IKONICS Reports 2016 Results

DULUTH, Minn., Feb. 27, 2017 -- IKONICS Corporation (NASDAQ:IKNX), a Duluth-based imaging technology company announced 2016 financial results.

IKONICS CEO Bill Ulland said: “This has been a year of contrasts for IKONICS.  Sales of Advanced Material Solutions (AMS), our aerospace business, grew 66% over 2015. Most of these sales were to one customer, and we expect that this business will continue for future years.  AMS has achieved industry recognition for service and quality. We are anticipating additional business from three potential new customers in 2017 and 2018. 

“IKONICS Imaging also had a good year, with sales up 8% over 2015, driven primarily by a new customer, which is continuing to increase its orders. We expect to introduce a new, patent-applied-for product to this market this year, which we believe will be an important contributor to sales and profits.”

Ulland noted that DTX, IKONICS’ automotive-based product line, experienced a 15% decline in sales, mirroring the segment of the automotive market the company serves. But based on firm orders in house, he expects that decline to reverse in the first half of 2017 and generate good sales and profits.

“Our traditional domestic screen print supply business was down 3%, reflecting the mature nature of this market. To counteract this, we are making a major effort in the growing printed electronics sector where we are developing a unique product that allows the printing of very fine circuits for touch pads, wearable electronics, antennas and other applications.  This is a large market that could bring us significant profits,” he said.

Ulland continued: “Our international business was down 8%, reflecting the strong dollar and a weak world economy.  We are looking for the printed electronics market described above and the new product being developed for IKONICS Imaging to improve our export business.”

“For the year, overall sales were flat with 2015, with AMS and IKONICS Imaging countering the decline in International and DTX,” Ulland said. “Unfortunately, we were hit with a large unforeseen increase in health care expenses in the fourth quarter of 2016. For the year, our employee health care costs were $721,000 compared to $408,000 in 2015.  This resulted in a loss of $0.03 per diluted share for the year compared to 2015 earnings of $0.07 per diluted share.  Without the $313,000 increase in healthcare costs, pre-tax earnings on a non-GAAP basis¹ would have increased by 8% over 2015.  

¹ Reconciliation to GAAP figure below.

This press release contains forward-looking statements regarding sales, gross profits, net earnings, balance sheet position, new products, new business initiatives and facilities expansion that involve risks and uncertainties. The Company's actual results could differ materially as a result of domestic and global economic conditions, downturns in the aerospace or automotive industries, unexpected production delays by customers using the Company’s products, competitive market conditions, changes in consumer preferences, inability to commercialize technologies the Company is developing on the anticipated timeline or at all, acceptance of new products the Company offers, introduction of new products or technologies by competitors, unexpected capital expenditure requirements, delays in completing planned expansions, the ability to control operating costs without impacting growth as well as the factors described in the Company's Forms 10-K, and 10-Q, and other reports on file with the SEC.

RECONCILIATION OF GAAP TO NON-GAAP PRE-TAX EARNINGS

We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). We have provided non-GAAP pre-tax earnings to assist investors in comparing earnings on a year-over-year basis and because management believes it is a useful metric in evaluating ongoing performance of our company. Reconciliation to the comparable GAAP measure is below.

News Contact:
Bill Ulland
Chairman, President & CEO
(218) 628-2217