Eastman Kodak Q3 2025 Earnings Call: Contradictions Emerge in Pension Reversion Timelines and Revenue Growth Claims

Date of Call: None provided

Financials Results

• Revenue: $269 million, up $8 million or ~3% year-over-year (vs $261M in Q3 2024); +$4M on a constant currency basis
• Gross Margin: 25%, compared to 17% in Q3 2024 (up 8 percentage points); gross profit $68 million, up $23 million or 51% YOY

Guidance:

• Pension reversion expected in December 2025 delivering approximately $600M (about $450M cash and $150M in hedge funds converting to cash).
• Approximately $305M of cash proceeds to be used to pay term loans, reducing principal to roughly $200M and lowering interest expense.
• Expect to end 2025 with a cash balance of more than $300M and be net cash positive relative to term loans and Series B preferred stock obligations.
• Replacement U.S. cash-balance plan to be funded (projected ~ $250M in assets); 25% of surplus to plan and 20% excise tax to be settled.
• Prior going-concern uncertainty resolved following pension actions and debt maturity extensions.

Business Commentary:

* Revenue and Gross Profit Growth: - Kodak reported revenue of $269 million for the third quarter of 2025, up 3% year-over-year. - Gross profit increased to $68 million, up 51% year-over-year, driven by improved pricing, volume, and lower aluminum costs, despite higher manufacturing costs.

• Pension Reversion and Debt Reduction:
• Kodak expects to receive approximately $600 million from the pension reversion process, consisting of $450 million in cash and $150 million in hedge funds.

• These funds will be used to pay down term debt, reducing the principal balance to approximately $200 million, and lower interest expense going forward.

• Advanced Materials and Chemicals Segment Expansion:

• Revenue in the Advanced Materials and Chemicals segment grew by 15% year-over-year.

• Growth is attributed to investments in core competencies, like layering and coating, and new pharmaceutical initiatives.

• Operational Efficiency and EBITDA Improvement:

• Kodak's operational EBITDA for the third quarter of 2025 was $29 million, up $28 million from 2024.

• The improvement was due to improved pricing and volume, lower aluminum costs, and reduced litigation-related expenses.

• Resolution of Going Concern Disclosure:

• The going concern disclosure was removed due to the successful resolution of pension obligations and debt restructuring.
• This resolution provides clarity on Kodak's ability to continue as an ongoing concern and meets U.S. GAAP accounting standards.

Sentiment Analysis:

Overall Tone: Positive

• "This quarter has been our best performance in years."; revenues of $269 million, up $8 million or 3% YOY; "gross profit of 25% versus 17% in the third quarter last year"; management: "we expect to be net cash positive" after the pension reversion and debt paydown.

Contradiction Point 1

U.S. Pension Plan and Asset Reversion

It involves differing expectations regarding the timeline and financial impact of the U.S. pension plan asset reversion, which is crucial for long-term financial planning.

What is the overview of Q2 2025 financial results and strategic initiatives? - James Continenza (Eastman Kodak Company)

20251107-2025 Q3: The corporate KRIP termination is expected to be effective by June 30, 2025, with approximately $600 million in assets expected to be reversioned to Kodak upon termination. - David Bullwinkle(CFO)

Can you provide an update on the U.S. pension plan and KRIP termination processes? - David Edward Bullwinkle (Eastman Kodak Company)

2025Q2: We expect approximately $500 million in assets to revert to the company by December 31, 2025. - David Edward Bullwinkle(CFO)

Contradiction Point 2

Revenue Growth and Performance

It highlights differing perspectives on revenue growth and performance, which are critical for investor expectations.

How did the company perform in Q3, and what are the plans for long-term investments? - James Continenza (Eastman Kodak Company)

20251107-2025 Q3: We were particularly pleased with our performance in our Advanced Materials and Chemicals segment, which delivered a 51% increase in gross profit. - James Continenza(CEO)

What are the Q2 2025 financial results and strategic initiatives? - James V. Continenza (Eastman Kodak Company)

2025Q2: Our core business performed as expected. Revenue for the second quarter was approximately $263 million, which was roughly flat year-over-year. - James V. Continenza(CEO)

Contradiction Point 3

Revenue Growth and Financial Performance

It involves differing presentations of revenue growth and financial performance, which are crucial for investor expectations and company evaluations.

The call did not include a Q&A session. Were there any questions asked? - Question not explicitly stated as it was part of the presentation.

20251107-2025 Q3: Overall, Kodak's financial performance for the third quarter was the best in many years, driven by long-term investments and operational efficiencies. - James Continenza(CEO)

No questions were asked during the call as there was no Q&A session. - Question not explicitly stated as it was part of the presentation.

2025Q1: Revenues were $247 million for the first quarter of 2025, a decline of $2 million or 1% compared to the previous year. - Jim Continenza(CEO)

Contradiction Point 4

U.S. Pension Reversion Process

It involves the progress and expected outcomes of the U.S. pension reversion process, which has significant implications for the company's financial health and debt reduction.

No questions were asked during the call as there was no Q&A session. - Question not explicitly stated as it was part of the presentation.

20251107-2025 Q3: The termination and settlement process for the U.S. Kodak Retirement Income Plan (KRIP) is proceeding as planned, with the expectation of using any reverted assets to reduce long-term debt. - Jim Continenza(CEO)

Why didn't the call include a Q&A session? - Question not explicitly stated as it was part of the presentation.

2025Q1: The plan is to use any reverted assets to reduce long-term debt. - David Bullwinkle(CFO)

Contradiction Point 5

Revenue Growth and Decline

It highlights a discrepancy in the company's reported revenue growth trends between the two quarters, which can impact investor perceptions and strategic planning.

Can you provide an overview of the third-quarter performance and the status of long-term investments? - None

20251107-2025 Q3: Our third-quarter 2025 results were the best we have delivered in years, highlighted by a 3% year-over-year increase in revenue. - James Continenza(CEO)

Can you provide details on the company's recent financial results and cash flow? - None

2024Q4: Revenue decreased 10% year over year in the fourth quarter, reflecting the continuing impact of inflationary cost increases and the competitive nature of our sales in the fourth quarter. - David Bullwinkle(CFO)