Good day, ladies and gentlemen, and welcome to the Eastman Kodak Q1 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. And I would now like to introduce your host for today's conference, Mr. Bill Love. Sir, you may begin.

Thank you, Sandra and good afternoon, everyone. I am Bill Love, Eastman Kodak Company's Treasurer and Director of Investor Relations. Welcome to Kodak's first quarter 2018 earnings call. At 4:15 p.m. this afternoon, Kodak issued its release on financial results for the first quarter 2018 and will file its quarterly report on Form 10-Q tomorrow. You may access the presentation and 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 these 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 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 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. 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 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 Jeff Clarke, Chief Executive Officer of Kodak and Dave Bullwinkle, Chief Financial Officer of Kodak. Jeff will provide some opening remarks, a review of Kodak's first quarter financial results, and divisional performance. Then Dave will summarize net earnings for the first quarter, provide an update on operational EBITDA and cost reductions and review first quarter cash performance before we open it up to questions. I will now turn the call over to Kodak's CEO, Jeff Clarke.

Thanks Bill. Welcome everyone and thank you for joining Q1 investor call for Kodak. On the call today I'll talk about the company and divisional results for the first quarter of 2018 and our 2018 full year forecast. Dave will then follow with more details on net earnings, a cost reduction update, discussion of cash flow, and our 2018 cash outlook after which we will welcome your questions. First, I'd like to highlight the progress we're making on the execution of our key growth strategies. We're pleased with the continuing strong demand in our SONORA Process Free Plates which grew 21% year-over-year. We continue to see strong growth in our flexible packaging division which includes a 15% volume growth in FLEXCEL NX Plates. Additionally annuities revenue for Kodak PROSPER grew 8% in the first quarter of 2018. In 2018 we will continue to invest in advanced technologies including ULTRASTREAM, and our Advanced Materials technology as they will provide strong growth in the future. Additionally we will continue to invest in the expansion of our Weatherford, Oklahoma plant to meet strong demand from our FLEXCEL NX customers. We are on plan to deliver full year performance with the expected guidance range of revenues of $1.5 million to $1.6 million in operational EBITDA of $60 million to $70 million. On slide 5, Kodak delivered first quarter revenues of $357 million flat while comparing the prior year quarter. Operational EBITDA for the quarter was $1 million down $5 million compared to the first quarter of 2017 or negative $6 million on a constant currency basis. When adjusted for higher aluminum costs and impacts of foreign exchange, Kodak's operational EBITDA increased by $2 million. When we further adjust for the expected $3 million decline in our legacy consumer Inkjet business, the year-on-year adjusted operational…

Thanks Jeff and good afternoon. Today the company issued its earnings release for the quarter. As Bill mentioned the company will file its Form 10-Q for the quarter-ended March 31, 2018 with the Securities and Exchange Commission tomorrow May 10th. As always I recommend you read this filing in its entirety. As Jeff noted our first quarter performance is consistent with our expectations and we are pleased with growth in key product areas. I will share further details on the company -- full company results and update on our cost structure, more details on our full year operational EBITDA, and cash flow results and outlook. First an important update and notable item in the first quarter reporting. During the first quarter of 2018 the company's segment measure was changed to exclude amortization of prior service costs and credits which due to the adoption of ASU 2017-07 are no longer reported in the same line as other compensation costs arriving from services rendered during the period. We have recast the prior year to present our results on a consistent basis. The appendix to this presentation provides revised information for 2017 on a quarterly basis by division. Now for the GAAP financial results for the first quarter. On slide 11 as we reported in our earnings release, the net loss for the first quarter of 2018 on a GAAP basis was $25 million compared to net earnings of $7 million in the first quarter of 2017, a decline of $32 million. The first quarter of 2018 results include $14 million of expense related to changes in the fair value for the embedded derivative for the Series A preferred stock. The prior year quarter included a $12 million onetime depreciation and amortization expense catch up for PROSPER partially offset by the $22 million…

[Operator Instructions]. And I'm showing no questions at this time.

Well thank you very much. I appreciate everyone listening on. As always if you got questions Bill Love our Investor Relations Director is available. And I want to thank you again for joining the Q1 call for 2018. I'm sorry I have been waved that a question has coming in. Operator.

Thank you. Our first question comes from the line of Craig Carlozzi of Bulwark. Your line is now open.

Yeah, hi, thanks guys. I appreciate the opportunity to ask a question. Regarding some of the strategic initiatives that you discussed in the past are those -- is there any update there that you can provide for the callers?

All I can say Craig as you would expect, I can't give any specifics on those but we continue to look at the overall portfolio of Kodak and different M&A opportunities to both build scale and to divest assets to delever.

Compared to say 90 days ago would there be any reason to expect the timeline as either extended or truncated with the process?

Yeah, sorry I can't get into specifics on them. I can just say general until we have something to formally announce.

Okay, it is ongoing?

The review of our portfolio is ongoing on a very thorough basis.

Great, thank you very much.

Thank you. And our next question comes from the line of Amer Tiwana with Cowen and Company. Your line is now open.

Hi guys, my first question is in your 2018 updated cash outlook, you guys showed $20 million of proceeds from potential asset sales, can you just give us some sense of what they are or is there anything in particular?

There are multiple non-strategic asset monetizations. Last quarter or last time we spoke we were presenting 18 so we have adjusted the values slightly given where we are. But other than that we don't have any real specifics to provide at this point.

An example would be for example an underutilized real estate building.

Understood. And on page 9 of your presentation you sort of break down your businesses and fee segments, is there a way for us to sort of try to figure out what the profitability attached to these three buckets is?

Yeah, why don't I just give you some general perspective. So SONORA is our flagship most differentiated product in our plate business. We have historically been able to price that anywhere between 5% and 15%, you can use a 10% on an average premium to other plates. And that is because of the benefits the plate gives in terms of using fewer chemicals, lower electricity, and less labor than other plates that do not have the capabilities of SONORA around not using chemicals being chemical free. So that would be the most profitable product within our graphic arts plates business. PROSPER as you know is our Enterprise Inkjet business and that business is primarily a business which is annuity based at this stage. We are not selling a significant number of presses in our 65 unit installed base. So there are two elements of profitability there; one is off the printing systems. These are heads that are in hybrid fashion. They're profitable when we sell the heads they are profitable in terms of the ink they use and they're profitable in terms of refurbishment of the head. And then obviously as you expect the ink profitability on sales into PROSPER are quite high. The third element of our business is our FLEXCEL NX business and you can determine the value of that by looking at the portfolio of FLEXCEL NX. What you see is our highest percentage of revenue margin business and then you can even look at that and understand that the FLEXCEL NX portion of that is even higher profitability than the unit as a whole which has some legacy businesses that have less margin. Software and solutions, overall that business is break even this quarter but the software portion of that is quite profitable particularly the maintenance area and the solutions are losing money at this stage as we are making some investments and transforming the Kodak solutions business. Brand licensing is a very high profitable business. Brand licensing has very low cost and is royalty based business. We mentioned that that has a $10 million run rate at this stage and you should think of the incremental margins on that being very high. There is a small group that manages that portfolio and seeks new brand licensees but it's over an 80% yield on the royalties there. And the last one is Advanced Technologies which is an investment center at this stage. So once the products get to probability they are more profitable than the overall portfolio for Kodak.

Understood, and just I know this is maybe a bit too early to comment on. Looking at your overall portfolio seems like the declining businesses are now a relatively small component of overall business. As we move into 2019 you can note the question then becomes where is EBITDA going to in 2019 and can you guys be free cash flow positive and obviously the refi of your term loan will be coming up in 2019 as well. So directionally can we assume that the business is going to be more profitable than 2019?

Yes, we expect the business to be more profitable in 2019 and we expect to be capital positive in 2019.

Thank you very much.

Thank you very much.

Thank you and now I'm showing no further questions.

Well, again thank you all for joining the call and I appreciate your time.