Corning

Credit: Corning Incorporated.

Corning (NYSE:GLW) reported third-quarter results two weeks ago, and it's no surprise the stock is up around 10% since then. The 163-year-old glass maker beat analysts' expectations on both the top and bottom line: Revenue jumped 26% year over year to $2.649 billion, and adjusted earnings per share rose 21% to $0.40.

After the announcement, Corning management spoke with financial analysts for roughly an hour to add color both to the company's third-quarter performance and what we should expect going forward. Here are five key takeaways from Corning CFO Jim Flaws during that call.

Even after the World Cup, TV sales are still strong

The supply chain had likely anticipated some cooling off the television sales after the World Cup. However, retail television unit sell-through in July and August was up in every region except Japan and Latin America. [...] All other regions were up, and year-to-date through August we estimate TV unit retail sell-through is up 7%. Additionally, consumers are buying larger televisions, which adds to the volume of glass shipments.

This marks a shift in Corning's previous expectations. Three months ago, management warned that the 2014 FIFA World Cup might have driven a temporary surge in LCD glass demand, which could have pulled some TV unit sales in from the back half of the year. As a result, and despite last quarter's outperformance, they left intact their expectations for TV unit sales at the time.

However, now that they see that's largely not the case -- with the exception of soccer-centric Latin America (unsurprising) and Japan (only 5% of the market) -- Corning has upgraded its retail market expectations and sees square feet of LCD glass up 10%, or an increase over its prior forecast for a mid- to high-single-digit increase.

Display tech and optical are leading the way

In the third quarter, we had record core sales in gross margin, with Optical Communications and Display Technologies exceeding our expectations. We delivered $0.40 of earnings per share that surpassed last year by $0.07. We realized increased synergies from the integration of CPM and we attained more moderate price declines for LCD glass.

Specifically, Optical Communications sales and core net income increased 7% to $698 million and 8% to $70 million, respectively, driven by a combination of manufacturing efficiencies and higher sales in every geography except China. Meanwhile, Corning saw Display Technologies core sales increase 62% to $1.1 billion, thanks to that LCD glass price moderation, the aforementioned strong TV sales, and synergies from its decision to acquire full ownership of Samsung Corning Precision Materials. Note that when that acquisition officially closed this past January, Corning renamed the subsidiary to Corning Precision Materials. 

Corning Precision Materials synergies are coming along nicely

Our CPM integration is going well, and we feel very good about getting $90 million or more in pre-tax synergies this year.

Speaking of which, this marks an encouraging reiteration of Corning's previous guidance on CPM integration synergies. In fact, note that three months ago, management stated that CPM synergies should increase to $170 million by 2016, and then ultimately reach a $210 million run rate by 2017. For perspective, in exchange for Samsung Display's 43% stake, Corning issued $1.9 billion in new convertible preferred shares, and Samsung purchased an additional $400 million in other new convertible preferred shares. That might seem like a steep price to pay, but it should ultimately prove to be a great deal over the long term as Corning marches toward its $210 million annual synergy goal.

Gorilla Glass 4 is already a winner

Now, we are planning to launch our next generation of Gorilla Glass on Nov. 20. I can't spoil the launch, but it does promise to have dramatically improved performance characteristics and our customers are already integrating this glass into the new products. Additionally, we expect our new glass to help us continue the trend of more moderate price impact we have seen the last two quarters.

For perspective, Gorilla Glass is included under Corning's Specialty Materials segment, sales from which increased 10% sequentially from last quarter to $327 million, and an 18% sequential jump in net income to $52 million. However, the latter number also represents a 20% decline over the same year-ago period, driven primarily by lower year-over-year prices of Gorilla Glass, which hurt the segment's profitability. It's a great sign that Corning's customers are already incorporating Gorilla Glass 4 into their latest and greatest electronics. Going forward, as Flaws suggests, this innovative new product should drive both Specialty Materials revenue and margins higher.

More share repurchases and dividend increases on the way

[W]e have been very active on shareholder distributions over the past two years. As our investors know, our current repurchase authorization will be complete this year. I am delighted that the Board of Directors has decided to accelerate the consideration of future repurchases and dividend increases.

Though he didn't outline the numbers specifically, we can fill in the gaps: Corning has returned nearly $4 billion to shareholders over the past two years through share repurchases alone, including 9.6 million shares repurchased for $200 million in Q3 under the current plan. As of the end of Q3, Corning had $183 million remaining under that plan, which Flaws promises will be utilized by the end of the year. And if Corning follows through on his "accelerate the consideration" comment, that means a new share repurchase authorization should follow shortly thereafter. 

Finally, Corning's last dividend increase came back in April 2013, when it raised its quarterly payout by a penny to its current level of $0.10 per share. Though that works out to a respectable 1.9% annual yield as of this writing, I'm sure you'd be hard pressed to find any investors willing to complain about another increase.

Steve Symington owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Corning. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.