CORNING INC /NY (GLW) Q4 2024 Earnings Summary

Executive Summary

• Core sales grew 18% year over year to $3.87B and core EPS rose 46% to $0.57; core operating margin expanded 220 bps to 18.5%, capping a strong first year of the “Springboard” plan .
• Optical Communications Enterprise sales surged 93% YoY, driving segment net sales to $1.37B (+51% YoY) and net income to $194M (+120% YoY); management cited strong Gen AI product adoption as the key catalyst .
• Display Technologies executed double‑digit price increases and expects 2025 segment net income of $900–$950M with a 25% net income margin, supported by a reset yen core rate of JPY 120 consistent with hedges for 2025–2026 .
• Q1 2025 guidance: core sales ~$3.6B (+10% YoY) and core EPS $0.48–$0.52 (+~30% YoY); management plans to upgrade the high‑confidence Springboard plan at the March investor event, a potential stock catalyst .

What Went Well and What Went Wrong

What Went Well

• Optical Communications Enterprise posted 93% YoY growth on “new products for Gen AI,” with Q4 Enterprise sales of $686M and segment net income up 120% YoY; “we expect continued growing demand in Optical in 2025 and beyond” .
• Margin and returns improved: core operating margin expanded 220 bps to 18.5% and core ROIC rose 390 bps to 12.7%; “we grew core EPS 46%… while expanding core operating margin” .
• Display pricing actions executed: “successfully implemented double‑digit price increases… to maintain stable U.S. dollar net income,” anchoring 2025 NI at $900–$950M with 25% margin .

What Went Wrong

• Environmental Technologies declined: Q4 net sales $397M (-7% YoY) and net income $81M (-17% YoY) on weaker heavy‑duty diesel markets, especially Europe .
• Hemlock & Emerging Growth Businesses remained loss‑making: Q4 net (loss) income of $(10)M; FY 2024 included $49M non‑cash charges tied to a customer restructuring and translation losses from foreign entity liquidations .
• Carrier recovery slower early 2025: management expects broader carrier deployments beyond Lumen but “not so much early in the year,” tempering near‑term optical momentum mix .

Financial Results

Segment Net Sales ($USD Millions):

Segment Net Income ($USD Millions):

Cash Flow KPIs ($USD Millions):

Vs. Estimates:

• S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at the time of this report due to data access limits. Company indicated the quarter exceeded its own guidance .

Guidance Changes

Other items:

• Management plans to “upgrade” the high‑confidence Springboard plan at the March 18 investor event, a potential narrative catalyst .

Earnings Call Themes & Trends

Management Commentary

• “We grew core sales 18% year over year to $3.9 billion and grew core EPS 46% to $0.57 while expanding core operating margin by 220 basis points to 18.5%… delivering $1.25 billion [free cash flow] for 2024, up 42%.” — CEO Wendell Weeks .
• “Strong adoption of our new products for Gen AI… drove sales growth of 93% year over year in the Enterprise portion of Optical Communications.” — CFO Ed Schlesinger .
• “We… implemented double‑digit price increases in Display Technologies… and we expect to deliver segment net income of $900 million to $950 million in 2025 and to maintain net income margin of 25%.” — CFO Ed Schlesinger .
• “In the first quarter, we expect core sales to grow 10% year over year to approximately $3.6 billion, with core EPS… $0.48 to $0.52.” — CFO Ed Schlesinger .

Q&A Highlights

• Yen hedging and core rate: “We will be resetting our yen core rate to JPY 120… hedged for 2025 and 2026” and reflected in Q1 guidance; hedging cost kept “very low” with multiple tools .
• Carrier outlook: Deployments broader than Lumen expected, but “not so much early in the year”; Enterprise strength continues in Q1 .
• Optical margins: Costs added to serve higher sales in Q4, but margins expected to accrete in 2025 as capacity fills .
• BEAD program: Earliest trickles; TAM view (~$4B) intact, but cynicism on timing warranted; material impact not expected before 2026 .
• Dividend and buybacks: Healthy dividend maintained; buybacks continue; desire to lower payout ratio before raising dividend again .

Estimates Context

• S&P Global consensus estimates for Q4 2024 and Q1 2025 could not be retrieved at the time of writing due to data access limits. Company reported that Q4 exceeded its own guidance (core sales and EPS) and guided Q1 2025 core sales/EPS growth YoY .
• Given strong Optical Enterprise momentum and Display pricing, estimate revisions may bias upward for 2025 Optical, while Environmental may see downward adjustments due to European heavy‑duty softness .

Key Takeaways for Investors

• Optical Gen AI exposure is now a tangible revenue driver: Enterprise +93% YoY and $686M Q4 sales; expect continued demand, with DCI (Lumen) ramping through 2025 .
• Display returns de‑risked: price increases plus yen hedges (core rate 120) support 2025 NI $900–$950M at 25% margin, stabilizing a key profit engine .
• Margin/return trajectory improving: core OM 18.5% (+220 bps YoY) and core ROIC 12.7% (+390 bps), consistent with Springboard’s 20% OM target by end‑2026 .
• Near‑term optics: Q1 2025 guide implies double‑digit core sales growth and ~30% EPS growth; potential upgrade to Springboard at March event is a positive narrative catalyst .
• Watch headwinds: Environmental remains soft; Hemlock/EGB losses and non‑cash charges underscore execution risk in emerging platforms .
• Capital deployment: 2025 capex ~$1.3B with strong FCF ($1.25B in 2024) and ongoing buybacks; dividend held at $0.28/share for March 28, 2025 .
• Trading setup: Upside skew near IR event from plan upgrade and AI optical momentum; monitor carrier order trajectory and macro/tariff developments for risk management .