Good day and welcome to the ImmuCell Corporation reports its Fourth Quarter Fiscal Year 2019 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Joe Diaz of Lytham Partners. Mr. Diaz, the floor is your sir.

Thank you, Mike, and good afternoon and welcome. My name is Joe Diaz, with Lytham Partners. We are the Investor Relations consultant firm for ImmuCell. I thank all of you for joining us today to discuss the unaudited financial results for the year ended December 31, 2019. I'd like to preface this discussion today with a caution regarding forward-looking statements. Listeners are reminded that statements made by management during the course of this call include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Additional information regarding these risks and uncertainties is available under the cautionary note regarding forward-looking statements of the safe harbor statements in the company's press release that was issued last evening, as well as in the company's periodic filings with the Securities and Exchange Commission, which can be obtained from the SEC or by visiting the Investor Section of the company's website at immucell.com. With that said, let me turn the call over to Michael Brigham, President and CEO of ImmuCell Corporation, after which we will open the call for your questions. Michael?

Okay. Great. Thank you all for taking the time to join today's call. I do appreciate that. I am not going to rehash a lot of the detail, you can pick up from the press release that we issued last night. But I do want to use this time to highlight four important topics. So, first of all, let’s review the sales growth. We reported a 25% increase in total sales to $13.7 million during 2019 over 2018. This has just continued great work by our sales team, with a product that is delivering visible results to our customers every day. You may recall that sales demand exceeded supply of Tri-Shield First Defense through the first half of 2019, because of difficulty producing enough of the complex rotavirus vaccine use and the manufacturer of this product. I would like to take this opportunity to publicly command our manufacturing and our quality and our product development teams that work together successfully to resolve this production lab challenge at the beginning of 2019. As a result, during the second half of 2019, we were able to return to a mass market selling approach through distribution for Tri-Shield First Defense. For that reason, I think it's also important to compare the sales results for the second half of 2019 to the second half of 2018. Total product sales increased by $1.5 million or 30% to $6.6 million during the six-month period ended December 31, 2019 versus the six-month period ended 2031 -- December 31, 2018. A second comment is that at this stage of the company's development, I believe its top line sales growth and positive cash flows are more important than our bottom line earnings or losses. For this, I point to page four of our press release. I think it is…

Yes, sir. We will now begin the question-answer-session. [Operator Instructions] Our first question will come from Bill Chadman [ph], investor. Please go ahead.

Yes. Good morning, everyone. When do you anticipate foreign sales to be initiated?

I think your question really is, when we expand them? Yeah, we do have some foreign sales today, of course, what happen to Canada have been for a while. We do get a little bit of product into Japan, South Korea, and some of these new territories working on currently should start to come online over the latter part of this year into 2020. So, it's a gradual expansion, territory-by-territory trying to get the licensure and find the right in-country marketer. The latter is not the issue. The issue is getting in-country licensure. Short answer. I think we're seeing progress towards the end of this year and more into 2020.

Okay. Thank you. One last question. With all that the company has going forward now, would you be enhancing your Investor Relations campaigns?

So, that's a fair question. And Joe Diaz is with me on the call from Lytham Partners. We've been working together for a few years. I think, right now, our strategy in our budget, time budget and money budget involves doing a complete job with of these quarterlies, four times a year that the call, the filing for the SEC, the press release, any news in between. And then getting out with Joe into his network of relevant investors around the country, we make about three visits per quarter, -- three, sometimes four, days where he packs a day up with a full roster of different investors in different cities. So, that's the current plan. It is back to the budget of time and money. We are smaller organization. The IR department pretty much consisted of me at the point. So, yeah, more of the same on that and I don't see the rationale to hire in a full IR department and try and make that a more fuller effort. I think, just keep working with Joe and get to the right people at the right time that three -- three-ish times -- three -- three to four days per quarter. I hope that's a fair answer, Bill.

Okay. You betcha. Thank you.

[Operator Instructions] Next, we have Sam Rebotsky of SCR Asset Management.

Good morning, Michael.

Hi, Sam.

So, we've achieved almost $14 million sales, and we have the capacity of $18 million and we expect by June to be up to $27 million. Now, how much of this extra $4 million will we get? Are we going at the rate? Will we utilize this extra $4 million in the first four months or for the year? What is the capa -- what is the rate that we're working at to increase sales?

Yeah, well, I'm real comfortable obviously and clearly just did speaking historically. I mean, really fantastic growth 25% for the year, 30% for that six-month period, I highlighted kind of last six -- 2019 versus last six of 2018. I'd love to see more of the same. Sales team is doing all the right things. The product is delivering the efficacy that is valued by the customer. I just -- as the operator here, from an operating perspective, that $18 million is pushing every button. It's really maxing out every dose out of this facility. So, I'm not comfortable sitting at close to $14 million knowing that full -- pretty darn near 100% capacity as 2018 that the way we're growing. I think this capacity expansions coming on at the right time. The next few quarters will prove us right or wrong on that. .: And we're with a good crew and contractors. It's a busy work site every day over there, just across the street from where I sit now. Going well, as I said, I think it will be online right around the end of the second quarter. That's what we need. I don't want to -- I don't want play it any closer than that.

Okay. And how many shifts are you working on? And so you will be up to utilizing the full by the six-month timeframe and/or the facility be up and running by the end of the second quarter. And do you -- now you have the capacity, capacity to sell more and more product overseas. Is the overseas print -- demand significantly greater than you're supplying or what is that?

Yeah. So, the shifting and then the overseas sort of a similar question to what Bill asked, the shifting is -- I think, formerly, we're a single shift. But we -- to support that single shift, there's a lot of second shift work going on around it. So, full staff -- is a full regular day shift, but there's setup work that gets done on a weekend. There's -- for instance, the freeze drying process takes no -- does not sleep, lyophilizer does not sleep, that runs overnight. So most of our crew is on a single day shift, but it's supported by both labor and machinery running overnight. And the international, I think we've timed this about right. I'm glad we don't have a whole bunch of international demand and face the challenge of trying to supply that out of the current facility. As those markets come on, we will be in the new facility. We will have the increased capacity. We will be able to fill it, whatever that may be. So, I think it's exciting. I think we need to be there. But there's so much opportunity as we're reporting in these current results. Right here with the product line, right here in the U.S. -- well, I say North American market that I think this expansion needed and justified just by anticipated North American growth alone.

Okay. Now with the coronavirus being in the news, and that very first day, was a stock traded almost 2.5 million shares. As far as pigs, we explored whether this corona -- whether our product First Defense Tri-Shield is desirable use for pigs or possible. And I know human is far away with everybody else coming into it. But talk about our product and coronavirus what you think opportunities might be?

Yeah, I think our association with the World Health Emergency coming out of China was a bit misguided. We got caught up in some cycles, some websites and I'd say some manipulators that kind of associated, hey, anything to do with coronavirus. By all those thoughts, let's be clear. We have an animal health application with coronavirus, that human coronavirus call it what it may be COVID-19, the novel coronavirus is a different subtypes. So, we're not sure. I don't think it's likely to have this cross protection, but we're in touch with the right people like CDC, NIH, USDA. Just in case, if we are tested -- if our product is tested and there is something positive there, we definitely would have a press release on that. I don't think it's right to get the volume up, get an anticipation up based on that. I don't see the scientific logic there. But we are going to say, very well connected principally through the USDA on if it does crossover and does become an -- this novel -- the COVID-19 if it becomes an animal health problem, say with cows, say with pigs, as you mentioned, we want to be there with our antibodies to see if we could help, see if there's a human and animal health benefit. Not to mention the business benefit. So, we'll stay in touch with the right people. But I don't want to create expectations there. I think it's a little off our track. I just want to reflect and recognize the grief this caused, something like -- this number numbers change every day, over 1,000 deaths, 70,000 infections. Where's it going? What impact is going to have on the economy overall?

All right. Thank you, Michael.

We are paying attention to it.

Okay. Good luck.

Thanks, Sam.

Next, we have Wally Wadman of Constitution Research. Please go ahead.

Hi, Michael. Good morning. How are you?

Hey, Wally.

Hey, a couple quick questions. In the release -- and I probably didn't do enough digging, but could you give us some balance sheet highlights in terms of cash position and debt, and then cap spending for the coming year?

Yeah. So, of course, a lot of detail will come out in the K that we're working on presently. But for cash -- the balance sheet -- just get to the right number -- so $8.8 million at the end of the year, good chunk of that is allocated to CapEx projects. So, I don't want to leave the impression is $8.8 million free and clear. But that will fund the completion of that First Defense expansion. It will also fund this final step and Re-Tain being the bringing of the aseptic filling the last days of the drug product production in-house away from a third-party manufacturer. So that cash is solid, net working capital $10.7 million, total assets $38.7 million, equity $29 million.

And short-term borrowings, there were some in September?

Yeah. Well, that was $8.4 million. I am looking at that, just to make sure -- when you say short-term, I'm affording total.

Bank debt whatever it was, total debt. Okay.

$8.4 million. So, yeah …

And then …

And 30 with three months of principal payment.

Okay. And then, just to nail down the exact number for cap spending if you have that for calendar 2020.

Yeah. So, I know the total CapEx project $7.5 million. But we did get started here in the fourth quarter. So, those two projects I mentioned $7 million to $7.5 million going to have -- that’s a number I'm going to have great -- in great detail for the 10-K filing, but healthy, but it’s relatively small start on that stand here in the fourth quarter. We really got started on both projects in December. So, most of that's going to flow through 2020. Let me get to the exact -- I have a pretty -- very detailed CapEx chart.

That's fine. I can wait for that, you give me the ballpark. And then stepping back and the industry was -- all the turmoil in the dairy industry and mergers and bankruptcies. What impact is that having on the farming community in general? And then the second, the relative question is, what are you seeing from the competitors?

-- : So, to balance that optimism, great fourth quarter. I've seen some projections for 2020 where some of the economists are saying that milk price will stay strong, but the economic challenge that these producers and our customers went through from 2014 until 2019 was so severe, it's going to take them a while to dig out. So, there's some optimism, but it's not -- it's still a very challenging industry. So, kind of leads me to your second question, it's great to be part of a growing market and sort of -- almost I'll say gravy sales, everybody's growing, but that's probably not the case for us. But what we're saying is we're available -- we're able to grow, even in a flat market, just by earning competitive share from competitors. So that's your second question. So, what we're seeing with the competitors is -- I'm biased, I'm an insider, consider this with the context of the source, but I do believe our technology is better. And when we go up against -- the competitive products, we can offer a value proposition that just meant ton of sense. We just have to sell that day after day after day against much bigger competitors. But what we did notice and I think, it's related is that the Elanco product, the animal, the farmers, the spin-off Eli Lilly, the animal spin-off from Eli Lilly, the Bovine Ecolizer, they've announced the distribution, they're not going to make any more of that. So, we still see as a market, they're still whining out whatever inventory they do have, but they have announced that they're not going to make more. So, that's a good opportunity for us, but it's not huge. The real competition -- the real big size competition for us is the Zoetis product Calf-Guard, a volume leader, a huge volume product at a very low price. And then this new territory, this new competitive territory of going against the Dam vaccine, a lot opportunity there. So I think that's where we're growing is this that competitive market share of a flat, but with some promising upside market economics.

Okay. Thank you.

Wally, thanks.

[Operator Instructions] Well, at this time, there appears to be no further questions. We'll go ahead and conclude our question-and-answer session. I will now turn the conference call back over to Mr. Joe Diaz for the closing remarks, sir.

Thank you, Mike. And again, thanks to all of you for taking the time to participate in today's call. We look forward to talking with you again or review the results of the current first quarter here of 2020 during the week of May 11. So, we thank you for your time, and have a great day.

And we thank you sir also for your time today and to rest of the management team. The conference calls now concluded. At this time, you may disconnect your lines. Thank you. Again, everyone take care and have a great day.