Earnings Labs

Eastman Kodak Company (KODK)

Q3 2024 Earnings Call· Tue, Nov 12, 2024

$13.27

+2.24%

Key Takeaways · AI generated
AI summary not yet generated for this transcript. Generation in progress for older transcripts; check back soon, or browse the full transcript below.

Same-Day

-16.55%

1 Week

-4.36%

1 Month

+23.64%

vs S&P

+22.41%

Transcript

Operator

Operator

Good day and thank you for standing by. Welcome to the Eastman Kodak Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Anthony Redding. Please go ahead.

Anthony Redding

Management

Thank you and good afternoon, everyone. I am Anthony Redding, Eastman Kodak Company’s Chief Compliance Officer. Welcome to Kodak's third quarter 2024 earnings call. At 4.15 p.m. this afternoon, Kodak filed its Form 10-Q and issued its release on financial results for the third quarter of 2024. You can access the presentation and webcast for today's call on our website and our Investor Center at investor.kodak.com. During today's call, we will be making certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based upon Kodak’s expectations and various assumptions. Future events or results may differ from those anticipated or those expressed in the forward-looking statements. Important factors that could cause actual events or results to differ materially from these forward-looking statements include, among others, the risk, uncertainties, and other factors described in more detail in Kodak’s filings with the U.S. Securities and Exchange Commission from time-to-time. There may be other factors that may cause Kodak’s actual results to differ materially from the forward-looking statements. All forward-looking statements attributable to Kodak or persons acting on its behalf only apply as of the date of the presentation and are expressly qualified in their entirety by the cautionary statements included or referenced in the presentation. Kodak undertakes no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In addition, the release just issued and the presentation provided contains certain measures that are deemed non-GAAP measures. Reconciliation to the most directly comparable GAAP measures have been provided with the release and within the presentation on our website in our Investor Center at investor.kodak.com. Reconciliation to the most directly comparable gap measures have been provided with the release and within the presentation on our website in our Investor Center at investor.kodak.com. Speakers on today's call are Jim Continenza, Executive Chairman and Chief Executive Officer of Eastman Kodak; and David Bullwinkle, Chief Financial Officer and Senior Vice President of Eastman Kodak. We will not be holding a formal Q&A during today's call. As always, the Investor Relations team is available for follow-up. I will now turn the call over to Jim.

Jim Continenza

Chairman

Welcome everyone and thank you for joining the third quarter 2024 investor call. We continue to be committed to execute in our long-term plan. We continue to invest in innovation, increase operational efficiency, focus on smart revenue. We say focus and invest in innovation, let's be clear, advanced material and print is what we do today. But inside of that is digital print, traditional print, advanced materials and chemicals, film, motion picture film, Eastman Business Park, brand licensing, and other large investments have been building out of our cGMP clean lab including the reagent facility. We're going to keep investing in battery technology. It's one of our core skill sets of substrate coating. So as I walk you through who we are, what we are, let's get into the numbers. Revenue is up $261 million for the third quarter of 2024 versus $269 million for the third quarter of 2023. The decline has slowed and right where we expected it to be. So it's right within expectations. When we look at the gross profit, we're coming in quarter at 17% in 2024 versus 19% for the third quarter 2023. The numbers are strong and let me tell you where we're at on this. When I look at the impact that we had on our plates business from jumping from China and Japan over the last several years, it has drove the other U.S. manufacturers out of America. When we looked at what happened with those tariffs and the pressure put on, we fought hard and automated and invested to keep these jobs in America and fight for the U.S. printers. And we're going to cover that tariff later on in this discussion. So when I look at gross profit at 17%, it's been a hard battle considering they were getting…

David Bullwinkle

Chief Financial Officer

Thanks Jim and good afternoon. This afternoon the company filed its Form 10-Q for the quarter ended September 30, 2024 with the SEC. As I always do, I recommend you read this filing in its entirety. I will share details on the full company results, operational EBITDA and cash flow for the third quarter and nine months ending September 30, 2024. The company's results reflect the continued focus on executing against our priorities and long-term plan, including driving smart revenue and aligning with the right customers, pricing rationalization, cost reductions, launching new products, and investing in innovation and information technology systems. The company's financial results are within our expectations at this point in our long-term strategy and for the current year. On slide seven, reported revenues of $261 million for the third quarter of 2024, compared to $269 million in the prior year quarter, a decrease of $8 million or 3%. The decline in revenues slowed notably when compared to recent quarters, reflecting our ongoing focus on driving smart revenue and strong profitability. On a constant currency basis, revenue declined by $9 million, compared to the prior year quarter. Gross profit decreased by $5 million or 10% when compared to the prior year quarter. Gross profit for the current year quarter was unfavorably impacted by a net change in employee benefit reserves of $3 million, an inventory reserve adjustment of $4 million in the Electrophotographic Printing Solutions business, and higher aluminum costs of $5 million. Foreign exchange had no impact on gross profit in the current year quarter. Our gross profit percentage was 17% in the third quarter of 2024, compared to 19% in the prior year quarter, unfavorably impacted by the factors previously noted. On a U.S. GAAP basis, we reported net income of $18 million for the third…

Jim Continenza

Chairman

Thank you, Dave. Our ongoing investments are going to continue. We continue to innovate. None of this is going to change. We're staying to our plan. We're going to keep investing in AMC, our growth initiatives and our future, layering, coding, and taking advantage of our skillsets. I was just up in Rochester and we have a massive large apprentice program four years of training and learning and dedication and watching them graduate and come into our workforce, you know full-time and highly skilled. I'm so proud of them that made it through because it's a hard, hard thing to do, right? As we continue to increase jobs. So we're going to keep investing in those things we talked about and to make it clear, we're going to keep investing in battery technology. It's one of our core skillsets is substrate coating. And we're going to continue to invest in reagents in a clean lab facility. This is where we're going. I want to thank our customers for staying loyal to us, helping us, supporting us, and help driving us bringing Kodak back to where it needs to be. And more importantly, need to thank our employees because this is tough times and they continually exceed the expectations that we put on them and the quality and the levels of the products that they develop and sell. I want to thank everyone for dialing in your interest in Kodak and letting you know we're doing everything we can to help drive the value back in the business.

Operator

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Q -

Management