Focusing Our Portfolio & Utilizing Our Financial Strength

Transcription

1 Focusing Our Portfolio & Utilizing Our Financial Strength Bank of America Merrill Lynch 2017 Asia Pacific Telecom, Media & Technology Conference Ann Nicholson Division Vice President, Investor Relations March 2017 Forward-Looking and Cautionary Statements This document contains "forward-looking statements" that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain These forward-looking statements relate to, among other things, the company s future operating performance, the company's share of new and existing markets, the company's revenue and earnings growth rates, the company s ability to innovate and commercialize new products, and the company s implementation of cost-reduction initiatives and measures to improve pricing, including the optimization of the company s manufacturing capacity In this context, forward-looking statements often contain words such as will, believe, anticipate, expect, intend, plan, seek, see, would, and target Although the company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, current estimates and forecasts, general economic conditions, its knowledge of its business, and key performance indicators that impact the company, actual results could differ materially The company does not undertake to update forward-looking statements Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to: global business, financial, economic and political conditions; tariffs and import duties; currency fluctuations between the US dollar and other currencies, primarily the Japanese yen, New Taiwan dollar, euro, Chinese renminbi and South Korean won; product demand and industry capacity; competitive products and pricing; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; the amount and timing of our cash flows and earnings and other conditions, which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; possible disruption in commercial activities due to terrorist activity, cyber-attack, armed conflict, political or financial instability, natural disasters, or major health concerns; unanticipated disruption to equipment, facilities, IT systems or operations; effect of regulatory and legal developments; ability to pace capital spending to anticipated levels of customer demand; rate of technology change; ability to enforce patents and protect intellectual property and trade secrets; adverse litigation; product and components performance issues; retention of key personnel; customer ability, most notably in the Technologies segment, to maintain profitable operations and obtain financing to fund their ongoing operations and manufacturing expansions and pay their receivables when due; loss of significant customers; changes in tax laws and regulations; the potential impact of legislation, government regulations, and other government action and investigations For a complete listing of risks and other factors, please reference the risk factors and forward-looking statements described in the annual reports on Form 10-K and quarterly reports on Form 10-Q Investor Relations 2017 Corning Incorporated 2 1

2 Use of Non-GAAP Financial Information Corning has included non-gaap financial measures in this presentation to supplement Corning s consolidated financial statements presented on a GAAP basis Definitions of these non-gaap financial measures and reconciliations of these non-gaap financial measures to the most directly comparable GAAP financial measures can be found on the company s website by going to the Investor Relations page and clicking Financial Highlights under the Performance tab These core performance measures are not calculated in accordance with GAAP and may not be comparable to similarly-titled measures of other companies, due to differences in methods of calculation and excluded items net sales, equity earnings of affiliated companies, and earnings should be considered in addition to, and not as a substitute for, the company s net sales, equity earnings of affiliated companies and net income, as well as other measures of financial performance and liquidity reported in accordance with US generally accepted accounting principles Our management uses non-gaap measures to analyze financial performance without the impact of items that are driven by general economic conditions and events that do not reflect the underlying fundamentals and trends in the company s operations Specifically, Corning s non-gaap financial measures are adjusted to exclude the impact of changes in the Japanese yen and Korean won foreign exchange rates, as well as other items that do not reflect ongoing operations of the company Corning does not forecast the movement of the Japanese yen against the US dollar, or other items that do not reflect ongoing operations As a result, the company is unable to provide guidance on a GAAP basis, and instead utilizes non-gaap measures that exclude those items We believe that providing these non-gaap financial measures in addition to the related GAAP measures provides investors with greater transparency to the information used by Corning s management in its financial and operational decision-making and allows investors to see Corning s results through the eyes of management We also believe that providing this information better enables investors to understand Corning s operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance Investor Relations 2017 Corning Incorporated 3 Corning Incorporated -Related Innovation Accelerates Evolving Industries 165 years of providing catalysts for evolving industries Unparalleled expertise in glass science and related capabilities Trust-based collaboration with global leaders Products and processes that transform people s lives and make new industries possible Faster, more capable communication Cleaner, greener environments Richer entertainment experiences Longer, healthier lives 2016 Sales * $97 Billion Employees: ~40,000 worldwide Traded: NYSE:GLW Investor Relations * See Corningcom website for definition 2017 Corning Incorporated 4 2

3 Leadership Priorities through 2019 Focus Portfolio & Utilize Financial Strength Focus Portfolio: Deliver strong financial performance & capital stewardship Improve ROIC Create new sales and profit streams Seek upside for cash distributions, eg, potential transactions outside focus areas Utilize Financial Strength: Deploy $26-30B in cash through 2019 Deliver >$125B to shareholders including >10% annual dividend increases Invest ~$10B in our growth and sustained leadership Target Debt/EBITDA* 2x (ie, BBB+ rating) Returned $6B to Shareholders Realigned Interest in Dow Corning Advanced Focused Portfolio Growth Initiatives Investor Relations * Adjusted debt to adjusted EBITDA, see Corningcom website for definition 2017 Corning Incorporated 5 Focused Portfolio Higher Success Rate, Lower Costs, and Better Cohesion Life s Focus >80% of resources on opportunities that leverage capabilities from at least two of three columns Investor Relations 2017 Corning Incorporated 6 3

4 How Will We Drive Growth? Leverage Platforms Over the Next Four Years 5 Platforms Life s Objective Add $2B in annual sales by 2020 Double sales over next several years Stabilize returns and build new businesses Launch GPF and create automotive glass business Grow base and create a significant pharmaceutical packaging business Leverage Opportunities Apply innovation model to win in segments crossing the Electron/Photon Frontier, including FTTH and Data Centers Acquire for customer access and products that enable additional co-innovation Innovate to enhance performance and deliver new features Activate new capabilities and leverage market position to: Add more dollars per device Attack value segment Win new devices Use competitive advantages to stabilize returns Build melting capacity only if others fund two-thirds Innovate to increase revenue per display Innovate to support customers seeking cleaner, safer and more connected solutions driven by: Tighter regulations and more countries adopting regulations Improved fuel efficiency More enhanced user experiences for both drivers and passengers Build on leadership position in genomics, 3D cell culture, bioprocessing, and cell therapy Win customers and secure regulatory path for disruptive pharmaceutical packaging solution Investor Relations 2017 Corning Incorporated 7 Utilize Financial Strength Capital Allocation Model Sources Uses Cash Flow from Ops (before RD&E investment) $13-16B (1) Existing cash at year end 2015 $46B Target Debt/EBITDA (2) 2x $4-5B Total Funds Available (1)(3) $26-30B+ Growth Shareholders RD&E (after-tax) ~$2B Capital Expenditures $6-7B M&A $1-3B Expand share repurchase program + Increase dividend per share by low-double-digit rate annually >$125B Potential Transactions $48B (1) + $?B Cash Global Cash Target Level ~$2B (1) In June 2016, Corning updated its Strategy and Capital Allocation Framework to reflect the realignment of its interest in Dow Corning: eliminating ~$800M in dividends; adding $48B in cash; raising Total Funds Available to $26-30B; and increasing shareholder returns to more than $125B Investor Relations (2) Adjusted debt to adjusted EBITDA, see Corningcom website for definitions 2017 Corning Incorporated 8 (3) Total Funds Available range assumes benefits/risks of current hedge ratio through

5 Broadly Tapping Corning s Capabilities Platform Life s Corning s success in market is an example of re-applying talent and leveraging manufacturing expertise and assets to bring a disruption to the market while lowering our cost of innovation Investor Relations 2017 Corning Incorporated 9 Broadly Tapping Corning s Capabilities Platform Life s Corning s success in market is an example of re-applying talent and leveraging manufacturing expertise and assets to bring a disruption to the market while lowering our cost of innovation Investor Relations 2017 Corning Incorporated 10 5

6 Broadly Tapping Corning s Capabilities Platform Life s Corning s success in market is an example of re-applying talent and leveraging manufacturing expertise and assets to bring a disruption to the market while lowering our cost of innovation Investor Relations 2017 Corning Incorporated 11 Broadly Tapping Corning s Capabilities Platform Life s Corning s success in market is an example of re-applying talent and leveraging manufacturing expertise and assets to bring a disruption to the market while lowering our cost of innovation Investor Relations 2017 Corning Incorporated 12 6

7 Broadly Tapping Corning s Capabilities Platform Life s Corning s success in market is an example of re-applying talent and leveraging manufacturing expertise and assets to bring a disruption to the market while lowering our cost of innovation Investor Relations 2017 Corning Incorporated 13 Broadly Tapping Corning s Capabilities Platform Life s Corning s success in market is an example of re-applying talent and leveraging manufacturing expertise and assets to bring a disruption to the market while lowering our cost of innovation Investor Relations 2017 Corning Incorporated 14 7

8 Leveraging Corning Capabilities How to Double Sales in a Saturated Market >5 Billion Devices More $ per Device Attacking Value Segment New Devices Investor Relations 2017 Corning Incorporated 15 8

9 Can GG5 Video be played at BoAML conference? Investor Relations Corning Restricted 17 How to Double Sales in a Saturated Market More $ per Device Improved performance price premium Improved performance device backs Personalization After-market sales, eg, screen protectors Investor Relations 2017 Corning Incorporated 18 9

10 How to Double Sales in a Saturated Market Attacking Value Segment Grow in value and mid-range segments Expanded geographic penetration Investor Relations 2017 Corning Incorporated 19 How to Double Sales in a Saturated Market New Devices Wearables Augmented / Virtual Reality Foldable Investor Relations 2017 Corning Incorporated 20 10

11 Leveraging Corning Capabilities Corning Gorilla SR+ Family Pushes Forward With Scratch Resistance Near Sapphire and Improved Readability With Anti-Reflection Cover Material Performance Better Scratch Resistance* Sapphire Gorilla SR+ Gorilla SLG Plastic Next Gen Gorilla SR+ DAR AR * Scratch defined as 1kg load on 150 grit sandpaper 7% Top Surface Reflection 1% Better Investor Relations 2017 Corning Incorporated 21 Re-applying Talent and Repurposing Our Manufacturing and Platforms Activate New Capabilities & Leverage Our Market Position Double Sales and Increase Differentiation Reduce Risk and Cost by Reusing Expertise and Repurposing Assets Life s Investor Relations 2017 Corning Incorporated 22 11

12 Questions Investor Relations 2017 Corning Incorporated 23 12