Corning (GLW) 29 Jan 202019 Q4 Earnings call transcript

Welcome to the Corning Incorporated Quarter Four 2019 Earnings Call. [Operator Instructions]

It is my pleasure to turn the call over to Ann Nicholson, Vice President of Investor Relations. Please go ahead.

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

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

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

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

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

will turn I Wendell. over call now, And to the

results. Thank good you, This XXXX everyone. we fourth Ann, quarter year full morning, reported and morning and

was For were billion, the $XXX $X.XX. $X.X fourth was million net quarter EPS income and sales

For billion net increased and the full X% $X.X year, billion, income EPS was sales to $XX.X was $X.XX.

new on while and were of once growth the While growth down. XX%, our were our sales Sciences, outperformed again products we we while culture. advanced markets. for We cell not smartphone underlying sales our exceeded grew grew targets, In X%, units did sales car XXXX long-term Specialty bioprocess strength down. We Environmental meet industry Life Materials

down, and EPS percentage. XXXX unit with Optical, two grew while year-over-year. continued up market TV and growth of digit XX% and outperformed which impacted high-single first sales growth, passive declined glass mid-single the Changing our in sales volume half Display, market, the optical Corning on entered building years significantly. XXXX, in customer and up In a dynamics our performance strong we digits, that were XX%

half, and declines Optical the Optical two highlighted reductions chain Display significant supply to led in Technologies correction the spending by in at and Display capital industry In Communications. customers, market, in second of a the our weakness

quickly acted expected and fully Optical, in we to mitigate While half overcome demand than did second challenges. lower we Display these not

especially down As our and were volume a and our factory declined sales versus utilization profitability, result, as half gross second decreased, so did XXXX margin. our

growth return the expect Display temporary, second we Communications and sales confident profit indicators situations second has in correction half. that of we In we Display, and to volume in half. Optical majority and in are company the to resume and and with growth supply the We're ended the to the that expect seasonality chain the normal see

will production at to which ramp. plants, plan We next start faster also Gen than as our support market growth XX.X plant's the

expect XG, we growth Optical, projects half, hyperscale the in second by year-over-year center deployments. fiber-to-the-home In and data driven for

Communications profitability from outlook. and higher and cost these details actions and and Display. focus increase volumes I utilization benefit and our higher expect Optical to will we and progress overall recent segment support We in the factory additional ongoing on provide Tony expect will to

introduced perspective, new we to Growth remain challenging & Strategy but financial from was committed Framework XXXX a our year. last

our factory We interiors business the initiatives regulatory burgeoning year. many and a excellent grew on made Building progress Framework, foundation of glass we auto of which original new Allocation we framework, significantly. progress dedicated our and for on Our our on Strategy Capital strong the completed framework evolution the is order opened strategic commercial made during and year. successfully We our book last Valor.

billion $XX.X XXXX in better, several Communications. of four repurchases met than more all and goals more We or advanced we years stronger, of Gorilla and our Capital moderate remained exceeded the Glass a through all XXXX a Optical pricing compelling Display increase, dividend innovations and resilient returning to Strategy including while and per creating Framework, share shareholders share company. XX% over Allocation to

we through and EPS $X From between to focus of increases XXXX capturing Growth to And creating dividend XX% expect significant continue for Under annual growth; we a deliver organic and compound shareholders. repurchases. X% growth capital, and annual opportunistic billion return to with value on share our invest sales new to growth. additional to to billion billion a expand $XX XX% operating return organic invested margin and & expect on compound to $XX growth Strategy billion $XX and shareholders Framework, combination X% XXXX,

$X we the plan with by end strategy are these We in of our billion $X goals? by How billion to offerings. categories annual customers' do new primarily create driven improved and XXXX, that product into profitability incremental achieve to along targeting enhance sell an to our sales

earlier. the during I is people not counting on We're big Life the four Sciences In us next before, XXXX mechanism happen outlined Specialty for provides that more that and said just even challenging part years a we're company. putting already in I've a to This story, it content of the buy. environments. to in into As saw we products Materials Corning's everybody grow more Corning We a buying short, expect across as stuff. and Environmental, see story over

access the platform how for each and market strategy fourth year. in look at full quarter the we Let's in advanced our

Optical carrier impact we In are of markets. reductions Communications, currently and in the enterprise capital the both spending feeling

by and XG, fiber-to-the-home recovery, expect We deployments. hyperscale center data driven

are both Communications align portfolio Optical progress advance costs and product in with our near-term. the goals demand in in Our making to areas. We're

the continue we XG XXXX, with connects enabling in leaders. way the perspective, product to industry solutions world by transform a From

increase demonstrate deployment. and address network to efficiency and of our challenges Verizon new collaborations Intel the helping with our commitment New customers

Portugal, our of EDGE We also in extended our centers selected provider largest as Altice leadership data telecommunication services product. the country's

in XX received in XX our it's awards installations and EDGE the to network used role capacity enterprise, introduction. success and been power deployed vital pressure future since servers has continued and has in global provides capabilities. withstand needed XX,XXX a on speed, its increased been EDGE playing in countries,

back, after that uniquely Optical network, network is strongly replacing Stepping shift. to we're always But electrons enable trend long-term the in not a it's the due to and benefits photons in positive line. smooth of situated

or As one there is begins. That be we right a before one upgrades to next pause segment now. pause where Optics, are can the network

So, Corning we're headcount network positioned leadership, aligning putting capacity are the and inventory and that we're our investments. capital reduced market and is into In of to current built. We’ve continue we every equipment to more solutions idled delaying long-term because demand.

as We will growth the inevitable return trend to continues. Optical

presence manufacturing screen fund it amplify its million in processes, that is sales and million protectors, advanced of Apple state-of-the-art grew Corning's $X.X $XXX making goal Corning sales we not backs announced mobile equipment sales did $XXX cumulatively, investments our next-generation the decorative and significant on solutions while of Turning support billion. a to on of to smartphone doubling to XXXX, building materials grow. for awarding million from sales. $XXX on consumer on from XX% Electronics. base We and durable devices. devices XXXX. the bolstered Corning, Both in with content Mobile of glass fund Since progress wearables. Apple's delivery We're XXXX, we've Consumer in received unit we In the added integral

and step enable in took customers that a are to In introduce will cover so we glasses, the we technologies XXXX, goals, major adoption our glass. as confident state-of-the-art we of one noted, new forward our to our sales stay of XXXX, will In prominent tuned. and us advance continue

both demand the double China for in capacity Automotive to our solutions to our In to committed Hefei, XXXX. market, is we meet Moving products. goal and gasoline glass our filter XXXX, by sales ran particulate production auto

way our Gorilla million, in Glass first plus with XXXX Glass along building patented interiors for on well to by XXXX. Automotive deliver the Solutions Technology. $XXX million Sales XD and and AutoGrade GPF ColdForm Corning's business are We exceeded a in industry's $XXX XD XXXX

LGE, Earlier ecosystem this across collaborations and Optronics. announced auto we Visteon, leaders industry BOE VIA the with month, including

have mass an that beginning order book dollars, million several We worth are hundred with of half built and contract. under nearly book production

leading marketed pharmaceutical XXXX. several a culture bioprocess long-term build segment FDA of build primary Vessels, as in for with a for for franchise approval in Corning cell rate We our Glass and standard Sciences strategy continues, use Life commercial dollar exceeded glass adoption $X X%. drug Sciences of industry-leading continue Valor exciting we Glass. pharmaceutical received milestones organic product. in billion a products growth our These create three we we to to in sales companies our new advanced as and signed multi-billion And our We driving major package Valor agreements Life as In momentum validate reached milestones a packaging.

In efficiently to large produced market are on The Gen returns. goal TVs, XX.X our customers by Display, is stabilize shift fabs. most which to our size to continues

at year low-single In moderate anticipated. pricing. we ramp Gen our XX.X in tandem for and glass customers. medium In supports glass capacity even We declines XXXX. year, continued XX.X price And And Gen more XXXX plant. display a in our to Gen output longer-term was expect environment XXXX, saw was plan growth. again digit we the we leadership increase XX.X moderate with XXXX, volume additional to in Our than for which full pricing a percentage first great

aligned opportunities. We've see major relationships our creating trends across investments customers place. can new are our steel well and got structural that with strategic with our industry-leading You markets, are in the

the sound. is market will and access Display platforms each of challenges and growth our strategy overcome in We're Our Optical. we advancing in

aligning cost to focus; our next these momentum and our innovations will strategy to and current successfully the drive create plants; priorities commercializing goals. operational priorities three capacity customers. growth achieve XXXX, our support and XX.X ramping framework to Gen In Execution against our demand; needed

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

morning. over delivered we the of Sales our performed We EPS you, at and guidance. each flow. $X to in In working gross Thank cash generated capital good sales quarter above fourth operating output fourth Optical below we and impacted expectations. customer our adjusted expectations actions or and production in This and to demand. Wendell, margin, billion in which businesses quarter, was align current accelerated on Communications

sales For Communications. profitability the and year expected as were challenges in to down the and Optical full Display due

challenges Sciences it's Technologies in Specialty Materials, note sales. While Environmental powered and through Life important markets, to other grew that we also faced and

all to continued XXXX, strong growth in turn of three these we we As businesses. expect

also second year-over-year profitability We to and beginning and Optical expect grow the sales half. Display in

As in of half we corporation year. profitability to and a the second the margins improve result, the for expect

largest and results difference note results, and GAAP venture in for in the and from our Now, into core the performance Display related between come Other our realignment Semiconductor. and GAAP want before with associated change differences core capacity contracts Hemlock at I details adjustment currency to to are a tax of get mark-to-market charges our results and hedge reserves. that our I a non-cash Optical and between equity Communications our our

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

To our us, GAAP has quarter accounting mark-to-market this this impact earnings flow. impacted For cash $XX in be by million. no clear, on four

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

or contracts We're hedging very pleased operations using since Our results the under $X.X non-GAAP economic inception cash aligned We provides. rate additional our the in than transparency with more our into with constant years billion by hedge our and provide transactions. economics core of program ago. certainty a their it received currency five underlying

$XXX results, net income Now billion, $X.X was was quarter shifting fourth sales $X.XX. million were and EPS to

net were sales year, billion, EPS was full $X.XX. $X.X was the billion X% up to $XX.X and For income

and look let's the results detailed outlook. Now, segment at

sales Technologies, glass as was slightly expected. income fourth Display prices declined were In $XXX net sequentially and QX million quarter million. $XXX

than were sales fourth expected. was Display’s quarter was net full and million. volume sequentially, income $X.X year up $XXX better low-single Our billion digit

low-single Our full decline a was price digit year XXXX percentage.

XXXX strong. in demand Retail was

supply and reductions think back mid-single up view display drove year but the Our conservative growth. TV due is inventory half to of a most, by is than conservatism driven the retail glass a the took macro in and volume market supply chain as in exiting panel that This was set all chain maker correction Last correction. retail stance increased to the behind digits largely believe makers low-single We in that is led digits, preliminary healthy, utilization of XXXX month data screen XXXX, size with not area uncertainty. less us. we

gross the digits, full XXXX XX.X than first more market the we. mid-single margin. shipped year. up year second volume the in correction and lower the for shipments reduced supply Full our our second during year our XXXX, driven increased glass glass was market by volume due half, half glass Gen half outperforming overall output so, The chain – in to the The did

glass to digit expect again we growth. quarter, up we mid-single maker our XXXX, for low-single growth market level, now to in we healthier to in driven first similar as In size For the glass increases. up at measured inventory and to chain given volume a supply And the digit TV market is feet the sequentially by digits screen market glass percentage utilization be overall the the to expect increase be that by panel the a mid-single be market. square the retail expect

expect our We a digit panel low-single to market. Korean be structural sequentially market the glass of the shift down volume in underperforming because

half to structural significantly years China. Up provider leading Korea as going South faster two expect the ago, impacts Korea. reduce global of and the panel fire glass are we This demand of as that our in of shipments panel their the XXXX, than the XX.X South China center until Korea. our shifting absorb tanks up makers market that moves Korean second panel capacity is new grow through was In panels. reduction to from the making changes in will Gen

leadership the expect shift. from we benefit Corning's regional Gen with XX.X three the Given four fabs, of planned this

seasonality of all and expect second year-over-year volume our almost We the from normal in growth to in more XXXX half. incur

As our improve. expect our margins volume increases, to we

sequential moderate. Turning to price to QX glass be expect pricing, we declines

declines, for changes even quarters. XX% are mid-single changes XXXX the restructure to expect over goal continue Korea more the reached that percentage. industry China. price recently declines XXXX, of be of contract, is and mid-single fundamental under through For of we just discussed, More several favorable a to price with of happening in to declines fact We had full capacity is half volume year-over-year our panel migrating while our digit subsequent second year as from working positive. The have digit these we moderate at

glass the We believe environment drive favorable experiencing. that been three pricing factors continue to we've

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

aligning are demand. For Corning, we our capacity with

also pacing align projects are capital schedules. our to Gen panel XX.X We makers’ with

pricing display prices continue our investments acceptable those to current at returns glass levels. competitors capacity Second, And operations. maintain investments. existing to challenges in Glass periodic must on face profitability manufacturing support requires third,

volume, correction. are industry Display, growth, to is emerging chain remained Now with continuing TV to size, the a the strong from expect year-over-year new of to with facilities, positioned half and in our Gen margins the drive recap temporary customers ramping in we supply increase profitability and and well the year. back screen XX.X Retail return successfully volume we to glass growth in

$XX quarter lower fourth was $XXX net Profitability were Communications, to by Optical sales reduced In million and down inventory. and impacted income output bring volume was million. production

year, income a a were declined million. single For by to that $X.X X% XX% in full Net down high- the declined billion, market digit percentage. $XXX sales

completed sales, debt. large volume second in two hyperscale declined year-over-year by back In and negatively XXXX, intense decline spending in redirected period half first A profitability. changes and its XX% half back the customers. concluded its center sales by year-over-year increased pay of impacted The A XX% capital half. lower the in build a the XX% to half margins unusually customer building. the in of Nearly explained down be fiber-to-the-home can data large carrier and

have excellent We them. to and these with continue co-innovate customers relationships with

We passes. they spend expect companies Optical our as increase to more at sales both on

we experienced the spending as strong we to to of XXXX, be in sales sales lower of down XXXX. XX% in half continues level of XXXX, In first sales second expect year-over-year QX down about the XX% of X% throughout the expect be first XXXX to we project versus quarter and the half

to center and fiber-to-the-home deployments. projects and resume, expect In the growth for by driven data we year-over-year back in hyperscale half profits XG, of sales XXXX,

and timing of improve. expected, proceed projects margins occurs, later, will exact If the is profitability the upper we’ll year-over-year end When as be and start they lower fill range. the to projects guidance. the of of our growth hard predict. will we’ll Now, in our the at these range our If be factories

We and you are progresses. the year as our we'll working customers with keep informed closely

improve are and cost back, capacity. speed, to Stepping we innovating network

with secure confirmation in agreements growth. and industry deliver long-term of XG long-term our We to that which essential sustains hyperscale, players, our to and for also to ability continue major receive confidence is Optical all

year-over-year Environmental $XXX of XX% million, Technologies, up In expectations. fourth were and sales quarter ahead

Continued of $XX income growth. strong the drove adoption ramping of driven and additional Net GPF operational was particulate by in gasoline filters successful China. million, performance capacity

year, For to greater way the XX%. well full sales million. income XXXX and we on gasoline million million a building are exceeded $XXX than sales were Net billion, $XXX $X.X was our filter up business. $XXX particulate GPF

X as as regulations. in are implementation earn Euro China product, globally X X accelerating full With are position China automakers to majority platforms our X in market-leading continue Sales make and award preparing we regulations and automakers effect to a XXXX. Euro for are

delivering Our Hefei sales ahead and plant schedule and net key startup to income. of has been is incremental

We expect continued growth.

despite digits to expected auto in year-over-year, downturn continued first XXXX, North for heavy the duty in up the to mid-single the grow markets Looking sales with once in again year. global America weakness and quarter expect we the full market, in and the the

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

unit ended $XX year-over-year for demand year-over-year glasses. million, and sales XX% X% net XXXX driven Full volume. up was for were $X.X essentially $XXX were by straight grew the $XXX year year, strong, billion, quarter our up Materials despite Specialty premium Net fourth sales was million. income and income flat Fourth smartphone million.

to expect for as XXXX, as we in and come growth further Electronics. our Consumer from glasses, Mobile of adoption additional premium Similar well innovations XXXX advancement our to our

digit a for Materials the year. Specialty sales expect We full to by up percentage be high-single

sales digit be a year-over-year. percentage QX mid-single expect We up to

an income million, million, $XX year-over-year. $XXX ended also fourth sales of Net strong, up with exceeding XX% Sciences the was year-over-year. increase year of quarter Life expectations X%

billion, business income a – year, up $X full milestone with Net sales XX% a $XXX year-over-year. was increase the year-over-year. the X% reached the million, of of For

For with and mid-single market quarter, also XXXX, positive, remained customer we continue, expect we up our year-over-year. digits. mid-single the In growth full to year and digits demand first outlook be up sales to expect sales

Now outlook. let's turn and results to the consolidated

Operating billion. cash quarter $X.X in was the flow

October, said we year $X.X in flow QX working was we second As half. $X Full just CapEx was in to the billion. again operating capital and cash adjusted QX. under and in did working reduce in reduce billion We expected capital

We are flow operating cash XXXX. taking lower that in result capital spending stronger actions in will and

for the approximately expect billion CapEx $X.X We to year. be

the was fourth output the Gross margin in half XXXX, down and quarter the impacted the in in back the impacting In margin XX%, of reduced Display low as the first and volume bring we percent. declined margin Communications year Communications. and our of gross first inventory to volumes XXXX, also Gross Display volumes by and production half was Display Optical to lower XX%. was of half margin gross gross XX%. remain Optical margin to In declined, expect Optical

sequentially lower grow volume half. expect basis the XXX expect the quarter, XXX the and gross the lowest We to basis gross and to year, approximately that fourth Optical margin improve from should Display to year-over-year in the happens, margin for and first in down points to points sales second be seasonally quarter than Communications In When to fourth we XX%. be quarter. the

percentage gross sequentially margin dollars increase We expect to thereafter. and

rest the of to on Moving P&L. our

XX% we be expect the for RD&E percent full a year. X.X% respectively nearly of and sales, approximately SG&A As to and

$XX approximately the at expected are to million prior be $XXX JV. other million year $XXX year. due sales XXXX million, expected Hemlock expected from to equity other In expense in gross Full we The be lower decline our XXXX. is Semiconductor to addition, in earnings income, down expect approximately

Semiconductor’s quality reduced business some Hemlock took cash years, long-term prior supported solar settled to of sales the upfront customer under contracts. semiconductor capacity similar take-or-pay impacted in selling are the related The positively sales long-term expectations the to The their which and solar fourth In XXXX, take-or-pay for contracts. profitable settlements lower payments. a Hemlock which is leadership products, XXXX level. quarter and remains include flow of cash contracts, segment. by charge their Most of quite future realigning to Hemlock's business primarily Hemlock

to be effective our for to rate approximately tax XX%. expect XXXX XX% We

a are people well-being before I one Corning. Now, safety questions the on The is of impact coronavirus priority. the I lot close, of know there our our on of and number

monitor suppliers, fluid in are time, the health employees, our are close or contact engaging any financial the situation information and organizations becomes the We operational in we factored same meaningful and we guidance, with services as we customers available. impact and governments situation, remains as have our and more with at not

you update accordingly. will We

ways In XXXX. the the customer closing, and we of half remain markets challenging We mirror believe dynamics expect XXXX reflect. to first be that will many image as in

challenging we've growth we what growth will the market in as six Communications and return the strong customer And Sciences. over expect Specialty remain Materials and half a dynamics Display continues seen half, to and to and second We the first expect last in reflect Environmental, months. Life Optical improved in

profitability this company saw to we XXXX. return expect in we the as happens, the to growing grow As to of and half sales first

as is we've strong four in ongoing evidenced areas, built the Corning customer foundation make we our on Overall, over key to continue by years that announcements. past operating and progress a

in ability laid to out achieve We are & the our in Strategy objectives XXXX Growth Framework. XXXX we our confident to

Ann? that, move to let's With Q&A.

Thanks, Tony.

Steve, Okay, for ready question. first our we're

Our Sachs. ahead. Hall Goldman first Instructions] from Rod of line Please come the question go [Operator will of

quick for ones. couple of Yes, question. the A thanks

half then own that is driving you in your Wendell view pricing And is you or going assisting that. us the we're talk to like pricing or timing more pricing XXXX Display the on also and you that are of Tony is different start talk from through whoever to see half about mid-single on to off, something this, through second dynamic? the there driven Are the factor the I China. What mix So, of to first that the by a that to understand pricing of could But being movement digit wanted could that? that Display? from declines answer movement of Korea wants movement with

in working you just sounds – I like And you you of are how any to Jeff's Thanks. quickly I'm low I guess but on been then the end like on some confidence visibility. it know that just you on I the the feel you yes, also are wondering got adequately ask cautious. you've Optical. engaging is, Optical? have risk that. you better do wanted think modeling answer And guide, about do

that I All as our most the me fourth get answer. start in know, right. pricing decline any declines in as you have price Rod, the we and of contracts more in and quarter mean, in quarter Let first price seasonally is put here the with largest quarters first moderate the too, expect year. the we case that the place the items move out and throughout

think Korea highlight to from there think on going the a of lot is here I just standpoint, important I industry. in what's is that change a

be Korea think is going year-over-year basis. a on around to I capacity down XX%

So And a from comes from has that's standpoint. it pretty pricing shows capacity back or capacity up significant a a in standpoint China. that offline, decline

in we back half as the the volume year volume – and the first flow see going year in year. our the So, more little out, market bit the in half of less to a we're of volume see less

we And so, the that's see on I that on trend XXXX. a that's a think that's trend impact going been and really that

think I think if just Display. we through

do little the weighted think I contracts which Rod, that, way First, the on more later. pattern it price in in of earlier year through our in a got of you've the year just than right. sort we the

were is sort or capital Korean and size a industrial And underwritten that to in the share LCD so I Tony of is compete if Korean get they to of challenge XX.X. production our market, across in think the lower just world China to happening was they that they ago is, years the the are customers their the investment when Korean Gen cost largest XX.X a you're made in plants you being of overall two much to what's what Gen panels world. the that policy China, look market producer do large of seeing haven’t trying and take how at giving

seen out was that you're seeing you're about Tony time switch So, we've see begin that and of was going announcements natural Koreans talking pretty to just the what about over it the reduction you're year, that this and plants. Gen XX% see XX.X and to time over China shift that their capacity, happen a in all going won't just period towards but a

worse shifts, are at when the Now, who that. that level glass better positioned or in are there players

we're we extremely that face the that well strong maintain well structure getting that, are just able good positioned pricing is We good environment. are dislocation back feel in is so, sort Tony to such about of of with that has folks, the for continue time through – of accelerate the really level performance but industry I we what sort this at think he and just that's to talked is progress pricing for of then in is And the that to in the just really the we'll news see that why since overall move fact so half positioned China, just announcements in

I year go kind is will guys a out this of multiyear year is be or do that year back all and you, do that you you of, things kind year is think the year think it to next Wendell, next a this to and the of play ask continue just And transition Can this this strange? more normal trajectory this

move the you're see that we this the panel have that, then bulk of clear just anticipated, China. it Taiwan with year see like on to fact much Japan with Korean I always happened from we this Well, for happen and to just that think and prepositioned We the their future. makers we going that to Korea – become the how move

panel on thought arms sort guns nearer makers. while Chinese term. more Korean-based their pricing sort Chinese was customers that this continue I pretty and made the year this long-term out as - players what innovations they're of more panel focusing and capacity. had to we last industry of And for some of in to chain produce in sharply set the the aggressive And think correction is, everybody the their next-gen implement surprising is went sourcing supply panels Korean they strongly just and pretty they’re through act, strategy for are the and this

feel big It's So, that going this has aftereffects. it to [indiscernible]. change. us this industry been will year be view to we’ll think move feel our of bulk its continue the But I pretty announced of behind the bulk the

Okay, visibility? Optical thank you. And

mean, I integrate Yes, doing team think especially the near-term the in relative a looks over that of happens, have what and future the that's visibility reflective I Jeff like his that of the we're as to from an you're by the the to standpoint actually projects Optical range, be that right, work, certain – X% XX%, lower work. get lot been of next really pushed some those both we've we'll and a end what an or of business year so. minus closely is And from customers we if that are and of what at and customer informed both us. us of what following And themselves those got know to range, out. standpoint closer projects tried would the minus the of our be the along with telling that at work range we've indication and that

clearly, over done how getting on So, six better last the months. mean, that the work that's we've focused really we've and I at

appreciate Okay, it. great, thank you guys. I

of from question Please America. of the go ahead. next will Bank be Mohan, Our Wamsi line

I that show stranded can maybe your have timeframe was expect results? be I can you. we wondering plans redeployment And in follow-up. capacity is should and going thank bit your about little you to in a LCD to up asset What use talk to Yes, if or financial this a in Korea.

So we've us. already is low-cost most we of facility Korea production a done for that. – basically

of sheet in for doing strong is continue So, what we some to are source finishing melting and to been to as use what that planning for our operations a China. full we've feed

be part of plants, where finished into see sizes. we the the cut therefore the that we'll right glass that it will which main is piece on So, the

where We've we’ll that's So that. those primarily adjustments. see made

We to of through workforce way do to the through have our continue that. way continuing work and way just to work appropriate our is to the all sort we're what's implications

put we so of our in making Display, taken of the as panel hunk right, a capacity have cost we've their plays, remember, well, evolved into But and production our Gorilla. in much Korea in Gorilla play instead that and higher to

just, it's It's a planning. long-term happening our on little out at accelerated playing all is more this fashion, So, Wamsi.

we CapEx a down should about about Wendell. as a this you, we couple in can years market sort next of this couple conditions more the How obviously How here, given think and should a expect we Thank CapEx of over that was a that And is CapEx the step demand there meaningful think next years, you. is this timeframe couple here know the something level the year. levels last Thank sustain years. given Okay. one-time. this follow-up, sort about environment over just of of or given sort more elevated few of of for should we year the that what we plans of sort the levels that, a of over your this is

especially businesses, into Wamsi, grow and kind our is different to really takes new takes customer of improve as what the is two of and CapEx businesses know, pieces, then one to kind the to our we divided demand. build you second and what as it get it continue sustain is

going get. going to what drive in what then and we And customer to how spending. demand the is so, longer-term is as far much And commitments capital as always additional do matter

in exactly course, there. back projects think and continue growth good years and XXXX a get demand did in and depend Day, look that to what once at – we’re evolve the our on spend of how description those up projects, And there XXXX. that customer and XXXX for commitment Jeff, innovations with I I we in to as much finishing it XXXX, both for show just the drive will And how are we Now the customer revenues certain couple to if up. you But that. of will XXXX sales of we'll on think takes a we start IR think

overall, So are spend with $X $X billion we that. consistent said these numbers billion I we'd and think really to

growth of I to is, think the on and got that way timing about of now we've Framework. Strategy investment our we earnings & deliver Yes, bulk laid to out think we need Growth the the sort the the revenue that

Okay, helpful. thank context. you the for That's

told happens to early and while in then we we'll facilities. we start then to those only thing demand the takes just after because a have they strong is it see to then, build And period how now, what and will that much

to more able a that's little for it, exactly. in So, lot bit as be to us get a the we'll closer clear future with to sir. be And far out dial-up you, we

great. Okay, you. Thank

next Meta Our go ahead. line Please of the from question Stanley. come will Morgan Marshall,

and newer how to thanks. new it just, of of dig Glass what generations cases. wanted effects kind core use a I a just growth the helpful. in margins, description much would from And that Great, And a into as if then carries versus that be just little you. of just the a impacted get kind little to of year. Gorilla bit maybe and out that QX of kind of is gross is QX of a non-core kind bit Materials sense just in Thank how Specialty seems forward second, difference of between of next backing one-time

various is and some start gross that, charges but up We that's with ends that and those that in – you that of Well, since number why of do Communications GAAP during think are core our as don't up results, part I one-time actions, into there business, restructuring did in operations in is in results. Display and the margin I the ongoing of Optical we shows our quarter, that. where and in our the our see a in particular not things that

overall also group that of our out bulk sets clearly optical market, see Specialty, year the drivers not of strongly. new And generations this But are revenue on an then durable innovation to next that margin get of some growth very we percent bit our will and strong grow non-glass we're glass but little in in has gross counting anticipating growth innovations are we unit which are our to growth financial that of And our the a glass. especially glass, providing new adopted treatments. lower

you. Got it. Thank

ahead. next the Chatterjee, question Samik from Please of will go JPMorgan. line come Our

question. the growth can to in you Hi, moderation from to talk going the be, I you're of Is growth I that a by is obviously rate to XXXX. year that if on had for Environmental in that this more the a If expecting? just What's driven the on has moderation content thanks or and of can digit segment, XXXX you teens outlook, kind Technologies start-off which for diesel driver the taking – expecting believe? more what the you are in mid-single challenging automotive more

but way on goal change up for diesel and is up we They market where that billion success. XXXX. the $XXX to million more the be we're we be out we our driven to very than sales the expect that were mostly XXXX, It have the segment. clearly to in in leader well $X.X great in this feel business, continues a strong GPF and set we to are continue by

thank you. Okay,

going see market, market. to our because from down diesel us go American to the you're our segment, with our new replacing of adopt diesel that but there we customers you'll – as diesel are here, tech the expect the talking North heavy-duty through going see In to we that some to see you're cycle Chinese as gains and

moderating. I've sort of why that's So

seems to flow what's be in quickly outlook driving or profitability more kind the if improving you Tony, profit to of XXXX clarify And side the down flat can in modestly. XXXX the on confidence versus when cash

thing couple first there working mean So, a the a in built capital. we of I of lot is there. things that I think XXXX, is

businesses build working the we to year, compared first didn't the as capital grow to businesses Now obviously part of we as and much. always expect our inventory grow, but

a spending is, course, did we as the see I we what to we help us working in of year, going And and spent be also standpoint. back on a expect that cash to much half capital then in year-over-year we there XXXX are And we compared flow do then capital will in the thing is, XXXX. the in basis from second to think of wouldn't growth finally, reduce XXXX. growing as So our

from overall free than we this be an expect standpoint, cash was flow So year. much greater our to it

you. thank right, questions. All for Thanks taking the

[Operator Steven the Cross next go Please will line Our of ahead. question from Fox of come Instructions] Research.

Hi, couple good had on actually. – Optical a morning. of questions question I a

the, China to into excess be then you those seamlessly of seems year any of across concerned and supply we capacity in pricing about guys excess of industry factoring be have the cannot the curious I as are of First just there your understand your is it goes understanding on. in should its any risks making all, model, Europe, that I view is into And follow-up. bit way pressure situation. But for the was a I quite fiber supply on My that, cable. on globe. move you

going on down, already to The extent that some seeing think has Steve. is level Where I financials. that there is us, our excess trending still is China to that of one, you’re impact in the to come. been actual in inventory

I anticipate their then builds, got little think have as densify we'll these of very tender, bulk If to tightens they think the very a see of that a this comes how quite market rapidly out what tighten XG aggressive, and If it's we've just numbers. forward clearly will plans in up market the of a significantly. therefore will they'll We bit network. Chinese upcoming out XG of set longer-tail. the depend aggressive this, what part on are not China it that lot a up is little lay need We more with that Mobile. will China will itself that

That's very half I what this And for doing margins. is then that. Okay. few math Thanks are the margins is just did which guess of quarters pre-tax about about ago. rough in helpful. quarter, terms you you the Optical of a X%

is to half back? longer where you're demand more reasonable we or when you I the I of point you about the anything to margins So, think just to come executing is a going or be, guess Thanks. think if it's to the that little are XX% the want from you but year, taking there. should But X%, out think is importantly to maybe walk there second get understand I XX% if

the in last from significant our when its and about to get growth cost volume volume back And period also go we've causes back an of But happens, do during benefit margins all XX% down. expect XXXX course, in half our margins time. impacts standpoint, the reductions both we and that and that return year-over-year that factory on a Display some think like and we that we clearly basis are I half utilizations volume. to really and the decline of our year, overall done had of and of in to that the business of this in

standpoint, an Optical the we'd where and before. expect, overall margins get XX% company we and get Optical they were back both back also to would gross So from to Display

Great, very Thank helpful. you.

the from Please Asiya of next of will line Our Citigroup. come ahead. Merchant question go

smartphones. smartphones been knowing but driven have to into of that for question Great, starting XXXX this calendar year, my thank lot had on them Lot just inflect primarily this be models, Materials, talked it see XG inflection about you smartphone. of there? to goes quick answered, questions. growth etcetera. to this We're Specialty The taking a I market year given growth for down you that rate should rate you're growth that it to by some similar was think what for Thank we expect slightly guiding you. was a

smartphones. impact we – that business would overall clearly really certainly smartphones grow, made from if content standpoint, our started an but Yes, standpoint on provide I would difference the what's from you is think business to the our that has the

year I we've though grown grown in said, number every years, smartphone units those been even four XX% year has of the last the have of over in single Wendell down four mean, As years. most

of single really get really more is us and of smartphones that's at you But matters and growth. end I as And glass there driving so, digits. our the strategy some premium high might think that higher our the our innovations yes, what's put what other

XG And so that we expect should phones.

other think electronics about We higher other but well. and in have content talked guys have higher as content, you a consumer I lot category

on talk just could that. a maybe you if then margins. bit just about little And So,

or we simply a that. of depends calendar expect you. segment? towards that something talking about range is matter third XX% the fourth just to third more Is XX% to Optical you quickly really does it inflecting that – keep to Thank quarter in that quarter? The It in the it XX%, talked Sorry on X% about that how quarter? the

I'll phone Tony, it over profitability. the turn me XG then with the start on Let to and

premium true. you of smartphones We content, right, anticipate XG So content be best very to takes which yes, your an has in our XG, think segment need this on to on our And hypothesis don't have our of large is we it tends required amount is are the tends increase phones, increase phones. coming that it the deliver of those glass. because which transparency, here in using what of but to I in of it more nature for year, more a very RF the becomes most the XG glass

unit insight back point question any for you. helpful be We into if I be a of have that, that, are now think a in sort inflection currently sales. positive you you smartphone would interested We would aren't predicting very if on to us. that counting

absolutely back you're that to margins, I the and half the year on in up the the volume the is in back timing XX% number. ends of is the at should that we expect think margins then that volume year, back And back of right, going where I the increase the to in mean of back half requires what we to be get exactly us drive to XX% for XX% what's the increase

thank Great, you.

got we've question. time Operator, one for more

line from of come Tim will of Long Please go question the Barclays. that ahead. And

squeeze the Yes, I ones go just two GPF in to just wanted market. could. me you. back Thank let quick to if I

and next XXXX in million $XXX results better-than-expected highlighted You additional year.

give the was you and Do that, year? you there, wins, help drove Just talk still into what advance then the think we next it better China to you us start in Or you. a Thank sales can auto the this when any the of that drove market? like year. lot but little contribution there. glass trajectory on specifically what a can bit sounds timing see on Were there share? just update an about outperformance it side, think more meaningful And

we product originally strength, our to So product the on our more the us GPF led winning of than planned. side, advantages relative

one is that driver. So

GPF and companies to other of their platforms. more even the that with more GPF, more automotive The use perhaps real-world the of some vehicle advanced technologies and are on envisioning driving move is

piece. a that's longer-term more of So,

positive need for especially even pretty a cars our has been so help think GPF technology I in relative in further, environment. the much clean-up and everything that far to learned position we've about city this

glass our then ramping. we're I winning piece, awards factories these And auto and mean, the clearly on

say So we consumer know, electronic supply chain longer automotive market will see in mobile chain. than But the some increased sales the year. as this supply takes you the

So the through in be but that we year. of see bigger we impact will of each XXXX, as will increases go quarter some this

forward. able to rate our after level Yes. be and you, be in million the lot more rate will get to helpful little revenue We we data. guide to then little a sir. and to able run of more trajectory through can breakthrough able for then need few be just $XXX us we analytics click We and going a more places sort to a implanted you should that need more break being accurate and was a be And will that run

thank Okay, very you much.

today. Thanks. All us right, thank you for joining everybody

I Sachs February you of Congress and at we let Before Technology close, on to going the at on World Mobile all XXth and XXth. the March wanted February XX. to know Susquehanna Conference that we're Technology Goldman Internet on be Conference

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