ImmuCell Corporation (ICCC) Earnings Call Transcript & Summary

Thanks, operator. Good morning, and welcome, everyone. As the operator said, I’m Joe Diaz with Lytham Partners. Our firm is the investor relations consultant for ImmuCell. I appreciate all of you being here today as we discuss the unaudited earnings for the third quarter and the nine months that ended September 30, 2026. Listeners should be reminded and cautioned that management’s statements during this call include forward-looking statements, which cover any statement referring to future events or expected future results or predictions regarding steps the company plans to take in the future; such statements are not guarantees of performance and are subject to risks and uncertainties that could cause actual results, outcomes, or events to differ materially from those discussed today. Additional information about forward-looking statements and the risks and uncertainties that could affect future results, outcomes, or events is available in the cautionary note regarding forward-looking statements included with the press release the company filed last night, as well as in the company’s other periodic filings with the SEC. Information discussed on today’s call speaks only as of today, Friday, November 13, 2026. The company undertakes no obligation to update any information discussed on today’s call. Please note that references to certain non-GAAP financial measures may be made during today’s call. With that said, let me hand the call over to Olivier te Boekhorst, President and CEO of ImmuCell Corporation, for some opening remarks. Olivier?

Thank you, Joe, and good morning everyone. It's great to have all of you with us as we go over what ImmuCell achieved in the third quarter of 2026. We'll walk through the results alongside a few key slides, which you'll also find in our updated investor presentation. You can access that presentation on our investor page at immucell.com/investors. To kick off today's call, I'll give a quick overview of ImmuCell's strategy, which we've developed and honed over the past year. Back in December of 2025, we made the decision to focus entirely on First Defense, our product line for preventing bovine scours, in order to take advantage of favorable market tailwinds. Elevated calf prices are fueling producer appetite for preventatives that actually work, and we identified substantial room to grow both in the U.S. and in markets abroad down the road; we stopped putting money into Re-Tain, a new product targeting subclinical mastitis, and that call was also shaped by our contract manufacturer being unable to secure GMP approval from the FDA. Our focus shifted to guaranteeing sufficient inventory for First Defense and restoring customer trust in our capacity to deliver after an extended period of supply difficulties that produced back orders; we put resources into leadership, into growing our commercial team, into colostrum sourcing capabilities and, crucially, into manufacturing. Initially, we focused on boosting production yields so that existing machinery could reliably deliver higher output. After that, we laid out a plan to put $8 million toward expanding manufacturing capacity before 2027 ends. At this point, we're examining ways to bring down product costs and putting money into longer-range growth efforts, including innovation and moving into international markets. This quarter's figures — $8 million in revenue, up 46% from the third quarter of 2025, a 44.2% gross margin, and $1 million in net income versus a $140,000 loss in the third quarter of 2025 — show that concentrating on First Defense is paying off. The outcomes we delivered show what comes from having products back on shelves, a strong calf market at home, more commercial engagement, and much better control of our supply chain all the way from sourcing through colostrum processing. Given how small we are, putting all our attention on First Defense and running the supply chain to meet rising customer demand still strikes us as very sensible, and we're glad to share our progress with you today. At this point I'll hand things to Timothy Fiori, our Chief Financial Officer, who will walk through our third quarter financial results in more detail. Tim?

Thanks, Olivier. I'll begin with a brief review of the product sales figures, and those are the same as what we shared in our October 12th press release. Every figure I mention is approximate and rounded. For the third quarter of 2026, product sales reached $8 million, which is up 46% from the third quarter of 2025. That big year-over-year rise in third quarter sales partly reflects the fact that the distributor restocking headwinds that had hurt third quarter sales in 2025 were absent this time. Domestic sales rose 29.2% in the third quarter versus the third quarter of 2025, reaching $6.9 million, and international sales for the third quarter were up 573% to $1.1 million over the same period. Canada accounted for most of that international growth, helped in large part by clearing back orders from 2025. Across the first nine months of this year, product sales totaled $25.6 million, which is a 27.8% increase over the first nine months of 2025. Tri-Shield, our flagship product offering the most advanced protection against neonatal diarrhea, posted strong growth of 32.1% for the first nine months of 2026. We also gauge commercial performance through volume growth at the distributor level. During the first nine months of 2026, distributor volumes were up 23% versus the same period last year, and in the third quarter of 2026 they rose 18% compared with the third quarter of 2025. Gross margin as a percentage of product sales came to 44.2% in the third quarter of 2026, versus 42.9% in the third quarter of 2025 and 33.9% in the second quarter of this year. The year-over-year improvement in the third quarter mainly reflected higher pricing and better manufacturing execution, partly offset by moving expenses previously tied to Re-Tain into cost of goods sold. That dynamic matters, and I want to explain it a little further. Because we decided to repurpose the Re-Tain facility and equipment for First Defense, Re-Tain product development expenses shifted into cost of goods sold, which moved roughly $400,000 of expenses there and lowers the Q3 stated gross margin by 480 basis points. The sequential gain from this year's second quarter to the third quarter was mainly driven by higher manufacturing output across all departments, less scrap, and bigger benefits from product pricing. We are seeing benefits from our manufacturing yield improvement projects. Sales, marketing, and administrative expenses rose to $2.4 million in the third quarter of 2026, compared with $1.6 million in the third quarter of 2025. That came from investments in leadership and expanded commercial activities, as previously announced and as Olivier will discuss shortly. Product development expenses fell from approximately $700,000 in the third quarter of 2025 to approximately $175,000 in the third quarter of 2026, driven by lower spending on Re-Tain product development and the shift mentioned earlier of former Re-Tain-related expenses into cost of goods sold. Right now, we don’t have any major future spending planned for Re-Tain. Finishing up on the income statement, net income came in at roughly $1 million for the third quarter of 2026, versus a net loss of $140,000 in the third quarter of 2025; across the first nine months of 2026, net income reached $4.7 million, up from $1.8 million in the same stretch last year. Those nine-month 2026 results take in the one-time $2 million legal settlement that we received from our former contract manufacturer in the second quarter, while the nine months of 2025 results got a boost from a $427,000 insurance settlement. As we always do, we included adjusted EBITDA numbers in yesterday’s earnings release, along with a reconciliation to net income under GAAP; in our view, adjusted EBITDA helps management and investors alike by showing how we perform across reporting periods on a consistent basis, leaving out certain charges from our reported income before income taxes. Adjusted EBITDA totaled $1.9 million in the third quarter of 2026, versus $800,000 in the third quarter of 2025. Over the first nine months of 2026, adjusted EBITDA came to $7.3 million, compared with $4.4 million in the same period last year. That nine-month year-to-date 2026 number includes the $2 million one-time legal settlement mentioned earlier, and the nine-month 2025 results got a boost from the $427,000 insurance settlement mentioned earlier. To finish on financials, let me point out a few key balance sheet items. As of September 30, 2026, our balance sheet remains strong, with $7.9 million in cash on hand and $9.9 million of inventory. We’ve begun spending cash on the First Defense manufacturing capacity expansion, and I’ll say more about that shortly. We’re very pleased right now to be heading into what is typically our busy season with finished goods inventory of about $3 million. Working capital rose from $13 million at the end of 2025 to $16.9 million at the end of the third quarter of 2026. The settlement added $2 million to our cash and to our working capital improvements. You may have seen in our press release that we expect to sign a new $3 million line of credit with a three-year term, replacing our prior $1 million one-year term line of credit, which expired in September. In addition, we’ve announced that our investment banking firm has been notified that we are terminating our at-the-market sales agreement, which has gone unused since May of 2025 and which we have no plans to use in the future. Historically, manufacturing capacity has constrained ImmuCell’s growth, so making sure supply is reliable stays a strategic priority. ImmuCell has already shared that it was putting money into freeze-drying plus liquids processing capacity, so that manufacturing can scale and First Defense can keep being supplied reliably. On the previous earnings call, we noted that in the first half of the year our team wrapped up a thorough planning effort covering process design, what equipment and facilities would be needed, cost estimates, and how implementation would roll out. The plan that came out of it pairs new equipment with the expertise we have built in preserving, concentrating, and purifying antibodies derived from colostrum. Implementation has just gotten underway, and a great deal of the key equipment has already been ordered. By September 30, 2026, $1.7 million had gone into the expansion project, mostly to buy equipment. Construction is set to begin shortly; we continue to expect the initial phase of the expansion, freeze-drying, to wrap up in the first half of 2027. The liquids processing expansion remains on track as well, with completion expected by the end of 2027. The project as a whole is still tracking to the original $8 million overall budget. An expansion of this scope became feasible because management chose to repurpose our former Re-Tain® manufacturing facility and equipment. With that, I'll hand the call back to Olivier. Olivier?

Thanks, Tim — and congratulations to everyone on the team for a terrific quarter. As I mentioned during my opening comments, in late 2025 ImmuCell made the decision to focus on the products we offer for preventing scours, which we refer to as First Defense. A number of factors converged to bring about that choice, and let me address calf values before turning to commercial activity and our new products. Our sector continues to benefit from calf values that are strong by historical standards. No matter whether a calf originates in a conventional beef herd or begins life on a dairy, its worth has risen fivefold since 2021. Calf values ought to remain robust in 2027 and 2028, because limited cattle supplies continue to underpin the market. Elevated calf prices are reshaping the economics at the farm level, and that is why keeping newborn calves healthy has become an ever-greater concern. Beyond that, with dairies adopting additional beef genetics to meet beef demand, fewer dairy replacement heifers remain to support growth of the dairy herd, which raises the value of those heifers. For ImmuCell, the upshot is that producers are eager to find out more about our premium products. The return on investment that comes from using Tri-Shield has always been firmly in positive territory—even in 2021, well before calf values climbed so sharply. Safeguarding a calf valued above $2,000 by means of a $15 product surely makes plenty of sense today. Commercial activity is another factor behind our top-line growth, and we've put substantial investment into both our team and our capabilities. Our commercial team has expanded from nine people to 13 since last November. With a bigger sales force, customer engagement keeps climbing. As the new hires build momentum in their territories, quality sales calls went up considerably between the second and third quarters, and revenue per field sales representative was also higher year-over-year. In the third quarter of 2026, roughly 46% of our net growth came from new customers, with the other 54% coming from increased utilization among existing customers. During Q3, the bulk of demand came from dairy customers, since not many traditional cow-calf operations are calving at this point in the year. That's excellent for us, because dairy demand is usually steady quarter over quarter. The final driver I'll cover is Functional Feed, our new product line. We created it for the calf ranch segment, and in our view that segment raises over 4 million calves. Calf ranches handle big groups of mostly beef-on-dairy calves brought in from several farms with differing newborn health protocols. Dealing with the natural variability of those incoming calves—which are two to seven days old upon arrival at the ranch—can be difficult. In a perfect world, those calves would receive Tri-Shield right at birth, but calf ranchers find it hard to know whether that happened. So we created a Functional Feed product line. It relies on the same hyper-immunized colostrum that goes into our biologicals line, and we make it with a different drying technology that costs less. The cost for each dose comes out much lower, and the goal is to prompt calf ranchers to administer it to every calf they bring in. Among these customers, we've demonstrated pre-weaning removal rates that are 50% lower, which increases the number of calves that make it to market weight and delivers a solid return on investment for calf ranchers. Although this product line isn't broken out as its own segment in our reporting, we're very happy that the full-year targets have already been achieved, and we feel good about how much more room there is to grow. Sales of First Defense are recovering following the problems caused by contamination issues, which had resulted in back orders. In our estimation, First Defense represents about 34% of U.S. spending on bovine scours biological products, and we take a lot of satisfaction in our premium positioning. Let me pass along something a dairy farmer said unprompted on the Dairy Girl Network, an online community connecting women across the U.S. dairy industry. To quote her: "For any lady struggling with newborn calf scours and loss, I highly recommend First Defense." "I'm not a salesperson, but this stuff works. In seven months, we've only lost three out of 650 heifers born. This has been a miracle on our farm, and I wish someone would have told me about this years ago." End quote. Endorsements like these, given without solicitation, remind us why we do what we do and drive our commitment to putting First Defense in the hands of more producers. A key part of our performance year to date has been changes in our manufacturing process. Over the past few years we've worked to lessen the impact of bacterial contamination, and we've made great progress preventing scrap events. Now our focus has shifted to managing yields so output increases. Because our manufacturing costs are fairly fixed, gross margin is ultimately determined by how much we produce. Through 2026 so far, monthly output has averaged roughly 435,000 manufacturing units. This unit measure is a standard way we adjust for differences between Tri-Shield and Dual-Force items in our lineup; it does not equal doses or revenue. Our 2026 monthly average has run 14% above 2025, and that compares with only 252,000 units per month in 2023, when contamination problems were at their worst. Basically, we have a better grasp of our bottlenecks now, and we plan ahead so those operations run at maximum output. We've adjusted our shift schedules to support all of these efforts, and we've also modified some of our technology and equipment. Although we expect to have new equipment up and running by the close of 2027 to expand First Defense capacity, we think better yield management allows us to satisfy customer demand until then. During this quarter, we put substantial work into examining earlier stages of our supply chain — in particular, the sourcing of colostrum and the production of the vaccines we use to hyper-immunize the cows that supply that colostrum. We've added a team leader for the farm team, developed a new value proposition for our source farms, and are running trials designed to increase yields from the colostrum we collect. Colostrum procurement is a fiercely competitive arena, and costs keep climbing. Despite that, our unique value offering and strategy should strengthen how we source colostrum and give us greater assurance about meeting demand down the road. One final note on Re-Tain: as we mentioned, we stopped putting money into that new product development effort. The latest clinical trials failed to back up additional or novel claims. We have entered into a small licensing deal with an aquaculture firm granting rights to apply our intellectual property to specific marine species, which may generate cash flow later. Throughout ImmuCell, we remain concentrated on First Defense as well as on sharpening process discipline and improving execution. My thanks go out to everyone on the team — sales, farm management, vaccine manufacturing, colostrum processing, and all the other functions that back the business — for the exceptional job they've done. It's a genuine pleasure to work alongside these people as we execute our focused strategy of delivering in the present while securing what lies ahead. With that said, we're happy to take your questions now, so let's have the operator open the lines.

That was a really strong quarter. What exactly shifted from Q2 to Q3 that brought gross margins back up to 44%? And can those gains hold going forward?

Hi Frank, appreciate the question. Tim here. The main factor, I'd say, was really the volume from manufacturing. I mean, there was also a price change in August that gave us a bit of a lift. Our margins are quite sensitive to output, and as we talked about on the Q2 call, we were working on improving yields, and some experimentation was happening in manufacturing. That certainly had an effect in Q2. In Q3, all the manufacturing teams — so we have vaccine, liquids manufacturing, and then formulation and fill, which are kind of the three main legs of it — they all delivered really good output for the quarter, and that helps a lot. That's the main driver, just the change there.

All right, so finished goods are up 50% while work in progress is actually down 15% — does that point to a lasting gain in manufacturing throughput? Or, put another way, how much more demand is the capacity we already have able to handle?

Olivier here. Thanks for the follow-up. We're seeing manufacturing throughput rise to an average of 435,000 manufacturing units per month, which works out to roughly a 14% increase compared with last year; that accounts for our gross margin, but it also stems from some quite targeted yield improvement projects we've put in place over the past, I'd say, year or so to boost output. Would you mind repeating the second part of your question?

How much additional demand can existing capacity support?

That is a really solid question too, and honestly it is a bit of a moving target. We think we can keep enhancing manufacturing yields the way we have been doing in order to satisfy demand until the new drying capacity expansion project is finished, since drying is the bottleneck we face right now in our process. As Tim mentioned and displayed on the slide, the new freeze dryer we intend to have installed during the first half of 2027 should roughly triple our freeze-drying capacity. We are working toward hitting that major milestone. Until then, we think we have sufficient capacity along with additional improvement potential to satisfy demand.

Thank you very much. I'll get back in the queue.

Good morning, and thanks for taking my question. Congratulations on the truly wonderful progress. My question is about the mix between Tri-Shield and Dual-Force. With calves staying persistently high in value, does that push more toward Tri-Shield rather than Dual-Force, and does it have an effect on gross margins?

Thank you for your question, George. I'm happy to take that one. We don't comment on gross margins for individual products, but what I will say is that, generally speaking, Tri-Shield carries a higher price. Producing it also takes somewhat more effort, since there is a third component—it protects against rotavirus—whereas Dual-Force protects against corona and E. coli. Yes, when calf values are higher, what that does is make it a little bit easier to get in front of the producer and have a conversation about how to protect these calves; then, once you are in that conversation, it really depends on the producer's understanding of what is going on in their particular production, and that then drives whether they will use one product or the other. Of course, we are focused on promoting Tri-Shield; we believe it provides the highest value to producers, and that is why you will see very healthy growth rates on that product line.