CORNING, N.Y., USA -- Corning Incorporated (NYSE: GLW) today announced results for the third quarter ended Sept. 30, 2021, and provided its outlook for the fourth quarter.
- GAAP and core sales were $3.6 billion; core sales grew 4% sequentially and 21% year over year, driven by strong growth in Optical Communications; GAAP net income was $371 million, and core net income was $485 million.
- GAAP EPS was $0.43 and core EPS was $0.56; core EPS increased 6% sequentially and 30% year over year.
- Lower production levels in the automotive industry due to the semiconductor chip shortage reduced sales by approximately $40 million and EPS by $0.02.
- Gross margin expanded 50 basis points sequentially and 70 basis points year over year to 38.3%, despite a net impact of 150 basis points from supply chain challenges and inflationary headwinds.
- Free cash flow was $497 million for the quarter and $1.3 billion for the first nine months of 2021.
- For the fourth quarter, Corning expects core sales to be in the range of $3.5 billion to $3.7 billion with core EPS in the range of $0.50 to $0.55. Profitability is expected to decline slightly on a sequential basis due to further reductions in automotive industry-related sales and lower Corning® Gorilla® Glass sales following large product launches by customers.
Wendell P. Weeks, chairman and chief executive officer, said, “Strong execution resulted in another outstanding quarter as sales reached an all-time high. For the full year, we are on pace to reach $14 billion in sales and over $2 in EPS. We are successfully capturing a compelling set of long-term growth opportunities by innovating, extending commercial relationships, and scaling operations to meet robust demand. We are advancing our market leadership and expect to grow again in 2022.”
Weeks continued, “Corning has become increasingly vital to multiple industry transformations that are moving the world forward. Key trends continue to converge around our capabilities – and we believe this is just the beginning. Corning’s strong position reflects the contributions of our dedicated people as we navigate this period of global disruption.”
Tony Tripeny, executive vice president and chief financial officer, said, “In the third quarter, we continued to execute well in a complex environment. A key driver of that execution was our global supply management and operations teams maintaining a steady supply of raw materials and finding creative shipping strategies. Their actions enabled us to deliver effectively for our customers. At the same time, we incurred additional costs that were elevated by inflation. To help offset these costs, we have price increases underway in all of our businesses.”
Tripeny concluded, “As we approach 2022, we remain focused on driving top-line growth and expanding our margins. We are well positioned to address growing customer demand, deepen our innovation portfolio, and reward shareholders.”
- Optical Communications – Demand on networks is at an all-time high, setting the stage for significant investments by operators to expand network capacity, capability, and access. During the quarter, the company announced a collaboration with AT&T. Corning’s capacity expansions will allow AT&T to extend investments in fiber infrastructure, expand U.S. broadband networks, and accelerate 5G deployment. Corning continues to outperform the market.
- Life Sciences – Corning continues to support the pandemic response, and its portfolio of advanced vials and pharmaceutical glass tubing has enabled the delivery of more than 3 billion doses of COVID-19 vaccines so far. The company also continues to advance its pharmaceutical packaging portfolio through key partnerships and a growing customer base. Additionally, innovations are helping advance developments in cell- and gene-based therapies, which offer a significant opportunity to increase Corning content in life sciences products.
- Mobile Consumer Electronics – Corning continues to advance its objective of delivering more Corning content and capturing higher revenue per device. During the quarter, Samsung introduced its Galaxy Z Fold3 5G and Galaxy Z Flip3 5G, both featuring Corning® Gorilla® Glass Victus®. These devices feature Corning® Gorilla®Glass with DX for device cameras, marking Corning’s entrance into a new product category. Additionally, nearly 30 new devices – including smartphones, wearables, and laptops – launched featuring Corning® Gorilla® Glass.
- Automotive – Corning is uniquely suited to address global trends toward cleaner, safer vehicles that enhance the driving experience. Jeep and Corning announced that a windshield with Corning® Gorilla® Glass is available as a factory-installed option on the 2021 Jeep® Wrangler and 2021 Jeep® Gladiator. Environmental Technologies continues to deliver more Corning content per vehicle; since 2017, the company’s automotive product sales have increased more than 40% while global car sales have decreased 20%.
- Display – The market for large-sized TVs is projected to grow at a double-digit compound annual growth rate through 2024. Gen 10.5 glass provides the most economical approach for larger sets, and Corning is well positioned to meet growing demand as the leader in Gen 10.5. Glass demand at retail is expected to be up by a high-single digit percentage in 2022. The company expects the glass pricing environment to remain favorable in the fourth quarter and in 2022. Fourth-quarter glass pricing is expected to be consistent with the third quarter.