ROCHESTER, N.Y.–(BUSINESS WIRE)–Eastman Kodak Company (NYSE: KODK) today reported financial results for
the first quarter 2019, including a net loss of $18 million on revenues
of $291 million and continued growth in key product areas.
Highlights include:
“Completing the sale of our Flexographic Packaging Division and using
the net proceeds to significantly pay down our term debt was a major
step toward strengthening our financial position,” said Jim Continenza,
Kodak’s Executive Chairman. “Our focus has shifted to completing the
refinancing of the remaining balance of our debt and realigning our
business to better serve customers and achieve our goal of generating
cash.”
For the quarter ended March 31, 2019, revenues decreased by
approximately $27 million compared with the same period in 2018. Kodak
ended the quarter with a cash balance of $240 million, down from the
December 31, 2018 cash balance of $246 million.
“We significantly paid down our term debt and delivered continued strong
performance in our key growth areas of SONORA Process Free Plates and in
PROSPER inkjet annuities,” said David Bullwinkle, Kodak’s CFO. “We
expect to secure new financing for our remaining term debt by the end of
May, which will further strengthen our balance sheet.”
Revenue and Operational EBITDA Q1 2019 vs. Q1 2018
| ($ millions) | |||||||||||||||||||||||||||||
| Q1 2019 Actuals | PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | 192 | $ | 32 | $ | 14 | $ | 49 | $ | 2 | $ | 2 | $ | 291 | |||||||||||||||
| Operational EBITDA * | $ | 5 | $ | – | $ | (1 | ) | $ | (7 | ) | $ | (2 | ) | $ | (1 | ) | $ | (6 | ) | ||||||||||
| Q1 2018 Actuals | PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | 216 | $ | 31 | $ | 16 | $ | 52 | $ | 1 | $ | 2 | $ | 318 | |||||||||||||||
| Operational EBITDA * | $ | 3 | $ | – | $ | 1 | $ | (7 | ) | $ | (4 | ) | $ | (2 | ) | $ | (9 | ) | |||||||||||
|
Q1 2019 vs. Q1 2018 Actuals
B/(W) |
PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | (24 | ) | $ | 1 | $ | (2 | ) | $ | (3 | ) | $ | 1 | $ | – | $ | (27 | ) | |||||||||||
| Operational EBITDA * | $ | 2 | $ | – | $ | (2 | ) | $ | – | $ | 2 | $ | 1 | $ | 3 | ||||||||||||||
|
Q1 2019 Actuals on constant currency ** vs. Q1 2018 Actuals B/(W) |
PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | (15 | ) | $ | 2 | $ | (2 | ) | $ | (2 | ) | $ | 1 | $ | – | $ | (16 | ) | |||||||||||
| Operational EBITDA * | $ | 1 | $ | – | $ | (2 | ) | $ | 1 | $ | 2 | $ | 1 | $ | 3 | ||||||||||||||
* 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 2018 foreign exchange
impact using average foreign exchange rates for the three months ended
March 31, 2018, rather than the actual exchange rates in effect for the
three months ended March 31, 2019.
About Kodak
Kodak is a technology company focused on imaging. We provide – directly
and through partnerships with other innovative companies – hardware,
software, consumables and services to customers in graphic arts,
commercial print, publishing, packaging, entertainment and commercial
films, and consumer products markets. With our world-class R&D
capabilities, innovative solutions portfolio and highly trusted brand,
Kodak is helping customers around the globe to sustainably grow their
own businesses and enjoy their lives. 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, 2018 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, 2019, 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 repay,
refinance or extend the maturity of its outstanding first lien term
loans prior to their maturity date of September 3, 2019 or prior to June
5, 2019, the date on which Kodak’s revolving credit facility will
terminate unless such repayment, refinancing or extension has occurred
or the revolving credit facility has been amended; Kodak’s ability to
discontinue, sell or spin-off certain businesses or operations or
otherwise monetize assets, including the completion of the deferred sale
of the China assets of Kodak’s Flexographic Packaging segment that was
sold, and the ability of the Flexographic Packaging segment that was
sold to perform during 2019 and 2020 at levels that will entitle Kodak
to earn-out payments; Kodak’s ability to fund continued investments,
capital needs and restructuring payments and service its debt and Series
A Preferred Stock; changes in foreign currency exchange rates, commodity
prices and interest 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 revolving 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 performance by third parties of their obligations to
supply products, components or services to Kodak; and the impact of the
global economic environment on Kodak.
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 2019 financial results news release, reference is
made to the following non-GAAP financial measures:
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”). 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, 2018, rather than the actual exchange rates in effect
for the three months ended March 31, 2019.
The following table reconciles the most directly comparable GAAP measure
of Net Loss to Operational EBITDA for the three months ended March 31,
2019 and 2018, respectively:
| (in millions) | ||||||||||||||
| Q1 2019 | Q1 2018 |
$ Change |
||||||||||||
| Net Loss | $ | (18 | ) | $ | (25 | ) | $ | 7 | ||||||
| Depreciation and amortization | 15 | 18 | (3 | ) | ||||||||||
| Restructuring costs and other (1) | 2 | 2 | – | |||||||||||
| Stock based compensation | 3 | 2 | 1 | |||||||||||
| Consulting and other costs (2) | 3 | 3 | – | |||||||||||
| Idle costs (3) | 1 | 1 | – | |||||||||||
|
Former CEO separation agreement compensation |
2 | – | 2 | |||||||||||
| Interest expense (1) | 3 | 2 | 1 | |||||||||||
| Pension income excluding service cost component (1) | (27 | ) | (32 | ) | 5 | |||||||||
| Other charges, net (1) | 1 | 16 | (15 | ) | ||||||||||
| Loss from discontinued operations, net of income tax (1) | 6 | – | 6 | |||||||||||
| Provision for income taxes (1) | 3 | 4 | (1 | ) | ||||||||||
| Operational EBITDA | $ | (6 | ) | $ | (9 | ) | $ | 3 | ||||||
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. |
|
| (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 represents the foreign exchange impact using average foreign exchange rates for the three months ended March 31, 2018, rather than the actual exchange rates in effect for the three months ended March 31, 2019. |
|
B. FINANCIAL STATEMENTS
| EASTMAN KODAK COMPANY | ||||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | ||||||||||
| (in millions) | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Revenues | ||||||||||
| Sales | $ | 224 | $ | 248 | ||||||
| Services | 67 | 70 | ||||||||
| Total net revenues | 291 | 318 | ||||||||
| Cost of revenues | ||||||||||
| Sales | 205 | 231 | ||||||||
| Services | 46 | 49 | ||||||||
| Total cost of revenues | 251 | 280 | ||||||||
| Gross profit | 40 | 38 | ||||||||
| Selling, general and administrative expenses | 59 | 58 | ||||||||
| Research and development costs | 11 | 13 | ||||||||
| Restructuring costs and other | 2 | 2 | ||||||||
| Other operating expense, net | — | — | ||||||||
|
Loss from continuing operations before interest expense, pension income excluding service cost component, other charges (income), net, and income taxes |
(32 | ) | (35 | ) | ||||||
| Interest expense | 3 | 2 | ||||||||
| Pension income excluding service cost component | (27 | ) | (32 | ) | ||||||
| Other charges, net | 1 | 16 | ||||||||
| Loss from continuing operations before income taxes | (9 | ) | (21 | ) | ||||||
| Provision for income taxes | 3 | 4 | ||||||||
| Loss from continuing operations | (12 | ) | (25 | ) | ||||||
| Loss from discontinued operations, net of income tax | (6 | ) | — | |||||||
| NET LOSS | $ | (18 | ) | $ | (25 | ) | ||||
The notes accompanying the Company’s first quarter 2019 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, | |||||||||
| 2019 | 2018 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 240 | $ | 246 | ||||||
| Trade receivables, net of allowances of $8 and $9, respectively | 201 | 232 | ||||||||
| Inventories, net | 249 | 236 | ||||||||
| Other current assets | 53 | 51 | ||||||||
| Current assets held for sale | 116 | 113 | ||||||||
| Total current assets | 859 | 878 | ||||||||
|
Property, plant and equipment, net of accumulated depreciation of $431 and $422, respectively |
233 | 246 | ||||||||
| Goodwill | 12 | 12 | ||||||||
| Intangible assets, net | 58 | 60 | ||||||||
| Operating lease right-of-use assets | 49 | – | ||||||||
| Restricted cash | 8 | 11 | ||||||||
| Deferred income taxes | 155 | 160 | ||||||||
| Other long-term assets | 164 | 144 | ||||||||
| TOTAL ASSETS | $ | 1,538 | $ | 1,511 | ||||||
|
LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) |
||||||||||
| Accounts payable, trade | $ | 160 | $ | 149 | ||||||
| Short-term borrowings and current portion of long-term debt | 396 | 396 | ||||||||
| Current portion of operating leases | 23 | – | ||||||||
| Other current liabilities | 191 | 213 | ||||||||
| Current liabilities held for sale | 25 | 20 | ||||||||
| Total current liabilities | 795 | 778 | ||||||||
| Long-term debt, net of current portion | 18 | 5 | ||||||||
| Pension and other postretirement liabilities | 368 | 379 | ||||||||
| Operating leases, net of current portion | 35 | – | ||||||||
| Other long-term liabilities | 163 | 179 | ||||||||
| Total liabilities | 1,379 | 1,341 | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||||
|
Redeemable, convertible Series A preferred stock, no par value, $100 per share liquidation preference |
175 | 173 | ||||||||
| Equity (Deficit) | ||||||||||
| Common stock, $0.01 par value | — | — | ||||||||
| Additional paid in capital | 615 | 617 | ||||||||
| Treasury stock, at cost | (9 | ) | (9 | ) | ||||||
| Accumulated deficit | (213 | ) | (200 | ) | ||||||
| Accumulated other comprehensive loss | (409 | ) | (411 | ) | ||||||
| Total shareholders’ deficit | (16 | ) | (3 | ) | ||||||
|
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) |
$ | 1,538 | $ | 1,511 | ||||||
The notes accompanying the Company’s first quarter 2019 Form 10-Q are an
integral part of these consolidated financial statements.
Contacts
Media:
Nick Rangel,
Kodak, +1 585-615-0549, nicholas.rangel@kodak.com
Investors:
Bill Love,
Kodak, +1 585-724-4053, shareholderservices@kodak.com
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