Slide 1: Second-Quarter 2023 Investor Call
Second-Quarter 2023 Investor Call Corning Reports Second-Quarter Financial Results July 25, 2023 1
Slide 2: Forward-Looking and Cautionary Statements
Forward-Looking and Cautionary Statements The statements contained in this presentation and related comments by management that are not historical facts or information and contain words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,” “target,” “estimate,”
Slide 3: Q2 GAAP Earnings: FX Hedge Accounting and Other Charges
Q2 GAAP EARNINGS FX Hedge Accounting and Other Charges • Recorded unrealized, non-cash, after-tax gain of $124M in Q2 2023 on mark-to-market adjustments associated with currency-hedging contracts and foreign debt • Translation hedges reduce our economic exposure to currency fluctuations, providing h
Slide 4: Second Quarter 2023 Core Performance and Primary Factors
CEO PERSPECTIVE Second Quarter 2023 Core Performance $3.5B Core Sales “We expect to continue improving profitability and cash flow despite 3% Increase QoQ our relatively muted sales environment. Furthermore, our ‘More Corning’ approach is opening additional revenue streams. Taken together, we antici
Slide 5: Comprehensive Plan and Display Technologies
CEO PERSPECTIVE Comprehensive Plan • Taking pricing actions • Returning productivity ratios to historic levels • Reducing inventory • Expecting profitability and cash generation to continue improving Actions will further improve profitability and cash generation when our markets recover, our volume
Slide 6: Creating Revenue Streams Across Markets
Creating Revenue Streams Across Markets OPTICAL COMMUNICATIONS Commercializing a Gen 2, high-density, high-value interconnect system designed to enable requirements – and capture growth – driven by AI MOBILE CONSUMER ELECTRONICS Launching two products – this fall and next year – featuring innovation
Slide 7: Second Quarter Results Highlights
CFO PERSPECTIVE Second Quarter Results “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.” - Ed Schlesinger,
Slide 8: Segment Recap: Optical Communications and Display Technologies
SEGMENT RECAP Optical Communications Q2 Results • Q2 Sales of $1,066M, down 5% sequentially – near-term demand for passive optical network products remains weak • Q2 Net income of $140M, down 12% sequentially – on lower volume, moderated $1,066M by productivity improvements Q2 Net Sales Down 5% QoQ
Slide 9: Segment Recap: Specialty Materials and Environmental Technologies
SEGMENT RECAP Specialty Materials Q2 Results • Q2 Sales of $423M, up 4% sequentially – on higher Gorilla Glass sales • Q2 Net income of $33M, down 15% sequentially – impacted by continued $423M development costs for new product launches Q2 Net Sales Up 4% QoQ Observations • New innovation opportunit
Slide 10: Segment Recap: Life Sciences and Hemlock and Emerging Growth
SEGMENT RECAP Life Sciences Q2 Results • Q2 Sales of $231M, down 10% sequentially – on lower demand for COVID- related products in China and customers continuing to draw down inventory $231M • Q2 Net income of $11M, up 22% sequentially –with productivity improvements Q2 Net Sales Down 10% QoQ more t
Slide 11: Outlook and CFO Summary
Outlook Q3 2023 • Core Sales: ~$3.5B, in line with second quarter • Core EPS: About the same or slightly better sequentially Outlook Reflects • Differing dynamics in each business • Improvements in Display Technologies and Specialty Materials • Declines in Optical Communications and Environmental Te
Slide 12: Q&A Session
Q&A Session Corning’s 2023 Investor Outreach Plans • September 7 – Citi’s 2023 Global Technology Conference • Management visits to investor offices in select cities © 2023 Corning Incorporated 24 12
Slide 13: 2023 Corporate Metrics
Appendix 2023 Corporate Metrics (as of July 25, 2023)(1)(2) Q3 2023 • Core Sales: ~$3.5B • Core EPS: About the same or slightly better sequentially • Hemlock and Emerging Growth Businesses: $320M - $340M • Operating Expense: ~$680M • Other income/expense: ~($100M) Full-Year 2023 • Hemlock and Emergi
Slide 14: Q2 2023 Core Performance and Operating Performance by Segment
Q2 2023 Core Performance Q2 Q1 Q2 $ in millions, except EPS 2023 2023 2022 Core Net Sales $3,482 $3,367 $3,762 Core Gross Margin $1,262 $1,186 $1,410 Gross Margin % 36% 35% 37% Core SG&A $403 $411 $460 % of Sales 12% 12% 12% Core RD&E $250 $252 $244 % of Sales 7% 7% 6% Core Operating Margin $609 $52
Slide 15: Year-to-Date Core Performance and Operating Performance by Segment
Year-to-Date Core Performance YTD YTD $ in millions, except EPS Q2 2023 Q2 2022 Core Net Sales $6,849 $7,506 Core Gross Margin $2,448 $2,780 Gross Margin % 36% 37% Core SG&A $814 $921 % of Sales 12% 12% Core RD&E $502 $494 % of Sales 7% 7% Core Operating Margin $1,132 $1,365 Operating Margin % 17% 1
Slide 16: Reconciliation of Non-GAAP to GAAP Financial Measures
Adjusted Operating Cash Flow Reconciliation YTD YTD $ in millions Q2 2023 Q2 2022 Q2 2023 Q2 2022 Cash flows from operating activities $619 $758 $570 $1,292 Realized gains on translated earnings contracts and other $96 $92 $177 $132 Translation losses on cash balances ($17) ($57) ($50) ($77) Adjuste
Slide 17: Corning
CORNING 17