Eastman Kodak Company (KODK) Cash Flow Statement

The OCF/NI ratio of 0.29 in 2026Q2 suggests that reported net income is not fully converting to cash, with working capital changes consuming $18M. Over the past year, OCF has been highly erratic, ranging from -$38M to $489M, while net income has also been volatile, including a -$108M quarter. This divergence implies that accruals and non-cash items, such as impairments and pension adjustments, are significantly distorting reported profitability, warranting close monitoring of cash conversion sustainability.

Despite four consecutive quarters of revenue improvement, FCF has been negative in six of the last ten quarters, with the only positive quarter being 2025Q4's $483M, which appears to be an anomaly driven by a $489M operating cash flow spike. The latest quarter's FCF of $0, despite a $17M net income, suggests that working capital demands and capex are absorbing earnings. This pattern implies that the operational turnaround is still in its early stages, and investors should monitor whether FCF can consistently turn positive as revenue growth matures.

The sharp reduction in capex, from $20M in 2024Q3 to $5M in 2026Q2, indicates that management is prioritizing cash preservation over investment in growth initiatives. While this supports near-term cash flow, it may also signal underinvestment in the Advanced Materials and Chemicals segment, which is critical for the company's strategic pivot. The low capital intensity relative to revenue suggests that the legacy manufacturing assets are being maintained rather than expanded, which could constrain the ability to capitalize on emerging opportunities.

The consistent negative working capital changes in most quarters, except 2024Q4 and 2024Q1, suggest that KODK is experiencing persistent cash outflows tied to inventory build-up or slower collections. In 2026Q2, working capital consumed $18M, offsetting the $17M net income, which explains the zero FCF. This pattern implies that the company may be funding growth through working capital, which is not sustainable without improved efficiency. Investors should monitor whether management can stabilize working capital cycles as revenue scales.

The company's capital deployment appears to prioritize maintaining a minimal dividend and occasional buybacks, with no significant acquisition activity. The $2M buyback in 2026Q2, despite negative FCF in prior quarters, suggests management is using cash reserves to support the stock price, which may not be sustainable. The lack of meaningful investment in growth or debt reduction, given the negative net margin, implies that capital allocation is defensive rather than opportunistic, warranting scrutiny of management's long-term value creation strategy.

The cumulative OCF of $448M versus net income of -$23M suggests that reported losses are not fully reflecting the company's cash-generating ability, largely due to large non-cash charges like impairments and depreciation. However, the $489M OCF in 2025Q4 appears to be an outlier, possibly from a one-time event, which inflates the cumulative figure. Excluding that quarter, cumulative OCF would be negative, implying that the underlying business is still burning cash. This divergence highlights the importance of adjusting for one-time items when assessing Kodak's true cash generation.