Management reaffirms expectation that
first-quarter sales will mark the low point of the year, as
improving market conditions support higher sales throughout
2024
Management expects core sales to grow
sequentially to approximately $3.4 billion in the second quarter of
2024, with core EPS in the range of $0.42 to $0.46
Corning is well positioned to add more than
$3 billion in annualized sales – and deliver strong incremental
profit and cash flow – as markets continue to improve
Corning Incorporated (NYSE: GLW) today announced its
first-quarter 2024 results and provided its outlook for
second-quarter 2024.
Wendell P. Weeks, chairman and chief executive officer, said,
“Our first-quarter results were at the high end of our guidance.
Importantly, we’re seeing encouraging signs of improving market
conditions. We continue to expect that the first quarter will be
the low quarter for the year.”
Weeks continued, “We are executing our plans to add more than $3
billion in annualized sales within the next three years, and we
already have the required capacity and capabilities in place. As a
result, we are poised to deliver powerful incremental profit and
cash flow and generate substantial shareholder value.”
First-Quarter 2024 Financial Highlights:
- GAAP sales were $2.98 billion. Core sales were $3.26 billion.
Year over year, GAAP and core sales declined by 6% and 3%,
respectively.
- Profitability improved despite the lower sales, reflecting the
continued benefit of pricing and productivity improvement actions.
Year over year, GAAP gross margin improved by 180 basis points and
core gross margin improved by 160 basis points.
- GAAP EPS was $0.24, and core EPS was $0.38. The difference
between GAAP and core EPS primarily reflected constant-currency
adjustments, translated earnings contract gains, and translation
gains on Japanese-yen-denominated debt.
- GAAP operating cash flow was $96 million, and adjusted free
cash flow was $(62) million – both significantly improved versus
the first quarter of 2023.
Second-Quarter 2024 Outlook:
- For the second quarter, management expects core sales to grow
to approximately $3.4 billion, with core EPS in the range of $0.42
to $0.46.
Ed Schlesinger, executive vice president and chief financial
officer, said, “Our actions to increase price and improve our
productivity ratios are paying off. In the first quarter, despite
lower year-over-year core sales, we grew core gross margin by 160
basis points. We also grew adjusted free cash flow by more than
$300 million versus the first quarter of 2023.”
Schlesinger continued, “Overall, we have established a
significantly stronger profitability and cash flow base, and we
expect to grow from first-quarter levels. In the second quarter, we
expect core sales of approximately $3.4 billion, with core EPS in
the range of $0.42 to $0.46.”
Strategy in Action Corning strives to be a catalyst for
positive change and to help move the world forward. The company
drives profitable multiyear growth by inventing, making, and
selling life-changing products while cultivating deep, trust-based
relationships with industry leaders, ultimately incorporating more
content into customers’ offerings. Corning takes the long view,
investing in a set of vital capabilities that are increasingly
relevant to profound transformations that touch many facets of
daily life. Today, Corning’s markets include optical
communications, mobile consumer electronics, display, automotive,
solar, semiconductor, and life sciences.
Recent highlights include:
- Advancing “More Corning” content opportunities by helping
automakers meet ever-tightening pollution standards to produce
cleaner vehicles. The U.S. Environmental Protection Agency’s
final multipollutant tailpipe emissions standards for cars and
trucks, announced in March, include a strong particulate emissions
limit that will require the deployment of gasoline particulate
filters in the U.S. for all gasoline vehicles, including hybrids,
beginning in 2027. Corning is the inventor of and clear market
leader in GPFs, and the new regulations add two to three times the
opportunity for emissions-control content in gasoline vehicles,
including hybrids.
- Innovating to enable faster deployments and higher-density
solutions needed for fiber-rich networks supporting growth in
broadband, 5G, and generative AI. Corning introduced
RocketRibbon® cable with Flow Ribbon Technology, featuring a 60%
reduction in cable diameter. Smaller, denser cables are ideal for
solving the AI-driven infrastructure challenges of carrier and data
center customers. Corning also launched its latest connectivity
advancement, Multifiber Pushlok™ Technology, with innovative
features that make it faster, easier, and up to $25 less expensive
per home to deploy optical fiber and expand broadband access. In
related media coverage, a recent CBS News “60 Minutes” segment
featuring U.S. Secretary of Commerce Gina Raimondo and Corning
Chairman and CEO Wendell P. Weeks spotlighted Corning’s
collaboration with the White House to bring high-speed internet to
underserved rural communities as part of the Broadband Equity
Access and Deployment (BEAD) program. The industry expects funding
approvals to begin late this year, leading to spending in 2025.
Corning anticipates BEAD-related projects will add significantly to
the company’s addressable market.
First-Quarter 2024 Results and
Comparisons
(In millions, except per-share
amounts)
Results (GAAP)
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$2,975
$2,994
$3,178
(1%)
(6%)
Net Income (Loss) (1)
$209
$(40)
$176
*
19%
Diluted EPS
$0.24
$(0.05)
$0.20
*
20%
(1) Represents GAAP net income
(loss) attributable to Corning Incorporated.
* Not meaningful
Core Results (Non-GAAP)
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Core Sales (1)
$3,258
$3,272
$3,367
—
(3%)
Core Net Income (1)
$330
$339
$350
(3%)
(6%)
Core EPS (1)
$0.38
$0.39
$0.41
(3%)
(7%)
(1) Core performance measures 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 website.
First-Quarter 2024 Segment
Results
(In millions)
The first-quarter results below
are prepared on a basis consistent with Corning’s segment reporting
as presented in the company’s consolidated financial
statements.
Optical Communications
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$930
$903
$1,125
3%
(17%)
Net Income
$100
$88
$159
14%
(37%)
In Optical Communications, first-quarter sales were $930
million, up 3% sequentially, driven by growing sales in carrier and
enterprise. Sales were down 17% year over year, reflecting
temporarily lower carrier demand as customers continued to draw
down inventory. First-quarter net income was $100 million, down 37%
year over year, reflecting the lower volume.
Display Technologies
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$872
$869
$763
—
14%
Net Income
$201
$232
$160
(13%)
26%
In Display Technologies, first-quarter sales were $872 million,
up 14% year over year, and net income was $201 million, up 26% year
over year, driven by higher volume and pricing actions taken in the
second half of 2023.
Specialty Materials
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$454
$473
$406
(4%)
12%
Net Income
$44
$58
$39
(24%)
13%
In Specialty Materials, first-quarter sales were $454 million,
up 12% year over year, driven by continued strong demand for
premium smartphone cover materials and semiconductor-related
products. First-quarter net income was $44 million, up 13% year
over year, driven by higher volume.
Environmental Technologies
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$455
$429
$431
6%
6%
Net Income
$105
$98
$82
7%
28%
In Environmental Technologies, first-quarter sales were $455
million, up 6% year over year, driven by increased gasoline
particulate filter adoption in China, which more than offset a
decline in heavy-duty diesel in North America. Net income was $105
million, up 28% year over year, driven by higher volume and
improved operating performance.
Life Sciences
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$236
$242
$256
(2%)
(8%)
Net Income
$13
$17
$9
(24%)
44%
In Life Sciences, first-quarter sales were $236 million, down 8%
year over year, as customers in North America and Europe continue
to draw down their inventory. Net income was $13 million, up 44%
year over year, reflecting improved productivity.
Hemlock and Emerging Growth
Businesses
Q1 2024
Q4 2023
Q1 2023
Q/Q
Y/Y
Net Sales
$311
$356
$386
(13%)
(19%)
Net (Loss) Income
$(10)
$(19)
$16
47%
*
* Not meaningful
In Hemlock and Emerging Growth Businesses, first-quarter sales
were $311 million, down 19% year over year, primarily reflecting
lower pricing for solar-grade polysilicon and lower sales in
Corning Pharmaceutical Technologies from the completion of volume
commitments for COVID-related products.
Upcoming Investor Events On May 2, Corning will hold its
Annual Meeting of Shareholders. On May 21, Corning will attend the
J.P. Morgan 52nd Global Technology, Media and Communications
Conference. Finally, Corning will host management visits to
investor offices in select cities. Visit the company’s Investor
Relations website for up-to-date conference information.
First-Quarter Conference Call Information The company
will host its first-quarter conference call on Tuesday, April 30,
at 8:30 a.m. EDT. To participate, individuals may preregister here
prior to the start of the call. Once the required fields are
completed, click “Register.” A telephone number and PIN will be
auto generated and will pop up on screen. Participants will have
the choice to “Dial In” or have the system “Call Me.” A
confirmation email will also be sent with specific dial-in
information. To listen to a live audio webcast of the call, go to
the company’s Investor Relations events page and follow the
instructions.
Presentation of Information in this News Release This
news release includes non-GAAP financial measures. Non-GAAP
financial measures are not in accordance with, or an alternative
to, GAAP. Corning’s non-GAAP financial measures exclude the impact
of items that are driven by general economic conditions and events
that do not reflect the underlying fundamentals and trends in the
company’s operations. The company believes presenting non-GAAP
financial measures assists in analyzing financial performance
without the impact of items that may obscure trends in the
company’s underlying performance. Definitions of these non-GAAP
financial measures and reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP financial measures
can be found on the company’s website by going to the Investor
Relations page and clicking “Quarterly Results” under the
“Financials and Filings” tab. These reconciliations also accompany
this news release.
With respect to the outlook for future periods, it is not
possible to provide reconciliations for these non-GAAP measures
because management does not forecast the movement of foreign
currencies against the U.S. dollar, or other items that do not
reflect ongoing operations, nor does it forecast items that have
not yet occurred or are out of management’s control. As a result,
management is unable to provide outlook information on a GAAP
basis.
Caution Concerning Forward-Looking Statements The
statements contained in this release and related comments by
management that are not historical facts or information and contain
words such as “will,” “believe,” “anticipate,” “expect,” “intend,”
“plan,” “seek,” “see,” “would,” “target,” “estimate,” “forecast” or
similar expressions are forward-looking statements. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
and include estimates and assumptions related to economic,
competitive and legislative developments. Such statements relate to
future events that by their nature address matters that are, to
different degrees, uncertain. These forward-looking statements
relate to, among other things, the company’s future operating
performance, the company’s share of new and existing markets, the
company’s revenue and earnings growth rates, the company’s ability
to innovate and commercialize new products, the company’s expected
capital expenditure and the company’s implementation of
cost-reduction initiatives and measures to improve pricing,
including the optimization of the company’s manufacturing
capacity.
Although the company believes that these forward-looking
statements are based upon reasonable assumptions regarding, among
other things, current estimates and forecasts, general economic
conditions, its knowledge of its business and key performance
indicators that impact the company, there can be no assurance that
these forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. The company undertakes no
obligation to update forward-looking statements if circumstances or
management’s estimates or opinions should change except as required
by applicable securities laws.
Some of the risks, uncertainties and other factors that could
cause actual results to differ materially from those expressed in
or implied by the forward-looking statements include, but are not
limited to: global economic trends, competition and geopolitical
risks, or an escalation of sanctions, tariffs or other trade
tensions between the U.S. and China or other countries, and related
impacts on our businesses’ global supply chains and strategies;
changes in macroeconomic and market conditions and market
volatility, including developments and volatility arising from
health crisis events, inflation, interest rates, the value of
securities and other financial assets, precious metals, oil,
natural gas, raw materials and other commodity prices and exchange
rates (particularly between the U.S. dollar and the Japanese yen,
New Taiwan dollar, euro, Chinese yuan and South Korean won), the
availability of government incentives, decreases or sudden
increases of consumer demand, and the impact of such changes and
volatility on our financial position and businesses; the duration
and severity of health crisis events, such as an epidemic or
pandemic, and its impact across our businesses on demand,
personnel, operations, our global supply chains and stock price;
possible disruption in commercial activities or our supply chain
due to terrorist activity, cyber-attack, armed conflict, political
or financial instability, natural disasters, international trade
disputes or major health concerns; loss of intellectual property
due to theft, cyber-attack, or disruption to our information
technology infrastructure; ability to enforce patents and protect
intellectual property and trade secrets; disruption to Corning’s,
our suppliers’ and manufacturers’ supply chain, equipment,
facilities, IT systems or operations; product demand and industry
capacity; competitive products and pricing; availability and costs
of critical components, materials, equipment, natural resources and
utilities; new product development and commercialization; order
activity and demand from major customers; the amount and timing of
our cash flows and earnings and other conditions, which may affect
our ability to pay our quarterly dividend at the planned level or
to repurchase shares at planned levels; the amount and timing of
any future dividends; the effects of acquisitions, dispositions and
other similar transactions; the effect of regulatory and legal
developments; ability to pace capital spending to anticipated
levels of customer demand; our ability to increase margins through
implementation of operational changes, pricing actions and cost
reduction measures; rate of technology change; adverse litigation;
product and component performance issues; retention of key
personnel; customer ability to maintain profitable operations and
obtain financing to fund ongoing operations and manufacturing
expansions and pay receivables when due; loss of significant
customers; changes in tax laws, regulations and international tax
standards; the impacts of audits by taxing authorities; the
potential impact of legislation, government regulations, and other
government action and investigations; and other risks detailed in
Corning’s SEC filings.
For a complete listing of risks and other factors, please
reference the risk factors and forward-looking statements described
in our annual reports on Form 10-K and quarterly reports on Form
10-Q.
Web Disclosure In accordance with guidance provided by
the SEC regarding the use of company websites and social media
channels to disclose material information, Corning Incorporated
(“Corning”) wishes to notify investors, media, and other interested
parties that it uses its website
(https://www.corning.com/worldwide/en/about-us/news-events.html) to
publish important information about the company, including
information that may be deemed material to investors, or
supplemental to information contained in this or other press
releases. The list of websites and social media channels that the
company uses may be updated on Corning’s media and website from
time to time. Corning encourages investors, media, and other
interested parties to review the information Corning may publish
through its website and social media channels as described above,
in addition to the company’s SEC filings, press releases,
conference calls, and webcasts.
About Corning Incorporated Corning (www.corning.com) is
one of the world’s leading innovators in materials science, with a
170-year track record of life-changing inventions. Corning applies
its unparalleled expertise in glass science, ceramic science, and
optical physics along with its deep manufacturing and engineering
capabilities to develop category-defining products that transform
industries and enhance people’s lives. Corning succeeds through
sustained investment in RD&E, a unique combination of material
and process innovation, and deep, trust-based relationships with
customers who are global leaders in their industries. Corning’s
capabilities are versatile and synergistic, which allows the
company to evolve to meet changing market needs, while also helping
its customers capture new opportunities in dynamic industries.
Today, Corning’s markets include optical communications, mobile
consumer electronics, display, automotive, solar, semiconductors,
and life sciences.
Consolidated Statements of
Income
Corning Incorporated and
Subsidiary Companies
(Unaudited; in millions, except
per share amounts)
Three months ended
March 31,
2024
2023
Net sales
$
2,975
$
3,178
Cost of sales
1,982
2,175
Gross margin
993
1,003
Operating expenses:
Selling, general and administrative
expenses
451
421
Research, development and engineering
expenses
258
254
Amortization of purchased intangibles
30
31
Operating income
254
297
Interest income
12
7
Interest expense
(83
)
(76
)
Translated earnings contract gain (loss),
net
39
(8
)
Other income, net
74
8
Income before income taxes
296
228
Provision for income taxes
(71
)
(37
)
Net income
$
225
$
191
Net income attributable to non-controlling
interest
(16
)
(15
)
Net income attributable to Corning
Incorporated
$
209
$
176
Earnings per common share available to
common shareholders:
Basic
$
0.25
$
0.21
Diluted
$
0.24
$
0.20
Consolidated Balance
Sheets
Corning Incorporated and
Subsidiary Companies
(Unaudited; in millions, except
share and per share amounts)
March 31,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
1,365
$
1,779
Trade accounts receivable, net of doubtful
accounts
1,621
1,572
Inventories
2,713
2,666
Other current assets
1,272
1,195
Total current assets
6,971
7,212
Property, plant and equipment, net of
accumulated depreciation
14,199
14,630
Goodwill
2,370
2,380
Other intangible assets, net
871
905
Deferred income taxes
1,132
1,153
Other assets
2,075
2,220
Total Assets
$
27,618
$
28,500
Liabilities and Equity
Current liabilities:
Current portion of long-term debt and
short-term borrowings
$
318
$
320
Accounts payable
1,476
1,466
Other accrued liabilities
2,381
2,533
Total current liabilities
4,175
4,319
Long-term debt
7,050
7,206
Postretirement benefits other than
pensions
399
398
Other liabilities
4,435
4,709
Total liabilities
16,059
16,632
Commitments and contingencies
Shareholders’ equity:
Common stock – Par value $0.50 per share;
Shares authorized 3.8 billion; Shares issued: 1.8 billion and 1.8
billion
917
916
Additional paid-in capital – common
stock
16,998
16,929
Retained earnings
16,358
16,391
Treasury stock, at cost; Shares held: 981
million and 980 million
(20,672
)
(20,637
)
Accumulated other comprehensive loss
(2,375
)
(2,048
)
Total Corning Incorporated shareholders’
equity
11,226
11,551
Non-controlling interest
333
317
Total equity
11,559
11,868
Total Liabilities and Equity
$
27,618
$
28,500
Consolidated Statements of
Cash Flows
Corning Incorporated and
Subsidiary Companies
(Unaudited; in millions)
Three months ended
March 31,
2024
2023
Cash Flows from Operating
Activities:
Net income
$
225
$
191
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation
307
310
Amortization of purchased intangibles
30
31
Severance payments
(41
)
(20
)
Share-based compensation expense
60
52
Translation gain on Japanese
yen-denominated debt
(81
)
(18
)
Deferred tax provision (benefit)
10
(38
)
Translated earnings contract (gain) loss,
net
(39
)
8
Changes in assets and liabilities:
Trade accounts receivable
(161
)
(28
)
Inventories
(86
)
17
Other current assets
2
(62
)
Accounts payable and other current
liabilities
(73
)
(369
)
Customer deposits and government
incentives
(25
)
(17
)
Deferred income
(34
)
(6
)
Other, net
2
(100
)
Net cash provided by (used in)
operating activities
96
(49
)
Cash Flows from Investing
Activities:
Capital expenditures
(252
)
(382
)
Proceeds from sale of equipment to related
party
67
Realized gains on translated earnings
contracts and other
94
81
Other, net
(26
)
6
Net cash used in investing
activities
(184
)
(228
)
Cash Flows from Financing
Activities:
Repayments of debt
(37
)
(69
)
Proceeds from other financing
arrangements
54
Payments of employee withholding tax on
stock awards
(34
)
(16
)
Proceeds from exercise of stock
options
13
16
Dividends paid
(243
)
(239
)
Other, net
(7
)
6
Net cash used in financing
activities
(308
)
(248
)
Effect of exchange rates on cash
(18
)
Net decrease in cash and cash
equivalents
(414
)
(525
)
Cash and cash equivalents at beginning of
period
1,779
1,671
Cash and cash equivalents at end of
period
$
1,365
$
1,146
Corning Incorporated and
Subsidiary Companies
GAAP Earnings per Common
Share
(Unaudited; in millions, except
per share amounts)
The following table sets forth
the computation of basic and diluted earnings per common share:
Three months ended
March 31,
2024
2023
Net income attributable to Corning
Incorporated
$
209
$
176
Weighted-average common shares outstanding
- basic
852
844
Effect of dilutive securities:
Stock options and other awards
10
15
Weighted-average common shares
outstanding - diluted
862
859
Basic earnings per common share
$
0.25
$
0.21
Diluted earnings per common
share
$
0.24
$
0.20
Core Earnings per
Share
(Unaudited; in millions, except
per share amounts)
The following table sets forth
the computation of core earnings per share:
Three months ended
March 31,
2024
2023
Core net income
$
330
$
350
Weighted-average common shares outstanding
- basic
852
844
Effect of dilutive securities:
Stock options and other awards
10
15
Weighted-average common shares
outstanding - diluted
862
859
Core earnings per share
$
0.38
$
0.41
CORE PERFORMANCE MEASURES
In managing the Company and assessing our financial performance,
we adjust certain measures included in our consolidated financial
statements to exclude specific items to arrive at our core
performance measures. These items include the impact of translating
the Japanese yen-denominated debt, the impact of the translated
earnings contracts, acquisition-related costs, certain discrete tax
items and other tax-related adjustments, restructuring, impairment
and other charges and credits, certain litigation, regulatory and
other legal matters, pension mark-to-market adjustments and other
items which do not reflect the ongoing operating results of the
Company.
In addition, because a significant portion of our revenues and
expenses are denominated in currencies other than the U.S. dollar,
management believes it is important to understand the impact on
sales and net income of translating these currencies into U.S.
dollars. Therefore, management utilizes constant-currency reporting
for the Display Technologies, Specialty Materials, Environmental
Technologies and Life Sciences segments to exclude the impact from
the Japanese yen, South Korean won, Chinese yuan, New Taiwan dollar
and euro, as applicable to the segment. In addition, effective
January 1, 2024, the Company began utilizing constant-currency
reporting for the Optical Communications segment to exclude the
impact from the Mexican peso on segment results. Prior periods were
not recasted as the impact was not material. The most significant
constant-currency adjustment relates to the Japanese yen exposure
within the Display Technologies segment.
The constant-currency rates established for our core performance
measures are internally derived long-term management estimates,
which are closely aligned with our hedging instrument rates. These
hedging instruments may include, but are not limited to, foreign
exchange forward or option contracts and foreign-denominated debt.
For details of the rates used, please see the footnotes to the
“Reconciliation of Non-GAAP Measures” section. We believe that the
use of constant-currency reporting allows management to understand
our results without the volatility of currency fluctuations,
analyze underlying trends in the businesses and establish
operational goals and forecasts.
Core performance measures are not prepared in accordance with
accounting principles generally accepted in the United States of
America ("GAAP"). We provide investors with these non-GAAP measures
to evaluate our results as we believe they are indicative of our
core operating performance and provide greater transparency to how
management evaluates our results and trends and makes financial and
operational decisions. These measures are not, and should not be
viewed as a substitute for, GAAP reporting measures. With respect
to the outlook for future periods, it is not possible to provide
reconciliations for these non-GAAP measures because management does
not forecast the movement of foreign currencies against the U.S.
dollar, or other items that do not reflect ongoing operations, nor
does it forecast items that have not yet occurred or are out of
management’s control. As a result, management is unable to provide
outlook information on a GAAP basis.
For a reconciliation of non-GAAP performance measures to their
most directly comparable GAAP financial measure, please see
“Reconciliation of Non-GAAP Measures.”
Reconciliation of Non-GAAP
Measures
Corning Incorporated and
Subsidiary Companies
(Unaudited; in millions, except
per share amounts)
Three months ended March 31,
2024
Net income
attributable
Net
Income before
to Corning
Effective tax
Per
sales
income taxes
Incorporated
rate (a)(b)
share
As reported – GAAP
$
2,975
$
296
$
209
24.0
%
$
0.24
Constant-currency adjustment (1)
283
226
172
0.20
Translation gain on Japanese
yen-denominated debt (2)
(81
)
(62
)
(0.07
)
Translated earnings contract gain (3)
(39
)
(30
)
(0.03
)
Acquisition-related costs (4)
32
24
0.03
Discrete tax items and other tax-related
adjustments (5)
15
0.02
Restructuring, impairment and other
charges and credits (6)
(9
)
(7
)
(0.01
)
Litigation, regulatory and other legal
matters (7)
(5
)
(4
)
(0.00
)
Pension mark-to-market adjustment (8)
11
8
0.01
Loss on investments (9)
5
5
0.01
Core performance measures
$
3,258
$
436
$
330
20.2
%
$
0.38
(a)
Based upon statutory tax rates in
the specific jurisdiction for each event.
(b)
The calculation of the effective
tax rate (“ETR”) for GAAP and Core excludes net income attributable
to non-controlling interest (“NCI”) of approximately $16 million
and $17 million, respectively.
Three months ended March 31,
2023
Net income
attributable
Net
Income before
to Corning
Effective tax
Per
sales
income taxes
Incorporated
rate (a)(b)
share
As reported - GAAP
$
3,178
$
228
$
176
16.2
%
$
0.20
Constant-currency adjustment (1)
189
149
114
0.13
Translation gain on Japanese
yen-denominated debt (2)
(18
)
(14
)
(0.02
)
Translated earnings contract loss (3)
8
6
0.01
Acquisition-related costs (4)
34
20
0.02
Discrete tax items and other tax-related
adjustments (5)
(2
)
(0.00
)
Restructuring, impairment and other
charges and credits (6)
66
53
0.06
Pension mark-to-market adjustment (8)
10
8
0.01
Loss on investments (9)
4
4
0.00
Gain on sale of assets (10)
(20
)
(15
)
(0.02
)
Core performance measures
$
3,367
$
461
$
350
19.4
%
$
0.41
(a)
Based upon statutory tax rates in
the specific jurisdiction for each event.
(b)
The calculation of the ETR for
GAAP and Core excludes net income attributable to NCI of
approximately $15 million and $21 million, respectively.
See “Items Adjusted from GAAP
Measures” for the descriptions of the footnoted reconciling
items.
Reconciliation of Non-GAAP
Measures
Corning Incorporated and
Subsidiary Companies
(Unaudited; in millions)
Three months ended March 31,
2024
Selling,
Research,
general
development
Gross
and
and
Operating
Gross
margin
administrative
engineering
Operating
margin
margin
%
expenses
expenses
income
%
As reported - GAAP
$
993
33.4
%
$
451
$
258
$
254
8.5
%
Constant-currency adjustment (1)
227
4
223
Acquisition-related costs (4)
30
Restructuring, impairment and other
charges and credits (6)
(20
)
(11
)
(9
)
Litigation, regulatory and other legal
matters (7)
5
(5
)
Pension mark-to-market adjustment (8)
(8
)
(3
)
11
Core performance measures
$
1,200
36.8
%
$
441
$
255
$
504
15.5
%
Three months ended March 31,
2023
Selling,
Research,
general
development
Gross
and
and
Operating
Gross
margin
administrative
engineering
Operating
margin
margin
%
expenses
expenses
income
%
As reported - GAAP
$
1,003
31.6
%
$
421
$
254
$
297
9.3
%
Constant-currency adjustment (1)
149
2
147
Acquisition-related costs (4)
1
30
Restructuring, impairment and other
charges and credits (6)
54
(5
)
59
Pension mark-to-market adjustment (8)
(8
)
(2
)
10
Gain on sale of assets (10)
(20
)
(20
)
Core performance measures
$
1,186
35.2
%
$
411
$
252
$
523
15.5
%
See “Items Adjusted from GAAP
Measures” for the descriptions of the footnoted reconciling
items.
Reconciliation of Non-GAAP
Measures
Corning Incorporated and
Subsidiary Companies
(Unaudited; in millions)
Three months ended
March 31,
2024
2023
Cash flows from operating activities
$
96
$
(49
)
Realized gains on translated earnings
contracts and other
94
81
Translation losses on cash balances
(33
)
Adjusted cash flows from operating
activities
$
190
$
(1
)
Less: Capital expenditures
$
252
$
382
Adjusted free cash flow
$
(62
)
$
(383
)
Items Adjusted from GAAP
Measures
Items adjusted from GAAP measures
to arrive at core performance measures are as follows:
(1)
Constant-currency adjustment: As a significant
portion of revenues and expenses are denominated in currencies
other than the U.S. dollar, management believes it is important to
understand the impact on sales and net income of translating these
currencies into U.S. dollars. The Company utilizes
constant-currency reporting for Display Technologies, Specialty
Materials, Environmental Technologies and Life Sciences segments
for the Japanese yen, Korean won, Chinese yuan, New Taiwan dollar
and euro, as applicable to the segment. In addition, effective
January 1, 2024, the Company began utilizing constant-currency
reporting for the Optical Communications segment to exclude the
impact from the Mexican peso on segment results. Prior periods were
not recasted as the impact was not material.
The constant-currency rates
established for our core performance measures are internally
derived long-term management estimates, which are closely aligned
with our hedging instrument rates. These hedging instruments may
include, but are not limited to, foreign exchange forward or option
contracts and foreign-denominated debt. For the three months ended
March 31, 2024, the adjustment primarily relates to our Japanese
yen exposure due to the difference in the average spot rate
compared to our core rate.
We believe that the use of
constant-currency reporting allows management to understand our
results without the volatility of currency fluctuation, analyze
underlying trends in the businesses and establish operational goals
and forecasts.
Constant-currency rates used are
as follows and are applied to all periods presented and to all
foreign exchange exposures during the period, even though we may be
less than 100% hedged:
Currency
Japanese yen
Korean won
Chinese yuan
New Taiwan dollar
Euro
Mexican peso
Rate
¥107
₩1,175
¥6.7
NT$31
€.81
MX$20
(2)
Translation
of Japanese yen-denominated debt: Amount reflects the gain
or loss on the translation of our yen-denominated debt to U.S.
dollars.
(3)
Translated
earnings contract: Amount reflects the impact of the
realized and unrealized gains and losses from the Japanese yen,
South Korean won, Chinese yuan, euro and New Taiwan
dollar-denominated foreign currency hedges related to translated
earnings, as well as the unrealized gains and losses of our British
pound-denominated foreign currency hedges related to translated
earnings.
(4)
Acquisition-related costs: Amount reflects
intangible amortization, inventory valuation adjustments and
external acquisition-related deal costs, as well as other
transaction related costs.
(5)
Discrete
tax items and other tax-related adjustments: Amount reflects
certain discrete period tax items such as changes in tax law, the
impact of tax audits, changes in tax reserves and changes in
deferred tax asset valuation allowances, as well as other
tax-related adjustments.
(6)
Restructuring, impairment and other charges and
credits: Amount reflects certain restructuring, impairment
losses and other charges and credits, as well as other expenses,
including severance, accelerated depreciation, asset write-offs and
facility repairs resulting from power outages, which are not
related to ongoing operations.
(7)
Litigation,
regulatory and other legal matters: Amount reflects
developments in commercial litigation, intellectual property
disputes, adjustments to our estimated liability for
environmental-related items and other legal matters.
(8)
Pension
mark-to-market adjustment: Amount primarily reflects defined
benefit pension mark-to-market gains and losses, which arise from
changes in actuarial assumptions and the difference between actual
and expected returns on plan assets and discount rates.
(9)
Loss on
investments: Amount reflects the gain or loss recognized on
investments due to mark-to-market adjustments for the change in
fair value or the disposition of an investment.
(10)
Gain on
sale of assets: Amount represents the gain recognized for
the sale of assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429418479/en/
Media Relations Contact: Michael A. West Jr. (607)
684-1167 westm4@corning.com
Investor Relations Contact: Ann H.S. Nicholson (607)
974-6716 nicholsoas@corning.com
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