Eastman Kodak Company (KODK) Q2 2025 Earnings Call August 11, 2025 05:00 PM ET Speaker0Good day and thank you for standing by. Welcome to the Eastman Kodak Q2 twenty twenty five 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 now like to hand the conference over to your speaker today, Anthony Redding, Chief Compliance Officer.Please go ahead.Speaker1Thank you, and good afternoon, everyone. I am Anthony R ...

Second Quarter 2025 Earnings Call August 11, 2025 Cautionary Statement Regarding Forward-looking Statements Pursuant to Safe Harbor Provisions of The Private Securities Litigation Reform Act of 1995 Cautionary Statement Regarding Forward-Looking Statements This presentation includes "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning Kodak's plans, objectives, goals, strategies, future event ...

[Part I: Financial Information](index=3&type=section&id=Part%20I.%E2%80%94Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss for Q2 and H1 2025, driven by revenue and gross profit declines, with debt maturities raising going concern doubts [Consolidated Statement of Operations](index=3&type=section&id=Consolidated%20Statement%20of%20Operations%20(Unaudited)) Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $263 | $267 | $510 | $516 | | **Gross profit** | $51 | $58 | $97 | $107 | | **(Loss) earnings from operations** | $(5) | $2 | $(18) | $9 | | **NET (LOSS) EARNINGS** | $(26) | $26 | $(33) | $58 | | **Diluted net (loss) earnings per share** | $(0.36) | $0.23 | $(0.48) | $0.52 | [Consolidated Statement of Financial Position](index=5&type=section&id=Consolidated%20Statement%20of%20Financial%20Position%20(Unaudited)) Consolidated Statement of Financial Position Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $155 | $201 | | **Total current assets** | $574 | $595 | | **TOTAL ASSETS** | $1,933 | $2,001 | | **Total current liabilities** | $729 | $261 | | **TOTAL LIABILITIES** | $1,183 | $1,142 | | **Total shareholders' equity** | $528 | $641 | [Consolidated Statement of Cash Flows](index=6&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%20(Unaudited)) Consolidated Statement of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(30) | $10 | | **Net cash used in investing activities** | $(19) | $(2) | | **Net cash used in financing activities** | $(4) | $(20) | | **Net decrease in cash, cash equivalents and restricted cash** | $(48) | $(17) | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements%20(Unaudited)) - The company's financial statements have been prepared on a going concern basis, but conditions exist that raise **substantial doubt about its ability to continue as a going concern** due to debt maturing within twelve months for which the company does not have committed financing[28](index=28&type=chunk)[29](index=29&type=chunk) - As of June 30, 2025, the company has Term Loans with a carrying value of approximately **$477 million** and Series B Preferred Stock of **$99 million**, both of which have accelerated maturity dates in **May 2026**[26](index=26&type=chunk) - In Q2 2025, Kodak recorded a **$17 million impairment charge** on its investment in Wildcat Discovery Technologies, Inc. due to strategic alternatives being considered by Wildcat[109](index=109&type=chunk) - As a subsequent event, on **August 8, 2025**, the company **exchanged all outstanding shares of its Series C Preferred Stock for 15,103,163 shares of common stock**, **fully discharging its obligations** related to the Series C Preferred Stock[154](index=154&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 1% revenue decline in Q2 and H1 2025, driven by Print segment weakness, offset by Advanced Materials growth, while addressing liquidity and going concern doubts [Executive Overview](index=38&type=section&id=EXECUTIVE%20OVERVIEW) - Consolidated revenues for Q2 and H1 2025 **decreased by 1%** compared to the same periods in 2024, amounting to **$263 million** and **$510 million**, respectively[162](index=162&type=chunk) - The **Print segment's revenues declined by 4% in Q2 and 7% in H1 2025**, while the **Advanced Materials and Chemicals segment's revenues grew by 3% in Q2 and 13% in H1 2025**[163](index=163&type=chunk) - Kodak has successfully petitioned the U.S. government for **anti-dumping and countervailing duties** on unfairly traded imports of printing plates from China and Japan to combat increasing competition[173](index=173&type=chunk) - Strategic growth initiatives include **developing materials for EV batteries**, **manufacturing diagnostic test reagents**, and **commercializing proprietary technologies for light-blocking fabrics and transparent antennas**[182](index=182&type=chunk) [Results of Operations](index=45&type=section&id=RESULTS%20OF%20OPERATIONS) Overall Results of Operations (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $263 | $267 | $510 | $516 | | **Gross Profit** | $51 | $58 | $97 | $107 | | **NET (LOSS) EARNINGS** | $(26) | $26 | $(33) | $58 | - Gross profit **declined by $7 million in Q2 and $10 million in H1 2025**, primarily due to higher aluminum costs, lower volumes, and increased manufacturing costs[186](index=186&type=chunk)[187](index=187&type=chunk) Segment Operational EBITDA (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Print** | $(4) | $0 | $(13) | $0 | | **Advanced Materials and Chemicals** | $8 | $8 | $15 | $9 | | **Brand** | $5 | $4 | $9 | $7 | [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's cash balance **decreased by $46 million** since year-end 2024 to **$155 million** as of June 30, 2025[217](index=217&type=chunk) - Kodak has **substantial doubt about its ability to continue as a going concern** because it has debt maturing within twelve months and does not have committed financing or available liquidity to meet these obligations[225](index=225&type=chunk) - The company's plan to fund its obligations is **dependent on receiving sufficient proceeds from the termination of the Kodak Retirement Income Plan (KRIP)**, which is expected to provide net proceeds of **approximately $500 million** after taxes and funding a replacement plan[226](index=226&type=chunk)[235](index=235&type=chunk) - On **August 8, 2025**, the company **exchanged all outstanding Series C Preferred Stock (carrying value of $123 million) for common stock**, **fully discharging this obligation**[249](index=249&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily foreign currency exchange rate fluctuations, due to its global operations - Due to its global operations, Kodak is **exposed to market risks**, primarily from **fluctuations in foreign currency exchange rates**, which can impact sales and net income[254](index=254&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls were effective as of June 30, 2025, with no material changes to internal controls over financial reporting identified - Management concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by the report[255](index=255&type=chunk) - **No changes in internal control over financial reporting** that materially affected, or are reasonably likely to materially affect, the company's internal controls were identified during the most recently completed fiscal quarter[257](index=257&type=chunk) [Part II: Other Information](index=59&type=section&id=Part%20II.%20%E2%80%94Other%20Information) [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ongoing legal proceedings, including tax litigation in Brazil and patent infringement claims from FUJIFILM, which are not expected to have a material adverse effect - The company is involved in **various litigation matters in Brazil related to taxes** and is also defending **patent infringement claims brought by FUJIFILM Corporation concerning its SONORA process-free plates**[82](index=82&type=chunk)[84](index=84&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) The company highlights a new risk: an investor's voting power increased to 15.7% after the Series C Preferred Stock exchange, potentially increasing their influence over company actions - As a result of the Series C Preferred Stock Exchange, an investor's **voting power increased to 15.7%**, which may allow for **greater influence on future company actions** that require shareholder approval[262](index=262&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales but repurchased 79,916 shares at an average of $6.45 per share to satisfy tax withholding obligations for employee restricted stock units - There were **no unregistered sales of equity securities** during the quarter ended June 30, 2025[263](index=263&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1-30, 2025 | 5,910 | $6.50 | | May 1-31, 2025 | 71,001 | $6.47 | | June 1-30, 2025 | 3,005 | $5.81 | | **Total** | **79,916** | **$6.45** | [Other Information](index=60&type=section&id=Item%205.%20Other%20Information) On August 8, 2025, the company exchanged all Series C Preferred Stock for 15.1 million common shares, fully discharging obligations and granting the investor board nomination rights - On **August 8, 2025**, the company **exchanged all outstanding Series C Preferred Stock for 15,103,163 shares of common stock**, based on an exchange price of **$8.25 per share**[267](index=267&type=chunk)[268](index=268&type=chunk) - The agreement grants the investor the **right to nominate one member to the Board of Directors** as long as the investor holds **at least 10% of the company's outstanding common stock**[270](index=270&type=chunk) [Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the 10-Q report, including corporate governance documents, the Series C Preferred Stock Exchange Agreement, and CEO/CFO certifications - Key exhibits filed with this report include the **Series C Preferred Stock Exchange Agreement (Exhibit 4.1)** and the **Amended and Restated Registration Rights Agreement (Exhibit 4.2)**, both dated **August 8, 2025**[278](index=278&type=chunk)

99.1 "In the second quarter, Kodak continued to make progress against our long-term plan despite the challenges of an uncertain business environment," said Jim Continenza, Kodak's Executive Chairman and CEO. "While tariffs did not have a material impact on our business in Q2, we are assessing the potential impact of new tariffs going forward. It's important to note that Kodak is committed to U.S. manufacturing — in fact, we manufacture a wide range of products in the U.S., including lithographic printing pl ...

Core Viewpoint - Kodak, once synonymous with photography, has successfully transformed itself from a traditional film company into a B2B enterprise focused on chemicals, materials processing, and manufacturing, demonstrating resilience and adaptability in a changing market [2][5][18]. Historical Context - Kodak was founded in 1881 and dominated the photography market for over a century, holding more than 80% market share at its peak [5][13]. - The company failed to adapt to the digital photography revolution in the 1990s, leading to a significant decline in revenue and eventual bankruptcy filing in 2012 [5][13]. Leadership Changes - Jim Continenza joined Kodak's board during its bankruptcy and later became CEO, emphasizing accountability and responsibility towards shareholders and employees [8][9]. - Continenza's leadership style focuses on respect for frontline employees and a commitment to supporting them rather than creating obstacles [16]. Strategic Transformation - Kodak's transformation involves a shift towards core competencies in chemicals and materials, with a significant investment of $20 million in a new pharmaceutical plant in Rochester [2][14]. - The company aims to leverage its extensive patent portfolio and expertise in high-quality film production while expanding into new markets such as pharmaceuticals and electric vehicle battery coatings [14][18]. Future Plans - Kodak plans to gradually increase the share of chemicals, coatings, and pharmaceutical businesses in its overall operations while maintaining its presence in film and printing [18]. - The company is focused on debt repayment and sustainable growth across all sectors, particularly in pharmaceutical chemicals [18][19].

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Group 1 - Eastman Kodak Company's shares have increased by 23.98% over the last year and 32.62% since the previous analysis, indicating strong momentum in the stock price [1] - The analysis revisits the company's fundamentals to determine if the stock price increase is supported by financial performance [1] Group 2 - The article emphasizes the importance of exploring new investment ideas for both long and short-term opportunities [1]

Core Viewpoint - Eastman Kodak Company experienced a decline in stock performance and profitability in Q1 2025, despite stable revenues, highlighting ongoing financial challenges and the need for strategic restructuring [1][12]. Earnings & Revenue Performances - Kodak reported consolidated revenues of $247 million, a decrease of 1% from $249 million in Q1 2024, with gross profit declining 6% to $46 million due to increased aluminum and manufacturing costs [2]. - The company recorded a net loss of $7 million, a significant drop from a net income of $32 million in the same quarter last year, influenced by the absence of a $17 million gain on asset sales [3]. Other Key Business Metrics - The Print division's revenues fell to $165 million, down $17 million year-over-year, with operational EBITDA dropping to negative $9 million due to input cost pressures [4]. - The Advanced Materials and Chemicals (AM&C) segment saw a 25% revenue increase to $74 million, with operational EBITDA rising to $7 million from $1 million, driven by stronger demand and improved pricing [5]. Cash Flow and Financial Position - Kodak ended the quarter with $158 million in cash, a decrease of $43 million from the end of 2024, and reported negative cash flow from operations of $38 million compared to a $17 million inflow in the previous year [6]. Management Commentary - CEO Jim Continenza emphasized Kodak's commitment to U.S.-based manufacturing and the focus on shedding unprofitable businesses while investing in innovation and operational efficiencies [7]. - CFO David Bullwinkle highlighted the AM&C segment as a growth driver and noted that cash usage was primarily for investments in AM&C initiatives and higher input costs [8]. Factors Influencing Headline Numbers - The stability in top-line revenues was attributed to steady demand in core businesses and contributions from AM&C, while the decline in net income and operational EBITDA was due to increased costs and the absence of prior-year asset sale gains [9]. Guidance Provided by Management - Management indicated ongoing investments in innovation and operational efficiency, particularly in AM&C and digital printing technologies, with expectations for the cGMP pharma facility to support revenue expansion later in 2025 [10]. Other Developments - Kodak made progress in terminating its U.S. pension plan, with plans for asset reversions to aid in debt reduction, and amended its term-loan credit agreement to allow interest payments in-kind for the next six quarters [11].

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $247 million, a slight decline from $249 million in Q1 2024, reflecting a decrease of $2 million or 1% year-over-year [11][20] - Gross profit percentage decreased to 19% in Q1 2025 from 20% in Q1 2024, indicating a decline in profitability [21] - The company reported a net loss of $7 million for Q1 2025, compared to a net income of $32 million in the prior year, a decrease of $39 million [21][22] - Operational EBITDA for Q1 2025 was $2 million, down from $4 million in Q1 2024, reflecting a decline of $2 million [22] Business Line Data and Key Metrics Changes - The Advanced Materials and Chemical Group (AM and C) is highlighted as crucial for Kodak's future, with ongoing investments in growth initiatives [11][12] - The commercial print business is transitioning from controlled introduction to controlled production of the Prosper Ultra 520 press, with several units being installed at customer sites [12] Market Data and Key Metrics Changes - Demand for various types of film, including still motion picture and NDT, continues to grow, prompting investments in expanding film production capacity [12] - The company remains committed to U.S.-based manufacturing, which is expected to reduce environmental impact and ensure high quality and reliable supply [13][27] Company Strategy and Development Direction - Kodak is focused on operational efficiencies and cost reductions, having shut down unprofitable businesses to concentrate on growth areas [9][19] - The company is committed to maintaining and expanding U.S. manufacturing across all business lines, which is part of its long-term strategy [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by global economic uncertainty but emphasized the company's commitment to executing its long-term plan [8][19] - The management expressed confidence in the core business performance and the potential for long-term gains despite short-term challenges related to tariffs [10][28] Other Important Information - The termination and settlement process for the U.S. Pension plan is proceeding as planned, with expectations to use reverted assets to reduce long-term debt [15][17] - The company ended Q1 2025 with a cash balance of $158 million, a decrease of $43 million from the end of 2024, primarily due to investments in growth initiatives and increased costs [22][25] Summary of Q&A Session - There was no formal Q&A session during the call, but the Investor Relations team is available for follow-up inquiries [7]