10-QPeriod: Q3 FY2016

CORNING INC /NY Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 27, 2016For Securities:GLW

Summary

Corning Inc. reported solid financial results for the third quarter and the first nine months of 2016. Net sales saw a notable increase in the third quarter, driven by strong performance in the Display Technologies and Optical Communications segments. The company's net income also experienced a significant boost, particularly in the nine-month period, largely due to a substantial non-taxable gain from the strategic realignment of its equity investment in Dow Corning. Corning continues to focus on its strategic capital allocation framework, prioritizing investments in core technologies and manufacturing platforms while committing to substantial returns to shareholders through dividends and share repurchases. The company's balance sheet remains strong, with ample cash and cash equivalents providing financial flexibility. Management expresses confidence in the company's ability to meet future financial obligations and pursue growth opportunities.

Financial Highlights

50 data points
Beta

Revenue

$2.51B

41.5% Gross Margin

Net Income

$284.00M

11.3% Net Margin

EPS (Diluted)

$0.26

Total Assets

$28.81B

Cash & Equivalents

$4.82B

Free Cash Flow

$654.00M

Financial Statements
Beta
Revenue$2.51B
Cost of Revenue$1.47B
Gross Profit$1.04B
SG&A Expenses$302.00M
Operating Income$535.00M
Net Income$284.00M
EPS (Basic)$0.27
EPS (Diluted)$0.26
Shares Outstanding (Basic)978.00M
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Net sales for the third quarter of 2016 increased by 10% to $2.507 billion compared to $2.272 billion in the same period of 2015.
  • 2Net income attributable to Corning Incorporated rose to $284 million ($0.26 per diluted share) in Q3 2016, up from $212 million ($0.15 per diluted share) in Q3 2015.
  • 3For the first nine months of 2016, net income surged to $2.123 billion, a significant increase from $1.115 billion in the comparable 2015 period, largely due to a $2.7 billion non-taxable gain from the Dow Corning equity investment realignment.
  • 4The Display Technologies segment showed robust growth in Q3 2016, with sales up 19%, primarily driven by the strengthening Japanese yen and increased volume.
  • 5The Optical Communications segment also performed well, with Q3 2016 sales up 6%, supported by strong demand for fiber-to-the-home products.
  • 6Corning announced an accelerated share repurchase (ASR) transaction to repurchase $2 billion of its common stock, demonstrating a commitment to returning capital to shareholders.
  • 7The company maintained a strong liquidity position, ending the third quarter with $4.8 billion in cash and cash equivalents.

Frequently Asked Questions

The primary driver was a substantial non-taxable gain of $2.7 billion recognized from the strategic realignment of Corning's equity investment in Dow Corning, completed on May 31, 2016.

The strengthening Japanese yen positively impacted Corning's net sales and net income. For the third quarter of 2016, it boosted net sales by $138 million and net income by $72 million in the Display Technologies segment. For the nine-month period, the positive impact on net sales was $274 million and on net income was $140 million.

The Optical Communications segment experienced a decrease in net sales and net income for the first nine months of 2016 primarily due to production issues related to the implementation of new manufacturing software, which limited the company's ability to fulfill customer orders in the first half of the year.

Corning's strategy focuses on investing approximately 80% of its R&D and capital spending on three core technologies, four manufacturing platforms, and five market-access platforms over the next four years. The company also intends to return over $12.5 billion to shareholders through share repurchases and dividends by 2019, with a goal of increasing its dividend per common share by at least 10% annually through 2019.