Eastman Kodak Company (NYSE: KODK) today reported financial
results for the full year 2021, including consolidated revenues of
$1.150 billion and continued growth in key product areas such as
SONORA Process Free Plates and PROSPER annuities.
Full-year 2021 highlights include:
- Consolidated revenues of $1.150 billion, compared with $1.029
billion for the full year 2020
- GAAP net income of $24 million, compared with a net loss of
$541 million for 2020
- Operational EBITDA of $11 million, compared with negative $1
million for 2020
- A year-end cash balance of $362 million, compared with $196
million at the end of 2020
“Kodak continued to navigate through an unusually challenging
business environment in 2021 and delivered revenue growth in all
our segments for the first time in years,” said Jim Continenza,
Kodak’s Executive Chairman and CEO. “We also saw increases in
customer satisfaction and market share in our key print business,
achievements which reflect the success of our ongoing strategy:
focus on our core businesses in commercial print and advanced
materials and chemicals, invest in product innovation and put our
customers at the center of everything we do.”
For the full year ended December 31, 2021, revenues were $1.150
billion, an improvement of $121 million compared to the same period
in 2020. GAAP net income was $24 million for the full year,
compared to a net loss of $541 million in 2020. The prior year
included a charge of $416 million to reflect the increased value of
the derivative liability embedded in the convertible notes
immediately prior to conversion and expense of $167 million related
to the increase in deferred tax valuation allowances for locations
outside the U.S. Operational EBITDA for the year ended December 31,
2021 was $11 million, compared to negative $1 million in 2020. The
increase was primarily the result of improvement in revenue and
manufacturing costs from increases in volume partially offset by
ongoing global cost increases in 2021. The current year Operational
EBITDA results did not benefit from $25 million in savings from
temporary pay cuts and furloughs that largely ended in January
2021. Kodak ended the year with a cash balance of $362 million, an
increase of $166 million from December 31, 2020. The increase is
primarily attributable to net proceeds received of $247 million
from the financing transactions completed in the first quarter of
2021.
“The Company ended 2021 with $362 million in cash, an increase
of $166 million from December 31, 2020,” said David Bullwinkle,
Kodak’s CFO. “The Company’s balance sheet is the strongest it has
been in years due to the execution of our strategy. We continue to
execute on our plan by driving increases in cost efficiency through
automation and process innovation and redesign.”
Revenue and Operational EBITDA by
Reportable Segment FY 2021 vs. FY 2020
($ millions) FY 2021 Actuals
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
659
$
249
$
212
$
15
$
1,135
Operational EBITDA *
$
9
$
(5
)
$
(6
)
$
13
$
11
FY 2020 Actuals TraditionalPrinting
DigitalPrinting AdvancedMaterials &Chemicals
Brand Total Revenue
$
592
$
241
$
172
$
13
$
1,018
Operational EBITDA *
$
21
$
(10
)
$
(23
)
$
11
$
(1
)
FY 2021 vs. FY 2020 ActualsB/(W)
TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
67
$
8
$
40
$
2
$
117
Operational EBITDA *
$
(12
)
$
5
$
17
$
2
$
12
FY 2021 Actuals on constant currency ** vs. FY 2020
ActualsB/(W) TraditionalPrinting DigitalPrinting
AdvancedMaterials &Chemicals Brand Total
Revenue
$
56
$
4
$
39
$
2
$
101
Operational EBITDA *
$
(8
)
$
3
$
16
$
2
$
13
* Total Operational EBITDA is a non-GAAP financial measure. The
reconciliation between GAAP and non-GAAP measures is provided in
Appendix A of this press release.
** The impact of foreign exchange represents the 2021 foreign
exchange impact using average foreign exchange rates for the twelve
months ended December 31, 2020, rather than the actual average
exchange rates in effect for the twelve months ended December 31,
2021.
Eastman Business Park segment is not a reportable segment and is
excluded from the table above.
About Kodak
Kodak (NYSE: KODK) is a leading global manufacturer focused on
commercial print and advanced materials & chemicals. With
31,000 patents earned over 130 years of R&D, we believe in the
power of technology and science to enhance what the world sees and
creates. Our innovative, award-winning products, combined with our
customer-first approach, make us the partner of choice for
commercial printers worldwide. Kodak is committed to environmental
stewardship, including industry leadership in developing
sustainable solutions for print. For additional information on
Kodak, visit us at kodak.com, or follow us on Twitter @Kodak and
LinkedIn.
Cautionary Statement Regarding Forward-Looking
Statements
This press release includes “forward-looking statements” as that
term is defined under the Private Securities Litigation Reform Act
of 1995.
Forward-looking statements include statements concerning Kodak’s
plans, objectives, goals, strategies, future events, future revenue
or performance, capital expenditures, liquidity, investments,
financing needs and business trends and other information that is
not historical information. When used in this press release, the
words “estimates,” “expects,” “anticipates,” “projects,” “plans,”
“intends,” “believes,” “predicts,” “forecasts,” “strategy,”
“continues,” “goals,” “targets” or future or conditional verbs,
such as “will,” “should,” “could,” or “may,” and similar words and
expressions, as well as statements that do not relate strictly to
historical or current facts, are intended to identify
forward-looking statements. All forward-looking statements,
including management’s examination of historical operating trends
and data, are based upon Kodak’s current expectations and
assumptions. Forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from historical results or those expressed in or
implied by such forward-looking statements. Important factors that
could cause actual events or results to differ materially from the
forward-looking statements include, among others, the risks and
uncertainties described in more detail in Kodak’s Annual Report on
Form 10-K for the year ended December 31, 2021 under the headings
“Business,” “Risk Factors,” “Legal Proceedings” and/or
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources,” and in
other filings Kodak makes with the U.S. Securities and Exchange
Commission from time to time, as well as the following:
- Kodak’s ability to improve and sustain its operating structure,
cash flow, profitability and other financial results;
- Kodak’s ability to achieve strategic objectives, cash
forecasts, financial projections, and projected growth;
- Kodak’s ability to achieve the financial and operational
results contained in its business plans;
- Kodak’s ability to comply with the covenants in its various
credit facilities;
- Kodak’s ability to fund continued investments, capital needs
and restructuring payments and service its debt and Series B
Preferred Stock and Series C Preferred Stock;
- The performance by third parties of their obligations to supply
products, components or services to Kodak and Kodak’s ability to
address supply chain disruptions and continue to obtain raw
materials and components available from single or limited sources
of supply, which may be adversely affected by the COVID-19
pandemic;
- The impact of the global economic environment or medical
epidemics such as the COVID-19 pandemic; including the restrictions
and other actions taken in response to the COVID-19 pandemic, and
Kodak’s ability to effectively mitigate or recoup associated
increased costs of materials, labor, shipping and operations;
- The impact of the investigations, litigation and claims arising
out of the circumstances surrounding the announcement on July 28,
2020, by the U.S. International Development Finance Corporation of
the signing of a non-binding letter of interest to provide a
subsidiary of Kodak with a potential loan to support the launch of
an initiative for the manufacture of pharmaceutical ingredients for
essential generic drugs;
- The impacts of the war in Ukraine and the international
response thereto on our business and operations, including the cost
of and availability of aluminum and other raw materials and
components, shipping costs, transit times and energy costs;
- Changes in foreign currency exchange rates, commodity prices,
interest rates and tariff rates;
- Kodak’s ability to effectively anticipate technology and
industry trends and develop and market new products, solutions and
technologies, including products based on its technology and
expertise that relate to industries in which it does not currently
conduct material business;
- Kodak’s ability to effectively compete with large,
well-financed industry participants;
- Continued sufficient availability of borrowings and letters of
credit under Kodak’s asset based credit facility and letter of
credit facility, Kodak’s ability to obtain additional financing if
and as needed and Kodak’s ability to provide or facilitate
financing for its customers;
- Kodak’s ability to effect strategic transactions, such as
acquisitions, strategic alliances, divestitures and similar
transactions, or to achieve the benefits sought to be achieved from
such strategic transactions; and
- The potential impact of force majeure events, cyber-attacks or
other data security incidents that could disrupt or otherwise harm
Kodak’s operations.
Future events and other factors 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 apply only as of the date of this press release and
are expressly qualified in their entirety by the cautionary
statements included or referenced in this press release. 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,
except as required by law.
APPENDICES
A. NON-GAAP MEASURES
In this full year 2021 financial results news release, reference
is made to the following non-GAAP financial measures:
- Operational EBITDA; and
- Revenues and Operational EBITDA on a constant currency
basis.
Kodak believes that these non-GAAP measures represent important
internal measures of performance. Accordingly, where they are
provided, it is to give investors the same financial data
management uses with the belief that this information will assist
the investment community in properly assessing the underlying
performance of Kodak, its financial condition, results of
operations and cash flow.
Kodak’s segment measure of profit and loss is an adjusted
earnings before interest, taxes, depreciation and amortization
(“Operational EBITDA”). Operational EBITDA represents the income
from continuing operations before income taxes excluding earnings
from discontinued operations, net of income taxes, loss on early
extinguishment of debt, non-service cost components of pension and
OPEB income; depreciation and amortization expense; restructuring
costs and other; stock-based compensation expense; consulting and
other costs; idle costs; other operating income, net; interest
expense; and other (income) charges, net.
The change in revenues and Operational EBITDA on a constant
currency basis, as presented in this financial results news
release, is calculated by using average foreign exchange rates for
the twelve months ended December 31, 2020, rather than the actual
average exchange rates in effect for the twelve months ended
December 31, 2021.
The following table reconciles the most directly comparable GAAP
measure of Net Income (Loss) to Operational EBITDA for the twelve
months ended December 31, 2021 and 2020, respectively:
(in millions) FY 2021 FY 2020 $ Change
Net Income (Loss)
$
24
$
(541
)
$
565
Other
(2
)
(1
)
(1
)
Depreciation and amortization
31
37
(6
)
Restructuring costs and other (1)
6
17
(11
)
Stock based compensation
7
15
(8
)
Consulting and other costs (2)
19
9
10
Idle costs (3)
2
3
(1
)
Other operating income, net, excluding income from transition
services agreement (4)
(6
)
(7
)
1
Interest expense (1)
33
12
21
Pension income excluding service cost component (1)
(102
)
(98
)
(4
)
Loss on early extinguishment of debt (1)
-
2
(2
)
Other (income) charges, net (1)
(5
)
386
(391
)
Earnings from discontinued operations, net of income taxes
-
(3
)
3
Provision for income taxes (1)
4
168
(164
)
Operational EBITDA
$
11
$
(1
)
$
12
Impact of foreign exchange (5)
1
1
Operational EBITDA on a constant currency basis
$
12
$
(1
)
$
13
Footnote Explanations:
(1)
As reported in the Consolidated Statement
of Operations.
(2)
Consulting and other costs are
professional services and internal costs associated with certain
corporate strategic initiatives, investigations and litigation.
(3)
Consists of third party costs such as
security, maintenance, and utilities required to maintain land and
buildings in certain locations not used in any Kodak operations and
the costs, net of any rental income received, of underutilized
portions of certain properties.
(4)
$6 million of income from the transition
services agreement related to the sale of the Flexographic
Packaging Business was recognized in the twelve months ended
December 31, 2020. No income was recognized in the year ended
December 31, 2021. The income was reported in Other operating
income, net in the Consolidated Statement of Operations. Other
operating income, net is typically excluded from the segment
measure. However, the income from the transition services agreement
was included in the segment measure.
(5)
The impact of foreign exchange is
calculated by using average foreign exchange rates for the twelve
months ended December 31, 2020, rather than the actual average
exchange rates in effect for the twelve months ended December 31,
2021.
B. FINANCIAL STATEMENTS
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF
OPERATIONS (in millions) Twelve Months Ended December
31,
2021
2020
Revenues Sales
$
925
$
806
Services
225
223
Total revenues
1,150
1,029
Cost of revenues Sales
830
743
Services
156
151
Total cost of revenues
986
894
Gross profit
164
135
Selling, general and administrative expenses
177
172
Research and development costs
33
34
Restructuring costs and other
6
17
Other operating income, net
(6
)
(14
)
Loss from continuing operations before interest expense, pension
income excluding service cost component, loss on early
extinguishment of debt, other (income) charges, net and income
taxes
(46
)
(74
)
Interest expense
33
12
Pension income excluding service cost component
(102
)
(98
)
Loss on early extinguishment of debt
—
2
Other (income) charges, net
(5
)
386
Earnings (loss) from continuing operations before income taxes
28
(376
)
Provision for income taxes
4
168
Earnings (loss) from continuing operations
24
(544
)
Earnings from discontinued operations, net of income taxes
—
3
Net income (loss)
$
24
$
(541
)
The notes accompanying the financial
statements contained in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021 are an integral part of these
consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF FINANCIAL
POSITION (in millions) December 31,
December 31,
2021
2020
ASSETS Cash and cash equivalents
$
362
$
196
Trade receivables, net of allowances of $7 and $10, respectively
175
177
Inventories, net
219
206
Other current assets
49
46
Current assets held for sale
2
2
Total current assets
807
627
Property, plant and equipment, net of accumulated depreciation
140
152
Goodwill
12
12
Intangible assets, net
34
39
Operating lease right-of-use assets
47
48
Restricted cash
54
53
Pension and other postretirement assets
1,022
262
Other long-term assets
55
55
TOTAL ASSETS
$
2,171
$
1,248
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY Accounts payable, trade
$
153
$
118
Short-term borrowings and current portion of long-term debt
1
2
Current portion of operating leases
13
12
Other current liabilities
142
164
Total current liabilities
309
296
Long-term debt, net of current portion
253
17
Pension and other postretirement liabilities
382
406
Operating leases, net of current portion
45
49
Other long-term liabilities
205
212
Total liabilities
1,194
980
Commitments and Contingencies (note 11) Redeemable,
convertible preferred stock, no par value, $100 per share
liquidation preference
196
191
Equity Common stock, $0.01 par value
—
—
Additional paid in capital
1,166
1,152
Treasury stock, at cost
(10
)
(9
)
Accumulated deficit
(596
)
(620
)
Accumulated other comprehensive income (loss)
221
(446
)
Total shareholders' equity
781
77
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
EQUITY
$
2,171
$
1,248
The notes accompanying the financial
statements contained in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021 are an integral part of these
consolidated financial statements.
EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF CASH
FLOWS (in millions) Twelve Months Ended
December 31,
2021
2020
Cash flows from operating activities: Net income (loss)
$
24
$
(541
)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization
31
37
Pension and other postretirement income
(83
)
(77
)
Change in fair value of the Preferred Stock and Convertible Notes
embedded derivatives
(7
)
382
Asset impairments
—
3
Stock based compensation
7
15
Non-cash changes in workers' compensation and postemployment
reserves
(4
)
4
Net loss (gain) on sales of assets
1
(10
)
Loss on early extinguishment of debt
—
2
(Benefit) provision for deferred income taxes
(1
)
160
(Increase) decrease in trade receivables
(5
)
33
(Increase) decrease in inventories
(19
)
12
Increase (decrease) in trade payables
38
(36
)
Decrease in liabilities excluding borrowings and trade payables
(29
)
(26
)
Other items, net
-
7
Total adjustments
(71
)
506
Net cash used in operating activities
(47
)
(35
)
Cash flows from investing activities: Additions to properties
(21
)
(17
)
Net proceeds from sales of assets
1
2
Net proceeds from return on equity investment
—
2
Net cash used in investing activities
(20
)
(13
)
Cash flows from financing activities: Net proceeds from Term Loan
Credit Agreement
215
—
Net proceeds from Convertible Notes
25
—
Net proceeds from Series C Preferred Stock
99
—
Proceeds from sale of common stock
10
—
Repurchase of Series A Preferred Stock
(100
)
—
Debt issuance costs
(2
)
—
Proceeds from stock option exercises
—
33
Preferred stock cash dividend payments
(7
)
(22
)
Treasury stock purchases
(1
)
—
Repayment of other borrowings
(1
)
Finance lease payments
-
(1
)
Net cash provided by financing activities
238
10
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(4
)
4
Net increase (decrease) in cash, cash equivalents and restricted
cash
167
(34
)
Cash, cash equivalents and restricted cash, beginning of period
256
290
Cash, cash equivalents and restricted cash, end of period
$
423
$
256
The notes accompanying the financial
statements contained in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021 are an integral part of these
consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220315005996/en/
Media Contact: Kurt Jaeckel,
Kodak, +1 585-490-8646, kurt.jaeckel@kodak.com
Investor Contact: Paul Dils,
Kodak, +1 585-724-4053, shareholderservices@kodak.com
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