Several innovations from Corning Incorporated’s (NYSE: GLW) new business portfolio have the opportunity for growth and could become significant revenue generators for the company, Wendell P. Weeks, chairman, chief executive officer and president, will tell investors today at the company’s annual investor meeting beginning at 9 a.m. in New York.
Weeks will open the meeting by acknowledging the challenges the company is facing in 2012: lower LCD glass prices; higher corporate tax rates; and declining equity earnings, which have combined to lower Corning’s profitability. However, he will remind investors that “despite these challenges, Corning plans to grow profits along our way to achieving our goal of $10 billion in sales.” Last week, the company announced record 2011 sales of $7.9 billion.
Vision of the future
Weeks will recall for investors that a year ago the company shared a vision of the future through a video, “A Day Made of Glass.” The video portrayed “a mobile world, a visual world, a world of intuitive interfaces, a world requiring massive bandwidth, and a world of life-enhancing technologies,” Weeks will say. “We are excited about this world, because it’s a world that depends on highly engineered specialty glass and fiber optic technology.”
Weeks also will unveil Corning’s newest video, “A Day Made of Glass 2,” which demonstrates even more ways that Corning’s specialty glass is helping enable a world of communication and connection. Both videos will be available for viewing at www.corning.com later today.
To illustrate how Corning’s latest innovations are helping to bring this vision of the future to life, Weeks will demonstrate Corning® Gorilla® Glass 2 in a live product-durability test, noting that the company has further improved the product attributes by reducing the glass thickness by 20% while maintaining its industry-leading damage resistance.
Additionally, Weeks will discuss several ways the company is providing glass innovations to enable high-performance displays. He will demonstrate Corning’s Lotus™ Glass and show work that the company is doing on ultra-slim flexible glass. Corning’s patented fusion glass manufacturing process should allow the company to produce slim, flexible glass that is five times thinner than standard display glass. It also has the potential to revolutionize the way displays are manufactured by allowing device makers to move from batch manufacturing to a continuous roll-to-roll process.
“Ultra-slim glass creates the opportunity to manufacture devices using the same techniques as plastic films, while providing all the advantages of glass in terms of transparency, encapsulation, and high-temperature tolerance,” Weeks will explain. “This unlocks the opportunity for some very exciting displays.”
Weeks also will tell investors that Corning continues to innovate its optical fiber and connectivity solutions to meet the ever-increasing bandwidth demand driven by consumer electronics applications. “Our new mobile access wireless solutions are assuring five-bar coverage, an ability to flex capacity allocation, and reduced installation time and cost.” At the same time, Corning continues improving optical connectivity with faster, lighter, smaller, and lower-energy-consumption device-to-device connectivity solutions for the home.
Finally, he plans to highlight an innovation that combines Corning’s expertise in biochemistry, specialty glass, and surface technology. “Corning is developing a glass that kills drug-resistant bacteria and viruses,” Weeks will explain. “The product is in the early stages, but it’s something we’re very excited about. This is an area that has a very real chance of becoming one of our exciting new growth opportunities.”
Path to $10 billion in sales
James B. Flaws, vice chairman and chief financial officer, will say, “As a company, we are approaching a lower level of profitability driven by LCD glass price declines. We expect these to moderate as glass capacity and demand come into balance. Our plan is to march up from this level with increased sales and profits, reaching $10 billion in sales in 2014.”
He plans to point out that while Corning LCD glass sales are likely to be flat through 2014, the business will remain highly profitable and continue to generate large amounts of cash. “We are confident we can maintain a healthy gross margin in the display business with a robust cost-reduction program, including bringing price declines in line with manufacturing costs and reduced capital expenses. Future glass-volume growth will come from an accelerated display-replacement cycle and advanced glass technologies, bringing thinner displays to the market,” he will remark.
“We now expect the Telecommunications, Specialty Materials, Environmental Technologies, and Life Sciences business segments to be the primary drivers of increased sales and profits going forward,” Flaws will add. Advances in the areas of fiber-to-the-home installations, enterprise network (data centers) solutions, optical fiber sales, and wireless applications, all are expected to contribute to Corning’s Telecommunications segment growth, which could see sales approaching $3 billion in a few years.
Corning’s Gorilla Glass sales, contained in the Specialty Materials segment, are expected to grow “materially” through 2014, led primarily by consumer electronic devices and potentially from industries outside this market, such as automotive, appliance, and architectural applications. Life Sciences sales are forecasted to nearly double to $1 billion as part of the company’s growth plan. And tighter global environmental emissions regulations will help drive Corning’s Environmental Technologies segment to $1.4 billion in sales by 2014. New businesses could contribute an additional $400 million to Corning’s path to $10 billion.
“We are addressing a number of challenges as we work to achieve these goals,” Flaws will point out. “But we have a solid balance sheet. We are committed to managing costs and to investing in future technologies that should lead to new market opportunities.”
“As the past has taught us, our path to achieve these goals is unlikely to be smooth. But by remaining nimble and focused, we believe we can achieve our $10 billion sales goal by 2014,” Flaws will tell investors.
Conference Broadcast Information
Corning’s annual investor meeting will be held on Friday, Feb. 3 at Cipriani, located at 110 E. 42nd Street, New York. Corning’s products and technologies will be on display from 8 until 9 a.m. and from 11 a.m. until 12 p.m. 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 a.m. EST. The dial-in number is (800) 230-1093 (U.S.) or (612) 332-0634 (international). The password is 2012 IR Meeting. The leader is Ken Sofio. A replay of the call will be available at 1 p.m. EST and will run through midnight EST on Friday, Feb. 17, 2012. To access the replay, dial (800) 475-6701 (U.S.) or (320) 365-3844 (international). The access code is 234927. The audio 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 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.