10-QPeriod: Q2 FY2020

CORNING INC /NY Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 30, 2020For Securities:GLW

Summary

Corning Inc. (GLW) reported a net loss of $71 million, or $(0.13) per diluted share, for the second quarter of 2020, a significant decline from the $92 million net income, or $0.09 per diluted share, reported in the same period of 2019. This downturn was primarily driven by substantial restructuring and impairment charges totaling $337 million in Q2 2020, including a significant $195 million asset impairment loss related to research and development programs, alongside increased severance and capacity realignment costs. Despite the net loss, the company saw increases in net sales for its Specialty Materials segment, driven by demand for premium glasses and IT products. However, this was offset by significant declines in Display Technologies, Optical Communications, and Environmental Technologies segments, largely attributed to broader market weakness and the impact of the COVID-19 pandemic on automotive manufacturing and consumer spending. Management has withdrawn full-year guidance due to economic uncertainty but anticipates sequential improvement in sales and profits for the third quarter, focusing on preserving financial strength and delivering on customer commitments.

Financial Highlights

50 data points
Beta

Revenue

$2.56B

29.5% Gross Margin

Net Income

-$71.00M

-2.8% Net Margin

EPS (Diluted)

$-0.13

Total Assets

$27.55B

Cash & Equivalents

$2.16B

Free Cash Flow

$550.00M

Financial Statements
Beta
Revenue$2.56B
Cost of Revenue$1.80B
Gross Profit$756.00M
SG&A Expenses$401.00M
Operating Income-$103.00M
Net Income-$71.00M
EPS (Basic)$-0.13
EPS (Diluted)$-0.13
Shares Outstanding (Basic)759.00M
Shares Outstanding (Diluted)759.00M

Key Highlights

  • 1Reported a net loss of $71 million for Q2 2020, a reversal from a net income of $92 million in Q2 2019.
  • 2Significant restructuring, impairment, and other charges of $337 million were recorded in Q2 2020, including a $195 million asset impairment loss for R&D programs.
  • 3Net sales decreased by 13% year-over-year to $2,561 million in Q2 2020, impacted by broad market weakness and COVID-19 effects.
  • 4Specialty Materials segment showed resilience with a 13% increase in net sales, driven by demand for premium glasses and IT products.
  • 5Display Technologies and Optical Communications segments experienced notable sales declines of 11% and 19% respectively.
  • 6The company withdrew its full-year 2020 guidance due to economic uncertainty but anticipates sequential improvement in Q3 2020.
  • 7Corning ended the first half of 2020 with $2.2 billion in cash and cash equivalents, indicating a strong liquidity position.

Frequently Asked Questions

The net loss was primarily driven by significant restructuring, impairment, and other charges and credits totaling $337 million in Q2 2020. This included a substantial $195 million asset impairment loss related to research and development programs, as well as increased severance and capacity realignment costs. These factors, combined with decreased net sales across several key segments, led to the net loss compared to the prior year's profit.

The COVID-19 pandemic had a varied impact. It led to decreased net sales in Environmental Technologies due to temporary shutdowns of vehicle manufacturers and in Life Sciences due to research lab closures. The Optical Communications segment was affected by general market weakness and capital spending reductions. However, the Specialty Materials segment saw an increase in net sales, driven by demand related to work-from-home trends and support for customer product launches.

Corning has withdrawn its full-year 2020 guidance due to ongoing economic uncertainty caused by COVID-19. However, the company anticipates sequential increases in sales and profits for the third quarter of 2020. Management's focus remains on preserving the company's financial strength, protecting employees and communities, and meeting customer commitments.

Corning maintains a strong liquidity position, ending the first half of 2020 with approximately $2.2 billion in cash and cash equivalents. The company has no debt due in the next twelve months and expects to generate positive free cash flow for the year. Management is confident in its ability to fund operations, capital expenditures, and dividend payments.