Eastman Kodak(KODK) - 2025 Q2 - Quarterly Results

Executive Summary Q2 2025 Financial Highlights Kodak reported a decrease in consolidated revenues, gross profit, and a significant GAAP net loss in Q2 2025 compared to Q2 2024, alongside a decline in Operational EBITDA and cash balance | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenues | $263M | $267M | $(4)M | (1)% | | Gross Profit | $51M | $58M | $(7)M | (12)% | | Gross Profit Percentage | 19% | 22% | (3) ppts | - | | GAAP Net Loss (Income) | $(26)M | $26M | $(52)M | (200)% | | Operational EBITDA | $9M | $12M | $(3)M | (25)% | | Quarter-end Cash Balance | $155M | $201M (Dec 31, 2024) | $(46)M | - | | Cash Flow from Operations | - | - | Decreased by $40M | - | Management Commentary & Strategic Outlook Management acknowledged an uncertain business environment but highlighted progress on long-term plans, particularly the growth of the Advanced Materials & Chemicals (AM&C) business, including FDA registration for its cGMP pharmaceutical manufacturing facility. The company is assessing the impact of new tariffs and remains committed to U.S. manufacturing, while also focusing on improving operational efficiency, strengthening the balance sheet, and managing debt and pension obligations - Continued progress against long-term plan despite uncertain business environment[1] - Accelerating growth of Advanced Materials & Chemicals (AM&C) business[1] - AM&C group's cGMP pharmaceutical manufacturing facility is now FDA registered and certified to manufacture and sell regulated pharmaceutical products, expanding current unregulated business[1][3] - Facility will begin manufacturing phosphate buffered saline (PBS) and aims for more sophisticated specialty products like injectable IV saline[3] - Commitment to U.S. manufacturing, producing lithographic printing plates, photographic/industrial films, inkjet presses/inks, and pharmaceutical key starting ingredients[1] - Assessing potential impact of new tariffs, expecting them to protect American businesses[1] - Focus on serving customers, strengthening the balance sheet, and developing growth businesses for the balance of the year[3] - Improving operational efficiency and investing in growth initiatives in the AM&C group[3] - Reducing costs and converting investments into long-term growth for the second half of the year[3] - Progressing with the termination of the U.S. Kodak Retirement Income Plan (KRIP) and reversion of excess funds to pay down debt, with completion anticipated by December 2025[3][6] Consolidated Financial Performance Revenue Analysis Consolidated revenues for Q2 2025 decreased by 1% year-over-year to $263 million. After adjusting for a favorable foreign exchange impact of $5 million, the decrease was 3% or $9 million | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $263M | $267M | $(4)M | (1)% | | Favorable FX Impact | $5M | - | - | - | | Revenues (Constant Currency) | - | - | $(9)M | (3)% | Profitability Analysis Kodak experienced a significant decline in profitability, moving from a net income of $26 million in Q2 2024 to a net loss of $26 million in Q2 2025, a 200% decrease. Operational EBITDA also fell by 25% to $9 million, primarily due to lower volumes and higher aluminum and manufacturing costs, partially offset by price increases and reduced IT/organizational investments | Metric | Q2 2025 | Q2 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | GAAP Net (Loss) Income | $(26)M | $26M | $(52)M | (200)% | | Operational EBITDA | $9M | $12M | $(3)M | (25)% | | Operational EBITDA (Constant Currency) | $8M | $12M | $(4)M | (33)% | | Gross Profit | $51M | $58M | $(7)M | (12)% | | Gross Profit Percentage | 19% | 22% | (3) ppts | - | - Decrease in Operational EBITDA primarily driven by lower volumes and higher aluminum and manufacturing costs[4] - Partially offset by price increases and lower spend on investments in information technology systems, organizational structure, and costs associated with trade shows[4] Cash Flow and Liquidity Kodak's cash balance decreased by $46 million from December 31, 2024, to $155 million at the end of Q2 2025. This decline was mainly driven by capital expenditures for growth initiatives, changes in working capital, and the impact of higher costs and lower operational profitability. Cash flow from operations decreased by $40 million year-over-year | Metric | June 30, 2025 | Dec 31, 2024 | Change ($M) | | :--- | :--- | :--- | :--- | | Quarter-end Cash Balance | $155M | $201M | $(46)M | - Cash flow from operations decreased by $40 million from the prior-year period[2][5] - Decrease in cash balance primarily driven by capital expenditures to fund growth initiatives, changes in working capital, and the impact of higher costs and lower profitability from operations[2][5] Segment Performance Revenue by Segment In Q2 2025, Print segment revenue decreased by $8 million (or $13 million on a constant currency basis) compared to Q2 2024. Conversely, Advanced Materials & Chemicals (AM&C) and Brand segments both saw revenue increases of $2 million each | Segment | Q2 2025 Revenue ($M) | Q2 2024 Revenue ($M) | Change ($M) | Change (Constant Currency, $M) | | :--- | :--- | :--- | :--- | :--- | | Print | $178 | $186 | $(8) | $(13) | | Advanced Materials & Chemicals | $75 | $73 | $2 | $2 | | Brand | $6 | $4 | $2 | $2 | | Total | $259 | $263 | $(4) | $(9) | Operational EBITDA by Segment The Print segment's Operational EBITDA declined by $4 million in Q2 2025 compared to Q2 2024, resulting in a loss of $4 million. The Advanced Materials & Chemicals segment maintained its Operational EBITDA at $8 million, while the Brand segment saw a $1 million increase to $5 million | Segment | Q2 2025 Operational EBITDA ($M) | Q2 2024 Operational EBITDA ($M) | Change ($M) | Change (Constant Currency, $M) | | :--- | :--- | :--- | :--- | :--- | | Print | $(4) | $0 | $(4) | $(4) | | Advanced Materials & Chemicals | $8 | $8 | $0 | $(1) | | Brand | $5 | $4 | $1 | $1 | | Total | $9 | $12 | $(3) | $(4) | Operational Developments Advanced Materials & Chemicals (AM&C) Expansion Kodak's AM&C group's cGMP pharmaceutical manufacturing facility has achieved FDA registration and certification, enabling it to manufacture and sell regulated pharmaceutical products. This expands its existing business in unregulated pharmaceutical products, with initial operations focused on phosphate buffered saline (PBS) and future plans for more complex specialty products like injectable IV saline - cGMP pharmaceutical manufacturing facility is now registered with the FDA and certified to manufacture and sell regulated pharmaceutical products[1][3] - This expands the current business in unregulated pharmaceutical products[1][3] - The facility will begin operation manufacturing phosphate buffered saline (PBS) for laboratory use[3] - Future plans include manufacturing more sophisticated specialty products, such as injectable IV saline[3] U.S. Manufacturing and Tariffs Kodak is committed to U.S. manufacturing, producing a wide range of products domestically, including lithographic printing plates, photographic and industrial films, inkjet presses and inks, and pharmaceutical key starting ingredients. The company is currently assessing the potential impact of new tariffs, anticipating they are designed to protect American businesses like theirs - Kodak is committed to U.S. manufacturing[1] - Manufactures a wide range of products in the U.S., including lithographic printing plates, photographic and industrial films, inkjet presses and inks, and pharmaceutical key starting ingredients[1] - Assessing the potential impact of new tariffs going forward[1] - Expects tariffs instituted by the U.S. government are designed to protect American businesses[1] Debt and Pension Management Kodak is actively progressing with the termination of its U.S. Kodak Retirement Income Plan (KRIP) and expects to use the reversion of excess funds to reduce term debt. The company anticipates a clear understanding of participant obligations by August 15 and completion of the reversion by December 2025. These plans are crucial for funding preferred stock and debt obligations - Termination of U.S. Kodak Retirement Income Plan (KRIP) and subsequent reversion of excess funds to pay down debt is progressing as planned[6][7] - Expects to have a clear understanding of how to satisfy obligations to all plan participants by August 15[6][7] - Anticipates completing the reversion by December 2025[6][7] - Proceeds from KRIP reversion are planned to reduce term debt and to amend, extend or refinance remaining debt and preferred stock obligations[6][7] Going Concern Disclosure Kodak has included a going concern disclosure in its Q2 2025 Form 10-Q. The company's plans to fund its preferred stock and debt obligations, primarily through proceeds from the expected reversion of cash from the Kodak Retirement Income Plan and refinancing efforts, are not solely within its control and thus not deemed "probable" under U.S. GAAP. Consequently, these conditions raise substantial doubt about Kodak's ability to continue as a going concern - Kodak included a disclosure regarding its going concern assessment in its Q2 2025 Form 10-Q filing[7] - Plans to fund preferred stock and debt obligations rely on proceeds from the expected reversion of cash from the Kodak Retirement Income Plan and amending, extending, or refinancing remaining debt and preferred stock[7] - These plans are not solely within Kodak's control and are not deemed "probable" under U.S. GAAP accounting rules[7] - These conditions raise substantial doubt about the Company's ability to continue as a going concern as of the issuance date of the Q2 financials[7] About Eastman Kodak Company Eastman Kodak Company is a global manufacturer specializing in commercial print and advanced materials & chemicals. Leveraging over 130 years of R&D and 79,000 patents, Kodak focuses on technology and science to deliver innovative, award-winning products and sustainable solutions for commercial printers worldwide, emphasizing a customer-first approach and environmental stewardship - Leading global manufacturer focused on commercial print and advanced materials & chemicals[11] - Holds 79,000 worldwide patents earned over 130 years of R&D[11] - Committed to environmental stewardship, including industry leadership in developing sustainable solutions for print[11] - Offers innovative, award-winning products combined with a customer-first approach[11] Cautionary Statement Regarding Forward-Looking Statements This section defines forward-looking statements as per the Private Securities Litigation Reform Act of 1995, outlining that such statements concern Kodak's future plans, objectives, and financial performance, and are based on current expectations and assumptions. It details important factors, including financial performance, strategic objectives, financing, foreign exchange rates, commodity prices, tariffs, global economic environment, competition, supply chain, compliance, technology trends (including AI), strategic transactions, legal claims, and force majeure events, that could cause actual results to differ materially from these statements. Kodak disclaims any obligation to update these statements unless required by law - Defines "forward-looking statements" as per the Private Securities Litigation Reform Act of 1995, covering future plans, objectives, goals, strategies, revenue, performance, capital expenditures, liquidity, investments, financing needs, and business trends[13][14] - Identifies common forward-looking terms like "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "predicts," "forecasts," "strategy," "continues," "goals," "targets," and future/conditional verbs[13][14] - States that all forward-looking statements are based on Kodak's current expectations and assumptions[13][14] - Lists important factors that could cause actual results to differ materially, including: ability to improve and sustain operating structure, cash flow, profitability; ability to achieve strategic objectives, cash forecasts, financial projections; ability to obtain additional financing and manage worldwide cash; receipt of projected reversion proceeds from KRIP liquidation; ability to fund investments, capital needs, and service debt/preferred stock; changes in foreign currency exchange rates, commodity prices, interest rates, and tariff rates; impact of global economic environment (inflation, geopolitical issues, trade policies, raw material costs, supply chain disruptions); ability to compete with well-financed industry participants or lower-cost competitors; performance of third-party suppliers and ability to address supply chain disruptions; ability to comply with credit facility covenants; ability to anticipate technology and industry trends (including AI) and develop new products; ability to effect strategic transactions and achieve benefits; ability to manage and resolve current and legacy claims; ability to discontinue, sell, or spin-off non-core businesses or monetize assets; and potential impact of force majeure events, cyber-attacks, or IT outages[15][16] - Kodak undertakes no obligation to update or revise forward-looking statements, except as required by law[17] Non-GAAP Financial Measures Operational EBITDA Definition and Reconciliation Kodak uses non-GAAP financial measures, specifically Operational EBITDA and constant currency revenues/Operational EBITDA, to provide investors with insights into its underlying performance. Operational EBITDA is defined as earnings from continuing operations excluding various non-operating and non-cash items. The reconciliation shows a decrease in Operational EBITDA from $12 million in Q2 2024 to $9 million in Q2 2025, further decreasing to $8 million on a constant currency basis - Non-GAAP Measures Used: Operational EBITDA; Revenues and Operational EBITDA on a constant currency basis[18] - Purpose: To provide investors with the same financial data management uses to assess underlying performance, financial condition, results of operations, and cash flow[19] - Operational EBITDA Definition: Represents (loss) earnings from continuing operations excluding: provision for income taxes; non-service cost components of pension and other postemployment benefits income; depreciation and amortization expense; restructuring costs and other; consulting and other costs; stock-based compensation expense; idle costs; other operating expense; interest expense; and other charges, net[20] - Constant Currency Calculation: Uses average foreign exchange rates for the three months ended June 30, 2024, instead of actual average rates for Q2 2025[21] | (in millions) | Q2 2025 | Q2 2024 | $Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net (Loss) Income | $(26) | $26 | $(52) | (200)% | | Adjustments: | | | | | | Depreciation and amortization | 7 | 6 | 1 | | | Restructuring costs and other | 6 | — | 6 | | | Stock based compensation | 1 | 1 | — | | | Consulting and other costs | (1) | 1 | (2) | | | Idle costs | 1 | 1 | — | | | Other operating expense, net | — | 1 | (1) | | | Interest expense | 15 | 15 | — | | | Pension income excluding service cost component | (16) | (41) | 25 | | | Other charges, net | 20 | 1 | 19 | | | Provision for income taxes | 2 | 1 | 1 | | | Operational EBITDA | $9 | $12 | $(3) | (25)% | | Impact of foreign exchange | (1) | — | (1) | | | Operational EBITDA on a constant currency basis | $8 | $12 | $(4) | (33)% | Unaudited Financial Statements Consolidated Statement of Operations The Consolidated Statement of Operations shows a total revenue of $263 million for Q2 2025, down from $267 million in Q2 2024. The company reported a net loss of $26 million in Q2 2025, a significant decline from a net income of $26 million in the prior-year quarter | (in millions, except per share data) | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | | | | Sales | $226 | $227 | | Services | $37 | $40 | | Total revenues | $263 | $267 | | Gross profit | $51 | $58 | | (Loss) earnings from operations before interest expense, pension income excluding service cost component, other charges, net and income taxes | $(5) | $2 | | (Loss) earnings from operations before income taxes | $(24) | $27 | | NET (LOSS) EARNINGS | $(26) | $26 | | Basic net (loss) earnings per share | $(0.36) | $0.25 | | Diluted net (loss) earnings per share | $(0.36) | $0.23 | Consolidated Statement of Financial Position As of June 30, 2025, Kodak's total assets were $1,933 million, a decrease from $2,001 million at December 31, 2024. Key changes include a decrease in cash and cash equivalents, an increase in inventories, and a significant increase in short-term borrowings and current portion of long-term debt from $1 million to $479 million, while long-term debt decreased from $466 million to $11 million. Total liabilities increased, and total shareholders' equity decreased | (in millions, except per share data) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $155 | $201 | | Inventories, net | $238 | $219 | | Total current assets | $574 | $595 | | Total assets | $1,933 | $2,001 | | LIABILITIES & EQUITY | | | | Short-term borrowings and current portion of long-term debt | $479 | $1 | | Total current liabilities | $729 | $261 | | Long-term debt, net of current portion | $11 | $466 | | Total liabilities | $1,183 | $1,142 | | Redeemable, convertible preferred stock | $222 | $218 | | Total shareholders' equity | $528 | $641 | Consolidated Statement of Cash Flows For the six months ended June 30, 2025, Kodak reported net cash used in operating activities of $30 million, a significant shift from $10 million provided in the prior-year period. Net cash used in investing activities increased to $19 million, and net cash used in financing activities decreased to $4 million. Overall, there was a net decrease in cash, cash equivalents, and restricted cash of $48 million | (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net (loss) earnings | $(33) | $58 | | 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) | | Cash, cash equivalents and restricted cash, end of period | $253 | $360 |