Corning Incorporated (NYSE: GLW) today announced its results for the fourth quarter of 2010.
- Sales were $1.77 billion, a 10% sequential increase and up 15% year over year.
- Earnings per share were $0.66. Excluding special items, earnings were $0.46,* a 10% sequential decline, but 5% improvement year over year.
- Display Technologies’ wholly owned business glass volume increased almost 20% sequentially. Volume at Samsung Corning Precision Materials Co., Ltd., declined by almost 15% sequentially. The company’s total glass volume, which includes its wholly owned business and SCP, was down slightly sequentially.
- Specialty Materials sales increased 24% sequentially and 79% year over year, driven by very strong sales in Corning® Gorilla® Glass and continued strong performance in advanced optics.
- Corning Environmental Technologies sales improved 12% sequentially and 28% year over year.
- Sales were $6.6 billion, a 23% increase over $5.4 billion a year ago, with each of the company’s business segments growing year over year.
- Gross margin percentage improved to 46% from 39% a year ago.
- Equity earnings were $2.0 billion, an increase of 36% from a year ago.
- Earnings per share were $2.25, a 76% increase over last year. Excluding special items, EPS was $2.07* compared to $1.35* a year ago.
- Free cash flow for the year was $2.8 billion*.
Quarter Four Financial Comparisons
|Net Sales in millions|
|Net Income in millions|
|Non-GAAP Net Income in millions*|
Full-Year Financial Comparisons
|Net Sales in millions|
|Net Income in millions|
|Non-GAAP Net Income in millions*|
*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 investor relations Web site.
Wendell P. Weeks, chairman, chief executive officer and president, said, “This past year was one of the most successful in the company’s 160-year history. Back in February, we said that our goal was to emerge from the recession as a stronger, more profitable company. I believe we have accomplished this.
“We achieved excellent financial results with strong sales growth and net profit improvement in each of our businesses. We substantially grew our cash position and saw the emergence of a significant new opportunity with Corning® Gorilla® Glass. Overall, it was a very good year for Corning.”
Fourth-Quarter Segment Results
Sales in the Display Technologies segment were $750 million, increasing 16% sequentially and 5% year over year. Volume at the company’s wholly owned business increased almost 20% sequentially and about 10% year over year. Samsung Corning Precision Materials’ volume declined nearly 15% on a quarterly basis and about 5% year over year. Glass price declines were down in the mid-single digits sequentially, and in line with expectations.
Telecommunications segment sales were $443 million, down 5% sequentially, but up 9% year over year. The typical quarterly seasonal downturn was milder than originally expected.
Environmental Technologies segment sales were $232 million, a 12% sequential increase and 28% year-over-year improvement. The company saw strong growth for its light-duty and heavy-duty diesel engine filters as well as sustained demand for its automotive substrates.
Specialty Materials segment sales were $197 million, a 24% sequential increase and 79% year-over-year business improvement. Most of the sales increase was driven by the rapidly growing market demand for Corning® Gorilla® Glass.
Life Sciences segment sales were $140 million, a 12% sequential increase, and 20% year-over-year growth. The growth was driven primarily by acquisitions.
Corning’s equity earnings were $511 million, including several one-time gains recorded as special items. Without these special items, equity earnings would have been $408 million* for the quarter.
In the quarter, Corning recouped $324 million ($206 million after tax) from a settlement for business interruption and property insurance claims in the Display Technologies segment resulting from earthquake activity near the company’s Shizuoka, Japan facility and a power disruption at the Taichung, Taiwan facility in 2009.
Corning ended the year with over $6.3 billion in cash and short-term investments. This is up from $3.6 billion at the beginning of the year.
James B. Flaws, vice chairman and chief financial officer, said, “We are entering the year with excellent momentum. Corning’s Gorilla® Glass is poised for dramatic sales growth. We believe the display supply chain exited 2010 with healthy levels of inventory. Corning is well positioned in each of our business segments to take advantage of the global economic recovery that is underway.”
In the display segment, Corning expects sequential glass volume for both its wholly owned business and Samsung Corning Precision to increase by the mid-single digits in the quarter. Glass price declines are expected to be more moderate than those in the fourth quarter.
In the company’s Telecommunications segment, first-quarter sales are expected to be consistent with a very strong fourth quarter, and 20% higher than from a year ago.
Environmental Technologies segment sales are expected to be in line with the very robust fourth quarter and up about 20% over last year.
Specialty Materials segment sequential sales growth in the quarter should be in the range of 20% to 25%, which would be more than double year over year, driven primarily by
Corning® Gorilla® Glass.
The Life Sciences segment first-quarter sales are expected to increase slightly sequentially and be up about 20% year over year.
Corning anticipates that equity earnings from Dow Corning Corporation will improve sequentially. Overall equity earnings are expected to be down 5%, excluding the impact of the one-time gains in last year’s fourth quarter.
As previously disclosed, Corning’s tax rate for 2011 will move up substantially due primarily to the non-repeat of the benefit of foreign tax credits. Corning anticipates its 2011 full-year tax rate will be approximately 15%. This new higher rate will take effect in the first quarter.
Corning will host investors and provide more information on its 2011 outlook at its annual investor meeting in New York on Friday, Feb. 4 at 9 a.m. ET at Cipriani on 42nd Street. Corning will showcase products and technologies prior to the meeting. The company’s exhibits, including hands-on Gorilla® Glass product demonstrations, will be available for viewing starting at 7:30 a.m. The exhibits will close at 9 a.m. Senior management will also be available during the exhibit period to answer individual investor questions. Attendees can register online at the company’s investor relations Web site. A live audio and video cast will be available through the company’s investor relations Web site.
Corning will also be presenting at the Goldman Sachs Technology Conference Feb. 15, and at the Morgan Stanley Media and Telecom Conference March 1, both in San Francisco.
Fourth-Quarter Conference Call Information
The company will host a fourth-quarter conference call on Tuesday, Jan. 25 at 8:30 a.m. ET. To participate, please call toll free (800) 288-8974 or for international access call (651) 291-0278 approximately 10-15 minutes prior to the start of the call. The password is ‘QUARTER FOUR’. The host is ‘SOFIO’. To listen to a live audio webcast of the call, go to Corning’s Web site at www.corning.com/investor_relations and click Investor Events on the left. A replay will be available beginning at 10:30 a.m. ET and will run through 5:00 p.m. ET, Tuesday, Feb. 8, 2011. To listen, dial (800) 475-6701 or for international access call (320) 365-3844. The access code is 188589. 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 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 150 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.