Smaller Loss for Kodak, Commerical Printing Sales and Revenue on the Upswing

Kodak Tower Postcard-1930[1]On August 4th, Eastman Kodak reported improved financial results for its second-quarter 2015, with a net loss of $23 million, compared to a net loss of $62 million for second-quarter 2014, a year-over-year improvement of $39 million.

The company also reported that operating expenses were $86 million for the second quarter, a 29-percent improvement versus second-quarter 2014. It also says it’s on track to achieve greater than a $100-million improvement in 2015 in operating expenses.

The firm says the following key product lines helped it achieve “strong sales growth,” as:

  • Sales volume for KODAK SONORA Process Free Plates increased by 66 percent.
  • Sales volume for KODAK FLEXCEL NX Plates increased by 39 percent.
  • Revenues from the KODAK PROSPER Portfolio increased by 23 percent.

Kodak reaffirmed its 2015 guidance for revenue of $1.8-$2.0 billion.

“I am pleased with our second-quarter operating performance,” commented Kodak CEO Jeff Clarke “We saw solid results from our core printing-business divisions, and strong growth in our industry-leading product lines: SONORA, FLEXCEL NX AND PROSPER. I am confident Kodak is on track to meet our financial goals for the year.”

Revenues for the second quarter of 2015 was $458 million, a decline of 13 percent from the $528 million for second-quarter of 2014. However, Kodak says this was primarily due to the adverse impact of foreign-currency exchange rates, as well as due to expected declines in revenue from legacy products.

Kodak Chief Financial Officer John McMullen noted that: “On an ‘apples-to-apples’ basis, excluding the impact of foreign-exchange and non-recurring intellectual property revenue from 2014, Operational EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) improved by $16 million or greater than 100 percent over the same period a year ago. With regard to the balance sheet, we remain confident in our ability to generate positive cash flow in the second half of the year.”

Print Systems Division (PSD), Kodak’s largest division, had second-quarter 2015 revenues of $282 million, down 12 percent from $321 million in the same period a year ago. The majority of the decline was due to unfavorable foreign-exchange rates, according to Kodak. On a constant currency basis, PSD revenues declined by 2 percent.

For the fifth0consecutive quarter, unit volume sales of digital plates increased, led by strong continuing demand for KODAK SONORA Process Free Plates. At the end of the second quarter, the number of customers using SONORA Plates reached over 2,700, up 19 percent from the end of the first quarter. Operational EBITDA for PSD was essentially flat, year-over-year, at $20 million.

Enterprise Inkjet Systems Division (EISD) had revenues of $45 million for the second quarter of 2015, down 4 percent from the second quarter of 2014. Foreign exchange rates had a significant impact, says Kodak. On a constant currency basis, EISD revenue improved by 4 percent versus last year. Operational EBITDA for EISD was negative $5 million, compared with negative $12 million in second-quarter 2014, for a year-over-year improvement of $7 million.

Five PROSPER systems were placed with customers during the second quarter, for a total of 10 systems placed year-to-date. In the second quarter, total pages produced on PROSPER systems increased by 11 percent, as customers continue to take advantage of Kodak’s Stream inkjet-printing technology.

Micro 3D Printing and Packaging Division (MPPD) had revenues of $34 million for the second quarter, up 3 percent from the same period a year ago, or 15 percent on a constant-currency basis. MPPD Operational EBITDA for the quarter turned positive at $4 million, compared with zero in the second quarter of 2014.

MPPD’s performance was driven by growth in FLEXCEL revenues in the packaging business. With 21 new FLEXCEL NX systems installed during the second quarter, the installed base rose to 441.

Kodak’s development of silver halide mesh and copper mesh films for touch-sensor applications is moving toward volume production. Kodak says these startup businesses will be in investment mode through the end of 2015, with a shift to profitability expected next year.

Software & Solutions Division (SSD) had second-quarter revenues of $27 million, which was flat versus the same period last year, and operational EBITDA of $1 million, up from zero last year.

Consumer and Film Division (CFD) had revenues of $66 million in the second quarter of 2015, down 24 percent from the same period a year ago. The decline was primarily due to the expected volume decrease for consumer-inkjet printer ink cartridges and motion-picture film.

CFD had Operational EBITDA of $8 million for the second quarter, a decline of $7 million from the $15 million for second-quarter 2014.

Kodak’s two other operating divisions are its Intellectual Property Solutions Division(IPSD) and Eastman Business Park Division (EBPD). IPSD had no revenues in the second quarter and Operational EBITDA of negative $7 million. In the same period a year ago, IPSD recorded $9 million in revenues from an intellectual-property licensing agreement and contributed $1 million to Operational EBITDA. IPSD includes the costs for corporate R&D.

EBPD had revenue of $4 million in the quarter, which was flat versus a year ago. Operational EBITDA was $2 million for the second quarter, versus zero a year ago.

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