Eastman Kodak(KODK) - 2025 Q2 - Quarterly Report

Part I: Financial Information Financial Statements 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 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 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 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 - 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][29] - 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] - 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] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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] - 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] - 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] - 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] Results of Operations 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][187] 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 - The company's cash balance decreased by $46 million since year-end 2024 to $155 million as of June 30, 2025[217] - 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] - 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][235] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] Part II: Other Information Legal Proceedings 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][84] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] 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 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][268] - 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] Exhibits 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]