Eastman Kodak Company (NYSE: KODK) today reported financial
results for the second quarter 2019, including net earnings of $201
million on revenues of $307 million and continued growth in key
product areas.
Highlights include:
- GAAP net earnings of $201 million for the quarter ended June
30, 2019, compared to GAAP net earnings of $4 million for the
quarter ended June 30, 2018.
- Current quarter GAAP net earnings included a gain on the sale
of the Company’s Flexographic Packaging Division of $207 million
and a loss from continuing operations of $6 million.
- Revenues for Q2 2019 of $307 million compared to revenues for
Q2 2018 of $332 million.
- Operational EBITDA for the quarter of negative $1 million
compared to Operational EBITDA of negative $2 million in the
prior-year period.
- Key product lines achieved strong year-over-year growth for the
second quarter 2019:
- Volume for KODAK SONORA Process Free Plates grew by 25
percent.
- Annuity revenues for the KODAK PROSPER inkjet platform grew by
9 percent.
- The Company ended the quarter with a cash balance of $216
million.
- The Company closed on the issue and sale of $100 million
aggregate principal amount of its 5.00% Secured Convertible Notes
due 2021 to funds managed by Southeastern Asset Management.
- Concurrent with the closing of the Convertible Notes issuance,
the Company repaid in full the approximately $83 million
outstanding under its senior secured first lien term loan
facility.
“Refinancing the remaining balance of our term debt was a
critical step toward creating the foundation for future success,”
said Jim Continenza, Kodak’s Executive Chairman. “Our priority is
generating cash by better serving customers in our core print, film
and advanced materials businesses and driving further cost
efficiencies.”
For the quarter ended June 30, 2019, revenues decreased by
approximately $25 million compared with the same period in 2018.
Kodak ended the quarter with a cash balance of $216 million, down
from the March 31, 2019 cash balance of $240 million.
“By refinancing our term debt, we have eliminated significant
interest costs and strengthened our balance sheet,” said David
Bullwinkle, Kodak’s CFO. “During the quarter we delivered continued
strong performance in our key growth areas of SONORA Process Free
Plates and in PROSPER inkjet annuities. Our goal is to build on
that momentum and generate cash.”
Revenue and Operational EBITDA Q2 2019 vs. Q2 2018
($ millions) Q2 2019 Actuals PSD
EISD KSD BFID AM3D EBPD Total
EK Revenue
$
207
$
29
$
14
$
54
$
-
$
3
$
307
Operational EBITDA *
$
7
$
(3
)
$
-
$
(2
)
$
(3
)
$
-
$
(1
)
Q2 2018 Actuals PSD EISD KSD
BFID AM3D EBPD Total EK Revenue
$
227
$
33
$
16
$
53
$
1
$
2
$
332
Operational EBITDA *
$
6
$
1
$
1
$
(5
)
$
(4
)
$
(1
)
$
(2
)
Q2 2019 vs. Q2 2018 ActualsB/(W) PSD
EISD KSD BFID AM3D EBPD Total
EK Revenue
$
(20
)
$
(4
)
$
(2
)
$
1
$
(1
)
$
1
$
(25
)
Operational EBITDA *
$
1
$
(4
)
$
(1
)
$
3
$
1
$
1
$
1
Q2 2019 Actuals on constant currency ** vs. Q2 2018
ActualsB/(W) PSD EISD KSD BFID
AM3D EBPD Total EK Revenue
$
(13
)
$
(3
)
$
(2
)
$
2
$
(1
)
$
1
$
(16
)
Operational EBITDA *
$
-
$
(3
)
$
(1
)
$
3
$
1
$
1
$
1
* 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 June 30, 2018, rather than the actual exchange rates
in effect for the three months ended June 30, 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 Reports on Form 10-Q
for the quarters ended March 31, 2019 and June 30, 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 fund
continued investments, capital needs and restructuring payments and
service its debt and Series A Preferred Stock; Kodak’s ability to
discontinue, sell or spin-off certain businesses or operations or
otherwise monetize assets; 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 second-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 June 30, 2018, rather
than the actual exchange rates in effect for the three months ended
June 30, 2019.
The following table reconciles the most directly comparable GAAP
measure of Net Income to Operational EBITDA for the three months
ended June 30, 2019 and 2018, respectively:
(in millions) Q2 2019 Q2 2018 $ Change
Net Income
$
201
$
4
$
197
Depreciation and amortization
14
19
(5
)
Restructuring costs and other (1)
2
2
-
Stock based compensation
2
1
1
Consulting and other costs (2)
2
4
(2
)
Idle costs (3)
2
-
2
Other operating expense (income), net, excluding income from
transition services agreement (4)
2
(2
)
4
Interest expense (1)
5
2
3
Pension income excluding service cost component (1)
(26
)
(32
)
6
Other charges, net (1)
-
1
(1
)
Income from discontinued operations, net of income tax (1)
(207
)
(1
)
(206
)
Provision for income taxes (1)
2
-
2
Operational EBITDA
$
(1
)
$
(2
)
$
1
Footnote Explanations:
- As reported in the Consolidated Statement of Operations.
- Consulting and other costs are primarily professional services
and internal costs associated with certain corporate strategic
initiatives.
- 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.
- $2 million of income from the transition services agreement
related to the sale of the Flexographic Packaging Business was
recognized in the quarter and year-to-date period ended June 30,
2019. The income was reported in Other operating income, net in the
Consolidated Statement of Operations. Other operating income, net
is typically excluded from the segment measure. However, the income
from the transition services agreement was included in the segment
measure.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited) (in millions) Three Months
Ended June 30,
2019
2018
Revenues Sales
$
240
$
261
Services
67
71
Total revenues
307
332
Cost of revenues Sales
218
237
Services
47
50
Total cost of revenues
265
287
Gross profit
42
45
Selling, general and administrative expenses
54
59
Research and development costs
11
12
Restructuring costs and other
2
2
Other operating income, net —
(2
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, other charges, net, and
income taxes
(25
)
(26
)
Interest expense
5
2
Pension income excluding service cost component
(26
)
(32
)
Other charges, net —
1
(Loss) earnings from continuing operations before income taxes
(4
)
3
Provision for income taxes
2
— (Loss) earnings from continuing operations
(6
)
3
Income from discontinued operations, net of income taxes
207
1
Net Income
$
201
$
4
The notes accompanying the financial statements contained in the
Company’s second 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) June
30, December 31,
2019
2018
ASSETS Cash and cash equivalents
$
216
$
246
Trade receivables, net of allowances of $8 and $9, respectively
204
232
Inventories, net
251
236
Other current assets
57
51
Current assets held for sale
1
113
Total current assets
729
878
Property, plant and equipment, net of accumulated depreciation of
$443 and $422, respectively
229
246
Goodwill
12
12
Intangible assets, net
56
60
Operating lease right-of-use assets
44
-
Restricted cash
19
11
Deferred income taxes
154
160
Other long-term assets
188
144
TOTAL ASSETS
$
1,431
$
1,511
LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND
EQUITY (DEFICIT) Accounts payable, trade
$
156
$
149
Short-term borrowings and current portion of long-term debt
2
396
Current portion of operating leases
26
-
Other current liabilities
198
213
Current liabilities held for sale —
20
Total current liabilities
382
778
Long-term debt, net of current portion
104
5
Pension and other postretirement liabilities
365
379
Operating leases, net of current portion
28
-
Other long-term liabilities
192
179
Total liabilities
1,071
1,341
Commitments and Contingencies (Note 10) Redeemable,
convertible Series A preferred stock, no par value, $100 per share
liquidation preference
177
173
Equity (Deficit) Common stock, $0.01 par value — —
Additional paid in capital
612
617
Treasury stock, at cost
(9
)
(9
)
Accumulated deficit
(12
)
(200
)
Accumulated other comprehensive loss
(408
)
(411
)
Total shareholders' equity (deficit)
183
(3
)
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY (DEFICIT)
$
1,431
$
1,511
The notes accompanying the financial statements contained in the
Company’s second 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/20190808005750/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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