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Earnings per share improve; LCD glass price declines less
than Q4
Company optimistic for
sustained core earnings growth
CORNING, N.Y., April 24,
2013 - Corning Incorporated (NYSE: GLW) today
announced its results for the first quarter of 2013.
Performance
Highlights
-
First-quarter core sales were $1.8 billion*,
similar to core sales in the first quarter last year. Net sales
(GAAP) for the quarter also were $1.8 billion.
-
First-quarter core earnings per share were $0.30*,
a 15% increase from last year's quarter. GAAP earnings per share
were $0.33, compared to $0.31 year over year.
-
Display Technologies LCD glass price declines in
the first quarter were more moderate than fourth-quarter declines,
as expected. Corning anticipates second-quarter price declines will
be smaller than those reported in the first quarter.
Quarter-One Financial
Comparisons
In millions, except percentages and per-share amounts
|
Core Performance* |
|
Q1 2013 |
Q1 2012 |
% Change |
Core Net
Sales |
$1,814 |
$1,820 |
0% |
Core Equity Earnings |
$180 |
$178 |
1% |
Core Earnings |
$445 |
$397 |
12% |
Core Earnings EPS |
$0.30 |
$0.26 |
15% |
|
GAAP |
|
Q1 2013 |
Q1 2012 |
% Change |
Net Sales |
$1,814 |
$1,920 |
(6%) |
Equity Earnings |
$173 |
$218 |
(21%) |
Net Income |
$494 |
$474 |
4% |
EPS |
$0.33 |
$0.31 |
6% |
*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. Core performance metrics (non-GAAP) are
adjusted to exclude the impact of changes in Japanese yen's foreign
exchange rate, equity earnings from the polysilicon segment of Dow
Corning Corporation, as well as other special items. See "Use of
Non-GAAP Financial Measures" section of attached Form 8-K for
details on Core Performance measures.
"We have made great progress on our plan to grow
earnings. We delivered our second consecutive quarter of
double-digit year-over-year core earnings-per-share growth,
significantly exceeding analysts' consensus. Key to achieving these
results were moderating price declines for LCD glass, stabilizing
our LCD market share, and achieving excellent operational
performance in our other businesses," said Wendell P. Weeks,
chairman, chief executive officer and president.
"We also moved decisively in the quarter to hedge
the company's translation exposure to the Japanese
yen-to-U.S.-dollar exchange rate. The company's economic exposure
to further weakening in the yen exchange rate is now capped at 93
Japanese yen to a U.S. dollar," Weeks explained.
First-Quarter Core
Performance Segment Results
Corning announced at its annual investor meeting last February that
it would move to core performance measures for financial reporting,
providing investors a clear view of the company's core operating
results. The core performance metrics exclude the impact of changes
in the yen-to-dollar exchange rate, the results of the polysilicon
segment of Corning's affiliate, Dow Corning Corporation, as well as
other special items. Corning's core performance results will now be
reported on a constant yen basis. These financial results are
non-GAAP financial measures.
Core sales in the Display Technologies segment
were $650 million*, a 7% increase compared to a year ago. Liquid
crystal display glass price declines were more moderate than in the
prior quarter, as expected. Total glass volume from Corning's
wholly owned business and Samsung Corning Precision Materials Co.,
Ltd. increased by a mid-teens percentage, on a year-over- year
basis. Year-over-year core earnings were up slightly.
Telecommunications segment sales were $470
million, a 7% decline from last year's first quarter, driven by the
U.S. government's broadband stimulus program winding down and
continued softness in European optical fiber demand. Despite these
challenges, net income was up 67%, driven by strong spending
control and improved manufacturing performance.
As previously forecasted, Specialty Materials'
segment year-over-year sales declined 10% to $258 million. The
lower quarterly sales performance is primarily attributed to
continued weakness in the semiconductor market. Core earnings were
up 39%*, driven by excellent Corning®
Gorilla® Glass
manufacturing performance.
Environmental Technologies segment sales were $228
million, a 13% year-over-year decline. Declines were driven by a
continued sluggish heavy-duty diesel market in North America and
weak demand for diesel cars in Europe.
Life Sciences segment sales were $207 million, a
34% increase over last year's period. The bulk of the sales
increase is attributed to the acquisition of the Discovery Labware
business. This drove core earnings in the segment to double year
over year.
Dow Corning Corporation's silicones segment equity
earnings were $42 million, up 31% on a year-over-year basis.
Core gross margin in the quarter was 43%*,
compared to 42%* at this time a year ago. Corning's balance sheet
remains strong with $5.8 billion in cash and short-term
investments. The company remains on track for capital spending for
the year of approximately $1.3 billion, down $500 million from 2012
levels. Corning's core earnings effective tax rate for the first
quarter was 16%*, lower than previously expected.
Looking
Forward
"We have established positive momentum for the year," James B.
Flaws, vice chairman and chief financial officer, said. "We
stabilized earnings in our Display Technologies business, and going
forward, we believe price declines will continue to be moderate as
a result of the customer agreements we entered into last year."
Flaws said, "The currency hedging program
initiated in the first quarter is designed to protect the company
from further yen weakening through 2014. With Corning's economic
exposure to weakening of the yen exchange rate to the dollar
effectively capped at 93, we chose to align our reporting of core
results at this rate. By reporting results on a constant yen basis,
we provide a clearer comparison of our quarter-to-quarter sales and
earnings results."
In the second quarter, Corning expects Display
Technologies overall LCD glass share to remain stable and volume to
be consistent with the first quarter. Price declines are expected
to be smaller than in the first quarter, in the range of a 2% to 3%
decline.
Telecommunications segment sales are expected to
improve about 20% sequentially, off the seasonally slow first
quarter. Specialty Materials segment sales are anticipated to
improve by 15% to 20% sequentially as demand for Gorilla Glass
increases. Environmental Technologies segment sales are expected to
be up slightly sequentially. In the Life Sciences segment, Corning
forecasts sales to increase by at least 35% to 40% year over year,
due to the acquisition of Discovery Labware.
Equity earnings from Dow Corning's silicones
business in the second quarter are expected to improve about 20%
year over year.
"We believe our strategy is working, and therefore
we are confident that in quarter two, we will see a third
consecutive quarter of year-over-year growth in core earnings per
share," Flaws concluded.
Upcoming Investor
Events
Corning will present at the 41st Annual J.P. Morgan Technology,
Media and Telecom Conference in Boston on May 14, 2013.
First-Quarter Conference
Call Information
The company will host a first-quarter conference call on Wednesday,
April 24 at 8:30 a.m. ET. To participate, please call toll free
(800) 288-8967 or for international access call (612) 332-0335
approximately 10-15 minutes prior to the start of the call. The
password is 'QUARTER ONE'. The host is 'NICHOLSON'. 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 p.m. ET, Wednesday, May 8, 2013. To listen, dial
(800) 475-6701 or for international access dial (320) 365-3844. The
access code is 287833. 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.
Media Relations
Contact:
Daniel F. Collins
(607) 974-4197
collinsdf@corning.com
Investor Relations
Contact:
Ann H. S. Nicholson
(607) 974-6716
nicholsoas@corning.com
Q1 2013 Press Release
Financials
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Corning Incorporated via Thomson Reuters ONE
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