Corning Incorporated (NYSE: GLW) today announced its results for the third quarter of 2014.
- Core sales were $2.6 billion*, a 26% increase on a year-over-year basis. Net sales (GAAP) were $2.5 billion, a 23% increase on a year-over-year basis.
- Core earnings per share were $0.40*, a 21% improvement over a year ago. This marked the eighth consecutive quarter of year-over-year core EPS growth. GAAP earnings per share were $0.72.
- Corning’s LCD glass volume was up by high single digits sequentially, driven by retail sales of TVs and supply chain preparations for the upcoming holiday season.
- Year-over-year core sales in Corning Environmental Technologies grew significantly at 25%, and core sales in the Optical Communications segment remained robust, growing 7%.
Third-Quarter Financial Comparisons
In millions, except percentages and per-share amounts
|Q3 2014||Q3 2013||% Change|
|Core Net Sales||$2,649||$2,108||26%|
|Core Equity Earnings||$76||$121||(37%)|
|Core Earnings EPS||$0.40||$0.33||21%|
|Q3 2014||Q3 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 and Korean won foreign exchange rates, 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.
“Our strong third-quarter performance marked two full years of year-over-year quarterly earnings growth, a significant accomplishment for Corning. We had record earnings in our Environmental Technologies segment, healthy demand for our Optical Communications solutions, and solid results in Display Technologies with the Corning Precision Materials integration providing significant synergies,” said Wendell P. Weeks, chairman, chief executive officer and president.
“We are benefitting from solid growth trends and positive momentum across the company, with balanced contributions to year-over-year earnings from Display Technologies and our other businesses,” Weeks added.
Third-Quarter Segment Results
Display Technologies segment core sales were $1.1 billion*, a 62% increase over core sales of $689 million* a year ago. Core earnings for the quarter increased 14% on a year-over-year basis. LCD glass volume grew by a high-single-digit percentage sequentially. As expected, price declines moderated.
Optical Communications segment core sales were $698 million*, a 7% increase from $650 million* in quarter three of last year. The quarterly sales increase was driven by all markets and regions with the exception of China. Core earnings increased by 8% on a year-over-year basis.
Environmental Technologies segment core sales were $282 million*, a 25% year-over-year increase. The global market for light-duty and heavy-duty diesel emissions products remained very strong in the quarter. Core earnings were a record, up 78% from last year.
Core sales in Corning’s Specialty Materials segment were $327 million*, a 10% increase on a quarter-over-quarter basis, driven by Corning® Gorilla® Glass shipments for new product launches in the quarter. Core earnings were up 18% sequentially.
Corning’s Life Sciences segment quarterly core sales and earnings were essentially even with last year. Core equity earnings from Dow Corning Corporation increased 143% year over year, with earnings growth from both the silicones and polysilicon businesses.
In the third quarter, Corning repurchased 9.6 million shares for approximately $200 million under its current share repurchase program, which the company anticipates completing by the end of the year.
Corning ended the third quarter with $6.1 billion in cash and short-term investments. The company’s capital spending for the quarter was $262 million.
“This has been an excellent year for Corning,” said James B. Flaws, vice chairman and chief financial officer. “We have grown sales and earnings each quarter, and we anticipate the fourth quarter will continue this positive year-over-year trend.”
In the fourth quarter, Corning LCD glass volume is expected to be even-to-down slightly from the previous quarter, and in line or slightly better than the overall glass market volume. Sequentially, the company anticipates LCD glass price declines will be more moderate. For the full year, Corning expects the global LCD glass retail market to grow 10%.
Optical Communications segment fourth-quarter core sales are expected to increase by a mid-single-digit percentage, year over year. For the Environmental Technologies segment, core sales are expected to increase by a high-single-digit percentage versus last year, driven by continued strength for heavy-duty diesel products.
Specialty Materials segment core sales are expected to decrease sequentially by a low-to-mid teen digit percentage, reflecting the absence of new product launches that occurred in the third quarter. Life Sciences segment core sales are expected to be consistent with last year’s fourth-quarter performance.
“In the fourth quarter, we are on track to deliver year-over-year sales and earnings growth. Two years ago, we set out to bring stability and momentum back to our display business, restore earnings growth, and return cash to shareholders. We have made excellent progress on each of these objectives,” Flaws said.
He added, “The acquisition of Corning Precision Materials and the return to more moderate glass price declines have us feeling good about our display business. We anticipate retail demand for larger-screen televisions and ultra-high definition units will result in increased demand for our LCD glass next year.”
Flaws noted that sales and profits for both the Optical Communications and Environmental Technologies segments have improved considerably over the past year. “The long-term trends for increasing bandwidth using optical fiber and growing wireless demand should continue to drive growth of our optical solutions sales. We also believe the longer-term market outlook for our heavy-duty emissions products will remain robust, due to new regulations.”
“We have experienced only minor disappointments this year, with the Life Sciences market not growing as expected and the lackluster retail sales of media tablets, which we had expected to contribute more volume growth of Gorilla Glass,” Flaws commented.
Flaws also noted progress on several innovation programs. “The company plans to introduce its latest Gorilla Glass innovation on Nov. 20. Gorilla Glass 4 will have dramatically improved performance capabilities over previous versions.
“We continue to work on a major initiative for our Life Sciences business, which we believe could become a large opportunity for us. Additionally, Gorilla Glass is receiving interest from the automotive industry for solutions that may reduce overall vehicle weight, improve gas mileage, and provide additional safety benefits. These new technologies may serve as the foundation for Corning’s next growth surge,” he said.
“We have returned considerable cash to shareholders with nearly $4 billion in share repurchases over the past two years. And with the anticipated conclusion of the current repurchase program this quarter, the board of directors has agreed to accelerate its evaluation of future share repurchases and dividend increases,” Flaws concluded.
Upcoming Investor Events
Corning will present at the 2014 UBS Global Technology Conference on Nov. 18, in Sausalito, Calif. and the Barclays Technology Conference on Dec. 9 in San Francisco.
Third-Quarter Conference Call Information
The company will host a third-quarter conference call on Tuesday, Oct. 28, at 8:30 a.m. ET. To participate, please call toll free (800) 230-1093 or for international access call (612) 234-9960 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, Tuesday, Nov. 11. To listen, dial (800) 475-6701 or for international access dial (320) 365-3844. The access code is 338301. 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 (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.