康寧 (GLW) 2023 Q4 法說會逐字稿

Welcome to the Corning Incorporated Quarter 4 2023 Earnings Call. (Operator Instructions) It is my pleasure to introduce to you, Ann Nicholson, Vice President of Investor Relations.

歡迎參加康寧公司 2023 年第四季財報電話會議。 （操作員說明） 我很高興向您介紹投資者關係副總裁 Ann Nicholson。

Thank you, Shannon, and good morning, and welcome to Corning's Fourth Quarter 2023 Earnings Call. With me today are Wendell Weeks, Chairman and Chief Executive Officer; Ed Schlesinger, Executive Vice President and Chief Financial Officer; and Jeff Evenson, Executive Vice President and Chief Strategy 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.

謝謝香農，早安，歡迎參加康寧 2023 年第四季財報電話會議。今天與我在一起的有董事長兼執行長 Wendell Weeks； Ed Schlesinger，執行副總裁兼財務長；執行副總裁兼首席策略長 Jeff Evenson。我想提醒您，今天的言論包含符合 1995 年《私人證券訴訟改革法案》含義的前瞻性陳述。

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 relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business.

這些陳述涉及風險、不確定性和其他因素，可能導致實際結果有重大差異。這些因素在公司的財務報告中有詳細說明。您還應該注意，除非我們特別指出與 GAAP 數據相關的評論，否則我們將使用核心績效指標來討論我們的綜合結果。我們的核心績效衡量標準是管理階層用來分析業務的非公認會計原則衡量標準。

For the fourth quarter, the difference between GAAP and core EPS primarily reflected constant currency adjustments, realized gains and unrealized noncash mark-to-market losses on translated earnings contracts, and noncash translation losses on Japanese yen-denominated debt as well as restructuring and asset write-off charges. As a reminder, these mark-to-market accounting has no impact on our cash flow. A reconciliation of core results to the comparable GAAP value can be found in the Investor Relations section of our website at corning.com.

第四季度，公認會計原則與核心每股收益之間的差異主要反映了持續匯率調整、已實現收益和折算收益合約的未實現非現金按市值計價損失，以及以日元計價的債務以及重組和資產的非現金折算損失。沖銷費用。提醒一下，這些以市值計價的會計對我們的現金流量沒有影響。您可以在我們網站 corning.com 的投資者關係部分找到核心績效與可比較 GAAP 值的調節表。

You may also access core results on our website with downloadable financials in the Interactive Analyst Center. Supporting slides are being shown live on our webcast, and we encourage you to follow along. They're also available on our website for downloading. And now I'll turn the call over to Wendell.

您也可以在我們的網站上存取核心結果，並在互動式分析師中心下載財務資料。支援幻燈片正在我們的網路廣播中即時播放，我們鼓勵您跟隨。它們也可以在我們的網站上下載。現在我將把電話轉給溫德爾。

Thank you, Ann. Good morning, everyone. Today, we reported fourth quarter and full year 2023 results. Sales for the fourth quarter were $3.3 billion, and EPS was $0.39 in line with expectations. Free cash flow was $0.5 billion. Gross margin was 37%, consistent with the third quarter despite lower sequential sales. As I shared with you last quarter, demand in most of our markets is temporarily depressed due to supply chain corrections and macroeconomic factors. Therefore, our sales are well below long-term trends.

謝謝你，安。大家，早安。今天，我們報告了 2023 年第四季和全年業績。第四季銷售額為 33 億美元，每股收益 0.39 美元，符合預期。自由現金流為 5 億美元。儘管環比銷售額有所下降，但毛利率為 37%，與第三季持平。正如我在上個季度與大家分享的那樣，由於供應鏈調整和宏觀經濟因素，我們大多數市場的需求暫時受到抑制。因此，我們的銷售額遠低於長期趨勢。

Nevertheless, the actions we took to improve our profitability and cash flow generation throughout 2023, are evident in our financial performance. And based on detailed assessments, we are confident that we have extended our leadership positions across our markets. While our current sales are below trend, we expect that to change in the midterm as our markets begin to normalize. This creates an opportunity for us to increase our sales by more than $3 billion when that happens.

儘管如此，我們為提高 2023 年獲利能力和現金流產生而採取的行動在我們的財務業績中顯而易見。根據詳細的評估，我們有信心擴大我們在整個市場的領導地位。雖然我們目前的銷售額低於趨勢，但我們預計隨著市場開始正常化，這種情況會在中期發生變化。當這種情況發生時，這將為我們創造一個將銷售額增加超過 30 億美元的機會。

As we capture that growth, we expect to deliver powerful incrementals because we already have the required production capacity and technical capabilities in place and the cost is already reflected in our financials. The incremental profit and cash flow annuity created by increasing sales by $3 billion plus is a terrific opportunity for our shareholders, and we expect to start making progress towards realizing that opportunity in 2024.

當我們抓住這一成長機會時，我們預計將實現強勁的增量，因為我們已經具備了所需的生產能力和技術能力，並且成本已經反映在我們的財務中。銷售額增加 30 億美元以上所創造的增量利潤和現金流年金對我們的股東來說是一個絕佳的機會，我們預計在 2024 年開始在實現這一機會方面取得進展。

Now it's difficult to call the specific timing of a recovery but we continue to see signs that it will occur in 2024. As a result, we expect the first quarter to be our low quarter of the year. So that's a summary of where we are and how we seek to create value in the medium term.

現在很難確定復甦的具體時間，但我們繼續看到跡象表明復甦將在 2024 年發生。因此，我們預計第一季將是今年的最低季度。這是我們的現狀以及我們如何尋求在中期創造價值的總結。

I'd like to provide some additional facts and perspective. At the start of 2023, we introduced plans to improve profitability and cash flow in this lower demand environment. Throughout the year, we took action to restore our productivity ratios to historical levels and to raise price to more appropriately share inflation with our customers.

我想提供一些額外的事實和觀點。 2023 年初，我們推出了在需求較低的環境中提高獲利能力和現金流的計畫。在這一年裡，我們採取了行動，將生產力恢復到歷史水平，並提高價格，以更適當地與客戶分擔通膨。

I'm happy to report we delivered on our plans. When you look at our fourth quarter results on a year-over-year basis, the evidence of our progress is quite clear. We increased gross margin by 330 basis points and free cash flow by $110 million to $0.5 billion despite sales being down by more than $350 million. Our profitability and productivity improvements led to significantly improved free cash flow conversion, and we expect to continue converting profit to cash at attractive rates going forward.

我很高興地報告我們已經實現了計劃。當您查看我們第四季度的年比業績時，我們的進展證據是非常明顯的。儘管銷售額下降超過 3.5 億美元，但我們的毛利率提高了 330 個基點，自由現金流增加了 1.1 億美元，達到 5 億美元。我們的獲利能力和生產力的提高導致自由現金流轉換顯著改善，我們預計未來將繼續以有吸引力的利率將利潤轉換為現金。

Overall, our results in the quarter and throughout 2023, demonstrate that we continue to make solid progress advancing our market leadership strengthening our profitability and improving our cash flow generation even in the lower demand environment we're experiencing. As a result, we're entering this year operationally strong. Now, we intend to build on this strength. As I previously mentioned, we have an opportunity to increase our sales by more than $3 billion in the medium term.

總體而言，我們本季和2023 年全年的業績表明，即使在我們面臨的需求較低的環境下，我們仍將繼續取得紮實的進展，推進我們的市場領導地位，增強我們的盈利能力並改善我們的現金流產生。因此，今年我們的營運表現強勁。現在，我們打算鞏固這項優勢。正如我之前提到的，我們有機會在中期內將銷售額增加超過 30 億美元。

Let's take a deeper look as to why we believe this. I shared a bit of how we're thinking about Optical Communications on the last call. I'll start there again today because it's a significant part of our opportunity. We anticipate Optical Communications sales will spring back because we believe and our carrier customers have confirmed that they purchased excess inventory during the pandemic and that they've been utilizing this inventory to continue deploying their networks.

讓我們更深入地看看為什麼我們相信這一點。我在上次通話中分享了我們對光通訊的一些看法。今天我將再次從這裡開始，因為這是我們機會的重要組成部分。我們預計光通訊銷售將會反彈，因為我們相信並且我們的營運商客戶已經確認他們在大流行期間購買了多餘的庫存，並且他們一直在利用這些庫存來繼續部署他們的網路。

We believe these carriers will soon deplete their inventory and execute on the increased broadband deployment plans they've communicated to us over the last several months. As a result, we expect them to return to their normal purchasing patterns to service their deployments. We also continue to expect BEAD funding for network builds in underserved areas to begin in the second half of 2024 and continue adding to our addressable market for several years.

我們相信這些運營商將很快耗盡他們的庫存並執行他們在過去幾個月中向我們傳達的增加的寬頻部署計劃。因此，我們希望他們恢復正常的購買模式來為其部署提供服務。我們也預計 BEAD 將於 2024 年下半年開始為服務不足地區的網路建設提供資金，並在未來幾年內繼續擴大我們的目標市場。

Additionally, we expect to grow hyperscale sales in support of the growing role of cloud computing and the need to build the second optical network necessary to directly connect the GPUs that drive artificial intelligence. Last quarter, I shared trend lines for fiber shipments, which showed that we are significantly below trend and outline why we expect our sales to get back on track. I'd now like to update you on progress during the fourth quarter.

此外，我們預計超大規模銷售將成長，以支援雲端運算日益增長的作用，以及建立直接連接驅動人工智慧的 GPU 所需的第二個光纖網路的需求。上個季度，我分享了纖維出貨量的趨勢線，這表明我們明顯低於趨勢，並概述了為什麼我們預計我們的銷售將重回正軌。我現在想向您介紹第四季度的最新進展。

Here, you see Corning's fiber shipments measured in fiber kilometers since the beginning of 2007. The trend line shows a 7.3% compound annual growth rate over the last decade compared to a 6.6% CAGR for industry fiber shipments over the same period. As I explained during our third quarter call, our fiber shipments in quarter 1 of 2023 were basically in line with expected market trends, but started to drop below our trend line in quarter 2 and even more so in quarter 3, with our shipments more than 30% below trend line, primarily due to elevated carrier inventory levels.

在這裡，您可以看到自2007 年初以來以光纖公里為單位衡量的康寧光纖出貨量。趨勢線顯示過去十年的複合年增長率為7.3%，而同期工業光纖出貨量的複合年增長率為6.6%。正如我在第三季電話會議中所解釋的那樣，我們在2023 年第一季的光纖出貨量基本上符合預期的市場趨勢，但在第二季開始跌破趨勢線，在第三季更是如此，我們的出貨量超過比趨勢線低 30%，主要是由於承運商庫存水準升高。

We now have another quarter of data to share. In the fourth quarter, we saw a small uptick in fiber shipments, but they remain more than 30% below trend. More importantly, our regular sit-downs with key customers indicate that they are deploying at a higher rate than they are purchasing as they continue to make progress on drawing down inventory. Additionally, they have plans to increase deployments in 2024. We look forward to updating you on takeaways from our next round of sit-downs. We're also seeing encouraging signs in hyperscale.

我們現在還有另一個季度的數據可以分享。第四季度，我們看到纖維出貨量小幅上升，但仍比趨勢水準低 30% 以上。更重要的是，我們與主要客戶的定期座談表明，隨著他們在減少庫存方面不斷取得進展，他們的部署速度高於採購速度。此外，他們還計劃在 2024 年增加部署。我們期待向您通報下一輪靜坐的最新進展。我們也在超大規模領域看到了令人鼓舞的跡象。

Overall orders grew in the fourth quarter, and we're seeing the earliest edge of AI-related network builds in our order books. Returning to trend adds more than 40% to our revenue run rate for optical communications, and we are laser focused on doing just that. Beyond that, we expect the strong underlying growth trend to continue far into the future and our sales to grow faster than the market through more Corning innovations.

第四季的整體訂單量有所增長，我們在訂單簿中看到了人工智慧相關網路的最早優勢。回歸趨勢使我們的光通訊收入運行率增加了 40% 以上，我們正​​專注於做到這一點。除此之外，我們預期強勁的潛在成長趨勢將在未來很長一段時間內持續下去，透過更多的康寧創新，我們的銷售成長速度將快於市場。

Optical fiber remains the ascendent technology with growing applications in wireless, cloud computing, including AI and broadband efforts to connect the unconnected. As those applications grow, we have new product innovations in each that will increase our revenue per installed fiber. Government incentives to ensure everyone has Internet access also extend the long-term trend line.

光纖仍然是優勢技術，在無線、雲端運算（包括人工智慧和寬頻連接未連接的領域）的應用不斷增長。隨著這些應用的成長，我們在每個應用中都有新的產品創新，這將增加我們每個已安裝光纖的收入。確保每個人都能上網的政府激勵措施也延長了長期趨勢線。

Display provides another example of how our sales will spring back. Retail sales during the fourth quarter selling season were softer than industry expectations. Panel makers responded by reducing their fourth quarter utilization levels.

展示提供了我們的銷售如何回升的另一個例子。第四季銷售旺季的零售額低於產業預期。面板製造商的回應是降低第四季的利用率水準。

Additionally, industry reports indicate the panel makers plan to run at lower utilization levels in the first quarter as they continue to align panel supply to demand with fab shutdowns planned during the Lunar New Year holidays in February. For the first quarter of 2024, we expect the glass market and our volume to be down by a mid-single-digit percentage sequentially.

此外，行業報告顯示，面板製造商計劃在第一季以較低的利用率水準運行，因為他們將繼續調整面板供應與需求，並計劃在二月農曆新年假期期間關閉工廠。對於 2024 年第一季度，我們預計玻璃市場和我們的銷售量將連續下降中個位數百分比。

For the full year of 2024 our expectations are in line with the industry. We anticipate relatively flat television unit volume, another year of TV screen size growth and some recovery in PC demand. Combined, this adds mid-single-digit growth in glass volume at retail versus 2023. We expect panel maker utilization to increase after the first quarter to meet the expected retail demand. As a result, we expect our financial performance to significantly improve from our first quarter run rate.

對於 2024 年全年，我們的預期與業界一致。我們預期電視單位銷售將相對持平，電視螢幕尺寸又將成長一年，個人電腦需求將有所回升。總而言之，與 2023 年相比，玻璃零售量將實現中等個位數成長。我們預計面板製造商的利用率將在第一季後增加，以滿足預期的零售需求。因此，我們預計我們的財務業績將比第一季的運作率顯著改善。

Longer term, we expect continued volume growth in retail to be mainly driven by television screen size growth as it has the past several years. And for some improvement in units as consumer demand normalizes. We expect to win in this market because we are the undisputed technology leader. Our successful development and capability in Gen 10.5 aligns with the continued move to larger-sized TVs produced on the lowest cost platforms for large displays.

從長遠來看，我們預計零售量的持續成長將主要由電視螢幕尺寸的成長推動，就像過去幾年一樣。隨著消費者需求的正常化，單位也會有所改善。我們期望贏得這個市場，因為我們是無可爭議的技術領導者。我們在 Gen 10.5 中的成功開發和能力與持續轉向在最低成本的大型顯示器平台上生產的更大尺寸電視相一致。

Life Sciences is another segment where market normalization contribute significantly to our expected growth. Customers in North America and in Europe are completing their inventory drawdowns. We are continuing our productivity and operations improvements, and we're refocusing our commercial and production efforts on drug discovery and production as the market returns.

生命科學是市場正常化對我們的預期成長有重大貢獻的另一個領域。北美和歐洲的客戶正在完成庫存削減。我們正在繼續提高生產力和營運水平，隨著市場的回歸，我們正在將商業和生產工作的重點重新集中在藥物發現和生產上。

We also continue to evolve our products and business model for vials in our Pharmaceutical Technologies business. In addition to markets returning to normal, we continue to execute our more Corning content opportunities across the company.

我們也繼續發展我們的製藥技術業務中的小瓶產品和業務模式。除了市場恢復正常外，我們還繼續在整個公司範圍內執行更多康寧內容機會。

In Mobile Consumer Electronics and Automotive, we see more Corning as the primary growth mechanism. Let's look first at Mobile Consumer Electronics. Since 2016, handhelds have declined 21% while our sales of Gorilla Glass have increased 41%. Now we've done this by advancing the state of the art for cover materials. And this is just a classic more Corning play. We have a strong innovation portfolio in support of our close collaborations with leading OEMs. And we expect to continue delivering new products that increase our content per device.

在行動消費電子和汽車領域，我們更將康寧視為主要成長機制。我們首先來看看行動消費性電子產品。自 2016 年以來，手持設備銷量下降了 21%，而我們的大猩猩玻璃銷量卻增加了 41%。現在，我們透過提高封面材料的技術水平來實現這一目標。而這只是康寧的經典。我們擁有強大的創新產品組合來支持我們與領先的原始設備製造商的密切合作。我們希望繼續提供新產品，以增加每台設備的內容。

You saw a great example of this earlier in January in our announcement with Samsung about Corning Gorilla Armor, which dramatically enhances sunlight readability and scratch resistance. Extreme ultraviolet lithography, or EUV a market we serve with our advanced optics products is another great more Corning opportunity. We are the market leader for the photomask and mirror materials of choice for GPUs and other advanced semiconductors.

一月初，我們與三星宣布推出康寧大猩猩裝甲，這就是一個很好的例子，它大大提高了陽光下的可讀性和耐刮擦性。我們用先進的光學產品服務的極紫外光刻（EUV）市場是康寧的另一個巨大機會。我們是 GPU 和其他先進半導體所選擇的光掩模和反射鏡材料的市場領導者。

In Automotive, proposed U.S. EPA regulations would require adoption of gasoline particulate filters. And provide an incremental driver of demand for our market-leading GPF offerings. In terms of more Corning, GPF adds 2 to 3x the content opportunity in ICE vehicles. This would meet significant growth in our environmental business even in the face of global BEV adoption. Additionally, we're winning both interior and exterior auto glass business as customers increasingly view our solutions to be system-enabling components.

在汽車領域，擬議的美國環保署法規將要求採用汽油顆粒過濾器。並為我們市場領先的 GPF 產品提供增量需求驅動力。就更多康寧而言，GPF 將 ICE 車輛的內容機會增加了 2 到 3 倍。即使在全球採用純電動車的情況下，這也將滿足我們環境業務的顯著成長。此外，隨著客戶越來越多地將我們的解決方案視為系統支援組件，我們正在贏得汽車內外玻璃業務。

As I wrap up, here's what I'd like to leave you with. A majority of our markets are operating below trend. And as a result, our 2023 full year sales are down from the prior year. In this lower demand environment, we have successfully taken actions to improve our profitability and cash flow, and we believe we have extended our leadership positions across our businesses. We are confident that our markets will normalize and as they do, we have an opportunity to increase our annual sales by more than $3 billion.

在我結束演講時，我想向您介紹以下內容。我們的大多數市場都低於趨勢運行。因此，我們 2023 年全年銷售額比前一年有所下降。在這種需求較低的環境中，我們成功地採取了行動來提高我們的獲利能力和現金流，我們相信我們已經擴大了我們在各個業務領域的領導地位。我們相信我們的市場將會正常化，隨著市場的正常化，我們的年銷售額將有機會增加超過 30 億美元。

As we capture that growth, we expect to deliver powerful incrementals since the required capacity and technical capabilities are already in place and the costs are already in our financials. This represents a terrific opportunity for our shareholders. We expect to make progress on this opportunity in 2024, and we believe the first quarter is our low quarter of the year.

當我們抓住這種成長時，我們預計將實現強大的增量，因為所需的產能和技術能力已經到位，並且成本已經計入我們的財務中。這對我們的股東來說是一個絕佳的機會。我們預計 2024 年將在這一機會上取得進展，我們相信第一季是我們今年的低谷季度。

It's difficult to call the specific timing of a recovery. We will continue our regular engagements with our large optical customers to review their recent deployments in detail and better understand their plans for deployments in 2024 and beyond.

很難確定復甦的具體時間。我們將繼續與大型光學客戶定期合作，詳細檢視他們最近的部署，並更深入了解他們 2024 年及以後的部署計畫。

Following the Lunar New Year, we'll have similar meetings with our display customers. And we look forward to updating you in the next few months at investor conferences on our learnings and our progress.

農曆新年之後，我們將與顯示器客戶舉行類似的會議。我們期待在未來幾個月的投資者會議上向您介紹我們的經驗和進展。

As I conclude, I'd like to remind you that the essence of what we do here at Corning is invent, make and sell. We drive durable multiyear growth by inventing category-defining products, developing scalable manufacturing platforms and building strong trust-based relationships with our customers who are the leaders in their industries.

最後，我想提醒您，我們在康寧所做的本質是發明、製造和銷售。我們透過發明類別定義產品、開發可擴展的製造平台以及與行業領導者客戶建立牢固的基於信任的關係來推動持久的多年成長。

Now I'll turn the call over to Ed so that he can get into the details of our results and our outlook.

現在我將把電話轉給艾德，以便他詳細了解我們的結果和前景。

Thank you, Wendell, and good morning, everyone. I will start by summarizing a few key takeaways, and then I'll move to the fourth quarter results. Our full year sales were $13.6 billion, down 8%, reflecting our markets being well below long-term trends. Despite the lower sales, we improved profitability and cash flow by restoring productivity ratios back to historical levels, and offsetting inflation by raising prices.

謝謝你，溫德爾，大家早安。我將首先總結一些關鍵要點，然後我將轉向第四季度的業績。我們的全年銷售額為 136 億美元，下降 8%，反映出我們的市場遠低於長期趨勢。儘管銷售額下降，但我們透過將生產力恢復到歷史水平並透過提高價格抵消通貨膨脹來提高獲利能力和現金流。

As a result, in the fourth quarter of 2023, we expanded gross margin by 330 basis points versus the fourth quarter of 2022, despite sales being down by more than $350 million, and we grew free cash flow sequentially every quarter from first quarter levels. As you heard from Wendell, we have an opportunity to increase our sales by more than $3 billion in the medium term as our markets normalize.

因此，儘管銷售額下降了超過3.5 億美元，但我們在2023 年第四季度的毛利率仍比2022 年第四季度增長了330 個基點，並且每個季度的自由現金流都比第一季的水平連續增長。正如您從 Wendell 那裡聽到的那樣，隨著我們的市場正常化，我們有機會在中期內將銷售額增加超過 30 億美元。

And we have in place the necessary production capacity and technical capabilities to service that growth. Our operations and finance teams are collaborating closely on processes and tools to ensure that we capture the growth and operating leverage required to deliver significant incremental profit and cash flow. We expect to make progress during 2024.

我們擁有必要的生產能力和技術能力來服務這種成長。我們的營運和財務團隊在流程和工具方面密切合作，以確保我們獲得實現顯著增量利潤和現金流所需的成長和營運槓桿。我們預計 2024 年將取得進展。

Moving to fourth quarter results. Sales were $3.3 billion, gross margin was 37%, EPS was $0.39 and free cash flow was $487 million. Now let me provide some details on our segment results. In Optical Communications, sales for the fourth quarter were $903 million, down 2% sequentially, primarily reflecting temporarily lower demand from carrier customers as they continue to draw down inventory. Net income for the quarter was $88 million, down 3% sequentially on the lower volume.

轉向第四季業績。銷售額為 33 億美元，毛利率為 37%，每股盈餘為 0.39 美元，自由現金流為 4.87 億美元。現在讓我提供有關我們細分市場結果的一些詳細資訊。在光通訊領域，第四季銷售額為 9.03 億美元，季減 2%，主要反映營運商客戶因持續減少庫存而暫時需求下降。該季度淨利潤為 8800 萬美元，比上一季下降 3%。

Longer term, we remain confident that optical communications market will normalize. We believe that the industry's underlying growth drivers are intact, specifically broadband, 5G, cloud computing and advanced AI. We will also benefit from public infrastructure investments to help connect the unconnected and bring broadband to a much larger share of the U.S. population. And from an order rate perspective, we are beginning to see green shoots in the hyperscale data center space.

從長遠來看，我們仍然對光通訊市場的正常化充滿信心。我們相信，該行業的潛在成長動力完好無損，特別是寬頻、5G、雲端運算和先進人工智慧。我們還將受益於公共基礎設施投資，以幫助連接未連接的人，並將寬頻帶給更多的美國人口。從訂單率的角度來看，我們開始看到超大規模資料中心領域的萌芽。

Moving to Display Technologies. Fourth quarter sales were $869 million, down 11% sequentially. The remainder of our second half price increases partially offset a sequential volume decline that was consistent with the market. Results -- retail results during the fourth quarter selling season were softer than industry expectations.

轉向顯示技術。第四季銷售額為 8.69 億美元，比上一季下降 11%。下半年價格上漲的其餘部分部分抵消了與市場一致的連續銷售下降。結果－第四季銷售季的零售業績弱於產業預期。

Panel makers responded by reducing their fourth quarter utilization levels. Additionally, industry reports indicate that panel makers plan to run at lower utilization levels in the first quarter as they continue to align panel supply to demand with fab shutdowns planned during the Lunar New Year holidays in February.

面板製造商的回應是降低第四季的利用率水準。此外，行業報告顯示，面板製造商計劃在第一季以較低的利用率水準運行，因為他們將繼續調整面板供應與需求，並計劃在二月農曆新年假期期間關閉工廠。

For the first quarter of 2024, we expect the glass market and our volume to be down by a mid-single-digit percentage sequentially. For the full year of 2024, our expectations are in line with the industry. We anticipate relatively flat television unit volume, another year of TV screen size growth and some recovery in PC demand.

對於 2024 年第一季度，我們預計玻璃市場和我們的銷售量將連續下降中個位數百分比。對於2024年全年，我們的預期與業界一致。我們預期電視單位銷售將相對持平，電視螢幕尺寸又將成長一年，個人電腦需求將有所回升。

This adds mid-single-digit growth in glass volume at retail versus 2023. We expect panel maker utilization to increase after the first quarter to meet the expected retail demand growth. As a result, we expect our financial performance to significantly improve from our first quarter run rate.

與 2023 年相比，零售玻璃銷售將出現中等個位數成長。我們預計面板製造商的利用率將在第一季後增加，以滿足預期的零售需求成長。因此，我們預計我們的財務業績將比第一季的運作率顯著改善。

Moving to pricing. We successfully executed a double-digit price increase at our customers in the second half of 2023. We expect the pricing environment to remain favorable with glass supply balance to demand as display glass makers reduced capacity in 2023. We expect our Q1 2024 glass prices to be consistent with Q4 of 2023.

轉向定價。我們在2023 年下半年成功地對客戶執行了兩位數的漲價。我們預計，隨著顯示器玻璃製造商在2023 年減少產能，玻璃供需平衡，定價環境將保持有利。我們預計2024 年第一季度玻璃價格將與 2023 年第四季保持一致。

In Specialty Materials, sales in the fourth quarter were $473 million, down 16% sequentially, following strong third quarter sales of our smartphone cover materials in support of customer product launches. Net income was $58 million, down 19% sequentially, reflecting the lower volumes.

在特種材料方面，第四季銷售額為 4.73 億美元，環比下降 16%，此前我們為支援客戶產品發布而智慧型手機外殼材料第三季銷售強勁。淨利潤為 5800 萬美元，環比下降 19%，反映出銷量下降。

In Environmental Technologies, fourth quarter sales were $429 million, down 4% sequentially, reflecting normal seasonality. Net income was $98 million, consistent sequentially. For the full year, sales increased 11% to $1.8 billion, outpacing the automotive market recovery. Our content-driven growth strategy and increased GPF adoption due to midyear implementation of China 6b regulations led to our outperformance.

在環境技術領域，第四季銷售額為 4.29 億美元，比上一季下降 4%，反映了正常的季節性因素。淨利潤為 9800 萬美元，與上一季持平。全年銷售額成長 11%，達到 18 億美元，超過了汽車市場的復甦速度。我們的內容驅動型成長策略以及由於年中實施中國 6b 法規而增加的 GPF 採用率導致我們表現出色。

In Life Sciences, sales in the fourth quarter were $242 million, up 5% sequentially. Customers in North America and Europe are completing their inventory drawdowns, additionally, productivity improvements allowed us to improve service levels to better supply the market as it normalizes.

在生命科學領域，第四季銷售額為 2.42 億美元，比上一季成長 5%。北美和歐洲的客戶正在完成庫存削減，此外，生產力的提高使我們能夠提高服務水平，以便在市場正常化時更好地供應市場。

Net income improved sequentially to $17 million, up 31% resulting from higher volume and productivity improvements. Turning to Hemlock and Emerging Growth businesses. Sales in the fourth quarter were $356 million, up 9% sequentially, primarily reflecting higher semiconductor polysilicon volume.

由於產量增加和生產率提高，淨利潤環比增長 31%，達到 1700 萬美元。轉向鐵杉和新興增長業務。第四季銷售額為 3.56 億美元，季增 9%，主要反映了半導體多晶矽銷量的增加。

Now let's turn to our outlook. We expect sales in the first quarter of approximately $3.1 billion. We expect EPS in the range of $0.32 to $0.38. The improvements we made in profitability and cash flow will continue to deliver benefits in 2024. We expect gross margin in the first quarter of '24 to be similar to the fourth quarter of 2023 despite lower sales and to improve first quarter free cash flow by $200 million to $300 million versus the first quarter of 2023.

現在讓我們來談談我們的展望。我們預計第一季的銷售額約為 31 億美元。我們預計每股收益在 0.32 美元至 0.38 美元之間。我們在獲利能力和現金流方面取得的改善將在2024 年繼續帶來效益。儘管銷售額較低，但我們預計24 年第一季的毛利率將與2023 年第四季相似，並將第一季度自由現金流提高200 美元與 2023 年第一季相比，成長 100 萬至 3 億美元。

We expect the first quarter to be our low quarter. We believe we are going to grow from these levels for the following reasons: in optical communications, we expect carriers to complete inventory drawdowns and increased deployments throughout the year.

我們預計第一季將是我們的低谷季度。我們相信我們將在這些水準上實現成長，原因如下：在光通訊領域，我們預計營運商將在全年完成庫存削減和增加部署。

We also see orders increasing from hyperscale data center customers. In display, we expect panel maker utilization to increase from first quarter levels to meet expected full year retail demand. In Life Sciences, we expect markets to continue normalizing. And we plan to deliver more Corning content opportunities in mobile consumer electronics and environmental technologies. Now I'd like to take a minute to address currency exchange rates.

我們也看到超大規模資料中心客戶的訂單增加。在顯示器方面，我們預計面板製造商的利用率將從第一季的水平增加，以滿足預期的全年零售需求。在生命科學領域，我們預期市場將繼續正常化。我們計劃在行動消費電子和環境技術領域提供更多康寧內容機會。現在我想花一點時間談談貨幣匯率。

As a reminder, we have actively hedged our foreign currency exposure over the past decade. This serves as an effective tool to reduce earnings volatility, protect our cash flow, enhance our ability to invest and protect shareholder returns. We're very pleased with our hedging program and the economic certainty it provides. We have received more than $2.5 billion in cash under our hedge contracts since their inception.

提醒一下，我們在過去十年中積極對沖我們的外匯風險。這是減少獲利波動、保護現金流、增強投資能力和保護股東回報的有效工具。我們對我們的對沖計劃及其提供的經濟確定性感到非常滿意。自對沖合約成立以來，我們已根據對沖合約收到了超過 25 億美元的現金。

Our largest exposure is the Japanese yen. As we've previously shared, investors, we have most of our 2024 yen exposure hedged. We plan to keep our yen core rate at JPY 107 through the end of 2024. As we look ahead, we are actively working to improve our hedge coverage for 2025. The yen forward curve works in our favor.

我們最大的敞口是日圓。正如我們之前向投資者分享的那樣，我們對 2024 年的大部分日圓敞口進行了對沖。我們計劃在 2024 年底將日圓核心匯率維持在 107 日圓。展望未來，我們正積極努力改善 2025 年的對沖覆蓋範圍。日圓遠期曲線對我們有利。

If you go out one year, the forward yen rate is about JPY 7 stronger than today's spot rate, out 2 years, it's about JPY 12 stronger and so on. Also, the current yen spot rate is significantly weaker than the 30-year average of approximately JPY 110. So we believe there will be an opportunity to place additional long-term hedges at more attractive rates. And in combination with hedging, we can institute an industrial solution, like price increases for display glass.

如果一年後，遠期日圓匯率比今天的即期匯率強約 7 日圓，兩年後，遠期日圓匯率比今天的即期匯率強約 12 日圓，依此類推。此外，目前日圓即期匯率明顯弱於約 110 日圓的 30 年平均值。因此，我們認為將有機會以更具吸引力的利率進行額外的長期避險。結合對沖，我們可以製定工業解決方案，例如提高顯示器玻璃的價格。

The first step of which we took in 2023. So that's how we think about it. It will either solve in the currency markets in a reasonable time frame or will move to an industrial solution.

我們在 2023 年邁出了第一步。這就是我們的想法。它要么會在合理的時間內在貨幣市場上得到解決，要么會轉向工業解決方案。

Now before I wrap up, I want to spend a minute on our priorities to maintain a strong and efficient balance sheet and return excess cash to shareholders. We ended the year with $1.8 billion in cash. We've created one of the longest debt tenors in the S&P 500. Our current average debt maturity is 23 years with only $1.4 million in debt coming due in the next 5 years and no significant debt coming due in any given year and essentially all of our debt instruments are fixed rate.

現在，在結束之前，我想花一點時間討論我們的優先事項，即維持強大而高效的資產負債表並將多餘的現金返還給股東。年底我們擁有 18 億美元現金。我們創造了標準普爾500 指數中最長的債務期限之一。我們目前的平均債務期限為23 年，未來5 年內只有140 萬美元到期債務，並且在任何特定年份都沒有重大債務到期，而且基本上所有債務都到期。我們的債務工具是固定利率的。

Additionally, we prioritize returning excess cash to shareholders. We have consistently done this, including throughout the pandemic. And one of the ways we do that is through dividends. We have grown our dividend 40% since 2019, and our dividend yield is top quartile in the S&P 500. We will propose that our Board maintains a quarterly dividend of $0.28 in the first quarter, and we will continue to be opportunistic on share repurchases.

此外，我們優先將多餘現金回饋給股東。我們一直這樣做，包括在整個大流行期間。我們做到這一點的方法之一就是透過股息。自2019 年以來，我們的股息成長了40%，我們的股息殖利率在標準普爾500 指數中名列前茅。我們將建議董事會在第一季維持0.28 美元的季度股息，並且我們將繼續在股票回購方面採取機會主義態度。

Now here's what I want to leave you with today. We are entering the year operationally and financially strong. We expect the first quarter to be the low quarter of the year. We have an opportunity to capture $3 billion plus in sales over the medium term as markets normalize and we capture more Corning content opportunities. As we do, we are positioned to capture significant incremental profit and cash flow because we have the capacity and capabilities in place and the costs are already in our financials.

這就是我今天想留給你們的。進入新的一年，我們的營運和財務狀況都十分強勁。我們預計第一季將是今年的最低季。隨著市場正常化，我們有機會在中期實現 30 億美元以上的銷售額，並且我們抓住更多康寧內容機會。正如我們所做的那樣，我們有能力獲得顯著的增量利潤和現金流，因為我們擁有適當的能力和能力，而成本已計入我們的財務中。

I look forward to updating you on our progress. And now I will turn things back over to Ann.

我期待向您通報我們的最新進展。現在我要把事情交還給安。

Thanks, Ed. Shannon, we're ready for our first question.

謝謝，艾德。香農，我們準備好回答第一個問題了。

(Operator Instructions) Our first question comes from the line of Mehdi Hosseini with SIG.

（操作員說明）我們的第一個問題來自 SIG 的 Mehdi Hosseini 線路。

I joined the call late, so I apologize if you already covered this on the prepared remarks, but can you give us an update on the CapEx clearance for this year? And how you see your cash flows are shaping up throughout the year? And to what extent, when should we expect the company to become more active in buyback program? And I have a follow-up.

我參加電話會議的時間很晚，所以如果您已經在準備好的發言中提到了這一點，我深表歉意，但是您能給我們介紹一下今年資本支出許可的最新情況嗎？您如何看待全年現金流的變化？我們應該預期公司在多大程度上、何時能更積極參與回購計畫？我有一個後續行動。

Sure. Thanks, Mehdi, for your question. So first of all, we expect our CapEx in 2024 to be about $1.2 billion, below our 2023 levels. As we mentioned, we have the capacity in place to deliver what we expect to be a significant sales opportunity so we don't necessarily need to add a lot of CapEx.

當然。謝謝邁赫迪的提問。首先，我們預期 2024 年的資本支出約為 12 億美元，低於 2023 年的水準。正如我們所提到的，我們有能力提供我們期望的重要銷售機會，因此我們不一定需要增加大量資本支出。

With respect to cash flow, what I shared was that we are guiding Q1 to be about $200 million to $300 million better than the prior year, better than Q1 of 2023. And we expect to continue to make progress on profitability and cash flow as our sales come back. And then I think your last question was around buybacks. Okay. Yes. So we'll -- we -- of course, we always prioritize in returning cash -- excess cash to shareholders, and we will continue to look to do that through both our dividend and buybacks. I don't have anything specific to report right now on buybacks.

關於現金流，我分享的是，我們指導第一季比上一年好約2 億至3 億美元，比2023 年第一季度好。我們預計將在盈利能力和現金流方面繼續取得進展，因為我們的銷售回來了。我認為你的最後一個問題是關於回購的。好的。是的。因此，我們——當然，我們總是優先考慮向股東返還現金——多餘的現金，我們將繼續尋求透過股息和回購來做到這一點。我現在沒有任何關於回購的具體報告。

Okay. Sorry for a multipart first question. But just if I may quickly squeeze the second question. In the optical business, have you seen any change to increasing broadband access? Is there any update on the BEAD program you can share with us? or BEAD's contribution?

好的。抱歉，第一個問題是多部分的。但我可以快速回答第二個問題嗎？在光纖業務中，您看到寬頻存取的增加有什麼變化嗎？您可以與我們分享有關 BEAD 計劃的任何更新嗎？或BEAD的貢獻？

So we continue to expect BEAD funding really to start to translate into demand, beginning of it, sort of late this year. They are progressing with awarding the grants and just take a bit for those to turn into real programs. So we expect sort of late this year.

因此，我們繼續預計 BEAD 資金將真正開始轉化為需求，從今年稍後開始。他們在授予贈款方面取得了進展，只需花一點時間就能將這些贈款變成真正的專案。所以我們預計會在今年晚些時候。

Our next question comes from the line of Wamsi Mohan with Bank of America.

我們的下一個問題來自瓦姆西·莫漢 (Wamsi Mohan) 與美國銀行的聯繫。

I was wondering, Wendell, if you could characterize sort of midterm as you think about the $3 billion opportunity that you're talking about incrementally? And can you give us some sense of how you see that opportunity across your segments? It sounds like you're probably -- most of that is going to be optical given the magnitude of inventory correction there, but would love any color you can share on that?

我想知道，Wendell，當您思考您所談論的增量 30 億美元的機會時，您是否可以描述中期選舉的特徵？您能否告訴我們您如何看待各個細分市場的機會？聽起來你可能——考慮到庫存調整的幅度，其中大部分將是光學的，但你會喜歡你能分享的任何顏色嗎？

Sure. Thanks, Wamsi. So as you would expect, it will -- we expect the markets to normalize at a different rate, depending on the market. And then we expect our more corning pieces to come in, in timing with the particular innovation. So those will have some markets that will begin this year. And we'll have some which will make even more progress as time goes on. When we say midterm, by and large, we mean that within the next 3 years, that we will see all of it, right? But we'll start to see it beginning to happen sooner in different markets. Does that make sense, Wamsi, is that responsive to your question?

當然。謝謝，瓦姆西。因此，正如您所期望的那樣，我們預計市場會以不同的速度正常化，具體取決於市場。然後我們預計更多的核心部件會隨著特定的創新而出現。因此，這些市場將在今年啟動。隨著時間的推移，我們將會取得一些進展。當我們說中期時，總的來說，我們的意思是在未來三年內，我們將看到這一切，對嗎？但我們將開始看到它在不同市場上更快地開始發生。這樣有道理嗎，Wamsi，這能回答你的問題嗎？

Yes. That's helpful. And Wendell, just -- is there -- would you say that the -- of the $3 billion incremental, half of it is optical, more than that is optical? How would you define sort of -- how do you break that out across your segments?

是的。這很有幫助。溫德爾，您是否會說，在 30 億美元的增量中，一半是光學的，比這更多的是光學的？你會如何定義——你如何在你的細分市場中分解它？

So it's a little harder to answer that because the actual opportunity between our markets returning to normal and our more Corning activities is larger than the three. So -- and then we discount back to what we're talking to you about, right? And so therefore, when you do the relative shares, it gets nontrivial to figure out.

所以回答這個問題有點困難，因為我們的市場恢復正常和我們更多的康寧活動之間的實際機會比這三個更大。那麼——然後我們就回到我們正在與您談論的內容，對吧？因此，當你計算相對份額時，弄清楚這一點並不簡單。

But I think, Wamsi, your fundamental grasp, that the biggest individual mover will be that 40% up opportunity in optical. I think your own thought processes here are really solid.

但我認為，Wamsi，你的基本把握，最大的個人推動力將是光學領域 40% 的上漲機會。我認為你自己的思考過程非常紮實。

Sorry, if I could just ask one clarifying question on your comment around price or Ed's comment on price as a lever to offset potentially the currency movement. You've done a great job using your contracts with some of your customers on display such that you'd be in a price taker and it's kind of eliminated a lot of the price competition for share reasons. Should we think that, that regime is sort of ended and now we're in a new regime where you're willing to force pricing and not be a price taker anymore?

抱歉，我能否就您關於價格的評論或艾德關於價格作為抵消潛在貨幣波動的槓桿的評論提出一個澄清問題。您已經很好地利用了與一些展示的客戶的合同，這樣您就成為了價格接受者，並且消除了很多出於份額原因的價格競爭。我們是否應該認為，這種制度已經結束，現在我們處於一個新的製度中，你願意強制定價而不再是價格接受者？

So not positive, I understand your question. But let me tell you how we tend to think about pricing and display, right? And really sort of ties back to Ed's commentary around the end. You've seen us do in really across our whole platform that we have sought to share inflation more appropriately with our customers. And that has led us to be a price increaser across our company, and that has helped us improve our profitability.

所以不是正面的，我理解你的問題。但讓我告訴你我們如何考慮定價和展示，對嗎？確實有點與埃德在結尾時的評論聯繫在一起。您已經看到我們在整個平台上確實所做的事情，我們尋求與客戶更適當地分享通貨膨脹。這使我們成為整個公司的價格上漲者，這幫助我們提高了獲利能力。

In display, we've been doing that. Perhaps more importantly, it's almost the reverse of that. What has happened with the yen being so well below it sort of 130 year. I mean, it's its 30-year average is that our customers are getting a lower price real in yen, right, while they sell in dollars. And we're fundamentally seeking to share that more appropriately with our customers. And so what we say is like either the yen will come back sometime here in the reasonable point of time, right?

在展示方面，我們一直在做這件事。也許更重要的是，情況幾乎恰恰相反。日圓匯率遠低於 130 年來發生了什麼事？我的意思是，30 年的平均水平是，我們的客戶以日元計算的實際價格較低，對吧，而他們以美元出售。我們從根本上尋求與我們的客戶更恰當地分享這一點。所以我們所說的是日元要么會在合理的時間點回歸，對嗎？

Or we will raise price to provide an industrial solution to have us be in a position where we can continue to earn the appropriate return on our invested capital in display that our shareholders expect rightly. So what Ed's commentary there on pricing has to do with is really tying around the totality of that situation and how our customers experience their price since we price in the end. Does that make sense to you, sir?

或者我們將提高價格以提供工業解決方案，使我們能夠繼續從我們的投資資本中獲得適當的回報，以顯示我們的股東的正確期望。因此，艾德對定價的評論實際上與整個情況以及自我們最終定價以來我們的客戶如何體驗他們的價格有關。先生，這對您來說有意義嗎？

Yes, it does, Wendell.

是的，確實如此，溫德爾。

Our next question comes from the line of Asiya Merchant with Citi.

我們的下一個問題來自花旗銀行的 Asiya Merchant 線路。

On optical, if I may, it seems like there was an order uptick or some sort of a demand uptick that you mentioned in 4Q, if you could drill down one more into that, if that was from your service provider or cloud customers and then looking ahead into 1Q, what should we be expecting for optical here better than seasonal trends? And again, if you could drill down if you're seeing that from your service provider or cloud customers.

在光學方面，如果可以的話，您在第四季度提到的訂單似乎有所增加或某種需求增加，如果您可以進一步深入了解，如果這是來自您的服務提供者或雲端客戶，然後展望第一季度，除了季節性趨勢之外，我們還應該對光學產業有何期待？再說一次，如果您從服務提供者或雲端客戶那裡看到這一點，您是否可以深入了解。

Really excellent question. So first, that tick up, you see, right, in our data isn't big enough yet for us to go. Oh, yes, it's happening the way we expect, right? It's encouraging, but it's too small for us to over conclude something analytically, right? Anecdotally, the conversations with our customers and what we can see from their data is that they are deploying at higher rates for carrier customers to get to your question of where is it. They continue to deploy in those numbers at higher rates than their purchases.

非常好的問題。首先，你看，我們的數據中的上升幅度還不足以讓我們繼續前進。哦，是的，事情正在按照我們的預期發生，對嗎？這是令人鼓舞的，但它太小了，我們無法透過分析得出結論，對嗎？有趣的是，與我們客戶的對話以及我們從他們的數據中可以看到的是，他們正在以更高的速率為營運商客戶提供部署，以解決您的問題。他們繼續以高於購買速度的速度部署這些數量。

So they continue to draw down numbers in that piece. I think the other -- now moving beyond just that fiber shipment data, right? What else are we seeing? We are beginning to see the tick up already in hyperscale. In our order book, not yet in those shipments that you see in that data. So there's an area where we're starting to get nice confirmatory to our anecdotal understanding of what will need to happen with these new generative AI networks. And we're seeing sort of the cloud and the beginning, the leading edge of that second optical network that will need to get built to do these generative AI programming.

所以他們繼續減少那部分的數字。我認為另一個 - 現在不僅僅是光纖發貨數據，對嗎？我們還看到什麼？我們開始看到超大規模的成長。在我們的訂單簿中，還沒有在您在該數據中看到的發貨量中。因此，在一個領域，我們開始對這些新的生成人工智慧網路需要發生的事情的軼事理解得到很好的證實。我們看到了某種雲和開始，第二個光網路的前沿，需要建構它來進行這些生成式人工智慧程式設計。

So that is what we're seeing in more of the detail. It's just too early yet for us to over conclude and call timing. We'll know more in the coming months and as Ed and Jeff and Ann are out there speaking with you all, they'll make sure they share as we learn more. Does that work for you?

這就是我們所看到的更多細節。現在我們就得出結論並確定時機還為時過早。在接下來的幾個月裡，我們將了解更多信息，當艾德、傑夫和安與大家交談時，他們將確保在我們了解更多信息時分享。那對你有用嗎？

Yes. Great. And if I may, on display as well, I think it's tough to call when the panel makers come back with their utilization levels off the 1Q downtick that you guys have talked about, and I think the industry has talked about. But if the retail volume happens to be, let's say, mid- to high single digits from a glass perspective, and you're already starting the year with healthy inventory levels. Is it reasonable to assume like a sharp snapback in 2Q and 3Q. Any color there would be helpful.

是的。偉大的。如果可以的話，我也想談談，我認為當面板製造商的利用率水平低於你們所討論的第一季度的下降水平時，我認為很難做出判斷，而且我認為業界也已經討論過。但如果從玻璃角度來看，零售量恰好是中高個位數，那麼今年伊始就已經擁有健康的庫存水準。假設第二季和第三季出現急劇回升是否合理？任何顏色都會有幫助。

Yes, Asiya, I'll take that one, and I won't give you a specific quarter. I think that's hard to call. But if you think about the Q1 panel maker utilization levels and a mid-single-digit glass market for the year, you would need to see a double-digit increase from their current levels in Q1 to achieve that glass market. And even if the glass market were lower than that, let's just say, even flat, you would still need to see a double-digit increase from their Q1 level. So I think the answer to the sharp part of your question is, yes, the timing is obviously harder to call.

是的，阿西婭，我會接受那個，我不會給你一個具體的季度。我認為這很難稱呼。但如果您考慮第一季面板製造商的利用率水準和今年中個位數的玻璃市場，您將需要看到第一季的當前水準實現兩位數的成長才能實現玻璃市場。即使玻璃市場低於這個水平，甚至持平，你仍然需要看到比第一季水平兩位數的成長。所以我認為你問題的尖銳部分的答案是，是的，時機顯然更難確定。

Our next question comes from the line of Meta Marshall with Morgan Stanley.

我們的下一個問題來自梅塔·馬歇爾與摩根士丹利的對話。

Maybe doubling down on Wamsi's question. Just around whether you've seen with the pricing increases on the display business, any changes in share or has it largely played out as expected? And then maybe just second question on the gross margin stability that you expect in the Q1 is that from kind of efficiencies that you found in the business over the last year that are just starting to play in or kind of the pricing increases on the display business? Or is that from a mix of the business? Just how to think about the stability in Q1 over Q4?

也許要加倍考慮瓦姆西的問題。就您是否看到顯示器業務的定價上漲、份額發生任何變化或基本上按預期發揮作用？然後，關於您期望的第一季毛利率穩定性的第二個問題可能是，您在去年的業務中發現的效率剛剛開始發揮作用，或者顯示業務的定價上漲？還是來自不同業務的混合？那麼該如何看待第一季相對第四季的穩定性呢？

I'm going to -- I'll start with your second question on gross margin. So I think if you think about what we've done throughout '22, we improved our productivity across all of our factories significantly and back to historical levels, best demonstrated levels. That's improved our gross margin. We've also raised prices, and we're now sort of right side up versus inflation. So that's improved gross margin.

我將從你關於毛利率的第二個問題開始。因此，我認為，如果您考慮一下我們在 22 年期間所做的事情，您會發現我們所有工廠的生產力都得到了顯著提高，並回到了歷史水平，最好的展示水平。這提高了我們的毛利率。我們也提高了價格，現在我們在對抗通貨膨脹方面處於有利地位。這就是毛利率的提高。

And we've certainly taken out some costs as well. So we're able to run at a much more efficient level even at a lower volume in a lower volume environment. That's allowed us to hold our gross margin. And we're also managing OpEx well, so that actually helps on the operating margin line. And that's what's allowed us to increase gross margin through the year despite sales falling, and that's why we feel confident around the gross margin or operating margin or both as we go into 2024. And I apologize, can you repeat the first?

我們當然也削減了一些成本。因此，即使在較低容量的環境中，我們也能夠以更有效率的水平運作。這使我們能夠保持毛利率。我們也很好地管理了營運支出，因此這實際上有助於提高營運利潤率。這就是為什麼我們在銷售額下降的情況下仍能全年提高毛利率，這就是為什麼我們在進入2024 年時對毛利率或營業利潤率或兩者都充滿信心。我很抱歉，你能再說一遍嗎？

I understood that first question. Did our -- I think what -- did our price increase lead to a disturbance of our market position? And we see no significant change in our market position as a result of our pricing actions to share more appropriately where the yen is at and where inflation is happening.

我明白第一個問題。我們的——我認為——我們的價格上漲是否導致了我們市場地位的混亂？我們的定價行動並未導致我們的市場地位發生重大變化，因為我們的定價行動是為了更適當地分享日圓匯率和通貨膨脹發生的情況。

Our next question comes from the line of Martin Yang with Oppenheimer.

我們的下一個問題來自馬丁楊和奧本海默的對話。

First question on display. Have you ever done an analysis similar to the chart you presented on optical fiber, thinking of a normal trend line for display volume in relation to current weakness on retail, particularly in China. China has been weak for quite a few years now. Are we significant below the trend line if there is such a more normal retail demand?

顯示的第一個問題。您是否曾經做過類似於您在光纖上展示的圖表的分析，考慮與當前零售疲軟（尤其是在中國）相關的顯示量的正常趨勢線。中國已經弱了很多年了。如果零售需求更加正常，我們是否會顯著低於趨勢線？

Excellent question. The answer is, yes, we have done those. And we'd be happy to share this. We'll put that on our list to do at some point in time this year. To be a little more responsive to the specifics of your question, China is just behaving a little differently than what you would normally expect on display demand as a country goes through its development cycle.

很好的問題。答案是，是的，我們已經做到了。我們很樂意分享這一點。我們將在今年的某個時候將其列入我們的待辦事項清單中。為了更具體地回答你的問題的具體情況，隨著一個國家經歷其發展週期，中國的表現與你通常預期的顯示器需求略有不同。

And you are right, it seems to be net underperforming. We are not counting on in the dialogue that we've been having with you about the $3 billion spring that we have. We are not counting on China "sort of reverting to a more traditional demand cycle." We're continuing to expect that to be relatively below trend for the foreseeable future. Does that make sense to you, Martin?

你是對的，它似乎淨表現不佳。我們並不指望在與你們的對話中討論我們擁有的 30 億美元的春天。我們並不指望中國「恢復到更傳統的需求週期」。我們繼續預計，在可預見的未來，這一數字將相對低於趨勢。馬丁，這對你來說有意義嗎？

Yes, definitely. Another question on specialty. Given that the semi exposure within specialty has been pretty strong. Has that changed that segment seasonality a little bit, where it was more exposed to smartphone cycle? And now do you think that has shifted a little bit.

當然是。還有一個關於專業的問題。鑑於專業領域的半曝光度相當強勁。這是否稍微改變了該細分市場的季節性，使其更容易受到智慧型手機週期的影響？現在你認為情況發生了一些變化嗎？

I still think that the biggest thing that drives seasonality or the different demand in different -- I don't even know what to call it seasonality. The different demand in different quarters is major product launches. And also major product launches not only of our customers but also of us introducing a major new category defining product. And any sort of real analysis of this sort of points to it's the product. Right? So I don't know that we can over conclude much beyond that yet, Martin.

我仍然認為推動季節性或不同需求的最大因素——我什至不知道如何稱呼它為季節性。不同季度的不同需求是主要產品的推出。不僅是我們的客戶推出了主要產品，而且我們還推出了一個主要的新類別定義產品。任何類型的真實分析都表明它是產品。正確的？所以我不知道我們還能得出更多的結論，馬丁。

Our next question comes from the line of Samik Chatterjee with JPMorgan.

我們的下一個問題來自 Samik Chatterjee 與摩根大通的對話。

Maybe just the way I'm interpreting your comment about $3 billion opportunity that you have in front of you is, let's say, hypothetically, the markets do recover by 4Q of this year, your exit run rate on a quarterly revenue will be somewhere close to $4 billion.

也許我對你面前的 30 億美元機會的評論的解釋是，假設市場在今年第四季度確實復甦，你的季度收入退出運行率將接近某處至 40 億美元。

And maybe just help us sort of the range bound some of the sort of the revenue opportunities here in terms of if you don't see a macro improvement by the end of the year, what is sort of the exit run rate for the year if you just have the seasonal improvements that you've talked about from 1Q onwards without a material macro improvement that hopefully gives us some sense of where the potential outcomes here in terms of exiting the year?

也許只是幫助我們確定一些收入機會的範圍，如果到年底你沒有看到宏觀改善，那麼今年的退出運行率是多少，如果您只是從第一季開始就談到了季節性的改善，而沒有實質性的宏觀改善，這希望能讓我們了解今年結束時的潛在結果？

And then a quick follow-up. I guess, Wendell, you mentioned BEAD a few times in the visibility here that it starts late in 2024. One of the suppliers reporting this morning as well as pushing out some of that expectation to early 2025 saying things are looking a bit more delayed than usual. Just any more color on what's sort of driving the confidence that it's more 2024 than 2025. Thank you.

然後快速跟進。我想，Wendell，您在這裡多次提到 BEAD，它將於 2024 年晚些時候開始。 今天早上報告的供應商之一併將部分預期推遲到 2025 年初，稱事情看起來比通常。請再詳細說明是什麼推動了人們對 2024 年比 2025 年更有信心。謝謝。

I think perhaps my emphasis was a little wrong in talking about BEAD. So we expect it to start is what I was trying to say. It's not going to be a big mover in 2024. I think your understanding is correct. It starts to become a much bigger mover in 2025. So if I created any dissidence with that understanding that you had -- I didn't mean to. I think you have a correct understanding of it. It's just that actually it has been not there, and now it's going to be there beginning in 2024. But the bulk of it starts after that.

我想也許我在談論BEAD時所強調的重點有點錯誤。所以我們預計它會開始，這就是我想說的。 2024 年不會有太大的推動力。我認為你的理解是正確的。到 2025 年，它開始成為一個更大的推動者。所以，如果我對你們的理解提出任何異議——我不是故意的。我想你對此的理解是正確的。只是實際上它一直不存在，現在它將從 2024 年開始存在。但大部分是在那之後開始的。

I'll take the first part of your question. I want to start by just talking a little bit. We did it in our prepared remarks and a little in Q&A. On the drivers of why we grow and why we think our first quarter is the low quarter. I think in optical, as carriers continue to deplete their inventory, that will come to an end even if they don't increase their deployment rates, which we think they will. But even if they don't, that is a good demand driver for us. That will start at some point this year, okay?

我將回答你問題的第一部分。我想先簡單談談。我們在準備好的發言和問答中做到了這一點。關於我們成長的驅動因素以及為什麼我們認為第一季是低季。我認為在光學領域，隨著運營商繼續耗盡庫存，即使他們不提高部署率（我們認為他們會的），這種情況也會結束。但即使他們不這樣做，這對我們來說也是一個很好的需求驅動力。這將在今年的某個時候開始，好嗎？

In display, we talked about panel maker utilization being really low in the first quarter and needing to sort of spring up from that level quite significantly. And then in Life Sciences, we're seeing market normalization in North America and Europe, and we actually started to see a little bit of that happening even in the fourth quarter, right? So those drivers, we expect to bring our run rate up significantly as we go through the year. The timing is really hard to call.

在顯示器方面，我們談到第一季面板製造商的利用率非常低，需要從該水平大幅提升。然後在生命科學領域，我們看到北美和歐洲的市場正常化，實際上我們甚至在第四季就開始看到這種情況發生，對嗎？因此，我們預計這些司機在這一年中將顯著提高我們的運行率。時機確實很難把握。

And so I think sitting here today, I would not want to leave you with a specific guide for the fourth quarter or how we exit the year. But just that we believe Q1 is the low and if we got to levels like you spoke about, okay, that would be awesome, and we would be well on our way to that $3 billion that Wendell talked about. But even if we don't, we still feel very confident in that window of time that Wendell shared earlier. Does that help?

因此，我認為今天坐在這裡，我不想給大家留下有關第四季度或我們如何結束這一年的具體指南。但我們相信第一季是最低點，如果我們達到你所說的水平，那太好了，我們將順利實現溫德爾所說的 30 億美元。但即使我們不這樣做，我們仍然對溫德爾之前分享的那個時間窗口非常有信心。這樣有幫助嗎？

Yes.

是的。

Our next question comes from the line of Josh Spector with UBS.

我們的下一個問題來自瑞銀集團的 Josh Spector。

Two quick ones. First, just on the FX side of it, understanding you're hedging at a lower spot rate today when you look out to '25 and you have some industrial options. Is there really a timing or milestone we should be looking at, at some point this year where you would know what the impact might be in 2025, be it you're doing some pricing actions, you have hedging locked in and then you might communicate what that impact would be to us.

兩個快的。首先，就外匯方面而言，當您展望 25 年並且有一些工業選擇時，您今天會以較低的即期匯率進行對沖。我們是否真的應該專注於一個時間點或里程碑，在今年的某個時候，你會知道 2025 年可能會產生什麼影響，無論你正在採取一些定價行動，你已經鎖定了對沖，然後你可能會進行溝通這會對我們產生什麼影響。

Yes.

是的。

You're not willing to share roughly when that timing would be?

您不願意透露大概的時間嗎？

I thought the straight -- I thought you'd take, yes.

我想直截了當——我以為你會接受，是的。

I'll push a little further.

我會再推一點。

Yes. And no, we're not going to share what timing we will.

是的。不，我們不會分享我們將要分享的時間。

All right, fair enough.

好吧，很公平。

It's too involved with our customers. I'm not being nonresponsive. That's why I really do think that yes is about right. This is -- this is super important with our customers. And so we want to get that pretty well advanced and have a high confidence of where we're going to end up before we share that with our shareholders, right? So that we can make sure we're as accurate as possible. And that's -- so I'm not going to give ourselves an exact time line. But this year, you can expect us to do that.

它與我們的客戶關係太密切了。我並不是沒有反應。這就是為什麼我確實認為“是”是正確的。這對我們的客戶來說非常重要。因此，在我們與股東分享之前，我們希望取得相當大的進展，並對最終的結果充滿信心，對嗎？這樣我們就可以確保盡可能準確。所以我不會給自己一個確切的時間表。但今年，你可以期待我們做到這一點。

Got it. No, I appreciate that. And just quickly on free cash flow. In the first quarter, in your guidance of up a few hundred million, it would seem that pretty low bar given that there was about $0.5 billion of working capital used last year and your expectation on margins are relatively flat. So are there any offsets we should be considering in the first half of the year that maybe make that a little bit less favorable from what we could see otherwise?

知道了。不，我很欣賞這一點。並且很快就能獲得自由現金流。在第一季度，在您預計的幾億美元的增長中，鑑於去年使用了約 5 億美元的營運資金，而且您對利潤率的預期相對持平，這似乎是相當低的標準。那麼，我們在今年上半年是否應該考慮一些抵銷措施，這些措施可能會使我們在其他情況下看到的情況變得不那麼有利？

I don't think so. I think we expect to have a nice year on free cash flow for the year. Nothing specific I would call out.

我不這麼認為。我認為我們預計今年的自由現金流將會是美好的一年。我沒有什麼具體的要求。

Okay. We can do one more question.

好的。我們還可以再做一題。

Our last question comes from the line of Matt Niknam with Deutsche Bank.

我們的最後一個問題來自德意志銀行的 Matt Niknam。

I'll keep it fairly brief. On the $3 billion incremental sales opportunity, maybe for -- a question for Ed, can you just walk us through the incremental gross and operating margin, this would come in at? And is it safe to assume there's minimal incremental CapEx here? I'm just trying to understand, is there more opportunity to scale past existing OpEx or is there a gross margin accretion opportunity as well?

我會保持相當簡短。關於 30 億美元的增量銷售機會，也許是——艾德的一個問題，你能向我們介紹增量毛利率和營業利潤率嗎？可以安全地假設這裡的增量資本支出最小嗎？我只是想了解，是否有更多機會擴大現有的營運支出，或者是否還有毛利率增加的機會？

And then this may be a more open-ended question. But on the macro, relative to the last call, 3 months ago, maybe for Wendell, any material changes in customer demand or spending plans across key verticals, i.e., what's really changed would you say, if at all, over the last 3 months in terms of customer demand or customer conversations you're having?

那麼這可能是一個更開放式的問題。但在宏觀方面，相對於3 個月前的最後一次電話會議，也許對Wendell 來說，關鍵垂直領域的客戶需求或支出計劃發生了任何重大變化，也就是說，在過去3 個月裡，您會說真正發生了什麼變化（如果有的話）就客戶需求或您正在進行的客戶對話而言？

Yes, I'll go first, Matt, on your first question. So I'll start off with we have the capital in place or the capacity in place to deliver the sales. So first, from a cash flow perspective, typically, we would add CapEx as we add sales. So that's a positive for free cash flow as we go forward. We also have the depreciation in our P&L for those assets. And then we also have some fixed cash costs that run through our P&L to support those assets. So generally speaking, the fixed costs are already in our P&L.

是的，馬特，我先回答你的第一個問題。因此，我首先會說我們有足夠的資金或能力來實現銷售。因此，首先，從現金流的角度來看，通常我們會在增加銷售時增加資本支出。因此，隨著我們的發展，這對自由現金流是正面的。我們的損益表中也包含這些資產的折舊。然後我們還有一些固定的現金成本貫穿我們的損益表以支持這些資產。所以一般來說，固定成本已經在我們的損益表中了。

So you would expect our gross margin to accrete at a higher level than our current gross margin level. So that's one operating leverage point or leverage point, if you will. And then I think on OpEx, we can also grow without adding OpEx much from these levels, and that creates a second leverage point for us. So that should accrete both gross margin and operating margin from our current levels, and you should start to see that as the volume comes back.

因此，您預計我們的毛利率將比目前的毛利率水準更高。如果你願意的話，這就是一個營運槓桿點或槓桿點。然後我認為在營運支出方面，我們也可以在不增加這些等級的營運支出的情況下成長，這為我們創造了第二個槓桿點。因此，這應該會在我們目前的水平上增加毛利率和營業利潤率，隨著銷量的回升，你應該開始看到這一點。

On your question of -- in our discussions with our customers, sort of what are the anecdotals and it's really a good question because sometimes highly quantitative analysis and data points one way and anecdotal evidence points the other, right? And in those situations, that's telling you there's dissonance there and how do we dive deeper to make sure we have the right data set and how do we create an understanding of those things that are pointing differently.

關於你的問題——在我們與客戶的討論中，軼事是什麼，這確實是一個很好的問題，因為有時高度定量的分析和數據指向一種方式，而軼事證據則指向另一種方式，對嗎？在這些情況下，這告訴您那裡存在不和諧，以及我們如何更深入地研究以確保我們擁有正確的數據集以及我們如何對那些指向不同的事物建立理解。

In this case, what we're seeing is the anecdotals are in support of what we're seeing in our deeper analytics and our understanding of being well below our long-term trends and the need for that to revert back towards those underlying huge secular trends that drive our demand over time.

在這種情況下，我們看到的軼事支持了我們在更深入的分析中看到的情況，以及我們對遠低於長期趨勢的理解，以及需要恢復到那些潛在的巨大世俗趨勢的必要性.隨著時間的推移推動我們需求的趨勢。

So basically reinforcing the opinion of the data, and that is what we tried to reflect in what we discussed with you today.

因此，基本上強化了數據的觀點，這就是我們今天與您討論的內容中試圖反映的內容。

Thank you, everybody, for joining us today. Before we close, I wanted to let you know that we'll be attending the Susquehanna Financial Group 13th Annual Technology Conference on March 1, and the Morgan Stanley Technology Media and Telecom Conference on March 5. Additionally, we will host management visits to investor offices in select cities. Finally, a replay of today's call will be available on our site starting later this morning. Once again, thank you, and operator, you can disconnect all lines.

謝謝大家今天加入我們。在結束之前，我想告訴您，我們將參加3 月1 日舉行的薩斯奎哈納金融集團第13 屆年度技術會議，以及3 月5 日舉行的摩根士丹利技術媒體和電信會議。此外，我們還將舉辦對投資者的管理層訪問在選定城市設有辦事處。最後，從今天上午晚些時候開始，我們的網站將提供今天電話會議的重播。再次感謝您，接線員，您可以斷開所有線路。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。