Eastman Kodak Company (NYSE: KODK) today reported financial
results for the first quarter 2020, including consolidated revenues
of $267 million.
Highlights include:
- Consolidated revenues for Q1 2020 of $267 million.
- GAAP net loss of $111 million for the quarter ended March 31,
2020.
- Current quarter net loss includes expense of $167 million
related to the increase in deferred tax valuation allowances for
locations outside the U.S. and income of $53 million related to the
change in fair value of embedded derivatives in the Series A
Preferred Stock and Convertible Notes.
- Operational EBITDA for the quarter of negative $8 million.
- The company ended the quarter with a cash balance of $209
million.
“Kodak started the quarter on a positive trajectory and the
actions we took last year to strengthen our balance sheet are
helping us manage through the slowdown,” said Jim Continenza,
Kodak’s Executive Chairman. “Kodak employees have risen to the
challenge of the pandemic, continuing to serve our customers and
redirecting resources to produce isopropyl alcohol for hand
sanitizer and manufacture face masks using our ESTAR film base.
Looking forward, we will continue with our plans to double down on
digital print, launch exciting new products and realign our
business to focus on customers.”
For the quarter ended March 31, 2020, revenues decreased by
approximately $24 million compared with the same period in 2019.
Kodak ended the quarter with a cash balance of $209 million, down
from the December 31, 2019 cash balance of $233 million.
“For the quarter we used $24 million of cash, after giving
effect to the release of $25 million of restricted cash,” said
David Bullwinkle, Kodak’s CFO. “During the economic slowdown caused
by the COVID-19 situation, we are managing our working capital
tightly to ensure sustainability for our customers and employees.
We continue to pursue cost-reduction efforts to preserve cash and
position Kodak for a strong rebound when business conditions start
to improve.”
Revenue and Operational EBITDA by Reportable Segment Q1 2020
vs. Q1 2019
($ millions) Q1 2020 Actuals
Traditional Printing
Digital Printing
Advanced Materials &
Chemicals
Brand
Total
Revenue
$
154
$
65
$
42
$
3
$
264
Operational EBITDA *
$
1
$
(2
)
$
(9
)
$
2
$
(8
)
Q1 2019 Actuals
Traditional Printing
Digital Printing
Advanced Materials &
Chemicals
Brand
Total
Revenue
$
166
$
72
$
48
$
3
$
289
Operational EBITDA *
$
6
$
(1
)
$
(11
)
$
1
$
(5
)
Q1 2020 vs. Q1 2019 ActualsB/(W)
Traditional Printing
Digital Printing
Advanced Materials &
Chemicals
Brand
Total
Revenue
$
(12
)
$
(7
)
$
(6
)
$
-
$
(25
)
Operational EBITDA *
$
(5
)
$
(1
)
$
2
$
1
$
(3
)
Q1 2020 Actuals on constant currency ** vs. Q1 2019
ActualsB/(W)
Traditional Printing
Digital Printing
Advanced Materials &
Chemicals
Brand
Total
Revenue
$
(10
)
$
(6
)
$
(6
)
$
-
$
(22
)
Operational EBITDA *
$
(5
)
$
(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 2020 foreign exchange impact using average foreign
exchange rates for the three months ended March 31, 2019, rather
than the actual average exchange rates in effect for the three
months ended March 31, 2020. Eastman Business Park segment is not a
reportable segment and is excluded from the table above.
About Kodak Kodak is a global technology company focused
on print and advanced materials & chemicals. We provide
industry-leading hardware, software, consumables and services
primarily to customers in commercial print, packaging, publishing,
manufacturing and entertainment. We are committed to environmental
stewardship and ongoing leadership in developing sustainable
solutions. Our broad portfolio of superior products, responsive
support and world-class R&D make Kodak solutions a smart
investment for customers looking to improve their profitability and
drive growth. 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, 2019 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, 2020, 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; the impact of the global
economic environment or medical epidemics such as the COVID-19
pandemic; 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 Kodak’s ability to effect
strategic transactions, such as divestitures, acquisitions,
strategic alliances and similar transactions, or to achieve the
benefits sought to be achieved from such strategic
transactions.
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 2020 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, 2019, rather
than the actual average exchange rates in effect for the three
months ended March 31, 2020.
The following table reconciles the most directly comparable GAAP
measure of Net Loss to Operational EBITDA for the three months
ended March 31, 2020 and 2019, respectively:
(in millions) Q1 2020 Q1 2019 $ Change
Net Loss
$
(111
)
$
(18
)
$
(93
)
All Other
1
1
-
Depreciation and amortization
10
15
(5
)
Restructuring costs and other (1)
7
2
5
Stock based compensation
1
3
(2
)
Consulting and other costs (2)
-
3
(3
)
Idle costs (3)
-
1
(1
)
Former CEO separation agreement compensation
-
2
(2
)
Other operating income, net, excluding income from transition
services agreement (4)
(6
)
-
(6
)
Interest expense (1)
4
3
1
Pension income excluding service cost component (1)
(26
)
(27
)
1
Other (income) charges, net (1)
(53
)
1
(54
)
Loss from discontinued operations, net of income tax (1)
-
6
(6
)
Provision for income taxes (1)
165
3
162
Operational EBITDA
$
(8
)
$
(5
)
$
(3
)
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 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 ended March 31, 2020. 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 March 31,
2020
2019
Revenues Sales
$
210
$
224
Services
57
67
Total revenues
267
291
Cost of revenues Sales
191
205
Services
40
46
Total cost of revenues
231
251
Gross profit
36
40
Selling, general and administrative expenses
48
59
Research and development costs
9
11
Restructuring costs and other
7
2
Other operating income, net
(7
)
—
Loss from continuing operations before interest expense,
pension income excluding service cost component, other (income)
charges, net and income taxes
(21
)
(32
)
Interest expense
4
3
Pension income excluding service cost component
(26
)
(27
)
Other (income) charges, net
(53
)
1
Earnings (loss) from continuing operations before income taxes
54
(9
)
Provision for income taxes
165
3
Loss from continuing operations
(111
)
(12
)
Loss from discontinued operations, net of income taxes
—
(6
)
Net loss
$
(111
)
$
(18
)
The notes accompanying the financial statements contained in the
Company’s first quarter 2020 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,
2020
2019
ASSETS Cash and cash equivalents
$
209
$
233
Trade receivables, net of allowances of $12 and $8, respectively
183
208
Inventories, net
236
215
Restricted cash - current portion
8
12
Other current assets
31
36
Current assets held for sale
2
2
Total current assets
669
706
Property, plant and equipment, net of accumulated depreciation of
$413 and $423, respectively
165
181
Goodwill
12
12
Intangible assets, net
43
47
Operating lease right-of-use assets
49
49
Restricted cash
24
45
Deferred income taxes
—
147
Other long-term assets
258
228
TOTAL ASSETS
$
1,220
$
1,415
LIABILITIES, REDEEMABLE,
CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
Accounts payable, trade
$
152
$
153
Short-term borrowings and current portion of long-term debt
2
2
Current portion of operating leases
11
12
Other current liabilities
175
201
Total current liabilities
340
368
Long-term debt, net of current portion
111
109
Pension and other postretirement liabilities
372
378
Operating leases, net of current portion
48
48
Other long-term liabilities
190
231
Total liabilities
1,061
1,134
Commitments and Contingencies
(Note 11)
Redeemable, convertible Series A preferred stock, no par
value, $100 per share liquidation preference
184
182
Equity (Deficit)
Common stock, $0.01 par value
—
—
Additional paid in capital
600
604
Treasury stock, at cost
(9
)
(9
)
Accumulated deficit
(190
)
(79
)
Accumulated other comprehensive loss
(426
)
(417
)
Total shareholders' equity (deficit)
(25
)
99
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY (DEFICIT)
$
1,220
$
1,415
The notes accompanying the financial statements contained in the
Company’s first quarter 2020 Form 10-Q are an integral part of
these consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200512005800/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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