ImmuCell (ICCC) 22 Feb 232022 Q4 Earnings call transcript

Good morning, and welcome to ImmuCell Corporation Reports Fiscal Year 2022 Unaudited Financial Results Conference Call. All participants will be in a listen-only mode. After today’s presentation there will be an opportunity to ask questions. Please note that this event is being recorded today.

I would now like to turn the conference over to Joe Diaz of Lytham Partners. ahead. go Please

morning Good Thank and you. welcome.

operator Diaz Joe the name is Lytham Partners. my with As indicated,

We Investor today all ended of unaudited are I results December you ImmuCell. the financial for Relations XX, consulting XXXX. joining the us for to the for discuss year firm thank

to that I to call include during management to the discussion about of this in not preface today. to discussed results today steps are uncertainties regarding outcome or predictions differ which a caution the performance events refers cause by would statements. of statements Listeners events statement future. the subject future made are forward-looking materially company future statements from like could include plans risks any statements, forward-looking and results, that are take those These this or to with and reminded the the actual that course expected guarantees or

the outcomes under could forward-looking last that filings risks the night's provided statements uncertainties information with note cautionary press safe the events Additional or or harbor regarding forward-looking statement SEC. along other the and periodic regarding company's the and with with statements results, is release, future impact available

performance. speaks be The made these call reconciliations today's to in understanding The during to these to financial company last as order may release today's of as on XX, note of as that XXXX. most Please figures press you better in call. call. discussed comparable Information any today's information February non-GAAP included in of financial night's definitions certain company the measures its well assist GAAP financial measures today, terms obligation no on undertakes only update discussed references to

questions. President of the let your Michael to Corporation, which open for the and said, me after call over that will we With Michael? CEO call ImmuCell turn Brigham,

full provides our The sales and reported release balance Joe, data. summary also January everyone. no some and that X. on morning, P&L reports press product results were unaudited results Thanks, unaudited change release the night's sheet good Last press to first Okay.

results We on about expect XX, March financial XXXX. to or on XX-K audited Form file our full

more discussing I'm much spend not going on financial to the this results. time call

is our contamination it to process. of time this product in problem a impact think more to serious production discuss I important use the

to to steps in believe the per first this diligently to of going product to from a we with XXXX. the are and take produce are are $XX emerge than But We taking production forward. of more million hit address appropriate the quarter problem in going situation we place capacity stronger year working

the control is a in capacity production increase event coming was quality standard by production by thing production were the of quarter the the end to of important production steps press quarter Tri-Shield to for situation was but detail this release, now. that clear like disclosed Defense in First began facility recap production. to in necessary million it I'd production we you response $XX night's to In series demand last We the the points increase XXXX, contamination XXXX. immediate took of address around of became detected outpacing increased contamination that's new end this to over capacity In a to capacity XXXX and of expansions our of demand, fourth during The issue testing year. just per [indiscernible] that, without equipment investments increasing third with as XXXX. We balance online, the in-process the this ran during and XXXX. place

response that that issues in significant a to our during the control and going without remediate of level is market challenging we assess meets first the our and -- in-process capacity to we further What corrective event. second the a taken XXXX of as necessary standard events in has testing output slowdown that ongoing quarter even makes take output higher allow and contamination expansion implementation resulting to contamination believe quality is that that product forward these matters all put production in the We production contaminations. should a plans any has of more This operate to actions us quality standards. at affected the ensure being steps

to production The order quarter end slowdown of output the has, of in in first part, than more a XXXX. contributed since backlog doubling the

expect the $XX the increase decision We as million March the the increased sales and being, to of reduced plan of we further XXXX, the gross margin to in Due production during year. first as the quarter a over per for being to quarter during first and backlog loss of of completion time to made XXXX. investments have defer earned report our large incremental XXXX capacity incurred XX,

by At The all of for which is laboratories. FDA. and first the preparing exciting during the results make sales several same XXXX, data the the are submission technical our quarter difficult submission Defense required demand by to to require increase the aim us. market for be we time, the both to Re-Tain. subject path six subject completion will of section, third We external required review First from a in the critical to to of is approval month CMC FDA that resubmit of items The

by achieving So company view to while of and side on FDA Defense backlog be yet the approval way not Re-Tain. direct, conclusion is the we very the that have First and of one contamination driven

the annual I that is a are $XX while greatest than that future, million $XX our latter to final same stages motivate capacity attract, make this all in million being view to were advancing production time, to we Defense to FDA possible. of product and retain auction are flex other that in the the more very employees the as assets, I working at significant to approaching so diligently a work the First both initiative. for development get we the with However, view take

posted very strategy it press summary you filed the a for I a A just I good last a copy. to corporate results. was we night. our Presentation deck. our website release Investors please website last night Us well provides Contact and have Corporate business our current Lastly, look encourage to of on slide as objectives that the Also, click or section our to our review of at presentation believe as and February update financial

We expect about status more the efforts contamination the our the on impact Form XX, our remediation product information updated report on annual about in to of XXXX. of and March disclose XX-K or

said, to that I With will be take questions. your happy

open operator the lines. have Let's up the

Sherhaummer] [Operator We our the SMI. will will session. question first And now question-and-answer [Charles with from come begin here (ph) Instructions]

Michael. you Hi, are today? How

Charles. you. How all Thank are I’m Hi, morning. doing Good right. you?

right. All

We are doing good.

those Michael, or charge-off quick see big questions. eight operations a a had the just were of I to loss? walked this and of got Were [indiscernible] call couple that’s inches didn't the snow Just to morning, outside [Multiple a we total words, a Speakers] hear. salvage statement they batches line the item. to on due other contamination, able any of you in I

good A question, Charles. a tricky. little that's Yes,

third in of as events. two event, the is That the in the quarter, K mentioned, with course, third So reflected goods results, discussion I in cost detail XXXX MD&A. quarter the of we'll that and

not and -- but still quarter, So a It's we're then evaluating all first you're write-off. this right.

timing. immediate I is impact think the

all evaluation. it will I that careful be some successfully of -- slow So it of become I and it does momentum, That's is that reworked referring some what was under can slows production, write-off. to. product down a as And

for with or in I to things. XX-K. the think right, a we'll four here weeks But or have of it's report weeks that three the that better couple assess data two you're

Some reworked. be can of it salvaged,

Some write-off. a of P&L be it will

Okay. I correct? that Would And in investment, of be for deferred your preservation that, that's assume would capital reasons.

margin. by project gross was sales, funded by largely That Yes.

yes. profit, By

profit. By

current So being a in as you with number capacity The of being we've taken cautious objective about sales million, It's million. some $XX a years. immediately not see take get was these to our needed approach. with and ahead around $XX time investments

that, want and it's ahead not the million $XX the million at settle, cash put back wise think place, and that to -- and that but -- to production still we not I pause urgent. get So to get flow-wise up back in I that start $XX intend but safe program level, is running it's and to prudent date get on

of do -- those rate of any fruition? or to have the are you the attrition you of products those lot idea on come did backlog other backlog? Okay. then a what that backlogs, And Do guys most lose the is to

That's Charles. another great question,

mentioned team that on every hard Our so the answer of I doubling backlog. works the day. sales

related Some know go these do and of the so that demand alternative orders -- contamination really an find a calves slowdown, we is continue will strong, are lot before a and the lot product. of of happened that customers but even strong, that real born these

are so that's So we'll lose to opinion, to and a They get go First my is That's want them our not supply In back our effective. and to efficacy. move they're product the orders to just our challenge as why and going sell Defense. bring strong. some

with to something has We'll supply sales and over challenge in the and find year. bring the the balance team So huge switched those of back. that a them bring else

Well, I you've a know product. got great

sell sell be more obviously, had more for what if If for a you you about in a do sales that to talk you what And you future, -- Is that the if raise funds those team, what another they'll I method you And get could is you've the just you've Or would stock? back methods stock, So that go loans? to second. you. it is look do funds? good got question. raise it When it that with dilutional? have do at deferred, to said.

go this team Yes. have our what's We've could a would customers But of fair to your to confidence then appreciate and works yes, good the you equity. selling eyes with suffered financing, is to quarter like long for a But sales inventory uniquely through hand. for sales the way done being I and this hard as to That's have best all make to my keep evaluated. fund going joy to back is gross first business. efficacy be a sales if in be up just this, bring regain best a a we're objective debt. lot backlog get of team, lost is product, of on going If and that add, is this way our situation I first We've still to and open, to margin. I back a loss so just there, the you flexible positioned our in second. amount your loss said three, to so an these the this done a to question

it's to options table. all say on have would I the prudent So only

[Multiple premature question. that. a know. Speakers] I'm hopefully, don't product, We or in it's with XXXX. When late about Yes, coming out you're sorry Re-Tain XXXX your

have or no place but to -- worry and So as Is made same we then going over product speculating -- from Re-Tain it factory to be issues lab? First your contamination the the your I the in Or one terminology crossing about next? point know that. is, to in on if don't do Defense?

Charles, that was another great question.

I'm sorry, are tough but… questions these

I it's no, spot are hood on. No, no, appreciate questions. just They it.

just the first let timing. comment me So on

that to months, be at six in, And end. the clear, will them month to submission Just goes be then this again, let's administrative review a call there's a two review. subject

it So I the But control, approval just the what and and review at that's right, FDA's hands. you're months the is we look from as eight then submission. submission, the in

that eight complete have will from months we So submission. incomplete or news

remediation But it's It's process, of would part far door. implemented a FDA equipment very is no out into a to air standards of and and it's back separation a people. and facility. little can the this different we walk of the but a regulated I crossover it have completely lessons very even crossover fair as facility, to which USDA. no, very in as it's It's Re-Tain say is opposed inspection facility. all product be very of of production, still control different facility, But USDA as different standards all some not process taking our or caution, at different from short

same company, there a for bit different little a [indiscernible] world call of at, but over Re-Tain. we XX what So

wasn't USDA the you that. Thank very today thinking and FDA, just about the between I difference I much Yes. about for learned something

up for thanks me. opening So for that horizon

I just for Defense. into putting and invested when Re-Tain, to Re-Tain First I investment at we're capacity to facility us Defense cost a price. the That this look budgets We've million comes compared the get First on think at about talk to million $X-ish expansion it $XX $XX development you million.

move quality is different. But fits to So we all. one yes, it

Michael. we've Now you, in confidence a lot got of

to I take One on. these more for I'm see kind much and of say, vision sketch but ImmuCell of XXXX, question sorry where finished. you, in for So XXXX what's of do that hope too going continue two give you is quick thumbnail you time here, a let's in, I'm -- the things next then or up your what can just years? your

right it surprise hasn't of clear, challenge pretty that significant us. one real top It's put changed except and Right. on

was great that, same So of huge the sales, the having milestone contamination. great being, contamination, $XX the top the a precontamination just capacity. year $XX of of we goal on remains setback XXXX achievements, to of grow number year $XX ability was post get doorsteps on million current which catalysts million, the one, transition, on a The million

we sort So -- the the same but work contamination. the new with the First is new of Defense, twist for remediate

seeing then And FDA when just I catalysts, a hit of it's the reading, the that XXXX, was this year big thing the year, other say second two same that.

to say the First backlog, the produce and And the more opportunity FDA give so goal get another yes. always Defense just is out

less question, XXXX, First Defense much we launch, market development call just and what introduction controlled and that more much selling initiating to of we a industry. your the focused, as we're So the commercial bunch in year to of Re-Tain product second that turn

Yes. all It with we sounds your a this like to little bless on of us bit need thing. luck work, hard

It its on need think side skills of luck. side, I I think on do the work and and believe I FDA . Defense hard -- First do bit just does take you little a -- the

fine is your want question. done time job challenges Michael, you. with have a lying you All these luck of really me impending good Yeah. I no and There front to and you in right, thank for for

very communications we Charles. chat. great, And the appreciate the keep current. That’s will I And

sir. you, Thank Okay.

question Our come Gaster, go from will a Investor. Please ahead. Private Frank next

Mike, thanks call. taking for the

you. thank Yes,

Re-Tain. inspection? redone on facilities one been the with believe about A the releases is -- question I submission to had Has of press do last that the inspection.

well, good well. it place will as suspect, The confident it a period. -- take take we say but That's six highly I during Right. that will place place should the inspection will review submission, during after that we're question month take sometime

a position we're think not to serious. I going guys essentially, takes you mobilize the are team So our inspection FDA of -- until

Now the review. submission is pending our and under

us. of ahead still is that So

Okay. about the of kind the prospects It where simple of inspection dictate seems a way like go having you release? to under it, odd

learned. process, make them, a And communicated tough but -- know. did that's -- what It's tough a issued should it's inspection. first to-do I then list. their essentially, really with I their clarify, They we they we as

tell the to-do Okay, of that wait. that When submission you inspection. with ready look, we're make we're them going one to the submission, items to that for list was on

we So let's have they're think months, and I just it submission. can think six they're to busy, serious that get I CMC within bother unless they took final the enough not attitude, done made

or some And some lab on you or that regards critical and right. understanding can question in to path Re-Tain. or your I from -- another about -- comments All explain give lab was third-party? results rather, the color

testing procedures the FDA to I analysis, certain two labs. Yes. what mean essentially, certain done required have is by

but it. be robust they that on can else we've hands, do our someone So completion, able it control want enough method and to process the the been to

that's is ImmuCell. that the have outside of the critical path item -- So repetition to that done

you're And QX submission time with frame? the still going

going in very feel down matter confident are. is, And all a important we very a this those target. changes from project of reality Yes, to they expecting -- I of the little here I out months the be to days, matter not everyone February. move still are. our how that the put We already best hard but March. in is that do But I because that ambitions, bit we're make to of don't it's a know when We projections, think towards close. we're it's end

seems you more. the year about ago. to give idea significantly a line? be SG&A It than And Okay. one higher me some Could

Yes.

get Of or course, to $XXX,XXX. administrative kind aggregates, I move that It not you pretty -- as line noted, steady, the because selling I'm is the press think release the $XXX,XXX I detail say than I'm is doesn't very line of but inflationary. more the sorry.

conscious expense a made increase by and percentage one We more triggered of that controlled or sales. have a budgeted by is decision that selling to

There's really has the programs. having of I very be the providing cheese backlog years really really good Dr. Listenberg. the from increased and our important remediate to him with critical rebound some also important So and it having and he hires here some personnel Mark to a came couple [indiscernible] Tecipar, contamination the the XX of experience to hugely Re-Tain in with part mean team problems. It's team, having for of and valuable.

sales. the sales it's the smaller and bump We admin to keep the sales in programs the sales has on and K. team in XXXX under I'll and always that detail it here you proportional it's on bump expense side, yes, grown grown and XX%. So we’ll side, the But get there have

Okay. potential a long fruition. I time to forward looking had, for It’s a First That’s [indiscernible] all Mike. [indiscernible] to I’m come been Defense And

over question-and-answer remarks. closing will I'd to session. turn This conclude our back for to like Diaz the conference Joe

participating I'd quarter results to you a like on of call. to again day. review today's XXXX, you XX, to look We with first May thank of XXXX. talking great about forward or for all the Have on for

has conference much for very Thank presentation. concluded. today's now attending The you

You may lines. now your disconnect