Eastman Kodak Company (NYSE: KODK) today reported financial
results for the second quarter 2021, including consolidated
revenues of $291 million and a year-over-year improvement in cash
performance.
Second-quarter 2021 highlights include:
- Consolidated revenues of $291 million
- GAAP net income of $16 million
- The Company ended the quarter with a cash balance of $395
million
“Kodak’s strong second-quarter performance reflects the impact
of changes we’ve made and our continued focus on our core
competencies and our long-term plan,” said Jim Continenza, Kodak’s
Executive Chairman and CEO. “Over the last two years we have
concentrated on our strengths as an industrial manufacturer,
established a customer-first model, fixed our balance sheet and
raised capital. The result is improved performance in all our
businesses and a solid foundation.”
For the quarter ended June 30, 2021, revenues were $291 million,
an improvement of $78 million compared to the prior-year quarter.
Kodak ended the second quarter with a cash balance of $395 million,
an increase of $199 million from December 31, 2020. GAAP net income
was $16 million for the second quarter, compared to a net loss of
$5 million in the second quarter 2020. Operational EBITDA for the
quarter was $10 million compared to negative $7 million in the
prior-year quarter.
“I am encouraged by our financial performance for the quarter,
which included year-over-year improvements in revenues and
Operational EBITDA across all of our divisions,” said David
Bullwinkle, Kodak’s CFO. “During the second quarter we used $6
million in cash, an improvement of more than $20 million compared
to the prior-year quarter, driven by increases in revenue and
profit. We will continue to focus on the execution of our long-term
plan.”
Revenue and Operational EBITDA by Reportable Segment Q2 2021
vs. Q2 2020
($ millions) Q2 2021 Actuals
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
169
$
62
$
54
$
3
$
288
Operational EBITDA *
$
6
$
-
$
1
$
3
$
10
Q2 2020 Actuals
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
119
$
52
$
38
$
2
$
211
Operational EBITDA *
$
1
$
(3
)
$
(7
)
$
2
$
(7
)
Q2 2021 vs. Q2 2020 ActualsB/(W)
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
50
$
10
$
16
$
1
$
77
Operational EBITDA *
$
5
$
3
$
8
$
1
$
17
Q2 2021 Actuals on constant currency
** vs. Q2 2020 ActualsB/(W) TraditionalPrinting
DigitalPrinting AdvancedMaterials &Chemicals
Brand Total Revenue
$
43
$
8
$
15
$
1
$
67
Operational EBITDA *
$
6
$
2
$
7
$
1
$
16
* 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 June 30, 2020, rather than the actual average exchange
rates in effect for the three months ended June 30, 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,” in the
corresponding sections of Kodak’s Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2021 and June 30, 2021, 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 second 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
charges, 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 June 30, 2020, rather than the actual
average exchange rates in effect for the three months ended June
30, 2021.
The following table reconciles the most directly comparable GAAP
measure of Net Income (Loss) to Operational EBITDA and Operational
EBITDA on a constant currency basis for the three months ended June
30, 2021 and 2020, respectively:
(in millions) Q2 2021 Q2 2020 $ Change
Net Income (Loss)
$
16
$
(5
)
$
21
All other
(1
)
(1
)
-
Depreciation and amortization
8
10
(2
)
Restructuring costs and other (1)
-
1
(1
)
Stock based compensation
1
-
1
Consulting and other costs (2)
4
1
3
Idle costs (3)
-
1
(1
)
Other operating income, net, excluding income from transition
services agreement (4)
(6
)
-
(6
)
Interest expense (1)
10
4
6
Pension income excluding service cost component (1)
(26
)
(27
)
1
Other charges, net (1)
1
8
(7
)
Provision for income taxes (1)
3
1
2
Operational EBITDA
$
10
$
(7
)
$
17
Impact of foreign exchange (5)
(1
)
(1
)
Operational EBITDA on a constant currency basis
$
9
$
(7
)
$
16
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 and investigations.
- 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 three months ended June 30, 2020. No income has
been recognized in 2021. 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.
- The impact of foreign exchange is calculated by using average
foreign exchange rates for the three months ended June 30, 2020,
rather than the actual average exchange rates in effect for the
three months ended June 30, 2021.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited) (in millions) Three Months
Ended June 30, Six Months Ended June 30,
2021
2020
2021
2020
Revenues Sales
$
234
$
163
$
443
$
373
Services
57
50
113
107
Total revenues
291
213
556
480
Cost of revenues Sales
204
159
389
350
Services
39
33
79
73
Total cost of revenues
243
192
468
423
Gross profit
48
21
88
57
Selling, general and administrative expenses
42
34
88
82
Research and development costs
8
8
16
17
Restructuring costs and other
—
1
1
8
Other operating income, net
(6
)
(3
)
(7
)
(10
)
Earnings (loss) from continuing operations before interest expense,
pension income excluding service cost component, other charges
(income), net and income taxes
4
(19
)
(10
)
(40
)
Interest expense
10
4
14
8
Pension income excluding service cost component
(26
)
(27
)
(51
)
(53
)
Other charges (income), net
1
8
1
(45
)
Earnings (loss) from continuing operations before income taxes
19
(4
)
26
50
Provision for income taxes
3
1
4
166
Net income (loss)
$
16
$
(5
)
$
22
$
(116
)
The notes accompanying the financial statements contained in the
Company’s second quarter 2021 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,
2021
2020
ASSETS Cash and cash
equivalents
$
395
$
196
Trade receivables, net of allowances of $9 and $10,
respectively
174
177
Inventories,
net
234
206
Other current assets
43
46
Current assets held for sale
2
2
Total current assets
848
627
Property, plant and equipment, net of accumulated depreciation of
$438 and $430,
respectively
148
152
Goodwill
12
12
Intangible assets, net
36
39
Operating lease right-of-use assets
49
48
Restricted cash
66
53
Other long-term
assets
375
317
TOTAL ASSETS
$
1,534
$
1,248
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
145
$
118
Short-term borrowings and current portion of long-term
debt
2
2
Current portion of operating leases
18
12
Other current liabilities
144
164
Total current liabilities
309
296
Long-term debt, net of current
portion
249
17
Pension and other postretirement
liabilities
391
406
Operating leases, net of current portion
43
49
Other long-term
liabilities
219
212
Total liabilities
1,211
980
Commitments and Contingencies (note 8) Redeemable,
convertible preferred stock, no par value, $100 per share
liquidation preference
193
191
Equity Common stock, $0.01 par
value
—
—
Additional paid in
capital
1,167
1,152
Treasury stock, at cost
(10
)
(9
)
Accumulated
deficit
(598
)
(620
)
Accumulated other comprehensive loss
(429
)
(446
)
Total shareholders' equity
130
77
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
1,534
$
1,248
The notes accompanying the financial statements contained in the
Company’s second quarter 2021 Form 10-Q are an integral part of
these consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF CASH
FLOWS (Unaudited) (in millions) Six Months
Ended June 30,
2021
2020
Cash flows from operating activities: Net income (loss)
$
22
$
(116
)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
16
20
Pension income
(42
)
(43
)
Change in fair value of embedded derivatives in the Series A,
Series B and Series C Preferred Stock and Convertible
Notes
—
(49
)
Net gain on sales of assets
—
(9
)
Asset impairments
—
3
Stock based compensation
4
1
Non-cash changes in workers' compensation reserves
(3
)
—
Provision for deferred income taxes
—
160
Decrease in trade receivables
1
64
Increase in inventories
(30
)
(17
)
Increase in trade payables
27
(50
)
Decrease in liabilities excluding borrowings and trade payables
(20
)
(31
)
Other items, net
4
3
Total adjustments
(43
)
52
Net cash used in operating activities
(21
)
(64
)
Cash flows from investing activities: Additions to properties
(5
)
(9
)
Net proceeds from sales of assets/businesses
—
2
Net proceeds from return on equity investment
—
2
Net cash used in investing activities
(5
)
(5
)
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
(5
)
(6
)
Treasury stock purchases
(1
)
—
Net cash provided by (used in) financing activities
241
(6
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(2
)
(3
)
Net increase (decrease) in cash, cash equivalents and restricted
cash
213
(78
)
Cash, cash equivalents and restricted cash, beginning of period
256
290
Cash, cash equivalents and restricted cash, end of period
$
469
$
212
The notes accompanying the financial statements contained in the
Company’s second quarter 2021 Form 10-Q are an integral part of
these consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210810005881/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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