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Eastman Kodak (KODK)

Participants
Paul Dils Chief Tax Officer, Director of Investor Relations
Jim Continenza Executive Chairman
David Bullwinkle CFO
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Eastman Kodak Second Quarter 2020 Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] It is now my pleasure to introduce Paul Dils.

Paul Dils

Thank you and good afternoon everyone. Eastman Relations. Chief Dils, Director Officer Paul Investor of am Kodak Tax Company's and I Kodak's quarter to Welcome second XXXX earnings call. At P.M. X:XX Kodak quarter second its results filed XX-Q the afternoon for issued financial release XXXX quarter. second and on this Form its

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

cautionary differ actual other There Kodak factors be date to in behalf Kodak attributable acting statements reflect All update or and and may Securities events cause the the the the of will are from of or events by Act XXXX. and results apply forward-looking entirety cause Exchange statements forward-looking with we be made to that statements date persons statements. to obligation among and Important from factors time-to-time. or statements or this of or or presentation unanticipated more presentation. reflect call, arise Reform certain from forward-looking Commission today's those expressly on forward-looking Future described defined are expressed that Kodak's occurrence forward-looking of as the Litigation results as upon that various others, Kodak's may included their materially filings differ forward-looking could its qualified statements. results detail in differ materially expectations only based circumstances factors U.S. risks, Kodak's During may or uncertainties this in from undertakes making actual other revise the referenced to by Securities events assumptions. the forward-looking Private include anticipated the or statements the events. All to in to no in statements after the

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

call our of regarding handling independent appointment committee Jim, activity of conduct to review internal the would in I U.S. week special of last of loan International connection Development this review details letter to we a acknowledge Before an the on Kodak’s from the directors of In discuss over like the potential interest this to the provided light with related Corporation. the cannot beyond announcement matters Finance call. the or internal

holding We formal Q&A today's will during be not a call.

turn available for call As always over the team now to will follow-up. Jim. relations the is I investor

Jim Continenza

for Welcome impacted investor second on COVID-XX world. will results challenges everyone joining for X were call Beginning by for year-to-date and second on more details results quarter thank provide you around the pandemic continued quarter and to quarter Dave present the the the shortly. company as slide the second Kodak.

whole organization As business of grateful workers. and by health We and first conditions. providing at masks has sanitizers essential an essential we and enforcing for safety put flexibility I of distancing, dedication our have requiring social operational. the all the am unprecedented hand measures to remained these shown employees

the with the order in all In and to and challenged the materials of serve our country experience addition, as company ourselves pandemic. manufacturing workers to a we in of flex capabilities chemicals line front on our have applied essential

will We our to produce products. continue traditional Kodak

to printed circuit and film manufacture that facilities shield, our used are for leveraged also in face board have We ventilators. IPA,

partner we are accountable One implemented with and results a us way continued more new are benefit first being ultimately see customers have we XXXX; and go that for structure functional, the model reacted reliable way which the in customer the nimble, more Kodak our our to market, in customers. the organizational to we We of the measurable, we have

in took the pandemic. notes to we with Recent million strengthens XXXX $XX sheet conversion of further financial throughout in In navigate our balance addition, the provided the balance strengthen flexibility steps us convertible to have the sheet.

on from of is government. U.S. two that XX,XXX which to only APIs loan More ingredients. keep announcement pharmaceutical mind signed is an patents them for a Next produce I in and this the essential the with Please this to about a active to larger was the materials, to want take Kodak The announced weeks discuss generic interest history. its American brand scale. is throughout KSM a loan. ago heritage in we innovation potential a including the an call moment country ability for potential move loan over letter key was a potential necessary Again much work drugs forward. iconic starting and

production expand our We to potential have and capabilities capacity. the

Our production. in Rochester, existing city York for Business city located a X,XXX a is manufacturing development and operations within New Eastman Park uniquely acre is chemical chemical which in suited

and waste rail of of miles well Our access infrastructure steam, park water vast electric, a variety XX Eastman of includes in safety including to Business gas, wide industrial components as as fire security and treatment, production services. of utilities Park with the facility. past few the for experience in XXX manufacturing deep pharmaceutical possesses years over unregulated also manufacturing years. expertise incredible an It's chemical Kodak KSMs, critical

of and existing business including moving expansion affect to with does The groundbreaking innovations our supply to business. committed Importantly print process. and meet manufacturing chemical needs. customer the we to KSMs proposed our not operations unregulated support before the and weight DFC's to decision continuing appreciate core the our manufacturing needs forward our pharmaceutical clarification of advanced materials investing remain XXX% in of chemicals We loan

several the existing the which the plates to joint print two new to first be vision our The CTP for cloud-based commitment inkjet this enhancements support slide packaging workflow digital Kodak powered UTECO platform. technology. Inkjet Press products will over now re-define press of revolutionary business. to on-demand Kodak productivity software, to and during Sapphire I XXX digital Dave the packaging product announcements EVO digital quality, new will quarter to that A results. it known ULTRA SONORA in quarter called new what's PROSPER possible continuous UTECO as world's first Turning cost Kodak include with prinergy terms X, XXXX financial discuss A Wide announced the company and and for and products press our point which ULTRASTREAM Kodak second enhancements devices. magnus the setters half turn industry-leading fastest the machine printing. our will reinforcing development by

David Bullwinkle

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

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

company the the from interest company's holders shares company's notes. to occurred second aggregate XXXX under company's exercising the of rights X% notes of the satisfies their million. convertible the subsequent outstanding delivery into stock. notes the conversion of the for Before obligations shares transaction conversion I of which due $X The quarter, principal million an quarter. get received common the secured important notices I an the like to of The July company's the of the XX, the $XX highlight details to convert payment would XXXX of accrued and of amounts is principal into amount remaining its notes On

million before of receivable a pandemic of impacts. net percentage results, to we second the million the details is prior The reported sales for the derivative risk our COVID-XX and our second sales convertible EBITDA like XXXX taking XXXX. respectively quarter second COVID-XX make and of cash a a to include loss accounts customers has basis embedded of in pandemic adapt The slide to would has quarter. I conversion as able and net a past of GAAP third few of for pandemic. in compared the and prior flow comments and XXXX of the accounts quarter to year in for cash operations quarter of has results impact quarter receivable amounts quarter accounts for the the doubled XXXX collection first $XX in the when negative on in The longer to collections have volumes compared year. revenues in a did X, of increased compared company and on value the for been to will million. regarding The quarter year preferred since and notes. to The We the improve further $X and we the receivable. operational to I million series in of full their million reported quarter half $XXX $X will On $XXX U.S. volumes of that share serve recovery decline due continues. businesses. the second $X maintain our On $XXX second changes now prior million income stock the to related million global changes income expense anticipate Additionally company

to related include on The assets. second gain income quarter of million XXXX of of the also results net sale the $X

of income of million includes gain the XXXX business. Flexographic the the of Packaging the of on second The related to quarter sale primarily impact $XXX

these impacts operational EBITDA business. furloughs million prior offset the $X The million for is quarter unfavorable negative driven manufacturing million year in compared declines negative cost an compared quarter including impacted a partially million Operational to $X driven by Operational improvement Excluding to as on quarter the volume for a the of savings by quarter in of was cost EBITDA and pay of prior reflecting year the current due loss million second higher to reductions. was absorption our result unfavorably revenues loss costs, million. was XXXX by decline $X and items COVID-XX a EBITDA the of reduction for the $X prior in $XX in quarter. $XX by

an exchange on Foreign impact did not operational EBITDA. have

second result and PROSPER by XX% in pandemic. attributable by to quarter, downturn demand applications. care related a increased in for free processed annuity which was of year-over-year to flat revenue the declined and as PROSPER volumes COVID-XX declined the plates to growth During component market the attributable printhead the Overall packaging for revenue personal sales SONORA XX% was

throughout the will in to fluctuations develop. the future business revenue However, year we applications continue these as face prosper

to future of advanced growth materials continue referred will and ULTRASTREAM to lead invest areas the to We in product new earlier. introductions Jim which

of the prior a a for the and million derivative a of results $XXX income half the net $XXX Turning compared the $X value of to decline first XXXX include net half year. for XXXX to in preferred XXXX million prior income loss changes million the of for $XXX to series year for million The convertible the $XX million period $XXX stock million revenues We half in slide related notes. X, embedded respectively first of $XXX to a reported the of reported we and million. first in and in compared

net also a the of expense valuation tax sale deferred half result gain of $XXX outside first of an non-cash of million a income million and $X allowances assets. trade the in the XXXX accounts million, of on The includes million, $X name in as increase increase a related impairment for impact receivable the the reserves to $X U.S. of

first business. impact the of includes $XXX half Flexographic related of XXXX to primarily million sale gain of income on The the Packaging the of the

items to we focused the continue these for in transformation This million cost print, Excluding break results EBITDA compared were as increase of of for reduction chemicals. loss period $XX year negative of our year. a $XX and the period. XXXX materials $X million advanced even year key impacts prior a initiatives prior compared million to current Operational business the areas on in our reflects the the prior was of the negative and a

million. by impacted reserves due was absorption of half savings $X furloughs partially $XX declines manufacturing cost increase driven of declined by EBITDA million EBITDA unfavorably unfavorable first volume million by pay reductions. offset Excluding for receivable and by costs year to the including $X higher accounts the the cost operational of in Operational

period on revenue to Foreign X% of downturn care for exchange and did and volumes by basis, XX% result process year-to-date million impact pandemic. compared not annuity in sales which attributable On for EBITDA. attributable component operational personal SONORA have to free prosper growth revenue market year the the as prior an to by increased declined plates printhead the demand increased PROSPER related applications. Overall COVID-XX $X declined packaging to a was in a the

in year will these I noted future previously business PROSPER the fluctuations throughout revenue as to we as face However, applications develop. the continue

growth We also areas invest of and ULTRASTREAM in continue future materials. to advanced

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

Alaris from XXXX by in and from ending balance primarily driven For $XX the operating use was cash and a $XX in $X months XX, liabilities including $XX net activities changes used $XX of change of million cash million earnings million a of use June working of decrease capital other sheet million receivable decreased in by cash million six million, changes recognition Kodak obligation million receivable million of historical $XX $XX and by was million by $X the $XX eliminated a million. decreased accounts offsetting gain. sheet a by deferred in to inventory payable balance accounts Accounts $XX million. that the increased is of $XX and Included

In million half payments included and includes first division. $XXX to income pension for included used reduction taxes the The the XXXX in the million period. Cash full the of was first year notes financing activities as reduction $XXX in used use lien the Cash proceeds agreement prior partially senior of interest. year a other tax year year cash million Flexographic the of increased million. in the and of payments credit half offset and of was Payments million half million addition, in The for the payments, accrued $XXX of for income convertible restructuring in XXXX $X the of of of cash Packaging for in activities have the actions, cash $X secured offset value-added by first restructuring the payments prior by from accrued activities compared period. provided liabilities severance prior by investing for of investing used the term first $XXX prior compared tax to secured repayment in used sale issuance interest.

the reducing have our order on focused continued efforts restricted XXXX the restricted quarter, first was on our at cash million due restricted million. operations past cash half the the quarter during of end the facility activities. in of In our As ABL in indicated of XXXX I to which was reduced amendment restructuring company first by $XX was calls the fund included and $XX to cash

on We will continue restrictions cash. reduce to focus on alternatives to

of lower transferred to make the to a an the the available balances company to jurisdictions company Kodak strengthens order cash other the the Kodak to This which position. further considered operate million transaction second U.S. approximately minimum transaction. intercompany to subsidiary trapped in across of in Chinese during $XX in a reduces subsidiary Additionally, with quarter complete the enables and cash China financial company's and cash world operating

significant conversion agreements. strengthened Jim. remain subsequent the form these compliance we had convertible XX-Q quarter second in our costs sheet balance covenants intercompany due position to the Finally, our was the that our financial company under a I impact COVID-XX in of been and summarize pandemic discussion transaction and able quarter with turn To the secured in discloses to impacts. occurred will on to credit reduce the offset operations notes quarter. have The to significantly the company's and the which the now to partially back

Jim Continenza

extremely proud digital introduced business our few represents innovate the from the in the towards announced and to past well-positioned R&D navigate products for challenges now we to and the that forward. again today. to most forward Kodak am highlights the look continue doubling and ability accelerated with Kodak on recent shift pandemic important quarter. the down opportunity restoring digital Despite of its speaking of several Kodak is world place products print to with our inkjet The you capture the by forefront commitment next move to experiencing. I time rightful Thank By steps at Kodak print. and We to six years months. your our you to is

Operator

participating now today's conference Ladies this concludes call. Thank you disconnect. for may and and you gentlemen