Corning Incorporated (NYSE: GLW) today announced its results for the first quarter of 2012.
- Sales were $1.9 billion, a 2% increase sequentially and consistent with the year-ago quarter.
- Earnings per share were $0.30. Excluding special items, earnings per share were also $0.30,* a 9% sequential and 36% year-over-year decline.
- Display Technologies’ wholly owned business LCD glass volume increased by mid-single digits sequentially and about 10% from the year-ago quarter. Volume at Samsung Corning Precision Materials Co., Ltd. was better than expectations, declining less than 10% sequentially and year over year.
- Telecommunications sales increased 4% sequentially and 7% year over year.
- Specialty Materials sales, which include the highly popular Corning® Gorilla® Glass, grew 21% sequentially and 13% year over year.
- Environmental Technologies sales improved 12% sequentially and 2% year over year.
Quarter One Financial Comparisons
|Q4 2011||% Change||Q1 2011||% Change|
|Net Sales in millions||$1,920||$1,887||2%||$1,923||-0.20%|
|Net Income in millions||$462||$491||-6%||$748||-38%|
|Non-GAAP Net Income in millions*||$463||$513||-10%||$751||-38%|
*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 website.
“We are pleased with the progress we made in the first quarter,” Wendell P. Weeks, chairman, chief executive officer, and president, said. “Our overall business performance is on track with our expectations. First-quarter sales in our Telecommunications, Environmental Technologies, Life Sciences, and Specialty Materials business segments grew, and we continued making strategic investments to create new revenue streams for the company. In the Display Technologies segment, LCD glass volume was slightly better than our forecast. And, we were especially delighted with the strength of Corning Gorilla Glass sales in the quarter.”
First-Quarter Segment Results
Sales in the Display Technologies segment were $705 million, declining 10% sequentially and 11% compared to a year ago. LCD glass price declines were in line with company expectations.
Telecommunications segment sales were $508 million, a 4% sequential increase and 7% year-over-year improvement. Sales remained strong across all of the major product areas for the segment, with fiber-to-the-home sales especially robust.
Specialty Materials segment sales were $288 million, a 21% sequential and 13% year-over-year improvement. The quarterly growth was driven by higher-than-expected Gorilla Glass sales for handheld devices and tablet computers.
Environmental Technologies segment sales were $263 million, a 12% sequential increase. Stronger light-duty and heavy-duty diesel vehicle filter and automotive substrate demand drove the first-quarter increase following normal seasonal holiday shutdowns in the previous quarter. Year-over-year sales increased 2%.
Life Sciences segment sales were $155 million, an 8% quarterly and year-over-year growth, driven primarily by acquisitions. Earlier this month, Corning announced it had signed a definitive agreement to purchase the majority of the assets of the BD (Becton, Dickinson and Company) Biosciences Discovery Labware unit for approximately $730 million. Corning expects the sale to be completed before the end of the year, subject to customary closing conditions, including receipt of regulatory approvals.
Dow Corning Corporation’s equity earnings were $35 million, down from $129 million last quarter, primarily reflecting price declines in the polysilicon market and the non-repeat of an $89 million gain in the fourth quarter of last year.
“After two successive quarters of significant LCD glass price declines, we expect our price declines will be much more moderate this quarter,” James B. Flaws, vice chairman and chief financial officer, said. At the same time, Flaws pointed out that LCD glass volumes are expected to be consistent in the company’s wholly owned business and up slightly in Samsung Corning Precision this quarter. The company expects stronger LCD glass volume growth later in the year, driven primarily by normal retail seasonality.
Telecommunications segment sales are expected to grow in the range of low to mid-teens, driven by continued strong demand worldwide for fiber-to-the-home products, enterprise network solutions, and fiber and cable products. “We project continued growth in all our major product areas in the Telecommunications segment,” Flaws noted. “Fiber-to-the-home demand is expected to remain robust in North America, parts of Europe, and Australia,” he remarked.
Specialty Materials segment sales are anticipated to grow in the range of 10% to 15%, driven primarily by the continued demand for Corning Gorilla Glass for the handheld and information technology markets. “Corning Gorilla Glass remains the cover glass of choice for most smartphones, tablet computers, and other consumer IT products,” Flaws remarked. “The retail industry is anticipating solid growth in these areas, which is good for our business.”
Environmental Technologies segment sales are expected to be consistent with the first quarter, which was a record in sales and profitability for the business segment.
In the Life Sciences segment, Corning forecasts sales to increase in the range of 5% to 10% as the company realizes the full synergies of recent acquisitions. Corning will publish an in-depth video interview with Dr. Richard M. Eglen, vice president and general manager of Corning Life Sciences, at www.corning.com following its quarterly investor conference later this morning. Dr. Eglen will provide insight on the business’ recent acquisitions and strategy for future growth.
Dow Corning’s equity earnings in the second quarter are expected to improve, driven by volume increases in the silicone and polysilicon markets.
Corning’s tax rate in the second quarter is expected to be approximately 20%, in line with the first quarter.
Flaws noted that Corning continued its share repurchase program through the first quarter, but at a slower pace than the prior quarter. “Since we launched the program, we've spent approximately $852 million. We plan to continue our activity this quarter, given our healthy cash balance and cash flow prospects for the year,” he said.
“Corning continues to make progress towards our goal of becoming a bigger, more balanced company. We anticipate continued growth across four of our major business segments and a return to LCD glass revenue growth later this year in our Display Technologies segment. We are excited about the future prospects our technology investments are creating. New glass compositions for next-generation displays, ultra-bendable fiber for faster internet connections, and ultra-slim flexible glass are a few of our most promising opportunities. We have financial stability and exciting growth opportunities to help drive us to our goal of becoming a $10 billion company in the next few years,” Flaws concluded.
Upcoming Investor Events
Corning will participate in a number of investor events in May. The company will present at the Jefferies TMT Conference at the Westin Hotel in New York on May 8; the JP Morgan TMT Conference at the Westin Hotel in Boston on May 15; the Barclays Global Technology, Media and Telecom Conference at the Sheraton Hotel in New York on May 22; and the Sanford C. Bernstein Strategic Decisions Conference at the Waldorf-Astoria Hotel in New York on May 31.
First-Quarter Conference Call Information
The company will host a first-quarter conference call on Wednesday, April 25 at 8:30 a.m. ET. To participate, please call toll free (800) 288-8960 or for international access call (612) 332-0342 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 website 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 9, 2012. To listen, dial (800) 475-6701 or for international access dial (320) 365-3844. The access code is 244213. 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 website 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.