GLW - Earnings call transcript Q2 2019

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Operator

Welcome to the Corning Incorporated Second Quarter Earnings Conference Call. It is my pleasure to turn the call over to Ann Nicholson, Vice President of Investor Relations.

Ann Nicholson

Thank you and good morning. Welcome to Corning’s quarter two 2019 earnings call. With me today are Wendell Weeks, Chairman and Chief Executive Officer; Tony Tripeny, Executive Vice President and Chief Financial Officer; and Jeff Evenson, Executive Vice President and Chief Strategy Officer.

you the remarks Securities meaning Act XXXX. remind that forward-looking Litigation to of within fall of like that contain today’s statements Reform I’d the Private cause uncertainties factors Those materially. and involve to differ risks, that statements could actual results other in These reports. company’s factors the financial are detailed

using our also we comments GAAP results relate should measures, unless discussing our will to You performance be we note consolidated that core specifically indicate data.

core business. results non-GAAP measures the used management A performance reconciliation can core the of of our value the measures are GAAP website Our on at Investor to section to comparable by found Corning.com. analyze be Relations

and You access follow along. encourage are also Supporting with Analyst you also our website They Center. website our available downloadable webcast financials slides are may live for we results the shown downloading. Interactive core to in being on on our on

I’ll And turn over call now, to the Wendell.

Wendell Weeks

excellent us XXXX you, and we good morning, everyone. growth in morning This for keep results reported and track Thank that beyond. Ann, on

performance demonstrates in strength macro-environment. our and mixed a for portfolio to Corning’s deliver ability shareholders Our of the

quarter, And were up year-over-year. the XX% in second the from than And Segment grew driven segments. growth mid-teens. at we year-over-year. margin million, grew sales of earnings $X.XX, all at $X faster sales X% billion, year-over-year, operating rates ranged by Net EPS Looking was income expansion. up $XXX sales XX% mid-single-digits to

continued growth, in driven accelerating XX% particulate center North Highlights from strong and data year-over-year sales the driven the quarter market. met heavy by growth, duty the our adoption by high-single-digit include optical fiber demand gasoline American delivering technologies sales demand. communications filters and of Environmental delivered expectations

Glass Materials sales, year-over-year. X% growing and net up our income X% Gorilla innovations. the much with Specialty faster up up than Life were on of year-over-year Sciences other strength sales were XX% sales year-over-year,

to net expected than up stable year-over-year pricing. with and second sales income continues quarter and Display returns deliver significantly better

Allocation to shareholders Framework $XX extend and introduced of Framework, the dividends, returning billion investing XXXX. and performance our Under the repurchases our targeted in successful we and our from four-year of through execution to leadership $XX.X stems growth. deliver October Capital billion Strategy while Our than more

X-year our $XXX of our the half the first-half investments in by And of in during second to quarter. second benefit than returning million year-over-year seeing shareholders performance more we’re of surpassed the We billion expectations goal our $XX.X XXXX. our for and

but resilient you’ve or economic And Of seen headwinds. to in this companies than season, facing immune or we’re course, all earnings trade any many downturns are uncertainty other history. at more and we not are geopolitical upsets, time disputes as other macroeconomic our

many we not the market, continue to downward the while is global in we production our Across year. growing growth growth low-teens outpace experiencing our In are markets revisions the to company, be the at in all, and of but auto environmental expect are markets. down, end sales auto we serve the competitors this business

Glass unit sales to Gorilla sell-through as Retail volume forecasted but declining display this sales units, expect we year are growth but television are also are we down, this Smartphone year. be in forecast sales and well. growing

economic of growth relatively expect we this year. our Life Life the rate, business low-single-digit headwinds, immune is industry typical is but to In its in mid-single-digit it Sciences, Sciences growing so

high-single-digits our to and expect Optical the now We in and our Communications, year, the in And mid- Earlier projected to for the low- grow to be we finally, X% market market sales to in be we down. be grow to up for to sales expect passive market mid-single-digits. optical now down to the the low-teens.

relative the to previously While still the is growth is lower it expected, positive than market. very

dynamics. on details from Tony the more You’ll current hear

this news more. improve, markets when grow we’ll are environment, good we even the And So, is, even in growing.

Framework successful confidence. addressed those adds execution in our we to confident long-term We are But challenges path plan. or goals. Capital to challenges, face prospects. The met XXXX throughout Allocation to growth XXXX our our our our and and growth We exceeded of along our Strategy all

In a foundation growth. additional and significant created so strong created bigger a we for stronger doing, company we

Our priorities for Framework leadership XXXX Strategy sets Growth to & our new XXXX.

Framework new It’s evolved growth our for original a era.

to portfolio strength. to $XX growth We and and financial utilize return will to our and We continue billion $XX shareholders, to leadership. $X billion in our invest focus billion to extending our billion plan to $XX

compound annual compound per share to an expect to of rate growth XX% and of an annual sales a X% growth at XX%. XX%, annual growth We X% dividend of rate EPS least

multiple and across businesses multiple driving and trends Our are geographies. vital capabilities multiple becoming in growth are increasingly

to In gen on in next is hyperscale. it optical market, fast fiber that the to announced Recently, build passive fiber driven America. Corning optical the are as using communications, opportunities ultra-low-loss network as and largest CenturyLink XG track we in deliver twice growth North by

X.X half, throughout second installed the XX connecting networks solutions fiber U.S. cities total million and and reduce ownership. well, introducing the expand access They’re as In Europe of major of we’re enable to than be next a network. generation be the more to into faster that soon mile and creating parts going XG will cost

despite Mobile network While replacing well between on strong smartphone Consumer way projects, Electronics, photons pauses to as a provides operators maturing electrons trajectory market. longer upward after network a doubling over transition periods. our we may in sales, occur network In are

wearables in to Glass on Gorilla glass featured categories emerging Gorilla expanding. devices augmented now has leader Glass more adoption of X and worldwide per for we capturing smartphones, continue world like device. billion X tablets been devices, and is reality value and the expect As

new expect We further second of continue in half. products the to new innovate in and categories adoption

particulate to to Glass by business. market, driven adoption Solutions by XXXX, sales filter and our expect automotive gas we Auto new double Turning the

the auto are already industry noted, expectations. companies in I many As dropping

and great capacity. a plant, not filters business, to particulate serve Glass generating million we we’re building We’re business. capturing of and Solutions we’re growing demand for In to are $XXX In GPF faster awarded the only now projects making our double-digit ramping new expected. large growth than producing parts growing we’re we new accelerating another, gasoline pipeline one Automotive progress

We to $XXX full exceed GPF now expect for sales the million year.

two recognized in in suppliers X half the Volkswagen And won new by network just of also leadership the were XXXX. in was chosen of X category, the Performance Group XX,XXX market March. Award first Volkswagen’s technology we received customers Our Supplier We Award. just We from Daimler honored recently Champion for publicly the this Global of suppliers. global

more industry manufacturing in Turning therapy outpace we for cell increased to by to recently used Life gene Sciences We’ve X times. aim key production. Vessels, capacity products several and the and development than

injectable supported for need Our increasing by and the drugs. quality growth also safety in the packaging is of

the long-term multibillion continue we a make Valor new franchise Glass. with progress on path On to strong to front, dollar this

In is successfully stabilize returns are Display, driver size and growth display produced our glass we goal efficiently most are by which for fabs. customers TVs, large The on our XX.X is to Gen delivering.

XX.X quarter with about has X new leadership we of the are world. Corning facilities Gen plants. continued We of announcement in X pricing. the planned thrilled And the two, two our now Gen XX.X in

two. Third to prices remain with prices quarter quarter are quarter should quarter me flat glass two. consistent to expected heard approximately Yes, correctly, be you third

we mid-single-digit pricing As to a the decline only low- glass range. glass full-year to prices result through the now three quarters, expect in of

our opportunities Across our paying are new creating and markets, collaboration industry-leading our investments for off. strategic are with customers relationships

in and businesses. multiple capturing opportunities We’re line significant bottom generating growth top and

over forward next the I to new our sharing against progress look objectives years. X our

to more call Tony me Now, over let the for turn details.

Tony Tripeny

growth. And Wendell, in and did good X%, Year-over-year, invest you, long-term this another we every earnings Thank XX%, with had segment. a and morning. sales quarter. we per share business net excellent growth XX% We grew while income to and all continuing earnings sales for

get the currency details and hedge for and tax I our are that in contracts, I to difference the want non-cash, results mark-to-market a results, our and GAAP a our largest reserves. our into Before note performance of adjustment between change core

period foreign settled to respect translations end in be adjustments, even not current to requires contracts in setting quarter. though each contracts and a the recorded hedge the With current be value accounting these at and earning mark-to-market debt quarter, will of mark-to-market future GAAP

flow. has in on For this be reduced earnings accounting us To this mark-to-market impact GAAP our no QX. cash clear,

from exchange and to for hedges rate and earnings us certainty our future currency economically invest shareholder for higher protect Our ability fluctuations our our foreign and flow, cash distributions. provide growth

results operations with the a of transactions. currency economics our aligned underlying using or by rate Our core constant into non-GAAP transparency additional provide

pleased in cash hedging billion received are program ago. our We under with provides. it our and contracts their $X.X very We’ve the inception since economic five hedge certainty years than more

brings me our That to outlook. results and

$XXX For the year-over-year $X.XX, were sales rose Net and $X X% to million XX% was EPS up billion. quarter, second XX%. income to up

strong technology our growth and results Our manufacturing from leadership.

investments, glass devices projects recent for from capacity Gen particulate such mobile benefiting filters cable, including display advanced gasoline are XX.X and and automotive. fiber optical for expansions and development multiple glass, as We

are investments and these continuing invest. very We are with how are pleased out, we playing to

for this additional totaled XXXX spending growth committed platform. just year, are and in demand Capital we plants in with new beyond. bringing capacity and billion market We XXXX over $XXX in online driving programs spend expect million access to sales every $X and creating QX in

detailed a is we at look had returns let’s Technology, segment outlook. and to the stabilize results Now Display goal In our quarter. very and strong

was were XX% X% year-over-year. sales and $XXX net income quarter year-over-year up million, Second up

price declines were even Second sequential glass and quarter expected. than moderate we better

expect we to approximately quarter be to glass said, Wendell third As QX. prices flat

mid-single-digits. mid-single to pricing expect a through we prices glass of As low- three guidance the of the digits glass our to quarters, prior now versus year result full in decline

drive Now this three continue. view our that will factors environment pricing favorable

we glass balanced First, supply tight. or expect even to be to demand continue

capacity face current pricing manufacturing requires existing in third, competitors display to challenges periodic Second, continue to investments maintain operations. our glass at And profitability levels.

returns on glass acceptable those prices investments. support Absolute must

grew and add get expected digits quarter, only glass of second shareholders. for can the the will if we Gen volume plant. year-over-year attractive volume XX.X Corning, ramp our to as mid-single our display our market grew For In return capacity due we the faster an

of some volume we end-market Now, the you’ve low-single for utilization. by lowered meeting have panel and percentage while a decrease Therefore, as expectations, to sequentially. hearing display third to market year-over-year, makers be digit glass to quarter recently is demand expect XXXX, been consistent their roughly our

be year-over-year decreased low-single market. the with digit ramp volume line the expected sequentially is our to XX.X However, due to up again and in Gen

display For weaker to Gen outperform by in our we digits and to XX.X. year, continue glass dynamics high-single the stable quarter, to ability capture driven despite In current expect by we growth to this full anticipated deliver very the pricing business Gen remain market the summary, our volume in with returns. delivering third XX.X pleased growth the

Communications, sales X% addition Division $XXX from acquisition. second sales $X.X and center our X% the quarter and move year-over-year. was by sales XX% sequentially the billion, and Growth up driven X% in fiber of Let’s Markets were of projects, Communication sequentially year-over-year. income grew Net to Optical XM multi-year data million,

spite the of year. we in strong half, our Now for first expectations our reducing are

more the by sales X% market sales to increase be We optical digits and and believe low-teens. the high- entered than that global projecting now mid- XXXX to to will the down up our be in that the passive market We grow in low- year half of our out, last digits. single been have see mid-single global build in weakness to earnings and remainder the projects for carrier for we second multiple reduced We the of market. projected large call, several Since the the the carriers year. the primarily pushed CapEx the have will

We delay for several leaders. in announced market America being weakness tender these the for XXXX next seeing in further that X The absorbed Tier this early momentum and densification in generation builds fiber Asia. Also, outside slower which gained now in expectations our reduced see are in has wireless and is at inventory, cable operators, not the China carriers, Mobile’s regions. yet currently related and earlier India have year deployment delays China Fiber-to-the-Home we resulted North surplus Southeast

and execute factors control to our the against above market. well Now remains continue our in significantly we growth

and digit we quarter, in XXXX. third the consistent exceptional sequentially to For down third be versus an expect sales quarter low-single

ahead up and Net Technology second and expectations, GPF ramping by income sales driven of grew $XXX North heavy-duty continued sales strong million, America quarter Environmental were in XX% market. demand XX%. year-over-year

full for We in European million in automakers a in regulations X effect are XXXX. particulate filter on $XXX gasoline business. are our full well building way China China to implementation are preparing and

as we’re than platforms more for We The OEMs we market faster majority prepare our planned anticipated. implementation. of awarded is platforms particularly and sustained X date position to winning wins China with developing than we additional

percentage million grow thereafter. demand, XX%. by result, and now a we exceed prior XXXX, on expect low-teens expectation to accelerating versus Based $XXX As year sales be to full GPF now expect to we robustly our our up a sales in of

quarter third sales year-over-year. expect also a up low-teens be to We by percent

solutions. company’s continued second for the X%. Net of portfolio and electronics income In quarter million, Specialty sales Materials, mobile X% consumer $XXX were was up glass driven year-over-year strong demand by up

expect approximately year-over-year. the quarter, sequentially to consistent up and For sales third we be XX%

again growth smartphone full of continue expect how to We innovations. will much our market, in on exactly a the rate depend despite maturing adoption XXXX year

the glasses value our Our of results demonstrate portfolio. strength premium of innovation and outlook and our the

$XXX second was Life sales Sciences, operating and Net performance income were million, quarter In up year-over-year. manufacturing leverage were up outstanding. year-over-year, X% XX%

the For across and excellent of be In The both the to year, performance the results. quarter at to contributing company. had mid-single year-over-year. an sales with benefits investments strong we quarter summary, we third expect digit our are recent second

All solid track of full our for for momentum their year growth we businesses on XXXX. markets have to relative sales are and

XX.X%, gross Now second first statement, move to a increase let’s quarter. margin quarter was slight the the from consolidated income

normal new the continuing facilities leverage we our last cost described quarter, we gross and some line. I margin are on offset startup, to build of while associated optimize invest, As ramp

the than in first half. well less than we as to is of XXXX, expect half sales slightly cost because in of the higher-than-expected For optical thought we gross margin second in This better display. as lower-than-expected be April

quickly Gen we our ramping technology, expected. and bringing we not cost, as XX.X as In facility, improving volume up new our just are

provide are half. they the manufacturing. expand majority the projects, half ultimately an XX.X we capture excited enable to expect a margin second We of growth operating and over the glass us our standpoint, first in Gen the market From step because to change about will

second $XXX expected year. be we gross predominantly additional be to consistent are from million. approximately with income, $XXX year the quarter to of to at with expense the $XX XXXX for $XX million $XX be Hemlock other gross our Moving approximately million Semiconductor quarter equity approximately details, to approximately earnings outlook expect QX. million versus third effective other tax million we expect equity earnings for full to And XX% XXXX Full rate

one in with In every closing, we half and an first our of growth sales excellent had businesses. NPAT

now. well, most strong discussed, we to first our feel factors solid for is confident We uncertainty and business headwinds gets year. that and facing these As the are companies as our full headwinds in our the macroeconomic every control our execution grow right in half, within but us ability makes evident

but are more are to than we not we immune Now, challenges, resilient ever.

capturing technology to the Our portfolio serve. and on substitutions we us enable emphasis markets outpace

As conditions accelerate. growth improve our will

Strategy access in opportunities across is Our confidence in to Framework. XXXX the & are we’ve Growth out reflected our long-term There targets growth exciting XXXX market platforms. laid our

are increasingly We and and markets, are allows the more the that relevant to leaders. those to capture trends in fueling us becoming opportunities products already categories, where we

Framework With I our look in progress forward years Ann? sharing months move the to let’s and that, Q&A. on ahead. to

Ann Nicholson

Tony. Thanks,

Okay, question. ready Greg, our for first we’re

Operator

Instructions] of of first Please [Operator Bank Mohan question the line you. from America. Thank from comes Wamsi go ahead. Your

Wamsi Mohan

growth if you mix which talking versus a businesses, little that morning. you. lower XXXX helpful half incremental Yes, second even Display. faster bit you be the isolate Tony, you Good can margins the versus bridge be the the in thank of impact and in margins gross in XXXX if you’re actually the operating of margin impact It can the will could? might

you just in half? square the improving glass price Thank margin the can deteriorating gross optics to of sort in And second trends the of here year the you.

Tony Tripeny

Wamsi. Sure,

than teens mean, to the from this. the beginning sales. to sales mid-single-digits. driven is on now of gone slightly carrier I the it’s I big XX% the here And the to change margin that had And XX% the drivers what’s where really two year be we’ve first back-half. happening is it the in better expected low- is think market, at there all at in to to the Communications looking to This Optical go we’re in are half. we statement gross first low

fixed sales profitability given is high, There infrastructure in all that on we are the have incremental cost these place.

expected. up area compression margin and improving we cost see is we technology as that our in our XX.X, and bring really quickly in not as occur. And is second So is And then those for as by, cost driving as the don’t sales being new really COC the in Gen driven higher-than-expected ramping we just company happening Display. volume it’s the –

change had over a what ago. the quarter So statement that big we is expected

the to And expand In we half margin year. of terms year versus operating in the did of half expand second expect margin, first year. of operating margin the we the operating in last

the most as our And we’ve because that we of of leverage grow discussed, so, from standpoint, that’s metrics, important sales. the the operating get as we

Wamsi Mohan

Thanks, Tony.

Operator

You comes from next Hosseini question Mehdi the go Please of ahead. from SIG. line

Mehdi Hosseini

consecutive first the Free for see Tony. free gross trending? operating flow up, slightly follow quick negative and a than do two better been with has margin you half cash half, the just Yes, flow in second how quarters, is cash

Tony Tripeny

that growth So, first flow of capital in pattern to mind working and related for the Mehdi, in And is our we cash support settlements. have the operating in compensation, sales. us I annual flow half, also have payments payments to our most we mean, And increased because back-half. to the occur significant the in that generate normal some legal operating keep is, tax first half that cash

this what’s $XXX cash half $XXX flow exactly is included million. And happened of for our million. mean, about first that’s working the and capital the build And operating in about that year. I is

than of that’s in expect, you dollars which inventory. would hundred what couple is Now, maybe a mostly more normally million

of bit you’d our little bit reason GPF, that products that. in that have terms Materials. Communications now And new be Gen little a bit sales. we innovations new significant stronger it’s is also Optical would And some higher the It’s than beginning less little at for thought the because we year like Specialty of expect, of a XX.X, in than a the

expect or cash all flow we back-half. And like the will generate itself the just that years But we in years, half. most operating expect in inventory correct to more in second in

for this normal free And end have. year. will that So just I flow think confident is we cash we’re the cycle that with up we the

Mehdi Hosseini

high And color. follow Sure. a one and little would confused bit just quick any I’m appreciate Optical. on level

that XG with additional contrary I’m handset having optimism for available phone sales the time millimeter side, wave. trends a increased be densification is kind with On the And reconciling. there’s ticking just and capacity. the of especially down especially you’re carriers are of investing hard going to in These

clarification any great. be or here color additional So would

Wendell Weeks

Great.

cycle. it’s I think top you things that. think that around, And actually when understand our need two those of we on Mehdi, you’re So, demand right just to about

is then, how the is which is, do choosing. put that our First second customers and quickly our it And highlighting, you’re folks one what win which architecturally solutions in.

sort we’re innovations. right, that is lights you’re are we demand for network means over point means So green. densification, of of which view And out all years going our significant to flashing with right ago, that laid turn the which in equal X more classification, XG

right; you’re And hearing be tend is topic. data all confirmatory on that to you

what well. hearing we’re that’s So as

bullish So long-term wins we increasingly projections, for for signal are confident of which of And us. XG. a architecture that’s our

has begin the organized, then, customers Now, These investments. next to make our to projects then capital need piece are those make to decision, and significant the and happen. themselves get

putting to house together, real occur. their of And demand their leaders right little Now, that and Other to, is in waiting to in would getting then the getting now in expect the we that people their XG, little a a alliances between a place, order you’re projects. pointing financing they’re plans of that bit, difficult than in what timing that, we’re seeing are can sort be is gap call. there sort

Does to you? that make sense

Mehdi Hosseini

a is Yes. But, XX XX-month timeframe? does that like Or more it these than are coming require together, what trends months? you’re saying,

Wendell Weeks

We one going customer piece. They thought, time name on it’s model be had came there major specific hard slightly. year, their to the business was that specific and it’s the least announcement densification altered player so other strong, their into XG timing on really at that an coming period. to changed slightly like exact No, and

are I that, up. the our is able here trying we’re they’re it. then gear right good and So we’ll and be is XG, demand cities decide support they how customers this to The And talk be and to they’ll talk customers go different think about to about All in cycle, to it. what the news announce architecture going subtle, to to the going our to, do going isn’t they’re roll as going on as long-term they be that roll.

demand, way, time you’ll and in a cycle a little announcement of up. keeping ahead normal the see follow, piece will And getting and then bit hard will the have demand of a

Mehdi Hosseini

I so it. Thanks Great. color. appreciate for the much

Operator

Your the Research. from Cross Steven of ahead. next line question from Please comes Fox go

Steven Fox

perspective ramp on Thanks. Good I G you the could provide the if was a change in you morning. more wondering mentioned. that little XX.X bit

same for, operating, projects versus you’re does this is obviously still it units there in plant own change demand terms the You’re the be TV appreciated. of cetera? sounds weaker, on your existing Any you’re about looking growth overall. but bringing the new like how in help would et

Wendell Weeks

what’s data make ramp on from is some of sized how at issue us it’s large really Tony, of a in You our of sort think which how have really utilization the Gen high customer strength will right? But relative month. TV significance, at I not moment, a of – a market given the to point. So, comments happening the interesting a the normal core XX.X,

to really of what’s that’s right? But our all all is dynamics those on All ability driving TVs. requirements yields the we’re are size us quickly we’re powerhouse going that’s happening large is here, bullish be on to and how That’s really XX.X’s improving. Gen meeting our

able deep. is profit So put technology be This us like just at hands it rate there’s more would at yield to a making in our yield our to matter shareholders. the the nothing of we of which

maybe you television. Tony, So about talk want to

Tony Tripeny

Steve. is ahead add TV Yeah, tracking actually market, just would in of of April. I terms slightly through sell-through Yeah, our expectations the

it’s in, the grown important that of grown Gen what’s going come and of takes As all four really large-size out where XX.X TVs. they’ve data XX% ended of TVs are Sell-through And TVs factories. that piece XX-inch announced what to Gen you Gen are have almost we the XX-inch XX.X up but investments, three is have happening on these course, the most for is know, months TVs optimized of it that’s XX%. for have the for really almost and to couple XX.X in driving a the

feel we So really that. good about

there’s so – some from a maker third slowdown utilization quarter. of in overall panel while an of bit little the standpoint, a And

year to high-single-digits up of We expect volume ahead XX.X. full our be for market of the the because well Gen

Steven Fox

then when quick about X where follow-up, taking going and the market tanks functionality you pricing Gen more here Thank trends at there And you a offline helpful. as you. the on think seeing and what’s below guys. similarly overall? customers for you’re Is as just That’s given a strong as you’re

Wendell Weeks

So technologies support our is will increasing to pricing productivity We us good trends. that. right. strong, overall what that continue really of then from for to feel it. yield have Yes, will roots out it’s the and capacity very about And we our see you by and account adjusting that our

So that we’ll than our share repurposing more or really to really we offline our other price, feel it feel really by dynamic older with about else, right. of feel markets. service generations the that’s ability And the of really increasing about we market, tech technology. sort just of good anything for market good we the And adjust about our good taking

you’re trends our got Steve, continues. to faster, little our that is a long-term plan. we would is up get all yields just do to I beautifully then match and that So on, And think

Steven Fox

Thank helpful. very you. That’s Great.

Operator

the Goldman from comes line Hall from Rod go ahead. Sachs. next Please of Your question

Rod Hall

the wonder, comment of it’s helping what that? like flat maybe whether mix Gen this Thanks kind So and seems pricing pricing window, Gen on dynamic guys. it a that’s you’d you back glass comment towards if below is I the for pricing? driving driving Or that? could if is is XX.X? come see It I XX.X question. wanted indication Hi, on guess, to I to

I Thanks. I know in flow, other Tony, is thing also I cash flow. mentioned cash tax see other And the then exactly on a is but if about ask to to income? some going the And deferrals? related on drag larger What the wondered to adjustment that a is, you there’s non-cash of capital working wanted I

Tony Tripeny

Sure.

think as glass pricing Wendell XX.X the market Let expect me to I said, to is first demand including pretty And one, XX.X. this continue balanced below the are clearly below take we be the and first, straightforward, Gen tight. reasons I across mean, particularly Gen even and supply

Second, support face at investments. requires competitors glass manufacturing levels. and absolute so our acceptable challenges current third, to operations, our continue investments returns pricing And display on periodic must to glass profitability maintain pricing those

saying for into to been environment. a And we we’ve said, what what QX consistent the years the we’re number and improvement as of environment, very see happened the continue continuation in that’s in by So QX. pricing Wendell pricing thrilled and

Rod Hall

you expand actually point? on some can up you go pricing at Tony, If – if that,

Wendell Weeks

to center performance grow of display though your therefore, enough And question operators that not make Their to quarters from now really tend been thesis. creating make leadership yet myself change sense, the They Rod? you’re Rod, on actually fair. aging in can I and net they where debate number be recent my this side. Does consecutive that have to count would income. the right data to believe our is think I’ve theory an investment of businesses their in open me my of on that put together those is A for really our about thing operators, between investment wisest do business Display right. gracefully,

Rod Hall

Wendell. Thanks, Yeah.

Tony Tripeny

that to indemnification the asset been with first of the incentives Rod, then, the of related in others on terms we’ve that of of a nonrecurring couple to our the And factories were in were comparison in last number quarter that related think, the receipts cash couple of and quarter operating a first nonrecurring, the occurred the – we payments year the building transaction of that occurred I a in had them CPM flow, some that years other, ago.

a last it’s different that’s why reason the And year. so this than number year

Rod Hall

Okay. Thank you, Tony.

Operator

the Your next comes from Please go Morgan of James ahead. line from Stanley. question Faucette

James Faucette

into bit right do little able just narrative of if in have to business back display visibility around in as visibility think, see are supply well you’re doing Great. as changes I is can the things the trajectory I’m a or through wondering, end about, Thank optical are investors your But in talk markets think, on you. I particular, to chain first? ask the now concerns about makes larger that I improve wanted And one what further probably size to sense. and you you to the that you can demand supplying?

a follow-up you upbeat opportunities. second of and is, opportunities at Analyst last Glass in the My both the month automotive assessment question gave pretty Valor Day

Just contribute been data any much. additional new if can those Thank you there’s you wondering, products. very points to

Wendell Weeks

So piece. – and tie the other to value think I do try I’ll on chain the first, in let’s then

for We’ve So just try that optical. us, to got on we a walk through I it’s little two like did that levels align. the

of the The the the growth from as to of our expect over to what our much products innovations. coming content and more how the primary we story, buy. Investor of our do, substitution of people core you that And is adopted is years remember first be then four is opposed economy into everything a that for the innovations type is everybody our is or face. Day, long-term buys growth as what more curves driver story technology we which And

areas just whether We or automotive. nothing, signals continue optical an but named, get that to positive you it’s those items on in the

projecting of Optical, would sales period we’re time that that Consumer very in because the the much our a answer. side more Mobile right have overall of We we the the happen and Similar are of and you you much teens, confirmatory Materials, Specialty my again see curve. So but growth here content. Valor the automotive heard in And same in Electronics on declining substitution we’re we forecasts also story. more to when to in things same. in evidence our once expect as production, business, of tend

next about overall then of does curve first that. out comes good feel level, and for how that pretty interact we The our customers. does play to the the that’s timing that how substitution So demand with

Now a can that get the and that. noise you near-term, little certainly of experiencing in some more we’re in,

exactly in back market row it don’t record the of we as pretty track – right We significant start feel that then way right, Evenson, to groups the way chain value end analytic get system. Jeff all who’s folks try able signals well models the at pretty are build So we through have as and like demand but the good and then to we to to here and the track tools right it. keep analytical to the always work the

James Faucette

Thanks lot. a

Operator

ahead. Your go JPMorgan. question Samik comes from from next of Chatterjee Please the line

Samik Chatterjee

Hi, taking the good morning. for question. Thanks

start margins, for I to full of Just right XXX the the off gross wanted points decline probably guidance here, year-over-year if get margin and in you gross with imply year. more basis

headwinds dissipating? As in maybe are that coming looking some kind basis help contingent and cost look of you of with kind points at you that might recovery of XXXX. more XXX the the back points? actions that XXX back it Or we exit Is some that on of macro line basis at recovery of

all once it second I have you to of share sense share question a online? display your XX.X Thank just give that be secondly follow-up, outsized market you. what can an on will side, the Is us given share display of Gen plants wanted today? And just see you And the to market are there. plants in –

Tony Tripeny

about think what’s happening profitability on me let our way really about in what’s talk the gross margin, So important is the operating to clearly, that line. margin most us we our

what thought compressed operating compared – is primarily sales, Our and happening business. being being compressed, gross is what’s and cost we optical our display of in margin the beginning in what’s on happening year, margin at to communication the and our

change things expect those course that as we’d continued for of there. So improvement then

making. years important the very in points on And this invested the overall course the us to XX But next the And year. last return over to first continue improvement the the what other standpoint, in year, we’re our is years actually we’re that we of that half driving four we capital, second margin. on profitability improved what’s half capital is an of get expect for investments thing, in return by on expanded to expect and operating to over expand and we’ve XXX basis points really and we’ve been really continue is, from and of returns is basis our the four we margin by what improves, the measuring our invested operating

Samik Chatterjee

on it. Got the in Any help share market display?

Tony Tripeny

three I where a is disclose market, growth that numbers announced inch important this four is we XX TVs have growth and factories. XX gets Gen in what’s – mean, and both don’t by think are important mean that the market XX.X larger I large-size really in where of the the what’s supplied and there Gen TVs, of projected much That because occurring, there, we XX.X share I year.

Samik Chatterjee

it. you. Thank Got

Operator

next question Your UBS. Please comes go from of the from line Venkatesh ahead. Tejas

Tejas Venkatesh

particular, any other optical. fiber effects if wonder, any In change you’re China of you’re environment seeing seeing I was makers markets. wondering, I pricing in moving to you. if Thank in competitive

Wendell Weeks

Wendell. is This

year, of So, in key had that tender, revision of yeah, clearly, China parts seeing carrier one Mobile in we a the right. this as the downward strong China are market that the especially delay

of sort largely in terms China pricing in China. in that of to expressed led a that so And itself buildup

We’re Optical some into And Asia, knock-on Communications effects India incorporated also business. we’ve all our for in primarily. our and seeing that Southeast outlook

Tejas Venkatesh

And now has vibrant backs forth. on other smartphone a glass have helpful the been Thank so adoption you glass for as and you. business, follow-up, very smartphones your like of Gorilla innovations

introductions, you get any to I innovations you. smartphone be closer X to next Thank we the wonder, those newer over adopted XX new As months? if of to expect

Wendell Weeks

That excellent is, question your simple yes. is observation, an answer to my and

Operator

comes go of Merchant ahead. Asiya question next line Citi. Please Your from the from

Asiya Merchant

more an of for by the Again, puts earlier end shared maybe the expect lot year But more smartphone have outlook that outs, on the some and coming Hi, on thank outlook the through the customers some you. Wendell the you the now about the consumer Optical other by to is reception for XG questions takes Is down side the you. to the as there if better that us could puts commentary the segment there? phones I about customer risk more as uptick and been it’s the segment? we maybe your walk and takes some – Thank of the as year progresses? XG progresses answered. Optical Can about cetera. see A push to just we et that

Wendell Weeks

excellent question. an That’s

it for I and if then get that leg it’s and to deploy XG some the people start understand and it the because us, market with the their see very XG in into to carrier one, some early is how leaders? is rather more XXXX arriving our growth. with That’s near-term have and of particular the growth. big less the it’s do is do to we them So happens they significant plans, when be than Meanwhile, like expand of rolling. sort delays projects XG let’s but few it call. having exactly – first, they’ve significant on quickly in, that just adopters how So push beyond think some way there’s of – what that does just will dealt the results clicks deeply plans, when it in pieces on with wireline, to When just wireless, of XG next that And in changes. and changing XG hard going really sort at outs they’re their of that clicks done

this the innovations in I growth that’s other piece pieces all you’re seeing cycle, why adoption year right, our So to you’ll and coming network. demand hit starts and our when XG won’t keep previous our saying, it subtle the the be of it see of is primarily,

started networks from world all ahead from to That’s big the of relatively us. the really to wireless We oomph of the feel fiber-poor changing fiber-rich. very haven’t

that we’ve deliver. do Now in the in case. expect tried say, confident that a here revisions feel continued is we to question can I downward our not we to your way would it next clearly it will auto? What highly is on, guide is intent that

Now to answer months of point view our question? of expectations know in more is, by, go intent accurate how as set and sliding [opto] not Does of [ph]. but the our sort it a we’ll have is your that

Asiya Merchant

Is kind the this that fiber the through just that about the like been year? the margin driving can sales should more on past or us margins we think relative profiles we what’s just you And how that’s significant years. to the let’s see more the margin hits, similar? great. few happening for a there as walk the XG Fiber then, given it’s are relative how more to expect builds, when No, rich, you Home to, Yeah. If we solution say, think the which of are about your newer leg-up should innovation for of

Wendell Weeks

What In to the of second bear bring in my densification approach. capabilities this remarks, you half suite is be products new wireless. question remarks, products new allusion heard those make a the to opening really in full in that great related to my to ways some our introducing is represent me an us we’ll – opening this technical for

suite in and profitability whole would consistent What which suite to be plans our products the XG you’ve is full our have relative that should therefore, innovations, be or its involved grown to communications. in our optical opportunity of for it of expect with that

Asiya Merchant

Right.

Wendell Weeks

is, That’s don’t is they steal want reason a operator’s little when product mysterious. the And it to set. new launch I their thunder my

Asiya Merchant

you. Thank

Wendell Weeks

right. All

Operator

question Notter next of Your go ahead. from comes from George Jefferies. the line Please

George Notter

to I a guys. clarification. maybe with Thanks just a lot, start guess,

absolute pricing you So just follow-up. I flat or relative flat you about a being clear, are glass in of pricing rate to pricing about be and talking erosion when talk are QX to a QX, you got talking

Wendell Weeks

pricing. Absolute

George Notter

real China. changing I Gen XX.Xs, customers, certainly China, also Gen coming some then, think in on, create dynamics supply Gen coming look can with traditional dynamics improvement. the it I on as at your in follow like great. Xs just like guess is I panel-maker among a Xs among Korea, That’s And about Okay, supply the places that to there And but panel-maker and in and Japan. online, Taiwan seems it customers your

leverage Or terms you feel again have So kind basis? downhill relationships customer pressure that go-forward pricing how pricing do where Is can of flow a to through those flat there to you? for on you rippling do you for of in on enough Corning? remain like see that potential

dynamic of or how then, guess, rates And alternatively, Thanks. utilization China? I the you in with changing terms ripple effect do that through think see you could do

Wendell Weeks

a had observations. number you So of

just compact Let’s two key ones.

first, again once pointing in shift out that, market. the regional think wisely quite display I seeing you’re some So

and to out We have Japan of to from China. Korea followed Taiwan it

again What try moves new done we of region each do we our to those position enhance is have with that each here. in and

production with shifting. we very for panel direction we So the see which positioned are well

level. strategic first the that’s So

capability, course, you’re a think So of weaker, combination happens be the panel in in capability, glass comment, you’re relatively things then there, is sort production of to a China? will which what I the in that, seeing happen. to embedded wise that making Now, relative regions production of

shifts is glass First, more we’re newer with supporting more advanced to display right, which types. and advanced newer and technologies,

you’re growing our that capital can of to number optimize serve continue of to you and of us expect we have markets. different of see of the in glass, always that supply, Second, to use to glass seeing optimization our network make to place,

structure, So supply, innovation then aspirations continue those glass regions, in we will previous expect support our so to us market their and diversification. that our optimize and cost customers our to optimize

in seeing a Like, automotive sets. in the we’re industry, going with capabilities opportunity address very to nice Taiwan, for are automotive of buildup instance, glass which nicely our

way work going to the So through that’s all. it we’re

Now, that I said without noting in continue can’t flat you your question to answer be pass to Display. pricing this

returns and rate We glass we’re stabilize. of to for to are not just decline saying we long term. that What yet, for a improve the is expect saying to our continue

predicting prices not for that We’re glass remain foreseeable flat future. the

George Notter

you. thank Right,

Ann Nicholson

squeeze in one We’ll question. more

Operator

Bank. Your go Deutsche from of Yun Please the ahead. comes Brian line final from question

Brian Yun

into Most answered in. be trends visibility been second even could hyperscale well. give questions on into or helpful. an us of the heading of have as the my But cloud would spending on just business? update color XXXX there thanks you Hey, Any half side for me or squeezing Thanks. XXXX the

Wendell Weeks

I’ll say X once layers. again divide it I’d into Hey, here,

each piece us point are accurate. Day interactions passing piece a at that confident in new making our month First, we with presented of view customers, architecturally, and – more technical work is that of IR our

adoption growing in of more continuing even see cloud the becoming and the we So glass dense. glassification of

we about really good So that. feel

any as get the can’t both us, quite the we hyperscale, fundamental But driver saying year. this of shifts to time Exact what in total to that’s can beyond. facilities a expect real real they the periods, and at the of have shift, growth beginning large as planned there we’re year fundamental be seeing different for get not market. we’re where for terms up fast of cloud and and any not they may continue cloud you don’t seeing And sort timing quite hyperscale these

Brian Yun

Thank you. Great.

Ann Nicholson

us joining thank And Wendell Tony. And Brian. Thanks, you all you, today. thank and for

close, let Conference that to August X. XX, Technology wanted Global on and and we’ll Infrastructure at the September Summit I know Before the we Jefferies on be Semiconductor, Hardware Citi Communications everyone just

and that posting presentations this on today’s be virtual webcast morning. replay call concludes Operator, also our site topics. will disconnect be And of on Please later our available a lines. call. We’ll some business web starting all

Operator

Ladies and for your participation. gentlemen, that conference. Thank does conclude your you

know You disconnect. may

Corning (GLW) 30 Jul 192019 Q2 Earnings call transcript