Corning Incorporated (NYSE: GLW) today announced its second-quarter
2023 results and provided its outlook for third-quarter 2023.
Wendell P. Weeks, chairman and chief executive officer,
said, “Corning’s second-quarter results reflect progress
on our comprehensive plan to improve profitability and cash flow –
even in the current weak end-market environment. As expected, core
gross margin expanded 1 percentage point sequentially, and has
grown more than 2 percentage points since the beginning of the
year. We also improved free cash flow to $310 million.”
Weeks continued, “We expect to continue improving profitability
and cash flow despite our relatively muted sales environment.
Furthermore, our ‘More Corning’ approach is opening additional
revenue streams. Taken together, we anticipate strong operating
leverage when our markets recover and our volume returns.”
Second-Quarter 2023
Highlights:
- Second-quarter GAAP sales were $3.2 billion, up 2%
sequentially. Core sales were $3.5 billion, up 3% sequentially,
driven by Display Technologies. GAAP and core sales were down year
over year, reflecting continued lower demand in several
markets.
- Second-quarter GAAP EPS was $0.33, up 65% sequentially. Core
EPS of $0.45 increased $0.04, or 10%, from the prior quarter. The
difference between GAAP and core EPS stemmed primarily from
restructuring charges and also from non-cash, mark-to-market
adjustments associated with the company’s currency-hedging
contracts and Japanese-yen-denominated debt.
- Core gross margin of 36.2% and core operating margin of 17.5%
increased sequentially by 100 basis points and 200 basis points,
respectively, reflecting pricing and productivity improvement
actions.
- Second-quarter free cash flow improved from the first quarter
to $310 million.
Third-Quarter
2023 Outlook:
- In the third quarter, management expects core sales of
approximately $3.5 billion and core EPS to be about the same or
slightly better than in the second quarter.
Ed Schlesinger, executive vice president and
chief financial officer,
said, “In the second quarter, sales grew 3% sequentially
as higher sales in Display Technologies more than offset a decline
in Optical Communications. We executed well on our comprehensive
plan to improve profitability and cash flow. Core operating income
increased 16% sequentially, and free cash flow grew to $310
million.”
Schlesinger continued, “Looking ahead, we will continue
improving profitability and cash generation in the second half
despite our current sales outlook. Overall, we remain well
positioned to capture upside, and as sales grow, we’ll drive strong
operating leverage.”
Strategy in Action
Corning strives to be a catalyst for positive change and to help
move the world forward. The company drives profitable multiyear
growth by inventing, making, and selling life-changing products
while cultivating deep, trust-based relationships with industry
leaders, ultimately incorporating more content into customers’
offerings. To do so, Corning takes the long view, investing in a
set of vital capabilities that are increasingly relevant to
profound transformations that touch many facets of daily life.
Today, Corning’s markets include optical communications, mobile
consumer electronics, display, automotive, solar, semiconductor,
and life sciences.
Recent
highlights include:
- Supporting “Internet for All” and
connecting the unconnected. Corning’s fiber was in
the spotlight at the White House in June as the administration
announced funding allocation for high-speed internet infrastructure
deployment through the Broadband Equity Access and Deployment
program. Corning is also working with the city of Pharr, Texas,
which was once ranked the worst-connected city in America, to bring
affordable broadband to its residents. When complete, Pharr’s new
fiber-to-the-home network will provide all the city’s residents
with the tools to work, learn, and interact – today and well into
the future.
- Addressing the growing need for
sustainable products
for the pharmaceutical supply
chain. The company announced the launch
of Corning® Viridian™ Vials, which reduce vial-manufacturing
carbon-dioxide-equivalent (CO2e) emissions by up to 30% and reduce
glass by 20% – all while improving filling line efficiency by 50%.
Corning is expanding its collaboration with West Pharmaceuticals, a
leader in drug packaging, to accelerate adoption of this
product.
- Driving “More Corning” opportunities
by delivering cover material
innovations that help enable the ultimate
visual gaming experience. In June,
Corning collaborated with Dough GmbH, known for its innovative
gaming hardware, on Dough’s latest flagship monitor, Spectrum
Black. The gaming monitor is designed with Corning® Gorilla® Glass
with DXC, which enhances optical clarity while maintaining the
durability consumers have come to expect from Gorilla Glass.
- Continuing its dedication to all its
stakeholders. For the sixth consecutive year, Corning was
named a Top Scorer on the Disability Equality Index®. Corning was
also recognized by non-profit advocacy organizations Disability:IN
and the American Association of People with Disabilities as a 2023
Best Place to Work for Disability Inclusion.
Second-Quarter 2023 Results and
Comparisons (In millions, except per-share
amounts)
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
GAAP Net Sales |
|
$ |
3,243 |
|
|
$ |
3,178 |
|
|
|
2 |
% |
|
$ |
3,615 |
|
|
|
(10 |
%) |
GAAP Net Income (1) |
|
$ |
281 |
|
|
$ |
176 |
|
|
|
60 |
% |
|
$ |
563 |
|
|
|
(50 |
%) |
GAAP EPS |
|
$ |
0.33 |
|
|
$ |
0.20 |
|
|
|
65 |
% |
|
$ |
0.66 |
|
|
|
(50 |
%) |
Core Sales (2) |
|
$ |
3,482 |
|
|
$ |
3,367 |
|
|
|
3 |
% |
|
$ |
3,762 |
|
|
|
(7 |
%) |
Core Net Income (2) |
|
$ |
388 |
|
|
$ |
350 |
|
|
|
11 |
% |
|
$ |
489 |
|
|
|
(21 |
%) |
Core
EPS (2) |
|
$ |
0.45 |
|
|
$ |
0.41 |
|
|
|
10 |
% |
|
$ |
0.57 |
|
|
|
(21 |
%) |
(1) Represents GAAP net income attributable to Corning
Incorporated.(2) 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.
Optical Communications
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
Net Sales |
|
$ |
1,066 |
|
|
$ |
1,125 |
|
|
|
(5 |
%) |
|
$ |
1,313 |
|
|
|
(19 |
%) |
Net
Income |
|
$ |
140 |
|
|
$ |
159 |
|
|
|
(12 |
%) |
|
$ |
182 |
|
|
|
(23 |
%) |
In Optical Communications, near-term demand for passive optical
network products remains weak. Second-quarter sales were $1.07
billion, down 5% sequentially and 19% year over year, due to lower
volume. Net income was $140 million, down 12% sequentially and 23%
year over year; the impact of lower volume was moderated by
productivity improvements.
Display Technologies
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
Net Sales |
|
$ |
928 |
|
|
$ |
763 |
|
|
|
22 |
% |
|
$ |
878 |
|
|
|
6 |
% |
Net
Income |
|
$ |
208 |
|
|
$ |
160 |
|
|
|
30 |
% |
|
$ |
228 |
|
|
|
(9 |
%) |
In Display Technologies, second-quarter sales were $928 million,
up 22% sequentially and 6% year over year, driven by higher volume
from increased panel maker utilization. Net income was $208
million, up 30% sequentially.
Specialty Materials
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
Net Sales |
|
$ |
423 |
|
|
$ |
406 |
|
|
|
4 |
% |
|
$ |
485 |
|
|
|
(13 |
%) |
Net
Income |
|
$ |
33 |
|
|
$ |
39 |
|
|
|
(15 |
%) |
|
$ |
91 |
|
|
|
(64 |
%) |
In Specialty Materials, second-quarter sales were $423 million,
up 4% sequentially, reflecting higher Gorilla Glass sales. Sales
were down 13% year over year, primarily reflecting continued
end-market softness. Net income was $33 million, down 15%
sequentially, impacted by continued development costs for new
product launches.
Environmental Technologies
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
Net Sales |
|
$ |
457 |
|
|
$ |
431 |
|
|
|
6 |
% |
|
$ |
356 |
|
|
|
28 |
% |
Net
Income |
|
$ |
107 |
|
|
$ |
82 |
|
|
|
30 |
% |
|
$ |
62 |
|
|
|
73 |
% |
In Environmental Technologies, second-quarter sales were $457
million, up 6% sequentially and 28% year over year, driven by a
ramp in gasoline particulate filter sales in China related to new
regulations. Net income increased to $107 million, reflecting
stronger sales and improved productivity.
Life Sciences
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
Net Sales |
|
$ |
231 |
|
|
$ |
256 |
|
|
|
(10 |
%) |
|
$ |
312 |
|
|
|
(26 |
%) |
Net
Income |
|
$ |
11 |
|
|
$ |
9 |
|
|
|
22 |
% |
|
$ |
37 |
|
|
|
(70 |
%) |
In Life Sciences, second-quarter sales were $231 million, down
10% sequentially and 26% year over year, as a result of lower
demand for COVID-related products in China and customers continuing
to draw down inventory. Net income increased sequentially to $11
million, driven by pricing and productivity actions.
Hemlock and Emerging Growth Businesses
|
|
Q2 2023 |
|
|
Q1 2023 |
|
|
% change |
|
|
Q2 2022 |
|
|
% change |
|
Net Sales |
|
$ |
377 |
|
|
$ |
386 |
|
|
|
(2 |
%) |
|
$ |
418 |
|
|
|
(10 |
%) |
Net
Income |
|
$ |
26 |
|
|
$ |
16 |
|
|
|
63 |
% |
|
$ |
25 |
|
|
|
4 |
% |
In Hemlock and Emerging Growth Businesses, second-quarter sales
were $377 million, down 2% sequentially and 10% year over year. Net
income increased sequentially to $26 million due to productivity
improvements.
Upcoming Investor EventsOn Sept. 7, Corning
will attend Citi’s 2023 Global Technology Conference. Corning will
also host management visits to investor offices in select cities.
Visit the company’s Investor Relations’ website for up-to-date
conference information.
Second-Quarter Conference Call
InformationThe company will host its second-quarter
conference call on Tuesday, July 25, at 8:30 a.m. EDT. To
participate, individuals may preregister here prior to the start of
the call. Once the required fields are completed, click “Register.”
A telephone number and PIN will be auto generated and will pop up
on screen. Participants will have the choice to “Dial In” or have
the system “Call Me.” A confirmation email will also be sent with
specific dial-in information. To listen to a live audio webcast of
the call, go to the company's Investor Relations’ events page 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.
With respect to the outlook for future periods, it is not
possible to provide reconciliations for these non-GAAP measures
because management does not forecast the movement of foreign
currencies against the U.S. dollar, or other items that do not
reflect ongoing operations, nor does it forecast items
that have not yet occurred or are out of management's control.
As a result, management is unable to provide outlook information on
a GAAP basis.
Caution Concerning Forward-Looking
StatementsThe statements contained in this release and
related comments by management that are not historical facts or
information and contain words such as “will,” “believe,”
“anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,”
“target,” “estimate,” “forecast” or 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 forward-looking statements relate to, among other things, the
company’s future operating performance, the company’s share of new
and existing markets, the company's revenue and earnings growth
rates, the company’s ability to innovate and commercialize new
products, the company's expected capital expenditure and the
company’s implementation of cost-reduction initiatives and measures
to improve pricing, including the optimization of the company’s
manufacturing capacity.
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, there can be no assurance that
these forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. The company undertakes no
obligation to update forward-looking statements if circumstances or
management’s estimates or opinions should change except as required
by applicable securities laws.
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: 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, 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), the
availability of government incentives, decreases or sudden
increases of consumer demand, and the impact of such changes and
volatility on our financial position and businesses; the duration
and severity of the COVID-19 pandemic, and its impact across our
businesses on demand, personnel, operations, our global supply
chains and stock price; 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; ability
to enforce patents and protect intellectual property and trade
secrets; unanticipated disruption to Corning’s, our suppliers’ and
manufacturers’ supply chain, equipment, facilities, IT systems or
operations; product demand and industry capacity; competitive
products and pricing; availability and costs of critical
components, materials, equipment, natural resources and utilities;
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; the amount and timing of any
future dividends; the effects of acquisitions, dispositions and
other similar transactions; the effect of regulatory and legal
developments; ability to pace capital spending to anticipated
levels of customer demand; our ability to increase margins through
implementation of operational changes, pricing actions and cost
reduction measures; rate of technology change; adverse litigation;
product and component 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, regulations and international tax
standards; the impacts of audits by taxing authorities; 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 DisclosureIn 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, solar, semiconductors, and life sciences.
Media Relations Contact:Megan Whittemore(202)
661-4171whittemom@corning.com
Investor Relations Contact:Ann H.S. Nicholson
(607) 974-6716 nicholsoas@corning.com
- Corning Q2 2023 Earnings Release Financials
- Corning Reports Second-Quarter 2023 Financial Results with
Notable Progress on Profitability and Cash Flow
- 2023_Q2_IR_Earnings_Infographic
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