10-QPeriod: Q2 FY2022

CORNING INC /NY Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 29, 2022For Securities:GLW

Summary

Corning Inc. reported solid performance for the second quarter and first half of 2022, demonstrating resilience amidst a dynamic global environment. Net sales increased by 3% to $3.6 billion for the quarter and 7% to $7.3 billion for the first half, driven by strong growth in Optical Communications and Hemlock and Emerging Growth Businesses. Net income also saw significant improvement, reaching $563 million for the quarter and $1.14 billion for the first half, largely due to favorable translated earnings contract gains and foreign currency translation effects on debt. The company's diverse portfolio continues to be a strength, with notable growth in Optical Communications benefiting from demand for 5G and broadband infrastructure. While Display Technologies experienced a slight decline in sales due to lower volumes, Specialty Materials showed modest growth. Environmental Technologies faced headwinds, with sales impacted by ongoing constraints in the automotive sector. Management remains focused on strategic priorities, including financial health, innovation, and shareholder returns, and anticipates continued positive free cash flow generation.

Financial Highlights

51 data points
Beta

Revenue

$3.62B

34.5% Gross Margin

Net Income

$563.00M

15.6% Net Margin

EPS (Diluted)

$0.66

Total Assets

$29.72B

Cash & Equivalents

$1.63B

Free Cash Flow

$758.00M

Financial Statements
Beta
Revenue$3.62B
Cost of Revenue$2.37B
Gross Profit$1.25B
SG&A Expenses$486.00M
Operating Income$490.00M
Net Income$563.00M
EPS (Basic)$0.67
EPS (Diluted)$0.66
Shares Outstanding (Basic)843.00M
Shares Outstanding (Diluted)856.00M

Key Highlights

  • 1Net sales increased 3% year-over-year to $3.615 billion for the second quarter of 2022 and 7% to $7.295 billion for the first half.
  • 2Optical Communications segment demonstrated robust growth, with net sales up 22% for the quarter and 25% for the first half, driven by 5G and broadband infrastructure demand.
  • 3Net income attributable to Corning Incorporated rose 25% to $563 million in Q2 2022 and increased 9% to $1.14 billion in the first half.
  • 4The company reported favorable translated earnings contract gains and positive foreign currency translation effects on debt, contributing significantly to net income improvements.
  • 5Display Technologies segment experienced a 6% decrease in net sales for the quarter, primarily due to lower volumes, though first-half sales saw a slight increase.
  • 6Environmental Technologies segment faced challenges, with a 13% decrease in net sales for the quarter due to automotive production constraints.
  • 7Corning generated strong operating cash flow, with $1.292 billion in the first half of 2022, although it decreased from $1.494 billion in the prior year period, partly due to higher inventory levels.

Frequently Asked Questions

Corning's revenue growth in the second quarter of 2022 was primarily driven by strong performance in the Optical Communications segment, which saw a 22% increase in net sales, and the Hemlock and Emerging Growth Businesses segment, which grew by 45%. These increases were partially offset by declines in the Display Technologies and Environmental Technologies segments.

Foreign currency movements had a mixed impact. While adverse movements negatively affected consolidated net sales by $147 million in the quarter, favorable translated earnings contract gains and positive foreign currency translation on Japanese yen-denominated debt contributed positively to net income. Overall, foreign currency translation adjustments led to a significant net loss in comprehensive income for the quarter.

Corning provided a corporate outlook for the third quarter of 2022, expecting core net sales to be in the range of approximately $3.65 billion to $3.85 billion.

Corning maintained a strong liquidity position, ending the quarter with $1.6 billion in cash and cash equivalents. The company amended its revolving credit agreement and a Japanese yen liquidity facility to extend their terms. Share repurchases continued, with $204 million spent in the first half of 2022 under its authorized programs. Capital expenditures for the first half totaled $736 million.