10-QPeriod: Q3 FY2023

CORNING INC /NY Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 30, 2023For Securities:GLW

Summary

Corning Inc. (GLW) reported third-quarter 2023 results showing a notable decline in net sales, down 9% year-over-year to $3.17 billion, and a 21% decrease in net income attributable to Corning Incorporated to $164 million ($0.19 diluted EPS). This performance was primarily impacted by reduced demand in the Optical Communications segment and inventory drawdowns in Life Sciences. Despite these headwinds, the company saw sequential improvement in gross margin due to pricing actions and productivity gains, and the Display Technologies segment experienced strong sequential growth driven by higher volumes. For the nine months ended September 30, 2023, net sales decreased by 11% to $9.59 billion, with net income attributable to Corning Incorporated falling significantly to $621 million. Management highlighted ongoing efforts to improve profitability and cash generation through price increases, productivity restoration, and inventory normalization. The company maintained a strong balance sheet with a working capital of $3.01 billion and a debt-to-capital ratio of 39%, and its outlook for the fourth quarter anticipates core net sales of approximately $3.25 billion.

Financial Highlights

50 data points
Beta

Revenue

$3.17B

31.6% Gross Margin

Net Income

$164.00M

5.2% Net Margin

EPS (Diluted)

$0.19

Total Assets

$28.28B

Cash & Equivalents

$1.64B

Free Cash Flow

$722.00M

Financial Statements
Beta
Revenue$3.17B
Cost of Revenue$2.17B
Gross Profit$1.00B
SG&A Expenses$468.00M
Operating Income$236.00M
Net Income$164.00M
EPS (Basic)$0.19
EPS (Diluted)$0.19
Shares Outstanding (Basic)850.00M
Shares Outstanding (Diluted)859.00M

Key Highlights

  • 1Net sales for Q3 2023 decreased 9% year-over-year to $3.17 billion, primarily due to declines in Optical Communications and Life Sciences segments.
  • 2Net income attributable to Corning Incorporated for Q3 2023 fell 21% to $164 million, resulting in diluted EPS of $0.19.
  • 3The Display Technologies segment saw a significant sequential increase in net sales and segment net income, driven by higher volumes.
  • 4Gross margin improved by 2 percentage points year-over-year to 32% in Q3 2023, reflecting management's pricing, productivity, and inventory management actions.
  • 5For the nine months ended September 30, 2023, net sales decreased 11% to $9.59 billion and net income attributable to Corning Incorporated decreased 54% to $621 million.
  • 6Corning maintains a solid financial position with $1.64 billion in cash and cash equivalents and $1.5 billion in available credit capacity.
  • 7The company provided a Q4 2023 outlook for core net sales of approximately $3.25 billion.

Frequently Asked Questions

The revenue decline of 9% in the third quarter of 2023 was primarily driven by decreased segment sales in Optical Communications due to lower order rates and inventory drawdowns by carriers. Life Sciences also contributed to the decline due to lower demand for COVID-related products and customer inventory drawdowns. Foreign exchange rate movements also had an adverse impact.

Corning implemented actions to improve profitability and cash generation, including raising prices, restoring productivity to pre-pandemic levels, and normalizing inventory. These actions led to an improvement in gross margin as a percentage of sales, increasing by 2 percentage points year-over-year in Q3 2023 to 32%.

The Display Technologies segment showed significant strength with a 42% sequential increase in net sales, driven by higher panel maker utilization. Environmental Technologies also saw an increase in net sales due to higher automotive product demand. The Optical Communications segment experienced the most significant weakness, with a 30% sequential decrease in net sales. Life Sciences also saw a notable decline.

Corning provided a corporate outlook for the fourth quarter of 2023, expecting core net sales of approximately $3.25 billion.