Second Quarter 2015 Conference Call

Transcription

1 Second Quarter 2015 Conference Call July 28,

2 Forward Looking and Cautionary Statements Certain statements in this presentation constitute forward looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 Such forward looking statements are based on current expectations and involve certain risks and uncertainties Actual results might differ from those projected in the forward looking statements Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the Securities and Exchange Commission filings on the Company and at the end of this presentation Investor Relations 2015 Corning Incorporated Priorities: Build on Momentum and Grow Sustain positive momentum in all businesses Leverage innovation engine to drive growth Grow sales and earnings Return cash to shareholders Investor Relations 2015 Corning Incorporated 4 2

3 First Half Results 190% Core Core, excluding FX 134% 159% 105% 47% 23% Sales Earnings EPS Investor Relations 2015 Corning Incorporated 5 Growing Sales and NPAT in Optical Communications +40% +72% Investor Relations 2015 Corning Incorporated 6 3

4 Gorilla Glass Gaining Share of Growing Cover Glass Market Gorilla Glass 4 now designed into 43 models and is penetrating quickly Additionally, GG4 carries a price premium Continue to increase penetration of Gorilla Glass in China Sales of Gorilla Glass in China up 45% year-to-date Antimicrobial Corning Gorilla Glass on first smartphone Specialty Materials gross margin % is up 170 basis points year-to-date driven by volume, cost reduction, and price premium Investor Relations 2015 Corning Incorporated 7 Heartbeat of LCD Glass Prices Encouraging Sequential Quarterly Price % Change* *Excludes impact of product and customer mix Investor Relations 2015 Corning Incorporated 8 4

5 Pharmaceutical tubing acquisition accelerates innovation opportunities Corning reached definitive agreement with Gerresheimer AG: 1Acquire pharmaceutical glass tubing business 2Enter ten-year supply agreement for glass tubing 3Form an equity venture (75% Corningowned) to focus on accelerating innovations for pharmaceutical glass packaging Enables Corning to bring revolutionary new technologies to market with a long-standing industry leader Corning Pharmaceutical Technologies division formed to support new business Long term size of the prize is $1 billion in sales Investor Relations 2015 Corning Incorporated 9 Q2 Core Performance Results In millions, except EPS Q Q Sales (1) (2) $2,517 $2,512 Gross Margin (1) (2) Gross Margin % SG&A (1)(2) % of Sales $1,120 45% $329 13% $1,103 44% $337 13% RD&E (1)(2) % of Sales $191 8% $206 8% Gross Equity Earnings (1)(2) $71 $57 NPBT (1) (2) $623 $583 Net Income (1) (2) $522 $487 EPS (1) (2) $038 $034 (1) These are non-gaap measures Definitions and reconciliations are provided on our web site (2) Figure includes change to constant currency basis, a non-gaap measure Investor Relations 2015 Corning Incorporated 10 5

6 Display Technologies Segment YoY % Q Q Change Core Sales (1) (2) $963 $1,017 (5%) Core Net Income (1) (2) $290 $300 (3%) Moderate sequential price declines and volume up low-single digits, as expected Gross Margin % consistent with Q Expect weeks of inventory to decline in Q3 (1) These are non-gaap measures Definitions and reconciliations are provided on our web site (2) Figure includes change to constant currency basis, a non-gaap measure Investor Relations 2015 Corning Incorporated 11 Corning Optical Communications Segment YoY % Q Q Change Carrier Sales $591 $538 10% Enterprise Sales $209 $148 41% Total Segment Sales $800 $686 17% Core Net Income (1) $91 $63 44% Sales growth driven by Fiber-to-the-Home and Data Centers in North America Stronger dollar impacted sales by $27M Y-o-Y (1) These are non-gaap measures Definitions and reconciliations are provided on our web site Investor Relations 2015 Corning Incorporated 12 6

7 Environmental Technologies Segment YoY % Q Q Change Auto Sales $129 $136 (5%) Diesel Sales $131 $149 (12%) Total Segment Sales $260 $285 (9%) Core Net Income (1) $46 $47 (2%) Weaker Euro impacted sales by $17M and impacted core net income by $6M Continued cost reduction efforts helped mitigate the impact of the Euro on core net income (1) These are non-gaap measures Definitions and reconciliations are provided on our web site Investor Relations 2015 Corning Incorporated 13 Specialty Materials Segment YoY % Q Q Change Sales $272 $298 (9%) Core Net Income (1)(2) $44 $45 (2%) Gorilla Glass volume up mid-teen percent Y-o-Y and in line with expectations for the quarter Sales down 9% Y-o-Y driven by lower sales of advanced optics products and Euro Cost reductions, new products, and increased volume helped minimize impact of sales decline on core net income (1) These are non-gaap measures Definitions and reconciliations are provided on our web site (2) Figure includes change to constant currency basis, a non-gaap measure Investor Relations 2015 Corning Incorporated 14 7

8 Life Sciences Segment YoY % Q Q Change Sales $211 $223 (5%) Core Net Income (1) $21 $22 (5%) Foreign Exchange was the primary cause of Y-o-Y declines in sales and core net income Core net income, excluding impact of Euro, would have been up 9% (1) These are non-gaap measures Definitions and reconciliations are provided on our web site Investor Relations 2015 Corning Incorporated 15 Dow Corning YoY % Q Q Change Sales (1) $1,424 $1,500 (5%) Core Gross Equity Earnings (2) $63 $49 29% Stronger dollar impacted sales by $81 million and core gross equity earnings by $4 million (1) Corning does not consolidate Dow Corning s sales (2) These are non-gaap measures Definitions and reconciliations are provided on our web site Investor Relations 2015 Corning Incorporated 16 8

9 Balance Sheet and Cash Flow Cash and short term investments Q Q $5,473 $5,067 Free cash flow* $380 ($110) Balance sheet and cash flow remain strong Spent $626 million on share repurchases 2015 CapEx forecast remains at $13-$14 billion *Free cash flow is a Non-GAAP measure Please refer to the GAAP reconciliation on our web site Investor Relations 2015 Corning Incorporated Outlook LCD Glass Market Expectations Updated retail glass market (ft 2 ) up 6-to-7% Y-o-Y LCD TV units at retail now consistent with 2014 but area still up 8%; IT market down and small format up 16% in area Long term TV outlook remains strong driven by replacement rate and innovations such as 4K Average screen size tracking better than expected, offsetting portion of weaker unit growth 2 nd half supply chain inventory levels to decline by ~2 weeks Investor Relations 2015 Corning Incorporated 18 9

10 Q Outlook Display Technologies Segment Expect LCD glass market to be up low-single digits sequentially and our sales volume to be in line with market growth Expect moderate price declines in Q3 and Q4 Industry conditions help keep price declines moderate even with slightly softer demand and inventory reductions: Q4 TV seasonality pulls down inventory Panel Makers profitable; getting benefit of weak Yen Balanced supply and demand for LCD glass Competitors operating margins lead us to believe that they can t push on price much further if they hope to remain profitable Thick to thin conversions coming to end Corning has levers to steer calmly through this period Investor Relations 2015 Corning Incorporated 19 Q Outlook Other Segments Sales Year-over-year data in percentages Optical Communications Up mid-teens Environmental Technologies Down mid-single digits Specialty Materials Down high-single digits Life Sciences Down slightly Investor Relations 2015 Corning Incorporated 20 10

11 Q Outlook Continued Core Performance Measures 1 Dow Corning Gross Equity Earnings ~$65 million Gross Margin ~44% SG&A RD&E Other Income / Other Expense ~13% of sales ~8% of sales ~($50) million Full Year Tax Rate ~18% (1) These are non-gaap measures Definitions and reconciliations are provided on our web site Investor Relations 2015 Corning Incorporated 21 Q&A Session Investor Relations 22 11

12 Forward Looking and Cautionary Statements This presentation contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which are based on current expectations and assumptions about Corning s financial results and business operations, that involve substantial risks and uncertainties that could cause actual results to differ materially These risks and uncertainties include: the effect of global political, economic and business conditions; conditions in the financial and credit markets; currency fluctuations and our ability to mitigate the impact to our earnings and cash flows; tax rates; product demand and industry capacity; competition; reliance on a concentrated customer base; manufacturing efficiencies; cost reductions; availability of critical components and materials; new product commercialization; pricing fluctuations and changes in the mix of sales between premium and non-premium products; new plant start-up or restructuring costs; possible disruption in commercial activities due to terrorist activity, armed conflict, political or financial instability, natural disasters, adverse weather conditions, 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; retention of key personnel; stock price fluctuations; and adverse litigation or regulatory developments These and other risk factors are detailed 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 Investor Relations 2015 Corning Incorporated 23 12