2014 4th Quarter Report

IKONICS REPORTS RECORD SALES FOR 2014

IKONICS Corporation (NASDAQ: IKNX), a Duluth-based imaging technology company, reported record sales of $18,490,000, a 6% increase over 2013. Earnings in 2014 were down 5% compared to 2013 to $649,000, or $0.32 per diluted share.

“While our Domestic and IKONICS Imaging businesses performed well for the year, our Export business was hurt by weak foreign markets and the strength of the U.S. dollar,” said IKONICS CEO Bill Ulland.

The company recognized improved fourth quarter sales for both DTX, which works primarily with the automotive industry, and Advanced Materials Solutions (AMS), which serves the aerospace and electronics industries.

For the year, AMS adversely affected corporate earnings as it incurred increased expenses as it geared up to meet existing and anticipated orders. Ulland said that IKONICS was pleased with the strong fourth quarter performance of both DTX and AMS and the potential for continued growth in those businesses.

“DTX, which supplies texturing and prototyping technology primarily to the automotive industry, turned its first profitable quarter with a sales increase of 132% over the same quarter of 2013,” he said.

“AMS continued to increase its visibility in the aerospace and electronics industries and ended the quarter with a 20% increase in sales over the comparable quarter of 2013, and for the first time is doing significant long-term production which we believe will extend into 2016 and beyond” he continued.

Among AMS’ ongoing production projects are:

• A supply agreement to use IKONICS’ technology to manufacture parts for the Airbus A350, which entered commercial service in December 2014. The agreement runs into 2016, and IKONICS believes it will be extended since A350 production is planned through 2023.
• Production of sound suppression technology for another commercial aircraft entering the market this year, which business IKONICS also believes could continue for many years as this project is in its initial stages.
• Orders from Honeywell to machine parts for defense-related technology.

AMS’ purchase orders are subject to cancellation by customers.

In addition to its growing purchase orders, AMS is machining fuselage parts for a next generation helicopter, which is expected to enter the market this year. AMS’s unique technology results in significant weight reduction for this aircraft.

“Other contracts are under negotiation and technical feasibility studies are underway with a number of major companies,” Ulland reported. “We recently applied for a patent relating to a technical breakthrough made by IKONICS staff that enhances our potential to earn this business,” added Ulland.

Additionally, Ulland said, “AMS continues to grow its wafer business with the electronics industry.”

 

IKONICS Corporation

CONDENSED STATEMENTS OF INCOME

For the Three Months and Twelve Months Ended December 31, 2014 and 2013

                                                           

                                                                          Three Months Ended                     Twelve Months Ended        

                                                                           12/31/14            12/31/13            12/31/14            12/31/13

Net sales                                                $4,622,500         $4,597,266        $ 18,489,837       $17,491,408

 

Cost of goods sold                                    3,017,261          2,649,196        11,786,608           10,553,553

 

Gross profit                                                1,605,239          1,948,070          6,703,229            6,937,855

 

Operating expenses                                   1,476,585          1,417,133          5,789,763            6,017,725

 

Income from operations                                 128,654             530,937             913,466               920,130

 

Other                                                                      1,691                1,712               5,304                 7,043

 

Income before income taxes                              130,345             532,649              918,770             927,173

 

Income tax expense                                                   23,893             172,000              270,000              245,000

 

Net income                                                             $   106,452        $   360,649        $    648,770       $     682,173

 

Earnings per common share-diluted                        $         0.05       $         0.18       $           0.32     $           0.34

 

Average shares outstanding-diluted                         2,018,802          2,014,691          2,018,334           2,010,659

 

CONDENSED BALANCE SHEETS

As of December 31, 2014 and 2013

 

                                                                        12/31/14           12/31/13

  

Assets 

Current assets                                        $  8,857,243       $  8,045,060

Property, plant and equipment, net          5,416,848          5,634,096

Intangible assets                                           353,871             322,647

 $14,627,962       $14,001,803

Liabilities and Stockholders’ Equity                                                                                

Current liabilities                                     $     744,497      $     874,985

Deferred income taxes                                    545,000             527,000

Long term debt                                                      –                           –

Stockholders’ equity                                  13,338,465         12,599,818

$14,627,962       $14,001,803

 

CONDENSED STATEMENTS OF CASH FLOWS

For the Twelve Months Ended December 31, 2014 and 2013

 

                                                                                                          12/31/14            12/31/13                   

Net cash provided by operating activities                            $   916,748        $ 1,466,532

 

Net cash used in investing activities                                           (730,821)           (819,573)

 

Net cash provided by financing activities                                      45,987               89,398

Net increase in cash and cash equivalents                                231,914             736,357

 

Cash and cash equivalents at beginning of period                       1,704,300             967,943

 

Cash and cash equivalents at end of period                                    $ 1,936,214        $  1,704,300

 

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