Eastman Kodak Company · NYSE:KODK
Eastman Kodak — Q4 2016 Earnings Presentation
42 slides from Eastman Kodak's earnings presentation, Mar 7, 2017
Slide 1: Fourth Quarter 2016 Earnings Call
Fourth Quarter 2016 Earnings Call March 7, 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 This presentation includes “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Forward-loo
Slide 3: Agenda
AGENDA Introduction Bill Love, Treasurer and Investor Relations CEO Perspective on 2016 and Jeff Clarke, Chief Executive FY 2017 Guidance Officer 2016 Fourth Quarter Results David Bullwinkle, Chief Financial and Financial Review Officer Concluding Remarks and Jeff Clarke and David Bullwinkle
Slide 4: CEO Perspective
CEO Perspective 2016 Results Cash Flow Prosper Update Notable Achievements Operational EBITDA Flexcel NX Strength PROSPER Growth Improved Capital Structure 4
Slide 5: FY 2016 Results vs Guidance
FY 2016 Results vs Guidance ($ millions) Total Company Q4 2016 Q4 2015 YTD 2016 YTD 2015 2016 Guidance Revenue $404 $439 $1,543 $1,709 $1,500 - $1,700 Operational EBITDA 1 = $46 $59 = $144 $171 $135 - $150 Year over Year Change - B/(W) Revenue ($) ($35) ($166) Operational EBITDA ($) ($13) ($27) Reve
Slide 6: FY 2016 Quality of Earnings
FY 2016 Quality of Earnings $ % $ % ($ millions) Q4 2016 Q4 2015 Change Change FY 2016 FY 2015 Change Change Operational EBITDA $ 46 $ 59 $ (13) $ 144 $ 171 $ (27) (1) Year over year impact of foreign exchange 3 - 3 12 - 12 Operational EBITDA on a constant currency basis 49 59 (10) -17% 156 171 (15)
Slide 7: FY 2016 Financial Summary by Division
FY 2016 Financial Summary by Division ($ millions) FY 2016 Actuals PSD EISD MPPD SSD CFD IPSD EBPD Total EK Revenue $ 1,018 $ 76 $ 132 $ 86 $ 216 $ - $ 15 $ 1,543 Operational EBITDA b/f corp costs 151 23 20 11 26 (14) 2 219 Corporate SGA 46 4 8 7 10 - - 75 Operational EBITDA 105 19 12 4 16 (14) 2 14
Slide 8: KODAK PROSPER Momentum
KODAK PROSPER Momentum Annuity revenue improved year over year by 40% for the full year 2016 vs. 2015 EBITDA for the twelve months ended December 31, 2016 includes $3 million of drupa investment Kodak continues to invest in KODAK ULTRASTREAM, the next-generation inkjet technology platform PROS
Slide 9: PROSPER Performance
PROSPER Performance Sales of PROSPER systems generate future annuity revenues. Twelve Months Ended December 31 2014 2015 2016 PROSPER Installed Base (Units) 39 55 65 Imprinting Systems Installed Base (Units) 974 1,144 1,299 Recurring Revenues ($ millions) $29 $36 $50 % Change 24% 40% PROSPER Annui
Slide 10: FY 2016 Summary
FY 2016 Summary PROSPER sale taking longer than expected First year with GAAP Net Income since 2013 Improved capital structure Improved quality of earnings Prosper annuities grew by 40 percent year over year Volume for KODAK SONORA Process Free Plates grew by 9 percent for the full year
Slide 11: 2017 Guidance
2017 Guidance 2016 Full Year 2017 Full Year ($ millions) Actual Guidance Revenue $1,543 $1,400 - $1,500 Operational EBITDA $144 $130 - $145 Full Year 2016 Operational EBITDA $144 Consumer Inkjet Reduction (13) Impact of Foreign Exchange 2017 vs. 2016 (5) Baseline 2016 Operational EBITDA $126 2017 Pr
Slide 12: Financial Overview
FINANCIAL OVERVIEW Interest and Debt Summary Fourth Quarter Financial Results Cost Reduction Update Cash Performance 12
Slide 13: Interest and Debt Summary
Interest and Debt Summary Annualized Impact of Repaying 2nd Lien Term Debt with Series A Preferred Stock and Balance Sheet Cash ($ millions) After 9/30/2016 Repayment $ Change Debt: First Lien Term Loan $ 402 $ 402 $ 0 Second Lien Term Loan 262 - (262) Total Term Debt 664 402 (262) Series A Preferre
Slide 14: 2015 to 2016 Net Earnings Improvement
2015 to 2016 Net Earnings Improvement ($ millions) Twelve Months Ended December 31, 2016 2015 Income (loss) from continuing operations before income taxes $ 78 $ 2 Provision for income taxes 32 30 Income (loss) from continuing operations 46 (28) Loss from discontinued operations, net of income taxes
Slide 15: Fourth Quarter 2016 Financial Summary by Division
Fourth Quarter 2016 Financial Summary by Division ($ millions) Q4 2016 Actuals PSD EISD MPPD SSD CFD IPSD EBPD Total EK Revenue $ 279 $ 19 $ 34 $ 23 $ 45 $ - $ 4 $ 404 Operational EBITDA b/f corp costs 48 6 7 5 - (3) - 63 Corporate SGA 10 1 2 2 2 - - 17 Operational EBITDA 38 5 5 3 (2) (3) - 46 Q4 20
Slide 16: Cost Reduction Update
Cost Reduction Update ($ millions) Year over Year Operating Expense Reductions Year Ended Year Ended 2015 - 2016 December December % 31, 2015 31, 2016 Reduction Headcount 6,400 6,100 5% Operating Expense $248 $212 15% Corporate Costs $78 $75 4% Operating Expense Reductions Year Ended Year Ended 2013
Slide 17: 2016 Fourth Quarter Cash Flow
2016 Fourth Quarter Cash Flow ($ millions) Q4 2016 Q4 2015 Change Primary Drivers of Cash: Cash from Operations: Net earnings $ 11 $ 23 $ (12) Depreciation and amortization 23 32 (9) $15M Decline in Pension and other postretirement income (37) (26) (11) Cash Flow from Net Non-cash restructuring cost
Slide 18: 2016 Cash Flow
2016 Cash Flow ($ millions) FY 2016 FY 2015 Change Primary Drivers of Cash: Cash from Operations: Net earnings (loss) $ 16 $ (75) $ 91 Depreciation and amortization 105 145 (40) $35M Improvement Pension and other postretirement income (147) (107) (40) in Cash Flow from Non-cash restructuring costs,
Slide 19: First Quarter 2015 through Fourth Quarter 2016 Cash Flow
First Quarter 2015 through Fourth Quarter 2016 Cash Flow Cash Balance from Q4 2014 - Q3 2016 800 ($ millions) 700 600 500 400 300 200 100 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Beginning Cash Balance * 712 609 576 521 547 513 515 490 Cash Flow - Generation/(Use) (102) (32)
Slide 20: 2017 Cash Flow Outlook
2017 Cash Flow Outlook ($ millions) Operational EBITDA $130 - $145 Working Capital 30 Interest and Dividend Payments (40) Capital Expenditures* (35) Legacy Payments (32) PROSPER (20) Cash Paid for Taxes (primarily outside U.S.) (20) Restructuring Payments (8) Other (6) Cash Generation $0 - $10 Ref
Slide 21: 2017 Cash Flow Outlook
2017 Cash Flow Outlook 2017 Cash Flow Outlook is not indicative of the cash flow and earnings power of Kodak: • Difficult economic headwinds • A strong US Dollar • Year over year negative impact of $5 million • Aluminum prices have increased $12 million year over year • Highest cost in the past 5½ y
Slide 22: Q&A
Q&A 22
Slide 23: Concluding Remarks
CONCLUDING REMARKS 23
Slide 24: Appendix
APPENDIX 24
Slide 25: Non-GAAP Measures
Non-GAAP Measures In this fourth quarter and full year 2016 earnings presentation, reference is made to the following non-GAAP financial measures: • Cash usage excluding foreign currency and debt prepayments net of preferred stock proceeds; • Improvement in Prosper EBITDA; • Decline in cash usage ex
Slide 26: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of decrease in cash and cash equivalents, end of period, to the use of cash excluding foreign currency and debt prepayments net of preferred stock proceeds for the twelve months ended December 31, 2016: Decemb
Slide 27: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile the most directly comparable GAAP measure of Loss from discontinued operations, net of income taxes to the improvement in PROSPER EBITDA for the three and twelve months ended December 31, 2016 and 2015, respectively: (in millions) YTD 2016 YTD 2015 $
Slide 28: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of decrease in cash and cash equivalents, end of period, to the decline in cash usage excluding debt prepayments net of preferred stock proceeds for the twelve months ended December 31, 2016 and 2015, respecti
Slide 29: Non-GAAP Measures
Non-GAAP Measures The following table reconciles to the most directly comparable GAAP measure of Net Income (Loss) Attributable to Eastman Kodak Company to Operational EBITDA, Operational EBITDA on a constant currency basis, Operational EBITDA on a constant currency basis excluding Consumer Inkjet O
Slide 30: Non-GAAP Measures
Non-GAAP Measures The following table reconciles to the most directly comparable GAAP measure of Net Income Attributable to Eastman Kodak Company to Operational EBITDA, Operational EBITDA on a constant currency basis, Operational EBITDA on a constant currency basis excluding Consumer Inkjet Operatio
Slide 31: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile 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 and twelve months ended December, 31, 2016 and 2015, respectively:
Slide 32: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile the most directly comparable GAAP measure of Revenues (Segment Measure) to the change in FLEXCEL NX, Kodak Technology Solutions and Consumer Inkjet revenues on a constant currency basis for the twelve months ended December 31, 2016 and 2015, respectiv
Slide 33: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Income (Loss) Attributable to Eastman Kodak Company to the improvement in Operating performance excluding depreciation and amortization and pension and other postretirement income for the twelve months
Slide 34: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Micro 3D Printing and Packaging Operational EBITDA (Segment Measure) to the Packaging Business Operational EBITDA before corporate costs on a constant currency basis for the twelve months ended December 31,
Slide 35: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile the most directly comparable GAAP measure of Loss from discontinued operations, net of income taxes to the improvement in PROSPER Standalone Operational EBITDA for the twelve months ended December 31, 2016 and 2015, respectively: (in millions) YTD 201
Slide 36: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Income (Loss) Attributable to Eastman Kodak Company to the improvement in net earnings excluding loss on deconsolidation of RED for the twelve months ended December 31, 2016 and 2015, respectively: (in
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, end of period, to Cash generated excluding debt repayments net of preferred stock proceeds, deconsolidation of RED and effect of exchange rates on cash for the three m
Slide 38: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of decrease in cash and cash equivalents, end of period, to Cash used excluding debt repayments net of preferred stock proceeds, deconsolidation of RED and effect of exchange rates on cash for the twelve month
Slide 39: 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 Cost for each Division for the twelve months ended December 31, 2016, and 2015, respectively: (in millions) For the Year Ended Dec
Slide 40: 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 Cost for each Division for the three months ended December 31, 2016, and 2015, respectively: (in millions) For the Three Months En
Slide 41: Non-GAAP Measures: Footnote Explanations
Non-GAAP Measures Footnote Explanations: (1) RED utilities variable interest entity (interest and depreciation of RED are included in the respective lines in the table). (2) Composed of interest cost, expected return on plan assets, amortization of actuarial gains and losses, and curtailments and se
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