Corning Incorporated Net Income dropped on 46.7% and Revenue decreased slightly on 1.7%
01/27/2021 • About Corning Incorporated (
$GLW) • By InTwits
Corning Incorporated reported FY2020 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 15.8%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $463m in FY2020, $432m in FY2019, $635m in FY2018, $1,069m in FY2017, $723m in FY2016
- The company has potentially unprofitable business model: ROIC is 2.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.6x 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
Corning Incorporated's Revenue decreased slightly on 1.7%. Annual revenue decline showed slowdown in FY20Q4 - revenue surged on 18.9%. During FY2016-FY2020 Revenue growth topped in FY2018 at 11.6% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.8 pp from 25.7% to 18.0% in FY2020.
Gross Margin decreased on 3.8 pp from 35.1% to 31.2% in FY2020. Gross Margin stuck to a declining trend at -2.2 pp per annum in FY2016-FY2020. SG&A as a % of Revenue increased slightly on 1.7 pp from 13.8% to 15.5% in FY2020.
Net Income margin decreased on 3.8 pp from 8.3% to 4.5% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 Corning Incorporated had CAPEX/Revenue of 12.2%. The company showed decline in CAPEX/Revenue of 5.7 pp from 17.8% in FY2017 to 12.2% in FY2020. Average CAPEX/Revenue for the last three years was 16.4%. Corning Incorporated invested a big chunk of EBITDA (67.9%) to CAPEX which didn't stop revenue from falling. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2018 at 19.9% and was declining since that time.
Return on investment
The company operates at low ROIC (2.4%) and ROE (3.8%). ROIC decreased on 4.2 pp from 6.6% to 2.4% in FY2020. ROE decreased on 4.0 pp from 7.8% to 3.8% in FY2020. During the last 5 years ROIC topped in FY2017 at 7.9% and was declining since that time.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and 3.9x Debt / EBITDA. Net Debt / EBITDA jumped on 0.6x from 2.1x to 2.6x in FY2020. Debt decreased on 6.3% while cash increased on 9.8%. Net Debt/EBITDA followed a growing trend at 0.8x per annum in the last 5 years.
Corning Incorporated has no short term refinancing risk: cash is higher than short term debt (1,691.1%).
Valuation and dividends
The company's trades at EV/EBITDA 15.9x and P/E 52.6x.
Management team
Wendell P Weeks is a the company's CEO. Wendell P Weeks has spent 15 years with the company. R Tony Tripeny is a Corning Incorporated's CFO. R Tony Tripeny has spent 5 years at the company.
Financial and operational results
Corning Incorporated ($GLW) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 9,390 | 10,116 | 11,290 | 11,503 | 11,303 | -1.7% |
| Gross Profit | 3,763 | 4,020 | 4,461 | 4,035 | 3,531 | -12.5% |
| SG&A | 1,462 | 1,473 | 1,799 | 1,585 | 1,747 | 10.2% |
| EBITDA | 2,619 | 2,766 | 2,868 | 2,957 | 2,029 | -31.4% |
| EBIT | 1,424 | 1,608 | 1,575 | | | |
| Tax | -3 | 2,154 | 437 | | | |
| Net Income | 3,695 | -497 | 1,066 | 960 | 512 | -46.7% |
Balance Sheet
|
|---|
| Cash | 5,291 | 4,317 | 2,355 | 2,434 | 2,672 | 9.8% |
| Accounts Receivable | 1,481 | 1,807 | 1,940 | | | |
| Inventory | 1,471 | 1,712 | 2,037 | | | |
| Accounts Payable | 1,079 | 1,439 | 1,456 | | | |
| Short Term Debt | 256 | 379 | 4 | 92 | 158 | 71.7% |
| Long Term Debt | 3,646 | 4,749 | 5,994 | 8,440 | 7,838 | -7.1% |
Cash flow
|
|---|
| Capex | 1,130 | 1,804 | 2,242 | 1,978 | 1,377 | -30.4% |
| Dividends | 645 | 651 | 685 | | | |
| Acquisitions | 333 | 171 | 842 | | | |
Ratios
|
|---|
| Revenue growth | 3.1% | 7.7% | 11.6% | 1.9% | -1.7% | |
| EBITDA growth | 4.5% | 5.6% | 3.7% | 3.1% | -31.4% | |
|
|---|
| Gross Margin | 40.1% | 39.7% | 39.5% | 35.1% | 31.2% | -3.8% |
| EBITDA Margin | 27.9% | 27.3% | 25.4% | 25.7% | 18.0% | -7.8% |
| EBIT Margin | 15.2% | 15.9% | 14.0% | | |
| SG&A, % of revenue | 15.6% | 14.6% | 15.9% | 13.8% | 15.5% | 1.7% |
| Net Income Margin | 39.4% | -4.9% | 9.4% | 8.3% | 4.5% | -3.8% |
| CAPEX, % of revenue | 12.0% | 17.8% | 19.9% | 17.2% | 12.2% | -5.0% |
|
|---|
| ROIC | 6.9% | 7.9% | 7.8% | 6.6% | 2.4% | -4.2% |
| ROE | 22.4% | -4.1% | 7.8% | 7.8% | 3.8% | -4.0% |
| Net Debt/EBITDA | -0.5x | 0.3x | 1.3x | 2.1x | 2.6x | 0.6x |
People
|
|---|
| Insider ownership | 0.3% | 0.3% | 0.3% | | | |
| Employees | 40,700 | 46,200 | 51,500 | | | |
| Revenue/Employee, th. $ | 231 | 219 | 219 | | | |
Corning Incorporated ($GLW) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,391 | 2,561 | 3,001 | 3,350 | | -15.0% | -12.9% | 2.3% | 18.9% |
| EBITDA | 261 | 249 | 651 | 868 | | -67.0% | -68.4% | -18.4% | 49.9% |
| Net Income | -96 | -71 | 427 | 252 | | -119.2% | -177.2% | 26.7% | 687.5% |
Balance Sheet
|
|---|
| Cash | 2,025 | 2,158 | 2,514 | 2,672 | | 39.1% | 83.2% | 158.9% | 9.8% |
| Short Term Debt | 87 | 91 | 345 | 158 | | 22.5% | -82.7% | -7.8% | 71.7% |
| Long Term Debt | 8,375 | 8,408 | 8,428 | 7,838 | | 26.7% | 25.1% | 21.5% | -7.1% |
Ratios
|
|---|
| Gross Margin | 23.5% | 29.5% | 33.4% | 36.2% | | -15.6% | -6.7% | -1.3% | 5.9% |
| EBITDA Margin | 10.9% | 9.7% | 21.7% | 25.9% | | -17.2% | -17.1% | -5.5% | 5.4% |
| Net Income Margin | -4.0% | -2.8% | 14.2% | 7.5% | | -21.8% | -5.9% | 2.7% | 6.4% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cavitation Technologies Inc ($CVAT) | - | -40.9% | 22.6% | -16.3% | 52.6% |
| IEH Corp ($IEHC) | - | 4.0% | 16.6% | 21.0% | 13.2% |
| Amphenol Corporation ($APH) | - | 11.5% | 17.0% | 0.3% | 4.5% |
| CPS Technologies Corp. ($CPSH) | - | -5.0% | 48.0% | -0.5% | -2.8% |
| Littelfuse, Inc. ($LFUS) | - | 15.7% | 40.7% | -12.5% | -3.9% |
| |
|---|
| Median (12 companies) | -10.4% | 8.3% | 16.6% | -4.3% | -5.8% |
|---|
| Corning Incorporated ($GLW) | - | 7.7% | 11.6% | 1.9% | -1.7% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cavitation Technologies Inc ($CVAT) | 93.2% | 93.5% | 90.6% | 93.7% | 97.6% |
| Dolby Laboratories ($DLB) | 89.4% | 89.1% | 87.9% | 87.0% | 87.4% |
| Airgain, Inc. ($AIRG) | 44.4% | 47.1% | 43.7% | 45.4% | 46.6% |
| Rogers Corporation ($ROG) | 38.0% | 38.8% | 35.4% | 35.0% | 36.4% |
| Belden Inc ($BDC) | 41.6% | 39.1% | 39.0% | 37.2% | 35.6% |
| |
|---|
| Median (12 companies) | 33.7% | 34.9% | 36.3% | 36.6% | 35.1% |
|---|
| Corning Incorporated ($GLW) | 40.1% | 39.7% | 39.5% | 35.1% | 31.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dolby Laboratories ($DLB) | 30.9% | 30.8% | 25.1% | 27.6% | 28.7% |
| Amphenol Corporation ($APH) | 22.6% | 23.6% | 24.2% | 24.7% | 22.6% |
| Littelfuse, Inc. ($LFUS) | 17.4% | 23.0% | 19.1% | 19.5% | 18.5% |
| Rogers Corporation ($ROG) | 18.5% | 21.3% | 18.5% | 18.1% | 17.7% |
| Vishay Intertechnology, Inc. ($VSH) | 15.4% | 18.7% | 21.3% | 16.8% | 16.0% |
| |
|---|
| Median (12 companies) | 13.6% | 8.7% | 9.3% | 16.9% | 14.4% |
|---|
| Corning Incorporated ($GLW) | 27.9% | 27.3% | 25.4% | 25.7% | 18.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dolby Laboratories ($DLB) | 9.8% | 9.2% | 6.9% | 7.8% | 5.7% |
| Rogers Corporation ($ROG) | 2.8% | 3.3% | 5.4% | 5.7% | 5.0% |
| Vishay Intertechnology, Inc. ($VSH) | 5.8% | 6.6% | 7.6% | 5.9% | 4.9% |
| Belden Inc ($BDC) | 2.3% | 2.7% | 3.8% | 5.2% | 4.8% |
| Knowles Corporation ($KN) | 4.5% | 6.9% | 9.7% | 4.8% | 4.2% |
| |
|---|
| Median (12 companies) | 3.0% | 4.2% | 3.8% | 4.5% | 3.6% |
|---|
| Corning Incorporated ($GLW) | 12.0% | 17.8% | 19.9% | 17.2% | 12.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Amphenol Corporation ($APH) | 18.3% | 19.2% | 21.1% | 19.4% | 18.0% |
| CPS Technologies Corp. ($CPSH) | -10.8% | -19.4% | -11.9% | -9.3% | 13.8% |
| IEH Corp ($IEHC) | 24.2% | 19.2% | 26.1% | 36.6% | 12.8% |
| Vishay Intertechnology, Inc. ($VSH) | 9.8% | 18.4% | 27.8% | 13.2% | 9.9% |
| Dolby Laboratories ($DLB) | 12.2% | 12.0% | 8.4% | 11.4% | 9.6% |
| |
|---|
| Median (12 companies) | 4.7% | 6.0% | 8.4% | 8.5% | 6.9% |
|---|
| Corning Incorporated ($GLW) | 6.9% | 7.9% | 7.8% | 6.6% | 2.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Belden Inc ($BDC) | 2.1x | 2.6x | 2.3x | 3.1x | 4.6x |
| Amphenol Corporation ($APH) | 1.4x | 1.1x | 1.2x | 1.4x | 1.1x |
| Bel Fuse Inc. ($BELFA) | - | 1.4x | 1.3x | 3.7x | 1.1x |
| Knowles Corporation ($KN) | 2.0x | 1.0x | 0.7x | 0.9x | 0.6x |
| Littelfuse, Inc. ($LFUS) | 1.0x | 0.2x | 0.6x | 0.6x | 0.1x |
| |
|---|
| Median (11 companies) | -0.4x | -0.3x | 0.5x | 0.6x | 0.0x |
|---|
| Corning Incorporated ($GLW) | -0.5x | 0.3x | 1.3x | 2.1x | 2.6x |
