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 AdvancedMaterials
&Chemicals Brand Total
Revenue
$
209
$
61
$
4
$
274
Operational EBITDA *
$
6
$
-
$
3
$
9
Q1 2022 Actuals
Print AdvancedMaterials &Chemicals
Brand Total Revenue
$
228
$
54
$
4
$
286
Operational EBITDA *
$
(7
)
$
(3
)
$
3
$
(7
)
Q1 2023 vs. Q1 2022
ActualsB/(W) Print AdvancedMaterials
&Chemicals Brand Total
Revenue
$
(19
)
$
7
$
-
$
(12
)
Operational EBITDA *
$
13
$
3
$
-
$
16
Q1 2023 Actuals on constant
currency ** vs. Q1 2022 ActualsB/(W) Print
AdvancedMaterials &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 ConvertibleNotes
embedded derivatives
1
3
Non-cash changes in workers' compensation and otheremployee 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005825/en/
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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