Kodak’s Financial Performance in 2024: Navigating Challenges and Exploring New Opportunities

In the year ended December 31, 2024, Kodak faced a mix of challenges and opportunities in its financial performance. The company’s consolidated revenues declined by $74 million (7%) compared to 2023, primarily due to lower volumes and less favorable pricing in its Print segment. However, the Advanced Materials and Chemicals segment saw improvements in revenue and profitability.

Revenue and Profit Trends

Kodak’s Print segment, which accounted for 71% of total revenues in 2024, experienced a decline of $91 million (11%) compared to 2023. This was driven by reduced volumes in Prepress Solutions, Electrophotographic Printing Solutions, and Prosper, as well as less favorable pricing in Prepress Solutions.

In contrast, the Advanced Materials and Chemicals segment saw a revenue increase of $16 million (6%) from 2023 to 2024. This was primarily due to improved pricing and product mix in the Industrial Film and Chemicals business, as well as higher volumes in the Motion Picture business.

Kodak’s overall gross profit declined by $7 million in 2024, mainly due to lower margins in the Advanced Materials and Chemicals segment, lower volumes and less favorable pricing in the Print segment, and inventory reserve adjustments in the Electrophotographic Printing Solutions business. These unfavorable impacts were partially offset by improved pricing and product mix in Advanced Materials and Chemicals, higher restructuring costs in the prior year, improved volume in the Brand segment, and changes in employee benefit reserves.

Selling, general, and administrative (SG&A) expenses increased by $20 million in 2024, primarily due to investments in information technology systems, changes in organizational structure, costs associated with the drupa trade show, and certain litigation matters. These cost increases were partially offset by a decline in equity compensation costs, changes in employee benefit reserves, and a reduction in other SG&A costs.

Strengths and Weaknesses

One of Kodak’s key strengths is its focus on core competency areas, such as print and advanced materials and chemicals, where it leverages its proprietary technologies to deliver technologically advanced products. The company’s strategy includes generating profitable revenues through a focus on customers across the Print segment, promoting the use of film and expanding the applications of its film and chemicals, and continuing to invest in automation and streamlining processes to drive cost reductions and operating efficiencies.

However, Kodak faces several challenges, including:

1. Digital Substitution: Segments within the print industry and the film industry face competition from digital substitution, which can impact Kodak’s revenues and profitability.

2. Higher Manufacturing Costs: Kodak has experienced increased manufacturing costs for certain businesses due to lower volumes and increases in labor, material, and distribution costs, as well as supply chain disruptions and shortages in materials and labor.

3. Competitive Pricing Pressures: The Print segment’s digital plate products are experiencing challenges from higher prices and availability of raw materials, digital substitution, and competitive pricing pressures.

4. Inventory Challenges: The Electrophotographic Printing Solutions business within the Print segment experienced higher-than-expected volume declines, leading to inventory reserve adjustments.

5. Labor Shortages: The Advanced Materials and Chemicals segment has experienced labor shortages in certain manufacturing areas, which have contributed to increased backorders.

6. Geopolitical Tensions: Kodak has been impacted by the war in Ukraine and the conflicts involving Israel, which have disrupted its operations and increased costs.

Outlook and Future Opportunities

Despite the challenges, Kodak sees opportunities for growth and profitability in several areas:

1. Print Segment Innovations: Kodak is investing in digital print technologies, such as the PROSPER Inkjet Systems and the ULTRASTREAM inkjet technology, to offset the impact of short-term and long-term market dynamics on pricing and volume pressures.

2. Advanced Materials and Chemicals Initiatives: Kodak is leveraging its expertise in chemistry, deposition, and coating processes to explore new opportunities in areas like EV/Energy Storage Battery Material Manufacturing, Reagent Manufacturing, Light-Blocking Technology, and Transparent Antennas.

3. Pharmaceutical and Healthcare Opportunities: The company remains interested in working with governmental agencies to leverage its assets and technology to onshore manufacturing of pharmaceutical and other healthcare materials.

4. Intellectual Property Monetization: Kodak plans to capitalize on its intellectual property through new business or licensing opportunities in 3D printing materials, smart material applications, and printed electronics markets.

5. Kodak Retirement Income Plan (KRIP) Termination: Kodak’s plan to terminate the KRIP and use the surplus assets to reduce debt and fund the Replacement Plan could provide additional liquidity and financial flexibility.

Conclusion

Kodak’s financial performance in 2024 reflects the challenges it faces in its core print and film businesses, as well as the opportunities it is pursuing in advanced materials and chemicals, and other emerging technologies. The company’s ability to navigate the current economic and geopolitical environment, effectively manage its costs, and capitalize on its strengths and new initiatives will be crucial in determining its future success.