Eastman Kodak Company
Q3 2019 Earnings Call Transcript

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  • Operator:
    Ladies and gentlemen, thank you for standing by, and welcome to the Eastman Kodak Third Quarter 2019 Earnings Conference Call. At this time, all participants lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Bill Love. Thank you. Please go ahead, sir.
  • Bill Love:
    Thank you, Skyler. Good afternoon, everyone. I am Bill Love, Eastman Kodak Company’s Treasurer and Director of Investor Relations. Welcome to Kodak’s third quarter 2019 earnings call. At 4
  • Jim Continenza:
    Thank you, Bill. Welcome, everyone, and thank you for joining the third quarter investor call for Kodak. On September 1, 2019, the company established a strategic relationship in the People’s Republic of China with Lucky HuaGuang Graphics Company. The transaction includes the sale of Kodak’s offset printing plates facility in Xiamen, China, a supply agreement to help Kodak fulfill its customer demand and intellectual property agreement under which Kodak licenses its plates technology to HuaGuang to expand the market in China. This transaction will leverage the combination strengths of HuaGuang’s market share – leader market share and Kodak’s world-class technology. Together, we expect to accelerate the conversion of KODAK SONORA Process-Free Plates in China, Hong Kong, Taiwan and Macau. We’ll pause here for a minute. As we have been stating for the last couple of calls, we’re moving to one Kodak. We’re going to look at build it, buy it, partner, what makes the most sense for the company to help satisfy and serve our customers and establish leaderships in the market. We are thrilled about this combined opportunity.
  • Dave Bullwinkle:
    Thanks, Jim, and good afternoon. Today, the company filed its Form 10-Q for the quarter ended September 30, 2019, with the SEC. As always, I recommend you read this filing in its entirety. Before we begin, I would like to mention that we recently announced the retirement of Bill Love, Corporate Treasurer and Director of Investor Relations, effective January 6, 2020. Bill has made significant contributions to Kodak’s transformation and has been a valuable member of the finance leadership team. Congratulations, Bill.
  • Jim Continenza:
    Date, I’d also like to thank Bill. I’ve known Bill for several years. And when we went through our restructuring, he came out – I don’t know if it would have been possible without what he – the work he did. It was incredible. And the contributions he made to the company will never be forgotten. So Bill, thanks for everything. I want to personally thank you, and every shareholder should be thanking you also.
  • Bill Love:
    Thank you, both. I very much appreciate it.
  • Dave Bullwinkle:
    Matthew Ebersold, Assistant Treasurer; will assume the role of Corporate Treasurer, and Paul Dils, Chief Tax Officer; will assume the additional role of Director of Investor Relations. As Jim previously mentioned, on September 1, 2019, the company finalized the establishment of a strategic relationship with Lucky HuaGuang Graphics Company Ltd in the People’s Republic of China. The deal included the sale of Kodak’s offset printing plates facility in Xiamen, China, a supply agreement help Kodak fulfilled its customer demand and an IP agreement under which Kodak licenses its plates technology to HuaGuang to expand the market in China. This transaction will leverage the combined strength of HuaGuang’s market leadership and Kodak’s world-class technology, which, together, are expected to accelerate the conversion to KODAK SONORA Process-Free Plates in China, Hong Kong, Taiwan and Macau. On September 12, 2019, the company adopted a tax asset protection plan and adopted a complementary protective amendment to its certificate of incorporation. The purpose of these protections is to restrict and deter certain transfers of common stock in order to preserve the tax benefits of the company’s U.S. net operating losses and foreign tax credits. The protections will expire on November 15, 2019, when the risk of losing the tax benefits under applicable tax rules is significantly reduced. I will now share further details on the full company results, operational EBITDA and cash flow for the third quarter and nine-month period ending September 30, 2019. Please note the results of FPD have been reported as discontinued operations for the third quarter and year-to-date September 30, 2019, and the comparable 2018 periods due to the sale of the division. Additionally, certain amounts have been reclassified for the current and prior year periods due to assets held for sale reporting requirements related to the HuaGuang transaction. On Slide 5, as we reported in our earnings release, net loss for the third quarter of 2019 on a U.S. GAAP basis was $5 million compared to net income of $19 million in the prior year quarter. For the nine months ending September 30, 2019, the reported net income was $178 million compared with net loss of $2 million for the nine months ended September 30, 2018. Excluding the impact from the net gain on sale of the Flexographic Packaging Division – excuse me, of $5 million, workers’ compensation and legal reserve adjustments of $2 million and the related changes in the fair value for the derivatives embedded in the Series A preferred stock and convertible notes of $4 million, the net loss for the third quarter of 2019 was $4 million compared to net income of $4 million in the prior year quarter.
  • Operator:
  • Jim Continenza:
    Well, again, I’d like to thank everyone for joining the call, and we appreciate your support. Thank you, everyone. Have a good evening.
  • Operator:
    Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.

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