Eastman Kodak Company (KODK) Earnings Call Transcript & Summary

Thank you. Good day and thank you for standing by. Welcome to the Eastman Kodak Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised, today's conference is being recorded.

I'd like to have the conference over your speaker today, Denise Goldbarg, please go ahead. Thank you, and good afternoon, everyone. I am Denise Goldbarg, Eastman Kodak's Chief Marketing Officer, and welcome to Eastman Kodak's second quarter 2026 earnings call. At 4.15 this afternoon, Kodak filed its Form 10-Q. issued its release on financial results for the second quarter of 2026. You may access the presentation and webcast for today's call on our Investor Center at investor.kodak.com. During today's conference call, we will be making certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. We intend for these forward looking statements to be covered by the safe harbor provisions for forward looking statements contained in section 27 of the Securities Act of 1933 and section 21 of the Securities Exchange Act of 1934. Investors are cautioned not to unduly rely on forward looking statements. And such statements should not be read or understood as a guarantee of future performance or results. All forward-looking statements are based on codex expectations and various assumptions. Future Inter-events or results may differ from those anticipated or expressed in the forward-looking statements. Important factors that could cause actual events or results to differ materially from these forward-looking statements include, among others, the risks, uncertainties, and other factors described in more detail in CODAX filings with the U.S. Securities and Exchange Commission from time to time. All forward looking statements attributable to codec or persons acting on its behalf only apply as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements included or referenced in this presentation. Codec undertakes no obligation to update or revise forward-looking statements or reflect events or circumstances that may arise after the date made or to reflect the occurrence of unanticipated events. In addition, the release just issued and the presentation provided contains certain measures that are deemed non-GAP measures. Reconciliations to the most directly comparable GAAP measures have been provided with the release and within the presentation and other documents on our website in our Investor Center at Investor.CODAX.com. Speakers on today's call are Jim Continenza, Kodak's Executive Chairman and Chief Executive Officer, and David Bullwinkle, Kodak's Chief Financial Officer and Senior Vice President. We will not be holding a formal Q&A during today's call. As always, the Investor Relations team is available for follow-up. I will now turn the call over to Jim. Thank you and have a great day.

Welcome everyone and thank you for joining the second quarter 2026 investor call for Eastman Kodak. If I had to summarize our performance in the second quarter, it would be stability and growth. Kodak has delivered year-over-year improvements in key metrics for four consecutive quarters. We've done it by consistent focus on leveraging our core strengths and focusing on execution. Highlights for the second quarter, consolidated revenues of $311 million compared with $263 million for Q2 2025, an increase of $48 million or 18%. Gross profit of $82 million compared with $51 million for Q2 2025, an increase of $31 million or 61%. Operational EBITDA of $36 million, compared with $9 million for Q2 2025, an increase of $27 million or 300%. debt to EBITDA of one times in Q2 2026 versus total debt to EBITDA of 23 times in Q2 2025. I don't want to just breeze through these metrics again. The growth in revenue, growth in gross profit, growth in operational EBITDA, the continually deluxing of the business and strictly the balance sheet. It's all been part of our long-term plan over the last seven years. We've continued to focus and execute on our plan and we're going to continue to focus and execute and innovate new products in the future. Moving on to segments of the business. Several years ago, right? Part of our business, we were vacating. Was a, as you recall, we've invested heavily back in it. This is our core competencies. This is what we do. This is our know how this is where our people shine. We are the best in the world. that layering and coating. It's just what we do. When we get into AM&C, I'm proud to see the results. I'm going to walk through some of them now. Advanced materials and chemicals revenues were $105 million, compared with 75 million for Q2 2025, an increase of $30 million 40 percent still film. We now offer a range of Kodak films sold directly to distributors to stabilize the market and meet customer demand. Motion, picture, film. This is a big one for me. When we look at where we are today and the resurgence we've seen and the demand, I'm so proud of the decision from my board all the way down to the leadership to really reinvest in this. And I want to thank some key directors, Christopher Nolan, Stephen Spielberg, and others for helping us understand the importance and pushing and supporting it. Currently out are two blockbuster movies that were shot on Kodak Film. The Odyssey, which was shot on 65 millimeter and played on 70 millimeter at IMAX theaters. You have to see it. That's all I'm going to tell you. Steven Spielberg's Disclosure Day, again, phenomenal movie shot on Kodak Film. It utilized our new Vision 3 AHU film structure. And we're glad to see, you know, the resurgence coming back into the industry and the appreciation we're seeing even of movie buffs and movie fans. Continue on AM&C. Let me give you an update on pharma. Kodak launched its first pharmaceutical website An important part of our strategic growth, adding saline products to the portfolio, continuing to work towards Class 2 certification to manufacture more complex, higher margin products. We continue to invest in our battery coating. We're putting CapEx into the machine to add additional capabilities, such as coating electrodes at a large scale and using our pilot facility to help other customers scale new technologies. Moving on to now our largest division, commercial print. We continue to see growth in our commercial print business. Print. revenues were $195 million compared with $178 million due to 2025, an increase of $17 million or 10%. Growth is remarkable in a competitive marketplace that's also dealing with shortage in supply, high cost, inflation. We continue to deliver all over the globe in all three markets that we manufacture. The performance you're seeing in commercial print reflects the superiority of our products and service, particularly when we we have a level playing field. And in these markets today with wars, supply, inflation, we continue to deliver and support and take care of our customers. Our next steps, focus. We have to focus on growth. We've been saying that for the last few quarters. We have built a stable, growing business. We are solidly in control of our destiny. We continue to work for shareholders, employees, and customers We are building momentum. We will continue to capitalize on our strengths as an industrial manufacturer. To accelerate our investment in R&D, we acquired an R&D division to help us focus on innovation, efficiency, and quality control. Now I'm going to turn it over to Dave Bullwinkle to discuss our financial results.

Thanks Jim and welcome to the call everybody. Thank you for joining us today. This afternoon the company filed its form 10Q for the quarter ended June 30, 2026. As I have done consistently, I encourage you to review the filing in its entirety along with today's earnings release, which provides additional detail on the results and metrics discussed during this call. Let's begin with the financial highlights for the second quarter of 2026. Once again, Kodak delivered a strong quarter with significant year-over-year growth in revenue, gross profit, and operational EBITDA, despite continued volatility in commodity costs and ongoing inflationary pressures. performance reflects our ability to navigate a challenging business environment by focusing on operational excellence and improving efficiency. Notably, this marks our fourth consecutive quarter of year-over-year growth across all three metrics. Highlights of our second quarter performance include revenue of $311 million, up $48 million, or 18% from the prior year quarter, primarily driven by robust growth in print and advanced materials and chemicals. Our gross profit was $82 million, compared with $51 million in the prior year quarter, an increase of $31 million, or 61%. This strong growth was driven by favorable pricing and higher volumes in print and advanced materials and chemicals, despite higher commodity costs for aluminum and silver. Our gross profit percentage was 26% compared with 19% in the prior year quarter, reflecting strong operational execution. Our gap net income was $17 million compared with a gap net loss of $26 million in the prior year quarter, representing a $43 million improvement. Key drivers of the year-over-year improvement in GAAP net income include $20 million increase in earnings from operations, reflecting strong growth in revenue and gross profit. a $9 million reduction in interest expense, which is driven by the significant reduction in our term loan debt. and the $28 million improvement in other income and charges net, driven primarily by the absence of asset impairment charges in the current year quarter versus a $17 million charge in the prior year quarter. These benefits were partially offset by an $11 million decline in non-cash pension INCOME FOLLOWING THE TERMINATION OF THE CRIP PENSION PLAN IN THE FOURTH QUARTER OF 2025. As we have previously communicated, we expect pension income to remain below prior year levels throughout 2026 as a result of the CRIP plan termination and asset reversion. Our operational EBITDA was $36 million compared with $9 million in the prior year quarter, an improvement of $27 million. This increase was primarily driven by improved pricing and higher volumes, which more than offset increases in aluminum and silver costs, as well as the as well as higher SG&A expenses primarily related to the net change in employee benefit reserves and corporate infrastructure costs. These results reflect the benefits of the actions we have taken to strengthen our balance sheet and create long-term shareholder value. Now let's turn to our financial highlights for the first half of 2026. We reported revenue of $576 million, an increase of $66 million, or 13% year-over-year. Currency fluctuations had a $7 million favorable impact on revenue. Our gross profit was $139 million, compared with $97 million in the prior year period, an increase of $42 million, or 43%. Our gross profit percentage was 24% compared to 19% in the prior year period. The company's gap net income for the year-to-date period was $1 million, compared with a gap net loss of $33 million in the prior year period, representing a $34 million increase, primarily driven by significant improvements in operating earnings, lower interest expense and the absence of asset impairment charges compared to the prior year period, partially offset by lower pension income. The company's operational EBITDA was $51 million compared with $11 million in the prior year period, an increase of $40 million, primarily driven by improved pricing and higher volumes, which again, more than offset higher commodity costs as well as SG&A expenses, as explained earlier. Overall, our second quarter and first half results demonstrate continued momentum across the business, reflecting improved profitability and the ongoing benefits of our initiatives to strengthen the balance sheet. Turn to cash and our liquidity. We ended the second quarter with $290 million of unrestricted cash down $47 million from December 31st, 2025. However, we You should note this decline primarily reflects required term loan repayments partially offset by cash proceeds received from the redemption of CRIP investment assets. Let me briefly highlight the key drivers of our quarter end cash position. First, we received $41 million in cash proceeds during the quarter from the redemption of hedge fund investments related to the CRIP pension reversion. Here to date through June 30th, 2026, cumulative proceeds totaled $87 million. Second, consistent with the term loan amendment, we made an additional $50 million principal payment on our higher rate term loans in June. bringing total principal repayments to $100 million for the year-to-date period. These repayments were primarily funded through the CRIP asset redemptions and further strengthen our balance sheet while reducing future interest expense. As a result, our net cash position increased to $180 million at June 30, 2026, from $128 million at December 31, 2025. This is an improvement of $52 million that reflects the continued strengthening of our financial position. Finally, working capital was impacted by a $37 million increase in inventory. The majority of this increase occurred within our AM&C segment during the first quarter as we previously reported. was driven primarily by significantly higher silver prices, which were more than double year-end levels, as well as an increase in the volume of silver we carry on the balance sheet due to supply terms. Inventory levels also increased as we built product ahead of a planned second quarter maintenance shutdown. As I conclude my remarks, I would like to personally reflect on my experiences over the years as Kodak progressed through this remarkable transformation. I've seen the transformation of Kodak over many years, and I'm proud of the progress we have made. Our strong performance over recent quarters has been the result of our commitment to executing our long-term plan. excited about the next phase of our turnaround as we shift our focus to growth. Thank you for your time and attention, and I'll turn the call back over to Jim.

Thank you, Dave. In summary, Kodak has built a stable growth business and delivered four consecutive quarters of strong year-over-year improvements. such as year-over-year growth and revenue, year-over-year growth and gross profit, year-over-year growth and operational EBITDA. And reminding everyone, our growth principles are strategically leveraging our core competencies, IT and infrastructure, emphasizing excellence in execution, focus on industrial manufacturing businesses in growth segments with a high barrier to entry and prioritizing opportunities, focusing on ROI and potential growth. With that, I want to thank everyone. I want to thank our shareholders for their patience. I want to thank our board for their participation, always supportive. And I want to thank my leadership team for executing on this plan and all the employees at Codex for giving it everything they have to bring in the company where it is today.

Thank you and goodbye. Thank you, ladies and gentlemen. That concludes today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day. This live transcript is auto-generated without human intervention or review. [Call has ended.]