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Kodak Reports Second-Quarter Revenue of $307 Million and Continued Growth in Key Product Lines

August 8, 2019

ROCHESTER, N.Y.--(BUSINESS WIRE)--Aug 8, 2019--

Eastman Kodak Company (NYSE: KODK) today reported financial results for the second quarter 2019, including net earnings of $201 million on revenues of $307 million and continued growth in key product areas.

Highlights include:

“Refinancing the remaining balance of our term debt was a critical step toward creating the foundation for future success,” said Jim Continenza, Kodak’s Executive Chairman. “Our priority is generating cash by better serving customers in our core print, film and advanced materials businesses and driving further cost efficiencies.”

For the quarter ended June 30, 2019, revenues decreased by approximately $25 million compared with the same period in 2018. Kodak ended the quarter with a cash balance of $216 million, down from the March 31, 2019 cash balance of $240 million.

“By refinancing our term debt, we have eliminated significant interest costs and strengthened our balance sheet,” said David Bullwinkle, Kodak’s CFO. “During the quarter we delivered continued strong performance in our key growth areas of SONORA Process Free Plates and in PROSPER inkjet annuities. Our goal is to build on that momentum and generate cash.”

Revenue and Operational EBITDA Q2 2019 vs. Q2 2018

($ millions)
 
Q2 2019 ActualsPSDEISDKSDBFIDAM3DEBPDTotal EK
Revenue

$

207

 

$

29

 

$

14

 

$

54

 

$

-

 

$

3

 

$

307

 

Operational EBITDA *

$

7

 

$

(3

)

$

-

 

$

(2

)

$

(3

)

$

-

 

$

(1

)

 
Q2 2018 ActualsPSDEISDKSDBFIDAM3DEBPDTotal EK
Revenue

$

227

 

$

33

 

$

16

 

$

53

 

$

1

 

$

2

 

$

332

 

Operational EBITDA *

$

6

 

$

1

 

$

1

 

$

(5

)

$

(4

)

$

(1

)

$

(2

)

 
Q2 2019 vs. Q2 2018 Actuals
B/(W)
PSDEISDKSDBFIDAM3DEBPDTotal EK
Revenue

$

(20

)

$

(4

)

$

(2

)

$

1

 

$

(1

)

$

1

 

$

(25

)

Operational EBITDA *

$

1

 

$

(4

)

$

(1

)

$

3

 

$

1

 

$

1

 

$

1

 

 
Q2 2019 Actuals on constant currency ** vs. Q2 2018 Actuals
B/(W)
PSDEISDKSDBFIDAM3DEBPDTotal EK
Revenue

$

(13

)

$

(3

)

$

(2

)

$

2

 

$

(1

)

$

1

 

$

(16

)

Operational EBITDA *

$

-

 

$

(3

)

$

(1

)

$

3

 

$

1

 

$

1

 

$

1

 

* 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 June 30, 2018, rather than the actual exchange rates in effect for the three months ended June 30, 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 Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 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 fund continued investments, capital needs and restructuring payments and service its debt and Series A Preferred Stock; Kodak’s ability to discontinue, sell or spin-off certain businesses or operations or otherwise monetize assets; 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 second-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 June 30, 2018, rather than the actual exchange rates in effect for the three months ended June 30, 2019.

The following table reconciles the most directly comparable GAAP measure of Net Income to Operational EBITDA for the three months ended June 30, 2019 and 2018, respectively:

(in millions)
Q2 2019Q2 2018$ Change
Net Income

$

201

 

$

4

 

$

197

 

Depreciation and amortization

 

14

 

 

19

 

 

(5

)

Restructuring costs and other (1)

 

2

 

 

2

 

 

-

 

Stock based compensation

 

2

 

 

1

 

 

1

 

Consulting and other costs (2)

 

2

 

 

4

 

 

(2

)

Idle costs (3)

 

2

 

 

-

 

 

2

 

Other operating expense (income), net, excluding income from transition services agreement (4)

 

2

 

 

(2

)

 

4

 

Interest expense (1)

 

5

 

 

2

 

 

3

 

Pension income excluding service cost component (1)

 

(26

)

 

(32

)

 

6

 

Other charges, net (1)

 

-

 

 

1

 

 

(1

)

Income from discontinued operations, net of income tax (1)

 

(207

)

 

(1

)

 

(206

)

Provision for income taxes (1)

 

2

 

 

-

 

 

2

 

Operational EBITDA

$

(1

)

$

(2

)

$

1

 

Footnote Explanations:

B. FINANCIAL STATEMENTS

EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in millions)
Three Months Ended June 30,

 

2019

 

 

2018

 

Revenues
Sales

$

240

 

$

261

 

Services

 

67

 

 

71

 

Total revenues

 

307

 

 

332

 

Cost of revenues
Sales

 

218

 

 

237

 

Services

 

47

 

 

50

 

Total cost of revenues

 

265

 

 

287

 

Gross profit

 

42

 

 

45

 

Selling, general and administrative expenses

 

54

 

 

59

 

Research and development costs

 

11

 

 

12

 

Restructuring costs and other

 

2

 

 

2

 

Other operating income, net

 

(2

)

Loss from continuing operations before interest expense, pension income excluding service cost component, other charges, net, and income taxes

 

(25

)

 

(26

)

Interest expense

 

5

 

 

2

 

Pension income excluding service cost component

 

(26

)

 

(32

)

Other charges, net

 

1

 

(Loss) earnings from continuing operations before income taxes

 

(4

)

 

3

 

Provision for income taxes

 

2

 

(Loss) earnings from continuing operations

 

(6

)

 

3

 

Income from discontinued operations, net of income taxes

 

207

 

 

1

 

Net Income

$

201

 

$

4

 

 

The notes accompanying the financial statements contained in the Company’s second 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)
 
June 30,December 31,

 

2019

 

 

2018

 

ASSETS
Cash and cash equivalents

$

216

 

$

246

 

Trade receivables, net of allowances of $8 and $9, respectively

 

204

 

 

232

 

Inventories, net

 

251

 

 

236

 

Other current assets

 

57

 

 

51

 

Current assets held for sale

 

1

 

 

113

 

Total current assets

 

729

 

 

878

 

Property, plant and equipment, net of accumulated depreciation of $443 and $422, respectively

 

229

 

 

246

 

Goodwill

 

12

 

 

12

 

Intangible assets, net

 

56

 

 

60

 

Operating lease right-of-use assets

 

44

 

 

-

 

Restricted cash

 

19

 

 

11

 

Deferred income taxes

 

154

 

 

160

 

Other long-term assets

 

188

 

 

144

 

TOTAL ASSETS

$

1,431

 

$

1,511

 

 
LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
Accounts payable, trade

$

156

 

$

149

 

Short-term borrowings and current portion of long-term debt

 

2

 

 

396

 

Current portion of operating leases

 

26

 

 

-

 

Other current liabilities

 

198

 

 

213

 

Current liabilities held for sale

 

20

 

Total current liabilities

 

382

 

 

778

 

Long-term debt, net of current portion

 

104

 

 

5

 

Pension and other postretirement liabilities

 

365

 

 

379

 

Operating leases, net of current portion

 

28

 

 

-

 

Other long-term liabilities

 

192

 

 

179

 

Total liabilities

 

1,071

 

 

1,341

 

 
Commitments and Contingencies (Note 10)
 
Redeemable, convertible Series A preferred stock, no par value, $100 per share liquidation preference

 

177

 

 

173

 

 
Equity (Deficit)
Common stock, $0.01 par value
Additional paid in capital

 

612

 

 

617

 

Treasury stock, at cost

 

(9

)

 

(9

)

Accumulated deficit

 

(12

)

 

(200

)

Accumulated other comprehensive loss

 

(408

)

 

(411

)

Total shareholders' equity (deficit)

 

183

 

 

(3

)

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)

$

1,431

 

$

1,511

 

The notes accompanying the financial statements contained in the Company’s second quarter 2019 Form 10-Q are an integral part of these consolidated financial statements.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190808005750/en/

CONTACT: Media:

Nick Rangel, Kodak, +1 585-615-0549,nicholas.rangel@kodak.com

Investors:

Bill Love, Kodak, +1 585-724-4053,shareholderservices@kodak.com

KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: TECHNOLOGY ENTERTAINMENT PHOTOGRAPHY GENERAL ENTERTAINMENT FILM & MOTION PICTURES HARDWARE CONSUMER ELECTRONICS

SOURCE: Eastman Kodak Company

Copyright Business Wire 2019.

PUB: 08/08/2019 04:15 PM/DISC: 08/08/2019 04:15 PM

http://www.businesswire.com/news/home/20190808005750/en