Eastman Kodak Company (NYSE: KODK) today reported financial
results for the fourth quarter and full year 2022.
Fourth-quarter 2022 highlights include:
- Consolidated revenues of $305 million, compared with $307
million for Q4 2021, a decrease of $2 million or 1 percent
(increased by $17 million on a constant currency basis, or 6
percent)
- Gross profit percentage of 14 percent, compared with 11 percent
for Q4 2021
- GAAP net income of $7 million, compared with net loss of $6
million for Q4 2021, an increase of 217 percent
- Operational EBITDA of $7 million, compared with negative $8
million for Q4 2021, an increase of 188 percent
- A year-end cash balance of $217 million, compared with $216
million at the end of the third quarter of 2022, reflecting an
improvement in use of cash of $19 million from the comparable
prior-year period
Full-year 2022 highlights include:
- Consolidated revenues of $1.205 billion, compared with $1.150
billion for the full year 2021, an increase of $55 million or 5
percent (increased by $125 million on a constant currency basis, or
11 percent)
- Gross profit percentage of 14 percent, flat compared to
2021
- GAAP net income of $26 million, compared with $24 million for
2021, an increase of 8 percent
- Operational EBITDA of $18 million, compared with $11 million
for 2021, an increase of 64 percent
- A year-end cash balance of $217 million, compared with $362
million at the end of 2021
“Kodak delivered strong performance in 2022, growing revenue in
consecutive years for the first time in decades, launching new
products and investing in our future despite ongoing inflationary
and supply chain challenges,” said Jim Continenza, Kodak’s
Executive Chairman and CEO. “Our performance reflected the success
of our strategic plan, which began four years ago with stabilizing
our balance sheet, reorganizing as One Kodak and focusing on our
core businesses. Our priorities for 2022 included providing our
customers with uninterrupted supplies, reducing costs by improving
operational efficiency and implementing pricing actions to realize
the value of our offerings, which contributed to a year-over-year
increase in gross profit for the fourth quarter. We also continued
to invest in initiatives including updating our infrastructure and
developing growth businesses in our Advanced Materials &
Chemicals group. More recently, we debuted the groundbreaking KODAK
PROSPER ULTRA 520 Inkjet Press and KODACHROME Inks at the Hunkeler
Innovationdays event and received extremely positive reaction from
customers and prospects who are excited about the new press’s
ability to increase productivity by delivering offset quality at
unprecedented speeds. Our goal is to build on the momentum we’ve
generated to continue our transformation in 2023.”
For the full year ended December 31, 2022, revenues were $1.205
billion, an improvement of $55 million or 5 percent compared to the
same period in 2021. Adjusting for the unfavorable impact of
foreign exchange of $70 million, revenues increased by $125
million, or 11 percent compared to the prior year.
GAAP net income was $26 million for the full year, compared to
$24 million in 2021 an increase of 8 percent. Operational EBITDA
for the year ended December 31, 2022 was $18 million, compared to
$11 million in 2021, an increase of 64 percent. The increase was
primarily driven by the growth in revenue due to improved pricing,
partially offset by higher continued ongoing global cost increases
and the unfavorable impact of foreign exchange.
Kodak was cash neutral for Q4 2022 and ended the year with a
cash balance of $217 million, a decrease of $145 million from
December 31, 2021. The decrease was primarily driven by a use of
cash from working capital mainly attributable to increased
investment in inventory to strengthen the Company’s ability to
supply customers, unfavorable effects of foreign exchange,
increased capital investment and the investment in Wildcat
Discovery Technologies, partially offset by proceeds received under
the Term Loan Credit Agreement.
“Kodak was cash neutral for Q4 2022, an achievement we’re proud
of considering the unprecedented cost increases our team was able
to more than offset for the quarter,” said David Bullwinkle,
Kodak’s CFO. “The Company ended 2022 with $217 million in cash and
cash equivalents, a decrease of $145 million from December 31,
2021. The decrease was primarily driven by the cost of building
inventory to keep customers supplied and productive, ongoing
investment in growth initiatives and the headwind of unfavorable
foreign exchange. We expect to continue our transition to cash
generation and drive improved cash flow for 2023.”
Revenue and Operational EBITDA by Reportable Segment Q4 2022
vs. Q4 2021
($ millions)
Q4 2022 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
176
$
58
$
61
$
6
$
301
Operational EBITDA *
$
12
$
(7
)
$
(2
)
$
4
$
7
Q4 2021 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
176
$
65
$
57
$
5
$
303
Operational EBITDA *
$
(7
)
$
(3
)
$
(3
)
$
5
$
(8
)
Q4 2022 vs. Q4 2021
Actuals
B/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
-
$
(7
)
$
4
$
1
$
(2
)
Operational EBITDA *
$
19
$
(4
)
$
1
$
(1
)
$
15
Q4 2022 Actuals on constant
currency ** vs. Q4 2021 Actuals
B/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
14
$
(3
)
$
5
$
1
$
17
Operational EBITDA
$
18
$
(4
)
$
1
$
(1
)
$
14
Revenue and Operational EBITDA by Reportable Segment FY 2022
vs. FY 2021
($ millions)
FY 2022 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
711
$
227
$
234
$
17
$
1,189
Operational EBITDA *
$
27
$
(22
)
$
(1
)
$
14
$
18
FY 2021 Actuals
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
659
$
249
$
212
$
15
$
1,135
Operational EBITDA *
$
9
$
(5
)
$
(6
)
$
13
$
11
FY 2022 vs. FY 2021
Actuals
B/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
52
$
(22
)
$
22
$
2
$
54
Operational EBITDA *
$
18
$
(17
)
$
5
$
1
$
7
FY 2022 Actuals on constant
currency ** vs. FY 2021 Actuals
B/(W)
Traditional
Printing
Digital
Printing
Advanced
Materials &
Chemicals
Brand
Total
Revenue
$
105
$
(8
)
$
25
$
2
$
124
Operational EBITDA
$
21
$
(13
)
$
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 foreign
exchange impact using average foreign exchange rates for the three
or twelve months ended December 31, 2021, rather than the actual
average exchange rates in effect for the three or twelve months
ended December 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 79,000 worldwide 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, 2022 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: 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 or
alternate financing if and as needed, Kodak’s continued ability to
manage world-wide cash through inter-company loans, distributions
and other mechanisms, and Kodak's ability to provide or facilitate
financing for its customers; 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, collateral requirements and
restructuring payments and service its debt and Series B Preferred
Stock and Series C Preferred Stock; changes in foreign currency
exchange rates, commodity prices, interest rates and tariff rates;
the impact of the global economic environment, including
inflationary pressures, medical epidemics such as the COVID-19
pandemic, geopolitical issues such as the war in Ukraine, and
Kodak’s ability to effectively mitigate the associated increased
costs of aluminum and other raw materials, energy, labor, shipping,
delays in shipment and production times, and fluctuations in
demand; 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 and the war in Ukraine; 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; Kodak’s ability to effect strategic transactions,
such as investments, acquisitions, strategic alliances,
divestitures and similar transactions, or to achieve the benefits
sought to be achieved from such strategic transactions; Kodak’s
ability to discontinue, sell or spin-off certain non-core
businesses or operations, or otherwise monetize assets; 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; 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
In this fourth quarter and full year 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 (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 or twelve months ended December 31, 2021, rather than the
actual average exchange rates in effect for the three or twelve
months ended December 31, 2022.
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
December 31, 2022 and 2021, respectively:
(in millions) Q4 2022 Q4 2021 $ Change
Improvement % Net Income (Loss)
$
7
$
(6
)
$
13
217
%
All other
(1
)
(1
)
-
Depreciation and amortization
7
8
(1
)
Restructuring costs and other
10
5
5
Stock based compensation
1
1
-
Consulting and other costs
(9
)
6
(15
)
Idle costs
1
-
1
Other operating income, net
(1
)
-
(1
)
Interest expense
11
10
1
Pension income excluding service cost component
(21
)
(26
)
5
Other income, net
(1
)
(4
)
3
Provision (benefit) for income taxes
3
(1
)
4
Operational EBITDA
$
7
$
(8
)
$
15
188
%
Impact of foreign exchange (5)
(1
)
(1
)
Operational EBITDA on a constant currency basis
$
6
$
(8
)
$
14
175
%
The following table reconciles the most directly comparable GAAP
measure of Net Income to Operational EBITDA and Operational EBITDA
on a constant currency basis for the twelve months ended December
31, 2022 and 2021, respectively:
(in millions) FY 2022 FY 2021 $ Change
Improvement % Net Income
$
26
$
24
$
2
8
%
All other
(3
)
(2
)
(1
)
Depreciation and amortization
29
31
(2
)
Restructuring costs and other (1)
13
6
7
Stock based compensation
5
7
(2
)
Consulting and other costs (2)
(2
)
19
(21
)
Idle costs (3)
3
2
1
Other operating income, net
(1
)
(6
)
5
Interest expense (4)
40
33
7
Pension income excluding service cost component (4)
(98
)
(102
)
4
Other charges (income), net (4)
1
(5
)
6
Provision for income taxes (4)
5
4
1
Operational EBITDA
$
18
$
11
$
7
64
%
Impact of foreign exchange (5)
9
9
Operational EBITDA on a constant currency basis
$
27
$
11
$
16
145
%
Footnote Explanations:
(1)
Restructuring costs and other as
reported in the Consolidated Statement of Operations plus $3
million of inventory write-downs included in cost of revenues for
the twelve months ended December 31, 2022.
(2)
Consulting and other costs are
primarily professional services and internal costs associated with
certain corporate strategic initiatives and investigations.
(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)
As reported in the Consolidated
Statement of Operations.
(5)
The impact of foreign exchange is
calculated by using average foreign exchange rates for the three or
twelve months ended December 31, 2021, rather than the actual
average exchange rates in effect for the three or twelve months
ended December 31, 2022.
A. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited) (in millions)
Three Months Ended December
31,
2022
2021
Revenues Sales
$
249
$
251
Services
56
56
Total net revenues
305
307
Cost of revenues Sales
223
235
Services
39
39
Total cost of revenues
262
274
Gross profit
43
33
Selling, general and administrative expenses
30
46
Research and development costs
8
9
Restructuring costs and other
7
5
Other operating income, net
(1
)
—
Loss from continuing operations before interest expense, pension
income excluding service cost component, other income, net and
income taxes
(1
)
(27
)
Interest expense
11
10
Pension income excluding service cost component
(21
)
(26
)
Other income, net
(1
)
(4
)
Earnings (loss) from continuing operations before income taxes
10
(7
)
Provision (benefit) for income taxes
3
(1
)
Earnings (loss) from continuing operations
7
(6
)
Earnings from discontinued operations, net of income taxes
—
—
NET EARNINGS (LOSS)
$
7
$
(6
)
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
CASH FLOW (Unaudited)
Three Months Ended December
31,
(in millions)
2022
2021
Cash flows from operating activities: Net earnings (loss)
$
7
$
(6
)
Adjustments to reconcile to net cash provided by (used in)
operating activities: Depreciation and amortization
7
8
Pension and other postretirement income
(13
)
(20
)
Change in fair value of the Preferred Stock and Convertible Notes
embedded derivatives
(2
)
(4
)
Asset impairments
1
—
Stock based compensation
1
1
Non-cash changes in workers' compensation and other employee
benefit reserves
(2
)
—
Increase in trade receivables
(5
)
(11
)
Decrease in inventories
43
19
(Decrease) increase in trade accounts payable
(17
)
5
Decrease in liabilities excluding borrowings
(12
)
(3
)
Other items, net
6
(3
)
Total adjustments
7
(8
)
Net cash provided by (used in) operating activities
14
(14
)
Cash flows from investing activities: Additions to
properties
(12
)
(11
)
Net cash used in investing activities
(12
)
(11
)
Cash flows from financing activities: Preferred stock
dividend payments
(1
)
(1
)
Repayment of other borrowings
—
(1
)
Finance lease payments
(1
)
—
Net cash used in financing activities
(2
)
(2
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
6
(1
)
Net increase (decrease) in cash, cash equivalents and restricted
cash
6
(28
)
Cash, cash equivalents and restricted cash, beginning of period
280
451
Cash, cash equivalents and restricted cash, end of period
$
286
$
423
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (in millions)
Year Ended December
31,
2022
2021
Revenues Sales
$
983
$
925
Services
222
225
Total net revenues
1,205
1,150
Cost of revenues Sales
885
830
Services
150
156
Total cost of revenues
1,035
986
Gross profit
170
164
Selling, general and administrative expenses
153
177
Research and development costs
34
33
Restructuring costs and other
10
6
Other operating income, net
(1
)
(6
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, loss on early
extinguishment of debt, other charges (income), net and income
taxes
(26
)
(46
)
Interest expense
40
33
Pension income excluding service cost component
(98
)
(102
)
Loss on early extinguishment of debt
—
—
Other charges (income), net
1
(5
)
Earnings from continuing operations before income taxes
31
28
Provision for income taxes
5
4
Earnings from continuing operations
26
24
Earnings from discontinued operations, net of income taxes
—
—
NET EARNINGS
$
26
$
24
The notes accompanying the financial statements contained in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022 are an integral part of these consolidated financial
statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As of December 31,
(in millions)
2022
2021
ASSETS Cash and cash equivalents
$
217
$
362
Trade receivables, net of allowances of $7 and $7
177
175
Inventories, net
237
219
Other current assets
48
49
Current assets held for sale
2
2
Total current assets
681
807
Property, plant and equipment, net
154
140
Goodwill
12
12
Intangible assets, net
28
34
Operating lease right-of-use assets
39
47
Restricted cash
62
54
Pension and other postretirement assets
1,233
1,022
Other long-term assets
76
55
TOTAL ASSETS
$
2,285
$
2,171
LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
134
$
153
Short-term borrowings and current portion of long-term debt
1
1
Current portion of operating leases
15
13
Other current liabilities
143
142
Total current liabilities
293
309
Long-term debt, net of current portion
316
253
Pension and other postretirement liabilities
230
382
Operating leases, net of current portion
31
45
Other long-term liabilities
171
205
Total liabilities
1,041
1,194
Commitments and contingencies (Note 12) Redeemable,
convertible preferred stock, no par value, $100 per share
liquidation preference
203
196
Equity Common stock, $0.01 par value
—
—
Additional paid in capital
1,160
1,166
Treasury stock, at cost
(11
)
(10
)
Accumulated deficit
(570
)
(596
)
Accumulated other comprehensive income
462
221
Total equity
1,041
781
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
2,285
$
2,171
The notes accompanying the financial statements contained in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022 are an integral part of these consolidated financial
statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF CASH
FLOW
Year Ended December
31,
(in millions)
2022
2021
Cash flows from operating activities: Net earnings
$
26
$
24
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
29
31
Pension and other postretirement income
(77
)
(83
)
Change in fair value of the Preferred Stock and Convertible Notes
embedded derivatives
(3
)
(7
)
Asset impairments
1
—
Stock based compensation
5
7
Non-cash changes in workers' compensation and other employee
benefit reserves
(15
)
(4
)
Net losses on sales of businesses/assets
—
1
Benefit for deferred income taxes
(3
)
(1
)
Increase in trade receivables
(12
)
(5
)
Increase in inventories
(31
)
(19
)
(Decrease) increase in trade accounts payable
(12
)
38
Decrease in liabilities excluding borrowings
(38
)
(29
)
Other items, net
14
—
Total adjustments
(142
)
(71
)
Net cash used in operating activities
(116
)
(47
)
Cash flows from investing activities: Additions to
properties
(31
)
(21
)
Purchase of preferred equity interest
(25
)
—
Net proceeds from sales of businesses/assets, net
—
1
Net cash used in investing activities
(56
)
(20
)
Cash flows from financing activities: Net proceeds from the
Term Loan Credit Agreement
49
215
Proceeds from issuance of Convertible Notes
—
25
Net proceeds from Series C Preferred Stock
—
99
Net proceeds from the sale of common stock
—
10
Repurchase of Series A Preferred Stock
—
(100
)
Debt issuance costs
—
(2
)
Preferred stock dividend payments
(4
)
(7
)
Treasury stock purchases
(1
)
(1
)
Repayment of other borrowings
—
(1
)
Finance lease payments
(1
)
—
Net cash provided by financing activities
43
238
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(8
)
(4
)
Net (decrease) increase in cash, cash equivalents and restricted
cash
(137
)
167
Cash, cash equivalents and restricted cash, beginning of period
423
256
Cash, cash equivalents and restricted cash, end of period
$
286
$
423
The notes accompanying the financial statements contained in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022 are an integral part of these consolidated financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230316005511/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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