Eastman Kodak Q4 results fail to impress the street

Shares of the imaging firm Eastman Kodak (KODK) dropped above 6% in the after-hours trading post the disappointing fourth-quarter results. The company failed to meet the outlook it provided last quarter for the fiscal 2018 period.

In addition, this is the first quarter Kodak is reporting its results under the helm of new CEO Jim Continenza. After a five-year stint, Jeff Clarke resigned from the company last month. Kodak’s stock price started off on a positive note this year increasing 19% post the new CEO appointment.

For the fiscal 2018 period, revenues dipped 4.4% to $1.32 billion last year hurt by the drop in sales from its largest division Print Systems Division (PSD). All divisions reported a modest dip or flat revenues over the last fiscal period. Operational EBITDA for the year nosedived 90% to $1 million due to decreased margins from PSD. It’s worth noting that last quarter Kodak forecasted fiscal year revenues to be between $1.475 billion and $1.525 billion.

Last quarter, Kodak reported revenues of $366 million, a modest drop from last year mainly impacted by lower sales from the Print Systems. Net income stood at $19 million recovering from the $46 million loss reported last year.

On a GAAP basis, net loss for the year stood at $16 million compared to $94 million profit in the last fiscal period. However, last year the company reported income tax-related benefits of $120 million which aided in improved earnings.

Commenting on the next fiscal’s strategies, CEO Continenza stated, “Our priorities will be to increase operational efficiency and focus on core competencies to achieve our growth objectives.”

Eastman Kodak’s cash flow continues the declining trend. At the end of the fiscal year, cash balance decreased 28% to $246 million. With most of the divisions reporting flat to decline in sales growth, the company needs to come up with a solid strategy to report stable revenues in the next fiscal.

Kodak got the nod from the Federal Trade Commission (FTC) for selling its Flexographic Packaging (FP) unit to private equity firm Montagu Private Equity in December. The deal was valued at $390 million, and the proceeds would be used to reduce the debt and strengthen the balance sheet.

The company did not provide any updates regarding its cryptocurrency KODAKCoin launch. Last year, Kodak licensed its brand to Ryde Holding (previously known as Wenn Digital) to launch KODAKOne, an image rights platform. The platform helps the owners to better manage their images and look for infringements using artificial intelligence to track images and monetize it better. In addition to the platform, Ryde also plans to launch KODAKCoin to be integrated with the KODAKOne platform.

KODAKOne’s post-licensing portal was out for private beta in October and Ryde claims to have generated $1 million as licensing claims in January. KODAKCoin is slated to be launched in June timeframe and will be restricted to accredited investors. Investors need to wait and see how Kodak is going to benefit from the platform and bitcoin venture in the impending quarter.

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