Q1 2025 Eastman Kodak Co Earnings Call
Operator: I will now turn the call over to Jim. Thank you and have a great day.
Now I'll turn the call over to Jim. Thank you and have a great day.
James Continenza: Welcome, everyone, and thank you for joining the first quarter 2025 investor call for Eastman Kodak. We continue to execute a long-term plan, despite global economic uncertainty. Kodak also stays committed to being a primarily U.S.-based manufacturer. We have expanded our US operations in pharma. We've expanded in battery. We continue to invest in innovation across the board. We focus heavily on operational efficiencies, trying to drive our costs down. We have shed on profitable businesses, allowing us to focus on growth businesses. and we will continue to focus on our growth process.
Speaker Change: Welcome everyone and thank you for joining the first quarter 2025 investor call for Eastman Kodak.
Speaker Change: We continue to execute our long term plan despite global economic uncertainty Kodak also stays committed to being a primarily U S based manufacturer.
Speaker Change: We have expanded our U S operations and pharma, we've expanded in battery, we continue to invest in innovation.
Speaker Change: Has the board we focused heavily on operational efficiencies trying to drive our cost down we are shedding unprofitable businesses, allowing us to focus on growth businesses.
Speaker Change: And we will continue to focus on our gross profit.
James Continenza: And I'm sure this is on a lot of people's minds, the tariffs. We will continue to work through them. They're changing and changing environment. We need to take the short-term pain to get the long-term gain. We've got a staff of people that are well-versed on the tariffs. We will comply with all of them and continue to work to better serve our customers as the administration finalizes the tariffs globally.
Speaker Change: And I'm sure. This is not a lot of People's mind with tariffs, we will continue to work through them they are changing and changing environment.
Speaker Change: We need to take the short term pain to get the long term gain.
Speaker Change: We've got a staff of people that are well versed on the tariffs we will comply with all of them and continue to work to better serve our customers as the administration finalizes with tariffs globally.
James Continenza: Our core business continues to perform as expected. Highlights from the first quarter include revenue of $247 million compared with $249 million for the first quarter 2024, roughly flat year over year. The rate of decline has slowed, which is in line with expectations. Gross profit percentage of 19% compared with 20% for first quarter 2024 was roughly flat year over year.
Speaker Change: Our core business continues to perform.
Speaker Change: As expected.
Speaker Change: Rates from the first quarter include revenue.
Speaker Change: Of $247 million compared with $249 million for the first quarter 2024, roughly flat year over year.
Speaker Change: The rate of decline has slowed.
Speaker Change: Which is in line with expectations.
Speaker Change: Gross profit percentage of 19% compared with 20% for first quarter 2024 was roughly flat year over year.
James Continenza: Here are some highlights. Our Advanced Materials and Chemical Group, AM&C. is key to Kodak's future.
Speaker Change: Here are some highlights.
Speaker Change: Our advanced materials and chemical group AMC.
Speaker Change: The key to collect future.
James Continenza: Ongoing investments in AMNC growth initiatives include our new CGMP pharma manufacturing facility to be online later this year. expanding our current pharma business into manufacturing FDA regulated diagnostic test reagents.
Speaker Change: Ongoing investments in a MNC growth initiatives include our new cgmp pharma manufacturing facility to be online later this year.
Speaker Change: Expanding our current pharma business into manufacturing FDA regulated diagnostic test reagents.
James Continenza: I'm pleased to say demand for various types of film, still motion picture, MDT, and others continue to grow. We've invested in expanding our capacity in the film facility.
Speaker Change: I am pleased to say demand for various types of film still motion picture MDT and others continue to grow.
Speaker Change: We've invested in expanding our capacity and the film facilities.
James Continenza: Moving on to highlights from our commercial print business.
Speaker Change: Moving on to highlights from our commercial print business.
James Continenza: We are moving from controlled introduction to controlled production of our Prosper Ultra 520 press. We've completed install sales of several Prosper Ultra 520 presses, which are currently being installed in customer sites. We have also seen continuous demand for our U.S.-made lithographic printing plates. We have been committed to manufacturing in the U.S. for over 100 years.
Speaker Change: We are moving from control introduction to control production of our Prosper Ultra 520, plus.
Speaker Change: We've completed installed sales of several prosper ultra 520 processes, which are currently being installed in customer sites.
Speaker Change: We have also seen continuous demand for our U S made lithographic printing plates.
Speaker Change: We have been committed to manufacturing in the U S drove a 100 years.
James Continenza: A primary example is our investment in the new pharma facility in Eastman Business Park in Rochester, New York. We also manufacture all of our film products and the world's fastest inkjet presses in the United States. We are the last remaining U.S. manufacturer of lithographic printing plates.
Speaker Change: Primary example is our investment in the new pharma facility in Eastman business Park in Rochester, New York.
Speaker Change: We also manufacture all of our film products and the world's fastest inkjet presses in the United States.
Speaker Change: We are the last remaining U S manufacturer of lithographic printing plates.
James Continenza: As a reminder, Our aim is to see growth initiatives continue to be U.S. Our commitment to manufacturing in-country reduces our environmental impact, gives our customers the highest quality, and a more reliable supply.
Speaker Change: As a reminder.
Speaker Change: Our agency growth initiatives continue to be U S based.
Speaker Change: Our commitment to manufacturing in country reduces our environmental impact gives our customers the highest quality and a more reliable supply.
James Continenza: I'd like to give an update also on U.S. pensions. The current termination and settlement process is proceeding as planned. We expect a significant portion of any reverted asset to be used to reduce long-term debt and therefore the annual cost of servicing that debt. You can find additional information in our Form 10-Q-5.
Speaker Change: I'd like to give an update also on the U S pension plan.
Speaker Change: Kurt termination and settlement process is proceeding as planned.
Speaker Change: We expect the <unk>.
Speaker Change: Significant portion of any reverted asset to be used to reduce long term debt and therefore, the annual cost of servicing that debt.
Speaker Change: You can find additional information in our Form 10-Q filings.
David Bullwinkle: I will now turn it over to Dave Bullwinkle to discuss the financial results. Thanks, Jim. Good afternoon. This afternoon, the company filed its Form 10-Q for the quarter ending March 31, 2025 with the SEC. As I always do, I recommend you read this filing in its entirety.
Speaker Change: I will now turn it over to Dave Bullwinkle to discuss the financial results.
Dave Bullwinkle: Thanks, Jim and good afternoon. This afternoon. The company filed its Form 10-Q for the quarter ending March 31, 2025 with the SEC.
Speaker Change: As I always do I recommend you read this filing in its entirety.
David Bullwinkle: Before I get into the details for the quarter, I would like to provide a brief status update on the termination process. for the U.S. Kodak Retirement Income Plan, or CRIP. and on an amendment to our term loan credit agreement.
Speaker Change: Before I get into the details for the quarter I would like to provide a brief status update on the termination process for the U S. Kodak retirement income plan for crimped.
Speaker Change: And on an amendment to our term loan.
Speaker Change: That agreement.
David Bullwinkle: On January 21, 2025, Kodak's Board of Directors approved the termination of CRIP, effective March 31, 2025. The crypt termination and settlement process is proceeding as planned, with selection mailings being sent to participants in the early summer and the purchase of annuities planned for the fourth quarter of 2025. We estimate it will take 7 to 11 more months to receive any pension reversion proceeds from the settlement of C. R. I. P. after required debt prepayment. Please be reminded, as previously disclosed, this timeframe is subject to factors beyond Kodak's control, including, but not limited to, regulatory review and approval of various aspects of the terms of CRIP, CRIP's activities, and the termination and liquidation process.
Speaker Change: On January 21, 2025 Codex board of directors approved the termination of crimped effective March 31 2025.
Speaker Change: The crypt termination and settlement process is proceeding as planned with selection mailings being sent to participants in the early summer and the purchase of annuities planned for the fourth quarter of 2025.
Speaker Change: We estimate it will take 7% to 11 more months to receive any pension reversion proceeds from the settlement of CRIP.
Speaker Change: After required debt prepayments.
Speaker Change: Please be reminded as previously disclosed this timeframe is subject to factors beyond codex control, including but not limited to regulatory review and approval of various aspects of the terms of crimped grips activities and the termination and liquidation process.
David Bullwinkle: Additionally, the company entered into the second amendment to the amended and restated credit agreement for the term loan that provides the company the option to make the next six quarterly interest payments following the amendment in the form of payments in kind or PIC. In addition, term debt prepayment requirements associated with certain transactions have been revised within the amendment.
Speaker Change: Additionally, the company entered into the second amendment to the amended and restated credit agreement for the term loan that provides the company the option to make the next six quarterly interest payments. Following the amendment in the form of payment in kind or Pik. In addition.
Speaker Change: Term debt prepayment requirements associated with certain transactions have been revised within the amendment.
David Bullwinkle: For further details on both of these topics, please refer to the Form 10-Q filed with the SEC today.
Speaker Change: For further details on both of these topics. Please refer to the Form 10-Q filed with the SEC today.
David Bullwinkle: I will now share details on the full company results, operational EBITDA, and cash flow for the first quarter of 2025. In the face of an extremely difficult global environment with economic uncertainties around global trade and inflation Kodak continued to build on its strong foundation during the first quarter of 2025. Delivering results reflecting the continued focus on executing against our priorities and long-term plan, including driving smart revenue, implementing pricing, rationalization and cost reduction. launching new products and investing in innovation and information technology systems to increase our operational efficiency. On slide 7, we reported revenues of $247 million for the first quarter of 2025, compared to $249 million in the prior year quarter, or a decline of $2 million, or 1%.
Speaker Change: I will now share details on the full company results operational EBITDA and cash flow for the first quarter of 2025.
Speaker Change: In the face of an extremely difficult global environment with economic uncertainties around global trade and inflation.
Speaker Change: <unk> continued to build on its strong foundation during the first quarter of 2025.
Speaker Change: Delivering results, reflecting the continued focus on executing against our priorities and long term plan, including driving smart revenue implementing pricing rationalization and cost reductions launching new products and investing in innovation and information technology systems to increase our operational.
Speaker Change: Efficiency.
Speaker Change: On slide seven we reported revenues of $247 million for the first quarter of 2025 compared to $249 million in the.
Speaker Change: Higher year quarter for a decline of $2 million or 1%.
David Bullwinkle: The decline in revenue has slowed, which reflects our ongoing focus on driving smart revenue and strong profitability. On a constant currency basis, revenue increased by $1 million or essentially flat when compared to the prior year quarter. Gross profit decreased by $3 million or 6% when compared to the prior year quarter. Excluding the unfavorable impact of foreign exchange, gross profit declined by $2 million or 4% when compared to the prior year quarter. Our gross profit percentage was 19% in the first quarter of 2025 compared to 20% in the prior year quarter. On a U.S.
Speaker Change: The decline in revenue has slowed which reflects our ongoing focus on driving smart revenue and strong profitability.
Speaker Change: On a constant currency basis revenue increased by $1 million or.
Speaker Change: Or essentially flat when compared to the prior year quarter.
Speaker Change: Gross profit decreased by $3 million or 6% when compared to the prior year quarter, excluding the unfavorable impact of foreign exchange gross profit declined by $2 million or 4% when compared to the prior year quarter.
Speaker Change: Our gross profit percentage was 19% in the first quarter of 2025 compared to 20% in the prior year quarter.
Speaker Change: On a U S. GAAP basis, we reported a net loss of $7 million for the first quarter of 2025 compared to net income of $32 million in the prior year quarter a.
David Bullwinkle: GAAP basis, we reported a net loss of $7 million for the first quarter of 2025, compared to net income of $32 million in the prior year quarter. a decrease of $39 million. The 2025 and 2024 first quarter results include expense of $1,000,000 and income of $1,000,000 respectively. related to non-cash changes in workers' compensation and employee benefit reserves. The first quarter of 2024 results also include income. $17 million related to a net gain on the sale of Excluding these current and prior year quarter items, net loss for 2025 was $6 million compared to net income of $14 million in the prior year quarter, reflecting a decline of $20 million.
Speaker Change: A decrease of $39 million.
Speaker Change: For 2025, and 2024 first quarter results include expense of $1 million and.
Speaker Change: And income of $1 million, respectively related to noncash changes in workers' compensation and employee benefit reserves.
Speaker Change: Our first quarter of 2024 results also include income of $17 million related to a net gain on the sale of assets.
Speaker Change: Excluding these current and prior year quarter items net loss for 2025 was $6 million.
Speaker Change: Compared to net income of $14 million in the prior year quarter, reflecting a decline of $20 million.
David Bullwinkle: Operational EBITDA for the quarter was $2 million compared to $4 million in the prior year quarter for a decline of $2 million. Excluding the impact of non-cash changes in workers' compensation and employee benefit reserves in both the current prior year quarters and the impact of foreign exchange in the current year quarter, operational EBITDA improved by $1 million when compared to the prior year quarter. Both gross profit and operational EBITDA for the first quarter of 2025 was unfavorably impacted by higher aluminum and manufacturing costs. partially offset by price increase and volume improvement.
Speaker Change: EBITDA for the quarter was $2 million compared to $4 million in the prior year quarter for a decline of $2 million.
Speaker Change: Excluding the impact of noncash changes in workers' compensation and employee benefit reserves in both the current <unk>.
Speaker Change: Prior year quarters, and the impact of foreign exchange in the current year quarter operational EBITDA improved by $1 million when compared to the prior year quarter.
Speaker Change: Both gross profit and operational EBITDA for the first quarter of 2025 was unfavorably impacted by higher aluminum and manufacturing costs, partially offset by price increases.
Speaker Change: Volume improvements.
David Bullwinkle: Moving on to the company's cash performance presented on slide 8. Company ended the first quarter with a cash balance of $158 million, a decrease of $43 million from December 31, 2024. Our use of cash was primarily driven by our continuing investments in AM and C growth initiatives and increased commodity and manufacturing. foreign exchange had a favorable impact on cash of $2 million in the current year quarter. Cash used in operating activities was $38 million for the current year quarter, driven primarily by the use of cash from net earnings of $14 million and the use of cash from balance sheet changes of $24 million.
Speaker Change: Moving on to the company's cash performance presented on slide eight.
Speaker Change: Company ended the first quarter with a cash balance of $158 million a.
Speaker Change: <unk> of $43 million from December 31, 2020 before.
Speaker Change: Our use of cash was primarily driven by our continuing investments in ANC growth initiatives and increased commodity and manufacturing costs.
Speaker Change: Foreign exchange had a favorable impact on cash of $2 million in the current year quarter.
Speaker Change: Cash used in operating activities was $38 million for the current year quarter, driven primarily by the use of cash from net earnings of $14 million and a use of cash from balance sheet changes of $24 million.
David Bullwinkle: including a change in working capital of $17 million. decrease in miscellaneous receivables of $3 million and a decrease in other liabilities of $20 million. Within working capital, accounts payable increased by $6 million, inventory increased by $15 million, and accounts receivable increased by $8 million.
Speaker Change: Including a change in working capital of $17 million.
Speaker Change: A decrease in miscellaneous receivables of $3 million and a decrease in other liabilities of $20 million.
Speaker Change: Within working capital accounts payable increased by $6 million inventory increased by $15 million in accounts receivable increased by $8 million.
David Bullwinkle: The change in working capital for the prior year period included the receipt of $40 million of cash proceeds from Brand Life Insurance. The team continues to focus on improving profitability and performance in working capital, which enhances the company's ability to generate Cash used in investing activities was $7 million for the current year quarter. primarily comprised of capital expenditure. and reflects a $14 million decrease when compared to the prior year quarter.
Speaker Change: The change in working capital for the prior year period included the receipt of $40 million of cash proceeds from brand licensing.
Speaker Change: The team continues to focus on improving profitability and performance in working capital, which enhances the company's ability to generate cash.
Speaker Change: Cash used in investing activities was $7 million for the current year quarter.
Speaker Change: Primarily comprised of capital expenditures and reflects a $14 million decrease when compared to the prior year quarter.
David Bullwinkle: prior year quarter included proceeds from the sale of $17 million. Cash used in financing activities for the first quarter of 2025 improved by $16 million when compared to the prior year quarter.
Speaker Change: The prior year quarter included proceeds from the sale of assets of $17 million.
Speaker Change: Cash used in financing activities for the first quarter of 2025 improved by $16 million when compared to the prior year quarter.
David Bullwinkle: Prior year quarter included the $17 million prepayment of the amended and restated term loan agreement made from the proceeds received from the sale of assets within investing activities. Restricted cash decreased by $2 million when compared to the balance as of December 31, 2024, primarily driven by strategic efforts to reduce cash collateral and ESCO requirements for certain company obligations and business arrangements. As a reminder, restricted cash primarily represents cash collaterals supporting the company's undiscounted actuarial workers' compensation obligation. with the New York State Workers' Compensation. and Cash Collateral required under the Letter of Credit facility. In addition, escrows to secure various ongoing obligations.
Speaker Change: Prior year quarter included $17 million prepayment of the amended and restated term loan agreement aid.
Speaker Change: Paid from the proceeds received from the sale of assets within investing activities.
Speaker Change: Restricted cash decreased by $2 million when compared to the balance as of December 31, 2024, primarily driven by strategic efforts to reduce cash collateral and ESCO requirements for certain company obligations and business arrangements.
Speaker Change: As a reminder, restricted cash primarily represents cash collateral supporting the company's undiscovered actuarial workers' compensation obligations within New York State Workers' compensation Board and cash collateral required under the letter of credit facility.
Speaker Change: In addition, escrow is to secure various ongoing obligations.
David Bullwinkle: continue to focus on opportunities to reduce restrictions on cats. As presented on the bottom portion of the slide, excluding the change in restricted cash and the effects of foreign exchange, the company recognized a $55 million decrease in cash and cash equivalents in the first quarter of 2025 compared to the prior year period.
Speaker Change: We continue to focus on opportunities to reduce restrictions on cash.
Speaker Change: As presented on the bottom portion of the slide excluding the change in restricted cash and the effects of foreign exchange. The company recognized a $55 million decrease in cash and cash equivalents in the first quarter of 2025 compared to the prior year period.
David Bullwinkle: We will continue to focus on maintaining the strength of the foundation we have worked hard to create, which provides us the opportunity to fund our ongoing operations, invest in our growth initiatives, and convert our historical investments into returns for the long term. Finally, as disclosed in our Form 10-Q, we remain in compliance with all applicable financial cover.
Speaker Change: We will continue to focus on maintaining the strength of the foundation. We have worked hard to create which provides us the opportunity to fund our ongoing operations and invest in our growth initiatives and convert our historical investments into returns for the long term.
Speaker Change: Finally as disclosed in our Form 10-Q, we remain in compliance with all applicable financial covenants.
James Continenza: I will now turn the discussion back to Jim. Thank you. Thank you, Dave.
Speaker Change: I will now turn the discussion back to Jim. Thank you.
Jim: Thank you Dave.
James Continenza: In summary, as a longtime manufacturer for over 100 years, Kodak remains committed to maintaining and expanding our manufacturing in the U.S. across all of our business. I am pleased to say our AM&C business continues to deliver profitable growth and return on our investment. Accessing the excess pension fund asset will help pay down debt and reduce interest costs. allowing Kodak to continue to invest in profitable growth business.
Jim: Summary, as a longtime manufacturer for over 100 years Kodak remains committed to maintaining and expanding our manufacturing in the U S across all of our businesses.
Jim: I am pleased to say, our AAM EMC business continues to deliver profitable growth and return on our investments accessing excess pension fund asset will help pay down debt and reduced interest costs.
Jim: Allowing codec to continue to invest in profitable growth businesses.
James Continenza: I'd like to thank our employees for their hard work, our customers for their loyalty, and our shareholders for their support.
Jim: I'd like to thank our employees for their hard work our customers for their loyalty and our shareholders for their support.
Operator: Have a good evening.
Jim: Have a good evening.
Operator: Thank you for your participation in today's conference.
Jim: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Operator: This does conclude the program. You may now disconnect.
Jim: [music].
Jim: No.
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: [music].
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Hum.
Jim: Thank you.
Jim: [music].
Jim: Yes.
Jim: [music].
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Thanks.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Sure.
Jim: Okay.
Jim: Okay.
Jim: Thank you.
Jim: Yes.
Jim: Great.
Jim: Okay.
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Thanks.
Jim: Okay.
Jim: Sure.
Jim: Yes.
Jim: [music].
Jim: Thank you.
Jim: Yes.
Jim: Okay.
Jim: Thank you.
Jim: Thanks.
Jim: Thanks.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: [music].
Jim: Great.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Yes.
Jim: [music].
Jim: Thank you.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: <unk>.
Jim: Yes.
Jim: [music].
Jim: Yes.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: [music].
Jim: Okay.
Jim: Okay.
Anthony Redding: [music] Thank you and good afternoon, everyone.
Jim: Yes.
Jim: [music].
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Sure.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Thank you.
Jim: Okay.
Jim: Yes.
Jim: Thanks.
Jim: Great.
Jim: Yes.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Sure.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Thank you.
Jim: Okay.
Jim: Perfect.
Jim: Okay.
Jim: Sure.
Jim: Thanks.
Jim: Yes.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Thanks, Doug.
Jim: Okay.
Jim: Yes.
Jim: Yes.
Jim: Okay.
Jim: Thanks.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Thanks.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Great.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Yes.
Jim: Yes.
Jim: [music].
Jim: Yes.
Jim: Okay.
Jim: Yes.
Jim: Please proceed.
Jim: Got it.
Jim: [music].
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Thank you.
Jim: Right.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Thank you.
Jim: Thanks.
Jim: Okay.
Jim: Okay.
Jim: Perfect.
Jim: Thank you.
Jim: Thanks.
Jim: Okay.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Sure.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Yes.
Jim: Yes.
Jim: Yes.
Jim: Okay.
Jim: Okay.
Jim: Okay.
Jim: Sure.
Jim: Good day, and thank you for standing backhaul welcome to the Eastman Kodak quarter, One earnings conference call.
Jim: This time all participants are in a listen only mode. Please be advised that today's conference is being recorded.
Anthony: I'd now like to hand, the conference over to your first speaker today, Anthony Anthony you May now begin.
Anthony: Thank you and good afternoon, everyone I am Anthony Righting, Eastman Kodak Company's Chief compliance Officer welcome to Kodak's first quarter 2025 earnings call at 415 P. M. This afternoon Kodak filed its Form 10-Q and issued its release on financial results for the first quarter of 2020.
Anthony Redding: I am Anthony Redding, Eastman Kodak Company's Chief Compliance Officer.
Anthony Redding: Welcome to Kodak's first quarter 2025 earnings call. At 4.15 p.m. this afternoon, Kodak filed its Form 10-Q and issued its release on financial results for the first quarter of 2025. You may access the presentation and webcast for today's call on our Investor Center at investor.kodak.gov.
Speaker Change: You may access the presentation and webcast for today's call on our investors center at Investor Doc codec Dot com.
Anthony Redding: During today's call, we will be making certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1933. All forward-looking statements are based upon Kodak's expectations in various ensembles. Future events or results may differ from those anticipated or those expressed in the forward-looking statement. Important factors 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 Kodak's filings with the U.S.
Speaker Change: During today's call, we will be making certain forward looking statements as defined by the private Securities Litigation Reform Act of 1095.
Speaker Change: We intend for these forward looking statements to be covered by the Safe Harbor provisions before looking statements contained in section 27 of the Securities Act of $19 33, and section 21 E of.
Speaker Change: Of the Securities Exchange Act of $19 34.
Speaker Change: All forward looking statements are based upon kodak's expectations and various assumptions future events or results may differ from those anticipated although as expressed in the forward looking statements.
Speaker Change: Important factors that could cause actual events or results to differ materially from these forward looking statements include 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: Securities and Exchange Commission from time before. There may be other factors that may cause Kodak's actual results to differ materially from the fall of the statement. All forward-looking statements attributable to Kodak or persons acting on its behalf only apply as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements included or referenced in this 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.
Speaker Change: 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 this presentation and are expressly qualified in their entirety by the cautionary statements included are referenced.
Speaker Change: This presentation Kodak.
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 in.
Anthony Redding: In addition, the release just issued and the presentation provided contain certain measures that are deemed non-GAP measures. Reconciliations to the most directly comparable GAP measures have been provided with the release within the presentation on our website and our investor center at investor.kodak.com.
Speaker Change: 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 GAAP measures have been provided with the release within the presentation on our website and our best Center at Investor Kodak Dot Com.
Anthony Redding: Speakers on today's call are Jim Continenza, Kodak's Executive Chairman and Chief Executive Officer, and David Bullwinkle, Kodak's Chief Financial Officer and Senior Vice President.
Speaker Change: Speakers on today's call are Gen continents, Kodak's executive Chairman and Chief Executive Officer, and David Bullwinkle, Kodak's, Chief Financial Officer, and senior Vice President, 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.
Anthony Redding: We will not be holding a formal Q&A during today's call. As always, the Investor Relations team is available for follow up.
Operator: I will now turn the call over to Jim.
Operator: Thank you and have a great day.
Speaker Change: Ill turn the call over to Jim. Thank you and have a great day.
James Continenza: Welcome everyone and thank you for joining the first quarter 2025 investor call for Eastman Kodak. We continue to execute a long-term plan, despite global economic uncertainty. Kodak also stays committed to being a primarily U.S.-based manufacturer. We have expanded our US operations in pharma. We've expanded in battery. We continue to invest in innovation across the board. We focus heavily on operational efficiencies, trying to drive our costs down. We have shed on profitable businesses, allowing us to focus on growth businesses. and we will continue to focus on our growth strategy. And I'm sure this is on a lot of people's minds, the tariffs, we will continue to work through them.
Speaker Change: Welcome everyone and thank you for joining the first quarter 2025 investor call for Eastman Kodak.
Speaker Change: We continue to execute our long term plan, despite global economic uncertainty codec hospital stays committed to be a primarily U S based manufacturer.
We have expanded our U S operations and firewall, we've expanded in battery, we continue to invest in innovation across the board, we focused heavily on operational efficiencies trying to drive our cost out we are shedding unprofitable businesses, allowing us to focus on growth businesses.
Speaker Change: And we will continue to focus on our gross profit.
Speaker Change: And I'm sure. This is not a lot of People's minds with tariffs, we will continue to work through them they are changing and changing environment.
James Continenza: They're changing and changing environment. We need to take the short term pain to get the long term gain. We've got a staff of people that are well versed on the tariffs. We will comply with all of them and continue to work to better serve our customers as the administration finalizes the tariff. Our core business continues to perform as expected. Highlights from the first quarter include revenue of $247 million compared with $249 million for the first quarter 2024, roughly flat year over year. The rate of decline has slowed, which is in line with expectations. Gross profit percentage of 19% compared with 20% for first quarter 2024 was roughly flat year over year.
Speaker Change: We need to take the short term pain to get the long term gain.
Speaker Change: Got a staff of people that are well versed on the tariffs we will comply with all of them and continue to work to better serve our customers.
Speaker Change: The administration finalizes with tariffs globally.
Speaker Change: Our core business continues to perform.
Speaker Change: It.
Speaker Change: Highlights from the first quarter include revenue of.
Speaker Change: $247 million compared with $249 million for the first quarter 2024, roughly flat year over year.
Speaker Change: The rate of decline has slowed.
Speaker Change: Which is in line with expectations.
Speaker Change: Gross profit percentage of 19% compared with 20% for first quarter 2024.
Speaker Change: Roughly flat year over year.
James Continenza: Here are some highlights. Our Advanced Materials and Chemical Group, AM&C. is key to Kodak's future.
Speaker Change: Here are some highlights.
Speaker Change: Our advanced materials and chemical group AMC.
Speaker Change: The key Dakota future.
James Continenza: Ongoing investments in AMNC growth initiatives include our new CGMP Pharma Manufacturing Facility to be online later this year. expanding our current pharma business into manufacturing FDA regulated diagnostic test reagents. I'm pleased to say demand for various types of film, still motion picture, NDT, and others continue to grow. We've invested in expanding our capacity in the film facility.
Speaker Change: Ongoing investments.
Speaker Change: MMC growth initiatives include our new cgmp pharma manufacturing facility to be online later this year.
Speaker Change: Expanding our current pharma business into manufacturing FDA regulated diagnostic test reagents.
Speaker Change: I am pleased to say demand for various types of Bill Bill motion picture, MDT and others continue to grow.
Speaker Change: We've invested in expanding our capacity and the film facilities.
James Continenza: Moving on to highlights from our commercial print business. We are moving from controlled introduction to controlled production of our Prosper Ultra 520 press. We've completed install sales of several Prosper Ultra 520 presses, which are currently being installed in customer sites. We have also seen continuous demand for our U.S. made lithographic printing plates. We have been committed to manufacturing in the U.S. for over 100 years.
Speaker Change: Moving on to highlights from our commercial print business.
Speaker Change: We are moving from control introduction to control production of our Prosper Ultra 520, plus <unk>.
Speaker Change: We've completed install sales of several prosper ultra 520 processes, which are currently being installed in customer sites.
Speaker Change: We have also seen continuous demand for our U S made lithographic printing plates.
Speaker Change: We have been committed to manufacturing in the U S probe for 100 years.
James Continenza: A primary example is our investment in the new pharma facility in Eastman Business Park in Rochester, New York. We also manufacture all of our film products and the world's fastest inkjet presses in the United States. We are the last remaining U.S. manufacturer of lithographic printing plates. As a reminder, Our AEM&C growth initiatives continue to be U.S. Our commitment to manufacturing in-country reduces our environmental impact, gives our customers the highest quality, and a more reliable supply.
Speaker Change: A primary example is our investment in the new pharma facility in Eastman business Park in Rochester, New York We.
Speaker Change: We also manufacture all of our own product and the world's fastest inkjet presses in the United States.
Speaker Change: We are the last remaining U S manufacturer of lithographic printing plates.
Speaker Change: As a reminder.
Speaker Change: Our agency growth initiatives continue to be U S based.
Speaker Change: Our commitment to manufacturing in country reduces our environmental impact gives our customers the highest quality and a more reliable supply.
James Continenza: I'd like to give an update also on U.S. pensions. The current termination and settlement process is proceeding as planned. We expect a significant portion of any reverted asset to be used to reduce long-term debt and therefore the annual cost of servicing that debt.
Speaker Change: I'd like to give an update also on the U S pension plan.
Speaker Change: Termination and settlement process is proceeding as planned.
Speaker Change: We expect a significant portion of any reverted asset to be used to reduce long term debt.
Speaker Change: Therefore, the annual cost of servicing that debt.
James Continenza: You can find additional information in our Form 10-Q file.
Speaker Change: You can find additional information in our Form 10-Q filings.
David Bullwinkle: I will now turn it over to Dave Bullwinkle to discuss the financial results. Thanks, Jim. Good afternoon. This afternoon, the company filed its Form 10-Q for the quarter ending March 31, 2025 with the SEC. As I always do, I recommend you read this filing in its entirety.
Speaker Change: I will now turn it over to Dave Bullwinkle to discuss our financial results.
Dave Bullwinkle: Thanks, Jim and good afternoon. This afternoon. The company filed its Form 10-Q for the quarter ending March 31, 2025 with the SEC.
Dave Bullwinkle: As I always do I recommend you read this filing in its entirety.
David Bullwinkle: Before I get into the details for the quarter, I would like to provide a brief status update on the termination process. for the U.S. Kodak Retirement Income Plan or CRIP. and on an amendment to our term loan credit agreement.
Dave Bullwinkle: Before I get into the details for the quarter I would like to provide a brief status update on the termination process for the U S. Codec retirement income plan our trip.
Dave Bullwinkle: And on an amendment to our term loan credit agreement.
David Bullwinkle: On January 21, 2025, Kodak's Board of Directors approved the termination of CRIP, effective March 31, 2025. The crypt termination and settlement process is proceeding as planned, with selection mailings being sent to participants in the early summer and the purchase of annuities planned for the fourth quarter of 2025. We estimate it will take 7 to 11 more months to receive any pension reversion proceeds from the settlement of C. R. I. P. after required debt prepayment. Please be reminded, as previously disclosed, this timeframe is subject to factors beyond Kodak's control, including, but not limited to, regulatory review and approval of various aspects of the terms of CRIP, CRIP's activities, and the termination and liquidation process.
Dave Bullwinkle: On January 21, 2025 codecs board of directors approved the termination of CRIP effective March 31 2025.
Dave Bullwinkle: The crypt termination and settlement process is proceeding as planned with election mailings being sent to participants in the early summer and the purchase of annuities planned for the fourth quarter of 2025.
Dave Bullwinkle: We estimate it will take 7% to 11 more months to receive any pension reversion proceeds from the settlement of <unk> after required debt prepayments.
Dave Bullwinkle: Please be reminded as previously disclosed this timeframe is subject to factors beyond codex control, including but not limited to regulatory review and approval of various aspects of the terms of crypt scripts activities and the termination and liquidation process.
David Bullwinkle: Additionally, the company entered into the second amendment to the amended and restated credit agreement for the term loan that provides the company the option to make the next six quarterly interest payments following the amendment in the form of payments in kind or PIC. In addition, term debt prepayment requirements associated with certain transactions have been revised within the amendment. For further details on both of these topics, please refer to the Form 10-Q filed with the SEC today.
Dave Bullwinkle: Additionally, the company entered into the second amendment to the amended and restated credit agreement for the term loan that provides the company the option to make the next six quarterly interest payments. Following the amendment in the form of payments and kind <unk>.
Dave Bullwinkle: <unk>. In addition term debt prepayment requirements associated with certain transactions have been revised within the amendment.
Dave Bullwinkle: For further details on both of these topics. Please refer to the Form 10-Q filed with the SEC today.
David Bullwinkle: I will now share details on the full company results, operational EBITDA, and cash flow for the first quarter of 2025. In the face of an extremely difficult global environment with economic uncertainties around global trade and inflation Kodak continued to build on its strong foundation during the first quarter of 2025. Delivering results reflecting the continued focus on executing against our priorities and long term plan, including driving smart revenue, implementing pricing, rationalization and cost reduction. launching new products and investing in innovation and information technology systems to increase our operational efficiency. On slide 7, we reported revenues of $247 million for the first quarter of 2025, compared to $249 million in the prior year quarter, or a decline of $2 million, or 1%.
Dave Bullwinkle: I will now share details on the full company results operational EBITDA and cash flow for the first quarter of 2025.
Dave Bullwinkle: In the face of an extremely difficult global environment with economic uncertainties around global trade and inflation.
<unk> continued to build on its strong foundation during the first quarter of 2025.
Dave Bullwinkle: Delivering results, reflecting the continued focus on executing against our priorities and long term plan, including driving smart revenue implementing pricing rationalization and cost reductions launching new products and investing in innovation and information technology systems to increase our operational.
Dave Bullwinkle: Efficiency.
Dave Bullwinkle: On slide seven we reported revenues of $247 million for the first quarter of 2025.
Dave Bullwinkle: Compared to $249 million in the prior year quarter, or a decline of $2 million or 1%.
David Bullwinkle: The decline in revenue has slowed, which reflects our ongoing focus on driving smart revenue and strong profitability. On a constant currency basis, revenue increased by $1 million or essentially flat when compared to the prior year quarter. Gross profit decreased by $3 million or 6% when compared to the prior year quarter. Excluding the unfavorable impact of foreign exchange, gross profit declined by $2 million or 4% when compared to the prior year quarter. Our gross profit percentage was 19% in the first quarter of 2025 compared to 20% in the prior year quarter.
Dave Bullwinkle: The decline in revenue has slowed which reflects our ongoing focus on driving smart revenue and strong profitability.
Dave Bullwinkle: On a constant currency basis revenue increased by $1 million or.
Dave Bullwinkle: <unk> flat when compared to the prior year quarter.
Dave Bullwinkle: Gross profit decreased by $3 million or 6% when compared to the prior year quarter, excluding the unfavorable impact of foreign exchange gross profit declined by $2 million or 4% when compared to the prior year quarter.
Dave Bullwinkle: Our gross profit percentage was 19% in the first quarter of 2025 compared to 20% in the prior year quarter.
David Bullwinkle: On a U.S. gap basis, we reported a net loss of $7 million for the first quarter of 2025 compared to net income of $32 million in the prior year quarter. a decrease of $39 million. The 2025 and 2024 first quarter results include expense of $1 million and income of $1 million respectively. related to non-cash changes in workers' compensation and employee benefit reserves. The first quarter of 2024 results also include income. $17 million related to a net gain on the sale of S. Excluding these current and prior year quarter items, net loss for 2025 was $6 million compared to net income of $14 million in the prior year quarter, reflecting a decline of $20 million.
Dave Bullwinkle: On a U S. GAAP basis, we reported a net loss of $7 million for the first quarter of 2025.
Dave Bullwinkle: Impaired to net income of $32 million in the prior year quarter.
Dave Bullwinkle: A decrease of $39 million.
Dave Bullwinkle: The 2025 and 2024 first quarter results include expense of $1 million and income of $1 million, respectively related to noncash changes in workers' compensation and employee benefit reserves.
Dave Bullwinkle: The first quarter of 2024 results also include income of $17 million related to a net gain on the sale of assets.
Dave Bullwinkle: Excluding these current and prior year quarter items net loss for 2025 was $6 million.
Dave Bullwinkle: <unk> to net income of $14 million in the prior year quarter.
Dave Bullwinkle: <unk> a decline of $20 million.
David Bullwinkle: Operational EBITDA for the quarter was $2,000,000 compared to $4,000,000 in the prior year quarter for a decline of $2,000,000. Excluding the impact of non-cash changes in workers' compensation and employee benefit reserves in both the current prior year quarters and the impact of foreign exchange in the current year quarter, operational EBITDA improved by $1 million when compared to the prior year quarter. Both gross profit and operational EBITDA for the first quarter of 2025 was unfavorably impacted by higher aluminum and manufacturing costs, partially offset by price increases. and volume improvement.
Dave Bullwinkle: Operational EBITDA for the quarter was $2 million compared to $4 million in the prior year quarter for a decline of $2 million.
Dave Bullwinkle: Excluding the impact of noncash changes in workers' compensation and employee benefit reserves in both the current and prior year quarters.
Dave Bullwinkle: And the impact of foreign exchange in the current year quarter operational EBITDA improved by $1 million when compared to the prior year quarter.
Dave Bullwinkle: Both gross profit and operational EBITDA for the first quarter of 2025 was unfavorably impacted by higher aluminum and manufacturing costs, partially offset by price increases.
Dave Bullwinkle: Volume improvements.
David Bullwinkle: Moving on to the company's cash performance presented on slide 8. Company ended the first quarter with a cash balance of $158 million, a decrease of $43 million from December 31, 2024. Our use of cash was primarily driven by our continuing investments in AM and C growth initiatives and increased commodity and manufacturing. foreign exchange had a favorable impact on cash of $2 million in the current year quarter. Cash used in operating activities was $38 million for the current year quarter, driven primarily by the use of cash from net earnings of $14 million and the use of cash from balance sheet changes of $24 million.
Dave Bullwinkle: Moving on to the company's cash performance presented on slide eight.
Dave Bullwinkle: Company ended the first quarter with a cash balance of $158 million of.
Dave Bullwinkle: Greece of $43 million from December 31, 2024.
Dave Bullwinkle: Our use of cash was primarily driven by our continuing investments in ANC growth initiatives and increased commodity and manufacturing costs.
Dave Bullwinkle: Foreign exchange had a favorable impact on cash of $2 million in the current year quarter.
Dave Bullwinkle: Cash used in operating activities was $38 million for the current year quarter, driven primarily by the use of cash from net earnings of $14 million and a use of cash from balance sheet changes of $24 million.
David Bullwinkle: including a change in working capital of $17 million. decrease in miscellaneous receivables of $3 million and a decrease in other liabilities of $20 million. Within working capital, accounts payable increased by $6 million, inventory increased by $15 million, and accounts receivable increased by $8 million.
Dave Bullwinkle: <unk> a change in working capital of $17 million.
Dave Bullwinkle: A decrease in miscellaneous receivables of $3 million and a decrease in other liabilities of $20 million.
Dave Bullwinkle: Within working capital accounts payable increased by $6 million inventory increased by $15 million and accounts receivable increased by $8 million.
David Bullwinkle: The change in working capital for the prior year period included the receipt of $40 million of cash proceeds from brand licensing. The team continues to focus on improving profitability and performance in working capital, which enhances the company's ability to generate capital.
Dave Bullwinkle: The change in working capital for the prior year period included the receipt of $40 million of cash proceeds from brand licensing.
Dave Bullwinkle: The team continues to focus on improving profitability and performance in working capital, which enhances the company's ability to generate cash.
David Bullwinkle: Cash used in investing activities was $7 million for the current year quarter. primarily comprised of capital expenditu and reflects a $14 million decrease when compared to the prior year quarter.
Dave Bullwinkle: Cash used in investing activities was $7 million for the current year quarter Pri.
Dave Bullwinkle: Primarily comprised of capital expenditures and reflects a $14 million decrease when compared to the prior year quarter.
David Bullwinkle: prior year quarter included proceeds from the sale of $17 million. Cash used in financing activities for the first quarter of 2025 improved by $16 million when compared to the prior year quarter. Prior year quarter included the $17 million prepayment of the amended and restated term loan agreement made from the proceeds received from the sale of assets within investing activity. Restricted cash decreased by $2 million when compared to the balance as of December 31, 2024, primarily driven by strategic efforts to reduce cash collateral and ESCO requirements for certain company obligations and business arrangements. As a reminder, restricted cash primarily represents cash collaterals supporting the company's undiscounted actuarial workers' compensation obligation.
Dave Bullwinkle: The prior year quarter included proceeds from the sale of assets of $17 million.
Dave Bullwinkle: Cash used in financing activities for the first quarter of 2025 improved by $16 million when compared to the prior year quarter.
Dave Bullwinkle: Prior year quarter included $17 million prepayment of the amended and restated term loan agreement.
Dave Bullwinkle: Aid from the proceeds received from the sale of assets within investing activities.
Dave Bullwinkle: Restricted cash decreased by $2 million when compared to the balance as of December 31, 2024, primarily driven by strategic efforts to reduce cash collateral and escrow requirements for certain company obligations and business arrangements.
Dave Bullwinkle: As a reminder, restricted cash primarily represents cash collateral supporting the company's undiscovered actuarial workers' compensation obligations with the New York State Workers' compensation Board and cash collateral required under the letter of credit facility.
David Bullwinkle: with the New York State Workers' Compensation. and Cash Collateral required under the Letter of Credit facility. in addition to escrows to secure various ongoing obligations. continue to focus on opportunities to reduce restrictions on cash.
Dave Bullwinkle: In addition to <unk> to secure various ongoing obligations.
Dave Bullwinkle: We continue to focus on opportunities to reduce restrictions on cash.
David Bullwinkle: As presented on the bottom portion of the slide, excluding the change in restricted cash and the effects of foreign exchange, the company recognized a $55 million decrease in cash and cash equivalents in the first quarter of 2025 compared to the prior year period. We will continue to focus on maintaining the strength of the foundation we have worked hard to create, which provides us the opportunity to fund our ongoing operations, invest in our growth initiatives, and convert our historical investments into returns for the long term. Finally, as disclosed in our Form 10-Q, we remain in compliance with all applicable financial coverage.
Dave Bullwinkle: As presented on the bottom portion of the slide excluding the change in restricted cash and the effects of foreign exchange. The company recognized a $55 million decrease in cash and cash equivalents in the first quarter of 2025 compared to the prior year period.
Dave Bullwinkle: We will continue to focus on maintaining the strength of the foundation. We have worked hard to create which provides us the opportunity to fund our ongoing operations invest in our growth initiatives and convert our historical investments into returns for the long term.
Dave Bullwinkle: Finally as disclosed in our Form 10-Q, we remain in compliance with all applicable financial covenants.
James Continenza: I will now turn the discussion back to Jim. Thank you. Thank you, Dave.
Jim: I will now turn the discussion back to Jim. Thank you.
Jim: Thank you Dave.
James Continenza: In summary, as a longtime manufacturer for over 100 years, Kodak remains committed to maintaining and expanding our manufacturing in the U.S. across all of our business I am pleased to say our AM&C business continues to deliver profitable growth and return on our investment. Accessing the excess pension fund asset will help pay down debt and reduce interest costs. allowing Kodak to continue to invest in profitable growth business.
Speaker Change: In summary as a.
Speaker Change: Long time manufacturer for over 100 years, Kodak remains committed to maintaining and expanding our manufacturing in the U S across all of our businesses.
Speaker Change: I am pleased to say, our <unk> business continues to deliver profitable growth and return on our investments.
Speaker Change: Excess pension fund asset will help pay down debt and reduced interest costs.
Speaker Change: Allowing codec to continue to invest in profitable growth businesses I'd like to thank our employees for their hard work our customers for their loyalty and our shareholders for their support and have a good evening.
James Continenza: I'd like to thank our employees for their hard work, our customers for their loyalty, and our shareholders for their support.
Operator: Have a good evening.
Operator: Thank you for your participation in today's conference.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Operator: This does conclude the program. You may now disconnect.