Edward A. Schlesinger
Senior Vice President & Corporate Controller at Corning
Thank you, Wendell. Good morning, everyone. I want to begin today by saying how encouraged and energized I am by the way our company is performing. We've started 2022 from a position of strength. We are successfully navigating against a complex external operating environment. We're confident in our ability to deliver on a short and long-term profitable growth opportunities to create compelling value for shareholders. Starting with the short term, we had an extremely strong quarter, commercially, operationally and financially. We delivered year-over-year top and bottom line growth, and we improved margins as our pricing actions began to take hold. Total company sales surpassed $3.7 billion, growing 15% year-over-year, highlighted by a nearly 30% increase in Optical sales, a slight increase in Display glass prices and continued demand for Hemlock solar materials. Net income for the quarter was $465 million, up 16% year-over-year and EPS was $0.54, up 20% year-over-year, both growing at a faster rate than sales. We generated $171 million in free cash flow in the quarter and we are on track for another strong year of cash generation. In terms of capital deployment, we invested $383 million in capex. We declared a quarterly dividend of $0.27, which reflects the 12.5% increase announced in January, and we repurchased approximately $150 million of outstanding shares. Taking a closer look at profitability. First quarter gross margin expanded 10 basis points sequentially, and 80 basis points year-over-year, primarily due to the benefits of our pricing actions. Typically, aggregate price for the company and gross margin percent declined sequentially in the first quarter.
This year, both increased as we took price actions across all businesses. Additionally, first quarter operating margin expanded 140 basis points sequentially and 50 basis points year-over-year. As we've previously discussed, we continue to experience increases in key input costs. We are tackling these challenges on multiple fronts. We're leveraging relationships with our suppliers to secure favorable long-term raw material pricing, our strategic approach to manufacture in region and to co-locate with customers has helped to shield us from some of the elevated freight and logistics costs. And most importantly, we are increasing price to more appropriately share rising costs of raw materials. We will continue our focus on these unusual costs as well as our normal rigorous cost reduction efforts. Combined with our pricing actions, we expect our gross margin percent to improve from the first quarter. I'm proud of the operational rigor our teams continue to apply and deliver. We're navigating with discipline and agility while capitalizing on our strong market positions, and we see the benefits in our improving profitability. With that background, let's take a closer look at our segment results. In Optical Communications, sales grew 28% year-over-year, reaching $1.2 billion for the first quarter as network operators increased capital spending.
Net income was $166 million, up 50% year-over-year and 7% sequentially. Corning continues to outpace the passive optical market and capture growth which is driven by increased spending on 5G and broadband projects, along with the accelerated pace of data center builds as applications rapidly move to the cloud. Looking ahead, we continue to see strong demand for our optical communication solutions. We believe the industry is at the beginning of a large multiyear wave of growth for passive optical networks. Project Momentum is strong across our customer base and as the broadband equity access and deployment program rolls out, it could add as much as $1 billion a year to our market for four years starting as early as 2023. We believe that the combination of private network and public infrastructure investments will push the market into double-digit growth over the next few years and that our solutions provide advantages particularly lower labor requirements for customers. In display, sales grew 11% year-over-year to $959 million. Net income was $236 million, also up 11% year-over-year. Sequentially, the price for display glass was up slightly. As we have previously discussed, the display industry is driven by three main factors: retail demand, panel makers production and glass makers' ability to supply panel makers. We continue to expect that glass at retail will grow in 2022 and by a high single-digit percentage, driven by average screen size growth and TV unit growth.
Over the last several months, panel makers have been reducing their capacity utilization rate. We expect additional utilization reductions in the second quarter, and we've reflected that expectation in our guidance. Nevertheless, -- similar to quarter 1, we expect second quarter price to be up slightly sequentially and glass supply and demand to remain tight. Two factors add to glass supply-demand tightness. First, over the last 18 months, we have extended tanks beyond their design life to support customer demand. Second, we have completely depleted our inventory leading to higher logistics costs and missed opportunities. So we plan to shut down end-of-life tanks, upgrade to the latest technology and begin to replenish our inventory levels to ensure excellent service for our customers. We feel good about our outlook for 2022. We've completed long-term share agreements that cover well over 90% of our planned volume for the year. In 2022, overall, we expect glass supply to remain tight to balanced and the pricing environment to remain favorable. In total, we're very pleased with Display's performance, and we're operating from a position of strength. In Specialty Materials, sales grew 9% year-over-year to $493 million. Net income was $75 million, down 18% year-over-year. This sales growth was driven by our More Corning strategy. Take the Samsung Galaxy S22 series, for example. Our cover materials are on the front and back of these devices, including all five rear cameras on the Galaxy S22 Ultra. Also, we continue to benefit from the strength of our new-to-the-world materials. Apple's iPhone 13 launch and legacy product lines like the iPhone 12, which features ceramic shield resulted in increased premium glass sales year-over-year. In the quarter, investments in innovations that are moving towards commercialization resulted in lower net income versus first quarter 2021.
We expect growth to accelerate and profitability to improve throughout the year as we introduce new innovations and capture more content per device. In the first quarter, Environmental Technology sales declined 7% year-over-year due to automaker production constraints. Net income was $74 million, consistent with 2021. The auto industry has been experiencing variability from ongoing shortages of chips, components and raw materials. As a result, Auto production has been paced by component availability versus consumer demand. Once these constraints are relieved, automakers will be able to increase production to satisfy pent-up vehicle demand and we would expect significant sales growth from current levels. Moving to Life Sciences. Sales increased 3% year-over-year to $310 million. Net income was $42 million, down 13% year-over-year, primarily driven by COVID-related operational challenges in the first half of the quarter, which impacted our output. We expect growth going forward with strong demand for our products and production output increasing over first quarter levels. Finally, in Hemlock and Emerging Growth Businesses, sales increased 38% year-over-year to $375 million, primarily driven by strong performance at Hemlock as we continue to see increased demand for solar materials.
Corning Pharmaceutical Technologies also contributed to year-over-year growth. Our portfolio of vials and tubing has enabled the delivery of 5.5 billion doses of COVID-19 vaccines. And Automotive Glass Solutions grew year-over-year as well. The company has been awarded more than $1 billion of business from multiple manufacturers and numerous car makes and models. In summary, we grew organic sales $500 million this quarter on a year-over-year basis, we are growing faster than our end markets driven by our More Corning strategy. And as we look ahead, we're confident that our content-driven strategy will continue to create outperformance and growth. Now let's talk about our outlook for the second quarter and how we're viewing the year. For the second quarter, we expect $3.7 billion to $3.9 billion in sales with EPS of $0.54 to $0.59. We expect benefits from pricing actions to accelerate in the quarter. And this guidance reflects our view of the most probable outcomes of potential COVID-19 lockdowns in China. For the full year, we're now expecting to exceed $15 billion in sales with growth at a high single-digit percentage. We expect EPS to grow up to a few percentage points faster than sales and gross margin to expand from the first quarter, and we anticipate another year of strong free cash flow in 2022.
Our priorities for capital allocation remain the same, investing in profitable growth opportunities across our market access platforms, extending our leadership and rewarding our shareholders. We expect our return on invested capital to increase as we continue to reuse and repurpose assets, secure customer commitments and deliver on high ROIC projects. We're continuing to build a stronger, more resilient company that can deliver multiyear consistent and profitable growth. Now as I wrap up my formal remarks, I'd like to leave you with a few key highlights. We're off to a great start in Q1. And we see strong demand across all our businesses, and our pricing actions are beginning to take hold with more coming in the second quarter. In Display, we achieved a slight price increase in the first quarter. For the second quarter, we expect price to be up slightly sequentially and glass supply and demand to remain tight. We expect Q2 sales in the range of $3.7 billion to $3.9 billion and EPS to be in the range of $0.54 to $0.59. And our guidance reflects our view of the most probable outcomes of potential COVID-19 lockdowns in China. We have an incredible set of opportunities across all of our market access platforms. For example, we see multiyear double-digit growth in Optical. Adding mobile consumer electronics, we have an exciting innovations in our pipeline. That will deliver growth in the second half of this year and beyond. In total, we're a stronger and more balanced company today than we were even five years ago. And we are focused on commercial and operational execution to achieve broad-based profitable growth.
With that, I'll turn it over to Ann for Q&A.