Corning Incorporated, one of the world’s leading innovators in materials science, announced results for the second quarter ended June 30, 2020.
- GAAP and core sales were 2.6 billion USD; versus the first quarter, GAAP sales increased 7% and core sales increased 2%
- GAAP EPS was (0.13) USD; core EPS was $0.25, up 25% sequentially
- GAAP net loss was 71 million USD; core net income was 218 million USD, up 23% sequentially
- The difference between GAAP and core results stemmed primarily from non-cash restructuring charges, including the reassessment and reprioritization of R&D programs
- Free cash flow of 285 million USD improved sequentially and keeps Corning on track to be free cash flow positive for the full year
Wendell P. Weeks, chairman and chief executive officer, said, “During the second quarter, we made great strides in positioning Corning to emerge stronger from the global health crisis and resume growth. Sales, net income, EPS, and free cash flow all increased sequentially.
“Corning advanced multiple initiatives throughout the second quarter, including the launch of Corning® Gorilla® Glass Victus™ and continued innovation with 5G industry leaders,” Weeks continued. “On the COVID-19 front, we continue to seek ways to leverage our deep technology, manufacturing, and engineering capabilities to combat the pandemic directly. We were delighted that Corning Valor® Glass was selected by the U.S. Department of Health & Human Services and the Department of Defense to accelerate delivery of COVID-19 vaccines.
“Overall, our decisive action and operational execution resulted in positive free cash flow and continued leadership in the capabilities that make Corning distinctive. We’re delivering for our customers, outperforming our markets, and preserving our financial strength.”
Market-Access Platform Highlights
Corning holds a leadership position in each of the markets addressed by its five Market-Access Platforms. In the second quarter, the company progressed important growth initiatives and reported the following highlights:
- Life Sciences – Corning Pharmaceutical Technologies continued to advance its strategy of building a multibillion-dollar pharmaceutical glass business. The company entered into a long-term supply agreement to provide Valor Glass vials for a portion of currently marketed Pfizer drug products and was awarded 204 million USD in funding from the Biomedical Advanced Research and Development Authority (BARDA). The BARDA funding will enable Corning to substantially expand domestic manufacturing capacity to help accelerate delivery of COVID-19 vaccines and drugs.
- Mobile Consumer Electronics – Specialty Materials delivered 13% year-over-year sales growth despite a year-over-year decline in the smartphone market. Growth resulted from strong demand for premium products. In July, the company announced the launch of Gorilla Glass Victus, the toughest Gorilla Glass yet. Samsung will be the first customer to adopt Gorilla Glass Victus in the near future.
- Automotive – Environmental Technologies outperformed a weak market and delivered more than 20% year-over-year growth in Gasoline Particulate Filters sales.
- Optical Communications – Segment sales grew 12% sequentially, driven by carrier network projects. Advancements relevant to the deployment of 5G continued. The company announced a strategic collaboration with EnerSys to simplify the delivery of fibre and electrical power to small-cell wireless sites. Corning is also working with Qualcomm Technologies to deliver indoor networks that are 5G-ready, easy-to-install, and affordable.
- Display – Display Technologies generated consistent sequential net income as large-screen TV sales continued to drive demand and support the continued ramp of the company’s new Gen 10.5 facilities.
Strengthening Financial Position
Tony Tripeny, executive vice president and chief financial officer, said, “We came into this economic downturn with a balance sheet built for times like these and took actions during the quarter to ensure we have the financial resources needed for the duration. We generated 285 million USD in free cash flow, exited the quarter with $2.2 billion in cash, and are on track to generate positive free cash flow for the year.
“Our financial position is strong,” Tripeny continued. “We are becoming more efficient, and we have the capacity in place to meet expected growth with minimal investment. We expect improved profitability and return on invested capital as we grow sales.”
Across Corning’s businesses, demand and visibility improved throughout the second quarter. As a result, the company expects sequential sales and profit growth in the third quarter. The level of growth will depend on end-market demand and economic activity in August and September.
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