Corning Incorporated (NYSE: GLW) has delivered on its commitment to improve earnings and is now focused on creating the company’s next growth surge, Wendell P. Weeks, chairman, chief executive officer, and president, told attendees at the company’s annual investor meeting today in New York City.
Weeks briefly reviewed performance highlights from 2013, including delivering five consecutive quarters of core earnings-per-share growth, outperforming major competitors, and announcing plans to acquire full ownership of Samsung Corning Precision Materials, Co., Ltd. Weeks also noted that the company was honoring its commitment to return cash to shareholders by doubling the dividend payment and repurchasing 13% of outstanding shares since October 2011.
“We did what we said we were going to do. We restored earnings growth,” said Weeks. “Now we need to create Corning’s next growth surge. Fortunately, this is familiar territory to us and we’re armed with the right tools.”
He shared examples of past innovations that have transformed industries and created long-term advantages for Corning, including glass ceramics, low-loss optical fiber, and LCD glass substrates. He noted that all Corning innovations share fundamental ingredients: a really tough problem, a combination of materials and process innovation, and a solution that makes a real difference in people’s lives.
“Our track record also reflects a culture that is committed to research and development – because we understand that our investments in innovation create Corning’s future revenue drivers. And we continue to apply that strategy and philosophy today,” Weeks said.
He told investors that Corning has made significant progress on bringing to life the world depicted in the viral video, “A Day Made of Glass.” Weeks highlighted these key technologies and market opportunities:
- Corning’s ONE™ Wireless Optical Distributed Antenna System (DAS) enables high-bandwidth, robust and reliable wireless connectivity – even in tough indoor environments like convention centers and sports stadiums. With less than 10% of the approximately five million commercial buildings in the United States currently utilizing DAS systems, this could be a large opportunity for the company.
- Corning® Willow® Glass, an ultra-slim, flexible glass that is thinner than a dollar bill, is positioned to participate in a significant way in the growth of the flexible displays market, which is expected to reach nearly 800 million units in 2020.
- Corning recently introduced the world’s first antimicrobial cover glass that inhibits the growth of microbes on touch devices at CES 2014. With approximately 1.3 billion touch devices in use today, this could be a very large opportunity for Corning.
- With Corning’s investment and collaboration, View, Inc., is developing a dynamic architectural glass that can significantly lower energy costs. This work with View could address a significant portion of the more than 25 billion square foot commercial windows market.
A culture of innovation
Dr. David L. Morse, executive vice president and chief technology officer, continued Corning’s theme of life-changing innovation by noting the company’s unique capability of developing proprietary manufacturing processes that provide an additional competitive edge. “Developing manufacturing processes and life-changing products, as we have done repeatedly throughout our history, requires a unique organization, capabilities, and culture. Our secret isn’t one competency or capability. It’s the integrated combination that powers Corning innovation,” he said.
Morse explained that Corning’s Emerging Innovations Group is focused on new revenue streams by extending current products into new markets. He pointed out that Corning is not only providing Corning® Gorilla® Glass for a high-end automotive application, “We are also collaborating with industry-leading auto glazers to bring Gorilla Glass to more mainstream vehicles. At nearly six billion square feet of glass consumed annually, it is a sizeable opportunity.” The company expects to announce some of these new relationships in the near future. Corning is also looking to extend Gorilla Glass into additional transportation applications including rail and aviation.
Morse noted that Corning has entered into collaborations with both SnapCab® Elevator Interior Systems and Elevecture LP, to use Gorilla Glass in modular wall systems, including elevator walls, lobbies, and conference rooms. He also highlighted new business opportunities secured with Egan Visual, Krystal™ Writing Boards, Inc., and MooreCo, Inc., on marker boards featuring Gorilla Glass.
James P. Clappin, president of Corning Glass Technologies, reinforced the critical competitive advantage that the company’s proprietary fusion platform plays in driving future opportunities. In reviewing the recently closed acquisition of Corning Precision Materials Korea, Co., Ltd., Clappin noted, “Having these flexible fusion assets enable us to be the leading and lowest-cost producer of specialty glasses specifically designed for a broad range of applications. This business is expected to add approximately $350 million incremental profit this year.
“We are optimistic about the growth outlook for our LCD glass, given the increase in the worldwide installed TV base, a faster replacement cycle for flat panel televisions, larger screens, and introduction of technologies such as ultra-high definition TVs,” he stated.
Clappin also pointed out that Corning Lotus™ Glass is positioned to capture growth in the high-performance display arena, which is expected to grow by 35% on average over the next several years. Corning’s Lotus glass is optimized to meet the demanding manufacturing processes of higher-resolution LCD or OLED displays.
In the cover glass market, “We expect healthy growth for cover glass from smartphones, tablets, and touch panels for notebook computers,” he noted. “In area terms, we expect the total cover glass market to almost double in the next few years, and with that, we expect our overall volume and revenue growth to be significant.”
Optical solutions will continue driving profitable growth for Corning’s Optical Communications segment, Clark S. Kinlin, executive vice president, told investors. He noted that the scale and rate of bandwidth growth-driven by video, wireless data, and cloud computing – are straining data centers and networks. “Optical-based solutions provide the most cost-effective capacity and speed to alleviate pressures on the network,” Kinlin explained. He highlighted industry studies that show global IP traffic growing at 23% per year through 2017, with mobile traffic the fastest-growing component. “Our solid foundation of optical components is providing our customers with the necessary integrated solutions for today’s growing variety of network applications,” he added. Kinlin said that the company expects its Optical Communications segment to grow twice as fast as the overall industry in 2014.
Environmental Technologies and Life Sciences
Tighter environmental emissions standards in China and Europe are happening and could drive a compound growth rate between 15% and 20% for Corning’s heavy-duty diesel products through 2017, Mark A. Beck, executive vice president for Environmental Technologies and Life Sciences segments, told investors.
For the automotive market, Corning is launching a new fast-light-off substrate and already providing samples to major automotive customers. “Our innovation reduces start-up emissions, improves fuel efficiency, and reduces overall system costs,” Beck explained.
In reviewing the Life Sciences segment, Beck said that Corning expects to see steady growth from its base businesses, and innovation programs to play an increasing role in delivering new products for the growing area of biologics and cell-based therapies.
James B. Flaws, vice chairman and chief financial officer, pointed out that Dow Corning Corporation, of which Corning is a 50% equity owner, remains the global leader of specialty chemicals and retains a unique technology set and innovation portfolio. “We expect Dow Corning’s silicone sales to improve on a year-over-year basis in the low-single digit level as the global economy improves. We anticipate Hemlock Semiconductor sales will increase by about 20%. Dow Corning’s net income is expected to be up 20% to 30% year over year, driven by an improved cost basis.”
Additionally, he provided an update on the integration of Corning Precision Materials (formerly Samsung Corning Precision Materials Co., Ltd.), noting that the business is expected to add approximately $2 billion in additional Display Technologies segment sales this year.
Flaws concluded the formal presentation by saying, “Our combination of increased earnings and shareholder returns is delivering significant value for investors.”
He added, “Corning has a 163-year history of developing products that have created new industries and transformed people’s lives. We believe our unique capabilities, collaborative culture, and passion for innovation will lead to future growth and long-term sustainability.”
Conference Broadcast Information
Corning’s annual investor meeting is being held on Friday, Feb. 7 at Cipriani, located at 110 E. 42nd Street, New York. Corning’s products and technologies will be on display from 8 a.m. until 9:30 a.m. EST. Corning will make the presentation at its annual investor conference available to the public through a video and audio webcast and telephone access. The broadcast will begin at 9:30 a.m. EST. The dial-in number is 877-710-0209 (U.S.) or 315-625-3068 (International). The call title is Corning Incorporated 2014 Investor Meeting. A replay of the call will be available at 2 p.m. EST and will run through 5 p.m. EST on Tuesday, Feb. 11, 2014. To access the replay, dial 855‐859‐2056 or 800-585-8367 (U.S.) or 404‐537‐3406 (International). The confirmation code is 14794808. 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 our investor relations section to find “Financial Reports." These reconciliations also accompany 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 160 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.