Business Wire | Aug 10, 2021 04:00PM EDT

Kodak Reports Second-Quarter 2021 Financial Results

Aug. 10, 2021

ROCHESTER, N.Y.--(BUSINESS WIRE)--Aug. 10, 2021--Eastman Kodak Company (NYSE: KODK) today reported financial results for the second quarter 2021, including consolidated revenues of $291 million and a year-over-year improvement in cash performance.

Second-quarter 2021 highlights include:

* Consolidated revenues of $291 million * GAAP net income of $16 million * The Company ended the quarter with a cash balance of $395 million

"Kodak's strong second-quarter performance reflects the impact of changes we've made and our continued focus on our core competencies and our long-term plan," said Jim Continenza, Kodak's Executive Chairman and CEO. "Over the last two years we have concentrated on our strengths as an industrial manufacturer, established a customer-first model, fixed our balance sheet and raised capital. The result is improved performance in all our businesses and a solid foundation."

For the quarter ended June 30, 2021, revenues were $291 million, an improvement of $78 million compared to the prior-year quarter. Kodak ended the second quarter with a cash balance of $395 million, an increase of $199 million from December 31, 2020. GAAP net income was $16 million for the second quarter, compared to a net loss of $5 million in the second quarter 2020. Operational EBITDA for the quarter was $10 million compared to negative $7 million in the prior-year quarter.

"I am encouraged by our financial performance for the quarter, which included year-over-year improvements in revenues and Operational EBITDA across all of our divisions," said David Bullwinkle, Kodak's CFO. "During the second quarter we used $6 million in cash, an improvement of more than $20 million compared to the prior-year quarter, driven by increases in revenue and profit. We will continue to focus on the execution of our long-term plan."

Revenue and Operational EBITDA by Reportable Segment Q2 2021 vs. Q2 2020

($millions) Q2 2021 Traditional Digital AdvancedActuals Printing Printing Materials & Brand Total Chemicals $ 169 $ 62 $ $ $ Revenue 54 3 288

Operational $ $ $ $ $ EBITDA * 6 - 1 3 10

Q2 2020 Traditional Digital AdvancedActuals Printing Printing Materials & Brand Total Chemicals $ 119 $ 52 $ $ $ Revenue 38 2 211

Operational $ $ ) $ ) $ $ )EBITDA * 1 (3 (7 2 (7

Q2 2021 vs. AdvancedQ2 2020 Traditional Digital Materials & Brand TotalActuals Printing Printing ChemicalsB/(W) $ $ 10 $ $ $ Revenue 50 16 1 77

Operational $ $ $ $ $ EBITDA * 5 3 8 1 17

Q2 2021Actuals onconstant Advancedcurrency ** Traditional Digital Materials & Brand Total^ vs. Q2 Printing Printing Chemicals2020ActualsB/(W) $ $ $ $ $ Revenue 43 8 15 1 67

Operational $ $ $ $ $ EBITDA * 6 2 7 1 16

* Total Operational EBITDA is a non-GAAP financial measure. The reconciliation between GAAP and non-GAAP measures is provided in Appendix A of this press release.

** The impact of foreign exchange represents the 2021 foreign exchange impact using average foreign exchange rates for the three months ended June 30, 2020, rather than the actual average exchange rates in effect for the three months ended June 30, 2021.

Eastman Business Park segment is not a reportable segment and is excluded from the table above.

About Kodak

Kodak is a global technology company focused on print and advanced materials & chemicals. We provide industry-leading hardware, software, consumables and services primarily to customers in commercial print, packaging, publishing, manufacturing and entertainment. We are committed to environmental stewardship and ongoing leadership in developing sustainable solutions. Our broad portfolio of superior products, responsive support and world-class R&D make Kodak solutions a smart investment for customers looking to improve their profitability and drive growth. For additional information on Kodak, visit us at kodak.com, follow us on Twitter @Kodak, or like us on Facebook at Kodak.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning Kodak's plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, liquidity, investments, financing needs and business trends and other information that is not historical information. When used in this press release, the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "predicts," "forecasts," "strategy," "continues," "goals," "targets" or future or conditional verbs, such as "will," "should," "could," or "may," and similar expressions, as well as statements that do not relate strictly to historical or current facts, are intended to identify forward-looking statements. All forward-looking statements, including management's examination of historical operating trends and data, are based upon Kodak's expectations and various assumptions.

Future events or results may differ from those anticipated or expressed in the forward-looking statements. Important factors that could cause actual events or results to differ materially from the forward-looking statements include, among others, the risks and uncertainties described in more detail in Kodak's Annual Report on Form 10-K for the year ended December 31, 2020 under the headings "Business," "Risk Factors," "Legal Proceedings" and/or "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources," in the corresponding sections of Kodak's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, and in other filings Kodak makes with the U.S. Securities and Exchange Commission from time to time, as well as the following: Kodak's ability to improve and sustain its operating structure, cash flow, profitability and other financial results; Kodak's ability to achieve cash forecasts, financial projections and projected growth; Kodak's ability to achieve the financial and operational results contained in its business plans; Kodak's ability to comply with the covenants in its various credit facilities; Kodak's ability to fund continued investments, capital needs and restructuring payments and service its debt and Series B Preferred Stock and Series C Preferred Stock; the impact of the global economic environment or medical epidemics such as the COVID-19 pandemic, including the restrictions and other actions implemented to fight the COVID-19 pandemic; the impact of the investigations, litigations and claims arising out of the circumstances surrounding the announcement by the U.S. International Development Finance Corporation in July 2020 of a potential loan to a subsidiary of Kodak to support the launch of a pharmaceutical initiative; the performance by third parties of their obligations to supply products, components or services to Kodak and the ability to address supply chain disruptions and continue to obtain raw materials and components available from single or limited sources of supply, which may be adversely affected by the COVID-19 pandemic; changes in foreign currency exchange rates, commodity prices, interest rates and tariff rates; Kodak's ability to effectively anticipate technology trends and develop and market new products, solutions and technologies; Kodak's ability to effectively compete with large, well-financed industry participants; continued sufficient availability of borrowings and letters of credit under Kodak's asset based credit facility and letter of credit facility, Kodak's ability to obtain additional financing if and as needed and Kodak's ability to provide or facilitate financing for its customers; the potential impact of cyber-attacks and other data security incidents that disrupt Kodak's operations; and Kodak's ability to effect strategic transactions such as acquisitions, strategic alliances, divestitures and similar transactions, or to achieve the benefits sought to be achieved from such strategic transactions.

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 apply only as of the date of this press release and are expressly qualified in their entirety by the cautionary statements included or referenced in this press release. 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, except as required by law.

APPENDICES

A. NON-GAAP MEASURES

In this second quarter 2021 financial results news release, reference is made to the following non-GAAP financial measures:

* Operational EBITDA; and * Revenues and Operational EBITDA on a constant currency basis.

Kodak believes that these non-GAAP measures represent important internal measures of performance. Accordingly, where they are provided, it is to give investors the same financial data management uses with the belief that this information will assist the investment community in properly assessing the underlying performance of Kodak, its financial condition, results of operations and cash flow.

Kodak's segment measure of profit and loss is an adjusted earnings before interest, taxes, depreciation and amortization ("Operational EBITDA"). Operational EBITDA represents the income from continuing operations excluding the provision for income taxes; non-service cost components of pension and OPEB income; depreciation and amortization expense; restructuring costs; stock-based compensation expense; consulting and other costs; idle costs; other operating income, net; interest expense; and other charges, net.

The change in revenues and Operational EBITDA on a constant currency basis, as presented in this financial results news release, is calculated by using average foreign exchange rates for the three months ended June 30, 2020, rather than the actual average exchange rates in effect for the three months ended June 30, 2021.

The following table reconciles the most directly comparable GAAP measure of Net Income (Loss) to Operational EBITDA and Operational EBITDA on a constant currency basis for the three months ended June 30, 2021 and 2020, respectively:

(in millions) Q2 2021 Q2 2020 $ ChangeNet Income $ 16 $ (5 ) $ 21 (Loss) ) ) - All other (1 (1

Depreciation )and 8 10 (2amortizationRestructuring - )costs and 1 (1other ^(1)Stock based - compensation 1 1

Consulting and other 4 1 3costs ^(2)Idle costs ^ - )(3) 1 (1

Otheroperatingincome, net,excluding ) - )income from (6 (6transitionservicesagreement ^(4)Interest expense ^(1) 10 4 6

Pensionincome excluding (26 ) (27 ) 1 service costcomponent^(1)Other )charges, net 1 8 (7^(1)Provision for income taxes 3 1 2^(1)Operational $ 10 $ (7 ) $ 17 EBITDAImpact of ) )foreign (1 (1exchange ^(5)OperationalEBITDA on a $ 9 $ (7 ) $ 16 constantcurrencybasis Footnote Explanations:

* As reported in the Consolidated Statement of Operations. * Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives and investigations. * Consists of third-party costs such as security, maintenance, and utilities required to maintain land and buildings in certain locations not used in any Kodak operations and the costs, net of any rental income received, of underutilized portions of certain properties. * $2 million of income from the transition services agreement related to the sale of the Flexographic Packaging Business was recognized in the three months ended June 30, 2020. No income has been recognized in 2021. The income was reported in Other operating income, net in the Consolidated Statement of Operations. Other operating income, net is typically excluded from the segment measure. However, the income from the transition services agreement was included in the segment measure. * The impact of foreign exchange is calculated by using average foreign exchange rates for the three months ended June 30, 2020, rather than the actual average exchange rates in effect for the three months ended June 30, 2021. B. FINANCIAL STATEMENTS

EASTMAN KODAKCOMPANYCONSOLIDATEDSTATEMENT OFOPERATIONS(Unaudited)(in millions) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020

RevenuesSales $ 234 $ 163 $ 443 $ 373

113 107 Services 57 50

Total revenues 291 213 556 480

Cost ofrevenuesSales 204 159 389 350

Services 39 33 79 73

Total cost of 243 192 468 423 revenues Gross profit 48 21 88 57

Selling, general and 42 34 88 82 administrativeexpensesResearch and development 8 8 16 17costsRestructuring costs and - 1 1 8otherOther ) ) ) )operating (6 (3 (7 (10income, netEarnings(loss) fromcontinuingoperationsbeforeinterestexpense, ) ) )pension income 4 (19 (10 (40excludingservice costcomponent,other charges(income), netand incometaxesInterest expense 10 4 14 8

Pension income excluding (26 ) (27 ) (51 ) (53 )service costcomponentOther charges )(income), net 1 8 1 (45

Earnings(loss) from continuing 19 (4 ) 26 50 operationsbefore incometaxesProvision for 166 income taxes 3 1 4

Net income $ 16 $ (5 ) $ 22 $ (116 )(loss) The notes accompanying the financial statements contained in the Company's second quarter 2021 Form 10-Q are an integral part of these consolidated financial statements.

EASTMAN KODAK COMPANYCONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)(in millions) June 30, December 31, 2021 2020

ASSETSCash and cash equivalents $ 395 $ 196

Trade receivables, net of allowances of $9 and $10, 174 177 respectively Inventories, net 234 206

Other current assets 43 46

Current assets held for sale 2 2

Total current assets 848 627

Property, plant and equipment, net of accumulated depreciation of $438 148 152 and $430, respectively Goodwill 12 12

Intangible assets, net 36 39

Operating lease right-of-use assets 49 48

Restricted cash 66 53

Other long-term assets 375 317

TOTAL ASSETS $ 1,534 $ 1,248

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITYAccounts payable, trade $ 145 $ 118

Short-term borrowings and current portion of long-term debt 2 2

Current portion of operating leases 18 12

Other current liabilities 144 164

Total current liabilities 309 296

249 Long-term debt, net of current portion 17

Pension and other postretirement liabilities 391 406

Operating leases, net of current portion 43 49

Other long-term liabilities 219 212

Total liabilities 1,211 980

Commitments and Contingencies (note 8) Redeemable, convertible preferred stock, no par value, $100 per share 193 191 liquidation preference Equity Common stock, $0.01 par value - -

Additional paid in capital 1,167 1,152

) )Treasury stock, at cost (10 (9

Accumulated deficit (598 ) (620 )

Accumulated other comprehensive loss (429 ) (446 )

130 Total shareholders' equity 77

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY $ 1,534 $ 1,248

The notes accompanying the financial statements contained in the Company's second quarter 2021 Form 10-Q are an integral part of these consolidated financial statements.

EASTMANKODAKCOMPANYCONSOLIDATEDSTATEMENT OFCASH FLOWS(Unaudited)(inmillions) Six Months Ended June 30, 2021 2020

Cash flowsfromoperatingactivities:Net income $ 22 $ (116 )(loss) Adjustmentsto reconcileto net cashused inoperatingactivities:Depreciation 16 20 andamortizationPension (42 ) (43 )incomeChange infair valueof embeddedderivativesin the Series A, - (49 )Series B andSeries C PreferredStock andConvertibleNotesNet gain on (9 )sales of -assetsAsset 3 impairments -

Stock based 4 1 compensationNon-cashchanges in (3 ) workers' -compensationreservesProvision 160 for deferred -income taxesDecrease in 1 64 tradereceivablesIncrease in (30 ) (17 )inventoriesIncrease in 27 (50 )tradepayablesDecrease inliabilitiesexcluding (20 ) (31 )borrowingsand tradepayablesOther items, 4 3 netTotal (43 ) 52 adjustmentsNet cashused in (21 ) (64 )operatingactivitiesCash flowsfrominvestingactivities:Additions to (5 ) (9 )propertiesNet proceeds from sales - 2 of assets/businessesNet proceeds from return - 2 on equityinvestmentNet cashused in (5 ) (5 )investingactivitiesCash flowsfromfinancingactivities:Net proceeds from Term 215 - Loan CreditAgreementNet proceeds from 25 - ConvertibleNotesNet proceeds from Series 99 - C PreferredStockProceeds 10 from sale of -common stockRepurchase of Series A (100 ) - PreferredStockDebt (2 ) issuance -costsPreferredstock cash (5 ) (6 )dividendpaymentsTreasury (1 ) stock -purchasesNet cashprovided by 241 (6 )(used in)financingactivitiesEffect ofexchangerate changeson cash, (2 ) (3 )cashequivalentsandrestrictedcashNet increase(decrease)in cash,cash 213 (78 )equivalentsandrestrictedcashCash, cashequivalentsand 256 290 restrictedcash,beginning ofperiodCash, cashequivalentsand $ 469 $ 212 restrictedcash, end ofperiod The notes accompanying the financial statements contained in the Company's second quarter 2021 Form 10-Q are an integral part of these consolidated financial statements.

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CONTACT: Media Contact: Kurt Jaeckel, Kodak, +1 585-490-8646, kurt.jaeckel@kodak.com

CONTACT: Investor Contact: Paul Dils, Kodak, +1 585-724-4053, shareholderservices@kodak.com