10-Q: Kodak Reports Q2 Loss, Addresses Debt Maturity

Eastman Kodak Company reported a net loss for the second quarter and first half of 2025, while taking steps to address significant debt and preferred stock obligations maturing in 2026.

Summary

• Eastman Kodak Company reported a net loss of $26 million for the three months ended June 30, 2025, compared to net earnings of $26 million in the prior year period.
• For the six months ended June 30, 2025, the company recorded a net loss of $33 million, a significant decline from net earnings of $58 million in the same period of 2024.
• Total revenues decreased by $4 million (1%) to $263 million for the second quarter of 2025 and by $6 million (1%) to $510 million for the first half of 2025, compared to the respective prior year periods.
• Gross profit declined by $7 million to $51 million (19% of revenues) for the second quarter and by $10 million to $97 million (19% of revenues) for the first half of 2025.
• The Print segment's revenues decreased by $8 million (4%) in Q2 2025 and $25 million (7%) in H1 2025, with Operational EBITDA declining to -$4 million and -$13 million, respectively.
• The Advanced Materials and Chemicals segment's revenues increased by $2 million (3%) in Q2 2025 and $17 million (13%) in H1 2025, with Operational EBITDA improving to $8 million and $15 million, respectively.
• Cash and cash equivalents stood at $155 million as of June 30, 2025, a decrease of $46 million from December 31, 2024.
• On August 8, 2025, the company exchanged all 1,241,871 outstanding shares of Series C Preferred Stock for 15,103,163 shares of common stock, effectively discharging its Series C obligations.
• The Series C Preferred Stock exchange was based on an exchange rate of $8.25 per common share, representing a 16% premium over the common stock's closing price on August 7, 2025.

Sentiment

Score: 3

Explanation: The company faces significant financial distress, evidenced by substantial net losses, declining revenues, and an explicit 'going concern' warning due to impending debt maturities. While strategic capital structure adjustments and some segment growth are noted, the overall financial health and liquidity position present high risk.

Positives

• The Advanced Materials and Chemicals segment showed revenue growth of 13% and Operational EBITDA improvement of $6 million for the six months ended June 30, 2025, driven by favorable pricing and volume increases.
• The Brand segment's revenues increased by $2 million for both the three and six months ended June 30, 2025, due to higher volumes, with Operational EBITDA also improving.
• The Series C Preferred Stock Exchange simplifies the company's capital structure by eliminating all outstanding Series C Preferred Stock and its associated obligations.
• Restructuring actions implemented in the first six months of 2025 are expected to generate future annual cash savings of approximately $15 million, primarily reducing SG&A, Cost of Revenues, and R&D costs.
• The company has largely mitigated the impact of increased tariffs through pricing actions, supplier negotiations, and other cost savings measures.
• The company has implemented measures to mitigate supply chain disruptions and material shortages, including increasing safety stock, extending lead-times, and certifying alternative sources, enabling it to largely meet current demand.

Negatives

• The company reported a significant net loss of $26 million for Q2 2025 and $33 million for H1 2025, a substantial decline from prior year earnings.
• Total revenues decreased by 1% for both the three and six months ended June 30, 2025.
• Gross profit margins declined from 22% to 19% in Q2 2025 and from 21% to 19% in H1 2025.
• The Print segment experienced revenue declines and a negative Operational EBITDA for both the three and six months ended June 30, 2025, primarily due to lower volumes and higher aluminum and manufacturing costs.
• Pension income excluding service cost component decreased significantly by $25 million in Q2 2025 and $44 million in H1 2025 due to lower expected return on assets.
• An asset impairment charge of $17 million was recorded in Q2 2025 related to the investment in Wildcat Discovery Technologies, Inc., reducing its carrying value to approximately $8 million.
• Net cash used in operating activities was -$30 million for the six months ended June 30, 2025, a $40 million decline from the prior year period.
• The company's cash and cash equivalents decreased by $46 million from December 31, 2024, to June 30, 2025.
• The company did not declare a quarterly cash dividend on Series B Preferred Stock in Q2 2025, and elected to pay Term Loan interest entirely in Paid-in-Kind (PIK) for Q2 2025.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to debt obligations and preferred stock maturing within twelve months without committed financing or available liquidity.
• Plans to fund existing preferred stock and debt obligations are dependent on obtaining sufficient proceeds from the expected reversion of cash from the KRIP settlement, which is not solely within the company's control and thus not deemed probable under U.S. GAAP.
• The company makes no assurances regarding the likelihood, certainty, or timing of consummating any refinancing transaction or the sufficiency of such actions to meet its obligations.
• Continued volatility in the global economic environment, including inflationary pressures, geopolitical issues (war in Ukraine, conflicts involving Israel), and changes in trade policies, could negatively impact operations and financial performance.
• The Print segment faces challenges from higher raw material prices, digital substitution, and competitive pricing pressures, with a slowdown in customer demand for plates.
• Increased demand for consumer film products, coupled with manufacturing equipment limitations and labor shortages, has contributed to increased backorders in the Advanced Materials and Chemicals segment.
• There is no assurance that the anti-dumping and countervailing duties imposed on imported plates from China and Japan will provide effective relief or will not be reduced or impaired by appeals.
• The investment in Wildcat Discovery Technologies, Inc. is subject to further impact on value or dilution of ownership due to strategic options being contemplated by Wildcat.
• The company could be required to provide up to $19 million of additional cash or letters of credit to fully collateralize certain surety bonds in the future.
• The Investor's increased voting power (15.7% post-Series C exchange) and right to nominate a board member may give it greater ability to influence future company actions.

Future Outlook

The company's future outlook is heavily dependent on its ability to address significant debt and preferred stock maturities in 2026. Plans include obtaining sufficient proceeds from the expected reversion of cash from the Kodak Retirement Income Plan (KRIP) settlement, which is projected to yield approximately $300 million in cash and $200 million in illiquid assets, with a portion used for mandatory Term Loan prepayments. The company also intends to convert, redeem, extend, or refinance its Series B Preferred Stock and amend, extend, or refinance the remaining Term Loans. Strategic investments will continue in core competency areas like print and advanced materials, leveraging proprietary technologies for product goods packaging, graphic communications, and functional printing markets. Efforts will focus on generating profitable revenues, increasing market share, promoting film use, and investing in automation and process streamlining for cost reductions and operating efficiencies. The company is also exploring new initiatives in EV/energy storage battery material manufacturing, diagnostic test reagent manufacturing, light-blocking technology, and transparent antennas.

Management Comments

• Management believes in the power of technology and science to enhance what the world sees and creates, with innovative, award-winning products and a customer-first approach making Kodak a partner of choice for commercial printers worldwide.
• The company is committed to environmental stewardship, including industry leadership in developing sustainable solutions for print.
• Kodak's plans to adequately fund its existing preferred stock and debt obligations when they come due are dependent on obtaining sufficient proceeds from the expected reversion of cash to the Company upon settlement of obligations under the KRIP.
• Management makes no assurances regarding the likelihood, certainty or timing of consummating any refinancing transaction, or the sufficiency of any such actions to meet Kodak's preferred stock or debt obligations.
• The company'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

The company operates in the commercial print and advanced materials and chemicals industries, facing competition from digital substitution in print and film. It is actively developing new technologies in areas like EV/energy storage battery materials, diagnostic test reagents, light-blocking technology, and transparent antennas, aligning with broader trends in advanced manufacturing and sustainable solutions. The company notes increasing competition in the U.S. from low-priced imported printing plates, leading to the imposition of anti-dumping and countervailing duties. Global economic volatility, including inflation, geopolitical conflicts (Ukraine, Israel), and trade policies, continues to impact operations through increased costs and supply chain disruptions.

Comparison to Industry Standards

• NA

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 approximately $90 million.
• The unreserved portion of indirect taxes, civil litigation, and disputes involving former employees and contract labor claims, for which there was at least a reasonable possibility of loss, amounted to approximately $5 million.
• The company is involved in ongoing patent infringement claims brought by FUJIFILM Corporation against Eastman Kodak Company (in the US) and its German subsidiaries (in Germany) alleging infringement of four patents by Kodak's 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, which are being handled and defended in the ordinary course of business.

Related Party Transactions

• The Series C Preferred Stock Exchange Agreement was entered into with GO EK Ventures IV, LLC (the Investor), a fund managed by Grand Oaks Capital, for the exchange of Series C Preferred Stock for common stock.
• The Amended and Restated Registration Rights Agreement was entered into with GO EK Ventures IV, LLC, granting customary registration rights for the common stock issued in the Series C Exchange.

Stakeholder Impact

• **Shareholders**: Potential dilution from the issuance of 15.1 million common shares in the Series C exchange and potential future sales under the ATM equity offering program. Increased influence of GO EK Ventures IV, LLC due to higher common stock ownership and board nomination rights. Risk of significant value erosion due to 'going concern' warning and operational losses.
• **Employees**: Termination of the Kodak Retirement Income Plan (KRIP) and establishment of the Kodak Cash Balance Plan (Replacement Plan) impacts retirement benefits. Restructuring actions may lead to workforce optimization.
• **Customers**: Pricing actions implemented to mitigate increased manufacturing costs may affect product affordability. Innovations in digital print technologies and new product development aim to enhance customer offerings.
• **Suppliers**: Supply chain disruptions and shortages in materials continue to be a challenge, potentially affecting relationships and procurement costs. Tariffs on imported materials also impact supplier dynamics.
• **Creditors**: Significant debt obligations (Term Loans, Series B Preferred Stock) maturing in 2026 raise substantial doubt about the company's ability to meet them without successful refinancing or KRIP proceeds. The company's ability to service its debt is a key concern.

Next Steps

• Finalize the purchase of an annuity contract for the Kodak Retirement Income Plan (KRIP) in October 2025.
• Distribute excess proceeds from the KRIP settlement to the company and the Replacement Plan in December 2025.
• Prepay Term Loans using net cash proceeds from the KRIP reversion, with 100% of proceeds until the Term Loans are reduced to $200 million, then 50% until $100 million.
• Continue efforts to convert, redeem, extend, or refinance the existing Series B Preferred Stock past its May 28, 2026, mandatory redemption date.
• Amend, extend, or refinance the remaining outstanding Term Loans past their May 22, 2026, maturity date.
• Replace collateral currently supporting letters of credit issued under the L/C Facility Agreement.
• Continue to assess the impact of the One Big Beautiful Bill Act (OBBBA) on the company's consolidated financial statements.
• Continue construction of a Current Good Manufacturing Practice (cGMP) lab and manufacturing facility for diagnostic test reagent solutions, with production scheduled to begin by the end of 2025.
• Continue to explore strategic alternatives for commercializing light-blocking technology.
• Continue to evaluate expansion or enhancement of the production coating facility for EV cell assembly.
• Continue to evaluate unique printing technology and expertise for transparent heaters.
• Continue to work with governmental agencies to leverage assets and technology for on-shoring manufacturing of pharmaceutical and other healthcare materials.
• Continue to capitalize on intellectual property through new business or licensing opportunities in 3D printing materials, smart material applications, and printed electronics markets.
• Roger W. Byrd's Rule 10b5-1 trading arrangement commences on September 15, 2025.

Key Dates

Recommendation

The company reported significant net losses and faces substantial doubt about its ability to continue as a going concern due to large debt and preferred stock maturities in 2026 without committed financing. While the Series C Preferred Stock exchange simplifies the capital structure, the underlying operational challenges and liquidity risks remain high, making the stock a high-risk investment.

Keywords

Eastman Kodak, KODK, Quarterly Report, SEC Filing, Financial Results, Net Loss, Revenue Decline, Going Concern, Debt Maturity, Preferred Stock Exchange, Series C Preferred Stock, KRIP, Pension Plan, Capital Structure, Print Industry, Advanced Materials, Chemicals, Film, Asset Impairment, ATM Equity Offering, Corporate Governance, Risk Factors, Liquidity