2012 2nd Quarter Report

DULUTH, MN – IKONICS Corporation (NASDAQ:IKNX), a Duluth based imaging technology company, reported sales of $4,547,000 in the second quarter of 2012, down slightly from the 2011 second quarter record sales of $4,587,000. For the quarter, earnings fell 21% to $243,000, or $0.12 per share, compared to $0.16 per share for the corresponding 2011 quarter.

IKONICS CEO, Bill Ulland stated, “Sales rebounded this quarter from the first quarter of 2012 to $4,547,000, our second-best quarter ever, and only 1% below our record second quarter in 2011.” Ulland continued, “The earnings decline, compared to last year, primarily reflects a lucrative, but non-repeating Micro-Machining contract we had in 2011. As our Micro-Machining business grows, it will be less influenced by any single customer, and we believe that much of our new business has the potential to yield long-term, repeat sales.”

Ulland added, “Sales and earnings are up substantially over the first quarter led by our domestic Chromaline business; there is reason to believe this upward trend will continue. We have recently introduced a new generation of DTX transfer films, engineered for high resolution printers. Market acceptance has been strong, and we are receiving orders for these products as well as for our digital prototyping offering.”

Ulland concluded, “We are also receiving increasing interest in our Micro-Machining technology. We have extended production hours to meet the demand for electronic and composite parts, as well as for samples and prototypes. Although not all this work is revenue generating, it does represent interest from major aerospace and electronics companies who recognize the value of our unique technology. We are increasing our manufacturing capacity to meet anticipated market demand.”

IKONICS Corporation

CONDENSED STATEMENTS OF OPERATIONS (unaudited)

For the Three Months and Six Months Ended June 30, 2012 and 2011

                                                           

                                                                  Three Months Ended                     Six Months Ended  

                                                                6/30/12              6/30/11              6/30/12              6/30/11

Net sales                                               $4,547,080         $4,587,432        $   8,556,704      $   8,240,531

 

Cost of goods sold                                   2,743,794          2,733,442         5,247,858             4,919,698

 

Gross profit                                              1,803,286          1,853,990          3,308,846             3,320,833

 

Operating expenses                                  1,438,636          1,405,183          3,040,547             2,848,735

 

Income from operations                                 364,650             448,807             268,299               472,098

 

Interest income                                                3,079                 4,781                6,805                  9,343

 

Income before income taxes                          367,729             453,588              275,104               481,441

 

Income tax expense                                    124,646             144,042                94,427               134,553

 

Net income                                             $  243,083         $   309,546        $   180,677        $     346,888

 

Earnings per common share-diluted                        $         0.12       $         0.16       $          0.09      $           0.17

 

Average shares outstanding-diluted                         1,991,311          1,987,662          1,990,129           1,984,040

 

 

Condensed Balance Sheets

As of June 30, 2012 and December 31, 2011

 

                                                                                       6/30/12          12/31/11        

                                                                                     (unaudited)

Assets 

Current assets                                                    $   8,535,161      $  8,404,194

Property, plant and equipment, net                             5,523,328         5,436,902

Intangible assets, net                                                  296,057            326,362

 $14,354,546       $14,167,458

Liabilities and Stockholders’ Equity                                                                                

Current liabilities                                                 $     824,064      $     838,915

Deferred income taxes                                                338,000              338,000

Long term debt                                                                   –                           –

Stockholders’ equity                                             13,192,482         12,990,543

 $14,354,546       $14,167,458

 

 

CONDENSED STATEMENTS OF CASH FLOWS (unaudited)

For the Six Months Ended June 30, 2012 and 2011

 

                                                                                                      6/30/12              6/30/11                     

Net cash used in operating activities                                  $ (187,898)        $    (83,848)

 

Net cash used in investing activities                                        (152,675)            (170,311)

 

Net cash provided by financing activities                                  11,250                66,131

 

Net decrease in cash                                                         (329,323)             (188,028)

 

Cash at beginning of period                                               1,867,165            1,291,383

 

Cash at end of period                                                      $1,537,842         $  1,103,355

 

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