Eastman Kodak Company (NYSE: KODK) today reported financial
results for the first quarter 2021, including consolidated revenues
of $265 million and an increase in cash from a series of financial
transactions previously announced.
First-quarter 2021 highlights include:
- Consolidated revenues of $265 million
- GAAP net income of $6 million
- The Company ended the quarter with a cash balance of $401
million
“The steps we have taken in the last two years — strengthening
our balance sheet, establishing a customer-first approach and
continuing to invest in innovation — have created the foundation
for growth,” said Jim Continenza, Kodak’s Executive Chairman and
CEO. “We will continue to execute on those strategies to create
long-term value for our shareholders and our employees.”
For the quarter ended March 31, 2021, revenues declined by only
$2 million compared with the same period in 2020. Kodak ended the
quarter with a cash balance of $401 million, up from the December
31, 2020 cash balance of $196 million. GAAP net income was $6
million for the quarter ended March 31, 2021, compared with a net
loss of $111 million in the prior-year quarter. The prior year
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 was $3 million for the
quarter ended March 31, 2021, compared with negative $8 million in
the first quarter 2020.
“We continued to see improved cash performance during the first
quarter, including an improvement in working capital and an
increase in our cash balance through several financing transactions
that closed during the quarter,” said David Bullwinkle, Kodak’s
CFO. “During the first quarter we returned to growth in our key
product areas, including SONORA Process Free Plates volume and
PROSPER annuities which were up 8 and 12 percent respectively
compared with the first quarter of 2020. We will continue to
evaluate strategies for investing the capital raised through
financing activities to generate additional growth.”
Revenue and Operational EBITDA by
Reportable Segment Q1 2021 vs. Q1 2020
($ millions)
Q1 2021 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
148
$
64
$
46
$
3
$
261
Operational EBITDA *
$
5
$
-
$
(4
)
$
2
$
3
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 2021 vs. Q1 2020 Actuals
B/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
(6
)
$
(1
)
$
4
$
-
$
(3
)
Operational EBITDA *
$
4
$
2
$
5
$
-
$
11
Q1 2021 Actuals on constant
currency ** vs. Q1 2020 Actuals B/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
(13
)
$
(3
)
$
4
$
-
$
(12
)
Operational EBITDA *
$
5
$
1
$
5
$
-
$
11
* 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 2021 foreign
exchange impact using average foreign exchange rates for the three
months ended March 31, 2020, rather than the actual average
exchange rates in effect for the three months ended March 31,
2021.
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, 2020 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,” 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 B Preferred Stock and Series C
Preferred Stock; the impact of the global economic environment or
medical epidemics such as the COVID-19 pandemic, including the
restrictions and other actions implemented to fight the COVID-19
pandemic; the impact of the investigations, litigations and claims
arising out of the circumstances surrounding the announcement by
the U.S. International Development Finance Corporation in July 2020
of a potential loan to a subsidiary of Kodak to support the launch
of a pharmaceutical initiative; the performance by third parties of
their obligations to supply products, components or services to
Kodak and the 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; changes in foreign currency
exchange rates, commodity prices, interest rates and tariff 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 asset based credit
facility and letter of 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 potential
impact of cyber-attacks and other data security incidents that
disrupt Kodak’s operations; and Kodak’s ability to effect strategic
transactions, such as acquisitions, strategic alliances,
divestitures 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 2021 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”). 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;
stock-based compensation expense; consulting and other costs; idle
costs; other operating income, 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 March 31, 2020, rather than the actual
average exchange rates in effect for the three months ended March
31, 2021.
The following table reconciles the most directly comparable GAAP
measure of Net Income (Loss) to Operational EBITDA for the three
months ended March 31, 2021 and 2020, respectively:
(in millions) Q1 2021 Q1 2020 $ Change
Net Income (Loss)
$
6
$
(111
)
$
117
All other
-
1
(1
)
Depreciation and amortization
8
10
(2
)
Restructuring costs and other
1
7
(6
)
Stock based compensation
3
1
2
Consulting and other costs (1)
5
-
5
Idle costs (2)
1
-
1
Other operating income, net, excluding income from transition
services agreement (3)
(1
)
(6
)
5
Interest expense
4
4
-
Pension income excluding service cost component
(25
)
(26
)
1
Other income, net
-
(53
)
53
Provision for income taxes
1
165
(164
)
Operational EBITDA
$
3
$
(8
)
$
11
Footnote Explanations:
(1)
Consulting and other costs are primarily
professional services and internal costs associated with certain
corporate strategic initiatives and investigations.
(2)
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.
(3)
$0 million and $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 March 31, 2021 and 2020, respectively. 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,
2021
2020
Revenues Sales
$
209
$
210
Services
56
57
Total revenues
265
267
Cost of revenues Sales
185
191
Services
40
40
Total cost of revenues
225
231
Gross profit
40
36
Selling, general and administrative expenses
46
48
Research and development costs
8
9
Restructuring costs and other
1
7
Other operating income, net
(1
)
(7
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, other income, net and
income taxes
(14
)
(21
)
Interest expense
4
4
Pension income excluding service cost component
(25
)
(26
)
Other income, net
—
(53
)
Earnings from operations before income taxes
7
54
Provision for income taxes
1
165
Net income (loss)
$
6
$
(111
)
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
FINANCIAL POSITION (Unaudited) (in millions)
March 31, December 31,
2021
2020
ASSETS Cash and cash equivalents
$
401
$
196
Trade receivables, net of allowances of $9 and $10, respectively
165
177
Inventories, net
224
206
Other current assets
42
46
Current assets held for sale
2
2
Total current assets
834
627
Property, plant and equipment, net of accumulated depreciation of
$431 and $430, respectively
143
152
Goodwill
12
12
Intangible assets, net
38
39
Operating lease right-of-use assets
47
48
Restricted cash
69
53
Other long-term assets
346
317
TOTAL ASSETS
$
1,489
$
1,248
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
141
$
118
Short-term borrowings and current portion of long-term debt
2
2
Current portion of operating leases
18
12
Other current liabilities
134
164
Total current liabilities
295
296
Long-term debt, net of current portion
246
17
Pension and other postretirement liabilities
389
406
Operating leases, net of current portion
41
49
Other long-term liabilities
222
212
Total liabilities
1,193
980
Redeemable, convertible preferred stock, no par value, $100
per share liquidation preference
192
191
Equity Common stock, $0.01 par value
—
—
Additional paid in capital
1,169
1,152
Treasury stock, at cost
(10
)
(9
)
Accumulated deficit
(614
)
(620
)
Accumulated other comprehensive loss
(441
)
(446
)
Total equity
104
77
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
1,489
$
1,248
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
CASH FLOWS (Unaudited) (in millions) Three
Months Ended March 31,
2021
2020
Cash flows from operating activities: Net income (loss)
$
6
$
(111
)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
8
10
Pension income
(21
)
(22
)
Change in fair value of embedded derivatives in the Series A,
Series B and Series CPreferred Stock and Convertible Notes
1
(53
)
Net gain on sales of assets
—
(8
)
Asset impairments
—
3
Stock based compensation
3
1
Provision for deferred income taxes
—
161
Decrease in trade receivables
8
19
Increase in inventories
(22
)
(26
)
Increase in trade payables
24
1
Decrease in liabilities excluding borrowings and trade payables
(22
)
(27
)
Other items, net
(1
)
11
Total adjustments
(22
)
70
Net cash used in operating activities
(16
)
(41
)
Cash flows from investing activities: Additions to properties
(1
)
(4
)
Net proceeds from sales of assets/businesses
—
2
Net proceeds from return on equity investment
—
1
Net cash used in investing activities
(1
)
(1
)
Cash flows from financing activities: Net proceeds from Term Loan
Credit Agreement
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
(4
)
(3
)
Treasury stock purchases
(1
)
—
Net cash provided by (used in) financing activities
242
(3
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(4
)
(4
)
Net increase (decrease) in cash, cash equivalents and restricted
cash
221
(49
)
Cash, cash equivalents and restricted cash, beginning of period
256
290
Cash, cash equivalents and restricted cash, end of period
$
477
$
241
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210512005833/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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