Q1 2024 Eastman Kodak Co Earnings Call
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Speaker Change: Good day, and thank you for standing by welcome to the Eastman Kodak Q1, 'twenty 'twenty four earnings conference call.
At this time all participants are in a listen only mode.
Please be advised that today's conference is being recorded.
Speaker Change: I would now like to kind of the conference over to your speaker today Anthony writing. Please go ahead.
Anthony Redding: Thank you and good afternoon, everyone.
Anthony Redding: Eastman Kodak company's Chief compliance officer.
Anthony Redding: Welcome to Kodak's first quarter 2024 earnings call.
Anthony Redding: At 415 P. M. This afternoon Kodak filed its Form 10-Q and issued its release on financial results for the first quarter of 'twenty 'twenty four.
Anthony Redding: They access the presentation and webcast for today's call on our Investor Center at Investor Kodak Dot Com.
Anthony Redding: On today's call, we will be making certain forward looking statements as defined by the private Securities Litigation Reform Act of 1995.
Anthony Redding: All forward looking statements are based upon kodak's expectations and various assumptions future events or results may differ from those anticipated or those expressed in the forward looking statements important factors that could cause actual events or results to differ materially from these forward looking statements include.
Anthony Redding: Among others the risks uncertainties and other factors described in more detail in Kodak's filings with the U S Securities and Exchange Commission from time to time.
Anthony Redding: There may be other factors that may cause kodak's actual results to differ materially from the forward.
Anthony Redding: Statements are.
Anthony Redding: Forward looking statements attributable to Kodak or persons acting on its behalf only apply as of the date of this presentation.
Anthony Redding: And are expressly qualified in their entirety by the.
Anthony Redding: The cautionary statements included a reference in this presentation.
Anthony Redding: <unk> undertakes no obligation to update or revise forward looking statements to reflect events or circumstances that arise after the date made.
Anthony Redding: What to reflect the occurrence of unanticipated events.
Anthony Redding: The release, just issued and the presentation provided contains certain measures that are deemed non-GAAP measures reconciliations to the most directly comparable GAAP measures have been provided with the release and within the presentation on our website in our Investor Center at Investor Kodak.
Anthony Redding: Dot com.
Speaker Change: Speakers on today's call are Jim Continental Kodak's, Executive Chairman, and Chief Executive Officer, and David Bullwinkle, Kodak's Chief Financial Officer.
Speaker Change: We will not be holding a formal Q&A during today's call as always the investor relations team is available.
Anthony Redding: Good luck.
Anthony Redding: I will now turn the call over to Jim. Thank you.
Speaker Change: Welcome everyone and thank you for joining the first quarter 2024 investor call for Eastman Kodak.
Speaker Change: I am very pleased with the company's performance for the first quarter of 2024.
Jim: Following our strong performance in 2023.
Jim: Have been committed to executing our long term play out for five years now.
Speaker Change: We have strengthened our balance sheet refinancing of long term debt.
Speaker Change: Now generating cash, which will allow us to keep investing in our businesses investing in innovation and print advanced materials and chemicals.
Speaker Change: I'm pleased to announce that we don't want our fourth Stevie Award our third goal.
Speaker Change: Our strategy in digital print technology.
Speaker Change: Improving operational efficiency and reducing cost of sale.
Speaker Change: We promise to our customers, we will become more efficient.
Speaker Change: And we have we've delivered on the expectation that we set we have achieved this by investing in new technologies, such as <unk> systems manufacturing equipment and business controls.
Speaker Change: Helping our customers with the right solution from our unmatched portfolio, we continue to invest in a broad spectrum of solutions footprint.
Speaker Change: Our focus is.
Anthony Redding: As in meeting our customers' needs.
Anthony Redding: We will only when our customers win.
Anthony Redding: Now we are preparing for the next stage.
Anthony Redding: Investing in long term opportunities that leverage our unique strengths and chemicals layering in coding developed over 130 years of history.
Anthony Redding: That has set a foundation for our future as a growth company everyone.
Anthony Redding: Everyone at Kodak is contributing to our success and excited about our future.
Anthony Redding: To thank our employees for their competitive spirit and Theyre winning attitude.
Anthony Redding: Turning to slide five.
Anthony Redding: I am pleased with.
Anthony Redding: With our continued progress in.
Anthony Redding: The company's results for the first quarter 2024.
Anthony Redding: Some highlights for the quarter.
Anthony Redding: That business.
Anthony Redding: We've continued to invest in innovation across our complete portfolio of offset and digital solutions.
Anthony Redding: We are uniquely qualified to help customers navigate and deliver the right solutions based on their needs we.
Anthony Redding: We are showcasing a range of new products add throughput also running live demonstration of our prosper Ultra 520, <unk> for us to demonstrate that unmatched combination of speed and quality.
Anthony Redding: Last year Kodak filed a petition with the U S Department of Commerce, and the U S International Trade Commission requesting relief.
Anthony Redding: From unfair trade imports of <unk> from China and Japan.
Anthony Redding: The Commerce Department.
Anthony Redding: As recently announced a preliminary finding.
Anthony Redding: And the countervailing duty.
Anthony Redding: And anti dumping investigations and the provisional duty on imports Outplace manufactured in China, and Japan are now being imposed.
Anthony Redding: You can find more details in our recent 10-Q filing.
Anthony Redding: And our AMC business, we are committed to film.
Anthony Redding: And continue to invest in manufacturing capacity.
Anthony Redding: To meet growing demand in both steel and motion picture film, we continue to expand OEM manufacturing for other types of bell to help absorb fixed manufacturing cost in our factories.
Anthony Redding: We will continue to invest in long term growth initiatives that leverage our unique strength in chemicals layering in coding and vast manufacturing infrastructure. We are currently building out a cgmp clean lab, along with our reagent facility currently under construction in Eastman business Park in Rochester.
Anthony Redding: Turning to slide six <unk>.
Anthony Redding: Performance highlights for the first quarter.
Anthony Redding: Revenues decreased 29 million approximately 10% compared to the prior year quarter. The revenue decline is in line with codecs estimate of the decline of the overall market.
Anthony Redding: Despite the revenue decline gross profit decreased only $1 million.
Anthony Redding: A negative 2% compared to the prior year quarter.
Anthony Redding: Gross profit percentage increased quarter over quarter by approximately 10%.
Anthony Redding: From 18% to 20%.
Anthony Redding: This performance reflects growth in advanced materials and chemicals.
Anthony Redding: And our commitment to improving our operational efficiency and investing in automation in this difficult economic environment.
Anthony Redding: Now I'll turn it over to Dave to discuss the first quarter 2024 financial results.
Dave: Thanks, Jim and good afternoon.
Dave: Afternoon, The company filed its Form 10-Q for the quarter ending March 31, 2024 with the SEC.
Dave: And as always I recommend you read this filing in its entirety.
Dave: I will share details on the full company results operational EBITDA and cash flow for the first quarter of 2024 in the face of an extremely difficult global environment could have continued to build on its strong foundation during the first quarter of 2024, driving smart revenue pricing rationalization.
Dave: And cost reductions delivering a gross profit percentage of 20% and generating cash while continuing to invest in long term growth initiatives.
Dave: The company's results reflect the continued focus on these priorities and the execution against our long term strategy.
Dave: On slide seven we reported revenues of $249 million for the first quarter compared to $278 million in the prior year quarter.
Dave: For a decline of $29 million or 10%.
Dave: Gross profit decreased by $1 million or 2% when compared to the prior year quarter.
Dave: Our gross profit percentage was 20% in the first quarter of 2024 compared to 18% in the prior year quarter.
Anthony Redding: Results of the actions our team has taken to mitigate the effects of the global economy to make our operations more efficient and to realize the value of our product offerings.
Anthony Redding: These actions have established positive momentum as we continue to drive profitable growth going forward.
Anthony Redding: Foreign currency had no impact on revenues or gross profit for the first quarter of 2024 versus the prior year period.
Anthony Redding: On a U S. GAAP basis, we reported net income of $32 million for the first quarter of 2024 compared to $33 million in the prior year quarter, a decrease of $1 million.
Anthony Redding: The 2024 and 2023 first quarter results include income of $1 million and expense of $1 million respectively.
Anthony Redding: Related to noncash changes in workers' compensation and employee benefit reserves.
Anthony Redding: The first quarter of 2024 results includes income of $17 million related to a net gain on sale of assets.
Anthony Redding: In the prior year first quarter results include expense of $1 million.
Anthony Redding: Related to changes in the fair value of embedded derivative liabilities.
Anthony Redding: And income of $9 million related to a refund from our non U S governmental authority.
Anthony Redding: Excluding these current and prior quarter items net income for 2024 was $14 million compared to net income of $26 million in the prior year quarter.
Anthony Redding: Reflecting a decline of $12 million.
Anthony Redding: Operational EBITDA for the quarter was $4 million compared to $9 million in the prior year quarter, a decline of $5 million.
Anthony Redding: Excluding the impact of noncash changes in workers' compensation and employee benefit reserves in both the current and prior year quarters.
Anthony Redding: Operational EBITDA decreased by $7 million when compared to the prior year quarter.
Anthony Redding: Operational EBITDA for the first quarter of 2024 was unfavorably impacted by significant investments in automation and simplification of back office functions.
Anthony Redding: For the balance of the year, we plan to concentrate on the fundamentals from our strategic plan.
Anthony Redding: Investing for growth.
Anthony Redding: Increasing operational efficiency and helping our customers succeed.
Anthony Redding: Moving on to the company's cash performance presented on slide eight the company ended the first quarter with a cash balance of $262 million, an increase of $7 million from December 31 2023.
Anthony Redding: Foreign exchange had an unfavorable impact on cash of $3 million for the current quarter.
Anthony Redding: The team continues to focus on improving profitability.
Anthony Redding: <unk> performance in working capital, which enhances the company's ability to generate cash.
Anthony Redding: Cash provided by operating activities was $17 million for the current quarter compared to $14 million in the prior year quarter.
Anthony Redding: Reflecting an improvement of $3 million.
Anthony Redding: Third quarter cash provided by operating activities was primarily driven by a use of cash from net earnings of $11 million in cash provided by balance sheet changes of $28 million.
Anthony Redding: <unk> a change in working capital of $45 million and a decrease in other liabilities of $19 million.
Anthony Redding: Within working capital accounts payable increased by $7 million inventory increased by $15 million and accounts receivable decreased by $53 million compared to the prior year period.
Anthony Redding: Primarily due to $40 million of cash proceeds from brand licensing.
Anthony Redding: Cash provided by investing activities for the first quarter increased by $12 million compared to the prior year period.
Anthony Redding: Due to proceeds from the sale of assets of $17 million, partially offset by an increase in capital additions of $5 million.
Anthony Redding: Cash used in financing activities for the first quarter increased by $17 million compared to the prior year period.
Anthony Redding: Driven by $17 million of an amended and restated term loan prepayments.
Anthony Redding: During the first quarter of 2024 from the proceeds received from the sale of assets within investing activities.
Anthony Redding: Restricted cash decreased by $4 million when compared to the balance as of December 31 2023.
Anthony Redding: As a reminder, our restricted cash primarily represents cash collateral supporting the company's undisc counted actuarial workers' compensation obligations within New York State Workers' compensation Board.
Anthony Redding: Cash collateral required under the letter of credit facility.
Anthony Redding: Certain aluminum supply contracts. In addition to ask grows to secure various ongoing obligations.
Anthony Redding: As presented on the bottom portion of the slide excluding the effects of foreign exchange.
Anthony Redding: In the prior year impact of a refund from a non U S. Governmental authority the company delivered an $11 million improvement in cash in the first quarter of 2024.
Anthony Redding: Compared to the prior year period.
Anthony Redding: We are pleased with the financial performance of the company for the first quarter of 2024.
Anthony Redding: We will continue to focus on maintaining the strength of the foundation, we have worked hard to create.
Anthony Redding: Which provides us the opportunity to fund our ongoing operations and invest in growth opportunities to continue to execute our strategy.
Anthony Redding: Finally, we remain in compliance with all applicable financial covenants.
Anthony Redding: I will now turn the discussion back to Jim.
James V. Continenza: Thank you Dave in summary.
Anthony Redding: <unk> continued to deliver strong profit.
James V. Continenza: And improved cash performance, despite a challenging business environment.
James V. Continenza: We continue to invest in our unmatched portfolio of solutions for both offset and digital print, we will showcase a wide range of new products at troop other small and I am excited for the world to see what we've been working on.
Anthony Redding: We are investing in the next generation of business and AMC that will set the stage for Kodak as a growth company.
Anthony Redding: Our success is due in large part to the competitive spirit of our employees and their winning attitudes as I stated before.
Anthony Redding: We will continue to put our customer first offering a.
Anthony Redding: A complete range of solutions.
Anthony Redding: A reliable supply and ongoing innovation in both offset and digital print.
Anthony Redding: And advanced materials and chemicals.
Speaker Change: Thank you everyone for attending this call.
Speaker Change: And your continued interest in Eastman Kodak. Thank.
Speaker Change: Thank you and have a good evening.
Speaker Change: This concludes today's conference call you may now disconnect.
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