Results exceed management guidance;
Company announces $2 billion
accelerated share repurchase
CORNING, N.Y.; JULY 27, 2016 - Corning
Incorporated (NYSE: GLW) today announced its results for the second
quarter ended June 30, 2016.
News Summary:
-
Q2 GAAP EPS up $2.23 sequentially to $1.87,
reflecting a one-time $2.7 billion non-taxable gain on strategic
realignment of Dow Corning; core EPS up $0.09, or 32% sequentially,
to $0.37; Q2 GAAP and core sales increased sequentially
-
Optical Communications sales increased 28%
sequentially on strong demand and cable production recovery,
exceeding management expectations
-
Corporate gross margin exceeded guidance by more
than one percentage point, benefiting from higher sales and
operational improvements in Optical Communications
-
Strategic realignment of Dow Corning Corporation
was a significant milestone in focusing Corning's portfolio, and
added $4.8 billion in cash
-
Sales and EPS expected to grow both sequentially
and on year-over-year basis in Q3
-
New $2 billion accelerated share repurchase
further advances Strategy and Capital Allocation Framework
"The sequential improvement surpassed our
expectations and reflects increasing momentum in our businesses
that we expect to continue through the second half of this year. We
anticipate both sequential and year-over-year sales and EPS growth
in the third quarter," Wendell P. Weeks, chairman, chief executive
officer, and president, said.
Update on Strategy and Capital
Allocation Framework
Weeks added, "We continue to make great progress on our leadership
priorities through our Strategy and Capital Allocation Framework.
We are creating significant value for our shareholders, increasing
our financial strength, and focusing 80% of our resources on our
three core technologies, four manufacturing and engineering
platforms, and five market-access platforms. The realignment of our
interest in Dow Corning is a significant milestone."
On May 31, Corning completed the realignment of
its interest in Dow Corning, acquiring a newly formed subsidiary
that contains $4.8 billion in cash and holds an equity interest in
Hemlock Semiconductor Group.
Weeks noted additional progress on long-term
growth opportunities, including an acquisition in Optical
Communications and new wins for gas-particulate filters in
Environmental Technologies. And last week, the company introduced
Corning®
Gorilla® Glass 5, its
newest innovation for mobile consumer electronic products, to
greatly enhance protection against breakage from drops.
Corning also increased the cash it expects to
distribute to shareholders through 2019 to more than $12.5 billion.
The newly announced $2 billion accelerated stock repurchase is
another step toward its cash distribution goals, which also include
increasing the dividend by a double-digit percentage annually.
Second-Quarter 2016 Results and
Comparisons
($ Figures in Millions Unless Otherwise
Designated)
|
Q2 2016 |
Q1 2016 |
% change |
Q2 2015 |
% change |
GAAP Net Sales |
$2,360 |
$2,047 |
15% |
$2,343 |
1% |
GAAP Net Income |
$2,207 |
($368) |
700% |
$496 |
345% |
GAAP EPS |
$1.87 |
($0.36) |
619% |
$0.36 |
419% |
Core Sales* |
$2,440 |
$2,171 |
12% |
$2,517 |
(3%) |
Core Net Income* |
$434 |
$340 |
28% |
$522 |
(17%) |
Core EPS* |
$0.37 |
$0.28 |
32% |
$0.38 |
(3%) |
*Core performance measures are
non-GAAP financial measures. The reconciliation between GAAP and
non-GAAP measures is provided in the tables following this news
release, as well as on the company's website. Core performance
metrics (non-GAAP) are adjusted to exclude the impact of changes in
Japanese yen and Korean won foreign exchange rates, as well as
other items that do not reflect ongoing operations of the company.
Corning does not forecast the movement of the Japanese yen against
the U.S. dollar or other items that do not reflect ongoing
operations. As a result, the company is unable to provide guidance
on a GAAP basis. See "Use of Non-GAAP Financial Measures" for
details on core performance measures.
Segment Results and Outlook
Display Technologies:
|
Q2 2016 |
Q1 2016 |
% change |
Q2 2015 |
% change |
GAAP Net Sales |
$801 |
$705 |
14% |
$789 |
2% |
GAAP Earnings |
$204 |
$209 |
(2%) |
$303 |
(33%) |
Core Sales* |
$880 |
$829 |
6% |
$963 |
(9%) |
Core Earnings* |
$237 |
$223 |
6% |
$290 |
(18%) |
NOTE: In all segments except the
Display Technologies segment, core net sales are consistent with
GAAP net sales. Because a significant portion of revenues in the
Display Technologies segment are denominated in Japanese yen, this
segment's net sales are adjusted to remove the impact of
translating yen into dollars.
As expected, the worldwide glass market and
Corning's volume increased in the high-single-digit percent range
sequentially in the second quarter. Corning's LCD glass price
declines were smaller than those experienced in the first
quarter.
In the third quarter, demand for Corning's LCD
glass is expected to increase by a mid-single-digit percentage
sequentially, and the company expects price declines to remain
moderate and consistent with the second quarter.
Optical Communications:
|
Q2 2016 |
Q1 2016 |
% change |
Q2 2015 |
% change |
GAAP Net Sales |
$782 |
$609 |
28% |
$800 |
(2%) |
GAAP Earnings |
$77 |
$17 |
353% |
$77 |
- |
Core Earnings* |
$86 |
$26 |
231% |
$91 |
(5%) |
Following a first-quarter software issue that
impacted cable production, Corning returned to full capacity toward
the end of the second quarter. Strong demand for fiber-to-the-home
and data center solutions drove higher sequential volume in the
second quarter.
In the third quarter, Corning expects Optical
Communications demand to remain strong and sales to grow
approximately 10% on a year-over-year basis.
Environmental
Technologies:
|
Q2 2016 |
Q1 2016 |
% change |
Q2 2015 |
% change |
GAAP Net Sales |
$259 |
$264 |
(2%) |
$260 |
- |
GAAP Earnings |
$37 |
$34 |
9% |
$46 |
(20%) |
Core Earnings* |
$37 |
$37 |
- |
$46 |
(20%) |
Second-quarter segment sales were consistent with
a year ago and in line with company expectations. High demand for
Corning's automotive light-duty substrates remained strong in the
second quarter, while expected softness continued in heavy-duty
truck demand in North America and China.
In the third quarter, the company anticipates
Environmental Technologies sales will decline slightly on a
year-over-year basis due to foreign exchange rates. Demand for
light-duty products in the automotive market is expected to remain
strong, while weakness will likely continue in the heavy-duty truck
market in North America and China.
Specialty Materials:
|
Q2 2016 |
Q1 2016 |
% change |
Q2 2015 |
% change |
GAAP Net Sales |
$266 |
$227 |
17% |
$272 |
(2%) |
GAAP Earnings |
$38 |
$26 |
46% |
$44 |
(14%) |
Core Earnings* |
$48 |
$32 |
50% |
$44 |
9% |
Second-quarter sales grew 17%, and core earnings
increased 50% sequentially. On a year-over-year basis,
second-quarter segment sales were below company expectations and
down 2% from last year's sales. The mobile consumer electronics
industry is experiencing lower smartphone and tablet demand in
2016, driven by worldwide macroeconomic conditions, fewer major
product launches, and longer replacement cycles.
Third-quarter segment sales are expected to be
consistent with last year's third-quarter sales, and up
sequentially, due to increased Gorilla Glass demand as the mobile
device supply chain ramps up for new product launches in the second
half of this year.
Full-year sales for Specialty Materials are now
expected to be consistent with, or down slightly from, 2015 versus
prior guidance of full-year growth at a mid-to-high single-digit
percentage rate.
Life Sciences:
|
Q2 2016 |
Q1 2016 |
% change |
Q2 2015 |
% change |
GAAP Net Sales |
$215 |
$204 |
5% |
$211 |
2% |
GAAP Earnings |
$17 |
$12 |
42% |
$18 |
(6%) |
Core Earnings* |
$21 |
$18 |
17% |
$21 |
- |
On a year-over-year basis, second-quarter segment
sales increased by a low-single-digit percentage, and third-quarter
sales are expected to grow similarly.
Summary
"We are pleased with our second quarter progress, and we are
confident that Corning's performance will continue to improve with
year-over-year sales and EPS growth in both the third and fourth
quarters," R. Tony Tripeny, senior vice president and chief
financial officer, said.
Tripeny added, "We remain committed to strong
capital stewardship and plan to execute the accelerated share
repurchase on July 28. With this action, we will fulfill our
commitment to be EPS accretive following the realignment of our
interest in Dow Corning."
Upcoming Investor
Events
Corning will present at the Citi 2016 Global Technology Conference
on Sept. 7 in New York City.
Second-Quarter Conference Call
Information
The company will host a second-quarter conference call on
Wednesday, July 27, at 8:30 a.m. EDT. To participate, please call
toll free (800) 553-0318 or for international access call (612)
332-0725 approximately 10-15 minutes prior to the start of the
call. The host is "NICHOLSON". To listen to a live audio webcast of
the call, go to Corning's website at
www.corning.com/investor_relations, click "Events" and follow the
instructions. A replay will be available beginning at 11 a.m. EDT
and will run through 5 p.m. EDT, Wednesday, August 10. To listen,
dial (800) 475-6701 or for international access dial (320)
365-3844. The access code is 397185. The webcast will be archived
for one year following the call.
Presentation of Information in
this News Release
Non-GAAP financial measures are not in accordance with, or an
alternative to, GAAP. Corning's non-GAAP financial measures exclude
the impact of items that are driven by general economic conditions
and events that do not reflect the underlying fundamentals and
trends in the company's operations. The company believes
presenting non-GAAP financial measures assists in analyzing
financial performance without the impact of items that may obscure
trends in the company's underlying performance. Detailed
reconciliations outlining the differences between these non-GAAP
measures and the most directly comparable GAAP measure can be found
on the company's website by going to the Investor Relations page
and clicking "Financial Highlights" under the "Performance" tab.
These reconciliations also accompany this news release.
Forward-Looking and Cautionary
Statements
This press release contains "forward-looking statements" (within
the meaning of the Private Securities Litigation Reform Act of
1995), which are based on current expectations and assumptions
about Corning's financial results and business operations, that
involve substantial risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties
include: the effect of global political, economic and business
conditions; conditions in the financial and credit
markets; currency fluctuations; tax rates; product demand
and industry capacity; competition; reliance on a concentrated
customer base; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in
the mix of sales between premium and non-premium products; new
plant start-up or restructuring costs; possible
disruption in commercial activities due to terrorist activity,
armed conflict, political or financial instability, natural
disasters, adverse weather conditions, or major health concerns;
adequacy of insurance; equity company activities; acquisition and
divestiture activities; the level of excess or obsolete inventory;
the rate of technology change; the ability to enforce patents;
product and components performance issues; retention of key
personnel; stock price fluctuations; and adverse litigation or
regulatory developments. These and other risk factors
are detailed in Corning's filings with the Securities and
Exchange Commission. Forward-looking statements speak only as
of the day that they are made, and Corning undertakes no obligation
to update them in light of new information or future events.
Digital Media
Disclosure
In accordance with guidance provided by the SEC regarding the use
of company websites and social media channels to disclose material
information, Corning Incorporated ("Corning") wishes to notify
investors, media, and other interested parties that it intends to
use its website
(http://www.corning.com/worldwide/en/about-us/news-events.html) to
publish important information about the company, including
information that may be deemed material to investors. The list of
websites and social media channels that the company uses may be
updated on Corning's media and website from time to time. Corning
encourages investors, media, and other interested parties to review
the information Corning may publish through its website and social
media channels as described above, in addition to the company's SEC
filings, press releases, conference calls, and webcasts.
About Corning
Incorporated
Corning (www.corning.com) is one of the world's leading innovators
in materials science. For more than 160 years, Corning has applied
its unparalleled expertise in specialty glass, ceramics, and
optical physics to develop products that have created new
industries and transformed people's lives. Corning succeeds through
sustained investment in R&D, a unique combination of material
and process innovation, and close collaboration with customers to
solve tough technology challenges. Corning's businesses and markets
are constantly evolving. Today, Corning's products enable diverse
industries such as consumer electronics, telecommunications,
transportation, and life sciences. They include damage-resistant
cover glass for smartphones and tablets; precision glass for
advanced displays; optical fiber, wireless technologies, and
connectivity solutions for high-speed communications networks;
trusted products that accelerate drug discovery and manufacturing;
and emissions-control products for cars, trucks, and off-road
vehicles.
Media Relations
Contact:
Daniel F. Collins
(607)
974-4197
collinsdf@corning.com
Investor Relations
Contact:
Ann H.S. Nicholson
(607) 974-6716
nicholsoas@corning.com
Corning Incorporated Q2 2016
Financials
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Corning Incorporated via Globenewswire
HUG#2030884
Corning (NYSE:GLW)
Historical Stock Chart
From Aug 2024 to Sep 2024
Corning (NYSE:GLW)
Historical Stock Chart
From Sep 2023 to Sep 2024