2011 4th Quarter Report
IKONICS REPORTS 2011 RECORD SALES
DULUTH, MN – IKONICS Corporation (NASDAQ:IKNX), a Duluth based imaging technology company, reported record sales for 2011 of $16,780,000, a 2% increase over 2010. Net income declined by 37% to $698,000, or $0.35 per share.
Bill Ulland, Ikonics CEO, said, “This was a disappointing year. Because of competitive pressure in our screen printing business, we were not able to pass on to the market all of the increased costs of our petrochemical based raw materials. As a consequence, we experienced an erosion of margins. We also incurred higher costs related to the development and launching of our new businesses, Micro-Machining and Digital Texturing (DTX).”
Ulland also added, “Micro-Machining sales were up substantially in 2011, and the business unit began to generate profits. Late in the year, we increased our Micro-Machining manufacturing capacity and focused our selling effort on machining composites for the aerospace industry. We are currently being evaluated by three major aerospace companies for use in production. Although the sales cycle with these customers is long, once specified as a process or component, the life of the business can be 20-30 years.
Digital Texturing (DTX) made its commercial debut in January of 2012, with the delivery of a second generation printer to a North American customer; a prototype printer had been sold to a customer beta site in the fourth quarter of 2010 and has since been successfully used in production. Sales are pending with our strategic printer partner, Colour Scanner Technology GmbH, to place additional printers with customers in North America, Europe and Asia.” A description of the DTX process may be viewed at http://ikonicsiis.com.
In February 2012, the company announced a partnership and distribution agreement with Tri-D Technology to provide ExacFlat software for placing textures on 3D molds. “I believe that coupled with the DTX second generation printer, this technology provides the mold maker with the fastest, most accurate and cost effective way to apply decorative features to 3D mold”, said Karl Shaw, PhD, Ikonics’ Director of New Technologies. Also in January, the U.S. Patent and Trademark Office granted the company a patent on its Digital Texturing technology. A European patent covering the technology was granted in 2011. Additional U. S. and European patent applications, as well as a Japanese patent application, are currently being examined by the respective patent offices.
IKONICS has cash and short-term investments of $3.7 million and no long term debt.
CONDENSED STATEMENTS OF INCOME
For the Three Months and Twelve Months Ended December 31, 2011 and 2010
Three Months Ended Twelve Months Ended
12/31/11 12/31/10 12/31/11 12/31/10
Net sales $4,178,419 $4,443,614 $ 16,780,262 $16,517,338
Cost of goods sold 2,469,645 2,619,788 10,070,852 9,713,054
Gross profit 1,708,774 1,823,826 6,709,410 6,804,284
Operating expenses 1,451,114 1,331,982 5,683,406 5,270,045
Income from operations 257,660 491,844 1,026,004 1,534,239
Interest income 3,882 6,009 17,253 19,681
Income before income taxes 261,542 497,853 1,043,257 1,553,920
Income tax expense 124,850 162,889 345,000 440,000
Net income $ 136,692 $ 334,964 $ 698,257 $ 1,113,920
Earnings per common share-diluted $ 0.07 $ 0.17 $ 0.35 $ 0.56
Average shares outstanding-diluted 1,989,106 1,976,618 1,986,041 1,973,447
CONDENSED BALANCE SHEETS
As of December 31, 2011 and 2010
Current assets $ 8,404,194 $ 7,811,830
Property, plant and equipment, net 5,436,902 5,012,933
Intangible assets 326,362 317,168
Liabilities and Stockholders’ Equity
Current liabilities $ 838,915 $ 777,984
Deferred income taxes 338,000 171,000
Long term debt – –
Stockholders’ equity 12,990,543 12,192,947
CONDENSED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2011 and 2010
Net cash provided by operating activities $ 793,532 $1,601,369
Net cash used in investing activities (288,881) (1,637,182)
Net cash provided by financing activities 71,131 22,610
Net increase (decrease) in cash 575,782 (13,203)
Cash at beginning of period 1,291,383 1,304,586
Cash at end of period $1,867,165 $ 1,291,383