IMMUCELL CORP /DE/ Q3 FY2025 earnings call

• Financial performance over first 9 months of 2025 improved compared to prior year, with increased production output and improved gross margins.
• Management transitions: Timothy Fiori joined as CFO in April, and Olivier Te Boekhorst became President and CEO effective November 1, 2025.
• Domestic sales showing positive momentum in the U.S. market.
• Focus on operational excellence to ensure consistent supply of quality product.
• Awaiting FDA approval for Re-Tain product, with investigational product use studies underway.
• New product offerings in the functional feed line.
• Commercial team now able to win new customers and increase use of First Defense.

Total product sales decreased 8% in the third quarter of 2025 compared to the prior year. Domestic sales were up 2% in Q3 2025 vs prior year and 9.5% vs Q2 2025. Domestic sales represented about 86% of trailing 12-month sales ended September 30, 2025. International sales, largely to Canada, were down in Q3 2025 vs prior year due to timing of shipments, but international sales during the 9-month period ended September 30, 2025, were 15% higher than the same period prior year. Net income for the 9 months ended September 30, 2025, was $1.8 million vs a net loss of $2.7 million in prior year, driven by improved gross margins. Adjusted EBITDA was $751,000, $4.4 million, and $5.8 million for 3-month, 9-month, and trailing 12-month periods ended September 30, 2025, respectively.

• Difficult sales comparisons may persist due to backlog fulfillment in prior periods for several quarters, but will lap in second half of 2026.
• Focus on continued strong production yields and sales growth.
• Opportunities to drive growth from existing products (regaining lost customers) and new product offerings.

• Supply issues and timing of international shipments impacting international sales.
• Contamination events in the past affecting production capacity.

Q: First of all, and I want to thank Mike for his service, for the years that he put in at ImmuCell, and we go back quite a way, it's about 25 years. So I wish him well in his upcoming retirement as I enjoy mine. As far as my questions, I'm going to take a somewhat more critical turn. I don't see the clean slate that you referred to. I see more -- in regards to First Defense, what has changed? It went from an expansion of capacity. We even committed capital, and now we're uncommitted to that expansion. I think you touch some of the causes of that. But what I'm looking for is what active and steps are you taking to increase that growth that was somewhat anticipated even years ago.

A: Thank you, Frank, for your question. And let me maybe just start with -- what we mentioned is we are now at a level of capacity that we set out for ourselves when we started the capacity expansion project a few years ago. And while we had a contamination event, we have now arrived at a place where we are actually in a better shape than we even were when we started that capacity expansion project because we have put all kinds of quality measures in place to ensure that we can manufacture at a predictable level. So that is an improvement in our capability. What I'm very excited to report after my first few calls with the commercial team is that after years of managing short supply, they are now able to go win new customers, talk to customers about increasing the use of First Defense if they're already using it. And this is a very different approach that the commercial team can now engage with, and they are very excited. I will be visiting the field next week with -- visiting with customers. And hopefully, we'll be able to report back to you firsthand what that excitement at both the customer and the sales team level is. So we're very pleased to be where we are. There is more to do but it does look quite positive from where I'm sitting. Thank you for your question.

Q: Thanks. First of all, I sort of want to reiterate what the previous caller said. Michael, thank you very much for your service and we appreciate it working with you. And I just want to say thank you very much. Olivier, welcome to the team. It's very exciting to have you. My question is a bit about the inventory. The WIP continues to grow. I mean a lot of it is the frozen colostrum, which is, I think we report is $3.3 million. But the finished good inventory right now stands at $2 million, which is the highest it's been, I think, in probably 6, 7 or maybe ever or at least from my model in at least 6 years. I'm trying to see and -- trying to see how you plan to balance sort of production with sort of cash generation or cash management.

A: Well, first, George, thank you very much for your welcome. I'm going to turn it over to Tim to address the inventory question. Timothy Fiori: George, good to talk with you. Yes, we definitely have seen inventory levels come up a lot. Of course, we started the year with really practically nothing, and now we have a more desirable level, frankly, of inventory and especially as we approach the peak selling season that's coming up in the -- around the first quarter. I meet with the team weekly with sales and the production team personally, and we have a good communication between the 2, and we do a planning process to seek those desired inventory levels. So we're paying a lot of attention to that. And I think we're in much better shape now than in the past couple of years for sure. On the colostrum side, we want to have a considerable amount of colostrum. And I think you're right that we need to carefully manage that and make sure that it doesn't become too much. And that is also on that regular review list of things that we're very focused on. But it is our key ingredient. And you're totally right that, when you look at WIP, that colostrum is a large component of that. P. F. Te Boekhorst: And George, if I could just add, I've worked with Tim for 15 years as my finance leader at IDEXX, as I mentioned earlier in the call, where we managed about $300 million business together. And Tim brings a very disciplined, rigorous process-focused approach to both operational and financial execution. And so I'm very excited to see that in place here and to continue working with him and also to partner with Bobbi Brockmann, our Vice President of Sales and Marketing, who has a very similar approach to commercial execution. And I'm bringing this up because I think that's the way forward for ImmuCell is to build on what Michael has built for us and now to really focus on disciplined day-to-day execution of our plans. Thank you for your question.

Q: Okay. This is Joe Diaz again, your moderator. I did want to have one question asked before we close the call out. The margin improvement in Q3 was very good. What do you attribute that to?

A: Thanks, Joe. Yes, the largest drivers of gross margin, as we see it, are the improved manufacturing performance as the primary one, but also the price increase. If you look around Page 37 of the recent 10-Q, we talked about our composite price increase in 2025 of around 6%. So those are both definitely important factors in gross margin improvement. And just the volume of sales, so you end up with that scale that's helping in manufacturing and with fixed cost spreading it out over a larger amount of volume is always a big part of that as well.