Corning Incorporated (NYSE: GLW) today announced its results for the first quarter of 2011.
- Sales were $1.9 billion, increasing 9% sequentially and 24% year over year.
- Earnings per share were $0.47. Excluding special items, earnings per share were also $0.47*, a 2% sequential increase, but a 10% decline year over year.
- Display Technologies wholly owned business glass volume increased by upper-single digits sequentially, while volume at Samsung Corning Precision Materials Co., Ltd., improved slightly. The company’s total glass volume, which includes its wholly owned business and SCP, increased 5% sequentially.
- Telecommunications sales increased 7% sequentially and 30% year over year.
- Specialty Materials sales jumped 29% sequentially and 165% year over year, driven primarily by Corning® Gorilla® Glass.
- Environmental Technologies sales improved 12% sequentially and 35% year over year.
First-Quarter Financial Comparisons
|Q1 2011||Q4 2010||% Change||Q1 2010||% Change|
|Net Sales in millions||$1,923||$1,765||9%||$1,553||24%|
|Net Income in millions||$748||$1,044||-28%||$816||-8%|
|Non-GAAP Net Income in millions*||$751||$733||3%||$818||-8%|
*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.
Remarking on the strong first-quarter results, Wendell P. Weeks, chairman, chief executive officer and president, said, “We built on the momentum coming out of 2010 to deliver exceptional year-over-year performance from all of our business segments. Our volume across the display business remained strong. We continued to experience very healthy sales and exceptional market acceptance for Gorilla® Glass. Our telecommunications performance was robust and at levels we haven’t experienced in a number of years, and the recovery in the heavy-duty diesel market has driven our diesel sales to record highs.”
First-Quarter Segment Results
Sales in the Display Technologies segment were $790 million, increasing 5% sequentially and comparable to a year ago. Glass price declines in the quarter were more moderate than the previous quarter, as expected.
Telecommunications segment sales were $474 million, a 7% sequential increase and 30% year-over-year improvement. Sequential sales for the quarter increased across most of the segment’s major product areas with significant demand for the company’s fiber-to-the-home solutions. Corning noted that its optical fiber volume in March was higher than any other month in its history.
Environmental Technologies segment sales were $259 million, an increase of 12% sequentially and 35% year over year. The company saw record quarterly sales in diesel engine filters and increased automotive substrate sales.
Specialty Materials segment sales were $254 million, a 29% sequential increase and 165% year-over-year improvement. The growth was fueled by a 50% increase in Gorilla® Glass sequential sales as more handheld and IT consumer device manufacturers make it the cover glass of choice. These Gorilla® Glass sales include TV cover glass.
Corning’s equity earnings totaled $398 million compared to $511 million in the previous quarter and $469 million a year ago. Equity earnings included nonrecurring gains of $103 million in the fourth quarter of 2010 and $21 million in the first quarter of 2010.
Gross margin for the quarter remained strong at 45%, an increase versus fourth-quarter gross margin of 43%. Net profit before tax*, excluding special items, was $867 million, an increase of 15% sequentially, and the result of strong sales growth, higher gross margin, and lower operating expenses. Excluding special items, net profit after tax was up only slightly sequentially, the result of the anticipated increase in the company’s effective tax rate.
James B. Flaws, vice chairman and chief financial officer, said, “First-quarter performance was tremendous and it bolsters our confidence that each of our business segments will experience substantial growth this year and for several years to come.”
In the display segment, Corning expects combined glass volume in the second quarter to be consistent with the first quarter. Glass volume for the company’s wholly owned business is anticipated to decline in the low- to mid-teen range sequentially, primarily the result of lower utilization rates at several customers. At Samsung Corning Precision, volume is expected to increase in the low- to mid-teen range for the quarter. Glass price declines are expected to continue to moderate.
Regarding the earthquake and tsunami in Japan and Sharp Electronics Corporation’s recent utilization reductions, Flaws said, “We have reviewed the display component supply chain in Japan. It is our opinion that a potential component shortage that could cause a significant disruption is unlikely. With regard to Sharp’s decision to reduce production, we see this as a temporary situation that will not last beyond the second quarter.”
As a result, the company expects a significant increase in LCD glass demand in the third quarter with Sharp resuming production and the global supply chain preparing for the seasonally strong fourth quarter.
Telecommunications segment second-quarter sales are expected to increase around 20% sequentially and be up nearly 30% year over year.
Environmental Technologies segment second-quarter sales are expected to decline slightly sequentially compared to a record first quarter. Year-over-year quarterly sales increases should be about 35%.
Specialty Materials sequential sales in the second quarter are expected to grow about 20%, the result of continued strong Gorilla® Glass performance.
Corning anticipates that equity earnings will be up about 10% sequentially.
“There are several key market trends that seem to be playing to Corning’s strengths as we look to the future. These trends provide us with great opportunities across all our major businesses and position Corning to grow sales to more than $10 billion by 2014,” Flaws concluded.
Corning executives will present at the JP Morgan Technology Conference in Boston, May 16, the Barclay’s Americas Select Conference in London, May 23, and at the Bernstein Strategic Decisions Conference in New York, June 2.
First-Quarter Conference Call Information
The company will host a first-quarter conference call on Wednesday, April 27 at 8:30 a.m. ET. To participate, please call toll free (800) 230-1059 or for international access call (612) 234-9959 approximately 10-15 minutes prior to the start of the call. The password is ‘QUARTER ONE’. 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, Wednesday, May 11, 2011. To listen, dial (800) 475-6701 or for international access call (320) 365-3844. The access code is 199110. 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 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.