Corning Incorporated Q1 FY2026 earnings call

• Wendell Weeks announced excellent first quarter 2026 results with sales growing 18% to $4.35 billion, EPS growing 30% to 70 cents, operating margin expanding 220 basis points to 20.2%, etc. • Solar business saw 80% year-over-year sales growth, with progress in polysilicon, wafers, and modules. Polysilicon business performed above 20% corporate operating margin target in Q1, module business on track to cross over in Q2. • Optical communications had 36% year-over-year sales growth, with robust demand, multi-year agreements with Meta and other hyperscale customers, and growth in enterprise and carrier segments. • Announced changes to segment reporting effective Q1 2026, with solar now in its own segment, glass innovations combining display and specialty materials, etc. • Ed Schlesinger discussed operating expenses, second quarter guidance, capital allocation, and progress on Springboard plan.

Optical Communications: Sales were $1.8 billion, up 36% year-over-year, driven by robust demand for GenAI products. Net income was $387 million, up 93% year-over-year. Both enterprise and carrier rose 36% year-over-year. Glass Innovations: First quarter sales were $1.4 billion, up 1% year over year. Net income was $324 million, up 7 million year over year. Net income margin was 22.8%. Display glass volume down slightly sequentially. Automotive: Q1 sales were $437 million, down 1% year-over-year. Net income of $70 million was up 2 million or 3% year-over-year. Solar: Sales were $370 million, up $164 million or 80% year over year. Net income was $7 million, down $20 million year over year. Sales and life sciences and emerging growth businesses were flat year over year.

• Second quarter expected sales growth about 14% year over year to approximately $4.6 billion and EPS growth about 25% year over year to a range of 73 to 77 cents. • Second quarter forecast includes an additional $30 million of expense due to solar wafer plant extended maintenance shutdown. • Full year expected to generate significantly more free cash flow year over year while continuing to invest strongly in growth vectors aided by customer financial support. • Plan to upgrade and extend springboard plan through 2030 at May 6 investor event.

Q: On the new hyperscaler agreements, are there material glass fiber draw capacity expansions associated with that or maybe a different way?

A: These agreements are driving expansion across all major optical operations, including fiber operations, and aim to share risk with customers.

Q: When you complete and are fully ramped on solar, what would be the approximate breakdown between semiconductor wafers and modules?

A: Running at about a half-a-billion-dollar semiconductor business, remainder in solar space, primarily wafer and module.

Q: Characterize the state of supply-demand balance in the optical communications market.

A: Very robust demand for innovations, entering long-term agreements, seeking balanced coverage, and focusing on unique innovation and manufacturing rather than price increases.

Q: Can you break apart incremental margins in optical year over year as operating leverage versus price mix?

A: Large driver is impact of moving to new innovations, with margin going up from selling more solutions.

Q: Looking forward to long-term agreements with hyperscalers and model builders, are you able to raise prices over the long-term?

A: Focus on improving visibility, sharing risk, and adoption of new product types as key drivers to profitability and revenue growth.

Q: When should we expect the drag on solar expenses to be completed?

A: Sequentially get better over time, with exact timing hard to determine, but will improve once factory comes back online.

Q: Go back to comments on hyperscaler agreements and how to think about sharing risk.

A: Blend of tools to share risk, including funding, guaranteed revenue, price, etc., with different customers having different risk profiles.

Q: Carrier piece of the business, sense of fiber to the home plans increasing and gaining share.

A: Ascendancy of fiber to the home is driving numbers, with big carriers being public about decisions.

Q: Split between carrier and enterprise growth rates this quarter.

A: Both carrier and enterprise grew 36% year over year in Q1.

Q: Capital expenditure plan for the year.

A: CAPEX could be a little above $1.7 billion this year, with tools to share investment with customers and investment continuing into next year, to be shared more at May 6 event.