Kodak Reports Third-Quarter 2023 Financial Results
Third quarter 2023 highlights include:
-
Consolidated revenues of
$269 million , compared with$289 million for Q3 2022, a decrease of$20 million or 7 percent -
Gross profit of
$50 million , compared to$43 million for Q3 2022, an increase of$7 million or 16 percent - Gross profit percentage of 19 percent, compared with 15 percent for Q3 2022
-
GAAP net income of
$2 million , flat compared with Q3 2022 -
Operational EBITDA of
$12 million , compared with$7 million for Q3 2022, an increase of$5 million or 71 percent -
A quarter-end cash balance of
$246 million , compared with$217 million onDecember 31, 2022 , an increase of$29 million . Cash flow from operations improved$151 million in the nine months endedSeptember 30, 2023 , compared with the prior-year period
“Kodak continued to execute its long-term plan and deliver strong results in the third quarter despite ongoing, extraordinary challenges including inflation, high interest rates, bank failures, labor shortages and now a new war,” said
For the quarter ended
The company ended the third quarter with a cash balance of
“Kodak’s cash performance continued to show improvement for the year-to-date period,” said
Revenue and Operational EBITDA by Reportable Segment Q3 2023 vs. Q3 2022
($ millions) | ||||||||||||||||
Q3 2023 Actuals |
|
Advanced Materials & Chemicals |
Brand |
Total |
||||||||||||
Revenue |
$ |
196 |
|
$ |
64 |
$ |
4 |
$ |
264 |
|
||||||
Operational EBITDA * |
$ |
4 |
|
$ |
4 |
|
$ |
4 |
|
$ |
12 |
|
||||
Q3 2022 Actuals |
|
Advanced Materials & Chemicals |
Brand |
Total |
||||||||||||
Revenue |
$ |
224 |
|
$ |
58 |
|
$ |
3 |
|
$ |
285 |
|
||||
Operational EBITDA * |
$ |
1 |
|
$ |
3 |
|
$ |
3 |
|
$ |
7 |
|
||||
Q3 2023 vs. Q3 2022 Actuals B/(W) |
|
Advanced Materials & Chemicals |
Brand |
Total |
||||||||||||
Revenue |
$ |
(28 |
) |
$ |
6 |
|
$ |
1 |
|
$ |
(21 |
) |
||||
Operational EBITDA * |
$ |
3 |
|
$ |
1 |
|
$ |
1 |
|
$ |
5 |
|
||||
Q3 2023 Actuals on constant currency ** vs. Q3 2022 Actuals B/(W) |
|
Advanced Materials & Chemicals |
Brand |
Total |
||||||||||||
Revenue |
$ |
(33 |
) |
$ |
5 |
|
$ |
1 |
|
$ |
(27 |
) |
||||
Operational EBITDA * |
$ |
3 |
|
$ |
- |
|
$ |
1 |
|
$ |
4 |
|
* 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
Effective
About
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
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
APPENDICES
In this third 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’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 (benefit) 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; loss on extinguishment of debt; interest expense; and other 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
The following table reconciles the most directly comparable GAAP measure of Net Income to Operational EBITDA and Operational EBITDA on a constant currency basis for the three months ended
(in millions) | ||||||||||||||
Q3 2023 | Q3 2022 | $ Change | % Improvement | |||||||||||
Net Income |
$ |
2 |
|
$ |
2 |
|
$ |
- |
|
0 |
% |
|||
All other |
|
(2 |
) |
|
(1 |
) |
|
(1 |
) |
|||||
Depreciation and amortization |
|
7 |
|
|
8 |
|
|
(1 |
) |
|||||
Restructuring costs and other (1) |
|
3 |
|
|
3 |
|
|
- |
|
|||||
Stock based compensation |
|
1 |
|
|
1 |
|
|
- |
|
|||||
Consulting and other costs (2) |
|
1 |
|
|
2 |
|
|
(1 |
) |
|||||
Idle costs (3) |
|
- |
|
|
1 |
|
|
(1 |
) |
|||||
Interest expense (4) |
|
14 |
|
|
10 |
|
|
4 |
|
|||||
Pension income excluding service cost component (4) |
|
(41 |
) |
|
(20 |
) |
|
(21 |
) |
|||||
Loss in extinguishment of debt (4) |
|
27 |
|
|
- |
|
|
27 |
|
|||||
Other charges, net (4) |
|
2 |
|
|
- |
|
|
2 |
|
|||||
(Benefit) provision for income taxes (4) |
|
(2 |
) |
|
1 |
|
|
(3 |
) |
|||||
Operational EBITDA |
$ |
12 |
|
$ |
7 |
|
$ |
5 |
|
71 |
% |
|||
Impact of foreign exchange (5) |
|
(1 |
) |
|
(1 |
) |
||||||||
Operational EBITDA on a constant currency basis |
$ |
11 |
|
$ |
7 |
|
$ |
4 |
|
57 |
% |
Footnote Explanations: |
|
(1) |
Restructuring costs and other for the three months ended |
(2) |
Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives, investigations and litigation. Consulting and other costs includes |
(3) |
Consists of third-party costs such as security, maintenance, and utilities required to maintain land and buildings in certain locations not used in any |
(4) |
As reported in the Consolidated Statement of Operations. |
(5) |
The impact of foreign exchange is calculated by using average foreign exchange rates for the three months ended |
A. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | |||||||||||||||||
(in millions, except per share data) | Three Months Ended | Nine Months Ended | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||||||
Revenues | |||||||||||||||||
Sales |
$ |
220 |
|
$ |
234 |
|
$ |
688 |
|
$ |
734 |
|
|||||
Services |
|
49 |
|
|
55 |
|
|
154 |
|
|
166 |
|
|||||
Total revenues |
|
269 |
|
|
289 |
|
|
842 |
|
|
900 |
|
|||||
Cost of revenues | |||||||||||||||||
Sales |
|
183 |
|
|
208 |
|
|
571 |
|
|
662 |
|
|||||
Services |
|
36 |
|
|
38 |
|
|
108 |
|
|
111 |
|
|||||
Total cost of revenues |
|
219 |
|
|
246 |
|
|
679 |
|
|
773 |
|
|||||
Gross profit |
|
50 |
|
|
43 |
|
|
163 |
|
|
127 |
|
|||||
Selling, general and administrative expenses |
|
40 |
|
|
39 |
|
|
114 |
|
|
123 |
|
|||||
Research and development costs |
|
7 |
|
|
8 |
|
|
25 |
|
|
26 |
|
|||||
Restructuring costs and other |
|
1 |
|
|
3 |
|
|
7 |
|
|
3 |
|
|||||
Earnings (loss) from operations before interest expense, pension income excluding service cost component, loss on extinguishment, other charges (income), net and income taxes |
|
2 |
|
|
(7 |
) |
|
17 |
|
|
(25 |
) |
|||||
Interest expense |
|
14 |
|
|
10 |
|
|
36 |
|
|
29 |
|
|||||
Pension income excluding service cost component |
|
(41 |
) |
|
(20 |
) |
|
(122 |
) |
|
(77 |
) |
|||||
Loss on extinguishment of debt |
|
27 |
|
|
— |
|
|
27 |
|
|
— |
|
|||||
Other charges (income), net |
|
2 |
|
|
— |
|
|
(2 |
) |
|
2 |
|
|||||
Earnings from operations before income taxes |
|
— |
|
|
3 |
|
|
78 |
|
|
21 |
|
|||||
(Benefit) provision for income taxes |
|
(2 |
) |
|
1 |
|
|
8 |
|
|
2 |
|
|||||
NET EARNINGS |
$ |
2 |
|
$ |
2 |
|
$ |
70 |
|
$ |
19 |
|
|||||
Basic net (loss) earnings per share attributable to |
$ |
- |
|
$ |
(0.01 |
) |
$ |
0.68 |
|
$ |
0.11 |
|
|||||
Diluted net (loss) earnings per share attributable to |
$ |
- |
|
$ |
(0.01 |
) |
$ |
0.64 |
|
$ |
0.11 |
|
The notes accompanying the financial statements contained in the Company’s third quarter 2023 Form 10-Q are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited) | ||||||||
|
|
|
||||||
(in millions) |
2023 |
|
2022 |
|||||
ASSETS | ||||||||
Cash and cash equivalents |
$ |
246 |
|
$ |
217 |
|
||
Trade receivables, net of allowances of |
|
191 |
|
|
177 |
|
||
Inventories, net |
|
239 |
|
|
237 |
|
||
Other current assets |
|
34 |
|
|
48 |
|
||
Current assets held for sale |
|
2 |
|
|
2 |
|
||
Total current assets |
|
712 |
|
|
681 |
|
||
Property, plant and equipment, net of accumulated depreciation of |
|
161 |
|
|
154 |
|
||
|
12 |
|
|
12 |
|
|||
Intangible assets, net |
|
25 |
|
|
28 |
|
||
Operating lease right-of-use assets |
|
33 |
|
|
39 |
|
||
Restricted cash |
|
119 |
|
|
62 |
|
||
Pension and other postretirement assets |
|
1,212 |
|
|
1,233 |
|
||
Other long-term assets |
|
83 |
|
|
76 |
|
||
TOTAL ASSETS |
$ |
2,357 |
|
$ |
2,285 |
|
||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY | ||||||||
Accounts payable, trade |
$ |
124 |
|
$ |
134 |
|
||
Short-term borrowings and current portion of long-term debt |
|
1 |
|
|
1 |
|
||
Current portion of operating leases |
|
13 |
|
|
15 |
|
||
Other current liabilities |
|
131 |
|
|
143 |
|
||
Current liabilities held for sale |
|
2 |
|
|
— |
|
||
Total current liabilities |
|
271 |
|
|
293 |
|
||
Long-term debt, net of current portion |
|
451 |
|
|
316 |
|
||
Pension and other postretirement liabilities |
|
225 |
|
|
230 |
|
||
Operating leases, net of current portion |
|
26 |
|
|
31 |
|
||
Other long-term liabilities |
|
217 |
|
|
171 |
|
||
Total liabilities |
|
1,190 |
|
|
1,041 |
|
||
Commitments and Contingencies (Note 8) | ||||||||
Redeemable, convertible preferred stock, no par value, |
|
208 |
|
|
203 |
|
||
Equity | ||||||||
Common stock, |
|
— |
|
|
— |
|
||
Additional paid in capital |
|
1,158 |
|
|
1,160 |
|
||
|
(11 |
) |
|
(11 |
) |
|||
Accumulated deficit |
|
(500 |
) |
|
(570 |
) |
||
Accumulated other comprehensive income |
|
312 |
|
|
462 |
|
||
Total shareholders’ equity |
|
959 |
|
|
1,041 |
|
||
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY |
$ |
2,357 |
|
$ |
2,285 |
|
The notes accompanying the financial statements contained in the Company’s third quarter 2023 Form 10-Q are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) | ||||||||
Nine Months Ended | ||||||||
(in millions) |
2023 |
2022 |
||||||
Cash flows from operating activities: | ||||||||
Net earnings |
$ |
70 |
|
$ |
19 |
|
||
Adjustments to reconcile to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization |
|
23 |
|
|
22 |
|
||
Pension income |
|
(109 |
) |
|
(64 |
) |
||
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 |
|
(3 |
) |
|
(13 |
) |
||
Stock based compensation |
|
6 |
|
|
4 |
|
||
Gain on sale of assets |
|
(1 |
) |
|
— |
|
||
Loss on extinguishment of debt |
|
27 |
|
|
— |
|
||
Decrease in deferred taxes |
|
— |
|
|
(3 |
) |
||
Increase in trade receivables |
|
(16 |
) |
|
(7 |
) |
||
Decrease in miscellaneous receivables |
|
10 |
|
|
1 |
|
||
Increase in inventories |
|
(4 |
) |
|
(74 |
) |
||
(Decrease) increase in trade accounts payable |
|
(15 |
) |
|
5 |
|
||
Increase (decrease) in liabilities excluding borrowings and trade payables |
|
23 |
|
|
(26 |
) |
||
Other items, net |
|
8 |
|
|
7 |
|
||
Total adjustments |
|
(49 |
) |
|
(149 |
) |
||
Net cash provided by (used in) operating activities |
|
21 |
|
|
(130 |
) |
||
Cash flows from investing activities: | ||||||||
Additions to properties |
|
(15 |
) |
|
(19 |
) |
||
Purchase of equity interest |
|
— |
|
|
(25 |
) |
||
Net cash used in investing activities |
|
(15 |
) |
|
(44 |
) |
||
Cash flows from financing activities: | ||||||||
Net proceeds from Amended and Restated Term Loan Credit Agreement |
|
435 |
|
|
— |
|
||
Net proceeds from Original Term Loan Credit Agreement |
|
— |
|
|
49 |
|
||
Repayment of Original Term Loan Credit Agreement |
|
(316 |
) |
|
— |
|
||
Repayment of Convertible Notes |
|
(28 |
) |
|
— |
|
||
Other debt acquisition costs |
|
(1 |
) |
|
— |
|
||
Preferred stock cash dividend payments |
|
(3 |
) |
|
(3 |
) |
||
|
— |
|
|
(1 |
) |
|||
Net cash provided by financing activities |
|
87 |
|
|
45 |
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(5 |
) |
|
(14 |
) |
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
88 |
|
|
(143 |
) |
||
Cash, cash equivalents and restricted cash, beginning of period |
|
286 |
|
|
423 |
|
||
Cash, cash equivalents and restricted cash, end of period |
$ |
374 |
|
$ |
280 |
|
The notes accompanying the financial statements contained in the Company’s third quarter 2023 Form 10-Q are an integral part of these consolidated financial statements.
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