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IC

IMMUCELL CORP /DE/ (ICCC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong margin recovery (gross margin 43%) despite lower revenue: product sales fell 8% year-over-year to $5.5M as distributor restocking normalized and international shipments (largely Canada) were timed later; domestic sales rose 2% YoY and 9.5% vs Q2, supporting sequential U.S. momentum .
  • Adjusted EBITDA improved to $0.75M vs $0.20M in Q3 2024, while net loss narrowed to ($0.14M) from ($0.70M) on better manufacturing yields and ~6% composite price increase in 2025; operating expense control contributed materially .
  • Backlog was effectively eliminated by June; management reiterated that year-over-year comparisons in H2 2025 would be difficult as earlier pipeline refills created a one-time lift. Capacity now supports ~$30M annual production, with evaluation of future expansion to ~$40M on hold pending cash and demand visibility .
  • Strategic and regulatory update: investigational product use for Re-Tain continues with Michigan State University; FDA approval timing depends on clearing inspection observations at the contract manufacturer, a key 2026 commercialization catalyst .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion: 43% in Q3 2025 vs 26% in Q3 2024 driven by improved manufacturing performance, pricing (~6% composite increase), and scale efficiencies. “The largest drivers… improved manufacturing performance… and the price increase” .
  • Adjusted EBITDA strength: $751K in Q3, $4.4M YTD, and $5.8M TTM vs $196K, $35K, and ($175K) in the prior-year periods, supporting cash stability into peak selling season .
  • U.S. demand resilience: domestic sales up 2% YoY and 9.5% vs Q2; trailing 12 months U.S. represented ~86% of sales, indicating core market strength .

What Went Wrong

  • Revenue decline: Q3 2025 product sales fell 8% YoY to ~$5.5M due to normalization after distributor restocking and timing of international shipments (largely Canada) .
  • International softness: Q3 international sales down vs Q3 2024 on shipment timing and short-supply allocations earlier in the year, though 9M international sales were up 15% YoY .
  • Inventory build and WIP management scrutiny: investors flagged rising WIP (frozen colostrum ~$3.3M) and finished goods ~$2.0M, prompting detailed commentary on planning discipline ahead of Q1 peak season .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD)$6.012M $8.067M $6.445M $5.506M
Gross Margin ($USD)$1.584M $3.354M $2.818M $2.363M
Gross Margin (%)26% 42% 44% 43%
Operating Income ($USD)($0.575M) $1.118M $0.570M $0.020M
Net Income ($USD)($0.702M) $1.447M $0.502M ($0.140M)
Diluted EPS ($USD)($0.09) $0.16 $0.06 ($0.02)
Adjusted EBITDA ($USD)$0.196M $2.305M $1.364M $0.751M

Segment breakdown: Not disclosed for Q3. Management noted Tri-Shield mix was 70% in Q1 2025 vs 55% in prior quarter, illustrating product suite momentum but no formal mix detail in Q3 .

KPIs and balance sheet highlights:

KPIQ3 2025
Cash & Equivalents ($USD)$3.886M
Frozen Colostrum WIP ($USD)~$3.3M (management Q&A)
Finished Goods Inventory ($USD)~$2.0M (management Q&A)
TTM Product Sales ($USD)~$27.8M
TTM Adjusted EBITDA ($USD)~$5.8M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales cadenceH2 2025Softening expected due to one-time distributor inventory rebuild (Q2 disclosure) Confirmed soft YoY in Q3; backlog dynamics make comparisons difficult; domestic momentum +9.5% vs Q2 Maintained
Gross margin trajectory2025Target ≥45% over time (Q1 commentary) Achieved 43% in Q3; drivers: manufacturing yields, pricing, scale Maintained target; progressing
Capacity expansionNext phase to ~$40MProject on hold pending cash/demand; evaluating timing (Q2 call) Continues on hold; monitoring inventory, sales, cash before moving beyond ~$30M capacity Maintained
Re-Tain commercialization2025–2026Investigational product use in 2H25; FDA approval dependent on CMO inspection resolution Investigational use underway; FDA timing unchanged pending CMO observations; strategic options under evaluation Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2 2025)Current Period (Q3 2025)Trend
Supply chain/backlogBacklog fell to $3.4M by May 6; eliminated by June; warned of H2 softening as pipeline refill normalizes Q3 YoY sales down 8% as expected; backlog dynamics complicate comps; U.S. demand up 2% YoY and 9.5% q/q Normalization post-backlog; domestic strength
Gross margin drivers42–44% margins in Q1–Q2 on improved yields, fixed-cost leverage 43% in Q3; primary drivers: manufacturing performance, ~6% price increase, scale Sustained improvement
PricingNoted price benefits in margins Composite price increase ~6% in 2025 supports margin Positive contributor
Regional mixBeef seasonality; distribution-led reach; Q2 noted traction with new formats International down on timing; 9M international +15% YoY; U.S. ~86% of TTM sales U.S. strengthening; international timing
Product portfolio (First Defense suite)Launching spray-dried/functional feed formats; early traction reported Commercial energy “palpable”; new functional feed products launched in June Expanding formats
Regulatory/legal (Re-Tain)FDA delay tied to CMO; investigational use to generate field data; strategic options considered Investigational studies underway; data to inform 2026 strategy; approval timing unchanged Progress through field studies
Inventory and cash disciplineCash rose to $6.0M (Q2); refinanced debt; active planning to avoid backlog return Cash $3.9M; managing WIP colostrum and finished goods into peak season; weekly S&OP cadence Tight cash/WIP control

Management Commentary

  • “Gross margin… drivers are the improved manufacturing performance… [and] the price increase… composite price increase in 2025 of around 6%” — CFO Tim Fiori .
  • “We demonstrated that we can produce at an annual rate… very close to… $30 million per year” — CEO Olivier te Boekhorst .
  • “Backlog dynamics have created difficult conditions for year-over-year sales comparisons… We anticipated softening in sales during the second half of 2025” — CFO Tim Fiori .
  • “Investigational product use of Re-Tain is underway… data… will inform strategies for Re-Tain in 2026” — CEO Olivier te Boekhorst .
  • “We now have sufficient inventory… to drive product adoption and revenue growth. We are operating from a clean slate” — CFO Tim Fiori .

Q&A Highlights

  • Capacity expansion and growth plan: Management emphasized achieving target capacity (~$30M) with enhanced quality measures; future expansion contingent on disciplined execution and customer wins; sales team pivoting from short-supply management to new customer capture .
  • Inventory/WIP management: Weekly integrated planning across sales and production; WIP colostrum ($3.3M) and finished goods ($2.0M) monitored to support Q1 peak season while avoiding overbuild .
  • Margin improvement drivers: Manufacturing performance, pricing (~6% increase), and scale were the key contributors to Q3 margin recovery .
  • Re-Tain approval and strategy: FDA timing hinges on contract manufacturer inspection; investigational use will utilize existing inventory nearing expiry, generate field data, and guide 2026 plans; strategic partnerships under evaluation to support commercialization .
  • Domestic momentum vs international timing: Domestic sales grew 2% YoY and 9.5% vs Q2; international sales declined in Q3 due to shipment timing but rose 15% for 9M YoY .

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q3 2025 appears unavailable for EPS and revenue (# of estimates also unavailable). The company has limited analyst coverage; actual revenue reported at ~$5.506M .
  • Implication: With no published consensus, estimate comparisons cannot be made; we anchor analysis to company-reported actuals and prior disclosures. Values retrieved from S&P Global (consensus) were unavailable.

Key Takeaways for Investors

  • Margin durability is the story: 43% gross margin and $0.75M adjusted EBITDA in Q3 despite lower sales suggests structural yield and pricing improvements; monitor persistence through Q4–Q1 seasonality .
  • Domestic recovery underway: Sequential U.S. growth (+9.5% vs Q2) and YoY (+2%) offsets international timing; expect comparisons to normalize as backlog effects fully roll off by 2H 2026 .
  • Balance sheet and inventory: Cash at $3.9M and disciplined WIP management ahead of peak season are key near-term execution risks/opportunities; watch cash generation in Q4–Q1 .
  • Re-Tain optionality: Field studies in 2H 2025/2026 could enable strategic partnerships and eventual commercialization post-FDA approval; this remains the medium-term catalyst .
  • Capacity prudence: Management will defer expansion beyond ~$30M annual capacity until cash and demand are clearer; this reduces execution risk but tempers near-term upside .
  • Pricing power: Composite ~6% price increase supports margins; sustainability depends on competitive dynamics and customer value perception .
  • Trading lens: Near-term narrative hinges on proving demand resilience and margin continuity into Q1 peak season while advancing Re-Tain milestones; any FDA progress or strategic partner news would be a significant stock catalyst .
Notes: All quantitative data cited from company press releases and transcripts. Where S&P Global consensus was sought, it was unavailable; therefore estimate comparisons are not provided.