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09-May-2023

Kodak Reports First-Quarter 2023 Financial Results

ROCHESTER, N.Y.--(BUSINESS WIRE)--Eastman Kodak Company (NYSE: KODK) today reported financial results for the first quarter 2023.


First-quarter 2023 highlights include:

  • Consolidated revenues of $278 million, compared with $290 million for Q1 2022, a decrease of $12 million or 4 percent (decreased by $2 million on a constant currency basis, or 1 percent)
  • Gross profit of $50 million, compared to $33 million for Q1 2022, an increase of $17 million or 52 percent
  • Gross profit percentage of 18 percent, compared with 11 percent for Q1 2022, an increase of 7 percentage points
  • GAAP net income of $33 million, compared with net loss of $3 million for Q1 2022, an increase of $36 million
  • Operational EBITDA of $9 million, compared with negative $7 million for Q1 2022, an increase of $16 million
  • A quarter-end cash balance of $225 million, compared with $217 million on December 31, 2022, an increase of $8 million in the first quarter of 2023, compared with a decrease of $53 million in the first quarter of 2022

“Kodak continued to make progress in the first quarter, generating cash and increasing our gross profit year over year in the face of significant headwinds,” said Jim Continenza, Kodak’s Executive Chairman and CEO. “These improvements didn’t just happen. They are the result of a wide range of actions we have taken over the last four years to put us on a path to sustainable growth and profitability. We are continuing to invest in four long-term growth initiatives in our Advanced Materials and Chemicals group, and we are starting to see contributions from that business. We have invested in a significant infrastructure upgrade, including expanded implementation of Salesforce and SAP, that has made us materially better in terms of efficiency. We have successfully introduced two groundbreaking inkjet presses and KODACHROME Inks, the gold standard for color. And, most importantly, we continue to execute on our go-to-market strategy, staying close to our customers and developing solutions that address their challenges and create new opportunities. We put our customers first because we know we only win when our customers win.”

For the quarter ended March 31, 2023, revenues were $278 million, a decline of $12 million or 4 percent compared to the same period in 2022. Adjusting for the unfavorable impact of foreign exchange of $10 million, revenues decreased by $2 million, or 1 percent compared to the prior year.

GAAP net income was $33 million for the quarter, compared with negative $3 million in Q1 2022, an increase of $36 million. Operational EBITDA for the first quarter 2023 was $9 million, compared with negative $7 million in the prior-year period, an increase of $16 million. The increase was primarily driven by improved profitability related to pricing passthrough and improved operational efficiency, partially offset by continued global cost increases.

Kodak ended the first quarter of 2023 with a cash balance of $225 million, an increase of $8 million from December 31, 2022, compared with a decrease of $53 million in the first quarter of 2022. The increase was primarily driven by improved performance in working capital, improved profitability from operations, proceeds from insurance reimbursement and a refund from a governmental authority in a location outside the U.S.

“Kodak got off to a strong start in the first quarter, increasing our cash balance from $217 million to $225 million and increasing our gross profit by 52 percent year over year while continuing to invest in both product innovation and our long-term growth initiatives,” said David Bullwinkle, Kodak’s CFO. “Our ability to make these improvements despite continuing challenges of inflation and supply chain disruptions reflects the positive impact of changes we have made as part of our strategic plan to drive operational efficiency and smart revenue.”

Revenue and Operational EBITDA by Reportable Segment Q1 2023 vs. Q1 2022

         
($ millions)        
         
Q1 2023 Actuals   Print   Advanced
Materials &
Chemicals
  Brand   Total
Revenue  

$

209

 

 

$

61

 

 

$

4

 

$

274

 

Operational EBITDA *  

$

6

 

 

$

-

 

 

$

3

 

$

9

 

         
Q1 2022 Actuals   Print   Advanced
Materials &
Chemicals
  Brand   Total
Revenue  

$

228

 

 

$

54

 

 

$

4

 

$

286

 

Operational EBITDA *  

$

(7

)

 

$

(3

)

 

$

3

 

$

(7

)

         
Q1 2023 vs. Q1 2022 Actuals
B/(W)
  Print   Advanced
Materials &
Chemicals
  Brand   Total
Revenue  

$

(19

)

 

$

7

 

 

$

-

 

$

(12

)

Operational EBITDA *  

$

13

 

 

$

3

 

 

$

-

 

$

16

 

         
Q1 2023 Actuals on constant currency ** vs. Q1 2022 Actuals
B/(W)
  Print   Advanced
Materials &
Chemicals
  Brand   Total
Revenue  

$

(10

)

 

$

8

 

 

$

-

 

$

(2

)

Operational EBITDA*  

$

13

 

 

$

4

 

 

$

-

 

$

17

 

* 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 March 31, 2022, rather than the actual average exchange rates in effect for the three months ended March 31, 2023.

Effective February 2023 Kodak changed its organizational structure. The Traditional Printing segment and the Digital Printing segment were combined into one segment, named the Print segment. No changes were made to Kodak's other segments. 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,” in the corresponding sections of Kodak’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, 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 first quarter 2023 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 (loss) 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 expense, 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 March 31, 2022, rather than the actual average exchange rates in effect for the three months ended March 31, 2023.

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 March 31, 2023 and 2022, respectively:

(in millions)
Q1 2023 Q1 2022 $ Change
Net Income (Loss)

$

33

 

$

(3

)

$

36

 

Depreciation and amortization

 

8

 

 

7

 

 

1

 

Restructuring costs and other (3)

 

1

 

 

-

 

 

1

 

Stock based compensation

 

4

 

 

2

 

 

2

 

Consulting and other costs (1)

 

(10

)

 

2

 

 

(12

)

Idle costs (2)

 

-

 

 

1

 

 

(1

)

Other operating expense, net

 

1

 

 

-

 

 

1

 

Interest expense (3)

 

11

 

 

9

 

 

2

 

Pension income excluding service cost component (3)

 

(40

)

 

(30

)

 

(10

)

Other (income) charges, net (3)

 

(7

)

 

3

 

 

(10

)

Provision for income taxes (3)

 

8

 

 

2

 

 

6

 

Operational EBITDA

$

9

 

$

(7

)

$

16

 

Impact of foreign exchange (4)

 

1

 

 

1

 

Operational EBITDA on a constant currency basis

$

10

 

$

(7

)

$

17

 

Footnote Explanations:

(1)

Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives, investigations and litigation. Consulting and other costs include $10 million of income in the three months ended March 31, 2023 representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation matters.

(2)

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.

(3)

As reported in the Consolidated Statement of Operations.

(4)

The impact of foreign exchange is calculated by using average foreign exchange rates for the three months ended March 31, 2022, rather than the actual average exchange rates in effect for the three months ended March 31, 2023.

A. FINANCIAL STATEMENTS

EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
(in millions) Three Months Ended
March 31,

2023

2022

Revenues
Sales

$

224

 

$

234

 

Services

 

54

 

 

56

 

Total revenues

 

278

 

 

290

 

Cost of revenues
Sales

 

192

 

 

220

 

Services

 

36

 

 

37

 

Total cost of revenues

 

228

 

 

257

 

Gross profit

 

50

 

 

33

 

Selling, general and administrative expenses

 

34

 

 

43

 

Research and development costs

 

9

 

 

9

 

Restructuring costs and other

 

1

 

 

 

Other operating expense

 

1

 

 

 

Earnings (loss) from operations before interest expense, pension income excluding service cost component, other (income) charges, net and income taxes

 

5

 

 

(19

)

Interest expense

 

11

 

 

9

 

Pension income excluding service cost component

 

(40

)

 

(30

)

Other (income) charges, net

 

(7

)

 

3

 

Earnings (loss) from operations before income taxes

 

41

 

 

(1

)

Provision for income taxes

 

8

 

 

2

 

NET EARNINGS (LOSS)

$

33

 

$

(3

)

The notes accompanying the financial statements contained in the Company’s first quarter 2023 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,

2023

2022

ASSETS
Cash and cash equivalents

$

225

 

$

217

 

Trade receivables, net of allowances of $8 and $7, respectively

 

167

 

 

177

 

Inventories, net

 

251

 

 

237

 

Other current assets

 

42

 

 

48

 

Current assets held for sale

 

2

 

 

2

 

Total current assets

 

687

 

 

681

 

Property, plant and equipment, net of accumulated depreciation of $457 and $450, respectively

 

153

 

 

154

 

Goodwill

 

12

 

 

12

 

Intangible assets, net

 

27

 

 

28

 

Operating lease right-of-use assets

 

38

 

 

39

 

Restricted cash

 

62

 

 

62

 

Pension and other postretirement assets

 

1,266

 

 

1,233

 

Other long-term assets

 

77

 

 

76

 

TOTAL ASSETS

$

2,322

 

$

2,285

 

 
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY
Accounts payable, trade

$

139

 

$

134

 

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

 

1

 

 

1

 

Current portion of operating leases

 

15

 

 

15

 

Other current liabilities

 

140

 

 

143

 

Total current liabilities

 

295

 

 

293

 

Long-term debt, net of current portion

 

320

 

 

316

 

Pension and other postretirement liabilities

 

232

 

 

230

 

Operating leases, net of current portion

 

29

 

 

31

 

Other long-term liabilities

 

173

 

 

171

 

Total liabilities

 

1,049

 

 

1,041

 

 
Commitments and Contingencies (Note 6)
 
Redeemable, convertible preferred stock, no par value, $100 per share liquidation preference

 

205

 

 

203

 

 
Equity
Common stock, $0.01 par value

 

-

 

 

 

Additional paid in capital

 

1,161

 

 

1,160

 

Treasury stock, at cost

 

(11

)

 

(11

)

Accumulated deficit

 

(537

)

 

(570

)

Accumulated other comprehensive income

 

455

 

 

462

 

Total shareholders’ equity

 

1,068

 

 

1,041

 

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY

$

2,322

 

$

2,285

 

The notes accompanying the financial statements contained in the Company’s first quarter 2023 Form 10-Q are an integral part of these consolidated financial statements.

EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
 
Three Months Ended March 31,
(in millions)

2023

2022

Cash flows from operating activities:
Net earnings (loss)

$

33

 

$

(3

)

Adjustments to reconcile to net cash provided by (used in) operating activities:
Depreciation and amortization

 

8

 

 

7

 

Pension income

 

(36

)

 

(26

)

Change in fair value of the Preferred Stock and Convertible
Notes embedded derivatives

 

1

 

 

3

 

Non-cash changes in workers' compensation and other
employee benefit reserves

 

1

 

 

(4

)

Stock based compensation

 

4

 

 

2

 

Decrease (increase in trade receivables)

 

12

 

 

(9

)

Decrease (increase) in miscellaneous receivables

 

7

 

 

(1

)

Increase in inventories

 

(13

)

 

(32

)

Increase in trade accounts payable

 

3

 

 

31

 

Decrease in liabilities excluding borrowings and trade payables

 

(13

)

 

(13

)

Other items, net

 

7

 

 

2

 

Total adjustments

 

(19

)

 

(40

)

Net cash provided by (used in) operating activities

 

14

 

 

(43

)

 
Cash flows from investing activities:
Additions to properties

 

(5

)

 

(5

)

Net cash used in investing activities

 

(5

)

 

(5

)

 
Cash flows from financing activities:
Preferred stock cash dividend payments

 

(1

)

 

(1

)

Net cash used in financing activities

 

(1

)

 

(1

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

8

 

 

(49

)

Cash, cash equivalents and restricted cash, beginning of period

 

286

 

 

423

 

Cash, cash equivalents and restricted cash, end of period

$

294

 

$

374

 

The notes accompanying the financial statements contained in the Company’s first quarter 2023 Form 10-Q are an integral part of these consolidated financial statements.


Contacts

Media Contact:
Kurt Jaeckel, Kodak, +1 585-490-8646, kurt.jaeckel@kodak.com

Investor Contact:
Anthony Redding, Kodak, +1 585-726-3506, shareholderservices@kodak.com

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Last Updated: 09-May-2023