Expects Strong LCD Glass Demand in Second Quarter
CORNING, N.Y., April 29 /PRNewswire-Asia/ -- Corning Incorporated (NYSE: GLW) on April 27th, 2009 announced results for the first quarter of 2009, as well as its expectations for the second quarter.
(Logo: http://www.prnasia.com/sa/200708141205.jpg )
First-Quarter Highlights
-- Sales were $989 million, a 9% decrease sequentially.
-- Earnings per share (EPS) were $0.01. Excluding special items, EPS were
$0.10,* down 23% sequentially.
-- Display Technologies combined LCD glass volume, including Corning's
wholly owned business and Samsung Corning Precision Glass Co., Ltd.
(SCP), increased 4% sequentially. Volume in the company's wholly owned
business was down 1% sequentially, while SCP's volume was up about 7%.
-- Gross margin was 27%, slightly lower than fourth-quarter gross margin
of 28%.
-- Corporate restructuring charges were $165 million pretax and in line
with expectations.
Quarter One Financial Comparisons
Q1 Q4 % Q1 %
2009 2008 Change 2008 Change
Net Sales in millions $989 $1,084 (9%) $1,617 (39%)
Net Income in millions $14 $249 (94%) $1,029 (99%)
Non-GAAP Net Income
in millions* $150 $208 (28%) $702 (79%)
GAAP EPS $0.01 $0.16 (94%) $0.64 (98%)
Non-GAAP EPS* $0.10 $0.13 (23%) $0.44 (77%)
* These are non-GAAP financial measures. The reconciliation between GAAP
and non-GAAP measures is provided in the tables following this news
release, as well as on the company's investor relations website.
"We were very pleased with our first-quarter performance given the high level of economic uncertainty we were facing," Wendell P. Weeks, chairman and chief executive officer, said. "The biggest questions we had coming into the first quarter were first, would the strong LCD TV sales rate continue in this tough environment, and second, when would the display supply chain contraction end? It was satisfying to see the continued strength of LCD TV sales at retail worldwide throughout the first quarter. We were also pleased to see demand for our glass pick up sooner than we anticipated, an indication that the display supply chain contraction was ending. These contributed to stronger-than-expected sales and earnings performance this quarter."
First-Quarter Segment Results
Sales in the Display Technologies segment were $357 million, down 8% sequentially. Sequential price declines were significant, but in line with the company's expectations. Positive foreign exchange rate movements basically offset the slight volume decline in the wholly owned business.
Telecommunications segment sales were $385 million, down 5% sequentially. Stronger optical fiber, cable and private network demand in China was offset by lower private network, cable, and hardware and equipment sales in North America.
Environmental Technologies segment sales were $110 million, down 14% sequentially, mirroring the difficulties experienced in the global automotive industry and continued weakness in heavy-duty diesel sales in the U.S.
Corning's equity earnings were $195 million, down significantly from last year's fourth-quarter equity earnings of $288 million. Equity earnings from Dow Corning Corporation were $5 million, an appreciable decline from the fourth quarter. First-quarter equity earnings from Dow Corning include $29 million in restructuring charges. Samsung Corning Precision's equity earnings contribution was $187 million, down 2% versus the fourth quarter of last year. Volume gains were more than offset by price declines, which were higher than Corning's wholly owned business.
Looking Forward
James B. Flaws, vice chairman and chief financial officer, said, "While economic uncertainty remains, we are expecting strong growth in display as our customers continue to ramp their capacity to match end market demand. We anticipate sequential volumes at our wholly owned business to be up more than 50% and up more than 25% at SCP. Therefore, we foresee relighting several of our glass melting tanks sooner than planned.
"With increased volume and manufacturing capacity," he continued, "we should see considerable improvement in both the display segment's and the company's gross margins in the second quarter." He noted that up through the end of the first quarter, Corning used existing inventory to meet the increase in glass demand. The company expects second-quarter glass price declines at both its wholly owned business and SCP to be much more moderate compared to the first quarter.
The company has increased its estimate for the 2009 LCD glass market from 2 billion square feet to a range of 2.1 billion to 2.2 billion square feet. The change was driven by stronger-than-anticipated demand for LCD TVs, offset slightly by weaker-than-expected demand for notebook computers. The company now expects LCD TV units to grow 18% this year versus its original expectation of 9%.
Corning expects modest sequential growth in its other business segments in the second quarter. Also, Dow Corning has seen improving monthly sales which could lead to notably better results for its earnings.
Flaws reminded investors that the company is not providing specific sales or earnings guidance for the second quarter. "However," he said, "We expect to see significant sequential improvement in the company's sales, gross margin, and earnings before special items.* Second-quarter results will also benefit from our recently completed fixed cost reduction programs."
He pointed out that Corning acted decisively to resize the company's cost structure in line with $5 billion in sales this year. "As we said previously, if we do not see continued growth into the second half of this year, we will consider taking further corporate-wide restructuring actions to improve profitability."
In concluding his comments, Flaws said, "We are encouraged by the early market interest and growth opportunities for some of our recent product innovations. A good example is Gorilla(TM) glass, our durable glass for touch screen and electronic applications. Gorilla glass has already been designed into 20 different electronic devices including both cell phones and notebook computers from more than seven separate manufacturers. We believe Corning has the right product mix and is well positioned in core markets to seize the upside when economic growth returns."
First-Quarter Conference Call Information
The company will host a first-quarter conference call on Monday, April 27 at 8:30 a.m. ET. To access the call, dial (800) 398-9379, or international access call (612) 288-0329 approximately 10-15 minutes prior to the start of the call. The password is 'QUARTER ONE'. The host is 'SOFIO'. To listen to a live audio webcast of the call, go to http://www.corning.com/investor_relations and follow the instructions. A replay will be available beginning at 10:30 a.m. ET and will run through 5:00 p.m. ET, Monday, May 11, 2009. To listen, dial (800) 475-6701 or for international access dial (320) 365-3844. The access code is 994513. The webcast will be archived for one year following the call.
Presentation of Information in this News Release
Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP. Corning's non-GAAP net income and EPS measures exclude restructuring, impairment and other charges and adjustments to prior estimates for such charges. Additionally, the company's non-GAAP measures exclude adjustments to asbestos settlement reserves required by movements in Corning's common stock price, gains and losses arising from debt retirements, charges or credits arising from adjustments to the valuation allowance against deferred tax assets, equity method charges resulting from impairments of equity method investments or restructuring, impairment or other charges taken by equity method companies, and gains from discontinued operations. The company believes presenting non-GAAP net income and EPS measures is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company's underlying performance. These non-GAAP measures are reconciled on the company's Web site at http://www.corning.com/investor_relations and accompanies this news release.
About Corning Incorporated
Corning Incorporated (http://www.corning.com ) is the world leader in specialty glass and ceramics. Drawing on more than 150 years of materials science and process engineering knowledge, Corning creates and makes keystone components that enable high-technology systems for consumer electronics, mobile emissions control, telecommunications and life sciences. Our products include glass substrates for LCD televisions, computer monitors and laptops; ceramic substrates and filters for mobile emission control systems; optical fiber, cable, hardware & equipment for telecommunications networks; optical biosensors for drug discovery; and other advanced optics and specialty glass solutions for a number of industries including semiconductor, aerospace, defense, astronomy and metrology.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes in global economic and political conditions; currency fluctuations; product demand and industry capacity; competition; manufacturing efficiencies; cost reductions; availability of critical components and materials; new product commercialization; changes in the mix of sales between premium and non-premium products; new plant start-up costs; possible disruption in commercial activities due to terrorist activity, armed conflict, political instability or major health concerns; adequacy of insurance; equity company activities; acquisition and divestiture activities; the level of excess or obsolete inventory; the rate of technology change; the ability to enforce patents; product and components performance issues; stock price fluctuations; and adverse litigation or regulatory developments. Additional risk factors are identified in Corning's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events.
Attached File:
CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME
http://www.corning.com/docs/pdfs/2009042701_Q12009_financials.pdf
