Corning Incorporated (NYSE: GLW) today announced results for its
second-quarter 2019 ended June 30, 2019.
News Summary:
- Strong second-quarter 2019 performance driven by year-over-year
growth in every business segment
- GAAP sales of $2.9 billion and core sales of $3.0 billion
increased 7% and 8%, respectively, on a year-over-year basis
- GAAP EPS of $0.09 declined from $0.78 in the second quarter of
2018 driven primarily by non-cash, mark-to-market losses associated
with the company’s currency-hedging contracts
- Core EPS grew by 18% to $0.45, reflecting year-over-year sales
and earnings growth across all businesses
- Display Technologies, Environmental Technologies, and Life
Sciences posted double-digit net income growth
- All business segments on track for sales growth for full-year
2019
- Environmental Technologies second-quarter sales growth of 15%
year over year significantly exceeded expectations; results
position business segment to surpass previous full-year growth
expectations
- Display Technologies second-quarter sales grew 9% year over
year; glass pricing environment better than expected with full-year
2019 price declines now expected to further improve to a low- to
mid-single digit percentage
- Optical Communications met second-quarter expectations;
continues to grow approximately twice as fast as the passive
optical market despite lowered full-year 2019 growth
expectations
- Specialty Materials sales grew 8% year over year; Life Sciences
sales increased 6% year over year; both business segments remain on
track to meet full-year growth expectations
- 2020-2023 Strategy & Growth Framework commenced following
company’s successful achievement of 2016-2019 Strategy and Capital
Allocation Framework
- Returned $306 million to shareholders in second-quarter 2019,
for a total of $12.6 billion under the 2016-2019 Framework
- Announced a new $5 billion share repurchase authorization to
support new Strategy & Growth Framework
“Our second-quarter performance reflects our strong execution
against our now-completed Strategy and Capital Allocation
Framework, which guided Corning during the 2016-2019 period,” said
Wendell P. Weeks, chairman, chief executive officer, and president.
“We’re outpacing the markets we serve, which demonstrates the
resilience of our portfolio in the face of macro-economic
headwinds. We look forward to extending our strong performance
under our new 2020-2023 Strategy & Growth Framework.”
Framework Progress Corning’s leadership
priorities are to focus its portfolio and utilize its financial
strength to grow and increase shareholder returns.
Under the company’s 2016-2019 Strategy and Capital Allocation
Framework introduced in October 2015, Corning has met its goal of
returning more than $12.5 billion to shareholders before the end of
2019. Through June 30, 2019, the company increased dividends per
share 67% and reduced outstanding shares by more than 37%.
“At our Investor Day in June, we introduced our 2020-2023
Strategy & Growth Framework. It’s our original Framework
evolved for a new growth era. Under it, we plan to invest $10
billion to $12 billion for growth and to return $8 billion to $10
billion to shareholders,” noted Weeks.
“Our capabilities are becoming increasingly vital to diverse
industries, and multiple opportunities support continued leadership
across all of our market-access platforms,” Weeks added. Highlights
include:
- Automotive: executing on plan to double automotive market sales
by 2023 with production capacity ramping in Hefei, China,
facilities for both AutoGrade™ glass and gas particulate filter
products for committed customer demand; now delivering glass parts
for more than 25 car models; and fueling GPF sales growth with
continued platform wins;
- Optical Communications: on track to continue growing
approximately twice as fast as the passive optical market;
CenturyLink announces utilization of Corning technologies for its
ultra-low-loss fiber network that will span 4.7 million fiber
miles;
- Mobile Consumer Electronics: making excellent progress toward
doubling sales; Corning® Gorilla® Glass has now been used on over 7
billion devices worldwide, with expanded adoption of Gorilla Glass
6 and advanced glass innovations for smartphones, wearables, and
other devices;
- Life Sciences Vessels: on track to grow sales at more than
double the life sciences industry rate and launch a Valor® Glass
franchise; bringing new capacity on line to meet increased demand
for cell and gene therapy products; partnering with key customers
to obtain FDA approval for use of Valor Glass packaging;
- Display: delivering stable returns; pricing environment
continuing to improve; advancing technology leadership with
Corning® Astra™ Glass for 8K TVs.
Second-Quarter 2019 Results and Comparisons (In
millions, except per-share amounts)
|
Q2 2019 |
|
Q1 2019 |
|
% change |
|
Q2 2018 |
|
% change |
GAAP Net
Sales |
$ |
2,940 |
|
$ |
2,812 |
|
5% |
|
$ |
2,747 |
|
7% |
GAAP Net
Income |
$ |
92 |
|
$ |
499 |
|
(82%) |
|
$ |
738 |
|
(88%) |
GAAP EPS |
$ |
0.09 |
|
$ |
0.55 |
|
(84%) |
|
$ |
0.78 |
|
(88%) |
Core Sales* |
$ |
2,986 |
|
$ |
2,850 |
|
5% |
|
$ |
2,759 |
|
8% |
Core
Earnings* |
$ |
410 |
|
$ |
365 |
|
12% |
|
$ |
359 |
|
14% |
Core EPS* |
$ |
0.45 |
|
$ |
0.40 |
|
13% |
|
$ |
0.38 |
|
18% |
*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.
Segment Results and Outlook“We had an excellent
second quarter with strong performance across the company. We
improved core earnings per share by 18% and increased core sales by
8% year over year, with sales growth in every business segment
ranging from mid-single digits to mid-teen percentages. And, we did
this all while continuing to invest for long-term growth,” said
Tony Tripeny, executive vice president and chief financial
officer.
“These results are driven by our technology and manufacturing
leadership and from recent investments across multiple businesses.
We are on track to deliver sales and earnings growth for the
full-year 2019 and throughout the 2020-2023 Strategy & Growth
Framework,” concluded Tripeny.
Display Technologies:
|
Q2 2019 |
|
Q1 2019 |
|
% change |
|
Q2 2018 |
|
% change |
Net Sales |
$ |
848 |
|
$ |
818 |
|
4% |
|
$ |
780 |
|
9% |
Net Income
Before Tax |
$ |
268 |
|
$ |
263 |
|
2% |
|
$ |
243 |
|
10% |
Net Income |
$ |
213 |
|
$ |
208 |
|
2% |
|
$ |
192 |
|
11% |
In Display Technologies, second-quarter net sales were $848
million, up 9% year over year, and net income increased by 11% year
over year. The display glass market second-quarter volume grew by a
mid-single digit percentage year over year, and Corning’s glass
volume grew significantly faster due to the ramp of Corning’s Gen
10.5 manufacturing capacity.
Second-quarter Display Technologies sequential glass price
declines were moderate and more favorable than expected.
Third-quarter glass prices are expected to be consistent with the
second quarter. Full-year 2019 price declines are now expected to
be a low- to mid-single digit percentage.
Optical Communications:
|
Q2 2019 |
|
Q1 2019 |
|
% change |
|
Q2 2018 |
|
% change |
Net Sales |
$ |
1,090 |
|
$ |
1,064 |
|
2% |
|
$ |
1,023 |
|
7% |
Net Income
Before Tax |
$ |
201 |
|
$ |
181 |
|
11% |
|
$ |
191 |
|
5% |
Net Income |
$ |
158 |
|
$ |
142 |
|
11% |
|
$ |
150 |
|
5% |
Optical Communications second-quarter sales were $1.09 billion,
up 7% year over year. Net income for the second quarter was up 5%
year over year. Sales growth was led by hyperscale data center and
optical fiber demand as well as sales from the 3M Communication
Markets Division acquisition.
For full-year 2019, Optical Communications year-over-year sales
growth is now expected to be up by a low- to mid-single digit
percentage. The lower growth expectations are driven primarily by
weakness in the carrier market. Optical Communications growth
remains significantly above passive optical market growth.
Environmental Technologies:
|
Q2 2019 |
|
Q1 2019 |
|
% change |
|
Q2 2018 |
|
% change |
Net Sales |
$ |
366 |
|
$ |
362 |
|
1% |
|
$ |
317 |
|
15% |
Net Income
Before Tax |
$ |
82 |
|
$ |
70 |
|
17% |
|
$ |
68 |
|
21% |
Net Income |
$ |
65 |
|
$ |
55 |
|
18% |
|
$ |
54 |
|
20% |
Environmental Technologies second-quarter sales were $366
million, up 15% year over year and significantly ahead of
expectations, driven by the accelerated adoption of gas particulate
filters and continued strong growth in heavy-duty diesel. Net
income grew 20% year over year.
With the market developing faster than planned, and Corning
winning even more platforms than anticipated, the company now
expects its 2019 GPF sales to exceed $200 million and robust growth
to continue thereafter. Full-year 2019 Environmental Technologies
sales are now expected to increase by a low-teens percentage year
over year, up from the company’s previous expectation of
approximately 10%.
Specialty Materials:
|
Q2 2019 |
|
Q1 2019 |
|
% change |
|
Q2 2018 |
|
% change |
Net Sales |
$ |
369 |
|
$ |
309 |
|
19% |
|
$ |
343 |
|
8% |
Net Income
Before Tax |
$ |
85 |
|
$ |
62 |
|
37% |
|
$ |
81 |
|
5% |
Net Income |
$ |
67 |
|
$ |
49 |
|
37% |
|
$ |
64 |
|
5% |
In Specialty Materials, second-quarter sales were $369 million,
up 8% year over year, driven by continued strong demand for the
company’s portfolio of mobile consumer electronics glass solutions.
Net income grew 5% year over year.
While the smart phone market continues to mature, Corning
expects Specialty Materials to grow sales year over year, with the
level dependent upon the adoption rate of Corning’s
innovations.
Life Sciences:
|
Q2 2019 |
|
Q1 2019 |
|
% change |
|
Q2 2018 |
|
% change |
Net Sales |
$ |
260 |
|
$ |
243 |
|
7% |
|
$ |
245 |
|
6% |
Net Income
Before Tax |
$ |
51 |
|
$ |
39 |
|
31% |
|
$ |
39 |
|
31% |
Net Income |
$ |
40 |
|
$ |
31 |
|
29% |
|
$ |
31 |
|
29% |
Life Sciences had another strong quarter with sales of $260
million, up 6% year over year. Net income was up 29% year over
year, driven by higher sales volume and manufacturing performance
optimization.
For the full-year 2019, Corning expects Life Sciences to grow by
a mid-single digit percentage year over year as the business
continues to outpace industry growth rate.
Upcoming Investor EventsOn Aug. 27, Corning
will attend the Jefferies Semiconductor, Hardware and
Communications Infrastructure Summit in Chicago. And Sept. 5,
Corning will attend the Citi Global Technology Conference in New
York City.
Second-Quarter Conference Call InformationThe
company will host a second-quarter conference call on Tuesday, July
30, at 8:30 a.m. ET. To participate, please call toll free (800)
230-1085 or for international access call (612) 234-9960
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
http://www.corning.com/investor_relations, click “Events” and
follow the instructions.
Presentation of Information in this News
ReleaseNon-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.
Definitions of these non-GAAP financial measures and
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures can be found on the
Company’s website by going to the Investor Relations page and
clicking “Quarterly Results” under the “Financials and Filings”
tab. These reconciliations also accompany this news release.
Caution Concerning Forward-Looking
StatementsThe statements contained in this release that
are not historical facts or information and contain words such as
“will,” “believe,” “anticipate,” “expect,” “intend,” “plan,”
“seek,” “see,” “would,” and “target” and similar expressions are
forward-looking statements. These forward-looking statements are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and include estimates and
assumptions related to economic, competitive and legislative
developments. Such statements relate to future events that by their
nature address matters that are, to different degrees, uncertain.
These estimates are subject to change and uncertainty which are, in
many instances, beyond our control. There can be no assurance that
future developments will be in accordance with management’s
expectations. Actual results could differ materially from those
expected by us, depending on the outcome of various factors. We do
not undertake to update forward-looking statements.
Some of the risks, uncertainties and other factors that could
cause actual results to differ materially from those expressed in
or implied by the forward-looking statements include, but are not
limited to: the effects of acquisitions, dispositions and other
similar transactions, global business, financial, economic and
political conditions; tariffs and import duties; currency
fluctuations between the U.S. dollar and other currencies,
primarily the Japanese yen, euro, Chinese yuan and South Korean
won; product demand and industry capacity; competitive products and
pricing; availability and costs of critical components and
materials; new product development and commercialization; order
activity and demand from major customers; the amount and timing of
our cash flows and earnings and other conditions, which may affect
our ability to pay our quarterly dividend at the planned level or
to repurchase shares at planned levels; possible disruption in
commercial activities due to terrorist activity, cyber-attack,
armed conflict, political or financial instability, natural
disasters, or major health concerns; unanticipated disruption to
equipment, facilities, IT systems or operations; effect of
regulatory and legal developments; ability to pace capital spending
to anticipated levels of customer demand; rate of technology
change; ability to enforce patents and protect intellectual
property and trade secrets; adverse litigation; product and
components performance issues; retention of key personnel; customer
ability, most notably in the Display Technologies segment, to
maintain profitable operations and obtain financing to fund their
ongoing operations and manufacturing expansions and pay their
receivables when due; loss of significant customers; changes in tax
laws and regulations including the Tax Cuts and Jobs Act of 2017;
the impacts of audits by taxing authorities; and the potential
impact of legislation, government regulations, and other government
action and investigations.
For a complete listing of risks and other factors, please
reference the risk factors and forward-looking statements described
in our annual reports on Form 10-K and quarterly reports on Form
10-Q.
Web 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 uses 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, or
supplemental to information contained in this or other press
releases. 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 IncorporatedCorning
(www.corning.com) is one of the world's leading innovators in
materials science, with a more than 165-year track record of
life-changing inventions. Corning applies its unparalleled
expertise in glass science, ceramic science, and optical physics
along with its deep manufacturing and engineering capabilities to
develop category-defining products that transform industries and
enhance people's lives. Corning succeeds through sustained
investment in RD&E, a unique combination of material and
process innovation, and deep, trust-based relationships with
customers who are global leaders in their industries.
Corning's capabilities are versatile and synergistic, which
allows the company to evolve to meet changing market needs, while
also helping our customers capture new opportunities in dynamic
industries. Today, Corning's markets include optical
communications, mobile consumer electronics, display technology,
automotive, and life sciences vessels. Corning's industry-leading
products include damage-resistant cover glass for mobile devices;
precision glass for advanced displays; optical fiber, wireless
technologies, and connectivity solutions for state-of-the-art
communications networks; trusted products to accelerate drug
discovery and delivery; and clean-air technologies for cars and
trucks.
Media Relations
Contact:
M. Elizabeth
Dann
(607)
974-4989
dannme@corning.com
Investor Relations Contact:Ann
H.S. Nicholson (607) 974-6716 nicholsoas@corning.com
- Q2 2019 Earnings Release Financials
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