Kodak Reports 2015 4Q, Year-End Financial Results

Eastman Kodak Company reported financial results for the fourth quarter and full year of 2015, delivering earnings higher than full-year guidance and reflecting significant progress in the Kodak transformation.
 
Revenues for the year ended Dec. 31, 2015, of $1.8 billion, compared to revenues of $2.1 billion for the year ended Dec. 31, 2014, a reduction of approximately $0.3 billion, or 15%. The company ended the year with a cash balance of $547 million. This reflects an increase in cash of $26 million for the fourth quarter of 2015.
 
The company’s 2016 guidance is revenues of $1.5 billion to $1.7 billion and Operational EBITDA of $130 million to $150 million. The Operational EBITDA guidance represents 12% to 29% improvement on a comparable basis versus 2015, adjusting for the year over year impact of foreign exchange. This guidance is on a continuing operations basis and excludes the PROSPER and silver metal mesh businesses.
 
“I am pleased with the performance of the company for 2015,” said Jeff Clarke, Kodak CEO. “We delivered strong operating performance, exceeding the Operational EBITDA guidance we provided for the year, delivering greater than the targeted cost structure savings and meaningfully improving the quality of our earnings.”
 
Revenues in the fourth quarter of 2015 were $467 million, a 12% decline from the fourth quarter of 2014. On a constant currency basis, revenues in Q4 2015 declined by 7% versus Q4 in 2014. The decrease was primarily driven by the expected continued decline in legacy consumer inkjet printer cartridge sales, non-recurring licensing revenue in the prior-year period as well as pricing reductions in digital plates within the Print Systems Division.
 
“We are executing well within the new divisional structure, and making the progress necessary in our key businesses to drive future growth,” said John McMullen, Kodak CFO. “We are also exceeding our aggressive cost goals to ensure we have the structure and capacity we need to invest in growth and to return the company to sustained profitability.”
 
Print Systems Division (PSD), Kodak’s largest division, had Q4 revenues of $292 million, an 11% decline compared to Q4 in 2014. Operational EBITDA for the quarter was $37 million, 23% better than the same period a year ago. On a constant currency basis, PSD Q4 revenues declined 5% while Operational EBITDA improved by 30%.
 
PSD had full year 2015 revenues of $1.106 billion, a 12% decline compared to 2014. Full year Operational EBITDA was $98 million, 5% better than the same period a year ago. On a constant currency basis, PSD revenues declined 4% while Operational EBITDA improved by 15%. The decline in year over year revenues was due primarily to foreign exchange, global economic volatility particularly in Brazil, Japan and China, and competitive pricing pressures.
 
Highlights for the division include the successful transition of SONORA plate manufacturing from England to the Americas, the release of two new products, KODAK ELECTRA MAX Thermal Plates and KODAK LIBRA VP Digital Plates, and the increase in KODAK NEXPRESS Digital Color Production Press placements by approximately 16%, from 67 to 78 units.
 
Enterprise Inkjet Systems Division (EISD) had Q4 revenues of $50 million, up from $47 million in the same period in 2014. On a constant currency basis, revenues improved by $5 million. Operational EBITDA was a negative $4 million, compared with a negative $8 million in the fourth quarter of 2014, for an improvement of $4 million. On a constant currency basis, Operational EBITDA improved by $5 million.
 
For the full year 2015, EISD revenues were $173 million, down from $185 million in the same period last year. On a constant currency basis, revenues improved by $2 million. Operational EBITDA for the full year 2015 was negative $26 million, an improvement of $18 million compared to the prior-year period. This improvement reflects the reduction in earnings contribution from the KODAK VERSAMARK legacy product, more than offset by improvement in PROSPER contribution through consumables growth and cost reductions.
 
Micro 3D Printing and Packaging Division (MPPD) had a strong year, driven by the success of the KODAK FLEXEL NX System. Revenues for Q4 were $31 million, down $5 million compared to the same period a year ago. On a constant currency basis, revenues declined by $2 million, or 6%, from Q4 2014. Operational EBITDA for Q4 was breakeven, which was flat with the fourth quarter of 2014. On a constant currency basis, Operational EBITDA improved by $2 million.
 
For the full year, FLEXCEL NX revenue increased by 12%, or 24% on a constant currency basis. The installed base grew by 20% year over year ending the year at over 470 FLEXCEL NX CTPs. Plate volume increased by 26% year over year for the full year. Operational EBITDA for MPPD improved from negative $1 million to $9 million, a year over year improvement of $10 million corresponding to a $14 million improvement on a constant currency basis. The improvement in this division represents strong growth in the FLEXCEL NX packaging business as well as a reduced loss in Micro 3D printing.
 
Software and Solutions Division (SSD) had strong performance in 2015. Q4 SSD revenues were $27 million, or $29 million on a constant currency basis, essentially flat compared to the same period last year. Operational EBITDA improved from $3 million to $4 million.
 
For the full year 2015, SSD revenues were $112 million, up from $108 million in the same period last year. Operational EBITDA improved from $3 million to $9 million, a year over year improvement of $6 million corresponding to a $9 million improvement on a constant currency basis. The improvement in this division reflects higher revenue from Kodak Technology Solutions and cost improvements in Unified Workflow Solutions due to increased operational efficiency.
 
Consumer and Film Division (CFD) revenues for Q4 were $63 million, down from $87 million in Q4 of 2014. Operational EBITDA declined from $17 million to $14 million. For the quarter, revenue and Operational EBITDA included $5 million of brand licensing from an amendment of an agreement, offsetting expected declines, both as built into our plan for the year.
 
For the full year, revenues for CFD were $265 million, down 25% from $352 million, driven by a 41% reduction in consumer inkjet revenue. Operational EBITDA declined from $66 million to $52 million, as expected. For the fourth quarter in a row, film recorded a profitable quarter on the basis of Operational EBITDA before corporate costs, which was the company’s goal.