Summary
Corning Inc. (GLW) reported a significant turnaround in the first quarter of 2017, moving from a net loss of $368 million in Q1 2016 to a net income of $86 million. This improvement was driven by strong sales growth across most segments, particularly Optical Communications and Specialty Materials, and a substantial reduction in translated earnings contract losses. The company also saw an increase in gross margin to 40% from 37% year-over-year. While facing some pricing pressures in Display Technologies, overall operational improvements and strategic growth initiatives position Corning for continued recovery and expansion.
Financial Highlights
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Financial Statements
Beta
| Revenue | $2.38B |
| Cost of Revenue | $1.42B |
| Gross Profit | $951.00M |
| SG&A Expenses | $319.00M |
| Operating Income | $413.00M |
| Net Income | $86.00M |
| EPS (Basic) | $0.07 |
| EPS (Diluted) | $0.07 |
| Shares Outstanding (Basic) | 925.00M |
| Shares Outstanding (Diluted) | 936.00M |
Key Highlights
- 1Net income improved dramatically to $86 million ($0.07 per share) in Q1 2017 from a net loss of $368 million ($(0.36) per share) in Q1 2016.
- 2Total net sales increased by 16% to $2.375 billion, with notable growth in Optical Communications (up 34%) and Specialty Materials (up 32%).
- 3Gross margin expanded to 40% from 37% year-over-year, reflecting higher sales and cost efficiencies.
- 4Translated earnings contract losses decreased significantly, contributing to the improved net income.
- 5The company continued to return capital to shareholders through increased dividends and substantial share repurchases.
- 6Corning is investing heavily in future growth, with capital expenditures totaling $364 million in Q1 2017, with an expectation of $1.5 billion for the full year 2017.
Frequently Asked Questions
The significant increase in net income was primarily driven by a substantial decrease in translated earnings contract losses (after-tax reduction of $273 million), improved sales across most segments, particularly Optical Communications and Specialty Materials, and a reduction in restructuring charges. These factors, combined with an increase in equity earnings from affiliates, led to the turnaround.
Most segments showed strong performance. Optical Communications and Specialty Materials were standouts with 34% and 32% sales growth, respectively. Display Technologies saw 4% sales growth despite LCD glass price declines. Environmental Technologies and Life Sciences also reported modest sales increases. The 'All Other' segment experienced a slight sales decline.
Corning anticipates continued growth across its segments. Display Technologies expects mid-single digit growth in glass demand and a favorable pricing environment. Optical Communications is projected to see low-teens sales growth. Specialty Materials growth will depend on customer adoption of new innovations, and Life Sciences expects low-single digit growth.
Corning ended Q1 2017 with $4.8 billion in cash and cash equivalents. The company is committed to returning capital through a growing quarterly dividend and share repurchases. In Q1 2017, $408.3 million was used for share repurchases, and capital expenditures are projected at $1.5 billion for the year to support growth initiatives.