ImmuCell Corporation (ICCC) Earnings Call Transcript & Summary

Thanks, Rocco. Good morning, everyone, and welcome. As Rocco mentioned, I'm Joe Diaz, and I'm with Lytham Partners, the investor relations consulting firm serving ImmuCell. I appreciate all of you being with us today as we go over the unaudited financial results for the third quarter, which ended September 30, 2025. I need to caution listeners that during this call, management will make forward-looking statements. That covers any statements referring to future events, expected future results, or predictions regarding steps the company intends to take going forward. Such statements aren't guarantees of performance, and they carry risks and uncertainties that might cause actual results, outcomes, or events to differ materially from what we discuss today. You can find additional information about forward-looking statements and the risks and uncertainties that could affect future results, outcomes, or events in the cautionary note on forward-looking statements — also known as the safe harbor statement — included with the Form 10-Q and the press release the company filed last night, as well as in the company's other periodic filings with the SEC. Anything we discuss on today's call is current only as of today, Friday, November 14, 2025. The company has no obligation to update any information discussed on today's call. Please be aware that we may reference certain non-GAAP financial measures during today's call. To help you better understand the company's financial performance, definitions of those terms, along with reconciliations of those figures to the most comparable GAAP financial measures, were included in last night's press release. With that, I'll hand the call over to Michael Brigham, Special Adviser to the CEO of ImmuCell Corporation, for his opening remarks. Michael?

Thank you, Joe, and hello everybody on this call; ImmuCell is at a thrilling moment. Considerable positive transformation is underway. When we look at how we did financially across the initial 9 months of 2025, the results are far better than what we saw a year earlier — a reversal that came about partly because we raised our manufacturing volume while also lifting gross margins. As a business, we now sit in a strong spot, armed with a stock distribution channel plus a motivated sales force. Shortly, our CEO and CFO will walk through the financial figures in more depth. Turning to another area of transformation, ImmuCell is currently going through 2 quite favorable leadership changes. To begin, as the majority of you are already aware, we brought Timothy Fiori, who serves as our CFO, on board during April. Next, during June we shared our plan for CEO succession. That process wrapped up effectively as of November 1, 2025, when Olivier Te Boekhorst was hired to take on the role of our new President and CEO. I want to extend a warm welcome to Olivier. Olivier carries more than 25 years of leadership plus results-driven execution expertise within animal health to ImmuCell. Ahead of his arrival at ImmuCell, he held the position of operating partner at ARCHIMED, a worldwide health care investment organization, where his attention went to Animal Health Investments and he also acted as Chairman and Chief Executive Officer for a portfolio company. Earlier still, Mr. Te Boekhorst spent 18 years with IDEXX, a main-based NASDAQ listed business generating over $4 billion in revenue, where Olivier directed strategy and M&A efforts between 2004 and 2008, then held roles as a Corporate Officer, Senior Vice President, and General Manager across multiple business units between 2008 and 2021, among them their livestock and dairy antibiotic residue testing operations. He possesses a demonstrated history of fueling expansion and operational excellence within the livestock sector. And when I depart in January following 36 years at ImmuCell, I feel highly certain that things are in capable hands with Olivier and Tim. Now, I'll hand the call to Olivier so he can share a few remarks. Olivier?

Thank you, Michael. Being here is genuinely thrilling, and I'm grateful for the backing you gave me while I was getting up to speed. The reception has been wonderful, and I value how much employees have invested in helping me learn the business across these past 2 weeks. When I talk with the team, people keep asking what drew me to ImmuCell. Part of what makes joining right now so exciting is how much the work here matters. At its core, ImmuCell is in the business of keeping cats alive and well. Selling doses of First Defense isn't all we do. What we deliver is protection for newmored animals that have no way to defend themselves. Our technology earns farmers' trust, and they rely on us to help them perform their jobs better. I remind the team that this begins with the concern and the hard work each of us brings daily. Seeing the enthusiasm, commitment and pride among our staff in Maine and out in the field is striking, since they're supporting a bigger mission: cutting antibiotic use in the food supply chain and keeping safe, healthy and affordable dairy and beef products available. Over the coming weeks of my onboarding, I'm eager to get going, with plans to devote substantial time in the field seeing customers, colostrum suppliers, distributor partners, key opinion leaders and the commercial team. As a leader who puts customers first, I plan to bring their viewpoints into every decision we make at ImmuCell. Great things lie ahead for ImmuCell, and being part of it is truly exciting. Delivering a strong value proposition for farmers is what this company is after, and our financial and operational results through 2025 so far demonstrate exactly that. When it comes to execution throughout our supply chain, quality and product availability will get absolute focus — from vaccine production, colostrum sourcing, liquid processing, formulation, packaging and shipping of final products, our people are restoring market confidence and faith in our capacity to reliably satisfy what customers need. Regaining customers, capturing share and growing the use of scours preventatives is what I'm eager to work toward; exploring new market opportunities more aggressively makes this an exciting moment for ImmuCell. Now, on to our revenue for the quarter. Total product sales fell 8% in the third quarter of 2025 versus the same quarter a year earlier. That matches what we said previously regarding how restocking our distribution channels earlier this year would play out. It's encouraging that domestic sales rose 2% in the third quarter versus the third quarter of 2024, and domestic sales climbed 9.5% in the third quarter versus the second quarter of 2025. Positive momentum is therefore showing up in the U.S. market, which accounted for roughly 86% of our sales across the trailing 12-month period that ended in September 30, 2025. Overseas revenue, mostly from Canada, declined in Q3 2025 versus Q3 2024 because of shipment scheduling and how we allocated product while supply was tight and we worked through our backlog. That's what produced the 8% drop in overall sales for the third quarter I referenced earlier, though I don't see it as a meaningful weakening of true customer demand. Notably, for the 9-month stretch that closed September 30, 2025, international sales came in 15% above the equivalent stretch a year earlier. The longer-range growth picture matters too. If you set our trailing 12-month sales through September 30, 2025 against the matching period through September 30, 2022 — before we hit major supply constraints — the 3-year compound annual growth rate works out to 11%. All right. Now to net income. For the 9 months ended September 30, 2025, we posted net income of $1.8 million, versus a net loss of $2.7 million across the 9 months ended September 30, 2024 — a $4.5 million improvement in the right direction, powered by a big gain in gross margins that Tim will walk through in detail. Our attention is on production capacity and quality, and an approximate gauge of that is the revenue level we're able to support today. Across the 9 months ended September 30, 2025, we showed we can run at an annual rate quite near our capacity expansion target of $30 million per year. What matters most now is operational excellence and execution as we evaluate where to expand capacity next. With that, I'll hand things over to Timothy Fiori, our Chief Financial Officer, to go deeper into the third quarter's financial highlights. Tim spent 15 years as my finance leader at IDEXX, and it's a pleasure to work alongside him again here at ImmuCell. Tim?

Thanks, Olivier. It's great to be collaborating with you once more. First off, I want to highlight the gains we've recorded in net income and earnings per share for the year to date, measured against the prior year. For the 9-month period that closed on September 30, 2025, net income rose by $4.5 million, swinging from the net loss we posted for the 9-month period ending September 30, 2024. Higher sales, together with improved gross margins and a reduction in operating expenses of 7.4%, or $543,000, fueled this notable improvement. Basic net income per share for the 9-month period ending September 30, 2025, came in at roughly $0.20 per share, versus a net loss of $0.34 per share for the equivalent stretch a year earlier. As Olivier noted in his remarks, product sales for 2025's third quarter fell 8%, or $505,000, relative to the third quarter of 2024. For the 9-month period ending September 30, 2025, product sales climbed 7%, or $1.3 million, above the 9-month period ending September 30, 2024. Product sales for the trailing 12-month period ending September 30, 2025, grew 16%, or $3.9 million, compared with the trailing 12-month period ending September 30, 2024. Through the first half of the year, we successfully cleared out our order backlog and restocked both inventory and distribution. Filling the distribution pipeline back up, following a prolonged backlog, gave sales a short-term lift. On the whole, I'm glad we've moved past the earlier order backlog problem. As the Q3 results show, backlog dynamics have made year-over-year sales comparisons challenging. On the Q2 call, we said we might see sales soften in the second half of 2025, and Q3 bore that out, just as anticipated. We think tough comparisons could continue for the next several quarters, reflecting backlog fulfillment in earlier periods. We ought to lap this backlog dynamic in the second half of 2026, since we had effectively exited the backlog situation as of June 30, 2025. Prior year backlog information by quarter is available in our most recent 10-K and in the 10-Q we just filed. In 2025, we've achieved gross margin improvements relative to the prior year. Gross margin as a percentage of product sales climbed to 43% in the third quarter of 2025, up from just 26% in the third quarter of 2024. Gross margin rose to 43% for the 9-month period ending September 30, 2025, versus just 27% for the 9-month period ending September 30, 2024. Gross margin grew to 41% for the 12-month period ending September 30, 2025, against just 27% for the trailing 12-month period ending September 30, 2024. Going forward, success will depend on continuing to achieve strong production yields while also growing sales strongly. We see multiple opportunities to drive growth from existing products, among them winning back customers we might have lost during the short supply of years past, and we also have several new product offerings within our functional feed product line. Let me spend a moment on adjusted EBITDA, since noncash depreciation expense weighs heavily on our bottom line. Just so we're clear, stock-based compensation expense is added back in adjusted EBITDA — that's yet another noncash item that GAAP-based net income includes. Our adjusted EBITDA came to $751,000, $4.4 million and $5.8 million for the 3-month, 9-month and trailing 12-month periods ending September 30, 2025; those solid figures stack up well against adjusted EBITDA of $196,000, $35,000 and negative $175,000 for the 3-month, 9-month and trailing 12-month periods ending September 30, 2024. Thanks to these solid results, our cash grew to $3.9 million as of September 30, 2025, up from $3.8 million as of December 31, 2024, even as we put roughly $2.7 million into building inventory ahead of peak selling season; we'll keep watching and managing cash closely as we weigh long-term investment against near-term operational needs. With that, I'll hand the call back to Olivier for some closing remarks. Olivier?

Thank you, Tim. Our attention is squarely on the business opportunity presented by the First Defense portfolio, which includes the functional feed line's new offerings that came to market in June. First Defense has an enormous amount of room to grow, and it's exciting to move past a period where supply held us back and begin pursuing expansion plans. You can really feel the enthusiasm among the commercial group. We're equally committed to running operations exceptionally well so that we reliably deliver high-quality product. The adjusted EBITDA gains compared with the prior year that Tim mentioned stem from this dedication, driven by higher sales, improved gross margin, and reduced operating expenses. As we've noted previously, we're waiting on FDA clearance for Re-Tain, our product that meets a significant market need by effectively treating subclinical mastitis. In our view, using Re-Tain on cows with subclinical infections may improve industry best practices by offering a substitute for conventional antibiotics that also see use in human medicine. During this waiting period for FDA approval, we've begun investigational product use studies alongside Michigan State University to gather field feedback on how the product performs. Those studies are progressing well, and what we learn from them will shape our optimal approaches for Re-Tain in 2026. This careful method is meant to pave the way for a strong market launch. At ImmuCell, our number one focus will be executing reliably throughout the entire organization. I'm also delighted that we can build on what Michael and his team have restored, and that our attention can now turn to crafting and carrying out a plan for sustained growth over the long term. With that, we'd be glad to answer your questions. Please have the operator open the lines.

To begin with, I'd like to express my appreciation to Mike for his service, for the time he dedicated at ImmuCell — and our history stretches back a fair distance, roughly 25 years. So I wish him the best in his forthcoming retirement, just as I'm enjoying mine. Regarding my questions, I'm going to adopt a slightly more critical stance. I don't perceive the clean slate you mentioned. I see more — when it comes to First Defense, what exactly has shifted? It moved from a capacity expansion. We even dedicated capital, and now we've pulled back from that expansion. I believe you addressed a few of the reasons behind that. But what I'm after is: what proactive measures are you implementing to boost that growth which was expected even years back.

Frank, thank you for your question. And perhaps let me begin with — what we stated is that we've reached a capacity level that we aimed for ourselves when we launched the capacity expansion initiative a few years back. And although we experienced a contamination event, we've now reached a point where we're genuinely in better condition than we were even at the outset of that capacity expansion initiative, since we've implemented every sort of quality measure to guarantee we can produce at a consistent level. So that represents an enhancement of our capability. What I'm really eager to share following my initial few calls with the commercial team is that after years of dealing with short supply, they can now pursue new customers, speak with customers about expanding their use of First Defense if they already use it. And this is a significantly different approach the commercial team can now take, and they're quite enthusiastic. I'll be out in the field next week with — meeting customers. And ideally, we'll be in a position to tell you directly what that enthusiasm looks like at both the customer and the sales team level. So we're extremely happy with where we stand. There's still work ahead, but it appears quite promising from my vantage point. Thanks for your question.

Thank you. To start, I'd like to echo what the person before me on the call expressed. Michael, we truly value everything you've done and it's been a pleasure collaborating with you. So I just want to extend my sincere gratitude. Olivier, we're glad to have you aboard. Having you here is really something to look forward to. What I'd like to ask about relates somewhat to inventory. Work in progress keeps increasing. A large portion of that, I realize, is the frozen colostrum, which as I recall we disclose as $3.3 million. Yet finished goods inventory currently sits at $2 million, the highest level it's reached, I believe, in perhaps 6, 7 or possibly ever, or at minimum going back 6 years according to my model. I'm trying to understand and — trying to understand what your approach will be to reconcile production with cash generation or cash management.