Eastman Kodak Company
Q2 2019 Earnings Call Transcript

Published: 9 Aug 2019

[Operator:]

Good day, ladies and gentlemen, and welcome to the Eastman Kodak Q2 2019 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 follow at that time. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Bill Love. You may begin.

[Bill Love:]

Thank you, and good afternoon, everyone. I am Bill Love, Eastman Kodak Company's Treasurer and Director of Investor Relations. Welcome to Kodak's second quarter 2019 earnings call. At 4

[Jim Continenza:]

Thank you, Bill. Welcome, everyone. Thank you for joining the second quarter investor call for Kodak. Turning to slide 4, I would like to start by discussing the progress we have made on several significant initiatives to strengthen the company. As mentioned on our last call, the company completed the sale of Flexographic Packaging Division in the second quarter to use the proceeds to repay a significant portion of the term loan outstanding under the company's senior secured credit agreement. Additionally, outstanding loan under the company's senior secured First Lien Term Credit Agreement. Additionally, the company calls on the issuance and sale of its secured convertible notes due 2021 allowing the company to repay in full the remaining term loan under the senior secured first learn term credit agreement.

[David Bullwinkle:]

Thanks, Jim, and good afternoon. Today the company filed its Form 10-Q for the quarter ended June 30, 2019 with the Securities and Exchange Commission. As always, I recommend you read this filing in its entirety. As Jim mentioned, the company completed the sale of its Flexographic Packaging Division in the second quarter. The net Proceeds from the transaction were use to repay $312 million of our outstanding first lien term debt. Additionally, the company closed on the issuance and sale of $100 million area principal amount of its secured convertible notes due in November of 2021 to funds managed by Southeastern Asset Management. Concurrent with the closing of the convertible notes issuance, the company repaid in full the approximately $83 million of remaining first lean term debt.

[Jim Continenza:]

Thanks, Dave. I don’t have anything else, are there other questions. We might turnover to the questions Dave.

[David Bullwinkle:]

So, operator could you please remind people of the instructions to ask questions.

[Operator:]

Our first question is from Jeremy Chang, Investor. Your line is now open.

[Unidentified Analyst:]

Hi. So I just got a quick question. Even with a key product lines achieving strong year-over-year growth the newly issued $100 million worth of secured convertible notes, interest payments, lease and purchase obligations and preferred dividends coming due between now and 2021 worries me about strengthening the balance sheet. Really just means taking on heavier amounts of debt and mainly deferring debt obligations. How do you plan on generating enough cash to fund these continued net operating losses. And do you think that Kodak will face liquidity issues before them?

[Jim Continenza:]

So we continue to cut costs. We've been doing and continue to consolidate and stay focused, right. We're going to continue to try to sell our products, launch new products get more focused around our customers and some more efficient that's one. Two, cut cost in our business by redundancies that we have. And also, as we get closer as you start generating cash, we'll go to the market when necessary and if needed, right, to seek another form of capital and change our debt structure, but we have to generate cash and continue to generate cash, and that's step one. It's all about making money.

[Unidentified Analyst:]

Okay. Thank you for your response.

[Operator:]

Thank you. At this time I'm showing no further questions. I would like to turn the call back over to Jim Continenza for closing remarks.

[Jim Continenza:]

I want to thank the person for that question because that is the absolute right question and the question that we focus on every single day since I've been here day one; delever, strengthen the balance sheet, get healthy, and operate your way out of the business. Because you can get there by just selling assets and burning money, so we will continue to take expense out of the business and become lean and profitable and continue with celebrate our profits and generate free cash flow. So, you'll be seeing more and more of this and we see at an accelerated path. That was a great question and it's exactly what we focus on every day. And we have the same conversations over and over. So, that was a great question. And that's our focus and we have a lot of other things that were going on the business that really we shouldn't be doing. We can't afford to fund. When you're not making money, you can't be funding things that don't make money. And we need to stop those activities and focus on the things that make money. And that means you're a smaller profitable business and you are a smaller profitable business and that's what we're going to become. Just want to be very clear. So, thanks everyone for dialing. I appreciate the question and we have a lot of work ahead of us still. We've done is fixing of the balance sheet and some of the customer focused pieces. As you have seen though and we've got a lot of feedback from our customer, we've gotten very close to them in the last five months. They appreciate the direction we're going and we continue to focus on them and meeting their needs. So, you'll be seeing more and more of that and you'll be seeing our revenues increasing because we are definitely getting aligned with our customers. So, thanks everyone.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.