IKONICS Announces First Quarter 2020 Results
April 30 2020 - 1:13PM
IKONICS Corporation (the “Company”) (Nasdaq:IKNX), a Duluth-based
imaging technology company, announced first quarter 2020 earnings.
Revenue was $3,497,000 compared to $3,529,000 in 2019, a decline of
1%. IKONICS posted a first quarter loss of $587,000, or $0.30 per
diluted share, in 2020 compared to a loss of $455,000, or $0.23 per
diluted share, in 2019. On a non-GAAP basis, IKONICS realized an
adjusted net loss of $222,000, or $0.11 per diluted share
(excluding one-time expenses relating to the Company’s Chief
Executive Officer transition), a 51% improvement over the $455,000
loss, or $0.23 per diluted share, for the same quarter of
2019.
Glenn Sandgren, IKONICS CEO, noted, “IKONICS traditionally has
experienced financial challenges in the first quarter. 2020 was no
exception, as we started the year with very strong January and
February sales, but the impact of COVID-19 on March revenue was
substantial, and is expected to continue and will overshadow much
of our short-term progress. Nevertheless, there have been numerous
positive events.”
Business Highlights:
- IKONICS has been deemed an essential business and continues to
operate with appropriate COVID-19 safety measures.
- A Payroll Protection Program SBA loan in the amount of $1.2
million was received in April pursuant to the CARES Act. This loan
may be forgiven in whole or in part under SBA guidelines, subject
to compliance with applicable regulatory requirements.
- As part of the CARES Act, IKONICS accounted for a first quarter
income tax benefit of $240,000.
- Our IKONART® craft product line is benefitting from the new
textile screen printing film introduction supported by aggressive
social marketing efforts and is on a favorable sales
trajectory.
- Excellent progress has been made on several outside
manufacturing opportunities.
Sandgren continued, “We have been responding aggressively to
this global crisis by implementing new workplace controls to
protect our people and by taking actions to improve our liquidity
and reduce our operating costs including a temporary reduction in
officer compensation and board fees. Compared with many similar
companies, IKONICS has a favorable cash position, with
approximately $3.0 million in cash and short-term investments as
well as a $2.1 million open line of credit. Due to the
unknown severity and duration of the COVID-19 pandemic and the
related lack of visibility to the impact on the Company's served
markets, it is impossible to predict the performance of the
business at this juncture. Ultimately, we believe that the crisis
could yield a number of strategic opportunities for IKONICS and
other well positioned companies.”
IKONICS Corporation |
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) |
For the Three
Months Ended March 31, 2020 and 2019 |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
3/31/20 |
|
|
3/31/19 |
|
Net sales |
$ |
3,497,192 |
|
|
$ |
3,528,691 |
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
2,343,960 |
|
|
|
2,519,572 |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
1,153,232 |
|
|
|
1,009,119 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
1,964,600 |
|
|
|
1,560,807 |
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(811,368 |
) |
|
|
(551,688 |
) |
|
|
|
|
|
|
|
|
Interest
expense |
|
(21,484 |
) |
|
|
(22,275 |
) |
|
|
|
|
|
|
|
|
Other
Income |
|
6,917 |
|
|
|
16,194 |
|
|
|
|
|
|
|
|
|
Loss before
income taxes |
|
(825,935 |
) |
|
|
(557,769 |
) |
|
|
|
|
|
|
|
|
Income tax
benefit |
|
(238,929 |
) |
|
|
(102,738 |
) |
|
|
|
|
|
|
|
|
Net
loss |
$ |
(587,006 |
) |
|
$ |
(455,031 |
) |
|
|
|
|
|
|
|
|
Loss per
common share-basic and diluted |
$ |
(0.30 |
) |
|
$ |
(0.23 |
) |
|
|
|
|
|
|
|
|
Average
diluted shares outstanding |
|
1,976,354 |
|
|
|
1,983,553 |
|
|
|
|
|
|
|
|
|
CONDENSED
BALANCE SHEETS |
|
As of March 31, 2020
and December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
3/31/2020 |
|
|
12/31/2019 |
|
Assets |
|
(unaudited) |
|
|
|
|
Current
assets |
$ |
7,508,435 |
|
$ |
8,692,188 |
|
Property,
plant, and equipment, net |
|
7,867,513 |
|
|
7,915,984 |
|
Intangible
assets, net |
|
268,004 |
|
|
271,369 |
|
|
$ |
15,643,952 |
|
$ |
16,879,541 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
Current
liabilities |
$ |
1,316,536 |
|
$ |
1,934,486 |
|
Long-term
debt |
|
2,654,036 |
|
|
2,688,357 |
|
Stockholders' equity |
|
11,673,380 |
|
|
12,256,698 |
|
|
$ |
15,643,952 |
|
$ |
16,879,541 |
|
|
|
|
|
|
|
|
CONDENSED
STATEMENTS OF CASH FLOWS (Unaudited) |
For the Three Months
Ended March 31, 2020 and 2019 |
|
|
|
|
|
|
|
|
3/31/2020 |
|
|
3/31/2019 |
Net cash used in operating activities |
$ |
(427,276 |
) |
|
$ |
(617,996 |
) |
Net cash provided by (used in) investing activities |
|
1,104,749 |
|
|
|
(352,476 |
) |
Net cash used in financing activities |
|
(35,682 |
) |
|
|
(35,419 |
) |
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
641,791 |
|
|
|
(1,005,891 |
) |
Cash and cash equivalents at beginning of period |
|
963,649 |
|
|
|
1,623,137 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
$ |
1,605,440 |
|
|
$ |
617,246 |
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP
LOSS
We report our financial results in accordance with U.S.
generally accepted accounting principles (“GAAP”). We have provided
non-GAAP loss in this press release to assist investors in
comparing losses on a year-over-year basis and because management
believes it is a useful metric in evaluating ongoing performance of
our company. Non-GAAP adjusted loss reflects the add back of costs
related to the 2020 first quarter chief executive officer
transition including severance payments, signing bonus, relocation
expenses and executive search consulting expenses. The presentation
of this information is not meant to be a substitute for the
corresponding financial measures prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of GAAP to
non-GAAP financials measures below.
|
|
|
3/31/20 |
|
|
3/31/19 |
|
% Change |
Net loss |
$ |
(587,006 |
) |
|
$ |
(455,031 |
) |
|
(29%) |
|
|
|
|
|
|
|
|
|
|
Add: CEO
transition costs |
|
365,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted loss |
$ |
(222,006 |
) |
|
$ |
(455,031 |
) |
|
51% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted loss per common share-basic and diluted |
$ |
(0.11 |
) |
|
$ |
(0.23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Average
diluted shares outstanding |
|
1,976,354 |
|
|
|
1,983,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
This press release contains forward-looking statements regarding
sales, gross profits, net earnings, balance sheet position, new
products, new business initiatives, customer behavior and market
trends 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.
News Contact: |
Glenn Sandgren |
|
Chief Executive Officer |
|
(218) 628-2217 |
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