Corning Inc Q3 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Samik Chatterjee - JPMorgan - Analyst : Hi. Thank you for taking my questions. And I guess for the first one, if I can start with the agreement that you signed with AT&T. And Wendell, you spoke about the opportunity there, but if you can just more sort of dive into the details in relation to how much of that is sort of an incremental opportunity that you're seeing related to some of the existing business that you do with AT&T on an ongoing basis. And sort of a broader question to the fiber opportunities. Is there something that's fundamentally changed? The question we're getting a lot from investors is in terms of fiber utilization. Is there something that's fundamentally changed that is going to drive a significant cycle on the fiber side just because fiber utilization has changed over the last few years? Can you help us think about that more on a longer-term basis as well?Thank you.

Question: Samik Chatterjee - JPMorgan - Analyst : In the more telecom networks, but in relation to the investment in fiber over the years. Has something changed in relation to being a lot more congested on fiber? Or very high fiber utilization already and seeing that drive a significant cycle, or are we sort of extrapolating just the amount of announcements, not really looking at the utilization, which is still probably low.

Question: Samik Chatterjee - JPMorgan - Analyst : Thank you. Thank you. I'll pass it on. Thanks for taking my questions.

Question: Matt Niknam - Deutsche Bank - Analyst : Hey, guys. Congrats on the quarter. I guess, first, on the 4Q revenue guide, if there's any additional color or context you can share in terms of unpacking expectations across the different segments. And then one follow-up on optical. Can you clarify whether there was any contribution from the Lumen deal in the third quarter, whether that is expected to kick in, in the fourth quarter? Just trying to get a sense of that ramp-up to the run rate.

Question: Steven Fox - Fox Advisors LLC - Analyst : Hi, good morning guys. Two questions from me, if I could. Real quick on the cash flows. Ed, can you put a little bit of context around the free cash flow you generated in the quarter? I think it was the best I've seen from you guys since 2018 in the third quarter. How do we put that in perspective with future free cash flows? Or was there any onetime things we should think about? And then from an optical standpoint, just on the cloud side of the business. Can you give us a little more perspective on the relative momentum versus Enterprise and how you think about that momentum into next year? Thanks.

Question: Wamsi Mohan - Bank of America - Analyst : Yes, thank you so much. Similar to cash flows, gross margins also were very impressive in the quarter, north of 39%. I'm wondering if you can unpack that a little bit in terms of the drivers there. How much of that was mix versus leverage? Given the strength in optical relative to display, you think that, that would put some mix pressure. But would be helpful to get some context around that and how we should think about that going into fourth quarter. Are we now renormalizing at a higher rate in general for gross margin? Thank you so much.

Question: Asiya Merchant - Citi - Analyst : Great. Thank you Two, if I may. Just on display, you've put in some pricing actions here. Just if you could help us understand how your customers are responding to that and expectations for further price increases in calendar '25. And if I may, just on OpEx. I know you talked a little bit about elevated levels here, variable compensation. How should we think about these OpEx levels to moderate in the fourth quarter? I think the assumption implied -- or the guide implied some moderation here.

Question: Meta Marshall - Morgan Stanley - Analyst : Great. Maybe kind of expanding upon on the gross margins. In the past, you guys have talked about 40% being a bogey but then also said that 39%, just given some of the price increases, is kind of a more appropriate new bogey. I know you guys have talked more in terms of operating margin targets and kind of this 20% operating margin target. But just how do you think about kind of gross margin leverage into the next year? Maybe as a first question.

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. And then at the event earlier this quarter, you guys had mentioned a lot of key milestones that may be coming on the Hemlock business, or just how to think about incrementals on the project Springboard. I noted that you guys got the CHIPS Act funding kind of earlier this week. But just anything else or any updates that we should be thinking of in terms of timing there or kind of TBD?

Question: Martin Yang - Oppenheimer - Analyst : Hi, good morning. Thank you for taking my question. One question on CapEx. Can you talk about some of the puts and takes and what led to the slight reduction in CapEx guidance for the year?

Question: George Notter - Jefferies LLC - Analyst : Hi guys. Thanks very much. I guess I just wanted to ask about the display price increases. I think as you guys were hedging the business at 107 on the yen, those hedges were in place through the end of this year, yet you're able to institute price increases here in Q3. I thought that was quite impressive. Could you give us a sense for how that conversation went with customers, what kind of leverage you have in the relationship? Anything you can tell us about your ability into price increases even ahead of the hedges running off? Thanks.

Question: George Notter - Jefferies LLC - Analyst : Got it. And then any sense for where the new hedge rate will wind up as we roll into next year?

Question: George Notter - Jefferies LLC - Analyst : Okay. Thank you very much. Appreciate it.

Question: Tim Long - Barclays - Analyst : Thank you.Two-parter, if I could, on optical. First, it looks like obviously a good recovery going on here. On the carrier side, still meaningfully below the levels we saw a few years ago. Could you talk about that piece? Will these new agreements, do you think, gets you back to those 2021-2022 levels for the carrier piece over the next year or two? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 12:30PM, GLW.N - Q3 2024 Corning Inc Earnings Call And then secondly, can you just talk a little bit about the op margin despite being a little overall base than what we saw in those peak years. Margins are pretty comparable. So is this all mix? And does that mean if we move higher from here, that we could see above historic margins for that optical business going forward as the business scales further from here?

Question: Tim Long - Barclays - Analyst : Yeah, just in the optical business, correct.