KODK - Earnings call transcript Q3 2018

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Operator

Good day ladies and gentlemen and welcome to the Eastman Kodak Third Quarter 2018 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 be given at that time. [Operator Instructions] As a reminder, today's conference may be recorded. I would now like to turn the call over to Bill Love. begin. may you Sir,

Bill Love

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

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

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

provide our have third EBITDA, and deemed call the Financial been financial Clarke. I a Jeff non-GAAP remarks, call performance results, directly comparable and provided net measures measures. will cash and the measures over In of Speakers just Bullwinkle, contain quarter Kodak. of now Then presentation GAAP most Chief investor.kodak.com. release on within on Center open Dave summarize to the Clarke, addition, Kodak's presentation Kodak Officer and and opening certain to divisional to questions. website at Reconciliations the review today's review Executive some the update earnings issued, Jeff of provide Investor in third it provided Jeff up release with turn the Chief operational that are on performance. Officer are CEO, the Dave before we will quarter, will Kodak's for our

Jeff Clarke

investor Thank you, thank Bill. for Kodak. joining the conference and you for Welcome everyone QX

XXXX. On third for of the call today, about results quarter division the the and I'll company talk

for is now are transaction to on fourth the to to agreement a welcome and Additionally, discussion negotiations company's and then Division I'll more basis I’ll to third provide close advanced quarter position will XXXX. net will outlook we XXXX its the exclusive initiatives the to a discuss which a sale in and the an we our cash expects details update, half be an our company in Packaging strengthen binding update with quarter. follow Flexographic capital last questions. after the definitive sell sign in the first taking of earnings, performance structure presented in in on cost your reduction and Dave The a flow, of on quarter.

of our or million, $X impact reserves the a workers' of compensation quarter adjusted we million, by decreased $XX further of quarter. compared EBITDA $X our million operational increased compared $X up when for quarter prior $X higher $X $XXX adjusted of and legacy third in XX% revenues reduction by expected delivered was the Operational from the million, when When prior consumer in million impact of for foreign million adjusted the or to million adjust the This $X or the Kodak's million, million Kotak is inkjet of of X, prior million, slide in quarter. increase foreign product business, EBITDA quarter. in its reflects operational revenue down million $XX cost cost year $X for on $XXX efforts, adjusted When strengthening of the prior impact year cutting the operational quarter year million, third portfolio. from to improvements, the Turning the year unfavorable $XX impact for aluminum quarter. improvement When year compared unfavorable XXXX. of double Kodak's X% of operational and exchange decline the of EBITDA EBITDA to to exchange

talk a compared is levels down of headwind aluminum flat included over headwind in at $X prices We’ve historical a past year. by Print Systems in presented this of Now third forecasted trade basis associated presenting a revenues impact The EBITDA when $XXX Again, business comments currency last the million, above is Slide cost compared performance Slide the discussed constant on for the X% All will the on Operational by XXXX the X the years. as average results to presented X years. the quarter. quarter. the million. with and $XX aluminum year million Starting Division, to operational compared euro unless quarter I'll LME of to $XX Exchange EBITDA million. of prior the Plate higher aluminum price year noted. continues division prior the The third supporting $X over year was division’s comparisons otherwise excluding impact tariffs on quarter aluminum million price When volume year in and X% year increased over about year which a X erosion well the to decline XXXX London were slide increased year of costs prior $X appendix be with each of X. Metal was quarter. million,

end plates. very beta the maintaining volume converted won will made plates this X, going sites, SONORA SONORA productivity X process-free are successfully to requirements of product newspaper and multi-site of X to presented account the test efficiency are in benefit in speeds and testing by plates for and completed number X of volume presses, the over in all of switch Japan. and which its Asia, medium on nearly previous printers large various I'm increased publishing SONORA to challenging run in and beyond The of to and As technology and pleased this Slide convert United the win faster bandwidth quarter, Based while X and commercialized these extensive better printers’ we major after million printing those those large supply customer applications. of proves testing applications. printers over to the printers results, SONORA and meet In greater Latin SONORA productivity to and Europe, SONORA plates. lengths, quality, imaging customers These PSD accounts X X of and In process have now These third the with printing savings printers the X,XXX and cost Canada level they SONORA plates XXX smoothly trials X fully with dramatically rose accelerate need of across pre-plates durability, plates. on following and continuous of to ROI America to the States the the X. environmental processed States can plates SONORA the is United we Beta of year. program prove over competitive QX, and process-free regions longer say the our of from print improvements environments, their expected plates accounts annually improvements expect be to X plates meters several the large Kodak’s offer plate business. to attractive commercial driving plate process-free in by October, a conversion square volume the capability process sales end a

year the the We result higher consumables, third quarter X unit and expect be and in represent enterprise full and from This of SONORA quarter offset third basis volume million, a of PROSPER we free placements compared unit was million inkjet $X expect prior million, reflecting $X expected PROSPER an volume a of to third revenues systems were for quarter quarter. the cost XX% of will by improvement on the process division process in X for -- sales. QX X Returning $XX Operational decline SONORA X, million of XX% increase year the will increase partially was to equipment Slide EBITDA approximately free an improvements. sales prior the VERSAMARK. $X quarter

year quarter, year the growth. continued PROSPER X% with their strong performance For over annuities

base $X FLEXCEL and writing systems. expect development, million, product million, ULTRASTREAM in quarter, This volume began due hybrid of quarter. inkjet business In shipping were We year remains systems quarter and in CTP revenues primarily volume activities. impact focused installed for in improvements availability manufacturers invest on on result equipment and the the consumables to ULTRASTREAM, The next investment in original third continue reflecting of over $X and offset to the an year product track to to $X of EBITDS was applications. generation an quarter, primarily ability place by Operational larger FLEXCEL technology $XX NX we XXXX. for in investment is the increase marketing, for commercialization starting compared in increase meaningful division, prior in in million sales the million NX improvements Flexographic Packaging a we the hits evaluation the the consumables FLEXCEL of NX XXXX

compared prior quarter. XX% FLEXCEL XX% quarter, revenues and volume plate the increased the NX to FLEXCEL For increased NX

our currently product for testing plates. Weatherford, track begin We of and to plant to Oklahoma demands FLEXCEL production new the at Weatherford is in site continue and fulfill expansion to full acceptance factor underway Site invest by XXXX. NX on in infrastructure early our we're development increased

This and Ultra environmentally Flexo of Additionally, is NX Kodak Ultra performing innovative and in high technology. now pending a enabled maintenance consistent by provide product low next see introduction solution. friendly the volume FLEXCEL Clean patent we technology new will plates high this September, generation solution.

final million, received earnings of For as $X compared Operational million, Solutions licensing Cost flat million, a and to from are brand analytics workflow excluding reduction focused When offset licensing to the brand Printing division compared motion inkjet. class a of cloud a agreement, and quarter primarily the XXXX due for quarter as a our investments declined by in quarter. offering digital intellectual eliminates The enhancements revenues the blackout offerings. group KODALUX had the light. royalty million over control Operational quarter. make The division revenue. year of we prior an decline for well the can layer incorporating prior performance. introduction wide for inkjet replacing and Business portfolio a in to absorb prior due prior in a flat of the from were the light use Continuing and software light $X year quarter the declines structure simpler of $X primarily EBP our prior to when of packaging which to important by modification $XX for of were Software to year brand year. negative increase EBITDA quarter to world's not reduction We're was one-time And the million control year the improvement carbon cost the in million. and significantly revenue in consumer The directly the of print payment as were in first materials the on coded million current for And the continuing consumer is Eastman compared cost in the a in rental quarter. $X Consumer negative well solution due applications. technologies other expected when new fabrics EBITDA $X light the prepared delivering was as year QX $XX division, of third Film one-time revenues with In for property the Technology and to control technology, of quarter. revenue $X which did management represents a it fabrics various a degrees business common October, be which the precision announced to million helps re-prioritized when KODALUX blackout of in EBP Park, format quarter the EBITDA improvements XD third picture received Materials light units. flat to films change compared KODALUX fabric blocking payment Advanced impact division, services $X income year digital investments XXXX, and due print industrial EBITDA fixed and to technology chemicals in operational year technology million prior operational and license the

which year I’ll The a XX% other provide year now PROSPER, our from Park slide advanced which is Toner growth quarter. and to which on software Business the portfolio. licensing represent X-point prior prior These FLEXCEL account brand our and packaging overall the products quarter. technologies The NEXPRESS SONORA, total Turning engines and NX, licensing an update include solutions X, and plates, businesses grew CTP Now XX% businesses for compared at revenues of businesses, increase and to strategic IP when related of other Service, Eastern film, total revenues. include XX%

in declining and which these and revenues businesses account we X% past, As for consumer company. the VERSAMARK, Digimaster strong The total inkjet, planned consistent stated the flow provide for revenues. cash of businesses include

been to product where past, an product earnings, expected orderly and flow and new net these the now Dave? decline stop the turn our in manage has made annuity I’ll to over to and decision in it to we the outlook. XXXX discuss Dave As cash are base. on full-year installed details stated development product lines performance,

Dave Bullwinkle

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

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

an described of proceeds sale net will Packaging balance sell Flexographic negotiations the term Jeff debt. company's The from are we used completion of outstanding on As in advanced a basis to exclusive to business. the reduce the be the transaction

binding sources results lender commitment with structure of full-year company I XXXX, expire the cash credit financing company quarter. work of financing outlook non-binding terms and entered third non-binding non-binding intent would our In and the the accordance I the a replaces proceeds revenue, to letter November a with an actions -- source the in full. now on The Exclusive consummated addition, EBITDA, negotiate has cash. the from cost term The XX, letter work the in our agreement refinance facility XXXX. letter. on if work company's between potential used another for into full to into during existing the loans the the and entered and non-bidding negotiations the new be under and discuss Kodak cost share update details first-lien potential will also and for on the letter. flow will on further operational letter

net of we earnings third an on our the slide for XXXX XX third with GAAP $XX basis quarter. income compared quarter the financial the the for results Now a GAAP of On in increase million for was third as reported XXXX. release, the quarter million, of $XX

XX, September the For of months a with loss ended net the XXXX, the September million is nine nine reported for net lost compared ending $XX XXXX. months million XX, $X

impairment for reductions year the impacts remeasurement, asset related for and the over for of the A a for year amortization date basis. value decrease in to net liabilities flat a the PROSPER million reserves, Excluding derivative earnings and embedded $X to on quarter of year stock, preferred the expense changes in Series and in was the period workers' the compensation and goodwill depreciation legal charges

by an million are pressures over aluminum in of $XX or of decline $X and increased reductions. mainly Details which XX, by increased Turning division Through On productivity year. and $XX EBITDA improvements expected NX primarily XX, result include volumes on are consumer partially CFD in decline to bridge announced offset month $XX actions EBITD results of the we the from for PSD due compared to a a currency pricing $XX September operational $XX period. million million EBITDA million. excluding taken by operational a EBITDA increased operational is costs, was cost earnings. a improvements, results of outlook cost basis, costs in million to $X $XX XXXX, XX, aluminum revenue driven by These sharpen period million in last of nine $XX result and systems. VERSAMARK prior and as were focus Further operational ending to impacts declines growth EISD are declines in operational of offset divisional million our slide AMXD by year. the as to presenting full XX% the slide XXXX a million million in million EBITDA year XX, inkjet offset plate XXXX our FPD by million. by September we to $X decline $X XXXX. in our expected FLEXCEL driven On in improvement XXXX by and A million investments in year the constant cost of year presenting $XX

exchange to related and and the favorable reserves. of $X million from we presented, for $X $XX impacts to in As aluminum impact the costs increased reduction the foreign in unfavorable liabilities compensation million related XXXX, million tariffs, impacts expect workers'

inkjet the $XX productivity full-year pricing, impact Implemented $XX favorable full improvements. will costs, on cost in waste are Our a yield, our will mix, expected million improvements million product have a savings the to a declines impact volumes provide impact and Changes consumer improvements in and to XXXX. full and unfavorable VERSAMARK projected year. Manufacturing in include and in unfavorable purchasing to million year. $XX manufacturing and reductions logistics in improvements result

mature in of $XX savings of approximately annualized cost cost businesses non-headcount will reductions the areas related for approximately from and XXX pre-revenue and from result $X elimination positions reductions approximately million. Additional million of operating

these November, $XX an of has and As company reduction actions million. Annual developed projected are approximately of has eliminations. the the XXX position of from the for plans approximately beginning at additional completed positions XX savings

XX, million, as June ended million down million XX, The XXXX reported at equivalents equivalents, third and cash. XX, million performance million were cash from $XXX on the from $XXX decrease $XXX December $XXX XXXX. restricted and quarter on down the company from $XXX XX. cash of cash presented in $XXX A with cash, December Moving to million $XX on the million slide company and Cash XXXX. sheet balance of

cash offset XX, pension the build $XX primarily our liabilities due in used seasonal and by million. company's $XX was operating to in partially cash ending lower $XX to in cash taxes, liabilities XXXX, and was $XX million of excluding the by cash decrease lower as restructuring, million months in the decrease primarily payables driven ending related period from presented. XXXX, trade September nine to million, million an inventory compared of nine-month was XX, payables balance in changes used used Cash $X by trade in foreign sheet operating from to activities activities of Cash decrease company XX, payable of excluding to nine-month earnings primarily expansion $XX trade million the million, During investing plans. from of of increased in $XX substantially $X and The cash prior a date related receivables. increase rebates, flow The million year period in million accounts in during $X capital September XXXX, activities a payments Packaging in to $XX has net compared line period. million flow year $XX September the the of Weatherford. as The requirements completed million ending of the plate Flexographic use of

the financing million expect preferred series first $X We of million we in stocks. have expenditures compared on for period project. the to the XXXX primarily capital begin XXXX, Cash production date to used dividend in to payment in spent activities to Year was the this $XX year reflecting million $XX for year XXXX. A prior quarter in date

and revenue, Moving provide cash. EBITDA, our operational XX, outlook slide for to latest I will

XXXX revenue $X.XXX of is guidance full-year revised to billion. to $X.XXX a expected Our range billion

XXXX to $XX remains $XX Our million. EBITDA operational million at guidance

of million, includes range related cash payments will of of restructuring XXXX $XXX payments, proceeds contributions, to a expenses million, and $X pension of business, repayments. $XX $X to and debt $XX This taxes offset $XX Expected capital the million consideration of before foreign legacy cash to which cash transactions Korean EBITDA operational of $X balance of tax uses of fourth of sale million. cash to capital with of quarter generation include expect of uses cash of of We million, the million million, million of expenditures by $X interest million, $XX payments, million, million in year-end of partially of range of our comprised $XX projected long-term refund withholding workers' disability million working be million. contingent $XXX a generate compensation $X and other the net $X net

covenant remain credit the Finally, In the compliance agreements. seasonal earnings. third and in as our the as Form by build to primarily the exceeded the of secured under loan credit used necessary of EBITDA the cash of performance, agreement with under disclosed in use capital covenants satisfy in ratio our To company’s reflects our company's first-lien working $XX quarter the the company's XX-Q, summarize EBITDA particular, calculated leverage we XXXX ratio million. seasonal term nature the the

quarter the to in We strengthen to expect fourth our generate cash and liquidity.

continuing to businesses. operating reduce and We efficiencies greater operations execute investment driving the in spending mature actions including are of cost to our

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

Operator

Instructions] [Operator

Jeff Clarke

year I for year thank momentum NX in much. PROSPER, looking to and talking on you quarter forward to and to you Thank everyone And this the very results. want FLEXCEL we're joining some fourth new So, we as SONORA, after good noted, call. our the had

Operator

in day. program, all does Everyone the great Ladies have and for This thank you disconnect. gentlemen, you conference. may today's participating conclude

Eastman Kodak (KODK) 9 Nov 182018 Q3 Earnings call transcript