Eastman Kodak Company (NYSE: KODK) today reported financial
results for the second quarter 2020, including consolidated
revenues of $213 million.
Second-quarter highlights include:
- Consolidated revenues of $213 million
- GAAP net loss of $5 million
- Operational EBITDA of negative $7 million
- A cash balance of $180 million at quarter-end
“Kodak continued to navigate the challenges posed by the
pandemic during the second quarter,” said Jim Continenza, Kodak’s
Executive Chairman. “Although the print industry slowdown impacted
our performance, we continued to serve our customers and furthered
our long history of innovation through the launch of six new print
products, including the groundbreaking KODAK PROSPER ULTRA 520
Digital Press, which delivers offset-like quality at high
production speeds – all at the industry’s lowest cost of operation.
As we look ahead, we remain committed to investing in our business
to support our position as a leader in advancing the evolution of
the print industry.”
For the quarter ended June 30, 2020, revenues declined by
approximately $94 million compared with the same period in 2019.
Kodak ended the quarter with a cash balance of $180 million, down
from the March 31, 2020 cash balance of $209 million.
“During the second quarter we used $29 million of cash,
primarily due to the impacts of the COVID-19 pandemic on our
business. While the COVID crisis affected our second quarter sales
volumes, we anticipate improvement in both sales volumes and
working capital in the third quarter,” said David Bullwinkle,
Kodak’s CFO. “Additionally, subsequent to quarter end, the Company
significantly reduced its debt as holders of the 5.00% Secured
Convertible Notes due November 2021 exercised their right to
convert an aggregate of $95 million of principal amount of the
Notes into shares of Kodak stock, reducing the remaining
outstanding amount to $5 million.”
Revenue and Operational EBITDA by Reportable Segment Q2 2020
vs. Q2 2019
($ millions) Q2 2020 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
119
$
52
$
38
$
2
$
211
Operational EBITDA *
$
1
$
(3
)
$
(7
)
$
2
$
(7
)
Q2 2019 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
181
$
69
$
52
$
2
$
304
Operational EBITDA *
$
9
$
(4
)
$
(8
)
$
2
$
(1
)
Q2 2020 vs. Q2 2019 ActualsB/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
(62
)
$
(17
)
$
(14
)
$
-
$
(93
)
Operational EBITDA *
$
(8
)
$
1
$
1
$
-
$
(6
)
Q2 2020 Actuals on constant currency ** vs. Q2 2019
ActualsB/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
(60
)
$
(17
)
$
(14
)
$
-
$
(91
)
Operational EBITDA *
$
(8
)
$
1
$
1
$
-
$
(6
)
* 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 June 30, 2019, rather than the actual average exchange
rates in effect for the three months ended June 30, 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 Reports on Form 10-Q
for the quarters ended March 31, 2020 and June 30, 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; whether the U.S. International Development
Finance Corporation approves and makes the potential $765 million
loan to a subsidiary of Kodak to support the launch of Kodak
Pharmaceuticals and the impact of the circumstances relating to
such potential loan and any related announcements and
investigations; 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 second 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 June 30, 2019, rather
than the actual average exchange rates in effect for the three
months ended June 30, 2020.
The following table reconciles the most directly comparable GAAP
measure of Net (Loss) Income to Operational EBITDA for the three
months ended June 30, 2020 and 2019, respectively:
(in millions) Q2 2020 Q2 2019 $
Change Net (Loss) Income
$
(5
)
$
201
$
(206
)
All Other
(1
)
-
(1
)
Depreciation and amortization
10
14
(4
)
Restructuring costs and other (1)
1
2
(1
)
Stock based compensation
-
2
(2
)
Consulting and other costs (2)
1
2
(1
)
Idle costs (3)
1
2
(1
)
Other operating loss, net, excluding income from transition
services agreement (4)
-
2
(2
)
Interest expense (1)
4
5
(1
)
Pension income excluding service cost component (1)
(27
)
(26
)
(1
)
Other charges, net (1)
8
-
8
Income from discontinued operations, net of income tax (1)
-
(207
)
207
Provision for income taxes (1)
1
2
(1
)
Operational EBITDA
$
(7
)
$
(1
)
$
(6
)
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 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)
$2 million of income from the
transition services agreement related to the sale of the
Flexographic Packaging Business was recognized in the three months
ended June 30, 2020 and 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,
2020
2019
Revenues Sales
$
163
$
240
Services
50
67
Total revenues
213
307
Cost of revenues Sales
159
218
Services
33
47
Total cost of revenues
192
265
Gross profit
21
42
Selling, general and administrative expenses
34
54
Research and development costs
8
11
Restructuring costs and other
1
2
Other operating income, net
(3
)
—
Loss from continuing operations before interest expense, pension
income excluding service cost component, other charges, net and
income taxes
(19
)
(25
)
Interest expense
4
5
Pension income excluding service cost component
(27
)
(26
)
Other charges, net
8
—
Loss from continuing operations before income taxes
(4
)
(4
)
Provision for income taxes
1
2
Loss from continuing operations
(5
)
(6
)
Income from discontinued operations, net of income taxes
—
207
Net (loss) income
$
(5
)
$
201
The notes accompanying the financial statements contained in the
Company’s second 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)
June 30,
December 31,
2020
2019
ASSETS Cash and cash equivalents
$
180
$
233
Trade receivables, net of allowances of $12 and $8, respectively
140
208
Inventories, net
228
215
Restricted cash - current portion
7
12
Other current assets
32
36
Current assets held for sale
2
2
Total current assets
589
706
Property, plant and equipment, net of accumulated depreciation of
$418 and $423, respectively
157
181
Goodwill
12
12
Intangible assets, net
41
47
Operating lease right-of-use assets
51
49
Restricted cash
25
45
Deferred income taxes
—
147
Other long-term assets
285
228
TOTAL ASSETS
$
1,160
$
1,415
LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND
EQUITY (DEFICIT) Accounts payable, trade
$
101
$
153
Short-term borrowings and current portion of long-term debt
2
2
Current portion of operating leases
11
12
Other current liabilities
161
201
Total current liabilities
275
368
Long-term debt, net of current portion
113
109
Pension and other postretirement liabilities
368
378
Operating leases, net of current portion
51
48
Other long-term liabilities
197
231
Total liabilities
1,004
1,134
Commitments and Contingencies (Note 11) Redeemable,
convertible Series A preferred stock, no par value, $100 per share
liquidation preference
186
182
Equity (Deficit) Common stock, $0.01 par value
—
—
Additional paid in capital
595
604
Treasury stock, at cost
(9
)
(9
)
Accumulated deficit
(195
)
(79
)
Accumulated other comprehensive loss
(421
)
(417
)
Total shareholders' (deficit) equity
(30
)
99
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY (DEFICIT)
$
1,160
$
1,415
The notes accompanying the financial statements contained in the
Company’s second 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/20200811005809/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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