Earnings up for Kodak’s Fiscal Year, Growth in Key Product Areas

Eastman Kodak Company of Rochester, New York, yesterday reported financial results for its fourth quarter and full-year 2017, delivering net earnings for the year of $94 million on revenues of $1.5 billion and continued growth in key product areas.

Highlights include:

• GAAP (Generally Accepted Accounting Principles) net earnings of $94 million for the 2017  year. GAAP net earnings for the year includes a tax benefit of $101 million due to the release of a valuation allowance in the fourth quarter of 2017 as a result of increased profits in a location outside the United States.
• Operational EBITDA (earnings before interest, taxes, depreciation and amortization) for 2017 of $57 million.
• Revenues for 2017 of $1.5 billion, a decline of $112 million compared with the same period in 2016.
• Key product lines achieved strong year-over-year growth for the full year 2017:
  • Volume for KODAK FLEXCEL NX Plates grew by 17 percent.
  • Volume for KODAK SONORA Process Free Plates grew by 21 percent.
  • Annuity revenues for the KODAK PROSPER inkjet platform grew by 13 percent.
• The company ended the year with a cash balance of $344 million.

2018 Forecast

2018 guidance is for revenues of $1.5 billion to $1.6 billion and Operational EBITDA of $60 million to $70 million. Beginning in 2018 Operational EBITDA will only include the service cost component of pension income in conjunction with the adoption of a new accounting standard. If this change were made in 2017 Operational EBITDA would have been $49 million.

“2017 was a year of investment in our strategic growth priorities which bodes well for the future,” said Jeff Clarke, Kodak Chief Executive Officer.  “We also eliminated several business initiatives while continuing to reduce cost and drive greater efficiency in the company.  We enter 2018 with a stronger growth profile and more productive operations.”

Revenues for the full year 2017 were $1.5 billion, down 7 percent from 2016. The revenue decline was driven by volume and pricing declines within the company’s commercial print business and volume declines in the company’s consumer inkjet and industrial film and chemicals businesses.

The company’s cash balance was $344 million at the end of 2017, compared with $434 million at the end of 2016. The company used cash to invest in strategic growth businesses, fund working capital needs, meet legacy cash obligations and service and prepay debt.

“Our use of cash in 2017 included meaningful investments in the ULTRASTREAM inkjet platform, FLEXCEL NX packaging, SONORA X plates, advanced materials and brand licensing which will contribute to growth,” said David Bullwinkle, Kodak Chief Financial Officer. “In the fourth quarter of 2017, we reprioritized our investments to focus on shorter payback periods and reduced costs which will improve our ability to generate cash in 2018 and beyond.”

Key Business Unit Performance

Print Systems Division (PSD), Kodak’s largest division, had fourth-quarter 2017 revenues of $261 million, a 6-percent decline compared with Q4 in 2016. Operational EBITDA for the quarter was $16 million, compared with $39 million for the same period a year ago. Print Systems Division had full-year 2017 revenues of $942 million, a 7-percent decline compared with 2016. Full-year Operational EBITDA was $58 million, a decline of $48 million compared with the prior year. The decline was due primarily to industry pricing pressures, higher aluminum costs and an overall commercial print industry slowdown.

PSD’s environmentally-advantaged KODAK SONORA Process Free Plates had continued strong performance, delivering 21 percent year-over-year growth in unit sales. SONORA Plates now account for 19 percent of the division’s total plate unit sales.

Enterprise Inkjet Systems Division (EISD), including the KODAK PROSPER and KODAK VERSAMARK businesses and the investment in ULTRASTREAM inkjet technology, had fourth-quarter revenues of $39 million, down from $43 million in the same period in 2016. Operational EBITDA was $3 million, an increase of $1 million compared with the fourth quarter of 2016.

For the full year 2017, EISD revenues were $144 million, compared with $166 million in 2016. Operational EBITDA for the full year 2017 increased by $21 million from 2016 to $5 million in 2017. The results reflect the positive impact of cost control actions and continued strong growth in PROSPER annuities.

The company continues to invest in the development of KODAK ULTRASTREAM, the next-generation inkjet writing system, which is scheduled for launch in 2019.

Revenue and Operational EBITDA Q4 2017 vs. Q4 2016

($ millions)

Q4 2017 Actuals	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ 261	$ 39	$ 41	$ 21	$ 47	$ 1	$ 4	$ 414
Operational EBITDA *	$ 16	$ 3	$ 10	$ 1	$ (6)	$ (5)	$ 1	$ 20
Q4 2016 Actuals	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ 279	$ 43	$ 34	$ 24	$ 47	$ 1	$ 4	$ 432
Operational EBITDA *	$ 39	$ 2	$ 7	$ 2	$ (2)	$ (5)	$ –	$ 43
Q4 2017 Actuals vs. Q4 2016 Actuals B/(W)	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ (18)	$ (4)	$ 7	$ (3)	$ –	$ –	$ –	$ (18)
Operational EBITDA *	$ (23)	$ 1	$ 3	$ (1)	$ (4)	$ –	$ 1	$ (23)
Q4 2017 Actuals on constant currency** vs. Q4 2016 Actuals B/(W)	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ (27)	$ (5)	$ 5	$ (3)	$ (1)	$ –	$ –	$ (31)
Operational EBITDA *	$ (25)	$ –	$ 2	$ (1)	$ (5)	$ –	$ 1	$ (28)

* Total Operational EBITDA is a non-GAAP financial measure. The reconciliation between GAAP and non-GAAP measures is provided in Appendix A of this press release.

** The impact of foreign exchange represents the 2017 foreign exchange impact using average foreign exchange rates for the three months ended December 31, 2016, rather than the actual exchange rates in effect for the three months ended December 31, 2017.

Revenue and Operational EBITDA FY 2017 vs. FY 2016

($ millions)

FY 2017 Actuals	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ 942	$ 144	$ 145	$ 85	$ 198	$ 1	$ 16	$ 1,531
Operational EBITDA *	$ 58	$ 5	$ 31	$ 1	$ (16)	$ (26)	$ 4	$ 57
FY 2016 Actuals	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ 1,108	$ 166	$ 132	$ 90	$ 221	$ 1	$ 15	$ 1,643
Operational EBITDA *	$ 106	$ (16)	$ 24	$ 1	$ 16	$ (26)	$ 2	$ 107
FY 2017 Actuals vs. FY 2016 Actuals B/(W)	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ (76)	$ (22)	$ 13	$ (5)	$ (23)	$ –	$ 1	$ (112)
Operational EBITDA *	$ (48)	$ 21	$ 7	$ –	$ (32)	$ –	$ 2	$ (50)
FY 2017 Actuals on constant currency** vs. FY 2016 Actuals B/(W)	PSD	EISD	FPD	SSD	CFD	AM3D	EBPD	Total EK
Revenue	$ (81)	$ (21)	$ 12	$ (4)	$ (23)	$ –	$ 1	$ (116)
Operational EBITDA *	$ (50)	$ 22	$ 5	$ –	$ (32)	$ –	$ 2	$ (53)

* Total Operational EBITDA is a non-GAAP financial measure. The reconciliation between GAAP and non-GAAP measures is provided in Appendix A of this press release.

** The impact of foreign exchange represents the 2017 foreign exchange impact using average foreign exchange rates for the twelve months ended December 31, 2016, rather than the actual exchange rates in effect for the twelve months ended December 31, 2017.

More Resources

• November 2017: Kodak Introduces First 3D Printer, the Portrait 3D Printer
• November 2017: Kodak Slips in Third Quarter, Reporting Net Loss
• August 2017: Kodak Reports $4 Million in Second-Quarter Net Earnings, ‘Strong Performance in Growth Products’
• May 2017: Kodak Reports $7 Million in Net Earnings, ‘Continued Growth in Key Product Areas’
• April 2017: Kodak Won’t Be Selling its PROSPER Commercial Inkjet-Printing Businesses
• March 2017: Kodak Reports Much Improved Earnings for 2016
• November 2016: Kodak Posts Third-Quarter Earnings of $12 Million