Kodak Reports $4 Million in Second-Quarter Net Earnings, ‘Strong Performance in Growth Products’

 

Eastman Kodak today reported financial results for the second quarter 2017, delivering net earnings of $4 million, and “continued strong growth in its KODAK SONORA Process Free Plates, KODAK FLEXCEL NX Packaging and KODAK PROSPER Inkjet annuities.”

Highlights for Kodak’s second quarter include:

• Net earnings of $4 million for the quarter ended June 30, 2017, compared with $8 million for the second-quarter 2016.
• Revenues of $381 million compared with revenues of $423 million for second-quarter 2016, down $42 million or 10 percent.

Kodak says that these key product lines achieved strong year-over-year growth for the quarter:

• Volume for KODAK FLEXCEL NX Plates grew by 22 percent.
• Volume for KODAK SONORA Process Free Plates grew by 18 percent.
• Annuities revenue for KODAK PROSPER Inkjet grew by 14 percent.

The company updated its 2017 outlook to reflect the impact of an expected “advanced technology transaction.” Kodak adjusted its forecast for the full year change in cash balance to a range of $0 to $10 million of cash generation. It continues to expect revenues of $1.5 billion to $1.6 billion, and adjusted its forecast for Operational EBITDA to a range of $90 million to $105 million.

“Our FLEXCEL NX Plates, SONORA Plates and PROSPER Inkjet businesses continue to deliver impressive performance and contribute a growing percentage of Kodak’s total revenues,” commented Kodak CEO Jeff Clarke. “We continue to invest significantly in new inkjet and advanced materials technologies for the future.”

The company ended the quarter with a cash balance of $370 million, down $8 million, or 2 percent, versus the balance at the end of first-quarter 2017, and down $64 million from the balance at the beginning of 2017. Kodak says this reflects the use of cash in working-capital items, such as inventory increases for sequential revenue growth during the second half of the year, partially offset by the release of restricted cash.

“Our cash position is in line with our expectations for the quarter and we are on track for our plan for the year,” commented David Bullwinkle, Kodak’s chief financial officer, said. “In the first half of 2017, we invested in working capital to support sequential growth in the second half of the year.”

Print Systems Division (PSD), Kodak’s largest division, had second-quarter revenues of $236 million, a 9-percent decline versus second-quarter 2016. Operational EBITDA for the quarter declined by $6 million compared with the same period a year ago. Kodak says the decline was largely due to pricing pressures and the higher cost of aluminum, the primary material for the division’s plate products.

For the quarter, KODAK SONORA Plates “delivered continued strong performance, with volume increasing by 18 percent compared with the same period a year ago.” SONORA Plates now account for 18 percent of the division’s total plate-unit sales.

Enterprise Inkjet Systems Division (EISD), including the KODAK PROSPER and KODAK VERSAMARK businesses, had second-quarter revenues of $35 million, compared with $44 million for second-quarter 2016, a decline of 20 percent. Operational EBITDA was $1 million, an improvement of $7 million compared with Q2 of 2016. On a constant currency basis, operational EBITDA improved by $8 million.

For the second quarter of 2017 the PROSPER business “continued to deliver solid performance with year-over-year annuity growth of 14 percent.”

Kodak says it continues to invest in next-generation ULTRASTREAM inkjet technology, working with a number of prospective OEM partners toward commercializing the technology in 2019.

The Flexographic Packaging Division (FPD) includes KODAK FLEXCEL NX Systems and Plates, as well as other packaging businesses, such as analog flexographic plates and letterpress plates, proofing products and services. FPD continued to deliver strong performance for the quarter, driven by consistent growth in KODAK FLEXCEL NX Plates. Revenues for the second quarter were $37 million, an increase of $2 million or 6 percent, versus second-quarter 2016. Operational EBITDA was $8 million, an increase of $2 million or 33 percent compared with the second quarter of 2016.

In the second quarter, FLEXCEL NX revenues increased 12 percent over the prior-year period and FLEXCEL NX Plate volume continued to deliver strong growth, increasing by 22 percent year-over-year. In April, Kodak broke ground on an expansion of its manufacturing facility in Weatherford, Oklahoma, to accommodate a new line for the production of KODAK FLEXCEL NX Plates.

Software and Solutions Division (SSD) delivered second-quarter 2016 revenues of $22 million, an increase of $1 million compared with the same period last year. Operational EBITDA increased $1 million compared with the prior-year period. Licensing revenue in Unified Workflow Solutions grew 6 percent for the first half of 2017.

Consumer and Film Division (CFD) revenues for the second quarter were $47 million, down 24 percent from $62 million in second-quarter 2016. Operational EBITDA was negative $5 million, primarily driven by the expected continued decline in consumer inkjet and a reduction in Industrial Films & Chemicals primarily due to a significant customer order in the prior year.

The division recently entered into multi-year supply agreements with three major Hollywood studios for motion picture film.

The Advanced Materials and 3D Printing Technology Division (AM3D) includes Kodak’s research lab, Micro 3D Printing, as well as intellectual property licensing not directly related to the other business divisions. AM3D had Operational EBITDA of negative $7 million, compared with negative $8 million for second-quarter 2016.

Eastman Business Park Division (EBP) had revenues of $4 million, an increase of $1 million versus second-quarter 2016. Operational EBITDA increased by $1 million from the prior period. During the quarter, the division added a controlled environment agriculture company as a tenant.

More Resources

• 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
• March 2017: Xerox May be Purchasing Kodak’s Commercial Inkjet Business
• January 2017: Kodak Expected to Take $17 Million Loss for Sale of Prosper Commercial-Inkjet-Printing Business
• November 2016: Kodak Posts Third-Quarter Earnings of $12 Million
• August 2016: Kodak Returns to Profitability in Second Quarter
• May 2016: Kodak Reports Smaller Loss for First Quarter, But Revenues Lower Due to Decline in Legacy Consumer Inkjet
• March 2016: On Heels of $75 Million Loss, Kodak Seeking to Sell PROSPER Enterprise Inkjet Business
• October 2014: Loss for Kodak’s Third Quarter, but Says ‘On Track’ to Meet 2015 Earnings Goals