Company raises outlook for full-year 2018, expecting higher
sales of $11.3 billion and
second-half capacity and margin
expansion
CORNING, N.Y.; JULY 25, 2018 - Corning
Incorporated (NYSE: GLW) today announced results for its
second-quarter 2018 ended June 30, 2018.
News Summary:
· Solid
second-quarter results driven by year-over-year sales growth in
each of the company's businesses
- GAAP
sales of $2.7 billion, up 10% year over year
- Core
sales of $2.8 billion, up 9% year over year
- GAAP
EPS of $0.78 reflected a non-cash mark-to-market gain associated
with the company's currency-hedging contracts
- Core
EPS of $0.38
· On track to
expand margins and reach approximately $11.3 billion in full-year
2018 sales, up from prior guidance of approximately $11 billion,
and up 10% year over year. Specific contributors to the raised
outlook for the full year include:
- Strong
market demand and successful ramping of capacity expansions
-
Optical Communications is now expected to grow by a high-teens
percentage for the year versus prior guidance of 10%
-
Environmental Technologies is now expected to grow by a mid-teens
percentage for the year versus prior guidance of 10%
-
Display Technologies continues to make advances toward stable
returns; glass pricing continues to moderate; and ramp of new Gen
10.5 plant is on schedule
· Continued
progress on Strategy and Capital Allocation Framework
-
Returned $829 million to shareholders in second-quarter 2018, for a
total of
$10.8 billion since the Framework's introduction
-
Completed the acquisition of 3M's Communication Markets
Division
- Introduced
Corning®
Gorilla® Glass 6 and
other innovative products for Mobile Consumer Electronics on July
18
"As planned, we undertook a phase of intense
operating and capital investment to meet committed demand and
capture new opportunities. We have now reached an inflection point
in which these investments are yielding clear benefits," said
Wendell P. Weeks, chairman, chief executive officer, and president.
"As a result, we are on track to meet increased demand, grow sales,
and significantly improve profitability in the third quarter and
beyond. We now expect full-year sales to reach approximately $11.3
billion."
Strategy and Capital Allocation
Framework Progress
Corning's Framework outlines the company's
2016-2019 leadership priorities. Under the Framework, Corning plans
to deliver more than $12.5 billion to shareholders while investing
$10 billion in growth opportunities. Since it was announced in
October 2015, the company has returned $10.8 billion to
shareholders, including $829 million in the second quarter.
"We continue to make excellent progress on our
Framework objectives, keeping us on track to fully achieve our
Strategy and Capital Allocation Framework goals," added Weeks.
Highlights of the company's progress:
-
Completed the acquisition of 3M's Communication
Markets Division
-
Extends the company's market reach and access to
global customers
-
Expands Corning's Optical Communications product
portfolio
-
Provides additional strength to the segment's
already robust sales momentum
-
Continued to add value to mobile consumer
electronic devices with the launch of Corning Gorilla Glass 6
alongside related innovations; Gorilla Glass has been designed into
more than 6 billion devices
-
Sustained market leadership in gasoline
particulate filters and advanced automotive innovation
-
Reached global production milestone of 1 million
gasoline particulate filters and expanded investment in Hefei,
China, as automakers prepare for upcoming regulations
-
Announced a finishing capacity investment for
Corning Gorilla Glass for Automotive Interiors in Hefei,
China
-
Continued collaboration with Merck and Pfizer on
Corning Valor Glass
-
Announced a high-volume manufacturing facility
in Durham, North Carolina
-
Presented with Pfizer at the DCAT Sharp Sourcing
conference
-
Continued ramping production of the world's
first Gen 10.5 glass at new Hefei facility on schedule and in
tandem with BOE's panel production.
Corning is investing across its market-access
platforms to capture short- and long-term sales growth
opportunities:
-
Reaching $5 billion in sales by 2020 in Optical
Communications
-
Doubling sales over the next several years in
Mobile Consumer Electronics
-
Maintaining stable returns and winning new
categories in Display
-
Building a $500 million GPF business and
creating a new glass business in Automotive
-
Growing the base and creating a significant
pharmaceutical packaging business in Life Sciences Vessels
Second-Quarter 2018 Results and
Comparisons
(In millions, except per-share amounts)
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Q2
2018 |
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Q1
2018 |
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%
change |
|
Q2
2017 |
|
%
change |
GAAP
Net Sales |
|
$ |
2,747 |
|
$ |
2,500 |
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10% |
|
$ |
2,497 |
|
10% |
GAAP
Net Income |
|
$ |
738 |
|
$ |
(589) |
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nm |
|
$ |
439 |
|
68% |
GAAP
EPS |
|
$ |
0.78 |
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$ |
(0.72) |
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nm |
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$ |
0.42 |
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86% |
Core
Sales* |
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$ |
2,759 |
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$ |
2,513 |
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10% |
|
$ |
2,527 |
|
9% |
Core
Earnings* |
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$ |
359 |
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$ |
299 |
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20% |
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$ |
400 |
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(10%) |
Core EPS* |
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$ |
0.38 |
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$ |
0.31 |
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23% |
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$ |
0.39 |
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(3%) |
*Core performance measures 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.
Segment Results and
Outlook
"Each of our businesses met or exceeded
expectations for the second quarter. We now anticipate that 2018
will be even stronger than originally expected, with full-year
sales up 10% to approximately $11.3 billion, and margin expansion
in the second half of 2018," said Tony Tripeny, senior vice
president and chief financial officer.
"Optical Communications, Specialty Materials,
Environmental Technologies, and Life Sciences segments are all
expected to continue to grow, and the pricing environment in
Display Technologies is the best in more than a decade. Several of
our largest capacity expansion projects have exited the start-up
phase, and production and efficiency rates are climbing. We expect
a step-change in sales and profitability in the third quarter, and
we plan to build on that going forward."
Display Technologies:
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Q2
2018 |
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Q1
2018 |
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%
change |
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Q2
2017 |
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%
change |
Net
Sales |
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$ |
780 |
|
$ |
745 |
|
5% |
|
$ |
777 |
|
0% |
Net
Income Before Tax |
|
$ |
243 |
|
$ |
234 |
|
4% |
|
$ |
285 |
|
(15%) |
Net Income |
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$ |
192 |
|
$ |
185 |
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4% |
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$ |
226 |
|
(15%) |
Second-quarter Display Technologies net sales were
$780 million, up sequentially and year over year. The
second-quarter pricing environment was the most favorable in more
than a decade.
Corning expects to reach the important milestone
of annual price declines improving to a mid-single digit percentage
in the third quarter and the improvement trend to continue into
2019.
For the third-quarter and full-year 2018, Corning
continues to expect that LCD glass market volume growth will be a
mid-single-digit percentage, as television screen size growth
continues. The company expects Corning's volume to grow faster than
the market, driven by the Gen 10.5 ramp up in Hefei, China.
Third-quarter sequential LCD glass price declines are expected to
remain very moderate.
Optical Communications:
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Q2
2018 |
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Q1
2018 |
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%
change |
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Q2
2017 |
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%
change |
Net
Sales |
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$ |
1,023 |
|
$ |
886 |
|
15% |
|
$ |
882 |
|
16% |
Net
Income Before Tax |
|
$ |
191 |
|
$ |
139 |
|
37% |
|
$ |
163 |
|
17% |
Net Income |
|
$ |
150 |
|
$ |
109 |
|
38% |
|
$ |
128 |
|
17% |
Optical Communications second-quarter 2018 net
sales were up 16% and exceeded $1 billion. Net income was up 17%
year over year. Sales growth was driven by data center and carrier
customers.
Third-quarter sales are expected to be up
approximately 25% year over year, including sales from the recently
acquired 3M Communication Markets Division.
For full-year 2018, Optical Communications sales
are now expected to increase by a high-teens percentage over last
year, with organic growth improving to the low teens and an
additional $200 million from the acquisition.
Specialty Materials:
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Q2
2018 |
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Q1
2018 |
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%
change |
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Q2
2017 |
|
%
change |
Net
Sales |
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$ |
343 |
|
$ |
278 |
|
23% |
|
$ |
337 |
|
2% |
Net
Income Before Tax |
|
$ |
81 |
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$ |
58 |
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40% |
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$ |
89 |
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(9%) |
Net Income |
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$ |
64 |
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$ |
46 |
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39% |
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$ |
70 |
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(9%) |
Specialty Materials second-quarter 2018 net sales
were $343 million, up 2% year over year.
The company expects year-over-year sales growth in
the third quarter of approximately 10%, driven by strong shipments
of new innovative products.
Environmental
Technologies:
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Q2
2018 |
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Q1
2018 |
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%
change |
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Q2
2017 |
|
%
change |
Net
Sales |
|
$ |
317 |
|
$ |
322 |
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(2%) |
|
$ |
263 |
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21% |
Net
Income Before Tax |
|
$ |
68 |
|
$ |
66 |
|
3% |
|
$ |
48 |
|
42% |
Net Income |
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$ |
54 |
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$ |
52 |
|
4% |
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$ |
38 |
|
42% |
Environmental Technologies second-quarter 2018 net
sales were up 21% to $317 million, and net income increased 42% to
$54 million, compared with last year's second quarter. All products
contributed to the growth.
This strong performance is expected to continue in
the third quarter, with sales growth up by a high-teens percentage
year over year. For full-year 2018, Environmental Technologies
sales are now expected to be up by a mid-teens percentage over last
year.
Life Sciences:
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Q2
2018 |
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Q1
2018 |
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%
change |
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Q2
2017 |
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%
change |
Net
Sales |
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$ |
245 |
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$ |
232 |
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6% |
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$ |
221 |
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11% |
Net
Income Before Tax |
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$ |
39 |
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$ |
34 |
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15% |
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$ |
28 |
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39% |
Net Income |
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$ |
31 |
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$ |
27 |
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15% |
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$ |
22 |
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41% |
In Life Sciences, second-quarter 2018 net sales
increased 11%, and net income increased 41% year over year, as the
business continued to outpace market growth. Third-quarter sales
are expected to increase by a mid-single-digit percentage year over
year. For full-year 2018, sales are expected to increase by a
mid-to-high single-digit percentage.
Upcoming Investor
Events
On Aug. 29, Corning will attend the Jefferies 2018 Semiconductor,
Hardware & Communications Infrastructure Summit in Chicago. And
on Sept. 12, Corning will present at the Deutsche Bank Technology
Conference in Las Vegas.
Second-Quarter Conference Call
Information
The company will host its second-quarter conference call on
Wednesday, July 25, at 8:30 a.m. EDT. To participate, please call
toll free (800) 230-1766 or for international access call (612)
332-0228 approximately 10-15 minutes prior to the start of the
call. The leader is Ann Nicholson. To listen to a live audio
webcast of the call, go to Corning's investor relations website at
investor.corning.com, click on "Events and Presentations" under the
"News and Events" tab and select the second-quarter conference
call. A webcast replay will be available 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 Corning's investor relations website at investor.corning.com, by
clicking "Quarterly Results" under the "Financials" tab. These
reconciliations also accompany this news release.
Caution Concerning
Forward-Looking 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 effects of acquisitions, dispositions and other
similar transactions by the Company, the effect of global business,
financial, economic and political conditions; tariffs and import
duties; currency fluctuations between the U.S. dollar and other
currencies, primarily the Japanese yen, New Taiwan dollar, euro,
Chinese yuan, and South Korean won; product demand and industry
capacity; competitive products and pricing; availability and costs
of critical components and materials; new product development and
commercialization; order activity and demand from major customers;
the amount and timing of our cash flows and earnings and other
conditions, which may affect our ability to pay our quarterly
dividend at the planned level or to repurchase shares at planned
levels; possible disruption in commercial activities due to
terrorist activity, cyber-attack, armed conflict, political or
financial instability, natural disasters, or major health concerns;
unanticipated disruption to equipment, facilities, IT systems or
operations; effect of regulatory and legal developments; ability to
pace capital spending to anticipated levels of customer demand;
rate of technology change; ability to enforce patents and protect
intellectual property and trade secrets; adverse litigation;
product and components performance issues; retention of key
personnel; customer ability, most notably in the Display
Technologies segment, to maintain profitable operations and obtain
financing to fund their ongoing operations and manufacturing
expansions and pay their receivables when due; loss of significant
customers; changes in tax laws and regulations including the Tax
Cuts and Jobs Act of 2017; and the potential impact of legislation,
government regulations, and other government action and
investigations.
For a complete listing of risks and other factors,
please reference the risk factors and forward-looking statements
described in our annual reports on Form 10-K and quarterly reports
on Form 10-Q. 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.
Web Disclosure
In accordance with guidance provided by the SEC regarding the use
of company websites and social media channels to disclose material
information, Corning Incorporated ("Corning") wishes to notify
investors, media, and other interested parties that it uses its
website
(http://www.corning.com/worldwide/en/about-us/news-events.html) to
publish important information about the company, including
information that may be deemed material to investors, or
supplemental to information contained in this or other press
releases. The list of websites and social media channels that the
company uses may be updated on Corning's media and website from
time to time. Corning encourages investors, media, and other
interested parties to review the information Corning may publish
through its website and social media channels as described above,
in addition to the company's SEC filings, press releases,
conference calls, and webcasts.
About Corning
Incorporated
Corning (www.corning.com) is one of the world's leading innovators
in materials science, with a more than 165-year track record of
life-changing inventions. Corning applies its unparalleled
expertise in glass science, ceramic science, and optical physics
along with its deep manufacturing and engineering capabilities to
develop category-defining products that transform industries and
enhance people's lives. Corning succeeds through sustained
investment in RD&E, a unique combination of material and
process innovation, and deep, trust-based relationships with
customers who are global leaders in their industries.
Corning's capabilities are versatile and synergistic, which allows
the company to evolve to meet changing market needs, while also
helping our customers capture new opportunities in dynamic
industries. Today, Corning's markets include optical
communications, mobile consumer electronics, display technology,
automotive, and life sciences vessels. Corning's industry-leading
products include damage-resistant cover glass for mobile devices;
precision glass for advanced displays; optical fiber, wireless
technologies, and connectivity solutions for state-of-the-art
communications networks; trusted products to accelerate drug
discovery and delivery; and clean-air technologies for cars and
trucks.
Media Relations
Contact:
M. Elizabeth Dann
(607)
974-4989
dannme@corning.com
Investor Relations
Contact:
Ann H.S. Nicholson
(607) 974-6716
nicholsoas@corning.com
Q2 2018 Earnings Release
Financials
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Corning Incorporated via Globenewswire
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