Corning Incorporated (NYSE: GLW) today announced its results for the second quarter of 2014.
- Core sales were $2.6 billion*, a 28% increase on a year-over-year basis. Net sales (GAAP) were $2.5 billion, a 25% increase on a year-over-year basis.
- Core earnings per share were $0.37 per share*, a 16% improvement over a year ago, marking the seventh consecutive quarter of year-over-year core EPS growth. GAAP earnings per share were $0.11.
- Corning’s LCD glass volume grew more than expected due in part to stronger-than-expected retail TV sales in Europe and South America, likely driven by the FIFA World Cup. Year-over-year sales in the Optical Communications and Environmental Technologies segments grew 14% and 25%, respectively.
Second-Quarter Financial Comparisons
In millions, except percentages and per-share amounts
|Q2 2014||Q2 2013||% Change|
|Core Net Sales||$2,577||$2,021||28%|
|Core Equity Earnings||$58||$173||(66%)|
|Core Earnings EPS||$0.37||$0.32||16%|
|Q2 2014||Q2 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.
Wendell P. Weeks, chairman, chief executive officer and president, said, “We had great results in the quarter that led to our seventh consecutive year-over-year quarterly core earnings improvement. We have positive momentum, and we are well-positioned to deliver on our 2014 business plan.
“We are particularly pleased with the improved performance in our Display Technologies segment. As we anticipated, LCD glass price declines were more moderate than they were last quarter. The integration of Corning Precision Materials Co., Ltd. into our global organization is proceeding very well, and we are benefiting from synergies attained through the consolidation.”
Weeks also pointed out that Corning’s Optical Communications segment maintained its outstanding sales performance with 14% year-over-year growth in the second quarter, and the Environmental Technologies segment had record sales in the quarter.
Second-Quarter Segment Results
Display Technologies segment core sales were $1.1 billion*, a 62% increase over core sales of $670 million a year ago. The sales improvement was driven by the consolidation of Corning Precision Materials. Core earnings for the quarter increased by 9% from the year-ago comparable period. LCD glass volume grew in the low teens percentage sequentially and was higher than anticipated. As the company expected, price declines were more moderate versus the first quarter.
Optical Communications segment sales were $686 million, a 14% increase from $601 million in quarter two of last year. The sales increase was stronger than anticipated, driven primarily by continued demand for Corning’s fiber-to-the-home solutions in North America and Europe.
Environmental Technologies segment sales reached a record $285 million, a 25% increase over second-quarter sales for 2013. Strong demand for the company’s heavy-duty diesel emissions control products continued in North America, China, and Europe.
Sales in Corning’s Specialty Materials segment were $298 million, comparable with quarterly results a year ago. Corning® Gorilla® Glass sales were less than anticipated in the quarter, due to lower retail demand for smartphones and high-end tablets, and lower-than-expected sales for planned new models.
Corning’s Life Sciences segment sales were $223 million, up 2% on a year-over-year quarterly basis. Core equity earnings from Dow Corning Corporation improved 17%* year over year.
In the second quarter of 2014, Corning repurchased 9.3 million shares for approximately $200 million under its current share repurchase program. The company also received 8.7 million shares in May from the settlement of an accelerated share repurchase transaction initiated in the first quarter of 2014. The company has approximately $400 million remaining under the share repurchase program that it expects to use by year-end.
Corning ended the second quarter with $5.9 billion in cash and short-term investments. The company’s capital spending for the quarter was $232 million. Corning has lowered its 2014 full-year capital spending estimate from $1.5 billion to approximately $1.3 billion.
“We have accomplished a great deal with our first-half business performance. We expect the third quarter will bring Corning’s eighth consecutive year-over-year quarterly sales and earnings improvement, and we are on track for strong earnings growth for the full year,” James B. Flaws, vice chairman and chief financial officer, remarked.
In the third quarter, the company anticipates its LCD glass volume will be up by a mid-single digit percentage, sequentially. Glass price declines are expected to moderate further, returning to the rates experienced through most of 2013.
Optical Communications segment third-quarter sales are expected to increase by a mid-single digit percentage year over year, driven by continued strong sales of fiber-to-the-home solutions in North America and Europe.
For the Environmental Technologies segment, third-quarter year-over-year sales are anticipated to grow by 20% to 25%. Corning continues to benefit from strong demand for its heavy-duty diesel emissions control products in North America, China, and Europe.
Specialty Materials segment sales are expected to grow approximately 10% sequentially as demand for Gorilla Glass increases in the second half of the year. Life Sciences segment sales are expected to be up slightly on a year-over-year comparison.
“Synergies from the Corning Precision Materials acquisition are rapidly being achieved, and we expect to surpass our original goal. The company is delivering excellent growth in our Environmental Technologies and Optical Communications business segments, which we expect will continue through the second half of this year,” Flaws said.
“Corning continues to invest in research and development to drive our future growth,” he pointed out. “We are working on new glass substrates for high-performance displays to enhance consumer viewing experiences, improved diesel emissions filters and substrates, and advancements in fiber-to-the-home and next-generation, data-center network solutions. Additionally, we have developments underway in wireless communications, and we plan to introduce a new, enhanced generation of our market-leading Gorilla Glass later this year,” Flaws concluded.
Upcoming Investor Events
Corning will present at Citi Global Technology Conference on Sept. 3, 2014 in New York City.
Second-Quarter Conference Call Information
The company will host a second-quarter conference call on Tuesday, July 29, at 8:30 a.m. ET. To participate, please call toll free (877) 209-9922 or for international access call (612) 332-0932 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, August 12. To listen, dial (800) 475-6701 or for international access dial (320) 365-3844. The access code is 330195. 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.