IKONICS Ends 2017 with Record Quarter

Thursday, February 22, 2018 6:21 PM UTC

DULUTH, Minn., Feb. 22, 2018 -- IKONICS Corporation (NASDAQ:IKNX), a Duluth-based imaging technology company, announced 2017 annual and fourth quarter financial results. Sales for IKONICS reached an all-time quarterly record in the fourth quarter of 2017, setting a strong pace for 2018, according to Bill Ulland, CEO of the 65 year-old company.

“The first half of 2017 was negatively impacted by a temporary slowdown of orders from our largest aerospace customer,” Ulland said. “That problem, which was internal to that customer, was resolved in the fourth quarter. In addition, the introduction of a new dye sublimation product, SubTHAT!™, further boosted fourth-quarter sales.”

“Earnings for the fourth quarter of 2017 were $0.19 per diluted share although annual sales were down 2% compared to 2016 primarily due to a weaker domestic screen printing market partially offset by growing export sales to this market and because of the above-mentioned slow-down in our aerospace sales early in the year. These lower sales were also partially offset by an 102% increase in sales to the automotive industry and a stocking order for our new SubTHAT! products,” he said. “Earnings for 2017 showed a loss of $226,000.”

Ulland noted several positive trends for 2018, including the reduction in the corporate federal income tax rate from 35% to 21%, an improved distribution for exports and a cost-reduction initiative that had a positive effect on fourth-quarter results and should continue to improve margins in 2018. “Our Chromaline screen print products will likely remain a primary source of revenue in 2018, and we anticipate continued growth in our automotive and aerospace business units as they become a more important part of our sales mix. Our Ikonics Imaging unit will be our primary platform for launching new products, such as our dye sublimation family of patent pending image transfer technology,” he added.

He concluded: “I believe that 2018 will see a return to profitability and growth.”

This press release contains forward-looking statements regarding sales, gross profits, net earnings, balance sheet position, new products, new business initiatives, customer behavior and market trends that involve risks and uncertainties. The Company's actual results could differ materially as a result of domestic and global economic conditions, downturns in the aerospace or automotive industries, unexpected production delays by customers using the Company’s products, competitive market conditions, changes in consumer preferences, inability to commercialize technologies the Company is developing on the anticipated timeline or at all, acceptance of new products the Company offers, introduction of new products or technologies by competitors, unexpected capital expenditure requirements, delays in completing planned expansions, the ability to control operating costs without impacting growth as well as the factors described in the Company's Forms 10-K, and 10-Q, and other reports on file with the SEC.

IKONICS Corporation
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Months Ended December 31, 2017 and 2016

		Three Months Ended						Twelve Months Ended
		12/31/17			12/31/16			12/31/17			12/31/16
Net Sales	$	4,944,791		$	4,752,612		$	17,243,244		$	17,569,901

Cost of goods sold		3,071,689			3,002,061			11,512,699			11,332,991

Gross profit		1,873,102			1,750,551			5,730,545			6,236,910

Operating Expenses		1,466,289			1,661,858			6,195,154			6,258,914

Income (loss) from operations		406,813			88,693			(464,609	)		(22,004	)

Interest Expense		(20,605	)		(21,502	)		(83,080	)		(58,222	)

Other		6,178			4,484			23,542			11,165

Income (loss) before income taxes		392,386			71,675			(524,147	)		(69,061	)

Income tax expense (benefit)		23,617			65,415			(298,000	)		(4,000	)

Net Income (loss)	$	368,769		$	6,260		$	(226,147	)	$	(65,061	)

Income (loss) per common share-basic and diluted	$	0.19		$	0.00		$	(0.11	)	$	(0.03	)

Average diluted shares outstanding		1,988,498			2,018,831			2,007,613			2,018,649

	Condensed Balance Sheets
	As of December 31, 2017 and December 31, 2016

			12/31/2017		12/31/2016
Assets
Current assets		$	8,271,383	$	9,045,472
Property, plant, and equipment, net			8,301,661		8,912,395
Intangible assets, net			351,186		338,127
		$	16,924,230	$	18,295,994
Liabilities and Stockholders' Equity
Current liabilities		$	875,781	$	1,313,377
Long-term debt			2,946,518		3,077,457
Deferred income taxes			144,000		446,000
Stockholders' equity			12,957,931		13,459,160
		$	16,924,230	$	18,295,994

	CONDENSED STATEMENTS OF CASH FLOWS
	For the Twelve Months Ended December 31, 2017 and 2016

			12/31/2017			12/31/2016
Net cash provided by operating activities		$	204,689		$	916,947
Net cash provided by (used in) investing activities			114,569			(5,316,572	)
Net cash (used in) provided by financing activities			(438,271	)		3,199,872

Net decrease in cash and cash equivalents			(119,013	)		(1,199,753	)
Cash and cash equivalents at beginning of period			1,048,713			2,248,466

Cash and cash equivalents at end of period		$	929,700		$	1,048,713

News Contact:
Bill Ulland
Chairman, President & CEO
(218) 628-2217

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