Corning Incorporated

Welcome to the Corning Incorporated Quarter 1 2019 Earnings Call. It is my pleasure to turn the call over to Ann Nicholson, Division Vice President of Investor Relations.

Thank you, Tani, and good morning, everyone, and welcome to Corning's Q1 2019 Earnings Call. With me today are Wendell Weeks, Chairman and Chief Executive Officer, Tony Trippany, 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. Those 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 will 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. A reconciliation of core results to the comparable GAAP value can be found in the investor relations section of our website at Corning.com. You may also access our results on our website with downloadable financials in the Interactive Analyst Center. Supporting slides are being shown live on our webcast, and we encourage you to follow along. They're also available on our website for downloading. Now I'll turn the call over to Wendell.

Thank you, Ann, and good morning, everyone. This morning we reported excellent results that position us for another year of strong growth. For the first quarter, sales were $2.9 billion, up 13% year over year. Net income was $365 million, up 22% year over year. And EPS was 40 cents, up 29% year over year. Four of our five segments achieved double-digit sales growth year over year. Highlights included that optical communications continued to outpace the market with sales up 20%. Environmental technologies delivered 12% sales growth, driven by accelerating adoption of our gasoline particulate filters. Specialty material sales were up 11% on the strength of Gorilla Glass and our other innovations. Life science sales were up 5% as the business continues to benefit from its leadership in in cell culture vessels. Display continues to deliver stable returns with first quarter sales and net income up double digits year over year and the best first quarter pricing environment in well over a decade. These results keep us on track to deliver the growth and shareholder returns we designed into the four-year strategy and capital allocation framework introduced in October of 2015. We targeted returning more than $12.5 billion to our shareholders through repurchases and dividends while investing $10 billion to extend our leadership and deliver growth. We continue to make great progress, and we expect to meet all our stated goals. Our cash generation is on target. Through the first quarter of 2019, we have returned $12.3 billion to shareholders, reducing outstanding shares by approximately 37%. And we've increased dividends per share by 67% since the framework began, including an 11% increase in February. Our investments in RD&E, capital expenditures, and acquisitions are also on track, totaling $8.8 billion through first quarter 2019. Now let's take a closer look at our progress in each of our market access platforms, starting with optical communications. Our performance in optical communications continues to be outstanding. We remain on track to surpass our goal of $5 billion in 2020 sales. We're growing faster than the overall market as our unique co-innovation model continues to deliver the right product at the right time for the right customer. Our first quarter results reflect our progress with 20% sales growth. We continue to earn recognition around the world for our stream of product and technology innovations that reduce network costs and increase the speed of installations. For example, in the first quarter, LightWave Innovation Reviews recognized two of our solutions, an extreme high-density cable, which makes hyperscale data center fiber deployment up to 30% faster, and a surface-mounted, in-home fiber connection solution that is not only fast and easy to install, but also integrates seamlessly into the decor because its transparency renders it essentially invisible. This product is among the innovations added to Corning's portfolio through our 2018 acquisition of 3M's Communication Markets Division. At the Global Conference OFC in March, We demonstrated that our Edge 8 solution provides data center operators with a simple migration path to 400G transmission speeds and beyond. This helps them stay ahead of requirements for emerging technologies such as artificial intelligence. We were first for 100G and will be first for 400 as well. March also marked the introduction of the new Corning Technology Center Montreal. The center will serve as Corning's global home for software solutions for telecommunications networks. And it will support emerging technologies such as artificial intelligence, augmented reality, cloud computing, and data analytics. The center will eventually become a hub for software innovation across all of Corning's business segments. And we're off to a strong start as two major North American service providers are now using our software for their fiber-to-the-home installation and maintenance. Overall, recognition of the value created by our solutions and co-innovation approach continues to grow. And that results in our optical communication sales growing faster than the market. Now let's turn to mobile consumer electronics. where we are the world leader in glass for smartphones, tablets, and emerging categories like wearables and augmented reality devices. Our goal has been to double mobile consumer electronics sales over the next several years, despite a maturing smartphone market. And we continue making significant progress toward that goal with steady adoption of our premium glass products and the other innovative solutions we offer for smartphones, laptops, tablets, and wearables. We launched our Amplify line of glass screen protectors on OtterBox.com and in more than 1,600 corporate-owned Verizon stores in the United States. Amplify screen protectors provide a new channel for Corning to capture an additional piece of high-value glass on smartphones. Our strategy combines the best screen protector glass with the number one selling smartphone case brand in the United States. In the first quarter, we also continued our success in emerging regions with multiple device launches featuring Gorilla Glass in India and Turkey. Overall, we're making great progress on our goal to double sales in mobile consumer electronics. We expect continued momentum throughout the year as we look forward to more new device announcements and will continue to innovate for our customers and you'll continue to see more Corning in your devices. Turning to the automotive market access platform, our core technologies are helping to propel the auto industry into a new era of cleaner cars with enhanced cockpit functionality, connectivity, and design. Our objectives are to grow our environmental business by continuing to win in gasoline particulate filters and to launch a disruptive automotive glass business. We're off to a great start in 2019 on both objectives. Our gasoline particulate filter technology makes cars significantly cleaner and and it increases our sales opportunity per car by a factor of three to four. We continue to see strong GPF sales in the first quarter, as European regulations are in full effect, and China demand is materializing earlier than expected. And we continue to win the majority of platforms with our industry-leading solutions. We now expect to exceed our goal of delivering $150 million in 2019 GPF sales. And we're investing more to capture accelerating demand. We also continue to demonstrate our ongoing leadership in the industry with a Daimler Supplier Award that recognizes our collaborative development of next-gen emissions control solutions. Next. Excitement about Corning Gorilla Glass for Automotive continues to grow as the industry transitions to highly connected and autonomous vehicles that use technical glass. Customers have validated their desire for Corning's technical glass solutions by awarding us hundreds of millions of dollars in our automotive glass pipeline. Our new and industry-first Auto-grade glass solutions are making it easier and more affordable for automakers to bring curved and flat displays to market. To service the growing pipeline for our solutions, a dedicated manufacturing facility in Hefei, China, is expected to begin ramping in the third quarter this year. In our Life Science Vessels platform, we continue to make strong progress on the path to a new, long-term, multibillion-dollar franchise. ValorGlass substantially reduces particle contamination, breaks, and cracks, while significantly increasing throughput. Valor helps protect patients and improve pharmaceutical manufacturing. We're making headway with our development partners, Merck and Pfizer, and our interaction with regulators has been favorable. We also continued important on-site research with a number of customers at their facilities, where we completed in-depth validation and filling line studies that reinforce our progress towards certification. What this means is in essence, is that various customers are doing test runs of our Valor glass vials on their lines. They're confirming that it's viable on their machines and that it provides the value we describe. They're documenting firsthand how significantly Valor glass will increase their throughput. We're getting ready for adoption of Valor Glass by scaling up our production capabilities. We brought new capacity online in 2018 and expanded our range of products. We're also progressing with the construction of the new high-volume manufacturing facility in North Carolina that we announced last year. Although this market is slow to adopt new technologies, we continue to invest and make encouraging progress. In display, we're delivering stable returns consistent with our goal. First quarter sales and net income were both up year over year, with the most favorable first quarter sequential price declines in well over a decade. And we expect continued progress. Full year 2019 price declines are expected to improve further to a mid-single-digit percentage and to be better than in 2018. Our first-in-the-world Gen 10.5 glass facility is ramping. to support the expected growth of large size TVs, allowing us to grow faster than the overall market. Overall, display will continue to execute its proven strategy to deliver stable returns. These examples demonstrate significant progress across all our market access platforms. Ultimately, we remain on track to fully achieve our strategy and capital allocation framework goals. Looking ahead, we are confident in our ability to deliver sustained performance. We have multiple businesses driving our growth Our capabilities are becoming increasingly vital to important trends. Our relationships with industry-leading customers are opening new opportunities. We continue to invest in capabilities and capacity that will create substantial additional growth. And you can see the benefits of these investments in our recent results. We're not only succeeding in at building a bigger company. We're building a stronger, more resilient one. We look forward to outlining the next phase of our strategic framework in the coming months, and we'll unpack some of the opportunities that I've discussed today in more detail at our Investor Day on June 14th. Now, let me turn the call over to Tony for a review of our results and outlook.