Yahoo Finance Corning Inc (GLW) Q1 2024 Earnings Call Transcript Highlights: Strong Financial Performance ...
Revenue: $3.26 billion for Q1 2024.
Earnings Per Share (EPS): $0.38, at the high end of guidance.
Gross Margin: Increased by 160 basis points to 36.8%.
Free Cash Flow: Improved by more than $300 million compared to Q1 2023.
Optical Communications Sales: $930 million, down 17% year-over-year.
Display Technologies Sales: $872 million, up 14% year-over-year.
Specialty Materials Sales: $454 million, up 12% year-over-year.
Environmental Technologies Sales: $455 million, up 6% year-over-year.
Life Sciences Sales: $236 million, down 8% year-over-year.
Net Income: Various segments reported differing performance, with notable increases in Display Technologies and Environmental Technologies.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Wendell, on the commentary around the data center opportunity around AI. I was wondering if you could just share some color on when you think these incremental orders and revenue will flow into Corning. And these hundreds of -- low hundreds of dollars per GPU, can you just break that down into maybe just a little bit more color on where exactly that's coming from? Is this rack-to-rack connections in optical and data center? And how large do you think the TAM for that is? A: Wendell P. Weeks - Corning Incorporated - Chairman & CEO: So the timing of when we'll start to see it in our financials. So we start with a pretty large business and enterprise, all related to the sort of front-end -- we think about it as a front-end network, which is all connecting the CPUs. So off over that base, you'll start to see sort of a relatively robust revenue growth assuming the orders that we've closed here all ship in the back half of this year. You're just going to start to see that momentum begin to build.
Q: You noted that you have the capacity kind of today with capital you've already built to have $3 billion of additional revenue. You noted that you expect to kind of grow over the next 3 years by more than that $3 billion. And so just trying to get a sense of where you think that the biggest opportunities or investments will be over the next couple of years? A: Edward A. Schlesinger - Corning Incorporated - Executive VP & CFO: Yes, Meta, on your other question. So first, I would start with we actually have capacity to do much more than $3 billion in sales. I think we're framing it up as we see it. Where those sales come from, where those opportunities come from will depend on whether we need to add anything beyond what we have in place today, but we feel very confident in supporting a number well above $3 billion.
: I would like to ask about your opinion regarding newly announced subsidy programs for home appliance trading in China. I know your retail estimates on PV sales this year hasn't changed. Do you think this could be a new catalyst to drive upside to retail TV market and your glass volume in '24? A: Wendell P. Weeks - Corning Incorporated - Chairman & CEO: That's a great question. They're relatively recent, and we're still in the midst of trying to understand how that will play out when it hits the consumer. Our expectations have been for China retail demand to be relatively muted this year. You're right to point it out, we're just a little early in being able to analyze and predict what its impact will be like. We'll get back to you on that as our understanding evolves.
Q: Maybe to sort of ask you another one on display, just a bit more longer term. I know you have a strong position in the display market with the display glass, but traditionally or historically, the problem with this market has been the shorter cycle nature of the swings in the volume cycle. When you think about the duration of this current cycle, are you thinking about it any differently, how does the cycle track rate to some of the sort of volatility we've seen in the past? A: Wendell P. Weeks - Corning Incorporated - Chairman & CEO: Right, that's -- let me take the first question. That is a wonderful deep question, Samik, on the first one, mainly because as the locus of panel manufacturing has shifted from Korea, Taiwan, into China and that high concentration there has begun to lead to sort of different behavior between set makers and panel makers. One of the things that led to the sort of classic crystal cycles would be that, a, you had a very strongly growing market, which meant predicting how much capacity you would need was challenging because you had to get the rate right.
Q: Thank you. Maybe just a 2 parter on the optical comms business. First, on the telco side, you talked about the inventory normalization, but there's also a lot of chatter out there and weakness given 5G hasn't seemed to work all that successfully to the telcos. So could you just talk about that business in the context of 5G isn't really successful and what that means for some of these longer-term contracts that you have with some of the larger players? A: Wendell P. Weeks - Corning Incorporated - Chairman & CEO: Thank you, Tim. On the 5G piece, I think that the challenge that our customers in telco have faced is that 5G, you move from a technology in 4G, which wireless is very wireless, right, to 5G, which, therefore, takes wireless and starts to make it more wireline. And therefore, taking a good amount of infrastructure to put in place. Now interestingly, what they've taken advantage of is if they're going to do that, you see them combining their networks from wireline and wireless into one. And that allows them some significant cost savings and offers many different potential revenue opportunities for a given deployment of network. Now -- so in a way, you're seeing their cost productivity improve, their ability to serve improve. There is a challenge of how much revenue -- incremental revenue the 5G at this stage has generated, and that is something they have wrestled with.
Q: Great. And apologies if this question has been answered. But I did notice inventory was a little higher this quarter and OpEx tracked a little bit higher as well. Just if you can provide some clarity on that. A: Edward A. Schlesinger - Corning Incorporated - Executive VP & CFO: Sure. Thanks, Asiya. On inventory, just think of it as we had a very low volume quarter in general. Our volume will go up through the year. So we still view inventory as an opportunity to take it down from the level we're at and we think that will be a catalyst for cash flow in 2024. With respect to OpEx, I'm going to answer your question, but I'm going to reframe it a little bit as well.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
