Corning Reports Third-Quarter 2023 Financial Results with Continued Improvement in Profitability and Cash Flow

Gross margin percentage expanded sequentially on consistent sales and year over year on lower sales; Operating and free cash flow both grew sequentially and year over year; Profitability and free cash flow sequential increases were driven by pricing actions, primarily in Display Technologies, and companywide productivity gains; For the fourth quarter, management expects similar core gross margin and another quarter of strong free cash flow – despite sequentially lower core sales of $3.25 billion

CORNING, N.Y., Oct. 24, 2023 (GLOBE NEWSWIRE) -- Corning Incorporated (NYSE: GLW) today announced its third-quarter 2023 results and provided its outlook for fourth-quarter 2023.

Wendell P. Weeks, chairman and chief executive officer, said, “Our third-quarter results show continued progress on our priorities to improve profitability and cash flow, even with weak demand across our markets. We increased third-quarter core gross margin to 37%, a 340 basis-point improvement from the fourth quarter of 2022. We grew free cash flow to $466 million. We also extended our market leadership and executed on ‘More Corning’ content opportunities. For example, we once again worked with Apple to advance the state of the art for smartphones, delivering durable color-infused glass – a first for any smartphone – for the iPhone 15 and iPhone 15 Plus.”

Weeks added, “Our markets continue to reflect demand below trend lines, but our sales will recover, and we will return to growth. In the meantime, we will continue to improve our profitability and cash flow, even in this current muted sales environment. As a result, as our markets recover to trend, we can serve them with our existing capacity and capabilities on an improved price and cost platform. This will allow us to grow profitability faster than sales and generate significant incremental cash flow.”

Third-Quarter 2023 Highlights:

• Third-quarter GAAP sales were $3.2 billion. Core sales were $3.5 billion, consistent with the second quarter, as expected.
• Third-quarter GAAP EPS was $0.19. Core EPS of $0.45 was consistent sequentially. The difference between GAAP and core EPS primarily reflected constant currency adjustments, translated earnings contract gains, and translation gains on Japanese-yen-denominated debt, as well as restructuring and asset write-off charges.
  
• Core gross margin of 37% increased by 80 basis points sequentially on consistent sales, driven primarily by pricing actions in Display Technologies. Core gross margin increased by 90 basis points year over year on lower sales, reflecting the continued benefit of pricing and productivity improvement actions across the company.
• Third-quarter free cash flow improved to $466 million, up $156 million sequentially and $211 million year over year.
  
  

Fourth-Quarter 2023 Outlook:

• Management expects fourth-quarter core sales of approximately $3.25 billion, core gross margin percentage similar to the third quarter despite the sequential sales decline, core EPS in the range of $0.37 to $0.42, and another quarter of strong free cash flow.
  
  

Ed Schlesinger, executive vice president and chief financial officer, said, “Sales in the third quarter were consistent sequentially, as expected. Our strong execution on our plan to improve profitability and cash flow is evident in our numbers. Specifically, we expanded core gross margin to 37%, primarily as a result of Display Technologies’ pricing actions. Additionally, we grew free cash flow to $466 million for the quarter, driven by strong operating cash flow – including inventory reductions – and lower capital expenditures.”

Schlesinger added, “For the fourth quarter, we expect core sales to be approximately $3.25 billion. We will continue our focus on profitability and cash flow. Despite lower sequential fourth-quarter sales, we expect to deliver a gross margin percentage similar to the third quarter and another quarter of strong free cash flow. Longer term, we remain confident in our ability to outperform our markets as they recover – and we expect to grow beyond prior-peak sales run rates. Importantly, we are already well positioned to capture that growth and drive strong operating leverage without substantial cash investments.”

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. 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:

• Helping industry leaders advance the form and function of smartphones through step changes in engineered glass and glass-ceramics.
  • Color-infused glass: Corning built on its deep relationship with Apple to deliver durable color-infused glass – a first for any smartphone – for the iPhone 15 and iPhone 15 Plus. Apple’s new devices also feature Ceramic Shield, a highly transparent, color-free glass-ceramic, which offers unparalleled durability and toughness for smartphones.
  • Ultra-thin bendable glass: For half a century, Corning has helped propel display and cover glass technologies in Korea – a global consumer-electronics innovation hotspot – with industry leaders like Samsung. Building on these relationships, Corning announced plans to expand capabilities in the region and create a hub for ultra-thin bendable-glass manufacturing.
    

• Advancing precision automotive glass to facilitate technology-rich interiors and user interfaces for a more connected and safer driving experience. Corning announced a new collaboration with longtime customer AUO Corporation to expand and accelerate the production of AUO’s industry-leading, large-format curved display modules. In the announcement, AUO highlighted how Corning’s innovative ColdForm™ Technology advances sustainable practices while enabling differentiated designs.
  
  
• Contributing to global climate initiatives through innovative practices and products.
  
  • The Science Based Targets Initiative approved Corning’s near-term science-based reduction targets for Scope 1 and Scope 2 emissions, determining them to be in line with the Paris Agreement’s goal to limit the global average temperature increase to 1.5° Celsius.
  • The company also built on its announcement of Corning® Viridian™ Vials – which reduce waste and carbon emissions in the pharmaceutical supply chain – with a suite of life sciences products that provides benefits ranging from renewable materials and sustainable packaging, to supply chain diversity, to energy efficiency and water conservation.
  • Corning also provided a hyperspectral imaging sensor that enables Orbital Sidekick’s recently launched satellites to detect pipeline leaks and other environmental issues.

Third-Quarter 2023 Results and Comparisons
(In millions, except per-share amounts)

(1) Represents GAAP net income attributable to Corning Incorporated.
(2) Coreperformance 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.

The third-quarter results below are prepared on a basis consistent with Corning’s segment reporting as presented in the company’s consolidated financial statements.

Optical Communications

In Optical Communications, third-quarter sales were $918 million, down 14% sequentially, reflecting lower order rates from carriers. Net income was $91 million, also down sequentially, reflecting lower volume.

Display Technologies

In Display Technologies, volume was lower than expected in the third quarter. Sales were $972 million, up 5% sequentially. Net income was $242 million, up 16% sequentially, primarily driven by price increases.

Specialty Materials

In Specialty Materials, third-quarter sales were $563 million, up 33% sequentially, driven by higher Gorilla Glass sales resulting from customer product launches in the quarter. Additionally, continued solid demand for semiconductor materials drove another strong quarter for Advanced Optics. Net income was $72 million, up 118% sequentially, primarily driven by higher sales.

Environmental Technologies

In Environmental Technologies, third-quarter sales were $449 million, up 6% year over year, driven by ongoing growth of gasoline particulate filter adoption in China offsetting expected softness in heavy-duty markets in North America. Net income grew faster than sales to reach $99 million, up 14% year over year, as a result of productivity-improvement actions.

Life Sciences

In Life Sciences, third-quarter sales were $230 million, consistent with the second quarter. Sales were down year over year, reflecting significantly lower demand for COVID-related products in China and the impact of customers drawing down inventory. Net income increased sequentially to $13 million, driven by productivity-improvement actions.

Hemlock and Emerging Growth Businesses

* Not meaningful

In Hemlock and Emerging Growth Businesses, third-quarter sales were $327 million, down 13% sequentially and 20% year over year, reflecting a decline in solar polysilicon prices and lower sales in Corning Pharmaceutical Technologies as the company completed the last of its volume commitments for COVID-related products in the second quarter. Net income was down sequentially and year over year, driven by lower sales.

Upcoming Investor Events
On Nov. 28, Corning will attend the UBS 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.

Third-Quarter Conference Call Information
The company will host its third-quarter conference call on Tuesday, Oct. 24, 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 Release
This 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 Statements
The 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 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 Incorporated
Corning (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) 661-4171
whittemom@corning.com

Investor Relations Contact:
Ann H.S. Nicholson
(607) 974-6716
nicholsoas@corning.com

Attachments

• Corning Q3 2023 Earnings Release Financials
• Corning Reports Third-Quarter 2023 Financial Results with Continued Improvement in Profitability and Cash Flow
• Corning 2023 Q3 IR Earnings Infographic