Corning Incorporated (NYSE:GLW) reported third-quarter sales of $3.5 billion and an EPS of $0.45, with a gross margin expansion to 37% and an improved free cash flow of $466 million. Notably, the company's market cap stands at $22.62B USD, according to InvestingPro Data. Despite lower-than-expected volume in Optical Communications and Display Technologies due to weak customer demand, the company remains confident in long-term industry growth drivers such as 5G and cloud computing. Corning also mentioned collaborations with Apple (NASDAQ:AAPL) and AUO, and believes it can deliver over $3 billion in additional sales as market volumes normalize.
Key takeaways from the call:
- Sales in Optical Communications declined 14% sequentially, while Display Technologies sales were $972 million. The company expects lower sales volume in these sectors in the fourth quarter due to weak demand and lower panel maker utilization.
- Corning expects fourth-quarter sales to be around $3.25 billion, with a similar gross margin to the third quarter and an EPS of $0.37 to $0.42. The company's P/E Ratio is currently 35.45, as per InvestingPro Data.
- Sales in Specialty Materials increased 33% sequentially to $563 million due to higher Gorilla Glass sales.
- The company highlighted its collaboration with Apple on durable glass and cover materials for the iPhone 15, as well as the introduction of Corning Viridian Vials and an expanded collaboration with AUO for curved automotive display modules.
- Corning's CEO Wendell Weeks emphasized the growing market opportunity and long-term compounded annual growth rates, particularly in the sphere of glass packaging for faster communication to photons.
- The company is considering share buybacks and has a hedging strategy for the Japanese yen.
- Corning expects minimal cash investment and high free cash flow conversion, with a decrease in capital spending.
During the earnings call, Corning executives expressed confidence in the pricing environment and expected profitability to improve in the fourth quarter and throughout 2024. They also highlighted the company's capacity and capability to deliver over $3 billion in additional sales with minimal additional cash investments as market volumes return to normal.
InvestingPro Tips suggest that Corning has maintained dividend payments for 17 consecutive years, which might be of interest to dividend-focused investors. The company's stock is currently trading near its 52-week low, potentially offering an attractive entry point for those who believe in its long-term prospects.
The company's CEO Wendell Weeks discussed their latest technology work, focusing on glass packaging for faster communication to photons. He emphasized the growing market opportunity and long-term compounded annual growth rates. Regarding hedging exposure to the yen, Corning is currently hedged through the end of next year but does not have a significant amount of hedge beyond that.
Despite the muted sales outlook, Corning aims to improve profitability and cash flow. The CEO also highlighted the opportunity to generate record revenue in a short time period due to the pandemic and post-pandemic environment. The company will attend the UBS Technology Conference and host management visits to investor offices. A web replay of the call will be available on their site.
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