ImmuCell Corporation (ICCC) Earnings Call Transcript & Summary

Thanks, Chris. Morning, everyone, and welcome aboard. Like the operator said, I'm Joe Diaz, calling in from Lytham Partners — the investor relations consultancy working with ImmuCell. Appreciate you all being here as we go over the unaudited results for Q1, which closed on March 31, 2026. A quick reminder and word of caution for those listening: anything management says on this call may include forward-looking statements — meaning any remark touching on upcoming events, anticipated future results, or projections regarding steps the company intends to take down the road. Such statements aren't promises of performance, and they come with risks and uncertainties that might make actual results, outcomes, or events turn out materially different from what we cover today. You can find more detail on forward-looking statements, plus the risks and uncertainties that could affect future results, outcomes, or events, in the cautionary note on forward-looking statements — commonly called 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. Everything we discuss on this call reflects information only as of today, Friday, May 15, 2026. The company has no obligation to update anything discussed on today's call. Also, please be aware that we may reference certain non-GAAP financial measures during this call. With all that said, I'll hand things over to Oliver Te Boekhorst, ImmuCell Corporation's President and CEO, for his opening remarks. Oliver?

Thanks, Joe, and good morning, everyone. It's a pleasure to have you join us as we talk through ImmuCell's results for the first quarter of 2026. Beginning with this quarter, a handful of key slides from our new investor presentation will go along with our discussion of results. That presentation is available on our investor page, immucell.com/investors; during 2025, the company implemented significant changes aimed at better positioning itself for success, among them a strategic focus on the calf scours market along with investments in leadership and in improving manufacturing yield. In the first quarter of 2026, those efforts are beginning to show up in our results; we reached a first ever $10 million revenue quarter, an exciting milestone for both our commercial team and our manufacturing team. We also posted 45% gross margins even after absorbing legacy Re-Tain related costs that moved out of product development and into gross — into cost of goods sold, which lowered gross margins by roughly 2.4% in the quarter. Net income also rose 34% versus the first quarter of 2025. On earlier calls, we walked through the reasoning behind our new strategy of concentrating on First Defense, our leading preventative product for calf scours. Since 1991, ImmuCell has competed successfully in the large, growing market for calf scours prevention with a highly differentiated product portfolio that we believe offers considerable runway for further expansion both domestically and internationally. As we'll get into later on this call, we believe we are picking up share in this market while competing against the world's largest animal health companies. Historically, ImmuCell's difficulties have revolved less around market demand and more around manufacturing capacity and product availability. For a company of our size, concentrating on our successful on-market product and resolving those challenges made a great deal of sense, and we are well along the way to doing so. The results we delivered in the first quarter give us confidence in that decision. Once Timothy Fiori, our Chief Financial Officer, finishes a deeper review of the financials for the first quarter of 2026, I will go through some of these drivers in more detail and share some of what we are seeing in the market. I'll now hand the call over to him. Tim?

Thanks, Oliver. I'll begin with a brief review of our product sales figures, and those are the same as what we shared in the April 8 press release. Every figure I mention is rounded and approximate. For the first quarter of 2026, product sales reached $10.4 million, which is up 28.4% against the first quarter of 2025, a period that had set a record. Domestic sales rose 35.7% year-over-year in the first quarter, hitting $9.7 million, whereas international sales fell 30.2% to roughly $600,000 for the same period. On the product side, we remain happy with how strongly Tri-Shield, our flagship offering, has performed relatively, with growth of 38.5% in the first quarter of 2026 versus the first quarter of 2025. We saw gross margin improvement in the first quarter relative to the prior year. As a percentage of product sales, gross margin climbed to 45% in the first quarter of 2026, up from 41.6% in the first quarter of 2025. We got there despite a 2.4% headwind in the first quarter of 2026 stemming from costs tied to former Re-Tain assets, which on a year-over-year basis have moved the cost of goods sold out of product development expense. The year-over-year gross margin expansion in the first quarter of 2026 comes from both pricing and manufacturing performance, partly offset by that shift of former Re-Tain-related costs I just mentioned. Operating expenses rose to $2.7 million in the first quarter of 2026, versus $2.2 million in the first quarter of 2025; the increase was caused by higher G&A, largely tied to investments in leadership, along with greater sales expense from expanded commercial activities that returned to a more normal pace after the backorder management period in the first quarter of 2025. Lower product development expenses partly offset operating expenses, thanks to the shift of former Re-Tain-related expenses into cost of goods sold that I noted earlier. Other expense dropped to $15,000 in the first quarter of 2026, compared with $330,000 of other income in the first quarter of 2025; that change came from a nonrecurring insurance payment in the first quarter of 2025. To finish our income statement discussion, net income was $1.9 million, or $0.21 per share, in the first quarter of 2026, versus $1.4 million, or $0.16 per share, in the first quarter of 2025. As Oliver noted, that represents a 34% year-over-year rise in net income. As we always do, we included EBITDA figures in yesterday's earnings release; we think examining EBITDA helps management and investors by showing our performance consistently across reporting periods, leaving out certain charges from our reported income before income taxes. EBITDA rose to $2.6 million in the first quarter of 2026, up from $2.3 million in the first quarter of 2025. To finish on financials, let me point out a few important balance sheet items. As of March 31, 2026, our balance sheet stands in a solid place, showing gains compared with the close of 2025, thanks to the strong product sales results we went over earlier. We closed out the first quarter of 2026 holding $6.8 million in cash along with $8.7 million in inventory. Working capital rose to $15 million by the end of the first quarter of 2026, up from $13 million at the conclusion of 2025. We'll keep watching and steering our cash and other assets carefully as we weigh long-term investment against what operations require in the near term. With that said, I'll hand things back over to Oliver. Oliver?

Thanks, Tim. I want to congratulate the team on a fantastic first quarter of '26. Like I said at the start, ImmuCell chose to concentrate on our scours prevention line, First Defense, back in late 2025. During Q1 of this year, we hit a record of $10 million in product sales, and Tri-Shield in particular has grown very strongly. Among the scours protection options we bring to market, it's the most advanced. Putting our emphasis on First Defense really makes sense once you look at how calf values have risen almost sevenfold over the last 3 years, and scours strikes as much as 15% of pre-weaning calves and ranks as the number one killer of those calves; in our view it creates as much as $1 billion in economic burden across the U.S. through treatment costs, performance losses and mortality. Because calf values are high and climbing fast, producers are more eager to put money into premium prevention products, and given how prevalent scours is along with its morbidity and mortality, it's top of mind for a lot of them. For 2025, we estimate U.S. farmers spent roughly $93 million on products that prevent scours, representing about 14% year-over-year growth. In Q1 2026, growth across the overall scours biologics category came in slightly moderated at 11% year-to-year, yet ImmuCell's first defense sped up and represented what we estimate was close to 80% of the entire category's dollar expansion for the quarter. That figure draws on revenues to end customers as reported by distribution partners and market research firms. We're thrilled to share that our portion of U.S. category spend grew from 29.1% to 35.2%, while our portion of animals treated climbed from 15% to 18.1% between 2021 and the first quarter of 2026. In our view, this performance stems from a pickup in sales activity that began last quarter plus growing market confidence in our product availability. Premium pricing and positioning in the market is another factor. Our share of spend exceeds our share of animals treated precisely because of that premium pricing. When I met with customers this quarter, they described several advantages of First Defense products that generate a premium value proposition for them. To be specific, First Defense delivers immediate protection to immune incompetent newborn calves against the 3 common pathogens responsible for scours. On top of that, since it's derived from colostrum, it also supplies plenty of other bioactives that support calf health. So our sales efforts are now shifting toward bringing in new customers, given that roughly 55% of calves still receive no biological treatments whatsoever. We think the addressable market here in the U.S. exceeds $200 million. And abroad, the TAM is at least 5x bigger. These are the opportunities we'll be concentrating on. Like I mentioned on earlier calls, one crucial element of our approach—because of favorable macro conditions and the strong value we deliver to customers—is making sure we have product on hand. That's been tough for ImmuCell, and every day we're putting in hard work to boost yield and raise our output so we can meet demand. Back in late 2025, we made choices to tackle limits on our manufacturing capacity. As you can see, the first quarter of 2026 was excellent, hitting a record above 450,000 manufacturing units of output each month. That's up against 380,000 manufacturing units monthly in 2025, 344,000 in 2024, and 252,000 in 2023. This boost in output, along with the price realization Tim brought up, helped lift our gross margin. Improving yield is hard and results from executing many different tasks extremely well daily. There isn't a magic bullet or one huge lever. The team came together and dedicated themselves to guaranteeing availability. After that, we enhanced our planning, which opened the door to more preventative maintenance and balanced workflows. We cut down on waste and scrap incidents, and we raised utilization through some overtime and incremental investments in assorted equipment to boost throughput. I'm endlessly grateful to the team for what they've done. One quick point on manufacturing units—they don't line up with revenue, since our products carry varying and shifting price points and a differing count of units goes into each product across our portfolio. Plenty of work remains to keep ahead of demand through the rest of 2026. We must remain focused on controlling and reducing contamination risk. We must continue delivering excellent service to the farms that supply our colostrum, and we must handle yield improvement while carrying out a significant capacity expansion at our colostrum processing plant. We're happy to report that we secured a $2 million settlement with a former contract manufacturer, and we intend to put that cash toward expanding capacity to satisfy long-term demand. Our plan is to rely on more advanced process flows, cutting-edge drying equipment, and assets we bought earlier to make Re-Tain, the subclinical mastitis product we'd been developing until we shifted focus to First Defense in December 2025. We're putting the finishing touches on these expansion plans and will share more details on upcoming earnings calls. On prior calls, we talked about other investments we're making to fit our new growth strategy. We brought on an international business development executive who has decades of experience in the dairy industry, and he's assisting us in moving from a reactive stance on international opportunities toward a planful, strategic one. We're following a rigorous process that includes management and the Board to grasp market opportunities and product requirements, go-to-market investments, regulatory activity and time lines, plus our capacity expansion time lines too. Although we think the international opportunity is substantial, achieving success will demand disciplined market prioritization and time to get ready and execute well. We're putting our energy into creating the proper base for lasting growth around the world. At the same time, we've added 3 more sales territories here in the U.S., not the 2 we told you about before, because the momentum we're seeing domestically is so strong. Last, let me say again what I've shared on every call. At ImmuCell, our number one priority is strong execution throughout the company, from sales to farm management to vaccine manufacturing and colostrum processing, along with every support function that allows profitable growth down the road. During the year's first quarter, we announced updates to our corporate governance that back this focus. We now have a smaller independent Board, with 3 new members bringing deep animal health and functional expertise. I'm eager to collaborate with the new Board on carrying out our concentrated strategy — delivering for today while we safeguard the future. Having said that, we'd be glad to answer your questions. Operator, please open the lines.

Great quarter — congrats to the team on those results. Could you say a bit about your First Defense in bulk product, covering how seasonal it is, which market it aims at, and if it goes head-to-head with products already out there?

I appreciate that question. Let me try to provide a bit more clarity on this. Our functional feed product is not approved by the USDA, and it's made through a different production method — we use a separate process to manufacture it — yet at its core it contains our First Defense technology. The same colostrum goes into it. Manufacturing costs come down as a result, and we bring it to market at a cheaper price point. It's especially helpful for operations that would rather not feed every calf one at a time, since they can instead put it into the water, colostrum, or milk given to calves as a group; because of that, the dynamics around it are different. We introduced it toward the end of last year — the latter half of last year — basically the new formulations of this product. So for us, it remains in a launch phase.

What an incredible quarter. Congrats on a wonderful beginning. I'd like to pose a handful of questions regarding production capacity. I believe you mentioned there's no single magic solution for boosting production and yield, that many different levers exist. Could you share a bit more about which key improvements drove the yield gain? And given your present capacity and your 4 freezers, what would you say your maximum capacity is right now?

Thanks, George, for asking. Some primary levers were applied during the last quarter, while others are being planned that should hopefully deliver more down the road. The main levers across the past 4 to 6 months have involved enhancing our planning. That means matching our sales forecast to our production forecast at a very detailed SKU level, then scheduling our workflows in a balanced manner so one portion of the team isn't idle waiting on another portion. Alongside this planning, we introduced additional overtime capacity at certain critical stages of manufacturing. When done in a planned manner, that's actually manageable, and it connects back to the timing point I raised; we also cut waste in our process. Certain stages of our process don't use everything available; so reusing and concentrating on that waste and cutting it boosts output. Lastly, a few stages in the process received what I'd call minor capital investments — a larger tank, additional membranes, things of that nature — which genuinely helped raise throughput at a specific stage that was either a bottleneck or on the verge of becoming one. So those are the main actions we've taken. Other avenues exist to further raise yields, and we're examining them continuously. A program is in place that we're all dedicated to in order to reach a higher yield. We review that program more — multiple times weekly, in fact, we're working on it. So we don't know, and don't have a particular figure in mind for, what our maximum is. We're simply boosting yields on a percentage basis, so to speak, continuously. Meanwhile, as I noted in my remarks, the moment has come to consider a major capacity expansion; and so we're quite fortunate to have the payment from our contract manufacturer available to deploy toward that; and we are actively in the middle of planning a capacity expansion for our plant.