Corning Beats Projections, Reports Strong Third-Quarter Results
Specialty glass maker Corning Inc. reported third-quarter GAAP net sales of just over $3 billion, beating 2019’s third-quarter mark of $2.93 million by 2%. GAAP earnings per share (EPS) totaled $0.48, compared to $0.38 for the third quarter of 2019. The company reported core EPS of $0.43 — up 72% from the previous quarter.
Net income for the quarter was $427 million (unaudited), compared to $337 million for third-quarter 2019.
Core sales, comparable to the GAAP total, represented a sequential increase of 16%. The company’s Environmental Technologies, Specialty Materials, and Life Sciences segments each reported improved net sales, both quarter to quarter and year over year. Environmental Technologies and Specialty Materials led the company with sequential growth of more than 65% and 35%, respectively.
Corning’s Display Technologies segment (third-quarter net sales of $827 million) surpassed the Zacks consensus estimate (ZCE) of $760 million. Environmental Technologies (ZCE $333 million, actual $379 million) and Specialty Materials (ZCE $539 million, actual $570 million) also beat projections.
The company cited increased light- and heavy-duty demand, as well as the increased production of OEMs, for its Environmental Technologies growth. Demand for premium glasses, including Corning’s new glass ceramic product (Ceramic Shield), contributed to success in Specialty Materials, the company reported.
Optical communications (ZCE $927 million, actual $909 million) and Life Sciences (ZCE $252 million, actual $223 million) failed to meet Zacks estimates.
Overall, the company surpassed the ZCE for total revenues by 2.9%. Zacks had pegged adjusted EPS for the company at 36 cents. Core EPS was predicted at 38 cents.
Cost of sales for the ended period reached $2 billion. Accordingly, and considering net sales of just over $3 billion, the company reported a gross margin (unaudited) just exceeding $1 billion. Quarterly operating income was $257 million for the quarter, a year-over-year drop of $108 million.
“We had a very strong quarter financially and operationally,” company Chairman and CEO Wendell Weeks said following Corning’s release of its financials. “Sales and operating income grew on improving demand and commercialization of our innovations. In all the industries we serve, important market trends are offering new opportunities that we’re uniquely qualified to address, and we’re supporting our customers with more Corning content for the products they already buy.
“When it comes to the global health fight, we’re all in — mobilizing our capabilities to combat the virus while prioritizing the health, safety, and well-being of our employees. We are focused on responding effectively to the current global uncertainties, and we continue to rise to the challenges of these times,” Weeks said.
“We expect another solid quarter to end the year,” said Tony Tripeny, executive vice president and CFO. “Our execution and market leadership position us to emerge from the current uncertainty even stronger. In the near term, we measure our success by our ability to outperform our markets, our innovation progress, and our balance sheet.”
Events and innovations contributing to segment successes, according to Corning’s earnings release Tuesday, include the launch of Apple’s iPhone 12, that, said Corning, highlighted the company’s transparent, color-free glass ceramic. Apple and Corning partnered to develop and scale manufacturing of Ceramic Shield, contributing to period growth in mobile consumer electronics.
The expansion of Corning Valor Glass capacity for glass vials (Life Sciences), strong adoption of Corning gasoline particulate filters (Automotive), and the launch of Evolv 5G-ready connectivity solutions (Optical Communications) were also identified by the company as contributions to a strong quarter.
Corning additionally recognized more than $30 million in quarterly sales from the recently consolidated Hemlock Semiconductor Group. Hemlock Semiconductor Group’s share redemption, in September, transformed Corning’s long-time ownership into a majority position.
Corning last week announced a collaboration with compound material supplier Pixelligent to further the development of augmented reality/mixed reality (AR/MR) optics. The collaboration aims to use Pixelligent’s optically transparent polymer resins with Corning’s glass to help reduce product-development time and expand the availability of AR devices.
Full quarterly financials are available here.
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