Speaking at the company’s annual meeting of shareholders this morning, Wendell P. Weeks, Corning Incorporated’s (NYSE: GLW) chairman, chief executive officer, and president, said, “Corning is financially healthy, our businesses are growing, and we are capturing exciting new opportunities to apply our unique expertise to solve tough technology challenges.” Looking ahead, he conveyed his confidence in Corning’s future and noted that “multiple businesses are driving the company’s growth.”
2014 Results and 2015 Quarter Performance
Weeks described 2014 as an “outstanding year,” including the highest sales in Corning’s history. He attributed profitability increases to a combination of top-line growth and cost reductions across the organization. He also noted that Corning had exceeded its expectations for synergies from the integration of Corning Precision Materials Co., Ltd.
Weeks told shareholders that Corning’s 2015 focus is to “build on this momentum and grow.” On Tuesday, the company announced its first-quarter results, including a 10th consecutive quarter of year-over-year core earnings-per-share growth.
Driving Near-Term and Long-Term Growth
Weeks reminded shareholders that the primary way Corning grows is through innovation. He shared examples of several recent products that would drive growth this year and in the years ahead. They included: Corning® Gorilla® Glass 4, which is twice as tough as other cover glasses and specifically designed to resist breakage when dropped; ONE™ Wireless, an all-optical technology that provides robust cellular service while also supporting Wi-Fi, video surveillance, building automation, and more on a converged platform; and FLORA™ substrates, which reduce engine start-up emissions.
Weeks told shareholders that, in addition to innovating in today’s businesses, Corning is also innovating to create entirely new businesses. He cited Corning® Gorilla® Glass Automotive as an example of how the company is leveraging its longstanding relationships in the automotive industry to create a new market opportunity for its specialty glass. Gorilla Glass Automotive enables windshields that are at least 25% thinner and weigh one-third less than conventional windshields. “Lower weight means better fuel economy,” Weeks noted.
Questions from Shareholders
Weeks devoted the remaining portion of his remarks to addressing questions that the company frequently receives from investors. He began by explaining why Corning maintains a diverse portfolio. “At any given time, there may be disruptions in one or two of our markets, but the strength of our other businesses helps to mitigate that volatility,” Weeks said. He told shareholders that Corning’s commitment to its other businesses led to the company’s survival following the telecommunications industry crash and remains a key source of the company’s strength today. “In 2014, market growth in our specialty materials and life sciences businesses was not as strong as the company originally expected, but we exceeded expectations in our display, optical communications and environmental technologies businesses, which led to outstanding performance overall,” Weeks said.
Weeks also addressed the question of why Corning spends more on research, development, and engineering than its peers. He explained that Corning’s investment in RD&E gives the company a set of distinctive capabilities, leads to long-standing customer relationships, and creates strong competitive advantage. He also shared data showing that Corning generates a larger return on investment in terms of operating profit than its peers. “That’s why our commitment to innovation is unwavering,” he said.
Turning to the topic of Corning’s “next big thing,” Weeks acknowledged that the company was excited about opportunities for Gorilla® Glass in adjacent markets and a potential new business in the life sciences market, but encouraged shareholders to take a broader view. “Historically, there has been a primary business driving the company’s growth until a new primary business takes over. But today, multiple businesses are driving growth,” Weeks explained. He added, “We unlock new opportunities by innovating for both existing and future businesses.”
Weeks ended this portion of the discussion by explaining Corning’s investment in the communities where the company operates. “As part of our commitment to good corporate citizenship, we invest to make our communities better places to live and work,” Weeks said. He shared examples of investments in Corning, N.Y., where the company is headquartered, while noting that Corning is engaged in similar initiatives around the globe.
“Our people are also generous with their time and their talent,” Weeks added. “I’m proud to be part of a company that makes a positive difference in people’s lives and part of a community where people support each other.”
Weeks concluded his remarks by telling shareholders, “We are committed to earning your confidence with our performance and your trust with our actions.”
During the meeting’s formal business, shareholders elected the following 14 directors to one-year terms: Donald Blair, 57; Stephanie Burns, 60; John Canning, 70; Richard Clark, 69; Robert Cummings, 65; James Flaws, 66; Deborah Henretta, 53; Daniel Huttenlocher,55; Kurt Landgraf, 68; Kevin Martin, 48; Deborah Rieman, 65; Hansel Tookes, 67; Wendell Weeks, 55; and Mark Wrighton, 65. They also ratified the appointment of PricewaterhouseCoopers as the company’s independent registered public accounting firm for 2015 and approved the company’s 2015 Executive Compensation Plan. A shareholder proposal by The Holy Land Principles, Inc., failed to receive a majority of the votes cast.
Following the meeting, Clark S. Kinlin, executive vice president, Corning Optical Communications, provided an overview of Corning’s optical solutions and discussed the company’s growth opportunities as demand for data continues to increase. Kinlin told shareholders, “Global demand for bandwidth is increasing faster than most networks can keep up with, especially in places like sports stadiums, apartment buildings and homes, data centers, and office buildings.” He said, “Optical solutions are the best technology for solving network challenges and Corning is a leader in this space.”
Kinlin noted that this year is the 45th anniversary of Corning’s life-changing invention of optical fiber and told shareholders that Corning continues to innovate in this area. “Since we invented optical fiber 45 years ago, we have found ways to reduce the signal loss of our fiber by 100 times, said Kinlin. “We’ve also cut manufacturing costs by half in just the last decade.” He noted that today’s optical fiber can transmit the entire collection of the U.S. Library of Congress from Florida to London in less than 25 seconds.
The company hosted a live audio webcast of the 2015 annual meeting of shareholders in Corning, N.Y., from 11 a.m. to 12:15 p.m. EDT, April 30, 2015. To access the audio webcast, please go to www.corning.com/investor_relations, select “Investor Events” in the left-hand column, and click on “More Information” next to the archived event. No password is required. The audio webcast will be archived on the website for one year following the broadcast.
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 (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.