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Eastman Kodak (KODK)

Participants
Bill Love Treasurer & Director of Investor Relations
Jim Continenza Executive Chairman
David Bullwinkle Chief Financial Officer
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Eastman Kodak Q2 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Mr. Love. Bill

begin. may You

Bill Love

PM good release Treasurer I Relations. and quarter second XX-Q XXXX. At Kodak's and quarterly of filed Eastman on quarter financial report Welcome Bill results Kodak second Form X:XX call. earnings Company's Director issued XXXX afternoon, afternoon, you, Kodak am its its everyone. and Love, to this on Thank of the Investor for

at for webcast You may investor.kodak.com. call our Investor presentation access today's Center on and the

or include, making statements certain materially or Private and these be the statements upon Exchange described today's as filings Act the anticipated time-to-time. the forward-looking will During statements. Future results U.S. others call, Important among expectations in by Kodak's forward-looking Securities and those from of factors and or defined events we to events Kodak's forward-looking differ more from assumptions. results that various other XXXX. statements with are risks, Securities actual expressed could Reform may Litigation uncertainties the in factors from in detail differ All forward-looking based Commission cause

may the There forward-looking the statements. statements to that other this in cautionary reflect forward-looking included reflect undertakes to behalf its attributable actual of cause Kodak as presentation. unanticipated in date acting and obligation or their made no after the the events. apply presentation update statements expressly persons circumstances Kodak on forward-looking referenced to the the or by revise or or All entirety are materially or differ only be that events to or statements occurrence results to arise of Kodak's of factors from may date qualified

that provided in at contains non-GAAP issued presentation the provided website, are been release Reconciliations investor.kodak.com. comparable with have the GAAP our the and to with on Investor release presentation our certain just In directly most deemed and the addition, measures measures. the measures Center

Financial Chief Kodak's Executive Officer Jim Bullwinkle, Chairman Speakers and David call Continenza, are of on today's Kodak.

turn now to will call the over Jim. I

Jim Continenza

for Bill. everyone. joining for call Kodak. Thank quarter investor you, Thank Welcome, you the second

X, I significant discussing to to we by Turning like several company. strengthen on have the would start initiatives to progress slide the made

on quarter in the the repay of call, use the proceeds Packaging second a secured last outstanding the mentioned senior company the sale of to Division significant under to Flexographic loan As our credit the company's term agreement. portion completed

company's under Credit outstanding Additionally, senior Agreement. First the Term loan Lien secured

due senior term Additionally, calls the the the XXXX the company credit its learn issuance to in sale remaining company secured notes first secured agreement. and the under on loan of repay full convertible allowing term

of August an if of will approximately strengthen The payments company transactions these reduces strategic delevering in the reaching X, the by announced with on result completing is our the position. on $XXX Ltd reduced and company the further and interest Lucky debt equity. to of Also million agreement This Republic financial defer significantly establish convert by $XXX interest HuaGuang expense a notes relationship company China. People’s will Graphics our be and XXXX million to

leadership, Process-Free accelerate supply the China. the Plates A to Kodak’s expand The HuaGuang plates to strength expected and sell will Taiwan which existing demand Macao. The and combined facility to Kodak its of transaction this class SONORA Kong, which offset market in license market under customers Hong sale deal to China. agreement Xiamen, in the technology, are to China, leverage agreement HuaGuang’s includes world printing of together conversion Kodak's KODAK Kodak the help technology in to IP

the third In deal in this significantly company. financial close months, improved the last with the to expect quarter have completed We of we five XXXX. transactions health

better print and structure continue provide will customers alignment business, of the team on shape concentrate We business, needs. to film the management also the This and have the Advanced with forward been our moving Materials.

revisiting of and changes process we'll the the be half a in within of are announcing reporting XXXX. second structure We

size our to cost the better to have we we the efficiencies. reduced the reduce and also As and our on reflect board focus size the gain of business, of business continue reduction of

We cash generate in work XXXX. on plans to continue to

this I'm said, second first the to Dave that financial XXXX going over With to now discuss turn half and to results. quarter

David Bullwinkle

and Jim, filed afternoon. good XX, and Today with Thanks, Form XX-Q the the June company XXXX quarter the for its ended Commission. Securities Exchange

this I read its recommend in always, you entirety. As filing

The the net were As to million of our its of the Division transaction second the Flexographic the completed sale Jim use Proceeds repay first term company mentioned, $XXX Packaging in debt. from outstanding lien quarter.

million of of closing XXXX Management. the its approximately full of amount of term on due issuance, notes closed funds to convertible company $XXX convertible first company lean the and the of managed notes issuance Concurrent with in secured repaid the debt. the principal Additionally, the by Asset million remaining $XX area November sale in Southeastern

tax of credits. losses of losses deter company's a adoption company common a U.S. net stock and the the in stock the the the XXXX, transfers notes, XXth connection preliminary information U.S. issuance certain asset order of benefits tax preserve protection adoption filed restrict transfers net foreign credits to foreign protective new certain the to of the July a of of order benefit On and company's operating amendment and convertible the statement to to tax and sale common in in of with tax tax operating preserve plan

strategic earlier in Graphics this In the People's China. Huaguang as of Limited growth transaction week, accelerate This designed a is form mentioned Republic Company we Jim the our signed free and an agreement relationship Lucky of in Kodak to place to addition, China. with process

China market to will of the go to solutions. sales that volumes growing current alongside with Kodak full the portfolio of its maintain structure ramp continue expectation SONORA in will Kodak

close quarter We of customary details Form expect of our this XXXX XX-Q. in third conditions. in on the to satisfaction disclosed are deal the subject to Further closing

FTD operations XXth second XXXX the been the and on I will results, the the Please the the have periods of year-to-date first details due the as XXXX. and EBITDA comparable flow June results for and discontinued and now second operational company's quarter of cash of share XXXX further reported to quarter half note sale for division.

second earnings a $XXX our U.S. in $X compared we net of quarter million quarter. as five, the million plus the on income for release, income in year prior to basis GAAP net XXXX slide reported of On

net XX, months $XX six XX, the $XXX a the the XXXX, June six of income million for ending For loss June million was reported compared months with ended net XXXX.

XXXX of Packaging net of quarter. notes. loss in a embedded the A million to Excluding the $X fair compared million changes in the sale the for business gain related $X derivatives impact of Series the net second million the from and of for The and on value the the convertible loss the Flexographic stock in preferred $XXX was quarter prior

of for loss this of completing the $XX FPD year-to-date compared The basis period, reduced million on was in year primarily to prior the non-cash pension non-recurring reflects a sale. $XX loss which million income costs XXXX and

impact by year X%. in negative Operational the a EBITDA of a X%. Turning declined $X second a quarter currency we million. EBITDA of million, slide a $X the On for the basis, six, revenues for year by to $XXX excluding quarter to revenue $XXX decline operational the quarter prior the negative to aluminum costs, of for favorable compared $X quarter, XXXX was million compared million declined reported constant of in prior million

have Foreign exchange operational EBITDA. not did on impact an

of year prior was of prior compared million we a For declined $XX on Operational this the X%. year $XXX currency to in $X negative for million a the compared decline a for the period. million million, EBITDA basis revenues period negative in by first period X% half of $XXX XXXX, reported revenue constant to a

Excluding the favorable operational $X impact of EBITDA costs, improved by aluminum X%. or million

an impact have operational. exchange on not Foreign did

We grew XXXX. continued performance by by for second to XX% the our X% and in in deliver Process a key the and annuity and period SONORA Plates and grew XX% PROSPER quarter June year-to-date year-over-year growth engines. ended strong On XX, basis, revenue Free respectively XX%

compared which Plates' year The to products PROSPER volume full XX% annuities over grew X% of year by the profitable these on XXXX year growth a and basis. during SONORA accelerated percent by grew has

We future to areas continue growth and Materials. in of invest ULTRASTREAM also Advanced

$XXX the second XX, presented in equivalents, quarter with of The and on cash company Moving slide seven. on a performance December to from million company cash the million $XX XXXX. ended decrease cash

equivalents use date cash The of a million the to period. cash at in Restricted cash year increased $X cash, arrive includes million year a by to current $XX restricted and of services prepayment million received $XX the a by of sale and the secured FPD was cash in from of in which cash products China. U.S. deposit transition services restricted and for corresponding

to of on $X restricted as in also of ABL next FPD million will be the services products There buyer services to from related This provided the in are the over XX and assets. restricted was increase China cash impact sale an released months. and the transition cash

the of Limited. third to cash Graphics restricted expect of the we HuaGuang increase forward, with XXXX quarter the completion with in Company Lucky Looking transaction

to reduce evaluate We benefit positions the from our and continue to cash to around opportunities cash restricted world.

XX, activities capital million, and offset liabilities used a $XX $XX million, driven net million. of cash the in million, earnings primarily by use $XX For of from cash in of generated changes ending June including of X other cash XXXX balance a partially $X operating was months sheet from change by working $XX decrease million in

million $X and by $XX by $XX decreased increased million. inventory increased payable million, accounts accounts capital, receivable working Within by

ongoing to XXXX. remainder in the for working expect We improvement continue capital of

accounts decrease year in proceeds the prior use investing in year manufacturing division. of half to Oklahoma in The of This capital million XXXX as the Cash completed year Weatherford, a the of of which in included for as the the million expenditures first Packaging Graphic from expenditures the was with expansion capital prior majority Flexo Division. sale a compared provided by year. $XXX the the compared of component current to period. included activities $XX The sold prior packaging for packaging and

$XXX was cash a $X Cash use repayment issuance lien secured partially for term agreement, period. million financing of of to million used credit of included in convertible year notes the first $XXX $XXX the in prior compared full first of of the the of the secured by The current in year senior XXXX million. million the offset activities used half

we in will now under disclosed to turn agreements. back Jim. as the Form in our credit XX-Q, with Finally, covenants remain compliance I discussion our

Jim Continenza

don’t anything I questions are Dave. might there turnover Thanks, We the to else, questions. have other Dave.

David Bullwinkle

please So, ask to operator could questions. the you people of instructions remind

Operator

first Our Chang, Jeremy is Investor. from question Instructions] [Operator

now Your open. is line

Unidentified Analyst

Hi.

heavier worth sheet. Really them? on payments, balance fund operating now year-over-year amounts got just do issued of worries to will How cash million preferred and just newly a And question. XXXX before do obligations on Even dividends that you product these the deferring me net enough strong key between purchase of secured face quick notes, generating about I coming taking strengthening lines due $XXX lease convertible continued and So think Kodak mainly losses. debt means you issues obligations. plan liquidity debt interest the with and and achieving growth a

Jim Continenza

we'll continue get about and that's focused costs. cash, to debt customers doing generate we necessary try to our market structure, form and if And and but We're going our focused, one. generating more as some also, our and cash launch making and that's efficient step products, another capital go start as business stay have. cut continue that redundancies and around cash, to It's to one. seek by closer to We've have continue change the to right, we So get all right. sell been you needed, when to of money. cut generate and we new consolidate in we Two, cost our to continue more to products

Unidentified Analyst

response. Okay. for you your Thank

Operator

like back closing would Thank no I call to for this the Continenza questions. turn I'm you. At to time over remarks. showing Jim further

Jim Continenza

because the thank get Because lean healthy, is burning day become question I of and day person I've balance single to that business and with out focus to the take absolute been there question right and the operate and profits the business. expense way assets strengthen we the selling you for out since your free flow. here question by every will continue that profitable just cash money, so celebrate on get our sheet, one; delever, of can that continue and want generate the and and we

path. accelerated more of you'll this seeing and at So, be see and we an more

what a over over. conversations same we was And we the it's on focus have and question great every That exactly day. and

going So, to When on focus and money. business business make that money. profitable question. stop those you're we're focus to don't we not We that and making that's be are And a we the can't profitable what things business need going can't was money, and a that funding you make and activities on become. we lot means that's be And a of that to doing. have afford great really you other you're a that that things were smaller fund. And the shouldn't our things smaller

Just clear. want to very be

have of the for customer we of lot everyone still. fixing thanks appreciate work balance some the done So, dialing. and of is focused of and sheet the We've us ahead a pieces. I question

though lot going seen a focus to and and in gotten we've we've direction we're our needs. got the As from them them months. you close meeting five very last their we the on have and of to continue feedback They customer, appreciate

So, you'll seeing are and be because you'll our increasing of our be aligned more getting we that customers. definitely seeing and more with revenues

everyone. thanks So,

Operator

gentlemen, and for in Ladies concludes This thank participation the you program. conference. your today's

You may now disconnect.