ICCC - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the ImmuCell Corporation first quarter fiscal year 2018 financial results conference call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. At this time, I would like to turn the conference over to Joe Diaz of Lytham Partners. sir. ahead, go Please

Joe Diaz

on and review of for the first with which for Denise, is My us Diaz. Joe ImmuCell for today the I'm ended XXXX of to unaudited Partners. quarter XX, thank you, XXXX. you name all Lytham joining Corporation March Thank financial results

consultant investor We ImmuCell are relations the Corporation. for firm

what include we is differ the course during get by made management could forward-looking those started, Before in results this discussed let forward-looking call statements. statements materially Actual me from say that statements. of

Michael Additional in financial full on me information press Commission today's as on questions. in they to release details that Securities both summary filings available is factors XX-K quarterly Michael? are the that could first with the which for Exchange cause of the with its we release. the turn company's such XX-Q open call I differences President on and results said, and recent the and as available the Forms today. your will press should Form to XX-Q call company's ImmuCell Corporation, quarter also filed Brigham, With most let well and that the after earlier CEO note were report over

Michael Brigham

our first that XXXX meet selling experienced XXXX of peak of quarter XX% during Though to orders for demand quarter the I Defense of first below the Thank record points however, that highlight business. backlog of I explain demand bivalent the orders production $XXX,XXX expectations. decrease of causes line, limitations of some the of most entire state because for later. $X.X Defense. all and products our for product by supply current from over newly Tri-Shield of up, join million could our the key our about about yield product which is the First well Defense two we shipped First the $XXX,XXX this First then taking you from ended output legacy comprised customer first, of and the season first would for quarter was biological our shortfall time some of reduced the during a We financial call. released important products with The today's like to our colostrum. We will increase review expanded are, in was the were not the line

and limits in our Second, up limited which the in vaccine manufacture vaccine, of supply production scaling new our used turn the of Tri-Shield of supply difficulties inventory. have

by modifying First vaccine problems the been quality have March manufacturing to We redundancies. XX% backlog control Since format Defense – $XXX,XXX. legacy the – is the and line product of increase excluding implementing the improving have Tri-Shield both that reacted science behind by to manufacturing probably XX, issue, the addressing approximately processes, to cut production for methods yield,

expect of expect have We which It clear to higher with above correct going actions our in in will something forward. closer cost to resulted challenges proceed production also we reducing backlog noted year-end inventory. adequate is will our Tri-Shield. this These June for goods margin forward that gross and sold, be just

common per fed immunity value On market's dairy market of is cow vaccine the scours our traction birth. – that That is of the has The traditional substitute year. The improving time level level the Tri-Shield to the for a treatment dam is compete have to the – the on opportunity for one claim are the effectively in include immediate to vaccines Previously, given for $XX good calf not positions these and Tri-Shield newly Beyond last been from calves and the a size. at to product mother substantial that In our with preventative good new for million sales colostrum that double not the very strong, that newborn against been market, market rotavirus three the scours us. vaccines gained protect rotavirus year. is as newborn for message purpose Vaccination market coronavirus like we pathogens the viable coli, until E. we indication news them response scours large because short causing could a protect programs. about to worth beef did dam-level something side, has the with have calves we which introduced that producers ability late is that most

in year backlog would rolling all benefits comparison sales quarter. hand XXXX include that since XX, able the Now, veterinarians. to bottom-line producers of same XXXX needle the with during that March will compelling vaccines influential of when are to health and orders stress been the is note target Purified product relationships we're by ended the sales backlog of ended confusion if had during first XXXX, Being first in compare the timing March up Tri-Shield, of is They period March period market to supply which of during XX% business are want XX into on inventory in top is to record as XX, we game they the injections the cows caused results the when responsive months the on shipped. our the Obviously, six-month orders the last period our sufficient significant this have years. on X% to of segment comparison XXXX up our and the our without are able the demonstrate benefits. of important product, June certain quarter year, quarter fulfill very to for hands by XXXX better the this among large first negative the same had XX, Tri-Shield coming to reducing and be to the getting and in will of for XXXX. we ending XX, operations strengthen It impact dairy our other the the with bigger Nisin we to launch we also results a the caused

we finance is our follow $XXX,XXX that to expense approximately release ended can to product, incurred financial XXXX to today's However forward. sales will expenses XXXX on is Form Depreciation controllable I of can increasing highlight to customers, has move press $X.X our few Because line, the during the future. expense no I reduce but a $XX.X effect Nisin a to on basis, are facility. in as decreased $X.X a million but I Interest XXXX, XX%. compared million not we as during decrease period XX XX, Purified access figures by approximately in but in shipped in increased have the XX-Q, increasing rolling the same read questions, we to ended million to same out XXXX, This important sales development rather decreased flows. X%. you this Purified of call begin a will numbers cash decrease we GAAP I compared as would and ahead $XXX,XXX your the March on by months other a the XX, this affect to during $X.X total service would believe expense a completed Nisin March that development our basis, product our Also the products to Product quarter debt Nisin going product during GAAP the bottom like of facility. million depreciate meaning to we of first on period total is that

future the these Given and during growth. strategic XXXX, in investments we raised afford to debt our and fund equity XXXX we can

the about talk development let's Lastly, our mastitis. status subclinical intramammary Nisin-based treatment for of

to milk revolutionize after and treated by eliminating medicines, active is of a can value on As a proposition. of is not many bacteria by for meat not in contribute of during is of No that as economically subclinical the antibiotic-resistant withhold to growth period goal infections the requirement way of antibiotics the growing our the widespread the is and time you that would other concern Nisin, treatment superbugs. the making product standard treatment. the market know, human mastitis feasible used this known use to ingredient, offer encourages the that bacteriocin

We towards the for are final approval. meeting making requirements consistent progress FDA

technical A quarter during first is to The the responses to section review, approval this early which filed FDA during supports Adherence include anticipated would first XXXX, expected late with submission timeline of anticipated to Nisin phase to XXXX. submission, is third direct substance XXXX, phase be CMC market XXXX. the phase subsequent obtaining half of second the FDA launch. first by

of paid equip Nisin March XX, remaining. to construct $XX.XXX the budget $XXX,XXX us as expenditures XXXX, leaving of just have We approximately million and

cash $XXX,XXX March bank line $XXX,XXX to of of hand in credit. of XX, on $X,XXX,XXX of our addition available As debt and XXXX,

the ending period I'm off, report that XX, the show up the period backlog's of months to months our confusion While June sales. June the to six-month for be results for the reported ended six three XX, stacks financial the against on already how impact results eager XXXX XXXX without may

Our your consistent for forward. yield objective that important the growth up is believe the balance lines that that operator going said, questions have any in position XXXX our our year ImmuCell output, the most immediate sets production open let's year the for will be and for increase customers for success to the lost of the an With and We stage please. regain future.

Operator

Instructions]. you, Brigham. [Operator Thank Mr.

ahead. will a Please Tom from go first question Fox, The come investor. private

Tom Fox

you little just Thank of trouble on I'm understanding. question that. prepared If for during weren't My of because backlog. that could just of the Michael. that the production? kind Was this sales Hi, is Tri-Shield you about issue quarter the a amount you. you experienced an elaborate the having

Michael Brigham

Yeah. Thanks, Sure. Tom.

much us. planned growth. The sales So, throw part. aren't Tri-Shield did beyond yes, so at We new something in but our only expectations. for

the So, here took had overriding the place it biological it yes, impact yield. production is an the in time, in plant. definitely issue took But, facility, Tri-Shield as in part, really,

grew, doses. lot many did as we a milk took As not we of that yield on

that would've fewer in we batches reality there but per producing So, doses. been were were bigger, plan

in back absolutely and new we growth it had better beginning supply we and farms had had these colostrum to get we to to correct and the at correct So, yield. the our with

those that into does and were as coupled we stuck yield as out need very hard with thought but all the one very way challenges, doses it's of expected what to know that to which for of low of I the yielding getting gotten that us add same process, biological keep in would far the mind, to production all and like six-month challenges of be – as and production get but applied we But sounds better So, peak hit cycle. to time. a behind. don't the have back we every those doses, – amount that time to number control went that same the is threw batch, season fixed number us of I I small, Tri-Shield needed guess of you now of when just we just more just right

just on it So, USDA-released months turn from to doesn't It's six dose. our a a vaccine dime.

lagging as were gaining and track. on we we're back So, we're now

Operator

unfortunately, sir. of Mr. Fox come [Operator Instructions]. has SER go next And Rebotsky disconnected Please Asset Management. Sam question your ahead. from will

Sam Rebotsky

Michael. afternoon, Good

it fewer there didn't you were from getting colostrum reason As doses reason the dealing cattle that with the the were got – the of understand what with you problem, or fewer these weren't the reason far were colostrum I for herds as or the familiar was – the doses, they're – animals why you the that was newer

Michael Brigham

farms, changed? milk. but not both new new Why optimal more has just So, cows and milk, it

milk. enough doses the or getting we the out out we're milk, of doses while weren't So, that standard of getting

that So, processing enough in plant. was enough, the essentially antibodies not liquid with not not be milk to efficient potent, concentrated filled

Sam Rebotsky

they at produce? and backlog have had doses – expected the they what yield animals point just in were you the time, or has the indicated, you've you as you've So, XX, reduced May where to and this increased more of

Michael Brigham

concentration part control milk. more got our but cow, doses of Getting per animals the is we've fix, of measured that to

feel I the I the those projections made making about confident about yeah, problem, the forward-looking projections, fix. but more both So,

we show, stage they're can So, a went or it preliminary further then, bunch. where Friday, batches we step shrunk was May gets we going as and in June. it XX that to see was And clear in the to us those went to out even It next was one growing shrinking? to come say, last filing

and least it's we So, thing. June. not arise as problems that's where fixes started projections make real, Those soon in be these as to how as place of that are are thing, but will about at XX long-term working and a both can a not we we put May good in

Sam Rebotsky

before indicating possible press seem to forward if or you XX release not June sure backlog getting out discussed it Does you – you you've going to that's if June might reduced or at – work your of kind extent have reduced the it advisable. the Okay. sort to with that end some or of extent the your I'm as the come time on period

Michael Brigham

look I'm the Yeah. bivalent a First is it, that One the different Defense. Sam, But format, I about and track. remember, is at obligated schedule bad I on projection. Tri-Shield if was different would Because when would that way confident projection on – June. would – we we've happen it's made report doesn't that I some have to forward-looking going to That's be June, say more happen, a news.

developed should forward think to to And I if have update we the that. our obligated of negative, projection. go of I'm some confident parts

Sam Rebotsky

Okay.

Tri-Shield increase line? get you production know of process. based And Now, the the demand to have and feel substantial for learning matter Tri-Shield, do it's more the the it sort a on in we of enough we

Michael Brigham

is we're doesn't alternative backlog. market the on because the product have to not the problem and want Nice

That's of Tri-Shield from and yield on basically Tri-Shield a whack news, is issue suffers demand the the that cow said, That very So, vaccine. as then, double most kind per importantly doses strong. board. But it same is issue, but – that the I affects trivalent. bivalent across takes the because is good

the going year-end that as that's we're did through not cycle. cycle there made feel it why and six-month did production needed in projection thereby, now the take because we to we've six-month like and the us take for that I then shape the quick get run around quantity timeline. all And six-month good it's the That not fix to plan. to needed that So, comes it. as scale we way

one the that lag different. on the will why – that's will the bivalent bivalent is So, on Tri-Shield that June It lag backlog fix fix backlog. the

Sam Rebotsky

we as a that so that the increasing – freezers more forward, go keeps to we inventory colostrum the inventory two we're have are hopefully up would have our demand, we and the more able up. build to which – Do build have, to to that with continue larger demand deal get

Michael Brigham

we Absolutely. a that question freeze until – need to answer certain having freeze again, thing and volume key dryer, do different of and With cycle so milk is in milk. and trays here volume second that the And same load the that door of volume milk. the concentration – What fixed is there's the in get Not a number the it's milk. quality and And it's that that to back we're dryer is producing you more that in like a dryer, company. cycle of and processing a the freeze second the yes. of the doses fixed doses. But, assay, the that shut your more It's we load. of turn time fixed on, that's where that antibodies, when we always

Sam Rebotsky

going we get it forward? to get more Okay. thing this to is still Do we we cows need or need do need to doing hours what produce right the any just to or longer we're work

Michael Brigham

they're cows, going The Yeah. to out. work

if number We will. better cows. just right cow, the purity it's per you need So, of

growth right It concentration. numbers. wasn't in in was right So, just that

cow do feel So, good the I on supply. far good I as as more feel And hours.

XXX%, We cycles get pretty level running you're these overnight. schedule. enough have XXXX, XXX%. what's sales, full always a at of closer you down what dryer. a It's at the to projected Some to capacity, freeze next road. Once the handle we looking to We're third run of XXXX, for run looking

bivalent are labor to the investments to be little catch current equipment. is right a us. handled and the and front by of The of kind current Tri-Shield those now and think I relaunch going in we out make bit of need catch-on

Sam Rebotsky

That sounds good.

in as out you described submit two FDA, is we to assume, all of everything, mast to everything batches to have the And what go what which submit What the expect FDA? Now, along, to is to to meeting the according do requirements? do? working it do to you Or do you produce you you ability. – to submitting the to need need get

Michael Brigham

really product end the or validation the the we looking really to before when broke same The CMO we It's to we us endpoint point as is make Nisin for when objective from broke same a when partner. a make three at potentially It's endpoint, ground, first ground. the were batches.

not I going construction from but and third some second It's installation XXXX. saying but three submission. first it XXXX made, to we've those time, be track been complete. quarter of middle for on Having of today, So, of in. Equipment stand the Still validation, batches look that the Once is are XXXX, validation was, from of And include then October the is will goes middle This quarter. update third making at produced three quite be of generally get year. to middle it middle position does of so the where June. quarter the XXXX. the batches, to middle third XXXX, we of as submission today

Sam Rebotsky

So, batch have are you produced produced of, all Do same? time? the three what they you all at batches one, do or you're get satisfied made at with whether same some the knowledge say,

Michael Brigham

one, three, it third No, submission. they will immediate and the two, three then will are sequential. two, One, the third all – tight It be sequential – be quarter. during production

Sam Rebotsky

I see. see, I

the there and going back out to see Okay. if is I'm that anybody has to to step questions. any come else queue

Michael Brigham

because queue. Is just to can Denise, Sam. I'm screen, Sam. see on a see talking I on wrong, in the unless that anybody Hang I I'll second don't correct? keep the

Operator

correct. is That sir. proceed, Please

Sam Rebotsky

Okay.

dealing So, the problem. right is now with the important thing

that before on even resolve you out tell tell go And you wait problem the story you thought For to there story. problem till solved to the a road which is some on any visibility the you the expect and reason, is up. you bit do problems with have the or have stock had – moved better is – the

Michael Brigham

Partners. I'll think and stay I Lytham Joe active No, with

disclosures so go I information, and the I think fair investors all new designed to basis. others equal disclosure that you give talk today's on we've to can and

So, after yeah, and release. hold back quarterly no each out We're generally on that. about

we as a script going a and the you if detail out as sort discussions will. the with I We quite coming the same very – use Q Q. in keep that hurdle, and really think clearing about press are my the talk a and of FD the bit openly I of have Reg there's release a right board can these – MD&A more

Joe Diaz

new has ImmuCell the be to you information. Michael, one-on-one And, I is loaded Partners. when information current up most the a all might Joe that been Diaz And the that Lytham speak basis. today this with deck to where website has direct we used slide investors will on

So, there in every is a may one-on-one transparency be on complete topic meeting. very that well broached

And make it. So, the there. use please information is of

Sam Rebotsky

to Michael, that's what is the behind doing you've – your Tri-Shield, product, that this transformative your this and things get… appears be June and and to out on getting And I'm and have substantial what to fact your not the your have do. should you done and telling long time. it take is for really get me you the XXX% just going road you because meet and sooner able story your time, the And to requirements, get – it's a been end demand it's the you

Michael Brigham

the by get this don't done follow take see this the you that's before. It's – together I closely you Usually, never timing can as really get awkward might and Sam, don't in one but what these different. extra you you and if we that breath, read backlog. how numbers I two confused the just difference because get there's a quarter why it, detail, like quickly I've is it is but and end

because in isn't slides the us want put of the Joe slide given just there's [indiscernible] – me flip up. I is there, backlog that is, or release, yeah, there, timing we'll thing like about tell to doesn't it's think a so is think is, out go out how what we've the backlog, he's whether will nothing all and And the about by dodge not I helps Q continue alternative. it's is it's good because than why and the disclosure to it deck those good but press the an and – And it it covered or worth we talk it. subscribe really that's what the to where the it, numbers in news to to story. it that bad trying details news. there that's just the remind become good put said, we do a better tried – news, present So, don't demand I'm we FD quarter, the and And a catch we've thing, this I this not production but what

Sam Rebotsky

will which that's been they Michael. And competes have you become. I to more the clear, in as of are production, the with products to market, on happy will the Well, And backlog the with time then about and with comfortable extent, your it Tri-Shield get talk the the the this increasing And more farmers the relative think it, the And increasing product, everything it there. happen. you'll the other will resolve.

the reasons So, doing so one talk good of will an been with this new lot, soon. Michael, and situation. again we you've dealing that's on luck awful

Michael Brigham

other Good, see couple a up. Sam. questions coming I of

So, I grab those. will

Sam Rebotsky

Okay, good.

Michael Brigham

thanks. Alright,

Operator

Technologies be Daley The next question from ahead. Tyler [ph]. Please go of will Jack

Unidentified Analyst

to calling taking happen of company. the again but note on for in out guys. my jump to Thanks that fellow like thought that end. I behalf, I not here main am be would my Tyler growth question, at I Technologies, I'd Hi. a does personal

the definitely, I'm guys you excited following So, very about prospects. closely and

Michael Brigham

and luck I've Good your been congrats. news reading too.

there. happening stuff good Some

Michael Brigham

Great. Thanks, guys.

prices had I'm really in rallied you has index, two NASDAQ the in at So, a quite – kind of the with relationship I prices mentioned spending but on looking products. And softball pretty sharply. to just to milk months, the how XX-Q a in and jump question, wanted recent milk much your your that

as on a you. from wondering farmers the Thank just [indiscernible]. comment was I tailwind on maybe So, spending your to if could dairy products you that

Michael Brigham

milk think Thanks. We're And always industry to one. trying find price I is a index. relevant

boom on, and our are most quarter, milk down, recently. pretty down, to for our low price, seeing XXXX. morning, focus projections to some XXXX so year. just after the what's here drilled it It's just was to literally I ratio not this out we feed just customer numbers is some morning, think two it's happening got what's – we market? saw the but late another. And happening our And quarter probably signs are Those and the I optimism down. this milk And

calf a soon it's want milk long I price product The me their milk. market. way going people think So, years $XX invest But it's know in six to haul. find They're tricky to as bucks. into our so it as milk a just is to that coming that – Today, into $XX, their suggest don't is certain bottom the line a come $XX is level. the and easier milk, asset way. effective I they're They off $XX, to two at at is that that drops find below a for they

Good just and And, We've very are projections optimism some in a will I price milk It's just doing it. yeah, everybody. on driven They and markets. the right. demand, So, because be simply we forward it's XXXX. our for think better the to why a new later, is price track the around cut looking. have when does. I always The us, the to relevant customers some of off but guess, milk later goes milk currently impact well. They better two price that milk huge I'm seen is say put know it price cycle that's export financially, don't years supply for trying you direct absolutely better

Unidentified Analyst

question. my taking for Thanks Great.

Michael Brigham

Yeah, thanks.

Operator

Instructions]. go will [Operator next from Doris ahead. Management. Shattemac Rossiter the question Capital be And Please of

Doris Rossiter

Hi, in I'm be you but what margin gross that with do Tri-Shield have may impact on forward? gross view Joe. a the do Mike my margin here Mike, going on have wondering wondering, it just to and working particular. I'm on early, the and model the will

Michael Brigham

Doris. Thanks, Yeah.

gross with wise reasons, So, quarter, all projection our feel did sticking confident we over but margin for staying of those in XX. not a pretty

a So, Tri-Shield, additional blend got the claim for got we additional you've the costs you've together, two price. and higher selling but as products

we the full think out we we And both out is at it can the got yield that. products. begin forward, XX well, think much of manifests figured how But to we're out. to I stick and the unusual sort with over we to first update So, we've above answer stay in and is XX. quarter that get The can figured once fix call aberration Once thing I this this. – an XX yield haven't going show get, an going doses, to

Doris Rossiter

I'm just you Tri-Shield for your ultimately, – ultimately a higher you mind, have Okay. get to do wondering we think if, but, in maybe or…? there, First gross wait Tri-Shield months be it'll to margin XX to expect versus Defense

Michael Brigham

No, I think we've here. – we've got product. very got a a challenge price That's to look expensive

to together seek the make more price, we're be is we have as on with over do Tri-Shield $XX. on it two careful we as We and the So, $XX margin $X gross vaccines product and retailing more think with – XX, but that's and far recover costly to selling getting $X I we'd competing still to when neutrality. blend the you

What customer it. choice. achieving the want we to I close have that we're think is mean to a I by

here go to over not bivalent, to a choice. to about rota, we that concerned see a You don't want That's you're negative. want the as

You come get customer's you Tri-Shield, the over little you more, a and that to on at pay choice. XX% little a keep more us

Doris Rossiter

Okay.

great. me. Okay, helps Thanks. this for clear up good. That That's

Michael Brigham

Thanks, Doris.

Operator

questions additional at would Joe for like conference remarks. closing no time, question-and-answer back showing Diaz to we in And will to session. any this Instructions]. I the [Operator hand the conclude

Joe Diaz

X:XX of in for annual of to meeting participating at that is PM for today's I'd the We call. And certainly you note in Maine. continued to XXth interest stockholders Denise. Portland, thank you, all Thank scheduled appreciate June company. Thursday, in your like ImmuCell's I Eastern like Time would

to encouraged of conclusion you A completion the mid-August. business tour the with attend. sometime Thank the talking you. all will second be company's matters we'll to and a and at look offered around of You're forward the facilities the of quarter of following welcome again week. balance Have great

Operator

Once Ladies today's you for the again, your you this At the time, concluded. Thank conference lines. presentation. has concluded. may gentlemen, Thank attending has and you. conference disconnect

disconnect your * may You lines.

ImmuCell (ICCC) 14 May 182018 Q1 Earnings call transcript