Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you elaborate on the potential upgrade to the risk-adjusted plan and the risks Corning is navigating to achieve the non-risk-adjusted plan by 2026? A: Wendell Weeks, CEO, explained that the probability of achieving higher numbers has increased, and the upgrade will likely fall between the non-risk-adjusted and risk-adjusted plans. Key risks include milestones in Optical Communications, solar, mobile consumer electronics, and automotive sectors.
Q: Are the expected carrier deployments in 2025 and demand for connectivity products excluding Lumen? Also, can you provide more color on the 10% year-on-year sales growth guidance? A: Edward Schlesinger, CFO, confirmed that the expected increase in carrier deployments is broader than Lumen. The 10% sales growth guidance reflects strong enterprise momentum and stable panel maker utilization in the display market.
Q: How should we think about net income margins in the Optical segment and free cash flow margins as Corning progresses with the Springboard plan? A: Schlesinger noted that Optical margins are expected to improve as sales ramp up. Free cash flow is anticipated to continue improving, with capital expenditures aligned with depreciation, indicating no significant capacity additions.
Q: What impact does DeepSeek have on AI build-out and Corning's Springboard plan? A: Weeks stated that DeepSeek's announcements do not negatively impact Corning's Springboard plan. Innovations in AI are expected to continue, driving the need for better compute and communications.
Q: How does Corning view the risk of the BEAD program being reworked, and what is the impact of satellite on fiber optics deployment? A: Weeks mentioned that Corning's Springboard plan accounts for potential changes in the BEAD program and satellite deployment. The company remains confident in its plan, with no significant changes expected in the near term.
Q: Has the prospect of new tariffs by the US administration affected demand or ordering activity? A: Schlesinger noted that Corning manufactures where its customers are, minimizing direct tariff impacts. The company supports US manufacturing and is prepared to adjust pricing if necessary.
Q: How is the order pattern for Lumen tracking, and what impact does the S25 phone from Samsung have on Specialty Materials? A: Weeks confirmed that Lumen's order pattern aligns with expectations, and the S25 phone's use of Corning innovations supports the company's strategy for increased content in mobile consumer electronics.
Q: How does Corning view cyclicality in the Optical Communications business, and what is the visibility for 2025 and beyond? A: Schlesinger acknowledged the potential for cyclicality but expressed confidence in 2025 momentum. Weeks added that the current growth is driven by data centers rather than carriers, providing some stability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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