Kodak Returns to Profitability in Second Quarter

It’s happy days at East Kodak, as, on August 9th, the firm reported financial results for its second quarter that ended on June 30th, delivering a return to profitability based primarily on an increase in income from continuing operations.

Net income was $8 million for the quarter, while income from continuing operations was $16 million for the quarter, a $31 million improvement over the prior year.

The company ended the quarter with a cash balance of $513 million, equal to the cash balance at the end of the first quarter of 2016. In the same period a year ago, Kodak’s cash balance declined by $33 million.

Revenues for the second quarter were $397 million, compared with revenues of $434 million for the same quarter a year ago,a reduction of $37 million, or 9 percent.

Operating expenses were $60 million for the second quarter, a 14-percent reduction compared to the prior-year second quarter.

The company says it remains committed to completing the sale of the KODAK PROSPER business, which is presented within discontinued operations. It says that it continues to make significant investments in the business, which grew its year-over-year annuity revenue by 35 percent in the second quarter.

Revenues in the second quarter of 2016 were $397 million, a 9-percent decline from second-quarter 2015. Kodak says the decrease was primarily driven by year-over-year price declines and lower equipment sales in the Print Systems Division, as well as the expected continuing decline in legacy consumer-inkjet printer cartridge sales.

Net income improved by $31 million year over year to $8 million for the quarter ended June 30, 2016.

Results by Group

Print Systems Division (PSD) Kodak’s largest division, had second quarter revenues of $258 million, a 9-percent decline compared to second-quarter 2015. Operational EBITDA for the quarter was $22 million, up $2 million or 10 percent from the same period a year ago. On a constant currency basis, Operational EBITDA improved by 15 percent.

For the quarter, KODAK SONORA Plate sales volume increased by approximately 8 percent. Excluding the Latin America region, which Kodak says was affected by economic and external factors, SONORA Plate volume was up 17 percent year-over-year.

PSD’s Electrophotographic Printing Solutions (EPS) business showed comparable profitability compared to second-quarter 2015, due to productivity and cost improvements, even with the anticipated slowdown in unit installations as “customers paused to evaluate new products introduced at (the) drupa (tradeshow).:

Enterprise Inkjet Systems Division (EISD) had second quarter revenues of $19 million, down from $21 million versus second-quarter 2015. Operational EBITDA was $5 million, which was flat compared to the second quarter of 2015.

Kodak says its PROSPER business had continued strong performance in the second quarter. For the half year, PROSPER results improved from a loss of $25 million to a loss of $16 million, including a $3 million investment related to the drupa trade show, and PROSPER EBITDA improved by $8 million year-over-year.

Kodak’s Micro 3D Printing and Packaging Division (MPPD) group had “solid results” for the quarter, driven by strong performance of the KODAK FLEXCEL NX Packaging business, which continues to represent a significant growth area for Kodak. Revenues for the second quarter were $35 million, compared to $33 million for second-quarter 2015. Operational EBITDA declined by $2 million, which Kodak says was primarily due to unfavorable foreign exchange rates, investment in drupa, and increased R&D expenses.

Revenues for the FLEXCEL NX Packaging business increased by 7 percent, and the company placed 12 Computer-to-Plate units in the quarter. FLEXCEL NX Plate volume grew at 16 percent year-over-year.

In Micro 3D Printing, Kodak says its continues to focus on copper-mesh touch sensors and shipped products to an All-in-One OEM customer in the second quarter.

Kodak’s Software and Solutions Division (SSD) group’s revenues for the second quarter were $21 million, down from $27 million for the same period last year. Operational EBITDA declined $3 million to a loss of $2 million. Kodak says this division’s performance was affected by delayed timing of government contracts in Latin America and the delayed timing of orders as a result of drupa.

Kodak’s Consumer and Film Division (CFD) revenues for the second quarter were $61 million, down 8 percent from the $66 million for its second quarter last year. Operational EBITDA improved from $8 million to $10 million, driven primarily by a significant industrial-films customer order in the quarter. Excluding the consumer-inkjet business, which saw revenues drop by 39 percent, the division’s revenues for the quarter improved by $2 million.

The firm’s Intellectual Property Solutions Division (IPSD) had Operational EBITDA of negative $4 million for the second quarter of 2016, an improvement of $2 million compared with negative $6 million for the year-ago period. Kodak says this improvement reflects continued efforts to “re-prioritize research programs.” During the quarter, Kodak participated in the formation of a partnership focused on brand protection technology with Alibaba Group, a leader in ecommerce, and signed a contract with Carbon3D, a 3D-printing technology company, which it says will result in improved profitability for the division.

Eastman Business Park Division (EBPD) had revenues of $3 million, down from $4 million in the second quarter of 2015. Operational EBITDA was $1 million, down $1 million from last year. Eastman Business Park continues to improve overall operational efficiency and has a “healthy pipeline” of potential tenants.

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