Executive Summary / Key Takeaways

• Strategic Transformation Underway: Eastman Kodak (NYSE:KODK) is executing a multi-faceted transformation, pivoting from its legacy imaging business to focus on commercial print and high-growth advanced materials and chemicals (AM&C), underpinned by a strong commitment to U.S. manufacturing and targeted innovation.
• Deleveraging as a Core Pillar: A critical financial restructuring is in motion with the expected $500 million reversion from the Kodak Retirement Income Plan (KRIP) by December 2025, earmarked to significantly reduce the company's term loan debt, which currently stands at approximately $477 million.
• Innovation Driving New Revenue Streams: The AM&C segment is a key growth engine, with investments in EV battery material coating, FDA-registered cGMP pharmaceutical manufacturing (starting with PBS by end of 2025), light-blocking technology, and transparent antennas, demonstrating a clear technological roadmap for future expansion.
• Mixed Financial Performance Amidst Transition: While Q2 2025 revenues were largely flat at $263 million, the company reported a net loss of $26 million, impacted by a $17 million asset impairment and lower pension income. Gross profit margins held at 19% despite higher aluminum and manufacturing costs, reflecting pricing actions and operational efficiencies.
• "Going Concern" Disclosure & Mitigation: A required "going concern" disclosure highlights liquidity challenges due to debt maturities in May 2026 preceding the KRIP reversion. However, management expresses confidence in its detailed plan to address these obligations through the pension funds and other financial levers.

A Legacy Reimagined: Kodak's Strategic Pivot

Eastman Kodak, a name synonymous with photography for over a century, is undergoing a profound transformation. Founded in the late 1880s by George Eastman, the company revolutionized photography, making it accessible to the masses. By the 1970s, Kodak dominated the U.S. film market, holding 90% of film and 85% of camera sales. However, a pivotal misstep in 1975, when it invented but failed to embrace the digital camera, ultimately led to its bankruptcy in 2012. Emerging in 2013, Kodak shed its consumer imaging past, strategically pivoting to commercial print and advanced materials and chemicals (AM&C).

Today, Kodak is a global manufacturer focused on these two core competency areas. Its overarching strategy centers on deleveraging the business, strengthening the balance sheet, and investing in profitable growth opportunities. This involves increasing operational efficiencies through technology, automation, and standardized practices, while also rationalizing its product portfolio to focus on "smart revenue." A significant aspect of this strategy is Kodak's unwavering commitment to U.S. manufacturing, with facilities in Rochester producing motion picture film, still film, digital printers, ink, chemicals, and notably, being the last U.S. manufacturer of lithographic plates. This domestic production base provides logistical advantages and a foundation for national economic contribution.

Technological Edge: Fueling Future Growth

Kodak's long-term viability hinges on its ability to leverage its deep expertise in chemistry, deposition, and coating processes into differentiated technologies across its Print and AM&C segments. These technological advantages are critical for establishing competitive moats and driving future financial performance.

In the Print segment, Kodak's innovations aim to enhance efficiency and reduce environmental impact. The KODAK SONORA Process Free Plates exemplify this, allowing customers to bypass the plate processing step. This innovation saves time and costs for printers, while also reducing environmental impact by eliminating the need for chemicals, water, and power typically required for traditional plate processing. In digital printing, the PROSPER Inkjet Systems are a key growth area. The PROSPER 7000 Turbo Press, launched in June 2022, is the world's fastest inkjet press, achieving speeds of 400 meters per minute (1,345 pages per minute). A significant benefit for investors is its upgradability; existing PROSPER 6000 users can upgrade to the 7000 Turbo for a 35% speed increase at a minimal cost, extending the lifecycle and return on investment for capital expenditures. The KODAK PROSPER ULTRA 520 Digital Press, utilizing ULTRASTREAM inkjet technology, offers offset print quality in a smaller footprint, with its first placement in Q4 2023. Both the 7000 Turbo and ULTRA 520 are now transitioning from controlled introduction to commercial production, signaling anticipated revenue generation.

The Advanced Materials and Chemicals (AM&C) segment is a critical investment for Kodak's future, leveraging its proprietary technologies for new business opportunities.

• EV Energy Storage Battery Material Manufacturing: Kodak is capitalizing on its coating expertise to develop coated electrodes for batteries, fuel cells, and solar film companies, utilizing a pilot coating facility for development and low-volume manufacturing. The company is evaluating expansion of an existing production coating facility for EV cell assembly, positioning itself in a high-growth market.
• Reagent Manufacturing: A new cGMP pharmaceutical manufacturing facility in Eastman Business Park (EBP) is now FDA-registered and certified. Production of phosphate buffered saline (PBS) for laboratory use is scheduled to begin by the end of 2025, with a strategic goal to bridge to more sophisticated products like IV saline. This initiative represents a direct entry into the regulated healthcare market, diversifying revenue streams.
• Light-Blocking Technology: Leveraging proprietary electrophotographic toner technology, Kodak has developed a carbon-less fabric coating for superior light management, from complete blackout to selective filtering, including UV and IR light. A production-scale machine has been installed in EBP, indicating commercialization efforts.
• Transparent Antennas: Utilizing copper micro-wire technologies and high-resolution printing, Kodak aims to contract-manufacture custom transparent antennas for automotive, commercial construction, and other applications requiring excellent radio frequency (RF) and optical performance. This technology also has potential for transparent heaters in biomedical analytical devices and telecom.

These technological differentiators are not merely R&D projects; they represent tangible efforts to create new revenue streams, enhance existing product lines, and build a competitive moat. For investors, these initiatives signify Kodak's strategic intent to move beyond traditional print into high-value, specialized markets where its unique material science and coating expertise can command premium pricing and drive long-term growth.

Competitive Arena: Battling for Market Share

Kodak operates in a dynamic competitive landscape, facing both direct and indirect rivals across its print and advanced materials segments. In commercial print, the company competes with established players like Xerox Holdings Corporation (XRX), HP Inc. (HPQ), and Canon Inc. (CAJ), while in advanced materials, Fujifilm Holdings Corporation (FUJIY) is a significant competitor.

Kodak's competitive positioning in the print industry has been significantly bolstered by recent developments regarding lithographic plates. Following the exit of other U.S. manufacturers, Kodak, as the last remaining domestic producer, faced intense competition from low-priced, often subsidized, imports from China and Japan. In a crucial victory for U.S. manufacturing, the U.S. International Trade Commission (ITC) imposed anti-dumping duties ranging from 91.83% to 317.43% and countervailing duties of 35.66% on these imported plates. This action, as stated by management, has created a "level playing field," allowing Kodak to compete more effectively on price and quality, which is vital for its Print segment's profitability and market share.

Against broader digital printing competitors like HP and Xerox, Kodak's PROSPER and ULTRASTREAM inkjet technologies offer specialized capabilities, particularly in high-speed and high-quality commercial applications. While HP and Xerox often boast greater scale and broader enterprise service offerings, Kodak's focus on specific performance metrics, such as the PROSPER 7000 Turbo's speed and upgradability, provides a differentiated value proposition for customers seeking specialized solutions.

In the advanced materials space, Kodak's deep expertise in chemistry and coating processes, honed over decades of film manufacturing, provides a unique competitive advantage against diversified players like Fujifilm. The investments in EV battery materials, cGMP pharmaceutical reagents, and transparent antennas are direct applications of this core competency, aiming to capture market share in high-growth, high-margin sectors.

Beyond direct competitors, Kodak also faces indirect threats from digital substitution across both print and film. However, a notable industry trend is the resurgence of film photography, particularly among Generation Z. This demographic, seeking "digital minimalism" and "nostalgia without lived experience," is driving increased demand for still and motion picture film. Kodak has responded by investing in expanding its film manufacturing capacity, including a planned modernization shutdown in November 2024, demonstrating its commitment to this unexpected growth area. This trend, coupled with the estimated $535 million global cinema camera market by 2032, provides a tailwind for Kodak's film business, distinguishing it from competitors who have largely exited this space.

Financial Performance: A Mixed Picture of Transition

Kodak's financial performance in the second quarter and first half of 2025 reflects a company in transition, balancing legacy business declines with strategic investments and cost management. For the three months ended June 30, 2025, consolidated revenues were $263 million, a slight 1% decrease from $267 million in Q2 2024. Year-to-date (YTD) Q2 2025 revenues also saw a modest 1% decline to $510 million from $516 million in the prior year period. This overall stability masks underlying shifts: Print segment revenues declined by $8 million (4%) in Q2 and $25 million (7%) YTD, primarily due to lower volumes. Conversely, the Advanced Materials and Chemicals segment demonstrated growth, with revenues improving by $2 million (3%) in Q2 and $17 million (13%) YTD, driven by favorable pricing and volume increases in Industrial Film and Chemicals and Motion Picture. The Brand segment also contributed positively, with revenues up $2 million for both periods.

Gross profit for Q2 2025 decreased by $7 million (12%) to $51 million, resulting in a gross profit margin of 19%, down from 22% in Q2 2024. YTD gross profit declined by $10 million (9%) to $97 million, maintaining a 19% margin. These declines were primarily driven by higher aluminum costs ($5 million in Q2, $12 million YTD), increased manufacturing costs (especially in Print), and lower volumes in both Print and AM&C. These headwinds were partially offset by successful pricing actions in both Print and AM&C ($5 million each in Q2, $8 million and $12 million YTD, respectively) and favorable foreign currency fluctuations.

The company reported a net loss of $26 million for Q2 2025, a significant shift from the $26 million net income in Q2 2024. YTD net loss was $33 million, compared to a $58 million net income in the prior year. This was largely influenced by a $17 million non-cash asset impairment charge related to its investment in Wildcat Discovery Technologies, Inc., and a substantial decline in pension income (excluding service cost component), which decreased by $25 million in Q2 and $44 million YTD due to a change in the Kodak Retirement Income Plan (KRIP) strategy. Operational EBITDA for Q2 2025 was $9 million, down $3 million from the prior year, and YTD Operational EBITDA was $11 million, down $5 million. These figures reflect the impact of lower volumes and higher costs, partially mitigated by pricing actions and reduced spending on IT systems and organizational restructuring.

Kodak's cash position shows an unrestricted cash balance of $155 million as of June 30, 2025, a decrease of $46 million from December 31, 2024. Net cash used in operating activities for the first half of 2025 was $30 million, a deterioration from the $10 million provided in the prior year, primarily due to an increase in trade receivables. Cash used in investing activities increased to $19 million, driven by higher capital expenditures ($5 million increase) and lower proceeds from asset sales ($12 million decrease), reflecting ongoing investments in AM&C growth initiatives.

Deleveraging and Liquidity: The Path to Financial Stability

A critical aspect of Kodak's current financial narrative is its liquidity position and the plan to address significant debt maturities. The company's Q2 2025 filing included a "going concern" disclosure, a mandatory reporting requirement under U.S. GAAP. This was triggered because the Series B Preferred Stock, with a carrying value of $99 million, has a mandatory redemption date of May 28, 2026. This, in turn, accelerated the maturity date of the company's Term Loans (approximately $477 million) to May 22, 2026, and the Letter of Credit Facility Agreement (approximately $24 million) to May 12, 2026. As these obligations fall due within 12 months, and committed financing or available liquidity to meet them is not yet "probable" under U.S. GAAP (as the plans are not solely within Kodak's control), the disclosure was necessary.

Kodak's primary mitigation strategy centers on the termination of the U.S. Kodak Retirement Income Plan (KRIP). The process is proceeding as planned, with participant settlement elections concluding on August 15, 2025, annuity purchases scheduled for October 2025, and payouts in November 2025. The company expects KRIP to distribute approximately $500 million in excess assets, including $300 million in cash, to the company and the Kodak Cash Balance Plan by December 2025. This timing is crucial, as it precedes the May 2026 debt maturities.

Under the terms of the 2025 Term Loan Credit Agreement Amendments, Kodak is obligated to use 100% of the net cash proceeds from the KRIP reversion to prepay Term Loans until the balance reaches $200 million, and then 50% of proceeds until it reaches $100 million, plus a 1% prepayment fee. Assuming the $300 million cash proceeds are applied, the outstanding Term Loan balance at May 22, 2026, is estimated to be approximately $175 million. Kodak projects ultimately receiving approximately $105 million in cash or other assets from the KRIP surplus over the next three years. This deleveraging is expected to significantly strengthen the balance sheet and reduce annual interest costs.

Further bolstering its financial flexibility, Kodak successfully exchanged all outstanding Series C Preferred Stock (carrying value $123 million as of June 30, 2025) for 15.10 million shares of common stock on August 8, 2025, eliminating this obligation. The company also has an At-The-Market (ATM) equity offering agreement in place to sell up to $100 million of common stock, though no shares have been sold as of June 30, 2025. Additionally, Kodak elected to pay the cash interest payment for its term loan entirely in kind (PIK) for Q2 2025, a flexibility extended for the next six quarterly payments, to conserve cash.

Outlook and Strategic Imperatives

Kodak's outlook is firmly rooted in the continued execution of its long-term plan. Management expects total capital expenditures for fiscal year 2025 to be approximately $30 million to $40 million, reflecting ongoing investments in growth initiatives, particularly within the AM&C segment. The new cGMP pharmaceutical manufacturing facility is on track to begin production of phosphate buffered saline by the end of 2025, marking a significant milestone in its diversification strategy. Restructuring actions implemented in the first half of 2025 are projected to generate annual cash savings of approximately $15 million, with the majority expected to be realized by the end of Q3 2025, contributing to improved profitability and cash flow.

The successful termination of KRIP and the subsequent debt reduction are paramount to Kodak's financial future. Management has expressed confidence that once the KRIP reversion is completed, Kodak will be "virtually net debt free" and possess a "stronger balance sheet than we have had in years." This improved financial health is intended to provide the necessary capital to continue investing in profitable growth businesses and to address any remaining debt or preferred stock obligations through refinancing or extension. The company's commitment to U.S. manufacturing, coupled with its technological advancements in print and advanced materials, positions it to capitalize on niche market opportunities and evolving industry trends, such as the growing demand for film and advanced materials in various industrial applications.

Conclusion

Eastman Kodak is in the midst of a critical and complex transformation, shedding its past to build a future rooted in commercial print and advanced materials. The company's strategic pivot, driven by targeted technological innovation and a deep commitment to U.S. manufacturing, is beginning to yield results, particularly in its AM&C segment. While recent financial performance shows the challenges of this transition, marked by a net loss and margin pressures from rising costs, the underlying operational efficiencies and pricing actions are helping to mitigate these headwinds.

The successful execution of the KRIP termination and the subsequent deleveraging of the balance sheet are the most critical near-term catalysts for Kodak. This financial maneuver, combined with the elimination of the Series C Preferred Stock obligation, is poised to significantly strengthen the company's financial foundation. Despite the required "going concern" disclosure, management's detailed plan and confidence in the KRIP reversion provide a clear roadmap for addressing upcoming debt maturities. For investors, Kodak represents a compelling, albeit high-risk, opportunity to participate in a storied company's determined effort to redefine itself through technological leadership and strategic financial restructuring, aiming for sustainable profitable growth in its chosen markets.