Jim Continenza - Executive Chairman Dave Bullwinkle - Chief Financial Officer Paul Dils - Chief Tax Officer, Director of Investor Relations.

Ladies and gentlemen, thank you for standing by and welcome to the Eastman Kodak Q4 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. [Operator Instructions] Please be advised that today’s conference may be recorded.

[Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Paul Dils. Thank you. Please go ahead, sir..

Thank you and good afternoon everyone. I am Paul Dils, Eastman Kodak Company’s Chief Tax Officer and Director of Investor Relations. Welcome to Kodak’s fourth quarter 2019 earnings call. At 4:15 p.m. this afternoon Kodak filed its annual report on Form 10-Q and issued its release on financial results for 2019.

You may access this presentation and the webcast for today’s call on our Investor Center at investor.kodak.com. During today’s call we will 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 those 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 risks, uncertainties and other factors described in more detail in Kodak’s filings with the U.S. Securities and Exchange Commission from time to time.

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 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.

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. In addition, this release just issued and the presentation provided contains certain measures that are deemed non-GAAP measures.

Reconciliations to the most directly comparable GAAP 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 Continenza, Kodak’s Executive Chairman; and Dave Bullwinkle, Chief Financial Officer of Kodak. I will now turn the call over to Jim..

Deep industry expertise, decades of experience, a complete portfolio of superior products that help increase productivity and drive growth and innovation. Introductions of new products and capabilities, you'll see over the next six to 12 months.

We are launching several new products in the digital line and also in the SONORA line there'll be an enhancement, including the previously announced UTECO Sapphire EVO press machine, which is a game changer and it's a co-branded machine between UTECO and Kodak.

It’s a great example of how Kodak is helping to lower cost and drive efficiency and providing innovation. The first flexible packaging for us uses continuous inkjet technology. There will be another machine also coming out, and this will be a wide format.

So we're using both stream and Ultrastream heads, environmentally friendly utilization of industry-compliant water-based pigments, inks, allowing excellent print for various qualities of substrates, leaving the door wide open for applications such as food, beverage and personal care. Again, this is ground breaking.

When you look at how long it takes to change the packaging industry from plates on a different run, it's literally a PDF file and the quality is unbelievable and the speeds are getting better and better.

We are excited about the breakthrough, we put a lot of money into it and so has UTECO who has been a great partner and we've placed a few of the machines and they've done very well out of the shoot. We’re well aware off the coronavirus and the business impacts. We are taking everything to follow best practices and safety for our employees.

Elisa Goldberg [ph] is on this call. She's been leading in-charge of the company, if you have any questions later. But we are addressing it and we are on top of it, we get calls daily. We get up to the minute notifications and changes as you guys know, and we're going everything we can do to keep our employees safe and our customers and our partners.

With that, I’m going to turn it over to Dave to discuss the 2019 financial results.

Dave?.

Thanks Jim and good afternoon. Today the company filed its Form 10-K for the year ended December 31, 2019 with the Securities and Exchange Commission. As always, I recommend you read this filing in its entirety.

The company generated positive cash flow in the fourth quarter of 2019, and had breakeven cash flow for the full year 2019, which reflects benefits from working capital improvements and individual transactions which occurred during the year. The company will remain focused on cash generation in 2020.

I will now share further details on the full company results, operation of EBITDA and cash flow for 2019. Please note the results of Flexographic Packaging Division have been reported as discontinued operations in 2019 and the comparable 2018 periods due to the sales division in April of 2019.

Additionally, certain amounts have been reclassified for the curtain and prior year periods due to assets held for sale reporting requirements related to the HuaGuang transaction. On slide seven, as we reported in our earnings release, net income for 2019 on a U.S. GAAP basis was $116 million compared to a net loss of $16 million in 2018.

2019 results include a net gain on sale of the FPD business of $214 million, non-cash changes in workers compensation and legal reserve adjustments of $3 million, expense of $4 million related to trade name impairments and the related changes in the fair value for the derivatives embedded in the Series A Preferred Stock and convertible notes of $42 million.

The 2018 results include $11 million associated with non-cash changes in workers compensation and legal reserves and the benefits of $16 million related to the Korean withholding tax refund. The 2018 results also include expense of $13 million related to a trade name impairment, driven by the sale of FPD.

Excluding the impact of these current and prior year item, the 2019 adjusted net loss was $49 million compared to a loss of $30 million in the prior year. Turning to slide eight, for 2019 we reported revenues of $1.242 billion compared to $1.320 billion in the prior year for a decline of $78 million.

Adjusting for the unfavorable impact of foreign exchange of $27 million and license revenue received from the HuaGuang transaction of $13 million. Revenue declined by $64 million compared to the prior year. Operational EBITDA for 2019 was $12 million compared to $1 million in 2018.

Excluding the favorable impact of foreign exchange in aluminum costs, license revenue received from the HuaGuang transaction and adjusting for the increase in workers compensation reserves, operational EBITDA decreased by $8 million from the prior year. We delivered strong full year performance in our key growth engines.

On a year-over-year basis volumes for SONORA Process-Free Plates grew by 22% and the annuity revenues for the PROSPER grew by 5%. We also continue to invest in future growth areas, Ultrastream and advanced materials. Moving on to the company cash performance presented on slide nine.

Cash, cash equivalents and restricted cash for 2019 increased by $23 million compared to a decrease of $102 million in the prior year. Restricted cash and cash included in assets held for sale increased by $23 million as compared to a decrease of $7 million in prior year.

The current year includes $14 million for the establishment of an escrow in China to secure various ongoing obligations under the agreements for the strategic relationship with HuaGuang, $19 million funding related to the ABL primarily due to the sale of FPD, remaining cash prepayment of $3 million received in the U.S.

for services and products provided by the company to the buyer of FPD, which was secured by a corresponding restricted cash deposit in China, offset by a decrease of $15 million of cash included in assets held for sale as of the prior year-end.

There was no change in cash and cash equivalents in 2019 compared to a net decrease of $95 million in the prior year. We continue to evaluate opportunities to eliminate or release restricted cash in 2020 and to benefit from our cash positions around the world. As of the year end 2019, restricted cash globally is $57 million.

During 2019 cash provided by operating activities was $12 million, driven primarily by cash use from net earnings of $42 million, offset by cash generated from balance sheet changes of $54 million, including a change in working capital of $57 million and a decrease in other liabilities of $10 million.

Accounts payable increased by $25 million, inventory decreased by $11 million and accounts receivable decreased by $21 million. Cash provided by investing activities was $311 million during 2019 as compared to the use of $22 million in the prior year. The current year included proceeds from the sale of FPD and the HuaGuang transaction.

Cash used in financing activities was $298 million for 2019 compared to a use of $11 million in the prior year. The current year included $395 million of cash used for the full repayment of the Senior Secured First Lien Term Credit Agreement, partially offset by the issuance of Secured Convertible Notes of $100 million.

Finally, as disclosed in our Form 10-K, we remain in compliance with the covenants under our credit agreement. We will now open the call to your questions. Operator, please remind participants of the instructions to ask questions. .

Operator:.

Great! Well, I’d like to thank everyone for dialing in. Again, it was one of our best years in a long time and it’s starting the foundation of the new Kodak and we are excited on the path we are going. So thanks again for dialing in. We appreciate it. Take care and stay safe.

Good Bye!.

Ladies and gentleman, this concludes today's conference call. Thank you for participating. You may now disconnect..