Q3 2024 Eastman Kodak Co Earnings Call
that could cause actual events or results to differ materially from these forward-looking statements include, among others, the risk, uncertainties, and other factors described in more detail in codex filings with the U.S. Securities and Exchange Commission from time to time.
There may be other factors that may cause Kodak's actual results to differ materially from the forward-looking statements.
All forward-looking statements attributable to Kodak or persons acting on its behalf only apply as of the date of the presentation and are expressly qualified in their entirety by the cautionary statements included or referenced in the presentation.
Kodak undertakes no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
In addition, the release just issued and the presentation provided contains certain measures that are deemed non-GAAP measures.
Reconciliations to the most directly comparable gap measures have been provided with the release and within the presentation on our website in our Investor Center at investor.kodak.com
Reconciliations to the most directly comparable gap measures have been provided with the release and within the presentation on our website and our investor center at investor.kodak.com.
Speakers on today's call are Jim Continenza, Executive Chairman and Chief Executive Officer of Eastman Kodak, and David Bullwinkle, Chief Financial Officer and Senior Vice President of Eastman Kodak.
Speaker Change: We will not be holding a formal Q&A during today's call. As always, the Investor Relations team is available for follow-up. I will now turn the call over to Jim.
Jim Continenza: Welcome everyone and thank you for joining the third quarter 2024 investor call. We continue to be committed to executing our long-term plans.
Jim Continenza: We continue to invest in innovation, increase operational efficiency, focus on smart revenue.
Jim Continenza: When we say focus and invest in innovation, let's be clear, advanced material and print is what we do today. But inside of that is digital print, traditional print, advanced materials and chemicals, film, motion picture film, Eastman Business Park, brand licensing.
Jim Continenza: and other large investments have been the building out of our CGMP clean lab, including the reagent facility. We're going to keep investing in battery technology as one of our core skill sets is substrate coating.
Jim Continenza: So, as I walk you through who we are, what we are, let's get into the numbers. Roman is a 261Million for the 3rd quarter of 2024. Versus 269Million for the 3rd quarter of 2023.
Jim Continenza: <unk> $269 million for the third quarter of 2023.
Jim Continenza: The decline has slowed and right, where we expected it to be forthright with their expectations.
Jim Continenza: The decline has slowed, and right where we expected it to be. That's right within our expectations.
Jim Continenza: When we look at the gross profit.
Jim Continenza: We look at the gross profit for coming quarter at 17% in 2024 versus 19% for the third quarter 2023.
Jim Continenza: Coming quarter at 17% in 2024 versus 19% for the third quarter 2023.
Jim Continenza: The numbers are strong and let me tell you where we're at on this when I look at the impact that.
Jim Continenza: The numbers are strong. And let me tell you where we're at on this. When I look at the impact that we had on our plates business from jumping from China and Japan over the last several years, it has drove the other U.S. manufacturers out of America.
Jim Continenza: So we had on our plates business from.
Jim Continenza: From dumping from China, and Japan over the last several years. It is drove the other U S manufacturers.
Jim Continenza: Out of America.
Jim Continenza: When we looked at what happened with those tariffs on the pressure put on we fought hard and automated invested to keep these jobs in America and fight for the U S printers, and we are going to cover that Taro later on in this discussion so when I look at gross profit in 2017.
Jim Continenza: When we looked at what happened with those tariffs and the pressure put on, we fought hard and automated and invested to keep these jobs in America and fight for the U.S. printers.
Jim Continenza: And we're going to cover that tariff later on in this discussion. So when I look at gross profit at 17, it's been a hard battle, considering they were getting subsidies on multiple things, and the tariff numbers will reflect that.
Jim Continenza: Battle, considering they were getting subsidies on multiple things in the tariff numbers will reflect that.
Jim Continenza: So let's talk about.
Jim Continenza: Big part of our future investments in the last five years, the best materials and chemical as we referred to as AMC right as we continue.
Jim Continenza: To grow the different initiatives that I touched on some of them earlier, which really comprises fulfill chemicals substrate coatings for evs and again, the buildout of the reagent facility.
Jim Continenza: And the cgmp colella.
Jim Continenza: It's exciting to see these dollars come to work and TV productivity increased auto sales have increased.
Motion picture and instill film and other films.
Jim Continenza: So until we're doing a shutdown in November total shutdown, we've continued to invest in our manufacturing process.
Jim Continenza: We need to shut down completely to bring light into the dark by film has made in the dark.
In November we will be modernizing the platt, putting more investment within that which was also caused us to use more cash in the quarter to build up inventories, while we do this but if we continue to see our commitment and our customer commitment to film.
Jim Continenza: And motion picture, we are going to continue to invest in that space and continue with that growth.
Jim Continenza: We're also looking at.
Jim Continenza: As we look at the park the buildings and the infrastructure, we've invested heavily in the infrastructure and I'm proud to say, we just reopened another one of our buildings and we have now moved into that building. So the parks really coming to life with one of our key assets and something we can't forget.
Jim Continenza: Every time I walk through the park IC power IC chemical recovery I see waste management I see a fire department I see electricity.
Jim Continenza: On the power of that part, but we continue to put that to work and bring U S jobs back to the park.
Jim Continenza: So I'm going to move on the commercial front, let me bring you some highlights and this is really important to get through so.
Jim Continenza: Mentioned earlier on the ITC, we were granted an affirmative decision 301 from the ITC on the plates tariff what does that really mean being the last U S manufacturer. The others have all left we reinvested in our plants.
Jim Continenza: On our American workers, and we were able to get a favorable ruling what does that mean the ranges anywhere from a 90, 183%.
Jim Continenza: As to a 350, 309% what does that mean that means Kodak now has a level playing field. So we could go out compete in some place and not have a disadvantage or government interference.
Jim Continenza: And the pricing of a commodity and a material.
Jim Continenza: A big move for Us and a great move obviously for Kodak and our customers.
Jim Continenza: Now I'll turn it over to Dave to discuss the financial results.
Thanks, Jim and good afternoon. This afternoon. The company filed its Form 10-Q for the quarter ended September 32024 with the SEC.
As I always do I recommend you read this filing in its entirety.
Jim Continenza: I will share details on the full company results operational EBITDA and cash flow for the third quarter and nine months ending September 32024.
The company's results reflect the continued focus on executing against our priorities and long term plan.
Jim Continenza: Including driving smart revenue and aligning with the right customers pricing rationalization cost reductions launching new products and investing in innovation and information technology systems.
Jim Continenza: The company's financial results are within our expectations at this point in our long term strategy and for the current year.
Jim Continenza: On slide seven we reported revenues of $261 million for the third quarter of 2024 compared to $269 million in the prior year quarter.
Jim Continenza: The decrease of $8 million or 3%.
Jim Continenza: The decline in revenue slowed, notably when compared to recent quarters, reflecting our ongoing focus on driving smart revenue and strong profitability.
Jim Continenza: On a constant currency basis revenue declined by $9 million compared to the prior year quarter.
Jim Continenza: Yes.
Jim Continenza: Gross profit decreased by $5 million or 10% when compared to the prior year quarter gross profit for the current year quarter was unfavorably impacted by a net change in employee benefit reserves of $3 million.
An inventory reserve adjustment of $4 million in the electric photographic printing solutions business.
Jim Continenza: And higher aluminum costs of $5 million.
Jim Continenza: Foreign exchange had no impact on gross profit.
In the current year quarter.
Jim Continenza: Our gross profit percentage was 17% in the third quarter of 2024 compared to 19% in the prior year quarter unfavorably impacted by the factors previously noted.
On a U S. GAAP basis, we reported net income of $18 million for the third quarter of 2024 compared to net income of $2 million in the prior year quarter, an increase of $16 million.
Jim Continenza: The 2024 and 2023 third quarter results include expense of $2 million and.
Jim Continenza: And income of $3 million, respectively related to noncash changes in workers' compensation and employee benefit reserves.
Jim Continenza: Prior year quarter also includes a loss on extinguishment of debt of $27 million, resulting from our refinancing transaction.
Jim Continenza: Excluding these current and prior year quarter items net income for 2024 was $20 million compared to net income of $26 million in the prior year quarter.
Jim Continenza: Operational EBITDA for the quarter was $1 million compared to $12 million in the prior year quarter.
Jim Continenza: Excluding the impact of noncash changes in workers' compensation employee benefit reserves in the current and prior year quarters operational EBITDA declined by $6 million when compared to the prior year quarter.
Jim Continenza: Foreign exchange had no impact on operational EBITDA in the current year quarter.
Jim Continenza: Operational EBITDA for the third quarter of 2024 was also unfavorably impacted by higher manufacturing costs, driven by an increase in aluminum costs.
Jim Continenza: Ranges and employee benefit reserves.
Jim Continenza: In inventory reserve adjustments as well as an increase in costs associated with certain litigation matters.
Jim Continenza: Turning to slide eight.
Jim Continenza: For the nine months ending September 32024, we reported revenues of $777 million.
Jim Continenza: Paired to $842 million in the prior year period, or a decline of $65 million or 8%.
Jim Continenza: Adjusting for the unfavorable impact of foreign exchange of $3 million in the current year period.
Jim Continenza: <unk> decreased by $62 million or 7% when compared to the prior year period.
Gross profit decreased by $11 million or 7% when compared to the prior year period.
Jim Continenza: Gross profit for the current year was unfavorably impacted by a net change in employee benefit reserves of $2 million in.
Jim Continenza: An inventory reserve adjustment of $4 million in the electro photographic printing solutions business.
Jim Continenza: And higher aluminum costs of $1 million.
Jim Continenza: Foreign exchange had no impact on gross profit in the current year period.
Jim Continenza: Our gross profit percentage was 20% for the nine months ending September 32024, compared to 19% in the prior year period.
Jim Continenza: On a U S. GAAP basis, net income was $76 million for the nine months ending September 32024, compared to net income of $70 million in the prior year period, an increase of $6 million.
Jim Continenza: The 2024 year to date results include expense of $1 million related to noncash changes in workers' compensation and employee benefit reserves and income of $17 million related to a net gain on the sale of assets.
Jim Continenza: The 2023 year to date results include charges of $2 million related to changes in the fair value of embedded derivative liabilities and.
Jim Continenza: $27 million related to a loss in the extinguishment of debt and income of $9 million related to a refund from a non U S governmental authority.
Jim Continenza: And $3 million related to noncash changes in workers' compensation and employee benefit reserves.
Jim Continenza: Excluding these current and prior year items net income for the nine months ending September 32024 was $60 million compared to net income of $87 million in the prior year period, a decline of $27 million.
Jim Continenza: Operational EBITDA for the period was $17 million compared to $43 million in the prior year period, a decline of $26 million.
Jim Continenza: Excluding the impact of noncash changes in workers' compensation and employee benefit reserves in the current and prior year periods.
Jim Continenza: Operational EBIT decreased by $22 million compared to the prior year period.
Jim Continenza: Foreign exchange had no impact on operational EBITDA in the current year period.
Jim Continenza: Operational EBITDA for the current year period was unfavorably impacted by lower volumes and higher manufacturing costs and inventory reserve adjustments changes in employee benefit reserves.
Jim Continenza: Selling and administrative costs associated with investments in information technology systems, and organizational structure improvements to drive further operational efficiencies as well as costs associated with the throughput tradeshow and certain litigation matters.
Jim Continenza: Moving on to the company's cash performance presented on slide nine the company ended the third quarter with $214 million in cash and cash equivalents.
Jim Continenza: A decrease of $41 million from December 31, 2023, which is in line with our expectations.
Jim Continenza: The decline reflects our continued capex investments in supporting agency growth initiatives, along with building working capital in this business to allow us to supply customers as we make improvements in our manufacturing facilities.
Jim Continenza: For the nine months ending September 32020 for cash used in operating activities was $11 million.
Speaker Change: Primarily driven by a use of cash from net earnings of $25 million Harsha.
Speaker Change: Partially offset by cash flow from balance sheet changes of $14 million, including a change in working capital of $26 million and a decrease in other liabilities of $39 million.
Speaker Change: Within working capital accounts payable decreased by $1 million.
Speaker Change: <unk> increased by $25 million and accounts receivable decreased by $52 million compared to the prior year period.
Speaker Change: The decrease in accounts receivable is primarily due to $40 million of cash proceeds received in January 2024 from brand licensing.
<unk> continues to focus on improving profitability and performance in working capital, which enhances the company's ability to generate cash.
Cash used in investing activities was $22 million for the nine months ending September 32024, an increase of $7 million when compared to the prior year period, primarily due to an increase in capital additions of $24 million.
Speaker Change: Partially offset by proceeds from the sale of assets of $17 million.
Speaker Change: Cash used in financing activities was $21 million for the nine months ending September 32024, compared to cash provided by financing activities of $87 million in the prior year period.
Speaker Change: This change was primarily driven by net proceeds of $90 million received from refinancing transactions in the prior year period and.
Speaker Change: $17 million related to the repayment of the amended and restated term loan agreement.
Speaker Change: During the first quarter of 2024 from the proceeds received from the sale of assets within investing activities.
Speaker Change: Restricted cash decreased by $14 million when compared to the balance of $122 million as of December 31, 2023, primarily driven by strategic efforts to reduce cash collateral in escrow requirements for certain company obligations and business arrangements.
Speaker Change: As a reminder, restricted cash primarily represents cash collateral supporting the companys on discounted actuarial workers' compensation obligations with the New York State Workers' compensation Board and cash collateral required under the letter of credit facility. In addition to escrow to secure.
Speaker Change: Various ongoing obligations.
We will continue to focus on alternatives to reduce restrictions on cash.
Speaker Change: As presented on the bottom portion of the slide excluding the effects of foreign exchange prior year period impact of a refund from our non U S. Governmental authority and net proceeds from refinancing transactions the year over year decrease in cash and cash equivalents was $34 million.
Speaker Change: As stated earlier in my remarks, the company's financial results are within our expectations at this point in our long term strategy.
Speaker Change: We will continue to focus on maintaining the strength of the foundation, we have worked hard to create.
Speaker Change: Which provides us the opportunity to fund our ongoing operations and invest in growth opportunities to continue to execute our strategy.
Speaker Change: Finally, we remain in compliance with applicable financial covenants I will now turn the discussion back to Jim.
Thank you Dave.
Jim Continenza: Our ongoing investments.
Speaker Change: <unk>.
Speaker Change: Will you continue to innovate those little change we're sticking to our plan, we will keep investing in AMC, our growth initiatives and our future layering coding taking advantage of our skill set I was just up in Rochester, and we have a massive large presence program four years of training and learning and dedication in Washington.
Speaker Change: <unk> and come into our workforce.
Speaker Change: Full time and highly skilled are so proud of them that made it through because it's a hard thing to do.
Speaker Change: As we continue to increase jobs can you keep investing in those things we talked about and then maybe clear.
Speaker Change: We're going to keep investing in battery technology is one of our core skill sets and substrate coatings and we're going to continue to invest in reagents and a clean lab facility. This is where we're going I want to thank our customers sustained loyal to us, helping us supporting us and helped driving us, bringing codec back to where it needs to be and more.
Speaker Change: Importantly need to thank our employees. This is tough times and they continually exceed the expectations that we put on them and the quality and the levels of the products that they develop and sell.
Speaker Change: I want to thank everyone for dialing in your interest in Kodak and letting you know we're doing everything we can to help drive the value back into the business.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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Speaker Change: Good day, and thank you for standing by welcome to the Eastman Kodak's third quarter 2024 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: Be advised that today's conference is being recorded.
Speaker Change: I'd now like to hand, the conference over to your first speaker today Anthony writing.
Speaker Change: Please go ahead.
Speaker Change: Thank you and good afternoon, everyone I am Anthony ready Eastman Kodak Company's Chief compliance officer, welcome to Kodak's third quarter 2024 earnings call.
At 415 P. M. This afternoon Kodak filed this Form 10-Q and issued its release on financial results for the third quarter of 2024, you can access the presentation and webcast for today's call on our website in our investors center at Investor Dot Kodak Dot com.
Speaker Change: During today's call, we will be making certain forward looking statements as defined by the private Securities Litigation Reform Act of $19 95.
Speaker Change: 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 <unk>.
Speaker Change: Among others the risks uncertainties and other factors described in more detail in Kodak's powders with the U S Securities and Exchange Commission from time to time.
There may be other factors that may cause kodak's actual results to differ materially from the forward looking statements. All forward looking statements attributable to Kodak or persons acting on its behalf only apply as of the date of the presentation and are expressly qualified in their entirety by the cautionary.
Speaker Change: <unk> included a referenced in the presentation.
Speaker Change: Kodak undertakes no obligation to update or revise forward looking statements to reflect events or circumstances that arise. After the date made also reflect the occurrence of unanticipated events.
Speaker Change: In addition, the release just issued and the presentation provided contains certain measures that are deemed non-GAAP measures reconcile.
Speaker Change: 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.
Speaker Change: At Investor Dot codec Dot Com <unk>.
Reconciliations to the most directly comparable GAAP measures have been provided with the release and within the presentation on our website.
Speaker Change: They're center at Investor Dot codec Dot com.
Speaker Change: Speakers on today's call are Jim Continence, Executive Chairman and Chief Executive Officer of Eastman Kodak, and David Bullwinkle, Chief Financial Officer, and senior Vice President of Eastman Kodak.
Speaker Change: We will not be holding a formal Q&A during today's call.
As always the Investor Relations team is available for follow up I will now turn the call over to Jim.
Jim Continenza: Welcome everyone and thank you for joining the third quarter 2024 investor call.
Jim Continenza: We continue to be committed to executing our long term plan.
Jim Continenza: We continue to invest in innovation increased operational efficiency focus on smart revenue.
Jim Continenza: When we say focus.
Jim Continenza: And innovation, let's be clear is that material in credit what we do today, but inside of that is digital and traditional print advanced materials and chemicals spill motion picture film Eastman business Park and licensing.
Jim Continenza: And other large investments have been building out of our cgmp clean lab.
Jim Continenza: <unk> the reagent facility, we're going to keep investing in battery technology is one of our core skill sets and substrate coatings.
Jim Continenza: So as I walk you through who we are what we are let's get into the numbers Rob.
Jim Continenza: Revenues of $261 million for the third quarter of 2024.
Jim Continenza: <unk> $269 million for the third quarter of 2023.
Jim Continenza: The decline has slowed and right, where we expected it to be forthright with their expectations.
When we look at the gross profit will come in quarter at 17% in 2024 versus 19% for the third quarter 2023.
Jim Continenza: The numbers are strong and let me tell you where we're at on this when I look at the impact.
Jim Continenza: So we have on our plate business.
Jim Continenza: Some dumping from China, and Japan over the last several years. It is drove the other U S manufacturers.
Jim Continenza: Out of America.
Jim Continenza: When we looked at what happened with those tariffs on the pressure put on we fought hard and automated invested to keep these jobs in America and fight for the U S printers, and I'm going to cover that Taro later on on this discussion so when I look at gross profit in 17.
Jim Continenza: Hard battle, considering they are getting subsidies on multiple things in the tariff numbers will reflect that.
So let's talk about <unk>.
Jim Continenza: A big part of our future investments over the last five years, the best materials and chemical as we referred to as IMC right as we continue.
Jim Continenza: To grow the different initiatives that I touched on some of them earlier, which really comprises of bell chemicals substrate coding for Evs and again the build out of the reagent facility.
Jim Continenza: And the Cgmp cool lab.
Jim Continenza: It's exciting to see these dollars come to work in television productivity increased auto sales have increased.
Jim Continenza: Motion picture and instill film and other films.
Jim Continenza: And so we're doing a shutdown in November total shutdown.
Jim Continenza: Continuing to invest in our manufacturing process, while we need to shut down completely to bring light into the dark films made in the dark.
Jim Continenza: In November we will be modernizing the flat putting more investment within that which was also caused us to use more cash in the quarter to build up inventory, while we do this but if we continue our commitment and our customer commitment to Phil still in motion picture, we are going to continue to invest in that space and continue with that growth.
Jim Continenza: We're also looking at.
Jim Continenza: As we look at the park the buildings and the infrastructure, we've invested heavily in the infrastructure and I'm proud to say, we just reopened another one of our buildings and we have now moved into that building. So the parks really coming to life with one of our key assets and some we can't forget.
Jim Continenza: Every time I walk through that park IC power IC chemical recovery IC waste management.
Jim Continenza: I see a fire department I see electricity.
Jim Continenza: The power of that part, but we continue to put that to work and bring U S jobs back to the park.
Jim Continenza: So I'm going to move on the commercial front, let me bring you some highlights and that's really important to get through so.
Jim Continenza: Mentioned earlier on the ITC, we were granted an affirmative decision 301 from the ITC equates tariff what does that really mean being the last U S manufacturer. The others are all left we reinvested in our plants.
Jim Continenza: On our American workers.
Jim Continenza: And we were able to get a favorable ruling what does that mean the ranges anywhere from a 90, 183%.
Jim Continenza: Two a 350, 309% what does that mean that means Kodak now has a level playing field. So we could go out and compete and sell place did not have a disadvantage or government interference in the pricing of a commodity and a material.
Jim Continenza: Big move for Us and a great move obviously for Kodak and our customers.
Speaker Change: Now I'll turn it over to Dave to discuss the financial results.
Dave: Thanks, Jim and good afternoon. This afternoon. The company filed its Form 10-Q for the quarter ended September 32024 with the SEC.
Dave: As I always do 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 third quarter and nine months ending September 32024.
The company's results reflect the continued focus on executing against our priorities and long term plan.
Dave: Including driving smart revenue and aligning with the right customers pricing rationalization cost reductions launching new products and investing in innovation and information technology systems.
Dave: The company's financial results are within our expectations at this point in our long term strategy and for the current year.
Dave: On slide seven we reported revenues of $261 million for the third quarter of 2024 compared to $269 million in the prior year quarter.
Dave: The decrease of $8 million or 3%.
Dave: The decline in revenue slowed, notably when compared to recent quarters, reflecting our ongoing focus on driving smart revenue and strong profitability.
Dave: On a constant currency basis revenue declined by $9 million compared to the prior year quarter.
Dave: Yes.
Dave: Gross profit decreased by $5 million or 10% when compared to the prior year quarter gross profit for the current year quarter was unfavorably impacted by a net change in employee benefit reserves of $3 million.
Dave: An inventory reserve adjustment of $4 million in the electric photographic printing solutions business.
Dave: And higher aluminum costs of $5 million.
Dave: Foreign exchange had no impact on gross profit in the current year quarter.
Dave: Our gross profit percentage was 17% in the third quarter of 2024 compared to 19% in the prior year quarter unfavorably impacted by the factors previously noted.
Dave: On a U S. GAAP basis, we reported net income of $18 million for the third quarter of 2024 compared to net income of $2 million in the prior year quarter.
Dave: An increase of $16 million.
Dave: The 2024 and 2023 third quarter results include expense of $2 million and income of $3 million, respectively related to noncash changes in workers' compensation and employee benefit reserves.
Dave: Prior year quarter also includes a loss on extinguishment of debt of $27 million, resulting from our refinancing transaction.
Dave: Excluding these current and prior year quarter items net income for 2024 was $20 million compared to net income of $26 million in the prior year quarter.
Operational EBITDA for the quarter was $1 million compared to $12 million in the prior year quarter.
Dave: Excluding the impact of noncash changes in workers' compensation and employee benefit reserves in the current and prior year quarters operational EBITDA declined by $6 million when compared to the prior year quarter.
Dave: Foreign exchange had no impact on operational EBITDA in the current year quarter.
Dave: Operational EBITDA for the third quarter of 2024 was also unfavorably impacted by higher manufacturing costs, driven by an increase in aluminum cost.
Dave: Changes in employee benefit reserves and.
Dave: In inventory reserve adjustments as well as an increase in costs associated with certain litigation matters.
Dave: Turning to slide eight.
For the nine months ending September 32024, we reported revenues of $777 million.
Dave: Paired to $842 million in the prior year period for a decline of $65 million or 8%.
Dave: Adjusting for the unfavorable impact of foreign exchange of $3 million in the current year period.
Dave: <unk> decreased by $62 million or 7% when compared to the prior year period.
Dave: Gross profit decreased by $11 million or 7% when compared to the prior year period.
Dave: Gross profit for the current year was unfavorably impacted by a net change in employee benefit reserves of $2 million an.
Dave: An inventory reserve adjustment of $4 million in the electro photographic printing solutions business.
Dave: And higher aluminum costs of $1 million.
Dave: Foreign exchange had no impact on gross profit in the current year period.
Dave: Our gross profit percentage was 20% for the nine months ending September 32024, compared to 19% in the prior year period.
Dave: On a U S. GAAP basis, net income was $76 million for the nine months ending September 32024, compared to net income of $70 million in the prior year period, an increase of $6 million.
Dave: The 2024 year to date results include expense of $1 million related to noncash changes in workers' compensation and employee benefit reserves and income of $17 million related to a net gain on the sale of assets.
Dave: The 2023 year to date results include charges of $2 million related to changes in the fair value of embedded derivative liabilities.
Dave: $27 million related to a loss in the extinguishment of debt and income of $9 million related to a refund from a non U S governmental authority.
Dave: And $3 million related to noncash changes in workers' compensation and employee benefit reserves.
Dave: Excluding these current and prior year items net income for the nine months ending September 32024 was $60 million compared to net income of $87 million in the prior year period, a decline of $27 million.
Dave: Operational EBITDA for the period was $17 million compared to $43 million in the prior year period, a decline of $26 million.
Dave: Excluding the impact of noncash changes in workers' compensation and employee benefit reserves in the current and prior year periods.
Dave: Operational EBIT decreased by $22 million compared to the prior year period.
Dave: Foreign exchange had no impact on operational EBITDA in the current year period.
Dave: Operational EBITDA for the current year period was unfavorably impacted by lower volumes and higher manufacturing costs and inventory reserve adjustment changes in employee benefit reserves.
Dave: Selling and administrative costs associated with investments in information technology systems, and organizational structure improvements to drive further operational efficiencies.
Dave: As well as costs associated with the throughput tradeshow and certain litigation matters.
Dave: Moving on to the company's cash performance presented on slide nine the company ended the third quarter with $214 million in cash and cash equivalents.
Dave: A decrease of $41 million from December 31, 2023, which is in line with our expectations.
Dave: The decline reflects our continued capex investments in supporting agency growth initiatives.
Dave: Along with building working capital in this business to allow us to supply customers as we make improvements in our manufacturing facilities.
Dave: For the nine months ending September 32020 for cash used in operating activities was $11 million.
Dave: Primarily driven by a use of cash from net earnings of $25 million.
Dave: Partially offset by cash flow from balance sheet changes of $14 million, including a change in working capital of $26 million and a decrease in other liabilities of $39 million.
Dave: Within working capital accounts payable decreased by $1 million.
Dave: Inventory increased by $25 million and accounts receivable decreased by $52 million compared to the prior year period.
Dave: The decrease in accounts receivable is primarily due to $40 million of cash proceeds received in January 2024 from brand licensing. The team continues to focus on improving profitability and performance in working capital, which enhances the company's ability to generate cash.
Dave: Cash used in investing activities was $22 million for the nine months ending September 32024, an increase of $7 million when compared to the prior year period, primarily due to an increase in capital additions of $24 million, partially offset by proceeds from the sale of assets.
Dave: $17 million.
Dave: Cash used in financing activities was $21 million for the nine months ending September 32024, compared to cash provided by financing activities of $87 million in the prior year period.
Dave: This change was primarily driven by net proceeds of $90 million received from refinancing transactions in the prior year period.
Dave: And $17 million related to the repayment of the amended and restated term loan agreement made during the first quarter of 2024 from the proceeds received from the sale of assets within investing activities.
Dave: Restricted cash decreased by $14 million when compared to the balance of $122 million as of December 31, 2023, primarily driven by strategic efforts to reduce cash collateral in escrow requirements for certain company obligations and business arrangements.
Dave: As a reminder, restricted cash primarily represents cash collateral supporting the companys on discounted actuarial workers' compensation obligations with the New York State Workers' compensation Board.
Dave: Cash collateral required under the letter of credit facility. In addition to escrow to secure various ongoing obligations.
Dave: We will continue to focus on alternatives to reduce restrictions on cash.
Dave: As presented on the bottom portion of the slide excluding the effects of foreign exchange prior year period impact refund from our non U S. Governmental authority and net proceeds from refinancing transactions the year over year decrease in cash and cash equivalents was $34 million.
Dave: As stated earlier in my remarks, the company's financial results are within our expectations at this point in our long term strategy.
We will continue to focus on maintaining the strength of the foundation, we have worked hard to create.
Dave: Which provides us the opportunity to fund our ongoing operations and invest in growth opportunities to continue to execute our strategy.
Finally, we remain in compliance with applicable financial covenants I will now turn the discussion back to Jim.
Jim Continenza: Thank you Dave.
Jim Continenza: Our ongoing investments are good.
Jim Continenza: <unk>.
Jim Continenza: Will you continue to elevate that was little changed we're sticking to our plan, we will keep investing in AMC, our growth initiatives and our future layering coding taking advantage of our skill set I was just up in Rochester, and we have a massive large apprentice program four years of training and learning and dedication in Washington.
Jim Continenza: <unk> and come into our workforce.
Jim Continenza: Full time and highly skilled are so proud of them that made it through because it's a hard hard thing to do.
Jim Continenza: As we continue to increase jobs can you keep investing in those things we talked about and then maybe clear.
Jim Continenza: We're going to keep investing in battery technology is one of our core skill sets and substrate coatings and we're going to continue to invest in reagents clinically lab facility. This is where we're going I want to thank our customers sustained loyal to us, helping us supporting us and helped driving us, bringing kodak back to where it needs to be and more.
Jim Continenza: Importantly need to thank our employees because this is tough times and they continually exceed the expectations that we put on them and the quality and the levels of the products that they develop and sell.
Jim Continenza: I want to thank everyone for dialing in your interest in Kodak and letting you know we're doing everything we can to help drive the value back into the business.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.