10-QPeriod: Q3 FY2022

CORNING INC /NY Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 27, 2022For Securities:GLW

Summary

Corning Incorporated (GLW) reported third quarter net sales of $3.49 billion, a 4% decrease year-over-year, primarily due to lower sales in Display Technologies, partially offset by growth in Optical Communications and Hemlock/Emerging Growth Businesses. For the first nine months of 2022, net sales increased by 4% to $10.78 billion. Net income attributable to Corning Incorporated for the third quarter was $208 million ($0.24 per diluted share), down from $371 million ($0.43 per diluted share) in the prior year. This decline was driven by lower segment net income in Display Technologies and increased asset write-offs, partially offset by gains on Japanese yen-denominated debt. For the nine-month period, net income decreased to $1.35 billion ($1.58 per diluted share) from $1.42 billion ($0.71 per diluted share) in 2021, with the EPS increase attributed to a one-time reduction in net income available to common shareholders in 2021 from preferred stock redemption. The company maintained a strong liquidity position with $1.6 billion in cash and cash equivalents.

Financial Highlights

50 data points
Beta

Revenue

$3.49B

30.4% Gross Margin

Net Income

$208.00M

6.0% Net Margin

EPS (Diluted)

$0.24

Total Assets

$28.73B

Cash & Equivalents

$1.63B

Free Cash Flow

$706.00M

Financial Statements
Beta
Revenue$3.49B
Cost of Revenue$2.43B
Gross Profit$1.06B
SG&A Expenses$461.00M
Operating Income$292.00M
Net Income$208.00M
EPS (Basic)$0.25
EPS (Diluted)$0.24
Shares Outstanding (Basic)843.00M
Shares Outstanding (Diluted)855.00M

Key Highlights

  • 1Third quarter net sales decreased 4% year-over-year to $3.49 billion, impacted by a significant decline in Display Technologies (-28%).
  • 2Optical Communications segment showed strong growth, with net sales increasing 16% in Q3 and 22% year-to-date.
  • 3Net income attributable to Corning Incorporated declined 44% in Q3 to $208 million ($0.24/share) from $371 million ($0.43/share) in the prior year.
  • 4Gross margin decreased significantly in Q3 (30% vs 37% in Q3 2021), attributed to higher production costs and asset write-offs.
  • 5The company reported a year-to-date net cash provided by operating activities of $1.998 billion, a decrease from $2.389 billion in the same period last year.
  • 6Corning ended the quarter with $1.6 billion in cash and cash equivalents, maintaining a solid liquidity position.
  • 7Management provided a fourth-quarter 2022 outlook for core net sales between $3.45 billion and $3.65 billion.

Frequently Asked Questions

The primary driver of the revenue decline was a 28% decrease in net sales for the Display Technologies segment, which was attributed to lower volumes resulting from decreased panel maker utilization. This was partially offset by growth in the Optical Communications segment and Hemlock and Emerging Growth Businesses.

Profitability was impacted by a significant decrease in gross margin, falling to 30% in Q3 2022 from 37% in Q3 2021. This was due to higher production, material, and freight costs, as well as accelerated depreciation and asset write-offs, particularly related to capacity optimization in an emerging growth business.

Corning expects core net sales for the fourth quarter of 2022 to be in the range of $3.45 billion to $3.65 billion.

Corning ended the third quarter with $1.6 billion in cash and cash equivalents. The company's total debt was approximately $6.7 billion, and its total debt to total capital ratio was 37%. Management believes they have sufficient liquidity to fund operations, acquisitions, capital expenditures, debt repayments, and dividends.