Corning Incorporated (NYSE: GLW) today announced its results for the fourth quarter of 2010.
“This past year was one of the most successful in the company's 160-year history. Back in February, we said that our goal was to emerge from the recession as a stronger, more profitable company. I believe we have accomplished this.”
Fourth-Quarter Highlights
- Sales were $1.77 billion, a 10% sequential increase and up 15% year over year.
- Earnings per share were $0.66. Excluding special items, earnings were $0.46, a 10% sequential decline, but 5% improvement year over year.
- Display Technologies' wholly owned business glass volume increased almost 20% sequentially. Volume at Samsung Corning Precision Materials Co., Ltd., declined by almost 15% sequentially. The company's total glass volume, which includes its wholly owned business and SCP, was down slightly sequentially.
- Specialty Materials sales increased 24% sequentially and 79% year over year, driven by very strong sales in Corning® Gorilla® Glass and continued strong performance in advanced optics.
- Corning Environmental Technologies sales improved 12% sequentially and 28% year over year.
Full-Year Highlights
- Sales were $6.6 billion, a 23% increase over $5.4 billion a year ago, with each of the company's business segments growing year over year.
- Gross margin percentage improved to 46% from 39% a year ago.
- Equity earnings were $2.0 billion, an increase of 36% from a year ago.
- Earnings per share were $2.25, a 76% increase over last year. Excluding special items, EPS was $2.07 compared to $1.35 a year ago.
- Free cash flow for the year was $2.8 billion.
Wendell P. Weeks, chairman, chief executive officer and president, said, "This past year was one of the most successful in the company's 160-year history. Back in February, we said that our goal was to emerge from the recession as a stronger, more profitable company. I believe we have accomplished this.
"We achieved excellent financial results with strong sales growth and net profit improvement in each of our businesses. We substantially grew our cash position and saw the emergence of a significant new opportunity with Corning® Gorilla® Glass. Overall, it was a very good year for Corning."
Fourth-Quarter Segment Results
Sales in the Display Technologies segment were $750 million, increasing 16% sequentially and 5% year over year. Volume at the company's wholly owned business increased almost 20% sequentially and about 10% year over year. Samsung Corning Precision Materials' volume declined nearly 15% on a quarterly basis and about 5% year over year. Glass price declines were down in the mid-single digits sequentially, and in line with expectations.
Telecommunications segment sales were $443 million, down 5% sequentially, but up 9% year over year. The typical quarterly seasonal downturn was milder than originally expected.
Environmental Technologies segment sales were $232 million, a 12% sequential increase and 28% year-over-year improvement. The company saw strong growth for its light-duty and heavy-duty diesel engine filters as well as sustained demand for its automotive substrates.
Specialty Materials segment sales were $197 million, a 24% sequential increase and 79% year-over-year business improvement. Most of the sales increase was driven by the rapidly growing market demand for Corning® Gorilla® Glass.
Life Sciences segment sales were $140 million, a 12% sequential increase, and 20% year-over-year growth. The growth was driven primarily by acquisitions.
Corning's equity earnings were $511 million, including several one-time gains recorded as special items. Without these special items, equity earnings would have been $408 million for the quarter.
In the quarter, Corning recouped $324 million ($206 million after tax) from a settlement for business interruption and property insurance claims in the Display Technologies segment resulting from earthquake activity near the company's Shizuoka, Japan facility and a power disruption at the Taichung, Taiwan facility in 2009.
Corning ended the year with over $6.3 billion in cash and short-term investments. This is up from $3.6 billion at the beginning of the year.
Looking Forward
James B. Flaws, vice chairman and chief financial officer, said, "We are entering the year with excellent momentum. Corning's Gorilla® Glass is poised for dramatic sales growth. We believe the display supply chain exited 2010 with healthy levels of inventory. Corning is well positioned in each of our business segments to take advantage of the global economic recovery that is underway."
In the display segment, Corning expects sequential glass volume for both its wholly owned business and Samsung Corning Precision to increase by the mid-single digits in the quarter. Glass price declines are expected to be more moderate than those in the fourth quarter.
In the company's Telecommunications segment, first-quarter sales are expected to be consistent with a very strong fourth quarter, and 20% higher than from a year ago.
Environmental Technologies segment sales are expected to be in line with the very robust fourth quarter and up about 20% over last year.
Specialty Materials segment sequential sales growth in the quarter should be in the range of 20% to 25%, which would be more than double year over year, driven primarily by Corning® Gorilla® Glass.
The Life Sciences segment first-quarter sales are expected to increase slightly sequentially and be up about 20% year over year.
Corning anticipates that equity earnings from Dow Corning Corporation will improve sequentially. Overall equity earnings are expected to be down 5%, excluding the impact of the one-time gains in last year's fourth quarter.
As previously disclosed, Corning's tax rate for 2011 will move up substantially due primarily to the non-repeat of the benefit of foreign tax credits. Corning anticipates its 2011 full-year tax rate will be approximately 15%. This new higher rate will take effect in the first quarter.
Upcoming Events
Corning will host investors and provide more information on its 2011 outlook at its annual investor meeting in New York on Friday, Feb. 4 at 9 a.m. ET at Cipriani on 42nd Street. Corning will showcase products and technologies prior to the meeting. The company's exhibits, including hands-on Gorilla® Glass product demonstrations, will be available for viewing starting at 7:30 a.m. The exhibits will close at 9 a.m. Senior management will also be available during the exhibit period to answer individual investor questions. Attendees can register online at the company's investor relations Web site. A live audio and video cast will be available through the company's investor relations Web site.
Corning will also be presenting at the Goldman Sachs Technology Conference Feb. 15, and at the Morgan Stanley Media and Telecom Conference March 1, both in San Francisco.