Apr. 30, 2015: IKONICS REPORTS EARNINGS FOR FIRST QUARTER OF 2015

DULUTH, MN – IKONICS Corporation (NASDAQ:IKNX), a Duluth-based imaging technology company, reported
sales of $3,598,000 for the first quarter of 2015, a 19% drop over the same quarter of 2014. The Company incurred
a net loss of $229,000, or $0.11 per diluted share, compared to a profit of $0.10 per diluted share for the first
quarter of 2014.

Bill Ulland, Ikonics’ CEO, said that a confluence of events, some unique and one ongoing, affected these results:

• The first quarter of 2014 benefited substantially from an initial stocking order of $569,000 for high-margin Ikonics Imaging product.
• Although sales continue to this customer, repeat orders of that magnitude did not occur in the first quarter of 2015.
• We experienced unusually high employee medical expenses of over $200,000 in the first quarter of 2015, which was more than 50% higher than what Ikonics usually incurs each quarter. Ikonics self-insures up to a specified amount before our stop loss insurance kicks in.
• The delayed startup of a significant new customer impacted Domestic Chromaline sales for the quarter.

The strong U.S. dollar had a negative impact on sales and margins for our export business–as it did for many other export industries. “I don’t see any evidence of this trend abating soon,” Ulland said.

“The challenging first quarter had a bright spot,” he said. “Our AMS aerospace business experienced a 21% increase over the first quarter of last year, and we are planning for some important new business. We have achieved approved vendor status in the supply chain for four new commercial jets, and we have quotes outstanding for several millions of dollars of additional aerospace work for the next two to four years. We do not expect to get all this business, but these requests for quotes were unsolicited and we believe reflect our reputation in the aerospace industry as a high quality and reliable supplier.”

“Further securing our future, we are now being specified in on major programs and, although that is no guarantee of continued business, once a supplier is specified it is usually for the long term and these projects are expected to run for several years.”

Read More