Corning Incorporated

Ladies and gentlemen, thank you for standing by. Welcome to Corning Incorporated Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To place yourself into the Q&A queue, please press star 11 on your telephone. You will hear a message advising your hand is raised. And to withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. It is my pleasure to introduce you, Ann Nicholson, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Corning's third quarter 2025 conference calls. With me today are Wendell Weeks, Chairman and Chief Executive Officer, and Ed Schlesinger, Executive Vice President and Chief Financial Officer. I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that could cause actual results to differ materially. These factors are detailed in the company's financial reports. You should also note that we will be discussing our consolidated results using core performance measures, unless we specifically indicate our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business. For the third quarter, differences between GAAP and core EPS include non-cash mark-to-market adjustments associated with the company's translated earnings contracts and foreign-denominated debt, as well as constant currency adjustments. As a reminder, the mark-to-market accounting has no impact on our cash flow. A reconciliation of core results to the comparable gap value can be found in the investor relations section of our website at Corning.com. You may also access core results on our website with downloadable financials in the Interactive Analyst Center. Supporting slides are being shown live on our webcast. We encourage you to follow along. They're also available on our website for downloading. And now I'll turn the call over to Wendell.

Thank you, Ann. Good morning, everyone. Today we reported another excellent quarter. Year over year, sales grew 14% to $4.27 billion. EPS grew 24% to 67 cents, again outpacing sales growth. Operating margin expanded 130 basis points to 19.6%. ROIC increased 160 basis points to 13.4%. And free cash flow of $535 million puts us on track for another year of strong free cash flow growth. These results demonstrate the powerful, profitable growth outlined in our springboard plan. I want to put our third quarter results in the context of that plan. In quarter four of 2023, we launched Springboard, which outlined our plan to significantly increase our sales as we captured important secular trends. We said we already have the required production capacity and technical capabilities in place to deliver the sales growth. and the cost and capital are already reflected in our financials. Therefore, we expect to deliver powerful incremental profit in cash flow, leading to our earnings growing much faster than sales. So as we approach the two-year anniversary of Springboard, how are we doing? When we compare our third quarter 2025 results to our launch point, we grew sales 31%. We expanded operating margin by 330 basis points. We grew EPS 72%, more than twice the rate of sales growth. We expanded ROIC by 460 basis points. and we generated strong free cash flow. Now let's compare our results to our upgraded springboard plan. We are tracking well above our high-confidence plan, and we're tracking very well on our internal plan. Through the end of the third quarter, we've added $4 billion of incremental annualized sales since the launch of Springboard. Looking ahead, we expect fourth quarter sales of $4.35 billion, which will add another $300 million to our annualized sales run rate. Of course, this plan is about more than sales growth. Our plan was also to dramatically improve our profitability by improving our operating margin from around 16% to 20% by the end of 2026. Let's see how we've done against that target. As we executed springboard, you can see that our operating margin expanded significantly. As we look to the fourth quarter, we now anticipate achieving the 20% target a full year ahead of plan. So, since the beginning of springboard, we have significantly increased our sales. We have grown operating profit at twice the rate of sales and we have increased EPS more than double the rate of sales. Going forward, of course, we still expect the effects of seasonality, which you can see on the chart, but this is a powerful enhancement to our profitability that should translate into very attractive returns as we continue to grow sales. Stepping back, as we approach the second anniversary of Springboard, the plan has certainly been a tremendous success. We've added $4 billion to our incremental annualized run rate, and we have significantly improved our profitability. Perhaps even more exciting is that we see much more growth and more springs ahead. Let me give you just a few quick examples of the opportunities we expect to add to our sales run rate. In mobile consumer electronics, I'm sure you all saw the recent announcement from Apple that committed $2.5 billion to produce 100% of iPhone and Apple Watch cover glass in the U.S. for the first time at our Harrodsburg, Kentucky facility. This plan will become home to the world's largest and most advanced smartphone production line. And we will open a new Apple Corning Innovation Center there to deepen our co-innovation and play a key role in future generations of Apple products. In total, this creates a significantly larger, longer-term spring for us in mobile consumer electronics. In optical communications, we are expanding our innovation and technology leadership in Gen AI. First in our enterprise business, where we report sales for inside the data center, we grew sales 58% year over year. And we'll share more detail. but the primary technical driver behind that growth is what the industry calls the scale out of the network. That basically means that hyperscale customers are scaling out the GPU clusters with more and more connected AI nodes of server racks or simply put larger neural networks because each AI node, is connected to the others in the cluster by fiber, this creates more volume for corning. Now, you only need to do a brief scan of the news each day to see that the scale out opportunity is expanding dramatically. We have plenty of growth ahead, and we expect demand for our innovations to continue to accelerate. We're not only the inventor of the world's first low loss optical fiber and the technology leader in this space. We are also the largest producer by revenue of fiber cable and multi fiber connectors in the world. Importantly, we also have low cost us based advanced manufacturing platforms for each of the critical components. This creates a unique Corning opportunity to support our hyperscale AI customers as they seek to build major U.S. data centers using U.S. origin products. There is more to come in this space. We're working to formalize customer agreements, so stay tuned. Now let me shift to another significant opportunity we are pursuing in Gen AI, driven by what the industry calls the scale-up of the network. Hyperscalers are creating more capable nodes that move from less than 100 GPUs per node today to hundreds of GPUs per node in the future. Historically, an AI node has been within a single server rack. As hyperscalers scale up, AI nodes are shifting to stretch across multiple server racks. This causes the distance to link these GPUs within the node to get longer. This will eventually cause the links to reach about 100 gigabit per second meter, what we call the electrical to optical frontier line, which roughly, marks the point where fiber connections become more techno-economical than copper, creating a large potential opportunity for us. To help understand the size of this opportunity, a single Blackwell-like node has more than 70 GPUs with more than 1,200 links using more than two miles of copper. As that node scales up, those two miles will eventually be replaced by fiber connections. And those miles will grow over time as more and more GPUs are included in the AI node. I'm sure you've seen announcements regarding co-package optics or CPO. That is one of the technologies that helps activate this scale up opportunity for us. If we succeed technically, the scale up opportunity could be two to three times the size of our existing enterprise business. And we are working with key customers and partners on making that future a reality as well. Another opportunity for growth tied to GenAI is playing out in our carrier business. In the industry, this is referred to as DCI or data center interconnect. We introduced a high density GenAI fiber and cable system that enables customers to fit anywhere from two to four times the amount of fiber into their existing conduit. And we have seen tremendous response to this product set. We expect this business to scale rapidly, reaching a billion dollar opportunity for us by the end of the decade. DCI also offers the opportunity for new, more radical innovations in this space. We recently strengthened our longstanding relationship with Microsoft. announcing a collaboration to accelerate the production of their hollow core fiber. Our fiber and cable manufacturing facilities in North Carolina will produce Microsoft's fiber as they seek to advance the performance and reliability of Azure's cloud and AI workloads. With hollow core technology, we're talking about cases where the difference between the speed of light through glass and the speed of light through air actually matters. This illustrates how important DCI could become as our customers look to decrease their latency. This offers Corning the opportunity to innovate on new dimensions. Now let's shift to our solar business, where we are pursuing another powerful secular trend and expect to add to our run rate in quarter four and beyond. We've been seeking a low risk, high return entry into the solar industry for some time. First, solar power is fundamentally about the efficient use of photons and low cost materials conversion platforms. Both are key opportunities for innovation that are right in our wheelhouse. Second, we are already a world leader in semiconductor polysilicon, which is simply a much purer form of the fundamental material used in solar. Finally, we anticipated the growing need for a U.S. domestic solar supply chain, which is only accelerating with the advent of gen ai and global tariff structures we began this journey in 2020 and since then we generated over a billion dollars in cash in this platform we funded the expansion of our manufacturing assets with a growing cash flow generated from assets we acquired for less than 10 cents on the dollar customer funding, and government support, all while generating positive cash flow every year. As a result, we now have built a strong foundation for rapidly accelerating growth. We may process advancements to serve a higher-end chip segment in semiconductors, allowing us to drive continued growth in the most advanced segment of semiconductor chips. we activated idle assets to serve the need for domestic solar polysilicon. And we added the capability to transform our polysilicon into higher value domestically made solar wafers, all integrated together on our campus in Michigan. We've sold out our polysilicon and wafer capacity in 2025, and now have more than 80% of our capacity committed for the next five years. And today, we're building on this progress with some exciting news. Over the last 18 months, we have built the largest solar ingot and wafer facility in the United States, co-located with our polysilicon manufacturing facility in Hemlock, Michigan. It was a significant undertaking. To give you a sense of scale, the factory contains as much steel as the Salesforce Tower, San Francisco's tallest skyscraper. The site is the equivalent of 60 football fields and the building itself occupies about a third of that. Now we hope we can offer our investors the opportunity to visit this site soon so you can see this terrific new factory for yourselves. We have grown the Corning family in Michigan, and as we speak, our folks are starting that big factory up. In this quarter, we expect to move from producing thousands of wafers a day to more than a million a day. So needless to say, this is an exciting and stimulating time for us. As we've shared, we have committed customers for more than 80% of our capacity for the next five years. So our focus will be on our continued ramp to meet their needs. At the same time, we'll be applying our deep material science expertise to bring our more corning content approach to bear in solar and applying our advanced manufacturing capabilities to establish ourselves as the global low-cost producer, even as we're based in the US. Overall, we are thrilled with our progress in solar. In quarter one of this year, we generated $200 million of sales in this map. We expect to triple that run rate by 2027, adding $1.6 billion of new annualized revenue to Corning's earnings power as we march towards our goal of building a $2.5 billion revenue stream by the end of 2028. So altogether, As we approach the second anniversary of Springboard, the plan has clearly been a tremendous success. And we have plenty of growth yet to come. With that, I'll turn it over to Ed for more detail on our results and outlook. Thank you, Wendell.