Corning Incorporated
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Corning Incorporated and its consolidated subsidiaries are hereinafter sometimes referred to as the “Company,” the “Registrant,” “Corning,” “we,” “our,” or “us.”
This report contains forward-looking statements that involve a number of risks and uncertainties. These statements relate to plans, objectives, expectations and estimates and may contain words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,” “target,” “estimate,” “forecast,” or similar expressions. Actual results could differ materially from what is expressed or forecasted in forward-looking statements. Some of the factors that could contribute to these differences include those discussed under “Forward-Looking Statements,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report.
ORGANIZATION OF INFORMATION
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) was prepared to provide a historical and prospective narrative on our financial condition and results of operations through the eyes of management and should be read in conjunction with our consolidated financial statements and the accompanying notes to those financial statements and our MD&A of our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”).
Our MD&A is organized as follows:
•Overview and Outlook
•Results of Operations
•Segment Analysis
•Core Performance Measures
•Liquidity and Capital Resources
•Environment
•Critical Accounting Estimates
•Forward-Looking Statements
OVERVIEW AND OUTLOOK
Corning is one of the world’s leading innovators in materials science, with a 175-year track record of life-changing inventions. Corning applies its unparalleled expertise in glass science, ceramic science, and optical physics, along with its deep manufacturing and engineering capabilities to develop category-defining products that transform industries and enhance people’s lives. Corning succeeds through sustained investment in RD&E, a unique combination of material and process innovation, and deep, trust-based relationships with customers who are global leaders in their industries. Corning’s capabilities are versatile and synergistic, which allows the company to evolve to meet changing market needs, while also helping its customers capture new opportunities in dynamic industries. Today, Corning’s markets include optical communications, mobile consumer electronics, display, automotive, solar, semiconductors, and life sciences.
Corning’s industry-leading products include damage-resistant cover materials for mobile devices and precision glass for advanced displays; optical fiber, cable and connectivity solutions for advanced communications networks, such as fiber to the home and data centers, enabling artificial intelligence and connections around the world; trusted products to accelerate drug discovery and delivery; clean-air technologies and technical glass for cars and trucks; and polysilicon materials and products for semiconductor and solar applications.
In the third quarter of 2023, we introduced our Springboard plan to grow sales and enhance our profitability base and launched our plan with an annualized sales run rate of $13 billion. Over the past two and a half years, we have significantly grown annualized sales and expanded profitability. Our continued performance on our Springboard plan has transformed the financial profile of the Company and delivered durable growth across our businesses. We see remarkable demand for our innovations and manufacturing capabilities, which we believe will lead to additional growth opportunities through 2026 and beyond.
As we continue to execute our Springboard strategy, we intend to pursue additional growth opportunities while focusing on profitable growth, higher returns on invested capital, and increased free cash flow generation. We expect to invest in capacity expansion and technology capabilities where appropriate to support customer demand and our long-term strategic objectives, while maintaining disciplined capital allocation and risk-sharing approaches designed to support attractive returns, even as we invest to capture additional growth.
23
RESULTS OF OPERATIONS
The following table presents selected highlights from our operations (in millions):
| Three months ended June 30, | % change | Six months ended June 30, | % change | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 vs. 2025 | 2026 | 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||
| Net sales | $ | 4,505 | $ | 3,862 | 17 | % | $ | 8,649 | $ | 7,314 | 18 | % | ||||||||||||||||||||
| Cost of sales | $ | 2,877 | $ | 2,470 | 16 | % | $ | 5,493 | $ | 4,708 | 17 | % | ||||||||||||||||||||
| Gross margin | $ | 1,628 | $ | 1,392 | 17 | % | $ | 3,156 | $ | 2,606 | 21 | % | ||||||||||||||||||||
| Gross margin % | 36 | % | 36 | % | 36 | % | 36 | % | ||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 608 | $ | 515 | 18 | % | $ | 1,196 | $ | 986 | 21 | % | ||||||||||||||||||||
| as a % of net sales | 13 | % | 13 | % | 14 | % | 13 | % | ||||||||||||||||||||||||
| Research, development and engineering expenses | $ | 299 | $ | 276 | 8 | % | $ | 577 | $ | 546 | 6 | % | ||||||||||||||||||||
| as a % of net sales | 7 | % | 7 | % | 7 | % | 7 | % | ||||||||||||||||||||||||
| Translated earnings contract gain, net | $ | 90 | $ | 131 | (31 | %) | $ | 74 | $ | 30 | 147 | % | ||||||||||||||||||||
| Income before income taxes | $ | 649 | $ | 584 | 11 | % | $ | 1,178 | $ | 824 | 43 | % | ||||||||||||||||||||
| Provision for income taxes | $ | 40 | $ | 84 | (52 | %) | $ | 161 | $ | 139 | 16 | % | ||||||||||||||||||||
| Effective tax rate | 6.2 | % | 14.4 | % | 13.7 | % | 16.9 | % | ||||||||||||||||||||||||
Net sales
For the three months ended June 30, 2026, net sales increased $643 million, or 17%, when compared to the same period in 2025. This was primarily driven by an increase in sales for optical communication products of $506 million and an increase in sales for polycrystalline silicon and solar products of $207 million.
For the six months ended June 30, 2026, net sales increased $1.3 billion, or 18% when compared to the same period in 2025. This was primarily driven by an increase in sales for optical communication products of $997 million and polycrystalline silicon and solar products of $371 million.
Cost of sales / Gross margin
The types of expenses included in cost of sales are: raw materials consumption, including direct and indirect materials; salaries, wages and benefits; depreciation and amortization; production utilities; production-related purchasing; warehousing (including receiving and inspection); repairs and maintenance; inter-location inventory transfer costs; production and warehousing facility property insurance; rent for production facilities; freight and logistics costs; and other production overhead.
For the three months ended June 30, 2026, cost of sales increased $407 million, or 16%, when compared to the same period in 2025, primarily driven by the increase in net sales as discussed above. Gross margin increased $236 million, or 17% and remained consistent as a percentage of sales when compared to the same period in 2025 as higher profit in Optical Communications was partially offset by temporarily higher costs to ramp up capacity to produce more in Solar.
24
For the six months ended June 30, 2026, cost of sales increased $785 million, or 17%, when compared to the same period in 2025, primarily driven by the increase in net sales as discussed above. Gross margin increased $550 million, or 21%, and remained consistent as a percentage of sales when compared to the same period in 2025 as higher profit in Optical Communications was partially offset by temporarily higher costs to ramp up capacity to produce more in Solar.
Selling, general and administrative expenses
The types of expenses included in selling, general and administrative expenses are: salaries, wages and benefits, including variable compensation and share-based compensation expense; travel; sales commissions; professional fees; and depreciation and amortization, utilities and rent for administrative facilities.
For the three and six months ended June 30, 2026, selling, general and administrative expenses increased $93 million and $210 million, respectively, and remained consistent as a percentage of sales when compared to the same periods in 2025. The increase was primarily due to higher share-based compensation expense, as the rise in the Company’s stock price increased the fair value of performance-based restricted stock units.
Research, development and engineering expenses
For the three and six months ended June 30, 2026, research, development and engineering expenses increased $23 million and $31 million, respectively, and remained consistent as a percentage of sales when compared to the same periods in 2025.
Translated earnings contract gain, net
Included in translated earnings contract gain, net, is the impact of foreign currency contracts which economically hedge the translation exposure arising from movements in the Japanese yen, Mexican peso, Chinese yuan, South Korean won, euro and New Taiwan dollar and its impact on net income.
The following table provides detailed information on the impact of translated earnings contract gain, net (in millions):
| Three months ended June 30, 2026 | Three months ended June 30, 2025 | Change 2026 vs. 2025 | |||||||||||||||||||||||||||||||
| Income before tax | Net income | Income before tax | Net income | Income before tax | Net income | ||||||||||||||||||||||||||||
| Hedges related to translated earnings: | |||||||||||||||||||||||||||||||||
Realized gain (loss), net (1) (2) (3) | $ | 43 | $ | 33 | $ | (9) | $ | (7) | $ | 52 | $ | 40 | |||||||||||||||||||||
| Unrealized gain, net | 47 | 35 | 140 | 107 | (93) | (72) | |||||||||||||||||||||||||||
| Total translated earnings contract gain, net | $ | 90 | $ | 68 | $ | 131 | $ | 100 | $ | (41) | $ | (32) | |||||||||||||||||||||
| Six months ended June 30, 2026 | Six months ended June 30, 2025 | Change 2026 vs. 2025 | |||||||||||||||||||||||||||||||
| Income before tax | Net income | Income before tax | Net income | Income before tax | Net income | ||||||||||||||||||||||||||||
| Hedges related to translated earnings: | |||||||||||||||||||||||||||||||||
Realized gain, net (1) (2) (3) | $ | 92 | $ | 71 | $ | 7 | $ | 5 | $ | 85 | $ | 66 | |||||||||||||||||||||
| Unrealized (loss) gain, net | (18) | (15) | 23 | 18 | (41) | (33) | |||||||||||||||||||||||||||
| Total translated earnings contract gain, net | $ | 74 | $ | 56 | $ | 30 | $ | 23 | $ | 44 | $ | 33 | |||||||||||||||||||||
(1)For the three and six months ended June 30, 2026, amount includes non-cash pre-tax realized losses of $75 million and $165 million, respectively, and for the three and six months ended June 30, 2025, amount includes non-cash pre-tax realized losses of $68 million and $108 million, respectively, related to the premiums of expired option contracts.
(2)For the three and six months ended June 30, 2026, amount excludes $4 million and $15 million gains, respectively, and for the three and six months ended June 30, 2025 amount excludes $8 million loss related to forward contracts designated as net investment hedge, which was recorded in accumulated other comprehensive loss on the consolidated balance sheets and reflected within investing activities on the consolidated statements of cash flows.
(3)For the three and six months ended June 30, 2026, amount excludes pre-tax gain of $6 million, related to forward contracts for the settlement of €300 million euro-denominated debt, which was reflected within investing activities on the consolidated statements of cash flows.
25
Since issuance of the Company’s Japanese yen-denominated debt, depreciation of the Japanese yen has reduced the U.S. dollar value of such obligations and generating unrealized foreign exchange gains that have been recognized over time in the consolidated statements of income. During the second quarter of 2026, the Company entered into a cross-currency swap contract related to ¥15 billion of the Company’s Japanese yen-denominated debt in order to economically lock in unrealized foreign exchange gains.
The impact to income from realized activity for the three and six months ended June 30, 2026 was primarily driven by realized gains from our Japanese yen and Mexican peso-denominated hedges, partially offset by realized losses from our South Korean won-denominated hedges.
The impact to income from realized activity for the three months ended June 30, 2025 was primarily driven by realized losses from our South Korean won denominated hedges, partially offset by realized gains from our Mexican peso denominated hedges. The impact to income from realized activity for the six months ended June 30, 2025 was primarily driven by realized gains from our Mexican peso and Japanese yen-denominated hedges, partially offset by realized losses from our South Korean won-denominated hedges.
The impact to income from unrealized activity for the three months ended June 30, 2026 was primarily driven by unrealized gains from our Mexican peso and Chinese yuan-denominated hedges, partially offset by unrealized losses from our Japanese yen-denominated hedges. The impact to income from unrealized activity for the six months ended June 30, 2026 was primarily driven by unrealized losses from our Japanese yen, South Korean won and New Taiwan dollar-denominated hedges, partially offset by unrealized gains from our Chinese yuan, euro and Mexican peso-denominated hedges.
The impact to income from unrealized activity for the three and six months ended June 30, 2025 was primarily driven by unrealized gains from our South Korean won and New Taiwan dollar-denominated hedges partially offset by unrealized losses from our Japanese-yen and euro denominated hedges.
Income before income taxes
For the three and six months ended June 30, 2026, income before income taxes increased $65 million and $354 million, respectively, when compared to the same periods in 2025, primarily driven by an increase in gross margin, as discussed above, partially offset by an increase in selling, general and administration expenses due to higher share-based compensation expense, as the rise in the Company’s stock price increased the fair value of performance-based restricted stock units.
Provision for Income Taxes
For the three months ended June 30, 2026, the effective tax rate differed from the United States (“U.S.”) statutory rate of 21%, primarily due to adjustments to share-based compensation, government incentives and foreign derived deduction eligible income. For the six months ended June 30, 2026, the effective tax rate differed from the U.S. statutory rate of 21%, primarily due to adjustments to share-based compensation, government incentives, changes in reserves and foreign derived deduction eligible income partially offset by the impact of an unfavorable tax ruling in South Korea.
For the three and six months ended June 30, 2025, the effective tax rate differed from the U.S. statutory rate of 21%, primarily due to foreign-derived intangible income, adjustments to share-based compensation and non-taxable items, partially offset by certain pre-tax losses with no corresponding expected tax benefit.
For the three months ended June 30, 2026, the effective tax rate differed when compared to the same period in 2025 primarily due to adjustments to share-based compensation, government incentives and foreign derived deduction eligible income. For the six months ended June 30, 2026, the effective tax rate differed when compared to the same period in 2025 primarily due to adjustments to share-based compensation, foreign derived deduction eligible income (previously foreign derived intangible income) and government incentives partially offset by the impact of an unfavorable tax ruling in South Korea.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes various tax law changes, including the permanent extension of certain provisions originally enacted under the Tax Cuts and Jobs Act, modifications to the international tax framework and the reinstatement of favorable treatment for certain business tax provisions. These include 100% bonus depreciation, immediate expensing of domestic research and development costs and revised limitations on the deductibility of business interest expense. The provisions of the OBBBA are subject to multiple effective dates, with some effective beginning in 2025 and others phased in through 2027. The Company does not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2026.
The Internal Revenue Service (“IRS”) is currently conducting examinations of the Company’s U.S. federal income tax returns for the years 2015 through 2018 and 2019 through 2020, including matters related to the one-time transition tax enacted under the Tax Cuts and Jobs Act of 2017. If challenged, Corning believes that it is at least more likely than not to sustain its position relating to these matters. However, if the Company is ultimately unsuccessful in defending its position, the impact could be material to its consolidated financial statements.
26
SEGMENT ANALYSIS
Financial results for the reportable segments and Life Sciences and Emerging Growth Businesses are prepared on a basis consistent with the internal disaggregation of financial information to assist the chief operating decision maker in making internal operating decisions. In addition, effective April 1, 2026, we made changes to the manner in which we determine our segment results. Specifically, we prospectively replaced constant-currency reporting with a new adjustment to derive our segment results, which we refer to as our “adjustment for hedged exposures.” The prior constant-currency adjustment and the current adjustment for hedged exposures are distinct adjustments determined using different methodologies. These changes are more fully discussed within Note 14 (Reportable Segments) in the accompanying notes to the consolidated financial statements and includes a reconciliation of segment information to the corresponding amounts in the consolidated statements of income.
Effective in the first quarter of fiscal 2026, the Company revised its segment structure. This revision corresponds with changes in how our businesses are managed, which align with how our chief operating decision maker (“CODM”) reviews performance and allocates resources. As a result, the Company began managing its Display and Specialty Materials businesses as a single operating segment, referred to as Glass Innovations, and its Hemlock Semiconductor Group, solar wafer, and solar module businesses as a single operating segment, referred to as Solar. In addition, the Company’s Life Sciences business does not meet the quantitative threshold for separate reporting and therefore is no longer reported as a reportable segment and is included together with all other businesses that do not meet the quantitative threshold for separate reporting within Life Sciences and Emerging Growth Businesses. Optical Communications and Automotive remain unchanged and continue to be reported as separate reportable segments.
As a result of the above changes, the Company has determined it has four reportable segments for financial reporting purposes, organized primarily based on product offerings, as follows:
•Optical Communications – manufactures carrier network and enterprise network components for the telecommunications industry; the carrier network group consists primarily of products and solutions for optical-based communications infrastructure for services such as video, data and voice communications; the enterprise network group consists primarily of optical-based communication networks, including hyperscale data centers, sold to businesses, governments and individuals for their own use.
•Glass Innovations – utilizes proprietary melting, precision forming, strengthening, and finishing processes to create advanced flat glass substrates for LCD and OLED displays and cover materials for mobile consumer electronics; and provides material formulations and optical fabrication for specialty glass, glass ceramic, fluoride crystal, and other precision materials and components for semiconductor, aerospace and defense, telecommunications, commercial, and industrial applications.
•Automotive – manufactures ceramic substrates and filter products for emissions control systems in mobile applications; as well as technical glass and optic products and solutions for the interior and exterior of vehicles.
•Solar – manufactures silicon materials and products for semiconductor and solar applications, including hyper-pure polysilicon produced by Hemlock Semiconductor Group, solar wafers, and solar modules. The segment’s products serve customers across the semiconductor and solar markets globally from a manufacturing footprint in the United States.
All other businesses that do not meet the quantitative threshold for separate reporting have been grouped as Life Sciences and Emerging Growth Businesses.
These changes reflect the Company’s internal management structure and align with the information regularly reviewed by the CODM.
Segment net income may not be consistent with measures used by other companies.
27
The following table presents segment net sales by reportable segment and Life Sciences and Emerging Growth Businesses (in millions) (1):
| Three months ended June 30, | $ change | % change | Six months ended June 30, | $ change | % change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 vs. 2025 | 2026 vs. 2025 | 2026 | 2025 | 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||
| Optical Communications | $ | 2,072 | $ | 1,566 | $ | 506 | 32 | % | $ | 3,918 | $ | 2,921 | $ | 997 | 34 | % | ||||||||||||||||||||||||||
Glass Innovations | 1,463 | 1,443 | 20 | 1 | % | 2,883 | 2,849 | 34 | 1 | % | ||||||||||||||||||||||||||||||||
| Automotive | 471 | 460 | 11 | 2 | % | 908 | 900 | 8 | 1 | % | ||||||||||||||||||||||||||||||||
Solar | 438 | 231 | 207 | 90 | % | 808 | 437 | 371 | 85 | % | ||||||||||||||||||||||||||||||||
| Net sales of reportable segments | 4,444 | 3,700 | 744 | 20 | % | 8,517 | 7,107 | 1,410 | 20 | % | ||||||||||||||||||||||||||||||||
Life Sciences and Emerging Growth Businesses | 294 | 345 | (51) | (15 | %) | 566 | 617 | (51) | (8 | %) | ||||||||||||||||||||||||||||||||
Net sales of reportable segments and Life Sciences and Emerging Growth Businesses (2) | $ | 4,738 | $ | 4,045 | $ | 693 | 17 | % | $ | 9,083 | $ | 7,724 | $ | 1,359 | 18 | % | ||||||||||||||||||||||||||
(1)Segment results for the comparative prior period as presented in the table above are the amounts as historically reported and adjusted only for the changes in segment reporting structure as described above. The prior constant-currency adjustment and the current adjustment for hedged exposures are distinct non-GAAP adjustments determined using different methodologies and reflect different foreign currency hedging approaches in the periods presented. Prior-period amounts have not been recast to the current-period presentation. Application of the current adjustment for hedged exposures in place of the prior constant-currency adjustment for the comparative 2025 periods would have resulted in higher year-over-year growth rates for segment net sales for our Glass Innovations segment for the three and six months ended June 30, 2026. The impact to segment net sales for all other segments would have been immaterial.
(2)Refer to Note 14 (Reportable Segments) in the accompanying notes to the consolidated financial statements for the reconciliation to consolidated net sales.
Optical Communications
The increase in segment net sales for both the three and six month periods was primarily due to continued growth in our Enterprise business driven by strong demand for our Generative AI products.
Glass Innovations
The increase in segment net sales for both the three and six month periods was primarily due to continued strong demand for LCD glass.
Automotive
The increase in segment net sales for both the three and six month periods was primarily driven by the adoption of our auto glass solutions.
Solar
The increase in segment net sales for both the three and six month periods was primarily driven by growth in polysilicon and solar wafers and module sales for the solar industry.
Life Sciences and Emerging Growth Businesses
The decrease in segment net sales for both the three and six month periods was primarily driven by our Pharmaceutical Technologies business.
28
The following table presents segment net income by reportable segment and Life Sciences and Emerging Growth Businesses (in millions) (1):
| Three months ended June 30, | $ change | % change | Six months ended June 30, | $ change | % change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 vs. 2025 | 2026 vs. 2025 | 2026 | 2025 | 2026 vs. 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||||||||||
| Optical Communications | $ | 438 | $ | 247 | $ | 191 | 77 | % | $ | 825 | $ | 448 | $ | 377 | 84 | % | ||||||||||||||||||||||||||
Glass Innovations | 354 | 324 | 30 | 9 | % | 678 | 641 | 37 | 6 | % | ||||||||||||||||||||||||||||||||
| Automotive | 82 | 79 | 3 | 4 | % | 152 | 147 | 5 | 3 | % | ||||||||||||||||||||||||||||||||
Solar | (7) | 2 | (9) | * | - | |||||||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-09 | WEEKS WENDELL P | Chairman, CEO and President | Sell | -100,000 | $186.46 | -$18,646,070 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-31 10-Q expected by 2026-11-09 (in 67 days)
- ~2027-02-11 10-K expected by 2027-03-29 (in 170 days)
- ~2027-05-01 10-Q expected by 2027-05-10 (in 249 days)
- ~2027-07-29 10-Q expected by 2027-08-07 (in 338 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-29 10-Q Quarterly Report
- 2026-07-28 8-K Earnings Release
- 2026-05-06 8-K Unregistered Equity Sale; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-01 10-Q Quarterly Report
- 2026-04-28 8-K Earnings Release; Regulation FD Disclosure
- 2026-04-24 S-3ASR S-3ASR
- 2026-02-12 10-K Annual Report
- 2026-01-28 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-31 10-Q Quarterly Report
- 2025-10-28 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-08 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-08-01 10-Q Quarterly Report
- 2025-07-30 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Financial Statements and Exhibits
- 2025-07-29 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-05 8-K Officer/Director Change; Shareholder Vote Results