Kodak Reports Second-Quarter 2023 Financial Results
- Eastman Kodak Company reported an increase in gross profit by 24% to $63 million and GAAP net income rose to $35 million, an increase of $15 million. Operational EBITDA increased to $22 million, a $11 million improvement. The company's cash balance increased to $223 million, up $6 million from December 31, 2022.
- None.
Second quarter 2023 highlights include:
-
Consolidated revenues of
, compared with$295 million for Q2 2022, a decrease of$321 million or 8 percent$26 million -
Gross profit of
, compared to$63 million for Q2 2022, an increase of$51 million or 24 percent$12 million - Gross profit percentage of 21 percent, compared with 16 percent for Q2 2022
-
GAAP net income of
, compared with$35 million for Q2 2022, an increase of$20 million $15 million -
Operational EBITDA of
, compared with$22 million for Q2 2022, an increase of$11 million $11 million -
A quarter-end cash balance of
, compared with$223 million on December 31, 2022; an increase of$217 million in the six months ended June 30, 2023, compared with a decrease of$6 million in the prior-year period, an improvement in cash of$73 million $79 million
“Kodak delivered strong results in the second quarter, once again increasing our gross profit and Operational EBITDA year over year despite challenging business conditions affecting the markets we serve,” said Jim Continenza, Kodak’s Executive Chairman and CEO. “A number of factors have contributed to our success: a strong leadership team, dedicated employees and a clearly defined long-term plan focused on driving innovation, productivity and smart revenue in our core businesses of print and advanced materials & chemicals. We are proud to be an industrial manufacturer and we are concentrating on what we do best. As part of the controlled introduction of our new inkjet presses, we placed our first two new machines during the quarter, one KODAK PROSPER ULTRA 520 Press and one PROSPER 7000 Turbo Press, and we expect them to be in production in the third quarter. We also continued to invest in our print business, acquiring Graphic Systems Services, Inc. (GSS), whose expertise and resources will help us provide our customers with more complete inkjet solutions. More recently, we proactively refinanced our term debt to strengthen our financial foundation and we announced a perpetual brand licensing agreement with EssilorLuxottica, a global vision care industry leader. Looking forward, we will continue to focus on executing our strategic plan and serving our customers, which is the key to building long-term value for our employees and shareholders.”
For the quarter ended June 30, 2023, revenues were
The company ended the second quarter with a cash balance of
“Kodak improved its year-over-year cash performance for the first half of 2023,” said David Bullwinkle, Kodak’s CFO. “Our quarter-end balance of
Revenue and Operational EBITDA by Reportable Segment Q2 2023 vs. Q2 2022
($ millions) | |||||||||||||||
Q2 2023 Actuals | Advanced Materials & Chemicals |
Brand | Total | ||||||||||||
Revenue | $ |
215 |
|
$ |
72 |
$ |
4 |
|
$ |
291 |
|
||||
Operational EBITDA * | $ |
8 |
|
$ |
11 |
$ |
3 |
|
$ |
22 |
|
||||
Q2 2022 Actuals | Advanced Materials & Chemicals |
Brand | Total | ||||||||||||
Revenue | $ |
252 |
|
$ |
61 |
$ |
4 |
|
$ |
317 |
|
||||
Operational EBITDA * | $ |
6 |
|
$ |
1 |
$ |
4 |
|
$ |
11 |
|
||||
Q2 2023 vs. Q2 2022 Actuals B/(W) |
Advanced Materials & Chemicals |
Brand | Total | ||||||||||||
Revenue | $ |
(37 |
) |
$ |
11 |
$ |
- |
|
$ |
(26 |
) |
||||
Operational EBITDA * | $ |
2 |
|
$ |
10 |
$ |
(1 |
) |
$ |
11 |
|
||||
Q2 2023 Actuals on constant currency ** vs. Q2 2022 Actuals B/(W) |
Advanced Materials & Chemicals |
Brand | Total | ||||||||||||
Revenue | $ |
(37 |
) |
$ |
11 |
$ |
- |
|
$ |
(26 |
) |
||||
Operational EBITDA * | $ |
2 |
|
$ |
10 |
$ |
(1 |
) |
$ |
11 |
|
*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.
**Foreign currency had no impact on revenues or Operational EBITDA for the three months ended June 30, 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 Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, and in other filings Kodak makes with the
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 second quarter 2023 financial results news release, reference is made to the following non-GAAP financial measure of Operational EBITDA.
Kodak believes that this non-GAAP measure represents an important internal measure of performance. Accordingly, where it is 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 income, net; interest expense; and other charges (income), net.
The following table reconciles the most directly comparable GAAP measure of Net Income to Operational EBITDA for the three months ended June 30, 2023 and 2022, respectively:
(in millions) | ||||||||||||||
Q2 2023 | Q2 2022 | $ Change | % Improvement | |||||||||||
Net Income | $ |
35 |
|
$ |
20 |
|
$ |
15 |
|
75 |
% |
|||
All other |
|
(1 |
) |
|
(1 |
) |
|
- |
|
|||||
Depreciation and amortization |
|
8 |
|
|
7 |
|
|
1 |
|
|||||
Restructuring costs and other (3) |
|
5 |
|
|
- |
|
|
5 |
|
|||||
Stock based compensation |
|
1 |
|
|
1 |
|
|
- |
|
|||||
Consulting and other costs (1) |
|
(1 |
) |
|
3 |
|
|
(4 |
) |
|||||
Idle costs (2) |
|
1 |
|
|
- |
|
|
1 |
|
|||||
Other operating income, net |
|
(1 |
) |
|
- |
|
|
(1 |
) |
|||||
Interest expense (3) |
|
11 |
|
|
10 |
|
|
1 |
|
|||||
Pension income excluding service cost component (3) |
|
(41 |
) |
|
(27 |
) |
|
(14 |
) |
|||||
Other charges (income), net (3) |
|
3 |
|
|
(1 |
) |
|
4 |
|
|||||
Provision (benefit) for income taxes (3) |
|
2 |
|
|
(1 |
) |
|
3 |
|
|||||
Operational EBITDA | $ |
22 |
|
$ |
11 |
|
$ |
11 |
|
100 |
% |
|||
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 |
|
(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. |
A. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY | ||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | ||||||||||||||||
(in millions) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||||
Revenues | ||||||||||||||||
Sales | $ |
242 |
|
$ |
266 |
|
$ |
468 |
|
$ |
500 |
|
||||
Services |
|
53 |
|
|
55 |
|
|
105 |
|
|
111 |
|
||||
Total revenues |
|
295 |
|
|
321 |
|
|
573 |
|
|
611 |
|
||||
Cost of revenues | ||||||||||||||||
Sales |
|
195 |
|
|
234 |
|
|
388 |
|
|
454 |
|
||||
Services |
|
37 |
|
|
36 |
|
|
72 |
|
|
73 |
|
||||
Total cost of revenues |
|
232 |
|
|
270 |
|
|
460 |
|
|
527 |
|
||||
Gross profit |
|
63 |
|
|
51 |
|
|
113 |
|
|
84 |
|
||||
Selling, general and administrative expenses |
|
40 |
|
|
41 |
|
|
74 |
|
|
84 |
|
||||
Research and development costs |
|
9 |
|
|
9 |
|
|
18 |
|
|
18 |
|
||||
Restructuring costs and other |
|
5 |
|
|
— |
|
|
6 |
|
|
— |
|
||||
Other operating income |
|
(1 |
) |
|
— |
|
|
— |
|
|
— |
|
||||
Earnings (loss) from operations before interest expense, pension income excluding service cost component, other charges (income), net and income taxes |
|
10 |
|
|
1 |
|
|
15 |
|
|
(18 |
) |
||||
Interest expense |
|
11 |
|
|
10 |
|
|
22 |
|
|
19 |
|
||||
Pension income excluding service cost component |
|
(41 |
) |
|
(27 |
) |
|
(81 |
) |
|
(57 |
) |
||||
Other charges (income), net |
|
3 |
|
|
(1 |
) |
|
(4 |
) |
|
2 |
|
||||
Earnings from operations before income taxes |
|
37 |
|
|
19 |
|
|
78 |
|
|
18 |
|
||||
Provision (benefit) for income taxes |
|
2 |
|
|
(1 |
) |
|
10 |
|
|
1 |
|
||||
NET EARNINGS | $ |
35 |
|
$ |
20 |
|
$ |
68 |
|
$ |
17 |
|
||||
The notes accompanying the financial statements contained in the Company’s second 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) | ||||||||
June 30, | December 31, | |||||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
ASSETS | ||||||||
Cash and cash equivalents | $ |
223 |
|
$ |
217 |
|
||
Trade receivables, net of allowances of |
|
161 |
|
|
177 |
|
||
Inventories, net |
|
252 |
|
|
237 |
|
||
Other current assets |
|
36 |
|
|
48 |
|
||
Current assets held for sale |
|
— |
|
|
2 |
|
||
Total current assets |
|
672 |
|
|
681 |
|
||
Property, plant and equipment, net of accumulated depreciation of |
|
155 |
|
|
154 |
|
||
Goodwill |
|
12 |
|
|
12 |
|
||
Intangible assets, net |
|
26 |
|
|
28 |
|
||
Operating lease right-of-use assets |
|
36 |
|
|
39 |
|
||
Restricted cash |
|
62 |
|
|
62 |
|
||
Pension and other postretirement assets |
|
1,179 |
|
|
1,233 |
|
||
Other long-term assets |
|
79 |
|
|
76 |
|
||
TOTAL ASSETS | $ |
2,221 |
|
$ |
2,285 |
|
||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY | ||||||||
Accounts payable, trade | $ |
129 |
|
$ |
134 |
|
||
Short-term borrowings and current portion of long-term debt |
|
1 |
|
|
1 |
|
||
Current portion of operating leases |
|
14 |
|
|
15 |
|
||
Other current liabilities |
|
148 |
|
|
143 |
|
||
Total current liabilities |
|
292 |
|
|
293 |
|
||
Long-term debt, net of current portion |
|
324 |
|
|
316 |
|
||
Pension and other postretirement liabilities |
|
231 |
|
|
230 |
|
||
Operating leases, net of current portion |
|
28 |
|
|
31 |
|
||
Other long-term liabilities |
|
172 |
|
|
171 |
|
||
Total liabilities |
|
1,047 |
|
|
1,041 |
|
||
Commitments and Contingencies (Note 7) | ||||||||
Redeemable, convertible preferred stock, no par value, |
|
207 |
|
|
203 |
|
||
Equity | ||||||||
Common stock, |
|
— |
|
|
— |
|
||
Additional paid in capital |
|
1,159 |
|
|
1,160 |
|
||
Treasury stock, at cost |
|
(11 |
) |
|
(11 |
) |
||
Accumulated deficit |
|
(502 |
) |
|
(570 |
) |
||
Accumulated other comprehensive income |
|
321 |
|
|
462 |
|
||
Total shareholders’ equity |
|
967 |
|
|
1,041 |
|
||
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY | $ |
2,221 |
|
$ |
2,285 |
|
The notes accompanying the financial statements contained in the Company’s second quarter 2023 Form 10-Q are an integral part of these consolidated financial statements.
Six Months Ended June 30, | ||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Cash flows from operating activities: | ||||||||
Net earnings | $ |
68 |
|
$ |
17 |
|
||
Adjustments to reconcile to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization |
|
16 |
|
|
14 |
|
||
Pension income |
|
(72 |
) |
|
(49 |
) |
||
Change in fair value of the Preferred Stock and Convertible Notes embedded derivatives |
|
2 |
|
|
(1 |
) |
||
Non-cash changes in workers' compensation and other employee benefit reserves |
|
— |
|
|
(8 |
) |
||
Stock based compensation |
|
5 |
|
|
3 |
|
||
Gain on sale of assets |
|
(1 |
) |
|
— |
|
||
Increase (decrease) in deferred taxes |
|
1 |
|
|
(2 |
) |
||
Decrease (increase) in trade receivables |
|
17 |
|
|
(26 |
) |
||
Decrease in miscellaneous receivables |
|
7 |
|
|
2 |
|
||
Increase in inventories |
|
(11 |
) |
|
(54 |
) |
||
(Decrease) increase in trade accounts payable |
|
(7 |
) |
|
17 |
|
||
Decrease in liabilities excluding borrowings and trade payables |
|
(9 |
) |
|
(17 |
) |
||
Other items, net |
|
5 |
|
|
1 |
|
||
Total adjustments |
|
(47 |
) |
|
(120 |
) |
||
Net cash provided by (used in) operating activities |
|
21 |
|
|
(103 |
) |
||
Cash flows from investing activities: | ||||||||
Additions to properties |
|
(11 |
) |
|
(9 |
) |
||
Net cash used in investing activities |
|
(11 |
) |
|
(9 |
) |
||
Cash flows from financing activities: | ||||||||
Net Proceeds from Term Loan Credit Agreement |
|
- |
|
|
49 |
|
||
Preferred stock cash dividend payments |
|
(2 |
) |
|
(2 |
) |
||
Net cash (used in) provided by financing activities |
|
(2 |
) |
|
47 |
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(2 |
) |
|
(5 |
) |
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
6 |
|
|
(70 |
) |
||
Cash, cash equivalents and restricted cash, beginning of period |
|
286 |
|
|
423 |
|
||
Cash, cash equivalents and restricted cash, end of period | $ |
292 |
|
$ |
353 |
|
||
The notes accompanying the financial statements contained in the Company’s second 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/20230808822222/en/
Media:
Kurt Jaeckel, Kodak, +1 585-490-8646, kurt.jaeckel@kodak.com
Investor:
Anthony Redding, Kodak, +1 585-726-3506, shareholderservices@kodak.com
Source: Eastman Kodak Company
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