Eastman Kodak Company

Thank you for standing by and welcome to the Eastman Kodak's Q4 2022 Earnings Conference Call. At this time, all participants are on a listen-only mode. As a reminder, today's call is being recorded. I would now like to call on to your host, Mr. Paul Dills. Please go ahead.

Thank you and good afternoon, everyone. I am Paul Dills, Eastman Kodak Company's Chief Tax Officer and Director of Investor Relations. Welcome to Kodak's fourth quarter and full year 2022 earnings call. At 4.15 p.m. this afternoon, Kodak filed its Form 10-K and issued its release on financial results for the fourth quarter and full year 2022. You may access the presentation and webcast for today's call on our Investor Center at investor.kodak.com. During today's call, we'll be making certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based upon Codex 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 that differ materially from these forward-looking statements include, among others, the risks, uncertainties, and other factors described in more detail in CODAC's filings with the US Securities and Exchange Commission from time to time. There may be other factors that may cause CODAC's actual results to differ materially from the forward-looking statements. All forward-looking statements attributable to CODAC or persons acting on its behalf only apply as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements included or referenced in this presentation. CODAC 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 an unanticipated event. In addition, the release just issued and presentation provided contains certain measures that are deemed non-GAAP measures. Reconciliations 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 Contonanza, Kodak's Chief Executive Officer and Chairman, and David Bonewinkle, Chief Financial Officer of 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.

Welcome, everyone, and thank you for joining the year-end 2022 investor call for Eastman Kodak. I'm excited to talk to the transformation we've made over the last four years and the journey and the results are starting to follow the efforts that we've taken as a team. I'm very pleased with the company's fourth quarter and full year performance. We continue to see the effects of our long-term strategy we put in place four years ago. and the actions we've taken thus far. These actions have repositioned the company, enabling us to focus on initiatives that drive positive results and which continue to drive smart revenue and support our plan to return Kodak to sustainable, profitable growth. Our past actions include stabilizing our balance sheet, allowing us to focus on overall business model, customers and growth initiatives, If you recall, when we went out and raised initial capital, they were to reinvest in these initiatives and the businesses you see today. Recognizing one codec and focusing on our core competencies in print, advanced materials, and chemicals, providing environmentally sustainable solutions, and turning the business focus on innovation, growth, and smart revenue. In 2022, our priorities included Continue to navigate through the ongoing global economic impacts. Like many other companies, Kodak is experiencing supply chain disruptions, shortages in materials and labor, and increased cost, labor, materials, distribution, shipping, and effects. Despite the above shortages and cost increases, we have taken steps to ensure uninterrupted supply for our customers, including increasing safety stock, and building inventories to help our customers stay productive and profitable. We only win when our customers win. Improving our cost controls resulting in reduction of operating expenses and implemented price actions that realize the value of our offerings. Combining these actions with improved inventory management, operational excellence has resulted in improved cash flow. We continue to invest in initiatives including updating our infrastructure, our facilities for better efficiency throughout the company to help drive our advanced materials and chemicals group. These actions continue to provide positive momentum in 2022 and we expect to continue in 2023. Turning to slide six, performance highlights for the fourth quarter include revenue decrease of 2 million or 1% compared to the prior year quarter. When excluding the impact of foreign exchange, revenue increased 17 million or 6% compared to the prior year quarter. Our focus on smart revenue, pricing, cost reduction, customer focused initiatives have been the priority for the team for the entire year and have resulted in significant improvements. Growth profit increased 10 million or 30% compared to the prior year quarter or 14 million excluding foreign exchange, an increase of 42%. Our gross profit percentage was 14% in quarter four 2022 compared to 11 in fourth quarter 2021. Performance highlights for the full year 2022 include we have recognized consecutive years of revenue growth for the first time in decades. revenues increased $55 million or 5% compared to the prior year. When excluding the impact from foreign exchange, revenue increased $125 million or 11% compared to the prior year. Gross profit improved $6 million or 4% when compared to the prior year. Excluding the impact of foreign exchange, gross profit improved $22 million or 13% compared to the prior year. Our gross profit percentage was 14% for the full year of 2022, flat one compared to 2021. Despite rising costs and difficult macro economic conditions, this is the result of many actions our team has taken to mitigate the effects of a global economy, including cost cutting efforts and implementing smart revenue actions. Turning to slide seven, we continue to invest in innovation and have launched two key print products, which are at the leading edge of digital technology. I am pleased to let you know that we are now releasing the Prosper Ultra 520 Digital Press, which delivers offset-like print quality at production speed, and the Prosper 7000 Turbo Digital Press, the world's fastest inkjet press. We are pleased to announce that we have two verbal commitments, one for the Prosper Ultra 520 digital press and one for the Prosper 7000 Turbo. Codec debuted the new Prosper Ultra 520 press and our new Chrotochrome inks at Hunkler Innovation Day's print industry event. Hunkler is a premier industry showcase of innovation in digital print and finishing. We received an extremely positive reaction from our customers and prospects who are excited about the new press's ability to increase productivity by delivering offset quality at 150 meters per minute. These groundbreaking products have helped bring digital print to the tipping point where it should be considered as a compliment to traditional print in virtually every print shop. Digital, especially our inkjet technology, now provides printers the ability to offer customers offset-like print quality while mitigating the supply and cost risk of traditional printed plates and eliminating the significant carbon footprint associated with manufacturing and distributing these items. Just to be clear what I stated earlier, the digital print is not a total replacement for offset. We'll continue to manufacture plates and CTPs and supply in our customers. It is a mitigation of risk and a new technology to help drive new business at lower cost. As discussed in our prior calls, we are also working on a new initiative within the AMC group to leverage our deep experience in chemistry and strength in layering and coding on multiple substrates that come from over a century of experience in film manufacturing. We are committed to changing the company's culture to focus on customer first, promote teamwork to support our customers, and encourage bold and courageous actions to simplify and standardize processes throughout the company, especially in support functions. We are investing in modernization of our IT infrastructure. In January 2023, we finalized the upgrade of SAP P20, our ERP system. The upgrade is a huge step forward in modernizing our infrastructure reflecting our commitment to long-term investment in Kodak and serving our customers' needs. Our goal is to build on the momentum we've generated to continue our transformation in 2023. I will now turn it over to Dave to discuss our 2022 financial results.