Q2 2021 ImmuCell Corp Earnings Call

It will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two.

Please note. This event is being recorded I would now like to turn the conference over to Joe Diaz. Please go ahead.

Thank you Betsy and good morning, and welcome My name is Joe Diaz Betsy indicated.

Lytham partners, where the Investor relations consulting firm for them yourself. Thank you for joining us today to discuss the unaudited financial results for the second quarter of 2021.

I'd like to preface this discussion today with a caution regarding forward looking statements listeners are reminded that statements made by management. During the course of this call include forward looking statements.

Get to risks and uncertainties that could cause actual results to differ materially from those discussed today.

Additional information regarding these risks and uncertainties is available under the cautionary note.

Regarding forward looking statements or better known as the Safe Harbor statement provided with last Night's press release and the company's quarterly report on Form 10-Q.

With that said, let me turn the call over to Michael Brigham President and CEO of it Michelle Corporation.

After which we will open the call for your questions Mike.

Great. Thanks, Joe I appreciate the opportunity to provide some updates on what is going on and then Michele the press release and the quarterly report on Form 10-Q that we disclosed last night cover the key financial highlights and all the details.

As you May know on July 7th we issued a press release covering our preliminary topline sales results. We have been making these optional announcements to give investors a very time, they look at what I view as the most critical measure of our operations and financial performance that being product sales early in the reporting period.

I have no changes to that very strong previous disclosure again product sales were up 53% during the second quarter of 2021 and up 10% for the first six months of the year compared to the same periods of the prior year respectively.

We have recovered from the first quarter sales drop and are on track to report positive sales growth for the full year 2021 over 2020 as projected.

The $4.5 million in sales that we recorded during the second quarter indicates an annualized rate of production of about $18.2 million.

We are clearly, making good progress towards achieving our stated objective of increasing our annual production capacity from about $16.5 million to about $23 million and eliminating the first defense order backlog.

As a result of our expanding production capacity, we shipped 11% more product during the second quarter of 2021 than during the first quarter of this year and we reduce the backlog of first defense orders to approximately $1.3 million as of the end of last week.

I am very pleased to report that our gross margin as a percentage of product sales recovered to 46% during the second quarter of 2021 compared to just 39% during the first quarter of 2021, we anticipated this improvement as the costs incurred to expand our production capacity were spread over the increasing output during the second.

Quarter.

This higher level of sales helped us to report net income of 141000 during the second during the quarter. The second quarter of 2021 in contrast to a net loss of 766000 during the second quarter of 2020.

At this stage in our development I think we should focus on our cash flows more than on our Bottomline as reported in accordance with GAAP page four of last Night's press release provides a look at some non-GAAP financial measures and the impact of certain noncash expenses on our financial results.

We reported increases in EBITDA during both of the three month and six month periods ended June 32021 to 843001 million 101000, respectively.

In comparison to the same periods during the prior year, but the most complete measure is the statement of cash flows in the financial statements to our quarterly report.

Full details about the capital expenditure investments that we are working on can be found in our quarterly report in the MD&A section under liquidity and capital resources.

Of the $10.7 million of cash that we had on hand as of June 30th we expect to use about $7.6 million to complete these identified projects about $5.3 million of this investment is for first defense related activities and the balance of 2.3.

Is directed towards retain.

This would leave us with about $3.1 million of cash available for other purposes.

Lastly, I would like to offer a few comments about retain our new subclinical mastitis treatment for lactating dairy cows without a milk discard or meat withhold requirement, which is currently subject to FDA review and approval.

On a road to FDA approval of retain its been long and expensive, but we are nearing completion of the required work.

We aim to demonstrate that our bacteria and nice in a.

Can play a productive role in the treatment of subclinical mastitis in today's dairy industry.

By providing a novel alternative to traditional and Biotics.

Our objective is to gain market acceptance of this new product concept as we develop a new product category ultimately the market determines the value of any new product retain will be no different.

Later this quarter, we expect to issue a press release announcing the Fda's response to our last five major technical section submissions.

This response from the FDA will determine whether we will be able to commence an initial limited market launch of retain around year end.

But it is important to confirm that we cannot predict the timing or the outcome of the Fda's review.

So in conclusion I encourage you to review the press release and the quarterly report on Form 10-Q that we filed last night also.

Have a look at our corporate presentation slide deck in August update was just posted to our website last night I believe it provides a very good summary of our business strategy and objectives as well as our current financial results. So see the investors section of our website and click corporate on the corporate presentation.

With that said I will be happy to take your questions, let's have the operator open up the lines.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

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At this time, we will pause momentarily to assemble our roster.

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Yeah.

And the first question comes from Sam Rybacki with S E R asset management.

Please go ahead, yes.

Good morning, Michael.

I'm trying to understand what the state what you expect to say hey.

In July about retain is that dependent upon the FDA.

Oh, 100%, yes, so so.

As you know we got.

For technical sections have been previously submitted and completed the fifth is the one pending review and we do expect a response in the third quarter still so when we have that responsibly, we definitely expected.

To announce the results of their review.

Okay.

And then as far as first defense you need another piece of equipment.

Yet.

To sort of continue to build up more first defense.

This sounds I mean, it's it's.

It's been difficult because of what's going on with Covid.

And so you expect that in the quarter ending September.

Yeah. So you know I really wanted everything buttoned up and done and just get onto the new level of production June 30 that didn't happen. There was some COVID-19 related delays there was some manufacturer problems.

You can see I guess my point is that we didn't hit the 23 point $23 million in annual capacity up or kind of you know kind of halfway there at around $18. Two so what we have completed it is growing our capacity and why we need a complete we'll come we'll bring it up to that $23 million level and so.

A little off on the timing, but at least at least we're gaining we are we are we have increased the capacity just not all the way yet.

Okay. Yeah, let me just get back to the <unk>, we have been talking to the FDA, but we haven't just received the final.

Decision or.

Yeah on these technical sections the five they're all the same you submit and you wait six months.

Joe statutory and it's been they've been consistent on the first floor and.

I don't see any difference on the fifth so yeah. It's just the way the system works is they they.

They take six months, usually are not more than usually not less so that's.

That's what we're waiting on you know, it's kind of a it's all or nothing thing. They don't they don't sort of give you you know.

Interim status check we wait for their response complete or incomplete.

Okay, Michael I'm at the airport. So I think we'll get them good to hear from me I'm travel travel safe.

Thank you.

Good luck.

Alright. Thanks.

As a reminder, if you have a question. Please press star then one to be join in to the queue.

This concludes our question and answer session I would like to turn the call back over to Joe Diaz for any closing remarks.

Okay. Thank you and thanks all of you for participating in today's call. We look forward to talking with you again to reuse the results.

The third quarter of 2021 around the second week of November have a great weekend, thanks, Nathan well.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.