Corning Incorporated Net Income surged on 314% and Revenue surged on 11.6%
01/29/2019 • About Corning Incorporated (
$GLW) • By InTwits
Corning Incorporated reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Corning Incorporated has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.9%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $305m in 2018, $111m in 2017, $118m in 2016, $85m in 2015, $103m in 2014
- The company has business model with low profitability: ROIC is 7.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.3x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 11.6%. Revenue growth showed acceleration in 18Q4 - it increased 15.1% YoY. During 2014-2018 Revenue growth bottomed in 2015 at -6.2% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 15.7 pp from 20.9% to 36.5% in 2018. EBITDA Margin stuck to a declining trend at -1.4 pp per annum in 2014-2018.
Gross Margin showed almost no change in 2018. Gross Margin followed a declining trend at -0.47 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 1.4 pp from 14.6% to 15.9% in 2018.
Net Income margin jumped on 14.4 pp from -4.9% to 9.4% in 2018. The efficient tax rate was 29.1% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 19.9% in 2018. Corning Incorporated's CAPEX/Revenue increased on 6.1 pp from 13.7% in 2015 to 19.9% in 2018. It's average CAPEX/Revenue for the last three years was 16.6%. To deliver its fast growth the company invested a large share of EBITDA (78.2%) to CAPEX. CAPEX as a % of Revenue stuck to a growing trend at 2.2 pp per annum in 2014-2018.
Accounts receivable as a % of Revenue decreased slightly on 0.68 pp from 17.9% to 17.2% in 2018. Inventories as a % of Revenue increased slightly on 1.1 pp from 16.9% to 18.0% in 2018. Accounts payable as a % of Revenue decreased on 2.3 pp from 23.6% to 21.3% in 2018.
Corning Incorporated has spent
$842m on M&A in 2018 which accounts for 7.5% of revenue.
Return on investment
The company operates at low ROIC (7.8%) and ROE (7.8%). ROIC showed almost no change in 2018. ROE surged on 11.9 pp from -4.1% to 7.8% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 2.1x. Net Debt / EBITDA surged on 1.0x from 0.3x to 1.3x in 2018. Debt surged on 17.0% while cash dropped on 45.4%.
Corning Incorporated has no short term refinancing risk: cash is higher than short term debt (58,875.0%).
Valuation and dividends
The company's trades at EV/EBITDA 10.6x and P/E 25.2x.
The company paid 64.3% of Net Income as dividends in 2018. Dividends grew on average at 3.0% per annum in the last 5 years).
Management team
Corning Incorporated's CEO Wendell P Weeks is a founder and has spent 14 years with the company. CEO total compensation was
$14,921,071 in 2018 which included
$1,412,769 salary. R Tony Tripeny is a the company's CFO. R Tony Tripeny has spent 1 year at the company.
Insider ownership is 0.30%. Insider ownership didn't change in 2018.
The company has 51,500 employees. The number of employees jumped on 11.5%. Average revenue per employee in 2018 was
$219,223 and it showed almost no change in 2018.
Financial and operational results
FY ended 12/31/2018
Corning Incorporated ($GLW) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 9,715 | 9,111 | 9,390 | 10,116 | 11,290 | 11.6% |
| Gross Profit | 4,052 | 3,653 | 3,763 | 4,020 | 4,461 | 11.0% |
| SG&A | 1,202 | 1,508 | 1,462 | 1,473 | 1,799 | 22.1% |
| EBITDA | 3,131 | 2,506 | 2,619 | 2,766 | 2,868 | 3.7% |
| EBIT | 1,931 | 1,322 | 1,424 | 1,608 | 1,575 | -2.1% |
| Tax | 1,096 | 147 | -3 | 2,154 | 437 | -79.7% |
| Net Income | 2,472 | 1,339 | 3,695 | -497 | 1,066 | |
| Stock Based Compensation | 58 | 46 | | | | |
Balance Sheet
|
|---|
| Cash | 5,309 | 4,500 | 5,291 | 4,317 | 2,355 | -45.4% |
| Accounts Receivable | 1,501 | 1,372 | 1,481 | 1,807 | 1,940 | 7.4% |
| Inventory | 1,322 | 1,385 | 1,471 | 1,712 | 2,037 | 19.0% |
| Accounts Payable | 997 | 934 | 1,079 | 1,439 | 1,456 | 1.2% |
| Short Term Debt | 36 | 572 | 256 | 379 | 4 | -98.9% |
| Long Term Debt | 3,227 | 3,890 | 3,646 | 4,749 | 5,994 | 26.2% |
Cash flow
|
|---|
| Capex | 1,076 | 1,250 | 1,130 | 1,804 | 2,242 | 24.3% |
| Dividends | 591 | 679 | 645 | 651 | 685 | 5.2% |
| Acquisitions | -66 | 732 | 333 | 171 | 842 | 392.4% |
Ratios
|
|---|
| Revenue growth | 24.2% | -6.2% | 3.1% | 7.7% | 11.6% | |
| EBITDA growth | 31.9% | -20.0% | 4.5% | 5.6% | 3.7% | |
|
|---|
| Gross Margin | 41.7% | 40.1% | 40.1% | 39.7% | 39.5% | -0.2% |
| EBITDA Margin | 32.2% | 27.5% | 27.9% | 27.3% | 25.4% | -1.9% |
| EBIT Margin | 19.9% | 14.5% | 15.2% | 15.9% | 14.0% | -1.9% |
| SG&A, % of revenue | 12.4% | 16.6% | 15.6% | 14.6% | 15.9% | 1.4% |
| SBC, % of revenue | 0.6% | 0.5% | | | |
| Net Income Margin | 25.4% | 14.7% | 39.4% | -4.9% | 9.4% | 14.4% |
| CAPEX, % of revenue | 11.1% | 13.7% | 12.0% | 17.8% | 19.9% | 2.0% |
|
|---|
| ROIC | 7.7% | 5.9% | 6.9% | 7.9% | 7.8% | -0.1% |
| ROE | 11.8% | 6.9% | 22.4% | -4.1% | 7.8% | 11.9% |
| Net Debt/EBITDA | -0.7x | -0.0x | -0.5x | 0.3x | 1.3x | 1.0x |
People
|
|---|
| Insider ownership | 0.3% | 0.3% | 0.3% | 0.3% | 0.3% | 0.0% |
| Employees | 34,600 | 35,700 | 40,700 | 46,200 | 51,500 | 11.5% |
| Revenue/Employee, th. $ | 281 | 255 | 231 | 219 | 219 | 0.1% |
Corning Incorporated ($GLW) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,500 | 2,747 | 3,008 | 3,035 | | 5.3% | 10.0% | 15.4% | 15.1% |
| EBITDA | 517 | 717 | 840 | 794 | | -25.1% | 7.7% | 14.1% | 17.8% |
| Net Income | -589 | 738 | 625 | 292 | | -784.9% | 68.1% | 60.3% | |
Balance Sheet
|
|---|
| Cash | 3,096 | 2,023 | 1,903 | 2,355 | | -36.1% | -51.7% | -50.8% | -45.4% |
| Short Term Debt | 380 | 252 | 252 | 4 | | 47.9% | -60.1% | -60.1% | -98.9% |
| Long Term Debt | 4,808 | 5,099 | 5,056 | 5,994 | | 31.0% | 54.4% | 26.6% | 26.2% |
Ratios
|
|---|
| Gross Margin | 38.2% | 39.0% | 41.0% | 39.6% | | -1.8% | -0.5% | 0.7% | 0.5% |
| EBITDA Margin | 20.7% | 26.1% | 27.9% | 26.2% | | -8.4% | -0.6% | -0.3% | 0.6% |
| Net Income Margin | -23.6% | 26.9% | 20.8% | 9.6% | | -27.2% | 9.3% | 5.8% | 63.2% |
Peers in Electronic Components
Below you can find Corning Incorporated benchmarking vs. other companies in Electronic Components industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Superconductor Technologies Inc. ($SCON) | | -61.4% | -46.3% | 240.5% | 248.9% |
| Akoustis Technologies, Inc. ($AKTS) | | | | | 148.3% |
| CPS Technologies Corp. ($CPSH) | | -5.9% | -29.5% | -5.0% | 48.0% |
| Littelfuse, Inc. ($LFUS) | | 1.9% | 21.7% | 15.7% | 40.7% |
| Cavitation Technologies Inc ($CVAT) | | -73.6% | 267.5% | -40.9% | 22.6% |
| |
|---|
| Median (22 companies) | | 0.0% | 1.1% | 8.3% | 16.6% |
|---|
| Corning Incorporated ($GLW) | | -6.2% | 3.1% | 7.7% | 11.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cavitation Technologies Inc ($CVAT) | 93.5% | 85.0% | 93.2% | 93.5% | 90.6% |
| Dolby Laboratories ($DLB) | 92.7% | 90.2% | 89.4% | 89.1% | 87.9% |
| Flexpoint Sensor Systems Inc ($FLXT) | 96.7% | 95.2% | 92.7% | 87.9% | 86.1% |
| Airgain, Inc. ($AIRG) | 44.6% | 41.9% | 44.4% | 47.1% | 43.7% |
| II-VI Incorporated ($IIVI) | 33.2% | 36.6% | 37.8% | 40.0% | 39.8% |
| |
|---|
| Median (22 companies) | 31.7% | 36.6% | 33.7% | 34.9% | 36.3% |
|---|
| Corning Incorporated ($GLW) | 41.7% | 40.1% | 40.1% | 39.7% | 39.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Dolby Laboratories ($DLB) | 34.1% | 29.1% | 30.9% | 30.8% | 25.1% |
| Amphenol Corporation ($APH) | 22.5% | 22.9% | 22.6% | 23.6% | 24.2% |
| Vishay Intertechnology, Inc. ($VSH) | 14.8% | 11.9% | 15.4% | 18.7% | 21.3% |
| IEH Corp ($IEHC) | 18.4% | 21.2% | 18.0% | 16.3% | 20.2% |
| Littelfuse, Inc. ($LFUS) | 20.6% | 16.8% | 17.4% | 23.0% | 19.1% |
| |
|---|
| Median (22 companies) | 8.6% | 11.9% | 13.6% | 8.7% | 9.3% |
|---|
| Corning Incorporated ($GLW) | 32.2% | 27.5% | 27.9% | 27.3% | 25.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Akoustis Technologies, Inc. ($AKTS) | | | | 334.0% | 574.7% |
| CBAK Energy Technology, Inc. ($CBAK) | 8.0% | 92.4% | 57.2% | 20.6% | 30.1% |
| II-VI Incorporated ($IIVI) | 4.3% | 7.1% | 7.0% | 14.3% | 13.2% |
| Superconductor Technologies Inc. ($SCON) | 586.1% | 57.8% | 0.0% | 34.1% | 12.1% |
| Knowles Corporation ($KN) | 7.4% | 7.4% | 4.5% | 6.9% | 9.7% |
| |
|---|
| Median (22 companies) | 3.9% | 2.7% | 3.0% | 4.2% | 3.8% |
|---|
| Corning Incorporated ($GLW) | 11.1% | 13.7% | 12.0% | 17.8% | 19.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Vishay Intertechnology, Inc. ($VSH) | 8.3% | 4.5% | 9.8% | 18.4% | 27.8% |
| IEH Corp ($IEHC) | 27.7% | 28.2% | 24.2% | 19.2% | 26.1% |
| Amphenol Corporation ($APH) | 19.1% | 18.5% | 18.3% | 19.2% | 21.1% |
| Inrad Optics Inc ($INRD) | -26.7% | -5.2% | -9.2% | -10.4% | 17.7% |
| Littelfuse, Inc. ($LFUS) | 14.3% | 11.1% | 11.7% | 15.8% | 12.1% |
| |
|---|
| Median (22 companies) | 6.8% | 6.1% | 4.7% | 6.0% | 8.4% |
|---|
| Corning Incorporated ($GLW) | 7.7% | 5.9% | 6.9% | 7.9% | 7.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Belden Inc ($BDC) | 3.9x | 5.2x | 2.1x | 2.6x | 2.3x |
| Inrad Optics Inc ($INRD) | | 9.9x | | | 1.4x |
| Bel Fuse Inc. ($BELFA) | 4.6x | 2.0x | | 1.4x | 1.3x |
| Amphenol Corporation ($APH) | 1.4x | 0.8x | 1.4x | 1.1x | 1.2x |
| II-VI Incorporated ($IIVI) | 0.7x | 0.0x | 0.1x | 0.5x | 0.9x |
| |
|---|
| Median (14 companies) | -0.6x | -0.3x | -0.4x | -0.3x | 0.5x |
|---|
| Corning Incorporated ($GLW) | -0.7x | -0.0x | -0.5x | 0.3x | 1.3x |
