinds; monitor if mix strength persists into seasonally softer quarters .
• Backlog conversion is a near‑term growth lever: backlog reduced to $3.4M by May 6; robust production should translate to continued q/q sales resilience even post‑seasonality .
• Re‑Tain remains a medium‑term optionality: FDA/CMO resolution is the gating item; investigational use provides market feedback but no revenue—plan for a pause after initial lots unless fill solution is secured .
• Balance sheet/liquidity improving: cash up, operating cash flow positive, no LOC draws; interest expense outlook manageable though debt service remains a watch item .
• Stock catalysts: 1) further margin expansion toward 45%; 2) additional backlog drawdown; 3) FDA/CMO inspection clearance and NADA visibility; 4) updates on bulk powder format and segment expansion .