Corning Incorporated

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter 2026 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 ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. And to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Chris Keenan, Director of Investor Relations. Please go ahead.

Thank you and good morning. Welcome to Corning's first quarter 2026 earnings call. 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 first quarter, differences between GAAP and core EPS include constant currency adjustments, as well as primarily non-cash items, including acquisition-related costs, discrete tax items and other tax-related adjustments, and restructuring impairment in other charges and credits. 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 and 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, Chris. And good morning, everyone. Today we announced excellent first quarter 2026 results. Year over year, sales grew 18% to $4.35 billion. EPS grew 30% to 70 cents. Operating margin expanded 220 basis points to 20.2%. Gross margin expanded 120 basis points to 39.1%, and ROIC expanded 190 basis points to 13.5%. These excellent results were led by optical communications and solar. Our performance this quarter serves as yet another proof point of Springboard's powerful trajectory. Versus our quarter four, 2023 springboard starting point, we grew sales 33% and EPS 79%, and we expanded operating margin and ROIC by 390 basis points and 470 basis points, respectively. As you remember, on our last earnings call, in January, we upgraded our internal springboard plan to add $11 billion in incremental annualized sales by the end of 2028 from our quarter four 2023 starting point. Now, based on increasing demand for our innovations, we actually plan to upgrade again and extend our plan through 2030 at our investor event in New York City on May 6th. We will share our improved springboard plan and the key drivers, as well as a particular focus on the latest developments in our Gen AI portfolio. So today, I want to get into more detail about our first quarter results and highlight some of the topics that we'll cover next week. I'll begin with solar. In quarter one, we grew solar sales 80% year over year. So let's talk about what's going on in this new market access platform. We have previously shared our goal to build a $2.5 billion revenue stream with profitability above the corporate average by 2028. We're making key strategic progress on the commercial and policy fronts. We now participate in the solar industry through three major manufacturing operations. First is solar polysilicon. We did a business where we had a minority ownership And we were receiving about $50 million a year in cash flow in the form of dividends. And we've turned it into almost a $1 billion revenue business. And we've been able to do all of this with customer funding and government support, all while generating positive cash flow every year. We activated idle assets to serve the need for domestic solar polysilicon. Now that that capacity is online, you can see the incremental sales in our results. The business performed above our corporate operating margin target of 20% in the first quarter. Now the focus is on improving the productivity of our operations to further improve our throughput and profitability going forward. Moving down the value chain, We added the capability to transform our polysilicon into higher value, domestically made solar wafers, all integrated together on our campus in Michigan. To leverage our advantage position in polysilicon, we built the largest solar ingot and wafer facility in the United States in just 18 months. In order to establish commercial footprint and to take advantage of government incentives in a very short timeframe. Importantly, we have committed customers for our wafer output. Now, we had to move fast. Part of that meant bringing up our facility on temporary power and water systems because we couldn't get the utilities to build the permanent systems on our schedule. Our ramp is running behind our ambitious plans. Our wafer facility will undergo an extended maintenance shutdown, and we will transition to a permanent power system and repair and upgrade production equipment to increase throughput in future quarters. To cover this transition, we have built into our second quarter guidance $30 million of additional expense versus the first quarter. We've also successfully entered the module business. We saw that 90% of the mass in a solar panel is materials in which we have adjacent world-class capabilities. We make the best technical glass in the world. We apply coatings to our strength and vapor deposition and we have a long-standing leading position in polysilicon for semiconductor materials. So not only is this an opportunity that's ripe for innovation, but it's also right in our wheelhouse. Therefore, we acquired and ramped a module manufacturing facility in Arizona to position ourselves for innovation as we progress the business. That factory is now up and running. And you can see incremental sales from this operation in our results. Profitability in this business should cross over our corporate operating margin target of 20% in the second quarter. We are now in the midst of adding capacity to this operation. And as it comes online and gets through our startup period, this will further accelerate our growth and profitability. Altogether, we are seeing strong strategic and commercial success across our solar market access platform. As a result, we will be increasing our sales plan for the solar map as part of our springboard upgrade on May 6th. Turning to optical communications, we saw robust demand across the business and continue to improve our productivity with year-over-year sales growth of 36%. In our enterprise business, early in the quarter, we announced our multi-year up to $6 billion agreement with Meta to support their apps, technologies, and AI ambitions using our newest innovations, and optical fiber, cable, and connectivity solutions. On our last call, I shared that we were in the process of concluding other agreements of the same size and duration as the META agreement. We now have concluded two more large, long-term agreements with hyperscale customers, and they are each similar in size and duration to the meta agreement. Now, I know we will get questions on who the other customers are and the specifics of our arrangements. However, our philosophy is to let our customers decide when and where they choose to make announcements on their critical supply chain decisions. I can share that these deals are very significant and they share the risk and rewards of the required expansions with our strategic customers. For long-time followers of Corning, you would recognize the model as quite similar to our extremely successful Gen 10 and a half agreements with our display customers. we're taking the proven approach in our glass businesses and applying it to optical communications. Our partnership with Lumen Technologies in the carrier space is another good example of this approach. We previously shared our agreement with Lumen to provide our new GenAI fiber and cable system that enables them to fit anywhere from two to four times the amount of fiber into their existing conduit. In February, Lumen shared that we've expanded and extended our multi-year agreement to ensure they have access to the newest state-of-the-art fiber technology. Lumen and Fiber to the Home contributed to carrier's growth in the quarter. You'll recall at the beginning of springboard, we pointed out that fiber to the home would recover strongly during the planning period. We're seeing just that in our sales. As noted in public statements, carriers are planning to expand their fiber networks going forward. The typical run rate for homes past by our large carrier customers has increased about 50% since the beginning of springboard. Overall, based on our strong progress in optical, we will be upgrading our sales plan for the business through 2030 at our investor event next week. Obviously, we have a lot of news to share next week. As part of our activities, we're planning to ring the bell at the New York Stock Exchange to celebrate our 175th birthday, the day after our May 6th event. It is perhaps fitting that as we celebrate 175 years, we will share a significant upgrade to our springboard plan with all of you, highlighting that we are in one of the most exciting growth periods in our long, long history. The demand for our innovation capabilities has never been stronger. We are seeing the power of our innovations drive growth across all our market access platforms. Thank you for being with us on this journey. And I look forward to seeing you next week.