ImmuCell(US:ICCC)2023-02-22 17:50Financial Data and Key Metrics Changes - The company reported a significant increase in order backlog, which more than doubled since the end of 2022 due to a slowdown in production output in the first quarter of 2023 [5][12] - Sales are expected to be reduced in the first quarter of 2023, with a large backlog reported as of March 31, 2023 [5][11] - The company has deferred completion of incremental investments to increase production capacity beyond $30 million per year due to loss in gross margin during the first quarter [5][12] Business Line Data and Key Metrics Changes - The production capacity for the First Defense product line is currently at $30 million per year, with plans to increase it to over $40 million in the future [4][13] - The contamination issues have impacted production output, but corrective actions are being implemented to ensure future production meets quality standards [12][13] Market Data and Key Metrics Changes - Demand for the First Defense product has been strong, but the contamination issues have led to challenges in fulfilling orders [12][68] - The company is facing competition as some customers may seek alternative products during the backlog period, which could lead to loss of market share [68] Company Strategy and Development Direction - The company aims to resolve contamination issues and ramp up production capacity to meet the strong demand for First Defense [12][13] - The strategic focus for 2024 is to be more commercially oriented, emphasizing sales of First Defense and the controlled launch of the Re-Tain product [23][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by contamination events but expressed confidence in the company's ability to recover and grow production capacity [11][12] - The company is preparing for a significant FDA product development initiative, with expectations for a submission in the first quarter of 2023 [32][50] Other Important Information - The company plans to file its full audited financial results on Form 10-K around March 29, 2023, which will provide more details on the impact of contamination and remediation efforts [30][66] - The company has made a conscious decision to increase selling expenses to support sales recovery efforts [52] Q&A Session Summary Question: Were any batches salvaged from the contamination event? - Management indicated that some product could be salvaged and reworked, while others would be written off, with evaluations ongoing [15] Question: What methods will be used to raise deferred funds? - Management stated that options include loans, selling stock, or other methods, with a focus on maintaining gross margin as the primary funding source [17][18] Question: Will the Re-Tain product be manufactured in the same facility as First Defense? - Management clarified that the Re-Tain facility operates under different standards and has no crossover with the First Defense production facility [39] Question: What is the expected timeline for the FDA submission for Re-Tain? - Management confirmed that the submission is expected to occur in March 2023, with a six-month review period following [50] Question: Why has the SG&A line increased significantly? - Management explained that the increase is due to higher selling expenses related to new personnel and sales programs aimed at recovering from the backlog [51][52]