Kodak blamed the reduction in revenue on volume declines in Entertainment Imaging and Commercial Films and Consumer Inkjet Systems, of 6% and 4% respectively, as well as unfavourable price/mix due to lower licensing revenue (down 4%).
Kodak's pre-tax and net earnings both slipped into the red ($60m and $36m respectively), while its gross profit fell more than 42% from $149m in Q1 2013 to $86m in Q1 2014.
However, the prior year earnings were skewed by the income from the $535m digital imaging patents sale and Kodak said that on a comparable basis its $36m net loss represented an improvement of $54m.
Both of the company's operating segments recorded declines in revenues and negative earnings for the quarter (see segment results below), although Kodak said that the "key product lines" in its strategic technology businesses had "achieved solid revenue growth".
Kodak said it was on track to increase the number of installed Prosper presses to "more than 40 during 2014" and the number of Prosper S-Series imprinting systems "by one-third to more than 1,000". Placements of Kodak Flexcel NX systems in the packaging industry are expected to increase by 25% to more than 400 units.
Kodak defines its strategic technology businesses as: digital printing solutions, packaging and functional printing, enterprise services, intellectual property/brand licensing, and graphics (encompassing digital plates and workflow software).
Chief executive Jeff Clarke said: "The path to sustainable growth and profitability is not a straight line, but we continue to progress, especially in the strategic technology businesses that will constitute the new Kodak.
"Our results, while within expectations, reflect the steep declines in our mature businesses, which are currently offsetting the increasing momentum we are seeing in our strategic technology businesses.
"We saw significant increases in sales for our key new products in packaging, digital printing and digital plates, as increasing numbers of customers embraced our solutions."
This decline could be seen in the operational EBITDA for Kodak's mature businesses, which fell from $44m to $8m, although the same chart actually showed a decline in operational EBITDA from Kodak's strategic technology businesses, from a $6m profit to a $5m loss.
Excluding non-recurring licensing revenue of $7m in Q1 2014 and $31m in Q1 2013, Kodak's strategic technology businesses posted an operational EBITDA of negative $12m in Q1 2014 versus negative $25m in the prior year quarter.
Graphics, Entertainment and Commercial Films (GECF)
GECF revenues declined 18% for the quarter to $316m, due to volume declines driven by reduced demand within Entertainment Imaging and Commercial Films (-9%) and Graphics (-2%), primarily associated with digital plates, as well as price/mix declines due to reduced revenue within Intellectual Property and Brand Licensing (-7%).
Gross profit for the segment fell 66% from $85m in Q1 2013 to $29m in Q1 2014, representing a drop in gross profit margin from 22% of sales to 9% of sales. The net result was a $30m segment loss in Q1 2014 versus a $16m profit in the prior year quarter.
Digital Printing and Enterprise (DP&E)
DP&E revenues fell 16% for the quarter to $166m, due to an 11% volume decline in Consumer Inkjet Systems, as well as a 4% drop in Digital Printing revenues, due to fewer toner equipment sales, and a 3% fall in Enterprise Services revenues due to a reduction in government contracts and divested operations.
On the plus side, Kodak noted a 2% volume improvement in Packaging and Functional Printing due to increased sales of Flexcel NX plates, largely rising from an increased installed base of Flexcel NX CTP equipment.
Gross profit fell 19% from $52m in Q1 2013 to $42m in Q1 2014, while the gross margin fell by one point as a percentage of sales, from 26% to 25%. Kodak said this was primarily due to consumer ink sales constituting a lower percentage of the segment's total gross profit dollars.
