Corning Incorporated (NYSE: GLW) today announced fourth-quarter and
full-year 2021 results and provided its outlook for first-quarter
and full-year 2022.
“Corning delivered another strong quarter of year-over-year
growth. For full-year 2021, we exceeded $14 billion in sales and $2
in EPS. We nearly doubled free cash flow, increased our dividend by
9%, and reduced outstanding shares by 5% through the resumption of
share repurchases. By leveraging our core capabilities and ‘More
Corning’ strategy, we are capturing a compelling set of short- and
long-term opportunities across our portfolio,” said Wendell P.
Weeks, chairman and chief executive officer.
Weeks continued, “We achieved double-digit ROIC and expanded our
operating margin by 230 basis points; however, our gross margin is
not where it should be. We are focused on expanding gross margin
and expect improvement in 2022 as sales grow and our price actions
take hold throughout the year.”
Financial
Highlights:
- Fourth-quarter GAAP and core sales were $3.7 billion, with core
sales up 12% year over year. Full-year GAAP and core sales were
$14.1 billion; core sales grew 23% year over year, led by Optical
Communications, Display, Life Sciences, and Hemlock Semiconductor
Group.
- Fourth-quarter GAAP EPS was $0.56 and core EPS was $0.54;
full-year GAAP EPS was $1.28 and core EPS was $2.07.
- Fourth-quarter core gross margin was 36.5%, down 180 basis
points sequentially. As expected, below-normal automotive
production, seasonally lower sales in Specialty Materials, and
inflationary headwinds reduced profitability. In addition, Hemlock
Semiconductor Group incurred temporary startup costs as it
restarted polysilicon capacity to support new long-term solar
contracts. Full-year core gross margin expanded 110 basis points to
37.1%.
- Fourth-quarter free cash flow was $425 million; full-year free
cash flow was $1.8 billion, with free cash flow conversion of
97%.
- Display glass pricing is expected to be flat sequentially in
the first quarter of 2022. The supply-demand balance for display
glass is tight. In 2022, management expects overall glass supply to
remain tight to balanced and the pricing environment to remain
favorable.
- For the first quarter, Corning expects core sales to be in the
range of $3.5 billion to $3.7 billion with core EPS of $0.48 to
$0.53. For 2022, management expects sales of approximately $15
billion and profit to grow faster than sales; capital expenditures
are expected to remain at approximately the 2021 level.
Tony Tripeny, executive vice president and chief financial
officer, said, “In 2021, we grew significantly year over year, with
all segments adding sales and four out of five logging double-digit
percentage increases. It was a strong year, even compared to
pre-pandemic levels. Since 2019, we have grown sales by 21% and EPS
by 18%. As we discussed throughout 2021, freight, logistics, and
raw material costs along with lower automotive sales due to chip
shortages impacted our margins. Over the last several months, we
negotiated with our customers to increase prices in our contracts
to share increased costs more appropriately. The revised pricing
terms take effect throughout 2022, and we expect gross margin to
expand accordingly.”
In December, Corning announced the appointment of Edward
Schlesinger to CFO, effective Feb. 18, 2022, and the retirement of
Tripeny.
Schlesinger, currently serving as senior vice president and
corporate controller, said, “It has been a privilege to work
alongside Tony for the past decade. Looking ahead, Corning is well
positioned to deliver significant advancements and growth in each
of its Market-Access Platforms. Creating value for shareholders and
maintaining a disciplined approach to capital allocation remain our
top priorities.”
Market-Access Platform Highlights:Corning holds
a leadership position in each of the markets addressed by its five
Market-Access Platforms. Throughout 2021, the company grew in all
segments and advanced important growth initiatives and strategic
partnerships with industry leaders.
- Optical Communications – Optical
Communications sales grew 22% year over year to $4.3 billion.
Growth was supported by increased spending in broadband, 5G, and
cloud computing. Corning seeks to consistently create new products
and extend its leadership by delivering passive optical solutions
that increase network capability and reduce deployment time and
cost. Notable innovations and partnerships during 2021 included the
introduction of Corning® SMF-28® Contour fiber, which offers an
industry-first combination of superior bendability, compatibility
with other fibers, and low signal loss; the launch of EDGE™ Rapid
Connect solutions, which are designed to help hyperscale customers
interconnect their data centers up to 70% faster than legacy
cabling methods; and the expansion of 5G collaboration with Verizon
to include indoor mmWave sites and edge deployments in Corning’s
largest cable plant. Management expects significant growth in 2022
and beyond, including from the U.S. Infrastructure Investment and
Jobs Act, which provides for broadband deployment to benefit
underserved and unserved communities.
- Life Sciences – The company is driving more
Corning content into the market, delivering all-time-high Life
Sciences segment sales of more than $1.2 billion in 2021 – up 24%
year over year. Growth was driven by strong ongoing demand to
support the global pandemic response, research labs reopening
following pandemic-driven closures, and continued growth in
bioproduction. The company also introduced Corning Velocity® Vials
to help drive faster manufacturing of COVID-19 vaccines and meet
global demand. Velocity Vials join Corning Valor® Glass vials and
pharmaceutical glass tubing as the company builds its
comprehensive, end-to-end pharmaceutical packaging portfolio. To
date, across that portfolio, Corning has enabled the delivery of
nearly 5 billion doses of COVID-19 vaccines. In support of global
demand, the company began production in two new facilities –
manufacturing pharmaceutical-grade vials in Durham, North Carolina,
and tubing in Bengbu, China. Additionally, West Pharmaceutical
Services recently announced a long-term supply agreement and
multimillion-dollar technology investment in Corning to enhance
injectable-drug packaging systems. In total, Corning enters 2022
with a significantly larger global footprint in Life Sciences and
expects continued growth.
- Automotive – In 2021, Environmental
Technologies sales grew 16%, driven by strength in heavy duty, to
reach an all-time-high $1.6 billion, despite weakness in the
automotive market related to chip shortages. The company also
captured “More Corning” opportunities with its precision glass
technology, including the Mercedes-Benz EQS that features the MBUX
Hyperscreen with Corning Gorilla Glass for Automotive Interiors.
Corning entered a new product category with its Corning® Curved
Mirror Solutions, which are deployed in Hyundai Mobis’ head-up
display system. Jeep and Corning announced that a windshield with
Corning® Gorilla® Glass is available as a factory-installed option
on the Jeep® Wrangler and Jeep® Gladiator. Looking ahead to 2022,
Corning continues to address a combined $100-per-car content
opportunity. Gasoline particulate filters (GPFs) remain a critical
component of that strategy, and next-generation GPFs are now
shipping to customers as OEMs seek to meet tailpipe particulate
emissions standards. Corning is also innovating and ramping
products to provide advantaged precision glass and optics solutions
for autonomous vehicles.
- Mobile Consumer Electronics – 2021 Specialty
Materials sales grew 7% and surpassed $2 billion for the first
time. Since 2016, the segment has added approximately $900
million in revenue on a base of slightly more than $1.1
billion. Corning® Gorilla® Glass is the clear market leader.
Corning consistently advances state-of-the-art premium glasses and
enhances devices with glass backs and its Gorilla Glass DX family
of surface treatments, which improve durability and optics for
wearables, laptops, and smartphone camera lens covers. In addition,
Corning’s Advanced Optics business is growing rapidly. Advanced
Optics provides optics for DUV and EUV photolithography tools for
semiconductor manufacturing as well as the world’s most advanced
inspection systems. The business is benefitting from strong
semiconductor wafer fab equipment spending, and Corning continues
to invest to support continued semiconductor-related growth.
- Display – 2021 sales grew 17% to $3.7 billion.
The company experienced the most favorable pricing environment in
more than a decade. In 2021, Corning’s display glass volume growth
exceeded glass market growth, as the company ramped up its Gen 10.5
facilities that supply glass for large-size TVs, which are expected
to grow at a high-teen percentage CAGR over the next several years.
In 2022, Corning expects overall glass supply to remain tight to
balanced and pricing to remain favorable, supported by growth in
the retail market as TV unit sales increase and screen size
grows.
Fourth-Quarter and Full-Year 2021 Results and
Comparisons (In millions, except per-share
amounts)
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
|
Full-year 2020 |
|
% change |
GAAP Net Sales |
|
$ |
3,676 |
|
$ |
3,615 |
|
2 |
% |
|
$ |
3,350 |
|
10 |
% |
|
$ |
14,082 |
|
$ |
11,303 |
|
25 |
% |
|
GAAP Net Income |
|
$ |
487 |
|
$ |
371 |
|
31 |
% |
|
$ |
252 |
|
93 |
% |
|
$ |
1,906 |
|
$ |
512 |
|
272 |
% |
|
GAAP Diluted EPS |
|
$ |
0.56 |
|
$ |
0.43 |
|
30 |
% |
|
$ |
0.28 |
|
100 |
% |
|
$ |
1.28 |
|
$ |
0.54 |
|
137 |
% |
|
Core Sales* |
|
$ |
3,714 |
|
$ |
3,639 |
|
2 |
% |
|
$ |
3,328 |
|
12 |
% |
|
$ |
14,120 |
|
$ |
11,452 |
|
23 |
% |
|
Core Net Income* |
|
$ |
465 |
|
$ |
485 |
|
(4 |
%) |
|
$ |
462 |
|
1 |
% |
|
$ |
1,811 |
|
$ |
1,237 |
|
46 |
% |
|
Core
EPS* |
|
$ |
0.54 |
|
$ |
0.56 |
|
(4 |
%) |
|
$ |
0.52 |
|
4 |
% |
|
$ |
2.07 |
|
$ |
1.39 |
|
49 |
% |
|
*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.
Fourth-Quarter Segment Results
Optical Communications
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
Full-year 2020 |
% change |
Net Sales |
|
$ |
1,206 |
|
$ |
1,131 |
|
7 |
% |
|
$ |
976 |
|
24 |
% |
|
$ |
4,349 |
|
$ |
3,563 |
|
22 |
% |
|
Net Income Before Tax |
|
$ |
198 |
|
$ |
177 |
|
12 |
% |
|
$ |
179 |
|
11 |
% |
|
$ |
705 |
|
$ |
467 |
|
51 |
% |
|
Net
Income |
|
$ |
155 |
|
$ |
139 |
|
12 |
% |
|
$ |
141 |
|
10 |
% |
|
$ |
553 |
|
$ |
366 |
|
51 |
% |
|
In Optical Communications, 5G, broadband, and cloud computing
continue to drive strong growth. Increased raw material and
shipping costs significantly impacted profitability in the second
half of the year.
Display Technologies
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
Full-year 2020 |
% change |
Net Sales |
|
$ |
942 |
|
$ |
956 |
|
(1 |
%) |
|
$ |
841 |
|
12 |
% |
|
$ |
3,700 |
|
$ |
3,172 |
|
17 |
% |
|
Net Income Before Tax |
|
$ |
317 |
|
$ |
311 |
|
2 |
% |
|
$ |
274 |
|
16 |
% |
|
$ |
1,209 |
|
$ |
907 |
|
33 |
% |
|
Net
Income |
|
$ |
252 |
|
$ |
247 |
|
2 |
% |
|
$ |
217 |
|
16 |
% |
|
$ |
960 |
|
$ |
717 |
|
34 |
% |
|
During the fourth quarter and full year, the glass pricing
environment remained favorable. Gen 10.5 capacity ramps contributed
to strong volume growth that outpaced the glass
market.Environmental Technologies
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
Full-year 2020 |
% change |
Net Sales |
|
$ |
353 |
|
$ |
385 |
|
(8 |
%) |
|
$ |
445 |
|
(21 |
%) |
|
$ |
1,586 |
|
$ |
1,370 |
|
16 |
% |
|
Net Income Before Tax |
|
$ |
69 |
|
$ |
76 |
|
(9 |
%) |
|
$ |
118 |
|
(42 |
%) |
|
$ |
341 |
|
$ |
249 |
|
37 |
% |
|
Net
Income |
|
$ |
54 |
|
$ |
60 |
|
(10 |
%) |
|
$ |
93 |
|
(42 |
%) |
|
$ |
269 |
|
$ |
197 |
|
37 |
% |
|
In Environmental Technologies, fourth-quarter sales were down
sequentially and year over year as a result of lower production
levels in the automotive industry due to the semiconductor chip
shortage. Full-year growth was driven primarily by strong
performance in heavy duty.
Specialty Materials
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
Full-year 2020 |
% change |
Net Sales |
|
$ |
518 |
|
$ |
556 |
|
(7 |
%) |
|
$ |
545 |
|
(5 |
%) |
|
$ |
2,008 |
|
$ |
1,884 |
|
7 |
% |
|
Net Income Before Tax |
|
$ |
117 |
|
$ |
135 |
|
(13 |
%) |
|
$ |
173 |
|
(32 |
%) |
|
$ |
470 |
|
$ |
536 |
|
(12 |
%) |
|
Net
Income |
|
$ |
92 |
|
$ |
107 |
|
(14 |
%) |
|
$ |
136 |
|
(32 |
%) |
|
$ |
371 |
|
$ |
423 |
|
(12 |
%) |
|
In Specialty Materials, fourth-quarter sales were down
sequentially on typical seasonality. Full-year sales were up,
driven by continued strong sales of premium cover materials. Net
income was down for the fourth quarter and full year, driven by
increased investments in innovation programs that are moving toward
commercialization.
Life Sciences
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
Full-year 2020 |
% change |
Net Sales |
|
$ |
317 |
|
$ |
305 |
|
4 |
% |
|
$ |
274 |
|
16 |
% |
|
$ |
1,234 |
|
$ |
998 |
|
24 |
% |
|
Net Income Before Tax |
|
$ |
61 |
|
$ |
57 |
|
7 |
% |
|
$ |
53 |
|
15 |
% |
|
$ |
245 |
|
$ |
176 |
|
39 |
% |
|
Net
Income |
|
$ |
49 |
|
$ |
45 |
|
9 |
% |
|
$ |
42 |
|
17 |
% |
|
$ |
194 |
|
$ |
139 |
|
40 |
% |
|
In Life Sciences, fourth-quarter and full-year sales were up as
a result of ongoing increased demand to support the global pandemic
response, continued recovery in research labs, and strong demand
for bioproduction vessels and diagnostic-related consumables.
All Other
|
|
Q4 2021 |
|
Q3 2021 |
|
% change |
|
Q4 2020 |
|
% change |
|
|
Full-year 2021 |
|
Full-year 2020 |
% change |
Net Sales |
|
$ |
378 |
|
|
$ |
306 |
|
|
24 |
% |
|
$ |
247 |
|
|
53 |
% |
|
$ |
1,243 |
|
|
$ |
465 |
|
|
167 |
% |
|
Net Income Before Tax |
|
$ |
(8 |
) |
|
$ |
(4 |
) |
|
(100 |
%) |
|
$ |
(37 |
) |
|
78 |
% |
|
$ |
(62) |
|
|
$ |
(272) |
|
|
77 |
% |
|
Net
Income |
|
$ |
(7 |
) |
|
$ |
(5 |
) |
|
(40 |
%) |
|
$ |
(29 |
) |
|
76 |
% |
|
$ |
(51) |
|
|
$ |
(214) |
|
|
76 |
% |
|
In All Other, fourth-quarter sales were up, driven by strong
performance in Hemlock Semiconductor Group, which Corning
consolidated in September 2020. Hemlock continued to see strong
demand for semiconductor products, along with new demand for
solar-grade polysilicon. Automotive Glass Solutions and Corning
Pharmaceutical Technologies also contributed to year-over-year
growth. Upcoming Investor EventsOn March 4,
Corning will attend the SIG 11th Annual Technology Conference. On
March 8, Corning will attend the Morgan Stanley Global Technology,
Media & Telecom Conference. Corning will also host management
visits to investor offices in select cities.
Fourth-Quarter Conference Call
InformationThe company will host its fourth-quarter
conference call on Wednesday, Jan. 26, at 8:30 a.m. EST. To
participate, please call toll-free (877) 710-0209 or for
international access, call (315) 625-3068 approximately 10 to 15
minutes prior to the start of the call. The access code is 124
4688. 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
ReleaseThis news release includes non-GAAP financial
measures. 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.
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
StatementsThe 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.
Although the Company believes that these forward-looking
statements are based upon reasonable assumptions regarding, among
other things, current estimates and forecasts, general economic
conditions, its knowledge of its business, and key performance
indicators that impact the Company, actual results could differ
materially. 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 duration and severity of the COVID-19
pandemic, and its impact across our businesses on demand,
operations, our global supply chains and stock price; our ability
to increase margins through implementation of price increases,
operational changes and other cost reduction measures; the effects
of acquisitions, dispositions and other similar transactions;
global economic trends, competition and geopolitical risks, or an
escalation of sanctions, tariffs or other trade tensions between
the U.S. and China or other countries, and related impacts on our
businesses' global supply chains and strategies; changes in
macroeconomic and market conditions and market volatility
(including developments and volatility arising from the COVID-19
pandemic), including inflation, interest rates, the value of
securities and other financial assets, precious metals, oil,
natural gas and other commodity prices and exchange rates
(particularly between the U.S. dollar and the Japanese yen, new
Taiwan dollar, euro, Chinese yuan and South Korean won), and the
impact of such changes and volatility on our financial position and
businesses; 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 or our supply chain due to terrorist
activity, cyber-attack, armed conflict, political or financial
instability, natural disasters, international trade disputes or
major health concerns; loss of intellectual property due to theft,
cyber-attack, or disruption to our information technology
infrastructure; unanticipated disruption to our supply chain,
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 to maintain profitable operations and obtain financing to
fund ongoing operations and manufacturing expansions and pay
receivables when due; loss of significant customers; changes in tax
laws and regulations; the impacts of audits by taxing authorities;
and the potential impact of legislation, government regulations,
and other government action and investigations; and other risks
detailed in Corning’s SEC filings.
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
(https://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 170-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 its customers capture new
opportunities in dynamic industries. Today, Corning's markets
include optical communications, mobile consumer electronics,
display, automotive, and life sciences.
Media Relations
Contact: Megan
Whittemore (202)
661-4171 whittemom@corning.com
Investor
Relations Contact:Ann H.S. Nicholson (607) 974-6716
nicholsoas@corning.com
- Q4 2021 Earnings Release Financials
- Corning Reports Fourth-Quarter and Full-Year 2021 Financial
Results
- Q4 2021 Earnings Infographic
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