Eastman Kodak Company (NYSE: KODK) today reported financial
results for the first quarter 2022, including consolidated revenues
of $290 million and continued growth in key product areas such as
KODAK SONORA Process Free Plates and KODAK PROSPER System
annuities.
First-quarter 2022 highlights include:
- Consolidated revenues of $290 million, compared with $265
million for Q1 2021
- GAAP net loss of $3 million, compared with net income of $6
million for Q1 2021
- Operational EBITDA of negative $7 million, compared with $3
million for Q1 2021
- A quarter-end cash balance of $309 million, compared with $362
million at the end of 2021
“Kodak continued to manage through an extremely challenging
business environment to deliver revenue growth for the first
quarter of 2022,” said Jim Continenza, Kodak’s Executive Chairman
and CEO. “We are also focused on long-term growth, making
significant investments in print technology and the four Advanced
Materials and Chemicals initiatives we announced earlier this year.
Finding new ways to leverage our core strengths and delivering for
our customers will be our focus as we execute our strategic
plan.”
For the quarter ended March 31, 2022, revenues were $290
million, an improvement of $25 million compared to the same period
in 2021. The Company had a GAAP net loss of $3 million for the
quarter, compared to net income of $6 million in the prior-year
quarter. Operational EBITDA for the first quarter was negative $7
million, compared to $3 million in Q1 2021. Operational EBITDA was
favorably impacted by the growth in revenue due to improved pricing
and volume, offset by higher ongoing global cost increases. Kodak
ended the first quarter with a cash balance of $309 million, a
decrease of $53 million from December 31, 2021. The decrease is
primarily attributable to the impact of higher costs, changes in
working capital and increased capital investment.
“Our quarter-end cash balance was generally in line with our
expectations,” said David Bullwinkle, Kodak’s CFO. “We have
successfully navigated supply chain issues by carrying
higher-than-historical levels of inventory to maintain supply for
our customers. We plan to continue executing our long-term strategy
despite the ongoing supply chain challenges and rising costs.”
Revenue and Operational EBITDA by
Reportable Segment Q1 2022 vs. Q1 2021
($ millions) Q1 2022 Actuals
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
172
$
56
$
54
$
4
$
286
Operational EBITDA *
$
(2
)
$
(5
)
$
(3
)
$
3
$
(7
)
Q1 2021 Actuals TraditionalPrinting
DigitalPrinting AdvancedMaterials &Chemicals
Brand Total Revenue
$
148
$
64
$
46
$
3
$
261
Operational EBITDA *
$
5
$
-
$
(4
)
$
2
$
3
Q1 2022 vs. Q1 2021 ActualsB/(W)
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
24
$
(8
)
$
8
$
1
$
25
Operational EBITDA *
$
(7
)
$
(5
)
$
1
$
1
$
(10
)
Q1 2022 Actuals on constant currency ** vs. Q1 2021
ActualsB/(W) TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
32
$
(6
)
$
8
$
1
$
35
Operational EBITDA *
$
(7
)
$
(4
)
$
1
$
1
$
(9
)
* 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 foreign exchange impact using average foreign
exchange rates for the three months ended March 31, 2021, rather
than the actual average exchange rates in effect for the three
months ended March 31, 2022.
Eastman Business Park segment is not a
reportable segment and is excluded from the table above.
About Kodak
Kodak (NYSE: KODK) is a leading global manufacturer focused on
commercial print and advanced materials & chemicals. With
31,000 patents earned over 130 years of R&D, we believe in the
power of technology and science to enhance what the world sees and
creates. Our innovative, award-winning products, combined with our
customer-first approach, make us the partner of choice for
commercial printers worldwide. Kodak is committed to environmental
stewardship, including industry leadership in developing
sustainable solutions for print. For additional information on
Kodak, visit us at kodak.com, or follow us on Twitter @Kodak and
LinkedIn.
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 words and
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 current expectations and
assumptions. Forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from historical results or those expressed in or
implied by such 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, 2021 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, 2022, 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 strategic objectives, 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 performance by
third parties of their obligations to supply products, components
or services to Kodak and Kodak’s 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; the impact of the
global economic environment or medical epidemics such as the
COVID-19 pandemic, including the restrictions and other actions
taken in response to the COVID-19 pandemic, and Kodak’s ability to
effectively mitigate or recoup associated increased costs of
materials, labor, shipping and operations; the impacts of the war
in Ukraine and the international response thereto on Kodak’s
business and operations, including the cost of and availability of
aluminum and other raw materials and components, shipping costs,
transit times and energy costs; changes in foreign currency
exchange rates, commodity prices, interest rates and tariff rates;
the impact of the investigations, litigation and claims arising out
of the circumstances surrounding the announcement on July 28, 2020,
by the U.S. International Development Finance Corporation of the
signing of a non‐binding letter of interest to provide a subsidiary
of Kodak with a potential loan to support the launch of an
initiative for the manufacture of pharmaceutical ingredients for
essential generic drugs; Kodak’s ability to effectively anticipate
technology and industry trends and develop and market new products,
solutions and technologies, including products based on its
technology and expertise that relate to industries in which it does
not currently conduct material business; 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; 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; and the
potential impact of force majeure events, cyber-attacks or other
data security incidents that could disrupt or otherwise harm
Kodak’s operations.
Future events and other factors 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 2022 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 and
other; 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 March 31, 2021, rather than the actual
average exchange rates in effect for the three months ended March
31, 2022.
The following table reconciles the most directly comparable GAAP
measure of Net (Loss) Income to Operational EBITDA and Operational
EBITDA on a constant currency basis for the three months ended
March 31, 2022 and 2021, respectively:
(in millions) Q1 2022 Q1 2021 $ Change
Net (Loss) Income
$
(3
)
$
6
$
(9
)
Depreciation and amortization
7
8
(1
)
Restructuring costs and other (1)
-
1
(1
)
Stock based compensation
2
3
(1
)
Consulting and other costs (2)
2
5
(3
)
Idle costs (3)
1
1
-
Other operating income, net
-
(1
)
1
Interest expense (1)
9
4
5
Pension income excluding service cost component (1)
(30
)
(25
)
(5
)
Other charges, net (1)
3
-
3
Provision for income taxes (1)
2
1
1
Operational EBITDA
$
(7
)
$
3
$
(10
)
Impact of foreign exchange (4)
1
1
Operational EBITDA on a constant currency basis
$
(6
)
$
3
$
(9
)
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, investigations and litigation.
(3)
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.
(4)
The impact of foreign exchange is
calculated by using average foreign exchange rates for the three
months ended March 31, 2021, rather than the actual average
exchange rates in effect for the three months ended March 31,
2022.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited) (in millions) Three
Months Ended March 31,
2022
2021
Revenues Sales
$
234
$
209
Services
56
56
Total revenues
290
265
Cost of revenues Sales
220
185
Services
37
40
Total cost of revenues
257
225
Gross profit
33
40
Selling, general and administrative expenses
43
46
Research and development costs
9
8
Restructuring costs and other
—
1
Other operating income, net
—
(1
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, other charges, net and
income taxes
(19
)
(14
)
Interest expense
9
4
Pension income excluding service cost component
(30
)
(25
)
Other charges, net
3
—
(Loss) earnings from continuing operations before income taxes
(1
)
7
Provision for income taxes
2
1
Net (loss) income
$
(3
)
$
6
The notes accompanying the financial
statements contained in the Company’s first quarter 2022 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,
2022
2020
ASSETS Cash and cash equivalents
$
309
$
362
Trade receivables, net of allowances of $7 and $7, respectively
182
175
Inventories, net
247
219
Other current assets
50
49
Current assets held for sale
2
2
Total current assets
790
807
Property, plant and equipment, net of accumulated depreciation of
$446 and $441, respectively
147
140
Goodwill
12
12
Intangible assets, net
32
34
Operating lease right-of-use assets
45
47
Restricted cash
58
54
Pension and other postretirement assets
1,049
1,022
Other long-term assets
54
55
TOTAL ASSETS
$
2,187
$
2,171
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
182
$
153
Short-term borrowings and current portion of long-term debt
1
1
Current portion of operating leases
12
13
Other current liabilities
139
142
Total current liabilities
334
309
Long-term debt, net of current portion
256
253
Pension and other postretirement liabilities
375
382
Operating leases, net of current portion
42
45
Other long-term liabilities
200
205
Total liabilities
1,207
1,194
Commitments and Contingencies (Note 6) Redeemable,
convertible preferred stock, no par value, $100 per share
liquidation preference
198
196
Equity Common stock, $0.01 par value
—
—
Additional paid in capital
1,165
1,166
Treasury stock, at cost
(10
)
(10
)
Accumulated deficit
(599
)
(596
)
Accumulated other comprehensive income
226
221
Total shareholders' equity
782
781
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
2,187
$
2,171
The notes accompanying the financial
statements contained in the Company’s first quarter 2022 Form 10-Q
are an integral part of these consolidated financial
statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF CASH
FLOWS (Unaudited) (in millions) Three Months
Ended March 31,
2022
2021
Cash flows from operating activities: Net (loss) income
$
(3
)
$
6
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
7
8
Pension income
(26
)
(21
)
Change in fair value of Preferred Stock and Convertible Notes
embedded derivatives
3
1
Non-cash changes in workers' compensation reserves
(4
)
-
Stock based compensation
2
3
(Increase) decrease in trade receivables
(9
)
8
Increase in inventories
(32
)
(22
)
Increase in trade payables
31
24
Decrease in liabilities excluding borrowings and trade payables
(13
)
(22
)
Other items, net
1
(1
)
Total adjustments
(40
)
(22
)
Net cash used in operating activities
(43
)
(16
)
Cash flows from investing activities: Additions to properties
(5
)
(1
)
Net cash used in investing activities
(5
)
(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
(1
)
(4
)
Treasury stock purchases
-
(1
)
Net cash (used in) provided by financing activities
(1
)
242
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
-
(4
)
Net (decrease) increase in cash, cash equivalents and restricted
cash
(49
)
221
Cash, cash equivalents and restricted cash, beginning of period
423
256
Cash, cash equivalents and restricted cash, end of period
$
374
$
477
The notes accompanying the financial
statements contained in the Company’s first quarter 2022 Form 10-Q
are an integral part of these consolidated financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220510006135/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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