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Improving Financial Picture at Kodak

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On March 19th, Eastman Kodak reported financial results for its fourth quarter and full-year 2013, with net earnings of $1.99 billion for the full year, including a reorganization-items net gain of $2.01 billion, as well as a gain of $535 million for the sale of its digital-imaging patent portfolio, partially offset by a $77 million non-cash impairment charge. In contrast, for full-year 2012, Kodak reported a net loss of $1.38 billion.

Other highlights include:

  • Sales for 2013 declined from the prior year by 14 percent to $2.35 billion, as sales of motion-picture film and consumer-inkjet printer ink – two businesses that Kodak has exited – continued to decline. Kodak’s revenue projection for 2013 was approximately $2.5 billion.
  • Full-year 2013 gross profit margin improved year-over-year by 10 percentage points, reflecting primarily increased contribution from non-recurring intellectual property arrangements, product mix improvements, and cost reductions.
  • Liquidity remained strong, as Kodak ended 2013 with $844 million in cash and debt of $678 million.
  • Fourth-quarter net loss was improved from $402 million in 2012, to $63 million in fourth-quarter 2013.

“We had significant year-over-year improvement in our operating performance, but our sales fell short of our plan. The decline was primarily due to the accelerated decline in our motion-picture film business, the decline in revenues in our consumer-inkjet business with the end of printer sales, and the loss of revenue while we were in reorganization,” commented Kodak CFO Becky Roof.  

Looking at 2014, Kodak’s newly appointed CEO, Jeff Clarke, added, “I am excited about the strong increases we are seeing in revenues from our emerging technology businesses that will create the foundation for Kodak’s future growth. We expect to mitigate the earnings declines in some of our mature businesses with improved performance from our strategic technology businesses. I also believe there are significant opportunities to improve the productivity and effectiveness of our sales, manufacturing and administrative functions.”

2014 Outlook

Kodak currently estimates revenue in 2014 will total approximately $2.1 to 2.3 billion. The company anticipates substantial year-over-year sales growth in its emerging-technology businesses, led by digital printing, packaging and functional printing; stability in its enterprise services and graphics-communications businesses, and revenue declines for motion-picture film and consumer-inkjet printer ink sales. The company expects to achieve earnings from continuing operations between a $40 million loss and break-even and Operational EBITDA of approximately $145-$165 million in 2014. Capital expenditures of approximately $50 million are projected.

Kodak Earnings Summary

Millions of dollars 4Q 2013 4Q 2012 Twelve Months 2013[1] Twelve Months 2012
Sales $    607 $    739 $    2,347 $    2,719
Gross Profit 96 103 486 293
Percent of Revenue 15.8% 13.9% 20.7% 10.8%
Gross Profit excluding fresh start and other accounting adjustments 151 103 568 293
Percent of Revenue 24.9% 13.9% 24.2% 10.8%
Net income (loss) (63) (402) 1,985 (1,379)
Operational EBITDA[2] (9) (50) 78 (215)
Operational EBITDA excluding fresh start and other accounting adjustments 46 (50) 160 (215)