Eastman Kodak Company (NYSE: KODK) today reported financial results
for the third quarter 2024.
Third-quarter 2024 highlights include:
- Consolidated revenues of $261 million, compared with $269
million for Q3 2023, a decrease of $8 million or 3 percent
- Gross profit of $45 million, compared with $50 million for Q3
2023, a decrease of $5 million or 10 percent
- Gross profit percentage of 17 percent, compared with 19 percent
for Q3 2023, a decrease of 2 percentage points
- GAAP net income of $18 million, compared with net income of $2
million for Q3 2023, an increase of $16 million or 800 percent
- Operational EBITDA of $1 million, compared with $12 million for
Q3 2023, a decrease of $11 million or 92 percent
- A quarter-end cash balance of $214 million, compared with $255
million on December 31, 2023, a decrease of $41 million
“In the third quarter, Kodak continued to focus on
the fundamentals of our long-term strategic plan: increasing
operating efficiency, investing in innovation and driving smart
revenue,” said Jim Continenza, Kodak’s Executive Chairman and CEO.
“Our Advanced Materials & Chemicals group continues to emerge
as a key part of our future and we continue to invest in AM&C
growth initiatives, including the cGMP facility for manufacturing
pharmaceutical ingredients currently nearing completion at Eastman
Business Park. Our legacy AM&C film business is growing
rapidly, and we are investing capex to increase capacity to meet
demand. In our commercial print business, we recently received an
affirmative determination from the U.S. International Trade
Commission in our tariff cases concerning imports of aluminum
printing plates from Japan and China. This is an important win for
the U.S. printing industry and Kodak because it establishes a level
playing field in the U.S. plates business which will allow us to
continue providing our customers with reliable supplies of
high-quality plates. We continue to gain momentum with our
groundbreaking continuous inkjet press portfolio. Looking forward,
we will continue to invest in streamlining our operations and
developing the leading-edge products our customers expect from
Kodak.”
For the quarter ended September 30, 2024, revenues
were $261 million, a decrease of $8 million or 3 percent compared
to the same period in 2023. Excluding the impact of foreign
exchange, revenue declined $9 million or 3 percent.
GAAP net income was $18 million for the quarter,
compared to $2 million in Q3 2023, an increase of $16 million or
800 percent. Operational EBITDA for the quarter ended September 30,
2024 was $1 million, compared to $12 million in Q3 2023, a decrease
of $11 million. The decrease was primarily driven by higher
manufacturing costs driven by an increase in aluminum costs,
changes in employee benefit reserves, inventory reserve adjustment,
as well as an increase in costs associated with certain litigation
matters.
Kodak ended the third quarter with a cash balance
of $214 million, a decrease of $41 million from December 31, 2023.
The decrease was driven by capital expenditures primarily to fund
growth initiatives, investments in technology systems and
organizational structure and lower profitability from operations,
partially offset by improvements in working capital primarily due
to cash proceeds of $40 million from brand licensing in the first
quarter of 2024.
“Kodak continued to execute on its long-term
strategy in the third quarter,” said David Bullwinkle, Kodak’s CFO.
“The decline in revenue, which slowed compared to recent quarters,
reflects our ongoing focus on generating smart revenue to drive
stronger profitability. Kodak ended the quarter with a cash balance
of $214 million, compared with $255 million on December 31, 2023,
which is in line with our expectations. The decline reflects our
continued capex investments in supporting AM&C growth
initiatives, along with building working capital in AM&C to
allow us to keep customers supplied as we make improvements in our
manufacturing facilities. Looking ahead, we plan to invest in
increasing operational efficiency and expanding manufacturing
capacity to continue delivering reliable value to our
customers.”
Revenue and Operational EBITDA by
Reportable Segment Q3 2024 vs. Q3 2023
($
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2024 Actuals |
Print |
|
Advanced Materials & Chemicals |
|
Brand |
|
Total |
Revenue |
$ |
182 |
|
|
$ |
71 |
|
$ |
5 |
|
$ |
258 |
|
Operational EBITDA
* |
$ |
(9 |
) |
|
$ |
6 |
|
$ |
4 |
|
$ |
1 |
|
|
|
|
|
|
|
|
|
Q3 2023 Actuals |
Print |
|
Advanced Materials & Chemicals |
|
Brand |
|
Total |
Revenue |
$ |
196 |
|
|
$ |
64 |
|
$ |
4 |
|
$ |
264 |
|
Operational EBITDA
* |
$ |
4 |
|
|
$ |
4 |
|
$ |
4 |
|
$ |
12 |
|
|
|
|
|
|
|
|
|
Q3 2024 vs. Q3 2023 Actuals
B/(W) |
Print |
|
Advanced Materials & Chemicals |
|
Brand |
|
Total |
Revenue |
$ |
(14 |
) |
|
$ |
7 |
|
$ |
1 |
|
$ |
(6 |
) |
Operational EBITDA
* |
$ |
(13 |
) |
|
$ |
2 |
|
$ |
- |
|
$ |
(11 |
) |
|
|
|
|
|
|
|
|
Q3 2024 Actuals on constant currency
** vs. Q3 2023
ActualsB/(W) |
Print |
|
Advanced Materials & Chemicals |
|
Brand |
|
Total |
Revenue |
$ |
(15 |
) |
|
$ |
7 |
|
$ |
1 |
|
$ |
(7 |
) |
Operational EBITDA
* |
$ |
(13 |
) |
|
$ |
2 |
|
$ |
- |
|
$ |
(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
foreign exchange impact using average foreign exchange rates for
the three months ended September 30, 2023, rather than the actual
average exchange rates in effect for the three months ended
September 30, 2024.
Eastman Business Park segment is not a reportable
segment and is excluded from the table above.
About KodakKodak (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 X @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, 2023 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,
2024, June 30, 2024 and September 30, 2024, 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 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 fund continued investments, capital
needs and collateral requirements 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, geopolitical issues such as the
war in Ukraine and conflicts involving Israel, medical epidemics,
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; Kodak’s ability to effectively compete with large,
well-financed industry participants or with competitors whose cost
structure is lower than Kodak’s; 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 war in Ukraine, the conflicts involving Israel, and
residual effects of the COVID-19 pandemic; Kodak’s ability to
comply with the covenants in its various credit facilities; 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 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 or information
technology outages 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 third quarter 2024 financial results news
release, reference is made to the following non-GAAP financial
measures:
- Operational EBITDA; and
- Revenues 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 earnings from operations excluding the provision for income
taxes; non-service cost components of pension and other
postemployment benefits income; depreciation and amortization
expense; restructuring costs and other; stock-based compensation
expense; consulting and other costs; interest expense; loss on
extinguishment of debt; and other (income) charges, net.
The change in revenues 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 September 30, 2023, rather than the actual average
exchange rates in effect for the three months ended September 30,
2024.
The following table reconciles the most directly
comparable GAAP measure of Net Income to Operational EBITDA for the
three months ended September 30, 2024 and 2023, respectively:
(in
millions) |
|
|
|
|
|
|
|
|
Q3 2024 |
|
Q3 2023 |
|
$ Change |
|
% Change |
Net Income |
$ |
18 |
|
|
$ |
2 |
|
|
$ |
16 |
|
|
800 |
% |
All other |
|
(1 |
) |
|
|
(2 |
) |
|
|
1 |
|
|
|
Depreciation and
amortization |
|
8 |
|
|
|
7 |
|
|
|
1 |
|
|
|
Restructuring costs and other
(1) |
|
1 |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
Stock based compensation |
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
Consulting and other costs
(2) |
|
- |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
Interest expense (3) |
|
14 |
|
|
|
14 |
|
|
|
- |
|
|
|
Pension income excluding
service cost component (3) |
|
(42 |
) |
|
|
(41 |
) |
|
|
(1 |
) |
|
|
Loss on extinguishment of debt
(3) |
|
- |
|
|
|
27 |
|
|
|
(27 |
) |
|
|
Other (income) charges, net
(3) |
|
(1 |
) |
|
|
2 |
|
|
|
(3 |
) |
|
|
Provision (benefit) for income
taxes (3) |
|
3 |
|
|
|
(2 |
) |
|
|
5 |
|
|
|
Operational
EBITDA |
$ |
1 |
|
|
$ |
12 |
|
|
$ |
(11 |
) |
|
-92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnote Explanations:
(1) Restructuring costs and other for the three
months ended September 30, 2023 included $1 million which was
reported as Restructuring costs and other and $2 million
representing inventory write-downs which was reported as Cost of
revenues.
(2) Consulting and other costs are primarily
professional services and internal costs associated with certain
corporate strategic initiatives, investigations and litigation.
Consulting and other costs included $1 million of income in the
three months ended September 30, 2023, representing insurance
reimbursement of legal costs previously paid by the Company
associated with investigations and litigation matters.
(3) As reported in the Consolidated Statement of
Operations.
- FINANCIAL
STATEMENTS
EASTMAN
KODAK COMPANY |
CONSOLIDATED STATEMENT OF
OPERATIONS(Unaudited) |
|
|
|
|
(in millions, except per share
data) |
Three Months Ended |
|
September 30, |
|
|
2024 |
|
|
|
2023 |
|
Revenues |
|
|
|
Sales |
$ |
221 |
|
|
$ |
220 |
|
Services |
|
40 |
|
|
|
49 |
|
Total revenues |
|
261 |
|
|
|
269 |
|
Cost of revenues |
|
|
|
Sales |
|
185 |
|
|
|
183 |
|
Services |
|
31 |
|
|
|
36 |
|
Total cost of revenues |
|
216 |
|
|
|
219 |
|
Gross profit |
|
45 |
|
|
|
50 |
|
Selling, general and
administrative expenses |
|
44 |
|
|
|
40 |
|
Research and development
costs |
|
8 |
|
|
|
7 |
|
Restructuring costs and
other |
|
1 |
|
|
|
1 |
|
(Loss) earnings from operations
before interest expense, pension income excluding service cost
component, loss on extinguishment of debt, other (income) charges,
net and income taxes |
|
(8 |
) |
|
|
2 |
|
Interest expense |
|
14 |
|
|
|
14 |
|
Pension income excluding service
cost component |
|
(42 |
) |
|
|
(41 |
) |
Loss on extinguishment of
debt |
|
- |
|
|
|
27 |
|
Other (income) charges, net |
|
(1 |
) |
|
|
2 |
|
Earnings from operations before
income taxes |
|
21 |
|
|
|
- |
|
Provision (benefit) for income
taxes |
|
3 |
|
|
|
(2 |
) |
NET EARNINGS |
$ |
18 |
|
|
$ |
2 |
|
|
|
|
|
Basic earnings per share
attributable to Eastman Kodak Company common shareholders |
$ |
0.16 |
|
|
$ |
- |
|
|
|
|
|
Diluted earnings per share
attributable to Eastman Kodak Company common shareholders |
$ |
0.15 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
The notes accompanying the financial statements
contained in the Company’s third quarter 2024 Form 10-Q are an
integral part of these consolidated financial statements.
|
|
|
|
EASTMAN
KODAK COMPANY |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
(in millions) |
|
2024 |
|
|
|
2023 |
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
214 |
|
|
$ |
255 |
|
Trade receivables, net of
allowances of $7 and $8, respectively |
|
143 |
|
|
|
195 |
|
Inventories, net |
|
241 |
|
|
|
217 |
|
Other current assets |
|
44 |
|
|
|
45 |
|
Total current assets |
|
642 |
|
|
|
712 |
|
Property, plant and equipment,
net of accumulated depreciation of $481 and $470, respectively |
|
190 |
|
|
|
169 |
|
Goodwill |
|
12 |
|
|
|
12 |
|
Intangible assets, net |
|
21 |
|
|
|
24 |
|
Operating lease right-of-use
assets |
|
28 |
|
|
|
30 |
|
Restricted cash |
|
100 |
|
|
|
110 |
|
Pension and other postretirement
assets |
|
1,313 |
|
|
|
1,216 |
|
Other long-term assets |
|
82 |
|
|
|
82 |
|
TOTAL ASSETS |
$ |
2,388 |
|
|
$ |
2,355 |
|
|
|
|
|
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND EQUITY |
|
|
|
Accounts payable, trade |
$ |
128 |
|
|
$ |
125 |
|
Short-term borrowings and current
portion of long-term debt |
|
1 |
|
|
|
1 |
|
Current portion of operating
leases |
|
9 |
|
|
|
13 |
|
Other current liabilities |
|
128 |
|
|
|
144 |
|
Total current liabilities |
|
266 |
|
|
|
283 |
|
Long-term debt, net of current
portion |
|
460 |
|
|
|
457 |
|
Pension and other postretirement
liabilities |
|
232 |
|
|
|
237 |
|
Operating leases, net of current
portion |
|
24 |
|
|
|
24 |
|
Other long-term liabilities |
|
208 |
|
|
|
213 |
|
Total liabilities |
|
1,190 |
|
|
|
1,214 |
|
|
|
|
|
Commitments and Contingencies
(Note 6) |
|
|
|
|
|
|
|
Redeemable, convertible preferred
stock, no par value, $100 per share liquidation preference |
|
216 |
|
|
|
210 |
|
|
|
|
|
Equity |
|
|
|
Common stock, $0.01 par
value |
|
— |
|
|
|
— |
|
Additional paid in capital |
|
1,152 |
|
|
|
1,156 |
|
Treasury stock, at cost |
|
(12 |
) |
|
|
(11 |
) |
Accumulated deficit |
|
(419 |
) |
|
|
(495 |
) |
Accumulated other comprehensive
income |
|
261 |
|
|
|
281 |
|
Total shareholders’ equity |
|
982 |
|
|
|
931 |
|
TOTAL LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY |
$ |
2,388 |
|
|
$ |
2,355 |
|
|
|
|
|
|
|
|
|
The notes accompanying the financial statements
contained in the Company’s third quarter 2024 Form 10-Q are an
integral part of these consolidated financial statements.
|
|
|
|
EASTMAN
KODAK COMPANY |
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited) |
|
|
|
|
|
Nine Months Ended |
|
September 30, |
(in millions) |
|
2024 |
|
|
|
2023 |
|
Cash flows from operating
activities: |
|
|
|
Net earnings |
$ |
76 |
|
|
$ |
70 |
|
Adjustments to reconcile to net
cash (used in) provided by operating activities: |
|
|
|
Depreciation and amortization |
|
21 |
|
|
|
23 |
|
Pension and other postretirement income |
|
(111 |
) |
|
|
(109 |
) |
Change in fair value of the Preferred Stock and Convertible Notes
embedded derivatives |
|
— |
|
|
|
2 |
|
Non-cash changes in workers' compensation and other employee
benefit reserves |
|
1 |
|
|
|
(3 |
) |
Stock based compensation |
|
5 |
|
|
|
6 |
|
Net gain on sale of assets |
|
(17 |
) |
|
|
(1 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
27 |
|
Decrease (increase) in trade receivables |
|
52 |
|
|
|
(16 |
) |
(Increase) decrease in miscellaneous receivables |
|
(6 |
) |
|
|
10 |
|
Increase in inventories |
|
(25 |
) |
|
|
(4 |
) |
Decrease in trade payables |
|
(1 |
) |
|
|
(15 |
) |
(Decrease) increase in liabilities excluding borrowings and trade
payables |
|
(39 |
) |
|
|
23 |
|
Other items, net |
|
33 |
|
|
|
8 |
|
Total adjustments |
|
(87 |
) |
|
|
(49 |
) |
Net cash (used in) provided by operating activities |
|
(11 |
) |
|
|
21 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Additions to properties |
|
(39 |
) |
|
|
(15 |
) |
Proceeds from sale of assets |
|
17 |
|
|
|
— |
|
Net cash used in investing activities |
|
(22 |
) |
|
|
(15 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Net proceeds from Amended and Restated Term Loan Credit
Agreement |
|
— |
|
|
|
435 |
|
Repayment of Original Term Loan Credit Agreement |
|
— |
|
|
|
(316 |
) |
Repayment of Convertible Notes |
|
— |
|
|
|
(28 |
) |
Other debt acquisition costs |
|
— |
|
|
|
(1 |
) |
Repayment of Amended and Restated Term Loan Agreement |
|
(17 |
) |
|
|
— |
|
Preferred stock cash dividend payments |
|
(3 |
) |
|
|
(3 |
) |
Treasury stock purchases |
|
(1 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
(21 |
) |
|
|
87 |
|
Effect of exchange rate changes
on cash, cash equivalents and restricted cash |
|
(1 |
) |
|
|
(5 |
) |
Net (decrease) increase in cash,
cash equivalents and restricted cash |
|
(55 |
) |
|
|
88 |
|
Cash, cash equivalents and
restricted cash, beginning of period |
|
377 |
|
|
|
286 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
322 |
|
|
$ |
374 |
|
|
|
|
|
|
|
|
|
The notes accompanying the financial statements
contained in the Company’s third quarter 2024 Form 10-Q are an
integral part of these consolidated financial statements.
Media
Contact:Kurt Jaeckel, Kodak, +1
585-490-8646, kurt.jaeckel@kodak.com
Investor
Contact:Anthony Redding, Kodak, +1
585-724-4053, shareholderservices@kodak.com
Eastman Kodak (NYSE:KODK)
Historical Stock Chart
From Nov 2024 to Dec 2024
Eastman Kodak (NYSE:KODK)
Historical Stock Chart
From Dec 2023 to Dec 2024