Corning Announces Second-Quarter Results
Strength seen across all business segments
CORNING, N.Y., July 28, 2010 – Corning Incorporated (NYSE:GLW) today announced its results for the second quarter 2010.
Second-Quarter Highlights
- Sales were $1.71 billion, an increase of 10% sequentially and 23% year over year.
- Earnings per share were $0.58, a gain of 12% sequentially and 49% over a year ago.
- Display Technologies’ wholly owned business volume increased more than 10% sequentially and more than 25% year over year. Samsung Corning Precision Materials Co., Ltd. volume was up more than 5% on a quarterly basis and more than 15% year over year.
- Specialty Materials sales increased 31% sequentially and 77% year over year, the result of very strong Gorilla® glass sales.
- Gross margin increased to 48% from 47% the previous quarter and by 7 percentage points over last year’s second quarter.
Quarter Two Financial Comparisons
|
|
Q2 2010
|
Q1 2010
|
% Change
|
Q2 2009
|
% Change
|
| Net Sales in millions |
$1,712
|
$1,553
|
10%
|
$1,395
|
23%
|
| Net Income in millions |
$913
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$816
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12%
|
$611
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49%
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| Non-GAAP Net Income in millions* |
$916
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$818
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12%
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$614
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49%
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| GAAP EPS |
$0.58
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$0.52
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12%
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$0.39
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49%
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| Non-GAAP EPS* |
$0.58
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$0.52
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12%
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$0.39
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49%
|
*These 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 investor relations Web site.
“We had an exceptional quarter with strong performance across our business segments,” Wendell P. Weeks, chairman and chief executive officer, said. “We saw global LCD glass volume increases, robust sales performance across our entire telecommunications product portfolio, and Gorilla glass now being used or designed into more than 200 mobile devices.”
Second-Quarter Segment Results
Sales in the Display Technologies segment were $834 million, increasing 7% sequentially and 24% year over year. Glass pricing for the quarter was down slightly on a sequential basis. Global LCD TV retail sales remained robust.
Telecommunications segment sales were $441 million, a 21% sequential increase, and much higher than anticipated. Year-over-year sales increased 4%*, excluding the impact of divestitures. The business saw sequential sales increases in all products and geographic regions during the quarter. In particular, private networks and new fiber-to-the-home projects in Canada were significant contributors to the increase.
Environmental Technologies segment sales were $184 million, a quarterly decline of 4% from an outstanding first quarter, but an increase of 39% on a year-over-year basis. The quarterly sales decline was due in part to movements in the Euro-versus-U.S.-dollar exchange rate.
Specialty Materials segment sales reached $126 million, a 31% sequential increase and 77% year-over-year improvement. The increase was driven by growing Gorilla glass sales, along with increased sales from advanced optics products.
Life Sciences segment sales were $125 million, a 6% increase over the previous quarter and 54% year over year. Second-quarter 2009 sales do not reflect results from Axygen Bioscience, Inc., which Corning acquired in September of last year.
Looking Forward
“The third quarter has the potential to be another excellent quarter for Corning. LCD glass demand was much stronger than we expected in the second quarter. We believe the glass demand level will remain robust in the third quarter,” James B. Flaws, vice chairman and chief financial officer, said.
In the Display Technologies segment, Corning expects the combined glass volume at its wholly owned business and SCP to be consistent sequentially in comparison to a very strong second quarter. This projection reflects Corning’s expectation that supply chain production will moderate slightly in the quarter. Corning believes that retail demand for LCD products will remain healthy in the second half of this year. The company’s third-quarter glass price declines should be similar to the previous quarter.
The company expects its third-quarter Telecommunications segment sales to be flat to down slightly following a very strong second quarter. Environmental Technologies and Life Sciences segment sales in the third quarter are expected to be consistent with the second quarter. Specialty Materials segment sales are expected to grow about 25%, driven by higher Gorilla glass sales.
“We see substantial growth opportunities for LCD glass in the future as LCD televisions begin to penetrate emerging economies. In addition, we expect that China will shortly become the world’s largest consumer market for LCD TVs,” Flaws said, noting that last week the company announced plans to construct a new glass substrate facility in China and has restarted its Taichung, Taiwan expansion project.
Corning recently increased its forecast of 2010 capital expenditures to approximately $1.2 billion. The company expects 2011 capital expenditure levels to be $2 billion or more.
“We are planning both sales and earnings growth over the next several years,” Flaws remarked. “To do so, we are maintaining significant levels of investment for several promising new technologies with the potential to achieve sizable revenues over the next decade.” He noted that Corning’s Gorilla glass, a protective cover glass that provides superior durability and scratch resistance, has emerged as one of the significant new business opportunities. “There is vigorous customer pull for Gorilla glass and sales could reach $1 billion by 2011, especially as the product broadens its reach into the television market,” Flaws said.
Upcoming Meetings
Corning will host a luncheon with Boston area investors on Tuesday, Aug. 3. For information on how to attend the luncheon, contact Corning's Investor Relations Department.
Second-Quarter Conference Call Information
The company will host a second-quarter conference call on Wednesday, July 28 at 8:30 a.m. ET. To participate, please call toll free (800) 230-1085 or for international access call (612) 288-0329 approximately 10-15 minutes prior to the start of the call. The password is ‘QUARTER TWO’. The host is ‘SOFIO’. To listen to a live audio webcast of the call, go to Corning’s Web site at www.corning.com/investor_relations and click Investor Events on the left. A replay will be available beginning at 10:30 a.m. ET and will run through 5:00 p.m. ET, Wednesday, Aug. 11, 2010. To listen, dial (800) 475-6701 or for international access call (320) 365-3844. The access code is 165308. 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 net income and EPS measures exclude restructuring, impairment and other charges and adjustments to prior estimates for such charges. Additionally, the company’s non-GAAP measures exclude adjustments to asbestos settlement reserves, gains and losses arising from debt retirements, charges or credits arising from adjustments to the valuation allowance against deferred tax assets, equity method charges resulting from impairments of equity method investments or restructuring, impairment or other charges taken by equity method companies and gains from discontinued operations. The company believes presenting non-GAAP net income and EPS measures is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company’s underlying performance. Reconciliation of these non-GAAP measures can be found on the company’s Web site by going to www.corning.com/investor_relations and clicking Financial Reports on the left. Reconciliation also accompanies 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.
About Corning Incorporated
Corning Incorporated (www.corning.com) is the world leader in specialty glass and ceramics. Drawing on more than 150 years of materials science and process engineering knowledge, Corning creates and makes keystone components that enable high-technology systems for consumer electronics, mobile emissions control, telecommunications and life sciences. Our products include glass substrates for LCD televisions, computer monitors and laptops; ceramic substrates and filters for mobile emission control systems; optical fiber, cable, hardware & equipment for telecommunications networks; optical biosensors for drug discovery; and other advanced optics and specialty glass solutions for a number of industries including semiconductor, aerospace, defense, astronomy and metrology.
Attached File:CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME
Media Relations Contact:
Daniel F. Collins
(607) 974-4197
collinsdf@corning.com
Investor Relations Contact:
Kenneth C. Sofio
(607) 974-7705
sofiokc@corning.com
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