Corning Incorporated (NYSE: GLW) today announced its third-quarter
2023 results and provided its outlook for fourth-quarter 2023.
Wendell P. Weeks, chairman and chief executive officer,
said, “Our third-quarter results show continued progress
on our priorities to improve profitability and cash flow, even with
weak demand across our markets. We increased third-quarter core
gross margin to 37%, a 340 basis-point improvement from the fourth
quarter of 2022. We grew free cash flow to $466 million. We also
extended our market leadership and executed on ‘More Corning’
content opportunities. For example, we once again worked with Apple
to advance the state of the art for smartphones, delivering durable
color-infused glass – a first for any smartphone – for the iPhone
15 and iPhone 15 Plus.”
Weeks added, “Our markets continue to reflect demand below trend
lines, but our sales will recover, and we will return to growth. In
the meantime, we will continue to improve our profitability and
cash flow, even in this current muted sales environment. As a
result, as our markets recover to trend, we can serve them with our
existing capacity and capabilities on an improved price and cost
platform. This will allow us to grow profitability faster than
sales and generate significant incremental cash flow.”
Third-Quarter 2023 Highlights:
- Third-quarter GAAP sales were $3.2 billion. Core sales were
$3.5 billion, consistent with the second quarter, as expected.
- Third-quarter GAAP EPS was $0.19. Core EPS of $0.45 was
consistent sequentially. The difference between GAAP and core EPS
primarily reflected constant currency adjustments, translated
earnings contract gains, and translation gains on
Japanese-yen-denominated debt, as well as restructuring and asset
write-off charges.
- Core gross margin of 37% increased by 80 basis points
sequentially on consistent sales, driven primarily by pricing
actions in Display Technologies. Core gross margin increased by 90
basis points year over year on lower sales, reflecting the
continued benefit of pricing and productivity improvement actions
across the company.
- Third-quarter free cash flow improved to $466 million, up $156
million sequentially and $211 million year over year.
Fourth-Quarter 2023 Outlook:
- Management expects fourth-quarter core sales of approximately
$3.25 billion, core gross margin percentage similar to the third
quarter despite the sequential sales decline, core EPS in the range
of $0.37 to $0.42, and another quarter of strong free cash
flow.
Ed Schlesinger, executive vice president and chief
financial officer, said, “Sales in the third quarter were
consistent sequentially, as expected. Our strong execution on our
plan to improve profitability and cash flow is evident in our
numbers. Specifically, we expanded core gross margin to 37%,
primarily as a result of Display Technologies’ pricing actions.
Additionally, we grew free cash flow to $466 million for the
quarter, driven by strong operating cash flow – including inventory
reductions – and lower capital expenditures.”
Schlesinger added, “For the fourth quarter, we expect core sales
to be approximately $3.25 billion. We will continue our focus on
profitability and cash flow. Despite lower sequential
fourth-quarter sales, we expect to deliver a gross margin
percentage similar to the third quarter and another quarter of
strong free cash flow. Longer term, we remain confident in our
ability to outperform our markets as they recover – and we expect
to grow beyond prior-peak sales run rates. Importantly, we are
already well positioned to capture that growth and drive strong
operating leverage without substantial cash investments.”
Strategy in Action Corning strives
to be a catalyst for positive change and to help move the world
forward. The company drives profitable multiyear growth by
inventing, making, and selling life-changing products while
cultivating deep, trust-based relationships with industry leaders,
ultimately incorporating more content into customers’ offerings.
Corning takes the long view, investing in a set of vital
capabilities that are increasingly relevant to profound
transformations that touch many facets of daily life. Today,
Corning’s markets include optical communications, mobile consumer
electronics, display, automotive, solar, semiconductor, and life
sciences.
Recent highlights include:
- Helping industry leaders advance the form and function
of smartphones through step changes in engineered glass and
glass-ceramics.
- Color-infused glass: Corning built on its deep
relationship with Apple to deliver durable color-infused glass – a
first for any smartphone – for the iPhone 15 and iPhone 15 Plus.
Apple’s new devices also feature Ceramic Shield, a highly
transparent, color-free glass-ceramic, which offers unparalleled
durability and toughness for smartphones.
- Ultra-thin bendable glass: For half a century,
Corning has helped propel display and cover glass technologies in
Korea – a global consumer-electronics innovation hotspot – with
industry leaders like Samsung. Building on these relationships,
Corning announced plans to expand capabilities in the region and
create a hub for ultra-thin bendable-glass manufacturing.
- Advancing precision automotive glass to facilitate
technology-rich interiors and user interfaces for a more connected
and safer driving experience. Corning announced a new
collaboration with longtime customer AUO Corporation to expand and
accelerate the production of AUO’s industry-leading, large-format
curved display modules. In the announcement, AUO highlighted how
Corning’s innovative ColdForm™ Technology advances sustainable
practices while enabling differentiated designs.
- Contributing to global climate initiatives through
innovative practices and products.
- The Science Based Targets Initiative approved Corning’s
near-term science-based reduction targets for Scope 1 and Scope 2
emissions, determining them to be in line with the Paris
Agreement’s goal to limit the global average temperature increase
to 1.5° Celsius.
- The company also built on its announcement of Corning®
Viridian™ Vials – which reduce waste and carbon emissions in the
pharmaceutical supply chain – with a suite of life sciences
products that provides benefits ranging from renewable materials
and sustainable packaging, to supply chain diversity, to energy
efficiency and water conservation.
- Corning also provided a hyperspectral imaging sensor that
enables Orbital Sidekick’s recently launched satellites to detect
pipeline leaks and other environmental issues.
Third-Quarter 2023 Results and Comparisons
(In millions, except per-share amounts)
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
GAAP Net Sales |
|
$ |
3,173 |
|
|
$ |
3,243 |
|
|
|
(2 |
%) |
|
$ |
3,488 |
|
|
|
(9 |
%) |
GAAP Net Income (1) |
|
$ |
164 |
|
|
$ |
281 |
|
|
|
(42 |
%) |
|
$ |
208 |
|
|
|
(21 |
%) |
GAAP EPS |
|
$ |
0.19 |
|
|
$ |
0.33 |
|
|
|
(42 |
%) |
|
$ |
0.24 |
|
|
|
(21 |
%) |
Core Sales (2) |
|
$ |
3,459 |
|
|
$ |
3,482 |
|
|
|
(1 |
%) |
|
$ |
3,666 |
|
|
|
(6 |
%) |
Core Net Income (2) |
|
$ |
386 |
|
|
$ |
388 |
|
|
|
(1 |
%) |
|
$ |
438 |
|
|
|
(12 |
%) |
Core
EPS (2) |
|
$ |
0.45 |
|
|
$ |
0.45 |
|
|
|
— |
|
|
$ |
0.51 |
|
|
|
(12 |
%) |
(1) Represents GAAP net income attributable to Corning
Incorporated.(2) 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.
The third-quarter results below are prepared on a basis
consistent with Corning’s segment reporting as presented in the
company’s consolidated financial statements.
Optical Communications
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
Net Sales |
|
$ |
918 |
|
|
$ |
1,066 |
|
|
|
(14 |
%) |
|
$ |
1,317 |
|
|
|
(30 |
%) |
Net
Income |
|
$ |
91 |
|
|
$ |
140 |
|
|
|
(35 |
%) |
|
$ |
183 |
|
|
|
(50 |
%) |
In Optical Communications, third-quarter sales were $918
million, down 14% sequentially, reflecting lower order rates from
carriers. Net income was $91 million, also down sequentially,
reflecting lower volume.
Display Technologies
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
Net Sales |
|
$ |
972 |
|
|
$ |
928 |
|
|
|
5 |
% |
|
$ |
686 |
|
|
|
42 |
% |
Net
Income |
|
$ |
242 |
|
|
$ |
208 |
|
|
|
16 |
% |
|
$ |
134 |
|
|
|
81 |
% |
In Display Technologies, volume was lower than expected in the
third quarter. Sales were $972 million, up 5% sequentially. Net
income was $242 million, up 16% sequentially, primarily driven by
price increases.
Specialty Materials
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
Net Sales |
|
$ |
563 |
|
|
$ |
423 |
|
|
|
33 |
% |
|
$ |
519 |
|
|
|
8 |
% |
Net
Income |
|
$ |
72 |
|
|
$ |
33 |
|
|
|
118 |
% |
|
$ |
96 |
|
|
|
(25 |
%) |
In Specialty Materials, third-quarter sales were $563 million,
up 33% sequentially, driven by higher Gorilla Glass sales resulting
from customer product launches in the quarter. Additionally,
continued solid demand for semiconductor materials drove another
strong quarter for Advanced Optics. Net income was $72 million, up
118% sequentially, primarily driven by higher sales.
Environmental Technologies
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
Net Sales |
|
$ |
449 |
|
|
$ |
457 |
|
|
|
(2 |
%) |
|
$ |
425 |
|
|
|
6 |
% |
Net
Income |
|
$ |
99 |
|
|
$ |
107 |
|
|
|
(7 |
%) |
|
$ |
87 |
|
|
|
14 |
% |
In Environmental Technologies, third-quarter sales were $449
million, up 6% year over year, driven by ongoing growth of gasoline
particulate filter adoption in China offsetting expected softness
in heavy-duty markets in North America. Net income grew faster than
sales to reach $99 million, up 14% year over year, as a result of
productivity-improvement actions.
Life Sciences
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
Net Sales |
|
$ |
230 |
|
|
$ |
231 |
|
|
|
— |
|
|
$ |
312 |
|
|
|
(26 |
%) |
Net
Income |
|
$ |
13 |
|
|
$ |
11 |
|
|
|
18 |
% |
|
$ |
43 |
|
|
|
(70 |
%) |
In Life Sciences, third-quarter sales were $230 million,
consistent with the second quarter. Sales were down year over year,
reflecting significantly lower demand for COVID-related products in
China and the impact of customers drawing down inventory. Net
income increased sequentially to $13 million, driven by
productivity-improvement actions.
Hemlock and Emerging Growth Businesses
|
|
Q3 2023 |
|
|
Q2 2023 |
|
|
% change |
|
|
Q3 2022 |
|
|
% change |
|
Net Sales |
|
$ |
327 |
|
|
$ |
377 |
|
|
|
(13 |
%) |
|
$ |
407 |
|
|
|
(20 |
%) |
Net
(Loss) Income |
|
$ |
(8 |
) |
|
$ |
26 |
|
|
|
* |
|
|
$ |
18 |
|
|
|
* |
|
* Not meaningful
In Hemlock and Emerging Growth Businesses, third-quarter sales
were $327 million, down 13% sequentially and 20% year over year,
reflecting a decline in solar polysilicon prices and lower sales in
Corning Pharmaceutical Technologies as the company completed the
last of its volume commitments for COVID-related products in the
second quarter. Net income was down sequentially and year over
year, driven by lower sales.
Upcoming Investor EventsOn Nov. 28, Corning
will attend the UBS Global Technology Conference. Corning will also
host management visits to investor offices in select cities. Visit
the company’s Investor Relations website for up-to-date conference
information.
Third-Quarter Conference Call InformationThe
company will host its third-quarter conference call on Tuesday,
Oct. 24, at 8:30 a.m. EDT. To participate, individuals may
preregister here prior to the start of the call. Once the required
fields are completed, click “Register.” A telephone number and PIN
will be auto generated and will pop up on screen. Participants will
have the choice to “Dial In” or have the system “Call Me.” A
confirmation email will also be sent with specific dial-in
information. To listen to a live audio webcast of the call, go to
the company’s Investor Relations events page and follow the
instructions.
Presentation of Information in this News
ReleaseThis news release includes non-GAAP financial
measures. 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.
With respect to the outlook for future periods, it is not
possible to provide reconciliations for these non-GAAP measures
because management does not forecast the movement of foreign
currencies against the U.S. dollar, or other items that do not
reflect ongoing operations, nor does it forecast items that have
not yet occurred or are out of management’s control. As a
result, management is unable to provide outlook information on a
GAAP basis.
Caution Concerning Forward-Looking
StatementsThe statements contained in this release and
related comments by management that are not historical facts or
information and contain words such as “will,” “believe,”
“anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,”
“target,” “estimate,” “forecast” or 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 forward-looking statements relate to, among other things, the
company’s future operating performance, the company’s share of new
and existing markets, the company’s revenue and earnings growth
rates, the company’s ability to innovate and commercialize new
products, the company’s expected capital expenditure and the
company’s implementation of cost-reduction initiatives and measures
to improve pricing, including the optimization of the company’s
manufacturing capacity.
Although the company believes that these forward-looking
statements are based upon reasonable assumptions regarding, among
other things, current estimates and forecasts, general economic
conditions, its knowledge of its business and key performance
indicators that impact the company, there can be no assurance that
these forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. The company undertakes no
obligation to update forward-looking statements if circumstances or
management’s estimates or opinions should change except as required
by applicable securities laws.
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: global economic trends, competition and geopolitical
risks, or an escalation of sanctions, tariffs or other trade
tensions between the U.S. and China or other countries, and related
impacts on our businesses’ global supply chains and strategies;
changes in macroeconomic and market conditions and market
volatility, including developments and volatility arising from the
COVID-19 pandemic, inflation, interest rates, the value of
securities and other financial assets, precious metals, oil,
natural gas and other commodity prices and exchange rates
(particularly between the U.S. dollar and the Japanese yen, new
Taiwan dollar, euro, Chinese yuan and South Korean won), the
availability of government incentives, decreases or sudden
increases of consumer demand, and the impact of such changes and
volatility on our financial position and businesses; the duration
and severity of the COVID-19 pandemic, and its impact across our
businesses on demand, personnel, operations, our global supply
chains and stock price; possible disruption in commercial
activities or our supply chain due to terrorist activity,
cyber-attack, armed conflict, political or financial instability,
natural disasters, international trade disputes or major health
concerns; loss of intellectual property due to theft, cyber-attack,
or disruption to our information technology infrastructure; ability
to enforce patents and protect intellectual property and trade
secrets; unanticipated disruption to Corning’s, our suppliers’ and
manufacturers’ supply chain, equipment, facilities, IT systems or
operations; product demand and industry capacity; competitive
products and pricing; availability and costs of critical
components, materials, equipment, natural resources and utilities;
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; the amount and timing of any
future dividends; the effects of acquisitions, dispositions and
other similar transactions; the effect of regulatory and legal
developments; ability to pace capital spending to anticipated
levels of customer demand; our ability to increase margins through
implementation of operational changes, pricing actions and cost
reduction measures; rate of technology change; adverse litigation;
product and component performance issues; retention of key
personnel; customer ability to maintain profitable operations and
obtain financing to fund ongoing operations and manufacturing
expansions and pay receivables when due; loss of significant
customers; changes in tax laws, regulations and international tax
standards; the impacts of audits by taxing authorities; the
potential impact of legislation, government regulations, and other
government action and investigations; and other risks detailed in
Corning’s SEC filings.
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 DisclosureIn 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
(https://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 170-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 its customers capture new
opportunities in dynamic industries. Today, Corning’s markets
include optical communications, mobile consumer electronics,
display, automotive, solar, semiconductors, and life sciences.
Media Relations Contact:Megan Whittemore(202)
661-4171whittemom@corning.com
Investor Relations Contact:Ann H.S. Nicholson
(607) 974-6716 nicholsoas@corning.com
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