Kodak plans $600M pension reversion to drive balance sheet deleveraging and growth

Earnings Call Insights: Eastman Kodak Company (KODK) Q3 2025

MANAGEMENT VIEW

* James Continenza, Executive Chairman & CEO, stated that "this quarter has been our best performance in years" and emphasized that Kodak is "starting to see a return from our long-term investments and growth initiatives" and continues to "increase our operational efficiencies." He highlighted $269 million in revenue for the quarter, an $8 million improvement compared to last year, and gross profit of 25% versus 17% in the third quarter last year, amounting to an increase of $23 million in gross profit.
* Continenza provided an update on the U.S. pension reversion process, noting, "we now expect to get approximately $600 million, which is $100 million more than we originally estimated. About $450 million will be in cash and $150 million will be in hedge funds that will convert to cash over time."
* He detailed growth in the Advanced Materials and Chemicals segment, stating that "revenue is up 15% year-over-year" and that investments in their core competency of layering and coating are paying off. The company has also nearly doubled its film finishing capacity and launched a direct distribution brand of films.
* The commercial print business remains a focus, with continued investment in new products and a full range of solutions for both offset and digital print.
* On a noteworthy disclosure, Continenza addressed the prior going concern issue: "The prior condition about Kodak's ability to continue as an ongoing concern has been resolved, eliminating the need for the going concern disclosure in this quarter."
* David Bullwinkle, CFO & Senior VP, said, "We are very pleased to report Kodak had an excellent quarter with strong business performance that delivered significant year-over-year growth in gross profit and operational EBITDA."

OUTLOOK

* Management expects to complete the pension reversion process in December 2025, with anticipated proceeds of approximately $600 million. Of this, approximately $305 million in cash will be used to pay the company's term loans, reducing the principal balance to approximately $200 million and lowering interest expense.
* Kodak expects to end 2025 with a cash balance of more than $300 million and to be in a net positive cash position with respect to term loans and Series B preferred stock obligations.
* The replacement employee benefit plan is projected to have assets of approximately $250 million after initial funding.
* The company emphasizes continued investment in growth initiatives and operational efficiency as a path to sustainable long-term value for shareholders.

FINANCIAL RESULTS

* Revenues were $269 million, up $8 million or 3% year-over-year, with $4 million growth on a constant currency basis.
* Gross profit was $68 million, an increase of $23 million or 51% compared to 2024, due to improved pricing, volume, and lower aluminum costs, partially offset by higher manufacturing costs.
* Gross profit percentage for the quarter was 25% compared to 17% in 2024.
* GAAP net income for the quarter was $13 million, down $5 million from 2024, impacted by a $26 million decrease in noncash pension income due to a change in investment strategy.
* Operational EBITDA for Q3 2025 was $29 million, up $28 million year-over-year.
* Unrestricted cash balance at quarter's end was $168 million, an increase of $13 million from June 30, 2025.

Q&A

* NOT_APPLICABLE: No formal Q&A session was held during this earnings call, as explicitly stated by management.

SENTIMENT ANALYSIS

* Analysts' sentiment cannot be assessed due to the absence of a Q&A session on this call.
* Management's tone was confident, highlighting operational achievements and progress in deleveraging: "We are very pleased to report Kodak had an excellent quarter with strong business performance that delivered significant year-over-year growth in gross profit and operational EBITDA."
* Compared to the previous quarter, management's tone shifted positively, especially with the resolution of the going concern issue and higher-than-expected pension reversion proceeds.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter saw a resolution to the going concern disclosure, which was a key concern in the previous quarter.
* Pension reversion expectations increased to $600 million from the prior $500 million estimate, with a larger cash component and clearer plans for debt repayment.
* Gross profit percentage improved from 19% in Q2 to 25% in Q3, and operational EBITDA surged from $9 million in Q2 to $29 million in Q3.
* Management's confidence and emphasis on operational execution and growth initiatives were more pronounced this quarter.
* Analysts' concerns regarding balance sheet and going concern issues appear to have been addressed, reducing uncertainty.

RISKS AND CONCERNS

* Management acknowledged ongoing economic uncertainties, including global trade and inflation.
* Higher manufacturing costs continue to impact results, though these are partially offset by operational efficiencies.
* The pension reversion process, while near completion, is still subject to final regulatory and procedural steps.
* Management spent resources countering misleading reporting related to the going concern disclosure in the previous quarter.

FINAL TAKEAWAY

Kodak's third quarter of 2025 was marked by its strongest performance in years, driven by growth in its Advanced Materials and Chemicals segment, a substantial increase in gross profit, and the resolution of prior going concern uncertainties. With the pension reversion process set to deliver $600 million—$100 million more than previously estimated—the company is poised to deleverage its balance sheet and invest further in core growth initiatives, supporting a trajectory toward sustained operational and financial improvement.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/kodk/earnings/transcripts]

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* Eastman Kodak Company 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4840431-eastman-kodak-company-2025-q3-results-earnings-call-presentation]
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