Corning Announces Fourth-Quarter and Full-Year Financial Performance
2013-01-29 13:15:41 -
Annual sales largest in company history
2012 Corning(®) Gorilla(®) Glass sales exceed $1 billion
CORNING, N.Y. - Corning Incorporated (NYSE: GLW) today announced its results for
the fourth quarter and full year of 2012.
Fourth-Quarter Highlights
* Sales were $2.15 billion, a 14% year-over-year increase. The quarter
performance reflects the largest quarterly sales in Corning history.
* Earnings per share were $0.34,* excluding special items, the company's first
year-over-year quarterly improvement since 2010; GAAP earnings per share
were $0.19.
* Display Technologies total glass volume from Corning's wholly owned business
and Samsung Corning Precision Materials Co., Ltd. (SCPM) increased
sequentially by a high-single digit percentage, reflecting overall improved
market demand throughout the quarter. Price declines in Corning's wholly
owned business were slightly higher than in the third quarter, as expected.
For SCPM, price declines were consistent with the previous quarter.
* Specialty Materials sales were up 68% on a year-over-year basis and 10%
sequentially, driven by the continued strength of Corning(®) Gorilla(®)
Glass.
* Telecommunications sales improved 10% over the year-ago period and 3%
sequentially.
Full-Year Highlights
* Sales were $8.01 billion, a 2% increase over $7.9 billion last year,
representing a sales record for the company.
* Excluding special items, earnings per share for the year were $1.29*
compared to last year's $1.76*. GAAP earnings per share for the year were
$1.15 versus $1.77 last year.
* Free cash flow for the year was $579 million*.
*These are non-GAAP financial measures. The reconciliation between GAAP and non-
GAAP measures is provided in the tables attached to this news release, as well
as on the company's investor relations website.
Quarter-Four Financial Comparisons
+------------------------+---------+---------+----------+
| | Q4 2012 | Q4 2011 | % Change |
+------------------------+---------+---------+----------+
| Net Sales in millions | $2,146 | $1,887 | 14% |
+------------------------+---------+---------+----------+
| Net Income in millions | $283 | $491 | (42%) |
+------------------------+---------+---------+----------+
| Non-GAAP Net Income | $498 | $513 | (3%) |
| in millions* | | | |
+------------------------+---------+---------+----------+
| GAAP EPS | $0.19 | $0.31 | (39%) |
+------------------------+---------+---------+----------+
| Non-GAAP EPS* | $0.34 | $0.33 | 3% |
+------------------------+---------+---------+----------+
Full-Year Financial Comparisons
+------------------------+--------+--------+----------+
| | 2012 | 2011 | % Change |
+------------------------+--------+--------+----------+
| Net Sales in millions | $8,012 | $7,890 | 2% |
+------------------------+--------+--------+----------+
| Net Income in millions | $1,728 | $2,805 | (38%) |
+------------------------+--------+--------+----------+
| Non-GAAP Net Income | $1,940 | $2,789 | (30%) |
| in millions* | | | |
+------------------------+--------+--------+----------+
| GAAP EPS | $1.15 | $1.77 | (35%) |
+------------------------+--------+--------+----------+
| Non-GAAP EPS* | $1.29 | $1.76 | (27%) |
+------------------------+--------+--------+----------+
*These are non-GAAP financial measures. The reconciliation between GAAP and non-
GAAP measures is provided in the tables attached to this news release, as well
as on the company's investor relations website.
"Corning made good progress in 2012, despite some challenging economic
conditions and changing market environments," Wendell P. Weeks, chairman, chief
executive officer and president, said. "We set a record for annual sales
performance and increased our dividend by 20 percent. And we advanced a number
of new technological innovations, which we believe will open additional markets
for our products in the future."
"We made major progress on our goal of stabilizing Display Technologies'
performance, primarily through moderating price declines. Corning Gorilla Glass
sales exceeded $1 billion for the year, a great example of another successful
Corning innovation," Weeks said.
Fourth-Quarter Segment Results
Sales in the Display Technologies segment were $800 million, an increase of
approximately 3% over the year-ago quarter.
Telecommunications segment sales were $540 million, a 10% year-over-year
increase. The quarter's results were helped by stronger fiber-to-the-home sales,
particularly to Australia's national broadband network project; excellent demand
for Corning Mobile Access wireless products; and optical fiber sales in China.
Specialty Materials segment sales were $399 million, a 68% year-over-year
increase. The quarter performance was a sales record for the business, ignited
by consumer sales of handheld and IT devices containing Corning Gorilla Glass,
which can now be found on more than 1 billion devices worldwide.
Environmental Technologies segment sales were $219 million, a decline of 6% from
its performance a year ago. The decline was slightly higher than the company's
expectations, the result of reduced demand for light-duty and heavy-duty diesel
products.
Life Sciences segment sales were $185 million, a 29% increase year over year.
The growth was driven primarily by increased sales from the recent acquisition
of the majority of the Discovery Labware business.
Dow Corning Corporation's gross equity earnings, excluding special items, were
$33 million,* a decline of 33% on a year-over-year basis and 13% sequentially.
The primary reason for the decline was weak results in the sales and production
of polysilicon for the solar industry. Sales of polysilicon for the
semiconductor industry remain stable. Corning's GAAP equity loss from Dow
Corning Corporation was $54 million.
Gross margin in the quarter was 42%, compared to 44% at this time a year ago.
Corning ended the year with $6.1 billion in cash and short-term investments.
Capital spending for the year was $1.8 billion. Corning's effective tax rate for
the year was 18.4%.
In the quarter, the company had a number of non-GAAP special items, primarily
related to restructuring and asset impairments across the company's business
segments, and at Samsung Corning Precision Materials and Dow Corning.
Looking Forward
James B. Flaws, vice chairman and chief financial officer, said, "We are not
without challenges in 2013 as we continue to face an uncertain global economy,
but we enter the year with prospects for growth in Specialty Materials,
Telecommunications, Environmental Technologies and Life Sciences. In our LCD
glass business, we expect our market share to be stable, and price declines to
be moderate."
Flaws will provide investors with details on the company's 2013 outlook at its
annual Investor Relations meeting in New York on Friday, Feb. 8. As a preview,
he provided the following highlights:
* In the Display Technologies segment, Corning expects first-quarter total
glass volume from its wholly owned display business and Samsung Corning
Precision Materials to increase on a year-over-year basis, but to decline
sequentially by mid-single digits. This volume decline is in line with
previous first-quarter seasonal declines. Corning's LCD glass volume is
anticipated to grow for the full year. Price declines in the quarter for our
wholly owned business are expected to be more moderate versus the previous
quarter. SCPM's price declines should be similar to last quarter.
* Telecommunications segment sales in the first quarter are expected to
increase on a year-over-year basis. A rise in demand for Corning's optical
fiber and cable, combined with growth of fiber-to-the-home sales in
Australia, and enterprise networks solutions, should bring about a strong
year for the company's Telecommunications segment.
* Specialty Materials segment sales are expected to decline in the first
quarter, which is typically the lowest quarter of the year for this
business. For the full year, the company is anticipating double-digit market
growth for Gorilla Glass, driven by its continued popularity as a cover
glass for smartphones and tablets, and the emergence of touch technology on
notebook computers.
* Environmental Technologies first-quarter results are expected to decline
from last year's record quarterly sales. For the full year, the company
anticipates that the worldwide auto and heavy-duty diesel truck markets
should grow year over year.
* In the Life Sciences segment, sales are expected to increase significantly
year over year for both the first quarter and full year, benefiting from its
recent acquisition.
Flaws pointed out two external factors that could negatively affect Corning this
year. "The current unfavorable solar industry conditions are expected to
continue for Dow Corning's subsidiary, Hemlock Semiconductor Group, and could
worsen if trade rulings on the importation of solar polysilicon into China are
negative. These problems are likely to impact Corning's equity earnings for the
year," he said. "The depressed solar industry demand led Dow Corning to impair
certain assets of the Hemlock business in the fourth quarter of 2012, and if
performance deteriorates, conditions could lead to further restructurings and
impairments in 2013," he added.
"Corning believes steps are available to mitigate the impact of the solar
industry problems as the year progresses. Hemlock prepared for the potentially
negative volatility in the solar market by requiring strong and firm contracts
with customers and getting customer pre-payments against these contracts. If
necessary, Hemlock's management is prepared to take action to enforce its
customers' contractual responsibilities," Flaws said.
"Among the many macro-economic uncertainties we face is the valuation of the
Japanese yen versus the U.S. dollar," Flaws said. "While beyond our control, the
recent sharp depreciation of the yen could negatively impact our reported net
earnings if the present level holds or the currency depreciates further in
2013. We are evaluating ways to potentially mitigate the impact of any further
weakening in the yen-to-dollar exchange rate."
"We have strong business momentum entering this year," Flaws said. "We
introduced our third version of Gorilla Glass earlier this month at the
International Consumer Electronics Show in Las Vegas, and the acceptance was
overwhelmingly positive. The expanding popularity of touch-enabled devices
should present even greater opportunities for our market-leading cover glass
solution."
Flaws also noted that Corning has the potential to create several new high-
growth market opportunities with Corning(®) Willow(TM) Glass, an ultra-slim,
flexible glass that will enable next-generation displays, touch screens and
other devices; and with its anti-microbial glass that reduces and kills drug-
resistant bacteria and viruses.
Corning also sees significant future growth opportunities in the
telecommunications market with rapidly expanding demand for mobile technologies
and optical fiber network expansions in developing markets.
"The positive market trends in our major businesses should drive demand for all
of Corning's existing and emerging technologies, creating terrific opportunities
for us," Flaws concluded.
Upcoming Investor Events
Corning will host investors and provide more information on its 2013 outlook at
its annual investor meeting in New York on Friday, Feb. 8 beginning at 8 a.m. ET
at Cipriani on 42(nd) Street. Corning will showcase products and technologies
prior to and following the formal meeting at 9 a.m. ET. Attendees can register
online at the company's investor relations website.
Also, company executives will be presenting at the Goldman Sachs Technology and
Internet Conference in San Francisco on Feb. 12, and the Morgan Stanley
Technology, Media & Telecom Conference on Feb. 26, also in San Francisco.
Fourth-Quarter Conference Call Information
The company will host a fourth-quarter conference call on Tuesday, Jan. 29 at
8:30 a.m. ET. To participate, please call toll free (800) 230-1074 or for
international access call (612) 234-9960 approximately 10-15 minutes prior to
the start of the call. The password is 'QUARTER FOUR'. The host is
'NICHOLSON'.
To listen to a live audio webcast of the call, go to Corning's Web site at
www.corning.com/investor_relations and click Investor Events on the left. A
replay will be available beginning at 10:30 a.m. ET and will run through 5 p.m.
ET, Tuesday, Feb. 12, 2013. To listen, dial (800) 475-6701 or for international
access dial (320) 365-3844. The access code is 276093. The webcast will be
archived for one year 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 net income and EPS measures exclude restructuring,
impairment and other charges and adjustments to prior estimates for such
charges. Additionally, the company's non-GAAP measures exclude adjustments to
asbestos settlement reserves, gains and losses arising from debt retirements,
charges or credits arising from adjustments to the valuation allowance against
deferred tax assets, equity method charges resulting from impairments of equity
method investments or restructuring, impairment or other charges taken by equity
method companies and gains from discontinued operations. The company believes
presenting non-GAAP net income and EPS measures is helpful to analyze financial
performance without the impact of unusual items that may obscure trends in the
company's underlying performance. Reconciliation of these non-GAAP measures can
be found on the company's website by going to www.corning.com/investor_relations
and clicking Financial Reports on the left. Reconciliation also accompanies this
news release.
Forward-Looking and Cautionary 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 effect of global political, economic and business
conditions; conditions in the financial and credit markets; currency
fluctuations; tax rates; product demand and industry capacity; competition;
reliance on a concentrated customer base; manufacturing efficiencies; cost
reductions; availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in the mix of sales between
premium and non-premium products; new plant start-up or restructuring costs;
possible disruption in commercial activities due to terrorist activity, armed
conflict, political or financial instability, natural disasters, adverse weather
conditions, or major health concerns; adequacy of insurance; equity company
activities; acquisition and divestiture activities; the level of excess or
obsolete inventory; the rate of technology change; the ability to enforce
patents; product and components performance issues; retention of key personnel;
stock price fluctuations; and adverse litigation or regulatory
developments. These and other risk factors are detailed in Corning's filings
with the Securities and Exchange Commission. 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.
About Corning Incorporated
Corning Incorporated (www.corning.com) is the world leader in specialty glass
and ceramics. Drawing on more than 160 years of materials science and process
engineering knowledge, Corning creates and makes keystone components that enable
high-technology systems for consumer electronics, mobile emissions control,
telecommunications and life sciences. Our products include glass substrates for
LCD televisions, computer monitors and laptops; ceramic substrates and filters
for mobile emission control systems; optical fiber, cable, hardware & equipment
for telecommunications networks; optical biosensors for drug discovery; and
other advanced optics and specialty glass solutions for a number of industries
including semiconductor, aerospace, defense, astronomy, and metrology.
Media Relations Contact:
Daniel F. Collins
(607) 974-4197
collinsdf@corning.com
Investor Relations Contact:
Ann H. S. Nicholson
(607) 974-6716
nicholsoas@corning.com
Q4 2012 Financial Tables:
hugin.info/155653/R/1673735/544917.pdf
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Source: Corning Incorporated via Thomson Reuters ONE
[HUG#1673735]
