Corning Incorporated (NYSE: GLW) today announced its results for the first quarter of 2014.
First-Quarter Performance Highlights
- Core sales grew to $2.4 billion*, a 32% increase on a year-over-year basis. Net sales (GAAP) were $2.3 billion, a 26% increase on a year-over-year basis.
- Core earnings per share were $0.31 per share*, an increase of 7% over the first quarter last year and better than expected. GAAP earnings per share were $0.20.
- Core sales in the Display Technologies segment increased 58% from the year-ago period, resulting primarily from the recent consolidation of Corning Precision Materials Co., Ltd.
- Sales in the Optical Communications segment increased 26% from the year-ago period.
- Environmental Technologies segment sales increased 21% on a year-over-year comparison.
Quarter-One Financial Comparisons
In millions, except percentages and per-share amounts
|Q1 2014||Q1 2013||% Change|
|Core Net Sales||$2,389||$1,814||32%|
|Core Equity Earnings||$61||$180||(66%)|
|Core Earnings EPS||$0.31||$0.29||7%|
|Q1 2014||Q1 2013||% Change|
*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 website. Core performance metrics (non-GAAP) are adjusted to exclude the impact of changes in Japanese yen foreign exchange rate, as well as other items that do not reflect ongoing operations of the company. See “Use of Non-GAAP Financial Measures” section of attached Form 8-K for details on core performance measures.
“We are continuing our trend of core earnings improvement with our first-quarter performance. This represents our sixth consecutive quarter of year-over-year core earnings growth,” Wendell P. Weeks, chairman, chief executive officer, and president, said. “Additionally, we have made terrific progress with the integration of Corning Precision Materials into our Display Technologies segment, and we have already realized benefits from the acquisition.
“We also had exceptional sales growth in our Optical Communications and Environmental Technologies segments, which exceeded our expectations. Optical Communications saw its greatest growth in North America, and our environmental business benefitted from strong demand for heavy-duty diesel emissions products,” he added.
First-Quarter Segment Results
Display Technologies segment core sales were $1 billion*, a 58% increase from core sales of $650 million* a year ago, primarily as a result of the consolidation of Corning Precision Materials during the quarter. Core earnings for the quarter declined 4% on a year-over-year basis. Total LCD glass volume grew by low single digits on a year-over-year basis. As anticipated, sequential LCD glass price declines in the quarter were higher than those in previous quarters.
Optical Communications segment sales were $593 million, a 26% increase from $470 million in quarter one 2013. The increase was driven primarily by continued strength in carrier network sales.
Environmental Technologies segment sales were $275 million, a 21% increase compared with $228 million in the first quarter last year. Net income was up 59% due primarily to increased sales and improved manufacturing efficiencies.
Sales in Corning’s Specialty Materials segment were $261 million, a slight increase from last year’s first-quarter results. Life Sciences segment sales were $210 million, also a slight increase over those of the year-ago period. Core equity earnings from Dow Corning Corporation increased 40% over first-quarter 2013 performance.
Core gross margin for the quarter was 44%*, an increase of one percentage point over the year-ago period.
During the quarter, Corning completed its $2 billion share repurchase program announced in April 2013 and began executing a new $2 billion share repurchase program, which became effective with the Corning Precision Materials acquisition. The new share repurchase program includes a $1.25 billion accelerated stock repurchase.
Corning ended the first quarter with $5.6 billion in cash and short-term investments.
“The strong first-quarter performance across all our business units has given us momentum for the remainder of the year,” James B. Flaws, vice chairman and chief financial officer, said. “We are starting to benefit from the synergies we anticipated with the consolidation of Corning Precision Materials, and, as LCD price declines lessen, we expect improved results throughout the year.”
In the second quarter, Corning expects its LCD glass volume to be up by a high single-digit percentage sequentially. Price declines in the second quarter are expected to be significantly less than those in the first quarter.
Optical Communications segment second-quarter sales are expected to increase year-over-year by a mid-to-high single-digit percentage, driven by continued strong sales with carrier networks in North America and Europe, and by increasing demand for the company’s wireless solutions.
For the Environmental Technologies segment, second-quarter sales are anticipated to grow by a low-to-mid teen percentage on a year-over-year basis. Demand for Corning’s heavy-duty diesel emissions products is expected to remain strong, driven by new government emissions standards in Europe and China, and by renewed demand in North America.
Specialty Materials segment sales are expected to increase by 20% to 25% sequentially, driven by significant growth in Corning® Gorilla® Glass demand. The company believes that the customer inventory buildup, which occurred late in 2012 and impacted Gorilla Glass sales throughout 2013, has now worked its way through the supply chain.
Life Sciences segment sales are anticipated to be consistent with the year-ago performance.
“We continue to deliver on our goal to return value to shareholders through our share buyback program, growth across all of Corning’s segments, and successful execution on the synergies to be gained through the Corning Precision Materials integration. We feel good about our first-quarter results, and we are confident that we can deliver on our 2014 growth plan,” Flaws concluded.
Upcoming Investor Events
Corning will present at the Jefferies 2014 Global Technology Media and Telecom Conference in Miami, on May 7, 2014; the J.P. Morgan Technology, Media and Telecom Conference in Boston on May 20, 2014; the Sanford C. Bernstein’s 30th Annual Strategic Decision Conference in New York on May 29, 2014; and at the Bank of America Merrill Lynch 2014 Global Technology Conference in San Francisco on June 3, 2014.
First-Quarter Conference Call Information
The company will host a first-quarter conference call on Monday, April 28, at 8:30 a.m. ET. To participate, please call toll free (800) 230-1059 or for international access call (612) 332-1213 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 and click “Investor Events” on the left. A replay will be available beginning at 11:00 a.m. ET and will run through 5 p.m. ET, Monday, May 12. To listen, dial (800) 475-6701 or for international access dial (320) 365-3844. The access code is 323571. 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 www.corning.com/investor_relations and clicking “Financial Reports” on the left. 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.