Eastman Kodak Company · NYSE:KODK
Eastman Kodak — Q1 2017 Earnings Presentation
40 slides from Eastman Kodak's earnings presentation, May 9, 2017
Slide 1: Q1 2017 Earnings Call
Q1 2017 Earnings Call May 9, 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- lo
Slide 3: Agenda
AGENDA Introduction Bill Love, Treasurer and Investor - First line bullet point First line bullet point Relations - Second line bullet point First line bullet point - CEO Third linePerspective bullet pointon Q1 line First 2017bullet pointJeff Clarke, Chief Executive Officer - andline Fourth FY 2
Slide 4: CEO Perspective
Welcome Quarter Performance Division Overview 2017 Guidance CEO PERSPECTIVE 4
Slide 5: 2017 First Quarter Results
2017 First Quarter Results Total Company Q1 2017 Q1 2017 Q1 2016 Revenue $357 $377 Operational EBITDA 1 $8 $19 Year over Year Change ‐ B/(W) Revenue ($) ($20) Operational EBITDA ($) ($11) Revenue (%) ‐5% Operational EBITDA (%) ‐58% Comparable Basis (excluding FX impact)(2) Q1 2017 Q1 2016 Revenue $3
Slide 6: PROSPER Update
PROSPER Update Trailing Twelve Months Ended March 31 2016 2017 PROSPER Installed Base (Units) 58 64 Imprinting Systems Installed Base (Units) 1,166 1,329 Recurring Revenues ($ millions) $38 $52 % Change 27% 37% The company made the strategic decision to retain the PROSPER business We expect our
Slide 7: EISD Portfolio Summary
EISD Portfolio Summary Versamark PROSPER ULTRASTREAM Technology Continuous Inkjet & Stream Continuous Inkjet Next Generation Stream Drop on Demand Product Launch 1998 2009 2019 Product Category Digital Press Digital Press Imprinting Systems Imprinting Systems Imprinting Systems OEM OEM
Slide 8: Q1 2017 Portfolio Summary
Q1 2017 Portfolio Summary 1 ($ millions) At Actual FX At Constant Currency Q1 2 0 1 6 Q1 2 0 1 7 Q1 2016 Q1 2017 B/(W) B/ (W) B/ (W) B/(W) Rev enues % Revenues % Revenues Revenues $$ % $$ % of Total of Total Total Growth Engines $ 82 22% $ 90 25% $ 8 9% $ 15 18% Strategic O ther Businesses $ 250 66%
Slide 9: First Quarter 2017 Financial Summary by Division
First Quarter 2017 Financial Summary by Division ($ millions) Q1 2017 Actuals PSD EISD FPD SSD CFD AM3D EBPD Total EK Revenue $ 213 $ 37 $ 33 $ 21 $ 49 $ ‐ $ 4 $ 357 Operational EBITDA b/f corp costs 25 1 8 3 1 (8) ‐ 30 Corporate SGA 12 2 2 2 4 ‐ ‐ 22 Operational EBITDA 13 (1) 6 1 (3) (8) ‐ 8 Q1 201
Slide 10: 2016 Recast Results
2016 Recast Results Operational ($ millions) Revenue EBITDA 2016 Actuals $1,543 $144 PROSPER and ULTRASTREAM $94 ($38) businesses, including Corporate Overhead 1 Other $6 $1 2016 Recast Actuals $1,643 $107 (1) ‐ adjustments to the Consumer and Film Segment (CFD) relating to silver recovery; and Corp
Slide 11: 2017 Guidance
2017 Guidance Operational ($ millions) Revenue EBITDA FY 2017 Guidance $1,400 ‐ $1,500 $130 ‐ $145 PROSPER and ULTRASTREAM $100 ($18) businesses, including Corporate Overhead Price of Aluminum ($6) 2017 Adjusted Guidance $1,500 ‐ $1,600 $105 ‐ $120 Guidance adjusted to include the PROSPER and ULTRAS
Slide 12: 2017 Guidance Comparison
2017 Guidance Comparison FY 2017 Operational ($ millions) FY 2016 EBITDA Guidance Operational EBITDA $107 Impact of foreign exchange ($6) Operational EBITDA, F(x) adjusted $101 Year‐over‐Year Impact in Aluminum Pricing ($13) Expected decline in Consumer Inkjet ($13) Adjusted Operational EBITDA $75 $
Slide 13: Quality of Earnings (Operational EBITDA)
Quality of Earnings (Operational EBITDA) ($ millions) 2014 2015 2016 2 0 1 7 GUIDANCE RANGE Core ex. EISD 54 101 103 95 100 EISD (44) (26) (19) ‐ 5 Core Business 10 75 84 95 105 Consumer Inkjet before Corp Costs 80 45 23 10 10 Intellectual Property (1x Proceeds) 70 5 ‐ ‐ 5 Subtotal 150 50 23 10 15 O
Slide 14: Q1 2017 Summary
Q1 2017 Summary Retain PROSPER inkjet business and continue investment in the next generation ULTRASTREAM technology Strong execution in Kodak growth engines: Annuities revenue for KODAK PROSPER Inkjet grew by 26 percent Volume for KODAK SONORA Process Free Plates grew by 24 percent Volume
Slide 15: Financial Overview
FINANCIAL OVERVIEW Reporting Structure Net Earnings Cost Update 2017 First Quarter Cash Flow Year Over Year Cash Bridge (GAAP) 15
Slide 16: Reporting Structure
Reporting Structure Retain PROSPER inkjet business and continue investment in the next generation ULTRASTREAM technology Micro 3D Printing business moved into a new division named Advanced Materials and 3D Printing Technology (AM3D) Advanced Materials and 3D Printing Technology (AM3D) also inc
Slide 17: 2017 First Quarter Net Earnings Improvement
2017 First Quarter Net Earnings Improvement ($ millions) Three Months Ended March 31 2017 2016 Earnings (loss) from continuing operations before income taxes $ 10 $ (7) Provision for income taxes 3 7 Earnings (loss) from continuing operations 7 (14) Net earnings (loss) $ 7 $ (15) Improvement of $22
Slide 18: Cost Update
Cost Update Run Rate Cost Progress Year Ended FY 2017 December Run Rate 31, 2013 % Change Headcount (Actual) 6,071 8,797 ‐31% Operating Expense $272 $510 ‐47% Percent of Revenue 18% 22% Corporate Costs $88 $138 ‐36% Percent of Revenue 6% 6% 18
Slide 19: 2017 First Quarter Cash Flow
2017 First Quarter Cash Flow ($millions) Q1 2017 Q1 2016 Change Primary Drivers of Cash: Cash from Operations: Net earnings (loss) $ 7 $ (15) $ 22 Depreciation and amortization 19 30 (11) Pension income (32) (37) 5 $13M Decline in Change in fair value of embedded conversion features derivative liabi
Slide 20: 2017 Cash Outlook
2017 Cash Outlook ($ millions) Operational EBITDA $105 ‐ $120 Working Capital 35 Interest and Dividend Payments (40) Capital Expenditures* (40) Legacy Payments (32) Cash Paid for Taxes (primarily outside U.S.) (20) Restructuring Payments (13) Other (5) Cash Generation ($10) ‐ $0 Reflects generatio
Slide 21: 2017 Opportunities and Risks
2017 Opportunities and Risks Aluminum sensitivity ($ USD/Metric Ton): +/- 1% = +/- $500k in Operational EBITDA F(x) sensitivity ($ USD vs. ¥ JPY, € EUR and £ GBP): +/- 1% = +/- $7M in Revenue and +/- $500k in Operational EBITDA Opportunities: SONORA Process Free Plate growth above expectations
Slide 22: Q&A
Q&A
Slide 23: Concluding Remarks
CONCLUDING REMARKS
Slide 24: Appendix
APPENDIX
Slide 25: FY 2016 Financial Summary by Division
FY 2016 Financial Summary by Division ($ millions) Q1 2016 Actuals PSD EISD FPD SSD CFD AM3D EBPD Total EK Revenue $ 231 $ 34 $ 29 $ 22 $ 57 $ ‐ $ 4 $ 377 Operational EBITDA b/f corp costs 30 (2) 6 3 10 (7) ‐ 40 Corporate SGA 12 3 2 1 3 ‐ ‐ 21 Operational EBITDA 18 (5) 4 2 7 (7) ‐ 19 Q2 2016 Actuals
Slide 26: Historic Aluminum Fluctuations
Historic Aluminum Fluctuations LME Cash in EURO/MT 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 Note: Historic Euro/Metric Ton (MT) data provided by London Metal Exchange (LME). 26
Slide 27: Non-GAAP Measures
Non-GAAP Measures In this first quarter earnings presentation, reference is made to the following non-GAAP financial measures: • Operational EBITDA; • Operational EBITDA and Revenues on a constant currency basis; • Versamark Operational EBITDA, PROSPER Operational EBITDA and ULTRASTREAM Operational
Slide 28: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings (Loss) Attributable to Eastman Kodak Company to Operational EBITDA and Operational EBITDA on a constant currency basis for the three months ended March 31, 2017 and 2016, respectively: (in mill
Slide 29: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Enterprise Inkjet Systems Division Operational EBITDA (Segment Measure) to Versamark Operational EBITDA, PROSPER Operational EBITDA and ULTRASTREAM Operational EBITDA for the twelve months ended December 31
Slide 30: 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 March 31, 2017 and 2016, respectively: (in millions) For the Three Months Ended
Slide 31: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings Attributable to Eastman Kodak Company to 2016 Comparable Operational EBITDA for the twelve months ended December 31, 2016: Prosper 2017 Projected Discontinued Change in FY 2016 As 2017 Projecte
Slide 32: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Consumer and Film Division Operational EBITDA (Segment Measure) to the expected decline in Consumer Inkjet Business Operational EBITDA for the twelve months ended December 31, 2016: 2017 FY (in millions) Pr
Slide 33: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Earnings Attributable to Eastman Kodak Company to Operational EBITDA and Operational EBITDA for Core Businesses Excluding Enterprise Inkjet Solutions Division (EISD) Operational EBITDA for the twelve mo
Slide 34: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Loss Attributable to Eastman Kodak Company to Operational EBITDA and Operational EBITDA for Core Businesses Excluding Enterprise Inkjet Solutions Division (EISD) Operational EBITDA for the twelve months
Slide 35: Non-GAAP Measures
Non-GAAP Measures The following table reconciles the most directly comparable GAAP measure of Net Loss Attributable to Eastman Kodak Company to Operational EBITDA and Operational EBITDA for Core Businesses Excluding Enterprise Inkjet Solutions Division (EISD) Operational EBITDA for the twelve months
Slide 36: 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 months ended March 31, 2017 and 2016, respectively, and for the twe
Slide 37: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile the most directly comparable GAAP measure of Net Earnings (Loss) Attributable to Eastman Kodak Company to Net Earnings adjusted for PROSPER one-time depreciation and amortization catch-up, one-time legal settlement, lower pension income and revaluatio
Slide 38: Supplemental Information
Supplemental Information The following tables provide Enterprise Inkjet Systems Division Operational EBITDA (Segment Measure) as adjusted to reflect the results of the Prosper business being reclassed from discontinued operations to continuing operations for the twelve months ended December, 31, 201
Slide 39: Non-GAAP Measures: Footnote Explanations
Non-GAAP Measures Footnote Explanations: (1) As reported in the Consolidated Statement of Operations. (2) RED utilities variable interest entity, which was deconsolidated on December 31, 2016 (interest and depreciation of RED are included in the respective lines in the table). (3) Composed of intere
Slide 40: Thank You
Thank You
Eastman Kodak Company — Q1 2017 Earnings Presentation on 6ix