Q1 2026 ImmuCell Corp Earnings Call

May 15, 2026

Operator 1: Good morning, and welcome to the ImmuCell Corporation Conference Call to discuss unaudited Q1 2026 financial results. Today, all participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event today is being recorded. I would now like to turn the conference call over to Joe Diaz of Lytham Partners. Please proceed.

Operator: Good morning, and welcome to the ImmuCell Corporation Conference Call to discuss unaudited Q1 2026 financial results. Today, all participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event today is being recorded. I would now like to turn the conference call over to Joe Diaz of Lytham Partners. Please proceed.

Speaker #2: After today's presentation there will be an opportunity to ask questions. Please note this event today is being recorded. I would now like to turn the conference call over to Joe Diaz of Litham Partners.

Speaker #2: Please proceed. Thank you, Chris. Good morning and welcome. As the operator indicated, my name is Joe Diaz with Litham Partners. We are the investor relations consulting firm for IMMUCELL.

Joe Diaz: Thank you, Chris. Good morning and welcome. As the operator indicated, my name is Joe Diaz with Lytham Partners. We are the investor relations consulting firm for ImmuCell. I thank you for joining us today to discuss the unaudited earnings for the Q1 ended 31 March 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 the steps the company plans to take in the future.

Speaker #2: I thank you for joining us today to discuss the unaudited earnings for the first quarter ended March 31, 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 the steps the company plans to take in the future.

Joe Diaz: 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 better known as a 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.

Speaker #2: These statements are not guarantees of performance and are subject to risk and uncertainty that could cause actual results, outcomes, or events to differ materially from those discussed today.

Speaker #2: Additional information regarding forward-looking statements and the risks and uncertainties that could impact future results, outcomes, or events is available under 'regarding forward-looking statements,' or better known as a 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.

Speaker #2: Information discussed on today's call speaks only as of today Friday, May 15, 2026. The company undertakes no obligation to update any information discussed on today's call.

Joe Diaz: Information discussed on today's call speaks only as of today, Friday, 15 May 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 Olivier te Boekhorst, President and Chief Executive Officer of ImmuCell Corporation, for opening remarks. Olivier?

Speaker #2: 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 Tabukars, president and CEO of IMMUCELL CORP /DE for opening remarks.

Speaker #2: Oliver. Thanks, Joe, and good morning everyone. It's my pleasure to welcome you to today's discussion of IMMUCELL's results for the first quarter of 2026.

Olivier te Boekhorst: Thanks, Joe. Good morning, everyone. It's my pleasure to welcome you to today's discussion of ImmuCell's results for the Q1 of 2026. Starting this quarter, our discussion of results will be accompanied by a few key slides that are part of our new investor presentation. You can find that on our investor page, immucell.com/investors. In 2025, the company made significant changes to better position itself for success, including a strategic focus on the calf scours market and investments in leadership and in manufacturing yield improvement.

Speaker #2: Starting this quarter, our discussion of results will be accompanied by a few key slides that are part of our new investor presentation. You can find that on our investor page immucell.com/investors.

Speaker #2: In 2025, the company made significant changes to better position itself for success, including a strategic focus on the CAF Scholars market and investments in leadership and in manufacturing yield improvement.

Speaker #2: In the first quarter of 2026, we are starting to see the results of this focus. We are achieved our first-ever $10 million revenue quarter, which is an exciting milestone for our commercial team and our manufacturing team, and we also achieved 45% gross margins after absorbing legacy retain-related costs that shifted from product development to gross to cost of goods sold, and reduced gross margins by approximately 2.4% during the quarter.

Olivier te Boekhorst: In the Q1 of 2026, we are starting to see the results of this focus. We achieved our first-ever $10 million revenue quarter, which is an exciting milestone for our commercial team and our manufacturing team. We also achieved 45% gross margins after absorbing legacy Re-Tain-related costs that shifted from product development to cost of goods sold and reduced gross margins by approximately 2.4% during the quarter.

Speaker #2: We also grew net income 34% compared to the first quarter of 2025. In previous calls, we explained the rationale behind our new strategy to focus on First Defense, our leading C.A.F. Scholars preventative product.

Olivier te Boekhorst: We also grew net income 34% compared to Q1 2025. In previous calls, we explained the rationale behind our new strategy to focus on First Defense, our leading calf scours preventative product. Since 1991, ImmuCell has competed successfully in the large, growing market for calf scours prevention with a highly differentiated product portfolio that we believe has considerable runway for further expansion domestically and internationally. As we will discuss later in the call, we believe we're gaining share in this market, competing against the world's largest animal health companies.

Speaker #2: Since 1991, ImmuCell has competed successfully in the large, growing market for calf scours prevention, with a highly differentiated product portfolio that we believe has considerable runway for further expansion domestically and internationally.

Speaker #2: As we will discuss later in the call, we believe we're gaining share in this market, competing against the world's largest animal health companies. Historically, ImmuCell's challenges have centered less around market demand and more on manufacturing capacity and product availability, and for a company our size, it makes a lot of sense to focus on our successful on-market product and solve those challenges, and we are well underway to do that.

Olivier te Boekhorst: Historically, ImmuCell's challenges have centered less around market demand and more on manufacturing capacity and product availability. For a company our size, it makes a lot of sense to focus on our successful on-market product and solve those challenges. We are well underway to do that. Our results in Q1 give us confidence in this decision. I will review some of these drivers in more detail and share some of our market observations after Timothy Fiori, our Chief Financial Officer, completes a deeper review of the financials for Q1 of 2026. I now turn the call over to him. Tim?

Speaker #2: Our results in the first quarter give us confidence in this decision. I will review some of these drivers in more detail and share some of our market observations after Timothy Fiori, our chief financial officer, completes a deeper review of the financials for the first quarter of 2026.

Speaker #2: I now turn the call over to him. Tim.

Speaker #3: Thank you, Oliver. I'll start with a short recap of product sales results, which are unchanged from our April 8th press release. All the numbers I'll speak to are approximate and rounded.

Timothy Fiori: Thank you, Olivier. I'll start with a short recap of product sales results, which are unchanged from our 8 April press release. All the numbers I'll speak to are approximate and rounded. Product sales for Q1 2026 came in at $10.4 million, an increase of 28.4% compared to what had been a record-breaking Q1 2025. Domestic sales for Q1 grew 35.7% compared to Q1 2025 to $9.7 million, while international sales for Q1 declined 30.2% to about $600,000 in the same period.

Speaker #3: Product sales for the first quarter of 2026 came in at $10.4 million, an increase of 28.4% compared to what had been a record-breaking first quarter of 2025.

Speaker #3: Domestic sales for the first quarter grew 35.7% compared to the first quarter of 2025 to 9.7 million, while international sales for the first quarter declined 30.2% to about $600,000 in the same period.

Speaker #3: In terms of product specifics, we continue to be pleased with strong relative sales of Tri-Shield, our flagship product. Which grew 38.5% in the first quarter of 2026 compared to the first quarter of 2025.

Timothy Fiori: In terms of product specifics, we continue to be pleased with strong relative sales of Tri-Shield, our flagship product, which grew 38.5% in Q1 2026 compared to Q1 2025. We realized gross margin improvement in Q1 compared to prior year. Gross margin as a percentage of product sales increased to 45% during Q1 2026 compared to 41.6% during Q1 2025. We achieved this improvement despite a headwind of 2.4% in Q1 2026 coming from costs associated with former Re-Tain assets which, year over year, have shifted to cost of goods sold from product development expense.

Speaker #3: We realized gross margin improvement in the first quarter compared to prior year. Gross margin is a percentage of product sales increased to 45% during the first quarter of 2026 compared to 41.6% during the first quarter of 2025.

Speaker #3: We achieved this improvement despite a headwind of 2.4% in the first quarter of 2026, coming from costs associated with former retain assets, which year over year have shifted to cost of goods sold from product development expense.

Speaker #3: Year over year, gross margin expansion in the first quarter of 2026 is coming from both price and manufacturing performance, partially offset by the aforementioned shift of former retain-related costs.

Timothy Fiori: Year-over-year gross margin expansion in Q1 2026 is coming from both price and manufacturing performance, partially offset by the aforementioned shift of former Re-Tain-related costs. Operating expenses increased to $2.7 million in Q1 2026 compared to $2.2 million during Q1 2025. This was driven by increases in G&A, mostly related to investments in leadership and higher sales expense related to expanded commercial activities resuming a more normal pace following the backorder management period in Q1 2025.

Speaker #3: Operating expenses increased to $2.7 million in the first quarter of 2026 compared to $2.2 million during the first quarter of 2025. This was driven by increases in G&A, mostly related to investments in leadership.

Speaker #3: And higher sales expense related to expanded commercial activities resuming a more normal pace following the backorder management period in the first quarter of 2025.

Speaker #3: Operating expenses were partially offset by lower product development expenses due to the previously mentioned shift of former retain-related expenses to cost of goods sold.

Timothy Fiori: Operating expenses were partially offset by lower product development expenses due to the previously mentioned shift of former Re-Tain-related expenses to cost of goods sold. Other expense decreased to $15,000 in Q1 2026 compared to $330,000 of other income in Q1 2025. This was driven by a non-recurring insurance payment in Q1 2025.

Speaker #3: Other expense decreased to $15,000 in the first quarter of 2026 compared to $330,000 of other income in the first quarter of 2025. This was driven by a non-recurring insurance payment in the first quarter of 2025.

Speaker #3: To wrap up our income statement discussion, our net income was $1.9 million, or $0.21 per share, during the first quarter of 2026, compared to $1.4 million, or $0.16 per share, during the first quarter of 2025.

Timothy Fiori: To wrap up our income statement discussion, our net income was $1.9 million or $0.21 per share during Q1 2026 compared to $1.4 million or $0.16 per share during Q1 2025. As Oliver mentioned, this is a 34% increase in net income year over year. As usual, we provided EBITDA figures in yesterday's earnings release. We believe looking at 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.

Speaker #3: As Oliver mentioned, this is a 34% increase in net income year over year. As usual, we provided EBITDA figures in yesterday's earnings release. We believe looking at 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.

Speaker #3: EBITDA improved to 2.6 million in the first quarter of 2026 from 2.3 million in the first quarter of 2025. To wrap up with financials, let me highlight a few key balance sheet items.

Timothy Fiori: EBITDA improved to $2.6 million in Q1 2026 from $2.3 million in Q1 2025. To wrap up with financials, let me highlight a few key balance sheet items. Our balance sheet as of 31 March 2026 is in a strong position, with improvements versus year-end 2025 driven by the robust performance in product sales that we discussed previously. We ended Q1 2026 with $6.8 million of cash on hand and $8.7 million of inventory.

Speaker #3: Our balance sheet as of March 31, 2026, is in a strong position, with improvements versus year-end 2025 driven by the robust performance in product sales that we discussed previously.

Speaker #3: We ended the first quarter of 2026 with $6.8 million of cash on hand and $8.7 million of inventory. Working capital increased from $13 million at the end of 2025 to $15 million at the end of the first quarter of 2026.

Timothy Fiori: Working capital increased from $13 million at the end of 2025 to $15 million at the end of Q1 2026. We will continue to closely monitor and manage cash and our other assets as we balance long-term investment with near-term operational needs. With that, I will turn the call back. Olivier.

Speaker #3: We will continue to closely monitor and manage cash and our other assets as we balance long-term investment with near-term operational needs. With that, I will turn the call back.

Speaker #3: Oliver?

Speaker #2: Thanks, Tim. Congratulations to the team for the excellent results in the first quarter of '26. As I mentioned in my initial remarks, ImmuCell made the decision to focus on our Scours preventative products called First Defense in late 2025.

Olivier te Boekhorst: Thanks, Tim. Congratulations to the team for the excellent results in Q1 2026. As I mentioned in my initial remarks, ImmuCell made the decision to focus on our scours preventative products called First Defense in late 2025. In Q1 of this year, we achieved the record $10 million product sales, and Tri-Shield particularly showed very strong growth. It is the most advanced protection against scours that we offer in the market.

Speaker #2: In the first quarter of this year, we achieved the record $10 million product sales and Tri-Shield particularly showed very strong growth. It is the most advanced protection against Scholars that we offer, in the market.

Speaker #2: Our focus on First Defense makes a lot of sense when you consider cap values have increased almost sevenfold in the past three years, and Scholars is a condition that affects up to 15% of pre-weaning calves and is the leading cause of death in these calves.

Olivier te Boekhorst: Our focus on First Defense makes a lot of sense when you consider calf values have increased almost seven-fold in the past three years, and scours is a condition that affects up to 15% of pre-weaning calves and is the leading cause of death in these calves. We believe it causes up to $1 billion of economic burden in the US due to treatment costs, performance losses, and mortality.

Speaker #2: We believe it causes up to $1 billion of economic burden in the U.S. due to treatment costs, performance losses, and mortality. High and rapidly increasing CAP values have driven an increased appetite to invest in premium prevention products, and Scours is top of mind for many producers due to prevalence, morbidity, and mortality.

Olivier te Boekhorst: High and rapidly increasing calf values have driven an increased appetite to invest in premium prevention products, and scours is top of mind for many producers due to prevalence, morbidity, and mortality. In 2025, we estimate US farmers spent approximately $93 million on scours prevention products for about 14% year-over-year growth. In Q1 2026, we saw a slightly moderated 11% year-to-year growth for the overall scours biologics category.

Speaker #2: In 2025, we estimate US farmers spent approximately $93 million on Scholars prevention products for about 14% year over year growth. In Q1 2026, we saw a slightly moderated 11% year-to-year growth for the overall Scholars Biologics category, but IMMUCEL's First Defense accelerated and accounted for what we estimated was nearly 80% of total category dollar expansion in the quarter.

Olivier te Boekhorst: ImmuCell's First Defense accelerated and accounted for what we estimated was nearly 80% of total category dollar expansion in the quarter. This is based on revenues to end customers as reported by distribution partners and market research firms. We are excited to report that our share of US category spend expanded from 29.1% to 35.2%, and our share of animals treated increased from 15% to 18.1% between 2021 and Q1 2026. We believe this performance is driven by an increase in sales activity that started last quarter and the market's increasing confidence in our product availability.

Speaker #2: This is based on revenues to end customers as reported by distribution partners and market research firms. We are excited to report that our share of US category spend expanded from 29.1% to 35.2%, and our share of animals treated increased from 15% to 18.1% between 2021 and the first quarter of 2026.

Speaker #2: We believe this performance is driven by an increase in sales activity that started last quarter and the market's increasing confidence in our product availability.

Speaker #2: Another driver is our premium pricing and positioning in the market. Premium pricing explains why our share of spend is higher than our share of animals treated.

Olivier te Boekhorst: Another driver is our premium pricing and positioning in the market. Premium pricing explains why our share of spend is higher than our share of animals treated. When I visited with our customers this quarter, they told me that First Defense products have several advantages that create a premium value proposition for them. Specifically, First Defense provides immediate protection for immune incompetent newborn calves against the three common pathogens that cause scours.

Speaker #2: When I visited with our customers this quarter, they told me that First Defense products have several advantages that create a premium value proposition for them.

Speaker #2: Specifically, First Defense provides immediate protection for immune-incompetent newborn calves against the three common pathogens that cause scours, and in addition, it also offers a lot of other bioactives that help calves stay healthy as a result of being derived from colostrum.

Olivier te Boekhorst: In addition, it also offers a lot of other bioactives that help calves stay healthy as a result of being derived from colostrum. Our sales activities are now pivoting to winning new customers, since about 55% of calves are still not getting any biological treatments at all. We believe the addressable market in the US is more than $200 million, and internationally, the TAM is at least 5 times as large. We will focus on these opportunities.

Speaker #2: So our sales activities are now pivoting to winning new customers since about 55% of calves are still not getting any biological treatments at all.

Speaker #2: We believe the addressable market in the U.S. is more than 200 million, and internationally, the TAM is at least five times as large. We will focus on these opportunities.

Speaker #2: As I discussed in previous calls, a key part of our strategy given the tailwind from the macroenvironment and our excellent value proposition for customers is to ensure we have product available.

Olivier te Boekhorst: As I discussed in previous calls, the key part of our strategy, given the tailwind from the macro environment and our excellent value proposition for customers, is to ensure we have product available. This has been challenging for ImmuCell, and we are working hard every day to ensure we maximize yield and increase our output to keep up with demand.

Speaker #2: This has been challenging for IMMUCEL, and we are working hard every day to ensure we maximize yield and increase our output to keep up with demand.

Speaker #2: We made decisions in late 2025 to address manufacturing capacity constraints. And as you can see, we had an excellent first quarter of 2026, reaching a record of more than 450,000 manufacturing units of output per month.

Olivier te Boekhorst: We made decisions in late 2025 to address manufacturing capacity constraints. As you can see, we had an excellent Q1 of 2026, reaching a record of more than 450,000 manufacturing units of output per month. This compares to 380,000 manufacturing units per month we achieved in 2025, 344,000 in 2024, and 252,000 in 2023. This expansion of output helped improve our gross margin in addition to the price realization that Tim mentioned. Yield improvement is challenging and comes from doing a lot of different things really well every single day. There's no magic bullet or single big lever.

Speaker #2: And this compares to 380,000 manufacturing units per month we achieved in 2025, 344,000 in 2024, and 252,000 in 2023. This expansion of output helped improve our gross margin, in addition to the price realization that Tim mentioned.

Speaker #2: Yield improvement is challenging, and comes from doing a lot of different things really well every single day. There's no magic bullet or single big lever.

Speaker #2: The team got together and committed to ensuring availability. And then we improved our planning, which allowed for more preventative maintenance and balanced workflows, reduced waste and scrap events, and we increased utilization by deploying some overtime and making incremental investments in various equipment to increase throughput.

Olivier te Boekhorst: The team got together and committed to ensuring availability, and then we improved our planning, which allowed for more preventative maintenance and balanced workflows, reduced waste and scrap events, and we increased utilization by deploying some overtime and making incremental investments in various equipment to increase throughput. I can't thank the team enough for their efforts. Just a note about manufacturing units. They do not match up with revenue because of the difference in changing price points of our products and the different number of units used for different products in our portfolio. There's still a lot of work to do to stay ahead of demand for the remainder of 2026. We have to stay focused on managing and mitigating contamination risk.

Speaker #2: I can't thank the team enough for their efforts. Just a note about manufacturing units, they do not match up with revenue because of the different and changing price points of our products and the different number of units used for different products in our portfolio.

Olivier te Boekhorst: They do not match up with revenue because of the difference in changing price points of our products and the different number of units used for different products in our portfolio. There's still a lot of work to do to stay ahead of demand for the remainder of 2026. We have to stay focused on managing and mitigating contamination risk.

Speaker #2: There's still a lot of work to do to stay ahead of demand for the remainder of 2026. We have to stay focused on managing and mitigating contamination risk.

Speaker #2: We have to keep providing great service to our colostrum supplying farms, and we have to manage yield improvement while we execute a major capacity expansion in our colostrum processing plant.

Olivier te Boekhorst: We have to keep providing great service to our colostrum supplying farms, and we have to manage yield improvement while we execute a major capacity expansion in our colostrum processing plant. We are pleased to announce that we reached a $2 million settlement with a former contract manufacturer. We plan to deploy this cash to expand capacity to meet long-term demand. We plan to use more advanced process flows, state-of-the-art drying equipment, and assets previously purchased to manufacture Re-Tain, the subclinical mastitis product that we have been developing until we focused on First Defense in December 2025. We are finalizing these expansion plans and will communicate more information on future earnings calls. In previous calls, we discussed other investments we're making to align with our new growth strategy.

Speaker #2: We are pleased to announce that we reached a $2 million settlement with a former contract manufacturer, and we plan to deploy this cash to expand capacity to meet long-term demand.

Speaker #2: We plan to use more advanced process flows, state-of-the-art drying equipment, and assets previously purchased to manufacture and retain the subclinical mastitis product that we had been developing until we focused on First Defense in December 2025.

Olivier te Boekhorst: We plan to use more advanced process flows, state-of-the-art drying equipment, and assets previously purchased to manufacture Re-Tain, the subclinical mastitis product that we have been developing until we focused on First Defense in December 2025. We are finalizing these expansion plans and will communicate more information on future earnings calls. In previous calls, we discussed other investments we're making to align with our new growth strategy.

Speaker #2: We are finalizing these expansion plans, and we'll communicate more information on future earnings calls. In previous calls, we discussed other investments we're making to align with our new growth strategy.

Speaker #2: We hired an international business development executive with decades of dairy industry experience, and he's helping us transition from a reactive approach to international opportunities to a planful, strategic approach.

Olivier te Boekhorst: We hired an international business development executive with decades of dairy industry experience, he's helping us transition from a reactive approach to international opportunities to a planful strategic approach. We are using a rigorous process involving management and the board to understand market opportunities and product requirements, go-to-market investments, regulatory activity and timelines, and our capacity expansion timelines as well. While we believe the international opportunity is significant, success will require disciplined market prioritization and time to prepare for and execute successfully. Our efforts are focused on building the right foundation for sustainable global expansion. In the meantime, we have expanded our sales territories in the US by 3 instead of the previously announced 2 territories since we see so much momentum in the domestic market. Finally, I will repeat what I've communicated on each call.

Speaker #2: We are using a rigorous process involving management and the board to understand market opportunities and product requirements, go-to-market investments, regulatory activity and timelines, and our capacity expansion timelines as well.

Speaker #2: While we believe the international opportunity is significant, success will require disciplined market prioritization and time to prepare for and execute successfully. Our efforts are focused on building the right foundation for sustainable global expansion.

Olivier te Boekhorst: While we believe the international opportunity is significant, success will require disciplined market prioritization and time to prepare for and execute successfully. Our efforts are focused on building the right foundation for sustainable global expansion. In the meantime, we have expanded our sales territories in the US by 3 instead of the previously announced 2 territories since we see so much momentum in the domestic market. Finally, I will repeat what I've communicated on each call.

Speaker #2: In the meantime, we have expanded our sales territories in the US by three instead of the previously announced two territories since we see so much momentum in the domestic market.

Speaker #2: Finally, I will repeat what I've communicated on each call. Our top priority at IMMUCEL 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.

Olivier te Boekhorst: Our top priority at ImmuCell 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. In Q1 of the year, we announced changes to our corporate governance that supports this focus. We now have a smaller independent board with three new board members who bring extensive animal health and functional expertise. I look forward to working with the new board on executing our focus strategy to deliver the day while we secure the future. With that said, we will be happy to take your questions. Let's have the operator open up the lines.

Speaker #2: In the first quarter of the year, we announced changes to our corporate governance that supports this focus. We now have a smaller independent board with three new board members who bring extensive animal health and functional expertise.

Speaker #2: I look forward to working with the new Board on executing our focus strategy to deliver the day while we secure the future. With that said, we would be happy to take your questions.

Olivier te Boekhorst: I look forward to working with the new board on executing our focus strategy to deliver the day while we secure the future. With that said, we will be happy to take your questions. Let's have the operator open up the lines.

Speaker #2: Let's have the operator open up the lines.

Speaker #1: Thank you, we will now begin the question and answer session. As a reminder, please limit yourself to one question and then rejoin the queue.

Operator 2: Thank you. We will now begin the question-and-answer session. As a reminder, please limit yourself to 1 question and then rejoin the queue. 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 your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster. As a reminder, if you do have a question, please press star then one. Today's first question comes from Frank Gasker, a private investor. Please go ahead. Frank, your line is open.

Operator: Thank you. We will now begin the question-and-answer session. As a reminder, please limit yourself to 1 question and then rejoin the queue. 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.

Speaker #1: 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.

Speaker #1: If your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster.

Operator: If your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble our roster. As a reminder, if you do have a question, please press star then one. Today's first question comes from Frank Gasker, a private investor. Please go ahead. Frank, your line is open.

Speaker #1: And as a reminder, if you do have a question, please press star then one. And today's first question comes from Frank Gasker, a private investor.

Speaker #1: Please go ahead. And Frank, your line is open.

Speaker #3: Yes, outstanding quarter. and congratulations to the team on that. performance. could you talk a little bit about your, First Defense bulk product and its seasonality?

Frank Gasker: Yes, outstanding quarter, and congratulations to the team on that performance. Could you talk a little bit about your First Defense bulk product and its seasonality, its target market, whether or not it competes with existing products?

Speaker #3: It's, target market? whether or not it competes with existing products?

Speaker #4: thank you for, for that, that question. let me see if I can give you a little bit more detail. So our functional feed product is a non-USDA-approved, product that uses a different manufacturing process, that we use a different process to, to, to make it.

Olivier te Boekhorst: Thank you for that question. Let me see if I can give you a little bit more detail. Our functional feed product is a non-USDA approved product that uses a different manufacturing process that we use a different process to make it. It essentially has our First Defense technology inside. It uses the same colostrum. It reduces our cost to manufacture, and it's offered to the market at a lower price point. It is particularly useful for those operations that don't want to feed each calf individually, but can add this to either water or colostrum or milk that they're providing to the calves as a group. It has a different, a different dynamic in that regard.

Speaker #4: But it essentially has our First Defense technology inside. It uses the same colostrum. and, it's, it reduces our cost of manufacturer, and it's, it's offered to the market at a lower, price point.

Olivier te Boekhorst: It reduces our cost to manufacture, and it's offered to the market at a lower price point. It is particularly useful for those operations that don't want to feed each calf individually, but can add this to either water or colostrum or milk that they're providing to the calves as a group. It has a different, a different dynamic in that regard. We launched it late last year, second half of last year, essentially the new formulations of this product. It's still in a product launch phase, for us.

Speaker #4: and it is particularly useful for those operations that don't want to feed each calf individually but can add this to, the water or colostrum or milk that they're providing to the calves, as a group.

Speaker #4: So it has a different, a different dynamic in that regard. We launched it late last year, second half of last year, essentially the new formulations of this product.

Olivier te Boekhorst: We launched it late last year, second half of last year, essentially the new formulations of this product. It's still in a product launch phase, for us.

Speaker #4: And so we're, we're it's still in a, a product launch phase, for us.

Speaker #5: thank you.

Frank Gasker: Thank you.

Olivier te Boekhorst: Thank you.

Speaker #4: Thank you.

Speaker #1: And the next question comes from George Milos with MKH Management. Please proceed.

Operator 2: The next question comes from George Melas-Kyriazi with MKH Management. Please proceed.

Operator: The next question comes from George Melas-Kyriazi with MKH Management. Please proceed.

Speaker #3: thank you, yeah, totally outstanding quarter. Congratulations to a fantastic start. when I ask a few questions about production capacity, I think you said that there's no magic bullet to improving production and yield, that there's so many different levels.

George Melas-Kyriazi: Thank you. Yeah, totally outstanding quarter. Congratulations to a fantastic start. I want to ask a few questions about production capacity. I think you said that there's no magic bullet to improving production and yield, that there's so many different levels. Can you tell us a little bit more about what were some of the key improvement that led to the yield improvement? Also, with your current capacity and your four freezers, what do you see is your maximum capacity at this point?

Speaker #3: Can you tell us a little bit more about what we're some of the key improvement, that led to, to the yield improvement? And also, with your current capacity and your full freezers, what do you see is your maximum capacity at this point?

Speaker #4: Thank you, George. for your question. the, th-there are some primary levers that we that we used in the last quarter, and there are some others that we are planning for that are con that we'll that we'll hopefully yield more in the in, in the future.

Olivier te Boekhorst: Thank you, George, for your question. There are some primary levers that we used in the last quarter, and there are some others that we are planning for that will hopefully yield more in the future. The primary levers in the past four to six months have been improving our planning. Aligning our sales forecasts with our production forecasts on a very kind of SKU level and then planning our workflows so that it's balanced, so that one part of the team isn't waiting for another part of the team. With this planning, we also added some overtime capacity to some critical steps in the manufacturing process. If you do that in a planned way, it's actually manageable.

Speaker #4: so the, the p the primary levers in the past four to six months have been, improving our planning. so aligning our sales forecasts with our production forecasts on a very kind of SKU level and, and then planning our workflows, so that it's balanced.

Speaker #4: So that one part of the team isn't waiting for another part of the team. And, with this planning, we also added some overtime capacity to some critical steps in the manufacturing process.

Olivier te Boekhorst: With this planning, we also added some overtime capacity to some critical steps in the manufacturing process. If you do that in a planned way, it's actually manageable. You know, it ties into back to the planning point that I made. We also reduced waste in our process. There are parts of our process where we're not using everything that we could, so reusing and just focusing on that waste and reducing that increases output.

Speaker #4: and if you do that in a planned way, it's actually manageable, and, and, and, and, you know, it, it ties into back to the, the planning point that I made.

Olivier te Boekhorst: You know, it ties into back to the planning point that I made. We also reduced waste in our process. There are parts of our process where we're not using everything that we could, so reusing and just focusing on that waste and reducing that increases output. Finally, there were a couple of steps in the process where minor, I would say, investments in capital, and a bigger tank, some extra membranes, I mean, some things like that, really helped increase the throughput of a particular step in the process that was either a bottleneck or about to become a bottleneck. Those are the key things that we've done.

Speaker #4: We also reduced waste in our process. There are parts of our process where we're not using everything that we could. and, and so reusing, and just focusing on that waste and reducing that increases output.

Speaker #4: Finally, there were a couple of steps in the process where minor—I would say—investments in capital, and a, a bigger tank, some extra membranes.

Olivier te Boekhorst: Finally, there were a couple of steps in the process where minor, I would say, investments in capital, and a bigger tank, some extra membranes, I mean, some things like that, really helped increase the throughput of a particular step in the process that was either a bottleneck or about to become a bottleneck. Those are the key things that we've done.

Speaker #4: I mean, some things like that really helped increase the throughput of a particular step in the process that was either a bottleneck or about to become a bottleneck.

Speaker #4: And so those were the key things that we've done. There are other ways to further improve yields, and we're looking at them on a continuous basis.

Olivier te Boekhorst: There's other ways to further improve yields, and we're looking at them on a continuous basis. We have a program in place that we're all focused on to get to a higher yield. We review that program more several times a week actually, we're working on it. We don't know and have a specific number in mind of what is our maximum. We're just improving yield kind of on a percentage basis, if you will, on a continuous basis. At the same time, as I mentioned in my comments, it is time to think about a major capacity expansion.

Speaker #4: We have a, a program in place that, we're all focused on to, to get to a, a, a higher, yield. and we review that program, more, several times a week, actually.

Speaker #4: We're working, we're working on it. And so, we don't know and don't have a specific number in mind of what is our maximum. We're just improving yield, kind of on a percentage basis, if you will, on a continuous basis.

Olivier te Boekhorst: We're just improving yield kind of on a percentage basis, if you will, on a continuous basis. At the same time, as I mentioned in my comments, it is time to think about a major capacity expansion. We're very fortunate or that we have the payment from our contract manufacturer that we can deploy towards that. We are in the midst of, you know, actively planning a capacity expansion for our plan.

Speaker #4: And, at the same time, as I mentioned in my comments, it is time to think about a major capacity expansion. And so, we're very fortunate that we have the payment from our contract manufacturer that we can deploy towards that.

Olivier te Boekhorst: We're very fortunate or that we have the payment from our contract manufacturer that we can deploy towards that. We are in the midst of, you know, actively planning a capacity expansion for our plan.

Speaker #4: and, and we're, we are in the midst of, you know, actively planning a capacity expansion for, for our plant.

Speaker #5: Okay, great. Thank you for that. if I look at slide number five, where you have basically the product mix, over the last, three years, help, help us understand the, the trajectory of TriShield, how it dipped during 2025 and has had a huge rebound.

George Melas-Kyriazi: Okay, great. Thank you for that. If I look at slide number 5, where you have basically the product mix over the last 3 years, help us understand the trajectory of Tri-Shield, how it dipped during 2025 and has had a huge rebound. What drove that? Was that demand driven? I imagine you have some ability to influence demand, but it's a puzzling. It seems to peak in the Q1, but maybe help us understand that, if you can.

Speaker #5: What drove that? Was that was that demand-driven? I imagine you have some ability to influence demand. but it's a it's a puzzling, i-it's, it seems to peak in the first quarter.

Speaker #5: But, it's i-i-i-it's maybe help us understand that. If you can.

Speaker #4: Yeah. Hi, George. Good to hear from you. I this is Sam here. I think that the, the thing that's past few years even, you know, that are is the backorder dynamic.

Timothy Fiori: Hi, George. Good to hear from you. This is Timothy Fiori here. I think that the thing that's challenging about some of the trends in the past few years even, you know, there is the back order dynamic. It really a lot of time depended on what was available to sell to customers. I think that creates some different dynamics that, you know, may not be intuitive. That could be what you're seeing. I mean, overall the trend is that more customers seem to be shifting to Tri-Shield. That seems to be really where we're growing. It's our flagship product. I, you know, that's the trend that we're focused on.

Speaker #4: So it really a lot of time depended on what was available to sell to customers. and I and I think that creates some, some different dynamics that, you know, may not be intuitive.

Speaker #4: So that could be what you're seeing. I mean, overall, the trend is that more customers seem to be shifting to TriShield. That seems to be really where we're growing.

Speaker #4: It's our flagship product. And, and I, you know, that-that's the that's the trend that we're focused on.

Speaker #5: Okay, great. Thank you very much.

George Melas-Kyriazi: Okay, great. Thank you very much.

Speaker #4: And I think, George, one other thing that I would add to that is that TriShield is a premium-priced product, also compared to DuoForce and our other products.

Olivier te Boekhorst: The other thing, George, only other thing that I would add to that is that Tri-Shield is a premium priced product also compared to Dual-Force and our other products. In the calving season, you know, the that we just had, it's the least price-sensitive segment that had a lot of demand in the last quarter or two. That helps explain some of the uptake on Tri-Shield as well.

Speaker #4: And in the calving season, you know, th-th-that we just had, it's the least price-sensitive segment that had a lot of demand in the last quarter or two.

Speaker #4: And so, that helps explain some of the uptake on TriShield as well.

Speaker #5: Okay. Yeah. And again, as a reminder, if you do have a question, please press star then one. And the next question is a follow-up from Frank Gasker, a private investor.

George Melas-Kyriazi: Okay. Yeah.

Operator 2: Again, as a reminder, if you do have a question, please press star then 1. The next question is a follow-up from Frank Gasker, a private investor. Please go ahead.

Operator: Again, as a reminder, if you do have a question, please press star then 1. The next question is a follow-up from Frank Gasker, a private investor. Please go ahead.

Speaker #5: Please go ahead.

Speaker #6: Yes, thanks for taking my questions. Your increase in sales force—again, that you just mentioned—I'm curious as to what the main drivers of that are.

Frank Gasker: Yes, thanks for taking my questions. Your increase in sales force again that you just mentioned, I'm curious as to what the main drivers of that is. As far as regionality and the target market for those regions, could you get into that? It's my understanding that the market is divided into dairy and beef. Where is your growth headed? Where is your sales directed? Thank you.

Speaker #6: And, as far as regionality and the target market for those regions, could you get into that? 'Cause it's my understanding that the market is divided into dairy and beef. Where is your growth headed?

Speaker #6: Where is your sales directed? Thank you.

Speaker #4: Thank you, Frank. We—we have expanded our sales team to essentially cover the entire country where there are calves, whether they're beef or dairy, 'cause both industries use our product.

Olivier te Boekhorst: Thank you, Frank. We have expanded our sales team to essentially cover the entire country where there are calves, whether they're beef or dairy, 'cause both industries use our product. Although traditionally more focused on the dairy segment, we're seeing significant increases in the beef as well because beef calves are also increasing in value. With the increase in value of the calf, investing in a preventative like First Defense makes a lot of sense for producers, and they get a really good return on investment.

Speaker #4: although traditionally, more focused on the dairy segment, we're, we're seeing significant increases in the beef as well because beef calves are also increasing in value.

Speaker #4: and, and so with the increase in value of the calf, investing in a preventative like first defense, makes, a lot of sense for producers with a really and they get a really good return on investment.

Speaker #4: so our goal is that, you know, we, we understand, and I understand this from my personal visits to customers, but the sales team sees this, of course, every day is that the more contact you have with customers to explain how our product works, the differences between, our product and, and some of our competitors, which are vaccines, and the, the, the differentiation that our product provides, it, it really, you know, it really helps close the deal, helps educate the customer, and they appreciate, the, the time and investment in them.

Olivier te Boekhorst: Our goal is that, you know, we understand, and I understand this from my personal visits to customers, but the sales team sees this of course every day: the more contact you have with customers to explain how our product works, the differences between our product and some of our competitors, which are vaccines, and the differentiation that our product provides, it really, you know, really helps close the deal, helps educate the customer, and they appreciate the time and investment in them. Our strategy around sales force expansion is that more customer contact equals more revenue. We've been seeing that now for a couple of years. We decided that it made sense to add a third territory.

Speaker #4: So our, our strategy around Salesforce expansion is that more customer contact equals more revenue. And we've been seeing that now for, a couple of years.

Olivier te Boekhorst: Our strategy around sales force expansion is that more customer contact equals more revenue. We've been seeing that now for a couple of years. We decided that it made sense to add a third territory. A territory in the west of the US that had been frankly open for almost a year now, we decided to accelerate the hiring for that region. I hope that gives you some color.

Speaker #4: and so we decided that, that it makes sense to, to add a third, territory, a territory in the west of the US that had been frankly open for almost a year now.

Olivier te Boekhorst: A territory in the west of the US that had been frankly open for almost a year now, we decided to accelerate the hiring for that region. I hope that gives you some color. We're really looking at in each region of the country, what are the number of calves that are out there? What percentage of them are getting any treatment at all? What does the sales cycle look like? We have some experience in that because in some regions you can close a deal faster than in others. We're looking at kind of the fastest, highest return of our investment when we talk about adding commercial people to our team.

Speaker #4: we decided to accelerate the hiring for that for that, for that region. So I, I hope that gives you some, some, color. we're really looking at, in each region of the country, what are the number of calves that are, out there, what percentage of them are getting any treatment at all, and what is the sales cycle look like.

Olivier te Boekhorst: We're really looking at in each region of the country, what are the number of calves that are out there? What percentage of them are getting any treatment at all? What does the sales cycle look like? We have some experience in that because in some regions you can close a deal faster than in others. We're looking at kind of the fastest, highest return of our investment when we talk about adding commercial people to our team.

Speaker #4: We have some experience in that, 'cause in some regions, if you can close the deal faster than in others. And so, we're looking at kind of the fastest, highest return on our investment when we, when we talk about adding commercial, commercial people to our team.

Speaker #6: that was great. Thank you, very much.

Frank Gasker: That was great. Thank you very much.

Speaker #4: Thank you.

Olivier te Boekhorst: Thank you.

Speaker #5: And at this time, this concludes our question-and-answer session. I would now like to turn the conference back over to Joe Diaz with Litham Partners for any closing remarks.

Operator 2: At this time, this concludes our question and answer session. I would now like to turn the conference back over to Joe Diaz with Lytham Partners for any closing remarks.

Operator: At this time, this concludes our question and answer session. I would now like to turn the conference back over to Joe Diaz with Lytham Partners for any closing remarks.

Speaker #7: Thank you, Chris. And thank all of you for participating on today's call. We look forward to talking with you again to review the results for the quarter ended June 30, 2026.

Joe Diaz: Thank you, Chris, and thank all of you for participating on today's call. We look forward to talking with you again to review the results for Q2 ended 30 June 2026, during the week of 10 August 2026. Thanks again, and have a great day.

Speaker #7: During the week of August 10, 2026. Thanks again, and have a great day.

Operator 2: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.