10-QPeriod: Q1 FY2018

CORNING INC /NY Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 26, 2018For Securities:GLW

Summary

Corning Inc. (GLW) reported a net loss of $589 million, or $(0.72) per share, for the first quarter of 2018, a significant decline from a net income of $86 million, or $0.07 per share, in the same period of 2017. This downturn was primarily driven by a substantial increase in translated earnings contract losses, totaling $622 million, and a $103 million charge related to legal matters. Additionally, a preliminary agreement with the IRS to settle a tax audit contributed $172 million to the tax expense. Despite the overall net loss, net sales saw a modest increase of 5% to $2.5 billion, driven by growth in the Optical Communications, Environmental Technologies, and Life Sciences segments. However, gross margin as a percentage of net sales declined from 40% to 38%, impacted by price declines in LCD glass and inefficiencies in manufacturing. The company also saw a significant increase in selling, general, and administrative expenses, largely due to litigation charges.

Financial Highlights

49 data points
Beta

Revenue

$2.50B

38.2% Gross Margin

Net Income

-$589.00M

-23.6% Net Margin

EPS (Diluted)

$-0.72

Total Assets

$26.83B

Cash & Equivalents

$3.10B

Free Cash Flow

$320.00M

Financial Statements
Beta
Revenue$2.50B
Cost of Revenue$1.54B
Gross Profit$955.00M
SG&A Expenses$501.00M
Operating Income$194.00M
Net Income-$589.00M
EPS (Basic)$-0.72
EPS (Diluted)$-0.72
Shares Outstanding (Basic)848.00M
Shares Outstanding (Diluted)848.00M

Key Highlights

  • 1Net loss of $589 million for Q1 2018, a significant shift from a net income of $86 million in Q1 2017.
  • 2Net sales increased by 5% to $2.5 billion, driven by Optical Communications, Environmental Technologies, and Life Sciences segments.
  • 3Translated earnings contract losses more than doubled to $622 million, significantly impacting profitability.
  • 4Selling, general, and administrative expenses surged by 57% to $501 million, largely due to a $132 million charge related to legal matters.
  • 5Gross margin percentage decreased from 40% to 38% due to LCD glass price declines and manufacturing inefficiencies.
  • 6Corning continued its capital allocation strategy with $814.3 million in share repurchases and declared a 16% increase in its quarterly common stock dividend.
  • 7The company provided a positive outlook for 2018, anticipating segment net sales to grow to approximately $11 billion.

Frequently Asked Questions

The primary driver for the net loss of $589 million in Q1 2018 was a substantial increase in translated earnings contract losses, which amounted to $622 million. This was compounded by significant charges related to legal matters and a preliminary agreement to settle an IRS audit.

While overall net income was negative, net sales showed growth in several segments. Optical Communications, Environmental Technologies, and Life Sciences saw increases in net sales. However, Display Technologies and Specialty Materials experienced declines in net sales.

Corning anticipates 2018 to be a year of strong growth, projecting segment net sales to reach approximately $11 billion. The company expects continued growth in Optical Communications and Environmental Technologies, with stabilizing returns in Display Technologies.

Corning continues to execute its capital allocation framework, which includes significant share repurchases, with $814.3 million made in Q1 2018 under its existing program. Additionally, the company increased its quarterly common stock dividend by 16% and approved a new $2 billion share repurchase program.