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Eastman Kodak (KODK)

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

Ladies and gentlemen, thank you for standing by, and welcome to the Eastman Kodak Third Quarter 2019 Earnings Conference Call. At this time, all participants lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]

to conference like speaker to now Mr. today, would hand over the your I Love. Bill you. Thank ahead, go Please sir.

Bill Love

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

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

today’s making assumptions. During various Securities certain statements as based XXXX. call, Act All are and Reform expectations Private the forward-looking on we will Kodak’s statements forward-looking be defined Litigation of by

forward-looking other results the statements. from filings events factors and detail in cause risks, more or uncertainties actual others, differ statements Securities could to among Exchange Important referenced U.S. may and Future materials those presentation events in described anticipated the to time. results the that and Kodak’s the or in factors with time from from include, Commission differ these materially forward-looking or in expressed

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

Executive are deemed measures Reconciliations call the website release Speakers the just Investor certain contains in our non-GAAP directly today’s Chief measures at Kodak’s the our and have and addition, and Kodak. most with Financial issued Dave Officer that release Chairman; presentation Bullwinkle, the Jim on within on provided Continenza, GAAP comparable of In presentation Center measures. been provided to the investor.kodak.com. are

to over I will Jim. the now call turn

Jim Continenza

everyone, printing sale China, in investor of HuaGuang call for you Bill. market Lucky help a in the joining relationship technology Kodak’s China of includes intellectual to company with Company. you, X, transaction agreement thank customer facility Republic under established supply expand fulfill the to agreement its to which demand The Welcome, strategic licenses Xiamen, offset for People’s its Thank Kodak plates Graphics and in Kodak. property a September Kodak HuaGuang the the XXXX, On and plates third quarter China. the

share conversion Kong, strengths This will leverage KODAK and – the transaction in Taiwan We’ll Plates Together, minute. HuaGuang’s here Macau. of and China, for share Hong Kodak’s Process-Free a pause of accelerate expect we to the combination market technology. SONORA leader world-class market

we’re stating been to for have one of couple we As Kodak. calls, moving last the

to establish what satisfy sense the market. going the for it, at and in the help leaderships customers most We’re look makes to serve our build buy and it, company partner,

this are combined thrilled about We opportunity.

over want them. we. together more so They are do We and with met to there,

one ours. which as generating on will customers. And is strengths and growth look alignment their China leveraging When its cash of this, look We’re organization simplifying and company our provide focus going ahead our going at to the XXXX, at structure, with better areas. in we again, will

employees leading-edge innovation are and delivering focus customers and and – we our of customer-first world-class customers a have focus are that, we will the to what to that moving technologies. model. service, We’re focus With our means what on employees

Materials leverage to our going We’re in our Print Core technology and Advanced business. Film

continue areas. We both in innovate will to

products. development non-core product and for We’re going to eliminate and delay programs

operating reducing expenses. our We’re

X%. KODAK revenue. The PROSPER annuities – XX%. revenue for Inkjet profitable to The grew going volume grew Process-Free Kodak grew grow SONORA of We’re Plates

to going Again, free to as we generate we’re move we’re clear, cash keep stating and just flow. so

We’re model put customer-first going work backwards. to a

are We products. really and core why our of focus to clear Advanced we’re Materials areas continue innovate on the is That’s going. strength, in where going to the company

With discuss XXXX financial year-to-date quarter to to to the I’m this results. Dave over third going that, turn

Dave Bullwinkle

company good Thanks, September with quarter its Form and SEC. ended afternoon. filed Jim, Today, XX-Q the the the XXXX, for XX,

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

has and made Before Investor team. we Congratulations, Bill Corporate of retirement begin, significant Bill. valuable the to effective Bill mention Relations, recently finance been XXXX. contributions to of I that we Love, transformation member has would X, like announced Kodak’s the Treasurer of January and leadership a Director

Jim Continenza

our – It Date, I’d was have through And company never what also known don’t contributions when possible work incredible. out restructuring, made been to if like thank we came the did. years. would the without know the And forgotten. he will to Bill. be I he Bill went he several he – for I’ve it

So Bill, thanking be also. should thanks to thank and for personally you everything. I you, shareholder every want

Bill Love

Thank you, both. I very appreciate much it.

Dave Bullwinkle

Dils, Paul assume Assistant Officer; Director Investor will Ebersold, will the Matthew of of role additional Chief Corporate Relations. role Treasurer; the Treasurer, of Tax and assume

Jim Graphics in the Lucky under the printing facility Xiamen, The plates technology Ltd China. in to demand which HuaGuang expand previously Kodak relationship deal sale an customer Kodak’s agreement of the offset September help market the and plates finalized HuaGuang fulfilled IP Company in Kodak supply to licenses a with a China, on its Republic As People’s the X, XXXX, agreement strategic included of mentioned, company China. establishment of its

a plan strength incorporation. U.S. to is Plates company HuaGuang’s the to transfers are its technology, stock common This accelerate restrict credits. and protections protection Taiwan together, transaction protective of conversion The certificate to XXXX, to preserve and in and to market and and tax deter Macau. the world-class China, which, these foreign complementary Hong of Process-Free benefits tax losses September of asset will SONORA order expected leverage of Kong, certain Kodak’s net of On amendment KODAK in the leadership the operating tax purpose the adopted adopted a company’s combined XX,

quarter is will now XX, of the November details on benefits and applicable further operational cash on third the full the expire and EBITDA ending significantly XXXX, nine-month when tax I tax the XX, will period September XXXX. losing protections company results, flow reduced. The share risk rules for under

results of FPD discontinued XXXX, of due XX, the the the sale division. September operations quarter XXXX for to as and year-to-date the and note the periods have reported comparable been Please third

Additionally, the have been and for certain due sale periods to reclassified transaction. amounts the requirements for current to held assets prior related year reporting HuaGuang

on our income quarter. was prior On net Slide to GAAP we third of year in for in loss basis release, as reported XXXX $X U.S. the of million quarter net X, compared million the $XX a earnings

September with net for $XXX compared loss nine the nine the XXXX. XXXX, months $X months million XX, of was For ending net September the XX, reported ended income million

Excluding workers’ Series Packaging on the adjustments sale of and me, excuse impact the $X million million, value from the $X Flexographic for of and the reserve fair related legal of compensation – changes the the net gain in Division $X derivatives net net of prior compared quarter stock convertible and in million was year million, embedded notes $X for A the quarter. loss income million third the in $X preferred to the of the of XXXX

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

Slide X. to Turning

unfavorable a year of reported the from and exchange quarter Adjusting million of transaction HuaGuang revenue decline quarter for compared $XX the prior of revenue million million XXXX, of the impact of quarter. million. prior $XXX to $XXX $XX by $XX the of in $X compared revenues we million license third foreign the for For year million, received declined to

compared to $XX million Operational the EBITDA quarter. year prior $X was quarter for in the million

of million. license received compared the September and revenues XXXX, the favorable for Excluding we $X from workers’ $XXX increase $XX million. revenue operational a $XXX adjusting impact decreased costs, XX, reported transaction EBITDA of foreign of and compensation by HuaGuang period year the the aluminum million prior exchange reserves, in million to in Through for decline

foreign for to $XX revenue million unfavorable of prior million impact period. HuaGuang year the compared the of and license Adjusting from by received $XX million, transaction revenue $XX the of declined exchange

period. $X Operational the period to million EBITDA for negative $X year-to-date a in the prior was million year compared

exchange aluminum EBITDA workers’ reserves, favorable costs, revenue and of the increase by the foreign compensation $X HuaGuang from impact Excluding in license transaction declined and adjusting the for million. received operational

performance engines. Process Free year-over-year revenue grew and volumes Plates by the SONORA by XX%, a strong On for We annuity year-to-date basis, growth delivered key our X%. for in PROSPER grew

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

million held increase million on from performance associated and facility from third reported and of Moving in in when plates $X cash million, the XX, balance adjusted for Kodak’s for printing of $XXX XXXX offset in being assets XX, assets June December presented a the sale. company the to Xiamen, company’s China on X. with ended cash $XX XXXX, million Slide an quarter of cash decrease equivalents, $XXX The cash with

million ended $X increased million Cash, compared a a cash cash increased included period. the nine in year by $XX for and equivalents $XX sale of Restricted cash XXXX, by the the decrease and compared for months $XXX of million prior cash to XX, in million in year held restricted period. assets to prior September as decrease

year cash This restricted buyer. cash services products to and million is being which $X the provided and the periodically remaining of China. China the in cash the received to corresponding was by current FPD, includes company released a deposit buyer services secured by provided The of products the in prepayment restricted for U.S. in as are

impact the assets. the Additionally, to of of from million increase under FPD on China of in company the million relationship various strategic the to $XX ABL established agreements ongoing related obligations The the there was for also HuaGuang. with sale an escrow an $XX secure

in XX, $X flow. representing in million decrease improvement in decrease prior a was significant period, year $XXX The cash equivalents compared cash September million net of to net the cash and through XXXX,

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

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

and by million, million. million Accounts payable by inventory increased $XX $XX decreased by $XX receivable accounts increased

from expect continue Flexographic a $XXX to September proceeds improvement as sale transaction. use in by the year XXXX, working We investing the Packaging compared to of The activities the million HuaGuang was provided Cash ongoing the XX, current the Division in during period. $XX of period included year nine-month capital. and prior ended million

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

in with Finally, covenants our as our disclosed agreements. remain we compliance in Form under credit XX-Q,

your to of the questions. please Operator, call the questions. We remind open ask will a now instructions to participants

Jim Continenza

like and again, the everyone thank your you, everyone. joining to Well, support. good I’d Have for Thank call, we evening. a appreciate

Operator

concludes you this today’s Thank gentlemen, and participating. for call. Ladies conference

may disconnect. You now