Eastman Kodak Company (NYSE: KODK) today reported financial
results for the first quarter 2019, including a net loss of $18
million on revenues of $291 million and continued growth in key
product areas.
Highlights include:
- GAAP net loss of $18 million for the
quarter ended March 31, 2019, compared to a GAAP net loss of $25
million for the quarter ended March 31, 2018.
- Revenues for Q1 2019 of $291 million
compared to revenues for Q1 2018 of $318 million.
- Operational EBITDA for the quarter of
negative $6 million compared to Operational EBITDA of negative $9
million in the prior-year period.
- Key product lines achieved strong
year-over-year growth for the first quarter 2019:
- Volume for KODAK SONORA Process Free
Plates grew by 22 percent.
- Annuity revenues for the KODAK PROSPER
inkjet platform grew by 12 percent.
- The company ended the quarter with a
cash balance of $240 million.
- The company completed the sale of its
Flexographic Packaging Division to Montagu Private Equity LLP on
April 8, 2019 and used the net proceeds to pay down $312 million of
its term debt.
“Completing the sale of our Flexographic Packaging Division and
using the net proceeds to significantly pay down our term debt was
a major step toward strengthening our financial position,” said Jim
Continenza, Kodak’s Executive Chairman. “Our focus has shifted to
completing the refinancing of the remaining balance of our debt and
realigning our business to better serve customers and achieve our
goal of generating cash.”
For the quarter ended March 31, 2019, revenues decreased by
approximately $27 million compared with the same period in 2018.
Kodak ended the quarter with a cash balance of $240 million, down
from the December 31, 2018 cash balance of $246 million.
“We significantly paid down our term debt and delivered
continued strong performance in our key growth areas of SONORA
Process Free Plates and in PROSPER inkjet annuities,” said David
Bullwinkle, Kodak’s CFO. “We expect to secure new financing for our
remaining term debt by the end of May, which will further
strengthen our balance sheet.”
Revenue and Operational EBITDA Q1 2019 vs. Q1 2018
($ millions)
Q1 2019 Actuals PSD
EISD KSD BFID AM3D EBPD Total
EK Revenue $ 192 $ 32
$ 14 $ 49 $ 2 $
2 $ 291 Operational EBITDA * $
5 $ - $ (1 ) $
(7 ) $ (2 ) $ (1
) $ (6 ) Q1 2018 Actuals
PSD EISD KSD BFID AM3D
EBPD Total EK Revenue $ 216
$ 31 $ 16 $ 52 $
1 $ 2 $ 318 Operational
EBITDA * $ 3 $ - $ 1
$ (7 ) $ (4 ) $
(2 ) $ (9 ) Q1 2019
vs. Q1 2018 Actuals
B/(W)
PSD EISD KSD BFID AM3D
EBPD Total EK Revenue $ (24
) $ 1 $ (2 ) $
(3 ) $ 1 $ - $
(27 ) Operational EBITDA * $ 2
$ - $ (2 ) $ -
$ 2 $ 1 $ 3 Q1
2019 Actuals on constant currency ** vs. Q1 2018 Actuals
B/(W)
PSD EISD KSD BFID AM3D
EBPD Total EK Revenue $ (15
) $ 2 $ (2 ) $
(2 ) $ 1 $ - $
(16 ) Operational EBITDA * $ 1
$ - $ (2 ) $ 1
$ 2 $ 1 $ 3
* Total Operational EBITDA is a non-GAAP financial measure. The
reconciliation between GAAP and non-GAAP measures is provided in
Appendix A of this press release.
** The impact of foreign exchange represents the 2018 foreign
exchange impact using average foreign exchange rates for the three
months ended March 31, 2018, rather than the actual exchange rates
in effect for the three months ended March 31, 2019.
About Kodak
Kodak is a technology company focused on imaging. We provide –
directly and through partnerships with other innovative companies –
hardware, software, consumables and services to customers in
graphic arts, commercial print, publishing, packaging,
entertainment and commercial films, and consumer products markets.
With our world-class R&D capabilities, innovative solutions
portfolio and highly trusted brand, Kodak is helping customers
around the globe to sustainably grow their own businesses and enjoy
their lives. For additional information on Kodak, visit us at
kodak.com, follow us on Twitter @Kodak, or like us on Facebook at
Kodak.
Cautionary Statement Regarding Forward-Looking
Statements
This press release includes “forward-looking statements” as that
term is defined under the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include statements concerning
Kodak’s plans, objectives, goals, strategies, future events, future
revenue or performance, capital expenditures, liquidity,
investments, financing needs and business trends and other
information that is not historical information. When used in this
press release, the words “estimates,” “expects,” “anticipates,”
“projects,” “plans,” “intends,” “believes,” “predicts,”
“forecasts,” “strategy,” “continues,” “goals,” “targets” or future
or conditional verbs, such as “will,” “should,” “could,” or “may,”
and similar expressions, as well as statements that do not relate
strictly to historical or current facts, are intended to identify
forward-looking statements. All forward-looking statements,
including management’s examination of historical operating trends
and data, are based upon Kodak’s expectations and various
assumptions.
Future events or results may differ from those anticipated or
expressed in the forward-looking statements. Important factors that
could cause actual events or results to differ materially from the
forward-looking statements include, among others, the risks and
uncertainties described in more detail in Kodak’s Annual Report on
Form 10-K for the year ended December 31, 2018 under the headings
“Business,” “Risk Factors,” “Legal Proceedings” and/or
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources,” in the
corresponding sections of Kodak’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2019, and in other filings Kodak makes
with the U.S. Securities and Exchange Commission from time to time,
as well as the following: Kodak’s ability to improve and sustain
its operating structure, cash flow, profitability and other
financial results; Kodak’s ability to achieve cash forecasts,
financial projections and projected growth; Kodak’s ability to
achieve the financial and operational results contained in its
business plans; Kodak’s ability to comply with the covenants in its
various credit facilities; Kodak’s ability to repay, refinance or
extend the maturity of its outstanding first lien term loans prior
to their maturity date of September 3, 2019 or prior to June 5,
2019, the date on which Kodak’s revolving credit facility will
terminate unless such repayment, refinancing or extension has
occurred or the revolving credit facility has been amended; Kodak’s
ability to discontinue, sell or spin-off certain businesses or
operations or otherwise monetize assets, including the completion
of the deferred sale of the China assets of Kodak’s Flexographic
Packaging segment that was sold, and the ability of the
Flexographic Packaging segment that was sold to perform during 2019
and 2020 at levels that will entitle Kodak to earn-out payments;
Kodak’s ability to fund continued investments, capital needs and
restructuring payments and service its debt and Series A Preferred
Stock; changes in foreign currency exchange rates, commodity prices
and interest rates; Kodak’s ability to effectively anticipate
technology trends and develop and market new products, solutions
and technologies; Kodak’s ability to effectively compete with
large, well-financed industry participants; continued sufficient
availability of borrowings and letters of credit under Kodak’s
revolving credit facility, Kodak’s ability to obtain additional
financing if and as needed and Kodak’s ability to provide or
facilitate financing for its customers; the performance by third
parties of their obligations to supply products, components or
services to Kodak; and the impact of the global economic
environment on Kodak.
There may be other factors that may cause Kodak’s actual results
to differ materially from the forward-looking statements. All
forward-looking statements attributable to Kodak or persons acting
on its behalf apply only as of the date of this press release and
are expressly qualified in their entirety by the cautionary
statements included or referenced in this press release. Kodak
undertakes no obligation to update or revise forward-looking
statements to reflect events or circumstances that arise after the
date made or to reflect the occurrence of unanticipated events,
except as required by law.
APPENDICES
A. NON-GAAP MEASURES
In this first-quarter 2019 financial results news release,
reference is made to the following non-GAAP financial measures:
- Operational EBITDA; and
- Revenues and Operational EBITDA on a
constant currency basis.
Kodak believes that these non-GAAP measures represent important
internal measures of performance. Accordingly, where they are
provided, it is to give investors the same financial data
management uses with the belief that this information will assist
the investment community in properly assessing the underlying
performance of Kodak, its financial condition, results of
operations and cash flow.
Kodak’s segment measure of profit and loss is an adjusted
earnings before interest, taxes, depreciation and amortization
(“Operational EBITDA”). The change in revenues and Operational
EBITDA on a constant currency basis, as presented in this financial
results news release, is calculated by using average foreign
exchange rates for the three months ended March 31, 2018, rather
than the actual exchange rates in effect for the three months ended
March 31, 2019.
The following table reconciles the most directly comparable GAAP
measure of Net Loss to Operational EBITDA for the three months
ended March 31, 2019 and 2018, respectively:
(in millions)
Q1 2019
Q1 2018
$ Change
Net Loss $ (18 ) $ (25
) $ 7 Depreciation and amortization 15 18 (3 )
Restructuring costs and other (1) 2 2 - Stock based compensation 3
2 1 Consulting and other costs (2) 3 3 - Idle costs (3) 1 1 -
Former CEO separation agreement
compensation
2 - 2 Interest expense (1) 3 2 1 Pension income excluding service
cost component (1) (27 ) (32 ) 5 Other charges, net (1) 1 16 (15 )
Loss from discontinued operations, net of income tax (1) 6 - 6
Provision for income taxes (1) 3 4
(1 )
Operational EBITDA $ (6 )
$ (9 ) $ 3
Footnote Explanations:
(1) As reported in the Consolidated Statement of Operations.
(2) Consulting and other costs are primarily professional services
and internal costs associated with certain corporate strategic
initiatives. (3) Consists of third-party costs such as security,
maintenance and utilities required to maintain land and buildings
in certain locations not used in any Kodak operations and the
costs, net of any rental income received, of underutilized portions
of certain properties. (4) The impact of foreign exchange
represents the foreign exchange impact using average foreign
exchange rates for the three months ended March 31, 2018, rather
than the actual exchange rates in effect for the three months ended
March 31, 2019.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (in
millions) Three Months Ended March 31, 2019
2018 Revenues Sales $ 224 $ 248 Services 67
70 Total net revenues 291 318
Cost of revenues Sales 205 231 Services 46
49 Total cost of revenues 251
280 Gross profit 40 38 Selling, general and administrative
expenses 59 58 Research and development costs 11 13 Restructuring
costs and other 2 2 Other operating expense, net —
— Loss from continuing operations before interest
expense, pension income excluding service cost component, other
charges (income), net, and income taxes (32 ) (35 ) Interest
expense 3 2 Pension income excluding service cost component (27 )
(32 ) Other charges, net 1 16 Loss from
continuing operations before income taxes (9 ) (21 ) Provision for
income taxes 3 4 Loss from continuing
operations (12 ) (25 ) Loss from discontinued operations, net of
income tax (6 ) — NET LOSS $ (18 ) $ (25 )
The notes accompanying the Company’s first quarter 2019 Form
10-Q are an integral part of these consolidated financial
statements.
EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)
(in millions) March 31, December 31,
2019 2018 ASSETS Cash and cash equivalents $
240 $ 246 Trade receivables, net of allowances of $8 and $9,
respectively 201 232 Inventories, net 249 236 Other current assets
53 51 Current assets held for sale 116 113
Total current assets 859 878 Property, plant and equipment,
net of accumulated depreciation of $431 and $422, respectively 233
246 Goodwill 12 12 Intangible assets, net 58 60 Operating lease
right-of-use assets 49 - Restricted cash 8 11 Deferred income taxes
155 160 Other long-term assets 164 144
TOTAL ASSETS $ 1,538 $
1,511 LIABILITIES, REDEEMABLE, CONVERTIBLE
PREFERRED STOCK AND EQUITY (DEFICIT) Accounts payable, trade $
160 $ 149 Short-term borrowings and current portion of long-term
debt 396 396 Current portion of operating leases 23 - Other current
liabilities 191 213 Current liabilities held for sale 25
20 Total current liabilities 795 778 Long-term
debt, net of current portion 18 5 Pension and other postretirement
liabilities 368 379 Operating leases, net of current portion 35 -
Other long-term liabilities 163 179
Total liabilities 1,379 1,341
Commitments and Contingencies (Note 10) Redeemable,
convertible Series A preferred stock, no par value, $100 per share
liquidation preference 175 173
Equity (Deficit)
Common stock, $0.01 par value — — Additional paid in capital 615
617 Treasury stock, at cost (9 ) (9 ) Accumulated deficit (213 )
(200 ) Accumulated other comprehensive loss (409 )
(411 ) Total shareholders' deficit (16 ) (3 )
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY (DEFICIT) $ 1,538 $
1,511
The notes accompanying the Company’s first quarter 2019 Form
10-Q are an integral part of these consolidated financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005943/en/
Media:Nick Rangel,
Kodak, +1 585-615-0549, nicholas.rangel@kodak.com
Investors:Bill Love,
Kodak, +1 585-724-4053, shareholderservices@kodak.com
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