Eastman Kodak Company · NYSE:KODK
Eastman Kodak — Q2 2017 Earnings Presentation
40 slides from Eastman Kodak's earnings presentation, Aug 9, 2017
Slide 1: Q2 2017 Earnings Call
Q2 2017 Earnings Call August 9, 2017
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-looking Statements Pursuant to Safe Harbor Provisions of The Private Securities Litigation Reform Act of 1995 Cautionary Statement Regarding Forward-Looking Statements This presentation includes “forward-looking statements” as that term is defined under the Pri
Slide 3: Agenda
Agenda ▪ Introduction Bill Love, Treasurer and - First line bullet point First line bullet point Investor Relations - Second line bullet point First line bullet point - ▪ CEO Third linePerspective on Q2 bullet point First line2017 bullet pointJeff Clarke, Chief Executive - andline Fourth FY bullet 2
Slide 4: CEO Perspective
▪ Welcome ▪ Quarter Performance ▪ Division Overview ▪ 2017 Guidance CEO PERSPECTIVE 4
Slide 5: CEO Overview
CEO Overview Eastman Kodak Company Financial Overview ▪ GAAP net earnings of $4 million for the quarter ended June 30, 2017, compared with $8 million for the quarter ended June 30, 2016 ▪ Operational EBITDA of $14 million in Q2 2017 and $22 million in 1H 2017 ▪ The company ended the second quarter w
Slide 6: Q2 2017 Portfolio Summary
Q2 2017 Portfolio Summary ($ millions) At Actual FX At Constant Currency 1 Q2 2 0 1 6 Q2 2 0 1 7 Q2 2 0 1 6 Q2 2 0 1 7 B/(W) B/(W) B/(W) B/(W) Revenues % Revenues % Revenues Revenues $$ % $$ % of Total of Total Growth Engines $ 101 24% 103 27% $ 2 2% $ 4 4% Advanc ed Tec hnologies $ - n/a $ - n/a $
Slide 7: 2017 Q2 Results
2017 Q2 Results Total Company Q2 2017 Q2 2017 Q2 2016 Revenue $381 $423 Operational EBITDA 1 $14 $23 Year over Year Change - B/(W) Revenue ($) ($42) Operational EBITDA ($) ($9) Revenue (%) -10% Operational EBITDA (%) -39% Comparable Basis (excluding FX impact) (2) Revenue ($36) Operational EBITDA ($
Slide 8: Quality of Earnings
Quality of Earnings $ % ($ millions) Q2 2017 Q2 2016 Change Change Operational EBITDA (1) $ 14 $ 23 $ (9) (2) Year over year impact of foreign exchange 1 - 1 Year over year impact of aluminum price 3 - 3 Subtotal $ 18 $ 23 $ (5) -22% Consumer Inkjet Operational EBITDA before Corporate Costs 2 6 (4)
Slide 9: Q2 Financial Summary by Division
Q2 Financial Summary by Division ($ millions) Q2 2017 Actuals PSD EISD FPD SSD CFD AM3D EBPD Total EK Revenue $ 236 $ 35 $ 37 $ 22 $ 47 $ - $ 4 $ 381 Operational EBITDA b/f corp costs 29 3 10 - (2) (7) 3 36 Corporate SGA 13 2 2 1 3 - 1 22 Operational EBITDA 16 1 8 (1) (5) (7) 2 14 Q2 2016 Actuals PS
Slide 10: PROSPER Update
PROSPER Update Trailing Twelve Months Ended June 30 2016 2017 PROSPER Installed Base (Units) 62 63 Imprinting Systems Installed Base (Units) 1,217 1,364 Recurring Revenues ($ millions) $42 $54 % Change 33% 29% ▪ We expect our Enterprise Inkjet Systems Division (EISD) to be break-even to profitable t
Slide 11: EISD Update
EISD Update Analyst and press event in June reinforced Kodak’s commitment to the Enterprise Inkjet business: First Prosper 6000S install in packaging application for folded cartons at Zumbiel Packaging Ed Zumbiel, President, Zumbiel Digital, explains: “Our customers are running more and more marketi
Slide 12: 2017 Adjusted Guidance and Cash Outlook
2017 Adjusted Guidance and Cash Outlook Operational ($ millions) Revenue EBITDA FY 2017 Guidance $1,500 - $1,600 $105 - $120 Impact of Expected Advanced Technology Transaction (15) FY 2017 Adjusted Guidance $1,500 - $1,600 $90 - $105 Cash (Use) / ($ millions) Generation FY 2017 Cash Outlook ($10) -
Slide 13: 2017 Guidance Comparison
2017 Guidance Comparison FY 2017 Operational ($ millions) FY 2016 EBITDA Guidance Operational EBITDA $107 Impact of foreign exchange ($6) Operational EBITDA, F(x) adjusted $101 Year-over-Year Impact in Aluminum Pricing ($13) Expected decline in Consumer Inkjet ($13) Adjusted Operational EBITDA $75 $
Slide 14: Q2 2017 Summary
Q2 2017 Summary ▪ Strong execution in Kodak growth engines: ▪ Volume for KODAK FLEXCEL NX Plates grew by 22 percent ▪ Volume for KODAK SONORA Process Free Plates grew by 18 percent ▪ Annuities revenue for KODAK PROSPER Inkjet grew by 14 percent ▪ Q2 operational results impacted by investments in: ▪
Slide 15: Financial Overview
FINANCIAL OVERVIEW ▪ Net Earnings ▪ Cost Update ▪ 2017 Second Quarter Cash Flow ▪ Year Over Year Cash Bridge (GAAP) 15
Slide 16: 2017 Q2 Net Earnings
2017 Q2 Net Earnings ($ millions) Three Months Ended June 30, 2017 2016 Earnings from continuing operations before income taxes $ 11 $ 15 Provision for income taxes 4 6 Earnings from continuing operations 7 9 Loss from discontinued operations, net of income taxes (3) (1) Net earnings $ 4 $ 8 Decline
Slide 17: 2017 First Half Net Earnings
2017 First Half Net Earnings ($ millions) Six Months Ended June 30, 2017 2016 Earnings from continuing operations before income taxes $ 21 $ 8 Provision for income taxes 7 13 Earnings (loss) from continuing operations 14 (5) Loss from discontinued operations, net of income taxes (3) (2) Net earnings
Slide 18: First Half Financial Summary by Division
First Half Financial Summary by Division ($ millions) 1H 2017 Actuals PSD EISD FPD SSD CFD AM3D EBPD Total EK Revenue $ 449 $ 72 $ 70 $ 43 $ 96 $ - $ 8 $ 738 Operational EBITDA b/f corp costs 54 5 18 2 (1) (15) 3 66 Corporate SGA 25 4 4 3 7 - 1 44 Operational EBITDA 29 1 14 (1) (8) (15) 2 22 1H 2016
Slide 19: Cost Update
Cost Update Run Rate Cost Progress Year Ended FY 2017 December Run Rate 31, 2013 % Change Headcount 6,009 8,797 -32% Operating Expense $272 $510 -47% Percent of Revenue 18% 22% Corporate Costs $88 $138 -36% Percent of Revenue 6% 6% 19
Slide 20: 2017 Q2 Cash Flow
2017 Q2 Cash Flow ($millions) Six Months Ended June 30, 2017 2016 Change Primary Drivers of Cash: Cash from Operations: Net earnings (loss) $ 11 $ (7) $ 18 Depreciation and amortization 41 57 (16) Pension income (59) (72) 13 $18M Decline in Change in fair value of embedded conversion features deriva
Slide 21: 2017 Cash Outlook
2017 Cash Outlook ($ millions) Operational EBITDA $90 - $105 Working Capital 20 ABL Cash Collateral Requirement Reduction 25 Interest and Dividend Payments (40) Capital Expenditures* (40) Legacy Payments (32) Cash Paid for Taxes (primarily outside U.S.) (25) Restructuring Payments (15) Other 15 Cash
Slide 22: Cash Flow Improvement
Cash Flow Improvement ($millions) $25 $2-12 $- 2014 2015 2016 2017 FY Outlook $(25) $(50) $(75) $(100) $(125) $(150) $(175) The above reflects the change in cash and cash equivalents excluding debt repayments net of proceeds from the Preferred Stock issuance in 2016 and from each period presented. 2
Slide 23: Q&A
Q&A
Slide 24: Concluding Remarks
CONCLUDING REMARKS
Slide 25: Appendix
APPENDIX
Slide 26: Non-GAAP Measures
Non-GAAP Measures In this second quarter earnings presentation, reference is made to the following non-GAAP financial measures: • Operational EBITDA; • Operational EBITDA and Revenues on a constant currency basis; • Operational EBITDA on a constant currency basis excluding increases in price of alum
Slide 27: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings Attributable to Eastman Kodak Company to Operational EBITDA, Operational EBITDA on a constant currency basis, Operational EBITDA on a constant currency basis excluding increases in the price of
Slide 28: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings (Loss) Attributable to Eastman Kodak Company to Operational EBITDA and Operational EBITDA on a constant currency basis for the six months ended June 30, 2017 and 2016, respectively: (in million
Slide 29: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Consumer and Film Division Operational EBITDA (Segment Measure) to Consumer Inkjet Operational EBITDA before Corporate Costs for the three months ended June 30, 2017 and 2016, respectively. (in millions) Q2
Slide 30: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile the most directly comparable GAAP measure of Operational EBITDA (Segment Measure) to Operational EBITDA before Corporate Costs for each Division for the three months ended June 30, 2017 and 2016, respectively: (in millions) For the Three Months Ended
Slide 31: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile the most directly comparable GAAP measure of Operational EBITDA (Segment Measure) to Operational EBITDA before Corporate Costs for each Division for the six months ended June 30, 2017 and 2016, respectively: (in millions) For the Six Months Ended June
Slide 32: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Revenues (Segment Measure) to the increase in FLEXCEL NX revenue on a constant currency basis for the three months ended June 30, 2017 and 2016, respectively: (in millions) Q2 2017 Q2 2016 $ Change % Change
Slide 33: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings Attributable to Eastman Kodak Company to 2016 Comparable Operational EBITDA for the twelve months ended December 31, 2016: Prosper 2017 Projected Discontinued Change in FY 2016 As 2017 Projecte
Slide 34: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Consumer and Film Division Operational EBITDA (Segment Measure) to the expected decline in Consumer Inkjet Business Operational EBITDA for the twelve months ended December 31, 2016: (in millions) 2017 Proje
Slide 35: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings Attributable to Eastman Kodak Company to the decline in Net Earnings adjusted for revaluation of the derivative embedded in the Series A Preferred Stock, lower interest expense, lower pension i
Slide 36: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings (Loss) Attributable to Eastman Kodak Company to the Improvement in Net Earnings adjusted for revaluation of the derivative embedded in the Series A Preferred Stock, lower interest expense, PROS
Slide 37: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of decrease in cash and cash equivalents and restricted cash, end of period, to the improvement in cash usage excluding debt repayments net of preferred stock proceeds for the twelve months ended December 31,
Slide 38: Non-GAAP Measures: Footnote Explanations
Non-GAAP Measures Footnote Explanations: (1) As reported in the Consolidated Statement of Operations. (2) RED utilities variable interest entity, which was deconsolidated on December 31, 2016 (interest and depreciation of RED are included in the respective lines in the table). (3) Composed of intere
Slide 39: Aluminum Price (LME): 1/1/11 – 6/30/17
ALUMINUM PRICE (LME): 1/1/11 – 6/30/17 LME Cash in EURO/MT 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 39
Slide 40: Thank You
< Thank You
Eastman Kodak Company — Q2 2017 Earnings Presentation on 6ix