Ikonics Posts Record Sales Quarter, But Finishes in Red for Full-Year 2017

Ikonics Posts Record Sales Quarter, But Finishes in Red for Full-Year 2017

The imaging company reported nearly $5 million in sales in its fourth quarter, but capped the year with an overall loss of nearly a quarter-million dollars.

True, Ikonics Corp. (Nasdaq: IKNX) posted a sizable loss for 2017. But the Duluth-based imaging technology company is going into 2018 with some positive momentum.
 
Last week, Ikonics announced that it had hit an all-time quarterly sales record in its fourth quarter of 2017. Net sales for the quarter, which ended December 31, were $4.94 million, up 4 percent from the previous fourth quarter. Net income for the fourth quarter of 2017 was $369,769.
 
It was a strong finish to what had been a disappointing year: Ikonics’ sales for all of 2017 were $17.2 million, down 2 percent from 2016. The company reported a loss in 2017 of $226,147, after a loss in 2016 of $65,061.
 
“The first half of 2017 was negatively impacted by a temporary slowdown of orders from our largest aerospace customer,” Ikonics CEO Bill Ulland said in a statement. “That problem, which was internal to that customer, was resolved in the fourth quarter.”
 
Ikonics also cited a weaker domestic screen printing market, which was offset by growing export demand for its screen printing products. Lower aerospace industry sales “were also partially offset by a 102 percent increase in sales to the automotive industry” in 2017, Ulland said.
 
A bright sales spot for Ikonics in the fourth quarter was the introduction of a new dye sublimation product, SubTHAT, which Ulland said helped boost fourth-quarter sales. SubTHAT is an image transfer film that can be used on a variety of substrates, including acrylic, wood, ceramic, glass, aluminum and stone.
 
SubTHAT is the latest addition to the 65-year-old company’s diverse product portfolio. Screen printing and sand carving equipment (the latter used for carving words and images into glass and plastic) are Ikonics’ flagship lines. Ikonics also develops and sells machinery and films to the aerospace customers for machining composites and other advanced materials. In the automotive industry, Ikonics’ machinery and films are used to create textures on vehicle components, among other applications.
 
Fourth quarter earnings for the imaging technology company were 19 cents per diluted share. The share price has generally fluctuated between $8 and $10 over the past year.
 
Despite posting a larger loss in 2017, Ulland believes that 2018 looks much brighter. He cited an improved distribution for exports and a cost-reduction initiative.
 
“Our Chromaline screen print products will likely remain a primary source of revenue in 2018, and we anticipate continued growth in our automotive and aerospace business units as they become a more important part of our sales mix,” Ulland said. He also looks forward to launching new imaging products to build on the early success of SubTHAT.
 
The reduction in the corporate federal income tax rate from 35 percent to 21 percent should also help lift Ikonics’ bottom line, Ulland said. All told, “I believe that 2018 will see a return to profitability and growth.”