Corning reports improved second quarter financials

27 Jul 2023

Sales increased sequentially but decreased year on year, in current “weak end-market”.

Glass, and optical materials and systems giant Corning has announced its second-quarter 2023 results and provided guidance for the third quarter. The firm stated that its “sequential margin expansion and $310 million of free cash flow reflect progress on pricing and productivity actions”. For the next quarter, management expects core sales of approximately $3.5 billion.

Wendell Weeks, chairman and CEO, commented, “Corning’s second-quarter results reflect progress on our comprehensive plan to improve profitability and cash flow – even in the current weak end-market environment. As expected, core gross margin expanded 1 percentage point sequentially, and has grown more than 2 percentage points since the beginning of the year. We also improved free cash flow to $310 million.”

“We expect to continue improving profitability and cash flow despite our relatively muted sales environment. Furthermore, our More Corning approach is opening additional revenue streams. Taken together, we anticipate strong operating leverage when our markets recover and our volume returns,” Weeks added.

Second quarter highlights

• Q2 GAAP sales were $3.2 billion, up 2% sequentially. Core sales were $3.5 billion, up 3% sequentially, driven by display technologies. GAAP and core sales were down year over year, “reflecting continued lower demand in several markets,” the company stated.
• Core gross margin of 36.2% and core operating margin of 17.5% increased sequentially by 100 basis points and 200 basis points, respectively, reflecting pricing and productivity improvement actions.
• Q2 earnings per share (EPS – GAAP) were $0.33, up 65% sequentially; core EPS of $0.45 increased $0.04, or 10%, from the prior quarter.
• Q2 free cash flow improved from the first quarter to $310 million.

Plan to improve profitability

Considering the third quarter of 2023, Corning’s announcement stated, “In the third quarter, management expects core sales of approximately $3.5 billion and core EPS to be about the same [$0.33] or slightly better than in the second quarter.”

Ed Schlesinger, Corning’s executive VP and CFO, said, “In the second quarter, sales grew 3% sequentially as higher sales in display technologies more than offset a decline in optical communications.

“We executed well on our comprehensive plan to improve profitability and cash flow. Core operating income increased 16% sequentially, and free cash flow grew to $310 million.”

He continued, “Looking ahead, we will continue improving profitability and cash generation in the second half despite our current sales outlook. Overall, we remain well positioned to capture upside, and as sales grow, we’ll drive strong operating leverage.”