Good morning and welcome to the ImmuCell Corporation Reports First Quarter Ended March 31st, 2025 Audited Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference call over to Joe Diaz of Lytham Partners. Please go ahead.

Thank you, Vicki. Good morning and welcome to all. As the operator indicated, my name is Joe Diaz with Lytham Partners. We are the Investor Relations consulting firm for ImmuCell. I thank all of you for joining us today to discuss the unaudited financial results for the first quarter ended March 31, 2025. Listeners are reminded and cautioned that statements made by management during the course of this call include forward-looking statements, which include any statement that refers to future events or expected future results or predictions about steps the company plans to take in the future. These 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 regarding forward-looking statements and the risks and uncertainties that could impact future results, outcomes or events is available under the cautionary note regarding forward-looking statements or the Safe Harbor statement provided with Form 10-Q and the press release the company filed last night, along with the company's other periodic filings with the SEC. Information discussed on today's call speaks only as of today, Thursday, May 15th, 2025. 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. The company included definitions of these terms as well as reconciliations of these figures to the most comparable GAAP financial measures in last night's press release in order to better assist you in understanding its financial performance. With that said, let me turn the call over to Michael Brigham, President and CEO of ImmuCell Corporation for opening remarks. We will then hear from Tim Fiori, the company's newly appointed CFO, with a review of some first quarter financial highlights, after which we will open the call for your questions.

Thanks, Joe and good morning everyone. As Joe said in a moment, I'd like to introduce you all to our new CFO, Tim Fiori. First, I would like to offer a few comments from a high-level strategic perspective. Quite simply, our business is becoming larger, more diverse, and more complex, and that's a great thing. We are very focused on the commercial opportunity that we have with First Defense. The recent growth in First Defense sales is very positive for us. Our investments to increase production capacity above $30 million per year are now complete, expanding our production facilities and implementing the new equipment was a huge project. We implemented important process improvements and worked through certain contamination events. It is important to note that we have not incurred another contamination event for over a year now. During the just completed quarter, we achieved gross margin expansion along with the revenue growth and we increased our cash balance to about $4.6 million as of March 31, 2025. Moreover, we are pleased to see traction for the different product formats we introduced for First Defense to the point where these now should be seen as a suite of related products with expanded uses and appeal. At the same time, we are initiating investigational product use of Re-Tain to collect market feedback about product performance in the field while reducing product development expenses and exploring potential strategic options for our novel technology. Our financial recovery and improvement shows up in the favorable adjusted EBITDA results that Tim will touch on. But first, I want to underscore that expanding the size and breadth of our product sales and managing other corporate objectives has become an increasingly complex responsibility. Over the years, we have prided ourselves in keeping administrative expenses low by public company standards. Growing our senior management team brings added expense, but also offers new opportunities and benefits. I've already experienced some of those benefits working with Tim for just over a month now. We are optimistic as we work our way through the balance of 2025. With that said, let me introduce Tim Fiori. Tim, would you please tell us a bit about your background and talk about some of the first quarter financial highlights.

Thanks, Michael. As Michael mentioned, I've been here at ImmuCell for just over a month. Before coming to ImmuCell, I worked for 24 years in various finance roles for IDEXX Laboratories, a well-respected public company headquartered in nearby Westbrook, Maine. Most recently, I was Senior Director of Finance and Commercial Operations for their livestock, poultry and dairy known as LPD, water testing and IDEXX's OPTI Medical Human Health line of business. Let's talk about the first quarter financial results for ImmuCell. Product sales during the first quarter of 2025 increased 11% or $810,000 over the first quarter of 2024 to a record $8.1 million. Those record quarterly sales eclipsed the previous record set in the fourth quarter of 2024. These strong sales helped us reduce our order backlog from $4.4 million as of December 31, 2024, to $4 million as of March 31, 2025. I'm pleased to say that we've continued to eat away at that backlog, which was down to $3.4 million as of May 6, 2025. We previously had announced our goal of increasing annual production capacity to $30 million or more per year. Our achievement of $15.8 million in sales during the six-month period ended March 31, 2025, suggests that we are achieving that target. Product sales during the 12-month period ended March 31, 2025, increased by 28% or $6 million to $27.3 million compared to the 12-month period ended March 31, 2024. To remain successful, we must continue to avoid significant contamination events and equipment breakdowns and operate with strong production yields. We pay our bills and drive our cash flows with the gross margin dollars. We experienced some low gross margin percentages in prior periods as we dealt with low output and scrap costs related largely to the contamination events mentioned previously. The 42% gross margin during the first quarter of 2025 is an improvement over the 37% during the fourth quarter of 2024, but we still have more work to do to achieve our target of 45% or more. The increase in sales and the improvement in gross margin are important. I take nothing away from those accomplishments, but I would like to talk for a moment about adjusted EBITDA because the impact of non-cash depreciation expense on our bottom line is significant. As a reminder, adjusted EBITDA as opposed to just EBITDA includes an add-back of stock-based compensation expense, which is another non-cash expense that is included in net income as calculated in accordance with GAAP. We created adjusted EBITDA of $2.3 million, $3.7 million and $3.3 million during the three-month, six-month and 12-month periods ended March 31, 2025. These strong results compare very favorably to adjusted EBITDA of just $458,000, $247,000 and negative $280,000 during the three-month, six-month and 12-month periods ended March 31, 2024. With regards to the other financial results, the press release and the Form 10-Q that we filed last night provide the complete unaudited P&L and balance sheet results. Lastly, I encourage you to review our corporate presentation slide deck. I believe it provides a very good summary of our business strategy and objectives as well as our current financial results. A May update was just posted to our website last night, see it in the Investors section of the website and click on corporate presentation or contact us for a copy. With that said, we would be happy to take your questions. Let's have the operator open up the lines.

Thank you. We will now begin the question-and-answer session. We have a question from George Melas, MKH Management. Please go ahead.

Good morning, Michael and Tim.

Hi, George, good morning. How are you?

Good, very well. Question on the product mix. First of all, I have to say I really like how you report the revenue ahead of time and then file your Q before the call. So it helps us sort of get ready for understanding the call. On product mix, this quarter was quite strong on Tri-Shield, which I think was 71% of sales compared to 55% in the previous quarter. So I have two questions. One of them is on the new sort of bulk powder product. How do you expect that to contribute towards the end of '25 and maybe in '26? And then it seems that the mix of Tri-Shield and bivalent has relatively little impact on the gross margin? And maybe could you comment on that?

Yes. Thanks, George. Looking at the Q, you pointed out the first quarter at 70% Tri-Shield and 30% other, that's three months. With 12 months, it's 64% Tri-Shield, 36% other. Tri-Shield has been a big seller since we launched it just a few years ago. The broader claim set really makes that product excel in the market based on efficacy, being similar to a vaccine in the coverage of the pathogens that it works on. So that's the exciting driver of our growth. And we're always looking at what else can we do and how can we expand the product line and how can we grow sales. So when you mentioned your question on the bulk powder, it's still in development. We're on track to get that product out into the market over the second, third and fourth quarter, but we have no sales yet. So it's a different format in that it's, again, bulk, as you mentioned, George, as opposed to in a capsule or a tube. It's going to be used as a feed additive, and it's going to go to big calf branches, where they're not accustomed to dosing individual calves with a capsule or with a tube. So more to come on that. I like the development progress; it's being led by our VP of Sales and Marketing, Bobbi Jo Brockmann, but no sales to report yet. So that's a new event, a new upside for the last nine months of the year. Did that answer you, George?

That totally does. And maybe the correlation of gross margin to the product mix right now, it seems it seems like regardless, like you achieved really strong gross margin regardless of whether Tri-Shield is 70% or 55%. We're just trying to see if you see if there is a bit of an impact, the mix on the gross margin.

Yes, we set our prices based on our estimated costs for each format. Tri-Shield is significantly more expensive than the bolus, which is more cost-effective in comparison, but I believe you get value for your money with Tri-Shield, and customers are willing to pay for the wider coverage it offers. We have a considerable amount of fixed costs, and we saw benefits from that, particularly in the fourth quarter at 37% and even more so in the first quarter at 42%. This is mainly due to our labor costs being largely fixed, as well as our equipment and facility expenses. The increase in volume helps all product formats benefit from that growth, which led us to the 42% margin. As Tim mentioned, we are still working on improvements and there is still room to grow.

Thanks. Congratulations, fantastic results. And Tim, welcome to the team and wonderful to have you on board.

Thank you, George.

We have a question from Russ Tolander at Capital Alliance. Please proceed.

Greetings Michael and Jim.

Thank you. Good morning.

Hello.

I would appreciate more detail on the breakdown of expense categories under the new CFO. It's good to see that already. The focus on adjusted EBITDA over the trailing 12 months is noteworthy. Looking back at the business, there was a contamination event last year around April. I'm interested in understanding how much EBITDA impact that event had in Q2 of last year. What I'm trying to get at is that Q2 and Q3 of last year might have had lower EBITDA than we would anticipate from the core business for Q2 and Q3 this year. Can you help set our expectations for EBITDA in Q2 and Q3 this year?

That's a great question, Russ. We addressed that on an annual basis, but I don't have the figures broken down quarterly. In the quarterly report, we discuss the annual scrap cost, which totaled $589,000. For the year ending 2023, it was $527,000, and previously it was $407,000. So, it's approximately $0.5 million yearly during the expansion phase when we faced those contaminations. Regarding the second quarter, you are correct that the last contamination occurred in April 2024. This impacted the entire year with $407,000 in costs, but most of that would have occurred in the first quarter due to the April contamination, with no further issues for the remainder of the year. While I can't provide a specific number, I hope this gives you some direction.

I got it. Maybe a better way of asking is, were there revenue implications still in Q2 and Q3 of last year? Or how do we look...

The revenue rebound began in the fourth quarter of 2024. We experienced a decline but set consecutive records in that quarter and then surpassed that record in the first quarter of 2025. This comparison is to those reduced periods. Nonetheless, those were our two best quarters in company history.

Yes. Absolutely. Congratulations. I'm driving at kind of what could be expectations for revenues for the next couple of quarters. I guess, the reality is we should expect greater EBITDA from the enterprise after the next couple of quarters because the comps from a year ago were maybe lower than the level of the business you're able to conduct currently?

Yes, I think that's fair. I mean, we definitely want to be real clear on that. The fourth quarter and the first quarter are strong. They look strong relative to the reduced quarters, to the reduced first nine months of 2024. But I think the other thing, and Tim and I were just looking at our notes here is also a factor in the backlog. So that’s – the second quarter is going to benefit. Tim mentioned, what did you say, Tim, 3-point.

4, I believe. $3.4 million at May 6.

At May 6, we have two key developments: increased capacity and the ongoing effort to clear out the accumulated backlog, with progress expected throughout the second quarter. While we do not publicly project revenue, I want to clarify our perspective on comparing productive periods to less favorable ones. We anticipate that the sales team can now actively pursue new business, unlike in 2024 when they were constrained by dealing with frustrated customers and limited product availability, which hampered efforts to attract new clients. This transition allows the sales team to shift successfully from a period of tight product allocation to one focused on business growth moving forward. Although I can't provide a specific numerical forecast, I believe we are heading in a promising direction, clearing the backlog, reconnecting with lost customers, and seeking new opportunities with both our existing and expanded product lines, which we discussed with George regarding the bulk powder.

So literally, what you're saying, I guess what I'm driving at is the core business EBITDA kind of run rate is much greater than $3.3 million for 12 months.

Yes, I think I misunderstood the question initially. We should definitely consider the three periods. The three-month period is more representative of the recovered company, while the six-month period provides a clearer picture, and the twelve-month period reflects a six-month lag.

Well, I think there's a lot of value here is what I'm driving at, and that you've been investing quite a bit of product development capital here, which detracts from the EBITDA of the kind of existing core business, all of which shareholders approve. And I think we're all excited to see the new product come to fruition for mastitis. So any update on that? I guess, you've got it in the press release.

I'm glad you mentioned that. I pointed to that segment footnote, and that's valid. We always disclose depreciation because it's significant, and it won't impact EBITDA, which is a major part of our product development expenses. We discussed more in the press release than in our script, but the investigational product use is crucial for our development. We're all frustrated about not obtaining the FDA license yet. There are aspects we can control and others we can't, and our frustration stems from the fact that we can't control some of it. Currently, we're held up due to our contract manufacturer's inspection clearance. It would be unfortunate if that were the end of the story. However, the new aspect is that investigational use, while it won't bring in revenue or allow the product to hit the market immediately, will enable our sales team to effectively get the product in the hands of customers and gather feedback over the next few months. This investigational product use provides some flexibility from the FDA. While we haven't received our license yet, we can still gather market feedback. This is an important step, and I wish we could take the bigger leap of achieving full commercial sales and FDA approval, but we can't at this moment. This allows us to move forward and test this product that hasn't been evaluated in cows since the efficacy trials years ago. We're eager to share those results, which will start coming in late in the second quarter and into the third quarter, with some findings by year-end regarding how the product performs outside the lab and on commercial dairy farms.

Well, congrats on the 6 months of performance, the opportunities ahead and perseverance over many years and good luck going forward.

Hey, Russ, Tim has a point for you on this one that I missed.

Yeah, just wanted to mention, when you were thinking about EBITDA and the full year estimate when you're in your thinking of that, I would consider that Q1 is a seasonal high, not going to quantify exactly relative to other quarters, but there is seasonality to it.

We need to be mindful of that. Yes, Tim is correct, but it’s worth noting that the mix of our backlog reduces some of the seasonal increase because we are currently selling nearly everything we produce. Moving forward, the first quarter will continue to be our peak season, and we will not have a backlog.

Okay. Thank you.

Awesome.

The next question from Jane Lindenman, Private Investor.

Hey, Mike, it's Bruce with Jane. First, we want to congratulate you and the company on a really, really nice quarter.

Thank you. Yes, I appreciate that, both of you. Thanks.

You're welcome. I have a few questions about the difference between investigating this and the product approval. Why can we investigate it, but it isn't approved?

Well, the biggest difference is it's not commercial sales. So it's not a revenue initiative. It doesn't generate revenue, but it's very similar in that we're going to dose. We're going to deliver product to cows, whether on the investigational status without license or under commercial approval with a license, we're going to put Re-Tain into cows and track data. So the real difference is, because of the inspectional issues at our CMO, we don't have a license. We're not going through distribution, typical sales where you just move out a lot of product. We really wanted to do something like this anyway, even with license. We had previously referred to it as a controlled launch. We weren't going to just mass market, a novel practice-changing product like this through distribution. And we're going to handhold and this just gives us the approval to start those studies to deliver that product and gather that data while the final stages of that FDA license and approval are still in process.

At this point, with this quarter, the great results of this quarter. At this point, we would stop having to sell common shares, because the company is profitable?

It's definitely an important aspect that we monitor closely. I want to emphasize our opportunistic approach to the ATM, which allows us to sell specific shares at particular prices while also considering our long-term capital requirements. This consideration goes beyond just our profitability, as it includes our debt obligations and capital expenditures necessary for growth. You've observed our active engagement in this area, particularly noted in the MD&A and subsequent events. In 2024, we were quite proactive, whereas recently our activity has decreased. The ATM is a valuable tool due to its flexibility, and we will continue to assess our capital needs, taking into account factors beyond just operating costs. As I mentioned, our focus remains on debt, capital expenditures, and growth, with our most significant activity occurring in 2024 during a challenging period that proved crucial for us.

So at this point, you would look at numbers that were higher than $5 or whatever?

Right. A lot of that 2024 money went out in the $350 to $370 range, which was needed cash, but the trade-off was unwanted dilution. But yes, look at that subsequent event note, you can see the activity is much smaller, as I think appropriate to where we stand today.

Right. It seems as the company gets more and more profitable that the needs other than really far out unless the stock was a really skyrocket would be as necessary at this point.

I definitely agree.

As Re-Tain receives approval and there are no more contaminations, will you consider projecting future expectations for the company so that people have a clearer understanding of what to anticipate?

Yes, working with Re-Tain is extremely challenging. It changes practices and alters the approach to mastitis significantly. It's completely new, making it difficult to navigate. I believe the performance of First Defense serves as a better benchmark. We've discussed our production capacity at length, aiming to increase from around $15 million or $16 million to over $30 million. There's also a desire to eventually reach $40 million in capacity. Some of these estimates are based on our aspirations and plans to expand capacity accordingly. However, we lack the support of financial analysts who could assist us in our projections. This small company has managed without analysts, and as one of the questioners noted, we've stuck to our initial top-line announcement because it was made shortly after the quarter ended. I'm hesitant to delve deeper into projections since they can change, and history shows that estimates are often inaccurate, whether too high or too low.

You all are doing a wonderful job, congratulations. I was thinking more about the future rather than immediate results. As you manage Re-Tain, keep in mind that the company has released conservative projections. Typically, it seems analysts rely more on the companies than the other way around.

Yes, I think it's something that has certainly been our objective for years, and we have succeeded, but we would love to have that interactive collaboration that is currently missing for ImmuCell, particularly from a third-party financial analyst. It has remained flat, as you mentioned.

As the company grows, it becomes more profitable and attracts more followers. Ideally, one of the institutions will either follow you because they hold your stock, or other services like Motley Fool might start covering you. Thank you very much, and congratulations to you.

No, that makes sense, Bruce. Thanks for your thoughts. I'm with you.

This concludes the Q&A session. I would like to turn the conference back over to Mr. Diaz for any closing remarks. Thank you.

Thank you, Vicki and thank all of you for participating on today's call. We look forward to talking with you again to review the results of the second quarter ending June 30, 2025, during the week of August 11, 2025. That concludes today’s call. Thank you and have a great day.

The conference is concluded. Thank you for attending today’s presentation. You may now disconnect. Goodbye.