ImmuCell (NASDAQ:ICCC) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/.
View the webcast at https://app.webinar.net/EQx8PqBGe36
Summary
ImmuCell Corporation reported a 11.5% increase in second-quarter product sales to $7.2 million, with a notable 27.7% growth in domestic sales offset by a 38.9% decline in international sales.
The company focused strategically on the calf scours market with their product First Defense, resulting in accelerated growth and increased market share, particularly in the U.S.
Gross margin fell to 33.9% from 43.7% year-over-year due to lower manufacturing output and a cost shift from the Re-Tain product into cost of goods sold.
Net income for the second quarter was $1.8 million, buoyed by a $2 million settlement from a former contract manufacturer, contributing to a strong balance sheet with $8.9 million in cash.
ImmuCell announced significant capacity expansions with planned investments totaling $8 million, aimed at tripling manufacturing capacity and reducing product costs.
The company is also making progress in international markets and expanding its commercial team to support strategic growth initiatives.
The long-term outlook is positive, with focus on improving yields and securing scalable growth through reliable supply chain management.
Full Transcript
OPERATOR
Good morning and welcome to the ImmuCell Corp conference call to discuss unaudited second quarter 2026 financial results. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.
Please note this event is being. I would now like to turn the conference over to Joe Diaz of Lytham Partners. Please go ahead.
Joe Diaz, Lytham Partners (Investor Relations)
Thank you. Good morning and welcome. As the conference call operator indicated, my name is Joe Diaz with Lytham Partners. We are the investor relations consulting firm for ImmuCell Corp. I thank all of you for joining us today to discuss the unaudited earnings for the second quarter and six months ended June 30, 2026. 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 uncertainty 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 the press release that 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, Friday, August 14, 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 turn the call over to Oliver te Buchorst, President and CEO of ImmuCell Corp, for some opening remarks. Oliver.
Oliver te Buchorst, President and CEO
Thanks, Joe, and good morning, everyone. It's my pleasure to welcome you to today's discussion of ImmuCell's results for the second quarter of 2026. Our discussion of results will be accompanied by a few slides that are also part of our updated investor presentation that you can find on our Investor page, immucell.com/investors. In late 2025, ImmuCell made significant changes to better position ourselves for success, including a strategic focus on the calf scours market and investments in leadership, sales force expansion, and manufacturing.
Our rationale for this shift was that we compete very effectively with First Defense, our highly differentiated calf scours preventative product, in the large, growing calf health market, and that we believe our portfolio has considerable runway for further expansion domestically, internationally, and through selected innovations. Since we introduced this focus on First Defense and enhanced our yield improvement efforts, we have accelerated our growth and increased our share.
Our strong commercial results reflect the benefits of restored product availability, investments in our commercial team and product portfolio, and a favorable domestic calf market. As previously discussed, we have been highly focused on ensuring reliable product supply. The team has made a lot of changes across the supply chain, and we are on track to produce nearly 1 million more manufacturing units this year than we did in 2024. We are now well positioned to meet growing customer demand with our current plant while we execute a major capacity expansion program that is expected to more than triple our current capacity and improve long-term product cost. On today's call, we will discuss the factors affecting gross margin, the actions underway to improve yields, and our planned capacity investments. For a company our size, it continues to make a lot of sense to focus on our successful on-market products and solve the supply challenges that have historically constrained our growth, and we're excited to report on our progress today. I will now turn the call over to Timothy Fiore, our Chief Financial Officer, for a deeper review of our second quarter financial results.
Timothy Fiore, Chief Financial Officer
Thank you, Oliver. I'll start with a short recap of product sales results, which are unchanged from our July 9th press release. All the numbers I'll speak to are approximate and rounded. Product sales for the second quarter of 2026 came in at $7.2 million, an increase of 11.5% compared to the second quarter of 2025. Our growth in the second quarter is particularly significant given the challenging comparison with the second quarter of 2025, when we resolved the backorder situation and benefited from significant restocking orders by distributors.
Domestic sales for the second quarter grew 27.7% compared to the second quarter of 2025 to $6.2 million, while international sales for the second quarter declined 38.9% to about $1 million in the same period. Sales to Canada accounted for the majority of the decline, which is related to the 2025 backorder clearing. Product sales for the six-month period ended June 30, 2026 came in at $17.5 million, an increase of 20.9% compared to the six-month period ended June 30, 2025.
Oliver will speak to sales out of distribution, which are both strong and trending in the right direction. Gross margin as a percentage of product sales was 33.9% in the second quarter of 2026 compared to 43.7% in the second quarter of 2025. This year-over-year decline in the second quarter primarily reflected the shift of costs formerly associated with Re-Tain into cost of goods sold and lower output in one of our manufacturing subprocesses. Sequentially, gross margin declined 11.1 percentage points from the first quarter, reflecting 7.5 points from lower manufacturing output, 2.1 points from approximately $150,000 of scrap caused by a purchased material, and 1.9 points from the Re-Tain cost shift. The lower second quarter output reflected anticipated sales volumes and planned process changes intended to improve future yields. Despite these pressures, we were able to meet demand and expand finished goods inventory. Reported operating expenses were reduced by the previously announced $2 million settlement with our former Re-Tain contract manufacturer, which is presented on the income statement as other operating income.
Sales, marketing, and administrative expenses increased to $2.4 million in the second quarter of 2026 compared to $1.4 million during the second quarter of 2025. This was driven by investments in leadership and expanded commercial activities, both as previously announced. Product development expenses declined from approximately $800,000 in the second quarter of 2025 to approximately $120,000 in the second quarter of 2026, driven by reductions in spending on Re-Tain product development and the previously mentioned shift of former Re-Tain-related expenses to cost of goods sold.
Excluding the settlement, operating expenses were $5.2 million in the six months ended June 30, 2026, compared with $4.5 million in the six months ended June 30, 2025. To wrap up our income statement discussion, our net income was $1.8 million, or $0.20 per share, during the second quarter of 2026 compared to $500,000, or $0.06 per share, during the second quarter of 2025. For the first six months of 2026, net income was $3.8 million compared to $1.9 million during the same period last year.
Both the second quarter and six-month 2026 results include the $2 million settlement received during the second quarter. As usual, we provided adjusted EBITDA figures in yesterday's earnings release. We believe looking at adjusted EBITDA assists management and investors by looking at our performance across reporting periods on a consistent basis, excluding certain charges from our reported income before income taxes. Adjusted EBITDA was $2.7 million in the second quarter of 2026 compared to $1.4 million in the second quarter of 2025.
For the first six months of 2026, adjusted EBITDA was $5.4 million compared with $3.7 million during the same period last year. Both 2026 figures include the aforementioned $2 million legal settlement. To wrap up with financials, let me highlight a few key balance sheet items. Our balance sheet, as of June 30th, continues to be in a strong position. We ended the second quarter of 2026 with $8.9 million of cash on hand and $9.1 million of inventory.
Working capital increased from $13 million at the end of 2025 to $16.6 million at the end of the second quarter of 2026. The settlement contributed $2 million to our cash and working capital improvement. ImmuCell Corp recently announced a $3.5 million investment in freeze-drying capacity to build scalable manufacturing capabilities and ensure continued reliable supply of First Defense. We expect to complete this initial phase of the expansion in the first half of 2027.
Today we are announcing our intent to invest approximately $4.5 million in our liquids processing capacity. This phase is expected to be completed by the end of 2027. Both of these investments leverage existing equipment and facilities that have been built for the discontinued Re-Tain product. We expect this capacity expansion will more than triple our current capacity and improve product costs long term. Currently, we intend to finance the majority of this expansion with cash on hand and cash from operations.
We may supplement this investment with our line of credit facility as needed. With that, I will turn the call
Oliver te Buchorst, President and CEO
Thanks, Tim. As I mentioned in my initial remarks, ImmuCell Corp made the decision to focus on our scours preventative products First Defense in late 2025. In the first half of this year we achieved $17.5 million in product revenue, a 20.9% increase compared to the first half of 2025. TRI Shield, which is our flagship product that offers the most advanced protection against neonatal diarrhea, had strong 25.1% growth for the first half of the year and, as Tim explained, the U.S. performed particularly well with 32.5% growth in the first half of 2026 compared to 2025. We're also excited to report that our functional feed line contributed about 20% of that growth. Some of the other metrics we review to measure commercial performance include volume growth at the distributor level and our market share. We access data that shows how much our distributors' out-the-door revenue and volumes from our products change each month. This gives us a good idea of what our products are doing at a producer level.
Our distributors saw 21% and 28% volume growth in the first and second quarter of 2026 respectively compared to the same quarters last year, or 24% for the first half of 2026 compared to the first half of 2025. We increased our market share as well, defined as First Defense's share of animals treated with a biological scours preventative in the U.S., and we increased that market share from approximately 15% in December 2025 to approximately 19% at the end of June 2026.
Our price point is approximately twice that of our competitors and that means our share of spending by producers rose from approximately 29% to 38% in the same period. We're very proud of our product efficacy, but this market share gain is also the direct result of investments we made to expand our commercial team. We are reaching and converting more producers every day. As a reminder, we compete in an attractive market supported by significantly higher calf values.
The value of a day-old calf has increased from approximately $400 to $1,700 since 2024, strengthening the economic case for preventing scours in those calves. Scours remains a leading cause of death in pre-weaning calves and results in up to $1 billion of annual economic loss. More than half of calves still do not receive any biological scours preventative. So we have to show up, ask the right questions and present the health and economic benefits of our solutions in ways that are appropriate for each specific production environment.
Historically, ImmuCell Corp's growth has been constrained by manufacturing capacity, so ensuring reliable supply remains a strategic priority. From January through July, our team completed an extensive planning process encompassing process design, equipment and facility requirements, cost estimates and implementation planning, and that work supports our decision to move forward with an approximately $8 million investment in freeze-drying and colostrum processing capacity using the facilities and equipment associated with the former RETAIN program.
The resulting plan combines new equipment with our established expertise in preserving, concentrating and purifying colostrum-derived antibodies. This is not just adding another production line. The project is designed to modernize our manufacturing approach, shorten processing times, expand capacity and improve long-term product economics. The new processes are expected to reduce total processing time from two to three months today to less than one month in the future and more than triple our current capacity.
We've signed contracts with equipment suppliers and expect to begin engineering and construction activities shortly. Currently, as Tim mentioned, we intend to finance the majority of the expansion with cash on hand, with the $2 million settlement contributing nicely to our available cash. In the meantime, improving yields from our existing plant remains a primary focus. In the first quarter we achieved record production of more than 450,000 units per month, and in the second quarter our output averaged approximately 350,000 units per month, with most of that reduction occurring in the month of June.
Part of the lower output was planned. The second quarter is seasonally our lowest revenue quarter and our improved planning showed that we could meet demand without running production too far ahead. We also made planned process changes and paused certain activities for quality investments and maintenance work intended to improve future yields. As Tim explained, lower manufacturing output reduced gross margin by approximately 7 percentage points compared to the first quarter.
Importantly, we still met customer demand and increased finished goods inventory during the quarter. As Tim also noted, we incurred approximately $150,000 of scrap related to a relatively minor purchased material. Our quality controls identified the issue early, stopped the manufacturing process and limited the impact. So we remain focused on improving yields, strengthening our process discipline and reliably supporting continued demand growth. I mentioned in our last call that yield improvement is challenging and comes from doing a lot of different things really well every single day and I cannot thank the team enough for their efforts.
There is still a lot of work to do to stay ahead of demand for the remainder of 2026. We have to stay focused on managing contamination risk, we have to keep providing great service to our colostrum suppliers and we have to manage yield improvement while we execute a major capacity expansion in our colostrum plant. The progress we are making on yields together with our two-phase expansion program gives us greater confidence in our ability to meet customer demand and establish a sustainable, scalable and reliable supply.
Tactically, with greater confidence in our ability to meet customer demand, we are now prioritizing product cost improvements and strengthening colostrum sourcing capabilities to support scalable growth. Competition for high-quality colostrum is increasing and we are responding with new payment programs, enhanced technical services and expanded farm recruitment efforts. Colostrum represents approximately half of our product costs, so growing our collections and improving the yields we generate from colostrum are very important drivers of our business.
We have discussed in previous calls that we believe strongly in international opportunity for our products. Our newly hired International Business Development Executive is helping us transition from a reactive approach to a more proactive and strategic approach. We're actively assessing market opportunities and weighing them against regulatory and go-to-market investments. The results from our international strategy will take some time to come to fruition.
In the meantime, our three new salespeople in the U.S. are getting up to speed and delivering results ahead of plan, as Tim discussed earlier on this call. Finally, I will repeat what I have communicated on each call. Our top priority at ImmuCell Corp is solid execution across the organization, from sales to farm management to vaccine manufacturing and colostrum processing, including all the support functions that make future profitable growth possible.
It is a pleasure to work with the team as we execute our focused strategy to deliver the day while we secure the future. And with that said, we will be happy to take your questions. So let's have the operator open up the lines.
OPERATOR
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Once again, it is star then one to ask a question.
And we have a question from Tom Fox, a private investor. Please go ahead.
Tom Fox, Private Investor
Good morning. Thank you for taking my question. I did get a chance to read the Form 10-Q. I do see on there that you guys are continuing investigation studies into RETAIN. Could you provide any more update on that? Has Michigan State maybe talked to you guys about potential timelines as to when that would be done? You know, any further insight into how that's all going would be helpful. Thank you.
Oliver te Buchorst, President and CEO
Thank you for your question. Yes, we have asked Michigan State to work with us to investigate, if you will, an additional use case for the RETAIN product. And that study is ongoing. Discussions about the interim results are ongoing and it will not be completed until, I would say, end of September, maybe even beginning of October. And so at that point, when we have the full results, we will be sharing those with the investors.
Tom Fox, Private Investor
Okay, that all sounds good. Thank you.
OPERATOR
Once again, if you have a question, please press star then one. The next question comes from Frank Gasker, a private investor. Please go ahead.
Frank Gasker, Private Investor
Yes, thanks for taking my call. Great to see the improvements in revenue and your focus on margins. You actually went in enough detail to satisfy my question on the margins. In your 10-Q, I saw that the two primary customers' percent went down and I'm seeing that as evidence of the results in your increased salespeople. Could you elaborate on that? Is that a fair enough assumption?
Oliver te Buchorst, President and CEO
So let me—that's a great question. Let me just start off by describing our commercial structure. So we essentially sell everything through distribution and then we have a commercial team that is focused on winning new customers who then will order their products through our distribution partners. So as we are expanding into new segments or new geographic areas, there could be momentary shifts from which distributors are the ones that are providing support to those customers.
But it's more a question of a little bit of timing and just where those new customers happen to be located and which distributors those new customers prefer to use than a purposeful change on our end. I hope that makes sense. Thank you very much. And the only thing I would add is that we've seen quite attractive customer acquisition results this quarter and we put that in our investor deck on the website so you can see the data. But it's been a very good couple of quarters actually of winning new customers.
Frank Gasker, Private Investor
Okay, thank you very much.
OPERATOR
Thank you once again. If you have a question, please press star then 1.
Joe Diaz, Lytham Partners (Investor Relations)
Gentlemen, while we wait for additional questions, I've got a couple of questions here that I think you might want to respond to. Oliver, can you describe your current distribution ordering dynamics? Is everything essentially set the way you want to see it? Any particular issues out there? Can you comment on that?
Timothy Fiore, Chief Financial Officer
Yeah, thanks, Joe. I'll actually take that one. So we've talked a lot over the past year about distributor ordering dynamics and also backlog fulfillment ordering dynamics where we would have compares that had fulfillment in them in the prior year. And we have consistently said we expected to lap that at the end of this past quarter, at the end of Q2 2026. And our view is still that that is what has happened. So backlog was fulfilled by approximately the end of the second quarter 2025, and now we have a little bit cleaner history to compare to.
Thank you.
OPERATOR
Thank you. The next question comes from John Rudnick, a private investor. Please go ahead.
John Rudnick, Private Investor
I'm not sure—has RETAIN business. I was interested if you've collected the data and set up a package for possible licensing.
Oliver te Buchorst, President and CEO
Thank you for your question. So we are in fact awaiting the results of the investigational study by Michigan State, which we expect to be completed September–October timeframe before we make any further decisions on our RETAIN product.
John Rudnick, Private Investor
Okay, thank you.
OPERATOR
Thank you. The next question comes from George Melas with MKH Management. Please go ahead.
George Melas, MKH Management
Great. Thanks for taking my question and thanks for the explanation on the gross margin and also on the expansion. Can you give us a bit more information on the seasonality of the business between dairy and beef? And I was looking at sales through distribution and it seems like when you sell in the beef season, they seem to be—those two distributors seem to be a smaller share of the sales. So is there a different channel partly on the beef side?
Oliver te Buchorst, President and CEO
Thank you. That's a great question. So my summary response would be that yes, there are different distributors that have strengths in dairy versus beef, although many are, as you can imagine, more geographically focused in their strengths. But different industries will buy from different distributors. That's certainly true. And our strategy is to make sure that we have, first of all, distribution coverage for the entire country, which we do. And in many places we have multiple distributors that can serve as customers, so that we're leaving it up to the customer who they want to buy the product from.
And that we then augment our distribution coverage with a focused commercial team that really works on new customer acquisition, which can be a fairly lengthy sales cycle for products like Functional Feet, so much shorter for other products. And then we add to our commercial team based on where we see the greatest opportunity for short-term sales gain. So that has been our approach. We aren't actively managing the volume that goes through one distributor versus another.
We are focused solely on winning new customers. So the result then of the concentration of those two big distributors within our overall revenue are really just kind of the results of the ordering pattern at a producer level more than anything else. To your seasonality question, there is seasonality. Dairy industry tends to use our product all year long at similar levels, whereas beef industry has more of a calving season where a lot of calves are born in the same period of time, which is why we have peak seasons in Q4 and Q1 of the year.
George Melas, MKH Management
Okay, understood, thanks. And then just a follow-up question on—I think you gave us some numbers on sell-through growth, which was up 24% year over year in the first half. Is that from the two large distributors or is that for the entire—for all your distribution? And is that something you've been able to track for a long time, or is that some new data that you have?
Oliver te Buchorst, President and CEO
So the 24% growth is volume growth out the door by all our distributors. So it covers the entire market. And these are national data that we purchase and have access to. And that we've had access to certainly for—I don't know how long. I've only been here since November—but certainly for years we've had access to this data to show us kind of what's going on at the producer level, which is ultimately how we measure our success.
George Melas, MKH Management
Great, thank you very much.
OPERATOR
Thank you. And next we have a follow-up from Frank Gasker, private investor. Please go ahead.
Frank Gasker, Private Investor
Yes, thank you again. Yeah. On your margin, your explanation for the decrease, the retained shift aspect, that's recurring and continuous, is that fair?
Timothy Fiore, Chief Financial Officer
Yeah, that's fair. Keep in mind that when I talked about it earlier, one time was sequential. So what happened is in Q2, even if it's the same dollars of shift, it's against a smaller amount of revenue, so you get a larger percentage impact. But also the dollars were slightly higher in Q2 than Q1, and there's slight variability. It's the same—the recurring costs associated with the building, essentially—but those can vary a bit.
Frank Gasker, Private Investor
I mean, is this the extent of that category or understanding it has a continuous impact? And the dollar amount, is that pretty much established and fixed, understanding the percent will change with volume?
Timothy Fiore, Chief Financial Officer
Yeah, the dollar—so really I can be completely transparent about this. This is the cost of the building. So it's utilities, depreciation associated with the building—those are the two biggest pieces—and then any maintenance that the building needs, of course, that isn't capitalizable. So that dollar amount is pretty, pretty stable, but it will fluctuate a little bit as utility billing do. Yeah.
Frank Gasker, Private Investor
Yep. Thank you.
OPERATOR
Thank you. This concludes our question and answer session. I would like to turn the conference back over to Oliver te Buchorst for any closing remarks.
Oliver te Buchorst, President and CEO
Thank you for your questions. Before I turn it over to Joe, I would just like to thank the ImmuCell Corp team once again for their hard work and for delivering another quarter of strong commercial growth. Joe.
Joe Diaz, Lytham Partners (Investor Relations)
Thank you, Oliver. We thank all of you on the call today for participating. We look forward to talking with you again to review the results for the quarter ending September 30, 2026, during the week of November 9, 2026. Have a great day.
OPERATOR
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
Login to comment