Corning Incorporated (
GLW)
Q3 2010 Earnings Call Transcript
November 1, 2010 8:30 a.m. ET
Executives
Kenneth C. Sofio – Vice President, Investor Relations
James B. Flaws – Vice Chairman of the Board and Chief Financial Officer
Executives
Mark Sue – RBC Capital Markets
Rod Hall – J.P. Morgan
Brian White – Ticonderoga Securities
C.J. Muse – Barclays Capital
Nikos Theodosopoulos – UBS
Jim Suva – Citigroup
Steven Fox – CLSA
Simona Jankowski – Goldman Sachs
Carter Shoop – Deutsche Bank
Yair Reiner – Oppenheimer & Co.
Vijay Rakesh – Sterne, Agee & Leach
George Notter – Jefferies & Co.
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Corning, Inc. Third Quarter 2010 Earnings Results. For the conference, all participants are in a listen-only mode. There will be an opportunity for your questions. Instructions will be given at that time. If you need any assistance during the call, please press star then zero. As a reminder, today''s call is being recorded.
With that being said, I''ll turn the conference now to the Vice President of Investor Relations, Mr. Ken Sofio. Please go ahead.
Kenneth C. Sofio
Thank you. Good morning. Welcome to Corning''s third quarter conference call. This morning, we have Jim Flaws, Vice Chairman and Chief Financial Officer who will start the call with some fair remarks and then go to the Q&A. These remarks do contain forward-looking statements and the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially. These risks are detailed in the company''s SEC reports. Jim?
James B. Flaws
Thanks, Ken. Good morning, everyone. This morning we released our results for the third quarter, which can be found on our Investor Relations website. We have posted accompanying slides online as well. Here are the key messages you will hear today.
First, our third quarter segment results were in line or better than revised guidance we provided on September 14. Telecom, environmental and specialty materials sales all exceeded our expectations for the quarter. Telecom sales were up 5% sequentially driven by strong fiber-to-the-home and private network demand.
Environmental sales were up 13% sequentially, driven by stronger auto and diesel demand. And specialty materials sales were up 26%, driven by Gorilla glass and advanced optics.
Second, our Q3 results did benefit from a stronger yen to U.S. dollar exchange rate in the quarter.
Our free cash flow was $208 million in quarter three. For the first three quarters, our free cash flow now totals $1.2 billion. Glass volume in total for our wholly owned business and SCP declined 8% sequentially, which was in line with the overall glass market.
Worldwide retail sales of LCD televisions, with the exception of the United States, continue to be strong in the third quarter. Inventory levels at the panel makers and for the supply chain in total have improved. For the entire supply chain, we believe there are about 17 weeks of inventory exiting the third quarter, down from 18.5 weeks entering the quarter.
We saw a modest increase in utilization rates at the Taiwanese panel makers in October, which in turn resulted in a modest increase in demand for our glass. We believe this was in response to improved panel inventories and expectations for strong holiday retail demand.
We are forecasting panel maker utilization rates to remain modestly higher the remainder of Q4 in comparison to the low point last quarter, which was in September. However, there is the possibility rates could be lower on average for Q4 versus Q3.
As a result, we expect worldwide glass market volume could be flat to down slightly in the fourth quarter. We expect fourth quarter volume at both our wholly owned business and SCP to be in line with the overall glass market.
