IKONICS Announces Third Quarter 2021 Results
IKONICS Corporation (Nasdaq: IKNX) reported record revenue of $4,743,000 for Q3 2021, a 51% increase from $3,135,000 in Q3 2020. Despite this growth, the company experienced a net loss of $851,000 ($0.43 per diluted share), widening from a loss of $274,000 ($0.14 per diluted share) in the prior year. The losses were attributed to expenses related to the pending merger with TeraWulf, Inc. Non-GAAP earnings for Q3 were $206,000, reflecting strong demand and a significant order backlog, amidst ongoing supply chain challenges.
- Record Q3 2021 revenue of $4,743,000, up 51% YoY.
- Non-GAAP third quarter earnings of $206,000 despite ongoing supply chain challenges.
- Strong demand in core businesses, leading to a robust order backlog.
- Pending business combination with TeraWulf expected to close in Q4 2021.
- Q3 2021 net loss increased to $851,000 from $274,000 in Q3 2020.
- Expenses related to the merger with TeraWulf negatively impacted earnings.
- Ongoing supply chain challenges expected to persist through 2021.
DULUTH, Minn., Oct. 28, 2021 (GLOBE NEWSWIRE) -- IKONICS Corporation (Nasdaq: IKNX), a Duluth-based imaging technology company (“IKONICS” or the “Company”), announced its third quarter 2021 earnings. The Company posted record third quarter revenue in 2021 with sales of
Both the 2021 third quarter and year-to-date earnings have been unfavorably impacted by transaction related expenses associated with the pending business combination with TeraWulf, Inc. (“TeraWulf”). On a non-GAAP basis for the three and nine month periods ended September 30, 2021 IKONICS realized earnings of
IKONICS CEO, Glenn Sandgren reports, “We are pleased with our overall performance. The IKONICS team has done a remarkable job maximizing productivity at every level given the prevailing constraints. Our plan to increase shareholder value is progressing rapidly. We remain excited by the continued improvement of our results further demonstrating the inherent value of our legacy business, and most importantly, the prospects of the pending business combination with TeraWulf – whose team is striving to generate environmentally sustainable bitcoin at an industrial scale in the United States using over
Key Highlights:
- Non-GAAP third quarter 2021 earnings were
$206,000 on record third quarter revenue of$4,743,000. - Industry-wide supply chain challenges remain and are impacting revenue. Issues have lessened but are expected to continue at least through the end of 2021.
- Core businesses continue to experience robust demand, producing a strong order backlog.
- Pending business combination with TeraWulf is targeted to close in the fourth quarter of this year.
| IKONICS Corporation | ||||||||||||||||
| CONDENSED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
| For the Three and Nine Months Ended September 30, 2021 and 2020 | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 9/30/21 | 9/30/20 | 9/30/21 | 9/30/20 | |||||||||||||
| Net sales | $ | 4,743,452 | $ | 3,134,984 | $ | 12,068,208 | $ | 9,204,615 | ||||||||
| Cost of goods sold | 3,161,362 | 2,261,205 | 8,060,482 | 6,792,709 | ||||||||||||
| Gross profit | 1,582,090 | 873,779 | 4,007,726 | 2,411,906 | ||||||||||||
| Operating expenses | 2,408,662 | 1,116,293 | 5,800,572 | 4,484,434 | ||||||||||||
| Loss from operations | (826,572 | ) | (242,514 | ) | (1,792,846 | ) | (2,072,528 | ) | ||||||||
| Interest expense | (103 | ) | (24,592 | ) | (102,443 | ) | (70,699 | ) | ||||||||
| Other Income | 20 | 39 | 5,195 | 8,722 | ||||||||||||
| Loss before income taxes | (826,655 | ) | (267,067 | ) | (1,890,094 | ) | (2,134,505 | ) | ||||||||
| Income tax expense (benefit) | 25,081 | 6,929 | 5,557 | (232,000 | ) | |||||||||||
| Net loss | $ | (851,736 | ) | $ | (273,996 | ) | $ | (1,895,651 | ) | $ | (1,902,505 | ) | ||||
| Loss per common share-basic and diluted | $ | (0.43 | ) | $ | (0.14 | ) | $ | (0.96 | ) | $ | (0.96 | ) | ||||
| Average diluted shares outstanding | 1,981,138 | 1,976,354 | 1,978,638 | 1,976,354 | ||||||||||||
| CONDENSED BALANCE SHEETS | ||||||||
| As of September 30, 2021 and December 31, 2020 | ||||||||
| 9/30/2021 | 12/31/2020 | |||||||
| Assets | (unaudited) | |||||||
| Current assets | $ | 5,214,388 | $ | 7,803,453 | ||||
| Property, plant, and equipment, net | 6,933,139 | 7,388,363 | ||||||
| Intangible assets, net | 232,679 | 243,583 | ||||||
| $ | 12,380,206 | $ | 15,435,399 | |||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | $ | 2,198,303 | $ | 3,596,053 | ||||
| Long-term debt | — | — | ||||||
| Stockholders' equity | 10,181,903 | 11,839,346 | ||||||
| $ | 12,380,206 | $ | 15,435,399 | |||||
| CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||
| For the Nine Months Ended September 30, 2021 and 2020 | |||||||||||
| 9/30/2021 | 9/30/2020 | ||||||||||
| Net cash provided by (used in) operating activities | $ | 565,468 | $ | (630,117 | ) | ||||||
| Net cash (used in) provided by investing activities | (18,878 | ) | 2,060,405 | ||||||||
| Net cash (used in) provided by financing activities | (2,739,588 | ) | 1,106,946 | ||||||||
| Net (decrease) increase in cash | (2,192,998 | ) | 2,537,234 | ||||||||
| Cash at beginning of period | 3,693,845 | 963,649 | |||||||||
| Cash at end of period | $ | 1,500,847 | $ | 3,500,883 | |||||||
RECONCILIATION OF GAAP LOSS TO NON-GAAP EARNINGS
We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). We have provided non-GAAP earnings in this press release to assist investors in comparing our performance 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 income reflects the add back of costs specifically related to the 2021 pending TeraWulf transaction expected to occur later this year. 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.
| Three Months Ended | Nine Months Ended | ||||||||||||||
| 9/30/21 | 9/30/20 | 9/30/21 | 9/30/20 | ||||||||||||
| Net loss | $ | (851,736 | ) | $ | (273,996 | ) | $ | (1,895,651 | ) | $ | (1,902,505 | ) | |||
| Add: Transaction related professional service expenses | 985,000 | — | 1,718,000 | — | |||||||||||
| Add: Stock compensation expense | 73,000 | 3,000 | 205,000 | 10,000 | |||||||||||
| Non-GAAP adjusted income (loss) | $ | 206,264 | $ | (270,996 | ) | $ | 27,349 | $ | (1,892,505 | ) | |||||
| Non-GAAP adjusted income (loss) per common share-basic and diluted | $ | 0.10 | $ | (0.14 | ) | $ | 0.01 | $ | (0.96 | ) | |||||
| Average diluted shares outstanding | 1,981,138 | 1,976,354 | 1,978,638 | 1,976,354 | |||||||||||
Additional Information and Where to Find It; Participants in the Solicitation
In connection with the proposed business combination between the Company and TeraWulf Inc. (“TeraWulf”) as more fully described in the current report on Form 8-K filed by the Company with the United States Securities and Exchange Commission (the “SEC”) on June 25, 2021, as amended on August 11, 2021, the Company filed a combined preliminary proxy statement and registration statement on Form S-4 with the SEC on July 30, 2021, as amended on August 2, 2021, August 11, 2021, September 20, 2021, and October 12, 2021. Following the filing of the definitive proxy statement with the SEC, the Company will mail the definitive proxy statement and a proxy card to each shareholder entitled to vote at the special meeting relating to the proposed transaction. The proxy statement, any other relevant documents, and all other materials filed with the SEC concerning the Company are (or, when filed, will be) available free of charge at http://www.sec.gov and http:/www.ikonics.com/investor-relations. Shareholders should read carefully the proxy statement and any other relevant documents that the Company files with the SEC when they become available before making any voting decision because they will contain important information.
This communication does not constitute a solicitation of proxy, an offer to purchase, or a solicitation of an offer to sell any securities. The Company and its directors and executive officers are deemed to be participants in the solicitation of proxies from shareholders in connection with the proposed transaction. Information regarding the names of such persons and their respective interests in the transaction, by securities holdings or otherwise, will be set forth in the definitive proxy statement when it is filed with the SEC. Additional information regarding these individuals is set forth in its annual report on Form 10-K for the fiscal year ended December 31, 2020, its definitive proxy statement for the annual meeting held on April 29, 2021, and the revised definitive proxy statement for the same meeting, which were filed with the SEC on March 3, 2021, March 23, 2021, and April 6, 2021, respectively. To the extent the Company’s directors and executive officers or their holdings of the Company’s securities have changed from the amounts disclosed in those filings, to the Company’s knowledge, such changes have been reflected on initial statements of beneficial ownership on Form 3 or statements of change in ownership on Form 4 on file with the SEC. These materials are (or, when filed, will be) available free of charge at http://www.Ikonics.com/investor-relations.
Forward Looking Statements
This communication contains “forward-looking statements” within the meaning of the U.S. federal securities laws. Such statements include statements concerning anticipated future events and expectations that are not historical facts. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Actual results may vary materially from those expressed or implied by forward-looking statements based on a number of factors, including, without limitation: (1) risks related to the consummation of the mergers, including the risks that (a) the mergers may not be consummated within the anticipated time period, or at all, (b) the parties may fail to obtain shareholder approval of the merger agreement, (c) other conditions to the consummation of the mergers under the merger agreement may not be satisfied, (d) all or part of TeraWulf’s contemplated financing may not become available, and (e) the significant limitations on remedies contained in the merger agreement may limit or entirely prevent a party from specifically enforcing another party’s obligations under the merger agreement or recovering damages for any breach; (2) approval of the combined company’s application to list its shares on The Nasdaq Stock Market LLC, (3) the effects that any termination of the merger agreement may have on a party or its business, including the risks that (a) the price of the Company’s common stock may decline significantly if the mergers are not completed, (b) the merger agreement may be terminated in circumstances requiring the Company to pay TeraWulf a termination fee of
| News Contact: | Glenn Sandgren | |
| Chief Executive Officer | ||
| (218) 628-2217 |
FAQ
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