Corning (GLW) Beats On Q3 Earnings On Strong Revenues
Zacks Investment Research | Oct 24, 2016 10:13PM ET
Corning Inc. (NYSE:GLW) reported third-quarter 2016 adjusted earnings of 42 cents, which beat the Zacks Consensus Estimate by 4 cents (10.5%). Earnings improved 5% on a year-over-year basis and 10.5% sequentially in the reported quarter.
Reported earnings were 26 cents compared with 15 cents reported in the year-ago quarter and $1.87 reported in the previous quarter.
The year-over-year growth was driven by an improvement in revenues. Adjusted revenues increased 4% year over year to $2.55 billion, which comfortably surpassed the Zacks Consensus Estimate of $2.50 billion. On a sequential basis, revenues increased 4.4%.
Reported revenues surged 10.3% from the year-ago quarter and 7.9% quarter over quarter to $2.51 billion.
Segment Details
The Display Technologies segment generated around 36% of the total revenue. Reported segment revenues were up 19.2% year over year and 12.6% sequentially. On an adjusted basis, revenues inched up 0.7% from the year-ago quarter and 7.2% sequentially to $943 million.
Glass market volume increased in the high-single-digit percentage range (better than the guidance) sequentially driven by increased demand from panel makers. LCD glass volume was slightly more than the market due to a favorable customer mix, while price declines remained moderate.
Optical Communications generated almost 31.7% of the total revenue. Reported segment revenues grew 6.4% year over year and 1.7% sequentially to $795 million driven by strong demand for fiber-to-the-home market solutions. Revenues from Hyper-scale data-center product sales were below management’s anticipation.
The Environmental Technologies segment generated around 10.4% of revenues. Reported segment revenues were up 2.7% year over year and 1.9% sequentially to $264 million. Strength in Corning’s automotive light-duty substrates were driven by solid demand in North America, Europe and China.
Specialty Materials generated 11.8% of revenues. Reported segment revenues rose 2.4% year over year and 10.9% sequentially to $295 million. Launch of two new Gorilla Glass products in the quarter drove sequential revenue growth.
The Life Sciences business accounted for around 8.5% of revenues. Reported revenues were up 1.4% from the year-ago quarter and 1.4% sequentially.
Operating Details
Adjusted gross margin expanded 130 basis points (bps) from the year-ago quarter and 10 bps from the previous quarter to 43.1%.
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Adjusted selling, general & administrative expense (SG&A) increased 30 bps year over year and declined 730 bps on a sequential basis.
Moreover, reported research & development expense (R&D) declined 50 bps year over year and 80 bps sequentially.
As a result, reported operating margin expanded 410 bps year over year and 640 bps sequentially to 21.3%.
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