Corning Incorporated

Ladies and gentlemen, thank you for standing by, and welcome to the Corning Incorporated Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Ann Nicholson, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, Joelle, and good morning. Welcome to Corning's second quarter 2020 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-gap measures used by management to analyze the business. Reconciliation of core results to the comparable gap value can be found in the investor relations section of our website at Corning.com. You may also access core results on our website with downloadable financials in the Interactive Analyst Center. Supporting slides are being shown live on our webcast. We encourage you to follow along, and 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 second quarter 2020 results. Sales were $2.6 billion. Net income was $218 million. EPS was 25 cents, and free cash flow was $285 million. All increased sequentially. I have two primary observations on the quarter. First, we're effectively adjusting to this period of uncertainty with decisive action and operational execution. We're generating positive cash flow and maintaining a strong balance sheet. Second, even in these uncertain times, our strategy to deliver for our customers and outperform our markets is working. We're continuing to lead in the capabilities that make Corning distinctive. In fact, we advance multiple growth initiatives during the quarter. Let's consider the first observation in more detail. In the second quarter, we completed adjustments to our operating plan and continued to execute across the board by delivering operational improvements that will generate significant cost savings through 2021. We delivered sequential growth in sales, EPS, and free cash flow. We also completed the vast majority of our anticipated restructuring, including the reprioritization of R&D programs. We believe we're continuing to position Corning for strong, long-term growth and improved profitability. Turning to my second observation, our long-term strategy is sound and our growth drivers are intact. As I've said before, we're not just counting on everybody buying more stuff. We're putting more corning into the products that people already buy. This provides a mechanism for us to outperform our end markets, even in challenging environments. The relevance of our focused and cohesive portfolio remains strong and is actually increasing. Some of the secular trends benefiting us could accelerate. As consumer lifestyles continue to adapt in a world with social distancing, and as healthcare companies advance solutions to end the pandemic, there is a need for expanded network capacity and ubiquitous displays as people spend more time online. Safe, widespread delivery of vaccines are among society's top priorities, And reduced fine particulate pollution appears to be helpful for reducing infection rates. All these needs fall directly within Corning's mission of improving lives through innovation. And we are well positioned to contribute. The progress we've made and the leadership position we leveraged across our market in the second quarter speaks for itself. Let's take a closer look. In life sciences, we're mobilizing our capabilities to combat the virus wherever we can. Glass packaging is critical to the COVID-19 vaccine effort, and it is currently in short supply. Our valid glass innovation helps enable faster filling line speeds and increased patient safety. Valor Glass was selected by the US Department of Health and Human Services and the Department of Defense to accelerate delivery of COVID-19 vaccines. And Corning was awarded $204 million in funding to expand Valor manufacturing capacity. Three leading COVID-19 vaccine producers have entered supply agreements for Valor Glass. And we're also working with several other potential customers to capture additional opportunities. Additionally, we announced a long-term supply agreement with Pfizer to provide ValorGlass for currently marketed drugs in their portfolio. Our life sciences segment entered several long-term agreements with major customers for COVID-19 molecular diagnostic testing and antibody detection kits in quarter two. We're seeing strong demand for these products currently, and we expect to accelerate shipments further in the second half. In mobile consumer electronics, Our specialty materials segment delivered 13% year-over-year sales growth, while the smartphone market declined year-over-year. Our performance was driven by strong demand for premium products, and we announced two exciting milestones. Gorilla Glass has now been used on more than 8 billion devices worldwide. And we maintained our industry leadership with the launch of Gorilla Glass Victus. This is the toughest Gorilla Glass yet and features significantly better drop and scratch performance than any other Gorilla Glass or competitive glass from other manufacturers. Samsung will be the first customer to adopt Gorilla Glass Victus in the near future. In automotive, our environmental technology segment outperformed in a weak market. Strong adoption of our gasoline particulate filters continued, driving their sales growth to more than 20% year over year. Turning to optical communications, Corning grew sales 12% sequentially, driven by carrier network projects. We announced a collaboration with Enersys to speed 5G deployment by simplifying the delivery of fiber and electrical power to small cell wireless sites. We also announced that we're working with Qualcomm Technologies to deliver indoor networks that are 5G ready, easy to install, and affordable. The corning systems are expected to be among the first designed to deliver 5G and R capability over millimeter wave spectrum in the indoor segment. This includes enterprises such as offices, university campuses, hospitals, hotels, retail outlets, and more. Our collaboration will enable a small footprint and low power consumption platform for true high bandwidth 5G for in-building networks. Customer deployment will begin in the fall. In display, Corning generated consistent sequential net income as customer demand remained steady. And large screen TV sales continue to drive demand, supporting the opening of our Gen 10.5 facilities. Across our markets, you can see that we're successfully advancing our long-term growth initiatives. Additionally, near-term market conditions have improved. Auto factories are resuming operations in North America and Europe. And auto sales in China have returned to pre-pandemic levels. Telecommunications service providers and data center operators have resumed sending their technicians into the field. And they're rethinking their network needs to address greater demand for their services. Life science labs are slowly reopening. We also expect television demand to remain resilient, as in-home entertainment is more important than ever. And the demand for computing devices will be boosted by work and learn from home. So, we're seeing some encouraging developments across our industries. On the other hand, Disruptive forces from the pandemic, the civil unrest, to a worldwide recession, and geopolitical struggles all remain in play, and they create uncertainty. We are united as a company to remain vigilant and adapt appropriately. We're rising to the challenge. I'll now turn the call over to Tony so he can give you some more detail on our quarter and our new term outlook.