Revenue Decline, Loss for Kodak’s First Quarter

Like many printer/copier companies, the Eastman Kodak Company of Rochester, New York, has been hard hit by the COVID-19 pandemic, especially since the company has been struggling to regain its footing since emerging from Chapter 11 bankruptcy reorganization in 2012.

On May 12th the company reported financial results for its first quarter of 2020 that ended on March 31, 2020.

Kodak reported net revenues of $267 million for the first quarter, down $24 million year-over-year. It also reported a net loss of $111 million, stating that the net loss included an expense of $167 million related to the increase in deferred tax valuation allowances for locations outside of the United States.

Operational EBITDA (Earnings Before Interest Taxes, Depreciation, Amortization) for the quarter were -$8 million. The company ended the quarter with a cash balance of $209 million, down from the December 31, 2019 cash balance of $233 million.

First Quarter Versus Third Quarter

Kodak did not post results for its fourth quarter ending on December 31, 2019. But it did post results for its third quarter ending on September 31, 2019. For the third quarter, it reported revenue of $315 million – versus $265 million for the first quarter.

For third-quarter 2019, it reported a net loss of $5 million, versus a net loss of $111 million for first-quarter 2020. Its share price is currently trading at $2.46 per share, versus a low of $1.55 per share in March 2020, falling from $4.00 per share in January 2020.

For fiscal-year 2019, Kodak posted net earnings of $116 million versus a loss of $16 million for the year earlier. However, the firm reported an operating loss of $91 million, versus an operating loss of $9 million for the previous fiscal year. It did, however, complete the sale of its Flexographic Packaging Division and repaid in full $395 million of its First Lien Term Loans.

Looking for ‘Strong Rebound’

Jim Continenza, Kodak’s executive chairman, commented on Kodak’s first-quarter results:  “Kodak started the quarter on a positive trajectory and the actions we took last year to strengthen our balance sheet are helping us manage through the slowdown.

“Kodak employees have risen to the challenge of the pandemic, continuing to serve our customers and redirecting resources to produce isopropyl alcohol for hand sanitizer and manufacture face masks using our ESTAR film base. Looking forward, we will continue with our plans to double down on digital print, launch exciting new products and realign our business to focus on customers.”

“For the quarter we used $24 million of cash, after giving effect to the release of $25 million of restricted cash,” explained Kodak CFO David Bullwinkle.  “During the economic slowdown caused by the COVID-19 situation, we are managing our working capital tightly to ensure sustainability for our customers and employees. We continue to pursue cost-reduction efforts to preserve cash and position Kodak for a strong rebound when business conditions start to improve.”

Revenue and Operational EBITDA by Reportable Segment Q1 2020 vs. Q1 2019

($ millions)
Q1 2020 Actuals Traditional Printing Digital Printing Advanced Materials & Chemicals Brand Total
Revenue  $ 154  $ 65  $ 42  $ 3  $ 264
Operational EBITDA *  $ 1  $ (2)  $ (9)  $ 2  $ (8)
Q1 2019 Actuals Traditional Printing Digital Printing Advanced Materials & Chemicals Brand Total
Revenue  $ 166  $ 72  $ 48  $ 3  $ 289
Operational EBITDA *  $ 6  $ (1)  $ (11)  $ 1  $ (5)
Q1 2020 vs. Q1 2019 Actuals
B/(W)
Traditional Printing Digital Printing Advanced Materials & Chemicals Brand Total
Revenue  $ (12)  $ (7)  $ (6)  $ –  $ (25)
Operational EBITDA *  $ (5)  $ (1)  $ 2  $ 1  $ (3)
Q1 2020 Actuals on constant currency **  vs. Q1 2019 Actuals
B/(W)
Traditional Printing Digital Printing Advanced Materials & Chemicals Brand Total
Revenue  $ (10)  $ (6)  $ (6)  $ –  $ (22)
Operational EBITDA *  $ (5)

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