Corning Incorporated

Welcome to the Corning Incorporated Order 3 2020 Earnings Call. To place yourself into the Q&A queue, please press star 1. It is my pleasure to introduce you to Ann Nicholson, Vice President of Investor Relations.

Thank you, Catherine, and good morning. And welcome to our third quarter 2020 earnings call. With me today are Wanda 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 gap data. Our core performance measures are non-gap measures used by management to analyze the business. Reconciliation of core results to 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. They're also available on our website for downloading. And now I'll turn the call over to Wendell. Thank you, Ann, and good morning, everyone.

Today, we reported third quarter results demonstrating that the company is strong, financially healthy, and well positioned for growth. Sales were $3 billion, up 16% sequentially. EPS grew 72% sequentially to $0.43 as higher sales and strong manufacturing execution resulted in operating margin expanding to 18.3%, up 710 basis points sequentially and 20 basis points year over year. We generated $518 million of free cash flow and finished the quarter with $2.5 billion in cash. Our financial performance has improved significantly since April, and we expect a strong fourth quarter. Nevertheless, we remain vigilant and continue to adapt appropriately to multiple disruptive forces playing out around the world, from the pandemic to civil unrest to recession and geopolitical struggles. We've been rising to the challenges since day one, and our priorities remain clear. First, we must make our values evident in our actions. Our commitment to the health, safety, and well-being of our employees underlines every facet of our operations. We're dedicating resources and providing leadership to support our communities around the world. We've launched unity campaigns as well as racial and social equality programs targeting the multitude of hardships people are confronting right now. And when it comes to the global health fight, we're all in, mobilizing our capabilities to combat the virus directly. We must also safeguard our financial health. Our third quarter results show that our decisive actions are providing clear benefits as we leverage cost savings and increase efficiencies across the company. Regardless of the depth or duration of global uncertainty, we're doing everything in our power to keep the company strong and it's working. Now to ensure that we emerge even stronger, we're continuing to invest to create additional revenue streams. We're inventing new to the world materials and manufacturing processes. as well as co-innovating new solutions in partnership with our customers. The relevance of our portfolio puts Corning at the heart of ongoing innovation with industry leaders, and we continue to solve our customers' toughest technology challenges. You may have seen Apple's recent promotion of Ceramic Shield for the iPhone 12. Their featuring our new-to-the-world material, which is the world's first highly transparent, color-free glass ceramic with performance that meets the rigorous demands put on smartphone cover materials. This latest innovation with Apple exemplifies our ongoing strategy of consistent, long-term value creation by combining our deep expertise in glass science, ceramic science, and optical physics with our unparalleled manufacturing and engineering capabilities. Ceramic Shield melds the attributes that we love about glass, great optics and retained strength, with the attributes we love about ceramics, most notably its toughness. Ceramic Shield consists of ceramic crystals within a glass matrix. There were two big inventions here. The first was keeping the best damage-resistant attributes of both glass and ceramics. The second was ensuring high optical transparency by growing index-matched nanocrystals inside the glass matrix that are 1 tenth the wavelength of light. As you recall, Apple made two investments in Corning, totaling $450 million as part of their advanced manufacturing fund and their commitment to foster innovation among American manufacturers. We thank Apple for our long-standing product development partnership and their investments in new manufacturing technology centered in our Harrodsburg, Kentucky facility. We could not be prouder to be a key component in the iPhone 12. Now, it's important to note the iPhone 12 and many other flagship phones that we are also proud to be part of support 5G. 5G matters to us. The density of fiber necessary to deliver its promise is yet another example. You see this illustrate that up to 100 times more fiber is required to deploy 5G in a city than 4G. This week, we announced a new product designed to help operators dramatically boost the speed and reduce the cost of their outdoor deployments. And we're embarking on new work to support Verizon's efforts to extend 5G indoors. The relevance of our portfolio and our deep customer relationships, as illustrated by these advancements, keep us at the center of the inexorable shift to optical. Stepping back, in all the industries we serve, important market trends offer new challenges that Corning is uniquely qualified to address. and new opportunities to integrate more corning content into products. This is an especially powerful value creation lever in times of economic uncertainty because we aren't exclusively relying on people buying more stuff. We're putting more corning into the products that people are already buying. We are clearly seeing the benefits of this letter in today's results, as innovation adoption drove specialty material sales up 23% year over year, despite a declining smartphone market. This type of outperformance is not unique. From 2016 to 2019, we added $500 million in sales, or 42% cumulatively, smartphone sales actually went down. And we're extending that growth streak this year. In environmental technologies, we grew sales 16% in 2019, much faster than the underlying unit demand, as automakers added gas particulate filters to cars. And we again saw outperformance this quarter, These are additional examples of the more corning strategy at work and why the content story is so powerful for us. I want to stress one additional point. You often hear us say that our core technologies enable life-changing capabilities. In these times, we're increasing focus on life-saving innovations. Safe, widespread vaccine delivery is one of society's top priorities, and glass packaging is critical. Our valor innovation will help enable faster filling line speeds and increased patient safety. Right now, we're expanding capacity and supplying glass vials for vaccines as part of Operation Warp Speed. all while leveraging our leadership in life sciences to help support COVID diagnostic testing and virus research efforts. Additionally, reduced fine particulate pollution, the objective of our filtration products, appears to be helpful for reducing infection rates. And we're excited about recent university lab tests showing that our guardian antimicrobial glass particles kill bacteria and viruses, including SARS-CoV-2. We're also well positioned to contribute as consumers continue to adapt to a world with social distancing. For example, Fiber increases the capacity and performance of networks, and glass provides the primary window to information and entertainment. We're confident that we can bring further innovations to bear in many vital areas as the world addresses and recovers from its current challenges. Overall, we had a very strong quarter on almost every dimension. From an innovation perspective, I just reviewed our significant advancements. Financially, we grew sales at double-digit rates sequentially and expanded margins to grow profitability even faster. Operationally, we performed well, and I'd like to share a few examples. In the midst of a pandemic, we deployed expert engineering teams to start up RGen 10.5 melting operations in both Wuhan and Guangzhou. These facilities are positioning us well to capture the fast-growing demand for large TVs. In mobile consumer electronics, we successfully scaled up a new-to-the-world manufacturing process and product to meet Apple's iPhone launch. In automotive, we fleshed our operations to adjust to the fast-paced ramp-up at OEMs after they significantly reduced production in quarter two. In optical communications, we successfully adjusted our costs to the current market environment, resulting in significant profitability expansion despite flattish sales on a quarter-over-quarter basis. We also remain vigilant in our actions to safeguard the company's financial strength. We're proud of our execution, especially given the current global uncertainties. Clearly, our employees around the world are dedicated to living our values and giving their best every day. Now I'll turn the call over to Tony so he can give you some more insight on the quarter.