Kodak Announces a Net Loss for Third-Quarter 2017 Financial Results

ROCHESTER, N.Y. - November 9, 2017 - Eastman Kodak Company reported financial results for the third quarter 2017, delivering a net loss of $46 million on revenues of $379 million.

Highlights include:

• GAAP net loss of $46 million for the quarter ended September 30, 2017, compared with net earnings of $12 million for the quarter ended September 30, 2016.
• The GAAP results include $58 million, net of tax, of non-cash impairments related to the write-off of goodwill in the Print Systems segment and assets for the previously announced exit from copper mesh touch screen products.
• Operational EBITDA for the quarter of $15 million, compared with $22 million for the third quarter of 2016.
• Revenues for the quarter of $379 million compared with revenues of $411 million for the third quarter of 2016, a decline of $32 million or 8 percent. On a constant currency basis revenues were down $35 million or 9 percent.
• The company ended the third quarter with a cash balance of $342 million, a decrease in cash of $28 million for the third quarter of 2017.
• Key product lines achieved strong year-over-year growth for the quarter:
  • Volume for KODAK SONORA Process Free Plates grew by 24 percent.
  • Volume for KODAK FLEXCEL NX Plates grew by 11 percent.
  • Annuities revenue for KODAK PROSPER Inkjet grew by 9 percent.
• The company maintained its range for 2017 full year revenue of $1.5 billion to $1.6 billion and adjusted its forecast for 2017 Operational EBITDA to be within a range of $60 million to $65 million. Several factors are impacting the Company’s 2017 outlook, including:
  • A slowdown in the commercial printing industry and higher costs adversely impacting Print Systems Division, Software and Solutions Division and Enterprise Inkjet Systems Division.
  • Vendor transition and timing of brand licensing affecting the Consumer and Film Division performance.
  • Time to commercialize certain Advanced Material and 3D Printing Division projects.

Jeff Clarke

“An overall print market slowdown and rising aluminum costs have impacted our commercial print business,” said Jeff Clarke, Kodak CEO. “We are taking immediate actions to accelerate cost reduction and reduce investments to sharpen our focus as we continue to actively pursue changes to the Kodak product and divisional portfolio.”

Revenues in the third quarter of 2017 were $379 million, an 8 percent decline from the third quarter of 2016 or 9 percent on a constant currency basis.

The company reported a GAAP net loss of $46 million for the quarter ended September 30, 2017, a decline of $58 million compared with the third quarter of 2016.

The company delivered third quarter Operational EBITDA of $15 million, down $7 million compared with the third quarter of 2016. On a constant currency basis, Operational EBITDA was down $8 million.

The company ended the quarter with a cash balance of $342 million, down $28 million, or 8 percent, from the balance at the end of the second quarter 2017 and down $92 million from the balance at the beginning of 2017. The year to date decrease reflects investments in new technologies, working capital changes, capital expenditures including the construction of a new FLEXCEL NX manufacturing line in Weatherford, OK and a contingent consideration payment related to the divestiture of Kodak Alaris in 2013.

“We expect to generate cash in the fourth quarter of 2017,” said David Bullwinkle, Kodak Chief Financial Officer. “We plan to improve our cash balance through reducing working capital and through cost actions including focusing investments in technologies most likely to deliver near-term returns.”

Print Systems Division (PSD), Kodak’s largest division, had Q3 revenues of $232 million, a decline of $18 million, or 7 percent, compared with Q3 2016. Operational EBITDA for the quarter was $13 million, down $14 million compared with the same period a year ago. The decline was primarily due to pricing pressures.

For the quarter, KODAK SONORA Plates delivered continued growth, with volume increasing by 24 percent compared with the same period a year ago. SONORA Plates now account for 19 percent of the division’s total plate unit sales.

Enterprise Inkjet Systems Division (EISD), including the KODAK PROSPER and KODAK VERSAMARK businesses and the investment in ULTRASTREAM inkjet technology, delivered Q3 revenues of $33 million, compared with $47 million for the prior-year quarter. Operational EBITDA was $1 million, an improvement of $9 million compared with Q3 of 2016.

For the third quarter of 2017 the PROSPER business continued to deliver solid performance with year-over-year annuity growth of 9 percent.

The Flexographic Packaging Division (FPD) includes KODAK FLEXCEL NX Systems and Plates as well as other packaging businesses, such as analog flexographic plates and letterpress plates, proofing products and services. FPD revenues for Q3 were $34 million, flat with the same period a year ago. Operational EBITDA was $7 million, also flat with the prior-year quarter.

For the quarter, FLEXCEL NX revenues increased 2 percent over the prior-year period and FLEXCEL NX Plate volume continued to grow, increasing by 11 percent year over year.

Software and Solutions Division (SSD) delivered Q3 revenues of $21 million, flat compared with the same period last year. Operational EBITDA was $1 million, a $1 million increase compared with the prior-year period.

Consumer and Film Division (CFD) revenues for Q3 were $55 million, flat compared with Q3 of 2016. Operational EBITDA was negative $2 million, a decline of $3 million compared with the prior-year period, driven primarily by lower volumes in industrial film and chemicals, vendor transition costs in motion picture film and the expected continued decline in the consumer inkjet business offset by a payment of contractual minimum royalties from a brand licensing arrangement.

The Advanced Materials and 3D Printing Technology Division (AM3D) includes Kodak’s research lab, Micro 3D Printing as well as intellectual property licensing not directly related to the other business divisions. AM3D had Operational EBITDA of negative $6 million, flat with Q3 2016.

Eastman Business Park Division (EBP) had revenues of $4 million, flat with third quarter 2016. Operational EBITDA of $1 million was also flat with the prior-year period.

Revenue and Operational EBITDA Q3 2017 vs. Q3 2016
($ millions)

(Click chart to enlarge)

Source: Kodak.

The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of Printing Impressions.