Eastman Kodak Company (NYSE: KODK) today reported financial
results for the third quarter 2022, including consolidated revenues
of $289 million.
Third-quarter 2022 highlights include:
- Consolidated revenues of $289 million, compared with $287
million for Q3 2021 (increased $24 million on a constant currency
basis)
- GAAP net income of $2 million, compared with $8 million for Q3
2021
- Operational EBITDA of $7 million, compared with $6 million for
Q3 2021
- A quarter-end cash balance of $216 million, compared with $362
million at the end of 2021
- Q3 performance of key products compared with Q3 2021: SONORA
Process Free Plates volume declined 10%, PROSPER inkjet annuities
revenue declined 11% (increased 1% on a constant currency
basis)
“For the third quarter of 2022, Kodak delivered year-over-year
revenue growth for the sixth consecutive quarter. I’d like to thank
our loyal customers and our employees for helping us deliver these
results,” said Jim Continenza, Kodak’s Executive Chairman and CEO.
“This continuing growth reflects our management team’s experience
with difficult business environments and our commitment to finding
ways of putting our customers first despite ongoing inflationary
and supply chain challenges. We continue to invest in digital print
technologies such as the KODAK PROSPER ULTRA 520 Press, which
offers offset print quality and can help printers mitigate the
supply and cost risks of traditional printing plates and eliminate
the significant carbon footprint associated with manufacturing and
distributing them. In addition, we continue to make significant
investments in our Advanced Materials & Chemicals business,
such as our minority stake in Wildcat Discovery Technologies, Inc.,
a private technology company that is developing a breakthrough EV
and energy storage ‘super cell’ battery technology. Looking
forward, we’ll continue to make strategic decisions focused on
driving smart revenue for Kodak.”
For the quarter ended September 30, 2022, revenues were $289
million, an improvement of $2 million compared to the same period
in 2021. Adjusting for the unfavorable impact of foreign exchange
of $22 million in the current-year quarter, revenue increased by
$24 million compared to the prior-year quarter.
The Company had GAAP net income of $2 million for the quarter,
compared to $8 million in the prior-year quarter. Operational
EBITDA for the third quarter was $7 million, compared to $6 million
in Q3 2021. Operational EBITDA was favorably impacted by the growth
in revenue due to improved pricing, partially offset by higher
continued ongoing global cost increases and unfavorable impact of
foreign exchange.
On June 15, 2022, Kodak exercised its right to draw an
additional $50 million of aggregate principal in the form of
delayed draw term loans under the Term Loan Credit Agreement. On
July 13, 2022, Kodak invested $25 million received from the loans
to acquire a minority stake in Wildcat Discovery Technologies.
Kodak ended the third quarter with a cash balance of $216
million, a net decrease of $146 million from December 31, 2021. The
decrease is primarily attributable to increases in working capital,
the impact of higher costs, increased capital investment and the
investment in Wildcat Discovery Technologies, partially offset by
proceeds received under the Term Loan Credit Agreement.
“In the third quarter, the Company’s primary uses of cash were
investments in our previously-announced growth initiatives and
increasing working capital to support our existing operations,”
said David Bullwinkle, Kodak’s CFO. “Our profitability during the
quarter was negatively impacted by the challenging business
environment, including factors such as increasing labor and
materials costs and the impact of foreign exchange.”
Revenue and Operational EBITDA by Reportable Segment Q3 2022
vs. Q3 2021
($ millions) Q3 2022 Actuals Traditional
Printing Digital Printing Advanced Materials &
Chemicals Brand Total Revenue
$
169
$
55
$
58
$
3
$
285
Operational EBITDA *
$
7
$
(6
)
$
3
$
3
$
7
Q3 2021 Actuals Traditional Printing
Digital Printing Advanced Materials & Chemicals
Brand Total Revenue
$
166
$
58
$
55
$
4
$
283
Operational EBITDA *
$
5
$
(2
)
$
-
$
3
$
6
Q3 2022 vs. Q3 2021 ActualsB/(W) Traditional
Printing Digital Printing Advanced Materials &
Chemicals Brand Total Revenue
$
3
$
(3
)
$
3
$
(1
)
$
2
Operational EBITDA *
$
2
$
(4
)
$
3
$
-
$
1
Q3 2022 Actuals on constant currency ** vs. Q3 2021
ActualsB/(W) Traditional Printing Digital
Printing Advanced Materials & Chemicals Brand
Total Revenue
$
19
$
2
$
4
$
(1
)
$
24
Operational EBITDA *
$
4
$
(1
)
$
4
$
-
$
7
* 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 foreign
exchange impact using average foreign exchange rates for the three
months ended September 30, 2021, rather than the actual average
exchange rates in effect for the three months ended September 30,
2022.
Eastman Business Park segment is not a reportable segment and is
excluded from the table above.
About Kodak
Kodak (NYSE: KODK) is a leading global manufacturer focused on
commercial print and advanced materials & chemicals. With
31,000 patents earned over 130 years of R&D, we believe in the
power of technology and science to enhance what the world sees and
creates. Our innovative, award-winning products, combined with our
customer-third approach, make us the partner of choice for
commercial printers worldwide. Kodak is committed to environmental
stewardship, including industry leadership in developing
sustainable solutions for print. For additional information on
Kodak, visit us at kodak.com, or follow us on Twitter @Kodak and
LinkedIn.
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 words and
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 current expectations and
assumptions. Forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from historical results or those expressed in or
implied by such 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, 2021 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
Reports on Form 10-Q for the quarters ended March 31, 2022, June
30, 2022 and September 30, 2022, 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 strategic objectives,
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 fund
continued investments, capital needs and restructuring payments and
service its debt and Series B Preferred Stock and Series C
Preferred Stock; the impact of the global economic environment,
including inflationary pressures, or medical epidemics such as the
COVID-19 pandemic, including the restrictions and other actions
taken in response to the COVID-19 pandemic, and Kodak’s ability to
effectively mitigate associated increased costs of materials,
labor, shipping and operations, and fluctuations in demand; the
performance by third parties of their obligations to supply
products, components or services to Kodak and Kodak’s ability to
address supply chain disruptions and continue to obtain raw
materials and components available from single or limited sources
of supply, which may be adversely affected by the COVID-19
pandemic; the impacts of the war in Ukraine and the international
response thereto on Kodak’s business and operations, including the
cost of and availability of aluminum and other raw materials and
components, shipping costs, transit times and energy costs; changes
in foreign currency exchange rates, commodity prices, interest
rates and tariff rates; continued sufficient availability of
borrowings and letters of credit under Kodak’s asset based credit
facility and letter of credit facility, Kodak’s ability to obtain
additional or alternate financing if and as needed, Kodak’s
continued ability to manage world-wide cash through inter-company
loans, distributions and other mechanisms, and Kodak's ability to
provide or facilitate financing for its customers; the impact of
the investigations, litigation and claims arising out of the
circumstances surrounding the announcement on July 28, 2020, by the
U.S. International Development Finance Corporation of the signing
of a non‐binding letter of interest to provide a subsidiary of
Kodak with a potential loan to support the launch of an initiative
for the manufacture of pharmaceutical ingredients for essential
generic drugs; Kodak’s ability to effectively anticipate technology
and industry trends and develop and market new products, solutions
and technologies, including products based on its technology and
expertise that relate to industries in which it does not currently
conduct material business; Kodak’s ability to effectively compete
with large, well-financed industry participants; Kodak’s ability to
effect strategic transactions, such as investments, acquisitions,
strategic alliances, divestitures and similar transactions, or to
achieve the benefits sought to be achieved from such strategic
transactions; and the potential impact of force majeure events,
cyber-attacks or other data security incidents that could disrupt
or otherwise harm Kodak’s operations.
Future events and other factors 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 third quarter 2022 financial results news release,
reference is made to the following non-GAAP financial measures:
- Operational EBITDA;
- Revenues and Operational EBITDA on a constant currency basis;
and
- PROSPER inkjet annuities revenue 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”). Operational EBITDA represents the income
from continuing operations excluding the provision for income
taxes; non-service cost components of pension and OPEB income;
depreciation and amortization expense; restructuring costs and
other; stock-based compensation expense; consulting and other
costs; idle costs; other operating expense, net; interest expense;
and other income, net.
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 September 30, 2021, rather than the actual
average exchange rates in effect for the three months ended
September 30, 2022.
The following table reconciles the most directly comparable GAAP
measure of Net Income to Operational EBITDA and Operational EBITDA
on a constant currency basis for the three months ended September
30, 2022 and 2021, respectively:
(in millions) Q3 2022 Q3 2021 $ Change
Net Income
$
2
$
8
$
(6
)
All other
(1
)
-
(1
)
Depreciation and amortization
8
7
1
Restructuring costs and other (1)
3
-
3
Stock based compensation
1
2
(1
)
Consulting and other costs (2)
2
4
(2
)
Idle costs (3)
1
1
-
Other operating expense, net
-
1
(1
)
Interest expense (1)
10
9
1
Pension income excluding service cost component (1)
(20
)
(25
)
5
Other income, net (1)
-
(2
)
2
Provision for income taxes (1)
1
1
-
Operational EBITDA
$
7
$
6
$
1
Impact of foreign exchange (4)
6
6
Operational EBITDA on a constant currency basis
$
13
$
6
$
7
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, investigations and litigation.
(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 is
calculated by using average foreign exchange rates for the three
months ended September 30, 2021, rather than the actual average
exchange rates in effect for the three months ended September 30,
2022.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited) (in millions) Three Months
Ended September 30, Nine Months Ended September 30,
2022
2021
2022
2021
Revenues Sales
$
234
$
231
$
734
$
674
Services
55
56
166
169
Total revenues
289
287
900
843
Cost of revenues Sales
208
206
662
595
Services
38
38
111
117
Total cost of revenues
246
244
773
712
Gross profit
43
43
127
131
Selling, general and administrative expenses
39
43
123
131
Research and development costs
8
8
26
24
Restructuring costs and other
3
—
3
1
Other operating expense (income), net
—
1
—
(6
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, other (income) charges,
net and income taxes
(7
)
(9
)
(25
)
(19
)
Interest expense
10
9
29
23
Pension income excluding service cost component
(20
)
(25
)
(77
)
(76
)
Other (income) charges, net
—
(2
)
2
(1
)
Earnings from continuing operations before income taxes
3
9
21
35
Provision for income taxes
1
1
2
5
Net income
$
2
$
8
$
19
$
30
The notes accompanying the financial statements contained in the
Company’s third quarter 2022 Form 10-Q are an integral part of
these consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
FINANCIAL POSITION (Unaudited) (in millions)
September 30, December 31,
2022
2021
ASSETS Cash and cash equivalents
$
216
$
362
Trade receivables, net of allowances of $6 and $7, respectively
164
175
Inventories, net
273
219
Other current assets
44
49
Current assets held for sale
2
2
Total current assets
699
807
Property, plant and equipment, net of accumulated depreciation of
$440 and $441, respectively
147
140
Goodwill
12
12
Intangible assets, net
30
34
Operating lease right-of-use assets
41
47
Restricted cash
57
54
Pension and other postretirement assets
1,198
1,022
Other long-term assets
75
55
TOTAL ASSETS
$
2,259
$
2,171
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
147
$
153
Short-term borrowings and current portion of long-term debt
1
1
Current portion of operating leases
12
13
Other current liabilities
137
142
Total current liabilities
297
309
Long-term debt, net of current portion
312
253
Pension and other postretirement liabilities
336
382
Operating leases, net of current portion
36
45
Other long-term liabilities
176
205
Total liabilities
1,157
1,194
Commitments and Contingencies (Note 8) Redeemable,
convertible preferred stock, no par value, $100 per share
liquidation preference
201
196
Equity Common stock, $0.01 par value
—
—
Additional paid in capital
1,162
1,166
Treasury stock, at cost
(11
)
(10
)
Accumulated deficit
(577
)
(596
)
Accumulated other comprehensive income
327
221
Total shareholders' equity
901
781
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
2,259
$
2,171
The notes accompanying the financial statements contained in the
Company’s third quarter 2022 Form 10-Q are an integral part of
these consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
CASH FLOWS (Unaudited) (in millions) Nine
Months Ended September 30,
2022
2021
Cash flows from operating activities: Net income
$
19
$
30
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
22
23
Pension income
(64
)
(63
)
Change in fair value of the Preferred Stock and Convertible Notes
embedded derivatives
(1
)
(3
)
Net loss on sales of assets
—
1
Non-cash changes in workers' compensation reserves
(13
)
(4
)
Stock based compensation
4
6
Benefit from deferred taxes
(3
)
(1
)
(Increase) decrease in trade receivables
(7
)
6
Increase in inventories
(74
)
(38
)
Increase in trade payables
5
33
Decrease in liabilities excluding borrowings and trade payables
(26
)
(26
)
Other items, net
8
3
Total adjustments
(149
)
(63
)
Net cash used in operating activities
(130
)
(33
)
Cash flows from investing activities: Additions to properties
(19
)
(10
)
Purchase of preferred equity investment
(25
)
—
Net proceeds from sale of assets
-
1
Net cash used in investing activities
(44
)
(9
)
Cash flows from financing activities: Net proceeds from Term Loan
Credit Agreement
49
215
Net proceeds from Convertible Notes
-
25
Net proceeds from Series C Preferred Stock
-
99
Proceeds from sale of common stock
-
10
Repurchase of Series A Preferred Stock
-
(100
)
Debt issuance costs
-
(2
)
Preferred stock cash dividend payments
(3
)
(6
)
Treasury stock purchases
(1
)
(1
)
Net cash provided by financing activities
45
240
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(14
)
(3
)
Net (decrease) increase in cash, cash equivalents and restricted
cash
(143
)
195
Cash, cash equivalents and restricted cash, beginning of period
423
256
Cash, cash equivalents and restricted cash, end of period
$
280
$
451
The notes accompanying the financial statements contained in the
Company’s third quarter 2022 Form 10-Q are an integral part of
these consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005932/en/
Media Contact: Kurt Jaeckel, Kodak, +1 585-490-8646,
kurt.jaeckel@kodak.com
Investor Contact: Paul Dils, Kodak, +1 585-724-4053,
shareholderservices@kodak.com
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