ImmuCell Corporation (ICCC) Earnings Call Transcript & Summary

Thanks, Bailey, and hello everyone on this line. Per what the conference call operator announced, I'm Joe Diaz of Lytham Partners. Our firm serves as the Investor Relations consultant to ImmuCell. I appreciate each of you taking part today as we review the unaudited financial results covering the fourth quarter and the full year that closed on December 31, 2025. A reminder and a word of caution to those listening: remarks delivered by management on this call contain forward-looking statements, and that category covers any statement referencing future events, anticipated future results, or predictions regarding steps the company intends to take going forward. Such statements should not be viewed as guarantees of performance, and they carry risks plus uncertainties that might lead actual results, outcomes, or events to diverge materially from what gets discussed today. More details about forward-looking statements, together with the risks and uncertainties that could affect future results, outcomes, or events, appear in the cautionary note on forward-looking statements, or the safe harbor statement, included with the press release the company filed last night, as well as in the company's other periodic filings with the SEC. Anything addressed during today's call is current only as of today, Thursday, March 5, 2026. No obligation is undertaken by the company to update any information addressed during today's call. Be aware that certain non-GAAP financial measures may be referenced during today's call. Having said that, I'll hand the call over to Oliver Te Boekhorst, President and CEO of ImmuCell Corporation, for his opening remarks. Oliver?

Thanks, Joe, and hello everybody on this morning's call. I'm glad to have all of you join us as we go over ImmuCell's results for the full year 2025. The company had a really strong 2025; during that year, a fresh management group came on board; we boosted production capability so we could satisfy demand from end customers and put an end to a backorder problem that had lasted multiple years. We shifted toward a plan centered on extracting as much shareholder value as possible from our extremely successful First Defense franchise. Product sales came in at $27.6 million in total, and net operating profit reached $1.6 million, an improvement of $3.3 million over 2024, mostly because gross margins grew substantially; on earlier calls, such as our special investor call on January 9, 2026, where we talked about full year revenue and our strategic shift toward First Defense, we laid out several factors behind our revenue results and the reasoning for the new approach. To put it briefly, we operate in a sizable, expanding market with a deeply differentiated product lineup that offers considerable room to grow further both at home and abroad. That's why we chose to increase our commitment to this thriving First Defense franchise. What we delivered in 2025 reinforces our confidence in that choice. Once Timothy Fiori, our Chief Financial Officer, finishes a more thorough walkthrough of the financials for the fourth quarter and the full year 2025, I'll go through several of these drivers in greater depth and offer some of what we've observed in the market. At this point I'll hand things over to him. Tim?

Thanks, Oliver. I want to begin by briefly going over how product sales came out, and those figures haven't changed since the conference call we held in January. Every figure I mention is rounded and approximate. For Q4 of 2025, product sales reached $7.6 million, which works out to a 1.6% drop versus Q4 of 2024. What stands out is just how small that Q4 decrease was. You'll remember that our exceptionally strong sales during Q4 of 2024 got a boost from higher demand along with recovery from a backorder situation we'd been dealing with earlier. We had already cautioned that comparisons between quarters across the back half of 2025 would be shaped by that catch-up effect. That same factor is going to keep weighing on growth rates through the first half of 2026, but let me be direct: operationally, 2026 isn't affected — we're out there shipping orders daily. Going deeper into the numbers, domestic sales during Q4 rose 8.7% versus Q4 of 2024, reaching $7 million, whereas international sales during Q4 fell by slightly more than half, landing at roughly $600,000 over that same stretch, largely because of how orders were timed in Canada; it's worth keeping in mind that for Q4 2025, international sales make up just about 8% of total sales; looking at the whole year, during 2025 we posted 4.3% growth versus 2024, bringing total product sales to $27.6 million. Much like what we saw quarterly, domestic sales went up while international sales went down, once again shaped by when our Canadian distributor placed orders. Turning to product mix, we're happy to see a continuing move toward Tri-Shield, which reflects both newly acquired customers and some customers migrating away from our cheaper Dual-Force products as they look for the widest protection we offer. We saw gross margin get better in 2025 versus the prior year. During Q4 of 2025, gross margin as a share of product sales climbed to 38%, up from 37% during Q4 of 2024. It's worth noting that we pulled off that gain even though Q4 2025 gross margin took a hit from noncash inventory write-downs. The full-year figures tell the story more plainly. For all of 2025, gross margin rose to 41%, compared with 30% for all of 2024. The 2025 gross margin gain came from higher manufacturing volumes and efficiencies, plus product price increases, partly offset by noncash inventory write-downs. As we already shared during our January conference call, we carried out a comprehensive review of fixed assets and inventories. Through that review, across Q3 and Q4 of 2025 we recorded a noncash write-down of roughly $650,000, mostly made up of work-in-process colostrum inventory. That noncash write-down equals roughly 5.9% of Q4 2025 revenue and roughly 2.4% of full year 2025 revenue. We'll keep watching assets closely, inventory included, as part of a rigorous and disciplined capital allocation process. During Q4 of 2025, operating expenses rose to $3 million, versus $2.2 million during Q4 of 2024. Our operating expenses came in at $9.8 million for the full year 2025, up from $9.6 million for full year 2024. In both comparisons, the rise was mainly the result of increases in G&A, partly offset by lower product development expenses tied to Re-Tain. Other expense came to $2.8 million in Q4 of 2025, versus $100,000 in Q4 of 2024. For full year 2025, other expense reached $2.7 million, compared with $500,000 for full year 2024. What drove both the Q4 and full year 2025 increases was our strategic shift regarding Re-Tain. Back in December, we announced we were moving away from Re-Tain manufacturing so we could concentrate more on our highly successful First Defense product line. In December, we recorded a noncash write-down impairment charge of $2.7 million tied to certain Re-Tain-related property, plant and equipment. That figure is roughly $200,000 below what I mentioned on the January conference call, and the difference stems from a slight bump in our estimate of future salvage value. We keep refining how we assess the value of former Re-Tain assets that we intend to repurpose for First Defense manufacturing, and our estimates of their net value may change. We also had a onetime income of $427,000 from insurance proceeds in the first quarter of 2025, which partially offset the Re-Tain write-down on a full year basis. Let me finish the income statement financials by discussing the improvements we saw in 2025 net income and earnings per share versus the prior year. A net loss of $1 million for 2025 marks a $1.1 million year-over-year improvement over 2024, even after factoring in the significant impact of the $2.7 million Re-Tain write-down I mentioned earlier. Higher sales and increased gross margins drove that year-over-year improvement. Basic net loss per share for 2025 was approximately $0.12 per share, compared with a net loss of $0.26 per share in the prior year. Keep in mind that we included EBITDA figures in yesterday's earnings release. That said, the EBITDA calculations don't adjust for the impact of write-downs for Re-Tain or inventory, which are clearly material to 2025 results. Finally, operating income for 2025 was $1.6 million, versus an operating loss of $1.6 million in 2024, a year-over-year improvement of $3.3 million. To close out the financials, let me point to a few key balance sheet items; we finished 2025 with $3.8 million of cash on hand. Working capital rose from $10.6 million at the end of 2024 to $13 million at the end of 2025, driven by higher finished goods inventory. As you may remember, we ended 2024 with near 0 finished goods. We'll keep closely monitoring and managing cash and our other assets as we balance long-term investment with near-term operational needs; with that, I'll hand the call back to Oliver for some closing remarks. Oliver?

Thanks, Tim. I want to congratulate the team on the strong financial performance we delivered in 2025. There's no doubt it was a tough 12 months, with plenty of change, but ImmuCell steered through it effectively, and we're set to make 2026 a winning year. As I committed earlier, I'll spend a brief amount of time walking through where we're focusing strategically and offering a few observations about the market. Through our First Defense line, ImmuCell competes in a highly appealing, sizable and expanding market for calf health solutions. The calf health space is dynamic, having experienced swift and significant growth in the value of cats, propelled by dairy beef cross breeding along with a shrinking U.S. calverd, which has made calf supply tighter compared with what the market demands. For calf scours — a condition impacting 14% to 15% of pre-weaning calves — First Defense is a best-in-class preventative. That works out to roughly 5 million calves annually in the U.S. by itself, and it ranks as the top cause of death among these pre-weaning calves. In the U.S., scours accounts for as much as $1 billion in economic burden stemming from treatment costs, performance losses and mortality. Meanwhile, American farmers lay out $90 million to $100 million each year on products that prevent scours. Whether our customers are dairies raising their own calves, calf ranches raising calfs on behalf of dairies, or cow calf operations, all of them want to stop scours outbreaks and safeguard these calves, which are the farm's highest risk animals. Calves arrive immune incompetent; during their first few weeks of life, they're especially susceptible to bacteria and viruses. Our lineup guards against 3 common pathogens responsible for scours: Bovine Coronavirus, E. coli and Rotavirus. First defense products come from colostrum and are the only USDA-approved scours solutions that aren't a vaccine, delivering 3 to 6x as many neutralizing antibodies against these pathogens as our main vaccine competitor. Plus, because they're colostrum-derived, we give these calves plenty of other bioactives that help keep them healthy as well. It shouldn't shock anyone that our pricing sits at roughly 2.5x competitive alternatives; these product traits have enabled us to gain market share, climbing from 10% to 15% of treated calves in the U.S. over the past 8 years, and we take in about 29% of the spend in this expanding category. In the U.S. specifically during 2025, producers laid out roughly $93 million on the calves scours category. That covers vaccines plus our antibody products, which came in 14% above 2024. 10% of that resulted from more calves receiving scours preventatives, with the remainder from price and product mix. Even so, roughly 55% of calves still receive no treatment whatsoever for scours. So if you run the numbers, the total addressable market in the U.S. exceeds $200 million. And abroad, the total addressable market is at least 5x bigger. ImmuCell held roughly 15% share of treated animals in the U.S. During 2025, we're happy to share that customer additions came in strong, with fresh account growth surpassing the typical losses we see, and repeat buyers boosted their order volumes last year as well, which came from better coverage levels and inventory returning to normal. Our sense is that things picked up speed in Q4. As a result, we took revenue share away from the world's 3 biggest animal health players, even while manufacturing difficulties left us unable to supply enough. With those production issues now being resolved, we feel very good about growth going forward. Near the end of December, we shared our plan to prioritize First Defense and stop putting money into a subclinical mastitis product the company had worked on for quite a while, which frees us to concentrate on the scours opportunity I mentioned earlier and, just as importantly, on strengthening our production abilities and output. For some context, our manufacturing output climbed from roughly 3 million units in 2023, a period when we faced backorders, up to 4.1 million units in 2024 and then 4.6 million units in 2025. That context should clarify what fueled the gross margin gains behind our 2025 bottom line, though volume wasn't the only source of that margin lift—efficiency gains and price hikes on products played a part too. Over the last 3 months, an in-depth review of our operations, guided by external specialists along with important internal leaders, has been finished, and we've pinpointed more than a dozen ways to push capacity even higher, to somewhere between 5 million and 6 million units annually. Because pricing across our portfolio varies and shifts, units aren't a perfect proxy for revenue, so we'll stop reporting capacity in revenue terms going forward. That said, we've just put medium- and long-term demand and supply planning into place, and our team feels sure we can satisfy demand across 2026 and 2027 through yield enhancements, even as we pursue our next big capacity build-out. Making First Defense our priority at the close of December let us truly dig into those yield enhancement possibilities, and we're eager to redirect assets that had been used for the subclinical mastitis product over to First Defense, with all our effort and funding now going toward growing a product line that's already succeeding. Last, as we said before, we're adding to our sales force, and I'm glad to report we brought on a senior international market development leader, brought in a new sales manager for the U.S., and are in the process of hiring for a third commercial role. Further territory hires will follow based on ongoing evaluations of calf population density, uptake of calf-level scours prevention solutions, and proven price acceptance in each region; meanwhile, I got back last week from a highly productive sales meeting where we rolled out a new standardized sales approach that should let us expand our commercial efforts more efficiently. At ImmuCell, carrying out our work reliably across the whole company—from the sales side to production, and counting every supporting team that allows profitable expansion down the road—continues to be what we put first. Having said that, we're glad to field whatever you'd like to ask. We'll ask the operator to bring everyone on the line.

Bailey, while the queue is still filling up, allow me to jump in here and kick things off with a few questions directed at management. Oliver, 2025 was without a doubt a year of transformation for ImmuCell. As we look forward to '26 and '27, what do you view as the most significant obstacles lying ahead for the company in reaching its objectives?

I appreciate that question, Joe. As an organization, we're tackling 2 categories of difficulties. The initial one involves a deliberate boost in yield, which is then accompanied by greater capacity achieved via additional significant investments; thus, as I mentioned, given the possibilities we pinpointed during the past 3 months, we're able to raise our output to somewhere between 5 million and 6 million units. And no significant investments are required for this. It comes about by better floor planning, certain maintenance work, a few modest enhancements to equipment we already have, plus an entire set of initiatives scheduled for the year that will bring us to that point. So ensuring we possess enough capacity to satisfy market demand ranks as our top priority. Simultaneously, we're currently ramping up our sales and marketing efforts. So while in the previous 1 year to 2 years our commercial group devoted considerable time to handling product allocations because of our backlog, these days it's demonstrating proactive engagement to attract new clients. Thus everything centers on top-line expansion for the business. So in the year ahead, those are the 2 main efforts we're concentrating on.