Kodak Reports Financial Results for 1Q 2016

Eastman Kodak Company reported financial results for the first quarter 2016, demonstrating continued improvement in operating and cash flow performance.

GAAP net loss was $15 million, compared to a net loss of $54 million in 2015. Income from continuing operations before income taxes was $2 million for the quarter ended March 31, 2016, compared to a loss of $32 million for the quarter ended March 31, 2015.

The company ended the quarter with a cash balance of $513 million. This reflects a decrease in cash of $34 million for the first quarter of 2016. Net cash used in operating activities was $21 million for the quarter ended March 31, 2016, compared with net cash used in operating activities of $89 million for the quarter ended March 31, 2015.

The company reiterated 2016 revenues guidance of $1.5 billion to $1.7 billion and increased Operational EBITDA guidance to $135 million to $150 million.

Operational EBITDA for the quarter of $29 million compared to $31 million for the first quarter of 2015. On a constant currency basis, Operational EBITDA improved by $1 million year over year for the quarter. The prior-period results have been recast to remove the KODAK PROSPER Enterprise Inkjet discontinued operations and are presented on a comparable basis.

Revenues for the quarter ended March 31, 2016, were $362 million, compared to revenues of $411 million for the quarter ended March 31, 2015, a reduction of $49 million, or 12%. On a constant currency basis, revenues declined by 10% year over year for the quarter.

The company remains committed to completing the sale of the PROSPER business, which will be presented as a discontinued operation beginning with this quarter’s reporting.

The PROSPER business had continued strong performance for the first quarter: Annuity growth was 36%; the installed base grew from 55 to 58 units and first quarter component placements grew greater than 50% year over year; PROSPER loss from discontinued operations, net of income tax, improved from negative $17 million in the first quarter of 2015 to negative $10 million in the first quarter of 2016; EBITDA improved 63% year over year from negative $16 million to negative $6 million.

“Kodak continues to make solid progress in our transition,” said Jeff Clarke, Kodak CEO. “We’re seeing better quality of earnings and improved cash performance. Looking ahead, I’m pleased we’re on track to improve Kodak’s Operational EBITDA and to generate cash in 2016.”

“The recent implementation of our more focused portfolio and continued productivity gains position us well to meet our objectives for 2016. I’m particularly pleased with the first quarter cash results,” said John McMullen, Kodak CFO.

Print Systems Division (PSD), Kodak’s largest division, had Q1 revenues of $231 million, a 9% decline compared to Q1 2015. Operational EBITDA for the quarter was $18 million, 38% better than the same period a year ago. On a constant currency basis, PSD Q1 revenues declined 7% while Operational EBITDA improved by 46%.

For the quarter, KODAK SONORA Plate volume increased by approximately 3%. This slower growth is primarily due to weakness in Latin America. Total year-over-year plate volume remained stable, due to SONORA growth and the success of two new products, KODAK ELECTRA MAX Thermal Plates and KODAK LIBRA VP Digital Plates.

In the quarter, PSD’s Electrophotographic Printing Solutions (EPS) business placed 14 KODAK NEXPRESS Digital Production Color Press units, and Kodak will continue to focus on improving profitability by driving productivity and cost improvements across the entire EPS portfolio. Kodak will showcase the new KODAK NEXPRESS ZX3900 Digital Production Color Press, preview a new NEXPRESS Platform and launch an opaque white ink at the drupa tradeshow in Dusseldorf, Germany, in May.

Enterprise Inkjet Systems Division (EISD) continued the sale process for the PROSPER business. EISD had Q1 revenues of $20 million, down from $23 million in the same period in 2015. Operational EBITDA was $5 million, a decline of $2 million compared to Q1 of 2015.

Micro 3D Printing and Packaging Division (MPPD) had solid results for the quarter, driven by growth in the KODAK FLEXCEL NX Packaging business as well as lower investment in Micro 3D printing as the business shifts from research to commercialization. Revenues for Q1 were $29 million, compared to $31 million in the same period a year ago.

The FLEXCEL NX Packaging business continues to represent a significant growth area for Kodak, which installed 20 new FLEXCEL NX units in the quarter.

In Micro 3D printing, Kodak is moving ahead with a focus on copper mesh touch sensors and is pursuing a number of RFQs, particularly in the industrial and All-in-One segments.

Consumer and Film Division (CFD) revenues for Q1 were $56 million, down 22% from $72 million in Q1 of 2015. Operational EBITDA declined from $18 million to $7 million, driven by a 41% reduction in consumer inkjet revenue.