CORNING INC /NY Q1 FY2025 earnings call

• Delivered outstanding first quarter results exceeding guidance with sales growth 13% to $3.7 billion, EPS growth more than 3 times sales growth to $0.54, and operating margin expansion to 18%.
• Guided for second quarter sales of approximately $3.85 billion and EPS of $0.55 to $0.59, with factors like tariffs and production ramp costs considered.
• Addressed impact of tariffs on Corning, stating direct impact is minimal and they have mitigation strategies.
• Reiterated confidence in delivering Springboard plan even in macroeconomic downturn, with $2 billion risk adjustment to buffer against economic slowdowns.
• Highlighted secular trends driving growth, including GenAI in optical communications, solar market expansion, display price increases, and automotive glass growth.

Optical Communications: First quarter sales were $1.4 billion, up 46% year-over-year. Enterprise sales were $705 million, up 106% year-over-year driven by demand for GenAI products. Carrier business grew 11%. Display: First quarter sales were $905 million, up 4% year-over-year on volume and price increases. Net income was $243 million, 26.9% of sales. Specialty Materials: First quarter sales were $501 million, up 10% year-over-year. Net income grew 68% year-over-year. Automotive: First quarter sales were $440 million, down 10% year-over-year, but the segment graduated into operations. Life Sciences: First quarter sales were $234 million, down 1% year-over-year. Hemlock and Emerging Growth: First quarter sales were $244 million, down 25% sequentially, excluding automotive glass.

• Second quarter sales expected to be approximately $3.85 billion.
• Second quarter EPS guidance $0.55 to $0.59, including $0.01 to $0.02 for tariff impact and ~$0.03 for production ramp costs.
• Expect EPS growth year-over-year about 21%, 3 times faster than sales growth.
• Springboard plan aims to add more than $4 billion in annualized sales run rate by end of 2026 and achieve 20% operating margin by then.

• Potential macroeconomic downturns, addressed by $2 billion risk adjustment in Springboard plan to buffer against economic slowdowns.
• Tariff impacts, with direct impact currently minimal but strategies in place to mitigate further.

Q: Steven Fox asked about pricing power in uncertain markets and competition, especially in solar, auto, and optical.

A: Wendell Weeks responded that they have experience passing on costs, are seeing increased potential realized price in solar due to customer interest, Opto products have unique moats, and automotive has not yet had significant tariff exposure impact.

Q: Wamsi Mohan asked about temporary capacity ramp costs in optical and solar, and visibility in GenAI orders.

A: Ed Schlesinger explained that capacity ramp costs are fixed until scale is reached, and Wendell Weeks noted that GenAI order dialogues with hyperscalers reinforce growth expectations.

Q: Asiya Merchant asked about optical supply constraints and moat strengthening.

A: Wendell Weeks stated that strategic next-gen products are expected to continue margin improvement and reinforce the moat.

Q: Samik Chatterjee asked about customer conversations on tariffs and recessions, and solar plan flexibility in downturn.

A: Wendell Weeks mentioned increasing demand for U.S. advanced manufacturing, and Ed Schlesinger noted solar demand is insulated from macro and has long-term supply agreements.

Q: Mehdi Hosseini asked about display demand, buyback aggressiveness.

A: Ed Schlesinger said display unit demand is flat with growth in glass market due to screen size, and they continue to buy back shares as part of returning cash to shareholders.

Q: John Roberts asked about tariff impacts on customers and customer production shifts.

A: Wendell Weeks responded that they pre-emptively prepare for customer production shifts to different regions and capture revenue from such moves.