Kodak Reports Smaller Loss for First Quarter, But Revenues Lower Due to Decline in Legacy Consumer Inkjet
Last week, Eastman Kodak Company reported financial results for its first-quarter of 2016, which it says demonstrate continued improvement in operating and cash-flow performance. The firm reported a net loss of $15 million, compared to a net loss of $54 million for first-quarter 2015, and income from continuing operations before income taxes was $2 million, compared to a loss of $32 million for first-quarter 2015.
Revenue for Kodak’s first quarter that ended on March 31, 2016, was $362 million, compared to revenue of $411 million for first-quarter March 31, 2015, a decline of $49 million, or 12 percent. On a constant-currency basis, revenues declined by 10 percent year-over-year for the quarter. Kodak says the decline was primarily driven by its expected continued decline in legacy consumer-inkjet printer-cartridge sales, as well as pricing pressures in its plates business.
Kodak ended the first quarter with a cash balance of $513 million, reflecting a decrease in cash of $34 million for first-quarter 2016. Net cash used in operating activities was $21 million versus net cash used in operating activities of $89 million for first-quarter 2015.
The company reiterated its 2016 revenues guidance of $1.5 billion to $1.7 billion, and increased Operational EBITDA (earnings before interest, taxes, depreciation, and amortization) guidance of $135 million to $150 million.
Operational EBITDA for the quarter was $29 million, compared to $31 million for first-quarter 2015. On a constant-currency basis, Operational EBITDA improved by $1 million year-over-year for the quarter. The prior-period results have been recast to remove the KODAK PROSPER Enterprise Inkjet production-printing business’s discontinued operations, and are presented on a comparable basis (Kodak is seeking to sell its PROSPER Enterprise inkjet business; see story here).
Kodak says the PROSPER business had continued strong performance for the first quarter: annuity growth was 36 percent; the installed base grew from 55 to 58 units, and first-quarter component-placements grew greater than 50 percent year-over-year; PROSPER loss from discontinued operations improved from negative $17 million in first-quarter 2015 to negative $10 million for first-quarter 2016. EBITDA improved 63 percent year-over-year from negative $16 million to negative $6 million.
Kodak CEO Jeff Clarke commented in a prepared statement: “Kodak continues to make solid progress in our transition. We’re seeing better quality of earnings and improved cash performance. Looking ahead, I’m pleased we’re on track to improve Kodak’s Operational EBITDA and to generate cash in 2016.”
Operational EBITDA improved in several of the company’s divisions, which it says offset the continued, expected decline in consumer-inkjet business profit within the Consumer and Film Division.
The firm says cash performance for the company “improved significantly” year-over-year. Net cash used in operating activities was $21 million for first-quarter 2016, compared with net cash used in operating activities of $89 million for first-quarter 2015. The company ended the quarter with a cash balance of $513 million.
Print Systems Division
Kodak’s Print Systems Division (PSD), Kodak’s largest division, had first-quarter revenues of $231 million, a 9-percent decline compared to first-quarter 2015. Operational EBITDA for the quarter was $18 million, 38-percent better than first-quarter 2015. On a constant-currency basis, PSD first-quarter 2016 revenues declined 7 percent, while Operational EBITDA improved by 46 percent.
For the quarter, KODAK SONORA Plate volume increased by approximately 3 percent. Kodak says this slower growth was primarily due to weakness in Latin America. It expects second-quarter growth to return to mid-teen percentage growth. Total year-over-year plate volume remained stable, due to SONORA growth and the success of two new products, KODAK ELECTRA MAX Thermal Plates and KODAK LIBRA VP Digital Plates.
In the quarter, PSD’s Electrophotographic Printing Solutions (EPS) business placed 14 KODAK NEXPRESS Digital Production Color Press units, and Kodak says it will continue to focus on improving profitability “by driving productivity and cost improvements across the entire EPS portfolio.” Kodak will showcase the new KODAK NEXPRESS ZX3900 Digital Production Color Press, preview a new NEXPRESS Platform, and launch an opaque white ink at the drupa tradeshow being held this month in Dusseldorf, Germany.