Loss for Kodak’s Third Quarter, but Says ‘On Track’ to Meet 2015 Earnings Goals
Eastman Kodak yesterday reported a net loss of $21 million for its third-quarter 2015, compared with net earnings of $19 million in third-quarter 2014.
However, Kodak says these key product lines achieved strong sales growth:
- Sales volume for KODAK SONORA Process Free Plates increased by 41 percent.
- Sales volume for KODAK FLEXCEL NX Plates grew by 32 percent.
- Revenues derived from the KODAK PROSPER Portfolio increased by 36 percent on a constant currency basis, or 27 percent as reported.
- Revenues for the Software and Solutions Division products and services increased by 22 percent on a constant currency basis, or 11 percent as reported.
“Q3 marked significant progress in Kodak’s transformation,” commented Kodak CEO Jeff Clarke. “I’m pleased with the strong growth of our strategic product lines. Further, Kodak is on track to improve comparable operational EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) by 50 percent to 80 percent versus last year.”
Revenues in the third quarter of 2015 were $446 million, a decline of 21 percent versus third-quarter 2014. Kodak says this decline was in large part due to the adverse impact of currency exchange rates, as well as expected declines in revenues from legacy consumer-inkjet printer-cartridge sales, and a one-time gain of $52 million from patent licenses in the third quarter of 2014. When adjusted for foreign exchange and these items, revenues decreased 4 percent year-over-year.
“We expect to generate cash in Q4 2015 and in 2016, with the majority of restructuring and legacy payments behind us,” said John McMullen, Kodak Chief Financial Officer. “We have substantially reduced our cost structure and are in line to achieve a greater than $100 million improvement in 2015. Like many U.S. companies, we are challenged by foreign currency exchange and other macro-economic factors, but we see strong growth opportunities ahead.”
Print Systems Division (PSD), Kodak’s largest division, had third-quarter 2015 revenues of $278 million, a 13 percent decline compared to third-quarter 2014. Operational EBITDA for the quarter was $28 million, down from $31 million for the same period a year ago.
Without the unfavorable impact of foreign exchange rates, Kodak says PSD’s third-quarter operational EBITDA would have increased by $1 million.
Enterprise Inkjet Systems Division (EISD) had third-quarter revenues of $39 million, down from $43 million for the same period last year. On a constant currency basis revenues were flat. Our PROSPER business grew by 27 percent and was offset by declines in KODAK VERSAMARK Printing System sales. Operational EBITDA was negative $4 million, compared with negative $12 million in third-quarter 2014, for an improvement of $8 million. On a constant currency basis, operational EBITDA improved by $9 million. Results for this division also reflected investments in a new generation of printer systems which will be unveiled in 2016.
Micro 3D Printing and Packaging Division (MPPD) had third-quarter revenues of $32 million, flat with the same period a year ago. Operational EBITDA improved on a constant currency basis to $6 million from $1 million in third-quarter 2014, driven by the continued growth of the KODAK FLEXCEL NX System and the gain from the termination of the relationship with UniPixel. FLEXCEL NX Plate volume increased by 32 percent year-over-year, and the installed base is now over 450 FLEXCEL NX CTPs.
Software and Solutions Division (SSD) had a strong quarter. Third-quarter revenues were $30 million, up 11 percent from $27 million for the same period last year. Operational EBITDA doubled from $1 million to $2 million.
A highlight of the quarter was the completion of a $5 million Kodak contract to produce ballots for the presidential election in Argentina.
Kodak’s Consumer and Film Division (CFD) had revenues of $64 million, down from $92 million in third-quarter 2014. Operational EBITDA declined from $24 million to $12 million. Kodak says it expected these declines, and built them into its plan for the year, with anticipated continued reduction in revenues and earnings from its consumer-inkjet printer-cartridge business.
For the third quarter in a row, Kodak film recorded a profitable quarter on an operational EBITDA before corporate cost basis. Kodak says it’s continuing to find new opportunities in brand licensing. During the third-quarter, Kodak signed deals with several new partners, including manufacturers of LED lighting and flash drives.
Kodak’s Intellectual Property Solutions Division (IPSD) had no revenues in the third-quarter, and operational EBITDA of negative $4 million. In the third quarter, this division recorded $52 million of revenue from the license of patents. Kodak says its inventions ranging from anti-microbial particles, to unique material solutions for 3D printing, to light-blocking materials will create new growth opportunities.
November 2014: In Landmark Third Quarter, Kodak Returns to Profitability