Corning Incorporated Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Corning Inc. Q1 2023 Earnings Summary

Key Financial Highlights (vs. Q4 2022):

  • Sales: $3.4 billion (down 7% sequentially due to recession-level demand in ~50% of markets and China disruptions)
  • EPS (core): $0.41
  • Gross margin: 35.2% (expanded 160 basis points sequentially)
  • Operating margin: 15.5% (expanded 150 basis points sequentially)
  • Free cash flow: -$383 million (typical Q1 negative; impacted by lower sales; expected positive from Q2 onward)

Actions on pricing and productivity delivered results despite lower sales. Company expects sequential improvement in Q2 and growth in H2 2023 from Q2 levels (most likely case).

Segment Performance

  • Optical Communications: Sales $1.1B (down 6% seq.); net income $159M (up 22% seq. from pricing/productivity). Fiber/cable demand strong; connectivity softer due to project pacing.
  • Display Technologies: Sales $763M (down 3% seq.); net income $160M (down 6% seq.). Volume/price slightly lower; panel utilization rose in March.
  • Specialty Materials: Sales $406M (down 20% seq., typical seasonality); net income $39M (down seq.). Semiconductor demand strong; smartphone/IT weak.
  • Environmental Technologies: Sales $431M (up 9% seq.); net income up 19% seq. Driven by gasoline particulate filter adoption.

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Operator: Welcome to the Corning Inc. Quarter 1 2023 Earnings Call. [Operator Instructions]. It is my pleasure to introduce to you, Ann Nicholson, Vice President of Investor Relations. Ann Nicholson: Thank you, and good morning, everybody. Welcome to Corning's First Quarter 2023 Earnings Call. With me today are Wendell Weeks, Chairman and Chief Executive Officer; Ed Schlesinger, Executive Vice President and Chief Financial Officer; and Jeff Evenson, Executive Vice President and Chief Strategy Officer. I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties and other factors that could cause actual results to differ materially. These factors are detailed in the company's financial reports. You should also note that we'll be discussing our consolidated results using core performance measures, unless we specifically indicate our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business. For the first quarter, the primary differences between GAAP and core EPS stemmed from restructuring charges and from non-cash mark-to-market adjustments associated with the company's currency hedging contracts and Japanese-yen-denominated debt. In total, these increased core earnings in Q1 by $97 million. As a reminder, the mark-to-market accounting has no impact on our cash f

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