Eastman Kodak Company

Ladies and gentlemen, thank you for standing by. Welcome to the Eastman Kodak third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would like now to turn the conference over to your speaker today, Anthony Redding. Please go ahead.

Thank you and good afternoon, everyone. I'm Anthony Redding, Eastman Kodak Company's Chief Compliance Officer. Welcome to Kodak's third quarter 2023 earnings call. At 4.15 p.m. this afternoon, Kodak filed its Form 10-Q and issued its release on financial results for the third quarter of 2023. You may access the presentation and webcast for today's call at 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 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 these forward-looking statements include, among others, the risk, uncertainties, and other factors described in more detail in Codex filings with the U.S. 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 apply only 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 unanticipated events. In addition, the release just issued and the 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 Continenzo, Kodak's Executive Chairman and Chief Executive Officer, and David Bullwinkle, Chief Financial Officer of Eastman Kodak Company. 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 Continenza.

Welcome, everyone, and thank you for joining the third quarter 2023 investor call for Kodak. I am pleased with the continuing improvements reported in our company's results for the third quarter 2023. Our accomplishments have not come easy. The ongoing challenges that we face, including inflation, high interest rates, bank failures, labor shortages, supply issues, and now another new war. We have overcome these challenges and built a strong foundation by continuing to focus on our existing long-term strategic plan, which started almost five years ago. Improving our operations has been critical for us. The efficiency that we put in and investing in opportunities to leverage our strength in industrial manufacturing, drive smart revenue, and always put our customers first. As a result, we have delivered increased gross profit and operational EBITDA year over year for the fourth consecutive quarter and improvement in our cash performance during these very difficult times. It shows our investments that we are making are starting to deliver. I'm extremely proud of our remarkable ability to continue our momentum in the face of unprecedented headwinds. I'd like to thank our employees for their dedication, loyalty, and hard work, the resilience that they have shown in supporting our customers and our customers who stayed loyal to us. We made a commitment to them that we will try to be as efficient as we can because we can only win when they win. Some highlights from the third quarter. We continue to invest in long-term growth initiatives in our Advanced Materials and Chemical Group, known as AMC. We are seeing top line revenue growth, but more importantly, we're also seeing a much greater contribution to the net profit of the company. In our substrate coating businesses, we are looking to expand the capabilities of our existing production machine beyond prime foils. In our light blocking area, We are focused on entering the hospitality segment in applications such as room darkening, drapes, and curtains. In our test reagent initiatives, we are moving forward with the construction of a CGMP, which means current good manufacturing practices facility, which we intend to have operational mid-year 2025. The facility is intended to help meet the growing demand for FDA-certified test reagents made in the USA. And in our functional printing area, we are now ready to manufacture antennas for automotive windshield applications as an entry point into the transportation segment. It's important to note that these AMC initiatives are natural extensions of our unique strengths in material science and layering and coding and the technologies that we've developed over decades in the film business. They are great examples of how we can create new growth opportunities based on skills and infrastructure that are unique to Kodak. We also continue to see growing demand in our still in motion picture film business. We are committed to manufacturing film as long as we have demand from our customers. I'm proud of our role in continuing to make the statistic medium available to photographers, directors, filmmakers who love the unique look and quality of film. We have completed the placement of two leading-edge Kodak inkjet presses. We placed the first Ultra 520 press, which offers offset quality at unmatched production speeds, and the new Prosper 7000 Turbo, which is the world's fastest inkjet press. Our press portfolio is now moving into full production and we're excited about the rollout. As I have stressed frequently, we are committed to being the last major manufacturer standing in the plates business. In our opinion, plates are going away. There are billions of dollars of CapEx out there in which printing equipment and those offset presses are going to be used. We are continuing to support our customers in the printing business to make sure they have options whether they want to use plates on their offset presses or transition to digital. We are committed to support them on both sides of the equation. We want to help them convert to the digital transition over a long period of time. That way they can maximize the value of their current investment. We recently have seen a surge in competitors that used to manufacture in the U.S., importing plates from China and Japan. These plates are selling at an unfair low price. As a result, Kodak recently filed petitions with the U.S. Department of Commerce and the U.S. International Trade Commission requesting relief from unfair trade imports of aluminum lithographic printing plates from China and Japan. Our goal in taking this action is simple, to restore fairness in pricing and to have a level playing field so we can preserve U.S. manufacturing jobs and continue to serve our customers. It's vitally important that the U.S. not lose the last major manufacturer of these plates, because then we'll be subjected to only imports, and you're right back to where we were during the pandemic, having trouble with logistics and supply chain by not having locally sourced products. Turning to slide six, I'm going to give some highlights of the third quarter. we had a decline in revenue of $20 million, which reflects a conscious decision we are making to prioritize increased productivity, investment and innovation, and driving smart revenue. The trade-off was this strategy enabled us to increase our profit by 7 million, or 16%. When we look at the business and we look at our customers and we look at the dollars and the trades that we need to make in these difficult times, we will trade negative revenue or less profitable revenue for improvement in gross profit. That's something we've focused on over the last three, four years, and we will continue to do so. And part of that result is we had a cash increase of $29 million in the nine-month ending September 30th, 2023, compared with a decrease of $146 million in the prior year, an improvement of $175 million in cash flow. These improvements are encouraging, and evidence of our ability to continue making progress despite unfavorable business conditions never seen before. However, we recognize that the environment will remain difficult and there are more headwinds on the horizon. To continue building our momentum, we will stay committed to executing our long-term plan, investing in innovation, improving efficiency, and helping our customers stay profitable and productive. We only win when they win. I would now like to turn it over to Dave to discuss the third quarter 2023 financial results. Dave?