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Corning Inc Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Sales in the Enterprise portion of the Optical business grew 93% YoY in Q4.
- Sales of $1.4 billion in Optical in Q4, reflecting 51% YoY growth.
- Environmental Technologies' Q4 sales were $397 million, down 7% YoY, driven by weaker light-duty and heavy-duty markets in Europe.
- Full-year sales were down 6% YoY as the company continued to experience weaker global heavy-duty markets, particularly in Europe.
- The company expects the back half of 2025 to be a little lower in Display if the front half is a little bit stronger.
- The company expects to deliver strong incremental profit and cash flow as it captures the sales growth opportunity outlined in its Springboard plan.
- The company expects to run at the same rate as it goes into calendar year 2025.
- The company expects free cash flow to continue to improve.
- The company has been guiding around $1.2 billion for most of the year.
- The company is planning to upgrade its $3 billion Springboard plan at its March investor event.
Q&A Highlights from Corning Inc Earnings Call Q4 2024
- Analyst asked about the potential upgrade to the risk-adjusted plan and the company's comfort level with the non-risk-adjusted plan.
- The company is comfortable with the non-risk-adjusted plan and is still working on the full strategic review. The company has shifted the probability of outcomes towards higher numbers being more probable, and the new plan will be between the $8 billion target and the risk-adjusted plan. The company will provide more details in March and will also discuss the milestones ahead.
- The company is comfortable with the non-risk-adjusted plan and is still working on the full strategic review. The company has shifted the probability of outcomes towards higher numbers being more probable, and the new plan will be between the $8 billion target and the risk-adjusted plan. The company will provide more details in March and will also discuss the milestones ahead.
- Analyst asked about the major risks that are still ahead for the company to navigate.
- The company sees the risks as milestones rather than risks. The company has several milestones to hit in Opto, solar, mobile consumer electronics, and automotive glass to achieve the full non-risk-adjusted plan. The company is seeing progress in some areas, but there is still work to be done to achieve the full plan.
- The company sees the risks as milestones rather than risks. The company has several milestones to hit in Opto, solar, mobile consumer electronics, and automotive glass to achieve the full non-risk-adjusted plan. The company is seeing progress in some areas, but there is still work to be done to achieve the full plan.
- Analyst asked about the impact of DeepSeek's set of announcements on AI buildout more broadly and for Corning in particular.
- Corning's management does not see any negative impact on their Springboard plan to deliver $3 billion-plus revenue by the end of 2026 due to DeepSeek's announcements. They do not see any significant impact on Corning's business. However, they believe that DeepSeek's innovations have been a topic of focus for the technical community for the last two or three months, and more will become public as time goes by. They also believe that significant innovations are expected to continue in the space, and all of us in the industry are counting on these innovations to realize the potential of GenAI.
- Corning's management does not see any negative impact on their Springboard plan to deliver $3 billion-plus revenue by the end of 2026 due to DeepSeek's announcements. They do not see any significant impact on Corning's business. However, they believe that DeepSeek's innovations have been a topic of focus for the technical community for the last two or three months, and more will become public as time goes by. They also believe that significant innovations are expected to continue in the space, and all of us in the industry are counting on these innovations to realize the potential of GenAI.
- Analyst asked about the core rate of ¥120 and if it will remain static for a few years.
- The core rate of ¥120 is expected to remain static for a few years, as the company has been able to hedge 2025 and 2026 at that rate and has hedges in place beyond 2026. The company will update its plans as the year progresses.
- The core rate of ¥120 is expected to remain static for a few years, as the company has been able to hedge 2025 and 2026 at that rate and has hedges in place beyond 2026. The company will update its plans as the year progresses.
- Analyst asked about the risk of the BEAD program being reworked and satellite playing a more significant role.
- The company has accounted for the risk of the BEAD program being reworked in its overall Springboard plan, and the modifications made to the plan do not change the fundamental Springboard thesis.
- The company has accounted for the risk of the BEAD program being reworked in its overall Springboard plan, and the modifications made to the plan do not change the fundamental Springboard thesis.
- Analyst asked about the company's order patterns for its new product and its visibility into 2025.
- The company's order pattern is tracking as expected, with the bottleneck being the company's ability to produce the new product rather than Lumen's desire to install it. The company is seeing the demand it anticipated and is excited about Lumen's announcement, which aligns with their More Corning strategy.
- The company's order pattern is tracking as expected, with the bottleneck being the company's ability to produce the new product rather than Lumen's desire to install it. The company is seeing the demand it anticipated and is excited about Lumen's announcement, which aligns with their More Corning strategy.
- Analyst asked about the company's visibility into 2025 and how they prepare for potential cyclicality.
- The company has a good understanding of their Enterprise business, which is up 50% for the full year of 2024 compared to 2023, with the majority of growth coming from the GenAI data center space. The company has good visibility into the near-term, but there may be periods of time where the sales growth may not be as strong as it has been over the last several quarters due to cyclicality. The company is humble about the possibility of a slowdown in their sales growth, but they are confident in their ability to continue their momentum in the data center space.
- The company has a good understanding of their Enterprise business, which is up 50% for the full year of 2024 compared to 2023, with the majority of growth coming from the GenAI data center space. The company has good visibility into the near-term, but there may be periods of time where the sales growth may not be as strong as it has been over the last several quarters due to cyclicality. The company is humble about the possibility of a slowdown in their sales growth, but they are confident in their ability to continue their momentum in the data center space.
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