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Kodak Slips in Third Quarter, Reporting Net Loss

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Despite posting several consecutive quarters of positive net earnings, Eastman Kodak Company yesterday reported a net loss of $46 million for its third quarter. It also posted revenues of $379 million, compared with revenues of $411 million for the third quarter of 2016, a decline of $32 million, or 8 percent.

For third-quarter 2016, Kodak had reported net earnings of $12 million.

The company ended the third quarter with a cash balance of $342 million, a decrease of $28 million.

However, Kodak says that key product lines achieved strong year-over-year growth for in the third quarter:

  • Volume for KODAK SONORA Process Free Plates grew by 24 percent.
  • Volume for KODAK FLEXCEL NX Plates grew by 11 percent.
  • Annuities revenue for KODAK PROSPER Inkjet grew by 9 percent.

The company maintained its range for 2017 full-year revenue of $1.5 billion to $1.6 billion, and adjusted its forecast for 2017 Operational EBITDA (earnings before interest, taxes, depreciation,amortization) to be within a range of $60 million to $65 million.

The firm says that several factors are affecting its 2017 outlook, including:

  • A slowdown in the commercial-printing industry and higher costs adversely affecting the Print Systems Division, Software and Solutions Division, and Enterprise Inkjet Systems Division.
  • Vendor transition and timing of brand licensing affecting the Consumer and Film Division performance.
  • Time to commercialize certain Advanced Material and 3D Printing Division projects.

“An overall print market slowdown and rising aluminum costs have impacted our commercial print business,” commented Kodak CEO Jeff Clarke. “We are taking immediate actions to accelerate cost-reduction and reduce investments to sharpen our focus as we continue to actively pursue changes to the Kodak product and divisional portfolio.”

According to The Rochester Democrat & Chronicle, Kodak’s cost-cutting efforts will include the reduction of some 425 jobs, including 100 jobs in Rochester, New York.

“We expect to generate cash in the fourth quarter of 2017,” said David Bullwinkle, Kodak chief financial officer. “We plan to improve our cash balance through reducing working capital and through cost actions including focusing investments in technologies most likely to deliver near-term returns.”

Kodak’s Print Systems Division (PSD), Kodak’s largest division, had third-quarter 2017 revenues of $232 million, a decline of $18 million, or 7 percent, compared with third-quarter 2016. Operational EBITDA for the quarter was $13 million, down $14 million compared with the same period a year ago. The decline was primarily due to pricing pressures.

For the quarter, KODAK SONORA Plates delivered continued growth, with volume increasing by 24 percent compared with the same period a year ago. SONORA Plates now account for 19 percent of the division’s total plate unit sales.

Kodak’s Enterprise Inkjet Systems Division (EISD), including the KODAK PROSPER and KODAK VERSAMARK businesses, and the investment in ULTRASTREAM inkjet technology, delivered third-quarter revenues of $33 million, compared with $47 million for the prior-year quarter. Operational EBITDA was $1 million, an improvement of $9 million compared with third-quarter 2016.

For the third quarter of 2017 the PROSPER business continued to deliver solid performance with year-over-year annuity growth of 9 percent.

The Flexographic Packaging Division (FPD) includes KODAK FLEXCEL NX Systems and Plates as well as other packaging businesses, such as analog flexographic and letterpress plates, proofing products and services. FPD revenues for the third-quarter were $34 million, flat with the same period a year ago. Operational EBITDA was $7 million, also flat with the prior-year quarter.

For the quarter, FLEXCEL NX revenues increased 2 percent over the prior-year period and FLEXCEL NX Plate volume continued to grow, increasing by 11 percent year over year.

Kodak’s Software and Solutions Division (SSD) delivered third-quarter revenues of $21 million, which was flat compared with the same period last year. Operational EBITDA was $1 million, a $1 million increase compared with the prior-year period.

Kodak’s Consumer and Film Division (CFD) revenues for the third quarter were $55 million, which was flat compared with third-quarter 2016. Operational EBITDA was negative $2 million, a decline of $3 million compared with the prior-year period, driven primarily by lower volumes in industrial film and chemicals, vendor transition costs in motion-picture film, and the expected continued decline in the consumer inkjet business offset by a payment of contractual minimum royalties from a brand-licensing arrangement.

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 $6 million, which was flat compared with third-quarter 2016.

Eastman Business Park Division (EBP) had revenues of $4 million, which was flat compared with third-quarter 2016. Operational EBITDA of $1 million was also flat compared to the prior-year period.

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