Corning Incorporated (NYSE: GLW) today announced results for
fourth-quarter and full-year 2019.
“In 2019, we grew sales 2% driven by strong performance in three
businesses. We advanced key growth initiatives and took actions to
address the material impact of changing market and customer
dynamics in Display Technologies and Optical Communications,” said
Wendell P. Weeks, chairman, chief executive officer, and president.
“While our 2019 growth did not meet long-term targets, we once
again outperformed our underlying markets and expect to build
momentum throughout 2020 that will keep us on track to achieve the
goals set forth in our four-year Strategy & Growth
Framework.”
2019 Highlights
- Corning successfully delivered on its 2016-2019 Strategy and
Capital Allocation Framework goals, returning more than $12.5
billion to shareholders over four years, including a 67% increase
in dividends per share, while investing to advance longer-term
growth initiatives
- All businesses outperformed their underlying markets, with
significant growth in three segments
- Environmental Technologies grew sales 16% in an auto market
that was down mid-single digits, driven by the adoption of
Corning’s proprietary gasoline particulate filter (GPF)
innovation
- Specialty Materials grew sales 8% with adoption of
industry-leading cover glass innovations despite smartphone unit
sales being down 3%
- Life Sciences reached a $1 billion sales milestone, growing at
nearly twice the rate of a strengthening market
- Corning’s display glass pricing reached low-single digit
percentage declines for the year
- The company significantly advanced product commercialization of
Corning Valor® Glass, with FDA approval and commercial agreements,
and in Automotive Glass Solutions, with the opening of a dedicated
factory to support growing demand from industry leaders
Financial Performance
- Fourth-quarter GAAP sales of $2.82 billion and core sales of
$2.85 billion; full-year GAAP sales of $11.5 billion and core sales
of $11.7 billion
- Fourth-quarter GAAP EPS of $0.01 and core EPS of $0.46;
full-year GAAP EPS of $1.07 and core EPS of $1.76. The primary
difference between GAAP and core results were charges associated
with capacity realignment
- Growth in three businesses within Corning’s focused and
cohesive portfolio mitigated the impact of headwinds in other
markets, enabling 2% overall sales growth for the year
“In the fourth quarter, Corning delivered on sales and EPS
expectations, and generated over $1 billion in adjusted operating
cash flow,” said Tony Tripeny, executive vice president and chief
financial officer. “We accelerated actions in Optical
Communications to align production output and working capital to
current customer demand. This impacted gross margin, which was
below our guidance for the fourth quarter.”
- Market-Access Platforms Progress
Highlights
- Automotive: Accelerated GPF adoption, driving more than
$250 million in 2019 sales; advanced commercialization of
AutoGrade™ Glass Solutions with industry leaders across the auto
ecosystem, including GAC, Visteon Corporation, LG Electronics, BOE,
and VIA Optronics; ramped manufacturing in Hefei facilities
- Optical Communications: Continued to co-innovate with
industry leaders to advance 5G and hyperscale data center solutions
that increase network efficiency – exemplified by new
collaborations with Intel, Verizon, CenturyLink, and Altice
Portugal; earned global recognition for products including
RocketRibbon™ extreme-density cable for hyperscale data
centers
- Mobile Consumer Electronics: Extended industry
leadership with next-generation cover glass solutions and deepened
customer commitments, including an additional $250 million
investment from Apple, setting the stage for strong adoption of
continued innovations
- Life Sciences Vessels: Signed commercial agreements with
three leading pharmaceutical companies, building on the
announcement that a leading pharmaceutical manufacturer received
FDA approval of Corning Valor Glass for use as a primary package
for a marketed drug product; advanced leadership in key growth
categories – cell culture and gene therapy – by innovating and
increasing capacity for market-leading solutions
- Display: Continued progress toward stable returns;
created richer entertainment experiences through display glass
innovation; advanced leadership in Gen 10.5 glass, supporting the
growth of large-size TVs; Corning display glass pricing remained
moderate
2020-2023 Strategy & Growth Framework outlook
Corning remains confident in its Strategy & Growth Framework
goals. Under the Framework, the company will continue to focus its
portfolio and utilize its financial strength to capture significant
organic growth and create additional value for shareholders over
the next four years. Through 2023, Corning expects to deliver 6% to
8% compound annual sales growth and 12% to 15% compound annual
earnings per share growth while investing $10 billion to $12
billion in RD&E, capital and mergers, and acquisitions. The
company also plans to expand operating margin and ROIC, and deliver
$8 billion to $10 billion to shareholders, including annual
dividend per share increases of at least 10%.
“To deliver our Strategy & Growth Framework goals, we expect
to add an incremental $3 billion to $4 billion in annual sales and
improve profitability by the end of 2023. We are confident in our
ability to achieve these goals because we are closely aligned with
major growth drivers in each of our Market-Access Platforms,
positioning us to create and sell into new product categories. In
short, we plan to drive more Corning technologies into the products
consumers already buy,” Weeks said. “This provides a mechanism for
us to grow – even in challenging environments.”
“We believe the benefits of this approach are already
manifesting themselves. In Automotive we grew Environmental sales
16% while car sales were down. In Mobile Consumer Electronics, we
grew Specialty Materials sales 8% while smartphone units were down.
In Life Sciences, we exceeded industry growth on the strength of
new products for cell culture and gene therapy,” Weeks
continued.
Fourth-Quarter and Full-Year 2019 Results and Comparisons (In
millions, except per-share amounts)
|
|
Q4 2019 |
|
Q3 2019 |
|
% change |
|
Q4 2018 |
|
% change |
|
|
Full-year 2019 |
|
|
Full-year 2018 |
|
% change |
GAAP Net
Sales |
|
$ |
2,817 |
|
$ |
2,934 |
|
(4%) |
|
$ |
3,035 |
|
(7%) |
|
$ |
11,503 |
|
$ |
11,290 |
|
2% |
GAAP Net
Income |
|
$ |
32 |
|
$ |
337 |
|
(91%) |
|
$ |
292 |
|
(89%) |
|
$ |
960 |
|
$ |
1,066 |
|
(10%) |
GAAP Diluted
EPS |
|
$ |
0.01 |
|
$ |
0.38 |
|
(97%) |
|
$ |
0.32 |
|
(97%) |
|
$ |
1.07 |
|
$ |
1.13 |
|
(5%) |
Core Sales* |
|
$ |
2,851 |
|
$ |
2,969 |
|
(4%) |
|
$ |
3,081 |
|
(7%) |
|
$ |
11,656 |
|
$ |
11,398 |
|
2% |
Core Net
Income* |
|
$ |
406 |
|
$ |
397 |
|
2% |
|
$ |
539 |
|
(25%) |
|
$ |
1,578 |
|
$ |
1,673 |
|
(6%) |
Core EPS* |
|
$ |
0.46 |
|
$ |
0.44 |
|
5% |
|
$ |
0.59 |
|
(22%) |
|
$ |
1.76 |
|
$ |
1.78 |
|
(1%) |
*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. **Effective July 1, 2019, we have replaced the term
“Core Earnings” with “Core Net Income.” The terms are
interchangeable, and the underlying calculations remain the
same.
Segment Results and Outlook“We are confident in our
long-term outlook and remain focused on key operational priorities
that will help accelerate growth and position us to achieve the
goals of our Strategy & Growth Framework. We’re successfully
ramping our next Gen 10.5 plants, aligning costs and capacity to
current demand, and commercializing innovations to support our
customers,” Tripeny said.
“In 2020, we expect continued growth in Specialty Materials,
Environmental Technologies, and Life Sciences. We also expect to
return to sales and profit growth and expand margins as a company
in the second half as volume in Display Technologies and Optical
Communications improves,” added Tripeny. Display
Technologies:
|
|
Q4 2019 |
|
Q3 2019 |
|
% change |
|
Q4 2018 |
|
% change |
|
|
Full-year 2019 |
|
|
Full-year 2018 |
|
% change |
Segment Net
Sales |
|
$ |
795 |
|
$ |
793 |
|
— |
|
$ |
899 |
|
(12%) |
|
$ |
3,254 |
|
$ |
3,276 |
|
(1%) |
Segment Net
Income Before Tax |
|
$ |
227 |
|
$ |
234 |
|
(3%) |
|
$ |
304 |
|
(25%) |
|
$ |
993 |
|
$ |
1,056 |
|
(6%) |
Segment Net Income |
|
$ |
180 |
|
$ |
185 |
|
(3%) |
|
$ |
240 |
|
(25%) |
|
$ |
786 |
|
$ |
835 |
|
(6%) |
Full-year sales in Display Technologies were $3.3 billion, and
net income was $786 million. Corning’s glass volume was up
mid-single digits, higher than the overall market, driven by
increased Gen 10.5 output during the year. The company’s display
glass pricing improved to low-single digit percentage declines for
the year.
Fourth-quarter sales were $795 million, and net income was $180
million. In the fourth-quarter Corning’s display glass volume grew
low-single digits sequentially.
For full-year 2020, Corning expects its display glass volume to
grow by a mid-single digit percentage, similar to the mid-single
digit growth expected in the display glass market. The company
expects glass price declines to remain moderate, down mid-single
digits for the full year.
In the first quarter, Corning’s display glass volume is expected
to be down low-single digits sequentially.
Optical Communications:
|
|
Q4 2019 |
|
Q3 2019 |
|
% change |
|
Q4 2018 |
|
% change |
|
|
Full-year 2019 |
|
|
Full-year 2018 |
|
% change |
Segment Net
Sales |
|
$ |
903 |
|
$ |
1,007 |
|
(10%) |
|
$ |
1,166 |
|
(23%) |
|
$ |
4,064 |
|
$ |
4,192 |
|
(3%) |
Segment Net
Income Before Tax |
|
$ |
81 |
|
$ |
162 |
|
(50%) |
|
$ |
217 |
|
(63%) |
|
$ |
639 |
|
$ |
777 |
|
(18%) |
Segment Net Income |
|
$ |
62 |
|
$ |
127 |
|
(51%) |
|
$ |
165 |
|
(62%) |
|
$ |
489 |
|
$ |
592 |
|
(17%) |
Optical Communications full-year 2019 sales were $4.1 billion,
down 3% in a market that declined by a high-single digit
percentage. Net income was down 17% year over year. Fourth-quarter
sales were $903 million and net income was $62 million.
Profitability was impacted by lower volume and reduced production
to decrease inventory.
The company expects Optical Communications full-year sales to
decline by 5% to 10% as the lower level of sales experienced in the
second half of 2019 continues throughout the first half of 2020.
Corning expects year-over-year growth in Optical Communications
sales and profit to resume in the back half of 2020, driven by
projects for 5G, fiber-to-the home, and hyperscale data center
deployments.
The company expects first quarter sales to be down about 25%
year over year versus the strong project spending in the first
quarter of 2019.
Environmental Technologies:
|
|
Q4 2019 |
|
Q3 2019 |
|
% change |
|
Q4 2018 |
|
% change |
|
|
Full-year 2019 |
|
|
Full-year 2018 |
|
% change |
Segment Net
Sales |
|
$ |
374 |
|
$ |
397 |
|
(6%) |
|
$ |
319 |
|
17% |
|
$ |
1,499 |
|
$ |
1,289 |
|
16% |
Segment Net
Income Before Tax |
|
$ |
81 |
|
$ |
100 |
|
(19%) |
|
$ |
53 |
|
53% |
|
$ |
333 |
|
$ |
263 |
|
27% |
Segment Net Income |
|
$ |
64 |
|
$ |
79 |
|
(19%) |
|
$ |
42 |
|
52% |
|
$ |
263 |
|
$ |
208 |
|
26% |
Environmental Technologies 2019 sales were $1.5 billion, up 16%
year over year, driven primarily by continued GPF adoption, and net
income was $263 million. Fourth-quarter sales grew 17% year over
year to $374 million.
On a year-over-year basis, Environmental Technologies sales are
expected to increase by a mid-single digit percentage in both the
first-quarter and full-year 2020.
Specialty Materials:
|
|
Q4 2019 |
|
Q3 2019 |
|
% change |
|
Q4 2018 |
|
% change |
|
|
Full-year 2019 |
|
|
Full-year 2018 |
|
% change |
Segment Net
Sales |
|
$ |
453 |
|
$ |
463 |
|
(2%) |
|
$ |
399 |
|
14% |
|
$ |
1,594 |
|
$ |
1,479 |
|
8% |
Segment Net
Income Before Tax |
|
$ |
119 |
|
$ |
117 |
|
2% |
|
$ |
110 |
|
8% |
|
$ |
383 |
|
$ |
396 |
|
(3%) |
Segment Net Income |
|
$ |
94 |
|
$ |
92 |
|
2% |
|
$ |
87 |
|
8% |
|
$ |
302 |
|
$ |
313 |
|
(4%) |
Specialty Materials 2019 sales were in line with expectations.
Full-year sales rose 8%, driven by innovations and strong demand
for premium glasses. Fourth-quarter sales were $453 million, up 14%
versus the fourth quarter of 2018.
The company expects high-single digit year-over-year sales
growth for Specialty Materials in 2020. First-quarter sales are
expected to increase by a mid-single digit percentage year over
year.
Life Sciences:
|
|
Q4 2019 |
|
Q3 2019 |
|
% change |
|
Q4 2018 |
|
% change |
|
|
Full-year 2019 |
|
|
Full-year 2018 |
|
% change |
Segment Net
Sales |
|
$ |
256 |
|
$ |
256 |
|
— |
|
$ |
238 |
|
8% |
|
$ |
1,015 |
|
$ |
946 |
|
7% |
Segment Net
Income Before Tax |
|
$ |
49 |
|
$ |
52 |
|
(6%) |
|
$ |
37 |
|
32% |
|
$ |
190 |
|
$ |
148 |
|
28% |
Segment Net Income |
|
$ |
38 |
|
$ |
41 |
|
(7%) |
|
$ |
29 |
|
31% |
|
$ |
150 |
|
$ |
117 |
|
28% |
In Life Sciences, full-year 2019 sales were up 7%, with strong
fourth-quarter sales, as the business continued to outpace market
growth. On a year-over-year basis, Life Sciences sales are expected
to increase by a mid-single digit percentage in both the
first-quarter and full-year 2020.
Upcoming Investor Events On Feb. 11, Corning will attend
the Goldman Sachs Technology & Internet Conference 2020 in San
Francisco. And March 12, Corning will attend the Susquehanna
Technology Conference in New York City.
Fourth-Quarter Conference Call Information The company
will host a fourth-quarter conference call on Wednesday, Jan. 29,
at 8:30 a.m. ET. To participate, please call toll free (877)
226-8216 or for international access call (409) 207-6983
approximately 10-15 minutes prior to the start of the call. The
Access Code is 238-4664 and the host is “ANN NICHOLSON.” To listen
to a live audio webcast of the call, go to Corning’s website at
http://www.corning.com/investor_relations, click “Events” and
follow the instructions.
Presentation of Information in this News Release Non-GAAP
financial measures are not in accordance with, or an alternative
to, U.S. generally accepted accounting principles (“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. Definitions of these non-GAAP financial measures and
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures can be found on the
Company’s website by going to the Investor Relations page and
clicking “Quarterly Results” under the “Financials and Filings”
tab. These reconciliations also accompany this news release.
Caution Concerning Forward-Looking Statements The
statements contained in this release that are not historical facts
or information and contain words such as “will,” “believe,”
“anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,”
and “target” and similar expressions are forward-looking
statements. These forward-looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to
economic, competitive and legislative developments. Such statements
relate to future events that by their nature address matters that
are, to different degrees, uncertain. These estimates are subject
to change and uncertainty which are, in many instances, beyond our
control. There can be no assurance that future developments will be
in accordance with management’s expectations. Actual results could
differ materially from those expected by us, depending on the
outcome of various factors. We do not undertake to update
forward-looking statements.
Some of the risks, uncertainties and other factors that could
cause actual results to differ materially from those expressed in
or implied by the forward-looking statements include, but are not
limited to: the effects of acquisitions, dispositions and other
similar transactions, 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, 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;
the impacts of audits by taxing authorities; 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.
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 IncorporatedCorning (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
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