康寧 (GLW) 2024 Q1 法說會逐字稿

Welcome to the Corning Incorporated Quarter 1 2024 Earnings Call.

歡迎參加康寧公司 2024 年第一季財報電話會議。

(Operator Instructions)

（操作員指示）

It is my pleasure to introduce to you, Ann Nicholson, Vice President of Investor Relations.

我很高興向大家介紹投資者關係副總裁安‧尼科爾森 (Ann Nicholson)。

Thank you, and good morning, everyone. Welcome to Corning's First Quarter 2024 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.

謝謝大家，早安！歡迎參加康寧2024年第一季財報電話會議。今天與我一同出席的有：董事長兼執行長溫德爾‧威克斯 (Wendell Weeks) 和執行副總裁兼財務長艾德‧施萊辛格 (Ed Schlesinger)。我想提醒大家，今天的發言包含符合1995年《私人證券訴訟改革法》規定的前瞻性聲明。這些陳述涉及風險、不確定性和其他可能導致實際結果與預期有重大差異的因素。

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. For the first quarter, the difference between GAAP and core EPS primarily reflected constant currency adjustments, translated earnings contract gains and translation gains on Japanese yen-denominated debt. As a reminder, the 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.

這些因素在公司財務報告中有詳細說明。另請注意，除非我們明確指出我們的評論與 GAAP 數據相關，否則我們將使用核心績效指標來討論我們的合併績效。我們的核心績效指標是管理層用於分析業務的非 GAAP 指標。第一季度，GAAP 每股盈餘與核心每股盈餘之間的差異主要反映了恆定匯率調整、折算後的獲利合約收益以及日圓計價債務的折算收益。需要提醒的是，以市價計價的會計方法對我們的現金流量沒有影響。核心業績與可比較 GAAP 值的調節表可在我們網站 corning.com 的「投資者關係」部分找到。

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, and they're also available on our website for downloading. And now I'll turn the call over to Wendell.

您也可以造訪我們的網站，查看核心績效報告，並在互動分析師中心下載財務資料。配套幻燈片正在我們的網路直播中播放。我們鼓勵您持續關注，您也可以在我們的網站上下載。現在，我將把電話交給溫德爾。

Thank you, Ann. Good morning, everyone. Today, we announced first quarter 2024 results. Sales were nearly $3.3 billion and EPS was $0.38. Year-over-year, gross margin grew 160 basis points to 36.8%, and free cash flow improved by $300 million. These results were at the high end of our guidance. More importantly, but we're seeing encouraging signs of improving market conditions. We continue to expect that the first quarter will be the low quarter for the year.

謝謝，安。大家早安。今天，我們公佈了2024年第一季的業績。銷售額接近33億美元，每股收益為0.38美元。毛利率年增160個基點至36.8%，自由現金流增加3億美元。這些業績處於我們預期的高點。更重要的是，我們看到了市場狀況改善的令人鼓舞的跡象。我們仍然預計第一季將是今年業績表現最差的一個季度。

We are executing our plans to add more than $3 billion in annualized sales within the next 3 years. And we already have the required capacity and capabilities in place. As a result, we're poised to deliver powerful incremental profit and cash flow and generate substantial shareholder value. Last quarter, we outlined a framework under which we expect to drive stronger returns on our existing innovation and capacity investments and we shared our expectation that these returns will begin in 2024.

我們正在執行未來三年內新增年化銷售額超過30億美元的計畫。我們已具備所需的產能和能力。因此，我們已準備好實現強勁的增量利潤和現金流，並創造可觀的股東價值。上個季度，我們概述了一個框架，預計在此框架下，我們現有的創新和產能投資將獲得更強勁的回報，並預計這些回報將於2024年開始。

The framework has 3 primary components: First, we believe that the first quarter will be the lowest quarter for the year. We will improve from here. Second, we expect to grow by more than $3 billion in annualized sales in the midterm, which we define as within the next 3 years. The outlook in each of our markets remains positive, and our market positions are quite strong. Third, as we capture this growth, we expect to deliver powerful incrementals. We already have the required production capacity and technical capabilities in place, and the cost and the capital are already reflected in our financials. This is a tremendous opportunity for our shareholders.

該框架包含三個主要組成部分：首先，我們認為第一季將是今年業績最低的一個季度。之後我們會有所改善。其次，我們預計中期（我們將其定義為未來三年內）年化銷售額將成長超過30億美元。我們各市場的前景依然樂觀，我們的市場地位也相當強勁。第三，隨著我們抓住這一成長機遇，我們預計將實現強勁的增量。我們已經具備了所需的產能和技術能力，成本和資本也反映在我們的財務狀況中。這對我們的股東來說是一個巨大的機會。

In the 3 months since our last call, our confidence in these 3 components has only increased. We expect our sales to grow from here and we have reflected this in our second quarter guidance. Today, I'd like to review each component of the framework and share some of the reasons why our confidence has grown. Let me begin with the first component. Our expectation that quarter 1 will be the lowest quarter of 2024. Near term, we expect optical and display to be the biggest drivers of our improvement.

自上次電話會議以來的三個月裡，我們對這三個組成部分的信心持續增強。我們預期銷售額將持續成長，這已反映在第二季業績指引中。今天，我想回顧一下該框架的每個組成部分，並分享一些我們信心增強的原因。首先，我想談談第一個組成部分。我們預計第一季將是2024年業績最低的季度。短期來看，我們預期光學和顯示業務將成為我們業績改善的最大驅動力。

In Optical Communications, carrier inventory drawdowns have been the primary source of our below-trend sales. Once carrier inventory starts returning to more normal levels and our customers resume purchasing to support their deployment rates, we would expect to see our order book grow. And that's exactly what is happening.

在光通訊領域，營運商庫存下降一直是我們銷售低於趨勢的主要原因。一旦營運商庫存開始恢復到更正常的水平，並且我們的客戶恢復採購以支援其部署速度，我們預計訂單量將會成長。而事實也確實如此。

Our order book grew nicely from fourth quarter levels. This and our regular conversations with large carrier customers indicate that the gap between our sales and customer deployments is moderating. As a result, we expect carrier sales to increase from first quarter levels. Additionally, in the enterprise portion of our optical business, we expected our recent wins for AI data centers will translate into orders and sales during the year. In display, panel makers increased their utilization rates late in the first quarter, and we expect the higher utilization to continue into the second quarter, driven by expected growth in retail demand resulting from midyear promotions.

我們的訂單量較第四季水準大幅成長。這與我們與大型營運商客戶的定期溝通表明，我們的銷售額與客戶部署之間的差距正在縮小。因此，我們預計營運商銷售額將較第一季有所成長。此外，在光學業務的企業部分，我們預計近期在人工智慧資料中心方面取得的進展將轉化為年內的訂單和銷售額。在顯示器方面，面板製造商在第一季末提高了產能利用率，我們預計這種高產能利用率將持續到第二季度，這主要得益於年中促銷活動帶來的零售需求成長。

For the full year 2024, our expectations for the retail glass market remain unchanged from our January view and consistent with industry expectations. We anticipate relatively flat television unit volume, another year of television screen size growth, and some recovery in PC demand. This leads to mid-single-digit percent growth in glass volume at retail versus 2023. As a result, we expect our financial performance in display to improve significantly from our first quarter run rate. Ed will share more details on that in just a few moments.

我們對2024年全年零售玻璃市場的預期與1月的預測保持一致，並與產業預期一致。我們預計電視出貨量將相對持平，電視螢幕尺寸將在未來一年持續成長，PC需求也將有所復甦。這將使零售玻璃出貨量較2023年實現中個位數百分比成長。因此，我們預期顯示器業務的財務業績將較第一季的營運率顯著提升。 Ed稍後將分享更多細節。

Now let's move to the second component of our framework. Our expectation that we will add more than $3 billion in annualized sales within the next 3 years. Our positive outlook for each of our market opportunities, results from our leadership positions and the power of the secular trends that we're addressing through innovation and close collaboration with customers. There's a lot more Corning to be had in our markets.

現在讓我們進入框架的第二部分。我們預計未來三年內，年銷售額將增加30億美元以上。我們對每個市場機會都抱持樂觀的預期，這源於我們的領導地位以及我們透過創新和與客戶密切合作應對的長期趨勢的力量。康寧在我們的市場上還有更多發展空間。

In Optical Communications, fiber is the ascendant technology, and we're the clear market leader. As I've covered in the last 2 calls, fiber shipments are more than 30% below trend. We fully expect that gap to close, adding more than 40% to our overall optical communication sales. In conversations with our large carrier customers during the quarter, they reinforced their commitment to increasing fiber deployments in 2024 and beyond. Additionally, we expect BEAD-related projects for network builds in underserved areas to add to our addressable market for the next several years. The industry expects funding approvals to begin late this year, leading to spending in 2025.

在光通訊領域，光纖是方興未艾的技術，而我們是當之無愧的市場領導者。正如我在過去兩次電話會議中提到的，光纖出貨量低於趨勢水準30%以上。我們完全有信心這一差距將會縮小，這將使我們的整體光通訊銷售額成長40%以上。在本季與大型業者客戶的溝通中，他們重申了在2024年及以後增加光纖部署的承諾。此外，我們預計，在未來幾年，在服務不足地區建造網路的BEAD相關項目將擴大我們的潛在市場。業內人士預計，相關資金審批將於今年稍晚開始，並於2025年開始投入使用。

Next, generative AI is an especially attractive opportunity for us, it creates significant demand for passive optical connectivity solutions and strengthens our value proposition and our competitive advantages. All data centers consist of a front-end network, connecting racks of CPUs. To meet the computational demands of AI, customers are building a new fiber-rich second network to connect GPUs, which increases our market opportunity.

其次，生成式人工智慧對我們來說是一個極具吸引力的機遇，它為無源光連接解決方案創造了巨大的需求，並增強了我們的價值主張和競爭優勢。所有資料中心都包含一個前端網絡，連接CPU機架。為了滿足人工智慧的運算需求，客戶正在建立一個全新的、富含光纖的二級網路來連接GPU，這增加了我們的市場機會。

Now we'll see this in our financials as customers begin to build large GPU clusters and adopt our latest high-density innovations. Customers want fast deployment. Our preconnectorized structured cabling solutions offer big installation time advantages. And the GPU clusters, which pack a very large amount of computing power per rack require smaller, tensor cables, making connector size and cable diameter, important requirements. To meet these high-density requirements, we've introduced new-to-the-world fiber cable and connectivity products.

隨著客戶開始建立大型 GPU 叢集並採用我們最新的高密度創新技術，我們將在財務表現中看到這一點。客戶希望快速部署。我們的預連接器結構化佈線解決方案提供了巨大的安裝時間優勢。而 GPU 集群，其每個機架承載著巨大的運算能力，需要更小的張量電纜，因此連接器尺寸和電纜直徑成為重要的要求。為了滿足這些高密度需求，我們推出了全新的光纖電纜和連接產品。

At OFC a few weeks ago, we introduced RocketRibbon cable with Flow Ribbon technology that can reduce cable diameter by 60% with fibers per cable approaching 7,000. A key part of delivering this innovation is our Contour optical fiber, which has a 40% smaller cross-sectional area than legacy fibers. Now our ability to integrate innovations across fiber, cable and connectors, to create end-to-end solutions is a unique competitive advantage, and we're accumulating significant customer wins for upcoming AI data center builds. In our recent customer wins, our revenue is low single-digit hundreds of dollars per GPU.

幾週前，我們在OFC（光纖通訊展覽會）上推出了採用Flow Ribbon技術的RocketRibbon光纜，該技術可將光纜直徑縮小60%，每根光纜的光纖數量接近7,000根。實現這項創新的關鍵在於我們的Contour光纖，其橫截面積比傳統光纖小40%。如今，我們能夠整合光纖、光纜和連接器的創新技術，打造端到端解決方案，這已成為我們獨特的競爭優勢，我們正在為即將到來的AI數據中心建設積累重要的客戶。在最近的客戶案例中，我們每塊GPU的收入僅為幾百美元。

We believe the customer density needs combined with our technology superior performance will sustain these attractive sales attach rates long term. Let's turn to automotive. The U.S. EPA announced new multi-pollutant standards last month. They include a strong particulate emissions limit that will require gasoline particulate filter adoption on U.S. gasoline vehicles, including hybrids, as early as 2026 for model year 2027. We are the inventor and the clear market leader in GPF and these standards increase our environmental technologies content opportunity by 2 to 3 times per U.S. ICE vehicle. This adoption offers hundreds of millions of dollars of growth for us in the U.S. alone, even in the face of BEV adoption. Keep in mind, we're also pursuing additional more Corning content opportunities in the automotive industry by introducing our automotive glass solutions, which are building success and momentum and are being adopted by both ICE and BEV platforms.

我們相信，客戶的密度需求加上我們卓越的技術性能，將長期維持這些誘人的銷售附加率。讓我們來看看汽車產業。美國環保署上個月宣布了新的多污染物標準。其中包括嚴格的顆粒物排放限制，要求美國汽油車（包括混合動力汽車）最早在2026年（2027年款）就必須採用汽油顆粒過濾器。我們是汽油顆粒過濾器（GPF）的發明者和當之無愧的市場領導者，這些標準使我們在美國每輛內燃機汽車上的環保技術含量機會增加了2到3倍。即使在純電動車（BEV）普及的情況下，光是在美國，這項技術的採用就為我們帶來了數億美元的成長。請記住，我們也正在透過推出汽車玻璃解決方案來尋求更多康寧在汽車行業的內容機會，這些解決方案正在取得成功並保持強勁勢頭，並被內燃機和純電動汽車平台採用。

In Mobile Consumer Electronics, our goal is to outpace the market by increasing the content we provide for each device. Our sales have consistently outpaced the market over the last decade, and we expect that to continue to be the case going forward. We've done this by advancing the state of the art for cover materials and adding more content per device, 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 value per device.

在行動消費電子領域，我們的目標是透過提升每台設備的功能來超越市場。過去十年，我們的銷售一直領先於市場，我們預計未來將繼續保持這一勢頭。我們透過提升外殼材料的先進水平，並在每台設備上增加更多功能來實現這一目標，這體現了康寧的一貫風格。我們擁有強大的創新產品組合，支持與領先的原始設備製造商 (OEM) 的密切合作，並期待繼續推出能夠提升每台設備價值的新產品。

In display, we expect volume growth at retail to be driven mainly by television screen size growth. In fact, in the first quarter, sales of 85-inch TVs increased by more than 50% year-over-year. Overall, we expect to capture growth in display because we are the undisputed technology leader. Our successful development of Gen 10.5 and advanced capabilities aligned with the continued move to larger-sized TVs produced on the lowest cost platforms for large displays.

在顯示器領域，我們預計零售銷售成長將主要由電視螢幕尺寸的成長所推動。事實上，第一季85吋電視的銷量年增超過50%。總體而言，我們預計將抓住顯示器市場的成長機會，因為我們是無可爭議的技術領導者。我們成功開發的10.5代線及其先進的生產能力，與大尺寸電視的持續發展相契合，這些電視採用大尺寸顯示器的最低成本平台生產。

Finally, we continue to build entirely new product platforms to capture opportunities in new categories. Examples include automotive glass solutions to support high autonomy systems, the growing opportunity to localize U.S. solar supply and pharmaceutical packaging. In sum, we expect the power of our market leadership positions and more Corning innovations to allow us to grow faster than our markets in advance our $3 billion plus opportunity.

最後，我們將繼續建立全新的產品平台，以抓住新類別的機會。例如，支援高自主性系統的汽車玻璃解決方案、日益增長的美國太陽能供應本地化機會以及醫藥包裝。總而言之，我們期待憑藉我們強大的市場領導地位以及康寧的更多創新，讓我們能夠以更快的速度超越市場，從而抓住超過30億美元的機會。

Now I'd like to move to the third component of the framework. Our expectation for powerful incrementals as we add sales. In the fourth quarter of 2022, we initiated a set of actions to restore historic productivity ratios and also to raise price to share the impact of inflation more equitably with our customers. Since we initiated these activities, we have expanded our gross margin by 320 basis points despite sales being down almost $400 million.

現在我想談談框架的第三部分。我們期望隨著銷售額的成長，實現強勁的成長。 2022年第四季度，我們啟動了一系列措施，以恢復歷史性的生產力，並提高價格，以便更公平地與客戶分擔通貨膨脹的影響。自從啟動這些措施以來，儘管銷售額下降了近4億美元，但我們的毛利率仍提高了320個基點。

Our actions have established a significantly stronger profitability and cash flow base even while our P&L includes the costs and technical capabilities necessary to support $3 billion plus in additional sales. Importantly, we have put processes and governance mechanisms in place to generate operating leverage as we grow sales. So as I close today, here's what I'd like to leave you with. Our first quarter results show encouraging signs of improving market conditions. We continue to expect this quarter will be the lowest quarter for the year. Additionally, we've established a higher profitability and cash flow base.

即使我們的損益表中包含了支援額外30億美元銷售額所需的成本和技術能力，我們的行動也建立了顯著增強的獲利能力和現金流基礎。重要的是，我們已經建立了流程和治理機制，以便在銷售成長的同時創造營運槓桿。今天結束之際，我想告訴大家的是：我們的第一季業績顯示出市場狀況改善的令人鼓舞的跡象。我們仍然預計本季將是今年業績最低的一個季度。此外，我們的獲利能力和現金流基礎也得到了提升。

Finally, as our markets improve, we have the opportunity to increase our annualized sales by more than $3 billion. As we capture that growth, we expect to deliver powerful incrementals because the required capacity, the technical capabilities are already in place and the costs are already in our financials. This represents a terrific opportunity for our shareholders. Our second quarter guidance reflects higher sales and strong incremental profit. And you'll hear more about this from Ed.

最後，隨著市場好轉，我們有機會將年化銷售額提升30億美元以上。隨著我們抓住這一成長機遇，我們預計將實現強勁成長，因為所需的產能、技術能力已經到位，成本也已計入我們的財務狀況。這對我們的股東來說是一個絕佳的機會。我們第二季的業績預期反映了更高的銷售額和強勁的增量利潤。 Ed 將詳細介紹這一點。

We will continue making progress on this opportunity in 2024. Think of us as continuing to march up. I look forward to updating you at investor conferences in the next few months. Now before I turn the call over to Ed, I'd like to take a moment to recognize Jeff Evenson, Executive Vice President and Chief Strategy Officer, who will retire from Corning at the end of May.

2024年，我們將在這一機遇上繼續取得進展。請把我們視為持續前進的動力。我期待在未來幾個月的投資者會議上向大家報告最新情況。現在，在將電話轉給Ed之前，我想先介紹執行副總裁兼首席策略長Jeff Evenson，他將於5月底從康寧退休。

I want to thank Jeff for his 13 years of outstanding leadership at our company. During his tenure, he's helped grow the company, develop frameworks that define our priorities and guide our actions and raised awareness of glass as a key enabling material. He also increased Corning's focus on sustainability. Jeff, we wish you the very best. With that, I'll turn things over to Ed.

我要感謝傑夫在公司13年來的傑出領導。在他任職期間，他幫助公司發展壯大，制定了明確優先事項和指導行動的框架，並提高了人們對玻璃作為關鍵賦能材料的認識。他也增強了康寧對永續發展的重視。傑夫，祝你一切順利。接下來，我將把時間交給艾德。

Thank you, Wendell, and good morning, everyone. Our first quarter sales were $3.26 billion, and EPS was $0.38, at the high end of our guidance. Our actions to increase price and improve productivity ratios are paying off. In the first quarter, despite lower year-over-year sales, we grew gross margin by 160 basis points. We also grew free cash flow by more than $300 million versus the first quarter of 2023. Overall, we have established a significantly stronger profitability and cash flow base, and we expect to grow from first quarter levels.

謝謝溫德爾，大家早安。我們第一季的銷售額為32.6億美元，每股收益為0.38美元，處於我們預期的高點。我們提高價格和提高生產力的措施正在取得成效。第一季度，儘管銷售額年減，我們的毛利率仍成長了160個基點。與2023年第一季相比，我們的自由現金流也增加了3億多美元。總體而言，我們的獲利能力和現金流基礎顯著增強，預計未來將比第一季有所成長。

In the second quarter, we expect sales of approximately $3.4 billion, with strong incremental profit and EPS in the range of $0.42 to $0.46. Let's take a closer look at our segment results. In Optical Communications, sales for the first quarter were $930 million, down 17% year-over-year, reflecting temporarily lower carrier demand as customers continued to draw down inventory. Net income for the quarter was $100 million, down 37% year-over-year, reflecting the lower volume.

我們預計第二季銷售額約34億美元，獲利增量強勁，每股盈餘在0.42美元至0.46美元之間。讓我們仔細看看我們各部門的業績。光通訊部門第一季銷售額為9.3億美元，年減17%，反映了由於客戶持續消耗庫存導致營運商需求暫時下降。本季淨利潤為1億美元，年減37%，反映了銷量下降。

We are seeing clear signs of improving market conditions, and we think Q1 represents an inflection point. Sequentially, sales grew in both carrier and enterprise in the first quarter, which is more favorable than normal seasonality. And our order rates are steadily increasing as some of our carrier customers are reaching the end of their inventory drawdowns. We believe we're well positioned to take advantage of the industry's long-term growth drivers, specifically broadband, 5G, cloud computing and 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.

我們看到了市場狀況改善的明顯跡象，我們認為第一季代表著一個轉折點。第一季度，營運商和企業銷售額均較上季成長，這比正常的季節性表現更為有利。隨著部分業者客戶的庫存消化即將結束，我們的訂單率也穩定上升。我們相信，我們已做好準備，充分利用產業的長期成長動力，尤其是寬頻、5G、雲端運算和人工智慧。我們也將受益於公共基礎設施投資，這些投資將有助於連接未連網人群，並將寬頻覆蓋更廣泛的美國人口。

Moving to Display Technologies. As we shared with you in January, panel makers reduced their utilization levels in the fourth quarter in response to a softer retail selling season. Additionally, as expected, panel makers utilization levels remained low in the first quarter to align supply to demand. Our first quarter sales were $872 million, up 14% year-over-year and net income was $201 million, up 26% year-over-year. The increase in net income was primarily driven by higher volume and pricing actions taken in the second half of 2023.

轉向顯示技術。正如我們一月份與大家分享的那樣，為了應對零售季疲軟，面板製造商在第四季度降低了產能利用率。此外，正如預期的那樣，為了使供需平衡，面板製造商在第一季的產能利用率仍然較低。我們第一季的銷售額為8.72億美元，年增14%，淨利為2.01億美元，年增26%。淨利潤的成長主要得益於2023年下半年的銷售成長和價格調整。

First quarter glass price was consistent with the fourth quarter of 2023 as expected. Now it's worth noting that first quarter net income was negatively impacted by our decision to reduce our production to align to the lower volume we experienced in the fourth and first quarters. Our profitability will be higher in the second quarter. Looking ahead to the second quarter, we expect panel makers to run at higher utilization rates, driven by growth in retail demand resulting from midyear promotions, and we will return our production volume to more normal levels. We expect the second quarter glass market and our volume to increase sequentially as a result of higher panel maker utilization, and we expect glass price to be consistent with the first quarter.

第一季玻璃價格與2023年第四季持平，符合預期。值得注意的是，第一季淨利潤因我們決定減產以應對第四季和第一季的產量下降而受到負面影響。第二季度我們的獲利能力將會有所提升。展望第二季度，我們預計面板製造商的產能利用率將有所提高，這主要得益於年中促銷活動帶來的零售需求成長，而我們的產量也將恢復到更正常的水平。我們預計，由於面板製造商產能利用率的提高，第二季度玻璃市場和我們的產量將環比增長，並且我們預計玻璃價格將與第一季持平。

For the full year, our expectations for the retail market remain unchanged from our January view and are consistent with industry expectations. Specifically, we anticipate relatively flat television unit volume, another year of TV screen size growth, and some recovery in PC demand. This adds mid-single-digit percent growth in glass volume at retail versus 2023. Overall, we expect the pricing environment to remain favorable.

我們對全年零售市場的預期與1月的預測保持一致，並與產業預期一致。具體而言，我們預計電視出貨量將相對持平，電視螢幕尺寸將在未來一年持續成長，PC需求也將有所復甦。這將使玻璃零售量較2023年實現中等個位數的百分比成長。總體而言，我們預計定價環境將保持有利。

Before I move on, I want to take a minute to address currency exchange rates. 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. And we've received more than $2.5 billion in cash under our hedge contracts since their inception.

在繼續之前，我想花點時間談談匯率問題。提醒一下，過去十年來，我們一直在積極對沖外匯風險敞口。這是降低獲利波動、保護現金流、增強投資能力和保障股東回報的有效工具。我們對我們的對沖計劃及其帶來的經濟確定性感到非常滿意。自對沖合約生效以來，我們已根據合約獲得了超過25億美元的現金。

Our most significant hedge contracts are for the Japanese yen, which support our yen core rate of 107 through the end of 2024. As we look beyond 2024, our goal is to maintain an appropriate return on our display business through a combination of currency hedges and industrial solutions like price increases. First, on hedging, we are actively working to improve our hedge coverage for 2025 and into the future. The yen forward curve works in our favor. So if you go out a year, the forward rate is about JPY 8 stronger than today's spot rate; out 2 years, it's approximately 14; and so on.

我們最重要的對沖合約是日圓，它支撐著我們的核心匯率在2024年底前維持在107。展望2024年以後，我們的目標是透過貨幣對沖和漲價等行業解決方案的組合，維持顯示器業務的合理回報。首先，在對沖方面，我們正積極努力提高2025年及未來的避險覆蓋率。日元遠期曲線對我們有利。因此，如果一年後，遠期匯率比今天的現貨匯率高出約8日圓；如果兩年後，則約為14日圓；依此類推。

The current yen spot rate is significantly weaker than the 30-year average of approximately JPY 110. We have made some progress on our hedges and are now partially hedged for 2025, and we'll continue to look for attractive opportunities to increase our hedges. Second, our customers sell panels in U.S. dollars, and they buy glass from us in yen. They are benefiting from the current weak yen rate. We plan to share the economics more appropriately with our customers by raising glass prices in yen.

當前日圓現貨匯率遠低於約110日圓的30年平均水準。我們的對沖措施取得了一些進展，目前已完成部分2025年的對沖，並將繼續尋找有吸引力的機會來增加對沖。其次，我們的客戶以美元出售面板，並以日元向我們購買玻璃。他們正受益於當日圓疲軟的匯率。我們計劃透過提高玻璃的日圓價格，更合理地與客戶分享經濟效益。

We successfully took a first step in this direction in the second half of 2023. We will continue to keep you updated as we make progress. Moving to Specialty Materials. Sales in the first quarter were $454 million, up 12% year-over-year, driven by strong demand for our premium smartphone cover materials as well as semiconductor-related products. Net income was $44 million, up 13% year-over-year, driven by higher volume. Our more Corning approach will continue to help us win as handheld and IT markets recover.

我們在2023年下半年成功邁出了這一方向的第一步。我們將持續向您通報最新進展。轉向特殊材料業務。第一季銷售額為4.54億美元，年增12%，這得益於市場對我們高階智慧型手機外殼材料以及半導體相關產品的強勁需求。淨利潤為4400萬美元，年增13%，這得益於銷量的成長。隨著手持設備和IT市場的復甦，我們「更康寧」的策略將繼續幫助我們成功。

Additionally, over time, we anticipate growth from new innovations such as bendable glass and augmented reality as they are adopted more broadly. Environmental Technologies first quarter sales were $455 million, up 6% year-over-year, driven by increased GPF adoption in China which more than offset a decline in heavy-duty diesel in North America, an impact we expect to continue through 2024. Net income was $105 million, up 28% year-over-year, driven by higher volume and improved operating performance. In Life Sciences, Sales in the first quarter were $236 million, down 8% versus the first quarter of 2023 as customers in North America and Europe continue to draw down their inventory.

此外，隨著時間的推移，我們預計可彎曲玻璃和擴增實境等創新技術將得到更廣泛的應用，從而帶來成長。環境技術部門第一季銷售額為4.55億美元，年增6%，這得益於中國GPF應用的增加，這足以抵消北美重載柴油市場下滑的影響，我們預計這一影響將持續到2024年。淨收入為1.05億美元，年增28%，得益於銷售成長和營運績效改善。生命科學部門第一季銷售額為2.36億美元，較2023年第一季下降8%，原因是北美和歐洲客戶持續減少庫存。

Net income was $13 million, up 44% year-over-year, reflecting improved productivity. Turning to Hemlock and Emerging Growth businesses. Sales in the first quarter were $311 million, down 19% year-over-year, reflecting lower pricing for solar grade polysilicon and lower sales in pharmaceutical technologies from the completion of volume commitments for COVID-related products.

淨利潤為1300萬美元，年增44%，反映出生產力的提高。轉向鐵杉和新興增長業務。第一季銷售額為3.11億美元，年減19%，反映出太陽能級多晶矽價格下跌，以及因新冠疫情相關產品批量承諾的完成導致製藥技術銷售額下降。

Now let's turn to our outlook. Last quarter, we shared our expectation that the first quarter would be the low quarter of the year, and we're even more confident that, that is the case. In the second quarter, we expect sales to grow sequentially to approximately $3.4 billion with strong incremental profit and EPS in the range of $0.42 to $0.46. We also anticipate free cash flow to grow sequentially by approximately $300 million in the second quarter and we expect CapEx of approximately $1.2 billion for the year.

現在讓我們來談談我們的展望。上個季度，我們曾預期第一季將是今年業績表現較差的一個季度，現在我們更加確信情況確實如此。我們預計第二季銷售額將季增至約34億美元，獲利增量強勁，每股盈餘將在0.42美元至0.46美元之間。我們也預計第二季自由現金流將季增約3億美元，全年資本支出預計約12億美元。

Wendell outlined our framework to drive strong returns on our existing innovation and capacity investments and shared our expectations for powerful incremental profit and cash flow. Given this opportunity, we've begun to think about our approach to the allocation of that cash going forward. As a reminder, we prioritize investing for organic growth opportunities.

溫德爾概述了我們推動現有創新和產能投資強勁回報的框架，並分享了我們對強勁增量利潤和現金流的預期。有鑑於此，我們已開始思考未來現金的配置方案。需要提醒的是，我們優先投資有機成長機會。

And as we've shared today, in the midterm, we have the capabilities and capacity in place to add more than $3 billion in annualized sales with minimal cash investment. You can see that reflected in our CapEx expectations for 2024. This contributes to the strong free cash flow we expect to generate. Additionally, we maintain a strong and efficient balance sheet, and we're in great shape. We have one of the longest debt centers in the S&P 500. Our current average debt maturity is about 23 years with about only $1 billion in debt coming due over the next 5 years, and we have no significant debt due -- coming due in any given year.

正如我們今天分享的那樣，在中期，我們有能力以最少的現金投入實現超過30億美元的年化銷售額成長。您可以從我們對2024年的資本支出預期中看到這一點。這有助於我們預期產生的強勁自由現金流。此外，我們保持著強勁高效的資產負債表，目前狀況良好。我們的債務中心是標準普爾500指數成分股中期限最長的債務中心之一。我們目前的平均債務期限約為23年，未來5年內到期的債務約為10億美元，而且我們沒有任何重大債務到期——在任何一年都沒有。

So as our cash flow increases, we remain committed to providing returns to our shareholders. We have grown our dividend 40% since 2019 and our dividend yield is top quartile in the S&P 500, and we will continue to be opportunistic on share repurchases. I look forward to sharing more in the coming months as we continue to make progress building a solid foundation for durable, profitable long-term growth. Now I'll turn things back over to Ann.

因此，隨著現金流的成長，我們始終致力於為股東提供回報。自2019年以來，我們的股息成長了40%，股息殖利率在標準普爾500指數中位居前四分之一，我們將繼續掌握股票回購的機會。隨著我們繼續在為持久、盈利的長期成長奠定堅實基礎方面取得進展，我期待在未來幾個月分享更多消息。現在，我將把時間交還給安。

Great. Thank you, Ed. We're ready for our first question.

太好了。謝謝你，艾德。我們準備好回答第一個問題了。

(Operator Instructions)

（操作員指示）

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

我們的第一個問題來自美國銀行的 Wamsi Mohan。

If I could, one for Wendell, one for Ed. Wendell, on the commentary around the data center opportunity around AI. I was wondering if you could just share some color on when you think these incremental orders and revenue will flow into Corning. And these hundreds of -- low hundreds of dollars per GPU, can you just break that down into maybe just a little bit more color on where exactly that's coming from? Is this rack-to-rack connections in optical and data center? And how large do you think the TAM for that is? And I have a follow-up for Ed please.

如果可以的話，我想問Wendell和Ed. Wendell兩位關於人工智慧資料中心機會的評論。您能否具體談談這些增量訂單和收入何時會流入康寧？每個GPU幾百美元的價位，您能否更詳細地解釋一下這些成本究竟來自哪裡？這是指光纖和資料中心的機架到機架連接嗎？您認為這種連結的潛在市場規模（TAM）有多大？我還有一個後續問題想問Ed。

So the timing of when we'll start to see it in our financials. So we start with a pretty large business and enterprise, all related to the sort of front-end -- we think about it as a front-end network, which is all connecting the CPUs. So off over that base, you'll start to see sort of a relatively robust revenue growth assuming the orders that we've closed here all ship in the back half of this year. You're just going to start to see that momentum begin to build.

那麼，我們什麼時候會在財務報表中看到這一點呢？我們先從相當大規模的企業開始，這些企業都與前端相關——我們把它看作是一個前端網絡，連接著所有的CPU。所以，在這個基礎上，假設我們在這裡完成的訂單都在今年下半年發貨，你就會開始看到相對強勁的收入成長。你很快就會看到這種勢頭開始增強。

Where does it come from? Well, the simplest way to think about this is let's just start at the rack level. A typical front-end rack filled with CPUs has about 32 fibers to sort of come into that top of the rack switch, right, 16 ports, 2 fibers per port. There's different ways to do it. But assuming one of these back-end network, GPU racks will tend to have on the order of a couple of [100] servers. To service those, you need more like 256 fibers on that same rack. So you've got about an 8x increase in the amount of fibers per rack. So this is what leads to the demand for us to do a more Corning innovation, how do you fit 8 times as many light pipes into fundamentally the same area. And that's why you see all of our new product innovation, what we've been working on the last few years is aimed at that. So as you start to see those large cluster GPU installations begin is when you should start to see it in our numbers, Wamsi. Was that -- did that answer your question?

它從何而來？最簡單的思考方式是從機架層面開始。一個典型的前端機架充滿了CPU，大約有32根光纖接入機架頂部的交換機，總共16個端口，每個端口2根光纖。有很多不同的方法可以實現這一點。但假設一個後端網絡，GPU機架通常會有大約幾百台伺服器。為了服務這些伺服器，你需要在同一個機架上安裝256根光纖。所以每個機架的光纖數量大約增加了8倍。這就要求我們進行更像康寧的創新，如何在相同的面積內安裝8倍數量的光導管。這就是為什麼你會看到我們所有的新產品創新，我們過去幾年一直在努力實現這一點。所以，當你開始看到那些大型叢集GPU安裝開始時，你就應該開始在我們的資料中看到它了，Wamsi。這是否回答了你的問題？

Yes, it did. I wonder, Wendell, if you might also comment on the B100, which seems to be a much more higher density solution than the H100 and the need for bandwidth probably -- order of magnitude higher between racks.

是的，確實如此。溫德爾，我想知道您是否可以評論一下B100？它似乎是一個比H100高得多的密度解決方案，而且對機架間頻寬的需求可能要高出幾個數量級。

So you -- that is a great observation, and it is in line with the sort of secular trend that we see that basically says we have plenty of innovation we have to get done because density continues to increase as well as the bandwidth requirements increase. And so what that does is it reduces the amount of distance with which you can travel in an electron and therefore pushes the photons closer and closer to sort of the beachfront of those GPUs, which is opening up an entire new set of categories for us -- for our flat glass, for our ability to couple light into various formats. And so in a way what you're describing is what's leading to a whole new family of innovations upon which we are working diligently, Wamsi.

所以，你——這是一個很棒的觀察，它符合我們所看到的長期趨勢，基本上表明我們有大量創新需要完成，因為密度持續增加，頻寬需求也隨之增加。這會導致電子傳播距離縮短，從而使光子越來越接近GPU的前沿，這為我們開闢了全新的領域——包括我們的平板玻璃，以及我們將光耦合成各種格式的能力。所以，從某種程度上來說，你所描述的正是引領一系列全新創新的因素，我們正在努力研究這些創新，Wamsi。

Okay. I appreciate the answer. And maybe quickly for Ed. I appreciate the yen commentary here as we look into 2025, there seem to be a lot of moving pieces for display between yen rate and the pricing you alluded to? How large is the partial hedge or where do you expect to -- as you exit this year, where do you think you will be hedged for 2025?

好的。感謝您的回答。 Ed，也許可以快速回答一下。我很欣賞您對日圓的評論，展望2025年，日圓匯率和您提到的定價之間似乎有很多變化因素。部分對沖的規模有多大？或者您預期－今年退出市場之際，您認為2025年的對沖規模會是多少？

What do you think is the sort of core rate that if we were to shift next year to a different core rate, where would you think that would be using all the tools that you have? And if you could perhaps just roll it up at the high level, including the price changes that you spoke about. How should we think about display at sort of the top line level, given all these different changes?

您認為，如果我們明年要調整核心廣告費率，您會如何運用現有的所有工具？能否從宏觀層面進行闡述，包括您所提到的價格變動？考慮到所有這些變化，我們應該如何從營收層面考慮展示廣告？

Yes. Thanks for the question, Wamsi, and I understand the desire to have all that information. I think the simplest way to think about it is we are committed to generating return in this business. And we think we will do that in 2024. We did that in 2023. And our goal is to get the economics to be similar as we go forward regardless of where the yen winds up and where we are able to hedge.

是的。感謝Wamsi的提問，我理解大家想要了解所有這些資訊的願望。我認為最簡單的理解是，我們致力於在這項業務中創造回報。我們認為我們將在2024年實現這一目標。我們在2023年就做到了。我們的目標是，無論日圓最終走向如何，無論我們能夠進行哪些對沖，未來經濟效益都保持相似。

We'll be -- we're good at hedging. We've got a long-standing program. We will look for attractive opportunities to build our 2025 hedge portfolio. And if the yen breaks our way, we'll go out beyond that. I think it's too early to talk about core rate or that kind of discussion, but I think you should just think about our display economics that we'll deliver in 2024 as being the way to think about our display business. So we'll raise price to offset the impact of the yen and the net of those two things to get you to the same place. That's the way we're thinking about it. We've made some nice progress on hedging, and we'll continue to keep you updated as we go. I think that's the way you all should think about it.

我們擅長對沖。我們有一個長期計劃。我們將尋找有吸引力的機會來建立我們2025年的對沖投資組合。如果日圓匯率對我們有利，我們將會採取更進一步的措施。我認為現在談論核心利率或類似的話題還為時過早，但我認為您應該以我們在2024年實現的顯示器經濟效益作為我們顯示器業務的考量標準。因此，我們將提高價格以抵銷日圓匯率的影響，並扣除日圓和日圓匯率的影響，最終達到相同的目標。這就是我們目前的想法。我們在對沖方面取得了一些不錯的進展，我們會持續向大家通報最新進展。我認為大家應該都這樣考慮。

Operator, we're ready for our next question.

接線員，我們準備好回答下一個問題了。

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

我們的下一個問題來自摩根士丹利的 Meta Marshall。

Great. Maybe a question for me. You noted that you have the capacity kind of today with capital you've already built to have $3 billion of additional revenue. You noted that you expect to kind of grow over the next 3 years by more than that $3 billion. And so just trying to get a sense of where you think that the biggest opportunities or investments will be over the next couple of years?

太好了。或許可以問一下我。您提到，憑藉目前累積的資本，目前有能力實現30億美元的額外收入。您也提到，預計未來三年的營收成長將超過這30億美元。所以，您認為未來幾年最大的機會或投資機會在哪裡？

And then maybe a second question. There's been obviously, a lot made of BEAD timing and understanding that you're seeing kind of improving demand trends on service provider as they come out of inventory digestion, but just kind of what your latest thoughts are around kind of BEAD timing as an enhancement to the optical business.

然後也許還有第二個問題。顯然，關於BEAD時機有很多討論，並且您了解到，隨著服務提供者消化庫存，他們的需求趨勢有所改善。但是，您對BEAD時機作為光學業務增強措施的最新想法是什麼？

I'll start with the second one and then maybe, Ed, you can discuss the first. So on BEAD timing, we tend to be relatively conservative in our outlook of how effective the government can be in allocating resources to build networks. We're in strong support of this. It requires U.S. content and we think it's aimed well and it will be done. The funds have been allocated. But the process, we would tend to be a little -- our expectations are being a little slower than what you see as the industry overall. We think they'll get allocated this year and you won't really start to see spending until next year. That's our current point of view (inaudible). Does that answer your question?

我先從第二個問題開始，然後，艾德，也許你可以討論第一個問題。關於BEAD（美國行動寬頻發展計畫）的時機，我們對政府在網路建設資源配置方面的有效性持相對保守的看法。我們堅決支持這項計劃。它需要美國內容，我們認為目標明確，而且會成功。資金已經撥付。但這個過程，我們預計會比你看到的整個產業慢一點。我們認為資金今年就能撥付，但要到明年才能真正開始投入。這是我們目前的觀點（聽不清楚）。這回答了你的問題嗎？

Yes, that's helpful.

是的，這很有幫助。

Yes, Meta, on your other question. So first, I would start with we actually have capacity to do much more than $3 billion in sales. I think we're framing it up as we see it. Where those sales come from, where those opportunities come from will depend on whether we need to add anything beyond what we have in place today, but we feel very confident in supporting a number well above $3 billion.

是的，Meta，關於你的另一個問題。首先，我想說的是，我們實際上有能力實現遠超過30億美元的銷售額。我想我們正在根據自身情況進行規劃。這些銷售額來自哪裡，這些機會來自哪裡，取決於我們是否需要在現有基礎上增加任何內容，但我們非常有信心能夠支持遠超過30億美元的銷售額。

There are certainly a few places where we might spend a little money, but it's all encapsulated in the CapEx guide we gave for 2024, and we ramped our capital spend down in the back half of 2023. So sitting here today, I don't see any need for significant amount of capital. A good example might be as we build out our auto glass business, and we continue to win there. We might need to spend a little bit, but not the kind of capital you're used to when you build like melting capacity for glass, more on the finishing side. So I think we -- our goal is to generate a significant amount of cash flow off of the existing capacity we have in place.

當然，有些地方我們可能會花一點錢，但這些都包含在我們給出的2024年資本支出指南中，而且我們在2023年下半年減少了資本支出。所以今天坐在這裡，我認為不需要投入大量資金。一個很好的例子可能是，我們正在拓展汽車玻璃業務，並且我們將繼續在該領域取得成功。我們可能需要投入一些資金，但不是像建造玻璃熔化產能那樣的資金，更多的是投入精加工環節。所以我認為我們的目標是利用現有產能創造大量現金流。

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

我們的下一個問題來自奧本海默的馬丁楊。

I would like to ask about your opinion regarding newly announced subsidy programs for home appliance trading in China. I know your retail estimates on PV sales this year hasn't changed. Do you think this could be a new catalyst to drive upside to retail TV market and your glass volume in '24?

我想問一下您對中國新宣布的家電交易補貼計畫的看法。我知道您對今年光電市場零售額的預測沒有改變。您認為這會成為推動2024年電視零售市場和玻璃銷售上漲的新催化劑嗎？

That's a great question. They're relatively recent, and we're still in the midst of trying to understand how that will play out when it hits the consumer. Our expectations have been for China retail demand to be relatively muted this year. You're right to point it out, we're just a little early in being able to analyze and predict what its impact will be like. We'll get back to you on that as our understanding evolves.

這個問題問得好。這些措施相對較新，我們仍在努力了解其對消費者的影響。我們一直預期今年中國的零售需求會相對低迷。您說得對，我們現在還無法分析和預測其影響。隨著我們了解的深入，我們會再回覆您。

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

我們的下一個問題來自摩根大通的 Samik Chatterjee。

Maybe to sort of ask you another one on display, just a bit more longer term. I know you have a strong position in the display market with the display glass, but traditionally or historically, the problem with this market has been the shorter cycle nature of the swings in the volume cycle. When you think about the duration of this current cycle, are you thinking about it any differently, how does the cycle track rate to some of the sort of volatility we've seen in the past? And then a bit more near term.

也許我想再問您一個關於顯示器的問題，稍微長遠。我知道你們在顯示器玻璃市場佔據著強勢地位，但從傳統或歷史來看，這個市場的問題在於產量週期波動的周期性較短。當您思考當前週期的持續時間時，您是否有不同的看法？這個週期的波動幅度與我們過去所見過的波動幅度相比如何？然後，再問一些短期問題。

I know you mentioned you're expecting a step up in terms of industry volume into 2Q. But any more color there because that does seem like 1Q panel maker utilization improved late in the quarter more than you expected. So how are you thinking about 2Q now based on the sort of stronger exit of 1Q?

我知道您提到過，您預計第二季度行業產量會有所增長。但能透露更多細節嗎？因為第一季面板製造商的利用率在本季末的提升似乎超出了您的預期。那麼，基於第一季強勁的業績表現，您現在如何看待第二季的業績？

Right, that's -- let me take the first question. That is a wonderful deep question, Samik, on the first one, mainly because as the locus of panel manufacturing has shifted from Korea, Taiwan, into China and that high concentration there has begun to lead to sort of different behavior between set makers and panel makers. One of the things that led to the sort of classic crystal cycles would be that, a, you had a very strongly growing market, which meant predicting how much capacity you would need was challenging because you had to get the rate right.

好的，那——讓我來回答第一個問題。薩米克，第一個問題問得非常深刻，主要是因為隨著面板製造中心從韓國、台灣轉移到中國大陸，那裡的高度集中已經開始導致電視機製造商和麵板製造商之間的行為有所不同。導致這種經典晶體週期的原因之一是，你的市場成長非常強勁，這意味著預測你需要多少產能會很困難，因為你必須確定正確的產能比率。

But then the second was that set makers would tend to have very strong back half demand. Panel makers would tend to want to make it pretty consistently. And therefore, you have build ups of value chain inventory that added volatility to the markets. Two things have changed. First, we're now in the mature stage of the display market, at least until such time (inaudible) something like a very new format as displays start to move -- so that end market has become easier to predict. Second, what we're seeing with the behavior of the new very strong panel makers is they're seeking to optimize panel price, and they are reducing their utilization to match more closely with the actual orders from set makers. So this has begun to change that dynamic of how much inventory gets built up in the value chain.

其次，電視機製造商往往對下半年的需求非常強勁。面板製造商往往希望保持穩定的產量。因此，價值鏈庫存的累積增加了市場的波動性。現在發生了兩點變化。首先，我們現在處於顯示器市場的成熟階段，至少在顯示器開始流行（聽不清楚）這種非常新的格式出現之前是如此——因此終端市場變得更容易預測。其次，我們看到一些新興的、實力雄厚的面板製造商正在努力優化面板價格，並降低產能利用率，以便更緊密地匹配電視機製造商的實際訂單。因此，這已經開始改變價值鏈中庫存累積的動態。

Now this has only been a couple of quarters, a couple of 3 quarters. And so it's too early to tell is this going to be a more longer-term change. If it is a longer-term change, that will reflect well on the health of the industry and the smoothing out of these cycles that you are pointing out. The pandemic was sort of a mega cycle, and we're sort of still dealing with some of the things that happened during that period. So that may be more color than you're looking for, Samik, but it is a question upon which obviously we're pondering.

現在這才過了幾個季度，或者說三個季度。所以現在判斷這是否會是一個更長期的變化還為時過早。如果這是一個長期變化，那將很好地反映出產業的健康狀況以及您所指出的這些週期的平滑。疫情就像一個超級週期，我們仍在處理那段時期發生的一些事情。所以，薩米克，這可能比您預期的更模糊，但這顯然是一個我們正在思考的問題。

And any thoughts on 2Q, the step-up from 1Q, 2Q just given the exit run rate was higher in 1Q.

對第二季有什麼看法？第二季較第一季上升，因為第一季的退出運行率更高。

Yes. Samik, as you articulate, panel maker utilization was low generally in Q1. We certainly saw a step-up towards the end of the quarter. We're expecting them to run at higher levels through the second quarter and really through the year because if retail is flat just to meet that flat unit demand, they would have to run at significantly higher levels for the remaining 3 quarters of the year to meet that demand. We're not guiding specific volume increase from Q1 to Q2, but I think it's pretty meaningful.

是的。 Samik，正如您所說，面板製造商的利用率在第一季普遍較低。我們確實在本季末看到了回升。我們預計他們的產能在第二季度甚至全年都會保持更高的水平，因為如果零售量持平才能滿足持平的單位需求，那麼他們就必須在餘下的三個季度保持更高的產能才能滿足這一需求。我們沒有預測第一季到第二季的具體產量成長，但我認為這意義重大。

Our next question comes from the line of Tim Long with Barclays.

我們的下一個問題來自巴克萊銀行的蒂姆·朗。

Thank you. Maybe just a 2 parter on the optical comms business. First, on the telco side, you talked about the inventory normalization, but there's also a lot of chatter out there and weakness given 5G hasn't seemed to work all that successfully to the telcos. So could you just talk about that business in the context of 5G isn't really successful and what that means for some of these longer-term contracts that you have with some of the larger players?

謝謝。關於光通訊業務，我大概可以分成兩個部分來談。首先，在電信業者方面，您談到了庫存正常化，但外界也有很多討論，而且考慮到5G對電信業者來說似乎並沒有那麼成功，這帶來了一些弱點。那麼您能否在5G不太成功的背景下談談這項業務，以及這對您與一些大型營運商簽訂的一些長期合約意味著什麼？

And then secondly, on the enterprise side, could you just touch on the opportunity for a lot of chatter about GPUs kind of chasing where there happens to be spare capacity for energy. Do you see an opportunity for your enterprise business with large data centers popping up in new areas that will need to be connected?

其次，在企業方面，您能否談談關於GPU追逐能源閒置容量的討論機會？您是否認為，隨著大型資料中心在需要連網的新領域湧現，您的企業業務將面臨機會？

Thank you, Tim. On the 5G piece, I think that the challenge that our customers in telco have faced is that 5G, you move from a technology in 4G, which wireless is very wireless, right, to 5G, which, therefore, takes wireless and starts to make it more wireline. And therefore, taking a good amount of infrastructure to put in place. Now interestingly, what they've taken advantage of is if they're going to do that, you see them combining their networks from wireline and wireless into one. And that allows them some significant cost savings and offers many different potential revenue opportunities for a given deployment of network. Now -- so in a way, you're seeing their cost productivity improve, their ability to serve improve. There is a challenge of how much revenue -- incremental revenue the 5G at this stage has generated, and that is something they have wrestled with.

謝謝，蒂姆。關於5G，我認為我們電信客戶面臨的挑戰是，5G是從4G技術（無線非常無線）轉變為5G技術的，因此，5G將無線技術帶入了有線網絡，並開始使其更加有線。因此，需要大量的基礎設施建設。有趣的是，他們利用了這一點，如果他們要這樣做，你會看到他們將有線和無線網路合而為一。這為他們節省了大量成本，並為特定的網路部署提供了許多潛在的收入機會。現在——從某種程度上來說，你可以看到他們的成本效益提高了，他們的服務能力提高了。目前面臨的挑戰是，5G在現階段創造了多少收入——增量收入，這是他們一直在努力解決的問題。

What you see reflected in our thoughts for the year is a relatively muted deployment outlook. But we'll still see the pickup because what's pushing us below sort of long-term deployment rates of fiber has been eating through the inventory largely purchased during the pandemic and dealing with that step-up. And then -- but it does incorporate a lower deployment outlook. So that's what we've sought to do for that, Tim. Does that address your question on that piece?

您從我們對今年的展望中可以看出，部署前景相對低迷。但我們仍會看到光纖部署率回升，因為導致光纖部署率低於長期部署率的因素是疫情期間採購的庫存被消耗殆盡，以及疫情期間光纖部署率的上升。但這確實也反映了較低的部署前景。這就是我們為此努力的方向，提姆。這是否解答了您之前提出的問題？

Yes, yes. And then just on the data centers popping up in other places impact?

是的，是的。那麼，其他地方新建的資料中心會有什麼影響嗎？

The answer to your question is yes. It is an interesting opportunity. And it is -- coming back to [enhancing], hey, capability we have that others don't, which is this ability for us to actually respond globally across a really big geographic footprint, not only in the U.S. but across the globe. Because this search for energy is more than just finding the exact right communities here. And so yes, it does offer a significant opportunity for us for both innovation as well as volume. But it's too early to factor that in because they haven't found all the energy sources yet that will be required, and they're still dealing with the infrastructure ramifications therein.

你的問題的答案是肯定的。這是一個有趣的機會。而且－回到[增強]我們擁有而別人沒有的能力，也就是我們能夠在非常大的地理區域內（不僅在美國，而且在全球範圍內）做出全球響應的能力。因為尋找能源不僅僅是在這裡找到合適的社區。所以，是的，它確實為我們提供了重要的創新和產量機會。但現在考慮這一點還為時過早，因為他們還沒有找到所有所需的能源，而且他們仍在處理由此產生的基礎設施影響。

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亞洲商家。

Great. And apologies if this question has been answered. But I did notice inventory was a little higher this quarter and OpEx tracked a little bit higher as well. Just if you can provide some clarity on that.

太好了。如果這個問題已經得到解答，請見諒。但我確實注意到本季庫存略高，營運支出也略高。請問您能否就此澄清一下？

Sure. Thanks, Asiya. On inventory, just think of it as we had a very low volume quarter in general. Our volume will go up through the year. So we still view inventory as an opportunity to take it down from the level we're at and we think that will be a catalyst for cash flow in 2024. With respect to OpEx, I'm going to answer your question, but I'm going to reframe it a little bit as well.

當然。謝謝，Asiya。關於庫存，就拿我們這個季度的銷售整體來說很低來說吧。我們的銷量全年都會上升。所以我們仍然將庫存視為一個降低庫存水準的機會，我們認為這將成為2024年現金流的催化劑。關於營運支出，我會回答你的問題，但我也會稍微重新表達。

So sequentially, our OpEx was up. The simplest way to think about it is that our variable compensation in '23 was lower than normal because we didn't perform to target in 2023, so we just didn't pay out at target. We've reset our targets, we expect to perform in 2024. So our variable compensation is at a normal level. But what I think is important to take away on OpEx is we are committed to keep our OpEx relatively flat to where it is. It will move around in any given quarter. It's -- I think we're -- we were about $700 million in the first quarter. It could be in the $700 million to $725 million range. But if we're able to do that over time, it creates another leverage point for us as our sales grow, and that's why we talk about powerful incrementals, gross margin expands and operating margin expands as well where profitability expands more than sales. So I feel good about OpEx overall.

因此，我們的營運支出較上季上升。最簡單的理解是，2023年我們的浮動薪酬低於正常水平，因為我們在2023年沒有達到目標，所以我們沒有支付目標薪酬。我們已經重新設定了目標，預計2024年也能達到目標。所以我們的浮動薪酬處於正常水準。但我認為，關於營運支出，重要的是我們致力於將營運支出維持在相對穩定的水平。它在任何季度都會波動。我認為我們第一季的營運支出約為7億美元。實際上可能在7億到7.25億美元之間。但如果我們能夠隨著時間的推移做到這一點，隨著銷售額的成長，這將為我們創造另一個槓桿點。這就是為什麼我們說成長強勁，毛利率和營業利潤率都在提高，獲利能力的成長速度超過了銷售額。所以，我對營運支出整體感覺良好。

Well, I was just going to ask, I know there was commentary on yen earlier, but investors have been asking when Corning would feel comfortable sharing sort of the new yen hedges. And perhaps this question has already been answered, but I did join late, so apologies if this is a repetitive question. But any color on this.

嗯，我本來想問一下，我知道之前有人評論過日元，但投資人一直在問康寧什麼時候願意分享新的日圓對沖策略。這個問題可能已經有人回答過了，但我來晚了，所以如果重複了，請見諒。不過，請問您對此有何評論？

Yes. No apologies necessary, Asiya. Yes, what I shared earlier was the most important thing is to think about the return we generate in this business, our goal is to generate an appropriate return. You could think of that as what we will deliver in 2024 or what we delivered in 2023. And we're going to use yen hedging and raising price in combination to generate that economics or those economics to generate that return.

是的。 Asiya，沒必要道歉。是的，我之前說過，最重要的是考慮我們在這個業務中創造的回報，我們的目標是創造適當的回報。你可以把它想像成我們在2024年或2023年要實現的目標。我們將結合日圓對沖和漲價來創造這種經濟效益，或者說，利用這些經濟效益來創造回報。

And so we have made progress on our hedges. We've made some nice progress, and we'll be opportunistic throughout the year, and we'll look to hedge at attractive rates. We're not sort of discussing the details. And I think it's too early to think about how to frame up core rate for 2025. So we'll keep you posted on that. But just think of it as the overall profitability level or cash generation level in the display business.

因此，我們的對沖工作取得了一些進展。我們取得了一些不錯的進展，全年我們都會抓住機會，尋求以有吸引力的利率進行對沖。我們目前還不討論細節。我認為現在考慮如何確定2025年的核心利率還為時過早。我們會隨時向大家通報。但可以將其視為顯示器業務的整體獲利水準或現金產生水準。

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

我們的下一個問題來自瑞銀的 Joshua Spector。

Congrats on a solid quarter. This is James Cannon on for Josh. I just wanted to poke on the powerful incrementals you described. We're talking about a $3 billion sales opportunity. I mean if I look back at kind of last couple of quarters, your gross margin has held in pretty steady despite sales declining. I think there's some noise with display pricing coming through. Can you just give me some color as to how we should think about the cadence of gross margins as we go through the rest of the year?

恭喜您本季業績穩健。我是 James Cannon，代表 Josh 為您報道。我只是想談談您所描述的強勁成長。我們談論的是一個 30 億美元的銷售機會。我的意思是，如果我回顧過去幾個季度，儘管銷售額下降，但你們的毛利率仍然保持相當穩定。我認為現在關於展示定價的討論有些爭議。您能否具體談談，我們該如何看待今年剩餘時間的毛利率變動節奏？

Yes. Thanks for the question. I think the way to think about it is if you go back to Q2 of -- I'm sorry, Q4 of 2022, that was our low point. We've expanded our gross margin 300 basis points while our sales have come down almost $400 million. We've done that by improving our productivity ratios, running our factories better and by raising price.

是的，謝謝你的提問。我認為應該這樣想：回顧一下2022年第二季——抱歉，應該是第四季——那就是我們的低谷。我們的毛利率提高了300個基點，而銷售額卻下降了近4億美元。我們透過提高生產率、改善工廠運作以及提高價格來做到這一點。

So we're actually at a very nice baseline of 37%. And I'd remind you that 37% is closer to 39% when you think about the old map before we absorb inflation and raised price, right? So we're starting from a very nice base and we have the capacity in place to support a lot higher sales, which is not normally the way we would grow. So as sales come back, we would expect our gross margin to march up along with those sales nicely each quarter. And then I mentioned just before, we also believe OpEx are on the operating margin line is another leverage point for us. So that's how we think about those powerful incrementals. I think you should just think of it as we will march up as our sales grow from 37%.

所以，我們實際上處於一個非常不錯的37%的基線水平。而且，我想提醒大家，如果以我們吸收通膨和漲價之前的舊數據來看，37%應該會更接近39%，對吧？所以我們的基準水平非常好，而且我們有能力支持更高的銷售額，這通常不是我們的成長方式。因此，隨著銷售額的回升，我們預計毛利率會隨著銷售額每季的穩定成長而穩定上升。我之前提到過，我們也認為營運支出與營業利潤率持平是我們的另一個槓桿點。這就是我們對這些強勁成長的理解。我認為，你應該認為，隨著銷售額從37%成長，我們的毛利率也會跟著上升。

Okay. I guess just another way to think about it is, as that $3 billion comes through, like I think 40 has typically been your target. Like has that changed? Or is that where you think -- that's where you think you can get to?

好的。我想換個角度想想，隨著30億美元的到位，我認為40億美元通常是你的目標。現在情況有改變嗎？或者你認為──你認為你能達到這個目標嗎？

Yes. So I think we can get there. But just as a reminder, the 40, if you go back in time, we've absorbed a significant amount of inflation and raised price, which brings our margin percentage down. So 38% is sort of the new 40% in old math. But I still think despite that new base, we can get back to that 40% level as we accrete our sales up.

是的。所以我認為我們能達到這個目標。不過提醒一下，如果回顧過去，我們吸收了大量通膨因素並提高了價格，導致利潤率下降。所以38%在舊計算中相當於新的40%。但我仍然認為，儘管基數是新的，但隨著銷售額的成長，我們能夠回到40%的水平。

Our next question comes from the line of Steven Fox with Fox Advisors.

我們的下一個問題來自 Fox Advisors 的 Steven Fox。

I guess I was just wondering on the Specialty Materials business, if you can provide some more detail. From my seat, it looks like it did much better than I would have thought for Q1. How much of that was due to Gorilla Glass? How do you sort of look at the rest of the year, given sort of mixed results in Q1 on the phone side, like what kind of seasonality, et cetera, are we looking at?

我只是想知道特殊材料業務的狀況，能否提供一些細節？在我看來，第一季的表現比我預想的要好得多。這在多大程度上歸功於大猩猩玻璃？考慮到第一季手機業務的業績好壞參半，您如何看待今年剩餘時間的表現？例如，我們面臨什麼樣的季節性因素等等？

Yes. I think it was more or less in line with how we would have expected it. I think it's a business that will grow as we add more Corning content. That's the way we think about it for the year. We don't see smartphone market being up that much in units maybe a point or 2 for the year. There certainly can be some growth in the IT space, but even that is single digit, maybe mid-single-digit level.

是的。我認為這基本上符合我們的預期。我認為隨著康寧業務的增加，這項業務將會成長。這就是我們對今年的預期。我們認為智慧型手機市場的出貨量不會成長太多，可能只有一、兩個點。 IT領域當然會有一些成長，但即使是這樣，也只是個位數，或中等個位數。

So I think the growth catalyst here is for us to add content into the market.

因此我認為這裡的成長催化劑就是我們在市場上添加內容。

And we just don't see a lot of that happening this year. Steve, we'll be -- this is most of our newest innovation will be aimed at the model year following this. So we're not looking at MC as being a big catalyst for near-term growth in terms of versus Q1, right, for this year, but future it will be.

但我們今年看不到太多這樣的情況發生。史蒂夫，我們大部分最新的創新都將針對下一年的車款。因此，就今年第一季而言，我們並不認為 MC 會成為近期成長的重大催化劑，但未來它會。

Super. We've got time for another question.

太好了。我們還有時間回答另一個問題。

Our next question comes from the line of George Notter with Jefferies.

我們的下一個問題來自 Jefferies 的 George Notter。

I guess I'm curious about your comments on display. I think you mentioned an appropriate level of profitability. I get what that is. But when you go out and re-up the hedging portfolio, obviously, there's a cost that comes with that. Do you still -- I think if I go back in the past, you guys looked at the hedging portfolio as being pretty neutral in terms of cost between what you were long and what you were short. Is that still going to be the case as we re-up the hedges going forward? And then when you talk about an appropriate level of profitability, are you including the cost of the hedging program when you make that statement?

我對你的評論很好奇。我記得你提到了適當的獲利水準。我明白那是什麼意思。但是，當你重新建立對沖組合時，顯然會產生成本。你現在還認為，在多頭和空頭之間的成本方面，對沖組合的持倉相對中性嗎？當我們未來重新建立對沖組合時，情況還會如此嗎？還有，你提到的適當的獲利水平，是否包括了對沖計劃的成本？

The appropriate level of profitability would include any cost of hedging. We're long yen, right? And so the -- you heard, and Ed was pointing out sort of over the sweep of time, we generated on the order of $2.5 billion of cash, positive cash arising from our hedges, right? That or us hedging that long end position. And the way we think about this is that position is coming from the fact we sell in yen. And so we will resolve this either in the currency market should the yen come back to more sort of reasonable levels, right? And we'll be opportunistic about that.

適當的獲利水準應包含對沖成本。我們做多日元，對吧？所以——你也聽到了，艾德也指出，隨著時間的推移，我們透過對沖產生了大約25億美元的現金，對吧？這部分現金是我們對沖多頭部位產生的。我們認為，多頭部位的產生源自於我們賣出日圓。所以，如果日圓回到更合理的水平，我們會在貨幣市場上解決這個問題，對吧？我們會抓住機會。

But if not, our customers are picking up the game in terms of lower-cost glass because we sell in yen. And so what we will do is just raise our price in yen to share some of that volatility that we're seeing in the yen. Does that make sense, George?

但即使沒有，由於我們以日元銷售，我們的客戶也會選擇低成本玻璃。所以我們會提高日圓價格，以分擔日圓匯率波動帶來的部分影響。喬治，你明白嗎？

It does. I assume it's still fair to say that the cost of the hedging program is pretty minimal to shareholders, we're pretty balanced in terms of the 2 sides.

確實如此。我認為，對沖計畫的成本對股東來說相當小，雙方的利益相當平衡。

Yes.

是的。

Thanks, George, and thank you, everybody, for joining us today. Before we close, I wanted to let you know that we will hold our Annual Meeting of Shareholders on May 2. In addition, we'll also attend the JPMorgan Technology Conference on May 21. And finally, we'll be hosting management visits to investor offices in [select cities].

謝謝喬治，也謝謝各位今天的到來。在結束之前，我想告訴大家，我們將於5月2日舉行年度股東大會。此外，我們也將參加5月21日的摩根大通科技大會。最後，我們將安排管理層訪問[部分城市]的投資者辦公室。

There'll be a web replay of today's call on our site starting later this morning. Thank you all for joining us. Shannon, that concludes our call. Please disconnect all lines.

今天上午晚些時候，我們的網站將提供今天電話會議的網路回放。感謝大家的收看。香農，我們的電話會議到此結束。請斷開所有線路。

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。您可以掛斷電話了。