ImmuCell Corporation (Nasdaq: ICCC)
(“ImmuCell” or the “Company”), a growing animal health company that
develops, manufactures and markets scientifically proven and
practical products that improve the health and productivity of
dairy and beef cattle, today announced its unaudited financial
results for the quarter ended March 31, 2023.
Management’s Discussion:“Our unaudited,
preliminary product sales were first reported on April 5, 2023,”
commented Michael F. Brigham, President and CEO of ImmuCell. “We
have no changes to those figures.”
“We have just persevered through the most difficult quarter in
the history of the Company,” continued Mr. Brigham. “As previously
disclosed, we made the strategic decision to significantly reduce
production output to remediate a production contamination event. We
believe that the operational improvements we have implemented
throughout the production process as part of this remediation will
help us run more effectively at a higher output level going
forward.”
This production slowdown, in part, contributed to an increase in
the order backlog to approximately $8 million as of May 3, 2023
from $2.5 million as of December 31, 2022. Due to the loss in
earned gross margin that was incurred during the first quarter of
2023, the Company has made the decision to defer, for the time
being, completion of certain capital expenditure investments.
The Company is being driven by data as it resolves this
temporary production problem. Product is tested at the beginning,
middle and end of the production process. From February 1, 2023
through May 3, 2023, the incoming quality control test has met
standards 88% of the time, and the mid-process and end-process
tests have both consistently passed. This improvement from the
depth of the contamination problem in January is allowing the
Company to come back into full production.
“As we recover and resume full production, our goal is to
produce more product quarter after quarter than we did during the
first quarter of 2023,” added Mr. Brigham. “When this contamination
event is fully behind us, our goal is to be able to produce at
least $6 million worth of product per quarter, which would
annualize to about 80% of our $30 million full production capacity
annually.”
“The increase in sales demand for the First
Defense® product line leading up to the contamination
events is both exciting and difficult for us. The 2023 supply
shortage may prove to be more detrimental to our growth curve than
any other supply shortage because it impacted so many customers
during peak calving season. We are doing the necessary work to
stabilize supply, regain lost business and reestablish our growth
objectives,” concluded Mr. Brigham. “At the same time, we are
preparing all the data required to make our third submission of the
CMC Technical Section for Re-Tain® during the
second quarter of 2023, and we remain poised and excited to
revolutionize the way that subclinical mastitis is treated in
today’s dairy market with a novel alternative to traditional
antibiotics.”
Certain Financial Results:
- Product sales decreased by 43%, or $2.6 million, to $3.4
million during the three-month period ended March 31, 2023 compared
to $6.0 million during the three-month period ended March 31,
2022.
- Product sales decreased by 24%, or $5.1 million, to $16.0
million during the trailing twelve-month period ended March 31,
2023 compared to $21.1 million during the trailing twelve-month
period ended March 31, 2022.
- Gross margin earned was 9% and 52% of product sales during the
three-month periods ended March 31, 2023 and 2022, respectively.
The less than normal gross margin during 2023 was largely the
result of product contamination events in the production processes
that resulted in a slowdown in production output and a write-off of
the affected inventory. Remediation measures are being implemented
to reduce the opportunity for recurrence.
- Net operating (loss) was ($2.3) million during the three-month
period ended March 31, 2023 in contrast to a net operating income
of $571,000 during the three-month period ended March 31,
2022.
- Net (loss) was ($2.3) million, or ($0.30) per basic share,
during the three-month period ended March 31, 2023 in comparison to
net income of $513,000, or $0.07 per diluted share, during the
three-month period ended March 31, 2022.
- EBITDA (a non-GAAP financial measure described on page 5 of
this press release) decreased to approximately ($1.6) million
during the three-month period ended March 31, 2023 from $1.2
million during the three-month period ended March 31, 2022.
Balance Sheet Data as of March 31, 2023:
- Cash and cash equivalents decreased to $3.1 million as of March
31, 2023 from $5.8 million as of December 31, 2022.
- Net working capital decreased to approximately $8.4 million as
of March 31, 2023 from $10.9 million as of December 31, 2022.
- Stockholders’ equity decreased to $28.2 million as of March 31,
2023 from $30.4 million as of December 31, 2022.
Cautionary Note Regarding Forward-Looking Statements
(Safe Harbor
Statement):
This Press Release and the statements to be made in the related
earnings conference call referenced herein contain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended. Forward-looking statements can be
identified by the fact that they do not relate strictly to
historical or current facts and will often include words such as
“expects”, “may”, “anticipates”, “aims”, “intends”, “would”,
“could”, “should”, “will”, “plans”, “believes”, “estimates”,
“targets”, “projects”, “forecasts”, “seeks” and similar words and
expressions. Such statements include, but are not limited to, any
forward-looking statements relating to: our plans and strategies
for our business; projections of future financial or operational
performance; the timing and outcome of pending or anticipated
applications for regulatory approvals; future demand for our
products; the scope and timing of ongoing and future product
development work and commercialization of our products; future
costs of product development efforts; the estimated prevalence rate
of subclinical mastitis and producers’ level of interest in
treating subclinical mastitis given the current economic and market
conditions; the expected efficacy of new products; estimates about
the market size for our products; future market share of and
revenue generated by current products and products still in
development; our ability to increase production output and reduce
costs of goods sold per unit; the adequacy of our own manufacturing
facilities or those of third parties with which we have contractual
relationships to meet demand for our products on a timely basis;
the impacts of backlogs on customer relationships; the efficacy or
timeline to complete our contamination remediation efforts; the
likelihood, severity or impact of future contamination events; the
anticipated costs of (or time to complete) planned expansions of
our manufacturing facilities and the adequacy of our funds
available for these projects; the robustness of our manufacturing
processes and related technical issues; estimates about our
production capacity, efficiency and yield; future regulatory
requirements relating to our products; future expense ratios and
margins; the efficacy of our investments in our business;
anticipated changes in our manufacturing capabilities and
efficiencies; projections about depreciation expense and its impact
on income for book and tax return purposes; and any other
statements that are not historical facts. These statements are
intended to provide management’s current expectation of future
events as of the date of this earnings release, are based on
management’s estimates, projections, beliefs and assumptions as of
the date hereof; and are not guarantees of future performance. Such
statements involve known and unknown risks and uncertainties that
may cause the Company’s actual results, financial or operational
performance or achievements to be materially different from those
expressed or implied by these forward-looking statements,
including, but not limited to, those risks and uncertainties
relating to: difficulties or delays in development, testing,
regulatory approval, production and marketing of our products
(including the First Defense®
product line and Re-Tain®),
competition within our anticipated product markets, customer
acceptance of our new and existing products, product performance,
alignment between our manufacturing resources and product demand
(including the consequences of backlogs), uncertainty associated
with the timing and volume of customer orders as we come out of a
prolonged backlog, adverse impacts of supply chain disruptions on
our operations and customer and supplier relationships, commercial
and operational risks relating to our current and planned expansion
of production capacity, and other risks and uncertainties detailed
from time to time in filings we make with the Securities and
Exchange Commission (SEC), including our Quarterly Reports on Form
10-Q, our Annual Reports on Form 10-K and our Current Reports on
Form 8-K. Such statements involve risks and uncertainties and are
based on our current expectations, but actual results may differ
materially due to various factors. In addition, there can be no
assurance that future risks, uncertainties or developments
affecting us will be those that we anticipate. We undertake no
obligation to update any forward-looking statement, whether written
or oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
|
Condensed Statements of Operations
(Unaudited) |
|
|
During the Quarters Ended March 31, |
(In
thousands, except per share amounts) |
|
2023 |
|
|
2022 |
|
|
|
|
Product sales |
$3,447 |
|
|
$6,000 |
Costs of goods sold |
|
3,146 |
|
|
|
2,897 |
Gross margin |
|
301 |
|
|
|
3,103 |
|
|
|
|
Product
development expenses |
|
1,110 |
|
|
|
1,036 |
Sales,
marketing and administrative expenses |
|
1,447 |
|
|
|
1,497 |
Operating expenses |
|
2,557 |
|
|
|
2,533 |
|
|
|
|
NET OPERATING (LOSS) INCOME |
|
(2,256 |
) |
|
|
570 |
|
|
|
|
Other
expenses, net |
|
57 |
|
|
|
56 |
|
|
|
|
(LOSS) INCOME BEFORE INCOME TAXES |
|
(2,313 |
) |
|
|
514 |
|
|
|
|
Income
tax expense |
|
2 |
|
|
|
1 |
|
|
|
|
NET (LOSS) INCOME |
($2,315 |
) |
|
$513 |
|
|
|
|
Basic weighted average common shares |
|
|
|
|
|
|
outstanding |
|
7,747 |
|
|
|
7,742 |
Basic net (loss) income per share |
($0.30 |
) |
|
$0.07 |
|
|
|
|
Diluted weighted average common shares |
|
|
|
|
|
|
outstanding |
|
7,747 |
|
|
|
7,789 |
Diluted net (loss) income per share |
($0.30 |
) |
|
$0.07 |
|
|
|
|
Selected Balance Sheet Data (In thousands)
(Unaudited) |
|
|
|
|
|
As ofMarch 31, 2023 |
|
As of December 31, 2022 |
Cash and cash equivalents |
$3,096 |
|
$5,792 |
Net working capital |
8,410 |
|
10,923 |
Total
assets |
43,123 |
|
44,861 |
Stockholders’ equity |
$28,161 |
|
$30,380 |
|
|
|
|
Non-GAAP Financial Measures:Generally, a
non-GAAP financial measure is a numerical measure of a company’s
performance, financial position or cash flow that either excludes
or includes amounts that are not normally excluded or included in
the most directly comparable measure calculated and presented in
accordance with GAAP. The non-GAAP measures included in this press
release should be considered in addition to, and not as a
substitute for or superior to, the comparable measure prepared in
accordance with GAAP. We believe that considering the non-GAAP
measures of Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) assists management and investors by looking
at our performance across reporting periods on a consistent basis
excluding these certain charges that are not uses of cash from our
reported (loss) income before income taxes. We calculate EBITDA as
described in the following table:
|
During the Quarters Ended March 31, |
(In thousands) |
|
2023 |
|
|
2022 |
|
|
|
|
(Loss) Income before income
taxes |
($2,313 |
) |
|
$514 |
Interest Expense (excluding debt issuance costs) |
|
88 |
|
|
|
73 |
Depreciation |
|
652 |
|
|
|
617 |
Amortization |
|
7 |
|
|
|
7 |
EBITDA |
($1,566 |
) |
|
$1,211 |
|
|
|
|
|
|
|
During the three-month periods ended March 31, 2023 and 2022,
EBITDA included approximately $96,000 and $54,000 of stock-based
compensation expense, respectively, which is a non-cash expense
that we add back to EBITDA when assessing our cash flows.
Conference Call:The Company will host a
conference call on Friday, May 12, 2023 at 9:00 AM ET to discuss
the full unaudited financial results for the quarter ended March
31, 2023. Interested parties can access the conference call by
dialing (844) 855-9502 (toll free) or (412) 317-5499
(international). A teleconference replay of the call will be
available until May 19, 2023 at (877) 344-7529 (toll free) or (412)
317-0088 (international), utilizing replay access code #3163870.
Investors are encouraged to review the Company’s updated Corporate
Presentation slide deck that provides an overview of the Company’s
business and is available under the “Investors” tab of the
Company’s website at www.immucell.com, or by request to the
Company.
About ImmuCell:ImmuCell Corporation’s
(Nasdaq: ICCC) purpose is to create scientifically
proven and practical products that improve the health and
productivity of dairy and beef cattle. ImmuCell manufactures
and markets First Defense®, providing
Immediate Immunity™ to newborn dairy and beef
calves, and is in the late stages of developing
Re-Tain®, a novel treatment for subclinical
mastitis in dairy cows without a milk discard requirement that
provides an alternative to traditional antibiotics. Press releases
and other information about the Company are available at:
http://www.immucell.com.
Contacts: |
Michael F.
Brigham, President and CEO |
|
ImmuCell Corporation |
|
(207) 878-2770 |
|
|
|
Joe Diaz, Robert Blum and Joe Dorame |
|
Lytham Partners, LLC |
|
(602) 889-9700 |
|
iccc@lythampartners.com |
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