CORNING | Corning Inc. reported strong results in the second quarter of 2019, continuing a yearslong streak of beating its own projections -- and also showing continued growth in businesses with a large local footprint.
“Our capabilities are becoming increasingly vital to diverse industries, and multiple opportunities support continued leadership across all of our market-access platforms,” President, Chairman and CEO Wendell Weeks told investors on a conference call Tuesday.
Despite the solid report, the company’s stock fell nearly 8 percent during the day, closing at $31.40, down $2.71 from the previous day’s close.
“We reported an excellent second quarter,” company Controller Ed Schlesinger told The Leader. “Sales were $3 billion, up 8 percent, earnings per share (EPS) were $0.45, up 18 percent. We grew our sales and earnings in all segments year-over-year.”
As sometimes happens, the government-regulated GAAP calculations showed a different picture than the company’s own internal measures, showing a major drop in year-over-year net income and EPS.
Schlesinger said the differences are mostly the result of the company doing business in multiple markets and in multiple currencies with varying exchange rates. Company officials have said their own “core” earnings and EPS measures are a clearer reflection of the company’s actual performance.
Growth continues to be strong in the Environmental Technologies and Life Sciences businesses, which have a significant presence in Erwin and Big Flats, respectively, as well as the company’s Advanced Optics business, which has manufacturing sites in Fairport and Caton as well as support facilities in Corning.
“Environmental happens to actually be the business that performed the best in the quarter, up about 15 percent in sales,” Schlesinger said. “[That] business is doing exceptionally well, and that’s having a very positive impact on the manufacturing facilities in the area. I wouldn’t call them ‘sold out,’ but they’re certainly very full.
“Life Sciences grew [6 percent] this quarter, and our Advanced Optics business is also growing and doing very, very well.”
Schlesinger noted that the company's research and development work at Sullivan Park in Erwin supports the company's future plans across all segments.
One area where both performance and expectations were somewhat lower was Optical Communications.
“We have two things that are impacting our results [in Optical] this year,” Schlesinger said. “One is related to the timing for a specific customer buildout. We are now seeing other customers push out some of their builds as well. The decline in the [overall] market is primarily related to China. China Mobile is the largest telecom provider in China, and they delayed their buying by a period of time, so that’s a significant impact in the market.”
Still, the 7 percent year-over-year growth in that segment is well within the expectations set when the company dialed back projections for Optical after the end of the first quarter.
“We are very confident in long-term growth in that space,” Schlesinger added.
Corning is continuing to see stabilizing glass prices in its key Display Technologies business, which saw sales grow 9 percent from the same time last year.
“We’re seeing stable returns in display, and the pricing environment in this quarter was actually even better than we expected,” Schlesinger said.
That business has seen a long-term interplay of falling prices and increasing volumes (from larger screens), and officials believe that’s coming close to an equilibrium point.
The company also kicked off in June a new plan to continue investments in growth and return cash to shareholders.
The Strategy and Growth Framework replaces the former Strategy and Capital Allocation Framework that started in 2015 and will meet or exceed its final goals this year.
“We now believe we are in a period of growth over that four-year time frame [defined in the new plan], so we’ve actually set specific growth targets for sales and EPS,” Schlesinger said. “In the previous plan we expected to grow throughout that time period but the growth was much less certain.”
Company officials say the Strategy and Capital Allocation Framework will return more than $12.5 billion to shareholders through the end of this year, with dividends up 67 percent over the life of the program and outstanding shares reduced 37 percent through stock buybacks.
“Under [the new framework], we plan to invest $10 billion to $12 billion for growth and to return $8 billion to $10 billion to shareholders,” Weeks told shareholders.