10-Q: Kodak Q3 2025: Pension Settlement Boosts Liquidity, Print Declines

Eastman Kodak Company reports mixed Q3 2025 results with revenue growth driven by pricing and Advanced Materials, but a net loss for the nine months, while a significant pension settlement resolves going concern doubts and boosts future liquidity.

Summary

• Consolidated revenues for the three months ended September 30, 2025, increased by $8 million (3%) to $269 million compared to Q3 2024.
• Consolidated revenues for the nine months ended September 30, 2025, increased by $2 million (0%) to $779 million compared to the same period in 2024.
• Net earnings for Q3 2025 were $13 million, a decrease from $18 million in Q3 2024.
• A net loss of $(20) million was reported for the nine months ended September 30, 2025, compared to net earnings of $76 million in the prior year period.
• Gross profit improved by $23 million to $68 million (25% of revenue) in Q3 2025 and by $13 million to $165 million (21% of revenue) for the nine months ended September 30, 2025.
• The Print segment's revenues decreased by $5 million (3%) to $177 million in Q3 2025 and by $30 million (5%) to $520 million for the nine months, primarily due to lower volumes.
• The Advanced Materials and Chemicals segment's revenues increased by $11 million (15%) to $82 million in Q3 2025 and by $28 million (14%) to $231 million for the nine months.
• The company resolved prior conditions that raised substantial doubt about its ability to continue as a going concern, primarily due to the termination and settlement of the Kodak Retirement Income Plan (KRIP) and extensions of debt maturity dates.
• Approximately $1.8 billion of KRIP annuity obligations were transferred to Metropolitan Tower Life Insurance Company on October 21, 2025, and $233 million in lump-sum payments were made in October 2025.
• Kodak expects to receive approximately $600 million in surplus assets from KRIP in December 2025, consisting of $450 million in cash and $150 million in non-cash assets.
• A mandatory prepayment of $300 million of Term Loans will be made using KRIP cash proceeds, reducing the outstanding Term Loan balance to an estimated $200 million by December 31, 2025.
• The Series C Preferred Stock was fully exchanged for 15,103,163 shares of common stock on August 8, 2025.
• Impairment charges totaling $21 million were recorded in Q2 and Q3 2025 related to the investment in Wildcat Discovery Technologies, Inc.

Sentiment

Score: 4

Explanation: The company faces ongoing operational challenges, evidenced by a nine-month net loss and declining Print segment revenue. While the pension settlement provides a significant liquidity boost and resolves going concern issues, and the Advanced Materials segment shows growth, the core business profitability remains weak, and there are notable impairment charges.

Positives

• Resolved prior conditions that raised substantial doubt about the company's ability to continue as a going concern.
• Successfully settled approximately $1.8 billion of pension obligations under the Kodak Retirement Income Plan (KRIP) and will transfer remaining liabilities by end of November 2025.
• Expects to receive approximately $600 million in surplus assets from KRIP in December 2025, including $450 million in cash, significantly boosting liquidity.
• Extended the maturity date of the Term Loans to August 15, 2028, and the L/C Facility Agreement to May 17, 2028.
• Eliminated the mandatory prepayment obligation requiring Kodak to use 50% of net cash proceeds from certain transactions to prepay Term Loans below $200 million.
• Gained the option to pay the cash interest payment on Term Loans entirely in PIK for six quarterly interest payments following May 2025.
• Advanced Materials and Chemicals segment showed strong growth, with revenues increasing 15% in Q3 2025 and 14% for the nine months ended September 30, 2025.
• Gross profit improved by $23 million in Q3 2025 and $13 million for the nine months ended September 30, 2025, driven by improved pricing and lower aluminum costs.
• Selling, general and administrative expenses decreased by $3 million in Q3 2025 and $9 million for the nine months ended September 30, 2025.
• Anti-dumping and countervailing duties were imposed on imported aluminum lithographic printing plates from China and Japan, potentially benefiting the Print segment's competitive position.
• Continued investment and progress in growth areas such as PROSPER Inkjet Systems, ULTRASTREAM technology, EV/Energy Storage Battery Material Manufacturing, Reagent Manufacturing, Light-Blocking Technology, and Transparent Antennas.

Negatives

• Reported a net loss of $(20) million for the nine months ended September 30, 2025, a significant decline from net earnings of $76 million in the prior year period.
• Net earnings for the three months ended September 30, 2025, decreased to $13 million from $18 million in the prior year quarter.
• Print segment revenue decreased by 3% in Q3 2025 and 5% for the nine months, primarily due to lower volumes and competitive pricing pressures.
• Pension income excluding service cost component decreased significantly by $26 million in Q3 2025 and $70 million for the nine months, due to a change in investment strategy.
• Incurred impairment charges totaling $21 million related to the investment in Wildcat Discovery Technologies, Inc. during Q2 and Q3 2025.
• Experienced higher manufacturing costs in the Print segment ($3 million in Q3, $10 million for nine months) and Advanced Materials and Chemicals segment ($3 million for nine months).
• Cash and cash equivalents decreased by $33 million from $201 million at December 31, 2024, to $168 million at September 30, 2025.
• Labor shortages in certain manufacturing areas of the Advanced Materials and Chemicals segment contributed to increased backorders for film products.
• No quarterly cash dividends were declared on the Series B Preferred Stock in the second and third quarters of 2025.

Risks

• Global economic environment remains highly volatile due to uncertain macroeconomic conditions, heightened inflation, geopolitical issues (war in Ukraine, conflicts involving Israel), and changes in trade policies.
• Ability to improve and sustain operating structure, cash flow, profitability, and achieve strategic objectives and financial projections.
• Ability to obtain additional or alternate financing, manage worldwide cash through intercompany loans, and provide/facilitate customer financing.
• Exposure to changes in foreign currency exchange rates, commodity prices, interest rates, and tariff rates.
• Uncertainty regarding the timing and final amount of reversion proceeds actually received from the liquidation of KRIP.
• Ability to fund continued investments, capital needs, and collateral requirements, and to service debt and Series B Preferred Stock.
• Intense competition from large, well-financed industry participants or competitors with lower cost structures.
• Reliance on third parties for supply of products, components, or services, and vulnerability to supply chain disruptions and shortages of materials and labor.
• Ability to comply with covenants in various credit facilities.
• Ability to effectively anticipate technology and industry trends, including AI, and develop and market new products and solutions.
• Ability to effect strategic transactions (investments, acquisitions, divestitures) and achieve their intended benefits.
• Continued ability to manage, defend, and resolve a variety of current and legacy claims without incurring material losses or business disruptions.
• Ability to discontinue, sell, or spin-off certain non-core businesses or operations, or otherwise monetize assets.
• Potential impact of force majeure events, cyberattacks, or other data security incidents or IT outages.
• No assurance that anti-dumping and countervailing duties imposed on imported printing plates will provide effective relief or will not be reduced/impaired by appeals.
• Wildcat Discovery Technologies, Inc. continues to explore options and alternatives which may further impact the value of Kodak's investment or dilute ownership.
• Limitations related to net asset balances in China may impact the ability to make cash available to other jurisdictions, potentially reducing U.S. liquidity.

Future Outlook

The company expects to receive approximately $600 million in surplus assets from the Kodak Retirement Income Plan (KRIP) in December 2025, including $450 million in cash. This will be used to mandatorily prepay $300 million of Term Loans, reducing the outstanding balance to an estimated $200 million by year-end 2025. The remaining KRIP proceeds are expected to redeem Series B Preferred Stock by its May 28, 2026, maturity date and be available for strategic growth or general corporate purposes. The company continues to focus product investment in core print and advanced materials, leveraging proprietary technologies, and investing in automation and efficiency to drive cost reductions and operating efficiencies. Efforts are ongoing to mitigate the impact of increased manufacturing costs and supply chain disruptions through pricing actions and customer-focused initiatives.

Management Comments

• Kodak believes in the power of technology and science to enhance what the world sees and creates.
• Kodak is committed to environmental stewardship, including industry leadership in developing sustainable solutions for print.
• Kodak is actively monitoring the tariff developments and continuing to analyze the potential impacts on its businesses, cost structure and supply chain.
• Kodak has implemented various pricing actions and customer-focused initiatives to mitigate the impact of increased manufacturing costs, primarily within its Print and Advanced Materials and Chemicals segments.
• Kodak has implemented numerous measures to mitigate the challenges associated with supply chain disruptions and shortages in materials, including increasing safety stock on certain materials, increasing lead-times, providing suppliers with longer forecasts of future demand and certifying additional sources or substitute materials where possible.
• Kodak believes it is in compliance with all sanctions.
• Kodak's plans to return to sustainable positive cash flow include generating profitable revenues through continued pricing actions and customer-focused initiatives, implementing effective working capital utilization, reducing operating expenses, continuing to simplify the organizational structure, investing in IT systems to drive operational efficiencies, effectively managing world-wide cash through intercompany loans, distributions or other mechanisms, generating cash from selling and leasing underutilized assets or through new licensing opportunities and implementing ways to reduce cash collateral needs.

Industry Context

Eastman Kodak operates in the commercial print and advanced materials and chemicals industries. The print segment faces ongoing challenges from digital substitution, which the company addresses through innovations like KODAK SONORA Process Free Plates and PROSPER Inkjet Systems, including the PROSPER 7000 Turbo Press and KODAK PROSPER ULTRA 520 Digital Press. The Advanced Materials and Chemicals segment is strategically expanding into new high-growth areas such as EV/energy storage battery material manufacturing, reagent manufacturing for healthcare, light-blocking technology, and transparent antennas, leveraging its deep expertise in chemistry and coating processes. The company notes increased competition in the U.S. from low-priced imported aluminum lithographic printing plates from China and Japan, which has led to the imposition of anti-dumping and countervailing duties.

Comparison to Industry Standards

• Following the cessation of U.S. plate manufacturing operations by key competitors, Kodak has faced increasing competition in the U.S. from low-priced plates imported from China and Japan.
• Anti-dumping duties of 115.84% were imposed on plates manufactured in China by Fuji and 317.43% on such plates manufactured in China by other entities.
• Countervailing duties of 35.66% were imposed on practically all plates manufactured in China.
• Anti-dumping duties of 91.83% were imposed on practically all plates manufactured in Japan.
• The PROSPER 7000 Turbo Press and KODAK PROSPER ULTRA 520 Digital Press are positioned to enable commercial, publishing, and newspaper printers to compete more effectively with offset printing and shift long-run jobs to inkjet, indicating a focus on advanced digital printing solutions to address market shifts.

Corporate Governance

Legal Proceedings

• Kodak's Brazilian operations are involved in various litigation matters, primarily related to federal and state value-added taxes and income taxes, with accruals of approximately $5 million for claims aggregating $93 million.
• The unreserved portion of indirect taxes, civil litigation, and disputes involving former employees and contract labor claims in Brazil, for which there was at least a reasonable possibility of loss, amounted to approximately $6 million.
• Security has been posted for Brazilian disputes, including $7 million of pledged cash and liens on certain Brazilian assets with a net book value of approximately $39 million (lien on non-cash assets resolved in March 2024, cancellation confirmed September 2025).
• Ongoing patent infringement claims brought by FUJIFILM Corporation against Eastman Kodak Company (in the US) and its German subsidiaries, alleging infringement of four patents by SONORA process free plates.
• The company is involved in various other lawsuits, claims, investigations, remediations, and proceedings, including commercial, customs, employment, environmental, tort, and health and safety matters.
• Management does not believe that the outcomes in these various matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations.

Related Party Transactions

• Series B Preferred Stock is held by funds affiliated with Southeastern Asset Management, Inc.
• Series C Preferred Stock was held by GO EK Ventures IV, LLC, a fund managed by Grand Oaks Capital, and was fully exchanged for common stock on August 8, 2025.
• Term Loan Lenders are certain funds affiliated with Kennedy Lewis Investment Management LLC (KLIM).

Stakeholder Impact

• Shareholders: Experienced dilution from the Series C Preferred Stock exchange (15.1 million common shares issued). Potential for further dilution from the ATM equity offering. The nine-month net loss negatively impacts shareholder value, but the pension surplus and debt reduction de-risk the company's financial position.
• Employees: The Kodak Retirement Income Plan (KRIP) was terminated and replaced with the Kodak Cash Balance Plan, providing continued benefits. Labor shortages in Advanced Materials and Chemicals may impact employee workload and retention.
• Creditors (Term Loan Lenders): Will receive a mandatory prepayment of $300 million from KRIP proceeds, reducing outstanding debt. The maturity date of Term Loans was extended to August 15, 2028. The option to pay interest in PIK provides financial flexibility to the company.
• Creditors (Series B Preferred Stockholders): Did not receive cash dividends in Q2 and Q3 2025. Expected to be redeemed on or prior to May 28, 2026, using excess KRIP cash proceeds.
• Customers: Face pricing actions implemented to mitigate increased manufacturing costs. The Print segment experienced a slowdown in demand. Increased backorders for film products due to high demand and manufacturing limitations may affect customer satisfaction.
• Regulatory Bodies: The company is subject to ongoing legal proceedings in Brazil and patent infringement claims. Compliance with SEC filing requirements and adherence to anti-dumping and countervailing duties on competitors are ongoing regulatory matters.

Next Steps

• Distribution of approximately $600 million in excess pension assets from KRIP to the Company and the Kodak Cash Balance Plan in December 2025.
• Transfer of remaining KRIP liabilities of approximately $15 million for missing participants to the Pension Benefit Guaranty Corporation (PBGC) by the end of November 2025.
• Mandatory prepayment of $300 million of Term Loans using KRIP cash proceeds in December 2025, reducing the outstanding balance to an estimated $200 million.
• Evaluation of repayment alternatives for the $68 million intercompany loan from the Chinese subsidiary to minimize impact on U.S. liquidity.
• Expected redemption of the Series B Preferred Stock in full on or prior to its maturity date of May 28, 2026, using excess cash proceeds from the KRIP reversion.
• Continue to generate profitable revenues through pricing actions and customer-focused initiatives.
• Implement effective working capital utilization, reduce operating expenses, and simplify the organizational structure.
• Invest in IT systems to drive operational efficiencies and manage worldwide cash effectively.
• Explore new licensing opportunities and implement ways to reduce cash collateral needs.
• Consider further investment or additional hiring in specific areas to address increased demand for film products and manufacturing equipment limitations.
• Monitor tariff developments and analyze potential impacts on businesses, cost structure, and supply chain.
• Continue to explore strategic alternatives for commercializing Light-Blocking Technology.
• Evaluate expansion or enhancement of the EV cell assembly coating facility to serve a wider variety of production level customers.
• Assess the potential impact of the One Big Beautiful Bill Act (OBBBA) on future periods.

Key Dates

Recommendation

While the resolution of the going concern issue, the substantial pension surplus, and the debt maturity extensions are significant positive developments that de-risk the company's financial structure, the underlying operational performance, particularly the nine-month net loss and declining Print segment revenue, remains a concern. The growth in Advanced Materials and strategic initiatives are promising but have not yet translated into consistent overall profitability. Investors should hold to monitor the execution of strategic initiatives and the impact of the pension surplus on long-term financial health and profitability.

Keywords

Eastman Kodak, KODK, Quarterly Report, Financial Results, Pension Plan, Debt Restructuring, Liquidity, Advanced Materials, Print Industry, Cash Flow, Risk Factors, Strategic Initiatives, Digital Printing, Film Manufacturing, EV Batteries, Tariffs, Corporate Governance, SEC Filing