Corning Inc (GLW) — Q1 2025 Earnings Call Transcript

Thank you, Carmen, and good morning. Welcome to Corning's first quarter 2025 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'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments related to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business. For the first quarter, the difference between GAAP and core EPS primarily reflected non-cash, mark-to-market losses associated with the company's translated earnings contracts in Japanese yen-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 comparable GAAP 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. We delivered outstanding first quarter results that exceeded guidance. We grew sales 13% year-over-year to $3.7 billion. We grew EPS more than 3 times the rate of sales to $0.54. We expanded operating margin 250 basis points year-over-year to 18%. For quarter two, we're guiding continued strong year-over-year sales growth. We expect our quarter two sales to be approximately $3.85 billion. Our quarter two EPS guidance of $0.55 to $0.59 includes the financial impact of existing tariffs, which is $0.01 to $0.02, and accelerated production ramp cost for our new products in optical communications and solar of about $0.03. Even including those items, we expect EPS to grow year-over-year about 21%, 3 times faster than sales. Ed will explain more about our guidance later. Overall, we're coming off a strong year one of our Springboard plan, and our results and guidance show we're off to a great start in year two. We just held an investor event in March to upgrade our Springboard plan. Normally, I would focus my remarks on our strong progress and upcoming milestones. However, many investors requested that we address two questions that are on their minds. What is the financial impact of tariffs on Corning? And can you deliver your Springboard plan if there is a macroeconomic downturn during the plan timeframe? So I want to start by answering both of those questions. And then I'll go into more detail on each before turning things over to Ed to discuss our quarter one results and outlook. Let's start with the financial impact of tariffs on Corning. First, our long-standing philosophy to locate our manufacturing operations close to our customers serves as a natural hedge against tariffs and mitigates the financial impact. Second, the direct financial impact of existing tariff structures, which are primarily between the U.S. and China, is only $0.01 to $0.02 per quarter. We've included that in our second quarter guidance. Third, based on our significant U.S. advanced manufacturing footprint, we're seeing early signs of stronger demand for our U.S.-made innovations. Next, can we deliver our Springboard plan in a macroeconomic downturn? The simple answer is yes. And today, we reiterate our confidence in our ability to deliver our recently upgraded high-confidence Springboard plan to add more than $4 billion in annualized sales and to achieve an operating margin of 20% by the end of 2026. Our growth is primarily driven by powerful secular trends and more Corning content in our customers' offerings. And in order to provide you with a high-confidence plan, we already applied a risk adjustment that accounts for multiple factors, including a potential macroeconomic slowdown. With that, let's dive into each answer, starting with the financial impact of tariffs. As I said a moment ago, our company has a long-standing philosophy to locate manufacturing operations close to our customers. We find the geographic proximity leads to better innovation and more delighted customers. This also has the benefit of serving as a natural hedge against global trade tensions and tariff structures. We apply this philosophy globally. As a result, the direct impact of current tariffs for us is minimal. For instance, looking at the impact of the tariffs between the U.S. and China, in the U.S., we have a large advanced manufacturing footprint, including our optical communications business, where we have the largest fiber factory in the world, in North Carolina. We also manufacture products for our automotive, life sciences, mobile consumer electronics, and solar businesses in the U.S. Almost all the products we sell in the U.S. originate from our 34 advanced manufacturing facilities in the U.S. In fact, nearly 90% of our U.S. revenue comes from products of U.S. origin. The majority of the remainder is generated from products that are fully compliant with U.S. MCA rules. Only 1% of the products we sell in the U.S. come from China. Now let's look at our approach for our customers in China. 80% of our sales in China we make in China or process in customs approved tax and duty-free zones. 15% is made in region, for example in Korea and Taiwan. Only about 5% of our China sales are imported from the U.S. and subject to Chinese tariff structures. We will mitigate the impact of that exposure primarily by optimizing our supply chain to minimize tariffs and adjusting price where necessary. In total, we expect a direct impact of approximately $10 million to $15 million, or $0.01 to $0.02 for currently enacted tariffs in the second quarter, which is included in our guidance. Of course, we will seek to improve this through additional mitigation strategies. Bottom line, the direct impact of currently enacted tariffs is not significant for Corning. Interestingly, we are seeing early signs of stronger demand for our U.S.-made innovations from our large advanced manufacturing footprint in the U.S. Our customers in optical communications, solar, mobile consumer electronics, and life sciences are seeking to leverage our U.S. manufacturing footprint. We expect to close and potentially announce commercial agreements in the coming months. Next, can we deliver the Springboard Plan in a macroeconomic downturn? As I previously stated, the simple answer is yes. Today we reiterate our confidence in our ability to deliver the recently upgraded Springboard plan. Our internal Springboard plan is to add $6 billion in annualized sales run rate by the end of 2026. We have a significant sales opportunity and our growth is fueled by powerful secular trends as I mentioned earlier. As a reminder, our Springboard base is quarter four of 2023 when sales were $3.27 billion or $13.1 billion annualized. Adding $6 billion in incremental annualized sales brings us to a $19 billion sales run rate by the end of 2026. That is the sales level we would expect to achieve if we deliver our internal Springboard plan. Our internal plan is the output of the strategic planning process we run with each of our market access platforms. These are our actual business plans. We set our objectives and compensation based upon those plans. When our businesses submit plans to corporate, they factor in a variety of probabilistic outcomes. They try to account for the known unknowns. The business plans aim for a 70% confidence interval, meaning that based on their analysis, there is a 70% chance that they will deliver sales greater than or equal to that number. What we wanted to do with Springboard was to provide an even higher confidence plan for our investors. So we take that internal plan and translate the opportunity into an investable thesis for all of you. At the corporate level, we seek to probabilistically adjust for factors including macroeconomic slowdowns, changes in government policy, and the timing of multiple secular trends in our related innovations. Our corporate-level risk adjustment is $2 billion. This is how we get to our $4 billion high-confidence plan. Annualized, that is a $17 billion sales run rate by the end of 2026. Unpacking the macroeconomic component of that corporate-level risk adjustment, we use third-party forecasts of potential macroeconomic slowdown scenarios and apply that to our demand planning model that underpins our $19 billion internal Springboard plan. That economic slowdown scenario would result in a sales run rate by the end of 2026 of a little less than $18 billion, well within our $2 billion risk adjustment. We also run a shock case using the worst downturn over the last 25 years. That scenario results in an adjustment to our plan that is still within our $2 billion risk adjustment. In other words, when we constructed the high-confidence plan, the impact of a potential economic slowdown was already built in. That being said, remember, we are innovators. We're not macroeconomists. We are not projecting a macroeconomic slowdown. We're simply providing this context for you to make your own decisions. I hope that's helpful to understand our risk adjustment as it pertains to a potential economic downturn. That's one of the reasons that today we reiterate our high-confidence plan to add more than $4 billion to our annualized sales run rate by the end of 2026. We feel good about our innovations in the secular trends driving our growth. So now let's turn to those trends. We continue to see and hear reconfirming evidence that our secular trends are intact and remain relevant. We see it in our results, we see it in our order books, and we hear it in our detailed dialogues with our customers. In optical communications, we see remarkable customer response to both our products used inside GenAI data centers as well as our innovations to interconnect AI data centers across the country. We shared some of our new products with you at our March investor event. These products are driving positive customer response and rapid adoption. In our enterprise business, where we capture sales for inside the data center, adoption of our products drove a record $2 billion in sales last year. At our March investor event, we upgraded our four-year enterprise sales compound annual growth rate from 25% to 30% based on strong customer demand. In the first quarter, we continue to outperform with sales growth of 106% year-over-year. We've just completed detailed reviews with our major hyperscale customers that reconfirmed our growth expectations. Additionally, our carrier business has seen significant growth due to our new innovations to interconnect AI data centers. We shared that we reached an agreement with Lumen Technologies to provide our new GenAI fiber and cable system that enables Lumen to fit anywhere from two to four times the amount of fiber into their existing conduit. Last month, we announced that we have fully commercialized this product. We now have three industry-leading customers adopting the technology, and our production tripled every month in the first quarter. This innovation is now turning into a revenue stream to positively influence our financials this year. We continue to receive strong positive customer responses to our innovations, and as a result, we're accelerating our ramp plans in the second quarter to meet growing demand. Additionally, in our carrier business, recent telecom earnings calls indicate that our key customers have stated they favor the economics of fiber and remain committed to their fiber deployment plans. We believe they have completed drawing down the inventory they built during the pandemic, and the conditions are now in place for our carrier business to spring back to growth later this year. We saw the beginning of that in the first quarter. Moving to solar, we expect our new market access platform to grow from a $1 billion business in 2024 to a $2.5 billion business by 2028. Key drivers include increased energy demand, favorable economics, and government policy focused on energy independence. We are commercializing our new Made in America ingot and wafer products this year, with production expected to come online in the back half of this year. As previously mentioned, we have committed customers for 100% of our capacity available in 2025 and 80% for the next five years. Recent trade actions are increasing new customer engagement. The goal of U.S. policy is to ensure domestic energy security, making our U.S. solar assets even more valuable. We're experiencing increasing demand for U.S.-sourced solar, leading us to accelerate our ramp of U.S. advanced manufacturing in our Midland-Michigan wafer facility. We're increasing our workforce to 1,500 manufacturing jobs from our previously announced level of 1,100. Recent events validate our low-risk, high-return entry into the solar market. In display, we continue to expect TV screen size growth of about one inch a year. In March, we communicated that the price increases we implemented last year will help deliver net income of $900 million to $950 million in 2025 and achieve a net income margin of 25%. The first quarter's business marked net income of $243 million and a net income margin of 26.9%. In automotive, we expect to nearly triple sales in our automotive glass business by 2026, driven by more Corning integration as automakers add larger shaped, immersive, and high-resolution displays. Given the milestones we've achieved in our automotive glass business, we're graduating it this quarter out of the Emerging Innovations Group and into operations. It will be managed alongside environmental technologies, forming a new segment called automotive. In mobile consumer electronics, our growth will be driven by demand for increased Corning content as customers adopt our new higher-value innovations. In the first quarter, our major innovation streams remain on tap, and we are optimistic about adopting our new technologies. We expect those innovations to drive growth as we enter 2026. In summary, our growth trends remain intact. The direct impact of current tariffs on Corning is not significant, and our $2 billion risk adjustment should provide a sufficient buffer against potential economic downturns. So now I'll turn it over to Ed to get into more detail on our results and outlook.

Thank you, Wendell. Good morning, everyone. As you just heard, our results and guidance show we are making great progress on our high-confidence Springboard plan to add more than $4 billion in annualized sales and achieve an operating margin of 20% by the end of 2026. And as we successfully execute the plan, we continue to improve our return profile. Year-over-year in the first quarter, we grew sales 13% to $3.7 billion. We grew EPS 42% to $0.54, we expanded operating margin by 250 basis points to 18%, and we expanded ROIC by 300 basis points to 11.6%. Looking ahead, we expect our momentum to continue. For the second quarter, we expect continued strong year-over-year sales growth with sales of approximately $3.85 billion and EPS in the range of $0.55 to $0.59 again, growing significantly faster than sales. We expect to continue expanding our operating margin as we march toward our Springboard target of 20% by the end of 2026 and anticipate continued strong growth in our enterprise business driven by our new products for GenAI. Two other things I want to note related to our second-quarter guidance. First, our guidance factors in $0.01 to $0.02 for the expected direct impact of currently enacted tariffs. We plan to further mitigate this impact going forward, primarily by optimizing our supply chains and adjusting price where necessary. Second, we shared with you that we are accelerating our production ramp for new products, given high customer demand in both optical communications for our new GenAI products for both inside and outside the data center and in solar for our new solar wafers. Our second-quarter guidance includes temporarily higher costs associated with these ramps of about $0.03. We expect the impact of these costs to dissipate as our production and sales increase in the second half of the year. Now I'd like to share some more detail on what we're seeing in our businesses, and then I'll review our capital allocation priorities as we expect to generate significant cash over the springboard timeframe. In optical communications, first quarter sales were $1.4 billion, up 46% year-over-year. Net income for the first quarter was $201 million, up 101% year-over-year, reflecting strong incremental profit on the higher volume. Enterprise sales were $705 million for the quarter, up 106% year-over-year, driven by continued strong demand for our new GenAI products for inside the data centers. We are tracking ahead of our 2023 to 2027 enterprise sales CAGR of 30%. We also grew 11% year-over-year in our carrier business. The growth included sales of our new data center interconnected products. Additionally, our carrier customers have completed drawing down inventory built during the pandemic, and the conditions are now in place for our carrier business to return to growth in 2025. We are seeing the beginnings of that in the first quarter. Moving to display, first quarter sales were $905 million, up 4% year-over-year on both volume and price increases. Net income was $243 million, representing 26.9% of sales. We successfully implemented double-digit price increases in the second half of 2024 to ensure that we can maintain stable U.S. Dollar net income in a weaker yen environment. Our first quarter results provide the first proof point that we achieved our objective. As a reminder, we hedged our yen exposure for 2025 and 2026 with hedges in place beyond 2026. In 2025, we reset our yen core rate to approximately 120 yen to the dollar, consistent with our hedge rate. We are not recasting our 2024 financials because we expect to maintain the same profitability in display at the new core rate. We remain confident that we can deliver net income of $900 million to $950 million in 2025 and maintain a net income margin of 25%, consistent with the last five years. Overall, we are maintaining our market, technology, and cost leadership, while benefiting from market growth in a glass supply demand environment that is increasingly balanced to tight. Turning to Specialty Materials, first quarter sales were $501 million, up 10% year-over-year driven by continued strong demand for premium glass for mobile devices. Net income grew 68% year-over-year to $74 million, reflecting strong incrementals on higher volumes, as well as strong demand for our premium glass innovations. Now I'd like to take a moment to elaborate on our new automotive segment. Our automotive glass solutions business has been part of our Hemlock and Emerging Growth businesses, which aim to launch early-stage projects and growth opportunities. This is where our solar business currently resides. Beginning in Q1, we graduated our auto glass business and together with our environmental technologies business created a new segment named automotive. We recast the comparative segment results for prior periods to align with our current reporting. Our environmental business has been a leader in the industry for more than 50 years. Now we're leveraging that market access to drive more Corning automotive glass into the market. We have several recent partnership and project announcements tied to automotive interiors and adjacencies and are making nice progress. With that, let me provide some color on what we're seeing right now in automotive. In the first quarter, automotive sales were $440 million, down 10% year-over-year, primarily driven by continued softness in light and heavy-duty European markets. As expected, the North American Class 8 market also continues to lag year-over-year following a strong Q1 2024. We remain confident that the underlying secular trends in automotive will be strong growth drivers for Corning, as demand for more larger shaped immersive and higher resolution displays grows. Our segment change reflects our continued confidence. Turning to Life Sciences, on a year-over-year basis, first quarter sales of $234 million were down 1% and net income of $13 million was consistent. Finally, in Hemlock and Emerging Growth businesses, first quarter sales were $244 million, down 25% sequentially on normal seasonality. As I just explained, these results no longer include automotive glass solutions, and we recast 2024 for this change. We are still reporting our solar business results in Hemlock and Emerging Growth businesses for the moment as we continue to ramp production for our new solar wafer products. We expect to grow our new solar map to a $2.5 billion revenue stream by 2028, and we expect a positive incremental impact on Corning's sales, profits, and cash flow starting in the second half of 2025. We are commercializing our new Made in America ingot and wafer products this year. We have committed customers for 100% of our capacity available in 2025 and 80% of our capacity for the next five years. We plan to update you on our solar sales and profits as we continue to make progress. With that, I'll shift from segment results to free cash flow. The first quarter was essentially breakeven. Normally, Q1 is negative, a seasonal low driven by our typical compensation and working capital cycles. So we're actually off to a great start in 2025 and expect to generate a significant amount of free cash flow this year and plan to invest approximately $1.3 billion on CapEx. Finally, let's move to capital allocation. As we shared with you in March, the upgrades to our internal and high-confidence plans include higher sales and higher profit. We expect to convert that profit into more cash flow. As an early proof point in year one of the plan, we grew free cash flow 42% for the full year 2024 versus the prior year. Capital allocation remains at the forefront of our decisions. How do we choose to invest the expected higher cash flow? Companies approach capital allocation differently. We prioritize investing in organic growth opportunities that drive significant returns, growing primarily through innovation. We believe this creates the most value for our shareholders over the long term. Our investors have confirmed this. As we see high return opportunities in the future, we will invest in those. We also seek to maintain a strong and efficient balance sheet. We're in great shape. We have one of the longest debt tenors in the S&P 500. Our current average debt maturity is about 23 years, with only about $1.2 billion in debt coming due over the next five years. We have no significant debt coming due in any given year. Finally, we expect to continue our strong track record of returning excess cash to shareholders. We already have a strong dividend. Therefore, as we go forward, our primary vehicle for returning cash to shareholders will be share buybacks. We have an excellent track record. Over the last decade, we repurchased 800 million shares, resulting in close to a 50% reduction in our outstanding shares, which at today's share price has created $17 billion in value for our shareholders. Because of our growing confidence in Springboard, we started to buy back shares in the second quarter of 2024 and have continued to do so since then. In the first quarter of 2025, we invested another $100 million in share repurchases and expect to continue buying back shares in the second quarter. As I wrap up today, I'd like to reiterate the important points we've shared with you this morning. In Q1, we exceeded our guidance on both sales and EPS and continued to deliver strong sales growth while improving our return profile. We expect another strong quarter as evidenced by our second quarter guidance, which factors in the expected direct impact of currently enacted tariffs and temporarily higher costs as we accelerate production ramps for our new GenAI products in optical communications and our new solar wafer products. Stepping back, we feel great about our progress on Springboard and are energized about the tremendous opportunity for value creation we've built for our shareholders. Our internal Springboard plan adds $6 billion in annualized sales run rate by the end of 2026. The expected growth is driven by powerful secular trends, in particular, GenAI and solar. Our risk-adjusted high-confidence plan adds more than $4 billion in annualized sales. We continue to expect our operating margin to improve to 20% by the end of 2026. Therefore, we expect to continue improving ROIC, growing EPS, and strengthening cash flow. Our $2 billion risk adjustment provides a sufficient buffer for a macroeconomic downturn. I look forward to updating you on our progress. With that, I'll turn it back over to Ann.

Thank you, Ed. Okay, Carmen, we're ready for questions.

Hi, good morning, and thanks for the detail. I guess for my question, Wendell, you talked a lot about the different aspects that could play out in this new world order. I guess the one that maybe you left out, I was wondering if you can touch on is just your pricing power in uncertain markets and how you think all this plays out versus competition. Obviously, you got pricing sort of settled on the display side. But how do you think about just where you are at with some of the other key markets like solar and auto and especially optical? Thanks.

It's a great question, Steve. The most recent example we've had of our ability to pass increasing costs onto our customers in the form of price was part of the recovery from the pandemic where we successfully shared the impact of inflation with our customers. And so we're coming-off that knowledge and those tools. At this moment, we're actually seeing in solar because of the increased customer interest in U.S.-sourced solar and because of events and trade, raising our potential realized price in that business and our customer dialogues. Similarly, our product sets in optical are driving the bulk of growth due to unique products. We haven't been exposed to any tariff friction costs in those businesses. Should there be changes, that fundamental competitive moat we have should serve us well. In automotive, as of yet, we just don't have enough exposure to tariff structures to have entered into direct dialogues with our customers, so more to be seen in that space. In general, we feel confident about the way our footprint naturally reduces exposure to changing tariff structures, and our relationships with our customers suggest we can mitigate any impact that comes our way.

Great. That’s very helpful. Thank you.

Yes, morning. Thank you so much. You spoke about temporary capacity ramp costs in optical and solar, but your CapEx outlook did not change. It stayed at $1.3 billion. So is this largely an OpEx ramp? Is it a pull forward of any demand that you're seeing? Or are there under-the-cover changes in CapEx allocation? And if I could, could you also address maybe just your visibility in GenAI orders? Obviously, you had very strong growth, but there are some concerns around pullback in data center spending. I'm just trying to get some sense from you if you're seeing anything different in your order patterns at all. Thank you so much.

Thanks, Wamsi. Great questions. Let me take the first one on the cost ramp. So as we bring up capacity, you heard Wendell talk about, for example, in solar, us adding 1,500 jobs. So we are bringing on fixed costs to actually get that capacity up and running. So until we are at scale, producing at the level we are capable of and selling, we actually have a fixed cost that is embedded in our financials, and that's how we think about that cost drag. It remedies itself when we are actually at scale and selling. In solar, for example, we believe that second half is when we will see this scale. In optical, we are bringing on capacity, but where we are bringing it on is not really costly CapEx. If you think about our CapEx guide, we've reflected our view of what we think we need to deliver the $6 billion and the $4 billion in our Springboard plan as we go forward. Obviously, we will continue to update you on that, but that's how you should think about it.

Remember, in Springboard, what helps lead to the very powerful incrementals you are seeing here with EPS going up 3 times as fast as sales is that we already largely have the capacity and capability in place to service the growth. The friction costs you referenced tend to hit here because we are introducing products for the first time. The amount of throughput on those given lines dedicated to these new products is lower than our more established products. As those revenues grow and we improve our manufacturing efficiency, we see some of those friction costs drop away. Wamsi, did that answer your question effectively?

Yes, absolutely. That was super helpful, Wendell. And if you could comment on the visibility of GenAI orders too, that would be great. Thank you.

We just completed our quarterly detailed dialogues with our major hyperscale customers. What we see is that it reinforces our growth estimates. What causes noise level is different players can alter their plans in subtle ways. However, given the range of our customer footprint, these tend to balance out. In total, we see continued reinforcement of our growth expectations. Overall, these dialogues focus on how to get more of our new product sets and leverage our advanced manufacturing footprint in the U.S. This leads us to believe we're not quite supplying enough to meet their demand. That being said, it can be challenging to determine whether we are gaining share or just seeing an increase in the market until we analyze subsequent months of performance data.

Yes. That's great, Wendell. Thank you so much.

Great. Thank you for taking my question. Just back on the comment on optical; obviously, very strong demand here. I’m wondering if this environment is very supply constrained at this point? And if there is an opportunity to further press on pricing or further strengthen Corning's moat in this segment? Thank you.

I think strategically you are correct. This is especially applicable to next-generation products we are introducing. You can already see some of this reflected in the rising profitability of our optical segment. This includes actions around the strategic centrality of what you’re pointing out. If our next-gen innovations are as competitively advantaged as we hope, we would see continued improvement in the margin profile.

Next question.

Hi, thank you for taking my question. Wendell and Ed, thanks for all the prepared remarks in terms of tariffs as well as a potential recession. Maybe, Wendell, if I can ask you more in relation to your customer conversations since the liberation day tariffs. Is the discussion around a recession becoming more frequent with customers? And regarding tariffs, what behavior changes are you seeing from customers since liberation day tariffs? Has that shifted compared to prior to that? Adding on to that, in terms of capital investment plans regarding your solar ramp, how should we think about flexibility in that plan if the environment turns more challenging? Thank you.

What we are experiencing is evidence of increasing demand from our existing and new customers for our advanced manufacturing platforms in the U.S. These significant dialogues will hopefully lead to closing some agreements soon. Because of Springboard's fundamentals, we have available capacity in the U.S., where we expect that incremental demand to emerge with strong profitability. Our discussions revolve less around capital risk given our capabilities and more around securing long-term commitments from customers due to the unpredictability of tariff structures. Does that make sense, Samik? Is that responsive to your question?

Yes. Specifically on solar, when you think about your plan there, is it sensitive to the macro? Or given its long-term nature, should we see it as largely unaffected by a challenging environment? Thank you.

I think a couple of thoughts here. First, the need for energy is somewhat insulated from macro conditions. As Wendell shared, we're seeing demand for U.S.-sourced solar surge. I believe this demand is also somewhat insulated from macro influences. In fact, we may have further commercial announcements soon. When we were with you in March, we mentioned that our solar capacity for the wafer facility we are building is essentially sold out for this year, and we expect to generate the capacity for next five years at 80% sale rates. We generally utilize long-term supply agreements with take-or-pay provisions in this space. We feel optimistic about the growth trajectory from our current position moving forward.

To clarify our strategic position regarding demand, we anticipate 40 to 50 gigawatts of solar being installed in the U.S. this year. Our plan is more focused on capturing significant share of the solar value chain currently dominated by imports. Presently, the segment we are entering offers negligible U.S.-manufactured chemical and silicon products installed in the U.S. Therefore, our goal is to gain a double-digit share of domestically produced solar solutions. The macroeconomic conditions may serve as a background factor, but the core of our strategy focuses on the demand for domestically produced solar. Recent trade dynamics have made this transition easier and more valuable.

Thank you. Thanks for the color.

Thanks a lot for taking my question. A couple of follow-ups. Wendell, can you tell me what you hear from your panel customers regarding end-market demand? Obviously, the TV, as part of the consumer electronics segment, is very sensitive to macro trends. I was wondering what you are hearing from your customers? And I have a follow-up.

Sure, Mehdi. Our view of the display market is that units for the year will essentially be flat, roughly $207 million, somewhere in that zone. We do expect growth in the glass market driven by increasing screen sizes of about one inch. I'd say, that recent Chinese stimulus had some impact on demand. However, we're not hearing anything that would alter our outlook for end-market numbers currently.

So a follow-up here, given your reported Q1 and assuming that there is a price increase embedded and your outlook for flattish volume shipment, does that imply a significant uptick starting in Q2?

What we see in Q1 is reflected in the price determinations we've made in conjunction with the transition to the new core rate. This ensures we maintain profitability in U.S. dollars. In Q1, panel maker utilization was slightly higher than we would have normally anticipated, suggesting that some companies might have been ahead of trade actions. Our Q2 guidance reflects the expectation that panel maker utilization will decline slightly towards the end of this quarter to correct for any supply chain fluctuations. Overall, we observe that glass supply and demand are balanced and relatively tight, leading us not to foresee any need to modify our forecast for television unit demand.

All right. Great. Thanks for the details, Wendell. And actually, going back to Ed, you talked about having confidence with strong free cash flow. You're investing in operations given your $1.3 billion CapEx. Given this context, why not be more aggressive with buybacks? What is holding you back? If you're so confident with Springboard and your execution above expectations, why not reflect that in a more aggressive buyback? Any thoughts?

Thanks for the question, Mehdi. Just a reminder that we started buying back shares in the second quarter of last year and have continued to do so every quarter. In Q1, we bought back $100 million worth of shares and expect to keep pursuing buybacks. It's critical for us to maintain a robust balance sheet, and we plan to continue buying back our shares, which will be our primary means of returning cash to shareholders as we move forward.

Thank you.

All right. One more question.

Thank you. I think of tariffs a little bit like Scope 1, 2 and 3 emissions. Your $0.01 to $0.02, that's basically Scope 1 and 2, and there's nothing from Scope 3 or tariff impact on your customers in there, right?

What we try to convey is if our customers face a tariff-based impact or if macro conditions create supply issues, we capture that in our overall risk adjustment. Most of our customers exhibit high levels of supply chain sophistication, allowing them to adapt and optimize around tariffs. Therefore, we prefer to integrate this complexity into our risk adjustments rather than predict it on a sector-by-sector or customer-by-customer basis.

And then something like a customer moving their production from China to India, is that something that would be material to Corning? Or how would you have to adjust for that?

We initiated efforts years ago to build pathways for finishing our products in India to support our customers' thoughtful relocations to various regions. Additionally, we have executed similar strategies historically with Samsung in Vietnam. These adjustments take time, but we ensure our production strategies can accommodate these shifts. Thus, whether a customer shifts to India or China, we expect to capture revenue from those transitions, as we are prepared to supply.

Great. Thank you very much.

Great. Thanks, everybody, for joining us today. Before we close, I wanted to let you know that we are going to attend the JPMorgan Annual Global Technology, Media and Communications Conference on May 14. Additionally, we’ll be scheduling management visits to offices in select cities. Finally, a replay of today’s call will be available on our site starting later this morning. Once again, thanks for joining. Operator, that concludes our call. Please disconnect all lines.