Apr. 28, 2011: IKONICS REPORTS FIRST QUARTER RESULTS

DULUTH, MN – IKONICS Corporation (NASDAQ:IKNX), a Duluth based imaging technology company, announced sales for first quarter of 2011 of $3,653,000, down slightly from 2010 first quarter sales of $3,685,000. Earnings fell from $148,000, or $0.08 per share, to $37,000, or $0.02 per share.

Bill Ulland, Ikonics CEO, said weakness from two Domestic Chromaline products negatively affected first quarter sales, but was partially offset by a significant increase in sales of new technologies.

Although the first quarter is usually the company’s most unpredictable because of cold weather shipping out of Duluth and the effect of the Asian holiday season on the timing of ocean shipping, this year we experienced some specific issues relating to our Domestic Chromaline business. Those sales were down 11% due to weaker than expected sales primarily from two products. Ulland said, “We have plans to address these specific issues and put Domestic Chromaline back on a growth track.”

The decline in Chromaline sales was partially offset by a 74% increase in sales of new technologies, Micro Machining and Digital Texturing (DTX). “This growth builds on the base established last year, and I anticipate it will continue,” Ulland said. “The strategic rationale for investing in these new technologies was to enter robust industrial markets with unique products and, thereby, supplement our traditional more mature markets. I believe this investment is beginning to pay off.”

Earnings for the quarter also reflect higher personnel costs relating to the continued introduction of the new technologies, and higher costs for petroleum based raw materials. “I believe that higher revenues will absorb the increased fixed costs, and that we will pass a portion of the higher raw materials costs on to customers, as appropriate,” he said.

“A challenge for the remainder of 2011 will be to manage the expected growth of our new technologies,” Ulland said. “We currently are designing equipment to substantially increase our Micro Machining capacity, and we are working with our DTX printer manufacturers to finalize their designs and get printers into the hands of customers. We are also working on an alliance to increase our distribution network for DTX.”

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