Tony Tripeny · 2019-06-25 · 23. Cash Generation. 2020-2023 Capital Allocation. 1. Cash Flow from...
Transcript of Tony Tripeny · 2019-06-25 · 23. Cash Generation. 2020-2023 Capital Allocation. 1. Cash Flow from...
Tony TripenyExecutive Vice Presidentand Chief Financial Officer
2© 2019 Corning Incorporated 2© 2019 Corning Incorporated
Strategy & Capital Allocation Framework
Strategy & Growth Framework
2016 - 2019 2020 - 2023
3© 2019 Corning Incorporated 3© 2019 Corning Incorporated
• Focus Portfolio: Deliver strong financial performance and capital stewardship– Improve ROIC– Create new sales and profit streams– Seek upside for cash distributions, e.g., potential transactions outside focus areas
• Utilize Financial Strength: Deploy $26-30B in cash through 2019– Deliver >$12.5B to shareholders including >10% annual dividend increases– Invest ~$10B in our growth and sustained leadership– Target Debt/EBITDA ≈ 2x
Focus Portfolio and Utilize Financial StrengthLeadership Priorities Through 2019
Fully Delivering on Goals
4© 2019 Corning Incorporated
2016-2019 Capital Allocation ModelSources Uses
Global Cash Target Level ~$2B
Total Funds
Available$26-30B
Cash
RD&E (after-tax)
Capital Expenditures
M&A
~$2B$6-7B$1-3B
Grow
th
Existing Cash atYear End 2015
Target Debt/EBITDA ≈ 2x
~$4.6B
~$4-5B
1~$13-16BCash Flow from Ops(before RD&E investment)
Potential Transactions ~$4.8B+ ~$?B
5Expand Share Repurchase Program
Increase Dividend per Share
+ >$12.5B
Shareholders
5© 2019 Corning Incorporated
2016-2019 Capital Allocation Model
1Sources Uses
Global Cash Target Level ~$2B
Total Funds
Available$26-30B
Cash
RD&E (after-tax)
Capital Expenditures
M&A
~$2B$6-7B$1-3B
Grow
th
Existing Cash atYear End 2015
Target Debt/EBITDA ≈ 2x
~$4.6B
~$4-5B
2Potential Transactions ~$4.8B+ ~$?B
~$13-16BCash Flow from Ops(before RD&E investment)
5Expand Share Repurchase Program
Increase Dividend per Share
+ >$12.5B
Shareholders
6© 2019 Corning Incorporated
Sources
2016-2019 Capital Allocation Model
1Uses
Global Cash Target Level ~$2B
3Total
FundsAvailable
$26-30B
Cash
RD&E (after-tax)
Capital Expenditures
M&A
~$2B$6-7B$1-3B
Grow
th
Existing Cash atYear End 2015
Target Debt/EBITDA ≈ 2x
~$4.6B
~$4-5B
2Potential Transactions ~$4.8B+ ~$?B
~$13-16BCash Flow from Ops(before RD&E investment)
5Expand Share Repurchase Program
Increase Dividend per Share
+ >$12.5B
Shareholders
7© 2019 Corning Incorporated
Sources
2016-2019 Capital Allocation Model
1Uses
4
Global Cash Target Level ~$2B
3Total
FundsAvailable
$26-30B
Cash
RD&E (after-tax)
Capital Expenditures
M&A
~$2B$6-7B$1-3B
Grow
th
5Expand Share Repurchase Program
Increase Dividend per Share
+ >$12.5B
Shareholders
Existing Cash atYear End 2015
Target Debt/EBITDA ≈ 2x
~$4.6B
~$4-5B
2Potential Transactions ~$4.8B+ ~$?B
~$13-16BCash Flow from Ops(before RD&E investment)
8© 2019 Corning Incorporated
Sources
2016-2019 Capital Allocation Model
1Uses
4
5Global Cash Target Level ~$2B
3Total
FundsAvailable
$26-30B
Cash
RD&E (after-tax)
Capital Expenditures
M&A
~$2B$6-7B$1-3B
Grow
th
Expand Share Repurchase Program
Increase Dividend per Share
+ >$12.5B
Shareholders
Existing Cash atYear End 2015
Target Debt/EBITDA ≈ 2x
~$4.6B
~$4-5B
2Potential Transactions ~$4.8B+ ~$?B
~$13-16BCash Flow from Ops(before RD&E investment)
9© 2019 Corning Incorporated
Sources
2016-2019 Capital Allocation Model
1Uses
4
Global Cash Target Level ~$2B
3Total
FundsAvailable
$26-30B
Cash
RD&E (after-tax)
Capital Expenditures
M&A
~$2B$6-7B$1-3B
5G
rowth
Expand Share Repurchase Program
Increase Dividend per Share
+ >$12.5B
Shareholders
Existing Cash atYear End 2015
Target Debt/EBITDA ≈ 2x
~$4.6B
~$4-5B
2Potential Transactions ~$4.8B+ ~$?B
~$13-16BCash Flow from Ops(before RD&E investment)
10© 2019 Corning Incorporated 10© 2019 Corning Incorporated
Returned >$12.5B
>60%October 2015 Market Cap
67%Dividend/Share Increase
>37%Reduction in Shares
11© 2019 Corning Incorporated 11© 2019 Corning Incorporated
Bigger and Stronger Corning
Strong Foundation for Growth
50%2015 2019F
$9
>$12
Sales ($B) EPS ROIC
~300bps
12© 2019 Corning Incorporated 12© 2019 Corning Incorporated
Grow
Increase Returns
• Sales CAGR of 6-8%• EPS CAGR of 12-15%• Invest $10-12B
• Increase operating margin and ROIC• Deliver $8-10B to shareholders, including
>10% annual dividend increases
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
Focus Portfolio and Utilize Financial Strength:
13© 2019 Corning Incorporated 13© 2019 Corning Incorporated
6-8%Sales CAGR
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
Focus Portfolio and Utilize Financial Strength:
14© 2019 Corning Incorporated 14© 2019 Corning Incorporated
2020-2023: Market-Access Platform Growth Goals
~2X Passive Optical Market GrowthOptical Communications 5G and Hyperscale
Double Sales by 2023Automotive GPF and Auto Glass Solutions
Continue on Path to DoublingMobile Consumer Electronics More Value per Device
Life Sciences Vessels
>2X Industry Growth and Valor® Glass Franchise Launch
Cell and Gene Therapy; Customer and Regulatory Adoption
Display Stable Returns Gen 10.5 and Moderate Price Declines
Objective Drivers
14
15© 2019 Corning Incorporated 15© 2019 Corning Incorporated
Grow
Increase Returns
• Sales CAGR of 6-8%• EPS CAGR of 12-15%• Invest $10-12B
• Increase operating margin and ROIC• Deliver $8-10B to shareholders, including
>10% annual dividend increases
Focus Portfolio and Utilize Financial Strength:
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
16© 2019 Corning Incorporated 16© 2019 Corning Incorporated
12-15%EPS CAGR
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
17© 2019 Corning Incorporated 17© 2019 Corning Incorporated
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
Grow
Increase Returns
• Sales CAGR of 6-8%• EPS CAGR of 12-15%• Invest $10-12B
• Increase operating margin and ROIC• Deliver $8-10B to shareholders, including
>10% annual dividend increases
Focus Portfolio and Utilize Financial Strength:
18© 2019 Corning Incorporated 18© 2019 Corning Incorporated
Operating margin and ROIC
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
Focus Portfolio and Utilize Financial Strength:
19© 2019 Corning Incorporated 19© 2019 Corning Incorporated
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
Grow
Increase Returns
• Sales CAGR of 6-8%• EPS CAGR of 12-15%• Invest $10-12B
• Increase operating margin and ROIC• Deliver $8-10B to shareholders, including
>10% annual dividend increases
Focus Portfolio and Utilize Financial Strength:
20© 2019 Corning Incorporated 20© 2019 Corning Incorporated
Deliver $8-10B to shareholders
Invest $10-12B
Strategy & Growth FrameworkLeadership Priorities 2020 through 2023
Focus Portfolio and Utilize Financial Strength:
21© 2019 Corning Incorporated
2020-2023 Capital Allocation
1Cash Flow from Ops(pre-RD&E)
$16-18B
*Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th
$8-10B
$10-12B
22© 2019 Corning Incorporated
Cash Generation
2020-2023 Capital Allocation
1Cash Flow from Ops(pre-RD&E)
$16-18B
*Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Investment and Returns
2Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th
$8-10B
$10-12B
23© 2019 Corning Incorporated
Cash Generation
2020-2023 Capital Allocation
1Cash Flow from Ops(pre-RD&E)
$16-18B
*Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Investment and Returns
Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th
$8-10B
$10-12B
2Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+
24© 2019 Corning Incorporated
Attractive Debt Maturity Profile
$0M
$200M
$400M
$600M
$800M
$1,000M
'19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '36 '37 '40 '41 '42 '48 '57 '68
USD Denominated JPY Denominated
Debt Maturity: • Avg. Maturity: 18.7 yrs• Due Through 2023: $1B • No Significant Maturity Towers
Yen Debt: • Natural Hedge• Low Interest Rates
25© 2019 Corning Incorporated
2020-2023 Capital Allocation
11Cash Flow from Ops(pre-RD&E)
$16-18B
*Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
3
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th
$8-10B
$10-12B
26© 2019 Corning Incorporated
2020-2023 Capital Allocation
*Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns $8-10B
11Cash Flow from Ops(pre-RD&E)
$16-18B 3
Grow
th
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
$10-12B
27© 2019 Corning Incorporated
2020-2023 Capital Allocation
*Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns $8-10B
11Cash Flow from Ops(pre-RD&E)
$16-18B
3
RD&E (after-tax)
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th $10-12BCapital Expenditures
28© 2019 Corning Incorporated
2020-2023 Capital Spending
Inner Loop
$4B
29© 2019 Corning Incorporated
2020-2023 Capital Spending
Build
$2-4B
30© 2019 Corning Incorporated
2020-2023 Capital Allocation
1Cash Flow from Ops(pre-RD&E)
$16-18B
* Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+ $8-10BIncrease Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
RD&E (after-tax)
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th $10-12BCapital Expenditures
31© 2019 Corning Incorporated
2020-2023 Capital Allocation
1Cash Flow from Ops(pre-RD&E)
$16-18B
* Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+ $8-10BIncrease Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th $10-12B
32© 2019 Corning Incorporated
RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th $10-12B
2020-2023 Capital Allocation
1Cash Flow from Ops(pre-RD&E)
$16-18B
* Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+ $8-10BIncrease Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B
Returns
33© 2019 Corning Incorporated
* Utilize debt capacity while maintaining strong financial metrics and investment grade rating
2020-2023 Capital Allocation
1RD&E (after-tax)
Capital Expenditures
Strategic Acquisitions
~$3B
$6-8B
~$1B
Grow
th $10-12BCash Flow from Ops(pre-RD&E)
$16-18B
Cash Generation Investment and Returns
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+
Returns
Increase Dividend/Share>10% Annually
Share Repurchases
~$3B
$5-7B$8-10B
34© 2019 Corning Incorporated
2020-2023 Capital Allocation
Cash Flow from Ops(pre-RD&E)
$16-18B
* Utilize debt capacity while maintaining strong financial metrics and investment grade rating
Cash Generation Investment and Returns
Grow
th $10-12B
Financial Strength• Cash • Debt Capacity*• Portfolio Mgt
$5B+
Returns $8-10B
35© 2019 Corning Incorporated
Strong value for shareholders
Well positioned for additional growth
Bigger and stronger Corning
35© 2019 Corning Incorporated