Corning Inc Q4 2024 Earnings Call Transcript

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

Question: Joe Cardoso - JPMorgan - Analyst : This is Joe Cardoso on for Samik. I guess maybe just for one question, and I'm not trying to get ahead of the investor event. But maybe Wendell, can you just flesh out your comments a bit more around an upgrade or the potential upgrade to the risk-adjusted plan? However, you're still feeling comfortable around the non-risk-adjusted plan. Obviously, the implications there is that the upgrade could land somewhere between those two plans, at least for your 2026 target that you provided. And if so, maybe can you just help us think about the lingering risk or the major risks from your perspective that Corning is still looking to navigate to achieve the non-risk-adjusted plan, at least relative to the 2026 target.

Question: Joe Cardoso - JPMorgan - Analyst : No, no. Very clear. I guess, Wendell, what I was just trying to get at more is just around like the risk that you still see ahead. I think at the time, or even in the call itself today, you mentioned that obviously, Optical's tracking ahead. And I think the risk back in June, you talked about timing around projects getting done. And then Display, obviously, was another one of the bigger risks relative to the plan. So as you think about today and now starting to get ahead of some of those -- or those checkmarks around some of those risks being in the rearview mirror, I guess, as you think about the plan, which are the major risks that are still ahead that you think are still left to navigate?

Question: Joe Cardoso - JPMorgan - Analyst : Yes, Wendell. That's great.

Question: Mehdi Hosseini - Susquehanna Financial Group LLLP - Analyst : Congrats on the quarter. This is Sebastian filling in for Mehdi. So you expect carrier deployments to increase in 2025 and growing demand of connectivity products? Is that ex Lumen? So that will be my first question. And my second question is, could you maybe give us a little bit of color on where you're guiding on those 10% year-on-year sales growth? If you could get a little bit of color on if you're still seeing enterprise being strong. And as well, if you could touch a little bit on the display market. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:30PM, GLW.N - Q4 2024 Corning Inc Earnings Call

Question: Asiya Merchant - Citi Investment Research (US) - Analyst : Congratulations on a great set of numbers. Two, if I may. The optical demand is obviously ramping up really well. Can you talk a little bit about how we should think about net income margins in that segment? It expanded a little bit relative to the last quarter. Growth was on the top line pretty strong. So as we think about the momentum here and the drivers for growth and enterprise more strongly than carrier, how we should think about the net income margin performance in that segment? And the second one, on cash flow, how we should think about free cash flow margins sort of as you guys progress towards your Springboard plan and exceed that Springboard plan, the high-confidence Springboard plan? How we should think about free cash flow margins in 2025?

Question: Wamsi Mohan - BofA Global Research (US) - Analyst : Wendell, your Optical business is clearly benefiting from Gen AI deployments, and we've heard a lot of market dislocation over the last week from DeepSeek. So I'm curious what your view is on DeepSeek's impact to AI build out more broadly and for Corning, in particular?

Question: Wamsi Mohan - BofA Global Research (US) - Analyst : Yes. Yes. No, it does. I appreciate that answer. And one for Ed, if I could. Just one quick clarification on the core rate of 120. Would this core rate be static again for a few years as you have had in the past? And that's just my quick clarification. And secondarily, would you say that -- as you think about 2025 and your guidance for CapEx over here, you're just coming off a pretty low year of CapEx relative to last several years, and it's ticking back up. Can you just help us think through what are the incremental places where investments are going on that incremental CapEx?

Question: John Roberts - Mizuho Securities USA - Analyst : How do you think about the risk of the BEAD program being reworked, and maybe satellite playing a more significant role? It seems like this administration is willing to go back into programs already well underway.

Question: John Roberts - Mizuho Securities USA - Analyst : And then maybe a quick one for Ed, but the Hemlock minority interest income surged. What's going on there? And will you break out Hemlock sales beginning in the March quarter?

Question: Matt Niknam - Deutsche Bank - Analyst : Congrats on the quarter. Just two for me. First on, I guess, new administration. And I'm wondering, is the prospect of newer tariffs implemented by the new US administration pulled forward any sort of demand or ordering activity into 4Q or even in the first quarter? And then secondly, maybe for Ed, you talked about the healthy balance sheet position, ramping free cash flow. And you talked about buybacks. I'm just wondering, the dividend was relatively flat last year, how are you thinking about resuming dividend growth in the context of the success of Springboard seen to date? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:30PM, GLW.N - Q4 2024 Corning Inc Earnings Call

Question: Matt Niknam - Deutsche Bank - Analyst : It does. It does.

Question: Meta Marshall - Morgan Stanley - Analyst : Great. A couple of quick questions for me. Maybe first, as you started to kind of get the Lumen orders early on, is that kind of tracking to kind of how you thought through the order patterns that you were expecting? And then maybe just a second question on Specialty Materials, noted kind of it looked like there was an upgrade in the content with the S25 phone from Samsung that just came out. So just wondering if that kind of impacts the trajectory of the year on Specialty Materials? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 1:30PM, GLW.N - Q4 2024 Corning Inc Earnings Call

Question: Tim Long - Barclays - Analyst : Two-parter, if I could, on Optical. First, maybe a quick one. I think this -- the enterprise piece of the business used to be about 50-50 enterprise data center. I'm assuming that's giving a lot more to the data center customers. If you could just give just some high-level impact there? And then secondly, Ed, maybe you or Wendell, just curious, just looking back, obviously, there's always been a lot of cyclicality in this optical comm business, some really big years followed by some down 10% or 20% years. So curious how you're thinking about cyclicality going forward? I'm sure the visibility into the next -- into 2025 is very solid. How far does the visibility extend for you? And how do you prepare for potential cyclicality like we've seen multiple times over the last decade?

Question: Tim Long - Barclays - Analyst : Yes, it does.

Question: James Cannon - UBS - Analyst : This is James Cannon on for Josh. I just wanted to dive back in on the Bead program, and I think there are three states, maybe at this point that have been -- that have gone through their final approval process. I just wanted to see if you've had any orders start to come in under that? Or if it's still pointing towards kind of that 2026 time line? And if you have had any orders, how do those track against your kind of prior target of, call it, a $4 billion TAM against the $42 billion allocated program?

Question: George Notter - Jefferies - Analyst : Congrats on the strong results. I guess I wanted to ask about the 120 rate on the yen. I guess that was a lot better than I was imagining, just looking at the forward curve we've seen over the last six or nine months. I guess I'm wondering if the company spent a lot on putting those hedges in place? Or is it the case that we've seen historically where the hedging portfolio has been relatively low cost or no cost for the company? Just trying to understand kind of how you got on that yen rate. And then also, I'd be curious if you could take the Q1 guidance and give us a year-on-year compare, so give us a sense for what Q1 of '24 would