Eastman Kodak Company (NYSE: KODK) today reported financial
results for the third quarter 2021, including consolidated revenues
of $287 million and continued growth in key product areas.
Third-quarter 2021 highlights include:
- Consolidated revenues of $287 million
- GAAP net income of $8 million
- The Company ended the quarter with a cash balance of $380
million
“I’m pleased with our continued improvement in the third quarter
despite challenges posed by supply chain issues, labor shortages
and inflationary pressures,” said Jim Continenza, Kodak’s Executive
Chairman and CEO. “Our core print business has achieved increased
market share in environmentally-friendly process-free plates and we
are well positioned to continue growing that important segment.
Looking forward, we’ll continue to execute our go-to-market
strategy focused on driving profitable revenue and growth.”
For the quarter ended September 30, 2021, revenues were $287
million, an improvement of $35 million compared to the prior-year
quarter. Kodak ended the third quarter with a cash balance of $380
million, an increase of $184 million from December 31, 2020. GAAP
net income was $8 million for the third quarter, compared to a net
loss of $445 million in the third quarter 2020. The prior year
quarter included a charge of $416 million to reflect the increased
value of the derivative liability embedded in the convertible notes
immediately prior to conversion. Operational EBITDA for the quarter
was $6 million compared to negative $1 million in the prior-year
quarter.
“During the third quarter we continued to see strong growth in
our key product areas, including SONORA Process Free Plates volume
and PROSPER annuities which were up 35 and 17 percent respectively
compared to the prior-year quarter,” said David Bullwinkle, Kodak’s
CFO. “Kodak used $15 million in cash for the quarter, primarily
driven by ongoing global cost increases which we are taking actions
to address. We will continue to execute on our long-term plan —
focusing on our core businesses and investing in future
growth.”
Revenue and Operational EBITDA by Reportable Segment Q3 2021
vs. Q3 2020
($ millions) Q3 2021 Actuals
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
166
$
58
$
55
$
4
$
283
Operational EBITDA *
$
5
$
(2
)
$
-
$
3
$
6
Q3 2020 Actuals TraditionalPrinting
DigitalPrinting AdvancedMaterials &Chemicals
Brand Total Revenue
$
146
$
56
$
44
$
3
$
249
Operational EBITDA *
$
5
$
(3
)
$
(6
)
$
3
$
(1
)
Q3 2021 vs. Q3 2020 ActualsB/(W)
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
20
$
2
$
11
$
1
$
34
Operational EBITDA *
$
-
$
1
$
6
$
-
$
7
Q3 2021 Actuals on constant currency ** vs. Q3 2020
ActualsB/(W) TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
19
$
1
$
11
$
1
$
32
Operational EBITDA *
$
1
$
1
$
6
$
-
$
8
* 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 2021 foreign
exchange impact using average foreign exchange rates for the three
months ended September 30, 2020, rather than the actual average
exchange rates in effect for the three months ended September 30,
2021.
Eastman Business Park segment is not a reportable segment and is
excluded from the table above.
About Kodak
Kodak is a global technology company focused on print and
advanced materials & chemicals. We provide industry-leading
hardware, software, consumables and services primarily to customers
in commercial print, packaging, publishing, manufacturing and
entertainment. We are committed to environmental stewardship and
ongoing leadership in developing sustainable solutions. Our broad
portfolio of superior products, responsive support and world-class
R&D make Kodak solutions a smart investment for customers
looking to improve their profitability and drive growth. 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, 2020 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, 2021, June 30, 2021 and September
30, 2021, 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 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
implemented to fight the COVID-19 pandemic, and Kodak’s ability to
effectively counteract or recoup associated increased costs of
materials, labor, shipping and operations; the impact of the
investigations, litigations and claims arising out of the
circumstances surrounding the announcement by the U.S.
International Development Finance Corporation in July 2020 of a
potential loan to a subsidiary of Kodak to support the launch of a
pharmaceutical initiative; changes in foreign currency exchange
rates, commodity prices, interest rates and tariff 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 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; the potential impact of
cyber-attacks and other data security incidents that disrupt
Kodak’s operations; and 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.
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 third quarter 2021 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; loss on early extinguishment of debt, 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 expense (income), net; interest expense; and other
(income) 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 September 30, 2020, rather than the actual
average exchange rates in effect for the three months ended
September 30, 2021.
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
September 30, 2021 and 2020, respectively:
(in millions) Q3 2021 Q3 2020 $ Change
Net Income (Loss)
$
8
$
(445
)
$
453
Depreciation and amortization
7
9
(2
)
Restructuring costs and other (1)
-
1
(1
)
Stock based compensation
2
17
(15
)
Consulting and other costs (2)
4
4
-
Idle costs (3)
1
1
-
Other operating expense, net, excluding income from transition
services agreement (4)
1
-
1
Interest expense (1)
9
3
6
Pension income excluding service cost component (1)
(25
)
(26
)
1
Loss on early extinguishment of debt (1)
-
2
(2
)
Other (income) charges, net (1)
(2
)
432
(434
)
Provision for income taxes (1)
1
1
-
Operational EBITDA
$
6
$
(1
)
$
7
Impact of foreign exchange (5)
1
1
Operational EBITDA on a constant currency basis
$
7
$
(1
)
$
8
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 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)
$1 million of income from the transition
services agreement related to the sale of the Flexographic
Packaging Business was recognized in the three months ended
September 30, 2020. No income has been recognized in 2021. The
income was reported in Other operating expense (income), net in the
Consolidated Statement of Operations. Other operating expense
(income), net is typically excluded from the segment measure.
However, the income from the transition services agreement was
included in the segment measure.
(5)
The impact of foreign exchange is
calculated by using average foreign exchange rates for the three
months ended September 30, 2020, rather than the actual average
exchange rates in effect for the three months ended September 30,
2021.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited) (in millions) Three Months
Ended September 30, Nine Months Ended September 30,
2021
2020
2021
2020
Revenues Sales
$
231
$
195
$
674
$
568
Services
56
57
169
164
Total revenues
287
252
843
732
Cost of revenues Sales
206
183
595
533
Services
38
38
117
111
Total cost of revenues
244
221
712
644
Gross profit
43
31
131
88
Selling, general and administrative expenses
43
56
131
138
Research and development costs
8
8
24
25
Restructuring costs and other
—
1
1
9
Other operating (expense) income, net
1
(1
)
(6
)
(11
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, loss on early
extinguishment of debt, other (income) charges, net and income
taxes
(9
)
(33
)
(19
)
(73
)
Interest expense
9
3
23
11
Pension income excluding service cost component
(25
)
(26
)
(76
)
(79
)
Loss on early extinguishment of debt
—
2
—
2
Other (income) charges, net
(2
)
432
(1
)
387
Earnings (loss) from continuing operations before income taxes
9
(444
)
35
(394
)
Provision for income taxes
1
1
5
167
Net income (loss)
$
8
$
(445
)
$
30
$
(561
)
The notes accompanying the financial statements contained in the
Company’s third quarter 2021 Form 10-Q are an integral part of
these consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF FINANCIAL
POSITION (Unaudited) (in millions) September
30, December 31,
2021
2020
ASSETS Cash and cash equivalents
$
380
$
196
Trade receivables, net of allowances of $8 and $10, respectively
167
177
Inventories, net
240
206
Other current assets
47
46
Current assets held for sale
2
2
Total current assets
836
627
Property, plant and equipment, net of accumulated depreciation of
$440 and $430, respectively
140
152
Goodwill
12
12
Intangible assets, net
35
39
Operating lease right-of-use assets
46
48
Restricted cash
64
53
Other long-term assets
402
317
TOTAL ASSETS
$
1,535
$
1,248
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
151
$
118
Short-term borrowings and current portion of long-term debt
2
2
Current portion of operating leases
18
12
Other current liabilities
141
164
Total current liabilities
312
296
Long-term debt, net of current portion
250
17
Pension and other postretirement liabilities
384
406
Operating leases, net of current portion
40
49
Other long-term liabilities
210
212
Total liabilities
1,196
980
Commitments and Contingencies (note 8) Redeemable,
convertible preferred stock, no par value, $100 per share
liquidation preference
195
191
Equity Common stock, $0.01 par value
—
—
Additional paid in capital
1,166
1,152
Treasury stock, at cost
(10
)
(9
)
Accumulated deficit
(590
)
(620
)
Accumulated other comprehensive loss
(422
)
(446
)
Total shareholders' equity
144
77
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
1,535
$
1,248
The notes accompanying the financial statements contained in the
Company’s third quarter 2021 Form 10-Q are an integral part of
these consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF CASH
FLOWS (Unaudited) (in millions) Nine Months
Ended September 30,
2021
2020
Cash flows from operating activities: Net income (loss)
$
30
$
(561
)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
23
29
Pension income
(63
)
(65
)
Change in fair value of embedded derivatives in the Series A,
Series B and Series CPreferred Stock and Convertible Notes
(3
)
382
Loss on early extinguishment of debt
—
2
Net loss (gain) on sales of assets
1
(9
)
Asset impairments
—
3
Stock based compensation
6
18
Non-cash changes in workers' compensation reserves
(4
)
9
(Benefit) provision for deferred income taxes
(1
)
160
Decrease in trade receivables
6
53
Increase in inventories
(38
)
(19
)
Increase (decrease) in trade payables
33
(33
)
Decrease in liabilities excluding borrowings and trade payables
(26
)
(24
)
Other items, net
3
7
Total adjustments
(63
)
513
Net cash used in operating activities
(33
)
(48
)
Cash flows from investing activities: Additions to properties
(10
)
(13
)
Net proceeds from sales of assets
1
2
Net proceeds from return on equity investment
—
2
Net cash used in investing activities
(9
)
(9
)
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
)
—
Proceeds from stock option exercises
—
29
Preferred stock cash dividend payments
(6
)
(19
)
Treasury stock purchases
(1
)
—
Net cash provided by financing activities
240
10
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(3
)
(2
)
Net increase (decrease) in cash, cash equivalents and restricted
cash
195
(49
)
Cash, cash equivalents and restricted cash, beginning of period
256
290
Cash, cash equivalents and restricted cash, end of period
$
451
$
241
The notes accompanying the financial statements contained in the
Company’s third quarter 2021 Form 10-Q are an integral part of
these consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211109006314/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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