Extending Corning Incorporated’s (NYSE: GLW) current and emerging innovations into new markets is key to capturing significant new growth opportunities, Wendell P. Weeks, chairman, chief executive officer and president, will tell attendees at Corning’s annual investor meeting today in New York.
In opening the meeting, Weeks will remind investors that Corning’s strategy calls for growth primarily through global innovation across a balanced product portfolio. He will point out that the company offers both strength and stability to investors. “We’re financially sound. We are the market and technology leader in the industries we serve, as well as the lowest-cost producer for most of our products. Our businesses are all tied to significant trends, and our business diversity helps reduce our volatility during market and economic upsets.
“We offer strong cash flow, a reliable dividend, and the earnings power to invest in growth. And, we have the opportunity for exceptional growth outside of our existing businesses,” Weeks will say.
Innovations with Breakout Potential
Corning continues to focus on breakthrough innovations while also leveraging existing capabilities and assets to enter new markets and generate quick returns. “Let me illustrate,” Weeks will offer. “When we launched Gorilla Glass in 2007, we basically created the market for tough, durable cover glass. Today, Gorilla Glass is featured on 1 billion devices worldwide. It is Corning’s second-most-profitable business and the fastest-growing product in Corning’s history.”
He will point out that “Our Gorilla Glass business has the potential to more than double in sales over the next several years,” with three major trends driving this opportunity: smartphone volume growth expected to double and tablet computers to triple by 2016; large screen sizes for electronic devices using more cover glass; and touch technology moving to notebook computers, creating an entirely new opportunity.
Additionally, he will explain to investors that Corning plans to bring forward new glass innovations for the consumer electronics market, including optimized touch and Radio Frequency (RF) capabilities; aesthetically pleasing shaped devices; and anti-reflectivity and antimicrobial properties. “We plan to have commercial launches for our shaped, anti-reflective, and antimicrobial Gorilla Glass solutions this year,” he will reveal.
Future of Display Technologies
“We are rapidly trending toward an ‘always on’ world, a world in which we can access information and communicate whether we’re in our homes, in transit, or at our desks,” James P. Clappin, president of Corning Glass Technologies, will tell meeting attendees. Clappin will explain that television trends, including larger screen sizes and faster replacement cycles, coupled with dynamic growth in high-performance tablets and smartphones “will continue to drive growth in the LCD glass market going forward.”
“Corning’s advanced glass solutions support the intuitive, touch-enabled interfaces, as well as the high-resolution, and ultra-thin form factor requirements of this next wave of innovations in display,” he will say.
He also will note, “Many technological advancements first emerge in smaller applications like smartphones or tablets, and Corning’s other advanced glasses are poised to address key display industry trends in these markets.” Corning® Lotus™ Glass is designed to offer superior performance for higher-resolution LCDs as well as OLEDs. Clappin will emphasize that the company remains optimistic about the OLED market, noting “all manufacturers making or developing OLED devices are relying on designs with two pieces of glass.” In addition, Clappin will remind investors that Corning’s newest advanced glass solution, the ultra-slim, flexible Corning® Willow™ Glass, “could be the key that unlocks a host of next-generation displays.”
Corning® Gorilla® Glass Applications
“Our outlook for Gorilla Glass is very positive,” Clappin will say. “We have already surpassed $1 billion in annual sales last year, and now the new functionality of Gorilla Glass 3, in combination with significant consumer electronics growth trends, could enable the business to double in size over the next several years.”
The near future in consumer electronics, Clappin will explain, should bring increased penetration of the smartphone as the handheld device of choice; a 30% increase in screen size; a doubling of the popularity of tablet devices over the next four years; and touch applications emerging on notebook computers.
Corning also sees growth possibilities for Gorilla Glass beyond the consumer electronic space. Clappin will tell investors, “The same qualities that make Corning Gorilla Glass so popular in the display category also afford us new opportunities in adjacent markets: transportation, interior architecture, appliances, and large-format displays.”
Citing potential 2013 double-digit growth in Corning’s Telecommunications Business Group, Clark S. Kinlin, executive vice president, will explain that the increasingly always-on world “is straining communication networks and providing tremendous opportunities for Corning.”
Rapidly expanding data storage requirements, ubiquitous access to that data, and quadrupling bandwidth demand all push the limits of existing networks, requiring major investments in optical infrastructure to meet consumer expectations. Kinlin will explain that Corning is able to bring together its market leadership in optical fiber, cable, connectors, hardware and actives to develop high-value optical solutions that expand bandwidth capacity and reduce costs for customers.
Looking across his major business areas, Kinlin will explain that the global optical fiber market is expected to exceed 250 million fiber kilometers in 2013. The bulk of this growth is expected to come from developing markets. In positioning the company to address one of the key emerging markets, Corning opened a new fiber manufacturing facility in India last year.
Providing a full suite of solutions across a wide range of application spaces, Corning continues to expand its Pretium EDGE™ solution for data centers; provides cost-effective pre-connected solutions for major fiber-to-the-home deployments around the globe; extends its distributed antenna systems for mobile access at large public-venue environments; and now offers Optical™ Cables by Corning, which enable consumers to have lightning-fast data transfer speeds over distances that greatly exceed the length limits of copper-based cables.
The advancement of regulations aimed at improved air quality around the world can help grow Corning’s Environmental Technologies profitability by more than 10% over the next several years, Mark A. Beck, executive vice president for Corning’s Environmental Technologies and Life Sciences Business Group, will tell investors. He will explain that new “clean air” initiatives in China and India, along with tightening regulations in Europe and the U.S., should contribute to the anticipated growth in both light-duty substrates and heavy-duty products.
Looking forward, Beck will point out that Corning is sampling new technologies to address: automotive emissions standards for improved fuel efficiency engines; expanded regulations impacting marine and locomotive regulations; and applications to help reduce greenhouse gas emissions.
Corning’s Life Sciences business is approaching $1 billion in annual sales, driven in large part by its recent acquisitions which have strengthened its global product and customer base. “We now have a broad portfolio of products that positions us well for the next wave in healthcare. Central to this is a trend toward biological therapies, which take a patient’s unique environmental, behavioral, and medical needs into account. As a pioneer in cell culture research, we are well-positioned to address the emerging bioprocessing market,” Beck will say.
Path to a more Balanced Company
James B. Flaws, vice chairman and chief financial officer, will reiterate the confidence Corning’s management has in its expectations for continued sales and earnings growth for the company. The three trends of seamless, real-time information delivery, cleaner air, and advances in medical technology “are driving our growth now and will continue to do so over the next several years.” He will point out that a large portion of this growth should come from emerging markets such as China, India, and Brazil.
He will also note the important role that Dow Corning Corporation (an equity company) plays in Corning’s future. “Dow Corning is an important contributor to our long-term growth, stability, and balance. Dow Corning remains the world leader in silicon and polysilicon production, as they focus on high-value, high-growth opportunities and make significant advances in expanding their geographic reach.” He will also acknowledge that Dow Corning’s Hemlock Semiconductor Group, will negatively impact Corning’s equity earnings in the near future, as it addresses the tumultuous market conditions in the global solar industry.
Flaws will review other important factors driving the company’s financial performance: foreign exchange rates could continue to impact Corning’s results; the company’s solid plan to manage its positive cash flow through debt repayment and reinvestment in the company’s future through capital spending of $1.3 billion in 2013; and the potential for additional returns to shareholders in the form of increased dividends or another share repurchase plan in the future.
Conference Broadcast Information
Corning’s annual investor meeting will be held on Friday, Feb. 8 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. EST. 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 877-430-4662 (U.S.) or 224-357-2218 (International). The call title is Corning Incorporated 2013 Investor Meeting. A replay of the call will be available at 1 p.m. EST and will run through 5 p.m. EST on Tuesday, Feb. 12, 2013. To access the replay, dial 855-859-2056 U.S. or 404-537-3406 International. The confirmation code is 75706989. 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 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.