Solid performance across all business segments drives
strong Q3 results
Company marks year of progress on
Strategy and Capital Allocation Framework
CORNING, N.Y., OCTOBER 25, 2016 - Corning
Incorporated (NYSE: GLW) today announced its results for the third
quarter ended Sept. 30, 2016.
News Summary:
-
Q3 GAAP EPS was $0.26, up 73% on a
year-over-year basis; core EPS was $0.42, up 24% year over year and
14% sequentially, exceeding company expectations
-
GAAP and core sales up both sequentially and
year over year, with solid operating performance across all
businesses, particularly Optical Communications and Display
Technologies
-
Year-over-year core sales, core earnings, and
core EPS growth expected to continue in the fourth quarter
- Strong corporate gross margin in the third
quarter expected to extend into the fourth quarter
- Strategy and Capital Allocation Framework remains
on track; third-quarter highlights included new product
introductions and $2 billion accelerated share repurchase
"Corning's strong third-quarter results reflect
the increasing momentum that we expected in the second half of this
year. Sales and gross margins increased in every business segment
year over year. We also grew the company's sales, core earnings and
core EPS both sequentially and year over year," Wendell P. Weeks,
chairman, chief executive officer, and president, said. "Our
operating results and progress on key growth initiatives continue
to reinforce our confidence in Corning's strategy."
"Third-quarter core earnings grew by 16% versus
last year excluding core equity earnings from the former Dow
Corning Corporation's silicones business, which no longer
contribute to our results. Even without this adjustment, core
earnings were 4% higher. We are very pleased by this strength and
expect continued year-over-year core sales, core earnings, and core
EPS growth in the fourth quarter," R. Tony Tripeny, senior vice
president and chief financial officer, added.
Update on Strategy and Capital
Allocation Framework
In October 2015, Corning's management committed to a Strategy and
Capital Allocation Framework designed to create significant value
for shareholders by leveraging the company's financial strength and
focusing the company's portfolio. The Framework includes a
commitment to delivering at least $12.5 billion to shareholders
while investing $10 billion in growth opportunities through
2019.
"Since the Framework was announced, we have gained
traction with customers on our growth initiatives, realigned our
interest in Dow Corning, and are on track to return more than $6
billion to shareholders by year end. We are making great progress
and creating significant value for our shareholders," Weeks
added.
Highlights of the company's achievements in the
third quarter include:
- Launch of a previously announced $2 billion
accelerated share repurchase.
- Introduction and adoption of two new
Corning®
Gorilla® Glass
solutions: Gorilla Glass 5, which provides superior drop
performance for smartphone devices, and Gorilla Glass SR+, which
delivers an unparalleled combination of scratch resistance, optical
clarity, and toughness for wearable devices.
- Additional platform wins with major OEMs for
Corning® DuraTrap® GC filters that reduce particulate emissions
from gasoline direct-injection vehicles.
- Announcement that Mercedes-Benz Stadium, home of
the Atlanta Falcons beginning in 2017, will use the Corning ONE
platform as a single optical core for its Wi-Fi, cellular, and
video network.
- Strong response to the debut of Gorilla Glass in
auto interiors at the Paris Auto Show.
Third-Quarter 2016 Results and
Comparisons
(In millions, except per-share amounts)
|
Q3 2016 |
Q2 2016 |
% change |
Q3 2015 |
% change |
GAAP Net Sales |
$2,507 |
$2,360 |
6% |
$2,272 |
10% |
GAAP Net Income |
$284 |
$2,207 |
(87%) |
$212 |
34% |
GAAP EPS |
$0.26 |
$1.87 |
(86%) |
$0.15 |
73% |
Core Sales* |
$2,548 |
$2,440 |
4% |
$2,451 |
4% |
Core Earnings* |
$466 |
$434 |
7% |
$447 |
4% |
Core EPS* |
$0.42 |
$0.37 |
14% |
$0.34 |
24% |
*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:
|
Q3 2016 |
Q2 2016 |
% change |
Q3 2015 |
% change |
GAAP Net Sales |
$902 |
$801 |
13% |
$757 |
19% |
GAAP Net Income |
$279 |
$204 |
37% |
$255 |
9% |
Core Sales* |
$943 |
$880 |
7% |
$936 |
1% |
Core Earnings* |
$270 |
$237 |
14% |
$257 |
5% |
NOTE: In all segments except the
Display Technologies segment, core net sales are consistent with
GAAP net sales. Because a significant portion of revenues and costs
in the Display Technologies segment are denominated in Japanese yen
and Korean won respectively, this segment's net sales and costs are
adjusted to remove the impact of translating yen and won into U.S.
dollars.
Panel makers increased utilization to meet strong
set maker demand in advance of the fourth-quarter peak retail
season. As a result, glass market volume was up by a high-single
digit percentage sequentially, above expectations. Corning's LCD
glass volume was up slightly more than the market due to customer
mix. Price declines remained moderate, as expected.
The company expects panel maker utilization to remain high and for
glass supply to remain tight in the fourth quarter. Sequentially,
fourth-quarter volume is expected to be consistent to slightly
down, in line with the glass market, as the company's full-year
outlook has not changed.
Optical Communications:
|
Q3 2016 |
Q2 2016 |
% change |
Q3 2015 |
% change |
GAAP Net Sales |
$795 |
$782 |
2% |
$747 |
6% |
GAAP Net Income |
$78 |
$77 |
1% |
$70 |
11% |
Core Earnings* |
$98 |
$86 |
14% |
$71 |
38% |
Third-quarter sales in Optical Communications were
up 6% on a year-over-year basis reflecting strong growth in
fiber-to-the-home market. Hyper-scale data-center product sales
were below company expectations.
Year over year, fourth-quarter sales are expected
to increase by a high-single-digit percentage driven by continued
fiber-to-the-home strength.
Environmental
Technologies:
|
Q3 2016 |
Q2 2016 |
% change |
Q3 2015 |
% change |
GAAP Net Sales |
$264 |
$259 |
2% |
$257 |
3% |
GAAP Net Income |
$35 |
$37 |
(5%) |
$38 |
(8%) |
Core Earnings* |
$35 |
$37 |
(5%) |
$38 |
(8%) |
Third-quarter segment sales were up 3% from last
year and slightly ahead of expectations. Light-duty substrate sales
for the auto market reached a record level, driven by continued
strong demand in North America, Europe, and China, and additional
platform wins.
For the fourth quarter, sales are expected to be
down year over year by a low-single digit percentage due to
continued weakness in the heavy-duty truck markets.
Specialty Materials:
|
Q3 2016 |
Q2 2016 |
% change |
Q3 2015 |
% change |
GAAP Net Sales |
$295 |
$266 |
11% |
$288 |
2% |
GAAP Net Income |
$42 |
$38 |
11% |
$46 |
(9%) |
Core Earnings* |
$44 |
$48 |
(8%) |
$44 |
- |
Specialty Materials third-quarter segment sales
were up 11% sequentially and 2% year over year, exceeding
expectations. Sales during the quarter benefited from the
introduction of two new Gorilla Glass products.
For the fourth quarter, sales are expected to
increase by a high-single-digit percentage year over year driven by
volume growth in Gorilla Glass.
Life Sciences:
|
Q3 2016 |
Q2 2016 |
% change |
Q3 2015 |
% change |
GAAP Net Sales |
$214 |
$215 |
- |
$211 |
1% |
GAAP Net Income |
$16 |
$17 |
(6%) |
$18 |
(11%) |
Core Earnings* |
$21 |
$21 |
- |
$21 |
- |
Third-quarter sales in Life Sciences met
expectations for low-single-digit percentage year-over-year growth,
with similar year-over-year sales growth expected in the fourth
quarter.
Gross Equity
Earnings:
GAAP and core gross equity earnings were $19 million in the third
quarter of 2016. Equity earnings in this year's third quarter
largely represent the contribution from Corning's interest in
Hemlock Semiconductor Group, formerly a part of Dow Corning. As a
result of the Dow Corning strategic realignment, this year's equity
earnings do not include any contribution from the former Dow
Corning silicones business.
The company's gross equity earnings in the fourth
quarter are expected to be between $75 million to $85 million due
to the timing of contract commitments in Hemlock's solar
business.
Upcoming Investor
Events
On Nov. 29, Corning will present at the Credit Suisse 20th Annual
Technology, Media and Telecom Conference to be held in Phoenix,
Ariz. Nov. 28 through Dec. 1, 2016.
Third-Quarter Conference Call
Information
The company will host a third-quarter conference call on Tuesday,
October 25, at 8:30 a.m. EDT. To participate, please call toll free
(800) 230-1074 or for international access call (612) 234-9959
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,
Tuesday, Nov. 8. To listen, dial (800) 475-6701 or for
international access dial (320) 365-3844. The access code is
403563. 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.
Caution Concerning
Forward-Looking Statements
This press release contains "forward-looking statements" - that is,
statements related 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, and the company's implementation of cost-reduction
initiatives and measures to improve pricing, including the
optimization of the company's manufacturing capacity.
In this context, forward-looking statements often contain words
such as "will," "believe," "anticipate," "expect," "intend,"
"plan," "seek," "see," "would," and "target". 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, actual results could differ materially. The company does
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:
competitive products and pricing; availability and costs of
critical components and materials; new product development and
commercialization; order activity and demand from major customers;
unanticipated disruption to equipment, facilities, or operations;
facility expansions and new plant start-up costs; our ability to
pace capital spending to anticipated levels of customer demand; 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; our capital allocation plans, as such plans may change
including with respect to the timing and size of share repurchases,
acquisitions, joint ventures, dispositions and other strategic
actions; and the effectiveness of our risk management
framework.
For a complete listing of risks and other factors,
please reference the risk factors and forward-looking statements
described in the annual reports on Form 10-K and quarterly reports
on Form 10-Q.
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 Q3 2016
Financials
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq 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
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