Corning Incorporated (NYSE: GLW) today announced results for the
second quarter ended June 30, 2020.
- GAAP and core sales were $2.6 billion; versus the first
quarter, GAAP sales increased 7% and core sales increased 2%
- GAAP EPS was $(0.13); core EPS was $0.25, up 25%
sequentially
- GAAP net loss was $71 million; core net income was $218
million, up 23% sequentially
- The difference between GAAP and core results stemmed primarily
from non-cash restructuring charges, including the reassessment and
reprioritization of R&D programs
- Free cash flow of $285 million improved sequentially and keeps
Corning on track to be free cash flow positive for the full
year
Wendell P. Weeks, chairman and chief executive officer, said,
“During the second quarter, we made great strides in positioning
Corning to emerge stronger from the global health crisis and resume
growth. Sales, net income, EPS, and free cash flow all increased
sequentially.
“Corning advanced multiple initiatives throughout the second
quarter, including the launch of Corning® Gorilla® Glass Victus™
and continued innovation with 5G industry leaders,” Weeks
continued. “On the COVID-19 front, we continue to seek ways to
leverage our deep technology, manufacturing, and engineering
capabilities to combat the pandemic directly. We were delighted
that Corning Valor® Glass was selected by the U.S. Department of
Health & Human Services and the Department of Defense to
accelerate delivery of COVID-19 vaccines.
“Overall, our decisive action and operational execution resulted
in positive free cash flow and continued leadership in the
capabilities that make Corning distinctive. We’re delivering for
our customers, outperforming our markets, and preserving our
financial strength.”
Market-Access Platform Highlights
Corning holds a leadership position in each of the markets
addressed by its five Market-Access Platforms. In the second
quarter, the company progressed important growth initiatives and
reported the following highlights:
- Life Sciences – Corning Pharmaceutical
Technologies continued to advance its strategy of building a
multibillion-dollar pharmaceutical glass business. The company
entered into a long-term supply agreement to provide Valor Glass
vials for a portion of currently marketed Pfizer drug products and
was awarded $204 million in funding from the Biomedical Advanced
Research and Development Authority (BARDA). The BARDA funding will
enable Corning to substantially expand domestic manufacturing
capacity to help accelerate delivery of COVID-19 vaccines and
drugs.
- Mobile Consumer Electronics – Specialty
Materials delivered 13% year-over-year sales growth despite a
year-over-year decline in the smartphone market. Growth resulted
from strong demand for premium products. In July, the company
announced the launch of Gorilla Glass Victus, the toughest Gorilla
Glass yet. Samsung will be the first customer to adopt Gorilla
Glass Victus in the near future.
- Automotive – Environmental Technologies
outperformed a weak market and delivered more than 20%
year-over-year growth in Gasoline Particulate Filters sales.
- Optical Communications – Segment sales grew
12% sequentially, driven by carrier network projects. Advancements
relevant to the deployment of 5G continued. The company announced a
strategic collaboration with EnerSys to simplify the delivery of
fiber and electrical power to small-cell wireless sites. Corning is
also working with Qualcomm Technologies to deliver indoor networks
that are 5G-ready, easy-to-install, and affordable.
- Display – Display Technologies generated
consistent sequential net income as large-screen TV sales continued
to drive demand and support the continued ramp of the company’s new
Gen 10.5 facilities.
Strengthening Financial
Position
Tony Tripeny, executive vice president and chief financial
officer, said, “We came into this economic downturn with a balance
sheet built for times like these and took actions during the
quarter to ensure we have the financial resources needed for the
duration. We generated $285 million in free cash flow, exited the
quarter with $2.2 billion in cash, and are on track to generate
positive free cash flow for the year.
“Our financial position is strong,” Tripeny continued. “We are
becoming more efficient, and we have the capacity in place to meet
expected growth with minimal investment. We expect improved
profitability and return on invested capital as we grow sales.”
Across Corning’s businesses, demand and visibility improved
throughout the second quarter. As a result, the company expects
sequential sales and profit growth in the third quarter. The level
of growth will depend on end-market demand and economic activity in
August and September.
Second-Quarter 2020 Results and Comparisons
(In millions, except per-share amounts)
|
Q2 2020 |
|
Q1 2020 |
|
% change |
|
Q2 2019 |
|
% change |
GAAP Net Sales |
$ |
2,561 |
|
|
$ |
2,391 |
|
|
7 |
% |
|
$ |
2,940 |
|
(13 |
%) |
GAAP Net (Loss) Income |
$ |
(71 |
) |
|
$ |
(96 |
) |
|
** |
|
$ |
92 |
|
** |
GAAP EPS |
$ |
(0.13 |
) |
|
$ |
(0.16 |
) |
|
** |
|
$ |
0.09 |
|
** |
Core Sales* |
$ |
2,588 |
|
|
$ |
2,529 |
|
|
2 |
% |
|
$ |
2,986 |
|
(13 |
%) |
Core Net Income* |
$ |
218 |
|
|
$ |
177 |
|
|
23 |
% |
|
$ |
410 |
|
(47 |
%) |
Core
EPS* |
$ |
0.25 |
|
|
$ |
0.20 |
|
|
25 |
% |
|
$ |
0.45 |
|
(44 |
%) |
*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.
**Not Meaningful
Second-Quarter Segment Results
Display Technologies
|
Q2 2020 |
|
Q1 2020 |
|
% change |
|
Q2 2019 |
|
% change |
Net Sales |
$ |
753 |
|
$ |
751 |
|
0 |
% |
|
$ |
848 |
|
(11 |
%) |
Net Income Before Tax |
$ |
193 |
|
$ |
192 |
|
1 |
% |
|
$ |
268 |
|
(28 |
%) |
Net
Income |
$ |
152 |
|
$ |
152 |
|
0 |
% |
|
$ |
213 |
|
(29 |
%) |
In Display Technologies, second-quarter sales were $753 million,
and net income was $152 million, both consistent sequentially.
Corning’s volume grew by a low-single digit percentage
sequentially. Sequential price declines were moderate, as
expected.
Optical Communications
|
Q2 2020 |
|
Q1 2020 |
|
% change |
|
Q2 2019 |
|
% change |
Net Sales |
$ |
887 |
|
$ |
791 |
|
12 |
% |
|
$ |
1,090 |
|
(19 |
%) |
Net Income Before Tax |
$ |
104 |
|
$ |
37 |
|
181 |
% |
|
$ |
201 |
|
(48 |
%) |
Net
Income |
$ |
81 |
|
$ |
29 |
|
179 |
% |
|
$ |
158 |
|
(49 |
%) |
In Optical Communications, second-quarter sales were $887
million, up 12% sequentially. Major carriers increased spending
versus the first quarter on cable deployments and access network
projects. The year-over-year decline in sales was in line with the
passive optical market decline.
Environmental Technologies
|
Q2 2020 |
|
Q1 2020 |
|
% change |
|
Q2 2019 |
|
% change |
Net Sales |
$ |
226 |
|
$ |
320 |
|
(29 |
%) |
|
$ |
366 |
|
(38 |
%) |
Net Income Before Tax |
$ |
— |
|
$ |
44 |
|
* |
|
$ |
82 |
|
* |
Net
Income |
$ |
— |
|
$ |
35 |
|
* |
|
$ |
65 |
|
* |
*Not Meaningful
In Environmental Technologies, the suspension of vehicle
manufacturing production in key markets that began in the first
quarter continued for much of the second quarter. As a result,
sales were down 38% year over year. Profitability was impacted by
the lower sales and production volumes.
Specialty Materials
|
Q2 2020 |
|
Q1 2020 |
|
% change |
|
Q2 2019 |
|
% change |
Net Sales |
$ |
417 |
|
$ |
352 |
|
18 |
% |
|
$ |
369 |
|
13 |
% |
Net Income Before Tax |
$ |
114 |
|
$ |
65 |
|
75 |
% |
|
$ |
85 |
|
34 |
% |
Net
Income |
$ |
90 |
|
$ |
51 |
|
76 |
% |
|
$ |
67 |
|
34 |
% |
In Specialty Materials, sales grew 13% year over year, driven by
strong demand for premium glasses in support of second-half
customer launches, growth in IT products due to work- and
study-from-home trends, as well as demand for products in the
semiconductor equipment space. Net income was up 34% year over year
on higher sales volume.
Life Sciences
|
Q2 2020 |
|
Q1 2020 |
|
% change |
|
Q2 2019 |
|
% change |
Net Sales |
$ |
243 |
|
$ |
258 |
|
(6 |
%) |
|
$ |
260 |
|
(7 |
%) |
Net Income Before Tax |
$ |
39 |
|
$ |
48 |
|
(19 |
%) |
|
$ |
51 |
|
(24 |
%) |
Net
Income |
$ |
31 |
|
$ |
38 |
|
(18 |
%) |
|
$ |
40 |
|
(23 |
%) |
Life Sciences second-quarter sales were down 7% year over year
as continued research lab closures in EMEA and North America
related to the COVID-19 pandemic more than offset strong demand for
test kit consumables and other products to address the pandemic.
The reduction in net income was driven by lower sales.
Upcoming Investor Events On Sept. 2, Corning
will attend the Jeffries Semiconductor, IT Hardware &
Communication Infrastructure Summit. On Sept. 9, Corning will
attend Citi's 2020 Global Technology Conference. Both will be
virtual conferences.
Second-Quarter Conference Call Information
The company will host a second-quarter conference call on
Tuesday, July 28, at 8:30 a.m. EST. To participate, please call
toll free (877) 710-0209 or for international access, call (315)
625-3068 approximately 10 to15 minutes prior to the start of the
call. The Access Code is 999 1654. 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
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. 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
Statements
The 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 duration and severity of the COVID-19 (coronavirus)
pandemic, and its ultimate impact across our businesses on demand,
operations and global supply chains; 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 Incorporated
Corning (www.corning.com) is one of the world's leading
innovators in materials science, with a 169-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 mobile consumer electronics,
optical communications, automotive technologies, life sciences
technologies, and display technologies.
Media Relations
Contact: Gabrielle Bailey(607)
974-6394baileygr@corning.com
Investor Relations Contact: Ann H.S. Nicholson
(607) 974-6716 nicholsoas@corning.com
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