Edward A. Schlesinger
Executive Vice President and Chief Financial Officer at Corning
Thank you, Wendell. Good morning, everyone. I'd like to preface my remarks today with three key takeaways on the quarter. We're executing well and successfully navigating the current environment; we're driving top line growth, improved profitability and strong cash flow with high single-digit year-over-year sales and EPS growth; and we are employing a highly disciplined approach towards investing for the long-term. With that said, let's walk through the details on the quarter.
Total company sales reached nearly $3.8 billion, growing 7% year-over-year. Highlights included sales growth of more than 20% in optical and strong growth in solar. We met our goal of improving gross margin and operating margin sequentially, driven by previously announced pricing actions across the organization. Gross margin grew 90 basis points and operating margin grew 120 basis points. Net income was $489 million, up 7% year-over-year and EPS was $0.57, which represents an 8% increase year-over-year. We generated $440 million of free cash flow in the quarter, keeping the company on pace for another year of strong cash generation and we invested $353 million in capex.
I'd also like to comment on the impact of currency. We have actively hedged our foreign currency exposure over the past decade. This serves as an effective tool to reduce earnings volatility, protect cash flow, enhance our ability to invest and provide shareholder returns. Our largest exposure is to the year, which has been weakening. We have most of next year hedged and we expect our core rate to remain the same in 2023. We're pleased with our hedging program and the economic certainty it provides. We've received more than $2 billion in cash under our hedge contracts since their inception.
Overall, I'm pleased with the operational rigor our teams display during the quarter. We successfully raised prices to more appropriately share the impact of higher inflation with our customers, we successfully navigated extended COVID-19 lockdowns in China, a sharp correction in panel maker utilization in the display market. lower demand for smartphones and an additional temporary step down in China automotive production and we're capitalizing on our market leadership and strong secular growth in optical and solar. Second quarter results reflect the benefits of our focused and cohesive portfolio, particularly the balance it provides.
Now, let's go through the segments. In Optical Communications, sales grew 20% year-over-year, reaching $1.3 billion for the second quarter. Year-over-year sales growth was driven by 5G, broadband and the cloud. Net income was $182 million, up 23% year-over-year primarily driven by strong volume and price increases. We believe we're in the early phases of a multi-year build cycle across multiple segments in the passive optical market. We are responding to this demand by ramping up production and opening new facilities. As always, we derisk these investments by requiring meaningful commitments from customers often including funding before beginning construction.
In the second quarter, Display Technologies sales were $878 million, down 8% sequentially. Panel makers have been reducing their utilization rates for the last few quarters. In June, we saw a significant decline in panel maker production versus April and May and our volume declined in line with this change and the market. Importantly, glass price was up slightly sequentially. This coupled with solid execution resulted in net income declining 3% sequentially, less than half the sales decline. In the third quarter, we expect June's low panel maker production levels to continue and our volume to decline in line with the market and lower average utilization, resulting in our glass volume down mid-teens sequentially. We expect third quarter glass price to be consistent with the second quarter.
The factors we use to assess the pricing environment in the display glass market continue to support a favorable pricing environment. First is glass supply demand balance. Currently, glass makers are taking tanks offline for maintenance and repairs after an extended period of glass tightness. We are actively managing tank repairs and restarts to align our supply to demand. These actions result in lower glass capacity in the market. Additionally, after running flat out for so long, we need to replenish our inventory toward optimal levels to reduce excess logistics costs.
And lastly, glass maker profitability also supports favorable pricing. In this inflationary environment, it is challenging for glass makers who have high fixed costs to maintain profitability during periods of low volume. Additionally, our customers depend on us for our market-leading supply reliability, enabling us to build on our strong competitive position. So, overall, we feel good about our execution against our goal to stabilize returns in display. The pricing environment is stable. We have maintained our pricing and when volume returns our sales and profitability will improve.
In Specialty Materials, sales were consistent with a strong second quarter 2021. Net income was $91 million, up 12% year-over-year. We achieved these results despite the smartphone and IT markets being down. Our more Corning approach, product leadership and ongoing collaboration with industry leaders are enabling our outperformance in this market. Specifically, we maintained revenue and profitability driven by the adoption of our premium cover materials. We also continue to benefit from the strength of the semiconductor equipment industry. In fact, we expect to see it continue -- we expect to see continued investments in the industry to meet rapidly growing demand and to support increased stability in the supply chain. To ensure we are prepared to capture growth we just announced an expansion of our advanced optics operations in New York State. And as Wendell mentioned, we expect Specialty Materials sales growth in the back half driven by customer product launches.
In Environmental Technologies, second quarter auto production experienced constraints due to prolonged chip shortages, the Russia-Ukraine war and COVID-19 lockdowns in China. As a result, second quarter sales were $356 million, down 13% both sequentially and year-over-year. In the automotive industry, this will be the 3rd year in a row production has been unable to meet end market demand. Since 2019, auto markets have declined around 16%. In contrast, we have outperformed the market and our sales were up about 5% over the same period. We're pursuing content opportunities that generate sales beyond end market demand such as additional adoption of GPS in new regions. We expect an uptick in sales in the third quarter driven primarily by a resumption of auto production in China following COVID lockdowns. We remain prepared to serve demand globally as supply constraints ease and auto production increases.
In Life Sciences, sales of $312 million remain consistent year-over-year and sequentially and net income of $37 million was down. Lower demand for COVID-related products was offset by growth in research and bioproduction products. Additionally, COVID lockdowns in China impacted sales and profitability. Looking ahead, we expect to see continued growth in research and bioproduction and we're well positioned to meet that demand with recent capacity investments, designed to improve efficiency and enable us to better support global customers. Finally, in Hemlock and Emerging Growth Businesses sales reached $418 million, a 45% increase year-over-year and an 11% increase sequentially. This strong performance was largely driven by our production ramp to meet new long-term solar take or pay contracts.
During the quarter, Corning Pharmaceutical Technologies also contributed to strong sales as we saw continued adoption of our pharmaceutical packaging solutions for critical drugs and Automotive Glass Solutions delivered year-over-year growth as well. During the quarter, Continental recognize the business as one of its Suppliers of the Year for our AutoGrade Corning Gorilla Glass technology, another proof point on our progress toward $100 per car opportunity. In sum, the multiple growth drivers and our market leadership across our portfolio create an inherent resiliency that enables us to consistently outperform our markets.
Now, turning to our outlook. For the third quarter, we expect sales roughly consistent with the second quarter in the range of $3.65 billion to $3.85 billion. We expect continued strong sales in Optical Communications, Hemlock solar products and Specialty Materials to offset lower display volume, which is expected to be down mid-teens from the second quarter as I noted earlier. We expect EPS in the range of $0.51 to $0.55 for the third quarter. While we expect the benefits of our pricing actions to continue, the lower volume in display will impact profitability. Our most likely outcome for the full year is to slightly exceed $15 billion in sales, as we shared with you in April. We now expect sales to be up 6% to 8% and we expect to grow EPS in line with sales. Our guidance factors in a range of probabilities for the market challenges that we'd outlined this morning.
As I wrap up my remarks today, I'll end by saying we're very pleased with the results of the quarter and the first half of the year. We're growing profitably and we remain highly disciplined in our approach to investment decisions while maintaining a strong balance sheet and delivering solid free cash flow. This gives us the ability and flexibility to address evolving market conditions. We're also expanding capacity to support committed customer demand, all while carefully monitoring the external environment to pace appropriately. We're confident in the many levers at our disposal to manage through any environment and come out the other side stronger while advancing our long-term growth initiatives.
With that, I'll turn it back over to Ann for Q&A.
